Mr. Sean Morrison reports

DIVERSIFIED ROYALTY CORP. ANNOUNCES $50 MILLION BOUGHT DEAL PUBLIC OFFERING OF 5.75% CONVERTIBLE UNSECURED SUBORDINATED DEBENTURES

Diversified Royalty Corp. has entered into an agreement with a syndicate of underwriters led by CIBC Capital Markets pursuant to which the underwriters have agreed to purchase $50-million aggregate principal amount of 5.75 per cent convertible unsecured subordinated debentures at a price of $1,000 per debenture.

In addition, the corporation has granted the underwriters an option to purchase up to an additional $7.5-million aggregate principal amount of debentures at the offering price for market stabilization purposes and to cover overallotments, if any. The overallotment option is exercisable, in whole or in part, by the underwriters at any time up to 30 days following the closing of the offering.

The debentures will mature March 31, 2031, and will bear interest at an annual rate of 5.75 per cent, payable semi-annually in arrears on the last day of March and September in each year, commencing Sept. 30, 2026. At the holder's option, the debentures may be converted into common shares of the corporation at any time prior to the close of business on the earlier of the last business day immediately preceding March 31, 2031, and the date fixed for redemption. The conversion price will be $5.35 per common share, subject to adjustment in certain circumstances.

The debentures will not be redeemable on or before March 31, 2029. After March 31, 2029, and prior to March 31, 2030, the debentures may be redeemed in whole or in part from time to time at Diversified Royalty's option, provided that the volume weighted average trading price of the common shares on the Toronto Stock Exchange during the 20 consecutive trading days ending on the fifth trading day preceding the date on which the notice of the redemption is given is not less than 125 per cent of the conversion price. On or after March 31, 2030, and prior to the maturity date, Diversified Royalty may, at its option, redeem the debentures, in whole or in part, from time to time at par plus accrued and unpaid interest.

The net proceeds of the offering are intended to be used to repay outstanding amounts under the corporation's acquisition facility, to finance expected additions to the royalty pools of certain of the corporation's royalty partners, and for working capital and general corporate purposes. The repayment of indebtedness under the corporation's acquisition facility will thereby increase the amount available to be drawn under the acquisition facility to finance future acquisitions.

The debentures to be issued under the offering will be offered by way of a prospectus supplement to the corporation's existing short form base shelf prospectus dated July 22, 2025. The prospectus supplement will be filed with the securities commissions in all of the provinces and territories of Canada, except Quebec. Access to the prospectus supplement, the base shelf prospectus and any amendment to the offering documents is provided in accordance with securities legislation relating to procedures for providing access to a shelf prospectus supplement, a base shelf prospectus and any amendment. The base shelf prospectus is, and the prospectus supplement will be (within two business days from the date hereof), accessible on SEDAR+. The offering documents will contain important detailed information about the securities being offered. An electronic or paper copy of the prospectus supplement, the base shelf prospectus and any amendment to such offering documents may be obtained without charge from CIBC Capital Markets at 161 Bay St. (fifth floor), Toronto, Ont., M5J 2S8, or by telephone at 1-416-956-6378 or by e-mail at mailbox.Canadianprospectus@cibc.com, by providing the contact with an e-mail address or address, as applicable. Prospective investors should read the base shelf prospectus and the prospectus supplement (when filed) before making an investment decision.

Closing of the offering is expected to occur on or about Feb. 9, 2026, and is subject to regulatory approval, including that of the Toronto Stock Exchange.

Recent updates

As announced on Jan. 26, 2026, the corporation amended the terms of its license agreements with Air Miles Loyalty Inc. and Bank of Montreal. Among other items, the terms of the licences were amended to provide a 10-year, fixed annual royalty payment of $3,925,000, paid quarterly. The royalty will grow at a rate of 2.42 per cent per annum commencing on Feb. 1, 2027, and each Feb. 1 thereafter during the term. Under the amendment, the annual royalty payments are increased by over 20 per cent and are guaranteed by BMO. Annually, on Dec. 31, the corporation tests the carrying value of its intangible assets for impairment. As a result of these amendments, at Dec. 31, 2025, the corporation may partially reverse previous impairments of intangible assets in respect of AIR MILES based on revised estimated associated future cash flows.

The corporation and Sutton entered into a royalty deferral agreement in the fourth quarter of 2024, which provides Sutton Group Realty Services Ltd. with a 20-per-cent deferral of royalties for the months of October, 2024, to December, 2025. This agreement supported Sutton's investment in building its management team, increasing marketing and business development. Subsequently, in December, 2025, with effect Oct. 1, 2025, the corporation and Sutton entered into a royalty relief agreement, which provides, inter alia, that: (i) the 20-per-cent deferred royalties payable by Sutton for the months of October, 2024, to September, 2025, are forgiven; and (ii) 33 per cent of the royalties payable by Sutton for the months of October, 2025, to December, 2026, are waived. This agreement is intended to support Sutton's continued investment in business development initiatives to increase its agent base. As a result, at Dec. 31, 2025, Diversified Royalty may write down intangible assets related to Sutton based on estimated associated future cash flows.

About Diversified Royalty Corp.

Diversified Royalty is a multiroyalty corporation, engaged in the business of acquiring top-line royalties from well-managed multilocation businesses and franchisors in North America. Diversified Royalty's objective is to acquire predictable, growing royalty streams from a diverse group of multilocation businesses and franchisors.

Diversified Royalty currently owns the Mr. Lube + Tires, Sutton, Mr. Mikes, Nurse Next Door, Oxford Learning Centres, Stratus Building Solutions, BarBurrito, Cheba Hut, and AIR MILES trademarks. Mr. Lube + Tires is the leading quick-lube-service business in Canada, with locations across Canada. Sutton is among the leading residential real estate brokerage franchisor businesses in Canada. Mr. Mikes operates casual steakhouse restaurants primarily in Western Canadian communities. Nurse Next Door is a home care provider with locations across Canada and the United States, as well as in Australia. Oxford Learning Centres is one of Canada's leading franchisee supplemental education services. Stratus Building Solutions is a leading commercial cleaning service franchise company providing comprehensive janitorial, building cleaning and office cleaning services primarily in the United States. BarBurrito is the largest quick-service Mexican restaurant food chain in Canada. Cheba Hut is a fast casual toasted sub sandwich franchise with locations in the United States. AIR MILES is a Canadian loyalty program.

Diversified Royalty's objective is to increase cash flow per share by making accretive royalty purchases and through the growth of purchased royalties. Diversified Royalty intends to continue to pay a predictable and stable monthly dividend to shareholders and increase the dividend over time, in each case as cash flow per share allows.

We seek Safe Harbor.