Slate Office REIT Announces Acquisition of Properties, $130 Million Equity Offering

TORONTO, ONTARIO--(Marketwired - March 6, 2017) -

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

Slate Office REIT (TSX:SOT.UN) (the "REIT"), a leading owner of office properties in Canada, announced today that it has agreed to acquire three office properties located in the Greater Toronto Area and Fredericton for an aggregate purchase price of $165 million (the "Acquisitions").

The Acquisitions will be primarily funded with the net proceeds from a $120 million public offering of subscription receipts of the REIT and a $10 million private placement of units of the REIT (each a "Unit") to the vendors of the properties. The Acquisitions are expected to be immediately accretive to the REIT's 2017E AFFO per unit on a leverage-neutral basis.

The Acquisitions, Offering and Private Placement will have significant benefits to the REIT, including:

• Market capitalization will exceed $500 million.
• Gross leasable area will be 5.7 million sq. ft., with 43% in the Greater Toronto Area.
• The occupancy of the REIT's portfolio will improve by approximately 100 basis points.
• Increases the overall credit quality of the REIT's tenants.
• Weighted average lease term increases to 5.5 years.

The Acquisitions

The REIT will be acquiring West Metro Corporate Centre ("West Metro") in Etobicoke, Ontario and 250 King Street ("250 King") and 460 Two Nations Crossing ("460 Two Nations") in Fredericton, New Brunswick.

West Metro is a three-building complex located at 185, 191 and 195 The West Mall in Etobicoke, Ontario. The 616,364 sq. ft. complex is 93.0% occupied by multiple credit-quality tenants including SNC-Lavalin and The Bank of Nova Scotia. West Metro is a prominent property along the 427 Corridor and is highly visible with excellent transit access. Upon acquisition, West Metro will be the REIT's largest property and SNC-Lavalin will become the REIT's largest tenant.

250 King is an 80,162 sq. ft. property built in 2000 which is located in downtown Fredericton. 460 Two Nations is a 50,945 sq. ft. property built in 2008 located in suburban Fredericton. Both properties are 100% occupied by the Province of New Brunswick, a AA rated credit. Together, these two properties provide a long-term government covenant and further strengthen the REIT's presence in Atlantic Canada.

The REIT has a robust pipeline of potential and attractive acquisitions which it is actively pursuing.

Public Offering of Subscription Receipts

In conjunction with the Acquisitions, the REIT also entered into an agreement with a syndicate of underwriters co-led by BMO Nesbitt Burns Inc., CIBC World Markets Inc. and TD Securities Inc. (the "Underwriters") to sell, on a bought deal basis 14,820,000 subscription receipts (the "Subscription Receipts") of the REIT at a price of $8.10 per Subscription Receipt for gross proceeds of approximately $120 million (the "Offering"). The REIT has also granted the underwriters an over-allotment option to purchase up to an additional 15% of the Subscription Receipts (or in certain circumstances, 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.

On closing of the Acquisitions: (i) one Unit will be automatically issued in exchange for each Subscription Receipt (subject to customary anti-dilution protection), without payment of additional consideration or further action by the holder thereof, (ii) an amount per Subscription Receipt equal to the amount per Unit of any cash distributions made by the REIT for which record dates have occurred during the period that the Subscription Receipts are outstanding, net of any applicable withholding taxes, will become payable in respect of each Subscription Receipt, and (iii) the net proceeds from the sale of the Subscription Receipts will be released from escrow to the REIT.

The net proceeds from the sale of the Subscription Receipts will be held by an escrow agent pending the fulfillment or waiver of all outstanding conditions precedent to closing of the Acquisitions, including, among other things, receipt of the Toronto Stock Exchange ("TSX") approval and all other regulatory and government approvals required to finalize such sales. There can be no assurance that regulatory approval will be obtained, closing conditions will be met or that the Acquisitions will be consummated.

If the Acquisitions fail to close as described above by July 31, 2017, or the Acquisitions are terminated at an earlier time, the gross proceeds of the Offering and pro rata entitlement to interest earned or deemed to be earned on the Subscription Receipts, net of any applicable withholding taxes, will be paid to holders of the Subscription Receipts and the Subscription Receipts will be cancelled. The Acquisitions are expected to close by mid-May 2017.

The Offering is being made under the REIT's base shelf prospectus dated September 7, 2016. The REIT intends to file a prospectus supplement relating to the issuance of the Subscription Receipts by March 8, 2017 with the securities commissions and other similar regulatory authorities in each of the provinces and territories of Canada. The Offering and the Private Placement are subject to the receipt of all necessary approvals, including the approval of the TSX. Closing of the Offering is expected to take place on or about March 15, 2017. The closing of the Private Placement will take place at the time of closing of the Acquisitions. The remainder of the net proceeds from the Offering and Private Placement that are not used to fund the Acquisitions will be used to repay outstanding indebtedness which may be redrawn to fund future acquisitions.

The Units have not been and will not be registered under the United States Securities Act of 1933 and accordingly will not be offered, sold or delivered, directly or indirectly within the United States, its possessions and other areas subject to its jurisdiction, or to, or for the account or for the benefit of, a U.S. persons, except pursuant to applicable exemptions from the registration requirements. 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 for the benefit of, U.S. persons.

Private Placement

In connection with the Acquisitions, the REIT will issue to the vendors approximately $10 million of Units by way of a private placement at a price of $8.10 per Unit (the "Private Placement"). These Units will be subject to a 4-month hold period, subject to applicable exemptions. The Private Placement will close simultaneously with the Acquisitions. Following closing of the Offering and the Private Placement, the vendors will own approximately 2% of the outstanding Units, on a fully diluted basis.

Cancellation of Q4 and Year End 2016 Conference Call

In light of the announcement of the Offering and the Private Placement, the REIT has cancelled the conference call scheduled to take place on Friday, March 10, 2017 at 9:00 a.m. ET to discuss its fourth quarter and year end 2016 results and ongoing business initiatives.

Forward-Looking Statements

Certain information herein constitutes "forward-looking information" as defined under Canadian securities laws which reflect management's expectations regarding objectives, plans, goals, strategies, future growth, results of operations, performance, business prospects and opportunities of the REIT. The words "plans", "expects", "does not expect", "scheduled", "estimates", "intends", "anticipates", "does not anticipate", "projects", "believes", or variations of such words and phrases or statements to the effect that certain actions, events or results "may", "will", "could", "would", "might", "occur", "be achieved", or "continue" and similar expressions identify forward-looking statements. Some of the specific forward-looking statements contained herein include, but are not limited to statements with respect to the following: the timing for the filing of the prospectus supplement; the intention of the REIT and the vendors to complete the Acquisitions, the Offering and the Private Placement on the terms and conditions described herein; and the date on which the closings of the Acquisitions, the Offering and the Private Placement are expected to occur. Such forward-looking statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations, including that the transactions contemplated herein are completed.

Forward-looking statements are necessarily based on a number of estimates and assumptions that, while considered reasonable by management as of the date hereof, are inherently subject to significant business, economic and competitive uncertainties and contingencies. When relying on forward-looking statements to make decisions, the REIT cautions readers not to place undue reliance on these statements, as forward-looking statements involve significant risks and uncertainties and should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not the times at or by which such performance or results will be achieved. A number of factors could cause actual results to differ, possibly materially, from the results discussed in the forward-looking statements. Additional information about risks and uncertainties is contained in the filings of the REIT with securities regulators, including the REIT's base shelf prospectus dated September 7, 2016 and the REIT's annual information form dated March 6, 2017.

Non-IFRS Financial Measures

The REIT has employed certain non-IFRS financial measures including AFFO and NOI, which are not generally accepted accounting principles as defined under International Financial Reporting Standards (IFRS). Management believes that in addition to conventional measures prepared in accordance with IFRS, investors in the real estate industry use these non-IFRS financial measures to evaluate the REIT's performance and ability to generate cash flows. Accordingly, these non-IFRS financial measures are intended to provide additional information and should not be considered in isolation or as a substitute for performance measures prepared in accordance with IFRS. In addition, they do not have standardized meanings and may not be comparable to measures used by other issuers in the real estate industry or other industries.

About Slate Office REIT (TSX:SOT.UN)

Slate Office REIT is an open-ended real estate investment trust. The REIT's portfolio currently comprises 35 strategic and well-located real estate assets located primarily across Canada's major population centres. The REIT is focused on maximizing value through internal organic rental and occupancy growth and strategic acquisitions. Visit www.slateofficereit.com to learn more.

About Slate Asset Management L.P.

Slate Asset Management L.P. ("Slate") is a leading real estate investment platform with over $4 billion in assets under management. Slate is a value-oriented manager and a significant sponsor of all its private and publicly-traded investment vehicles, which are tailored to the unique goals and objectives of its investors. The firm's careful and selective investment approach creates long term value with an emphasis on capital preservation and outsized returns. Slate is supported by exceptional people, flexible capital and a proven ability to originate and execute on a wide range of compelling investment opportunities. Visit slateam.com to learn more.