R&R REIT Announces Closing of Previously Announced US$52.0 Million Portfolio Acquisition

MISSISSAUGA, ON, Sept. 25, 2019 /CNW/ - R&R Real Estate Investment Trust (the "REIT") (TSXV: RRR.UN) today announced that it has completed its previously announced acquisition (the "Acquisition") of a portfolio of eight economy hotels (the "Acquisition Properties") comprising 906 rooms located in the United States. The REIT acquired the Acquisition Properties from entities (the "Vendors") controlled by an arm's length third party and that Majid Mangalji, Executive Chairman and Trustee of the REIT and the largest beneficial unitholder of the REIT (on a fully diluted basis), and Michael Klingher, President and Chief Executive Officer of the REIT (as well as certain employees of Westmont Hospitality Group ("WHG")), which is controlled by Mr. Mangalji), have minority interests in.

The total cost for the Acquisition Properties was approximately US$53.6 million (including closing costs) and was satisfied by a combination of: (i) cash from a mortgage loan of approximately US$34.0 million aggregate principal amount from a third party lender; (ii) the issuance of approximately US$9.6 million of Class B limited partnership units (the "Class B LP Units") of a newly formed limited partnership that indirectly holds the Acquisition Properties (economically equivalent to and exchangeable for units of the REIT ("Trust Units")), at a price of C$0.20 per Class B LP Unit, and attached special voting units in the REIT ("Special Voting Units" and together with the Trust Units, "Voting Units"); (iii) a US$7.0 million vendor-take back loan (under which loan entities controlled by Mr. Mangalji and Mr. Klingher, as well as certain other WHG employees, will be the lenders); and (iv) approximately US$3.0 million in cash.

Following the Acquisition, the REIT's portfolio is now comprised of 20 hotel properties located in 12 states across the United States, representing an aggregate of 2,379 rooms.

As a result of the Acquisition, Majid Mangalji, Executive Chairman and Trustee of the REIT, now beneficially owns, or exercises control and direction over, an additional 59,620,500 Class B LP Units and Special Voting Units. The Class B LP Units are exchangeable for 59,620,500 Trust Units, representing 64.07% of the Trust Units on a partially diluted basis. Prior to the closing of the Acquisition, Mr. Mangalji was the beneficial owner of, or exercised control or direction over, 10,100,000 Trust Units and 156,116,678 class B limited partnership units of subsidiary partnerships of the REIT that are exchangeable for Trust Units and have Special Voting Units attached ("Exchangeable Units"), representing approximately 30.21% of the outstanding Trust Units, 86.03% of the outstanding Exchangeable Units and 77.34% of the outstanding Voting Units. Immediately following closing of the Acquisition, Mr. Mangalji was the beneficial owner of, or exercised control or direction over, 10,100,000 Trust Units and 215,737,178 Exchangeable Units, representing approximately 30.21% of the outstanding Trust Units, 88.03% of the outstanding Exchangeable Units and 81.09% of the outstanding Voting Units.

As a result of the Acquisition, Michael Klingher, President and Chief Executive Officer of the REIT, now beneficially owns, or exercises control and direction over, an additional 2,649,800 Class B LP Units and Special Voting Units. The Class B LP Units are exchangeable for 2,649,800 Trust Units, representing 7.34% of the Trust Units on a partially diluted basis. Prior to the closing of the Acquisition, Mr. Klingher was the beneficial owner of, or exercised control or direction over, 1,800,000 Trust Units and 25,358,979 Exchangeable Units, representing approximately 5.38% of the outstanding Trust Units, 13.97% of the outstanding Exchangeable Units and 12.64% of the outstanding Voting Units. Immediately following closing of the Acquisition, Mr. Klingher was the beneficial owner of, or exercised control or direction over, 1,800,000 Trust Units and 28,008,779 Exchangeable Units, representing approximately 5.38% of the outstanding Trust Units, 11.43% of the outstanding Exchangeable Units and 10.70% of the outstanding Voting Units.

This press release is being issued in compliance with the requirements of National Instrument 62-103 – The Early Warning Report System and Related Take-Over Bid and Insider Reporting Issues. A copy of the early warning reports to be filed by Mr. Mangalji and Mr. Klingher in connection with the transaction described herein will be available on the REIT's SEDAR profile at www.sedar.com and can also be obtained by contacting Bob Choo, Chief Financial Officer, R&R Real Estate Investment Trust, by phone at 905-206-7102, by mail at 5090 Explorer Drive, Suite 700, Mississauga, Ontario L4W 4T9 or by e-mail at [email protected].

About R&R REIT

R&R REIT is an open-ended real estate investment trust focused on increasing unitholder value through the acquisition and ownership of hotel properties located in the United States.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

SOURCE R&R Real Estate Investment Trust

Bob Choo, Chief Financial Officer, R&R Real Estate Investment Trust, at 905-206-7102 or e-mail [email protected].