Regal Lifestyle Communities Inc. Agrees to Acquire $160MM Portfolio and Announces $27 Million Public Offering of Common Shares

TORONTO, ONTARIO--(Marketwired - May 20, 2014) -

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

Regal Lifestyle Communities Inc. ("Regal" or the "Company") (TSX:RLC) announced today that it has agreed to acquire a portfolio of seven multi-unit retirement communities located in the Province of Québec (the "Acquisition Portfolio") from ELAD Genesis Limited Partnership (the "Vendor") for a purchase price of approximately $160 million, subject to closing adjustments (the "Purchase Price").

"This acquisition provides Regal with a meaningful presence in Québec, which is one of the strongest and most active markets for seniors housing in Canada", said Simon Nyilassy, Regal's President and CEO. He added, "We are pleased to have obtained a large portfolio of well-leased and maintained homes focused in the Montreal area, the economic heartland of Québec, at an attractive price that will result in immediate AFFO per share accretion for our shareholders."

The Acquisition Portfolio comprises the following:

Name		Location		Year Built/ Last Renovated		Occupancy as of May 1, 2014		Number of Suites
Le Clair Matin		Longueuil, Québec		1989		93.4%		197
L'Émérite de Brossard		Brossard, Québec		1988-1989		94.6%		242
Les Jardins du Couvent		Marieville, Québec		2002/2008-2009		87.7%		131
Les Jardins Intérieurs		Saint-Lambert, Québec		1989/2013		94.9%		418
Les Jardins Vaudreuil		Vaudreuil-Dorion, Québec		1975/2002		95.7%		142
Pavillon des Cèdres		Rivière-du-Loup, Québec		1956/1985		93.3%		105
Manoir Lafontaine		Rivière-du-Loup, Québec		1993/2000-2005		97.2%		214
Total/Weighted Average						94.3%		1,449

The Acquisition Portfolio has been managed by Société de Gestion Cogir S.E.N.C. ("Cogir"), one of the largest managers of seniors homes in Québec, for the past six to twelve years. Regal will enter into a building management agreement whereby Cogir will continue to manage the Acquisition Portfolio. The management agreement will be terminable without penalty by either party.

Regal has identified approximately $9.4 million of capital improvement and renovation programs which it will undertake over the next five years to maintain and enhance the competitive position of each of the properties in the Acquisition Portfolio in their respective markets. An allowance for a portion of these costs was negotiated with the Vendor and is reflected in the purchase price of approximately $160 million, which represents a capitalization rate on estimated 2014 net operating income of approximately 7.8%.

The closing of the Acquisition Portfolio is subject to certain conditions typical for transactions of this type, including lender consents. The acquisition is scheduled to close on or about June 6, 2014. There can be no assurance that all conditions to closing of the acquisition will be satisfied or waived.

Related Financings and Assumption of Debt

Regal also announced today that it has reached an agreement with a syndicate of underwriters, led by CIBC (the "Underwriters"), to issue to the public on a bought deal basis, subject to regulatory approval, 3,530,000 common shares (the "Common Shares") at a price of $7.65 per Common Share, representing gross proceeds of approximately $27 million (the "Offering"). The Company has also granted the Underwriters an over-allotment option to purchase up to an additional 529,500 Common Shares on the same terms and conditions, exercisable in whole or in part at any time, up to 30 days after the closing of the Offering (the "Over-Allotment Option").

The net proceeds from this Offering (after deducting the Underwriters' fee and estimated Offering expenses) will be used to pay a portion of the Purchase Price for the Acquisition Portfolio. The Offering is not conditional upon the acquisition of the Acquisition Portfolio. In the event that the Offering is completed but the acquisition of the Acquisition Portfolio is not completed, the net proceeds of the Offering will be used by the Company to fund future acquisitions and for general corporate purposes.

The remainder of the Purchase Price will be satisfied by the Company through the issuance to the Vendor, on a private placement basis, of approximately 3,374,833 Common Shares at a price of $7.47 per Common Share, cash on hand and the assumption by the Company of approximately $104.8 million in mortgages secured against the Acquisition Portfolio. Such mortgages will have a weighted average annual contractual interest rate of approximately 4.5% and a weighted average term to maturity of 5.8 years. Regal will receive a credit from the Vendor in the amount of approximately $2.2 million to reduce the effective annual interest rate on the assumed mortgages to a weighted average of 4.0%. The price of the Common Shares that are being issued to the Vendor was established by applying a 5% discount to the five day volume weighted average trading price of Regal's Common Shares on the TSX as at May 20, 2014.

Upon closing of the acquisition of the Acquisition Portfolio and the Offering (without giving effect to the exercise of the Over-Allotment Options), the Vendor will own an approximate 11.0% interest in Regal. The Common Shares to be issued to the Vendor will be subject to a six month contractual hold period.

The Company will, on or before May 22, 2014, file with the securities commissions and other similar regulatory authorities in each of the provinces and territories of Canada, a preliminary short form prospectus relating to the Offering. The Offering is scheduled to close on or about June 5, 2014, and is subject to regulatory approval, including the approval of the Toronto Stock Exchange.

The Common Shares have not been, nor will they be, registered under the United States Securities Act of 1933, as amended, and may not be offered, sold or delivered, directly or indirectly, in the United States or to, or for the account or benefit of, "U.S. persons" (as defined in Regulation S under the United States Securities Act of 1933, as amended), except pursuant to an exemption from the registration requirements of the 1933 Act. This press release does not constitute an offer to sell or a solicitation of an offer to buy the Common Shares in the United States or to, or for the account or benefit of, U.S. Persons.

About Regal Lifestyle Communities Inc.

Regal Lifestyle Communities Inc. is a corporation incorporated under the laws of the Province of Ontario which currently owns a portfolio of 16 income-producing retirement communities offering a continuum of care, from independent serviced living to a full range of assisted living programs. The 16 retirement communities comprise over 2,100 suites, primarily located in the Province of Ontario and including a property located in each of the Provinces of British Columbia, Saskatchewan and Newfoundland and Labrador.

Forward Looking Information

Certain information in this press release may constitute forward-looking statements that involve a number of risks and uncertainties, including statements with respect to the Company and its operations, strategy, financial performance and financial condition, as well as with respect to the Company entering into a building management agreement with COGIR, anticipated capital improvements and renovation programs, which the Company expects to undertake over the course of the next five years at each of properties in the Acquisition Portfolio, the effects of such capital improvements and renovation programs, including the maintenance and enhancement of the competitive position of each of the properties in the Acquisition Portfolio, the closing of the acquisition of the Acquisition Portfolio and the effects of the acquisition of the Acquisition Portfolio on the financial performance of the Company including that the acquisition of the Acquisition Portfolio is anticipated to be accretive to the Company's AFFO. Forward-looking statements use the words "believe", "expect", "anticipate", "may", "should", "intend", "estimate" and other similar terms, which do not relate to historical matters. Such forward-looking statements involve known and unknown risks and uncertainties and other factors that may cause the actual results to differ materially from those indicated. Such factors include, but are not limited to, general economic conditions and the failure to receive any required approvals or consents in connection with the acquisition of the Acquisition Portfolio or the failure to satisfy or waive any other condition to the acquisition of the Acquisition Portfolio, the failure of the Company to realize expected benefits from the acquisition of the Acquisition Portfolio, the failure of the Company to satisfy the conditions of the Offering or otherwise close the Offering. Also see the risk factors identified in the public filings of the Company available on www.sedar.com. The Company believes that the expectations reflected in its forward-looking statements are based on reasonable assumptions; however, the Company can give no assurance that actual results will be consistent with these forward-looking statements. Except as required by applicable securities laws, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise. Readers are cautioned not to place undue reliance on the forward-looking statements.

"AFFO" and net operating income ("NOI") are not measures recognized under International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board and do not have any standardized meaning prescribed by IFRS. AFFO and NOI are supplemental measures of a company's performance and management believes that AFFO and NOI are useful in the assessment of the Company's operating performance for valuation purposes, and is also a relevant measure of the ability of the Company to earn and declare dividends to shareholders. AFFO and NOI, as computed by the Company, may differ from similar computations as reported by other similar organizations and, accordingly, may not be comparable to AFFO and NOI reported by such organizations. AFFO and NOI should not be construed as alternatives to comprehensive income or cash flow from operating activities determined in accordance with IFRS as indicators of Regal's performance. For additional information regarding these non-IFRS measures, including the definitions thereof, refer to the Company's most recent management's discussion and analysis of results of operations and financial condition, a copy of which is available at www.sedar.com.