InterRent Real Estate Investment Trust

InterRent Real Estate Investment Trust

July 30, 2009 10:36 ET

InterRent Real Estate Investment Trust Responds to NorthWest Value Partners Inc. Allegations

TORONTO, ONTARIO--(Marketwire - July 30, 2009) - InterRent Real Estate Investment Trust (TSX:IIP.UN) ("InterRent") has reviewed the allegations of NorthWest Value Partners Inc. ("NorthWest"), as set out in the press release issued by NorthWest on July 30, 2009, and has concluded that they are entirely without merit.

InterRent would like to inform its unitholders that their Board of Trustees has completed an extensive six month process that resulted in the recently announced transaction involving CLV Group Inc. (the "CLV Proposal"). The CLV Proposal includes a private placement of between $8 million to $14 million in cash from over 40 institutional and high net worth investors at a price of $1.50 per unit, and represents the best alternative for InterRent, when all proposals were considered.

As part of InterRent's value maximizing process, a Special Committee comprised of independent trustees engaged legal advisors and Scotia Capital as financial advisors who provided advice and assistance to the Special Committee and InterRent's Board of Trustees. The Special Committee, with the assistance of its advisors, evaluated proposals submitted by multiple parties.

InterRent believes that it is worth noting that NorthWest has been a full participant in InterRent's value maximization process since March, 2009. At that time, NorthWest originally proposed an all cash offer for 100% of the units at $1.50 per unit, but subsequently withdrew such proposal. NorthWest, with InterRent's full cooperation, completed detailed due diligence examinations of InterRent and InterRent continued to provide financial information to NorthWest as recently as July 23, 2009. InterRent was engaged in active negotiations with NorthWest during this time and received a variety of written proposals from NorthWest, including private placements and rights offering transactions.

On July 22, 2009, NorthWest submitted its final proposal (the "NorthWest Proposal") for consideration by InterRent's Special Committee. The following summarizes the material terms of the final NorthWest Proposal as compared with the CLV Proposal:

- The NorthWest Proposal included a cash private placement of approximately $6 million (to be completed in two tranches) at a price of $1.275 per unit. The CLV Proposal includes a minimum private placement of $8 million and a maximum of $14 million, at a price of $1.50 per unit, or a per unit price that is approximately 18% higher than the NorthWest Proposal.

- The NorthWest Proposal would result in NorthWest holding 47.3% of the total units, assuming NorthWest exercises the announced put/call arrangements with another significant unitholder, which would result in NorthWest being InterRent's sole dominant unitholder. Under the CLV Proposal, InterRent would continue to be widely held, as the CLV Proposal includes a cash private placement to over 40 investors and will not create any new unitholders holding greater than 10% of the units. Accordingly under the CLV Proposal, unitholders should enjoy enhanced market liquidity.

- The Northwest Proposal required the turnover of a majority of InterRent's Board of Trustees immediately following an initial private placement of approximately $2.4 million and without a unitholder vote. The proposed nominees under the CLV Proposal will be nominated for election by unitholders at InterRent's upcoming unitholders meeting which will be held on or before September 30, 2009.

- The CLV Proposal includes a one year property management agreement, which was negotiated at arm's length containing industry standard terms, with a proven and successful property manager, that already manages all of InterRent's Ottawa Region properties. NorthWest did not provide any information with respect to the identity of a proposed future property manager, the terms upon which such manager would be retained or what relationship such a manager has or would have to NorthWest or any of its principals.

- The NorthWest Proposal called for an amendment to InterRent's existing declaration of trust which would likely have resulted in InterRent becoming more highly leveraged, by increasing InterRent's debt to gross book value ratio limitation to 85% from its current limit of 70%. The CLV Proposal is expected to significantly reduce leverage by lowering its debt to gross book value ratio to approximately 66%.

- Despite requests, NorthWest did not provide InterRent with proof of financial capability to complete its proposal. InterRent has received confirmation that over $10 million of the maximum $14 million financing is ready to complete the initial private placement following the receipt of the necessary regulatory approval.

- Both the NorthWest Proposal and the CLV Proposal called for: (i) a rescheduling of the unitholder meeting; and (ii) a requirement that the trustees and officers of InterRent vote their units in favour of the respective proposal.

InterRent's Board of Trustees, with the benefit of advice from its financial and legal advisors, carefully evaluated the terms of the latest NorthWest Proposal in comparison with the other alternatives available, including the CLV Proposal. Notwithstanding certain similarities between the NorthWest Proposal and the CLV Proposal as noted above (many of which are now being criticized by NorthWest), simply viewed, the CLV Proposal is clearly superior on both a financial and operational basis. The Board of Trustees therefore elected to proceed with the CLV Proposal, which it concluded was in the best interests of all unitholders and InterRent. The Board of Trustees viewed the NorthWest Proposal as being primarily in the best interests of one particular unitholder, namely NorthWest Value Partners Inc.

InterRent looks forward to completing the CLV Proposal which will substantially improve InterRent's financial condition and will position it well for future profitable growth. The $8 million to $14 million cash proceeds to be received from the CLV Proposal will be used for working capital, upgrading of the current property portfolio and future growth.

In the event that NorthWest proceeds with its threatened litigation, InterRent shall vigorously defend the matter. In addition, InterRent shall hold NorthWest responsible if NorthWest persists in obstructing the CLV Proposal and the financing does not proceed and InterRent incurs significant legal expenses as a result.

About InterRent

InterRent is a rapidly expanding, growth oriented real estate investment trust engaged in building unitholder value through the accretive acquisition, ownership and operation of strategically located income producing multi-residential real estate, with 4,033 apartment suites under ownership.

Forward Looking Statements

This news release contains "forward-looking statements" within the meaning applicable Canadian securities legislation. Generally, forward-looking statements can be identified by the use of forward-looking terminology such as "plans", "anticipated", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". This news release includes forward looking statements with respect to the CLV Proposal and the related financing, the proposed management agreement and the proposed new slate of trustees. In addition to the risks that such proposal and the related financing may not be completed on the terms disclosed in this news release, or at all, the management agreement may not be finalized, and the new slate of trustees may not be elected at InterRent's upcoming unitholders' meeting. In addition, InterRent is subject to significant risks and uncertainties which may cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward looking statements contained in this news release. A full description of these risk factors can be found in InterRent's publicly filed information which may be located at InterRent cannot assure investors that actual results will be consistent with these forward looking statements and InterRent assumes no obligation to update or revise the forward looking statements contained in this news release to reflect actual events or new circumstances, except as required by applicable law.

Contact Information