Milestone Apartments REIT Closes Internalization Transaction and Renews Base Shelf Prospectus

TORONTO and DALLAS, Sept. 30, 2016 /CNW/ - Milestone Apartments Real Estate Investment Trust (TSX: MST.UN) ("Milestone" or the "REIT") today announced that it has completed the previously announced internalization of the REIT's asset management function (the "Internalization" or the "Transaction") and also filed and obtained a receipt for a final base shelf prospectus (the "Shelf Prospectus"). All dollar amounts are in U.S. currency unless otherwise noted.

Internalization

With closing of the Internalization, the REIT's operating partnership has acquired the REIT's asset manager, TMG Partners L.P. (the "Asset Manager") for $25.0 million in cash, which is being funded with a drawdown on the REIT's revolving line of credit, and approximately 5.3 million class B limited partnership units of the REIT's operating partnership ("Class B Units"), which are redeemable on a one-for-one basis for trust units of the REIT ("Units"), subject to a minimum hold period. The aggregate consideration of $106.5 million was based on the Toronto Stock Exchange 10-day volume weighted average price of the REIT's units ended July 25, 2016 (the day prior to the announcement of the Internalization) of C$20.20 and a US$ to C$ exchange rate of US$1 to C$1.3225 based on the Bank of Canada's noon U.S. dollar exchange rate as at July 25, 2016.

At a special meeting of unitholders of the REIT ("Unitholders") held on September 13, 2016, Unitholders overwhelmingly voted in favour of the Internalization with the Internalization approved by over 99% of votes cast by Unitholders. Affiliates of the Asset Manager abstained from voting on the Internalization.

Prior to closing, the Asset Manager was indirectly owned by Robert P. Landin and Jeffrey L. Goldberg. Prior to closing, Messrs. Landin, Goldberg and their joint actors (including MST Investors, LLC) directly and indirectly owned or exercised control or direction over 19,500 Units and 5,513,675 Class B Units, which together represented an approximate 7.3% ownership interest in the REIT on a partially diluted basis (assuming all Class B Units held by Messrs. Landin, Goldberg and their joint actors were redeemed for Units). Following closing, Messrs. Landin, Goldberg and their joint actors (including MST Investors, LLC) directly and indirectly own or exercise control or direction over 19,500 Units and 10,850,938 Class B Units, which together represent an approximate 13.4% ownership interest in the REIT on a partially diluted basis (assuming all Class B Units held by Messrs. Landin, Goldberg and their joint actors were redeemed for Units).  Messrs. Landin, Goldberg and their joint actors have informed the REIT that the REIT securities owned by them are held for investment purposes and that they may, subject to market conditions and in compliance with applicable securities laws, make additional investments in, or dispositions of, securities of the REIT. A copy of the early warning reports required to be filed by Messrs. Landin and Goldberg with applicable securities commissions will be filed under the REIT's profile on SEDAR at www.sedar.com and a copy of the early warning reports may also be obtained by contacting Robert Debs, the REIT's Director of Investor Relations, at 5429 LBJ Freeway, Suite 800, Dallas, TX 75240, or 214-561-1215.  

Shelf Prospectus

The Shelf Prospectus was filed with the securities regulatory authorities in each of the provinces and territories of Canada for the purpose of the sale of securities. The intention of the Shelf Prospectus is to allow the REIT to more quickly access capital when market opportunities permit.

The Shelf Prospectus is valid for a 25-month period, during which time the REIT may offer and issue, from time to time, trust units, debt securities, warrants and subscription receipts, or any combination thereof, having an aggregate offering price of up to C$750 million.  Any issue of securities under the shelf prospectus will require the filing of a prospectus supplement that will include the specific terms of the securities being offered.

This news release shall not constitute an offer to sell or the solicitation of an offer to buy securities, nor shall there be any sale of the securities, in any jurisdiction in which such offer, solicitation or sale would be unlawful. This news release does not constitute an offer to sell or the solicitation of an offer to buy securities in the United States and the securities referred to in this news release may not be offered or sold in the United States absent registration under the U.S. Securities Act of 1933 or pursuant to an applicable exemption from the registration requirements under the U.S. Securities Act of 1933 and applicable state securities laws.

About Milestone

The REIT is an unincorporated, open-ended real estate investment trust that is governed by the laws of Ontario. The REIT's portfolio consists of 72 multifamily garden-style residential properties, comprising 22,546 apartment units that are located in 14 major metropolitan markets throughout the Southeast and Southwest United States. The REIT is the largest real estate investment trust listed on the TSX focused solely on the United States multifamily sector. Milestone's vertically integrated platform employs more than 1,200 employees and manages more than 50,000 apartment units across the United States. For more information, please visit www.milestonereit.com.  

Forward-looking information

This news release may contain forward-looking statements (within the meaning of applicable securities laws) relating to the business of the REIT and the environment in which it operates.  Forward-looking statements are identified by words such as "believe", "anticipate", "expect," "intend", "plan", "will", "may" and other similar expressions. Some of the specific forward-looking statements in this news release include, but are not limited to, statements regarding whether the REIT will issue additional securities pursuant to a prospectus supplement and future intentions of Messrs. Landin and Goldberg with respect to their securities. Such statements are based on a number of assumptions and are subject to a number of risks and uncertainties, many of which are beyond the REIT's control that could cause actual results and events to differ materially from those that are disclosed in or implied by such forward-looking information. There can be no assurance that forward-looking statements will prove to be accurate as actual outcomes and results may differ materially from those expressed in these forward-looking statements. Readers, therefore, should not place undue reliance on any such forward-looking statements. Further, a forward-looking statement speaks only as of the date on which such statement is made. The REIT undertakes no obligation to publicly update any such statement or to reflect new information or the occurrence of future events or circumstances.

SOURCE Milestone Apartments REIT

Image with caption: "Milestone Apartments Real Estate Investment Trust (CNW Group/Milestone Apartments REIT)". Image available at: http://photos.newswire.ca/images/download/20160930_C3783_PHOTO_EN_785563.jpg

For further information: Robert Debs, Investor Relations, Milestone Apartments REIT, Tel: 214.561.1215; Bruce Wigle, Investor Relations, Bay Street Communications, Tel: 647.496.7856

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