Unit Price Tender Offer Well Below Market Value
CALGARY, AB, Oct. 8, 2024 /CNW/ - Telsec Property Corporation ("Telsec"), the largest minority holder of Melcor Real Estate Investment Trust Units (TSX: MR.UN), categorically rejects the Melcor Developments Ltd. ("Melcor Parent") takeout offer as outlined in its September 12, 2024 news release.
Telsec urges all minority unit holders to support the position of minority unit holder Firm Capital which calls for a take-out price at 95 per cent of the REIT's current IFRS net asset value. Details of the Firm Capital position are outlined in a September 18news release.
Telsec believes Melcor is trying to take advantage of minority REIT Unit Holders by trying to buy the real estate back at less than 50% of the Net Asset Value; having gotten investors to buy into the REIT at the Net Asset Value, they now won't buy them out on the same Net Asset Value basis; by not giving a potential buyer enough time to make an informed decision; and, by being in conflict of interest by sitting on both sides of the table (being a buyer and a seller).
The lowball offer of $4.95 is a 45% discount to the REIT's Net Asset Value (NAV) of $9.09 per Trust Unit as issued by the REIT itself on July 30, 2024. In addition, the REIT announced several self-dealing initiatives that solely benefit the Melcor Parent at the expense of Unitholders.
The $4.95 per unit offer is misleading as Melcor plans to keep the 2024 profits which we estimate at $0.59 per unit but unit holders only received $0.04 per unit. This puts the actual Melcor offer at $4.40 per unit.
Just as the real estate market is recovering nicely and interest rates have dropped, and will continue to drop, putting the REIT in an ever-improving position, Melcor decided to attempt to force minority unitholders out at $4.95, a discount of some 45% on their own, publicly stated Net Asset Value.
"To suggest we are disappointed in Melcor is an understatement," says Kris van Grieken, President, Telsec Property Corp. "Who knew that it wouldn't be an outside interest trying to take advantage of the low unit price, but rather it is the same group that spun the REIT out to the market in the first place. We feel betrayed."
Melcor REIT Minority Unit Holders, say NO to the Melcor offer. We ask unitholders to contact Melcor to voice their concerns and to publicly state their support for our position.
SOURCE Telsec Property Corporation
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