FC Private Equity Realty Management Corp. Sends Letter to Melcor REIT

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Furthermore, the REIT should also provide an overall plan in regard to the repayment of the Convertible Debentures.

Please see Appendix A for a copy of this letter and questions asked for Melcor to disclose to the public in a press release prior to the Q4/2023 results.

Firm Capital has been engaged with both the Board of Trustees and Management of the REIT since October 2019. Firm Capital has tabled numerous concerns to the board that have largely gone unanswered. This includes a dilutive private placement offered solely and unfairly to the Melcor Parent; inquiries at to the rationale for now two distribution cuts; and issues surrounding the 2024 debt maturities.

ONLY SOLUTION – MELCOR DEVELOPMENTS LTD. TAKE THE REIT PRIVATE
Melcor Developments Ltd. took the REIT public. It is obvious to Unitholders that the process has not worked out. As such, as the 55% owner and external manager, they should now take the REIT private.

The Board of Trustees are obligated to find a way to maximize value for all unitholders. Failure to do so is an oppressive action toward minority unitholders. While there are possibly many scenarios that the board can seek to maximize unitholder value, we believe the current best solution would be for Melcor Parent to repurchase the 45% minority interest in the REIT and regain full ownership.

• Trust Units Issued & O/S (including Class B LP Units): 29.1 million
• Trust Units not already owned by the Melcor Parent: 13.0 million

A take-out price at 95% of IFRS NAV is $7.69 per Trust Unit, or approximately $100 million for minority holders. This would be a successful outcome for both the Melcor Parent and long-suffering minority unitholders. Anything less than this would be an oppressive action to minority unitholders.

To our knowledge and based on disclosed ownerships, Firm Capital, through affiliated entities, is the largest minority unitholder of the REIT and would vote in favor of this proposed takeout transaction.

MINORITY UNITHOLDER SUPPORT
We are reaching out to all Melcor REIT Unitholders to support our position regarding Melcor Developments Ltd. taking the REIT private and ask all Unitholders contact Melcor to voice their concerns. Supporting Unitholders should feel welcome to reach out to show support for this position.

For further information, please contact:

Eli Dadouch		Sandy Poklar
President & Chief Executive Officer		Chief Operating Officer
[phone]		[phone]

ABOUT FC PRIVATE EQUITY REALTY MANAGEMENT CORP.