Mr. Phil Soper reports

BRIDGEMARQ REAL ESTATE SERVICES ANNOUNCES STRATEGIC TRANSACTION TO ACQUIRE HIGH-QUALITY REAL ESTATE BROKERAGE ASSETS AND BECOME INDEPENDENTLY MANAGED

Bridgemarq Real Estate Services Inc. has entered into a definitive agreement with an affiliate of Brookfield Business Partners to complete a transaction that is intended to position the company for future growth.

The transaction involves the acquisition by Residential Income Fund LP, a wholly owned subsidiary of the company, of the following:

• A significant portfolio of high-quality residential real estate brokerages operating across Canada, including 25 Royal LePage and Johnston & Daniel brokerages, three Via Capitale brokerages and Proprio Direct Inc., one of the leading and fastest-growing virtual brokerages based in Quebec;
• Bridgemarq Real Estate Services Manager Ltd., resulting in the internalization of the company's existing management services arrangements, including the retention of the employees of the manager that have been responsible for managing Bridgemarq and the brokerages for the past two decades, and the termination of management fee payments to Brookfield.

A special committee of Bridgemarq's board of directors, comprising solely independent directors, was appointed to review, consider, negotiate, evaluate and recommend the approval of the terms and conditions of the transaction. The special committee retained an independent financial adviser and independent legal counsel to assist in the discharge of its mandate.

Pursuant to the definitive agreement for the transaction, the partnership will issue approximately 2.9 million Class B limited partnership units, subject to certain customary purchase price adjustments, to (1) acquire all of the issued and outstanding shares of the brokerages and the manager, and (2) settle certain management fees and distributions owing by the partnership to Brookfield totalling approximately $6.6-million, at a discount to face value by converting the amount owing to exchangeable units at a premium above the current share price. The exchangeable units are exchangeable on a one-for-one basis into an equivalent number of restricted voting shares of the company.

At a five-day VWAP of $11.74 as of Dec. 13, the total consideration for the transaction is valued at approximately $34-million. As a result of the transaction, Brookfield's ownership interest in the company is expected to increase from approximately 28.4 per cent to approximately 41.7 per cent.

In addition to simplifying the organizational structure of the company, the transaction will reduce the company's financial leverage by increasing earnings and fully settling the outstanding deferred payments owed to Brookfield.

"We are pleased to announce the internalization of management and acquisition of several best-in-class brokerages, including one of the largest real estate brokerages in the country, operating in three provinces under our flagship Royal LePage brand. We are also acquiring the innovative Proprio Direct business, which operates an industry-leading high-efficiency brokerage model from one location servicing the entire province of Quebec. The special committee believes the transaction is in the best interests of the company and is fair from a financial point of view," said Colum Bastable, independent director and special committee chair.

"The broadening of our business to include direct brokerage operations enables us to capture more revenues and adds new capabilities with which to expand our market share across Canada. We are also excited by the addition of the established Proprio Direct brand to our portfolio of industry-leading real estate brands, which will improve our ability to provide diverse, innovative brokerage solutions for Realtors," Spencer Enright, chairman of the board and chief executive officer of the manager, added. "We expect the transaction to deliver value for all shareholders over the long term as we add additional growth levers to capitalize on our market leading brands. In addition, the settlement of the deferred payments owed to Brookfield meaningfully deleverages the business."

"These are exciting developments for our business which will build on our 100 years' experience in the Canadian real estate industry," said Phil Soper, president and chief executive officer of Bridgemarq. "Our iconic leading brands, strong nationwide networks of Realtors and franchises, proprietary technology solutions, and commitment to providing reliable and attractive shareholder distributions remain intact and will benefit greatly from the internalization of our experienced management team and the addition of new brokerage operating capabilities."

Benefits of the transaction

The transaction provides a number of meaningful benefits to shareholders, including the following:

• Compelling pro forma financial metrics. The transaction is expected to meaningfully enhance the scale of Bridgemarq and deleverage the business. Given the expected liquidity of the pro forma entity, the company anticipates maintaining existing levels of cash dividends per share, subject to the discretion of the board.
• Expanded growth opportunities. With the acquisition of the brokerages, including the innovative Proprio Direct virtual brokerage model operating only in Quebec, Bridgemarq adds the capability to capture future growth across a broader spectrum of the real estate industry through both organic growth and future acquisition opportunities.
• Simplified organizational structure. The transaction will result in a more traditional and simplified organizational model, allowing for increased efficiency of operations and focused, dedicated management as well as eliminating external management fees.
• Stronger alignment of interests. The simplified organizational structure creates a stronger alignment of interests among management, the board and shareholders. By combining owned brokerages with the Royal LePage and Via Capitale franchise networks, it also empowers the management team to respond to market dynamics more efficiently through its enhanced service offerings.
• Strengthened franchise network. With the expansion of business lines to include direct brokerage operations, Bridgemarq is expected to be in a better position to grow its industry-leading national network of Realtors and brokers in addition to diversifying its revenue streams.

Organizational update

If consummated, upon closing of the transaction, the company intends to effect several key changes to the board and management team that are anticipated to further increase the operational effectiveness of the business while maintaining continuity of operations:

• Lorraine Bell, who has been a valuable member of the board since 2003, will succeed Spencer Enright as the independent chair of the board.
• Spencer Enright, who for the past decade has been the chief executive officer of the manager, responsible for overall leadership and oversight over operations of the brokerages, will become chief executive officer of Bridgemarq and continue as a director on the board.
• Phil Soper will continue his role in managing all agent and franchise relationships as the president of Bridgemarq.

Board and special committee recommendation

The board, acting on the unanimous recommendation of the special committee, has unanimously approved the transaction and recommends that holders of restricted voting shares vote in favour of the transaction at the special meeting of shareholders to be called to approve the transaction. In making its recommendation, the board considered a number of factors, including among others, the special committee's receipt of a fairness opinion from Blair Franklin Capital Partners Inc., which concluded that in Blair Franklin's opinion, and based upon and subject to the assumptions, limitations and qualifications set forth therein, the issuance of the exchangeable units to Brookfield pursuant to the transaction is fair, from a financial point of view, to the company.

Transaction approvals

The transaction constitutes a related party transaction for purposes of Multilateral Instrument 61-101 -- Protection of Minority Security Holders in Special Transactions, however the company expects to receive exemptive relief from the minority approval and formal valuation requirements of MI 61-101 in accordance with sections 5.5(a) and 5.7(a), respectively, by virtue of the fact that the value of the transaction is less than 25.0 per cent of the company's market capitalization.

Under applicable Toronto Stock Exchange (TSX) rules, the transaction will be subject to approval by Bridgemarq's shareholders, as the number of exchangeable units to be issued to Brookfield, an insider of the company, exceeds 10.0 per cent of the total number of outstanding restricted voting shares. In accordance with the TSX rules, Brookfield, and its associates and affiliates (representing approximately 28.4 per cent of the restricted voting shares of Bridgemarq on a fully diluted basis) will be excluded for the purposes of such shareholder approval. Senior officers and directors of the company (representing approximately 0.7 per cent of the restricted voting shares on a fully diluted basis) have entered into voting and support agreements pursuant to which they have agreed to, among other things, vote their restricted voting shares in favour of the transaction.

In addition to shareholder approval, the completion of the transaction is subject to, among other things, applicable regulatory approvals, including TSX approval, and the satisfaction or waiver of certain other closing conditions customary in transactions of this nature. Subject to the satisfaction of such conditions, the transaction is expected to close by April, 2024.

A copy of the fairness opinion, and the factors considered by the special committee as well as other relevant background information with respect to the transaction will be included in an information circular that will be filed with applicable regulatory authorities and mailed to shareholders in accordance with applicable securities laws in advance of the shareholder meeting. Bridgemarq expects to mail the circular in March, 2024, and to hold the shareholder meeting in April, 2024. The circular will be made available on SEDAR+ under the company's issuer profile.

Advisers

Blair Franklin is acting as independent financial adviser and Stikeman Elliott LLP is acting as independent legal counsel to the special committee in connection with the transaction. Goodmans LLP is advising Brookfield on the transaction.

About Bridgemarq Real Estate Services Inc.

Bridgemarq is a leading provider of services to residential real estate brokers and a network of approximately 21,000 Realtors. The company operates in Canada under the Royal LePage, Via Capitale, and Johnston & Daniel brands. F

Conference call

The company will host a conference call on Monday, Dec. 18, 2023, at 10 a.m. Eastern Time to discuss the transaction.

To access the call by telephone, please dial 1-888-664-6383 or 416-764-8650.

Please connect approximately ten minutes prior to the beginning of the call to ensure participation.

A recording of the conference call will be available in the investor centre section of the company's website by Wednesday, Dec. 20, 2023, where you can also find a copy of the management presentation discussed on the call.

Pro forma financial information

The transaction is expected to improve the company's leverage profile and contribute to higher EBITDA (earnings before interest, taxes, depreciation and amortization).

The pro forma financial information referred to in this press release, which gives effect to the transaction as if it had closed on Jan. 1, 2022, and Oct. 1, 2022, respectively, was prepared utilizing accounting policies that are consistent with those disclosed in the audited consolidated financial statements of the company for the year ended Dec. 31, 2022, and the unaudited condensed consolidated financial statements of the company as at and for the three and nine months ended Sept. 30, 2023.

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