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PMC Commercial Trust Enters Into Merger Agreement With CIM Urban REIT, LLC

Stocks in this article: PCC

DALLAS, July 8, 2013 /PRNewswire/ -- PMC Commercial Trust (NYSE MKT: PCC), ("PMC Commercial"), a real estate investment trust ("REIT") that specializes in real estate financing primarily through first lien collateralized loans to small businesses, announced today that it has entered into a definitive merger agreement with CIM Urban REIT, LLC and subsidiaries of the respective parties.  CIM Urban REIT is a private commercial REIT with Class A commercial real estate assets located in premier urban markets throughout the United States.  CIM Urban REIT is managed by a subsidiary of CIM Group, LLC, a real estate and infrastructure investment firm with approximately $12 billion in assets under management. The merger and other transactions were unanimously approved by both PMC Commercial's Board of Trust Managers and CIM Urban REIT's Director.

Pursuant to the merger agreement, CIM Urban REIT and its affiliates will receive approximately 22.0 million newly-issued PMC Commercial Common Shares of beneficial interest and approximately 65.0 million newly-issued PMC Commercial Preferred Shares. Each Preferred Share will be convertible into seven Common Shares, resulting in the issuance of approximately 477.2 million Common Shares in the merger and other transactions.  This will represent approximately 97.8% of PMC Commercial's outstanding Common Shares.

All PMC Commercial Common Shares that are outstanding immediately prior to the transactions will remain outstanding following the transactions.  In addition, PMC Commercial shareholders of record at the close of the business day prior to the closing of the transactions will receive a special cash dividend of $5.50 per common share, to be paid shortly after closing. The special dividend will be funded from existing cash and credit lines.  Based on the agreed equity value of CIM Urban REIT's contributed portfolio of $2.386 billion and the issuance of 477.2 million PMC Commercial Common Shares, the merged company (including subsidiaries) will have an implied valuation of $2.439 billion.  The merged company is initially expected to pay a quarterly cash dividend of $0.175 per common share, which will provide a 3.5% annualized yield on its pro forma equity market capitalization.

After the closing of the merger and other transactions, it is expected that the merged company will primarily invest in substantially stabilized real estate and real estate-related assets in high density, high barrier–to-entry urban markets throughout the United States.  CIM Group will manage most aspects of the merged company's business and it is anticipated that the merged company will be the principal investment vehicle through which CIM Group will place substantially stabilized real estate investments.  As a result of CIM Group's urban market investment and operating experience developed over the last 19 years, the merged company will benefit from investment opportunities in a diverse range of stabilized urban properties (and to a lesser extent loans secured by such properties), including office, retail, hotel, multifamily apartments, signage and parking.  Over time, the merged company may expand into new real estate-related activities, supported by CIM Group's broad real estate investing capabilities.  In addition, the merged company will continue to originate loans to small businesses collateralized by first liens on the real estate of the related business, in accordance with the current investment strategy of PMC Commercial and its subsidiaries.

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