KingSett Capital Led Consortium Responds to Trustees' Circular from Primaris Retail REIT

Primaris Unitholders Encouraged to Seize Liquidity at a Premium Price by Tendering to the Offer

TORONTO, Dec. 20, 2012 /CNW/ - The KingSett Capital led consortium commented today on the Trustee's Circular issued earlier today by Primaris Retail Real Estate Investment Trust ("Primaris") in response to the all-cash offer of $26.00 per Primaris unit (the "Offer") made by KS Acquisition II LP (the "Offeror").  As previously disclosed, the Offeror is a limited partnership owned equally and beneficially by a KingSett Capital managed fund and by Ontario Pension Board.  A full discussion of the Offer, including reasons to accept the Offer, is available at www.kingsettprimarisoffer.com.

Jon Love, KingSett Capital Managing Partner, said, "The Primaris Trustees' Circular does not contain any new value-enhancing information about Primaris that was not already taken into account in formulating our offer.  Primaris is asking its unitholders to forgo an opportunity to seize liquidity at a premium price." Jon Love added, "Our offer is currently the only premium offer available to Primaris unitholders and we are confident that they will recognize that it delivers full and fair value for Primaris units and is in their best interest to tender their units to the offer."

The KingSett Capital led consortium urges Primaris unitholders to consider the following points in response to the Primaris Trustees' Circular:

• The Offer Represents Full Value for Primaris Units

The Offer price represents a significant premium of approximately 13% to the closing price of Primaris units on the TSX on December 4, 2012 (the last trading day before the Offeror announced its intention to make the Offer).  There are a number of Canadian REIT transactions that have been completed at similar or lower premiums to the Offer. In the absence of the Offer, it is likely that the trading price of Primaris units will decline to levels prior to the announcement of the Offeror's intention to make the Offer.

Primaris unitholders should note that the Offer represents a premium price at a time of peak valuations in the sector.  Although Primaris has increased its portfolio size over the past 5 years, it has generated growth in fully diluted funds from operations (FFO) of only 1.4% per annum¹.  The historical appreciation in Primaris' unit price during this time has been primarily a function of lower interest rates and lower capitalization rates in the Canadian real estate sector.  Primaris unitholders should not assume that capitalization rates will continue to decrease. According to a report published on December 6, 2012 by a North American portfolio strategist and quantitative analyst at Canaccord Genuity, one of the disclosed financial advisors to Primaris, the analyst commented, "Stay underweight Canadian REITs owing to relative overvaluation conditions of publicly listed companies." The analyst also noted that, "Similar overvaluations were seen at the peak of the sector in 1997 and early 2007."

• The Offer fully considers and reflects Primaris' future growth potential  

Prior to the announcement of the Offer, Primaris had already communicated its growth plans and strategy to the market, including an announcement in June 2011 detailing the conversion of certain stores in its portfolio from Zellers to Target stores as well as regular updates on various redevelopment projects.  Accordingly, such initiatives were fully reflected in the pre-announcement trading price of Primaris units to which the Offer provides a significant premium.

The internal growth opportunities available to Primaris are more challenging than expressed by Primaris. The majority of Primaris' portfolio is comprised of enclosed shopping centres in secondary markets where there are fewer opportunities to increase rental rates, attract new tenants and exploit redevelopment, mixed use and intensification initiatives. Primaris also does not highlight the risks related to four of its properties, all in tertiary markets, where in 2013 Target is not replacing vacating Zellers stores.

Although Primaris has grown through acquisitions, further acquisitions at current historically low capitalization rates may not be accretive to the long-term interest of Primaris unitholders.

1. Represents the estimated compound annual growth rate (CAGR) for the 5 years ended December 31, 2012 for reported funds from operations (FFO) per unit on a diluted basis.  2012 FFO per unit estimated by annualizing the reported FFO per unit (diluted) for the 9 months ended September 30, 2012.
• The Offer has a high likelihood of completion

The Offer is not subject to any financing condition and is subject only to a limited number of customary conditions for transactions of this nature.

As disclosed previously, KingSett and Ontario Pension Board are supported by prominent Canadian real estate investors and operators, including RioCan Real Estate Investment Trust, Canada's largest real estate investment trust.  This group has a proven track record for completing major real estate transactions and are fully committed to completing this transaction.

• Primaris unitholders can substantially enhance value and annual distribution income by tendering to the Offer and reinvesting the proceeds received

There are currently over 50 Canadian real estate public companies which have a collective market capitalization of over $60 billion. Furthermore, the number of Canadian public real estate companies will likely increase in light of the recent announcements of potential spin-off plans by Loblaw and Hudson's Bay Company.  Primaris unitholders can receive substantially enhanced value and realize a significant increase in their annual distribution income by reinvesting premium proceeds received under the Offer into comparable REITs at their current trading values.

• Primaris will have sufficient time to fully consider the Offer

Since announcement of the Offeror's intention to make Offer on December 5, 2012 to January 17, 2013 (expiry date of the Offer), Primaris will have had 43 days to fully consider the Offer and any other alternatives available to Primaris. Sophisticated parties that have an interest in pursuing a transaction with Primaris will have had sufficient time to organize their affairs and to propose any alternative to the Offer.

About the Offer

Full details of the offer are included in the Offer to Purchase, takeover bid circular and ancillary documents dated December 10, 2012, that are available to Primaris unitholders by visiting www.sedar.com or the Offeror's web site at www.kingsettprimarisoffer.com.

The Offer is open for acceptance until 5:00 p.m. (Toronto time) on January 17, 2013, unless it is extended or withdrawn by the Offeror.

Unitholder Questions

Unitholders with questions related to the Offer, should contact CST Phoenix Advisors, the information agent in connection with the Offer, at 1-866-822-1237 (North American toll-free) or 201-806-2222 (collect calls) or by email at [email protected].

Advisors

The Offeror has engaged TD Securities Inc. and CIBC World Markets Inc. as financial advisors.  Its legal advisors are Osler, Hoskin & Harcourt LLP and Bennett Jones LLP.

About KingSett Capital

KingSett Capital is Canada's leading private equity real estate investment business, co-investing with pension fund and high net worth individual clients. KingSett Capital invests through a series of growth funds, mortgage funds and a core investment income fund, each with its own risk/return strategy. KingSett Capital has executed transactions valued at over $12.5 billion in the past 10 years.

About Ontario Pension Board

Ontario Pension Board administers Ontario's Public Service Pension Plan, a defined benefit pension plan serving more than 42,000 members and their employers as well as more than 40,000 pensioners and deferred members. With more than $17 billion in assets, it is one of Canada's largest pension plans.  Over the last 20 years, Ontario Pension Board has become one of Canada's leading direct owners of high quality shopping centres.

Important Notice

This announcement is for informational purposes only and does not constitute or form part of any offer or invitation to purchase, otherwise acquire, subscribe for, sell, otherwise dispose of or issue, or any solicitation of any offer to sell, otherwise dispose of, issue, purchase, otherwise acquire or subscribe for, any security. The release, publication and distribution of this announcement in certain jurisdictions may be restricted by law and therefore persons in such jurisdictions into which this announcement is released, published and distributed should inform

themselves about and observe such restrictions. The Offer is not being made in, nor will deposits of securities be accepted in, any jurisdiction in which the making or acceptance thereof would not be in compliance with the laws of such jurisdiction. However, the Offeror may, in its sole discretion, take such action as it deems necessary to extend the Offer in any such jurisdiction.

Forward-Looking Statements

Certain information contained in this news release constitutes "forward-looking information" (or "forward-looking statements") within the meaning of applicable securities laws. All statements, other than statements of historical or present fact, constitute forward-looking information and typically include words and phrases about the future such as "may", "will", "anticipate", "estimate", "anticipate", "expect", "plan", "intend", "believe", "predict", "goal", "target", "project", "potential", "strategy" and "outlook" or the negative thereof or similar variations. Forward-looking information is necessarily based upon a number of assumptions that, while considered reasonable by each of KingSett Capital and Ontario Pension Board, are inherently subject to significant business, economic and competitive uncertainties and contingencies. KingSett Capital and Ontario Pension Board caution the reader that such forward-looking information involves known and unknown risks, uncertainties and other factors, estimates and assumptions that may cause actual results and developments to differ materially from those expressed or implied by such forward-looking information. Some important factors, estimates and assumptions that could cause actual results to differ materially from expectations include,

among other things, the assumption that KingSett Capital and Ontario Pension board will acquire a 100% interest in Primaris through the Offer; the assumption that all of the conditions to the Offer will be satisfied; certain assumptions relating to general economic conditions, market factors, competition, changes in government regulation and changes in prevailing interest rates; and the assumption that there are no inaccuracies or material omissions in Primaris' publicly available information, and that Primaris has not disclosed events which may have occurred or which may affect the significance or accuracy of such information. While KingSett Capital and Ontario Pension Board consider these factors, estimates and assumptions to be reasonable based on information currently available to them, they may prove to be inaccurate. The information concerning Primaris contained in this press release has been taken from or is based entirely upon Primaris' publicly available documents and has not been independently verified by KingSett Capital or Ontario Pension Board. Neither KingSett Capital, Ontario Pension Board, nor any of their respective directors or officers assumes any responsibility for the accuracy or completeness of such information, or for any failure by Primaris to disclose events or facts which may have occurred or which may affect the significance or accuracy of any such information, but which are

unknown to KingSett Capital and Ontario Pension Board. Forward-looking information contained herein are made as of the date of this press release based on the opinions and estimates

of each of KingSett Capital and Ontario Pension Board on the date statements containing such forward-looking information are made. KingSett Capital and Ontario Pension Board do not undertake any obligation to update or revise forward-looking information, whether as a result of new information, future events or otherwise, except to the extent legally required. Accordingly, readers should not place any undue reliance on forward-looking information.

SOURCE: KingSett Capital

For further information:

Media contact:

Longview Communications
Louise Kozier
Tel: [phone]
Email: [email protected]

Unitholder inquiries:

CST Phoenix Advisors
North American Toll-Free Phone : [phone]
Banks, brokers and collect calls : 201-806-2222
Toll-Free Facsimile : 1-888-509-5907
Email : [email protected]