Edgefront Realty Corp. Completes Conversion into Edgefront REIT

Acquires 10 Industrial Properties from RTL-Westcan

TORONTO, Jan. 14, 2014 /CNW/ - Edgefront Realty Corp. (the "Company") (TSXV: ED) announced today that it has effected its plan of arrangement transaction (the "Plan") pursuant to which, among other things, the shareholders of the Company have exchanged their shares for units (the "Units") of Edgefront Real Estate Investment Trust (the "REIT", and together with the Company, "Edgefront") on the basis of 20 shares for every one Unit, and has completed the acquisition (the "Acquisition") of a portfolio of 10 industrial properties from former affiliates of RTL-Westcan Limited Partnership ("RTL-Westcan"), namely, Westcan Transport Limited Partnership, RTL-Construction Limited Partnership, Westcan Bulk Transport Ltd., RTL-Robinson Enterprises Ltd., RW Real Estate Holdings Limited Partnership, 1767366 Alberta Ltd., 1253481 Alberta Ltd., 1770685 Alberta Ltd. and the limited partners of Westcan (2013) Limited Partnership (the Plan and the Acquisition herein collectively called the "Transactions").

It is expected that final approval of the Transactions be granted by the TSX Venture Exchange (the "TSXV") shortly.  The REIT will be listed as a Tier 1 real estate issuer on the TSXV.  It is expected that the Units will commence trading on the TSXV on or around Friday, January 17, 2014 under the symbol "ED.UN" concurrently with the delisting of the Company's shares from the TSXV.

About the Transactions

The REIT acquired, indirectly through the purchase of two newly created holding companies and a newly created limited partnership, a portfolio of 10 industrial properties totaling approximately 435,000 square feet of building area on approximately 122 acres of land located in Alberta, Saskatchewan, British Columbia and the Northwest Territories for $68,000,000 satisfied by way of (i) an initial cash deposit of $200,000, (ii) the issuance of $34,000,000 of Units at an issue price of $2.00 per unit (or 17,000,000 Units), and (iii) the remainder of $33,800,000 from a new five year secured credit facility with Alberta Treasury Branches.

As part of the Acquisition, two former subsidiaries of RTL-Westcan, which were not acquired by the REIT, have agreed to lease 100% of the properties for an initial 12 year term, with four 5 year renewal options, at a net annual minimum rent of $5,364,000 for the first three years with annual increases thereafter calculated as the lesser of CPI and 2.5%.

The closing of the Acquisition occurred following the Plan becoming effective pursuant to which, among other things, the Company's shareholders exchanged their shares for Units on the basis of 20 shares for every one Unit.  The Plan was effected following receipt of both shareholder and court approvals to implement the Plan.

Circular Disclosure Changes

In accordance with the policies of the TSXV, Edgefront announced that the number of Units to be held in escrow has been increased from 13,765,760 to 17,877,967 Units, representing approximately 90.53% of the outstanding Units, assuming conversion of all outstanding Class B units. The 4,112,207 additional Units escrowed are subject to a TSXV Form 5D Value Security Escrow Agreement. In addition 33,750 Units remain subject to the current CPC escrow agreement.

		Prior to Giving Effect to the Transactions		After Giving Effect to the Transactions
Name and Municipality of Residence of Securityholder	Designation of Class	Number of Common Shares held in escrow	Percentage of class	Number of Units held in escrow	Percentage of class
Kelly C. Hanczyk Toronto, Ontario	Common Shares; Units	2,850,000	5.18%	340,000	1.72%
Robert P. Chiasson Mississauga, Ontario	Common Shares; Units	3,000,000	5.45%	200,000	1.01%
Mario Forgione Oakville, Ontario	Common Shares; Units	5,625,000	10.23%	375,000	1.90%
Ted Manziaris Toronto, Ontario	Common Shares; Units	5,850,000	10.64%	390,000	1.97%
RTL-Westcan Holdings LP	Units	-	-	12,865,760	65.14%
ECL Group of Companies Ltd.	Units	-	-	1,227,690	6.22%
1250114 Alberta Ltd.	Units	-	-	589,538	2.99%
1250124 Alberta Ltd.	Units	-	-	589,538	2.99%
1250126 Alberta Ltd.	Units	-	-	589,538	2.99%
1315586 Alberta Ltd.	Units	-	-	568,722	2.88%
The Kim Miller Family Trust	Units	-	-	142,181	0.72%
Total		17,325,000	31.5%	17,877,967	90.53%

As the REIT will be listed as a Tier 1 issuer, 25% of the escrowed securities will be eligible for release on the date the TSXV issues its final exchange bulletin, as well as 6 months, 12 months and 18 months thereafter.

Further, Edgefront also announced amendments to the management agreement with respect to the termination payment payable to its manager upon a change of control. The management agreement is not at arm's length since trustees and officers of the REIT are also directors and officers of the manager. The former clause was calculating the termination payment fee as a lump sum payment equal to (i) the Annual Asset Management Fee calculated on the basis of the REIT having an asset value of $1.1 billion and payable for the period from the date of the Change of Control to the expiry of the term or for 18 months (whichever is greater); plus (ii) the Acquisition Fee calculated on the basis of the difference between the then current value of the assets of the REIT and $1.1 billion; and (iii) termination payments to certain employees of the Manager. The amended clause now provides that the termination payment fees are a lump sum cash payment equal to the anticipated fees which would have been payable to the manager in respect of services during the balance of the term of such agreement; provided that if there remained less than two years on the term, the manager will then be entitled to a termination fee equal to the anticipated fees which would have been payable to it in respect of services during the following two years.

Additional information regarding the Transactions is available on Edgefront's issuer profile on SEDAR.

About the REIT

Edgefront REIT is a growth oriented real estate investment trust focused on increasing shareholder value through the acquisition, ownership and management of industrial properties located in primary and secondary markets in North America, with an initial focus on Western Canada.

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

 

SOURCE: Edgefront Realty Corp.

Please contact Kelly C. Hanczyk at [phone]