TORONTO, July 2, 2013 /CNW/ – WPT Industrial Real Estate Investment
Trust (the “REIT“) (TSX: WIR.U) announced today that it has entered into an agreement
with Welsh Property Trust, LLC (“Welsh“), the external asset and property manager of the REIT, and certain
others, pursuant to which the REIT, through WPT Industrial, LP (the “Partnership“) (the REIT’s operating subsidiary), will indirectly acquire from Welsh
an industrial property for a total purchase price of approximately
US$53 million (exclusive of closing and transaction costs and acquisition
fee).

The proposed acquisition is expected to close in July 2013 and is subject to the completion of Welsh’s indirect acquisition of
the property and customary closing conditions.

The property, located in Pontoon Beach, Illinois, is a single-tenant
bulk distribution building, totalling approximately 1.3 million square
feet of gross leaseable area with 32-foot clear ceiling height,
cross-dock configuration, ample trailer storage on three sides of the
building, 185-foot truck court depth and ESFR sprinkler systems. The
property is currently 100% leased to Conopco, Inc. dba Unilever Home &
Personal Care USA, a division of Unilever (NYSE: UN), with a lease
expiration of June 30, 2023.

“We are pleased to announce our first acquisition since the completion
of our initial public offering in April 2013,” commented Scott
Frederiksen, Chief Executive Officer. “In addition to expanding our
geographic footprint into the St. Louis market, the purchase will be
immediately accretive to the REIT’s adjusted funds from operations and
aligns with our objective to acquire stabilized, high quality
industrial properties in attractive U.S. markets that are expected to
enhance the predictability and sustainability of the REIT’s cash
distributions to unitholders.”

The property is currently owned by a third party that has entered into a
purchase and sale agreement with Welsh to sell the property to Welsh.
The property is being acquired by the REIT from Welsh pursuant to
provisions related to the REIT’s right of first opportunity under a
non-competition and non-solicitation agreement among the REIT, the
Partnership and Welsh. Pursuant to that agreement, the purchase price
to the REIT to acquire the property from Welsh is equal to Welsh’s cost
of acquisition plus certain permitted expenses incurred by Welsh and
Welsh will be entitled to be paid by the REIT the acquisition fee set
out in the asset management agreement among the REIT, the Partnership
and Welsh. The acquisition fee for the proposed acquisition will be
approximately US$530,000.

The total purchase price for the proposed acquisition (exclusive of
closing and transaction costs and acquisition fee) will be satisfied
by: (i) the indirect assumption by the Partnership of a senior secured
promissory note in the principal amount of US$31.8 million with a per annum floating interest rate of 2.25% plus the one-month LIBOR rate and a 90-day maturity date, which note will be secured by a mortgage on
the property and will be pre-payable without premium or penalty, at any
time and from time to time, in whole or in part; and (ii) the issuance
by the Partnership of 2,192,347 Class B partnership units of the Partnership (“Class B Units“). The REIT expects the promissory note to be repaid on or prior to the
maturity date for the note by obtaining from a third party financial
institution mortgage financing secured by the property.

The number of Class B Units to be issued to a subsidiary of Welsh has
been determined applying a price of US$9.67 per unit, which is the 20–trading day volume-weighted average price for the trust units of the
REIT for the period up to and including June 28, 2013. The closing
price of the trust units on the Toronto Stock Exchange (the “TSX“) on June 28, 2013 was US$9.60 per unit.

Welsh currently owns 10,867,362 Class B Units. Following the proposed
acquisition, Welsh will directly and indirectly own 13,059,709 Class B
Units, representing an approximate 53.3% effective interest in the REIT
(assuming all Class B Units are redeemed for Units, but otherwise on a
non-diluted basis).

Under the agreement for the acquisition, the REIT and Welsh have agreed
to certain terms that will apply to the Class B Units to be issued
under the agreement unless and until the REIT has received all
necessary acceptances and approvals from the TSX for the issuance and
listing on the TSX of such Class B Units, including a restriction on
the transfer or redemption of such Class B Units and a liquidity right
exercisable whereby the holder may request the Partnership to purchase
for cancellation all or any portion of such Class B Units. It is
expected that any such purchases would be financed by a sale of trust
units or other equity securities of the REIT.

Since the proposed acquisition constitutes a “related party transaction”
under Multilateral Instrument 61- 101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101“), the proposed acquisition was reviewed and considered by the
independent members of the board of trustees of the REIT. The Lead
Trustee took a lead role in respect of the examination and review of
the proposed acquisition by the independent trustees.

Based upon, among other things, the recommendations of, and discussions
with management of the REIT, discussions with management of Welsh,
considering the advice of its financial and legal advisors and its own
review and consideration of the proposed acquisition and related
agreements, the independent members of the board of trustees reviewed
and determined the proposed acquisition to be in the best interests of
the REIT and unanimously approved the proposed acquisition.

MI 61-101 provides a number of circumstances in which a transaction
between an issuer and a related party may be subject to valuation and
minority approval requirements. An exemption from such requirements is
available when the fair market value of the transaction is not more
than 25% of the market capitalization of the issuer. The REIT has been
granted exemptive relief from the requirements of MI 61-101 that,
subject to certain conditions, permits it to be exempt from the
minority approval and valuation requirements for transactions that
would have a value of less than 25% of the REIT’s market
capitalization, if the Class B Units held by Welsh and any of its
permitted transferees (as set out in section 11.3A(1) of the limited
partnership agreement governing the Partnership) are included in the
calculation of the REIT’s market capitalization. As a result, the 25%
threshold, above which the minority approval and valuation requirements
would apply, is increased to include the approximately 48.7% indirect
effective interest held by Welsh and any of its permitted transferees
in the REIT in the form of Class B Units (assuming all Class B Units
are redeemed for Units, but otherwise on a non-diluted basis).
Consequently, the proposed acquisition is not subject to the valuation
and minority approval requirements under MI 61-101.

This press release is being issued less than 21 days before the expected
closing date of the proposed acquisition. The board of trustees of the
REIT has determined that it was both reasonable and necessary to
complete the transaction on an expedited basis in order to achieve
certain efficiencies by completing the review and indirect acquisition
of the property by the Partnership contemporaneously with the review
and indirect acquisition of the property by a Welsh subsidiary from a
third party vendor.

About WPT Industrial Real Estate Investment Trust

WPT Industrial 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. The
REIT has been formed to own and operate an institutional-quality
portfolio of primarily industrial properties located in the United
States, with a particular focus on warehouse and distribution
industrial real estate. WPT Industrial, LP (the REIT’s operating
subsidiary) indirectly owns a portfolio of properties consisting of
approximately 8.6 million square feet of gross leasable area, comprised
of 35 industrial properties and two office properties located in 12
states in the United States. Welsh Property Trust, LLC is the external
asset manager and property manager of the REIT.

Forward-Looking Statements

This press release contains “forward-looking information” as defined
under applicable Canadian securities law (“forward-looking information” or “forward-looking statements“) which reflect management’s expectations regarding objectives, plans,
goals, strategies, future growth, results of operations, performance,
business prospects and opportunities of the REIT. The words “plans”,
“expects”, “does not expect”, “scheduled”, “estimates”, “intends”,
“anticipates”, “does not anticipate”, “projects”, “believes” or
variations of such words and phrases or statements to the effect that
certain actions, events or results “may”, “will”, “could”, “would”,
“might”, “occur”, “be achieved” or “continue” and similar expressions
identify forward-looking statements. Some of the specific
forward-looking statements in this press release include, but are not
limited to, statements with respect to: the closing of the proposed
acquisition and the expected closing date; the REIT’s expectation that
the senior secured promissory note indirectly assumed by the Partnership in connection with the purchase of
the property will be repaid on or prior to the maturity date for the
note by obtaining mortgage financing secured by the property from a
third party financial institution; expectations regarding accretion to
the REIT’s adjusted funds from operations and enhancement of the
predictability and sustainability of the REIT’s cash distributions; and
the expectation that purchases for cancellation of Class B Units
pursuant to the liquidity right under the agreement for the acquisition
would be financed by a sale of trust units or other equity securities
of the REIT. Forward-looking statements are necessarily based on a
number of estimates and assumptions that, while considered reasonable
by management of the REIT as of the date of this press release, are
inherently subject to significant business, economic and competitive
uncertainties and contingencies. The REIT’s estimates, beliefs and
assumptions, which may prove to be incorrect, include the various
assumptions set forth herein, including, but not limited to, the REIT’s
and the property’s future growth potential, results of operations,
future prospects and opportunities, the demographic and industry trends
remaining unchanged, no change in legislative or regulatory matters,
future levels of indebtedness, the tax laws as currently in effect
remaining unchanged, the continual availability of capital, the current
economic conditions remaining unchanged, and continued positive net
absorption and declining vacancy rates in the markets in which the
REIT’s properties are located.

When relying on forward-looking statements to make decisions, the REIT
cautions readers not to place undue reliance on these statements, as
forward-looking statements involve significant risks and uncertainties,
should not be read as guarantees of future performance or results and
will not necessarily be accurate indications of whether or not the
times at or by which such performance or results will be achieved. A
number of factors could cause actual results to differ materially from
the results discussed in the forward-looking statements, including, but
not limited to, the factors discussed under “Risk Factors” in the
REIT’s final prospectus dated April 18, 2013, which is available under
the REIT’s profile on SEDAR at www.sedar.com. These forward-looking
statements are made as of the date of this press release and, except as
expressly required by applicable law, the REIT assumes no obligation to
publicly update or revise any forward-looking statement, whether as a
result of new information, future events or otherwise.

Non-IFRS Measures

Funds from operations (“FFO“) and adjusted funds from operations (“AFFO“) are not measures recognized under International Financial Reporting
Standards as issued by the International Accounting Standards Board and
as adopted by the Canadian Institute of Chartered Accountants in Part I
of The Canadian Institute of Chartered Accountants Handbook —
Accounting, as amended from time to time (“IFRS“) and do not have standardized meanings prescribed by IFRS. FFO and
AFFO are supplemental measures of a Canadian real estate investment
trust’s performance and the REIT believes they are relevant measures of
the ability of the REIT to earn and distribute cash returns to
investors in the REIT’s trust units and to evaluate the REIT’s
performance. The IFRS measurement most directly comparable to FFO and
AFFO is net income.

“FFO” is defined as net income in accordance with IFRS, (i) plus or minus
fair value adjustments on investment properties; (ii) plus or minus
gains or losses from sales of investment properties; (iii) plus or
minus other fair value adjustments; (iv) plus amortization of tenant
incentives; (v) plus transaction costs expensed as a result of the
purchase of a property being accounted for as a business combination;
(vi) plus distributions on redeemable or exchangeable units treated as
interest expense; (vii) plus or minus any negative goodwill or goodwill
impairment; and (viii) plus deferred income tax expense, after
adjustments for equity accounted entities and joint ventures calculated
to reflect FFO on the same basis as consolidated properties. FFO has
been prepared consistently with the definition presented in the White
Paper on funds from operations prepared by the Real Property
Association of Canada for all periods presented.

“AFFO” is defined as FFO subject to certain adjustments, including: (i)
amortization of fair value mark-to-market adjustments on long-term debt
and amortization of financing costs; (ii) adjusting for any differences
resulting from recognizing property rental revenues or expenses on a
straight-line basis; (iii) amortization of grant date fair value
related to compensation incentive plans; (iv) adjusting for any
non-cash compensation expense; and (v) deducting a reserve for
normalized maintenance capital expenditures, tenant inducements and
leasing commissions, as determined by the REIT. Other adjustments may
be made to AFFO as determined by the trustees of the REIT in their sole
discretion.

FFO and AFFO should not be construed as alternatives to net income and
comprehensive income determined in accordance with IFRS as indicators
of the REIT’s performance. The REIT’s method of calculating FFO and
AFFO may differ from other issuers’ methods and accordingly may not be
comparable to measures used by other issuers.

SOURCE WPT Industrial Real Estate Investment Trust