TORONTO, ON—(Marketwired – July 02, 2015) – Delavaco Residential Properties Corp. (“Delavaco” or the “Company”) (TSX VENTURE: DVO.U) (OTCQX: DELAF) is pleased to provide the following update.

Possible Transaction

As reported on April 15, 2015, the Company had entered into discussions regarding a possible transaction to acquire a controlling interest in the Company. The Board of Directors (the “Board”) had previously established a special committee of the Board (“Special Committee”) comprised of two independent directors, Messrs. Michael Serruya and Romeo DeGasperis, to review and consider proposals in respect of such a possible transaction. The Special Committee completed the mandate and made its recommendation to the Board and the Board unanimously concluded that the Company will no longer pursue any such possible transaction and that the mandate of the Special Committee has been completed.

Change of Management and Board of Directors

The Company would like announce that Andrew DeFrancesco, Chairman of the Board and Chief Executive Officer (“CEO”), has resigned as CEO effective immediately and relinquished his position as Chairman. Mr. DeFrancesco will continue on the Board to serve as a director. There is no termination fee associated with Mr. DeFrancesco's departure. The Company would like to express its sincere thanks to Mr. DeFrancesco for his commitment to date and the Board looks forward to continuing this relationship through his directorship.

The Board will temporarily leave the CEO position unfilled. The Compensation and Governance Committee, comprised of Messrs. Michael Serruya (Chairman), Kelly Hanczyk and Marc Muzzo, have recommended, and the Board has unanimously approved Mr. Keith Ray, a current independent director, to assume the role of Interim Chairman. At the operational level, Mr. Jorge Aldecoa, currently Senior Asset Manager, will be promoted into the role of Interim Chief Operating Officer and will report directly to the Board.

Mr. Ray has been a member of the Board since helping take the Company public in January, 2014 and shall remain Chairman of the Audit Committee. Mr. Ray carries a breadth of experience in various private and public real estate companies, including both private and public real estate investment trusts and currently acts as a director of two other Canadian listed reporting issuers, Firm Capital Mortgage Investment Corporation, listed on the TSX, and Cliffside Capital Ltd, listed on the TSX–V. For 27 years until his retirement in 2007, Mr. Ray was a Chartered Professional Accountant and partner at KPMG LLP and a KPMG LLP predecessor firm where he served as audit partner and relationship partner for a wide variety of public and private companies, mostly in the real estate industry.

Mr. Aldecoa has more than 10 years of experience in residential and commercial asset management. Mr. Aldecoa's most recent positions include Regional Vice President of Invitation Homes, a single–family homes operator in the United States with over 45,000 rentals nationwide. In this role, Mr. Aldecoa was instrumental in developing the framework for property management. Mr. Aldecoa also acted as Regional Director, Single–Family Residential/Commercial services for FirstService Residential Realty, LLC where he assisted in the re–development and implementation of a new business segment focused on the single–family homes asset space. Mr. Aldecoa was recruited by the Company in November, 2014 and has brought a wealth of knowledge and structure to the organization. Mr. Aldecoa is an accredited commercial manager, Florida licensed real estate broker and certified apartment manager.

The Board is pleased to add Messrs. Ray and Aldecoa to these interim roles.

Operational Updates

Related Party Loan and Managing Park Colony:

As reported in the Company's first quarter 2015 consolidated results, Mr. DeFrancesco was provided two separate advances in the amounts of approximately $4.3M and $789K in the form of promissory notes bearing interest at a rate of 7.00% per annum, maturing on December 30, 2015 (the “Notes”). The $4.3M Note is dated December 30, 2013 while the $789K Note is dated May 25, 2015. Both Notes resulted from the Company's previous intention to purchase from Mr. DeFrancesco a 316 door multi–family residential unit asset located within the Park Colony Apartment Homes in Hollywood FL (the “Park Colony Property”); a property currently third party managed by GREP Southeast, LLC (“Greystar”).

The Company has determined that it no longer desires to purchase this asset and as such the parties have agreed to amend the repayment terms of the Notes by collecting from Mr. DeFrancesco in stages over the duration of the term of the Notes commencing immediately. As of the date of this press release, $200,000 has been repaid under these Notes. Mr. DeFrancesco has provided the Company with security for such indebtedness that will remain in place until the debt has been repaid. The Company and Mr. DeFrancesco have also agreed to amend the $789K Note such that the interest accrued and payable shall commence on the date it was originally funded being October 28, 2013, removing an initial interest free period originally contemplated. The proceeds shall be directed towards working capital.

Furthermore, the Company currently provides oversight of Greystar on behalf of Mr. DeFrancesco for a fee of 1% of gross revenue of the Park Colony Property. The parties intend to enter into a formal agreement to continue this arrangement at the same rate for one year rolling periods. Either party shall have the ability to terminate this relationship at any time.

Advisory Fee:

On December 30, 2013, the Company signed an advisory services agreement with Delavaco Capital Inc. (“DCI”), a company managed by Mr. DeFrancesco, whereby Mr. DeFrancesco agreed to continue providing services related to two multi–family properties that were acquired by the Company in Austin, Texas (the “Advisory Properties”) including acting as a required guarantor for certain banks (the “Advisory Agreement”). Under the terms of the Advisory Agreement, the Company is required to pay DCI $23,500 per month. The Company and Mr. DeFrancesco have decided to terminate the Advisory Agreement effective June 30, 2015 and replace it with a new agreement which shall indemnify Mr. DeFrancesco for all exposure related to the Advisory Properties for a period of one year. Both parties have agreed that there will be no termination fee applied to the cancellation of the Advisory Agreement and no fees associated with entering into the new agreement. During this time, the Company shall commit its best efforts to have Mr. DeFrancesco removed as guarantor.

Sale of Single–Family Portfolio and Debt Repayment:

The Company continues to sell its single–family home portfolio. To date, the Company has sold 76 single–family homes in Florida and has 45 homes pending sale with executed contracts in place. The Company will continue to divest itself of its single–family home portfolio in Florida, Georgia and New Jersey while using proceeds therefrom to pay down its corporate debt facilities. In March of 2015, the Company successfully paid down $2.5M of its corporate debt and paid down another $2.5M on June 30, 2015, a total debt repayment of $5M representing 20% of the original principal amount being $25M. This debt was incurred pursuant to a debenture carrying an annual interest rate of 7.5%, with interest only payments and maturing in June, 2016. The Company remains confident that the sale of the single–family home portfolio accompanied by the pay down of debt shall strengthen its balance sheet's leverage profile while increasing operating income by eliminating the costs associated with operations of the single–family home portfolio.

New Jersey Note:

On March 26, 2014, the Company completed the acquisition of 96 residential units across 19 multi–family properties in Paterson, New Jersey (the “New Jersey Portfolio”). As part of the acquisition, the Company issued promissory notes dated May 1, 2015 to Petrogas Holdings Inc. (“Petrogas”) payable in the amount of $3,188,685 (the “New Jersey Notes”). The New Jersey Notes bear interest at a rate of 5.5% per annum and matured on November 1, 2014. The parties subsequently agreed the New Jersey Notes would not be called for the time being and remain on demand terms. Commencing July 2, 2015, the parties will enter into an extension agreement whereby the New Jersey Notes will roll on a bi–monthly basis provided the parties mutually agree to such extensions on a bi–monthly basis, failing which outstanding amounts on the New Jersey Notes will become immediately due and payable (the “Rolling Note”). The Company is currently working to divest itself of the New Jersey Portfolio and intends to pay down the Rolling Note immediately upon divestiture.

Municipal Code Violations:

The Company has received notices of fines and penalties relating to liens placed by municipal authorities as a result of various code violations pertaining to some of the Florida investment properties, which it estimates totalled approximately $8,404,824 as at March 31, 2015. The Company is aggressively rectifying the outstanding issues and currently expects to resolve these violations over the next 3 to 6 months. Since March 31, 2015, the Company has successfully settled approximately $970,000 of these fines and penalties at a cost of approximately $47,000. The Company has also taken actions to remove and discharge liens of approximately $4.0M and awaits settlement of such liens while the balance of the liens continue to be addressed. The rate at which these liens are being remedied has increased substantially due to the efforts of our advisors and the Interim Chief Operating Officer. As previously press released, based on past experience and discussions with our advisors specializing in the area of code violations, the Company expects to settle the penalties and fines for approximately 5% of the lien totals. The Board is very aware of the impact of these liens on our operations and has mandated they be managed on the basis of efficiency, timeliness and foremost with the lowest impact to our working capital. To ensure this issue is not repeated, the Interim Chief Operating Officer has implemented appropriate operating procedures so that this exposure is significantly reduced and brought to a level in line with industry standards.

Operating Costs:

The Board is currently working to review all operating, general and administrative costs in order to reduce the cash burn of the Company. All costs shall be reviewed with the help of the Chief Financial Officer and the newly appointed Interim Chief Operating Officer with immediate effect. Costs to be affected include compensation to senior officers, rent in Toronto and Florida and all others necessary and appropriate measures to achieve reductions that are meaningful to operating income.

About Delavaco Residential Properties Corp.

Delavaco Residential Properties Corp. was formed on January 27, 2011 to take advantage of the U.S. housing crisis with the goal of significant capital appreciation through the recovery of the housing sector. Now a public company, Delavaco has its shares listed for trading on the TSX Venture Exchange and the OTCQX marketplace in the U.S. Delavaco is focused on the ownership and management of single and multi–family residential properties located principally in the south–eastern United States. Delavaco's real estate portfolio consists of 790 single–family homes in Florida, Georgia and New Jersey, and 311 multi–family units in Florida and Texas.

CAUTIONARY NOTE REGARDING FORWARD–LOOKING STATEMENTS: Certain information in this news release constitutes forward–looking statements under applicable securities law. Any statements that are contained in this news release that are not statements of historical fact may be deemed to be forward–looking statements. Forward–looking statements are often identified by terms such as “may”, “should”, “anticipate”, “expect”, “intend” and similar expressions. Forward–looking statements in this news release include, but are not limited to, statements with respect to Delavaco's intended acquisition focus. Forward–looking statements necessarily involve known and unknown risks, including, without limitation, risks associated with general economic conditions; adverse industry events; marketing costs; loss of markets; volatility of real estate prices; inability to access sufficient capital from internal and external sources, and/or inability to access sufficient capital on favourable terms; industry and government regulation; changes in legislation, income tax and regulatory matters; the ability of Delavaco to implement its business strategies; competition; currency and interest rate fluctuations and other risks.

Readers are cautioned that the foregoing list is not exhaustive. Readers are further cautioned not to place undue reliance on forward–looking statements as there can be no assurance that the plans, intentions or expectations upon which they are placed will occur. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated. Forward–looking statements contained in this news release are expressly qualified by this cautionary statement.

Neither the Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Additional information about Delavaco Residential Properties Corp. is available at www.delavacoproperties.com or www.sedar.com.

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