Mr. Daniel Drimmer reports

TRUE NORTH COMMERCIAL REIT REPORTS Q4 2023 AND YEAR END RESULTS

True North Commercial Real Estate Investment Trust today released its financial results for the three months and year ended Dec. 31, 2023.

"We are pleased the REIT continued its strong leasing momentum from the third quarter and entered into new and renewal leases totalling approximately 340,000 square feet during the fourth quarter, which demonstrated the strong relationships the REIT has built with existing tenants and its ability to establish strong relationships with new tenants," stated Daniel Drimmer, the REIT's chief executive officer. "Given the success of reallocating funds previously used for distributions to the unit buyback program whereby units were repurchased at an inferred distribution yield of approximately 19 per cent, the REIT intends to continue its normal course issuer bid until the end of Q2 2024, subject to the Toronto Stock Exchange's approval. The REIT will evaluate the reinstatement of a distribution as operating and capital market conditions improve and continues to remain focused on its strategic initiatives, including delivering long-term value to its unitholders, as well as strengthening the REIT's financial statement and liquidity position with steps including the sale of 400 Carlingview Dr., 360 Laurier Ave. West and 32017 South Fraser Way, delivering net proceeds of approximately $47.4-million, prior to mortgage repayment."

On Nov. 24, 2023, the REIT executed a consolidation of its trust units, special voting units of the REIT and the Class B limited partnership units of the REIT on the basis of 1:5.75. All unit and per-unit amounts noted within have been retroactively adjusted to reflect the unit consolidation. The REIT's presentation currency is the Canadian dollar. Unless otherwise stated, dollar amounts expressed in this news release are in thousands of dollars.

Update on normal course issuer bid (NCIB) and distribution reallocation:

• A 50-per-cent reduction to the monthly cash distribution from 28.46 cents per unit to 14.23 cents per unit or $1.70775 per unit on an annualized basis commenced on April 17, 2023, and effective Dec. 15, 2023, the REIT redirected and reallocated substantially all distributions paid to unitholders to purchase the maximum number of units available under the NCIB (distribution reallocation).
• From the commencement of the NCIB program in April, 2023, up to the date of this filing, the REIT had repurchased 946,272 units for $8.7-million at a weighted average price of $9.12 per unit under the NCIB, which represented an inferred distribution yield of approximately 18.7 per cent*. The REIT had repurchased 66 per cent of the maximum units able to be repurchased under the existing NCIB program and has utilized substantially all of the capital previously used to finance distributions to REIT unitholders. The REIT intends to renew the NCIB program for a one-year period, subject to TSX approval, and believes the NCIB continues to be a very attractive use of capital.

Q4 highlights:

• Portfolio occupancy as at Dec. 31, 2023, remained above average occupancy for the markets in which the REIT operates at 89 per cent, with an average remaining lease term of 4.6 years, excluding investments properties held for sale;
• Contractually leased and renewed approximately 338,900 square feet with a weighted average lease term of 5.1 years and a positive rent spread of 4.2 per cent, excluding the government renewal in Alberta, which renewed at a lower rate in line with the respective markets;
• Excluding termination income and investment properties held for sale, revenue and net operating income (NOI) (1) decreased 1 per cent and 6 per cent, respectively, compared with Q4 2022. Including termination income and investment properties held for sale, revenue and NOI decreased 7 per cent and 16 per cent, respectively, compared with Q4 2022, driven by lower NOI from properties owned for the entire reporting period in both the current and comparative period (same-property NOI) (1);
• Q4 2023 same-property NOI decreased 2.3 per cent, excluding termination fees and investment properties held for sale (9.3-per-cent decrease, excluding investment properties held for sale only);
• 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, 82 per cent of the vacated space has been contractually re-leased, with rents commencing in the latter half of 2023 and first half of 2024;
• Q4 2023 funds from operations (FFO) (1) and adjusted funds from operations (AFFO) (1), basic and diluted, decreased 18 cents and 20 cents per unit, respectively, to 59 cents and 58 cents per unit. Excluding termination fees, Q4 2023 FFO and AFFO (1), basic and diluted, were lower by nine cents and 10 cents per unit, respectively compared with Q4 2022, due to the loss of rental revenue from the vacancy at 6925 Century Ave., Mississauga, Ont.;
• FFO and AFFO per unit decreased four cents and three cents, respectively, to 59 cents and 58 cents when compared with Q3 2023, due to termination income received in Q3 2023 from a tenant that downsized, combined with an increase in vacancy in the Nova Scotia portfolio as a result of certain tenants vacating at the end of their lease term in the second half of 2023;
• $45.3-million of cash and available funds from the REIT's undrawn floating rate revolving credit facility at the end of Q4 2023 (available funds) (1).

* Estimated using the $1.70775-per-unit distribution prior to reallocating funds used for distributions to the NCIB and the average market price the REIT repurchased units at under the NCIB up to the date of this filing.

YTD (year-to-date) highlights:

• Contractually leased and renewed approximately 851,700 square feet, with a weighted average lease term of 5.1 years and a 5.7-per-cent increase over expiring base rents;
• Completed the sale of 400 Carlingview Dr., Toronto, Ont., on March 10, 2023, for a sale price of $7.25-million;
• Completed the sale of 360 Laurier Ave. West, 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.

Subsequent events:

• Subsequent to Dec. 31, 2023, the REIT entered into an unconditional agreement of purchase and sale to dispose of 251 Arvin Ave., located in Hamilton, Ont., for a sale price of $2,700, 6865 Century Ave., located in Mississauga, Ont., for a sale a price of $15,300 and 135 Hunter St. E, located in Hamilton, Ont., for a sale price of $6,375. Closing is expected on or about April 8, 2024, April 10, 2024, and April 21, 2024, respectively.
• Subsequent to Dec. 31, 2023, the REIT refinanced a $12,962 mortgage for a one-year term, which represents approximately 16 per cent of mortgages maturing in 2024, with the majority of the remaining 2024 debt maturities occurring toward the end of 2024 on loans with large Canadian financial institutions with which the REIT and its asset manager have strong relationships.

Operating results

Revenue and NOI decreased 1 per cent and 6 per cent, respectively, excluding termination income and investment properties held for sale. Revenue and NOI decreased 2 per cent and 7 per cent, respectively, for YTD 2023 compared with YTD 2022. Revenue and NOI decreased 7 per cent (YTD 2023 -- 8 per cent) and 16 per cent (YTD 2023 -- 16 per cent) in Q4 2023 when compared with Q4 2022, including termination income and investment properties held for sale. The main contributor was termination income received in 2022 relating to a tenant in the REIT's Greater Toronto Area portfolio that downsized a portion of its space effective Q4 2022, which also led to lower rental revenue YTD 2023. Sixty per cent of this space was re-leased during the year, resulting in higher rental revenue YTD 2023 at the property. Additional drivers of the decrease included disposition activity in 2023, a 101,200-square-foot lease expiry in Q1 2023 at the Laurier property and 115,000-square-foot lease expiry in Q2 2023 at the Victoria Park property (together with the termination income previously mentioned, the primary variance drivers). The decrease was partially offset by termination income received from two tenants in the Ontario portfolio and the tenant at the Carlingview property. In addition, revenue and NOI were positively impacted by NOI from an acquisition completed in Q3 2022, contractual rent increases and positive leasing activity in New Brunswick.

Q4 2023 FFO and AFFO decreased $3,023 (YTD 2023 -- $14,888) and $3,263 (YTD 2023 -- $15,363), 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 refinancings and higher interest expense on the REIT's credit facility. FFO and AFFO benefited from NOI increases resulting from the acquisition completed in Q3 2022, termination income, contractual rent increases and positive leasing activity primarily in New Brunswick.

Q4 2023 FFO and AFFO, basic and diluted, decreased 18 cents per unit (YTD 2023 -- 96 cents per unit) and 20 cents per unit (YTD 2023 -- 99 cents per unit) to 59 cents per unit and 58 cents per unit over the comparable period. Excluding termination fees, Q4 2023 FFO and AFFO, basic and diluted, were lower by nine cents per unit (YTD 2023 -- 53 cents per unit) and 10 cents per unit (YTD 2023 -- 56 cents per unit), respectively, compared with the same period in 2022.

Same-property NOI (1)

Q4 2023 same-property NOI decreased by 2.3 per cent (YTD 2023 -- 2.6 per cent), excluding termination fees and investment properties held for sale. Excluding investment properties held for sale only, Q4 2023 same-property NOI decreased by 9.3 per cent (YTD 2023 -- 10.8 per cent) as a result of the significant termination fee income recorded in the prior-year periods.

Same-property NOI in Alberta increased due to contractual rent increases and a one-time fee incurred upon tenant vacancy. Occupancy in Alberta also decreased 24.1 per cent due to a lease maturity at one of the properties in Q4 2023, where the tenant did not renew.

Same-property NOI for British Columbia increased due to contractual rent increases and lower one-time non-recoverable expenses compared with 2022. Same-property NOI for New Brunswick increased as a result of a new leases that commenced throughout 2023 on previously vacant space, coupled with 141,000 square feet of government renewals across three properties at higher rental rates and project management fees earned on tenant projects started in 2023. Same-property NOI for Nova Scotia decreased due to lower occupancy from certain tenants not renewing upon lease maturity and lower project management fees compared with 2022, which was partially offset by contractual rent increases and new lease commencements.

Same-property NOI for Ontario decreased mainly due to termination fees received in Q4 2022 relating to a tenant in the REIT's GTA portfolio that downsized a portion of their space effective December, 2022, of which 82 per cent has been contractually re-leased, with rents commencing in the latter half of 2023 and first half of 2024. In addition, NOI was lower as a result of lower project management fees earned compared with 2022 and lower rental revenue from the acquisition completed in Q3 2022 due to the free rent provided to the tenant as part of the new lease term that commenced in 2023. The decrease in NOI generated from investment properties held for sale was due to the lead tenant vacating one of the properties on expiry.

Debt and liquidity

At the end of Q4 2023, the REIT had access to available funds of approximately $45,346 and a weighted average term to maturity of 3.01 years in its mortgage portfolio, with a weighted average fixed interest rate of 3.90 per cent.

During Q4 2023, the REIT refinanced $62,834 of mortgages with the new loans having a weighted average fixed interest rate of 6.06 per cent and term to maturity between three-year and five-year terms. YTD 2023, the REIT refinanced $130,407 of mortgages with a weighted average fixed interest rate of 5.87 per cent (excluding one with a variable interest rate at prime plus 1.5 per cent) and a weighted average term to maturity of 3.9 years, providing the REIT with additional liquidity of approximately $4,200.

Subsequent to Dec. 31, 2023, the REIT renewed a $12,962 mortgage for a one-year term.

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

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 on 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, 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 to 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, 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 for the three months and year ended Dec. 31, 2023, and the annual information form, available on the REIT's profile on SEDAR+.

We seek Safe Harbor.