Leisureworld Announces Agreements to Acquire Three Luxury Retirement Residences in British Columbia and Public Offering of $49 Million of Subscription Receipts

MARKHAM, ONTARIO--(Marketwire - April 26, 2012) -

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Leisureworld Senior Care Corporation ("Leisureworld" or the "Company") (TSX:LW) today entered into acquisition agreements to acquire three luxury retirement residences in the Greater Vancouver Area (the "GVA") in British Columbia (the "Acquisition"). The aggregate purchase price is $119.8 million including a mark to market on assumed debt and excluding a performance-based earn-out of up to $6.0 million. Two residences located in South Surrey, BC consist of 257 residential suites, in aggregate, and one residence located in Port Coquitlam, BC consists of 135 residential suites. In conjunction with this transaction, the Company also announced an agreement to sell, on a bought-deal basis, $49 million of subscription receipts ("Subscription Receipts") at a price of $12.05 per Subscription Receipt.

The Acquisition further diversifies Leisureworld's existing portfolio of retirement residences and long-term care homes, provides a strategic entry point into BC's seniors' living market and increases Leisureworld's asset base by approximately 16%. The residences are all recently developed luxury retirement living properties with top quality amenities and are situated in attractive markets.

"We are focused on establishing Leisureworld as a leading provider of facilities and services across the continuum of seniors' living in Canada. This acquisition represents an important step for us as it both expands our retirement residence portfolio and extends our presence outside Ontario," said David Cutler, President and Chief Executive Officer of Leisureworld. "We look forward to establishing our presence in the attractive British Columbia seniors' living market with three first-class retirement residences. Further, the transaction is consistent with our commitment to make acquisitions that are accretive to AFFO, to further support our shareholder dividends."

An experienced team at each retirement residence will continue to operate the residences after the Acquisition closing and the existing corporate management team of the vendors will continue to manage the three acquired residences for one year, which will ensure a smooth transition and efficient integration of the Acquisition into Leisureworld's business. The vendors of two of the three residences in the Acquisition are entitled to earn up to an additional $6.0 million, in aggregate, based on the performance of these residences over the next 12 months.

As one of the residences is currently in the lease-up phase, the aggregate purchase price includes an income guarantee of $2.0 million for a three-year term to be held in escrow and used by the Company to complement cash flow from this residence in accordance with the terms of the Acquisition. The income guarantee is intended to increase after-tax net operating income ("NOI") during the remaining lease-up period to a stabilized after-tax NOI.

The aggregate purchase price implies a 7.48% capitalization rate on the stabilized NOI for the Acquisition as estimated by the Company.

The closing of the Acquisition is expected to occur on or about May 23, 2012.

Financing the Acquisition

In order to partially finance the purchase price of the Acquisition and transaction costs, the Company has agreed to sell 4,070,000 Subscription Receipts, on a bought-deal basis, at a price of $12.05 per Subscription Receipt to a syndicate of underwriters led by TD Securities Inc. for gross proceeds of $49,043,500. The underwriters will have an over-allotment option to purchase up to an additional 610,500 Subscription Receipts at the same offering price, exercisable in whole or in part no later than 30 days after the closing of the offering, which if exercised in full, would increase the gross offering size to $56,400,025.

Each Subscription Receipt represents the right to receive one common share of the Company for no additional consideration on the closing of the Acquisition. The proceeds from the offering of Subscription Receipts will be deposited in escrow pending closing of the Acquisition. If the Acquisition closes on or before July 31, 2012, the escrowed proceeds from the offering of Subscription Receipts will be released to the Company and used by the Company to pay a portion of the purchase price of the Acquisition. If the Acquisition fails to close by July 31, 2012, or the Acquisition is terminated at an earlier time, the gross proceeds and pro rata entitlement to interest thereon will be paid to holders of the Subscription Receipts.

On or before May 2, 2012, the Company will file with the securities commissions or other similar regulatory authorities in each of the provinces of Canada, a preliminary short form prospectus relating to the issuance of the Subscription Receipts. Closing of the offering is expected to occur on or about May 23, 2012, subject to TSX and other necessary regulatory approvals.

The securities offered pursuant to the Subscription Receipt offering have not been and will not be registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of such Act. This news release shall not constitute an offer to sell or the solicitation of an offer to buy the securities in any jurisdiction.

On closing of the Acquisition, $1.0 million of the purchase price will be satisfied by the issuance of common shares of Leisureworld, each priced at the same price as a Subscription Receipt, and a portion of the purchase price will be satisfied by the assumption of an existing mortgage secured by one of the acquired residences. This mortgage has an outstanding balance of $23.6 million, accrues interest at a fixed annual rate of 5.18% and matures in 2017. In addition, the Company has received a commitment letter from a Canadian chartered bank to provide a $26.0 million two-year loan and a $26.1 million one-year loan to finance the remainder of the purchase price of the Acquisition and acquisition costs. Each of the two loans will accrue interest at a floating rate equal to the bankers' acceptance rate plus 187.5 basis points. It is also anticipated that the availability under an existing credit facility will be increased from $55 million to $61.5 million. Subsequent to the closing of the Acquisition, the Company intends to review its options with respect to obtaining long term debt financing to replace these loans, including the possibility of obtaining Canada Mortgage and Housing Corporation insured mortgages.

Description of the Acquisition

Pacifica Resort Retirement Living

Pacifica is located in South Surrey within the GVA and serves surrounding communities, including White Rock. Opened in 2008, Pacifica consists of two connected four-storey buildings containing a total of 175 suites, 130 of which are being purchased. One of the buildings contains 60 condominium suites, 15 of which will be purchased, and the remaining 45 of which are owned by third parties. Residents of the 45 condominium suites owned by third parties will also be able to purchase services and utilize the facilities at Pacifica for a monthly fee. Of the 130 purchased suites, 90 are designated as independent serviced living ("ISL") suites (including the 15 purchased rental condominium suites) and 40 are designated as assisted living ("AL") suites. Its current occupancy is 96%. Living spaces and amenities include a dining room, activity room, theatre room, library, fitness area, indoor pool and hair salon. Neighbourhood amenities include a public library, shopping centre, hospital, outdoor parks and beaches.

Peninsula Resort Retirement Living

Peninsula is a six-storey building located in South Surrey within the GVA and serves surrounding communities, including White Rock. Peninsula opened its doors in 2006 and contains 127 suites, 92 of which are designated as ISL suites and 35 of which are designated as AL suites. Its current occupancy is 93%. Living spaces and amenities include a dining room, activity room, theatre room, library, fitness area and a full service spa. The Peninsula also features an indoor pool, outdoor gardens and valet parking services. Neighbourhood amenities include a public library, shopping mall, hospital and many outdoor parks and beaches.

Astoria Resort Retirement Living

Astoria is a four-storey building located in Port Coquitlam within the GVA and serves surrounding communities. Astoria contains 135 suites, 110 of which are designated as ISL suites and 25 of which are designated as AL suites. Astoria opened its doors in 2010 and is currently in a lease-up phase. Its occupancy is currently 59%. Living spaces and amenities include a dining room, activity room, theatre room, library, fitness area and hair salon. Astoria's landscaped exterior grounds feature an outdoor waterfall and garden patio. Astoria benefits from its central location in Port Coquitlam and neighbourhood amenities including a public library, shopping mall, hospital and many outdoor parks.

About Leisureworld Senior Care Corporation

Leisureworld is the third largest licensed long-term care (LTC) provider in Ontario. The Company owns and operates 26 LTC homes, representing 4,314 beds across Ontario, Canada. Leisureworld also owns and operates three retirement residences comprising 323 suites and one independent living residence with 53 apartments. Leisureworld subsidiary entities include: Preferred Health Care Services, an accredited provider of professional nursing and personal support services; and Ontario Long Term Care, a provider of purchasing services, and dietary, social work, and other regulated health professional services.

Forward-Looking Statements

This news release contains forward-looking information that reflects the current expectations of management about the future results, performance, achievements, prospects or opportunities for the Company and the seniors' living industry. This information generally can be identified by the use of forward-looking words such as "may", "will", "expect", "estimate", "anticipate", "believe", "project", "should" or "continue" or the negative thereof or similar variations. Forward-looking statements are based upon a number of assumptions and are subject to a number of known and unknown risks and uncertainties, many of which are beyond the Company's control, that could cause actual results to differ materially from those that are disclosed in or implied by such forward-looking statements.

The Company's estimates and assumptions, which may prove to be incorrect, include, but are not limited to, the various assumptions set forth herein as well as the following: the expected completion of the Acquisition; the expected completion of the Subscription Receipt offering; the Company's ability to settle and enter into a definitive credit agreement pursuant to the Commitment Letter; the estimated stabilized NOI of the acquired residences and the accretion to be realized by the Company as a result of the Acquisition; the future performance of the acquired residences and that the income guarantee will be of sufficient size and duration to stabilize NOI during the lease-up period; the transition and integration of the acquired residences will be smooth and efficient; that actual future market conditions will not be different than anticipated by the Company; that there will be no material changes to government and environmental regulations affecting the Company's operations; that there will be no material shifts in demographic trends; and that the Company will maintain good relationships with its unionized employees.

While the Company anticipates that subsequent events and developments may cause its views to change, the Company does not have an intention to update this forward-looking information, except as required by applicable securities laws. This forward-looking information represents the Company's views as of the date of this news release and such information should not be relied upon as representing its views as of any date subsequent to the date of this news release. The Company has attempted to identify important factors that could cause actual results, performance or achievements to vary from those current expectations or estimated, expressed or implied by the forward-looking information. However, there may be other factors that cause results, performance or achievements not to be as expected or estimated and that could cause actual results, performance or achievements to differ materially from current expectations. There can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from those expected or estimated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. These factors are not intended to represent a complete list of the factors that could affect the Company. See "Risks and Uncertainties" in the Company's MD&A and risk factors highlighted in materials filed with the securities regulatory authorities on SEDAR accessible at www.sedar.com, including but not limited to the Company's most recent annual information form.

Non-IFRS Measures

Certain terms used in this news release, such as AFFO and NOI, are not measures defined under International Financial Reporting Standards ("IFRS") and do not have standardized meanings prescribed by IFRS. AFFO and NOI should not be construed as alternatives to "net income (loss)" or cash flow from operating activities determined in accordance with IFRS as indicators of the Company's performance. The Company's method of calculating AFFO and NOI may differ from other issuers' methods and accordingly, these measures may not be comparable to measures used by other issuers. The Company believes that NOI and AFFO are useful in the assessment of its operating performance and that this measure is also useful for valuation purposes and is a relevant and meaningful measure of its ability to earn and pay dividends on its common shares. Examples of reconciliations of NOI and AFFO to the most directly comparable measure calculated in accordance with IFRS are provided in the Company's MD&A for the year ended December 31, 2011.