TransGlobe Apartment REIT Completes Management Internalization and Significant Portfolio Acquisition

Not for dissemination in the United States or over United States newswires

TORONTO, Sept. 1, 2011 /CNW/ - TransGlobe Apartment REIT (the "REIT") announced today that it has completed its previously announced internalization of the asset and property management functions of the REIT (the "Internalization") and the indirect acquisition of a portfolio of 57 properties (the "Acquisition Properties") comprising an aggregate of approximately 7,500 residential suites in an aggregate of 94 residential buildings and three townhouse complexes located in the Provinces of Alberta, Ontario, Québec and Nova Scotia, as well as approximately 13,000 square feet of commercial space in London, Ontario. The Acquisition Properties were previously owned or co-owned and operated by affiliates of TransGlobe Investment Management Ltd. (collectively "DrimmerCo"). Additionally, in consideration for the REIT assuming certain mortgages secured by the Acquisition Properties, DrimmerCo will make instalment payments to the REIT pursuant to instalment notes (the "Notes") in order to achieve an effective weighted average interest rate of 3.5% per annum on such mortgages.

In connection with the Internalization, the REIT acquired from DrimmerCo all of the assets (including all "TransGlobe" trademarks), and assumed certain obligations, that are related or required to manage the properties of the REIT, the REIT terminated certain commercial relationships with DrimmerCo (including the non-competition agreement among the parties), and Messrs. Daniel Drimmer and Alon Ossip resigned from the REIT's board of trustees effective September 1, 2011.

The purchase price for the Acquisition Properties and the Notes (the "Acquisition") of approximately $740.4 million implied a capitalization rate on the purchase price attributable to the Acquisition Properties of approximately 6.0%, and was satisfied by a combination of approximately $394.8 million of cash (prior to any closing adjustments), the assumption of approximately $262.6 million aggregate principal amount of existing mortgage debt on the Acquisition Properties, and the issuance to DrimmerCo of approximately $83.0 million of Class B limited partnership units of new limited partnerships (the "New LPs") formed by the REIT to hold the Acquisition Properties (which are economically equivalent to and exchangeable for trust units of the REIT ("Trust Units")) and accompanying special voting units of the REIT.

The cash component of the purchase price of the Acquisition was satisfied by a combination of approximately $216.8 million from part of the net proceeds of a public offering of approximately $194 million of subscription receipts of the REIT (the "Subscription Receipts") and $50 million aggregate principal amount of 5.40% extendible convertible unsecured subordinated debentures of the REIT (the "Debentures"), approximately $170.0 million of proceeds from new mortgage debt secured against certain of the Acquisition Properties, the net cash proceeds from the transfer to DrimmerCo of 411 Ellerdale Street, Saint John, New Brunswick and 100 Rideau Street, Oshawa, Ontario for approximately $24.4 million, and cash on hand.

On closing of the Acquisition, one Trust Unit was automatically issued in exchange for each outstanding Subscription Receipt, resulting in the issuance of approximately 17.25 million Trust Units, and the maturity date for the Debtentures was automatically extended to September 30, 2018.

As part of the purchase price for the Acquisition, as noted above, DrimmerCo, which prior to the Acquisition, beneficially owned or had control or direction over 7,422,682 Trust Units (assuming conversion to Trust Units, on a one-for-one basis, of all issued and outstanding Class B limited partnership units of limited partnerships controlled by the REIT), acquired beneficial ownership of or control or direction over 7,377,780 Class B limited partnership units of the New LPs, at a deemed price of $11.25 per unit. Accordingly, DrimmerCo currently beneficially owns or has control or direction over 14,800,462 Trust Units (assuming conversion to Trust Units, on a one-for-one basis, of all issued and outstanding Class B limited partnership units of limited partnerships controlled by the REIT), or an approximate 20.5% effective interest in the REIT. The Class B limited partnership units of New LPs were acquired for investment purposes. DrimmerCo may from time to time acquire additional securities of the REIT and its controlled entities (whether pursuant to property acquisition transactions, or otherwise), dispose of some or all of the securities of any such entity or maintain current securities position in any such entity. A copy of the early warning report regarding DrimmerCo's effective interest in the REIT may be obtained on SEDAR at, or from Mr. Daniel Drimmer, voting trustee of such interest, at 5925 Airport Road, Suite 615, Mississauga, Ontario L4V 1W1, telephone (416) 234-8444.

About TransGlobe Apartment REIT

The REIT is an unincorporated, open-ended real estate investment trust established under the laws of the Province of Ontario. The REIT owns a portfolio of 151 real estate properties containing approximately 20,260 suites principally located in urban centres in Alberta, Ontario, Québec, New Brunswick and Nova Scotia.

Forward-looking Statements

This press release contains forward-looking statements which reflect the REIT's current expectations regarding future events. The forward-looking statements are not guarantees of future performance and are based on the REIT's estimates and assumptions that are subject to risks and uncertainties, including those discussed in the REIT's materials filed with the Canadian securities regulatory authorities from time to time. Actual results could differ materially from those projected herein. The REIT disclaims any obligation to update these forward-looking statements except as required by applicable Canadian securities laws.

SOURCE TransGlobe Apartment REIT

For further information:

Kelly Hanczyk,
Chief Executive Officer
TransGlobe Apartment REIT
(416) 234-8444


Leslie Veiner
Chief Financial Officer
TransGlobe Apartment REIT
(416) 234-8444

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TransGlobe Apartment REIT

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