KEYreit

TSX : KRE.UN


KEYreit

November 19, 2012 16:20 ET

KEYreit Announces $20 Million Treasury Financing of Convertible Debentures

TORONTO, ONTARIO--(Marketwire - Nov. 19, 2012) -

NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR DISSEMINATION IN THE U.S.

KEYreit (TSX:KRE.UN) ("KEYreit" or the "Company") today announced that it has entered into an agreement with a syndicate of underwriters co-led by National Bank Financial Inc. and BMO Capital Markets to issue to the public, subject to regulatory approval, on a bought deal basis, $20 million aggregate principal amount of convertible unsecured subordinated debentures (the "Debentures") due December 31, 2017 (the "Maturity Date"). KEYreit has also granted the underwriters an over-allotment option to purchase up to $3 million additional aggregate principal amount of Debentures, representing 15% of the size of the treasury offering. The over allotment option may be exercised, in whole or in part, up to 30 days after the closing of the offering.

The Debentures will bear interest at a rate of 7.00% per annum payable semi-annually in arrears on June 30 and December 31, with the initial interest payment on June 30, 2013. The REIT will have the option to pay such interest either in cash or units of KEYreit ("Units"), subject to regulatory approval.

The Debentures will be convertible at any time prior to the earlier of December 31, 2017 and the business day immediately preceding the date fixed for redemption at a conversion price of $8.00 per Unit (the "Conversion Price"), being a ratio of 125.000 Units per $1,000 principal amount of Debentures. The Debentures will not be redeemable prior to December 31, 2015. On and after December 31, 2015 and prior to December 31, 2016, the Debentures may be redeemed, in whole or in part, at the option of the REIT provided that the volume weighted average trading price for the Units is not less than 125% of the Conversion Price. On and after December 31, 2016 and prior to the Maturity Date, the Debentures may be redeemed, in whole or in part, at the option of the REIT at a price equal to their principal amount plus accrued interest. Subject to regulatory approval, the REIT may satisfy its obligation to repay the principal amount of the Debentures on redemption or at maturity, in whole or in part, by delivering that number of Units equal to the amount due divided by 95% of the volume weighted average trading price for the Units, plus accrued interest in cash.

The net proceeds from the offering will be used to redeem the REIT's outstanding Series A 7.15% convertible unsecured subordinated debentures maturing December 31, 2012 (the "2007 Debentures").

KEYreit will, by December 4, 2012, file with the securities commissions and other similar regulatory authorities in each of the provinces of Canada (excluding Quebec), a preliminary short form prospectus relating to the issuance of the Debentures. Closing of the offering is expected to take place on or about December 11, 2012.

This press release shall not constitute an offer to sell, or the solicitation of an offer to buy, any securities in any jurisdiction in which such offer, solicitation or sale would be unlawful and is not an offering of securities for sale in the United States. The securities being offered have not been and will not be registered under the U.S. Securities Act of 1933 as amended and may not be offered or sold in the United States absent registration or pursuant to applicable exemption from registration.

About KEYreit

KEYreit (TSX:KRE.UN) (formerly Scott's Real Estate Investment Trust) is Canada's premier small-box retail property owner with 232 properties in nine provinces across Canada. KEYreit's properties are well located and geographically diverse across Canada with the majority of all properties containing long-term quadruple net leases. To find out more about KEYreit (TSX:KRE.UN), visit our website at www.keyreit.com.

Forward-looking Statements

This document contains certain information that may constitute forward-looking information within the meaning of securities laws. In some cases, forward-looking information can be identified by the use of terms such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "intend", "estimate", "predict", "potential", "continue" or other similar expressions concerning matters that are not historical facts. Forward looking information may relate to management's future outlook and anticipated events or results, including the completion of the contemplated offering of Debentures and the redemption of the 2007 Debentures. Forward looking-information is subject to certain factors, including risks and uncertainties, which could cause actual results to differ materially from what is currently expected. Such factors include risks relating to KEYreit's reliance on key tenants, risks associated with investment in real property, competition, reliance on key personnel, financing and refinancing risks, distributions, environmental matters, tenant risks, risks related to current economic conditions and other risk factors more particularly described in KEYreit's Annual Information Form for the year ended December 31, 2011. You should not place undue importance on forward-looking information and should not rely upon this information as of any other date. Other than as required by applicable Canadian securities law, KEYreit does not undertake to update this information at any particular time. Additional information identifying risks and uncertainties is contained in KEYreit's filings with the Canadian securities regulators, available at www.sedar.com.

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