TORONTO, April 2, 2015 /CNW/ - Slate Retail REIT ("Slate Retail" or the
"REIT") (TSX:SRT.U/SRT.UN) and Slate U.S. Opportunity (No. 3) Realty
Trust ("SUSO 3") are pleased to announce that their boards of trustees
have unanimously approved the previously announced transaction pursuant
to which the REIT will acquire SUSO 3's assets in a US$195 million
transaction (the "Acquisition"). As consideration for the Acquisition,
the REIT will issue class U trust units (the "Units") of the REIT, and
units of a subsidiary of the REIT that will be economically equivalent
to Units, at a deemed price of US$10.47 per unit. In connection with
closing the Acquisition, SUSO 3 will also make a special distribution
of its remaining cash balance, estimated to be approximately US$6
million to current investors, for total proceeds to current SUSO 3
investors of US$201 million less debt.
The approval of the Slate Retail board of trustees is based on the
unanimous recommendation of the independent committee of the REIT, a
fairness opinion and independent formal valuation of SUSO 3's assets
from Blair Franklin Capital Partners, independent appraisals of the
SUSO 3 properties from Altus Group Limited, and other considerations.
The approval of the SUSO 3 board of trustees is based on the unanimous
recommendation of the independent committee of SUSO 3, a fairness
opinion from Trimaven Capital Advisors and other considerations.
Special meetings of unitholders to consider the approval of the
Acquisition in accordance with Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Acquisitions and the applicable rules of the Toronto Stock Exchange will be held at
the offices of McCarthy Tétrault LLP (66 Wellington St W, Suite 5300,
Toronto, ON, M5K 1E6), for Slate Retail unitholders, on May 13, 2015 at
10:00 a.m. EST and, for SUSO 3 unitholders, on May 13, 2015 at 10:30
a.m. EST. Further details on the Acquisition will be set out in the
management information circulars of Slate Retail and SUSO 3 that will
be available on SEDAR and mailed, as applicable, in advance of the
Slate Retail believes the Acquisition provides several benefits to its
Strategic Acquisition of Quality Assets. The Acquisition is an opportunity for the REIT to grow through the
acquisition of quality assets that are consistent with its growth
strategy. The SUSO 3 assets are also managed and were acquired by
Slate Asset Management LP ("Slate" or the "Manager"), which will result
in a smooth transition following the Acquisition.
No Acquisition Fee or Equity Commission. Slate will not earn an acquisition fee on the Acquisition and the
issuance of Class U Units to holders of SUSO 3's units will not be
subject to equity commissions.
Creation of a Larger More Diversified Entity. Upon completion of the SUSO 3 Acquisition, the REIT will have total
assets in excess of U.S.$900 million. The REIT's portfolio will
comprise of 56 grocery anchored assets with over 6.6 million square
feet of gross leasable area ("GLA") diversified across 20 states with 66% of GLA occupied by either
grocery or national tenants. The REIT's portfolio will be well
diversified by tenant and geography with no tenant comprising more than
7% of revenues and no state comprising more than 12% of GLA.
Accretive to Adjusted Funds from Operations per Unit. The Acquisition values SUSO 3 at a 7.3% cap rate and US$130 per
square foot and is accretive to the REIT's adjusted funds from
operation per Unit.
SUSO 3 believes the Acquisition provides several benefits to its
Liquidity for Unitholders. The Acquisition will provide unitholders liquidity through Slate
Retail Units which are listed and freely tradable on the Toronto Stock
Exchange. Unitholders will also receive a special distribution
providing immediate cash proceeds.
Attractive Return on SUSO 3 unitholders' Initial Investment. The Acquisition will provide unitholders a total return in excess of
20%, varying depending on the currency of their initial investment.
Investment into a Larger More Diversified Entity. As described above, upon completion of the Acquisition, Slate Retail
will have total assets in excess of US$900 million. The REIT's
portfolio will comprise of 56 grocery anchored assets with over 6.6
million square feet of GLA diversified across 20 states with 66% of GLA
occupied by either grocery or national tenants. The REIT's portfolio
will be well diversified by tenant and geography with no tenant
comprising more than 7% of revenues and no state comprising more than
12% of GLA.
Participation in Future Growth. Following the Acquisition, unitholders will participate in future
growth of the REIT through their ownership of Slate Retail Units. The
REIT will continue its investment strategy to (i) provide unitholders
of the REIT with stable cash distributions from a portfolio of
diversified revenue-producing commercial real estate properties in the
United States with a focus on grocery anchored retail properties, (ii)
enhance the value of the REIT's assets and maximize long-term value
through active management and (iii) expand the asset base of the REIT
and increase the REIT's distributions, including through accretive
Tax Efficient Equity Rollover. In general, the exchange of SUSO 3 units for Slate Retail Units is
intended to result in a tax-deferred "rollover" to SUSO 3 unitholders
for Canadian federal income tax purposes.
Payment of Monthly Distributions. Slate Retail pays monthly distributions as opposed to quarterly
distributions currently paid by SUSO 3.
The Acquisition is expected to close in Q2 2015 and is conditional upon
receiving the approval of unitholders of Slate Retail and SUSO 3 as
well as the approval of the Toronto Stock Exchange and other customary
About Slate Retail REIT
Slate Retail REIT is an open-ended real estate investment trust focused
on U.S. grocery-anchored real estate. The REIT's portfolio includes
over 40 properties located primarily across the top 50 U.S. metro
markets. The REIT is focused on maximizing value through internal
organic rental growth and strategic acquisitions. For more information,
please visit www.slateretailreit.com.
About Slate U.S. Opportunity (No. 3) Realty Trust
Slate U.S. Opportunity (No. 3) Realty was established for the primary
purpose of indirectly acquiring, owning and leasing a portfolio of
diversified revenue-producing commercial real estate properties in the
U.S. with a focus on anchored retail properties. SUSO 3 indirectly
owns a portfolio of 13 properties.
About Slate Asset Management
Slate Asset Management LP is a leading real estate investment platform
with over $2.5 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.
More information is available at www.slateam.com.
SOURCE Slate Retail REIT
For further information:
Chief Executive Officer, Slate Retail REIT
416 644 4267
Chief Financial Officer, Slate Retail REIT
416 644 4263