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After publicly opposing Melcor Developments’ (MRD-T) bid to take Melcor REIT (MR-UN-T) private for the past several months, FC Private Equity Realty Mgmt. Corp. (Firm Capital) and Telsec Property Corp. have done an about-turn and signed agreements to support the move.
In an announcement late Wednesday, Melcor said the two formerly dissenting minority shareholders “have entered into voting support agreements”, largely clearing the way for the transaction to go ahead, pending other required approvals.
The Telsec group includes agreements with the corporation as well as deals with president Kris Van Grieken, Richard Van Grieken and Bonnie Van Grieken.
The Melcor entities had already scheduled a shareholder meeting for April 11 for a shareholder vote on the take-private move, which requires approval from the minority shareholders.
The announcement does not provide any comment on the change in stance from executives of any of the involved parties.
Melcor's bids to take REIT private
Melcor REIT and Melcor Developments, which is the trust’s majority shareholder and parent entity, first announced the take-private bid in September of 2024 with a per-share offer of $4.95 in cash.
Firm Capital, which had called for Melcor to take the REIT private earlier in 2024 due to what it considered long-term underperformance of the share prices, then issued a public statement criticizing the offer. It had suggested a takeout price of $7.69 per unit, about 95 per cent of the REIT’s IFRS asset value at that time.
Melcor subsequently increased the offer to $5.50 a few weeks later.
Melcor and entities controlled by Melcor and its principals hold approximately 55 per cent of the REIT’s units. Its unowned interest comprises approximately 13 million Class A LP units, the company states in the announcement. This values the takeout at approximately $71.5 million which will be returned to the minority shareholders.
Melcor REIT shares had been trading around the $3 mark prior to the first announcement of the take-private bid by Melcor Developments. In recent weeks they have been trading at or around the $5.30 to $5.40 mark.
Melcor REIT units were valued at $10 during its IPO in 2013.
If approved, Melcor Developments intends to close the transaction by the end of Q2.
Melcor REIT assets
The trust owned 37 properties comprising 3.1 million square feet of leasable space at the end of Q3, its most recent financial report states. Its asset value was $673 million at the end of the quarter, down about $27 million from year-end 2023.
In the wake of the sale of a retail property, Melcor Crossing in Grande Prairie, Alta., which was announced last week, it now owns interests in 34 properties comprising approximately 2.8 million square feet of space.
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