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CHC Realty Capital Corp. Announces Agreement in Principle for Qualifying Transaction

Transaction Initiates Company's Strategy to be Market Leader in Student Housing

TORONTO, ONTARIO -- (Marketwired) -- 01/09/14 -- CHC Realty Capital Corp. ("CHC" or the "Company") (TSX VENTURE: CHC.P), a capital pool company, is pleased to announce that it has entered into a purchase and sale agreement dated January 9, 2014 to acquire the "Liberty Terrace" student housing property located in Kingston, Ontario (the "Property"). Subject to the terms and conditions of the agreement and the completion of certain conditions precedent, including satisfactory due diligence and receipt of all necessary regulatory approvals, including TSX Venture Exchange ("TSXV") approval, the proposed transaction will qualify as CHC's "Qualifying Transaction" as defined in TSXV Policy 2.4 - Capital Pool Companies.

The Property is situated at 335 Barrie Street, Kingston, in close proximity (approximately 1.2 km) to Queen's University. It is comprised of 18 beds and 1,108 sq ft. of ground floor commercial space. The vendor of the Property is Q4 Realty Inc. (the "Vendor"), a corporation incorporated under the laws of Ontario. The Vendor is not related to CHC or any of its directors and officers. As such, the acquisition will not be a Non-Arm's Length Qualifying Transaction (as that term is defined in TSXV Policy 2.4) and approval of CHC's shareholders will not be required for the completion of the acquisition. The principal shareholders of the Vendor are Bernard Luttmer, Oskar Johansson and John Feaver all of Toronto, Ontario and Andrew Keilty of Kingston, Ontario.

The purchase price for the Property is $2.5 million, subject to adjustments, which CHC intends to satisfy through the assumption of an existing mortgage on the Property in the principal amount of approximately $1.3 million, and the payment to the Vendor of the balance of the purchase price in cash from CHC's existing funds. CHC has paid a refundable deposit to the Vendor in the amount of $25,000. The deposit will become non-refundable upon satisfaction or waiver of CHC's due diligence condition in respect of the acquisition.

"We are very excited to enter into this transaction as the first step in our growth plan to become the leading provider of student housing across Canada", said Mark Hansen, Chief Executive Officer of CHC. "Liberty Terrace meets our criteria for acquiring high quality assets in close proximity to a major university in a proven market. The property provides stable and secure cash flow and is managed by a strong local partner in Varsity Properties, who are the leading property manager of student accommodations in the Kingston market. This model represents our template for growth across the country."

In addition to the deposit paid by the Company, CHC Realty Investments Inc. ("CHC RI"), a company owned by Mark Hansen, President, CEO and a director of the Company and Craig Smith, a director of the Company, has paid the Vendor an additional $75,000 refundable deposit, which will also become non-refundable upon satisfaction or waiver of CHC's due diligence condition in respect of the acquisition. CHC RI will also pay the Vendor an additional non-refundable deposit of $100,000 upon satisfaction or waiver of CHC's due diligence condition. The deposits will be repaid by the Company to CHC RI on closing of the proposed transaction, without interest or fees.

There will be no changes to the directors and officers of CHC as a result of the Qualifying Transaction. The directors and officers of CHC are Mark Hansen, President, CEO and director, Robert Waxman, CFO, Vaughn MacLellan, Corporate Secretary and director, Craig Smith, director and Thomas Murphy, director. Additional information about the directors and officers of CHC is contained in the prospectus of the Company dated November 19, 2013 relating to its initial public offering, which is available under the Company's profile on SEDAR at www.sedar.com.

On closing of the acquisition of the Property, CHC anticipates meeting the "Tier 2" initial listing requirements of the TSXV for a real estate issuer. Closing of the acquisition is currently anticipated to be in the first quarter of 2014.

The acquisition of the Property is intended to form part of a series of transactions which will result in CHC carrying on business as an owner and operator of student housing properties located in Canada with an internalized executive management platform and, at an appropriate time, the effective conversion of CHC into a real estate investment trust focused on student housing.

Additional Information Regarding the Property

The Property's 18 student beds are fully occupied and the commercial space is currently 100% leased to two tenants. Both commercial leases expire later in 2014. One of the commercial tenants has decided not to renew its lease and will be vacating the space at the end of its term. The other tenant is Varsity Properties Inc. ("Varsity"), a related entity to the Vendor. The location leased by Varsity is its head office. Varsity has entered into a new 5 year lease for the entire commercial space upon expiry of the existing leases. The terms of the new lease will increase NOI by $10,000 annually.

The existing mortgage on the Property will be assumed by CHC on closing. The mortgage is with a Canadian chartered bank and CHC is currently in discussions with the bank to assume the mortgage on closing. The principal balance outstanding on the mortgage is approximately $1.3 million. The mortgage comes due on June 1, 2014 with an above market interest rate. CHC intends to enter into discussions post-closing to renew the mortgage at current market rates.

The following table highlights additional information about the Property:

Year                             NOI         NOI   Occupancy        AMR
Built               Beds       (LTM)    Cap Rate       (LTM)       (LTM)
2009                  18    $149,527        6.0%        100%     $847.69
Notes: NOI = net operating income. See also "Non-IFRS Measure".
LTM = last 12 months ended November 30, 2013.
AMR = average monthly rate per bed (excluding commercial and parking)

Property Management

In connection with the acquisition of the Property, CHC expects to enter into property management arrangements with Varsity, pursuant to which Varsity will become the property manager of the Property. Varsity is not related to CHC or any of its directors and officers. Varsity will be entitled to receive a fee for its property management services calculated on the basis of the Property's aggregate gross revenue to be negotiated.

Conditions of Completion

The acquisition of the Property will be subject to receipt of all necessary regulatory approvals, including the approval of the TSXV. In addition, the acquisition of the Property is subject to certain closing conditions, including completion of satisfactory due diligence and the completion of financing arrangements with the mortgage lender.

CHC Capitalization

As of the date hereof, CHC has 55,000,000 common shares issued and outstanding, 4,125,000 incentive options exercisable at $0.10 per share and 1,000,000 agent's options exercisable at $0.10 per share. There will be no change to the capitalization of CHC as a result of the acquisition of the Property, other than the new mortgage financings in respect of the Property to be obtained by CHC.


Sponsorship of a Qualifying Transaction of a capital pool company is required by the TSXV unless an exemption from the sponsorship requirement is available. CHC intends to seek a waiver from the TSXV of the sponsorship requirement but if such waiver is not obtained, CHC will then retain a qualified sponsor.

Trading Halt

CHC's common shares are currently halted and CHC anticipates they will remain halted until the documentation required by the TSXV for the proposed transaction can be provided to the TSXV.

About CHC Realty Capital Corp.

CHC is currently designated as a capital pool company by the TSXV. The Company has not commenced commercial operations and has no assets other than cash. Upon completion of its "Qualifying Transaction", CHC intends to carry on business as an owner and operator of student housing properties located in Canada with an internalized executive management platform. At an appropriate time in the future, CHC intends to convert into and carry on such business as a real estate investment trust.

Cautions Regarding Future Plans and Forward Looking Information

Completion of the proposed transaction is subject to a number of conditions, including but not limited to TSXV acceptance and, if applicable pursuant to TSXV requirements, majority of the minority approval. Where applicable, the transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the transaction, any information released or received with respect to the proposed transaction may not be accurate or complete and should not be relied upon. Trading in the securities of CHC should be considered highly speculative.

The TSXV has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release. Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.

This press release contains forward-looking information within the meaning of Canadian securities laws. Such information includes, without limitation, information regarding the completion of the proposed transaction and the business strategies of CHC. Although CHC believes that such information is reasonable, it can give no assurance that such expectations will prove to be correct. Forward looking information is typically identified by words such as: believe, expect, anticipate, intend, estimate, postulate and similar expressions, or are those, which, by their nature, refer to future events. CHC cautions investors that any forward-looking information provided by CHC is not a guarantee of future results or performance, and that actual results may differ materially from those in forward looking information as a result of various factors, including, but not limited to: CHC's ability to complete the proposed transaction; the state of the real estate sector in the event the proposed transaction is completed; recent market volatility; CHC's ability to secure the necessary mortgage financing or to be fully able to implement its business strategies and other risks and factors that CHC is unaware of at this time. The reader is referred to CHC's initial public offering prospectus and other continuous disclosure documents for a more complete discussion of risk factors relating to CHC and their potential effects, copies of which may be accessed through CHC's profile on SEDAR at www.sedar.com.

This news release shall not constitute an offer to sell or the solicitation of an offer to buy any securities nor shall there by any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.

Non-IFRS Measure

This press release uses the term "NOI", which stands for net operating income. NOI is not a measure recognized under IFRS and does not have a standardized meaning prescribed by IFRS. It is a supplemental measure of performance for issuers. CHC believes that NOI is an important measure of operating performance and is useful in assessing the company's property operating performance on an unlevered basis. The IFRS measurement most directly comparable to NOI is net income and NOI should not be construed as an alternative to net income determined in accordance with IFRS as an indicator of the company's performance.

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