Partners Real Estate Investment Trust Announces Update on Ontario Property Acquisition

BARRIE, ONTARIO--(Marketwired - April 2, 2014) - Partners Real Estate Investment Trust (TSX:PAR.UN) (the "REIT") is pleased to provide an update on its proposed acquisition of retail centres in Ontario that was most recently described in its announcement on February 11, 2014. The REIT and the vendor, Holyrood Holdings Limited (the "Vendor") have agreed to the mutual termination of the previously announced purchase and sale agreement and have concurrently entered into a new purchase and sale agreement (the "Agreement") in respect of three of the four previously announced Ontario properties (collectively, the "Properties"). The Properties comprise Hamilton City Centre in Hamilton, the Crossroads Centre in London and a multi-tenant retail property in Kemptville and total approximately 611,510 square feet of gross leasable area.

The REIT will pay immediate consideration of approximately $90,000,000 for the Properties and an investment by way of loan to the Vendor. This purchase price will be satisfied by (i) the assumption of certain debt secured by the Properties, (ii) the issuance of 1,188,188 units of the REIT ("REIT Units"), issued at an effective price of $5.80 per REIT Unit, and (iii) the issuance of 4,813,517 class B units (the "Class B Units") of a limited partnership to be formed by the REIT for the purposes of completing the acquisition, at an effective price of $5.80 per Class B Unit. The Class B Units will be exchangeable for REIT Units on a one-for-one basis and will be the economic equivalent of REIT Units and carry the right to vote at the REIT level. After giving effect to the issuance of the REIT Units and Class B Units, the Vendor is expected to hold approximately 18.7% of the outstanding REIT Units, calculated on a fully-diluted basis.

Pursuant to the Agreement, the REIT and the Vendor will enter into a development agreement pursuant to which the Vendor, as developer, will be granted the right to perform development and leasing activities in respect of certain vacant space and undeveloped space located on the Properties. The REIT has agreed to pay the Vendor (i) $25,000,000, as a deferred purchase price which is fully contingent on the Vendor entering into qualified leases in respect of certain vacant space located on the Properties (the "Contingent Deferred Payment"), and (ii) earn-out payments contingent on the Vendor entering into qualified leases in respect of certain undeveloped space located on the Properties (the "Earn-Out Payments"). Both the Contingent Deferred Payments and Earn-Out Payments will be calculated by dividing the amount that the qualified lease increases the REIT's net operating income (on a 12 month basis) by a capitalization rate of 6.6%. The REIT has discretion to make payment of any Contingent Deferred Payment or Earn-Out Payment by way of (i) cash, (ii) the offsetting of certain debt of the Vendor, (iii) the issuance of up to 506,634 Class B Units at an effective price of $5.95, (iv) requiring the Vendor to provide a vendor take-back mortgage for 60% of the amount payable, or (v) a combination thereof.

Management expects the acquisition of the Properties to be $0.0142 accretive to the REIT's 2013 AFFO per REIT Unit after giving effect to the issuance of all Class B Units and REIT Units.

The Properties include:

• Hamilton City Centre, a multi-tenant retail centre located at the heart of Hamilton's business district in Hamilton, Ontario. Originally built in 1990, Hamilton City Centre comprises approximately 423,900 square feet of gross leasable area. The property has been well maintained, and its more than 50 tenants include Hart Stores, Thunder Alley Entertainment and the City of Hamilton.
• Crossroads Centre, a multi-building, multi-tenant retail centre located just north of Highway 401 in London, Ontario. Originally built in 1990, Crossroads Centre comprises approximately 159,800 square feet of gross leasable area. The property will be aesthetically enhanced with new facades and its tenants include Winners, Living Lighting, and OK Tire. The centre's gross leasable area now reflects the removal of a building, which will allow for the construction of three or four additional out-parcels. The removal of the building and aesthetic enhancements are included in the major capital project noted above, which is to be funded by the Vendor.
• A multi-tenant retail property in Kemptville, Ontario, which is approximately 55km south of Ottawa and the largest community in North Grenville. Built in 1998, the property comprises approximately 26,500 square feet of gross leasable area, and its tenants include Dollar Tree and Giant Tiger.

Mr. Ron McCowan, interim CEO of the REIT stated: "The REIT's portfolio will grow significantly as a result of this transaction, which increases our total gross leasable area by approximately 22% and reinforces our position within the healthy Ontario marketplace. This transaction is a clear achievement of our objective of pursuing accretive acquisitions that enhance and protect unitholder value. We look forward to continue to work with Holyrood Holdings Limited as they pursue mutually beneficial leasing and development activities on the Properties."

The closing of the transaction is expected to occur in April and remains subject to regulatory approval and the fulfillment of certain conditions, including the consent of the applicable lenders to the REIT's assumption of mortgage debt on the Properties.

About Partners REIT

Partners REIT is a growth-oriented real estate investment trust, which currently owns (directly or indirectly) 39 retail properties, well-located in British Columbia, Alberta, Manitoba, Ontario, and Quebec, aggregating approximately 2.7 million square feet of leasable space. Partners REIT focuses on expanding and managing a portfolio of retail and mixed-use community and neighbourhood shopping centres located in both primary and secondary markets across Canada.

Disclaimer

Certain statements included in this press release constitute forward-looking statements, including, but not limited to, those identified by the expressions "expect," "will" and similar expressions to the extent they relate to Partners REIT. The forward- looking statements are not historical facts but reflect Partners REIT's current expectations regarding future results or events. These forward looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations, including the timing of the offering, success of the offering, listing of the units, use of proceeds of the Offering, access to capital, regulatory approvals, intended acquisitions and general economic and industry conditions. Although Partners REIT believes that the assumptions inherent in the forward-looking statements are reasonable, forward-looking statements are not guarantees of future performance and, accordingly, readers are cautioned not to place undue reliance on such statements due to the inherent uncertainty therein.