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Acquisition Highlights

• Acquisition of 100% interests in Le 4300 and Haddon Hall, two high quality properties in Montreal, together comprising 528 large suites, for approximately $281.1 million;
• Premium institutionally maintained properties in desirable urban locations that have received substantial capital investment in the last decade;
• Significant value expected to be generated from planned suite repositioning, with 86% of suites still to be renovated;
• Additional opportunities to generate revenue growth by realizing embedded gains to lease on suite turnover;
• Increases the REIT's exposure to the attractive Montreal market while complementing portfolio quality, in line with stated REIT strategy;
• Purchase price to be satisfied through a $225 million bought deal public offering of trust units, a new $45 million mortgage and the REIT's credit facility; and
• The Offering provides excellent balance sheet flexibility to capitalize on future NAV enhancing opportunities.

OTTAWA, Oct. 10, 2019 /CNW/ - Minto Apartment Real Estate Investment Trust (TSX: MI.UN) (the "REIT") today announced that it has entered into an agreement to acquire Le 4300 and Haddon Hall, two premium institutionally owned and maintained multi-residential properties in Montreal, Quebec (the "Acquisition"). The properties have a combined 528 suites and are located in the highly attractive neighbourhoods of Westmount and Ville-Marie. The properties are also located in close proximity to the REIT's existing Rockhill property, enhancing economies of scale. The purchase price is approximately $281.1 million, representing an implied cap rate of 3.70% on forecasted year-one net operating income. Following closing of the Acquisition, the REIT will have ownership interest in a total of 7,243 suites.

The REIT also announced today that it has entered into an agreement to issue 9,850,000 trust units of the REIT (the "Units") from treasury on a bought deal basis at a price of $22.85 per Unit (the "Offering Price") to a syndicate of underwriters bookrun by TD Securities Inc. and BMO Capital Markets (the "Underwriters") for gross proceeds of approximately $225 million (the "Offering"). In addition, the REIT has granted the Underwriters an option, exercisable in whole or in part at any time up to 30 days following closing of the Offering, to purchase up to an additional 985,000 Units at the Offering Price (the "Over-Allotment Option") which, if exercised in full, would increase the gross proceeds of the Offering to approximately $247.5 million. The REIT intends to use the net proceeds of the Offering to finance directly and/or indirectly a portion of the purchase price for the Acquisition.

"When we launched Minto Apartment REIT last year, one of our objectives was to build a strong presence in the Montreal market. This acquisition, combined with our purchase of the Rockhill property in May, clearly achieves this goal," said Michael Waters, Chief Executive Officer. "Upon closing of this transaction, our Montreal properties will make up more than 20% of the total suites of the REIT. Moreover, we believe that the REIT will own one of the best portfolios of multi-residential properties in Montreal. Both Le 4300 and Haddon Hall are premium properties in desirable locations, and provide substantial opportunities for us to build value. They are outstanding additions to our portfolio."

Property Profiles

Le 4300
Le 4300 is a 12-storey premium building originally built in two phases in 1957 and 1962, located on 3.1 acres at 4300 de Maisonneuve Boulevard West in Montreal's affluent Westmount neighbourhood. Le 4300 has 318 large suites with an average size of approximately 1,260 square feet and average monthly rent of $2,667 per suite. Over 70% of the suites have at least two bedrooms. It features many attractive amenities, including valet service, a fitness facility, and a large landscaped courtyard.

Le 4300 is located close to transit, parks, restaurants, retail amenities, schools and universities, resulting in a 95 Walk Score(1). Current tenants are primarily retirees or high-earning professionals. Residents in the area have average household income of approximately $151,800(2), and 66%(2) of households in the area rent.

Haddon Hall
Constructed in 1928, Haddon Hall consists of 10 six- and seven-storey buildings on 3.2 acres located at 2150-2174 Sherbrooke Street West, 2211-2255 Lambert Closse Street, 2151-2177 Lincoln Avenue, and 2260 Chomedey Street. It is an attractive area nestled between the Westmount and Golden Square Mile neighbourhoods. The buildings have an aggregate of 210 large suites, with an average suite size of approximately 1,200 square feet and average monthly rent of $1,882 per suite. Nearly 70% of the suites have either two or three bedrooms. Current amenities include storage lockers, laundry rooms and a fitness facility.

The property is located close to transit, parks, restaurants, retail amenities, schools and universities, resulting in a high Walk Score of 98(1). Current tenants have diverse ages, occupations and incomes. Residents in the area have average household income of $106,500(2), and 77%(2) of households in the area rent.

(1) Source: walkscore.com
(2) Source: Environics Analytics

Suite Repositioning and Other Value-Generating Opportunities

The REIT plans to reposition suites at both Le 4300 and Haddon Hall following tenant turnover. Only 76 suites at the two properties have been renovated to date, leaving 452 with potential for repositioning. The REIT believes that the in-place rents are significantly below renovated market rents for both properties, providing attractive upside. The repositioning program is expected to generate an annual return on investment in line with the REIT's 8% to 15% target.

To drive further rent growth, the REIT intends to upgrade the common areas at both properties, create additional suites and amenity areas from underutilized space at Le 4300, and upgrade the fitness facility at Haddon Hall.

Acquisition Funding

The aggregate purchase price of approximately $281.1 million for the Acquisition will be satisfied by a new $45 million mortgage on Haddon Hall, with the balance to be funded from net proceeds of the Unit Offering described below and the REIT's credit facility. Following completion of the Acquisition and the Unit Offering, the REIT's Debt to Gross Book Value ("GBV") ratio will be approximately 42%, but is expected to increase over time to align with management's previously stated leverage target of 45% to 55%.

Unit Offering

The REIT has reached an agreement with the Underwriters to issue 9,850,000 Units at a price of $22.85 per Unit, on a bought deal basis, for gross proceeds of $225 million. The REIT has also granted the Underwriters an Over-Allotment Option to purchase up to an additional 985,000 Units on the same terms and conditions. The REIT intends to use the net proceeds of the Offering, including the Over-Allotment Option, if any, to finance directly and/or indirectly a portion of the purchase price for the Acquisition.

The Units will be offered in each of the provinces and territories of Canada pursuant to a prospectus supplement to the REIT's base shelf short form prospectus dated December 21, 2018. The terms of the Offering will be described in a prospectus supplement to be filed with Canadian securities regulators. The Offering is expected to close on or about October 22, 2019 and is subject to certain conditions including, but not limited to, the approval of the Toronto Stock Exchange.

The Units 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.

Closing

The REIT expects the Acquisition to close on or about November 20, 2019.

About Minto Apartment Real Estate Investment Trust
Minto Apartment Real Estate Investment Trust is an unincorporated, open-ended real estate investment trust established pursuant to a declaration of trust under the laws of the Province of Ontario to own income-producing multi-residential properties located in urban markets in Canada. The REIT owns a portfolio of high-quality income-producing multi-residential rental properties located in Toronto, Montreal, Ottawa, Calgary and Edmonton. For more information on Minto Apartment REIT, please visit the REIT's website at: https://www.mintoapartments.com/.

Forward-Looking Information
This news release may contain forward-looking information within the meaning of applicable securities legislation, which reflects the REIT's current expectations regarding future events and in some cases can be identified by such terms as "will" and "expected". In particular, this news release contains forward-looking information in relation to: the proposed Acquisition; the properties that are the subject of the proposed Acquisition; the timing for completion of the proposed Acquisition and the Offering; the satisfaction of the conditions for completion of the proposed Acquisition and the Offering; and the potential economic impact of the proposed Acquisition. Forward-looking information reflects management's current beliefs and is based on a number of assumptions that the REIT believes are reasonable and is subject to a number of risks and uncertainties, many of which are beyond the REIT's control that could cause actual results and events to differ materially from those that are disclosed in or implied by such forward-looking information. Such risks and uncertainties include, but are not limited to, the factors discussed under "Risks and Uncertainties" in the REIT's Management Discussion & Analysis dated August 12 2019, which is available on SEDAR+ (www.sedarplus.ca), as well as the ability of the REIT to complete the proposed Acquisition, including arranging the mortgage financing contemplated herein, and the Offering on terms as contemplated. Certain information in this press release may be considered as "financial outlook" within the meaning of applicable securities legislation. The purpose of this financial outlook is to provide readers with disclosure regarding the REIT's reasonable expectations with respect to the proposed Acquisition. Readers are cautioned that the financial outlook may not be appropriate for other purposes. The REIT does not undertake any obligation to update such forward-looking information, whether as a result of new information, future events or otherwise, except as expressly required by applicable law. This forward-looking information speaks only as of the date of this news release.

Non-IFRS Financial Measures
This news release contains certain financial measures which are not defined under International Financial Reporting Standards ("IFRS") and may not be comparable to similar measures presented by other real estate investment trusts or enterprises. Debt to GBV is a measure of financial position used by the REIT's management and real estate businesses. This measure is not defined by IFRS and does not have a standardized meaning prescribed by IFRS. See the REIT's Management Discussion & Analysis dated August 12, 2019 for further discussion of this and other non-IFRS financial measures.

SOURCE Minto Apartment Real Estate Investment Trust