SIR Royalty Income Fund Responds to Lembit Janes Press Release

BURLINGTON, ON, April 15, 2021 /CNW/ - SIR Royalty Income Fund (TSX: SRV.UN) (the "Fund") today responded to the press release disseminated on April 12, 2021 by Lembit Janes (the "Janes Release") that proposed to nominate three new trustees for election at the annual general meeting of unitholders of the Fund to be held on June 29, 2021 (the "Meeting").

The Fund's trustees continue to closely review the matters raised in the Janes Release and will respond to such matters as appropriate. The Fund's trustees would be pleased to engage, in a constructive manner, with Mr. Janes or any other unitholder on any of the matters described in the Janes Release.

The impact of the COVID-19 pandemic has been particularly challenging for the hospitality industry, including the Fund and SIR Corp. ("SIR"). While restaurants in Ontario, where the majority of SIR's restaurants are located, remain closed for in-restaurant dining, the expenses for operating the restaurants subject to the royalty pool (the "Royalty Pooled Restaurants"), many of which are fixed, are borne by SIR. Notwithstanding this structure, which results in the Fund benefitting from minimal operating expenses other than taxes and "public company costs", revenues generated by the Royalty Pooled Restaurants have declined substantially and are not forecast to fully recover until the pandemic subsides, government regulated operating restrictions are lifted and in-restaurant dining returns to pre-pandemic levels.  

In the interim, SIR continues to work with its lenders to secure renewed credit arrangements and with suppliers to extend credit terms. As previously announced, as a result of successful negotiations with its lenders, SIR recently remitted a $1,000,000 payment to the Fund towards previously deferred royalty payments. The Fund's trustees are committed to full transparency and will continue to update Fund unitholders of material developments.

The Fund notes that a number of statements made in the Janes Release were inaccurate, including, among others:

• That the new debt secured by SIR has resulted in the Fund moving from being the "most secured party to now being subordinated". In fact, the Fund has always been subordinated to SIR's bank lenders;
  
  
• That any revenues derived from the Renegade Chicken ghost kitchen operations are solely for SIR's benefit. Renegade Chicken is in a test mode and is not using any of the Fund's trademarks or being supported in any way by the Fund. Revenues generated by Renegade Chicken contribute to assisting SIR in maintaining liquidity, which will put SIR in a better position to catch up on deferred royalties and pay future royalties to the Fund. The test phase is expected to conclude by the end of May.  At that time, SIR is expected to advise the Fund how it intends to move forward with these ghost kitchen operations; and
  
  
• That the unitholders received nothing for the closure of the three restaurants at Yonge and Gerrard. In fact, on January 1, 2022, SIR will, as required by its agreements with the Fund and the SIR Royalty Limited Partnership (the "Partnership"), return the same number of Class A GP Units in the Partnership that it received for the vend-in of two of these restaurants (a Scaddabush location and Reds Midtown Tavern) to the Fund's Royalty Pool. The third closed restaurant at Yonge and Gerrard, a Duke's Refresher, was not part of the Royalty Pool.  This return of Class A GP Units will reduce SIR's future share of the Partnership's earnings and correspondingly increase the unitholders' share of the Partnership's earnings.

The Fund also notes that Mr. Janes seems to want to be reimbursed by the Fund for his personal expenses, including proxy solicitation expenses and legal fees. This is not contemplated by the Fund's Declaration of Trust and would inappropriately reduce amounts that would otherwise be available for legitimate Fund expenses and distributions. Under the Fund's Declaration of Trust, the Fund's trustees are only entitled to be reimbursed for reasonable travel and other out of pocket expenses properly incurred by them in attending meetings of the trustees, or any committee thereof, or in connection with their services as trustees. Distributions have been made by the Fund consistently for more than 15 years until the onset of the COVID-19 pandemic, and SIR and the Fund have every intention to re-establish distributions at an appropriate level as soon as it is reasonable and feasible to do so. The Fund paying for the personal expenses of one unitholder would not be consistent with that goal.

About SIR Corp.                                                

SIR Corp. ("SIR") is a privately held Canadian corporation that owns a portfolio of 53 restaurants in Canada. SIR's Concept brands include: Jack Astor's Bar and Grill®, with 37 locations; Scaddabush Italian Kitchen & Bar® with nine locations; and Canyon Creek®, with two locations. SIR also operates one-of-a-kind "Signature" brands including Reds® Wine Tavern, Reds® Square One and The Loose Moose®. All trademarks related to the Concept and Signature brands noted above are used by SIR under a License and Royalty Agreement with SIR Royalty Limited Partnership. SIR also owns one Duke's Refresher® & Bar location in downtown Toronto, and one seasonal Signature restaurant, Abbey's Bakehouse®, which are currently not in consideration to be part of the Royalty Pool. For more information on SIR Corp. or the SIR Royalty Income Fund, please visit www.sircorp.com.

About SIR Royalty Income Fund

The Fund is a trust governed by the laws of the province of Ontario that indirectly has interests in the trademarks used by SIR.

Caution concerning forward-looking statements

Certain statements contained in this report, or incorporated herein by reference, including the information set forth as to the future financial or operating performance of the Fund or SIR, that are not current or historical factual statements may constitute forward-looking information within the meaning of applicable securities laws ("forward-looking statements"). Statements concerning the objectives, goals, strategies, intentions, plans, beliefs, expectations and estimates, and the business, operations, financial performance and condition of the Fund, the SIR Holdings Trust (the "Trust"), the Partnership, SIR, the SIR Restaurants or industry results, are forward-looking statements. The words "may", "will", "would", "could", "should", "expect", "believe", "plan", "anticipate", "intend", "estimate" and other similar terminology and the negative of such expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of Fund, the Trust, the Partnership, SIR, the SIR Restaurants or industry results, to differ materially from the anticipated results, performance, achievements or developments expressed or implied by such forward-looking statements. These statements reflect Management's current expectations, estimates and projections regarding future events and operating performance and speak only as of the date of this document. Readers should not place undue importance on forward-looking statements and should not rely upon this information as of any other date. Risks related to forward-looking statements include, among other things, challenges presented by a number of factors, including: the impact of the COVID-19 pandemic; market conditions at the time of this filing; competition; changes in demographic trends; weather; changing consumer preferences and discretionary spending patterns; changes in consumer confidence; changes in national and local business and economic conditions; pandemics or other material outbreaks of disease or safety issues affecting humans or animals or food products; changes in tariffs and international trade; changes in foreign exchange and interest rates; changes in tax laws; changes in availability of credit; legal proceedings and challenges to intellectual property rights; dependence of the Fund on the financial condition of SIR; legislation and governmental regulation, including the cost and/or availability of labour as it relates to changes in minimum wage rates or other changes to labour legislation and forced closures of restaurants and bars; laws affecting the sale and use of alcohol (including availability and enforcement); changes in cannabis laws; accounting policies and practices; and the results of operations and financial condition of SIR. The foregoing list of factors is not exhaustive. Many of these issues can affect the Fund's or SIR's actual results and could cause their actual results to differ materially from those expressed or implied in any forward-looking statements made by, or on behalf of, the Fund or SIR.  Given these uncertainties, readers are cautioned that forward-looking statements are not guarantees of future performance, and should not place undue reliance on them. Forward-looking statements are based on Management's current plans, estimates, projections, beliefs and opinions, and the Fund and SIR do not undertake any obligation to update forward-looking statements should assumptions related to these plans, estimates, projections, beliefs and opinions change, except as expressly required by applicable securities laws.

For more information concerning the Fund's risks and uncertainties, please refer to the March 31, 2021 Annual Information Form, for the year ended December 31, 2020, and the Fund's most recent annual financial statements, which are available under the Fund's profile at www.sedar.com.

All of the forward-looking statements made in this report are qualified by these cautionary statements and other cautionary statements or factors contained herein, and there can be no assurance that the actual results or developments will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, the Fund or SIR. 

SOURCE SIR Royalty Income Fund

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