PADLOCK EURO STORAGE FUND I TO SELL ENTIRE PORTFOLIO COMPRISING 26 SELF-STORAGE ASSETS IN TRANSACTION WITH GROSS ASSET VALUE OF APPROXIMATELY £270 MILLION

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

TORONTO, Dec. 19, 2025 /CNW/ - Padlock Euro Storage Fund I (the "Fund") today announced it has entered into a sale and purchase agreement ("Purchase Agreement") pursuant to which QR CS Padlock LP (the "Purchaser"), an affiliate of QuadReal Property Group (QuadReal), will indirectly acquire the Fund's portfolio of 26 self-storage and mixed-use properties located in the United Kingdom (the "Properties"). Pursuant to the Purchase Agreement and related transaction agreements, the Purchaser will acquire a 95% interest in the holding companies indirectly owning the Properties from an indirect subsidiary of the Fund (the "Canco Seller") and certain affiliates of Clear Sky Capital Inc. (the "Canadian Manager"), with affiliates of the Canadian Manager and members of management collectively continuing to hold an indirect 5% equity interest of the Properties (the "Transaction").

The Transaction values the Properties at a gross asset value of approximately £270,000,000. The Purchaser will indirectly assume the Fund's proportionate share of the existing debt on the Properties. After the assumption of debt and other working capital adjustments, the Fund expects the net cash proceeds for its 95% interest in the Properties to be approximately £93,600,000, which reflects applicable U.K. exit taxes that will be required to be paid by the Fund or its subsidiaries in connection with the Transaction as a result of the sale of the Fund's U.K. holding companies, ("U.K. Exit Taxes") and the deduction of estimated transaction, closing and other customary costs and payment of the carried interest. It also assumes full receipt of the Closing Retention Amount (as defined below).

"Under Clear Sky's management, the Fund, including its predecessors, has assembled a sizable portfolio of high-quality self-storage assets, which allowed us to identify QuadReal as a buyer", said Iyngaran Muniandy, Chief Executive Officer of the Fund. "The sale of the Properties is a compelling opportunity for Fund unitholders to realize on their investments and achieve liquidity in the Fund. We are proud of being able to execute a transaction of this nature in what is currently a difficult U.K. property market."

The proceeds of the Transaction are, subject to the assumptions and estimates set forth below and as otherwise described in this news release, expected to result in the following estimated pre-tax investor gross internal rate of return ("IRR") to holders ("Unitholders") of trust units of the Fund ("Units"):

Class of Units	IRR^(1)(2)
Class A, Series 1	9.31 %
Class F, Series 1	9.17 %
Class U, Series 1	8.38 %
Class A, Series 2	6.69 %
Class F, Series 2	7.50 %
Class U, Series 2	5.92 %
Class A, Series 3	9.00 %
Class F, Series 3	10.01 %
Class U, Series 3	3.80 %
Class A, Series 4	3.25 %
Class F, Series 4	4.53 %
Class U, Series 4	0.37 %

⁽¹⁾ The IRR is, in each case, calculated based on the estimated net pre-tax cash proceeds expected to be realized by the Fund from the indirect sale of the Fund's 95% indirect interest in the Properties pursuant to the Transaction, and is calculated prior to deduction of any U.K. Exit Taxes (estimated to be £6,273,000) and the carried interest required to be paid to affiliates of the Canadian Manager (estimated to be £4,097,000), but taking into account the estimated expenses incurred in connection with the Transaction (estimated to be C$16,402,000). The IRR represents the returns achieved by the holding companies indirectly owning the Properties on such Properties that are attributable to each class and series of Units.

⁽²⁾ The IRR assumes the declaration of a special distribution shortly following the closing date for the Transaction (the "Closing Date") and one or more liquidating distributions in connection with the redemption of the Units following completion of the Post-Closing Adjustment (as defined below) process and is (i) based on estimated expenses incurred in connection with the Transaction of C$16,402,000 (ii) calculated before deduction of estimated U.K. Exit Taxes of £6,273,000, (iii) calculated before deduction of the Managers' (as defined below) estimated carried interest of £4,097,000 (assuming a Closing Date of February 28, 2026), and (iv) assuming the Bank of Canada daily exchange rate on December 18, 2025 of £1.00 to C$1.845.

The proceeds of the Transaction are, subject to the assumptions and estimates set forth below and as otherwise described in this news release, expected to result in the following estimated aggregate distribution (the "Distribution per Unit") per Unit, after deducting U.K. Exit Taxes, and both before and after deducting amounts in respect of the carried interest required to be paid to affiliates of the Canadian Manager:

Class of Units	Issue Price per Unit^(1)	Pre-Carried Interest, Estimated Distribution per Unit^(2)	Post-Carried Interest Estimated Distribution per Unit^(2)
Class A, Series 1	C$10.00	C$11.93	C$11.50
Class F, Series 1	C$10.00	C$12.31	C$11.86
Class U, Series 1	£10.00	£11.22	£10.82
Class A, Series 2	C$10.00	C$10.21	C$9.84
Class F, Series 2	C$10.00	C$10.53	C$10.15
Class U, Series 2	£10.00	£9.78	£9.43
Class A, Series 3	C$10.00	C$11.35	C$10.94
Class F, Series 3	C$10.00	C$11.71	C$11.29
Class U, Series 3	£10.00	£9.54	£9.19
Class A, Series 4	C$10.00	C$9.34	C$9.00
Class F, Series 4	C$10.00	C$9.67	C$9.32
Class U, Series 4	£10.00	£8.67	£8.35

⁽¹⁾ The Issue Price per Unit is, in each case, the price per unit of the respective predecessor fund's initial public offering.

⁽²⁾ The consideration that holders of Canadian dollar denominated Units will be entitled to receive will ultimately be subject to the actual applicable rate(s) of exchange to be determined in connection with the distribution of net proceeds from the Transaction to Unitholders. The estimated Distribution per Unit set out in this news release assumes the declaration of a special distribution shortly following the Closing Date and one or more liquidating distributions in connection with the redemption of the Units following completion of the Post-Closing Adjustment process and is based on (i) estimated expenses incurred in connection with the Transaction of C$16,402,000 (ii) estimated U.K. Exit Taxes of £6,273,000, (iii) in the case of the Post-Carried Interest Distribution per Unit, deduction of the Managers' estimated carried interest of £4,097,000 (assuming a Closing Date of February 28, 2026) and (iv) the Bank of Canada daily exchange rate on December 18, 2025 of £1.00 to C$1.845.

Unitholders are cautioned that the IRR and Distribution per Unit figures set out in the tables above are based on, as applicable, the Managers' determination of the estimated net asset value of the Properties, U.K. Exit Taxes, estimated expenses and carried interest, in each case as at the date hereof and actual amounts may differ, including materially, based on, among other things, the final amounts of transaction, closing and other customary costs, taxes and the amount of the Closing Retention Amount actually received by the Fund.

The Distribution per Unit takes into account U.K. Exit Taxes that will be required to be paid by the Fund or its subsidiaries in connection with the Transaction as a result of the sale of the Fund's U.K. holding companies, but does not account for any income or other taxes payable by Unitholders on any amounts received.

In accordance with the Purchase Agreement, the consideration payable by the Purchaser will be adjusted based on the difference between the Fund's estimated net asset value of the Properties and the actual net asset value of the Properties as of the Closing Date, in each case calculated in accordance with the Purchase Agreement (the "Post-Closing Adjustment"), as well as for certain planning-related approvals in respect of the Chippenham South Property (the "Chippenham South Planning Condition") and tax matters related to the Transaction. Pursuant to the Purchase Agreement, the consideration payable by the Purchaser may be reduced by £3,000,000 if the Chippenham South Planning Condition is waived by the Purchaser within two business days of the April 20, 2026 (the "Long Stop Date"). In addition, approximately £17,182,000 (the "Closing Retention Amount") will be retained by the Purchaser (as to approximately £4,582,000) and the Fund or its affiliates (as to approximately £12,600,000) to address any shortfall in the net asset value of the Properties based on the Post-Closing Adjustment. There is no guarantee that any or all of the Closing Retention Amount will be retained or paid to the Fund and available to be distributed to Unitholders.

In connection with the Transaction, the Fund and an affiliate of the Managers have entered into a letter agreement (the "Letter Agreement") providing for a true-up of the pro rata purchase price allocation under the Purchase Agreement, to the extent necessary to account for the Post-Closing Adjustment. In addition, such affiliate has agreed to compensate the Fund for shortfalls in the purchase price under the Purchase Agreement beyond specified thresholds, in order to mitigate against a potential material reduction in the net proceeds available to the Fund from the Transaction.

The Fund currently expects (i) to declare a special distribution to Unitholders payable shortly following the Closing Date, based on the net proceeds available to be distributed following such date, and (ii) to pay the balance (if any) pursuant to one or more liquidating distributions in connection with a redemption of the Units following completion of the Post-Closing Adjustment procedures, expected to occur approximately two to three months following the Closing Date. If the Post-Closing Adjustment identifies a shortfall between the estimated net asset value of the Properties and the actual net asset value of the Properties as of the Closing Date that exceeds the amount of the Closing Retention Amount, the Closing Retention Amount will be retained by or repaid to the Purchaser. In such circumstance, the Fund will redeem the Units for a de minimis amount.

Benefits of the Transaction for Unitholders

• Liquidity. The expected Distribution per Unit to be received by Unitholders is payable entirely in cash and therefore provides Unitholders with certainty of value and immediate liquidity when distributed, and removes the risks associated with the Fund remaining an independent public entity, including challenges related to the closed-end and limited term of the Fund.
  
  
• Compelling Value Relative to Alternatives Reviewed. The independent trustees of the Fund (the "Independent Trustees") and the board of trustees of the Fund (the "Board"), with the assistance of their respective financial and legal advisors, and based upon their collective knowledge of the business, operations, financial condition, earnings and prospects of the Fund, as well as their collective knowledge of the current and prospective environment in which the Fund operates, including industry, economic health and market conditions and outlooks, as well as their respective expectations of the future prospects of the self-storage real estate industry in the United Kingdom, assessed the relative benefits, risks and potential timelines of various alternatives reasonably available to the Fund and concluded that:
  
  
  • the Distribution per Unit expected to be received by Unitholders represents greater value for the Unitholders than would reasonably be expected from the continued execution of the Fund's existing strategic plan, taking into account the Fund's limited term (expiring in July 2026, subject to extension by the Managers) and the capital requirements to sustain the Fund's ongoing development and build-out strategy;
    
    
  • conditions for sale transactions in the real estate market in the regions where the Fund operates are generally unfavourable at this time, such that a transaction providing liquidity to Unitholders, such as the Transaction, is a positive factor and avoids potential further downside in the U.K. self-storage market;
    
    
  • it was unlikely that any other party would be willing to acquire the Fund or all or substantially all of its Properties as a portfolio on terms that were more favourable to the Fund, from a financial point of view, than the Transaction; and
    
    
  • a sale of all of the Properties as a portfolio was preferable to a piecemeal sale of Properties, which, among other things, could (i) result in certain Properties being unable to be sold, (ii) result in additional transaction costs in marketing and selling Properties on an individual basis, (iii) have an indeterminate timeline for liquidity, with the Managers continuing to earn asset management fees throughout the sale process, (iv) fail to receive interest from more institutional buyers seeking to achieve a certain level of scale, (v) result in a reduction in borrowing base under the Fund's credit facility, and (vi) have a significant disruption to operations of the Fund for an extended period.
    
    
• Independent Oversight and Arm's Length Negotiations. The Independent Trustees took an active and independent role in supervising all material strategic decisions with respect to the Transaction and provided oversight and guidance with respect to the negotiations involving the Transaction. The Purchase Agreement is the result of a focused and lengthy negotiation process that was undertaken by the Managers, on behalf of the Fund under the oversight and direction of the Independent Trustees and at arm's length to the Purchaser, with the participation of the Independent Trustees' and the Fund's respective outside financial and legal advisors.
  
  
• Fairness Opinion. The Independent Trustees and the Board received a fairness opinion (the "Fairness Opinion") from Blair Franklin Capital Partners Inc. ("Blair Franklin") to the effect that as of the date of such opinion and based upon and subject to the limitations, qualifications, assumptions and other matters set out therein, the aggregate consideration (as such term is defined in the Fairness Opinion) to be received by the Unitholders (other than Clear Sky Capital Inc. and its affiliates) pursuant to the Transaction is fair, from a financial point of view, to such Unitholders.

Summary of Other Transaction Terms

In connection with the Transaction, the accumulated value of the "carried interest" payable to an affiliate of Padlock Capital Partners, LLC, Padlock Capital Partners II, LLC, Padlock Capital Partners III, LLC and Padlock Capital Partners IV, LLC (collectively, the "UK Managers" and together with the Canadian Manager, the "Managers") and certain members of management will be extinguished in return for a pro rata payment from the consideration payable by the Purchaser based on the pre-existing carried interest formulas set out in the share terms of the Fund's applicable subsidiaries. Assuming the Distribution per Unit set out above, the aggregate carried interest is expected to be approximately £4,097,000.

The Purchase Agreement provides for, among other things, customary covenants, including customary non-solicitation covenants from the Fund and a "fiduciary out" that allows the Board to accept a superior proposal in certain circumstances, subject to a "right to match" in favour of the Purchaser and payment of a termination fee of approximately £4,582,000 to the Purchaser.

Closing of the Transaction is expected to occur in the first quarter of 2026, subject to satisfaction of certain conditions, including (i) approval of the Transaction by Unitholders; (ii) completion of a pre-closing reorganization; (iii) a satisfactory planning permission for the Chippenham South Property; and (iv) the completion of the previously disclosed acquisition of a self-storage property in Newcastle upon Tyne currently under contract to a subsidiary of the Fund.

The foregoing summary is qualified in its entirety by the provisions of the Purchase Agreement and the Letter Agreement, as applicable, copies of which will be filed under the Fund's profile on SEDAR+ at www.sedarplus.ca.

Declaration of Trust Amendments and Suspension of Redemptions

In connection with the approval of the Purchase Agreement and the Transaction, the Board amended its amended and restated declaration of trust dated May 13, 2025 (the "DOT"), to temporarily suspend redemptions until the earlier of the redemption of all Units in connection with the Transaction and the termination of the Transaction, as well as to provide for dissent rights for Unitholders in connection with the Transaction in light of the proposed wind-up of the Fund (the "DOT Amendments"), in each case in order to facilitate an orderly closing of the Transaction and provide fair treatment to Unitholders.

Full details of the DOT Amendments will be found in the management information circular (the "Circular") that will be mailed to Unitholders. The Circular will also be viewable on the Fund's profile on SEDAR+ at www.sedarplus.ca.

Special Meeting, Required Unitholder Approvals and Management Information Circular

The Fund will be holding a special meeting of Unitholders (the "Meeting") to seek approval of the Transaction and certain related matters. The Fund will mail the Circular and certain related documents to Unitholders in connection with the Meeting, copies of which will be filed under the Fund's profile on SEDAR+ at www.sedarplus.ca. It is anticipated that the Meeting will take place in January, 2026.

Implementation of the Transaction will be subject to, among other things, the approval at the Meeting of (i) at least 66 2/3% of the votes cast by Unitholders present in-person or represented by proxy, voting as a single class, at the Meeting and (ii) subject to receipt of discretionary exemptive relief from the Ontario Securities Commission ("OSC"), a majority of the votes cast by all Unitholders present in-person or represented by proxy, voting together as a single class, other than Unitholders whose votes are required to be excluded pursuant to Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions ("MI 61-101"), provided that if such exemptive relief is not obtained, the Unitholders will vote on a class by class and series by series basis in respect of (ii).

MI 61-101 requires approval of the Transaction to be received from a majority of the votes attached to the Units voted by "disinterested unitholders" voting separately on a class-by-class and series-by-series basis at the Meeting. However, the Fund has applied to the OSC for exemptive relief from the requirement that the Fund obtain approval separately for each class and series of Units on the basis that, among other reasons: (i) the DOT provides that Unitholders vote as a single class unless the nature of the business to be transacted at the meeting affects holders of one series or class of Units within a series in a manner materially different from its effect on holders of another series or class of Units within a series, in which case the Units of the affected series or class within a series will vote separately as a series or class within a series, and the Independent Trustees and the Managers have determined that the Transaction does not affect holders of one series and/or class of Units in a manner materially different from its effect on holders of another series and/or class of Units; (ii) the relative returns of the Transaction to each series or class of Units within a series are fixed pursuant to the formulas set out in the Fund's DOT; (iii) providing a series or class vote could grant disproportionate power to a potentially small number of Unitholders; (iv) negotiation of the Transaction was overseen by the Independent Trustees who received the Fairness Opinion; and (v) to the best of the knowledge of the Fund or the Managers, there is no reason to believe that Unitholders of any particular class or series would not approve the Transaction. There can be no assurance that the requested relief will be granted by the OSC.

As of the date hereof and to the knowledge of the Fund, pursuant to MI 61-101, "disinterested unitholders" hold 100% of each series and class of the Fund Units.

In the event that any of the above approvals of Unitholders is not obtained, the Purchase Agreement will be terminated and the Transaction will not proceed, and the Fund will be responsible for paying an expense reimbursement in the amount of £2,400,000.00 to the Purchaser. If the Purchaser terminates the Purchase Agreement as a result of the Chippenham South Property Condition not having been satisfied by the Long Stop Date, no termination fee or expense reimbursement would be payable by the Fund.

Full details of the Transaction, including detailed information on the implications for holders of the different series and classes of Units, as well as procedures to submit proxies and other related materials, will be found in the Circular that will be mailed to Unitholders. The Circular will also be viewable on the Fund's profile on SEDAR+ at www.sedarplus.ca.

Independent Trustees and Board Recommendation

In connection with the Transaction, Blair Franklin orally delivered its Fairness Opinion to the Independent Trustees and the Board, respectively, to the effect that, as of December 19, 2025, subject to the limitations, qualifications assumptions and other matters communicated to the Fund, the aggregate consideration (as such term is defined in the Fairness Opinion) to be received by the Unitholders (other than Clear Sky Capital Inc. and its affiliates) pursuant to the Transaction is fair, from a financial point of view, to such Unitholders.

Based on the Fairness Opinion, the reasons set out above and other considerations, the Independent Trustees concluded that the Transaction is in the best interests of the Fund and, accordingly, unanimously recommended that the Board approve the Transaction and related matters and unanimously recommend that Unitholders vote IN FAVOUR of the Transaction and related matters.

Based on the Fairness Opinion, the reasons set out above and other considerations, the Board unanimously concluded (with Marcus Kurschat declaring his interest and recusing himself from consideration and voting) that the Transaction is in the best interests of the Fund and, accordingly, unanimously approved the Transaction and related matters and unanimously recommends that Unitholders vote IN FAVOUR of the Transaction and related matters.

A copy of the Fairness Opinion, as well as additional details regarding the terms and conditions of the Transaction and the rationale for the recommendation made by the Independent Trustees will be set out in the Circular to be mailed to Unitholders in connection with the Unitholders' meeting and filed by the Fund on its profile on SEDAR+ at www.sedarplus.ca.

Transaction Advisors

CIBC World Markets Inc. is acting as exclusive financial advisor to the Fund in connection with the Transaction. Blair Franklin is acting as independent financial advisor to the Independent Trustees and has provided a fairness opinion to the Independent Trustees and the Board in connection with the Transaction. Blake, Cassels & Graydon LLP is Canadian counsel to the Fund and Gowlings WLG (UK) LLP is U.K. counsel to the Fund. Wildeboer Dellelce LLP is counsel to the Independent Trustees of the Fund. Linklaters LLP and Stikeman Elliott LLP are acting as legal advisors to the Purchaser in connection with the Transaction.

About Padlock Euro Storage Fund

The 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 with a focus on self-storage and mixed-use properties. The Fund has acquired self-storage properties in Bicester, Letchworth, Leighton Buzzard, Wimbledon, Chippenham, Enfield, Huntingdon, Brentwood, Newmarket, Houghton Regis, Brighton, Watford, Woking, Southend-on-Sea, Seaford, Gillingham, Mitcham, Sittingbourne, Wisbech, Swindon, Edmonton, Haverhill, Newbury, Chippenham, Sidcup and Ashford.

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 Transaction; the timing of the Meeting; the expected timing for closing the Transaction and the Post-Closing Adjustment; the estimated net asset value; the Distribution per Unit; the estimated transaction costs, U.K. Exit Taxes and carried interest; the timing and quantum of the proposed distribution of net proceeds of the Transaction to Unitholders; any reduction to the consideration relating to the Closing Retention Amount, the Chippenham South Property Condition not being satisfied, the carried interest, transaction costs, U.K. Exit Taxes; the timing and quantum of expected investment returns and performance; receipt from the OSC of the requested exemptive relief; and the benefits of the Transaction to the Unitholders generally. 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 Fund, affect the operations, performance and results of the Fund and its business, 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 Transaction, the risk that the anticipated benefits of the Transaction may not be realized, including as concerns regarding the performance of the U.K. self-storage real-estate markets, the risk of not receiving the requested relief from the OSC and general economic and market factors, including interest rates, foreign exchange rates, business competition and changes in government regulations or in tax laws and other risk factors described in the Fund's continuous disclosure materials from time to time, available on SEDAR+ at www.sedarplus.ca, or as will be further set out in the Circular.

Information contained in forward-looking statements is 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 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; extent of competition for properties; the population of self-storage real estate market participants; the global, U.K. 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 Fund undertakes 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.

SOURCE Padlock Euro Storage Fund I

For further information: For further information, please contact: Iyngaran Muniandy, Chief Executive Officer, Padlock Euro Storage Fund I, [email protected]; Matthew Collins, Chief Financial Officer, Padlock Euro Storage Fund I, [email protected]