Firm Capital and Telsec have agreed to back Melcor Developments’ plan to take Melcor REIT private, marking a shift from their earlier opposition to the proposal.

Melcor REIT and Melcor Developments have entered into voting support agreements with Firm and Telsec, with the latter two companies committing to vote in favour of the transaction at the REIT’s special unitholder meeting set for April 11. Firm and Telsec collectively own or control about 4 million trust units.

Under the amended arrangement agreement announced in November, Melcor Developments will acquire the remaining 45% of the REIT that the company does not already own for $5.50 per unit, an 11% increase over the initial offer. The proceeds will be used to repurchase and cancel all outstanding REIT trust units. The agreement also includes a new 90-day go-shop period to seek potential alternative offers.

Melcor REIT owns and manages 34 commercial properties across Alberta and Regina. The portfolio comprises about 2.8 million square feet of leasable space.

Firm and Telsec’s reversal came after Melcor REIT had concluded an earlier go-shop period and the sale of the Melcor Crossing mall in Grande Prairie, Alta., for $48 million.

Firm and Telsec, two of the REIT’s largest minority investors, had previously claimed that the take-private bid undervalued the REIT and its assets.

Melcor Developments, Firm and Telsec announced the agreement in a news release. The release did not say whether Firm and Telsec received any payment in return for agreeing to the proposal.

Pictured: Melcor REIT retail property in Red Deer, Alta.

Photo: Melcor REIT