Edgefront REIT to increase market cap by $12.3 million through property acquisitions

To Acquire Two Properties for $16 million

CALGARY, July 6, 2015 /CNW/ - Edgefront Real Estate Investment Trust (the "REIT") (TSXV: ED.UN) is pleased to announce that it has entered into conditional agreements to acquire two industrial properties for an aggregate purchase price of approximately $16 million to be satisfied by the issuance to the vendors of approximately $12.3 million of REIT equity at an issue price of $1.90 and $3.7 million in cash. The REIT has also completed the sale of its non-core office property in Miramichi, New Brunswick for a sale price of $5.65 million.

"We are extremely pleased to announce these acquisitions and the disposition of our non-core office building in New Brunswick. The vendors are all non-related, third party vendors and realize the attractiveness of becoming long-term Edgefront REIT unitholders. With these acquisitions, which will be accretive to AFFO per unit, Edgefront will grow its market cap by approximately $12.3 million without the need to raise equity in the public markets. Additionally, because the majority of the purchase price is being settled in units, proceeds from mortgage financing on the properties will provide the REIT cash available to complete additional transactions in the near future. We are currently in negotiations with additional vendors and hope these are the first in a series of deals that we complete this year." stated Kelly Hanczyk, the REIT's Chief Executive Officer.

Highlights

• In partial satisfaction of the aggregate purchase price, $12.3 million of REIT equity will be issued to the vendors at $1.90 per unit, which is a premium to the current market price of the REIT units (the "REIT Units"), increasing the REIT's market capitalization without the need to raise equity in the public markets.
• The two industrial properties will add 202,903 square feet of gross leasable area ("GLA"), expanding the REIT's property portfolio at closing to 16 commercial properties totaling approximately 921,563 square feet of GLA.
• The Barrie Ontario acquisition (the REIT's first Ontario property) is structured as a long-term vendor-leaseback transaction, with 100% tenant occupancy and an average lease term of approximately 10 years at closing. The Kelowna property will be the first multi-tenant property of the REIT.
• The $16 million purchase price (which excludes closing costs) represents an attractive 7.6% going-in capitalization rate. The acquisitions are expected to be immediately accretive to the REIT's AFFO per unit.
• The REIT will put mortgages on the two properties, creating available cash to complete future transactions.

Property Acquisitions

Pursuant to conditional agreements with two unrelated vendors, the REIT intends to acquire two industrial properties located in Kelowna, British Columbia (the "Kelowna Property"), and Barrie, Ontario (the "Barrie Property"), for an aggregate purchase price (excluding closing costs) of approximately $16 million.  The aggregate purchase price will be satisfied by: (i) the issuance to the vendors of 5,470,985 REIT Units and 1,000,0000 units (the "LP Units") of a subsidiary limited partnership of the REIT, in each case at an issue price of $1.90 per unit (which represents a premium to the current market price of the REIT Units as traded on the TSXV), for an aggregate deemed value of approximately $12.3 million; and (ii) $3.7 million in cash to be funded from cash on hand (including from cash proceeds of the Miramichi property sale as well as funds available under the REIT's existing line of credit). 

The LP Units are intended to be economically equivalent to and exchangeable for REIT Units on a one-for-one basis, and will be accompanied by special voting units of the REIT that provide their holders with equivalent voting rights to holders of REIT Units. 

Both acquisitions remain subject to customary closing conditions, including TSXV and other necessary regulatory approvals.  The Barrie Property acquisition is also subject to completion of due diligence to the satisfaction of the REIT.

The following table provides additional information for each of the two property acquisitions:

About the REIT

Edgefront REIT is a growth oriented real estate investment trust focused on increasing unitholder value through the acquisition, ownership and management of industrial properties located in primary and secondary markets in North America. Edgefront REIT currently owns a portfolio of 14 properties comprising approximately 719,000 square feet of rentable area.

The REIT has approximately 28,738,354 units issued and outstanding. Additionally, there are 360,000 Class B LP units of Edgefront Limited Partnership issued and outstanding.

Forward Looking Statements

Certain statements contained in this new release constitute forward-looking statements which reflect the REIT's current expectations and projections about future results. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "estimates", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the REIT to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Actual results and developments are likely to differ, and may differ materially, from those expressed or implied by the forward-looking statements contained in this news release. Such forward-looking statements are based on a number of assumptions that may prove to be incorrect.

While the REIT anticipates that subsequent events and developments may cause its views to change, the REIT specifically disclaims any obligation to update these forward-looking statements except as required by applicable law. These forward-looking statements should not be relied upon as representing the REIT's views as of any date subsequent to the date of this news release. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. The factors identified above are not intended to represent a complete list of the factors that could affect the REIT.

Non-IFRS Measures

Included in this news release are non-IFRS measures such as Adjusted Funds from Operations (or AFFO) that should not be construed as an alternative to net income / loss, cash from operating activities or other measures of financial performance calculated in accordance with IFRS, and may not be comparable to similar measures as reported by other issuers.  Readers are encouraged to refer to the REIT's MD&A for further discussion of the non-IFRS measures presented.

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 Real Estate Investment Trust