Milestone Unitholders to receive US$16.15 per Unit in cash reflecting an attractive premium of approximately 16% to the 30-day volume weighted average price per REIT Unit and an average price per apartment unit of approximately US$120,000

TORONTO and DALLAS, Jan. 19, 2017 /CNW/ - Milestone Apartments Real Estate Investment Trust (TSX: MST.UN) ("Milestone" or the "REIT") announced today that it has entered into an acquisition agreement (the "Acquisition Agreement") with an affiliate of Starwood Capital Group ("Starwood") pursuant to which Starwood will acquire all of Milestone's subsidiaries and assets and Milestone unitholders ("Unitholders") will receive US$16.15 per trust unit ("Unit") in cash (the "Transaction"). Subject to the satisfaction of all conditions precedent, the Transaction is expected to be completed early in the second quarter of 2017.

"I am extremely proud of what this organization has achieved since the REIT's 2013 initial public offering including more than doubling the REIT's enterprise value, more than tripling our equity market capitalization and generating total annual compound returns for our investors in excess of 28%," said Robert P. Landin, CEO of Milestone. "This compelling all-cash transaction reflects an attractive value for our Unitholders and will position Milestone and its employees for continued growth with an experienced, reputable and very capable strategic owner. I'd like to thank our employees, trustees and all stakeholders for their hard work, support and trust in Milestone over the last several years," concluded Mr. Landin.

"Today's announcement can be largely attributed to the REIT's high quality portfolio of multifamily properties and associated state of the art operating platform," said Michael Young, Chairman of Milestone's board of trustees. "The transaction delivers significant and certain value to Unitholders while at the same time providing an excellent opportunity for Milestone's employees to continue their success."

Transaction Highlights:

Unitholders to receive US$16.15 per Unit in cash, offering certainty of value and liquidity, and representing an aggregate Transaction value of approximately US$2.85 billion ;

per Unit in cash, offering certainty of value and liquidity, and representing an aggregate Transaction value of approximately ; The Transaction implies an average price per apartment unit of approximately US$120,000 , which compares favourably to the book value of approximately US$109,500 per apartment unit;

, which compares favourably to the book value of approximately per apartment unit; The purchase price represents a premium of approximately 16% to the 30-day volume weighted average price per Unit on the TSX ended January 18, 2017 of US$13.93 , based upon on an average US$ to C$ exchange rate over the period of US$1.00 to C$1.3282 ;

of , based upon on an average US$ to C$ exchange rate over the period of ; The Transaction reflects an attractive value for Milestone's portfolio of properties and a premium to Milestone's IFRS book value per Unit;

Milestone's board of trustees has unanimously approved the Transaction and recommends that Unitholders vote in favour of the Transaction;

Holders of 99% of the non-voting redeemable class B limited partnership units of the REIT's operating partnership ("Class B Units"), including Robert P. Landin , the REIT's Chief Executive Officer and other senior officers of the REIT, have agreed to support the Transaction and tender their Class B Units, which represent, on an as redeemed basis, approximately 12% of the outstanding Units;

, the REIT's Chief Executive Officer and other senior officers of the REIT, have agreed to support the Transaction and tender their Class B Units, which represent, on an as redeemed basis, approximately 12% of the outstanding Units; Milestone's senior officers and trustees representing approximately 14% of the outstanding fully-diluted Units have entered into agreements supporting the Transaction;

BMO Capital Markets and National Bank Financial have provided fairness opinions to the special committee of Milestone's Board of Trustees, that based upon and subject to the assumptions and limitations described in their respective opinions, the consideration to be received by holders of Units pursuant to the Transaction is fair, from a financial point of view, to such holders; and

The acquisition of Milestone's portfolio of multifamily properties and operating platform of more than 1,200 employees is strategic to Starwood's growth initiatives in the multifamily sector and in the Sunbelt region specifically, where Starwood already owns over 67,000 apartment units.

Transaction Details

The Transaction implies an average portfolio capitalization rate of approximately 5.8%, which directly compares to the Q3 2016 reported IFRS weighted average capitalization rate of 6.3%.

The cash consideration of US$16.15 per Unit represents a premium of approximately 16% to the 30-day volume weighted average price per Unit ended January 18, 2017 of US$13.93, based on an average US$ to C$ exchange rate over the period of US$1.00 to C$1.3282. The aggregate transaction value is approximately US$2.85 billion. The cash consideration will be paid to Unitholders in U.S. dollars at closing. The REIT expects to continue paying its monthly distributions in the normal course through to closing.

The Transaction will involve Starwood acquiring all of the assets and liabilities of the REIT. The US$16.15 per Unit purchase price will then be paid to Unitholders by way of a redemption of the REIT's outstanding Units. Holders of Class B Units, each of which is non-voting but redeemable for one Unit, will also receive US$16.15 per Class B Unit at the closing of the Transaction. Upon completion of the Transaction and subsequent to the redemption of all Units, the REIT will be terminated.

The consummation of the Transaction will be subject to the approval of at least 66 2/3% of the votes cast by Unitholders at a special meeting of Unitholders. Under applicable securities laws, the Transaction will also require approval of a simple majority of the votes cast by Unitholders at the special meeting, other than by Robert P. Landin and affiliated entities. The Transaction is subject to other customary conditions. The Transaction is not subject to a financing condition.

The Acquisition Agreement provides for, among other things, customary representations and warranties, board support and non-solicitation covenants from Milestone, inclusive of appropriate "fiduciary out" provisions that allow Milestone to accept a superior proposal in certain circumstances and a four business day "right to match period" in favour of Starwood. The Acquisition Agreement also provides for the payment of a termination fee of US$53 million to Starwood and a reverse termination fee of US$100 million to Milestone if the Transaction is terminated in certain specified circumstances. The REIT's recourse for a breach of the Acquisition Agreement by Starwood (including a failure by Starwood to close) will be limited to collection of the reverse termination fee.

Each of the trustees and senior officers of the REIT (including Robert P. Landin and Jeffrey L. Goldberg and their affiliated entities) has entered into a voting and support agreement pursuant to which, among other things, he or she has agreed to support and vote his or her Units in favour of the Transaction, representing less than 1% of the outstanding Units and approximately 12% of the outstanding Units and Class B Units. Robert P. Landin and Jeffrey L. Goldberg will not have continuing roles with the REIT's business or Starwood after the Transaction is completed.

The Acquisition Agreement will be available on the SEDAR website at www.sedar.com within 10 days following the date of this press release. Copies of the REIT's management information circular and certain related documents will be sent to Unitholders and filed with Canadian securities regulators and will also be available on the SEDAR website at www.sedar.com.

Milestone Board of Trustees Recommendation and Fairness Opinions

The REIT's Board of Trustees, after consultation with its financial and legal advisors, and on the unanimous recommendation of a special committee of Milestone's Board of Trustees composed solely of independent trustees, has unanimously resolved to approve the Transaction and unanimously recommends that Unitholders vote in favour of the Transaction.

BMO Capital Markets and National Bank Financial have provided fairness opinions to the special committee of Milestone's Board of Trustees, that based upon and subject to the assumptions and limitations described in their respective opinions, the consideration to be received by holders of Units pursuant to the Transaction is fair, from a financial point of view, to such holders.

Advisors

Goodmans LLP and Vinson & Elkins LLP are acting as legal counsel to Milestone.

Stikeman Elliott LLP and Kirkland & Ellis LLP are acting as legal counsel to Starwood.

BMO Capital Markets is acting as financial advisor to Milestone and has provided a fairness opinion to the special committee of Milestone's Board of Trustees.

National Bank Financial has provided the special committee of Milestone's Board of Trustees with an independent fairness opinion in respect of the Transaction.

About Milestone

The REIT is an unincorporated, open-ended real estate investment trust that is governed by the laws of Ontario. The REIT's portfolio consists of 78 multifamily garden-style residential properties, comprising 24,061 apartment units that are located in 16 major metropolitan markets throughout the Southeast and Southwest United States. The REIT is the largest real estate investment trust listed on the TSX focused solely on the United States multifamily sector. Milestone's vertically integrated platform employs more than 1,200 employees and manages more than 50,000 apartment units across the United States. For more information, please visit www.milestonereit.com.

About Starwood

Starwood Capital Group is a private alternative investment firm with a core focus on global real estate, energy infrastructure and oil & gas. The Firm and its affiliates maintain nine offices in three countries around the world, and currently have more than 2,000 employees. Starwood Capital Group has raised over $37 billion of equity capital since its inception in 1991, and currently manages approximately $52 billion in assets. The Firm has invested in virtually every category of real estate on a global basis, opportunistically shifting asset classes, geographies and positions in the capital stack as it perceives risk/reward dynamics to be evolving. Over the past 25 years, Starwood Capital Group and its affiliates have successfully executed an investment strategy that involves building enterprises in both the private and public markets. Additional information can be found at www.starwoodcapital.com. Starwood Capital Group is one of the largest owners of multifamily housing in the United States. Following the Transaction, the Firm will have more than 109,600 units under management.

Forward Looking Information

Certain statements contained in this press release constitute forward-looking information within the meaning of applicable securities laws. Forward-looking information may relate to the REIT's future outlook and anticipated events or results and may include statements regarding the financial position, business strategy, budgets, litigation, projected costs, capital expenditures, financial results, taxes, plans and objectives of or involving the REIT. Particularly, statements regarding future results, performance, achievements, prospects or opportunities for the REIT or the real estate industry are forward-looking statements. In some cases, forward-looking information can be identified by such terms such as "may", "might", "will", "could", "should", "would", "occur", "expect", "plan", "anticipate", "believe", "intend", "estimate", "predict", "potential", "continue", "likely", "schedule", or the negative thereof or other similar expressions concerning matters that are not historical facts. Some of the specific forward-looking statements in this press release include, but are not limited to, statements with respect to the expected completion of the Transaction, the anticipated benefits to the Unitholders, the conditions required with respect thereto and the payment of monthly distributions prior to closing. There can be no assurance that the proposed Transaction will be completed, or that it will be completed on the terms and conditions contemplated in this press release. The proposed Transaction could be modified or terminated in accordance with its terms.

The REIT has based these forward-looking statements on factors and assumptions about future events and financial trends that it believes may affect its financial condition, financial performance, business strategy and financial needs, including, that the Acquisition Agreement will be not be amended; and all conditions precedent to completing the Transaction will be met.

Although the forward-looking statements contained in this press release are based upon assumptions that senior officers of the REIT believes are reasonable based on information currently available to management, there can be no assurance that actual results will be consistent with these forward-looking statements. Forward-looking statements necessarily involve known and unknown risks and uncertainties, many of which are beyond the REIT's control, that may cause the REIT's or the industry's actual results, performance, achievements, prospects and opportunities in future periods to differ materially from those expressed or implied by such forward-looking statements. These risks and uncertainties include, among other things, those identified in the REIT's materials filed under the REIT's profile at www.sedar.com from time to time and the risk that the conditions to the Transaction will be satisfied.

The forward-looking statements made in this press release relate only to events or information as of the date hereof. Except as required by applicable Canadian law, the REIT undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events.

SOURCE Milestone Apartments REIT

For further information: Robert P. Landin, Chief Executive Officer, Milestone Apartments REIT, Tel: 214.561.1206; Robert Debs, Investor Relations, Milestone Apartments REIT, Tel: 214.561.1215

Related Links

www.milestonereit.com

