Realty Finance Corporation Announces the Execution of Term Sheet with JAC Investment Corp. to Tender for all Outstanding Shares of Common Stock of the Company

ROCKY HILL, Conn., Oct. 26 /PRNewswire-FirstCall/ -- Realty Finance Corporation (Pink Sheets: RTYFZ) (the "Company") and  JAC Investment Corp. ("JAC") today announced the execution of a term sheet (the "Term Sheet") to tender for all outstanding shares of the Company's common stock (the "Common Stock").

Pursuant to the Term Sheet, JAC agreed to form a new limited liability company ("Buyer") which will use its reasonable best efforts to tender for all outstanding shares of the Common Stock at a price of $0.11 per share (the "Tender").  Upon consummation of the Tender (the "Consummation"), the current members of the Company's board of directors (the "Board") and the Company's officers will resign and the Board will appoint designated replacements of Buyer.  The commencement of the Tender (the "Commencement") and the Tender are subject to certain conditions precedent, including, but not limited to, the requirements that (i) the holders of more than 50% of the outstanding shares of Common Stock tender their shares and (ii) the Company receives a favorable fairness opinion from a firm it selects at its sole discretion prior to the Commencement and a bring-down fairness opinion prior to the Consummation.  Prior to the Commencement, the Company agreed to have a minimum cash balance of $2.2 million and not to incur any additional indebtedness or obligations other than in the ordinary course of its business.  In addition, in connection with the Tender, Buyer agreed to pay for certain of the Company's reasonable out-of-pocket expenses, including the costs associated with obtaining a fairness opinion, subject to certain conditions.  Buyer and JAC will work expeditiously to draft and finalize definitive documentation.  Buyer agreed to commence the Tender within seven days of both entering into definitive agreement with the Company in respect of the Tender and the Company obtaining the fairness opinion, but not later than 30 days from the date hereof.  The Tender will expire no later than 45 days after the Commencement, subject to extension for an additional 21 days by Buyer if at least 40% of the shares of Common Stock having been validly tendered.  The Term Sheet will terminate automatically within ten days after the date hereof unless Buyer indicates to the Company in writing that it wishes to proceed with the Tender or within 30 days if definitive documentation is not executed.  In the event the Term Sheet is terminated automatically, the Company will refund the full amount of any cash deposits not already expended.  The Company has granted Buyer exclusivity in connection with the Tender, subject to certain fiduciary exceptions, including, among others, the Company's right to participate in discussions or negotiations with third parties making unsolicited offers, and will pay Buyer a break-up fee of $75,000 and repay all expense reimbursements funded by Buyer in the event it enters into a similar transaction with any third party, subject to certain conditions.  

In accordance with its goals to maximize stockholder value, the Company believes that entering into the Term Sheet is in the best interest of its stockholders given the Company's current financial condition.  The Company had previously engaged in an extensive strategic review, which was advised by Goldman Sachs, that did not result in a viable transaction.  Since then, the Company had many further discussions with additional parties.  The Term Sheet was the result of several months of discussions.  To the extent the Company, JAC and Buyer successfully complete definitive documentation, the Company will provide further details related to the Tender in the tender offer documents to be circulated to stockholders at a later date.  No assurances can be given that the Company, JAC and Buyer will launch the Tender until definitive documentation is complete or that if launched, that the Tender will meet all conditions precedent.

About Realty Finance Corporation

Realty Finance Corporation is a commercial real estate specialty finance company primarily focused on managing a diversified portfolio of commercial real estate-related loans and securities. For more information on the Company, please visit the Company's website at http://www.realtyfinancecorp.com.

The Company's common stock is currently quoted on the Pink OTC Markets, or Pink Sheets. While not a requirement, the Pink Sheets encourages companies having their securities quoted thereon to provide adequate current information in accordance with its disclosure guidelines. The Company will evaluate the need to issue press releases containing information similar to such information disclosed herein. There is no assurance that the Company will provide timely periodic disclosures or at all.

The Company has elected to qualify to be taxed as a real estate investment trust, or REIT, for U. S. federal income tax purposes commencing with the taxable year ended December 31, 2005. As a REIT, the Company generally will not be subject to U. S. federal income tax on that portion of income that is distributed to stockholders if at least 90% of the its REIT taxable income is distributed to its stockholders. The Company conducts its operations so as to not be regulated as an investment company under the Investment Company Act of 1940, as amended, or the 1940 Act. The Company has not had any taxable income in 2008 and 2009 and does not expect to have any taxable income in the future.

About JAC Investment Corp.

JAC Investment Corp. is a private investment company controlled by James A. Coyne. Through its active investment in Hera East Holdings LLC, it invests in real estate and financial service businesses.  Mr. Coyne is also a principal of Stoneleigh Partners Acquisition Corp., which had previously entered into a joint venture partnership agreement with the Company.

Forward-Looking Information

This press release contains forward-looking statements based upon the Company's beliefs, assumptions and expectations of its future performance, taking into account all information currently available. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to the Company or are within its control. If a change occurs, the Company's business, financial condition, liquidity and results of operations may vary materially from those expressed in its forward-looking statements. The factors that could cause actual results to vary from the Company's forward-looking statements include: the Company's ability to continue to cover its operating cash shortfall; the risk factors included as part of the Company's Annual Report on Form 10-K for the period December 31, 2008 filed on March 16, 2009; the Company's future operating results; its business operations and prospects; general volatility of the securities market in which the Company invests and the market prices of its common stock; the effect of trading on the Pink Sheets; availability, terms and deployment of short-term and long-term capital; availability of qualified personnel; changes in the industry; interest rates; the debt securities, credit and capital markets, the general economy or the commercial finance and real estate markets specifically; performance and financial condition of borrowers and corporate customers; the status of the appeal of the class action lawsuit; any future litigation that may arise; the ultimate resolution of the Company's numerous defaulted loans; the state of the Company's joint venture investments; the ability to continue as a going concern; availability of liquidity; and other factors, which are beyond the Company's control. The Company undertakes no obligation to publicly update or revise any of the forward-looking statements. For further information, please refer to the Company's previous periodic filings with the Securities and Exchange Commission. However, the Company is no longer a Securities and Exchange Commission reporting company as of March 16, 2009 and therefore, such information is not current and circumstances have changed significantly since the date of such filings.

SOURCE Realty Finance Corporation