Mr. George Armoyan reports

CLARKE INC. REPORTS REFINANCING OF CREDIT FACILITIES AND 2025 SECOND QUARTER RESULTS

Clarke Inc. today released its results for the three and six months ended June 30, 2025.

Refinancing of credit facilities

The company completed the refinancing of its Talisman development construction financing during the quarter. This resulted in a new $250.0-million facility consisting of a $115.0-million term loan-partially used to repay the existing $85.0-million construction loan from the development's first phase and a $135.0-million construction facility to finance the development's second phase. Previously, the company had financed the construction of phase 2 through its cash flow from operations and existing revolving credit facilities. This refinancing allowed the company to pay down its revolving credit facilities, increase its liquidity and fully repay its $30.0-million, unsecured credit facility, which was due to a related party.

"With this $250-million facility now in place, we've secured the funding needed to support both the stabilization of phase 1 and to complete the buildout of phase 2," said Tom Casey, chief financial officer of Clarke. "Tenant, lender and stakeholder response to our development has been overwhelmingly positive, and we're very pleased with the outcome. The facility's competitive pricing and flexible terms speak to the quality of the asset, the strength of our balance sheet and our track record of execution. We want to thank the Toronto RBC real estate markets team for their support and for executing a smooth transaction."

Also, during the quarter, the company refinanced an investment property in St. John's, Nfld. This marked a milestone in our financing strategy, as we were able to secure the loan using residential loan terms rather than hospitality terms after the conversion of the property. The repurposing of the property not only enhanced the asset's results but also led to a meaningful capitalization rate compression and a substantial improvement in financing terms. "This financing is a strong validation of this strategy," said Mr. Casey. "We appreciate the CIBC real estate finance division team for their support of our conversion strategy and for facilitating an efficient, well-executed transaction."

Second quarter results

The company's net loss for the three and six months ended June 30, 2025, was $100,000 and $2.4-million, respectively, compared with net income of $1.8-million and $4.2-million for the same periods in 2024. The net loss in the quarter was primarily attributable to certain interest outlays expensed in the current period, compared with a portion in the prior period that had been capitalized due to continuing construction. The net loss for the six-month period was primarily attributable to a pension expense resulting from past service costs following a pension plan amendment, as well as higher interest and a reduced deferred income tax recovery. Hotel and rental revenue increased primarily due to the operations of the first phase of the Talisman, which did not have occupancy until June 1, 2024.

The other comprehensive loss of $1.3-million during the quarter is a result of remeasurement losses in the company's pension plans because of an increase to the discount rate. Remeasurement gains in the first quarter of 2025 more than offset these second quarter losses, resulting in net other comprehensive income of $4.0-million for the six-month period. Other comprehensive losses in each of the respective 2024 periods were driven by remeasurements losses on the company's pension plans.

During the second quarter of 2025, the company's book value per common share decreased by 15 cents, or 0.7 per cent. The company had a net loss of $100,000 during the quarter which included hotel net operating income of $5.3-million, or 38 cents per common share, offset by depreciation and amortization of $2.9-million, or 21 cents per common share and interest and accretion of $3.2-million, or 23 cents per common share. The company also recorded remeasurement losses on its pension surplus of $1.3-million, or 10 cents per common share in other comprehensive income. The company's book value per common share at the end of the quarter was $19.91, while the common share price was $26.13.

Additional commentary on the company's first quarter results can be found in the company's management's discussion and analysis for the three and six months ended June 30, 2025.

Other information

Highlights of the interim condensed consolidated financial statements for the three and six months ended June 30, 2025, compared with the three and six months ended June 30, 2024 are as shown in the attached table.

About Clarke Inc.

Clarke is a real estate company with holdings across real estate sectors -- primarily residential, furnished suites and hospitality. Clarke's common shares (CKI) trade on the Toronto Stock Exchange.

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