PADLOCK FUNDS TO FURTHER CONSOLIDATE UNDER PADLOCK EURO STORAGE FUND I, RESULTING IN AGGREGATE OF 1,025,094 SQUARE FEET OF MAXIMUM LETTABLE AREA, WITH A VALUE OF APPROXIMATELY GBP208.9 MILLION AS AT DECEMBER 31, 2024

• Unitholders to benefit from opportunity to participate in a larger fund with further upside potential
• Portfolio to be comprised of 25 properties across three UK primary markets

/NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES/

TORONTO, April 7, 2025 /CNW/ - Padlock Euro Storage Fund I ("Euro Fund") and Padlock Partners UK Fund IV ("Fund IV", and together with Euro Fund, the "Padlock Funds") today announced the entering into of an agreement to consolidate the assets of the Padlock Funds through an acquisition of Fund IV by Euro Fund by way of a plan of arrangement (the "Arrangement"). Following completion of the Arrangement, the consolidated fund will exist under the name "Padlock Euro Storage Fund I" (the "Merged Fund"). The Arrangement follows the successful consolidation on July 31, 2024 (the "Previous Arrangement") of Padlock Partners UK Fund I ("Fund I"), Padlock Partners UK Fund II and Padlock Partners UK Fund III (collectively, the "Predecessor Padlock Funds") under Fund I, which was subsequently renamed Padlock Euro Storage Fund I.

At the time of the Previous Arrangement, Fund IV was excluded from the consolidation on the basis of several factors considered by the managers and trustees of the Predecessor Padlock Funds and Fund IV, including the short duration of Fund IV since inception (less than one year at the time of entry into the Previous Arrangement), market conditions, and significant planning and development work that had not yet been completed on three of Fund IV's five acquired properties. As at the date hereof and as described further below, the managers and trustees of Euro Fund and Fund IV have determined that it is now in the best interests of the unitholders of each Padlock Fund (the "Unitholders"), respectively, to include Fund IV in the Merged Fund and complete the proposed Arrangement.

"We are excited to announce entering into an agreement to consolidate Padlock Partners UK Fund IV into Padlock Euro Storage Fund I. We expect the increased scale to provide even greater unitholder value to Unitholders of both funds, all while continuing to provide best in class service to our customers, team members and communities", says Padlock Funds CEO Iyngaran Muniandy. "We expect that the further enhanced scale and size of Padlock Euro Storage Fund I upon completion of the Arrangement will result in a better liquidity event for all Unitholders."

Arrangement Details

The arrangement agreement among each of the Padlock Funds, Padlock Canadian Holdco 1 Limited and Padlock Canadian Holdco 4 Limited (the "Arrangement Agreement") includes customary business conduct covenants and an expense reimbursement payable in specified termination circumstances. Existing units of Fund IV ("Fund IV Units") will be exchanged for the designated Merged Fund Units, with existing Fund IV unitholders ("Fund IV Unitholders") receiving an equivalent number of Merged Fund Units of the applicable Class, Series 4 commensurate with the number of Fund IV Units held.

The "carried interest" represented by the Class B shares of the UK holding companies sitting beneath each Padlock Fund will not be crystallized or paid out as part of the Arrangement and will continue to accumulate based on the returns attributable to investors of each of the Padlock Funds.

The Merged Fund will target a 10-12% pre-tax, pre-carried interest, internal rate of return upon disposition either at or before the targeted two-year investment horizon, subject to the two, one-year extensions, calculated from July 31, 2024 (being the date of the Previous Arrangement).

Benefits to the Merged Fund Unitholders

1. Superior investment in a larger, more geographically diversified fund with further upside potential – The Merged Fund's portfolio (consisting of the combined properties of the Padlock Funds) will be comprised of stabilised, recently constructed in lease-up, stabilised with additional expansion opportunity, and development properties located in attractive UK markets with favourable demographic trends, supply demand ratios, strong employment growth and increasing population, resulting in continued store-level performance. The Merged Fund also intends to acquire additional properties in attractive UK markets to provide further geographical concentration, diversification and growth potential. Furthermore, the Merged Fund declaration of trust, consistent with the current Euro Fund declaration of trust, will provide the ability for the Merged Fund to acquire additional self-storage assets in Spain, up to a maximum of 10% of the net asset value of the Merged Fund. Additional property acquisitions of the Merged Fund would be in compliance with the investment objectives of the Padlock Funds, as amended (in the case of Fund IV) to include the ability to access the Spanish market, and additional liquidity expected to be provided by additional borrowing capacity as a result of completion of the Arrangement.
   
   Upon completion of the Arrangement, the Merged Fund will have 25 properties comprising 1,025,094 square feet of maximum lettable area, appraised at approximately GBP208.9 million as at December 31, 2024, and is expected to benefit from increased geographical diversity across the London, commuter markets to London, South East UK and South West UK markets. The asset managers of the Padlock Funds (the "Managers") believe that additional growth remains to be realized in these markets and that further geographic property diversification across the property portfolio mitigates the risk and exposure to any one market.
   
   
2. Maintained distributions — The Managers expect the unitholders of the Merged Fund ("Merged Fund Unitholders") to continue earning an attractive cash distribution commensurate with each Padlock Fund's established and ongoing distribution while participating in the potential future growth in value of the Merged Fund's real estate assets. The Merged Fund will target an annual pre-tax distribution yield of 6.0% per unit of the Merged Fund ("Merged Fund Unit") based on its original Investment per Merged Fund Unit (as set out in the table at the end of this news release). The access to expanded capital in the Merged Fund will be particularly impactful to Fund IV Unitholders, as based on current cash flow projections, in the view of the Managers, Fund IV currently lacks sufficient capital to effectuate distributions beyond Q1 2025 while also maintaining its development schedule.
   
   
3. Potential to increase overall return by accessing improved debt terms — Currently, there are three loans across the two Padlock Funds. Each loan and its associated terms were secured and priced pursuant to the then-current market conditions and status of the applicable property at acquisition as either stabilised, stabilised with expansion opportunity, conversion, ground up construction and/or development. The properties secured by the loans in Fund IV remain in development and have faced delays, as discussed in Fund IV's MD&A. The ability to refinance Fund IV's loans through an increased Merged Fund debt facility with a larger collateral pool would benefit each of the Padlock Funds. The Managers expect less favourable terms and greater expenses negotiating each of the Padlock Funds' replacement loans separately, as compared to negotiating a consolidated Merged Fund debt facility. 
   
   
4. Potential for greater cost efficiencies — The Trustees believe that the proposed Arrangement to consolidate Fund IV in the Merged Fund presents a compelling opportunity to unlock cost efficiencies and synergies, thereby optimizing the management of working capital and enhancing overall performance. Duplicative costs such as legal, accounting and auditing fees and costs associated with operating the Padlock Funds as separate funds (including separate public company costs) will be eliminated. By consolidating resources and operations onto an enlarged platform, the Managers believe they can streamline administrative processes, reduce overhead expenses, and eliminate redundancies. This consolidation is also expected to enable the Merged Fund to leverage economies of scale in procurement, financing, and asset management, resulting in lower transaction costs and enhanced profitability. Additionally, the expanded scope of the Merged Fund's platform is expected to allow for improved diversification across the Padlock Funds' current assets and submarkets, mitigating risk and enhancing resilience to market fluctuations. 
   
   
5. No crystallization of Carried Interest — As was the case in the Previous Arrangement, the proposed merger of Euro Fund and Fund IV will not cause a crystallization of the Carried Interest associated with either Padlock Fund, and the original Carried Interest structure of each Padlock Fund will be maintained with necessary modification to reflect the structure of the Merged Fund. 
   
   
6. Tax deferral for existing Fund IV Unitholders — Fund IV Unitholders resident in Canada are expected to be able to defer capital gains tax as Fund IV Units can be exchanged for units of the Merged Fund without creating a taxable event. Please consult the management information circular and letter of transmittal for further information. 
   
   
7. Continued management by experienced executives with proven track record of value creation — The Managers are subsidiaries of Clear Sky, a privately owned real estate investment management and development company with a history of value creation. The Merged Fund will continue to benefit from the management team provided by the Managers, at the same cost as currently provided to each of the Padlock Funds.

Unitholder Approvals

A special resolution of each Padlock Fund must be passed by at least (i) 66⅔% of the votes cast by Unitholders present in person or represented by proxy at the applicable security holder meeting voting as a single class, and (ii) subject to receipt of a discretionary exemption from the Ontario Securities Commission ("OSC"), a majority of the votes attached to the units of Euro Fund (the "Euro Fund Units") and the Fund IV Units, respectively, voted by disinterested unitholders at each meeting pursuant to Multilateral Instrument 61-101 — Protection of Minority Security Holders in Special Transactions ("MI 61-101") voting as a single class, as further described below. In the event that the exemptive relief referred to below is not obtained from the OSC, the votes will be conducted, in the case of Euro Fund, with each series and/or each class of a series of Euro Fund Units voting separately as a series and/or class of a series and, in the case of Fund IV, with each class of Fund IV Units voting separately as a class, all in accordance with the provisions of MI 61-101.

MI 61-101 requires approval of the Arrangement to be received from a majority of the votes attached to the Euro Fund Units and/or Fund IV Units voted by disinterested unitholders voting separately on a class-by-class or series-by-series (and/or class of a series by class of a series) basis at each of the Padlock Fund's meetings. However, both of the Padlock Funds have applied to the OSC for exemptive relief on the basis that, among other reasons (i) each Padlock Fund's governing declaration of trust provides that unitholders vote as a single class unless the nature of the business to be transacted at the meeting affects holders of one class or series of units in a manner materially different from its effect on holders of another class or series of units, and each Padlock Fund, the Managers and the independent trustees of each Padlock Fund have determined that the Arrangement does not affect holders of one class or series of Euro Fund Units and/or Fund IV Units in a manner materially different from its effect on holders of another class or series of Euro Fund Units and/or Fund IV Units; (ii) as the relative returns (and, accordingly, the number of units of the Merged Fund to be received on exchange of Fund IV Units of each class) are to be determined in accordance with the terms established in the governing declaration of trust of that were set at the time of, in the case of Euro Fund, the time of the Previous Arrangement (which was intended to replicate the terms set at the time of each of the Predecessor Padlock Fund's initial public offerings, with necessary modification) and, in the case of Fund IV, at the time of its initial public offering, when investors selected their preferred class and purchased their Euro Fund Units and/or Fund IV Units, the interests of the holders of each class and series of Euro Fund Units and/or Fund IV Units, as applicable, are aligned in respect of the Arrangement, and (iii) the Arrangement is subject to a number of procedural mechanisms to ensure the collective interests of the Unitholders were protected, including, but not limited to, that (a) negotiation of the Arrangement has been overseen by the independent trustees of each Padlock Fund, (b) both the independent trustees of each Padlock Fund and the Boards (as defined below) have received a fairness opinion, (c) each Padlock Fund will hold its respective meeting to allow Unitholders to consider and, if deemed advisable, approve the Arrangement, and (d) the Padlock Funds will prepare and deliver to its Unitholders an information circular which describes the Arrangement.

As of the date hereof and to the knowledge of the Padlock Funds, pursuant to MI 61-101, no Existing Units are held by Unitholders that would not be "disinterested unitholders" within the meaning of MI 61-101.

In the event that any of the above approvals of Unitholders from each Padlock Fund is not obtained, the Arrangement Agreement will be terminated and the Arrangement will not proceed. Completion of the Arrangement is also subject to the approval by the Court, and the satisfaction or waiver of the other conditions specified in the Arrangement Agreement.

Subject to obtaining Court approval and the satisfaction or waiver of all other conditions specified in the Arrangement Agreement, if unitholder approval from each Padlock Fund is obtained at each respective meeting, it is anticipated that the Arrangement will be completed in mid-May 2025.

Board Recommendation

In connection with the Arrangement, the independent members of the board of trustees of each Padlock Fund (together, the "Boards" and each, a "Board") were required to approve the transaction. In connection with such approvals, each Board retained Evans & Evans, Inc. ("Evans & Evans") as its independent financial advisor to provide advice. Evans & Evans has provided a separate opinion to each Board stating that, and based upon and subject to the assumptions, limitations and qualifications therein, the Arrangement is fair, from a financial point of view, to the Unitholders of each Padlock Fund. Based on the fairness opinions, the reasons set out above and other considerations, the trustees of each Padlock Fund have unanimously concluded (with Marcus Kurschat declaring his interest and refraining from consideration and voting in the case of each Padlock Fund) that the Arrangement is in the best interests of each of its respective Padlock Funds (and unitholders of each Padlock Fund) and, accordingly, have each unanimously approved the Arrangement and related matters and each unanimously recommends that Unitholders vote IN FAVOUR of the Arrangement and related matters.

Transaction Advisors

CIBC World Markets Inc. is acting as exclusive financial advisor to the Padlock Funds in connection with the Arrangement. Evans & Evans has provided a fairness opinion to the Boards in connection with the Arrangement. Blake, Cassels & Graydon LLP is counsel to the Padlock Funds and Wildeboer Dellelce LLP is counsel to the independent trustees of each Padlock Fund.

Management Information Circular and Meeting Date

Full details of the Arrangement, including detailed information on the implications for holders of the different classes of Existing Units in the Padlock Funds, as well as procedures to submit proxies and other related materials relating to the Merged Fund, can be found in the joint management information circular that will be mailed to Unitholders in mid April. The management information circular will also be viewable on each Padlock Fund's profile at www.sedarplus.ca.

The Boards of the Padlock Funds have selected the close of business (Toronto time) on April 9, 2025 as the record date for each special meeting. Accordingly, unitholders of the Padlock Funds as at the close of business (Toronto time) on April 9, 2025 will be eligible to vote at the special meetings. Proxy forms must be received by TSX Trust Company, at 100 Adelaide Street West, Suite 301, Toronto, Ontario M5H 4H1 200 University Avenue, Suite 300, Toronto, Ontario M5H 4H1 Attention: Proxy Department or by fax to [phone] or by internet at www.voteproxyonline.com, prior to the deadline set out in the management information circular. It is anticipated that the special meeting of each Padlock Fund will take place on May 9, 2025, and that the Arrangement will be completed in mid-May 2025.

About the Padlock Funds

Each Padlock Fund is an unincorporated investment trust formed under the laws of the Province of Ontario and was established for the primary purpose of investing in a diversified portfolio of income producing commercial real estate properties in the United Kingdom (and Spain, in the case of Euro Fund) with a focus on self-storage and mixed-use properties. Currently, the Padlock Funds have acquired self-storage properties in Bicester, Letchworth, Leighton Buzzard, Wimbledon, Chippenham, Enfield, Huntingdon, Brentwood, Newmarket, Houghton Regis, Brighton, Watford, Woking, Southend, Seaford, Mitcham, Sittingbourne, Gillingham, Edmonton, Haverhill, Newbury, Chippenham, Sidcup, Wisbech and Swindon.

Forward-Looking Statements

This news release includes certain statements which may constitute forward-looking information within the meaning of Canadian securities laws, including, but not limited to, statements or information relating to the successful completion of the Arrangement and timing thereof, the benefits of the Arrangement, including the earning of stable returns, future cash distributions and increases in property values, the target pre-tax internal rate of return, the performance of the UK real-estate markets, the ability of security holders to defer taxes, the meeting date for each special meeting and receipt of the requested relief from the OSC. Such forward-looking information, in some cases, can be identified by terminology such as "may", "will", "would", "expect", "plan", "anticipate", "believe", "intend", "target", "potential", "continue", or the negative thereof or other similar expressions concerning matters that are not historical facts.

By their nature, forward-looking statements and information involve known and unknown risks, uncertainties and other factors that may be general or specific and which give rise to the possibility that expectations, forecasts, predictions, projections or conclusions will not prove to be accurate, that assumptions may not be correct and that objectives, strategic goals and priorities may not be achieved. A variety of factors, many of which are beyond the control of the Padlock Funds, affect the operations, performance and results of such issuer's and their respective businesses, and could cause actual results to differ materially from current expectations of estimated or anticipated events or results. The reader is cautioned to consider these and other factors, uncertainties and potential events carefully and not to put undue reliance on forward-looking information as there can be no assurance that actual results will be consistent with such forward-looking information. These risks include, but are not limited to, the risk of failure to satisfy the conditions to completion of the Arrangement, the risk that the anticipated benefits of the Arrangement may not be realized, including as concerns regarding the performance of the UK and Spanish self-storage real-estate markets, the risk of not receiving the requested relief from the OSC, the availability of mortgage financing for properties or debt financing and refinancing in general, and general economic and market factors, including interest rates, business competition and changes in government regulations or in tax laws. For more information on risks relating to the Arrangement and risks relating to the Merged Fund, read the management information circular that will be mailed to Unitholders and shareholders in mid-April.

Information contained in forward-looking statements are based upon certain material assumptions that were applied in drawing a conclusion or making a forecast or projection, including the perceptions of management of the Padlock Funds and the Merged Fund of historical trends, current conditions and expected future developments, as well as other considerations that are believed to be appropriate in the circumstances, including the following: the inventory of self-storage real estate properties; the availability of properties for acquisition and the price at which such properties may be acquired; the availability of mortgage financing and current interest rates; the ability to refinance Fund IV's existing loans; the extent of competition for properties; the population of self-storage real estate market participants; assumptions about the markets in which the Merged Fund will operate; the ability of the manager of the Merged Fund to manage and operate the properties; the global, UK, Spanish and European economic environment; foreign currency exchange rates; and governmental regulations and tax laws.

These forward-looking statements are made as of the date of this news release and, except as expressly required by law, the Padlock Funds undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events.

Exchange Values

Existing Fund IV Units	Initial Investment per Unit	Value of Unit at Exchange	Merged Fund Unit	Exchange Ratio	Initial Annual Distribution	Pro Forma Targeted Annual Distribution
Padlock Partners UK Fund IV
Class A - C$	$10.00	$9.75	Class A, Series 4 - C$	1.0x	$0.60	$0.60
Class F - C$	$10.00	$10.06	Class F, Series 4 - C$	1.0x	$0.60	$0.60
Class U - UK£	£10.00	£9.26	Class U, Series 4 - UK£	1.0x	£0.60	£0.60

Note: The effective exchange rate that will be used to calculate the proportionate interests of each class on the exchange will be determined based on the exchange rates in effect at the time of the effectiveness of the Arrangement.

SOURCE Padlock Euro Storage Fund I and Padlock Partners UK Fund IV

To learn more about the Padlock Funds, contact: Iyngaran Muniandy, Chief Executive Officer, Padlock Euro Storage Fund I and Padlock Partners UK Fund IV, [email protected]; Matthew Collins, Chief Financial Officer, Padlock Euro Storage Fund I and Padlock Partners UK Fund IV, [email protected]