Plazacorp Announces Bought Deal Public Offering of $40 Million Common Shares and $30 Million of Convertible Unsecured Subordinated Debentures

FREDERICTON, NEW BRUNSWICK--(Marketwired - Oct. 2, 2013) -

NOT FOR DISTRIBUTION IN THE UNITED STATES OR OVER UNITED STATES WIRE SERVICES

Plazacorp Retail Properties Ltd. ("Plazacorp" or the "Company") (TSX:PLZ) is pleased to announce that it has entered into an agreement to sell to a syndicate of underwriters led by RBC Capital Markets, on a bought-deal basis, 9,400,000 common shares (the "Shares") of Plazacorp issued from treasury at a price of $4.25 per Share for gross proceeds to the Company of $40 million and $30 million aggregate principal amount of 5.75% convertible unsecured subordinated debentures due December 31, 2018 (the "Debentures") (the "Offering"). The Debentures are convertible at the option of the holder, into common shares of the Company at $5.75 per common share.

Plazacorp has granted the Underwriters an over-allotment option (the "Over-Allotment Option"), exercisable in whole or in part up to 30 days after Closing, to purchase up to an additional 1,410,000 common shares and $4.5 million additional aggregate principal amount of Debentures to cover over-allotments, if any. Any Shares or Debentures issued under the Over-Allotment Option will be issued by Plazacorp from treasury.

Plazacorp intends to use the net proceeds from the Offering as follows:

(i) approximately $15 million to fully repay the balance that is currently outstanding on the Company's operating line of credit (the majority of which was drawn to fund Plazacorp's on-going development and re-development program and previous acquisitions);

(ii) approximately $35 million to partially repay the Company's bridge facility, which was drawn to fund the cash portion of its acquisition of KEYreit;

(iii) approximately $16 million to redeem the currently outstanding Series A 7.75% convertible subordinated unsecured debentures, which mature on December 31, 2014 and which have a par call date of December 31, 2013 (the "Series A Debentures"); and

(iv) the remainder, if any, will be used to fund the Company's future and on-going development and re-development activities and for general corporate purposes.

Plazacorp intends to provide notice of redemption to holders of the Series A Debentures in November 2013.

Plazacorp will, within the next few days, file with the securities commissions and other similar regulatory authorities in each of the provinces of Canada, a preliminary short form prospectus relating to the issuance of the Shares and the Debentures. Closing of the Offering is expected to take place on or about October 24, 2013.

Upon closing of the Offering (excluding the effect of the Over-Allotment Option) and after giving effect to events subsequent to June 30, 2013 including the repayment of indebtedness and the redemption of the Series A Debentures with the net proceeds of this Offering, Plazacorp's debt-to-gross-book value ratio¹ will decrease to approximately 54.2% from approximately 57.7% as at June 30, 2013.

"This de-levering of Plazacorp's balance sheet will provide us with the flexibility to continue our development and acquisition activities. We have approximately 15 projects with approximately 850,000 square feet in our current development pipeline, many of which are expected to deliver accretive AFFO growth upon their completion over the next 3 to 12 months. The redemption of the existing Series A Debentures and their replacement with a new series of market priced convertible debentures (pursuant to this offering), allow Plazacorp to generate meaningful AFFO accretion as a result of reduced interest costs. Furthermore, Plazacorp is on track with its program to integrate and extract value from the properties acquired from KEYreit earlier this year. We are well advanced in executing our program to retire the remaining amounts outstanding on the bridge facility drawn for that acquisition from the proceeds expected to be received from our selective disposition program and new mortgages or up-financings of near-term maturing mortgages. The completion of this program will create additional incremental flexibility for Plazacorp to pursue our core development and acquisition activities", commented Michael Zakuta, President and CEO of Plazacorp.

The Company has received a positive ruling from Canada Revenue Agency in respect of converting from a mutual fund corporation to a real estate investment trust ("REIT") structure on a tax-deferred basis (the "Conversion"). The Company believes that the Conversion will be beneficial to shareholders since a REIT is a more tax efficient structure and is the preferred vehicle in Canada for owning real estate. The Conversion is expected to be effective as of January 1, 2014 and will be subject to shareholder approval, which approval will be sought at a meeting expected to be held in December 2013. In conjunction with the Conversion, the Company will move from a quarterly dividend to a monthly distribution. Holders of common shares of the Company are expected to receive units of the REIT on a one-for-one basis pursuant to the Conversion. The first monthly distribution to which investors hereunder will be entitled, should they hold units following the Conversion, will be the initial REIT distribution for January 2014, anticipated to be paid in February 2014.

The Company currently pays quarterly cash dividends to Shareholders of record on each record date, the next being October 15, 2013. The Offering will close after the next record date and, accordingly, purchasers of Shares hereunder will not be holders of record at such time and will not be entitled to receive such dividend payment. Plazacorp recently announced its 11^th consecutive annual dividend increase, with the Company's Board of Directors approving an increase in Plazacorp's dividend to an annualized amount of $0.24 per share. The dividend increase will be effective January 2014.

This press release shall not constitute an offer to sell, or the solicitation of an offer to buy, any securities in any jurisdiction in which such offer, solicitation or sale would be unlawful. The securities being offered 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 pursuant to applicable exemption from registration.

ABOUT PLAZACORP

Plazacorp is a leading retail property owner and developer, particularly in Eastern Canada. Plazacorp has an entrepreneurial focus with strong "value-add" capabilities. Plazacorp's current portfolio includes interests in approximately 345 properties totaling approximately 6.6 million square feet across Canada and additional lands held for development. Plazacorp's properties include a mix of strip plazas, stand-alone small box retail outlets and enclosed shopping centres, anchored by approximately 90% national tenants. Total assets have reached almost $1 billion. Plazacorp is fully internalized, therefore providing shareholders directly with the synergies that come with an internalized management structure. Plazacorp has proven its strong "value-add" capabilities to develop, redevelop and acquire retail real estate throughout Canada. Plazacorp has a strong track record of generating growth in distributions, having increased its distributions at least once every year in the last 10 years.

CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements with respect to the Company and the Offering. These statements generally can be identified by the use of forward-looking words such as "forecast", "may", "will", "would", "expect", "estimate", "planned", 'anticipate", "intend", "believe" or "continue" or the negative thereof or similar variations. Some of the specific forward-looking statements in this press release include, but are not limited to, statements with respect to the use of proceeds of the Offering, the Company's expected debt-to-gross book value ratio following closing of the Offering, the expected contribution to the Company's AFFO growth by its development properties, the integration of the KEYreit assets and the Company's intention to convert to a REIT. The actual results and performance of the Company could differ materially from those expressed or implied by such statements. See the risk factors in the public filings of the Company. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations. Some important factors that could cause actual results to differ materially from expectations include, among other things, general economic and market factors, the failure to receive any required approvals or consents in connection with the Offering or the conversion, the failure of the Company to realize expected benefits from its development properties. the failure of the Company to satisfy the conditions of the Offering or otherwise close the Offering, and changes in securities or other laws or regulations or the application thereof. The cautionary statements qualify all forward-looking statements attributable to the Company and persons acting on its behalf. The assumptions made in making forward-looking statements are referred to in the public filings of the Company. The assumptions made in making forward-looking statements in this press release also include the assumption that the Company will be in a position to satisfy the conditions in respect of the Offering and complete the Offering. Unless otherwise stated, all forward-looking statements speak only as of the date of this press release. Except as required by applicable law, the Company specifically disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise. Additional information about these assumptions and risks and uncertainties are more fully described in the Company's regulatory filings that can be obtained on SEDAR at www.sedar.com.

¹ Including Plazacorp's convertible debentures other than the well-in-the-money Series VI convertible debentures.