FAM Real Estate Investment Trust Announces $39 Million Class A GTA Property Acquisition and $20 Million Equity Offering

TORONTO, ONTARIO--(Marketwired - July 15, 2013) -

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

FAM Real Estate Investment Trust (TSX:F.UN)(TSX:F.WT) (the "REIT") announced today that it has entered into an agreement to acquire a 159,752 square foot Class A office complex on an 11.1 acre site in the Greater Toronto Area ("GTA"), municipally known as 2655 and 2695 North Sheridan Way in, Mississauga, Ontario ("The Promontory"). Closing of the acquisition is expected on or about August 14, 2013.

Shant Poladian, CEO of the REIT, said, "The Promontory acquisition builds on our strategy of improving portfolio quality and increasing primary market exposure in nodes which are fundamentally sound. The Promontory acquisition, together with the REIT's previously completed property transactions are expected to generate approximately $2.1 million of pro-forma annualized AFFO, and are accretive by 4% on a leverage neutral basis to AFFO per unit as compared to our 2013 IPO forecast."

Highlights

• Attractive going-in capitalization rate of 7.6% for The Promontory: The purchase price of $39.0 million (excluding closing costs) represents an attractive 7.6% going-in capitalization rate.
  
  
• The Promontory is a Class A Office Complex in the GTA: The Promontory is strategically located in a high visibility office node in the GTA and has benefited from strong institutional ownership and management over the past decade. The building has recently achieved "BOMA BESt" certification for environmental sustainability, and features numerous tenant-friendly amenities which enhance the property's competitive position in the marketplace.
  
  
• Increased primary market focus: The acquisition of The Promontory together with the previously completed acquisition of 4211 Yonge Street in Toronto, Ontario and the disposition of a 50% interest in 220 Portage Avenue in Winnipeg, Manitoba further establishes the REIT's presence in strategic, primary markets in Canada. The REIT's primary market presence (representing the GTA and the Calgary census metropolitan area) increases to 51% of annualized net operating income ("NOI") from 24% at the time of the REIT's initial public offering that closed on December 28, 2012 (the "IPO").
  
  
• Improved geographic mix and portfolio diversification: The GTA becomes FAM REIT's largest market, representing 48% of NOI, up from 22% at IPO. The Winnipeg properties will account for 31% of NOI, compared to 49% of NOI at the time of the IPO.
  
  

Additional Property Details

The Promontory is 100% leased, with the top five tenants representing 88% of base rent with a weighted average remaining lease term of 3.8 years (3.7 years for all tenants). There are no major tenant leases expiring before December 2015.

The Promontory is well located at the major intersection of Queen Elizabeth Way and Winston Churchill Boulevard on the Mississauga-Oakville border in Ontario, Canada, providing convenient highway access and nearby public transit. In addition, The Promontory offers an attractive parking ratio of 4.3 stalls per 1,000 square feet of GLA (689 stalls in total, including 157 stalls in an underground parking garage).

Completion of The Promontory acquisition is subject to the satisfaction of customary closing conditions, including but not limited to the receipt of all necessary consents and waivers from third parties.

Debt Financing

FAM REIT has secured a commitment from a Canadian Schedule I Chartered Bank for a $23 million first mortgage with a 10-year term, 25-year loan amortization, and bearing a fixed interest rate equal to 200 basis points above the 10-year Government of Canada bond yield, or approximately 4.4% (based on the current benchmark government bond yield).

Shant Poladian further commented, "We are focused on building a strong balance sheet. To this end, we now have only $1.7 million of mortgage debt maturities prior to November 2015, and we chose to utilize 10-year term mortgage debt for both property acquisitions instead of shorter duration financing. In a period of rising interest rates and increased capital market volatility, we believe that strong liquidity, low leverage and the utilization of long-term fixed rate debt financing will best serve the interests of our unitholders."

Equity Financing

In connection with the acquisition of The Promontory, the REIT announced today that it has entered into an agreement to sell to a syndicate of underwriters led by TD Securities Inc., Canaccord Genuity Corp. and RBC Capital Markets (collectively, the "Underwriters"), on a bought deal basis, 2.23 million trust units ("Units") at a price of $9.00 per Unit (the "Offering Price") for gross proceeds to the REIT of approximately $20 million (the "Offering"). The REIT has also granted the Underwriters an over-allotment option to purchase up to an additional 334,500 Units on the same terms and conditions, exercisable at any time, in whole or in part, up to 30 days after the closing of the Offering (the "Over-Allotment Option"). The proceeds from the Offering will be used to partially fund the acquisition of The Promontory and to repay amounts drawn on the REIT's revolving credit facility. The Offering is expected to close on or about August 2, 2013 and is subject to customary conditions, including regulatory approval. The Offering is not conditional upon closing of The Promontory acquisition.

The Units will be offered by way of a short form prospectus to be filed with the securities commissions and other similar regulatory authorities in each of the provinces and territories of Canada, pursuant to National Instrument 44-101 - Short Form Prospectus Distributions.

The Units have not been, nor will they be, registered under the United States Securities Act of 1933, as amended, (the "1933 Act") 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 1933 Act), except pursuant to an exemption from the registration requirements of the 1933 Act. This press release does not constitute an offer to sell or a solicitation of an offer to buy any Units in the United States or to, or for the account or benefit of, U.S. persons.

Huntingdon Private Placement

Concurrent with the closing of the Offering, the REIT will issue 425,532 Units on a private placement basis to Huntingdon Capital Corp. (TSX:HNT)(TSX:HNT.DB)(TSX:HNT.WT) ("Huntingdon"), the manager of the REIT, at a purchase price of $9.40 per Unit for gross proceeds of $4 million. Following closing of the private placement and the Offering, Huntingdon will hold an approximate 27% interest in the REIT (an approximate 26% interest if the Over-Allotment Option is exercised in full) assuming the exchange of all Class B limited partnership units of a subsidiary of the REIT held by Huntingdon. The proceeds from the private placement will be used to partially fund the acquisition of The Promontory and to repay amounts drawn on the REIT's revolving credit facility.

About FAM Real Estate Investment Trust

The REIT is a diversified commercial real estate investment trust focused on owning and acquiring strategically well-located office, industrial and retail real estate located primarily across Canada's large population centres.

Forward-Looking Information and Cautionary Statements:

This press release contains forward-looking statements with respect to the REIT and its operations, strategy, financial performance and financial condition, as well as with respect to the acquisition of The Promontory. These statements generally can be identified by the use of forward-looking words such as "forecast", "may", "will", "would", "expect", "estimate", "anticipate", "intend", "believe" or "continue" or the negative thereof or similar variations. Some of the specific forward-looking statements in this press release include, but are not limited to, statements with respect to the closing of the transactions contemplated herein and the effect of the transactions contemplated herein on the financial performance of the REIT. The actual results and performance of the REIT and the properties discussed herein could differ materially from those expressed or implied by such statements. See the risk factors in the public filings of the REIT. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations. Some important factors that could cause actual results to differ materially from expectations include, among other things, general economic and market factors, competition, the failure to receive any required approvals or consents in connection with the acquisition of The Promontory or the failure to satisfy or waive any other condition to the acquisition of The Promontory, the failure of the REIT to realize expected benefits from the acquisition of The Promontory or 4211 Yonge, the failure of the REIT to satisfy the conditions of the Offering or otherwise close the Offering, the performance of the Promontory or 4211 Yonge generally, and changes in securities or other laws or regulations or the application thereof. The cautionary statements qualify all forward-looking statements attributable to the REIT and persons acting on its behalf. The assumptions made in making forward-looking statements are referred to in the public filings of the REIT. The assumptions made in making forward-looking statements in this press release also include the assumption that the REIT will be in a position to satisfy the conditions in respect of the acquisition of The Promontory and the Offering and complete those transactions. Unless otherwise stated, all forward-looking statements speak only as of the date of this press release. Except as required by applicable law, the REIT specifically disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise. Additional information about these assumptions and risks and uncertainties is contained in the REIT's filings with securities regulators, including its latest annual information form and MD&A. These filings are also available at the REIT's website at www.famreit.com.

"NOI" is not a measure recognized under International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board and does not have any standardized meaning prescribed by IFRS. Management considers NOI to be an appropriate supplemental performance measure as it reflects the operating performance of the real estate portfolio. NOI, as computed by the REIT, may differ from similar computations as reported by other similar organizations and, accordingly, may not be comparable to NOI reported by such organizations. For additional information regarding this non-IFRS measure, including the definition thereof, refer to the REIT's management's discussion and analysis of results of operations and financial condition for the three months ended March 31, 2013, a copy of which is filed on www.sedar.com.