Mr. Sandy Poklar reports

FIRM CAPITAL APARTMENT REIT REPORTS Q1/2023 RESULTS AND PROVIDES STRATEGIC REVIEW UPDATE

Firm Capital Apartment Real Estate Investment Trust has released its financial results for the three months ended March 31, 2023, as well as provided an update regarding the previously announced strategic review.

All figures are in United States dollars unless otherwise noted.

Earnings:

• For the three months ended March 31, 2023, net loss was approximately $4.9-million, in comparison with the $300,000 net loss reported for the three months ended March 31, 2022, and the $2-million net loss reported for the three months ended Dec. 31, 2022;
• Excluding non-cash fair value adjustments, net income was $200,000 for the three months ended March 31, 2023, in comparison with the $500,000 reported for the three months ended March 31, 2022, and the $300,000 reported for the three months ended Dec. 31, 2022;
• AFFO (adjusted funds from operations) was approximately $200,000, in comparison with the $400,000 reported for the three months ended March 31, 2022, and the $100,000 reported for the three months ended Dec. 31, 2022.

Net asset value at $7.52 per trust unit

For the three months ended March 31, 2023, the trust reported NAV at $7.52 per trust unit ($10.18 Canadian).

Average rent increases across investment portfolio:

• Wholly owned real estate investments portfolio: For the three months ended March 31, 2023, average rents saw a slight increase of 1.4 per cent to $1,206 per unit from the $1,189 per unit reported for the three months ended Dec. 31, 2022;
• Joint venture real estate investments portfolio: For the three months ended March 31, 2023, average rents saw a decrease to $1,576 per unit from the $1,589 per unit reported for the three months ended Dec. 31, 2022.

Strategic review

On Nov. 15, 2022, the board of trustees initiated a strategic review process to identify, evaluate and pursue a range of strategic alternatives with the goal of maximizing unitholder value.

By way of update, the board is pleased to report on the following:

• Wholly owned asset dispositions: The trust has listed for sale all of its wholly owned real estate investments and is pleased to report on the following:
  • Texas: The trust has a purchase and sale agreement (PSA) in place for one of its properties located in Austin, Tex. The disposition price for the property is approximately $12.6-million. Net of associated mortgage debt and closing costs, the sale would generate net cash of approximately $8.8-million. Expected closing of the sale is anticipated to be prior to the end of Q2 2023. The property disposition has a sales price in line with its IFRS (international financial reporting standards) value. The trust has one other property in Austin, Tex., and two properties in Houston, Tex., which are in various stages of sale.
  • New Jersey: The trust has a PSA in place for its property located in New Jersey. The disposition price for the property is approximately $19.5-million. Net of associated mortgage debt and closing costs, the sale would generate net cash of approximately $5.6-million. The expected closing of the sale is anticipated to be prior to the end of Q2 2023. The property disposition has a sales price in line with its IFRS value.
  • Florida: The trust's property in Florida is under negotiations to be sold.
• Joint venture asset dispositions: The trust has listed for sale its joint venture real estate investments located in Maryland, as both the trust and its partners have decided it was an appropriate time to exit the respective investments. As of today, one of the Maryland properties is under negotiations and one is being actively marketed. In terms of the remaining joint venture properties located in New York, Connecticut and Georgia, the trust has decided with its partners to hold these investments until such time that the respective investment can be adequately monetized.
• Preferred capital investments: As at March 31, 2023, the trust has two preferred capital investments located in Texas and South Dakota that aggregate approximately $5.1-million. The trust continues to hold these investments and earns income at 10 per cent and 12 per cent, respectively. Both investments are current in terms of their interest payments.

The board will continue to assess matters on a quarterly basis and determine if the trust should: (i) distribute excess income; (ii) distribute net proceeds from asset sales, after debt repayment; (iii) reinvest net proceeds into other investments; (iv) distribute proceeds as a return of capital or special distribution; and/or (v) use excess proceeds to repurchase trust units in the marketplace. It is the trust's current intention not to disclose developments with respect to the strategic review unless and until it is determined that disclosure is necessary or appropriate, or as required under applicable securities laws.

We seek Safe Harbor.