Mr. Daniel Drimmer reports

TRUE NORTH COMMERCIAL REIT REPORTS Q3-2023 RESULTS AND ANNOUNCES UPDATED STRATEGY TO INCREASE UNITHOLDER VALUE

True North Commercial Real Estate Investment Trust has released its financial results for the three and nine months ended Sept. 30, 2023. The REIT has also outlined the next steps in its strategy to increase unitholder value, which includes: (i) effective with the November, 2023, distribution payable on Dec. 15, 2023, to unitholders of the REIT of record on Nov. 30, 2023, the redirection and reallocation of substantially all distribution amounts to purchase trust units of the REIT under the REIT's normal course issuer bid (NCIB) or through other acquisition programs, for approximately six months or earlier if appropriate; and (ii) a consolidation of the units, the special voting (SV) units of the REIT and the Class B limited partnership (LP) units of True North Commercial LP on the basis of 1:5.75.

"The next logical step in the REIT's strategy involves the reallocation of substantially all distributions to purchase the maximum number of units available under the NCIB, which will be immediately accretive to unitholders, with the intention to revisit the reallocation in approximately six months, or earlier if appropriate, to reinstate a sustainable distribution to unitholders. At the end of the quarter, the REIT's IFRS NAV per unit was approximately $4.97, resulting in the current unit price trading at a significant discount to intrinsic value and supporting the buyback of units under the NCIB as a very attractive use of the REIT's capital. The REIT remains focused on delivering long-term value for our unitholders by allocating available capital to generate the highest potential return, while pro-actively managing risk," stated Daniel Drimmer, the REIT's chief executive officer. "We are also pleased with the continued strong leasing momentum resulting in a weighted average lease term of 7.7 years on new lease deals and renewals completed in the third quarter, while continuing to build strong relationships with the REIT's tenants to maintain high occupancy levels."

Third quarter 2023 highlights:

• Maintained strong portfolio occupancy of 93 per cent, with an average remaining lease term of 4.4 years (91 per cent and 4.4 years, including investment properties held for sale);
• Completed the sale of 360 Laurier Ave. Wt, Ottawa, Ont., totalling 107,100 square feet, on July 10, 2023, for a sale price of $17.5-million;
• Completed the sale of 32071 South Fraser Way, Abbotsford, B.C., totalling 52,300 square feet, on July 31, 2023, for a sale price of $24.0-million;
• Contractually leased and renewed approximately 86,900 square feet with a weighted average lease term of 7.7 years and a 1.5-per-cent increase over expiring base rents;
• Excluding termination income and investment properties held for sale, revenue and net operating income (NOI) decreased 1 per cent and 4 per cent, respectively, compared with Q3 2022. Due to significant termination income included in 2022 and lower same-property NOI, revenue and NOI decreased 11 per cent and 18 per cent, respectively, compared with Q3 2022.
• Same-property NOI decreased 1.6 per cent, excluding investment properties held for sale and termination fees;
• During 2022, the REIT received termination income from one tenant at 6925 Century Ave., Mississauga, Ont., that downsized a portion of its space effective Q4 2022. To date, 60 per cent of this vacancy has been contractually re-leased with rents commencing in the latter half of 2023. Q3 2023 funds from operations (FFO) and adjusted funds from operations (AFFO), basic and diluted, per unit decreased four cents to 11 cents, which is consistent and in line with Q2 2023. Excluding termination fees, Q3 2023 FFO and AFFO, basic and diluted, per unit were lower by two cents and three cents, respectively, compared with Q3 2022 due to the loss of rental revenue from the above vacancy;
• Excluding investment properties held for sale only, Q3 2023 same-property NOI decreased 8.8 per cent as a result of the significant termination fee income recorded in the prior-year period;
• $48.3-million of available funds at the end of Q3 2023;
• The REIT repurchased 83,500 units for $200,000 under the NCIB.

YTD (year-to-date) highlights:

• Completed the sale of 400 Carlingview Dr., Toronto, Ont., on March 10, 2023, for a sale price of $7.25-million;
• Contractually leased and renewed approximately 512,800 square feet with a weighted average lease term of 5.0 years and an 11-per-cent increase over expiring base rents;
• The REIT repurchased 208,400 units for $500,000 under the NCIB;
• 50-per-cent reduction to the monthly cash dividend from 4.95 cents per unit to 2.475 cents per unit or 29.7 cents per unit on an annualized basis. The new declared distribution was paid on April 17, 2023, to unitholders of record on March 31, 2023. The distribution reduction is expected to provide an additional $25-million in cash annually that will be used to improve the REIT's capital profile;
• Effective June 30, 2023, Tracy Sherren, the REIT's president and chief financial officer, and president, Canadian commercial, Starlight Investments, retired from her executive positions at the REIT and Starlight Investments. Ms. Sherren will remain as a trustee of the REIT. Martin Liddell, the current chief financial officer at Starlight, was appointed as CFO of the REIT in addition to his positions at Starlight.

Subsequent events:

• The REIT refinanced a $3,834 mortgage for a three-year term.

The REIT's presentation currency is the Canadian dollar. Unless otherwise stated, dollar amounts expressed in this news release are in thousands of dollars.

Operating results

Excluding termination income and investment properties held for sale, revenue and NOI decreased 1 per cent and 4 per cent, respectively, in Q3 2023, while revenue remained flat and NOI decreased 5 per cent YTD 2023.

Revenue and NOI decreased 11 per cent and 18 per cent, respectively, in Q3 2023 and YTD 2023 when compared with the same periods in 2022. The decrease in revenue and NOI was largely a result of the decrease in termination income and lower revenue from a tenant in the REIT's Greater Toronto Area portfolio that downsized a portion of its space effective Q4 2022, combined with a 101,200-square-foot lease expiry in Q1 2023 at the Laurier property and a 115,000-square-foot lease expiry in Q2 2023 at 3650 Victoria Park Ave., Toronto, Ont., together with the dispositions in Q1 2023 and Q3 2023. This decrease was partially offset by termination income received from the tenant at the Carlingview property and NOI from an acquisition completed in Q3 2022.

Q3 2023 FFO and AFFO decreased $4,085 (YTD 2023 -- $11,865) and $4,189 (YTD 2023 -- $12,100), respectively, compared with the same period in 2022. FFO and AFFO were negatively impacted by the primary variance drivers, combined with higher financing costs as a result of higher interest rates on mortgage refinancing and higher interest expense on the credit facility. FFO and AFFO benefited from NOI on the acquisition completed in Q3 2022 and termination income.

Q3 2023 FFO and AFFO, basic and diluted, per unit decreased four cents to 11 cents. YTD 2023 FFO and AFFO, basic and diluted, per unit decreased 13 cents and 14 cents to 34 cents and 33 cents, respectively. Excluding termination fees, Q3 2023 FFO and AFFO, basic and diluted, per unit were lower by two cents and three cents, and YTD 2023 FFO and AFFO, basic and diluted, per unit were lower by seven cents and eight cents compared with 2022.

Same-property NOI (1)

Q3 2023 same-property NOI decreased 1.6 per cent (YTD 2023 -- 3.6 per cent), excluding termination fees and investment properties held for sale. Excluding investment properties held for sale only, Q3 2023 same-property NOI decreased 8.8 per cent (YTD 2023 -- 11.8 per cent) as a result of the significant termination fee income recorded in the prior-year periods.

British Columbia same-property NOI increased due to contractual rent increases. New Brunswick same-property NOI increased as a result of a new lease that commenced in June, 2023, coupled with 141,000 square feet of government renewals across three properties at higher rental rates. Same-property NOI in Nova Scotia increased due to new lease commencements and contractual rent step-ups, partly offset by certain tenants that downsized on renewal.

Ontario same-property NOI decreased mainly due to termination fees received in Q3 2022 relating to a tenant in the REIT's GTA portfolio that downsized a portion of its space effective December, 2022, of which 60 per cent has been contractually re-leased with rents commencing in the latter half of 2023. The decrease in NOI generated from investment properties held for sale was due to the lead tenant vacating the property on expiry.

Debt and liquidity

At the end of Q3 2023, the REIT had access to available funds of approximately $48,283 and a weighted average term to maturity of 2.99 years in its mortgage portfolio with a weighted average fixed interest rate of 4.03 per cent. During the quarter, the REIT refinanced $36,452 of mortgages with a weighted average fixed interest rate of 6.05 per cent for five- and seven-year terms. YTD 2023, the REIT refinanced $67,573 of mortgages with a weighted average fixed interest rate of 5.65 per cent (excluding one with a variable interest rate at prime plus 1.5 per cent) and a weighted average term to maturity of 4.5 years, providing the REIT with additional liquidity of approximately $5,700.

Subsequent to Sept. 30, 2023, the REIT refinanced a $3,834 mortgage with a fixed interest rate of 6.62 per cent for a three-year term.

(1) This is a non-IFRS (international financial reporting standards) financial measure.

Distribution reallocation

After careful consideration, the board has determined that the most effective use of available capital is to reallocate substantially all distributions paid to unitholders for the month commencing Nov. 1, 2023, and ending April 30, 2024, to purchase the maximum number of units available under the NCIB or through other acquisition programs, with the intention of revisiting the reallocation in approximately six months to reinstate a sustainable distribution to unitholders. The board believes that reallocating the distribution amounts to the NCIB, given the dislocation between the unit price and the intrinsic value of the business will be immediately accretive to unitholders and is the most compelling near-term opportunity to increase unitholder value and per-unit growth. At Sept. 30, 2023, the REIT's net asset value (NAV) per unit was $4.97, resulting in the REIT's unit price trading at a significant discount to intrinsic value.

Unit consolidation

The REIT announced that it intends to affect a consolidation of its voting units and Class B LP units on the basis of 1:5.75. The consolidation will become effective on or about Nov. 22, 2023, and is primarily intended to increase the REIT's per-unit trading price. As a result of the consolidation, every 5.75 voting units and Class B LP units will be converted automatically into one issued and outstanding consolidated unit. Unitholders holding consolidated units through a brokerage account will have their consolidated units automatically adjusted to reflect the consolidation.

The consolidation will affect all unitholders uniformly and will not alter any unitholder's percentage interest in the REIT's equity, except to the extent that the consolidation would result in a unitholder owning fractional consolidated units. Any fractional consolidated units of a unitholder resulting from the consolidation will be rounded down to the nearest whole number of consolidated units. The consolidation will reduce the number of the REIT's units total issued and outstanding from 92,020,251 units to approximately 16,003,521 units and 2,420,164 Class B LP units and SV units to approximately 420,891 Class B LP units and SV units, respectively. Proportional adjustments will be made to the number of the REIT's units issuable upon exercise or conversion of the Class B LP units.

Holders of consolidated units held in book-entry form or through a bank, broker or other nominee will have their positions automatically adjusted to reflect the consolidation, subject to a broker's particular processes, and do not need to take any action in connection with the consolidation. Unitholders of record will be receiving information from TSX Trust Company, the REIT's transfer agent, regarding their consolidated unit ownership postconsolidation. Unitholders who hold consolidated units in brokerage accounts should direct any questions concerning the consolidation to their brokers; all other unitholders may direct questions to the transfer agent, TSX Trust Company, which can be reached by phone at 1-866-600-5869 and by facsimile at 416-361-0470.

The units will commence trading on the Toronto Stock Exchange on a postconsolidation basis effective at the market opening on or about Nov. 24, 2023. The trading symbol for the units will remain TNT.UN. The new Cusip number for the units following the consolidation will be 89784Y 40 7.

About True North Commercial Real Estate Investment Trust

The REIT is an unincorporated, open-ended real estate investment trust established under the laws of the Province of Ontario. The REIT currently owns and operates a portfolio of 44 commercial properties consisting of approximately 4.8 million square feet in urban and select strategic secondary markets across Canada focusing on long-term leases with government- and credit-rated tenants.

The REIT is focused on growing its portfolio principally through acquisitions across Canada and such other jurisdictions where opportunities exist. Additional information concerning the REIT is available on SEDAR+ or the REIT's website.

Non-IFRS measures

Certain terms used in this news release, such as FFO, AFFO, FFO and AFFO payout ratios, NOI, same-property NOI, indebtedness, gross book value (GBV), indebtedness to GBV ratio, net earnings before interest, tax, depreciation and amortization, and fair value gain (loss) on financial instruments and investment properties (adjusted EBITDA), interest coverage ratio, net asset value (NAV) per unit, total equity, and available funds, are not measures defined by IFRS as prescribed by the International Accounting Standards Board, do not have standardized meanings prescribed by IFRS, and should not be compared with or construed as alternatives to profit/loss, cash flow from operating activities or other measures of financial performance calculated in accordance with IFRS. FFO, AFFO, FFO and AFFO payout ratios, NOI, same-property NOI, indebtedness, GBV, indebtedness to GBV ratio, adjusted EBITDA, interest coverage ratio, adjusted cash provided by operating activities, NAV per unit, total equity, and available funds as computed by the REIT may not be comparable with similar measures presented by other issuers. The REIT uses these measures to better assess the REIT's underlying performance and provides these additional measures so that investors may do the same. Details on non-IFRS measures are set out in the REIT's management's discussion and analysis (MD&A) for the three and nine months ended Sept. 30, 2023, and the annual information form (AIF), which are available on the REIT's profile on SEDAR+.

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