European Commercial Real Estate Limited
TSX VENTURE : ERE

April 27, 2017 15:45 ET

European Commercial Real Estate Limited Prices $30 Million Offering and Announces Filing of Final Prospectus and Private Placement

TORONTO, ONTARIO--(Marketwired - April 27, 2017) -

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

European Commercial Real Estate Limited (the "Corporation") (TSX VENTURE:ERE) is pleased to announce today that the Corporation has filed and obtained a receipt from the securities regulatory authorities of all provinces and territories of Canada for a final short form prospectus (the "Final Prospectus") in respect of a marketed offering (the "Offering") of 6,000,000 class B common shares (the "Class B Shares") of the Corporation. The Class B Common Shares will be issued at a price of $5.00 per Class B Common Share (the "Offering Price") for gross proceeds of $30 million.

In connection with the Offering, the Corporation also expects to enter into subscription agreements with non-Canadian exempt purchasers, including the officers of the Corporation, pursuant to which such purchasers will agree to purchase, on a private placement basis, an aggregate of 140,000 Class B Shares at the Offering Price, subject to TSXV approval, for gross proceeds of $700,000 (the "Private Placement"). Closing of the Private Placement is conditional upon, and is expected to occur substantially concurrently with, the closing of the Offering and the Arrangement (as defined below).

Copies of the Final Prospectus will be available under the Corporation's profile on SEDAR at www.sedar.com.

The closing of each of the Offering and the Private Placement is expected to occur on or about May 3, 2017. In connection with each of the closings, the net proceeds of the Offering and the Private Placement will be partly used to fund the previously announced acquisition of an office property located in Landshut, Germany, part of the greater Munich metropolitan region, for approximately EUR30.2 million (the "Acquisition Property"). The acquisition of the Acquisition Property is expected to be completed on or about May 15, 2017.

The Offering is being underwritten by a syndicate of underwriters led by CIBC Capital Markets. The underwriters have been granted an over-allotment option, exercisable up to 30 days following closing to purchase up to an additional 900,000 Class B Shares (or, if the Arrangement has been completed, Units (as defined below)), which, if exercised in full, will increase the total gross proceeds of the Offering to approximately $34.5 million. The net proceeds of the over-allotment option will be used by the Corporation or the REIT for future acquisitions, investments in properties and for general corporate or trust purposes, as applicable.

As previously announced, the Corporation intends to reorganize into a publicly listed real estate investment trust to be named European Commercial Real Estate Investment Trust (the "REIT") pursuant to a plan of arrangement under the Business Corporations Act (Ontario) (the "Arrangement"), subject to receipt of all necessary approvals, including holders ("Common Shareholders") of common shares (the "Common Shares") of the Corporation. As part of the Arrangement, all issued and outstanding Common Shares will be consolidated based on a ratio of one (1) Common Share for every 31.25 Common Shares held, or such other ratio determined by the board of directors of the Corporation with reference to the trading price of the Common Shares and the Offering Price (the "Consolidation Ratio").

Pursuant to the Arrangement, among other things, Common Shareholders will transfer their Common Shares to ECRE Limited Partnership ("ECRE LP"), a subsidiary of the REIT, for Units and/or, in the case of certain eligible Common Shareholders, for class B limited partnership units of ECRE LP ("Class B LP Units"), in each case, at an exchange ratio of one (1) to one (1) (the "Exchange Ratio"). Prior to such transfer, the Common Shares will be consolidated based on the Consolidation Ratio.

The Class B LP Units are intended to be the economic equivalent of the Units and will be exchangeable for Units. The Class B LP Units will not be listed on the TSX Venture Exchange (the "TSXV") or on any other stock exchange or quotation system. Holders of Class B LP Units will receive special voting units of the REIT that will each initially entitle the holder to one vote at meetings of Unitholders.

The REIT will be managed by Maple Knoll Capital Ltd. ("Maple Knoll"), a London, England-based investment manager, asset manager and advisor. Led by Phillip Burns and Ian Dyke, the Chief Executive Officer and Chief Financial Officer of the REIT, respectively, Maple Knoll's primary focus is on exploiting real estate investment opportunities throughout Europe on behalf of its partners and clients. As the REIT's asset manager, Maple Knoll will provide strategic, advisory, asset management, project management, construction management and administrative services necessary to manage the day-to-day operations of the REIT.

The REIT intends to make regular quarterly cash distributions to Unitholders, subject to the discretion of the REIT's board of trustees. Distributions are initially estimated to be $0.35 per Unit on an annual basis, other than to certain Unitholders and holders of Class B LP Units, including all of the trustees and officers of the REIT (the "Waiving Distribution Holders") pursuant to certain contractual waivers of distribution, implying a 7.0% annual yield based on the Offering Price. The initial cash distribution, estimated to be $0.1439 per Unit, will be for the period from and including the date of closing of the Offering to September 30, 2017, and is expected to be paid on October 13, 2017, to Unitholders of record, other than Waiving Distribution Holders, on September 30, 2017.

The TSXV has conditionally approved the listing of the Units under the symbol "ERE.UN". Listing is subject to the REIT fulfilling all of the requirements of the TSXV.

The Corporation intends to present the terms of the Arrangement, among other items, to the Common Shareholders for approval at a special meeting of Common Shareholders (the "Special Meeting") to be held by the Corporation on May 1, 2017 as detailed in the Corporation's management information circular dated March 30, 2017 (the "Circular"). The Final Prospectus will be incorporated by reference in part into the Circular and Common Shareholders are encouraged to read each of the Circular and the Final Prospectus in advance of the Special Meeting.

The Units have not been, nor will they be, registered under the U.S. Securities Act of 1933, as amended, and may not be offered, sold or delivered, directly or indirectly, in the United States or to, or for the account or benefit of, "U.S. persons" (as defined in Regulation S under the United States Securities Act of 1933, as amended) except pursuant to certain exemptions. This press release does not constitute an offer to sell or a solicitation of an offer to buy any of the Units in the United States or to, or for the account or benefit of, U.S. persons.

About European Commercial Real Estate Limited

The Corporation's business is the ownership of and investment in commercial properties in Europe. It currently owns and operates one commercial property in Düsseldorf, Germany, which constituted the Corporation's "qualifying transaction" under the TSXV rules, and it has a second commercial property in Landshut, Germany, a suburb of Munich, under contract. The Corporation's strategy is to aggregate a bespoke portfolio of high-quality, non-prime, core assets in key European markets designed primarily to deliver long-term, secure income with additional potential for capital appreciation.

The information in this news release includes certain information and statements about management's view of future events, expectations, plans and prospects that constitute forward looking statements. These statements are based upon assumptions that are subject to significant risks and uncertainties. Because of these risks and uncertainties and as a result of a variety of factors, the actual results, expectations, achievements or performance may differ materially from those anticipated and indicated by these forward looking statements. Forward-looking statements in this news release include, but are not limited to, the ability of the Corporation to complete the acquisition of the Acquisition Property, the Offering, the Private Placement and the Arrangement. Any number of factors could cause actual results to differ materially from these forward-looking statements as well as future results. Although the Corporation believes that the expectations reflected in forward looking statements are reasonable, it can give no assurances that the expectations of any forward looking statements will prove to be correct. Except as required by law, the Corporation disclaims any intention and assumes no obligation to update or revise any forward looking statements to reflect actual results, whether as a result of new information, future events, changes in assumptions, changes in factors affecting such forward looking statements or otherwise.

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

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