Retrocom REIT Announces Two Acquisitions Totalling Nine Investment Properties for $179 Million and $45 Million Bought Deal Financing

TORONTO, ONTARIO--(Marketwired - July 16, 2014) -

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Retrocom Real Estate Investment Trust ("Retrocom") (TSX:RMM.UN) today announced that it has entered into two separate conditional acquisition agreements to acquire nine investment properties in aggregate, consisting of Walmart anchored and Walmart shadow-anchored new format shopping centres. Retrocom agreed to acquire seven properties (the "Calloway Properties") from Calloway Real Estate Investment Trust ("Calloway REIT") for an aggregate purchase price of approximately $111 million (the "Calloway Acquisition"). The Calloway Properties are located in Ontario (3 properties), Québec (1 property), Nova Scotia (2 properties), and Newfoundland & Labrador (1 property). Separately, Retrocom agreed to acquire two Ontario properties (the "Walmart/SmartCentres Properties") from Wal-Mart Canada Realty Inc. and SmartCentres Realty Inc. ("SmartCentres") (the "Walmart/SmartCentres Vendors") for an aggregate purchase price of approximately $68 million (the "Walmart/SmartCentres Acquisition" and, together with the Calloway Acquisition, the "Proposed Acquisitions").

"The acquisition of these 9 properties will strengthen Retrocom's cash flow with additional rental income from Walmart, Canadian Tire, Dollarama and other leading Canadian retail tenants," said Richard Michaeloff, Retrocom Trustee and Chief Executive Officer. "It will also contribute to further geographic diversification of our revenue across Canada."

The Proposed Acquisitions will increase Retrocom's total gross leasable area and asset base by 16% and 18%, respectively. All properties offer solid anchor composition with national and regional tenants occupying 97% of the leasable area. Walmart occupies 75% of the leasable area. Many of these retail tenants are those on the forefront of retail activity, proactively attending to changes in the shopping behaviours of the Canadian consumer. The combined portfolios have a 99% occupancy rate and weighted average remaining lease term of 11 years. These attributes are expected to contribute positively to Retrocom's operations with relatively low capital expenditures and lease roll-over costs in the near future. The Proposed Acquisitions will also increase total Walmart stores in Retrocom's portfolio from 9 to 16 locations, increasing Walmart's contribution to Retrocom's total gross revenue from 10% to 18%.

The aggregate purchase price, excluding value attributable to developable land, represents an approximate 6.6% yield on going-in net operating income.

The following table provides a summary description of the properties Retrocom proposes to acquire:

CALLOWAY PROPERTIES
Property Location	Gross Leasable Area (Sq. Ft.)		Occupancy		Year Anchor Built		Major Tenants
Rockland, Ontario	147,358		100.0	%	2007		Walmart, Dollarama, LCBO, Boston Pizza, Bulk Barn, The Source, EB Games
Truro, Nova Scotia	132,851		95.4	%	2001		Walmart, Dollarama, Reitmans, Penningtons
Napanee, Ontario	107,871		97.8	%	2006		Walmart, Dollarama, Mark's, The Source
Magog, Québec	106,976		100.0	%	2007		Walmart, TD Bank
Kapuskasing, Ontario	71,306		100.0	%	2000		Walmart, Dollar Tree
New Minas, Nova Scotia	45,561		95.5	%	2003		Walmart (shadow anchor), Sport Chek, Mark's, Bulk Barn, Bank of Nova Scotia, PJ's Pets, EB Games
Gander, Newfoundland & Labrador	25,235		91.8	%	2006		Walmart (shadow anchor), Kent Building Supplies (shadow anchor), Bank of Nova Scotia, Buck or Two, Penningtons, EasyHome, The Source
Total	637,158		98.0	%
WALMART/SMARTCENTRES PROPERTIES
Property Location	Gross Leasable Area (Sq. Ft.	)	Occupancy		Year Anchor Built		Major Tenants
Orillia, Ontario	241,516		100.0	%	2009		Walmart, Winners, Dollarama, Michaels, Staples, Sleep Country
Simcoe, Ontario	129,876		100.0	%	2008		Walmart, LCBO, Dollar Tree
Total	371,392		100.0	%
Grand Total	1,008,550		98.8	%

Retrocom expects to complete the proposed Walmart/SmartCentres Acquisition and the proposed Calloway Acquisition in September, 2014 and October, 2014, respectively, subject in each case to the satisfaction of certain conditions, including among others:

• satisfactory completion of due diligence by Retrocom on the Walmart/SmartCentres Properties and the Calloway Properties, as applicable, including receipt by the Special Committee of Retrocom's Board of Trustees (the "Board") of an opinion from its financial advisor, Brookfield Financial Corp., that the consideration payable by Retrocom pursuant to the Proposed Acquisitions is fair, from a financial point of view, to Retrocom's Unitholders (other than Mitchell Goldhar, owner of SmartCentres, entities controlled by Mr. Goldhar (collectively, the "SC/MRR Group"), and their affiliates);
  
  
• approval by Retrocom's Board;
  
  
• receipt of certain regulatory approvals;
  
  
• approval of the Proposed Acquisitions by Retrocom's Unitholders (excluding Mitchell Goldhar, the SC/MRR Group, and their affiliates) at a future special meeting to be called for such purpose; and
  
  
• satisfaction of other customary closing conditions.
  
  

There can be no assurance that all conditions to the Proposed Acquisitions will be satisfied or waived or that either or both of the acquisitions will be completed.

Financing of the Proposed Acquisitions

Retrocom has entered into an agreement to sell, on a bought deal basis to a syndicate of underwriters led by TD Securities Inc., 10,500,000 units ("Units") at a price of $4.30 per Unit for gross proceeds of $45,150,000 (the "Offering"). In addition, Retrocom has granted the syndicate an over-allotment option, exercisable in whole or in part for a period of 30 days following closing, to purchase up to an additional 1,575,000 Units at the same price which, if exercised in full, would increase the gross offering size to $51,922,500.

The net proceeds from the Offering are expected to be used to partially fund the Proposed Acquisitions, if either or both of such acquisitions are completed. In the event neither of the Proposed Acquisitions is completed the net proceeds will be used to repay existing indebtedness, to fund development and re-development activities and for general trust purposes. Pursuant to the Offering, Mitchell Goldhar will purchase, directly or indirectly, 2,750,000 Units at a price of $4.30 per Unit.

The Offering is expected to close on or about August 6, 2014. Closing of the Offering is subject to certain customary conditions, including the receipt of all necessary regulatory approvals.

At the election of SmartCentres, Retrocom may satisfy a portion of the purchase price for the Walmart/SmartCentres Properties by issuing to SmartCentres up to 2,400,000 Class B limited partnership units ("LP Units") of Retrocom's subsidiary, RMM Limited Partnership I, exchangeable for Units on a one-for-one basis, at a price per LP Unit of $4.55 based on the volume weighted average trading price of Units on the Toronto Stock Exchange for the 10 trading days immediately preceding July 14, 2014. Retrocom intends to satisfy the remainder of the purchase price for the Walmart/SmartCentres Properties through mortgage financing to be placed on the two Walmart/SmartCentres properties and net proceeds from the Offering. SmartCentres Management Inc. will retain responsibility for completing the development and leasing with respect to an additional 69,000 square feet of undeveloped retail space on the Walmart/SmartCentres Properties, which will entitle the Walmart/SmartCentres Vendors to an additional payment as the space is completed and occupied by tenants.

Retrocom intends to satisfy the purchase price for the Calloway Properties by the assumption of existing mortgage debt on three of the properties in an aggregate amount of approximately $36 million, additional mortgage financing to be placed on the other four Calloway Properties, net proceeds from the Offering and a vendor take-back mortgage in the amount of approximately $40 million.

Upon closing of the Offering and both Proposed Acquisitions, Retrocom's debt / gross book value is expected to be approximately 58% (50% excluding convertible debentures).

Calloway REIT and SmartCentres may each be considered to be a "related party" of Retrocom under Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions ("MI 61-101") as Mitchell Goldhar is a control person of each of Calloway REIT and Retrocom, and is the owner of an interest in the Walmart/SmartCentres Properties. As a result, each Proposed Acquisition may be considered to be a "related party transaction" under MI 61-101. Additional information regarding Mr. Goldhar's relationship to Retrocom is included in Retrocom's Annual Information Form for the year ended December 31, 2013, and in its Management Information Circular dated May 28, 2014 (the "Circular"), which are available on SEDAR at www.sedar.com.

MI 61-101 provides a number of circumstances in which a transaction between an issuer and a related party may be subject to valuation and minority approval requirements. The independent real estate appraisal firms Altus Group Limited and Jones Lang LaSalle, IP, Inc. have prepared formal valuations ("Independent Valuations") of the Calloway Properties on behalf of each of the vendor and purchaser, respectively. The average of the two Independent Valuations is $111 million. Jones Lang LaSalle, IP, Inc. will also prepare formal valuations of the Walmart/SmartCentres Properties. In addition, Brookfield Financial Corp., financial advisor to the Special Committee of the Board, will provide the Special Committee with an opinion as to whether the consideration payable by Retrocom pursuant to the Proposed Acquisitions is fair, from a financial point of view, to Retrocom's Unitholders (other than Mitchell Goldhar, the SC/MRR Group, and their affiliates). The completion of each of the Proposed Acquisitions will also be subject to approval by Retrocom's Unitholders (excluding, for such purposes, Mr. Goldhar, the SC/MRR Group, and their affiliates) at a future special meeting of Retrocom's Unitholders to be called for such purpose. In addition, if the Calloway Acquisition is completed on or prior to October 6, 2014, or, if certain conditions are met by January 4, 2015, then SC/MRR Group's Minimum Voting Entitlement, as defined in the Circular, will be extended to July 8, 2018.

About Retrocom REIT

Retrocom is an unincorporated, open-end real estate investment trust which focuses on owning and acquiring retail properties across Canada with the goal of enhancing long-term unitholder value.

Forward-Looking Information

This press release may contain forward-looking statements. These statements relate to, but are not limited to, Retrocom's expectations, intentions, plans and beliefs. 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" or the negative or grammatical variations of these terms or other comparable terminology. Forward-looking statements may sometimes also be identified by discussions of strategies that involve risks and uncertainties, including, for example, the Proposed Acquisitions described in this press release. By their nature, forward-looking statements involve numerous assumptions and are subject to known and unknown risks, uncertainties and other factors, that contribute to the possibility that the predictions, forecasts, projections and various future events will not occur. Those risks, uncertainties and other factors include, but are not limited to, competition within the commercial real estate sector, international, national and regional economic conditions and the availability of capital to fund further investments in Retrocom's business. Although management of Retrocom 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, and actual events or results may differ materially from those suggested by any forward-looking statements. Accordingly, undue reliance should not be placed on any forward-looking statements contained in this press release. Neither Retrocom 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.

This press 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, nor shall there be any sale of the Units in any state, province or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under securities laws of any such state, province or other jurisdiction. The Units of Retrocom have not been, 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 exemption from the registration requirements of U.S. securities laws.