SIR Royalty Income Fund Announces Adjustments to Royalty Pool

Executive Summary

• SIR Royalty Income Fund added a new Scaddabush restaurant (Barrie, ON) and removed a Jack Astor’s location (Greenfield Park, QC), adjusting the royalty pool to 52 restaurants.
• The 2026 Initial Adjustment will deliver an estimated $0.5 M increase in royalty stream, resulting in conversion of 232,665 Class B GP Units to Class A GP Units valued at ~$3.3 M (≈$14.10 per unit).
• The 2025 Second Incremental Adjustment finalized a smaller-than‑expected addition of 88,161 Class A GP Units after actual revenues fell short of estimates; the fund now holds 1,693,453 Class A GP Units (16.82% fully‑diluted ownership).

Key Details

• Royalty Pool Composition: 35 Jack Astor’s, 14 Scaddabush, Reds® Square One, Loose Moose Tap & Grill®, Edna + Vita™ – total 52 restaurants.
• 2026 Initial Adjustment Calculations:
• Estimated annual net revenue of new restaurant: $8.58 M.
• 6% royalty → $514,800 gross royalty increase.
• 7.5% accretion discount → $38,610 reduction.
• Net royalty addition after 80% initial adjustment: $380,952.
• Capitalized value at current yield (11.61%): $3,280,578.
• Units exchanged: 232,665 Class A GP Units valued at $3.3 M ($14.10 per unit).
• 2026 Adjustment for Reduction:
• Closed Jack Astor’s results in repayment of 196,520 Class A GP Units to the Partnership.
• 2025 Second Incremental Adjustment (finalized):
• Actual revenue from four new restaurants: $24.166 M (10.9% below estimate).
• Net royalty increase after discount: $1,341,229.
• Capitalized value at current yield (12.20%): $10,991,826.
• Units exchanged: 864,137, net of prior adjustments → 88,161 Class A GP Units issued to SIR.
• Conversion Distribution (Dec 31 2025): Aggregate amount $144,584, payable Jan 28 2026, based on 88,161 converted units.
• Capital Structure Post‑Adjustments (effective Jan 1 2026):
• SIR holds 1,693,453 Class A GP Units (16.82% of fully diluted fund units).
• Fully diluted unit count: 10,069,020.
• Remaining Class B GP Units held by SIR: 95,882,832, convertible only upon future restaurant performance triggers.
• Future Outlook: Anticipated 2026 Second Incremental Adjustment and associated Conversion Distribution expected Jan 1 2027; amounts not yet determinable.

Notable Quotes

(No direct quotes were provided in the release.)