Slate Office REIT Reports Strong Second Quarter 2015 Results and Announces the Appointment of John O'Bryan as Chair of the Board of Trustees

Highlights for the Quarter

• Completed over 184,000 square feet of leasing transactions
• Core - FFO per unit increased 5% compared to three months ended in the prior year
• Rental rates for new leases increased 15.2% above building in-place rent
• Rental rates for renewed leases increased 21.9% over expiring rents
• Completion of the $430 million Fortis Portfolio acquisition in which the REIT has a $304 million investment; the contribution to net operating income from the acquisition will begin in the third quarter of 2015.
• Rent commenced at the MTS Data Centre in Winnipeg, Manitoba and based on a 50% ownership is expected to contribute $2.2 million to year one Funds from Operations on an annualized basis
• Subsequent to the quarter end, the loan provided to the 50% partner in the MTS Data Centre development was converted into a further 30% equity interest for the REIT, with the remaining 20% anticipated to be acquired by the REIT at fair market value in third quarter 2015
• Further corporate governance enhancements with the addition of Nora Duke as the REIT's sixth independent trustee

TORONTO, Aug. 6, 2015 /CNW/ - Slate Office REIT (the "REIT") (TSX: SOT.UN/SOT.WT) today announced its financial results for the three months and six months ended June 30, 2015.

Scott Antoniak, Chief Executive Officer of the REIT, said:

"We are delighted to report another highly successful quarter for Slate Office REIT.  The acquisition of the Fortis Portfolio in Atlantic Canada creates a meaningful contribution to net operating income, establishes a national presence for the REIT, and provides another excellent avenue through which we can continue to create value for our stakeholders.  That we've virtually tripled the size of our portfolio in eight months is 100 per cent attributable to our remarkable operations team and Slate Asset Management's breadth of resources and market intelligence.

"In keeping with our commitment to hands-on real estate operations, we have also delivered another robust quarter of leasing activity with over 184,000 square feet of transactions that resulted in double-digit rental rate spreads." Added Mr. Antoniak.

Key Performance Indicators
Compared with the three months ended June 30, 2014,

• Net Operating Income ("NOI") increased $3.1 million
• Core - Funds from Operations ("Core - FFO") increased by $1.7 million
• Adjusted Funds from Operations ("AFFO") increased by $1.4 million
• Balance sheet remains strong with debt to gross book value ratio of 61.5% and 2.7x interest coverage ratio

(Thousands of Canadian dollars excluding ratios, per unit values)
		Three months ended				Three months ended
		June 30, 2015				June 30, 2014
Revenue from investment properties		$	14,390			$	7,972
Net operating income		8,003				4,927
Weighted average number of trust units (000s)		20,204				13,551
Funds from operations (FFO)		5,575				2,074
Core Funds from Operations (Core- FFO)		4,658				2,930
Adjusted funds from Operations (AFFO)		3,670				2,228
FFO per unit ^(1)		$0.28				$0.15
Core - FFO per unit ^(1)		$0.23				$0.22
AFFO per unit ^(1)		$0.18				$0.16
Portfolio Occupancy		90.0 %				97.8 %
AFFO pay-out ratio ^(1)		105.0 %				117.0 %
Debt/GBV ratio		61.5 %				47.6 %
Interest coverage		2.7x				2.8x
^(1) See Non-IFRS Measures below

Operations
During the quarter the REIT completed 34,838 square feet of new leasing and 149,280 square feet of renewals. On a quarter-over-quarter basis, the committed occupancy rate, which includes completed lease transactions with commencement dates subsequent to quarter-end, increased from 92.3% to 92.4%, for the same property portfolio.

Net rents on new deals increased by 15.2% over building in-place rents on a weighted-average basis. Net rents on renewals increased by 21.9% over the previous contractual rents on a weighted-average basis.

Since March 31, 2015, the in-place occupancy for the same property portfolio decreased from 91.6% to 90.2%, equivalent to a reduction of 37,875 square feet. This reduction is the net result of 42,333 square feet of new vacancy offset by 4,458 square feet of new leases that commenced during the quarter. The new vacancy includes the impact of a previously disclosed tenant insolvency in Grande Prairie, Alberta - the insolvent tenant vacated a single-use 33,280 square foot industrial building in April 2015.

Acquisition of Fortis Portfolio
On June 30, 2015, the REIT successfully completed the $430 million acquisition of a 14-property portfolio from Fortis Properties (the "Portfolio") in which the REIT retained a $304 million interest. Primarily consisting of high quality office properties, the acquisition makes the REIT one of Atlantic Canada's preeminent commercial real estate investors while at the same time further establishing the REIT's national footprint, which now spans seven provinces. Consistent with management's stated strategy of focusing on high-quality office properties, this asset class - including properties in the Portfolio - now generates approximately 90% of the REIT's net operating income. The contribution to net operating income from the acquisition will begin in the third quarter of 2015.

Update on the MTS Data Centre
Construction of the MTS Data Centre (the "Data Centre"), a fully pre-leased development in Winnipeg, Manitoba, has been completed and rent commenced on June 5, 2015. The REIT owns a 50% equity interest in a limited partnership that owns the Data Centre through a $9.5 million investment. The 15-year lease with MTS is on a quadruple net basis. The Data Centre is expected to have a significant positive impact on the REIT's financial performance. On an annualized basis, the incremental year one contribution to Funds from Operations will be approximately $2.2 million based on 50% equity ownership.

Subsequent to the June 30, 2015 reporting period, the mezzanine loan provided to the 50% limited partner to fund their share of the Data Centre development with a due date of July 31, 2015 was converted into a further 30% equity ownership interest in the Data Centre partnership.  Additionally, the REIT and the limited partner agreed that the REIT will acquire the remaining 20% equity interest in the Data Centre partnership at fair market value by way of the exercise of the put-call option as contemplated in the limited partnership agreement.  The REIT is expected to purchase this 20% interest in the third quarter of 2015 to increase its ownership to 100%.

Appointment of John O'Bryan as Chair of the Board of Trustees
Mr. O'Bryan was appointed as an Independent Trustee in March 2015 and serves as Chair of the REIT's Investment Committee. He has been appointed as Chair of the Board of Trustees, effective immediately.

Mr. O'Bryan has over 40 years of experience in the commercial real estate industry. Over the course of his career, John has advised on many of the country's largest commercial real estate sales, having completed more than $9 billion in transactions. Until 2014, John was the Chairman of CBRE Limited, Canada. Prior to this, John was a Managing Director in the commercial brokerage arm of TD Securities. In addition, he spent 24 years with Cushman & Wakefield in Canada and the United Kingdom where he was responsible for the firm's appraisal and national investment operations.

John's numerous professional affiliations include board positions with the Urban Land Institute (ULI) and REALpac in addition to being an associate of the Royal Institution of Chartered Surveyors. He is a past president of the National Association of Industrial and Office Properties (NAIOP) and former member of the Appraisal Institute of Canada (AIC).

Distributions and Distribution Reinvestment Plan
The REIT pays a monthly distribution of $0.0625 per unit of the REIT, representing $0.75 per unit on an annualized basis.

Eligible unitholders (which includes holders of Class B limited partnership units that are exchangeable into trust units of the REIT) that elect to participate in the Distribution Reinvestment Plan (the "DRIP") will have their cash distributions used to purchase trust units of the REIT and will also receive a "bonus distribution" of units equal in value to 3% of each distribution. Unitholders wishing to participate should contact their investment advisors to enroll in the DRIP. Additional details and information can be found on the REIT's website at slateam.com/SOT.

The REIT may issue up to 1,045,000 trust units of the REIT under the DRIP. The REIT may increase the number of trust units available to be issued under the DRIP at any time at its discretion subject to (a) the approval of the Board of Trustees, (b) the approval of any stock exchange upon which the trust units trade, and (c) public disclosure of such an increase.

Slate Management Corp., a wholly-owned subsidiary of Slate Asset Management L.P. ("Slate"), is the REIT's manager.

Forward-Looking Statements
Certain information herein constitutes "forward-looking statements" within the meaning of applicable securities legislation. Forward looking statements include statements about management's expectations regarding objectives, plans, goals, strategies, future growth, operating results and performance, business prospects and opportunities of the REIT. Forward-looking statements can be identified by the use of forward-looking terminology such as "believes", "expects", "may", "might", "should", "seeks", "intends", "plans", "pro forma", "estimates" or "anticipates"; or variations of such words; and phrases or statements that certain actions, events or results "may", "could" or "might" occur or be achieved; or the negative connotation thereof. Forward-looking statements are made based on reasonable assumptions, however, there is no assurance that the events or circumstances reflected in forward-looking statements will occur or be achieved. Forward-looking statements are based on numerous assumptions of factors that if untrue, could cause actual results to differ materially from those that are implied by such forward-looking statements. These factors include but are not limited to: general and local economic and real estate business conditions; the financial condition of tenants; occupancy rates; rental rates; the ability of the REIT to refinance maturing debt; the REIT's ability to source and complete accretive acquisitions; changes in government, environmental and tax regulations; inflation and interest rate fluctuations; the REIT's ability to obtain equity or debt financing for additional funding requirements; and adequacy of insurance.

Forward-looking statements are subject to risks and uncertainties, many of which are beyond the REIT's control. These risks and uncertainties include, but are not limited to: risks related to general and local financial conditions including available equity and debt financing at reasonable costs and interest rate fluctuations; operational risks including timely leasing of vacant space and re-leasing of occupied space on expiration of current leases on terms at current or anticipated rental rates; tenant defaults and bankruptcies; uncertainties of acquisition activities including availability of suitable property acquisitions and integration of acquisitions; competition including development of properties in close proximity to the REIT's properties; loss of key management and employees; governmental, environmental, taxation and other regulatory risks; litigation risks and other risks and factors described from time to time in the documents filed by the REIT with the securities regulators.

The REIT has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements. However, there may be other factors that could cause results to not be as anticipated, estimated or intended. Forward-looking statements are provided to inform readers about management's current expectations and plans and allow investors and others to better understand the REIT's operating environment. However, readers should not place undue reliance on forward looking statements, as forward-looking statements involve significant risks and uncertainties and should not be read as guarantees of future performance or results, or of the timing that such performance or results will be achieved. Additional information about risks and uncertainties is contained in Slate Office REIT's annual information form for the year ended December 31, 2014 available on SEDAR at www.sedar.com.

Non-IFRS Financial Measures
The REIT has employed certain non-IFRS financial measures. Management believes that in addition to conventional measures prepared in accordance with IFRS, investors in the real estate industry use these non-IFRS financial measures to evaluate the REIT's performance and ability to generate cash flows. Accordingly, these non-IFRS financial measures are intended to provide additional information and should not be considered in isolation or as a substitute for performance measures prepared in accordance with IFRS. In addition, they do not have standardized meanings and may not be comparable to measures used by other issuers in the real estate industry or other industries.

About Slate Office REIT
Slate Office REIT is an open-ended real estate investment trust. The REIT's portfolio currently comprises 48 strategic and well-located real estate assets located primarily across Canada's major population centres. The REIT is focused on maximizing value through internal organic rental and occupancy growth and strategic acquisitions. Visit slateam.com/SOT to learn more.

About Slate
Slate Asset Management L.P. is a leading real estate investment platform with $3 billion in assets under management. Slate is a value-oriented company and a significant sponsor of all its private and publicly-traded investment vehicles, which are tailored to the unique goals and objectives of its investors. The firm's careful and selective investment approach creates long term value with an emphasis on capital preservation and outsized returns. Slate is supported by exceptional people, flexible capital and a proven ability to originate and execute on a wide range of compelling investment opportunities. Visit slateam.com to learn more.

SOURCE Slate Office REIT

For further information: Scott Antoniak, Chief Executive Officer, Slate Office REIT, [phone], [email protected]; Conor McBroom, Vice President, Investor Relations, Slate Asset Management L.P., [phone], [email protected]