H&R REIT Is Pleased to Announce Completion of the Primaris Transaction

H&R Real Estate Investment Trust (H&R) and Primaris Retail Real Estate Investment Trust (Primaris) announced that H&R has completed its previously announced acquisition of Primaris. As part of the transaction, a KingSett Capital-led consortium, which consists of certain KingSett Capital managed funds, Ontario Pension Board and RioCan REIT, acquired 17 Primaris properties pursuant to separate purchase agreements between Primaris and the consortium members. H&R then acquired Primaris and its remaining 27 properties.
 
Transaction Details
 
Unitholders who elected cash for their Primaris units are entitled to $28 cash per Primaris unit for approximately 55% of their Primaris units and 1.166 H&R stapled units per Primaris unit for the balance.  All other former Primaris unitholders are entitled to 1.166 H&R stapled units for each Primaris unit.  H&R delivered an aggregate of approximately 62.1 million stapled units pursuant to the transaction1.
 
As a result of the transaction, H&R has acquired a $3.1 billion portfolio of 27 shopping centres. A complete list of the acquired properties is appended to this release. H&R expects to complete its previously announced sale of South Cambridge Centre in Cambridge, Ontario to RioCan for $35 million on April 5, 2013.
 
In connection with the transaction, holders of approximately 2.1 million exchangeable units of certain subsidiaries of Primaris now hold an equal number of exchangeable units of certain subsidiaries of H&R each of which are exchangeable for 1.166 H&R stapled units. Similarly, the 6.75% (remaining aggregate principal amount outstanding $1,220,000), 6.30% (remaining aggregate principal amount outstanding $7,726,000), and 5.40% (remaining aggregate principal amount outstanding $74,963,000) convertible debentures issued by Primaris (TSX: PMZ.DB, PMZ.DB.B, PMZ.DB.C) have been assumed by H&R and are now convertible into H&R stapled units at previously announced conversion ratios (new ticker symbols TSX: HR.DB.F, HR.DB.G, HR.DB.H respectively).  H&R intends to promptly deliver to CIBC Mellon Trust Company, as trustee for its 6.75% and 6.30% convertible debentures, notice of its intent to redeem all such remaining outstanding debentures in accordance with their terms. It is anticipated that such redemption will be completed approximately 45 days following the delivery to the trustee of the notice of intention to redeem.
 
In addition to the convertible debentures which have been assumed by H&R, H&R has assumed an aggregate of $1.4 billion principal amount of mortgages on the acquired properties and has guaranteed the operating line of PRR Trust, now a subsidiary of H&R REIT, the outstanding principal of which is expected to be approximately $105 million after all closing costs have been paid.
 
The transaction was structured so former holders of Primaris units who are resident in Canada and who held their Primaris units as capital property received their H&R stapled units on a substantially tax-deferred rollover (the receipt of H&R Finance Trust units, the fair market value of which is 3.788% of the aggregate fair market value of the total unit consideration received by Primaris unitholders, is taxable).
 
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1 Does not include 433,174 units held by a subsidiary of H&R in partial satisfaction of exchange obligations related to the H&R exchangeable units.
Executive Appointments
 
H&R REIT is pleased to announce the appointments of Patrick Sullivan as Chief Operating Officer of Primaris and Lesley Gibson as Executive Vice President, Finance of Primaris, which continues operations as a wholly-owned subsidiary of H&R.
 
Prior to this appointment, Mr. Sullivan served as Primaris' Senior Vice President, Portfolio Management since 2011, where he had overall responsibility for operations and leasing of Primaris' portfolio of properties; previously he was Vice President of Portfolio Management for western Canada.  Prior to joining Primaris, Mr. Sullivan served as Director of Leasing with Oxford Properties Group where he was responsible for its portfolio of shopping centres in western Canada.
 
Mr. Sullivan holds a Bachelor of Commerce degree from the University of British Columbia.
 
Lesley Gibson has been the Vice President of Finance with Primaris since its IPO in 2003. In this position, she oversaw corporate finance, accounting and public reporting responsibilities for Primaris.  Before joining Primaris, Ms. Gibson worked at Borealis Capital Corporation as Director, Client Reporting and at KPMG LLP as a Senior Manager in the Real Estate Group.
 
Ms. Gibson earned a Bachelor of Arts (Economics) at the University of Western Ontario and holds a Chartered Accountant designation.
 
New H&R Properties
 
           
Property Location Tenants (>50,000 sq.ft.) Build Date/ 
Last Renovation GLA (sq.ft.) Occupancy
Enclosed Centres          
  Sunridge Mall Calgary, AB The Bay, Target 1981 / 2005 814,000 99.40%
  Place d'Orleans Orleans, ON Target, The Bay, Sport Check, Fed. Govt. 1979 / 1999 759,000 96.10%
  Orchard Park Shopping Centre Kelowna, BC The Bay, Sears 1971 / 2007 712,000 98.50%
  Catarqui Centre Kingston, ON Sears, The Bay, Target 1982 / 2006 596,000 98.50%
  Place du Royaume Saguenay, QC Wal-Mart, Canadian Tire 1973 / 2008 592,000 97.50%
  Dufferin Mall Toronto, ON Wal-Mart, No Frills 1956 / 2007 563,000 96.20%
  Medicine Hat Mall Medicine Hat, AB Target, The Bay, Sears, Safeway 1980 / 2008 539,000 100.00%
  Stone Road Mall Guelph, ON Sears, The Bay, Target 1975 / 2007 513,000 98.80%
  Northland Village Mall Calgary, AB Wal-Mart 1971 / 2005 503,000 100.00%
  McAllister Place Saint John, NB Sears, Target 1978 / 2011 489,000 98.30%
  Regent Mall Fredericton, NB Sears, Wal-Mart 1976 / 2010 488,000 99.80%
  Park Place Shopping Centre Lethbridge, AB Sears 1988 / 2001 471,000 98.00%
  Sherwood Park Mall Sherwood Park, AB Target, Safeway 1972 / 2012 461,000 99.00%
  Grant Park Winnipeg, MB Target, Safeway 1962 / 1996 386,000 96.30%
  St Albert Centre Edmonton, AB Target, The Bay, Winners 1980 / 1995 316,000 100.00%
  Total / Weighted Average       8,202,000 98.4%
Other Properties
  Garden City Winnipeg, MB Home Depot 1976 / 2004 161,000 98.70%
  Edinburgh Market Place Guelph, ON Metro 1996 / 2008 113,000 97.60%
  Park Plaza Medicine Hat, AB n/a 1981 / 2004 61,000 100.00%
  Northland Professional Centre Calgary, AB n/a 1978 51,000 100.00%
  Sherwood Park Plaza Sherwood Park, AB n/a 1988 / 2005 44,000 100.00%
  Dunmore Plaza Medicine Hat, AB n/a 1989 / 1999 30,000 100.00%
  Carry Drive Plaza Medicine Hat, AB n/a 1989 / 2004 30,000 98.00%
  Trans-Canada Plaza Medicine Hat, AB n/a 2005 20,000 100.00%
  Northland Shoppes Calgary, AB n/a 1974 / 1999 14,000 100.00%
  Scotia Plaza Medicine Hat, AB n/a 1996 11,000 100.00%
  Development Land Sherwood Park, AB n/a 0 0 0
  Total / Weighted Average       535,000 99.0%
Total/Weighted Average       8,737,000 98.4%

on April 4, 2013