Mr. Michael Loeb reports

LANTOWER RESIDENTIAL REAL ESTATE DEVELOPMENT TRUST (NO. 1) AND H&R REAL ESTATE INVESTMENT TRUST ANNOUNCE AGREEMENT FOR H&R TO ACQUIRE LANTOWER PROJECTS

Lantower Residential Real Estate Development Trust (No. 1) (the REDT) and H & R Real Estate Investment Trust have noted that REDT has entered into an acquisition agreement with H & R REIT (U.S.) Holdings Inc. and Lantower Residential LP (the purchaser), each a wholly owned subsidiary of H & R, pursuant to which the purchaser will indirectly acquire the REDT's approximately 70.9-per-cent interest in two residential development projects (the REDT projects) in Florida expected to contain an aggregate of 601 suites and an aggregate of 606,000 net rentable square feet, in Largo, Fla. (Tampa), and Kissimmee, Fla. (Orlando), in a transaction that will provide liquidity in the form of all-cash consideration to unitholders of the REDT.

The transaction was negotiated in accordance with the management agreement among the REDT, Lantower Residential REDT (No. 1) JV LP, H & R REIT Management Services LP, the REDT's Canadian manager, Lantower Management Services LP, the REDT's U.S. manager (collectively, the managers), and H & R dated April 3, 2024, in light of the pending change of control of H & R as announced by H & R on Aug. 11, 2026.

The transaction values the REDT JV interest at a price that would result in REDT unitholders receiving a pretax investor gross compounded annualized return of 20 per cent (calculated based on the annualized return for the U.S.-dollar-denominated units of the REDT), before asset management fees and the carried interest accruing to Lantower Management Services LP, as contemplated in the management agreement. Assuming a closing date of Dec. 1, 2026, the transaction values the REDT JV interest at a gross price of approximately $84.3-million (U.S.), with an estimated net purchase price of approximately $77.9-million (U.S.) payable by the purchaser (after deducting accrued asset management fees and carried interest). Following closing of the transaction, the REDT's subsidiaries will distribute the net proceeds from the sale of the REDT JV interest to the REDT, with the REDT expecting to distribute its net assets (after deducting a reserve, as determined by the board of trustees of the REDT, for taxes, transaction, closing, and other expenses and liabilities of the REDT and its subsidiaries) to REDT unitholders in accordance with the amended and restated declaration of trust of the REDT dated March 27, 2024, and thereafter cancel the units of the REDT held by REDT unitholders.

Assuming a closing date of Dec. 1, 2026, distributions to REDT unitholders are expected to be approximately $15.65 per Class A and F unit, and $15.15 (U.S.) per Class E and U unit, compared with an original cost of $10.00 per Class A and F unit and $10.00 (U.S.) per Class E and U unit, after deducting asset management fees and carried interest, but before deducting the reserve described above and any taxes required to be withheld, resulting in a pretax investor gross compounded annualized return of approximately 18.4 per cent for holders of Canadian-dollar denominated units and approximately 16.9 per cent for holders of U.S.-dollar denominated units, before such deductions. The actual distributions to REDT unitholders may differ from these estimates based on the actual closing date, exchange rates, the amount of the reserve, and the actual amount of taxes, costs, expenses and liabilities of the REDT and its subsidiaries. The timing of the distribution, including the applicable record date and payment date, has not yet been determined, and further details will be announced by the REDT in due course.

The transaction has received the unanimous recommendation of an independent special committee of the board comprising Andrew Elbaz, Mark Johnson and Samantha Adams, and the unanimous approval of the board (with interested trustees abstaining).

Other benefits of the transaction

The special committee, in recommending the transaction, considered, among other things, the following factors:

• Certainty of value and liquidity -- The consideration is all cash and is not subject to a financing condition, which provides REDT unitholders with certainty of value and immediate liquidity, while providing REDT unitholders with an attractive return on their original investment, including based on the 20-per-cent pretax investor gross compounded annualized return methodology contemplated by the management agreement.
• Well-capitalized purchaser and high likelihood of completion -- H & R is well capitalized and capable of completing the transaction. The transaction is not subject to any due diligence and the special committee and the board believe that the few closing conditions that are outside of the control of the REDT are reasonable, such that the likelihood of the transaction being completed is high, if certain unitholder approvals related to H & R's change of control are obtained.
• Attractive transaction relative to alternatives -- After consultation with management of the REDT, as well as its independent financial and legal advisers, the special committee believes that the transaction is an attractive proposition to REDT unitholders, in light of certainty of value, the attractive return on REDT unitholders' original investment, the agreed upon mechanics for a change of control offer from H & R set out in the management agreement, as well as the fact that the REDT projects are not yet stabilized, so an early exit at a fixed return avoids any potential downturn in the markets in which the REDT projects are situated and removes the risks associated with the REDT remaining an independent public entity with a finite time horizon.
• Arm's-length negotiations and oversight -- The special committee, with the assistance of its independent financial and legal advisers, engaged in arm's-length negotiations with the purchaser and its representatives in entering into the transaction. Such advice included detailed financial advice from Ventum Financial Corp.
• Supporting financial adviser opinion -- Ventum Capital Markets has provided an oral opinion to the special committee to the effect that, based upon and subject to the assumptions, limitations and qualifications contained in such opinion the consideration to be received by REDT unitholders pursuant to the transaction is fair, from a financial point of view, to REDT unitholders.

Summary of transaction terms

The acquisition agreement provides for, among other things, customary covenants, including customary non-solicitation covenants from the REDT, and a fiduciary out that allows the REDT to accept a superior proposal in certain circumstances, subject to a right to match in favour of the purchaser and payment of a termination fee of $2,378,420 (U.S.) to the purchaser. The foregoing summary is qualified in its entirety by the provisions of the acquisition agreement, a copy of which will be filed on SEDAR+.

In connection with the transaction, the accumulated value of the carried interest owing to Lantower Management Services LP will be deducted from the price payable by the purchaser for the REDT JV interest, and the purchaser and other affiliates of H & R will wholly own the REDT projects. H & R does not own any units of the REDT, and instead holds its approximately 29.1-per-cent indirect interest in the REDT projects through the JV LP.

The transaction is expected to close in the fourth quarter of 2026, subject to the satisfaction or waiver of certain closing conditions, including unitholder approval of the transaction, as described below, certain other customary closing conditions, and in addition, receipt of the approval of H & R's unitholders and the unitholders of GO Residential Real Estate Investment Trust in connection with the transaction involving, among others, H & R and GO Residential Real Estate Investment Trust, as further described in H & R's Aug. 11, 2026, press release. Closing is expected to occur within 30 days following receipt of such H & R and GO Residential Real Estate Investment Trust unitholder approvals.

Following closing of the transaction, the REDT will apply to cease to be a reporting issuer in each of the provinces of Canada in which it is presently a reporting issuer.

Required approvals

The REDT expects to hold a special meeting of REDT unitholders to seek approval of the transaction. The REDT will mail a management information circular and certain related documents to REDT unitholders in connection with the meeting, copies of which will be filed on SEDAR+. It is anticipated that the meeting will take place in November, 2026.

The transaction constitutes a business combination within the meaning of Multilateral Instrument 61-101 -- Protection of Minority Security Holders in Special Transactions, as the purchaser is a related party of the REDT under MI 61-101, and as a consequence of the transaction the REDT is indirectly selling assets to the purchaser and the units will be cancelled in connection with the distribution of the net assets of the REDT. The REDT is exempt from the requirement to obtain a formal valuation in reliance on Section 4.4(1)(a) of MI 61-101.

REDT unitholders must approve the transaction by at least (i) 66.66 per cent of the votes cast by REDT unitholders present in person (virtually or otherwise) or represented by proxy, voting as a single class, at the meeting, and (ii) subject to receipt of exemptive relief from the applicable provincial securities regulators, a majority of the votes attached to the units held by REDT unitholders present in person (virtually or otherwise) or represented by proxy, voting as a single class, at the meeting, excluding for this purpose votes cast by REDT unitholders that are required to be excluded pursuant to MI 61-101, provided that if such exemptive relief is not obtained, the REDT unitholders will vote on a class by class basis in respect of (ii).

MI 61-101 requires approval of the transaction to be received from a majority of the votes attached to the units voted by disinterested REDT unitholders voting separately on a class-by-class basis. However, the REDT intends to apply for exemptive relief from the commissions from the requirement that the REDT obtain approval separately for each class of units on the basis that, among other reasons: (i) the Declaration of Trust provides that REDT unitholders vote as a single class unless the nature of the business to be transacted at the meeting affects holders of one class of units in a manner materially different from its effect on holders of another class of units, and the REDT, the managers and the special committee have each determined that the transaction will not affect holders of one class of units in a manner materially different than holders of another class of units; (ii) the relative returns are fixed pursuant to a formula established in the declaration of trust that was set at the time of the REDT's initial public offering when investors selected their preferred class and purchased their units, and accordingly the interests of the holders of each class of units are aligned in respect of the transaction; (iii) the transaction was subject to a number of procedural mechanisms to ensure the collective interests of the REDT unitholders were protected, including, but not limited to, that (a) negotiation of the transaction has been overseen by the special committee, (b) the special committee has received the fairness opinion (as defined below), (c) the REDT will hold the meeting to allow REDT unitholders to consider and, if deemed advisable, approve the transaction, and (d) the REDT will prepare and will deliver to the REDT unitholders a management information circular describing the transaction; (iv) the board believes that providing a class vote would provide disproportionate voting power to a potentially small number of REDT unitholders; and (v) to the best of the knowledge of the REDT and the managers, there is no reason to believe that REDT unitholders of any particular class would not approve the transaction. There can be no assurance that the requested relief will be granted by the commissions.

REDT board process and recommendation

The board constituted the special committee to oversee negotiation of the transaction for the REDT.

The special committee retained Ventum Capital Markets as its financial adviser, which has provided an oral fairness opinion to the special committee to the effect that the consideration to be received by REDT unitholders pursuant to the transaction is fair, from a financial point of view, to REDT unitholders.

The special committee unanimously determined that the transaction is fair, from a financial point of view, to the REDT and in the best interests of the REDT and the REDT unitholders and, accordingly, recommended that the board approve the transaction and related matters and recommend that REDT unitholders vote in favour of the transaction and related matters.

The board unanimously concluded (with Thomas Hofstedter and Michael Loeb declaring their interest and recusing themselves from consideration and voting other than for quorum purposes) that the transaction is fair, from a financial point of view, to the REDT and in the best interests of the REDT and the REDT unitholders and, accordingly, unanimously approved the transaction and recommends that REDT unitholders vote in favour of the transaction and related matters.

Transaction advisers

Ventum Capital Markets is acting as financial adviser to the special committee and has provided the fairness opinion to the special committee in connection with the transaction. DLA Piper (Canada) LLP is acting as legal counsel to the special committee in connection with the transaction.

Blake, Cassels & Graydon LLP is acting as Canadian counsel to H & R and the purchaser in connection with the transaction.

About Lantower Residential Real Estate Development Trust (No. 1)

Lantower Residential Real Estate Development Trust was formed for the primary purpose of indirectly owning an interest in the development of two residential development projects in Florida expected to contain an aggregate of 601 units and an aggregate of 603,000 net rentable square feet, in Largo, Fla. (Tampa), and Kissimmee, Fla. (Orlando).

About H & R Real Estate Investment Trust

H & R is one of Canada's largest real estate investment trusts. H & R has ownership interests in a Canadian and U.S. portfolio primarily comprised of high-quality residential (operating as Lantower Residential), industrial and office properties totalling approximately 20.5 million square feet.

We seek Safe Harbor.