HUNTINGDON REIT ANNOUNCES PLAN TO CONVERT TO A CORPORATE STRUCTURE AND SUBSTANTIAL ISSUER BID

RICHMOND, BC, June 14, 2011 /CNW/ - Huntingdon Real Estate Investment Trust (the "Trust" or "HREIT") (TSX: HNT.UN) today announced its plans to seek Unitholder approval to convert from an income trust into a corporate structure effective on or about October 31, 2011 (the "Conversion"), as well as plans to proceed with a substantial issuer bid (the "Offer") to purchase for cancellation up to five percent (5%) of the Trust's issued and outstanding trust units.

Conversion

The unitholders of the Trust ("Unitholders") will be asked to approve a plan of arrangement to implement the conversion at a special meeting (the "Meeting") of Unitholders to be held on or about September 26, 2011.  The Trust has been analyzing options for the long-term maximization of Unitholder value. The conclusion of the analysis was that conversion to a corporate structure is the best option for the Trust. The Trust's Board of Trustees and management believe that the proposed reorganization offers a number of benefits, including:

  • the ability to utilize the value of the Trust's tax assets, previously not used in the income trust structure, to minimizing taxable income while providing a structure accretive to acquisitions; and

  • providing a simplified tax structure that is more comparable to public companies operating in Canada and internationally, providing, among other things, the benefit of reduced internal and external administrative costs.

Pursuant to the Conversion, holders of trust units will receive, through a series of steps, in exchange for each such unit they hold on the effective date of the Conversion, one common share of a new corporation ("Newco").  It is expected that the Conversion will be completed on a tax-free, rollover basis for Canadian income tax purposes.  As part of the Conversion, HREIT and IAT Air Cargo Facilities Income Fund will be wound up into Newco, leaving Newco holding directly the interest in International Aviations Terminals Inc. that is currently indirectly owned by HREIT, the intent being to convert to a simplified corporate structure while maintaining as nearly as possible all of the existing rights and relationships among the affected parties.  Newco will indirectly own and operate the existing business of HREIT and its subsidiaries and it is expected that the existing trustees of HREIT will become the directors of Newco.  As part of the Conversion, HREIT intends that Newco will assume all of the Trust's covenants and obligations under the 5-Year 7.50% Series C Convertible Redeemable Unsecured Subordinated Debentures (the "7.50% Debentures") issued pursuant to the March 29, 2007 trust indenture.

Full details of the proposed Conversion will be contained in the management information circular to be mailed on or about September 1, 2011 in connection with the Meeting. To be implemented, the Conversion must be approved by not less than two-thirds of the votes cast by Unitholders at the Meeting. Completion of the Conversion is also subject to a number of other conditions, including TSX and court approval, as well as receipt of all required consents, orders, approvals, authorizations and releases, if any, from third parties (including lenders holding conventional mortgages) in form and substance satisfactory to the Trust. The Conversion is also subject to the approval by the holders of the 7.50% Debentures of a special resolution providing that the Conversion is deemed not to be a change of control for purposes of the trust indenture governing the 7.50% Debentures (the "Debenture holder Approval").  A meeting of the holders of the 7.50% Debentures to consider this special resolution is proposed to take place following the Meeting.  Notice and information in connection with such meeting is expected to be mailed to holders of 7.50% Debentures at the same time as the materials for the Meeting. There can be no assurance at this time that all approvals, consents and conditions required to effect the Conversion will be obtained or satisfied, as applicable, to the satisfaction of the Trust within that timeframe or at all.  Accordingly, there can be no assurance that the Conversion will be completed on the terms described in this news release or at all.

Substantial Issuer Bid

Pursuant to the Offer, the Trust will offer to repurchase for cancellation up to $5.5 million in value of its outstanding trust units from Unitholders. The Offer will proceed by way of a modified "Dutch Auction" and the range of Offer prices will be $6.80 to $7.50 per trust unit. The maximum purchase price under the Offer represents a premium of approximately 10% over the daily volume weighted average trading price of the trust units on the TSX for the 30 trading days preceding the date of this announcement.

The modified Dutch Auction tender process allows Unitholders to individually select the price, within the specified range, at which they are willing to sell all or a portion of their trust units. When the Offer expires, the Trust will select the purchase price (the "Purchase Price") which will be the lowest tendered price from within the range of prices allowing it to buy up to $5.5 million of the trust units validly tendered to the Offer, or such lower aggregate purchase price as the board of trustees of the Trust, in its discretion, determines to be in the best interests of the Trust.  All trust units tendered at or below the selected price level will be bought at the Purchase Price, subject to pro-ration.  All trust units tendered at prices higher than the Purchase Price will be returned to Unitholders.  The Trust will fund any purchases of trust units pursuant to the Offer from available cash on hand.

The Offer will be for up to approximately 5% of the total number of issued and outstanding trust units (based on a Purchase Price equal to the minimum purchase price per trust unit of $6.80 and 14,286,774 trust units outstanding on June 13, 2011).

The Offer will not be conditional on any minimum number of trust units being tendered to the Offer, but will be subject to other conditions customary for transactions of this nature. It is anticipated that the formal offer to purchase and issuer bid circular and other related documents (the "Offer Documents"), containing the terms and conditions of the Offer and instructions for tendering trust units will be mailed to Unitholders and filed with the applicable securities regulators and available on SEDAR at www.sedar.com on or about July 8, 2011. The Offer will remain open for acceptance for at least 35 days after the date of commencement, unless withdrawn or extended by HREIT.

Neither HREIT nor its board of trustees makes any recommendation to Unitholders as to whether to tender or refrain from tendering their trust units to the Offer.  Unitholders are strongly urged to consult their own financial, tax and legal advisors and to make their own decisions whether to tender or refrain from tendering their trust units to the Offer and, if so, how many trust units to tender and at what price or prices.  HREIT is making the Offer as an equitable and efficient means to distribute an aggregate of up to $5.5 million in cash to Unitholders, while at the same time proportionately increasing the equity interest in the Trust of Unitholders who do not deposit their trust units to the Offer.  The board of trustee's decision to authorize making the Offer, was based on a number of factors, including that the Offer is an equitable and efficient means of distributing capital to Unitholders, the Offer provides Unitholders who desire liquidity with an opportunity to realize on all or a portion of their investment in HREIT and the deposit of trust units is optional and Unitholders are free to accept or reject the Offer. Further information concerning the factors considered by the board of trustees, along with the terms and conditions of the Offer, will be contained in the Offer Documents that will be mailed to Unitholders and available on SEDAR when the Offer is formally launched.

THIS PRESS RELEASE IS FOR INFORMATION PURPOSES ONLY AND IS NOT AN OFFER TO BUY OR THE SOLICITATION OF AN OFFER TO SELL ANY TRUST UNITS OF THE TRUST.

HREIT is a real estate investment trust which is listed on the Toronto Stock Exchange under the symbols HNT.UN (Trust Units) and HNT.DB.C (Series C Convertible Debentures).  HREIT owns, directly or indirectly, 77 income producing office, industrial, retail and standalone parking lot properties, including the aviation-related facilities at five of Canada's leading international airports that have a total gross leasable area of 5.5 million square feet; and two land parcels held for development, with other development and expansion opportunities within the portfolio.

The Toronto Stock Exchange has not reviewed nor approved the contents of this press release and does not accept responsibility for the adequacy or accuracy of this press release.


SOURCE Huntingdon Real Estate Investment Trust

For further information:

Zachary R. George, Trustee, President and Chief Executive Officer
Tel: (604) 249-5119
Fax: (604) 249-5101
Email: zgeorge@hreit.ca

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Huntingdon Real Estate Investment Trust

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