Retrocom REIT Announces $193 Million Strategic Acquisition, $75 Million Bought Deal Financing and $15 Million Private Placement

TORONTO, ONTARIO--(Marketwired - April 30, 2013) -

NOT FOR DISSEMINATION IN THE UNITED STATES OR TO ANY NON-CANADIAN SOURCE

Retrocom Real Estate Investment Trust (TSX:RMM.UN) (the "REIT" or "Retrocom REIT") today announced it has waived its due diligence conditions on the purchase of a portfolio of 12 properties from First Capital Realty Inc. (the "Vendor") for $193 million (the "Acquisition"). In connection with this Acquisition, the REIT also announced an agreement to sell, on a bought deal basis, $50 million of subscription receipts of the REIT and $25 million aggregate principal amount of 5.50% extendible convertible unsecured subordinated debentures (the "Offering").

"We have agreed to acquire a geographically diverse portfolio concentrated in growth markets that complement our existing holdings and provide us with stable and growing cash flows," said Richard Michaeloff, Retrocom REIT Trustee and Chief Executive Officer. "The Acquisition is expected to be accretive to FFO per unit on a debt-neutral basis and is a further step in our growth strategy, increasing our assets by 22% to a total of approximately $950 million."

Description of Properties

The Acquisition is comprised of a national retail portfolio of 12 properties totalling nearly 1 million square feet of gross leasable area. The portfolio consists of a combination of enclosed malls and neighbourhood shopping centres in Ontario as well as neighbourhood shopping centres in Western Canada and Quebec anchored by grocery stores, drugstores, and other national tenants.

The following table provides a summary description of the portfolio:

Name		City		Province		GLA (sq. ft.)		Occupancy		Key Tenants
South Fraser Gate		Abbotsford		BC		32,457		97.8%		Shoppers Drug Mart
Cochrane City Centre		Cochrane		AB		59,383		94.8%		Shoppers Drug Mart, CIBC
Eastview Shopping Centre		Red Deer		AB		35,211		100.0%		Sobeys, BMO, 7-Eleven
Tillsonburg Town Centre		Tillsonburg		ON		281,013		95.5%		Walmart, Canadian Tire, Shoppers Drug Mart, LCBO, TD, CIBC
Norfolk Mall		Tillsonburg		ON		87,979		99.0%		Dollarama, Fabricland, Swiss Chalet/Harvey's
Bowmanville Mall		Bowmanville		ON		123,705		99.4%		Metro, Shoppers Drug Mart, GoodLife Fitness, Dollarama
Bowmanville Square		Bowmanville		ON		27,910		100.0%		Staples, The Beer Store, RBC
Carrefour des Forges		Drummondville		QC		74,782		100.0%		IGA Extra, SAQ, Dollarama, National Bank
Plaza Don Quichotte		Greater Montreal Area		QC		107,083		96.1%		IGA Extra, SAQ, Desjardins Credit Union
Galleries Don Quichotte		Greater Montreal Area		QC		26,742		100.0%		L'Aubainerie, Laurentian Bank
Carrefour Don Quichotte		Greater Montreal Area		QC		72,221		95.3%		Giant Tiger, CIBC
IGA Tremblant		Mont-Tremblant		QC		37,549		100.0%		IGA Extra
Total / Average						966,035		97.3%

These 12 properties solidify the REIT's geographic diversification across Canada. All properties are in growing markets and offer solid anchor composition with national tenants occupying 76.4% of the leasable area. The portfolio has a 97.3% occupancy rate and weighted average remaining lease term of 5.5 years. The properties are located in markets with high barriers to entry, thereby contributing to their long-term competitive position.

The Acquisition is estimated to be approximately 6-8% accretive to the REIT's funds from operations ("FFO") per unit. The purchase price of $193 million (the "Acquisition Purchase Price") represents an approximate 6.8% yield on going-in net operating income.

Financing of the Acquisition

In order to partially finance the Acquisition, the REIT announced that it has entered into an agreement to sell, on a bought deal basis, to a syndicate of underwriters led by TD Securities Inc., 9,530,000 subscription receipts of the REIT (the "Subscription Receipts") at a price of $5.25 per Subscription Receipt for gross proceeds of $50 million and $25 million aggregate principal amount of 5.50% extendible convertible unsecured subordinated debentures (the "Debentures") at a price of $1,000 per Debenture. The underwriters will have an over-allotment option to purchase up to an additional 1,429,500 Subscription Receipts at the same offering price and $3.75 million aggregate principal amount of additional Debentures on the same terms, exercisable, in whole or in part, no later than 30 days after the closing of the Offering. The underwriters may exercise the over-allotment option for Subscription Receipts, Debentures, or any combination of Subscription Receipts and Debentures. If the over-allotment option is exercised in full, the gross offering size will total $86.25 million, consisting of $57.5 million of Subscription Receipts and $28.75 million aggregate principal amount of Debentures.

Each Subscription Receipt represents the right to receive one unit of the REIT at no additional consideration upon the closing of the Acquisition. The proceeds from the offering of Subscription Receipts will be deposited in escrow pending the closing of the Acquisition (the "Acquisition Closing"). The Acquisition Closing will be deemed to occur upon the closing of the acquisition of a number of retail properties where the purchase price attributable to such properties represents at least 80% of the Acquisition Purchase Price. If the Acquisition Closing occurs on or before July 31, 2013, the escrowed proceeds from the offering of Subscription Receipts will be released to the REIT and used by the REIT to pay a portion of the purchase price of the Acquisition. If the Acquisition Closing does not occur by July 31, 2013, or the Acquisition is terminated at an earlier time, or the REIT advises the underwriters or announces to the public that it does not intend to proceed with the Acquisition, the escrowed proceeds and pro rata entitlement to interest thereon will be paid to holders of the Subscription Receipts.

The Debentures will have an initial maturity date of July 31, 2013, which will be extended to June 30, 2020 upon the Acquisition Closing. The Debentures will bear an interest rate of 5.50% per annum payable semi-annually in arrears on the last day of June and December in each year, commencing on December 31, 2013. Each $1,000 principal amount of Debentures is convertible at the option of the holder into approximately 138.8889 trust units of the REIT (representing a conversion price of $7.20 per unit), subject to adjustment in certain circumstances, at any time prior to the close of business on the earlier of the business day immediately preceding the maturity date and the business day immediately preceding the date fixed for redemption of the Debentures.

In addition to the Offering, the REIT has agreed to issue, upon the Acquisition Closing, to the Vendor on a private placement basis $7.5 million of units of the REIT at the same price as the offering price for the Subscription Receipts and $7.5 million aggregate principal amount of convertible unsecured subordinated debentures on the same terms as the Debentures issued in the Offering.

In connection with the Acquisition, the REIT will also obtain a $90 million bridge loan from the Toronto-Dominion Bank, which the REIT intends to repay from the proceeds of conventional first mortgages to be placed on certain of the properties following the closing of the Acquisition. The remainder of the purchase price of the Acquisition will be satisfied by the assumption of existing mortgages of $40.3 million and cash on hand. Upon closing of the Offering and the Acquisition, the REIT's Debt / Gross Book Value is expected to be approximately 53% (44% excluding convertible debentures).

The Offering is expected to close on or about May 22, 2013. Closing of the Offering is subject to certain customary conditions, including the receipt of all necessary regulatory approvals.

The Acquisition is expected to close on or about June 4, 2013, subject to the satisfaction of customary closing conditions.

About Retrocom REIT

Retrocom REIT is an unincorporated, open-ended real estate investment trust which focuses on owning and acquiring retail properties across Canada with the goal of enhancing long-term unitholder value. The trustees of the REIT have approved changing the name of the REIT to Retrocom Real Estate Investment Trust, subject to regulatory approval.

Forward-Looking Information

This press release may contain forward-looking statements. In some cases, forward-looking statements can be identified by the use of words such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "estimate", "predict", "potential", "continue", and by discussions of strategies that involve risks and uncertainties. The forward-looking statements are based on certain key expectations and assumptions made by the REIT regarding, among other things, the use of the net proceeds of the Offering, the closing of the Offering, and the closing of the Acquisition. By their nature, forward-looking statements involve numerous assumptions, inherent risks and uncertainties, both general and specific, that contribute to the possibility that the predictions, forecasts, projections and various future events will not occur. Although management of the REIT believes that the expectations reflected in the forward-looking statements are reasonable, there can be no assurance that future results, levels of activity, performance or achievements will occur as anticipated. Neither the REIT nor any other person assumes responsibility for the accuracy and completeness of any forward-looking statements, and no one has any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or such other factors which affect this information, except as required by law.

The securities offered pursuant to the Offering have not and will not be registered under the U.S. Securities Act of 1933, as amended, and may not be offered, sold or delivered in the United States absent registration or an applicable exemption from the registration requirements of U.S. securities laws. This news release shall not constitute an offer to sell or the solicitation of an offer to buy, which may be made only by means of a prospectus, the securities in any jurisdiction.