Melcor Real Estate Investment Trust 5 1 Convertible Unsecured Subordinated Debentures T.MR.DB.B

RE:Firm Capital - "take under"

[longrun86]

I read this release a few times over. They make some valid points but stop short of putting forward anything of substance that is actionable other than an outright rejection.

They are familiar with the assets as they have been a holder and lender in the past. They also have extensive experience in real estate. Their valuation adjustment at the bottom showing the discount to IFRS NAV seems a bit out of touch. If they truly felt this was the an accurate assessment, then they should be comparing this to historical public comparables of REIT portfolios transacting. Maybe they are right, but they didn't take the opportunity in the press release to truly prove their point using actual transactions.

The "Go Shop" provision days is not out of the realm of expectations (30 to 45 days) and there is a report put out by BLG indicating this. As outlined in BLG's report (I can't provide the link as it only downloads to PDF), many deals put forward a "No Shop" provision and only 2% of the deals reviewed included a "Go Shop" provision. 

If the REIT's special committee had truly completed the due process with BMO, then work should have already be done to line up and solicit bids from the market for either the entire REIT or for groups of properties to be disposed of.

I would suggest that they either need to put forward a class action lawsuit or put out an offer to buy the units at a higher price to be truly seen as living up to the words of their press release.

LR