Edgefront Realty Corp. mails information circular regarding conversion to Real Estate Investment Trust

TORONTO, May 17, 2013 /CNW/ - Edgefront Realty Corp. ("Edgefront", or the "Corporation") (TSXV: ED) announces today that it has filed a management information circular (the "Information Circular") and notice of special meeting in respect of its previously announced reorganization under a plan of arrangement under the Business Corporations Act (Ontario) (the "Arrangement") whereby the Corporation intends to convert into a real estate invest trust named "Edgefront Real Estate Investment Trust" (the "REIT"), subject to receipt of all necessary approvals, including the approval of the TSX Venture Exchange ("TSXV") and the shareholders of the Corporation.

Pursuant to the Arrangement, among other things: (i) the issued and outstanding shares of the Corporation will be exchanged for units of the REIT on a 40 for 1 basis (1 unit for every 40 shares) (the "Exchange Ratio"), and (ii) the issued and outstanding options to purchase shares will be exchanged for options to purchase units on terms and conditions substantially similar to the terms and conditions of the existing options of the Corporation, subject to adjustments to the number of units underlying REIT options based upon the Exchange Ratio.

Information about the Meeting

The special meeting (the "Meeting") of shareholders will be held at 9:00 a.m. on June 14, 2013, at 199 Bay Street, Commerce Court West, 40th Floor, Toronto Ontario. Each person who is a holder of record of shares at the close of business on May 13, 2013 is entitled to receive notice of, and to attend and vote at, the Meeting, and any adjournment or postponement thereof.

At the meeting, shareholders will also be asked to consider resolutions regarding (i) the Arrangement, (ii) the adoption by the REIT of a unit option plan, (iii) the adoption by the REIT of a unitholder rights plan, (iv) the entering into of a management agreement with Edgefront Realty Advisors Inc. pursuant to which Edgefront Realty Advisors Inc. will be entitled to receive unit compensation for the provision of advisory services to the REIT (the "Management Agreement Resolution") and (v) the acquisition of the Cambridge and Oakville Properties (as defined below) from MM Sam Ltd. (the "Acquisition Resolution"). The resolution regarding the Arrangement put forth at the Meeting will be subject to the approval of two-thirds of votes cast by shareholders entitled to vote at the Meeting voting in person or by proxy, and each of the remaining resolutions will be subject to the approval of a majority of votes cast by disinterested shareholders.

Mario Forgione, the Chairman and a director of Edgefront, is the President and a director of MM Sam Ltd., which is the sole vendor of the Cambridge and Oakville Properties. Kelly C. Hanczyk, President and Chief Executive Officer of Edgefront, Robert P. Chiasson, Chief Financial Officer and Corporate Secretary of Edgefront, and Mario Forgione are owners, and directors or officers, of Edgefront Realty Advisors Inc. As such the acquisition of the Cambridge and Oakville Properties, and the unit compensation under the management agreement, will be non-Arm's Length Transactions and subject to Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions and TSXV Policy 5.9, and will be subject to all necessary approvals, including the approval by the affirmative vote of a majority of votes cast by minority shareholders voting at the Meeting.

Shareholders are urged to read the Information Circular for a full description of all matters to be considered at the Meeting. Shareholders are cautioned that, except as disclosed in the Information Circular, any information released or received with respect to the Arrangement may not be accurate or complete and should not be relied upon. The Information Circular is available for review at www.sedar.com.

Registered shareholders unable to attend the Meeting in person are requested to read the Information Circular and the form of proxy which accompanies the notice of meeting and to complete, sign, date and deliver the form of proxy, together with the power of attorney or other authority, if any, under which it was signed (or a notarially certified copy thereof) to Equity Financial Trust Company at 200 University Avenue, Suite 400, Toronto, Ontario M5H 4H1, Attention: Proxy Department, no later than 48 hours prior to the Meeting, excluding Saturdays, Sundays and holidays, or any adjournment thereof. Late proxies may be accepted or rejected by the Chairman of the Meeting in his discretion, and the Chairman is under no obligation to accept or reject any particular late proxy.

Registered shareholders have the right to dissent with respect to the Arrangement and be paid the fair value of their shares in accordance with the provisions of section 185 of the Business Corporations Act (Ontario) and an interim order of the Ontario Superior Court of Justice (Commercial List) with respect to the Arrangement dated May 13, 2013, if the Arrangement becomes effective. This right to dissent is described in the Information Circular. Failure to strictly comply with the dissent procedures set out in the Information Circular may result in the loss or unavailability of any right of dissent.

Private Placement

As previously announced, immediately prior to the conversion into a REIT, the Corporation intends to complete a private placement of shares at a price per share equal to $0.15 for an aggregate subscription amount of approximately $45,000,000, resulting in the issuance of approximately 300,000,000 shares. The net proceeds from the private placement will be used to acquire the REIT Properties (as defined below), fund future acquisitions and for general trust purposes.

REIT Properties

As previously announced, in connection with the Arrangement, the Corporation will acquire the following properties (the "REIT Properties") for a total purchase price of $74,485,000.

• a 396,000 square foot portfolio of industrial properties in Ajax, Ontario which are fully occupied by 11 tenants, with a total weighted remaining lease term for all tenants of over seven years (the "Ajax Properties") for a total purchase price of $29,500,000 to be satisfied by way of cash and the delivery to the vendor of the Ajax Properties of approximately $5,000,000 of REIT units based on an issue price of $6.00 per unit;
  
  
• a 150,000 square foot industrial property in Cambridge, Ontario that is currently 100% occupied with an average remaining lease term of 2.2 years (the "Cambridge Property") for a total purchase price of $7,400,000 to be satisfied by way of cash and the delivery to MM Sam Ltd. of approximately $1,000,000 of REIT units based on an issue price of $6.00 per unit;
  
  
• a 16,200 square foot retail property in Oakville, Ontario that is currently 100% occupied with an average remaining lease term of 3.25 years (the "Oakville Property") to be satisfied by way of cash and the delivery to MM Sam Ltd. of approximately $1,000,000 of REIT units based on an issue price of $6.00 per unit;
  
  
• a 71,800 square foot retail/office property in Bedford, Nova Scotia that is currently 100% occupied, with an average remaining lease term of 4.6 years (the "Bedford Property") for a total purchase price of $17,200,000 to be satisfied by way of cash;
  
  
• a 24,200 square foot retail/office property in Bedford, Nova Scotia that is currently 100% occupied, with an average remaining lease term of 8.8 years (the "Nova Scotia Property") for a total purchase price of $6,875,000 to be satisfied by way of cash; and
  
  
• a 23,100 square foot single-tenant office property in Halifax, Nova Scotia that is currently 100% occupied by the Nova Scotia provincial government with a remaining lease term of seven years and a real estate management company with a remaining lease term of three years (the "Halifax Property") for a total purchase price of $6,875,000 to be satisfied by way of cash and the assumption of a mortgage in respect of the property in the remaining principal amount of approximately $3,050,000, with a fixed interest rate of 5.49% per annum. On closing of the acquisition of the Halifax Property the Corporation shall receive a credit in the amount sufficient to reduce the annual interest rate of such mortgage to 4.1%.

The Corporation retained Atlantic Realty Advisors to provide appraisals of the Bedford, Nova Scotia and Halifax Properties, and CB Richard Ellis Limited to provide appraisals of the Cambridge, Oakville and Ajax Properties. Atlantic Realty Advisors estimated the value of the Bedford, Nova Scotia and Halifax Properties at $17,200,000, $7,060,000 and $7,160,000, respectively, and CB Richard Ellis Limited estimated the value of the Cambridge, Oakville and Ajax Properties at $7,500,000, $6,350,000 and $29,900,000, respectively, for a total appraised value of $75,170,000 for the REIT Properties.  Based on the negotiated purchase price to be paid for the REIT Properties of $74,485,000, the appraised value is $685,000 greater than the aggregate purchase price to be paid for the REIT Properties. It is expected that the REIT will operate with a debt to gross book value ratio in the range of 50 to 55%, and a 95% adjusted funds from operations payout ratio.

About Edgefront

Edgefront is a growth oriented, diversified real estate company focused on increasing shareholder value through the acquisition, ownership and management of commercial real estate assets initially located in secondary markets. It is the intention of Edgefront to expand its business of purchasing, owning and operating real estate assets and to raise funds in the marketplace in order to convert Edgefront into a real estate investment trust having an external asset management structure, subject to receipt of all necessary approvals, including that of the TSXV.

Completion of Arrangement remains subject to TSXV approval.  There can be no assurance that the Arrangement will be completed as proposed or at all.

The TSXV has in no way passed upon the merits of the Arrangement and has neither approved nor disapproved the contents of this press release.  Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.

This press release contains forward-looking information within the meaning of Canadian securities laws.  Such information includes, without limitation, information regarding the completion of the Arrangement.  Although Edgefront believes that such information is reasonable, it can give no assurance that such expectations will prove to be correct. In particular, this news release contains forward-looking information relating to the expected completion of the Arrangement and the business strategies of Edgefront.

Forward looking information is typically identified by words such as: believe, expect, anticipate, intend, estimate, postulate and similar expressions, or are those, which, by their nature, refer to future events.  Edgefront cautions investors that any forward-looking information provided by Edgefront is not a guarantee of future results or performance, and that actual results may differ materially from those in forward looking information as a result of various factors, including, but not limited to: Edgefront's ability to complete the Arrangement; the state of the real estate sector in the event the Arrangement is completed; recent market volatility; Edgefront's ability to secure the necessary financing or to be fully able to implement its business strategies and other risks and factors that Edgefront is unaware of at this time.  The reader is referred to Edgefront's Information Circular for a more complete discussion of risk factors relating to Edgefront and their potential effects, a copy of which may be accessed through Edgefront's page on SEDAR at www.sedar.com.

This news release shall not constitute an offer to sell or the solicitation of an offer to buy any securities nor shall there by any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.

SOURCE Edgefront Realty Corp.

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