Firm Capital Property Trust - Announcement: Formation of Firm Capital Property Trust and $9.0 million private placement.

TORONTO, Oct. 31, 2012 /CNW/ - Firm Capital Realty Partners Inc. is pleased to announce the formation of Firm Capital Property Trust (the "Trust"). The Trust has been formed to create long-term value for Unitholders, through (i) disciplined investing and capital preservation; and (ii) to achieve stable cash distributions. The objectives will be achieved through partnership with management and real estate industry leaders.

The Trust will focus on co-owning a diversified property portfolio of multi-tenant residential, single and multi-tenant industrial, net lease convenience retail, and core service provider professional space. In addition to stand-alone accretive acquisitions, the Trust's primary focus will be on acquisitions on a co-ownership basis with strong financial partners. This will be achieved through joint acquisitions with management and the acquisition of partial interests from existing co-ownership groups in a manner that will provide a tax efficient liquidity option to co-owners and professional management for those remaining as investors.

Firm Capital Realty Partners Inc. ("FCRP") and Firm Capital Properties Inc ("FCPI"), through a management agreement structure focused on an alignment of interests with the Trust, are the asset and property manager of the Trust, respectively, and will source, syndicate and participate in investments made by the Trust

PLAN OF ARRANGEMENT AND PUBLIC LISTING
On October 29, 2012 ISG shareholders overwhelmingly approved the previously announced plan of arrangement involving ISG Capital Corporation ("ISG"), the Trust and the ISG shareholders under Section 192 of the Canada Business Corporations Act (the "Arrangement"). ISG will be effectively converted into the Trust with units listed on the TSX Venture Exchange ("TSXV"), subject to the satisfaction of customary conditions of the TSXV.

As part of the proposed Arrangement, ISG shareholders elected (or were deemed to have elected) to (i) redeem a total of 7,117,965 ISG shares for an estimated aggregate amount of approximately $1.2MM cash and (ii) exchange a total of 11,124,035 ISG shares for an estimated aggregate of approximately 389,341 units of the Trust (at the Exchange Ratio defined below).  As noted in the information circular dated October 3, 2012 provided to ISG shareholders in connection with the Arrangement (the "Circular") ISG anticipates that the cash redemption amount will be approximately $0.17 per share and that the ratio at which shares will be exchanged for Trust units will be approximately 0.035 Trust units for each ISG share (the "Exchange Ratio"). Accordingly, following the sale of the Ingersoll property as described in the Circular, the net proceeds to ISG from the sale of the Ingersoll property, after payment of the redemption amount and expenses related to the Arrangement, will be approximately $1.9MM, which will be available to the Trust, together with the proceeds of the Private Placement (described below), for future property acquisitions and general trust purposes.

TRUST'S BUSINESS PLAN:
The Trust will be a publicly (TSXV) listed real estate investment trust, designed for retail investors, as an opportunity to invest with management in a portfolio of diversified, non-business related real estate assets (i.e. no resorts, hotels, self-storage or retirement / nursing homes). The Trust will own a diversified portfolio of real estate, focused on stable distributions derived in part from succession and co-ownership acquisitions.  The Trust's acquisition strategy will consist of stand-alone acquisitions, acquisitions with co-investors (including management, board members and strategic real estate investors), and co-ownership with existing ownership groups.

The Trust will look to acquire a diversified property portfolio within the following asset classes:

• Multi-Tenant Residential;
• Industrial and Flex Industrial;
• Net Lease Convenience Retail;
• Net Lease Stand Alone Retail; and
• Core Service Provider Office / Healthcare Professional.

The Trust will operate as an actively managed private equity model entity. Through the asset manager, the Trust will exploit opportunities through a combination of holding long-term, stable, income-producing assets, as well as actively trading mature assets - all in order to maximize total return.

MANAGEMENT PARTICIPATION/ALIGNMENT OF INTEREST:
Senior management, trustees and other real estate industry partners that management feels would benefit the Trust will participate in the acquisition of properties through either a direct investment in the real estate or through an investment in the Trust.

BOARD OF TRUSTEES:
The board is currently comprised of nine trustees of whom five are independent and four are nominees of the asset manager, as outlined below:

Stanley Goldfarb, F.C.A. Chairman, is Chairman of Firm Capital Mortgage Investment Corporation (TSX:FC), Chief Executive Officer of Goldfarb Management Services Limited (a private investment management company). Mr. Goldfarb is also President, Treasurer and a director of Consolidated HCI Holdings Inc. (a publicly traded real estate investment and development company) and was a founding partner of Goldfarb, Shulman, Patel and Co., Chartered Accountants (a chartered accountant firm that is now part of Pricewaterhouse Coopers LLP), where he practiced from 1959 to January 1999. Mr. Goldfarb has been a chartered accountant since 1957.

Lawrence Shulman, C.A. Trustee, is a director of Firm Capital Mortgage Investment Corporation (TSX:FC).  Mr. Shulman graduated with a Bachelor of Commerce degree from the University of Toronto in 1961 and has been a Chartered Accountant since 1964. From that time, up until his retirement in June 2006, he has been a senior partner of Goldfarb, Shulman, Patel & Co. LLP, an accounting firm that is now part of Pricewaterhouse Coopers LLP. Goldfarb, Shulman, Patel & Co. LLP, which had a staff of 75 professionals and support personnel, concentrated its practice in the land development and construction company areas. As well, they offered a full range of services and were affiliated with other accounting firms around the world. Mr. Shulman has lectured extensively in income taxes and estate planning and has had significant experience in advising real estate developers and construction company executives, both local and non-resident. He currently manages, on behalf of clients, portfolios of investment funds in excess of $30 million and has acted as the financial advisor on the sale of numerous corporations, including a large multi-national corporation with sales approaching $100 million annually. Over the years Mr. Shulman has worked with many professional and religious organizations, both in administrative and fundraising roles.

Howard Smuschkowitz, Trustee, is the president of Total Body Care Inc. since 2011, a manufacturer of private label health and beauty aid products.  He has experience with private companies across many sectors of the economy, as well as experience in commercial real estate ownership. Prior to joining Total Body Care Inc., Mr. Smuschkowitz was president of Homeland Self Storages from 2005 until its sale in 2011 and president of Concord Confections Inc (Dubble Bubble) from 1986 to 2004, the company was sold to Tootsie Roll Industries, Inc.

Manfred Walt, Trustee, is currently President and Chief Executive Officer of Walt & Co. Inc., a private investment and management company that provides various consulting services to entities owned by or associated with the Reichmann family and other third parties.  Mr. Walt previously held various consulting or management positions with Chartwell Seniors Housing REIT, Retirement Residences REIT and Brookfield Asset Management. Mr. Walt current serves on the board of Killam Properties Inc. (TSX:KMP) and previously served on the boards of Canadian Apartment Properties REIT and Retirement Residences REIT.

Geoffrey Bledin, Trustee, is a director of Firm Capital Mortgage Investment Corporation(TSX:FC), was the past President and Chief Executive Officer of The Equitable Trust Company from 1990 to 2007 (a deposit taking institution that specializes in residential and commercial real estate lending). Prior to 1990 Mr. Bledin was a partner at Price Waterhouse

Eli Dadouch, Co-Chief Investment Officer and Vice Chairman, is the President, Chief Executive Officer and a director of Firm Capital Mortgage Investment Corporation(TSX :FC).Mr. Dadouch is also the President of Firm Capital Corporation, Firm Capital Properties Inc. (a property management company) and Firm Capital Mortgage Corporation (a mortgage investment company) since 1988.

Jonathan Mair, C.A., Co-Chief Investment Officer and Trustee, is the Chief Financial Officer of Firm Capital Mortgage Investment Corporation(TSX :FC)and Vice-President, Mortgage Banking, of Firm Capital Corporation. Prior to that, Mr. Mair was a Vice-President of KPMG Inc. (a financial advisory services firm) specializing in the management and debt restructuring of mortgage lending institutions and mortgage portfolios from 1993 to 1997.  Mr. Mair has been a chartered accountant since 1991.

Robert McKee, President &CEO and Trustee,is currently a managing director of Firm Capital Realty Partners Inc. and is Vice President Finance and Administration of Firm Capital Mortgage Investment Corp. Previously, Mr. McKee was a member of the Real Estate Investment Banking Group at TD Securities Inc. Mr. McKee currently serves on the board of trustees of True North Apartment Real Estate Trust (TSXV:TN.un).

Sandy Poklar, C.A.,CFO and Trustee, is currently Chief Operating Officer and Managing Director, Capital Markets & Strategic Developments of Firm Capital Corporation and a director of Genesis Land Developments Corporation(TSX:GDC). Previously Mr. Poklar held various positions with Macquarie Capital, TD Securities Inc. and Canaccord Adams.

INTERNALIZED VP INVESTMENTS AND ASSET MANAGEMENT:
The Trust will have an internalized Vice President Investments and Asset Management reporting to the independent Trustees to insure compliance with the Declaration of Trust and to oversee the Trust's assets independently of the external asset manager.

PRIVATE PLACEMENT:
The Trust is in the process of raising equity in the form of a private placement of units (the "Private Placement") which will be subject to a four month hold.  The Trust expects to close the private placement for approximately $9.0MM at $5.00 per unit on or about November 27, 2012.  The Trust will use the proceeds of the Private Placement to fund acquisitions.

ABOUT FIRM CAPITAL PROPERTY TRUST
Firm Capital Property Trust is focused on creating long-term value for Unitholders, capital preservation and disciplined investing to achieve stable distributable income. In partnership with management and industry leaders, FCPT's focus is on co-owning a diversified property portfolio of multi residential, flex industrial, net lease convenience retail, and core service provider professional space. In addition to stand alone accretive acquisitions, FCPT's will make acquisitions, on a co-ownership basis with strong financial co-owned partners and will make joint acquisitions and the acquisition of partial interests from existing co-ownership groups, in a manner that provides liquidity to those selling co-owners and professional management for those remaining as co-partners. Firm Capital Realty Partners Inc., through a structure focused on an alignment of interests with the Trust, and will source, syndicate and participate in investments.

SOURCE: Firm Capital Property Trust

Robert McKee
President & CEO
Firm Capital Property Trust
416 635-0221
[email protected]