CALGARY,
AB, Oct. 15, 2024 /CNW/ - Telsec Property
Corporation ("Telsec"), through affiliated entities, is an
owner of approximately 2,830,000 million Trust Units of Melcor Real
Estate Investment Trust (TSX: MR.UN) (the "REIT") or
approximately 21.84% of the publicly traded units and 9.7%
ownership of the REIT.
We have been a very patient Unitholder in the Melcor REIT for 8
years feeling comfortable that management was doing their level
best in running the REIT and that the interest of the majority
Unitholder (Melcor Developments) was aligned with the interests of
the minority Unitholders. It is truly disappointing that it appears
our trust was misplaced. Just as the real estate market is
recovering nicely and interest rates have been dropping and will
continue to drop putting the REIT in an ever improving position,
management would like to attempt to force minority Unitholders out
at $4.95, a discount of some 45% on
their own, publicly stated Net Asset Value of $9.09 per unit. To add insult to
injury, other than the $0.04 the
Unitholders received in February, they are keeping the 2024 income
which we believe is roughly $0.55 per
unit.
Telsec believes Melcor Developments is taking advantage of
minority REIT Unitholders by trying to buy the real estate back at
roughly 54.5% of the Net Asset Value. The REIT's Unit value was
established at inception using the Net Asset Value, now Melcor
would like you to ignore the Net Asset Value and use the recent
trading pattern of the Unit to establish the "take under"
value. The Unit performance has been directly affected by
decisions made by those that were in control and are on both sides
of the table of this transaction.
Both the REIT and the Parent are run by sophisticated real
estate executives, so it was surprising to us that a Special
Committee needed to be formed at all. It didn't occur to us that
the need for the Special Committee was to formulate a "take under"
and isolate the executive team, who represent both sides, from
reproach.
To suggest we are disappointed in the Melcor REIT Trustees,
Melcor Developments and those
associated with this transaction is an understatement. At the
outset, with the Melcor Parent owning about 55% of the REIT, it
reassured us that someone from the outside could not take advantage
of a low unit price. Who knew that the group that we needed to
concern ourselves with was the same group that spun the REIT out to
the market in the first place.
We have reviewed the press release issued by FC Private Equity
Realty Management Corp. ("Firm Capital") responding to the
"take under" transaction issued on Sept 18,
2024. We support Firm Capital's position presented and the
arguments made. We urge Unitholders to support their position and
to vote against Melcor Parent's transaction. If Unitholders haven't
done so already, please read Firm Capital's press release.
https://www.globenewswire.com/en/news-release/2024/09/18/2948637/0/en/FC-Private-Equity-Realty-Management-Corp-Responds-to-Melcor-REIT-Take-Under-Transaction.html
We urge Unitholders to contact the undersigned and Firm Capital,
along with the Board of Trustees and Special Committee of the REIT,
to voice their concerns in regard to the transaction. Note that a
minimum of 50.01% of the minority of Unitholders are required to
stop this transaction, and with enough support, the goal of a fair
and favourable outcome to all Unitholders can be achieved.
Together with Firm Capital, we hope to engage in meaningful and
open conversations with the Melcor REIT Special Committee to reach
common ground.
SOURCE Telsec Property Corporation
