Northern Property REIT Files Letter to Unitholders, Management Information Circular, and Notice of Meeting Regarding Acquisition of True North Apartment REIT and Multi-Family Portfolio From Starlight Investments Ltd. and Public Sector Pension Investment Board

• Board of Trustees unanimously recommends Unitholders vote their BLUE proxy IN FAVOUR of proposed transactions ­
• Proxy deadline, Friday October 9, 2015
• Unitholder Meeting October 14, 2015

CALGARY, Sept. 11, 2015 /CNW/ - Northern Property Real Estate Investment Trust ("NPR") (TSX:NPR:UN) today announced that it has filed on SEDAR and is mailing a Letter to Unitholders, Management Information Circular, and Notice of Meeting in respect of a special meeting of Unitholders scheduled for October 14, 2015 in Calgary, Alberta.  

The documents present the reasons for the unanimous recommendation from NPR's Board of Trustees that unitholders vote their blue proxy IN FAVOUR of the transactions initially disclosed on August 10, 2015 that would see NPR acquire approximately 14,000 multi-family residential suites through the acquisition of True North Apartment Real Estate Investment Trust ("True North") (TSX:TN.UN,TN.DB), and transactions with affiliates of Starlight Investments Ltd. ("Starlight") and joint ventures between affiliates of Public Sector Pension Investment Board ("PSP") and affiliates of Starlight, as well as rename itself Northview Apartment Real Estate Investment Trust ("Northview"). 

"These transactions are a vital next step in the continuation of our successful strategy of expanding and diversifying into new markets and significantly improve our ability to continue delivering sustainable and growing funds from operations and distributions to unitholders," said NPR President and Chief Executive Officer, Todd Cook. "With these transactions, we gain access to considerable growth opportunities while also reducing the inherent risks associated with portfolio concentration in markets exposed to the volatility of resource prices. These are logical, strategic transactions for NPR, uniquely available at this time that allow us to continue our proven strategy and core skillset of owning and managing multi-family apartments in Canada."

The opportunity to diversify and expand through an acquisition of a portfolio of this size and quality will enable NPR to create additional value and deliver profitable growth that is otherwise limited under its existing platform. The transactions also provide NPR unitholders a number of other compelling benefits:

• Expanded field of opportunity: With a significantly expanded portfolio in new markets characterized by expanding populations, growing economies, high occupancy levels and rising rents, Northview will have a greatly enhanced ability to increase profitability and cash distributions over time. Management will deploy its expertise, as it does in NPR's existing portfolio, to maximize property performance and generate growth in same-door net operating income through its proven renovation and repositioning programs. With a substantially larger operating platform in many high growth markets, Northview will actively look to expand its development program, building new, contemporary multi-family complexes in select markets in Central and Eastern Canada, as NPR already does successfully in Western and Northern Canada.
• High quality multi-family portfolio: Before entering into these transactions, NPR's management conducted a rigorous and comprehensive review of the properties to be acquired. NPR's executive management team personally visited more than 80% of the properties, and an extensive due diligence process was undertaken by NPR in accordance with its investment policies, including a review of third party-prepared structural and environmental reports, independent appraisals and detailed reviews of historical financial data and budgets for each property. The existing owners have invested approximately $120 million to renovate and improve the properties since 2012, greatly improving their physical appearance, attractiveness to tenants and enhancing their physical and structural attributes. The quality of the properties is underscored by the current occupancy rate of approximately 96%. Unitholders are encouraged to view more information about the property portfolios in the Management Information Circular and at www.NorthviewREIT.com.
• Portfolio diversification: Upon completion of the transactions, Northview's portfolio will be diversified across more than 60 Canadian markets located in eight provinces and two territories, proportionately reducing NPR's overall relative exposure to resource oriented markets and the impact that the volatility of occupancy and rental rates in those markets may have on Northview's financial performance.
• Financial strength: These acquisitions provide a near-term opportunity to grow Funds from Operations ("FFO") per unit as the portfolios are integrated. Further, management believes a more diversified portfolio should contribute to enhanced stability in financial results, and should allow Northview's unit price to better reflect its financial performance over time.  Northview will continue to have a low target FFO payout ratio of under 70% as NPR does today, with the potential to increase distributions as FFO per unit grows.
  
  Northview will internalize the property asset management functions of the acquired portfolios over the next 12-36 months. A Transitional Service Agreement with Starlight will provide Northview with the asset management continuity to facilitate a systematic, orderly transition of these functions during that period.
  
  To complete these transactions, NPR is adopting a temporarily increased leverage position with a plan to reduce leverage over the medium term. NPR has traditionally maintained a more conservative leverage level, reflecting the nature of the properties it owns and the inherent operational volatility of its smaller, secondary markets. With these transactions, Northview will own a significantly larger and more diversified portfolio that management believes can support higher leverage. While the initially increased leverage is manageable and in keeping with its peers, Northview fully intends to reduce its overall consolidated leverage via a variety of focused strategies including organic growth, the selective sale of non-core assets, as well as potentially accessing capital markets at an appropriate time in the future. Management does not believe it will need to access capital markets in the near term.
• Near-term prospects for growth: Near-term opportunities for growth in the portfolios to be acquired, include synergies from the internalization of property management, continued execution of high-end renovation and sub-metering programs, increasing rents on tenant turnover, approved above guideline increases (AGI) for rent in properties that have completed significant capital improvements and occupancy improvements in certain regions where current occupancy is below market vacancy rates.
• New strategic partner and potential acquisition pipeline: Northview will benefit from a unique relationship with a new strategic partner. Mr. Daniel Drimmer, principal of Starlight, through affiliated entities will own approximately $174 million in Class B limited partnership units and ordinary units of Northview representing an effective interest of 14.5% in Northview and will join the Northview board or trustees. Mr. Drimmer is a proven real estate investor who has considerable experience and expertise in sourcing acquisitions in Canada and upgrading multi-family properties and is making a long-term commitment to Northview as a result of a shared belief in Northview's vision and potential. The fact that Mr. Drimmer will hold a significant equity position in Northview demonstrates his conviction as to Northview's prospects and aligns his interests with those of other unitholders of the REIT. Management believes that the relationship with Mr. Drimmer and Starlight will provide the opportunity to access and consider further residential acquisition opportunities. Following these transactions, Mr. Drimmer through affiliates will continue to hold interests in approximately 12,000 multi-family suites in Canada that could be considered as part of future transactions.
• Strengthened management team: NPR's experienced management team will be bolstered by the addition of Mr. Leslie Veiner, President and Chief Executive Officer of True North since 2012, as Chief Operating Officer of Northview. In addition to strengthening an incumbent management team with a proven track record of value creation, Mr. Veiner's addition will support the integration of the True North and institutional portfolio properties.

The complete Letter to Unitholders, along with the Management Information Circular and the Notice of Meeting, has been mailed to unitholders and is also available at www.northviewreit.com and on SEDAR, www.sedar.com. 

Voting Instructions and Unitholder Meeting Information

NPR Voting Unitholders are being asked to pass a resolution approving the issuance of up to 21,636,506 NPR Units (including NPR Ordinary Units issuable on exchange of Class BLP Units issued pursuant to the contemplated transactions) in connection with: (i) NPR acquiring all of the assets and properties of True North; and (ii) NPR acquiring the portfolio of properties from Starlight and PSP.

NPR unitholders are recommended to vote their BLUE proxy IN FAVOUR of the proposed transaction resolutions no later than the deadline of 11:00 a.m. Mountain Daylight Time / 1:00 p.m. Eastern Daylight Time on Friday October 9, 2015.  The record date has been set at September 4, 2015.  Further information on voting can be found in the Management Information Circular.

In addition, NPR has formed a soliciting dealer group and engaged Scotiabank as a soliciting dealer manager in connection with the special meeting.

Scotiabank will form and manage a soliciting dealer group comprised of members of the Investment Industry Regulatory Organization of Canada to solicit proxy votes from retail unitholders in favour of the proposed transactions.

In accordance with standard practice in Canada and as compensation for their time and services, NPR will pay the members of the soliciting dealer group a fee of $0.10 per NPR unit voted in favour of the proposed transactions that is solicited by a member of the soliciting dealer group from a Canadian retail unitholder. The fees are subject to the following limitations: (a) the amount paid for any single beneficial unitholder shall not be less than $75 or more than $1,500 per soliciting dealer; and (b) the minimum fee of $75 shall only be paid for any one beneficial unitholder where the number of units owned and voted by such beneficial unitholder is greater than or equal to 500.  Fees will only be paid for units voted in favour of the transactions and if the transactions are approved. No solicitation fees will be paid if the transaction resolutions are not adopted.

For voting inquiries, or assistance with voting, contact NPR's Proxy Solicitor, Kingsdale Shareholder Services, toll-free at 1-877-657-5859 or from outside North America at 416-867-2272 or by email [email protected].

The Unitholder Meeting will be held at the Calgary Marriott Downtown Hotel, 110 9th Avenue SE, Calgary, Alberta at 11:00 a.m. (Mountain Daylight Time) on Wednesday, October 14, 2015.

About Northern Property REIT

NPR is primarily a multi-family residential real estate investor, providing a broad spectrum of rental accommodations across Canada. NPR's residential portfolio is comprised of a multi-family segment: apartments, town homes and single family rental units; and execusuites and hotel where the rental period ranges from a few days to several months. From its inception in May 2002, NPR focused on northern markets with attractive fundamentals, and where it had an existing presence and enjoyed strong market positions. In order to reduce its concentration risk and take advantage of growth opportunities elsewhere, NPR subsequently began expanding geographically by acquiring properties in Newfoundland and Labrador, and in select secondary markets in British Columbia, Alberta, Saskatchewan and Québec. NPR also has a portfolio of commercial buildings focused on government and quality corporate tenancies predominantly located in the Northwest Territories, Nunavut, and Newfoundland and Labrador. NPR is traded on the TSX under the ticker symbol: NPR.UN. Additional information concerning NPR is available at www.sedar.com or the REIT's website at www.npreit.com.

Non-GAAP and Additional GAAP Measures

Certain measures contained in this press release do not have any standardized meaning as prescribed by International Financial Reporting Standards ("IFRS") and, therefore, are considered non-GAAP measures. These measures are provided to enhance the reader's overall understanding of financial conditions and to provide investors with an alternative method for assessing operating results in a manner that is focused on the performance of operations and to provide a more consistent basis for comparison between periods. These measures include widely accepted measures of performance for Canadian real estate investment trusts; however, the measures are not defined by IFRS. In addition, these measures are subject to the interpretation of definitions by the preparers of financial statements and may not be applied consistently between real estate entities. Please refer to NPR's second quarter 2015 Management's Discussion & Analysis for definitions of non-GAAP measures and additional GAAP measures, including FFO.

Forward Looking Information

This press release contains forward looking statements that reflect current expectations of each of NPR and True North about their future results, performance, prospects and opportunities, including with respect to the closing, costs and benefits of the proposed transactions, population growth, economic growth, occupancy levels, rental rates, same door net operating income, expansion of NPR's development program, FFO, pro forma FFO payout ratio, internalization of property asset management, leverage, results from the high-end renovation program, results from the sub-metering program, synergies from management internalization, development and acquisition opportunities and other statements that are not historical facts.

Forward-looking statements are based on information available at the time they are made, underlying estimates and assumptions made by management and management's good faith belief with respect to future events, performance and results, and are subject to inherent risks and uncertainties surrounding future expectations generally, which could cause actual results to differ materially from what is currently expected. Such risks and uncertainties include, but are not limited to, risks associated with customary closing conditions not being met, required regulatory, court, and unitholder approvals, risks of unexpected operating results, risks of investment in and development of real property, competition, financing and refinancing risks, changes in economic conditions, changes in interest rates, changes in taxation rules, reliance on key personnel, environmental matters, tenant risks, fluctuations in commodity prices and other risk factors more particularly described in NPR's and True North's Management Information Circulars and most recent Annual Information Forms available on SEDAR at www.sedar.com.

Readers are cautioned not to place undue importance on forward-looking information. NPR and True North disclaim any intention or obligation to update or revise any forward-looking information, except as required under applicable securities laws.

SOURCE Northern Property Real Estate Investment Trust

Investors, Kingsdale Shareholder Services, Toll-free: 1-877-657-5859, Outside North American: 416-867-2272, Email: [email protected]; Todd Cook, President and Chief Executive Officer, [phone]; Robert Palmer, Chief Financial Officer, [phone]; Media, Joel Shaffer, Longview Communications, [phone]; Trevor Zeck, Longview Communications, [phone]