H&R Enters Definitive Agreement to Acquire Primaris for

H&R Enters Definitive Agreement to Acquire Primaris for Premium Value
to Hostile Bid 
TORONTO, ONTARIO -- (Marketwire) -- 01/16/13 --  

--  H&R to become Canada's largest REIT by enterprise value 
--  Combines two unique REITs consisting of high quality, low risk
    properties, to form a fully diversified commercial portfolio emulating
    the real estate investment model adopted by large Canadian pension plans
--  Provides Primaris unitholders a tax-deferred rollover for substantially
    all of the unit portion of the consideration 
--  Offers Primaris unitholders the ability to continue to participate in
    the future growth and value creation of the combined REIT 
--  Retains the valuable platform created by Primaris over the last 10 years
    to acquire, develop, and manage premium enclosed shopping centres in
--  Has unanimous approval by the Boards of Trustees of both H&R and

Investor conference call scheduled for January 17 at 8:00 am Eastern
- see below for details. A detailed presentation regarding the
transaction will be available at www.primarisreit.com and
H&R Real Estate Investment Trust and H&R Finance Trust (collectively
"H&R") (TSX:HR.UN) and Primaris Retail Real Estate Investment Trust
("Primaris") (TSX:PMZ.UN) are pleased to announce that they, together
with PRR Investments Inc., have entered into an arrangement agreement
whereby H&R will acquire 100 per cent of the issued and outstanding
units of Primaris. 
Unitholders of Primaris will be entitled to elect to receive 1.13
stapled units of H&R or $28.00 cash per unit, subject to a maximum
cash amount of $700 million.  
The Boards of Trustees of Primaris and H&R have unanimously agreed to
both vote their units in favour of the transaction and to recommend
that unitholders vote in favour of the transaction.  
Benefits to H&R: 

--  A unique opportunity to acquire a professional retail platform, with an
    irreplaceable Canadian enclosed shopping centre portfolio 
--  This transaction will create the largest REIT in Canada by enterprise
--  Increased market capitalization will result in substantially enhanced
    liquidity for unitholders 
--  Broader portfolio diversification geogr
aphically, by asset class, and by
    tenant base 
--  A deleveraging of the balance sheet to 51.9 per cent Debt/FV (assuming
    full take-up of the cash consideration) 
--  Combines two businesses having similar philosophies with respect to
    asset and tenant qualities and their disciplined approach to real estate
--  With expected savings from synergies of up to $10 million over the next
    two years, the transaction will be accretive to FFO 

Benefits to Primaris: 

--  The transaction offers superior value to the hostile bid currently in
    the market 
--  Provides Primaris unitholders the option to retain ownership in the
    enclosed shopping centre asset class or to elect to receive immediate
    cash payment, subject to proration 
--  Offers Primaris unitholders the opportunity for a tax-deferred rollover
    for substantially all of the unit portion of the consideration 
--  Improves Primaris distributions by 20 per cent from the current
    annualized rate of $1.27 to $1.53 pro forma ($1.35 H&R distributions x
    1.13 exchange ratio) for those Primaris unitholders who elect to receive
    unit consideration 
--  Preserves the substantial value of the asset and employee platform
    developed over the last 10 years 
--  H&R is a credible and reputable real estate investor with the financial
    capability and operational expertise to complete the transaction and
    successfully integrate the businesses

"This is a unique opportunity to acquire an irreplaceable and much
sought-after enclosed shopping centre portfolio. It permits us to
expand into a new and exciting asset class in Canada with an existing
infrastructure having an experienced and dedicated professional
team," said Tom Hofstedter, CEO of H&R. "This acquisition will
solidify H&R's position as Canada's leading diversified real estate
investment trust and is complementary to our existing low risk, high
quality and conservative philosophy."  
"We are excited to be able to participate in the U.S. retail
expansion into Canada, with Target set to open in 10 Primaris
shopping centres within the next few months. This will undoubtedly
lead to increased traffic and sales within the Primaris portfolio and
ultimately result in an increase in value to our combined
unitholders," Mr. Hofstedter added.  
"This transaction is compelling from a number of perspectives," said
John Morrison, CEO of Primaris. "It enhances H&R's objective of
providing unitholders with stable and growing cash distributions from
a diversified portfolio. It also provides H&R with the unique
opportunity to own a significant portfolio of high quality regional
shopping centres and management platform."  
"We have succeeded in our mandate to attract a financially superior
alternative to the hostile offer currently in the market," said Bill
Biggar, Chair of the Independent Committee at Primaris. "This
transaction delivers greater value to our unitholders while allowing
them to remain invested in the enclosed shopping centre asset class,
and provides our employees with the opportunity to be a part of the
largest consolidated REIT in Canada, with excellent growth
Transaction Details 
Under the terms of the Agreement, H&R will acquire all of the issued
and outstanding units of Primaris for a combination of cash and H&R
stapled units. For each Primaris unit held, Primaris unitholders may
elect to receive either $28.00 in cash, subject to a maximum amount
of $700 million, or 1.13 stapled units of H&R, substantially all of
which would be received on a tax-deferred basis. If the maximum cash
is elected, it will represent approximately 25 per cent of the total
consideration. In the event that Primaris unitholders elect more cash
than is available, the cash consideration will be prorated among
those unitholders electing cash, with the balance of the
consideration being settled in H&R stapled units on the basis of the
1.13 exchange ratio. Based on H&R's 20-day VWAP ended January 15,
2013 of $23.99, the value of each Primaris unit under the transaction
at full proration will be $27.33, consisting of $6.89 in cash, and
0.8518 H&R units (valued at $20.44). The transaction has been
structured so holders of Primaris units will receive their H&R
stapled units on a substantially tax-deferred rollover (the receipt
of H&R Finance Trust units, expected to be less than 4% of the total
unit consideration, will be taxable). 
The cash price of $28.00 for each Primaris unit represents a 22.0 per
cent premium over the $22.95 volume weighted average price of
Primaris units for the 20 trading days up to and including December
4, 2012, the day before KingSett Capital announced its hostile bid
for Primaris. The full proration price of $27.33 represents a 19.1
per cent premium over the same reference price. If the maximum cash
is elected, Primaris unitholders will own approximately 30 per cent
of the combined REIT.  
The proposed transaction will be structured as a plan of arrangement.
The transaction is subject to the approval of 66 2/3 per cent of
Primaris units voted at a special meeting of Primaris unitholders and
a 50.1 per cent majority of H&R units voted at a special meeting of
H&R unitholders.  
It is expected that each 
of H&R and Primaris will prepare and mail
meeting circulars to their respective investors within the next few
weeks and that the special unitholder meetings will be held in March.
The transaction is also subject to regulatory approvals (including
under the Competition Act (Canada)), court approvals, required
consents and other customary closing conditions. Assuming the
requisite approvals and consents are received and other conditions
are met or waived, the plan of arrangement is expected to be
completed by late March.  
Under the arrangement agreement, H&R is entitled to an effective
$106.6 million break fee in certain circumstances, including the
acceptance by Primaris of an unsolicited superior proposal from a
third party. The break fee is structured as a cash payment of $70
million and an option to acquire Dufferin Mall and certain Yonge
Street properties owned by Primaris, priced at an aggregate $36.6
million discount to the appraised values of the properties. H&R has
also been granted other typical deal protection provisions including
a right to match any superior proposal that is received by Primaris
on an unsolicited basis.  
Prior to closing, holders of Primaris convertible debentures will be
entitled to convert their debentures in accordance with their terms
and participate in the arrangement on the same basis as other
unitholders. In accordance with the terms of these debentures,
holders may also require that their convertible debentures be
purchased at a price equal to 101% of the principal amount plus
accrued and unpaid interest following closing. Following closing,
holders of the convertible debentures will be entitled to receive
stapled units of H&R upon conversion based on the exchange ratio
contemplated by the transaction.  
The Board of Trustees of Primaris appointed an Independent Committee
in response to the hostile bid from the group led by KingSett
Capital. The Independent Committee, together with management of
Primaris and its financial and legal advisors, has undertaken a
rigorous process designed to achieve a result that is financially
superior to the hostile offer and delivers greater value for Primaris
unitholders. Through the process, parties from across the globe were
contacted, consisting of both potential strategic investors within
the real estate industry and financial investors. Primaris signed
confidentiality and standstill agreements with a number of those
parties who were granted access to the confidential data room of
Primaris in order to facilitate offers reflecting the fair value of
Primaris and several of those parties submitted proposals. The terms
of the arrangement agreement with H&R require Primaris to terminate
those discussions and close its data room.  
Canaccord Genuity, a financial advisor to the Independent Committee,
has provided the Board of Trustees of Primaris with an opinion to the
effect that, as of the date of the opinion and based upon and subject
to the limitations and qualifications therein, the consideration to
be received is fair, from a financial point of view, to Primaris
unitholders other than KingSett Capital. The Independent Committee
carefully considered a number of factors, including the terms of the
transaction, the assets and business of H&R, the outcome of the
process described above, including the Independent Committee's belief
that it is very unlikely that a superior offer will emerge for all
the outstanding units of Primaris, and the opinion of Canaccord
Genuity in recommending the transaction to the Board of Trustees of
Primaris. Based in part on the recommendation of the Independent
Committee and the other factors noted herein, the Board of Trustees
of Primaris determined that the consideration to be received by
Primaris unitholders is fair, from a financial point of view, and it
would be in the best interests of Primaris to enter into the
arrangement agreement. The Board of Trustees of Primaris has
unanimously agreed to recommend that unitholders of Primaris vote in
favour of the transaction.  
Each of the Trustees and senior executive management of Primaris have
agreed to support the transaction by voting their units in favour of
the transaction.  
Canaccord Genuity and Evercore Partners were engaged by the
Independent Committee as its financial advisors. McCarthy Tetrault
LLP was engaged as counsel to the Independent Committee and to
Primaris, and Cassels Brock & Blackwell LLP was retained as counsel
to Primaris.  
The Board of Trustees of H&R has unanimously agreed to recommend that
unitholders of H&R vote in favour of the transaction.  
H&R has retained Blake, Cassels & Graydon LLP to act as its legal
counsel in this matter. 
Conference call: 
H&R and Primaris will host an investor conference call on Thursday
January 17, 2013 at 8am EST to discuss the transaction. Senior
management of both H&R and Primaris will speak to the transaction and
be available for questions.  

Toronto:                      (647) 427-7450                                
North America (toll free):    (888) 231-8191                                

Audio replays of the conference call will be available immediately
following its completion and will remain available until March 15.  

Phone: (855) 859-2056         Password: 90616174                            

The audio replay will also be available for download at
www.primarisreit.com and at www.hr-reit.com. 
About H&R  
H&R is an open-ended real estate investment trust, which owns a North
American portfolio of 42 office, 115 industrial and 138 retail
properties comprising over 45 million square feet and 2 development
projects, with a fair value of approximately $10 billion. The
foundation of H&R's success since inception in 1996 has been a
disciplined strategy that leads to consistent and profitable growth.
H&R leases its properties long term to creditworthy tenants and
strives to match those leases with primarily long-term, fixed-rate
H&R Finance Trust is an unincorporated investment trust, which
primarily invests in notes issued by a U.S. corporation which is a
subsidiary of H&R. The current note receivable is U.S. $162.5
million. In 2008, H&R completed an internal reorganization which
resulted in each issued and outstanding H&R unit trading together
with a unit of H&R Finance Trust as a "Stapled Unit" on the Toronto
Stock Exchange.  
About Primaris  
Primaris is a TSX listed real estate investment trust that
specializes in owning and operating Canadian enclosed shopping
centres that are dominant in their local trade areas. Merchandising
for each property is dynamic in order to meet the unique needs of its
local customers and the community. Primaris maintains a high
occupancy rate at its shopping centres and has retail tenants that
offer new and exciting brands. Primaris owns 35 income-producing
properties comprising approximately 14.7 million square feet located
in Canada. As of December 31, 2012, Primaris had 100,346,768 units
issued and outstanding (including exchangeable units for which units
have yet to be issued). 
Primaris unitholders who have already tendered their units to the
hostile KingSett bid can withdraw them. Unitholders should contact
their broker, who will withdraw the units on their behalf. If you
require assistance in withdrawing your Primaris units, please contac
Kingsdale Shareholder Services Inc. at 1-866-581-1571 toll-free in
North America, or 416-867-2272 outside North America (collect calls
accepted), or by email at contactus@kingsdaleshareholder.com.  
This press release contains forward looking statements that reflect
current expectations of each of Primaris and H&R about their future
results, performance, prospects and opportunities, including with
respect to the closing, costs and benefits of the proposed
transaction and all other statements that are not historical facts.
The timing and completion of the proposed transaction is subject to
customary closing conditions, termination rights and other risks and
uncertainties including, without limitation, required regulatory,
court, and unitholder approvals. Accordingly, there can be no
assurance that the proposed transaction will occur, or that it will
occur on the timetable or on the terms and conditions contemplated in
this news release. The proposed transaction could be modified,
restructured or terminated. Readers are cautioned not to place undue
reliance on forward looking information. Each of Primaris and H&R has
tried to identify these forward looking statements by using words
such as "may", "will", "should" "expect", "anticipate", "believe",
"intend", "plan", "estimate", "potentially" and similar expressions.
By its nature, such forward looking information necessarily involves
known and unknown risks and uncertainties that may cause actual
results, performance, prospects and opportunities in future periods
of Primaris or H&R to differ materially from those expressed or
implied by such forward looking statements.
Tom Hofstedter
President & Chief Executive Officer
(416) 635-7520 
Larry Froom
Chief Financial Officer
(416) 635-7520
John Morrison
President & Chief Executive Officer
(416) 642-7860 
Louis Forbes
Executive Vice President & Chief Financial Officer
(416) 642-7810
NATIONAL Public Relations
Peter Block
(416) 848-1431 
NATIONAL Public Relations
Jennifer Lee
(416) 848-1383
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