Edgefront Realty Corp. announces new property purchases and property closing

TORONTO, May 3, 2013 /CNW/ - Edgefront Realty Corp. ("Edgefront") (TSXV: ED) announces today that it has entered into two agreements, each dated May 3, 2013, with MM Sam Ltd. (an Ontario corporation) to purchase a 150,000 square foot industrial property in Cambridge, Ontario (the "Cambridge Property") and a 16,200 square foot retail property in Oakville, Ontario (the "Oakville Property", together with the Cambridge Property, the "Properties") for an aggregate purchase price of approximately $13,750,000, to be satisfied by a combination of $11,750,000 of cash, generated from new mortgages and the previously announced private placement of common shares at a price of $0.15 per share for aggregate gross proceeds of up to $45 million which will be sold on a best efforts basis through a syndicate of agents co-led by Desjardins Securities Inc. and Dundee Securities Ltd., and a share issuance to MM Sam Ltd. of $2,000,000 of Edgefront shares at a deemed price of $0.15 per share (approximately 13,333,333 Edgefront shares). The Cambridge Property is fully leased to a manufacturing company for a remaining term of 2.4 years. The Oakville Property consists of two prime located multi-tenant retail properties in Bronte Village with future potential development opportunity.

The acquisition of the Properties will form part of a series of transactions relating to the previously announced conversion of Edgefront into a real estate investment trust having an external asset management structure. Mario Forgione, the Chairman and a director of Edgefront, is the President and a director of MM Sam Ltd., which currently owns the Properties. As such the acquisition of the Properties will be non-Arm's Length Transactions and will be subject to Multilateral Instrument 61-101 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 a special meeting of shareholders to be held on June 14, 2013. Such transactions are expected to close on or about the end of June 2013.

The acquisition of the Properties has not yet received TSXV approval and is subject to certain closing conditions, including completion of satisfactory due diligence, receipt of any necessary shareholder and other regulatory approval and successful financing. Edgefront retained CBRE Limited as its independent appraiser to determine the market value of the Cambridge Property and the Oakville Property.  In its report, the independent appraiser concluded that the market value of the Cambridge Property as at April 29, 2013 was $7,500,000 based on various factors including annual total gross revenue of $744,000 (unaudited) for the property, and the market value of the Oakville Property as at April 26, 2013 was $6,350,000 based on various factors including annual total gross revenue of $582,857 (unaudited) for the property.

Management Agreement

In connection with Edgefront's previously announced conversion into a real estate investment trust (the "REIT"), it is currently expected that the REIT will enter into a management agreement with Edgefront Realty Advisors Inc. (the "Manager") pursuant to which the Manager will provide advisory, consultation and investment management services to the REIT regarding strategic matters, including potential acquisitions, dispositions, financings and developments as well as services regarding the identification and evaluation of acquisitions, dispositions and other transactions.

The management agreement is expected to contain provision for the termination or internalization of the management of the REIT upon the earlier of the REIT achieving a market capitalization of $500 million or five years after conversion. In addition, it is expected that the Manager will have the right, in its sole discretion, to elect to internalize management at no cost to the REIT at any time.  The REIT is expected to have the right to terminate the management agreement upon 30-days written notice in the event of a material default.

Certain trustees and persons acting in the capacity of executive officers of the REIT will own the Manager. As such, the Manager will be a non-arm's length party to the REIT.  Shareholder approval will be sought for the conversion of Edgefront into a real estate investment trust, which will include approval of the management agreement by a majority of the votes cast by disinterested shareholders, at a special meeting of shareholders to be held on June 14, 2013.

Closing of New Brunswick Acquisition

Edgefront is also pleased to announce that on May 1, 2013 Edgefront closed its previously announced acquisition of an approximate 28,950 square foot two-storey Class A office property in Miramichi, New Brunswick for a total price of $5.465 million. Newly built in 2012, the property is leased to a department of the federal government until September 30, 2022 (with one five-year renewal option).  The total purchase price for the transaction was satisfied by Edgefront with cash on hand as well as cash generated from a new 10 year mortgage.  The transaction was an Arm's Length Transaction (as that term is defined in TSXV Policy 1.1), and received TSXV approval on April 29, 2013.

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. As compensation for services provided to the REIT, it is expected that the Manager will be entitled to: (a) an annual asset management fee in the amount of 0.75% of the REIT's gross book value up to $150 million to be paid in REIT units, 0.65% of the REIT's gross book value between $150 million and $300 million to be paid 50% in REIT units and 50% in cash and 0.50% of the REIT's gross book value over $300 million to be paid 50% in REIT units and 50% in cash; (b) a construction management fee payable on capital projects in an amount equal to 5% of all hard construction costs incurred on a project excluding work done on behalf of tenants or any maintenance capital expenditures; (c) an acquisition fee in the amount of 0.50% of the purchase price of any property acquired by the REIT payable in cash on completion of each acquisition; and (d) a property management fee on a cost recovery basis.

Completion of the acquisition of Properties (the "Transactions") remains subject to TSXV approval.  There can be no assurance that the Transactions will be completed as proposed or at all.

The TSXV has in no way passed upon the merits of the Transactions 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 Transactions, completion of the private placement and entering into of the management agreement.  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 Transactions 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 Transactions; the state of the real estate sector in the event the Transactions are 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 initial public offering Prospectus and Filing Statement for a more complete discussion of risk factors relating to Edgefront and their potential effects, copies of which may be accessed through Edgefront's page on SEDAR at www.sedar.com.

SOURCE: Edgefront Realty Corp.

For further information:

Kelly C. Hanczyk at (416) 906-2379.

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