Slate Retail REIT and Slate U.S. Opportunity (No. 3) Realty Trust Announce Board Approval of Proposed Transaction and Special Meetings of Unitholders

TORONTO, April 2, 2015 /CNW/ - Slate Retail REIT ("Slate Retail" or the "REIT") (TSX:SRT.U/SRT.UN) and Slate U.S. Opportunity (No. 3) Realty Trust ("SUSO 3") are pleased to announce that their boards of trustees have unanimously approved the previously announced transaction pursuant to which the REIT will acquire SUSO 3's assets in a US$195 million transaction (the "Acquisition").  As consideration for the Acquisition, the REIT will issue class U trust units (the "Units") of the REIT, and units of a subsidiary of the REIT that will be economically equivalent to Units, at a deemed price of US$10.47 per unit.  In connection with closing the Acquisition, SUSO 3 will also make a special distribution of its remaining cash balance, estimated to be approximately US$6 million to current investors, for total proceeds to current SUSO 3 investors of US$201 million less debt.

The approval of the Slate Retail board of trustees is based on the unanimous recommendation of the independent committee of the REIT, a fairness opinion and independent formal valuation of SUSO 3's assets from Blair Franklin Capital Partners, independent appraisals of the SUSO 3 properties from Altus Group Limited, and other considerations.  The approval of the SUSO 3 board of trustees is based on the unanimous recommendation of the independent committee of SUSO 3, a fairness opinion from Trimaven Capital Advisors and other considerations.

Special meetings of unitholders to consider the approval of the Acquisition in accordance with Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Acquisitions and the applicable rules of the Toronto Stock Exchange will be held at the offices of McCarthy Tétrault LLP (66 Wellington St W, Suite 5300, Toronto, ON, M5K 1E6), for Slate Retail unitholders, on May 13, 2015 at 10:00 a.m. EST and, for SUSO 3 unitholders, on May 13, 2015 at 10:30 a.m. EST.  Further details on the Acquisition will be set out in the management information circulars of Slate Retail and SUSO 3 that will be available on SEDAR and mailed, as applicable, in advance of the special meetings.

Slate Retail believes the Acquisition provides several benefits to its unitholders, including:

1. Strategic Acquisition of Quality Assets. The Acquisition is an opportunity for the REIT to grow through the acquisition of quality assets that are consistent with its growth strategy.  The SUSO 3 assets are also managed and were acquired by Slate Asset Management LP ("Slate" or the "Manager"), which will result in a smooth transition following the Acquisition.
2. No Acquisition Fee or Equity Commission.  Slate will not earn an acquisition fee on the Acquisition and the issuance of Class U Units to holders of SUSO 3's units will not be subject to equity commissions.
3. Creation of a Larger More Diversified Entity.  Upon completion of the SUSO 3 Acquisition, the REIT will have total assets in excess of U.S.$900 million.  The REIT's portfolio will comprise of 56 grocery anchored assets with over 6.6 million square feet of gross leasable area ("GLA") diversified across 20 states with 66% of GLA occupied by either grocery or national tenants.  The REIT's portfolio will be well diversified by tenant and geography with no tenant comprising more than 7% of revenues and no state comprising more than 12% of GLA.
4. Accretive to Adjusted Funds from Operations per Unit.  The Acquisition values SUSO 3 at a 7.3% cap rate and US$130 per square foot and is accretive to the REIT's adjusted funds from operation per Unit.

SUSO 3 believes the Acquisition provides several benefits to its unitholders, including:

1. Liquidity for Unitholders.  The Acquisition will provide unitholders liquidity through Slate Retail Units which are listed and freely tradable on the Toronto Stock Exchange. Unitholders will also receive a special distribution providing immediate cash proceeds.
2. Attractive Return on SUSO 3 unitholders' Initial Investment.  The Acquisition will provide unitholders a total return in excess of 20%, varying depending on the currency of their initial investment.
3. Investment into a Larger More Diversified Entity.  As described above, upon completion of the Acquisition, Slate Retail will have total assets in excess of US$900 million.  The REIT's portfolio will comprise of 56 grocery anchored assets with over 6.6 million square feet of GLA diversified across 20 states with 66% of GLA occupied by either grocery or national tenants.  The REIT's portfolio will be well diversified by tenant and geography with no tenant comprising more than 7% of revenues and no state comprising more than 12% of GLA.
4. Participation in Future Growth.  Following the Acquisition, unitholders will participate in future growth of the REIT through their ownership of Slate Retail Units. The REIT will continue its investment strategy to (i) provide unitholders of the REIT with stable cash distributions from a portfolio of diversified revenue-producing commercial real estate properties in the United States with a focus on grocery anchored retail properties, (ii) enhance the value of the REIT's assets and maximize long-term value through active management and (iii) expand the asset base of the REIT and increase the REIT's distributions, including through accretive acquisitions.
5. Tax Efficient Equity Rollover. In general, the exchange of SUSO 3 units for Slate Retail Units is intended to result in a tax-deferred "rollover" to SUSO 3 unitholders for Canadian federal income tax purposes.
6. Payment of Monthly Distributions.  Slate Retail pays monthly distributions as opposed to quarterly distributions currently paid by SUSO 3.

The Acquisition is expected to close in Q2 2015 and is conditional upon receiving the approval of unitholders of Slate Retail and SUSO 3 as well as the approval of the Toronto Stock Exchange and other customary closing conditions.

About Slate Retail REIT
Slate Retail REIT is an open-ended real estate investment trust focused on U.S. grocery-anchored real estate. The REIT's portfolio includes over 40 properties located primarily across the top 50 U.S. metro markets.  The REIT is focused on maximizing value through internal organic rental growth and strategic acquisitions. For more information, please visit www.slateretailreit.com.

About Slate U.S. Opportunity (No. 3) Realty Trust
Slate U.S. Opportunity (No. 3) Realty was established for the primary purpose of indirectly acquiring, owning and leasing a portfolio of diversified revenue-producing commercial real estate properties in the U.S. with a focus on anchored retail properties.  SUSO 3 indirectly owns a portfolio of 13 properties.

About Slate Asset Management
Slate Asset Management LP is a leading real estate investment platform with over $2.5 billion in assets under management. Slate is a value-oriented company and a significant sponsor of all its private and publicly-traded investment vehicles, which are tailored to the unique goals and objectives of its investors.  The firm's careful and selective investment approach creates long term value with an emphasis on capital preservation and outsized returns.  Slate is supported by exceptional people, flexible capital and a proven ability to originate and execute on a wide range of compelling investment opportunities.  More information is available at www.slateam.com.

SOURCE Slate Retail REIT

Blair Welch
Chief Executive Officer, Slate Retail REIT
416 644 4267

Brady Welch
Chief Financial Officer, Slate Retail REIT
416 644 4263