Mr. Jonathan Li reports

MINTO APARTMENT REIT ANNOUNCES AGREEMENT TO TERMINATE THE FIFTH + BANK OPTION TO PURCHASE

Minto Apartment Real Estate Investment Trust today formed an agreement with Minto Properties Inc. to terminate the REIT's option to purchase Fifth + Bank effective immediately. The REIT's cost of capital in the current high interest rate environment is too high relative to the anticipated purchase capitalization rate of the asset. The future prospect that interest rates move materially lower prior to the expiry of the option to purchase is unlikely and, acting in good faith, the REIT wants to provide MPI with advanced notice so it may evaluate its alternatives with respect to the asset.

The $30-million convertible development loan related to Fifth + Bank (the CDL) matures on Jan. 31, 2024, and the REIT will work to negotiate an option for MPI to prepay earlier, should circumstances permit. The REIT will use the proceeds from the repayment of the CDL to repay a portion of its revolving credit facility. As previously announced, the coupon payable under the CDL commencing July 1, 2023, will be equal to the all-in interest rate the REIT pays from time to time on its revolving credit facility (subject to a collar of between 5 per cent and 7 per cent per annum), which is approximately 6.75 per cent.

The REIT's rationale for not exercising the option to purchase includes the following:

• The REIT is focused on maximizing FFO per unit, and given the REIT's current cost of capital, exercising the option to purchase does not represent an attractive allocation of capital, despite the high-quality and strong expected performance of the property.
• Allows the REIT to reduce its variable rate debt exposure by $30-million, consistent with its stated strategy.
• The REIT is committed to maximizing its unit price by removing uncertainty related to the prospective purchase of Fifth + Bank.

"Fifth + Bank is a new, attractive urban asset that any apartment owner would like to have in its portfolio," said Jonathan Li, the REIT's president and chief executive officer. "However, current market conditions plus our cost of capital must be factored into any decision, and as a result, we believe it's in the best interest of the REIT to terminate the option to purchase. The CDL pipeline is a strategic program that gives the REIT access to newly constructed multifamily assets in major, urban markets, and we remain hopeful that once market conditions are more favourable, the REIT will be better positioned to execute on opportunities arising from the CDL pipeline, which is a strategic advantage for the REIT. The decision to terminate the option to purchase is not related to our capital recycling program, which continues to be a strategic priority for the REIT."

Allan Kimberley, lead independent trustee of the REIT, commented, "The decision to terminate the option to purchase is a clear representation that we will make decisions that we believe to be in the best interest of the REIT and its unitholders."

Michael Waters, chief executive officer of Minto Group, added: "Fifth + Bank is an asset that MPI will retain -- brand new assets of this quality in urban locations are irreplaceable. MPI will evaluate its alternatives and although not guaranteed, MPI will endeavour to preserve an ability for the REIT to purchase the property at some point in the future."

Fifth + Bank is a newly constructed, mixed-use multiresidential rental and retail property located at 99 Fifth Ave. in the Glebe neighbourhood of Ottawa, Ont. Construction of the 163-suite property was completed in Q3 2021. The property is 100-per-cent leased and is not subject to rent control because it was delivered after November, 2018.

About Minto Apartment Real Estate Investment Trust

Minto Apartment 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 multiresidential properties located in urban markets in Canada. The REIT owns a portfolio of high-quality income-producing multiresidential rental properties located in Toronto, Montreal, Ottawa, Calgary and Edmonton.

We seek Safe Harbor.