KEYreit and Plazacorp Enter into Definitive Support Agreement

KEYreit announced that it has agreed to be sold to Plazacorp Retail Properties Ltd. (Plazacorp) for $320 million, including assumed debt, and has entered into a definitive support agreement with Plazacorp pursuant to which Plazacorp will make a take-over bid to acquire 100% of the issued and outstanding units of KEYreit for a purchase price, at the election of each unitholder, of $8.00 per Unit in cash, subject to a maximum aggregate cash amount of approximately $59.5 million, representing approximately 50% of the consideration, 1.6326 Plazacorp shares or any combination, subject to proration. The transaction values KEYreit's equity at approximately $119 million.
The purchase price of $8.00 per KEYreit unit to be offered by Plazacorp represents a premium of 29% to the closing price of the KEYreit units on the Toronto Stock Exchange on January 28, 2013, the last trading day before Huntingdon Capital Corp. (Huntingdon) announced its intention to make an unsolicited partial offer for KEYreit units, and a significantly more attractive offer than Huntingdon's unsolicited amended offer of $7.50 per unit.
Accordingly, KEYreit advises unitholders not to tender to Huntingdon's Amended Offer and to withdraw units that have already been tendered.  Unitholders holding units through a dealer, broker or other nominee should contact such dealer, broker or nominee to withdraw their KEYreit units.  For further details as to why the KEYreit Board of Trustees unanimously recommends that unitholders reject Huntingdon's Amended Offer, KEYreit encourages unitholders to read the notice of change to the Trustees' Circular, which is expected to be filed shortly.
Board Unanimously Recommends Unitholders ACCEPT Plazacorp's Offer
The Board of Trustees of KEYreit, based on the unanimous recommendation of the KEYreit Special Committee and upon consultation with its financial and legal advisors, has unanimously determined that Plazacorp's offer is fair, from a financial point of view, to KEYreit unitholders and is in the best interests of KEYreit and its unitholders. The Board of Trustees of KEYreit will therefore unanimously recommend that unitholders accept Plazacorp's offer.
BMO Capital Markets, the financial advisor to the Special Committee and the Board of Trustees of KEYreit, has provided an opinion to the effect that, as of the date of such opinion and based upon and subject to the assumptions, limitations and qualifications stated in such opinion, the consideration to be received by the unitholders pursuant to Plazacorp's offer is fair, from a financial point of view, to the unitholders, other than Plazacorp, John Bitove, Huntingdon, and each their respective affiliates.
This transaction represents the culmination of the rigorous value maximizing process that commenced following the announcement by Huntingdon on January 29, 2013 of its intention to offer $7.00 per unit (which was subsequently increased to $7.50 per unit on March 18, 2013). During this process, KEYreit and BMO Capital Markets contacted multiple parties to discuss their interest in pursuing a strategic transaction with KEYreit, which ultimately resulted in the Plazacorp offer.
"We are very pleased with the results of our value maximization process which we believe represents an excellent outcome," said Donald Biback, the Chairman of the Board of Trustees of KEYreit, "In the view of the Special Committee and the Board, the Plazacorp offer provides unitholders with a very attractive offer and for those who choose to hold shares in Plazacorp, a promising ongoing investment."
Details of the Plazacorp Offer
The Plazacorp offer will be subject to applicable regulatory approvals and the satisfaction of certain closing conditions customary in transactions of this nature including a minimum tender condition of 66 2/3% of the outstanding units. The Support Agreement also provides for, among other things, board support and non-solicitation covenants (subject to the fiduciary obligations of the KEYreit Board and a Plazacorp "right to match") as well as the payment to Plazacorp of a break fee equal to $5 million if the proposed transaction is not completed in certain specified circumstances.  A copy of the Support Agreement will be available on KEYreit's website and on SEDAR at
The Plazacorp offer will be carried out by way of a take-over bid.  It is expected that the offer will be mailed to unitholders early-to-mid April 2013 concurrently with the mailing of the Trustees Circular recommending acceptance of the Plazacorp offer. The terms and conditions of the proposed transaction will be included in Plazacorp's take-over bid circular.  It is anticipated that units tendered to the Plazacorp offer will be taken-up in May 2013.  In accordance with the order of the Ontario Securities Commission made on March 14, 2013, the unitholder rights plan adopted by the Board of Trustees on March 8, 2013 will be cease traded on March 27, 2013.
John Bitove, the Chief Executive Officer of KEYreit, and its largest shareholder has entered into an agreement with Plazacorp pursuant to which he has agreed to tender to the Plazacorp offer KEYreit units beneficially owned or over which he has control or direction, representing 16.5% of the outstanding units. Mr. Bitove, as owner of JBM Properties Inc. ("JBM") (the external asset and property manager of KEYreit), has also agreed to terminate the asset and property management agreements between KEYreit and JBM upon closing of the transaction.
BMO Capital Markets is acting as financial advisor to the Special Committee and the Board of Trustees of KEYreit.  Legal counsel to the KEYreit Special Committee is Norton Rose Canada LLP and Stikeman Elliott LLP is legal counsel to KEYreit.

on March 25, 2013