Edgefront Realty Corp. announces the acquisition of a property ground lease as qualifying transaction

TORONTO, Jan. 22, 2013 /CNW/ - Edgefront Realty Corp. ("Edgefront") (TSXV: ED.P), a capital pool company, is pleased to announce that it has entered into a purchase and sale agreement dated January 21, 2013 (the "Purchase Agreement") with 1732228 Ontario Inc. (the "Vendor") to purchase the Vendor's rights as tenant in a 66 year ground lease (the "Ground Lease") (which commenced on May 1, 2006 with the option to extend for two additional 10 year terms) in respect of a property in Charlottetown, Prince Edward Island containing a 4,500 square foot building (the "Property") for a total purchase price of $1.148 million (the "Transaction"). The purchase price will be satisfied by the assumption by Edgefront of the existing mortgage on the Property, with a principal balance of approximately $0.5 million, with the remainder of the purchase price to be paid in cash.

The beneficial interest in the Vendor's right as tenant in the Ground Lease is owned by 695 University Avenue (TD PEI) Partnership which is unrelated to Edgefront or any of its directors and officers. The Vendor has leased the Property to a Schedule 1 chartered bank until June 30, 2016 (the "Lease"). On completion of the Transaction, Edgefront will assume the Vendor's interest in both the Ground Lease and the Lease. 

The Property currently generates an annual net operating income ("NOI") of approximately $75,000 (unaudited) which represents a capitalization rate of approximately 6.5% based on the above-noted purchase price of the Property. The NOI on the Property is calculated net of payment to the ground lessor. As part of the Transaction, Edgefront has agreed to pay a refundable deposit of $50,000 to be held in trust pending completion or termination of the Transaction and to be credited on account of the cash purchase price on closing.

Pursuant to the Purchase Agreement, completion of the Transaction shall be subject to, among other things, completion of due diligence to the satisfaction of Edgefront, receipt by Edgefront of all necessary approvals under the Ground Lease and the existing mortgage, and delivery of customary closing documents.

The Transaction remains subject to TSX Venture Exchange ("TSXV") approval and is intended to constitute Edgefront's "Qualifying Transaction" in accordance with TSXV Policy 2.4 - Capital Pool Companies.  On closing of the Transaction, Edgefront anticipates being classified as a "Tier 2" real estate issuer that will meet the TSXV's initial listing requirements applicable therefor.  The Transaction will not be a Non-Arm's Length Qualifying Transaction (as that term is defined under the TSXV policies), and as such approval of Edgefront's shareholders will not be required.

The directors, officers and senior management of Edgefront will remain unchanged upon completion of the Transaction.

Capitalization

As of the date hereof, Edgefront has 55,000,000 common shares issued and outstanding, 5,500,000 management options exercisable at $0.10 per share and 240,000 agent's options exercisable at $0.10 per share. The foregoing capitalization will remain unchanged upon completion of the Transaction.

Sponsorship

Sponsorship of a qualifying transaction of a capital pool company is required by the TSXV unless an exemption from the sponsorship requirement is available. The Transaction may require sponsorship and Edgefront intends to retain a qualified sponsor if so required.

Trading Halt

Edgefront's common shares are currently halted and Edgefront anticipates they will remain halted until the documentation required by the TSXV for the proposed Transaction can be provided to the TSXV.

Completion of the Transaction is subject to a number of conditions, including but not limited to, TSXV acceptance.  There can be no assurance that the Transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the Transaction, any information released or received with respect to the Transaction may not be accurate or complete and should not be relied upon.  Trading in the securities of a capital pool company should be considered highly speculative.

The TSXV has in no way passed upon the merits of the Transaction 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 Transaction.  Although Edgefront believes that such information is reasonable, it can give no assurance that such expectations will prove to be correct.

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 Transaction; the state of the financial markets for Edgefront's securities; the state of the real estate sector in the event the Transaction is completed; recent market volatility; Edgefront's ability to raise the necessary capital 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 for a more complete discussion of applicable risk factors and their potential effects, copies of which may be accessed through Edgefront's page on SEDAR at www.sedar.com.

SOURCE: Edgefront Realty Corp.

Kelly C. Hanczyk at [phone].