Slate Retail REIT Reports Strong Fourth Quarter and 2015 Year Results and Announces Unitholder Rights Offering

TORONTO, ON--(Marketwired - March 02, 2016) - Slate Retail REIT (TSX: SRT.U) (TSX: SRT.UN) (the "REIT"), a significant owner and operator of grocery-anchored real estate in the United States, announced its financial results for the three months and year ended December 31, 2015. Senior management will host a conference call at 8:30 a.m. EST on Thursday, March 3, 2016 to discuss the results and ongoing business initiatives of the REIT.

The REIT achieved strong results in the year as it executed on its strategy of building a stable, high quality portfolio of U.S. grocery-anchored retail properties. Remarking on the achievements of the past year, Greg Stevenson, the REIT's Chief Executive Officer, wrote in a letter to unitholders:

"Our real estate managers did an exceptional job this year leasing over 700,000 square feet while increasing income, reducing expenses, overseeing capital spend, strengthening tenant relationships, and continuing to make our real estate properties a place where tenants want to operate and grow their businesses."

Read the full letter to unitholders here.

The REIT also announced today it has filed a rights offering notice and circular in respect of a rights offering (the "Rights Offering") to security holders to subscribe for class U units of the REIT ("Units").

If all of the rights are exercised, the net proceeds of the Rights Offering will be approximately C$50 million. The completion of the Rights Offering is not conditional upon the REIT receiving any minimum amount of subscriptions for Units. The REIT intends to use a majority of the available funds from the Rights Offering to make new investments as and when attractive opportunities become available.

"We continue to uncover many attractive opportunities to grow the REIT on an accretive basis both organically and through acquisition," said Mr. Stevenson. "Not only will the rights offering enhance our balance sheet but it will provide long-time REIT supporters with a compelling opportunity to participate in future growth."

Details of the Rights Offering are provided below.

Q4 2015 Highlights

• Increased monthly distribution to unitholders by 3% to $0.06489 per class U unit, or $0.77868 per class U unit on an annualized basis effective for the December 2015 distributions;
• Achieved a 94.7% occupancy rate;
• Increased rental rates 30.7% above in-place rents for new leases less than 10,000 square feet;
• Completed 40 lease transactions for 150,365 square feet;
• Completed 115,197 square feet of renewals 7.0% above expiring rent; and
• Subsequent to quarter-end, the REIT refinanced its revolving credit facility and term loan, increasing the available capacity by $135.0 million to $585.0 million and also extended the term to 2020 with an option to extend for an additional year. A reduction in the borrowing rate of 25 bps was also achieved.

2015 Highlights

• Increased Funds from Operations ("FFO") on an accretive basis to $1.32 per unit, representing a 26.9% increase over the previous year (excluding a one-time write-off of financing costs);
• Increased Adjusted Funds from Operations ("AFFO") on an accretive basis to $1.12, representing a 21.7% increase over the previous year;
• Acquired 25 grocery-anchored retail properties for 2.7 million square feet including the 13-asset portfolio of Slate U.S. Opportunity (No. 3) Realty Trust at an average cost per square foot of $125; and
• Completed 701,306 square feet of leasing transactions.

Summary of Results

⁽¹⁾ Adjusting prior year FFO for the write-off of deferred financing costs on a corporate credit facility that was repaid in 2014, FFO would be $0.34 per unit for the three months ended December 31, 2014.

Conference Call and Webcast

Senior management will host a live conference call at 8:30 a.m. EST on Thursday, March 3, 2016 to discuss the results and ongoing business initiatives of the REIT.

The conference call can be accessed by dialing (647) 788-4919 or toll-free (877) 291-4570. Additionally, the conference call will be available via simultaneous audio webcast on the REIT's website at www.slateam.com/SRT. A replay will be available on the website or by dialing (416) 621-4642 or toll-free (800) 585-8367, conference ID 33233437, approximately two hours after the event and will be available until March 17, 2016.

Distributions and Strong Payout Ratio

In December 2015 the REIT increased its monthly distribution to unitholders by 3% to $0.06489 per class U unit, or $0.77868 per class U unit on an annualized basis. This change reflects the continued increase in income generated from the REIT's property portfolio and increased AFFO. The REIT's AFFO payout ratio for 2015 was an industry leading 70.4%. On a pro forma basis, using annualized fourth quarter AFFO and the increased distribution rate, the AFFO payout ratio would be 72.1%.

Details of the Rights Offering

Under the terms of the Rights Offering, rights are being offered to eligible holders of the REIT's outstanding Units, class A units and class I units and eligible holders of units of subsidiaries of the REIT that are redeemable for Units (the "Exchangeable Securities").

Eligible security holders of record as at 5:00 p.m. (Toronto time) on March 10, 2016 (the "Record Date") will be entitled to participate in the Rights Offering. Eligible holders of class U units will receive one right for each class U unit held. Eligible holders of class A units will receive 1.0078 rights for each class A unit held (rounded down to the nearest whole number of rights) and eligible holders of class I units will receive 1.0554 rights for each class I unit held (rounded down to the nearest whole number of rights), which ratios correspond to the proportionate distribution entitlement and conversion ratio of such units. Eligible holders of Exchangeable Securities, which are economically equivalent to the Units in all material respects, will receive one Right for each Exchangeable Security held. No fractional Rights will be issued.

Every nine rights held will entitle an eligible holder of Rights to subscribe for one Unit at the subscription price of C$13.71 or US$10.21, which represents a discount to the Canadian dollar closing price of the Units on the TSX on March 1, 2016.

Holders of rights that exercise in full their basic subscription privilege will also be entitled to subscribe for additional Units that are not otherwise purchased by other holders of the rights. The maximum number of additional Units for which an eligible holder will be able to subscribe will be limited to such holder's pro rata share (based on the basic subscription privilege exercised by that holder relative to other holders) of the total amount of additional Units available.

The rights will be transferable. The rights will be listed on the TSX under the symbol "SRT.RT" and will be posted for trading on the TSX until 12:00 noon (Toronto time) on April 19, 2016, at which time they will be halted from trading.

The rights will expire at 5:00 p.m. (Toronto time) on April 19, 2016. Rights not exercised before the expiry time will no longer have any value. If a holder does not exercise the rights and the Rights Offering is completed, such holder's percentage interest in the REIT will be diluted upon the exercise of rights by other holders. Holders of rights who wish to exercise their rights must do so in the manner set forth in the rights offering circular.

The rights offering notice and rights offering circular containing details of the Rights Offering will be filed on SEDAR at www.sedar.com and on the REIT's website at www.slateam.com/SRT.

Use of Proceeds

The REIT intends to use a majority of the available funds from the Rights Offering to acquire new properties. Consistent with the REIT's strategy, the REIT is continuously engaged in discussions with respect to possible acquisitions of new properties. There can be no assurance that any of these discussions will result in a definitive agreement, and, if they do, what the terms or timing of any acquisition or disposition would be. Funds are also expected to be allocated by the REIT to capital improvement and redevelopment opportunities within the REIT's portfolio of properties.

The REIT intends to spend the available funds as stated above. However, there may be circumstances where a reallocation of the available funds may be necessary. The REIT will reallocate funds only for sound business reasons. In any event the available funds will be used by the REIT in furtherance of its business and consistent with its stated business plan.

Participation of Trustees and Slate Asset Management L.P.

The Trustees who currently beneficially own, directly or indirectly, or control or direct Units, class A units, class I units and/or Exchangeable Securities, and Slate Asset Management L.P. ("Slate"), the manager of the REIT, have indicated that they intend to exercise at least their basic subscription privilege to acquire additional Units.

No Offering in the United States

The Rights have not been, nor will they be, registered under the United States Securities Act of 1933, as amended, (the "1933 Act") and may not be offered, sold or delivered, directly or indirectly, in the United States, or to, or for the account or benefit of, "U.S. persons" (as defined in Regulation S under the 1933 Act), except pursuant to an exemption from the registration requirements of the 1933 Act. This press release does not constitute an offer to sell or a solicitation of an offer to buy any Units in the United States or to, or for the account or benefit of, U.S. persons.

Holders of Class B Exchangeable Securities

A holder of class B limited partnership units of Slate Retail One L.P. or class B limited partnership units of Slate Retail Two L.P. must be an "accredited investor" (as such term is defined in National Instrument 45-106 - Prospectus Exemptions ("NI 45-106")) in order to qualify as an eligible holder and to receive any rights in respect of such units, and will be subject to certain restrictions on transfer and resale under applicable securities legislation with respect to such rights. See the rights offering notice and circular for further details.

About Slate Retail REIT (TSX: SRT.U) (TSX: SRT.UN)

Slate Retail REIT is an open-ended real estate investment trust focused on U.S. grocery-anchored real estate. The REIT's portfolio includes 66 properties located primarily across the top 50 U.S. metro markets. The REIT is focused on maximizing value through internal organic rental growth and strategic acquisitions. Slate is the manager of the REIT. Visit slateam.com/SRT to learn more about the REIT.

About Slate Asset Management L.P.

Slate is a leading real estate investment platform with over $3 billion in assets under management. Slate is a value-oriented company and a significant sponsor of all its private and publicly-traded investment vehicles, which are tailored to the unique goals and objectives of its investors. The firm's careful and selective investment approach creates long term value with an emphasis on capital preservation and outsized returns. Slate is supported by exceptional people, flexible capital and a proven ability to originate and execute on a wide range of compelling investment opportunities. Visit slateam.com to learn more about Slate.

Supplemental Information

All interested parties can access the REIT's supplemental information online at slateam.com/SRT in the Investors section. Materials are also available on SEDAR at sedar.com or upon request to the REIT at ir@slateam.com or (416) 644-4264.

Forward-Looking Statements

Certain statements herein may be forward-looking statements within the meaning of applicable securities laws. These statements reflect management's expectations regarding objectives, plans, goals, strategies, future growth, results of operations, performance and business prospects and opportunities of the REIT including expectations for the current financial year, and include, but are not limited to, statements with respect to management's beliefs, plans, estimates and intentions, and similar statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. Statements that contain words such as "could", "should", "would", "anticipate", "expect", "believe", "plan", "intend", "will", "may", "might" and similar expressions or statements relating to matters that are not historical facts constitute forward-looking statements.

These forward-looking statements are not guarantees of future events or performance and, by their nature, are based on the REIT's current estimates and assumptions, which are subject to significant risks and uncertainties. Forward-looking statements contained herein are made as the date hereof and accordingly are subject to change after such date. The REIT does not undertake to update any forward-looking statements that are contained herein except as expressly required by applicable securities laws.

Non-IFRS Financial Measures

We disclose a number of financial measures in this news release that are not measures used under IFRS, including NOI, same property net operating income, FFO, AFFO, AFFO payout ratio, adjusted EBITDA and the interest coverage ratio, in addition to certain measures on a per unit basis. We utilize these measures for a variety of reasons, including measuring performance, managing the business, capital allocation and the assessment of risk. Descriptions of why these non-IFRS measures are useful to investors and how management uses each measure are included in the MD&A. We believe that providing these performance measures on a supplemental basis to our IFRS results is helpful to investors in assessing the overall performance of our businesses in a manner similar to management. These financial measures should not be considered as a substitute for similar financial measures calculated in accordance with IFRS. We caution readers that these non-IFRS financial measures may differ from the calculations disclosed by other businesses, and as a result, may not be comparable to similar measures presented by others. Reconciliations of these non-IFRS measures to the most directly comparable financial measures calculated and presented in accordance with IFRS are included within this news release.