Temple Real Estate Investment Trust : Temple REIT Announces Plan To Convert To A Corporation (2024)

WINNIPEG, MANITOBA, August 28, 2012 - Temple Real Estate Investment Trust (TSX: TR.UN) ("Temple" or the "REIT") today announced that the REIT and its affiliated entities, TR Trust, Temple Limited Partnership and Temple General Partner Inc., as well as a newly incorporated corporation named "Temple Hotels Inc." have entered into an agreement (the "Arrangement Agreement") relating to a proposed conversion of the REIT from a trust to a corporation (the "Conversion") pursuant to a statutory plan of arrangement (the "Plan of Arrangement") under the Canada Business Corporations Act (the ("CBCA"). The Conversion will be presented to holders ("Unitholders") of trust units ("Units") of the REIT for approval at a special meeting (the "Meeting") of the Unitholders at a date and time to be determined. If approved, the Conversion will result in the reorganization of the REIT into a new corporation called Temple Hotels Inc. ("New Temple").
The nature of the REIT's assets and operations means that Temple does not currently qualify for the "REIT Exception" from the tax on "specified investment flow through entities" ("SIFTs") that was adopted in 2007 (the "SIFT Rules") by the Canadian federal government and currently applies to the REIT at a rate comparable to the combined federal and provincial corporate tax rate. As a result, continuing as a trust does not provide any meaningful long term benefits to the REIT or its securityholders.
The board of trustees of the REIT believes that the Conversion is in the best interests of the REIT and has unanimously determined that the Conversion is fair to Unitholders and in the best interests of the REIT and unanimously recommends that Unitholders vote in favour of the Conversion at the Meeting.
Pursuant to the Conversion:
(i) Unitholders will receive, in exchange for each Unit they hold on the effective date of the
Conversion, one common share of New Temple;
(ii) Holders of options to acquire Units will receive options to acquire common shares of New Temple which provide for the same vesting provisions, exercise prices and expiry dates;

(iii) Holders of deferred units of the REIT will receive deferred shares of New Temple which provide for the same terms as the deferred units, including vesting and redemption terms.
As a condition of the completion of the Conversion, the obligations of the REIT under its convertible debentures outstanding immediately prior to the Conversion will be assumed by New Temple. Holders of convertible debentures will be entitled to convert such convertible debentures into common shares of New Temple on the same terms and conditions as they can currently convert such convertible debentures into Units.
The current board of directors of New Temple is comprised of the current trustees of the REIT, and New Temple will continue to be managed by Shelter Canadian Properties Limited pursuant to the existing asset management agreement which will be assigned by the REIT to New Temple. Senior management of New Temple will be comprised of the current senior management of the REIT, including Mr. Arni Thorsteinson as Chief Executive Officer and Mr. Larry Beeston as Chief Financial Officer. The hotel properties of New Temple will continue to be managed by Atlific Hotels and Resorts.
It is anticipated that New Temple will adopt a monthly dividend policy similar to the REIT's monthly distribution policy. While the Conversion is not anticipated to result in any change in the frequency or amount of distributions paid to Unitholders, New Temple's dividend policy following the Conversion will be subject to the discretion of the board of directors of New Temple and may vary depending on, among other things, New Temple's earnings, financial requirements, growth opportunities and the satisfaction of solvency tests imposed by the CBCA for the declaration of dividends.
Completion of the Conversion is subject to a number of conditions, including the approval of Unitholders, the Toronto Stock Exchange and the Manitoba Court of Queen's Bench, as well as receipt of all required consents, orders, approvals, authorizations and releases, if any, from third parties.
Full details of the proposed Conversion will be contained in a management information circular anticipated to be mailed to Unitholders in October, 2012 in connection with the Meeting.
Among other items of business, Unitholders will be asked to consider, and if thought advisable approve, the Conversion at the Meeting.
There can be no assurance at this time that all approvals, consents and conditions required to effect the Conversion will be obtained or satisfied, as applicable, within that timeframe or at all. Accordingly, there can be no assurance that the Conversion will be completed on the terms described in this news release or at all.
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The securities offered have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except, and in compliance with

applicable U.S. state securities laws, in certain transactions exempt from the registration requirements of the U.S. Securities Act.