/C O R R E C T I O N from Source -- Scott's Real Estate Investment Trust/

Please note that an error occurred in c3019 sent yesterday, May 12 at 18:56 ET. The first sentence under the heading "Liquidity" should read "At March 31, 2010, Scott's REIT had $19 million of cash and short-term investments." and not "...$1.9 million of cash and short-term investments" as previously issued. Correct copy follows:

Scott's REIT reaches goal of doubling its asset base also reports first quarter 2010 results

Announces an acquisition of a newly developed property in Canada's second fastest growing community and closes its milestone sale leaseback agreement with Shoppers Drug Mart

TORONTO, May 12 /CNW/ - Scott's Real Estate Investment Trust (TSX: SRQ.UN) ("Scott's REIT" or the "REIT"), Canada's leading owner of small-box retail properties, today reported its financial results for the first quarter ended March 31, 2010. The REIT also announced its 54th consecutive monthly cash distribution for the month of May 2010.

Scott's REIT also announced the acquisition of a new 24,500 square foot property in Okotoks Alberta from JBM Properties Inc. Okotoks is located less than 18 kilometres south of Calgary and is the second fastest growing community in Canada. The property has eight tenants in total, including major national brands such as Western Financial Bank, Tim Hortons, KFC/Taco Bell and Subway, in addition to local tenants. The REIT financed the acquisition with cash on hand.

First Quarter 2010 Financial Highlights

Three months ended March 31, 2010 vs. Three months ended March 31, 2009

    
    -   Revenue increased by 3.6 per cent to $5 million
    -   Net operating income* increased by 3.4 per cent to $4.1 million
    -   Payout ratio* increased to 117.6 per cent from 90.3 per cent
    -   Completed a $15 million equity offering of 1,974,000 Class A Units to
        the public
    -   Closed a sale leaseback transaction for 12 properties tenanted by
        Shoppers Drug Mart

    *See section entitled Non-GAAP measures.
    

"Following quickly on the heels of our acquisition of 12 Shoppers Drug Mart retail locations, we recently acquired a large property in Okotoks," said Evelyn Sutherland, Chief Financial Officer of Scott's REIT. "We continue to make progress diversifying our revenue base and mitigating our risk profile. We believe that Scott's REIT offers a good opportunity for investors who are looking for an investment that offers a consistent monthly income as well as growth potential."

Regarding the REIT's $65 million mortgage that will mature in October 2010, Ms. Sutherland said, "We have commenced the refinancing process and have received indicative terms and discussion sheets for an amount well in excess of our $65 million mortgage. We believe that the significant value of the underlying portfolio relative to the loan value is very attractive. While there is a possibility that we may seek an extension of our existing facility, we are looking at other lenders and also exploring other options.

Financial Performance

Scott's REIT reported revenue of $5 million for the three-month period ended March 31, 2010, an increase of 3.6 per cent over the first quarter of 2009. The primary reason for the increase in the quarter was a result of the acquisition of 12 properties leased to Shoppers Drug Mart which closed in early March 2010. Operating expenses for the three-month period were $0.84 million, an increase of $36,000 over the first quarter of 2009. The increase in property expense was a result of timing differences from property carrying costs as a result of one time invoices to tenants which are fully collectible by Scott's REIT.

The REIT's net operating income for the first quarter of 2010 was $4.1 million, an increase of 3.4 per cent over the prior year quarter.

During the first three months of 2010, distributable income amounted to $1.5 million, a decrease of 15 per cent over the first quarter of 2009. Although there was a decline in distributable income, and an increase in the payout ratio, this was caused by the recent equity offering and the timing of closing the acquisition of 12 properties tenanted by Shoppers Drug Mart. Scott's REIT anticipates that this is temporary, and expects that as Scott's collects the rental revenue from the Shoppers Drug Mart property acquisition and it deploys its cash from the equity raised in February 2010 on income producing initiatives, the payout ratio will decline and the distributable income will increase over the next twelve months.

Equity Offering

On February 24, 2010, Scott's REIT closed an offering of 1,974,000 Units at a price of $7.60 per Unit with approximate net proceeds to the REIT of $14 million. Of the proceeds, an estimated $7 million will be used for land intensification projects, approximately $5 million will be used to fund future acquisitions and the balance will be used for working capital purposes.

Property Acquisition from Shoppers Drug Mart

On March 5, 2010, the REIT closed its previously announced sale leaseback transaction with Shoppers Drug Mart for 12 properties located in Alberta, Manitoba, Ontario, Quebec and Nova Scotia. The aggregate purchase price for the properties was $30.2 million. The average remaining lease term is 11.5 years and all leases have rental escalations of seven per cent every five years. The REIT financed the acquisition with a one year secured bridge loan facility for $20 million on favourable terms and the balance with cash generated from the convertible debenture offering completed in the fourth quarter of 2009. This bridge loan was done to maximize the benefits to the Unitholders of the REIT as it pursues various financing alternatives in the capital markets.

Upon close of this acquisition, Scott's REIT has successfully diversified its tenant base by increasing the gross leasable area occupied by national pharmacies to 26 per cent from 12 per cent pre-acquisition.

Subsequent Events

On May 10, 2010, the REIT closed an acquisition for a 24,543 square foot property in Okotoks Alberta for a purchase price of $10.2 million plus closing costs. The property was acquired from JBM Properties Inc., a related party. The REIT financed the acquisition with cash on hand. The REIT has a first right of refusal on any properties that are available for sale from JBM Properties. The Trustees of Scott's REIT assessed the acquisition independent of management. As part of the analysis on the offer, the REIT obtained an independent third party appraisal for the property. In addition, the REIT had evaluated several other bids from third parties which included bids that were higher than the purchase price paid. The average remaining lease term on the tenants is 11.5 years. There are eight tenants in total including, Western Financial Bank, Tim Horton's, KFC/Taco Bell, Subway and local tenants.

Okotoks is less than 18 km south of Calgary, Alberta. The town's population has grown by 47 per cent in the last five years, making it the second fastest growing community in Canada. The property is located on the main thoroughfare directly across from a Wal-Mart, Canadian Tire and Sobey's anchored power centre.

Liquidity

At March 31, 2010, Scott's REIT had $19 million of cash and short-term investments. Approximately $12 million of REIT's cash balance was used to close the acquisition of the properties from Shoppers Drug Mart in March 2010 with the balance to be used for, among other things, general corporate purposes.

In the first quarter, distributable income was lower than distributions paid. Although there was a decline in distributable income, the REIT anticipates that this is temporary due to the timing of the closing of the acquisition of 12 properties from Shoppers Drug Mart and the timing on the deployment of cash after the raise of equity in February 2010. The acquisition of the additional revenue producing asset in Okotoks should offset some of this deficiency. In addition, the REIT will also be deploying capital on land intensification initiatives over the next six to 12 months, which is expected to have a positive effect on distributable income.

Monthly Distribution for May 2010

Scott's REIT announced a cash distribution for the month of May 2010 of $0.0708 per unit payable on June 15, 2010 to Unitholders of record on May 31, 2010.

Scott's REIT also announced today a monthly cash distribution of $0.0708 per unit to Unitholders of record of Class B Limited Partnership Units in Scott's Real Estate LP on May 31, 2010. This distribution marks the 54th consecutive cash distribution declared since Scott's REIT began operations on October 6, 2005.

Non-GAAP Measures

Distributable income

Distributable Income is not a measure recognized under GAAP and does not have a standardized meaning prescribed by GAAP. Distributable Income is presented in this MD&A because management of Scott's REIT believes this non-GAAP measure is a relevant measure of the ability of Scott's REIT to earn and distribute cash returns to Unitholders. Distributable Income as computed by Scott's REIT may differ from similar computations as reported by other similar organizations and, accordingly, may not be comparable. Distributable Income in this MD&A represents income before non-controlling interest of Scott's REIT on a consolidated basis as determined in accordance with GAAP, plus amortization expense, income taxes, stock compensation, less the straight-line revenue accrual, deferred financing costs, deferred amortization costs, below market rents and interest accretion.

Net Operating Income ("NOI")

NOI is not a measure recognized under GAAP and does not have a standardized meaning prescribed by GAAP. NOI is presented in this MD&A because the management of Scott's REIT believes that this non-GAAP measure is a relevant measure of the ability of Scott's REIT to earn and distribute cash to Unitholders. NOI as computed by Scott's REIT may differ from similar computations as reported by other similar organizations and, accordingly, may not be comparable.

About Scott's Real Estate Investment Trust

Scott's REIT (TSX: SRQ.UN) is Canada's premier small-box retail property owner with 219 properties in seven provinces across Canada. Scott's REIT's properties are well-located and geographically diverse across Canada with the majority of all properties containing long-term quadruple net leases. The REIT has approximately 75.6 per cent interest in Scott's Real Estate LP. To find out more about Scott's Real Estate Investment Trust (TSX: SRQ.UN), visit our website at http://www.scottsreit.com.

Forward-Looking Statements

This document contains certain information that may constitute forward-looking information within the meaning of securities laws. In some cases, forward-looking information can be identified by the use of terms such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "intend", "estimate", "predict", "potential", "continue" or other similar expressions concerning matters that are not historical facts. Forward-looking information may relate to management's future outlook and anticipated events or results, and may include statements or information regarding future growth opportunities and potential and expected cash distributions or cash distribution levels. In particular, information regarding the REIT's monthly cash distributions and information relating to the impact of the REIT's recent acquisitions on annual revenues and interest expense is forward-looking information. Forward-looking information is based on certain factors and assumptions regarding, among other things, occupancy rates, property expense and capital expenditures. While the REIT considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect. Forward looking-information is subject to certain factors, including risks and uncertainties, which could cause actual results to differ materially from what is currently expected. Such factors include risks relating to the REIT's reliance on Priszm LP, the REIT's largest tenant, risks associated with investment in real property, competition, reliance on key personnel, financing and refinancing risks, environmental matters, tenant risks, risks related to current economic conditions and other risk factors more particularly described in the REIT's Annual Information Form for the year ended December 31, 2009. You should not place undue importance on forward-looking information and should not rely upon this information as of any other date. Other than as required by applicable Canadian securities law, the REIT does not undertake to update this information at any particular time. Additional information identifying risks and uncertainties is contained in Scott's REIT filings with the Canadian securities regulators, available at www.sedar.com.

The following selected financial information, with the exception of the Reconciliation of Distributable Income, has been derived from and should be read in conjunction with the historical audited financial statements of Scott's REIT for the quarter ended March 31, 2010 and 2009, and the notes thereto included in Scott's REIT's annual filings at www.sedar.com.

    
    RECONCILIATION OF DISTRIBUTABLE INCOME TO CASH PROVIDED BY OPERATING
    ACTIVITIES (UNAUDITED)
    (in thousands of dollars except per Unit amounts)

    The following table outlines the reconciliation of distributable income
    to cash provided by operating activities:

    -------------------------------------------------------------------------
                                                         Three months ended
                                                              March 31,
    -------------------------------------------------------------------------
                                                        2010            2009
    -------------------------------------------------------------------------
    Cash provided by operating activities             $1,537          $1,594
    Net change in non-cash working capital               (85)            116
    -------------------------------------------------------------------------
    Distributable income                               1,452           1,710
    Distributions declared                             1,819           1,541
    -------------------------------------------------------------------------
    Excess/(deficiency)                                 (367)            169
    -------------------------------------------------------------------------
    Distributable income per Unit                       0.18            0.24
    Distributions per Unit                              0.21            0.21
    -------------------------------------------------------------------------
    Distributable income Payout Ratio(1)              117.6%           90.3%
    -------------------------------------------------------------------------
    Note
    (1) Distributable income payout ratio is calculated by taking
        distributable income divided by the weighted average number of units
        outstanding assuming full conversion of the class B exchangeable
        units during the relevant period end.



    CONSOLIDATED BALANCE SHEETS
    (in thousands of dollars)

    As of March 31, 2010 and 2009

    Assets                                              2010            2009
                                                           $               $

    Income-producing properties                      197,986         167,525

    Intangible assets                                  9,789           7,743

    Cash and cash equivalents                         19,027          16,004

    Accounts receivable                                  281             247

    Prepaid expenses and other assets                    905             795

    Due from related companies                            46             101

    Straight-line rent receivable                      2,495           2,446
                                               ------------------------------
                                                     230,529         194,861
                                               ------------------------------
                                               ------------------------------

    Liabilities and Unitholders' Equity

    Mortgages payable                                131,216         111,600

    Convertible debentures                            37,241          37,074

    Accounts payable and accrued liabilities           2,317           1,284

    Due to related companies                              51             117

    Distributions payable to unitholders                 653             513

    Other liabilities                                  3,546             151
                                               ------------------------------
                                                     175,024         150,739
                                               ------------------------------
    Class B Exchangeable Units                        13,626          14,334
                                               ------------------------------

    Unitholders' Equity
    Contributed surplus                                2,588           2,588

    Class A Units of Scott's REIT                     58,685          44,676

    Convertible debentures                             1,265           1,265

    Cumulative earnings (losses)                        (761)           (183)

    Cumulative distributions declared on
     Class A Units                                   (19,898)        (18,558)
                                               ------------------------------
                                                      41,879          29,788
                                               ------------------------------
                                                     230,529         194,861
                                               ------------------------------
                                               ------------------------------



    CONSOLIDATED STATEMENTS OF OPERATIONS AND CUMULATIVE EARNINGS
    (in thousands of dollars, except per Unit amounts)

    For the three months ended March 31, 2010 and 2009

                                                        2010            2009
                                                           $               $


    Revenue
    Rental revenue                                     4,932           4,735
    Amortization of (above) below market rentals          (6)             19
    Straight-line rent                                    49              48
                                               ------------------------------

                                                       4,975           4,802
                                               ------------------------------

    Expenses
    Depreciation and amortization                      2,049           2,066
    Operating expenses                                   842             806
    Interest expense, net                              2,480           1,977
    General and administrative                           412             380
                                               ------------------------------

                                                       5,783           5,229
                                               ------------------------------

    Loss before non-controlling interest                (808)           (427)

    Non-controlling interest of Class B
     Exchangeable Units                                 (203)           (133)
                                               ------------------------------

    Net loss for the year                               (578)           (294)

    Cumulative earnings - Beginning of year             (183)          1,277
                                               ------------------------------

    Cumulative earnings (losses) - End of year          (761)            983
                                               ------------------------------
                                               ------------------------------

    Basic and diluted loss per Unit                   (0.100)         (0.059)
                                               ------------------------------
                                               ------------------------------

    Class A Units outstanding                      6,967,964       4,993,964
                                               ------------------------------
                                               ------------------------------

    Class B Exchangeable Units outstanding         2,254,909       2,254,909
                                               ------------------------------
                                               ------------------------------



    CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
    (in thousands of dollars)

    For the years ended March 31, 2010 and 2009

                                                        2010            2009
                                                           $               $

    Net loss for the year                              (578)            (294)

    Other comprehensive income                            -                -
                                               ------------------------------

    Comprehensive loss                                 (578)            (294)
                                               ------------------------------
                                               ------------------------------



    CONSOLIDATED STATEMENTS OF CASH FLOWS
    (in thousands of dollars)

    For the years ended March 31, 2010 and 2009

                                                        2010            2009
                                                           $               $

    Cash provided by (used in)

    Operating activities
    Net loss for the year                               (578)           (294)
    Add (deduct)
      Non-controlling interest of Class B
       Exchangeable units                               (230)           (133)
      Amortization of income-producing properties      1,804           1,728
      Amortization of intangible assets and other
       liabilities                                       251             319
      Amortization of deferred financing charges         184             118
      Amortization of deferred costs                      11               6
      Interest accretion                                  59              14
      Straight-line revenue accrual                      (49)            (48)
                                               ------------------------------

    Change in other non-cash operating items
      Accounts receivable                                (34)            154
      Prepaid expenses and other assets                 (311)           (248)
      Accounts payable and accrued liabilities           441            (120)
      Due to/ from related companies                     (11)             98
                                               ------------------------------

                                                       1,537           1,594
                                               ------------------------------

    Investing activities
    Tenant inducements and leasing commissions           (60)              -
    Construction-in-progress                             (29)              -
    Acquisitions-in-progress                               -               1
    Acquisitions of income producing properties      (30,372)              2
                                               ------------------------------

                                                     (30,461)              3
                                               ------------------------------

    Financing activities
    Class A units issued                              15,002               -
    Proceeds from mortgage payable                    20,000               -
    Issuance Costs                                      (917)              -
    Buyback of Class A units                               -            (300)
    Demand loan                                            -           1,300
    Mortgage financing fees                             (214)             (4)
    Principal repayment on mortgages payable            (246)           (184)
    Distributions Paid                                (1,678)         (1,546)
                                               ------------------------------

                                                      31,947            (734)
                                               ------------------------------

    Increase (decrease) in cash and cash
     equivalents during the year                       3,023             863

    Cash and cash equivalents - Beginning of year     16,004             102
                                               ------------------------------

    Cash and cash equivalents - End of year           19,027             965
                                               ------------------------------
                                               ------------------------------

    Cash and cash equivalents consist of
    Cash                                               4,693             565
    Cash equivalents                                  14,334             400
                                               ------------------------------

                                                      19,027             965
                                               ------------------------------
                                               ------------------------------

    Supplemental Disclosure
    Interest paid                                      1,459           1,493
    Accrued costs relating to acquisition
     of income producing properties                      516               -
    Accrued costs relating to issuance of Units           76               -
    

%SEDAR: 00022537E

SOURCE KEYreit

For further information: For further information: For investor information, please contact: Trish Moran, (416) 624-5133, trish.moran@scottsreit.com; For media information, please contact: Wilcox Group, (416) 203-6666, scottsreit@wilcoxgroup.com

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