Subversive Acquisition LP - Annual Report 2019

SUBVERSIVE REAL ESTATE ACQUISITION REIT LP

ANNUAL INFORMATION FORM

Fiscal year ended December 31, 2019

February 12, 2020

GENERAL ................................................................................................................................................................... 1 FORWARD-LOOKING STATEMENTS ................................................................................................................. 1 GLOSSARY ................................................................................................................................................................. 3 CORPORATE STRUCTURE .................................................................................................................................... 7 Name, Address and Incorporation ......................................................................................................................... 7 DESCRIPTION OF THE BUSINESS AND GENERAL DEVELOPMENT OF THE BUSINESS ..................... 8 Initial Public Offering ............................................................................................................................................ 8 Qualifying Transaction .......................................................................................................................................... 9 General ............................................................................................................................................................ 9 Identifying Target .......................................................................................................................................... 10 Conflicts of Interest ....................................................................................................................................... 10 Additional Funding for General Ongoing Expenses ..................................................................................... 12 Permitted Timeline and Extension ................................................................................................................ 12 Minimum Fair Market Value of Qualifying Transaction .............................................................................. 12 Lack of Business Diversification ................................................................................................................... 13 Limited Ability to Evaluate the Target’s Management Team ....................................................................... 13 Completion of a Qualifying Transaction ....................................................................................................... 13 Initial Listing Requirements .......................................................................................................................... 14 Exchange’s Escrow Policy ............................................................................................................................ 14 Redemption Rights ........................................................................................................................................ 15 Automatic Redemption if No Qualifying Transaction .................................................................................. 16 Contractual Rights of Action ......................................................................................................................... 17 DESCRIPTION OF CAPITAL STRUCTURE ....................................................................................................... 17 General ................................................................................................................................................................ 17 General Description of Units ............................................................................................................................... 17 Interests of Unitholders ................................................................................................................................. 17 Consideration for Units ................................................................................................................................. 17 No Pre-Emptive Rights ................................................................................................................................. 18 Fractional Units ............................................................................................................................................. 18 Allotment and Issue ....................................................................................................................................... 18 Transferability ............................................................................................................................................... 18 Subdivision or Consolidation ........................................................................................................................ 18 Distribution and Allocation of Income and Losses .............................................................................................. 18 Distributions of Distributable Cash ............................................................................................................... 19 Payment of Distributions ............................................................................................................................... 19 Allocation of Income and Losses .................................................................................................................. 19 SPECIFIC DESCRIPTION OF UNITS .................................................................................................................. 21 Founders’ Proportionate Voting Units, Class A Restricted Voting Units and Class B Units .............................. 21 Restricted Voting Units and Limited Partnership Units ...................................................................................... 22 Proportionate Voting Units .................................................................................................................................. 24 Conversion Rights and Transfers .................................................................................................................. 24 Conversion Conditions .................................................................................................................................. 24 Voting Rights ................................................................................................................................................ 25 Issuance of Additional Proportionate Voting Units....................................................................................... 25 Take-Over Bid Protection ............................................................................................................................. 25 Rights ................................................................................................................................................................... 26 Make Whole Covenants ....................................................................................................................................... 27

DISTRIBUTION POLICY ....................................................................................................................................... 27

MARKET FOR SECURITIES ................................................................................................................................. 28 Trading Price and Volume ................................................................................................................................... 28 Prior Sales ............................................................................................................................................................ 28 ESCROWED SECURITIES AND SECURITIES SUBJECT TO CONTRACTUAL RESTRICTIONS ON TRANSFER ................................................................................................................................................................ 29 VOTING SECURITIES AND PRINCIPAL UNITHOLDERS ............................................................................. 29 DIRECTORS AND OFFICERS ............................................................................................................................... 29 Name, Address, Occupation and Security Holding ............................................................................................. 29 Directors and Officers ................................................................................................................................... 31 Indemnification and Insurance ............................................................................................................................ 34 Cease Trade Orders, Bankruptcies, Penalties or Sanctions ................................................................................. 35 INDEBTEDNESS OF DIRECTORS AND OFFICERS ......................................................................................... 35 INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS .................................... 35 Related Party Transaction .................................................................................................................................... 35 DISCLOSURE OF CORPORATE GOVERNANCE PRACTICES ..................................................................... 36 Board of Directors ............................................................................................................................................... 36 Conflicts of Interest ............................................................................................................................................. 36 Audit Committee ................................................................................................................................................. 38 External Audit Service Fees ................................................................................................................................ 38 EXECUTIVE COMPENSATION AND OTHER PAYMENTS ........................................................................... 39 Compensation Discussion and Analysis .............................................................................................................. 39 RISK FACTORS ....................................................................................................................................................... 39 AUDITORS, TRANSFER AGENT, RIGHTS AGENT AND ESCROW AGENT .............................................. 62 PROMOTER .............................................................................................................................................................. 62 LEGAL PROCEEDINGS AND REGULATORY ACTIONS ............................................................................... 62 Legal Proceedings................................................................................................................................................ 62 Regulatory Actions .............................................................................................................................................. 62 MATERIAL CONTRACTS ..................................................................................................................................... 62 ADDITIONAL INFORMATION ............................................................................................................................. 63 APPENDIX A ........................................................................................................................................................... A-1

SUBVERSIVE REAL ESTATE ACQUISITION REIT LP

ANNUAL INFORMATION FORM

GENERAL

Unless otherwise noted herein, all references to “$”, “U.S.$”, “United States dollars” or “U.S. dollars” are to the currency of the United States. In this Annual Information Form (“ AIF ”), unless the context otherwise requires, the “ REIT LP ” or “ we ” or “ us ” or “ our ” refers to Subversive Real Estate Acquisition REIT LP. Please refer to the “Glossary” in this AIF for the definitions of other defined terms.

Unless otherwise indicated, the information contained herein is given as at February 12, 2020.

FORWARD-LOOKING STATEMENTS

Certain statements contained in this AIF constitute “forward-looking information” for the purpose of applicable Canadian securities legislation (“ forward-looking statements ”). These statements reflect the General Partner’s management’s expectations with respect to future events, the REIT LP’s financial performance and business prospects.

All statements other than statements of historical fact are forward-looking statements. The use of the words “anticipate”, “believe”, “continue”, “could”, “estimate”, “expect”, “intends”, “may”, “might”, “plan”, “possible”, “potential”, “predict”, “project”, “should”, “would”, and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not a forward-looking statement. These statements involve known and unknown risks, uncertainties, and other factors that may cause actual results or events to differ materially from those anticipated or implied in such forward-looking statements. Such risks and uncertainties include, but are not limited to, the factors discussed under “ Risk Factors ” herein. No assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this AIF should not be unduly relied upon. Unless otherwise indicated, these statements speak only as of the date of this AIF.

In particular, this AIF contains forward-looking statements pertaining to the following, among other things:

our ability to complete our Qualifying Transaction and its potential success;
our success in retaining or recruiting, or changes required in, the General Partner’s directors and officers or key employees, both before and following our Qualifying Transaction;
the General Partner’s directors and officers allocating their time to other businesses and having conflicts of interest with our business or in approving our Qualifying Transaction;
our potential ability to obtain additional financing to complete our Qualifying Transaction;
our pool of prospective target cannabis-related real estate businesses and/or assets for our Qualifying Transaction;
the ability of the General Partner’s directors, officers and management team to generate a number of potential acquisition opportunities;
operation of the business following the Qualifying Transaction;
the use of proceeds not held in the escrow account;
potential regulatory changes;
fluctuations in interest rates; and
2 -
our financial performance.

With respect to forward-looking statements contained in this AIF, assumptions have been made regarding, among other things:

the ability of the REIT LP, our Founders and the General Partner’s management team to successfully consummate a Qualifying Transaction within the Permitted Timeline;
an interest rate of 2% per annum, for the REIT LP’s projection of an accrual of interest earned in the escrow account over the next 12 months, and the increase of the initial U.S.$10.00 per Class A Restricted Voting Unit sold to the public held in the escrow account to approximately U.S.$10.20 per Class A Restricted Voting Unit, before applicable taxes, if any, and other permitted deductions; and
projected operational and Qualifying Transaction-related expenses during the Permitted Timeline leading up to our Qualifying Transaction.

Actual results could differ materially from those anticipated in these forward-looking statements as a result of the risk factors set forth below and included elsewhere in this AIF, including:

the REIT LP’s lack of operating history and revenues;
the ability of our holders of Restricted Voting Units to redeem their Restricted Voting Units for cash may make our financial condition less attractive to potential Qualifying Transaction targets;
the requirement that we complete our Qualifying Transaction within the Permitted Timeline (unless extended);
the net proceeds of the IPO not being held in the escrow account may be insufficient to allow us to operate throughout the Permitted Timeline;
third parties may bring claims against us where we are not indemnified by our Sponsors;
the ability of our unitholders to exercise redemption rights with respect to a large number of our Restricted Voting Units, which may not allow us to complete the most desirable Qualifying Transaction or optimize our capital structure;
changes in laws or regulations, or a failure to comply with any laws and regulations;
potential adverse tax consequences on holders of Restricted Voting Units and on the REIT LP in the event the REIT LP acquires a United States entity or assets of a United States entity in an “inversion” transaction;
the target cannabis-related real estate business and/or asset with which we acquire in connection with our Qualifying Transaction may not have attributes entirely consistent with our general criteria and guidelines;
we may not be required to obtain an opinion from a qualified person and consequently, an independent source may not confirm that the price we are paying for the target cannabis-related real estate business and/or asset is fair to us or our unitholders from a financial point of view;
resources could be wasted in researching acquisitions that are not consummated;
the loss of the General Partner’s directors and officers;
3 -
the loss of key personnel;
the REIT LP may be subject to competition from other companies seeking to execute a business plan similar to that of the REIT LP;
our Sponsors and the General Partner’s directors and officers may have conflicts of interest with the target;
our Sponsors and the General Partner’s directors, officers, security holders and their respective affiliates and associates may have interests that conflict with our interests;
our Founders will lose their investment in us if our Qualifying Transaction is not completed within the Permitted Timeline and their holdings of Founders’ Proportionate Voting Units may create financial incentives that differ compared to holders of Restricted Voting Units;
multiple prospective targets may give rise to increased costs and risks that could negatively impact our operations and profitability;
a Qualifying Transaction whereby we acquire an asset and/or business about which little information is available may result in a Qualifying Transaction with an entity that is not as profitable as we suspected, if at all;
the inability to maintain control of a target cannabis-related real estate business and/or asset after our Qualifying Transaction;
the inability to obtain additional financing to complete our Qualifying Transaction or to fund our operations and/or growth following our Qualifying Transaction;
the lack of investment diversification and dependence on a single group of real estate assets (or businesses);
competition from other businesses;
the tax consequences of the Qualifying Transaction;
possible loss of limited liability of the limited partners;
limitation on the statutory rights of unitholders; and
other factors discussed under “ Risk Factors ”.

Readers are cautioned that the foregoing list of risk factors should not be construed as exhaustive.

Any forward-looking statement included in this AIF is expressly qualified by this cautionary statement, and except as otherwise indicated, is made as of the date of this AIF. None of the REIT LP, the Founders (including our Sponsors) or the underwriters of the IPO assume or undertake any obligation to update or revise any forward-looking statements or departures from them, except as required by applicable law. New factors emerge from time to time, and it is not possible for the General Partner’s management to predict all such factors and to assess in advance the impact of each such factor on the business of the REIT LP or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statement.

GLOSSARY

“ A&R LP Agreement ” means the amended and restated limited partnership agreement of the REIT LP;

“ Audit Committee ” has the meaning set out under the sub-heading “ Disclosure of Corporate Governance Practices– Audit Committee ”;

“ CG IV ” means CG Investments Inc. IV;

“ Charter of the Audit Committee ” has the meaning set out under the sub-heading “ Disclosure of Corporate Governance Practices – Audit Committee ”;

“ Class A Restricted Voting Units ” means the 22,500,000 Class A restricted voting units of the REIT LP sold to the public under the IPO Prospectus and upon the partial exercise of the Over-Allotment Option at an offering price of U.S.$10.00 per Class A Restricted Voting Unit (for an aggregate purchase price of U.S.$225,000,000), each comprised of one Restricted Voting Unit and one Right, and each a “ Class A Restricted Voting Unit ”;

“ Class B Units ” means the 512,000 Class B units of the REIT LP sold to our Sponsors simultaneously with the public offering of Class A Restricted Voting Units and the additional 12,500 Class B Units sold to our Sponsors upon closing of the partial exercise of the Over-Allotment Option, at an offering price of U.S.$10.00 per Class B Unit (for an aggregate purchase price of $5,245,000), each comprised of 1/100 of a Proportionate Voting Unit and one Right, and each a “ Class B Unit ”;

“ Discretionary Deferred Portion ” means U.S.$0.10 per Class A Restricted Voting Unit;

“ Distributable Cash ” means, for any period, the aggregate of all amounts received by the REIT LP in such period, less reasonable reserves determined by the General Partner and less Taxes, if any, payable by the REIT LP;

“ Escrow Agent ” means Olympia Trust Company;

“ Escrow Agreement ” means the escrow agreement dated January 8, 2020 between the REIT LP, the Escrow Agent, and the underwriters of the IPO;

“ Exchange ” means the Neo Exchange Inc., or any successor, assign or replacement exchange on which any of the REIT LP’s securities are listed from time to time;

“ Exchange Agreement and Undertaking ” means the transfer restrictions agreement and undertaking dated as of January 8, 2020, entered into by our Founders in favour of the Exchange;

“ Fiscal Year ” means the fiscal year of the REIT LP;

“ Founders ” means our Sponsors and the General Partner’s directors, Michael Auerbach, Leland Hensch, Richard Acosta, Omar Mangalji, Scott Baker, Octavio Boccalandro, Craig Hatkoff, Anne Sullivan, Eric Clarke, Michael Miller, Dylan Marcoot and Dylan Hart as the holders of the Founders’ Proportionate Voting Units;

“ Founders’ Proportionate Voting Units ” means the 58,820 proportionate voting limited partnership units of the REIT LP issued to our Founders prior to the IPO Closing (1,259 of such Founders’ Proportionate Voting Units, referred to as the Over-Allotment Relinquished Founders’ Proportionate Voting Units, were relinquished by our Sponsors as the Over-Allotment Option was partially exercised), and for greater certainty does not include the Proportionate Voting Units forming part of the Class B Units purchased by our Sponsors;

“ FPI Condition ” has the meaning set out under the heading “ Specific Description of Units – Proportionate Voting Units” ;

“ General Partner ” means Subversive Real Estate Acquisition REIT (GP) Inc., a company incorporated under the laws of the Province of British Columbia;

“ Inception Sponsor ” means Inception Altanova Sponsor, LLC;

“ IPO ” means the REIT LP’s initial public offering of 20,000,000 Class A Restricted Voting Units offered to the public under the IPO Prospectus;

“ IPO Closing ” means the closing of the IPO on January 8, 2020;

“ IPO Prospectus ” means the REIT LP’s final long form prospectus dated December 23, 2019;

“ Limited Partnership Units ” means the Restricted Voting Units following the automatic renaming of such class of securities to “Limited Partnership Units” on or following completion of our Qualifying Transaction;

“ Make Whole Agreement and Undertaking ” means the make whole agreement and undertaking dated as of January 8, 2020, entered into by our Sponsors in favour of the REIT LP;

“ Net Income ” or “ Net Loss ” means, for accounting purposes, the net income or net loss of the REIT LP for a Fiscal Year as determined in accordance with International Financial Reporting Standards;

“ Odd Lot ” has the meaning set out under the sub-heading “ Specific Description of Units – Proportionate Voting Units – Take-Over Bid Protection ”;

“ Over-Allotment Option ” means the non-transferable option granted by the REIT LP to the underwriters of the IPO to purchase up to an additional 3,000,000 Class A Restricted Voting Units (being 15% of the aggregate number of Class A Restricted Voting Units issued upon the IPO Closing), at a price of U.S.$10.00 per Class A Restricted Voting Unit, intended to cover over-allotments and for market stabilization purposes;

“ Over-Allotment Relinquished Founders’ Proportionate Voting Units ” means the 1,259 of the aggregate 58,820 Founders’ Proportionate Voting Units purchased by the Founders prior to the IPO Closing, which Founders’ Proportionate Voting Units were relinquished by our Sponsors without compensation upon the partial exercise of the Over-Allotment Option;

“ Permitted Timeline ” means the allowable time period within which the REIT LP must consummate its Qualifying Transaction, being 12 months from the IPO Closing (or 15 months from the IPO Closing if we have executed a definitive agreement for a Qualifying Transaction within 12 months from the IPO Closing but have not completed the Qualifying Transaction within such 12-month period), as it may be extended as described in the IPO Prospectus;

“ person ” means any individual, partnership, association, body corporate, trust, trustee, executor, administrator, legal representative, government, regulatory authority or other entity;

“ Proportionate Share ” means in respect of each holder of Restricted Voting Units (or Limited Partnership Units following the automatic re-designation) and Proportionate Voting Units, as the case may be, means that fraction which, as of the date of such determination:

(a) has as its numerator the number of Restricted Voting Units (or Limited Partnership Units following the automatic re-designation) or Proportionate Voting Units, as the case may be, held by such unitholder; and
(b) has as its denominator the aggregate number of Restricted Voting Units (or Limited Partnership Units following the automatic re-designation) or Proportionate Voting Units, as the case may be, outstanding.

“ Proportionate Voting Unit ” means the Proportionate Voting Units forming part of the Class B Units, and where applicable, the Founders’ Proportionate Voting Units, and each a “ Proportionate Voting Unit ”;

“ Proportionate Voting Unit Percentage Interest ” means, at any particular time, the percentage determined by multiplying 100 by the following formula:

A ÷ (A + B)

where:

(a) A is the total number of Proportionate Voting Units outstanding at the particular time multiplied by the Specified Ratio; and
(b) B is the total number of Restricted Voting Units (or Limited Partnership Units following the automatic re-designation) outstanding at the particular time, and, for greater certainty, where A is nil the Proportionate Voting Unit Percentage Interest is zero.

“ PVU Offer ” has the meaning set out under the sub-heading “ Specific Description of Units – Proportionate Voting Units – Take-Over Bid Protection ”;

“ Qualified Institutional Buyer ” has the meaning ascribed to such term under Rule 144A of the U.S. Securities Act;

“ Qualifying Transaction ” means the acquisition, directly or indirectly, of one or more businesses or assets, by way of a merger, amalgamation, arrangement, equity exchange, asset acquisition, equity purchase, reorganization, or any other similar business combination involving the REIT LP, which is intended to be consummated by the REIT LP within the Permitted Timeline and in accordance with applicable law and as more fully described in the IPO Prospectus;

“ Qualifying Transaction Meeting ” means the meeting of the REIT LP’s unitholders to be held, if required under applicable law, to vote on the Qualifying Transaction;

“ REIT LP ” means Subversive Real Estate Acquisition REIT LP, a limited partnership formed under the laws of the Province of Ontario pursuant to the Limited Partnerships Act (Ontario);

“ Restricted Voting Units ” means the restricted voting limited partnership units of the REIT LP forming part of the Class A Restricted Voting Units, which may be considered “restricted securities” within the meaning of such term under applicable Canadian securities laws, and each a “ Restricted Voting Unit ”;

“ Restricted Voting Unit Percentage Interest ” means, at any particular time, the percentage determined as 100% less the Proportionate Voting Unit Percentage Interest;

“ Rights ” means the 22,500,000 rights underlying the Class A Restricted Voting Units, and the 524,500 rights underlying the Class B Units issued to our Sponsors simultaneously with the public offering of Class A Restricted Voting Units and the partial exercise of the Over-Allotment Option, to receive, for no additional consideration, oneeighth (1/8) of one Restricted Voting Unit following the closing of a Qualifying Transaction (which at such time will represent one-eighth (1/8) of a Limited Partnership Unit, subject to adjustment under the terms of the Qualifying Transaction) in each case as further described in the IPO Prospectus, and each, a “ Right ”;

“ Rights Agent ” means Olympia Trust Company;

“ Rights Agreement ” means the rights agency agreement dated as of January 8, 2020 between the REIT LP and the Rights Agent;

“ SEDAR ” means the System for Electronic Document Analysis and Retrieval located at www.sedar.com;

“ SPAC ” has the meaning ascribed to it in the Neo Exchange Listing Manual;

“ Specified Ratio ” means 100;

“ Sponsors ” means, together, Subversive Sponsor, Inception Sponsor and CG IV;

“ Subversive Sponsor ” means Subversive Real Estate Sponsor LLC;

“ Tax Act ” means the Income Tax Act (Canada) including the regulations promulgated thereunder, as amended;

“ Taxable Income ” and “ Taxable Loss ” means, for income tax purposes, the income, loss, capital gain or capital loss of the REIT LP determined under all applicable income tax statutes and regulations after applying the following principles, subject to a determination by the General Partner that such an application generally would not be in the best interest of unitholders:

(a) deductions in arriving at income, loss, capital gain or capital loss for tax purposes will be taken at the earliest time and to the maximum extent permitted by applicable income tax statutes and regulations; and
(b) the recognition of income for tax purposes will be deferred to the maximum extent permitted by applicable income tax statutes and regulations.
“ Treaty ” means the Canada-U.S. Tax Convention;

“ Underwriting Agreement ” means the underwriting agreement dated December 23, 2019 among the REIT LP, the General Partner, our Sponsors and the underwriters of the IPO;

“ United States ” or “ U.S. ” means the United States of America, its territories and possessions, any State of the United States and the District of Columbia;

“ Upfront Deferred Amount ” means U.S.$2,561,995; and

“ Winding-Up ” means the liquidation and cessation of the business of the REIT LP, upon which the REIT LP shall be permitted to use up to a maximum of U.S.$50,000 of any interest and other amounts earned from the proceeds in the escrow account to pay actual and expected costs and expenses in connection with applications to cease to be a reporting issuer and winding-up and dissolution expenses as determined by the General Partner.

CORPORATE STRUCTURE

Name, Address and Incorporation

Subversive Real Estate Acquisition REIT LP was established under the Limited Partnership Act (Ontario) on November 12, 2019. Our head office is located at 135 Grand Street, 2nd Floor, New York, New York 10013 and our registered office is located at 333 Bay Street, Suite 3400, Toronto, Ontario, M5H 2S7, Canada.

On January 8, 2020, the REIT LP’s Class A Restricted Voting Units commenced trading on the Exchange under the symbol “SVX.UN”. On February 18, 2020, the Restricted Voting Units and Rights underlying the Class A Restricted Voting Units are expected to begin trading separately on the Exchange.

The REIT LP’s A&R LP Agreement includes, among other provisions, a provision providing for a forum for adjudication of certain disputes, whereby unless the REIT LP approves or consents in writing to the selection of an alternative forum, the courts of the Province of Ontario and appellate courts therefrom shall be the sole and exclusive forum for (i) any action asserting a claim for breach of a fiduciary duty owed by any director or officer of the General Partner to the REIT LP, (ii) any action asserting a claim arising pursuant to any provision of the Limited Partnership Act (Ontario) or the A&R LP Agreement (as they may be amended from time to time), or (iii) any action asserting a claim otherwise related to the relationships among the REIT LP, its affiliates and their respective unitholders, the General Partner’s directors and/or officers, but does not include claims related to the business carried on by the REIT LP or such affiliates. Any person or entity owning, purchasing or otherwise acquiring any unit, including without limitation any registered or beneficial ownership thereof, in the securities of the REIT LP shall be deemed to have notice of and consented to the provisions of the A&R LP Agreement.

DESCRIPTION OF THE BUSINESS AND GENERAL DEVELOPMENT OF THE BUSINESS

The REIT LP is a limited partnership formed under the Limited Partnerships Act (Ontario) for the purpose of effecting, directly or indirectly, an acquisition of one or more businesses or assets, by way of a merger, amalgamation, arrangement, equity exchange, asset acquisition, equity purchase, reorganization, or any other similar business combination involving the REIT LP, that will qualify as its “ Qualifying Transaction ”. The REIT LP is a special purpose acquisition corporation (“ SPAC ”) for purposes of the rules of the Exchange. The REIT LP received U.S.$200 million of proceeds from its IPO which was completed on January 8, 2020, as well as an additional U.S.$25 million of proceeds on the closing of the Over-Allotment Option. The total proceeds of U.S.$225 million were placed in an escrow account with Olympia Trust Company either immediately following the IPO or immediately following the closing of the partially-exercised Over-Allotment Option, as applicable. Funds will be released from escrow upon consummation of the Qualifying Transaction in accordance with the terms and conditions of the Escrow Agreement or upon (i) a redemption (on the closing of a Qualifying Transaction or on an extension of the Permitted Timeline, each as provided herein) of, or an automatic redemption of, Restricted Voting Units, and (ii) a Winding-Up. Proceeds held in the escrow account may also be used to satisfy the requirement of the REIT LP to pay taxes, if any, on the interest or certain other amounts earned on the escrowed funds, and for payment of certain expenses.

The General Partner is the governing general partner of the REIT LP and has sole responsibility and authority for the governance of the REIT LP. The REIT LP’s General Partner is wholly owned by Subversive Sponsor.

Initial Public Offering

On January 8, 2020 (the “ IPO Closing ”), the REIT LP closed its initial public offering (the “ IPO ”) of 20,000,000 Class A Restricted Voting Units at a price of U.S.$10.00 per Class A Restricted Voting Unit for gross proceeds of U.S.$200,000,000. Each Class A Restricted Voting Unit consists of one Restricted Voting Unit and one right (“ Right ”). The Class A Restricted Voting Units will separate into Restricted Voting Units and Rights on February 18, 2020, the date that is 40 days following the IPO Closing. On or following completion of the Qualifying Transaction, the class of Restricted Voting Units shall be automatically renamed “Limited Partnership Units” with no action taken on the part of the holders thereof.

Subsequently, on January 23, 2020, the REIT LP successfully completed the issuance of an additional 2,500,000 Class A Restricted Voting Units at a price of U.S.$10.00 per Class A Restricted Voting Unit for aggregate gross proceeds of U.S.$25,000,000 pursuant to the partial exercise by the underwriters of the IPO of the Over-Allotment Option.

On December 31, 2019, the Sponsors and the General Partner’s directors and officers, Michael Auerbach, Leland Hensch, Richard Acosta, Omar Mangalji, Scott Baker, Octavio Boccalandro, Craig Hatkoff, Anne Sullivan, Eric Clarke, Michael Miller, Dylan Marcoot and Dylan Hart (collectively, the “ Founders ”), purchased 58,820 Proportionate Voting Units (the “ Founders’ Proportionate Voting Units ”), for an aggregate price of U.S.$25,000, or approximately $0.425 per Founders’ Proportionate Voting Unit (before taking into account the Proportionate Voting Units forming part of the Class B Units purchased for U.S.$10.00 each pursuant to the IPO Prospectus). As the Over-Allotment Option was partially exercised, the Sponsors relinquished 1,259 of the Founders’ Proportionate Voting Units on January 23, 2020, which are referred to throughout the IPO Prospectus as the “Over-Allotment Relinquishable Founders’ Proportionate Voting Units”, without compensation. The Founders’ Proportionate Voting Units outstanding after giving effect to the IPO and at the conclusion of the Over-Allotment Option period, including any corresponding relinquishment of the Over-Allotment Relinquished Founders’ Proportionate Voting Units, represents 20% of the issued and outstanding units of the REIT LP (including all Restricted Voting Units and Proportionate Voting Units on an as-converted basis to Restricted Voting Units, but assuming no exercise of the Rights).

In addition, concurrent with the IPO Closing, the Sponsors purchased 512,000 Class B Units of the REIT LP (each consisting of 1/100 of a Proportionate Voting Unit and one Right) for a purchase price of U.S.$10.00 per Class B Unit, resulting in aggregate proceeds of approximately U.S.$5,120,000 to the REIT LP. Subsequent to the IPO Closing and simultaneously with the closing of the Over-Allotment Option, the Sponsors purchased an additional 12,500 Class B Units at a price of U.S.$10.00 per Class B Unit, resulting in aggregate proceeds of approximately U.S.$125,000 to the REIT LP.

The IPO was undertaken by the REIT LP pursuant to the terms of the Underwriting Agreement dated December 23, 2019 among the REIT LP, the General Partner, the Sponsors and the underwriters of the IPO. Pursuant to the Underwriting Agreement, the REIT LP paid U.S.$643,754.86 to the underwriters of the IPO on the IPO Closing, being part of the underwriters’ fee. The balance of the underwriters’ fee, being U.S.$10,436,995, is deferred and will be paid to the underwriters of the IPO upon the closing of the Qualifying Transaction.

Both (i) upon the IPO Closing and (ii) upon the closing of the Over-Allotment Option, the REIT LP placed U.S.$10.00 per Class A Restricted Voting Unit (an aggregate of U.S.$225,000,000) in an escrow account with the Escrow Agent. The terms of the Escrow Agreement provide that, subject to applicable laws, none of the funds held in the escrow account will be released from the escrow account until the earliest of: (i) the closing of our Qualifying Transaction within the Permitted Timeline, (ii) a redemption (on the closing of a Qualifying Transaction or on an extension of the Permitted Timeline) of, or an automatic redemption of, Restricted Voting Units, and (iii) a Winding‐Up.

The escrowed funds will also be used to pay the Upfront Deferred Amount and the deferred underwriting commission in the amount of U.S.$10,436,995, which (subject to availability, failing which any shortfall shall be made up from other sources) will be payable by the REIT LP to the underwriters of the IPO upon the closing of our Qualifying Transaction, provided that the Discretionary Deferred Portion may be used to pay agents or advisers for services provided in connection with the Qualifying Transaction. The per unit amount we will distribute to holders of Restricted Voting Units who properly redeem their units will not be reduced by the deferred underwriting commission or the Upfront Deferred Amount we will pay to the underwriters of the IPO. The holders of the Founders’ Proportionate Voting Units and Class B Units (including the underlying Proportionate Voting Units and Rights) and Rights have no access to the funds held in the escrow account prior to or following the closing of our Qualifying Transaction in respect of such securities. The Qualifying Transaction must occur within the Permitted Timeline, being 12 months from the IPO Closing (or 15 months from the IPO Closing if we have executed a definitive agreement for a Qualifying Transaction within 12 months from the IPO Closing but have not completed the Qualifying Transaction within such 12-month period). The Permitted Timeline could be extended to up to 36 months with unitholder approval of only the holders of Restricted Voting Units, by ordinary resolution, with approval by the board of directors of the General Partner. If we are unable to complete a Qualifying Transaction within the Permitted Timeline, we will redeem the Restricted Voting Units using the cash held in the escrow account.

Qualifying Transaction

General

We are not presently engaged in, and we will not engage in, any operations for an indefinite period of time following the IPO. We have not completed a Qualifying Transaction and although we have reviewed, and continue to review, a number of potential Qualifying Transaction targets, we are not able to determine at this time whether we will complete a Qualifying Transaction with any of the prospective targets that we have reviewed or with any other target. As a result, there is no assurance that we will be able to locate a target or that we will be able to effect a Qualifying Transaction on favourable terms or at all. No assurance can be given that any discussions with prospective targets will lead to the entering of a binding acquisition agreement. Notwithstanding the foregoing, we intend to continue our search for target portfolio properties with a focus on the cannabis industry. However, we are not limited to the acquisition of cannabis-related real estate businesses and/or assets or to a particular geographic region and may acquire other classes of real estate assets and/or non-real estate assets or businesses for purposes of completing our Qualifying Transaction. We intend to effectuate our Qualifying Transaction using the cash proceeds from (i) the escrow account after redemptions and permitted expenses, (ii) the portion of the sales of the Class B Units not placed in the escrow account (in the estimated amount of U.S.$2,000,000), and (iii) the U.S.$25,000 of initial proceeds to be raised prior to the IPO Closing, or our units, or debt, or a combination of these as the consideration to be paid in our Qualifying Transaction. A Qualifying Transaction may involve the acquisition of, or merger with, an entity which does not need substantial additional capital but which desires to establish a public trading market for its securities, while avoiding what it may deem to be adverse consequences of undertaking a public offering itself. These include time delays, significant expense, loss of voting control and compliance with various applicable securities laws. We may also seek to effect simultaneous Qualifying Transactions with more than one real estate asset.

If we complete more than one transaction as part of our Qualifying Transaction, each such Qualifying Transaction is expected to occur concurrently and would be subject to the same unitholder vote at the Qualifying Transaction Meeting, if required under applicable law.

10 -

Identifying Target

We intend to identify, evaluate and execute an attractive Qualifying Transaction by leveraging our network to find one or more attractive investment opportunities. We intend to execute a Qualifying Transaction which will aggregate a portfolio of properties with a focus on assets used in cannabis industries. Occupants may be involved in manufacturing, cultivation, extraction, processing, distribution, dispensaries, and/or retail of cannabis. However, we are not limited to the acquisition of cannabis-related real estate businesses and/or assets or to a particular geographic region and may acquire other classes of real estate assets and/or non-real estate assets or businesses for purposes of completing our Qualifying Transaction. We believe based on the General Partner’s management’s business knowledge and past experience that there are numerous Qualifying Transaction targets. We expect that our principal means of identifying potential target cannabis-related real estate businesses and/or assets will be through the extensive contacts and relationships of our Sponsors, Founders, the General Partner’s officers and directors. While the General Partner’s officers and directors are not required to commit any specific amount of time in identifying or performing due diligence on potential real estate businesses or assets, the General Partner’s officers and directors believe that the relationships they have developed over their careers and their access to our Sponsors’ and their affiliates, contacts and resources will generate a number of potential Qualifying Transaction opportunities that will warrant further investigation. We also anticipate that target cannabis-related real estate business and/or asset candidates will be brought to our attention from various unaffiliated sources, including investment bankers, venture capital funds, private equity funds, leveraged buyout funds, management buyout funds and other members of the financial community. Target cannabis-related real estate businesses and/or assets may be brought to our attention by such unaffiliated sources as a result of being solicited by us through calls or mailings. These sources may also introduce us to target cannabis-related real estate businesses and/or assets they think we may be interested in on an unsolicited basis, since many of these sources will have read this AIF and know what types of real estate cannabis businesses and/or assets we are targeting. Our Sponsors, Founders, the General Partner’s officers and directors, as well as their affiliates, may also bring to our attention target cannabis-related real estate business and/or asset candidates that they become aware of through their business contacts as a result of formal or informal inquiries or discussions they may have, as well as attending trade shows or conventions. While we do not presently anticipate engaging the services of professional firms or other individuals that specialize in business and/or asset acquisitions on any formal basis, we may engage these firms or other individuals in the future, in which event we may pay a finder’s fee, consulting fee or other compensation to be determined in an arm’s length negotiation based on the terms of the transaction. In no event, however, will our Sponsors, Founders, the General Partner’s officers, directors or their respective affiliates be paid any finder’s fee, consulting fee or other compensation prior to, or for any services they render in order to effectuate, the consummation of an initial Qualifying Transaction (regardless of the type of transaction that it is) other than the reimbursement of any out-of-pocket expenses.

Conflicts of Interest

In no event will the REIT LP pay its Sponsors or any of their affiliates a finder’s fee in connection with the Qualifying Transaction. Additionally, there will be no finder’s fees, consulting fees, reimbursements or cash payments made to our Founders, the General Partner’s officers or directors, or to their affiliates, for services rendered to us prior to or in connection with the completion of our Qualifying Transaction, unless expressly approved by a majority of the General Partner’s unconflicted directors, being the other directors who do not have a conflict of interest in respect of the proposed acquisition, and subject to any consent required from the Exchange, except for the following payments, which will not be made prior to the completion of the Qualifying Transaction and will not be paid from the proceeds of the escrow account prior to the completion of the Qualifying Transaction, but rather from funds on hand, from additional sources of funds at the time of the Qualifying Transaction, from the proceeds of the escrow account after their release to the REIT LP, or from additional funds as described in the IPO Prospectus:

repayment of unsecured loans, and any interest thereon, which may be made by our Sponsors or their affiliates to finance transaction costs in connection with a prospective Qualifying Transaction;
payment of U.S.$10,000 (plus applicable taxes) per month for administrative and related services pursuant to an administrative services agreement entered into with Subversive Sponsor which, if applicable, may include payment for services of related parties or qualified affiliates of related parties, for, but not limited to, various administrative, managerial or operational services or to help effect our Qualifying Transaction; and
11 -
reimbursement of out-of-pocket expenses incurred by our Sponsors and the above-noted persons in connection with certain activities on our behalf, such as identifying possible business and/or asset targets and Qualifying Transactions.

There is no limit on the amount of out-of-pocket expenses reimbursable by us; provided, however, that to the extent such expenses exceed the available proceeds not deposited in the escrow account, such expenses would not be reimbursed by us unless we consummate a Qualifying Transaction.

The General Partner’s board of directors will review and be required to approve all material reimbursements and payments made to our Founders, its officers or directors or our affiliates or associates or their respective affiliates or associates, with any interested director abstaining from such review and approval.

None of the Founders or the General Partner’s directors or officers are required to commit their full time to our affairs and, accordingly, they may be susceptible to conflicts of interest in allocating their time among various business activities. In addition, in the course of their other business activities, the Founders, the General Partner’s directors and/or officers may owe fiduciary or other duties, and may have obligations, to other entities or pursuant to other outside business arrangements, including to seek and present investment and business opportunities to other entities. As more fully discussed in “ Disclosure of Corporate Governance Practices – Conflicts of Interest ” if any of the General Partner’s officers or directors becomes aware of a Qualifying Transaction opportunity that may also be appropriate for the business of any entity to which he or she has pre-existing fiduciary or contractual obligations, they may be required to present such Qualifying Transaction opportunity to such entity prior to presenting such Qualifying Transaction opportunity to us. Certain of the General Partner’s officers and directors currently have certain relevant pre-existing fiduciary duties or contractual obligations. Mr. Auerbach is currently a participant in the sponsor group of both Tuscan I and Tuscan II and a director of the latter. Tuscan II cannot commence a transaction until Tuscan I has successfully completed its qualifying acquisition. He is also the Chairman of the Board of Directors at Subversive Capital Acquisition Corp. and has agreed to present all suitable Qualifying Transaction opportunities to Subversive Capital Acquisition Corp. prior to any other company (subject to any pre-existing fiduciary or contractual obligations). Accordingly, Mr. Auerbach will be required to present all suitable Qualifying Transaction opportunities to Subversive Capital Acquisition Corp., prior to presenting them to the REIT LP for consideration. In addition, Mr. Acosta and Mr. Mangalji may owe fiduciary or other duties to Inception REIT, and have agreed to present all suitable Qualifying Transaction opportunities to Inception REIT prior to any other company. Mr. Baker is currently the Vice President of New England Development. Mr. Baker has an obligation to present and evaluate opportunities on New England Development’s behalf prior to presenting them to the REIT LP.

However, it is intended that Mr. Auerbach, Mr. Acosta, Mr. Mangalji and Mr. Baker would each be subject to confidentiality restrictions with respect to any potential Qualifying Transaction opportunities sourced for the REIT LP by someone other than Mr. Auerbach, Mr. Acosta, Mr. Mangalji and Mr. Baker, respectively. Furthermore, we do not believe that any fiduciary duties or contractual obligations of the General Partner’s executive officers would materially undermine our ability to complete our Qualifying Transaction. Tuscan II and Subversive Capital Acquisition Corp. are blank check companies/special purpose acquisition corporations formed to pursue a transaction in the cannabis industry however, they are not focused on acquiring real estate assets, and Tuscan II will not invest in or consummate Qualifying Transactions with a target business that they respectively determine has been operating in violation of U.S. federal laws. In addition, Inception REIT focuses on acquiring real estate assets that are significantly smaller in scale than those the REIT LP intends to target.

In addition, if the Qualifying Transaction involves a related party, the transaction may be subject to the minority unitholder protections of MI 61-101, which would, in certain circumstances, require approval by minority unitholders and/or an independent valuation. The Exchange may also impose additional requirements in such circumstances. Further, in addition to the requirements of the A&R LP Agreement in this respect, the General Partner’s officers and directors will be required to recuse themselves from our consideration of a potential acquisition involving a participant in respect of which the director or officer has either a material economic interest or a perceived conflict of interest.

The REIT LP may, as needed and as may be approved by the General Partner’s board of directors, from time to time, both prior to and following our Qualifying Transaction, enter into service agreements with related parties or qualified affiliates of related parties for, but not limited to, various administrative, managerial or operational services or to help effectuate our Qualifying Transaction. Although some of the General Partner’s officers and directors may enter into employment or consulting agreements with the acquired entity or entities following our Qualifying Transaction, the

12 -

presence or absence of any such arrangements will not be used as a criteria in our selection process of an acquisition target.

Additional Funding for General Ongoing Expenses

To the extent that we require additional funding for general ongoing expenses or in connection with our Qualifying Transaction, we may seek funding by way of unsecured loans from our Sponsors and/or their affiliates, which loans would bear interest at no more than the U.S. dollar prime rate plus 1.0%. The lender under the loans would not have recourse against the funds held in the escrow account, and thus the loans will not reduce the value thereof. Such loans will collectively be subject to a maximum aggregate principal amount equal to 10% of the escrowed funds and may only be repayable in cash no earlier than the closing of the Qualifying Transaction. Such loans may only be convertible into units and/or Rights in connection with the closing of the Qualifying Transaction. The REIT LP will not obtain any form of debt financing except: (i) in the ordinary course for short term trade, accounts payable and general ongoing expenses; (ii) contemporaneous with, or after, the completion of a Qualifying Transaction; or (iii) through unsecured loans from our Sponsors and/or their affiliates in accordance with the foregoing.

The REIT LP may also seek to raise additional funds through a rights offering in respect of units available to our unitholders, in accordance with the requirements of applicable securities legislation and the Exchange’s rules, and subject to the consent of the underwriters of the IPO, subject to placing the required funds raised in the escrow account in accordance with the Exchange’s rules and also subject to fulfilling the following condition: the REIT LP would not undertake a rights offering unless the amount per unit deposited into the escrow account in connection therewith would be at least equal to the per unit amount of the escrow funds then on deposit in the escrow account, including any interest and other amounts earned thereon (net of any applicable taxes payable by the REIT LP on such interest and other amounts earned in the escrow account), and provided that 100% of the gross proceeds raised in any subsequent rights offering from holders of Class A Restricted Voting Units are held in the escrow account.

Permitted Timeline and Extension

We have 12 months from the IPO Closing to consummate a Qualifying Transaction (or 15 months from the IPO Closing if we have executed a definitive agreement for a Qualifying Transaction within 12 months from the IPO Closing but have not completed the Qualifying Transaction within such 12-month period).

If the General Partner’s management believes that we need an extension of the Permitted Timeline in order to successfully execute a Qualifying Transaction, the REIT LP will hold a meeting of holders of Restricted Voting Units and seek unitholder approval by ordinary resolution for an amendment to the limited partnership agreement to facilitate an extension to up to 36 months and an acceleration of such holders’ redemption rights, with approval by the board of directors of the General Partner. Assuming a meeting of holders of Restricted Voting Units is called and the requisite unitholder approval is obtained, holders of Restricted Voting Units would be permitted to redeem all or a portion of their Restricted Voting Units, provided that they deposit their units for redemption prior to the second business day before the meeting, and, subject to applicable law, immediately prior to the date that an extension to the Permitted Timeline takes effect. See “ Description of Capital Structure” . Holders of Restricted Voting Units will be given not less than 21 days’ notice of the meeting. Participants through CDS may have earlier deadlines for accepting deposits of Restricted Voting Units pursuant to the redemption right. If a CDS participant’s deadline is not met by a holder of Restricted Voting Units, such holder’s Restricted Voting Units may not be eligible for redemption.

Minimum Fair Market Value of Qualifying Transaction

Absent exemptive relief from the Exchange, the cannabis-related real estate businesses and/or assets forming our Qualifying Transaction (or any number of Qualifying Transactions, all of which must be completed concurrently) must have a minimum fair market value equal to 80% of the assets held in the escrow account at the time the agreement(s) is entered into (excluding the deferred underwriting commission and applicable taxes, if any, payable on interest and other amounts earned in the escrow account). The fair market value of the target business(es) and/or asset(s) will be determined by the General Partner’s board of directors based upon one or more valuation methods generally accepted by the financial community (including, without limitation, actual and potential sales, earnings, cash flow and book value). Where the Qualifying Transaction is comprised of more than one acquisition, and multiple acquisitions are required to satisfy the aggregate fair market value of a Qualifying Transaction, these acquisitions are expected to close concurrently. The fair market value of the real estate business and/or assets will be determined by

13 -

the General Partner’s board of directors based upon one or more valuation methods generally accepted by the financial community (including, without limitation, actual and potential sales, earnings, cash flows and book value).

In the event that the amount required to be paid to holders of Restricted Voting Units to be redeemed in connection with a unitholder vote on the Qualifying Transaction would exceed the additional financing obtained by the REIT LP to offset the redemption amount (especially where the proposed Qualifying Transaction contains a minimum cash balance condition as a condition to closing), the REIT LP may consider offering additional units to the vendor of the target entity, such that the cash that would otherwise be payable to the vendor that is needed to redeem the units is replaced with additional units issued to the vendor. In addition, holders of Restricted Voting Units that would otherwise intend to redeem their units may (including for tax reasons) prefer to sell their units in the market, and the REIT LP may also pursue debt financing, as further described in the IPO Prospectus, all of which may reduce the likelihood of any cash deficiencies at the time of the Qualifying Transaction. Accordingly, any such cash deficiencies, including as a result of redemptions, may result in the inability of the REIT LP to complete a Qualifying Transaction despite unitholder approval thereof.

Lack of Business Diversification

For an indefinite period of time after the completion of our Qualifying Transaction, the prospects for our success may depend entirely on the future performance of single tenant or a small number of tenants in the event that the real estate businesses and/or assets we acquire (assuming we acquire real estate assets) have only one tenant or a small number of tenants. Unlike other real estate entities that may own real estate assets in one or several industries and geographic areas and have multiple tenants, it is possible that we will not have the resources to diversify our asset portfolio and mitigate the risks of operating in a single industry and/or geographic area with few tenants. Such lack of diversification may have an adverse impact on our operations after our initial Qualifying Transaction.

Limited Ability to Evaluate the Target’s Management Team

Although we intend to closely scrutinize the management of prospective target cannabis real estate businesses and/or assets when evaluating the desirability of effecting our Qualifying Transaction with that business or entity, our assessment of the target’s management may not prove to be correct. The future role of members of the General Partner’s management team, if any, in the target entity cannot presently be stated with any certainty. Consequently, members of the General Partner’s management team may not become a part of the target’s management team, and the future management may not have the necessary skills, qualifications or abilities to manage a public entity. Further, it is also not certain whether one or more of the General Partner’s directors will remain associated in some capacity with us following our Qualifying Transaction. Moreover, members of the General Partner’s management team may not have significant experience or knowledge relating to the operations of the particular target business. Our personnel may not remain in senior management or advisory positions with the combined entity. The determination as to whether any of our key personnel will remain with the combined entity will be made at the time of our Qualifying Transaction.

Following our Qualifying Transaction, we may seek to recruit additional managers to supplement the incumbent management of the target entity. We may not have the ability to recruit additional managers, or such additional managers may not have the requisite skills, knowledge or experience necessary to enhance the incumbent management.

Completion of a Qualifying Transaction

As 100% of the gross proceeds of the IPO and any additional equity raised pursuant to a rights offering will be held by Olympia Trust Company, as Escrow Agent, in the escrow account, unitholder approval of our Qualifying Transaction is not required pursuant to the Exchange rules. As such, and unless unitholder approval is otherwise required under applicable law, we will: (i) prepare and file with applicable securities regulatory authorities a prospectus containing disclosure regarding the REIT LP and its proposed Qualifying Transaction, (ii) mail a notice of redemption to the holders of the Restricted Voting Units and make the final prospectus publicly available at least 21 days prior to the deadline for redemption; and (iii) send by prepaid mail or otherwise deliver the prospectus to the holders of the Restricted Voting Units no later than midnight (Toronto time) on the second business day prior to the deadline for redemption, which delivery may be effected electronically in compliance with NP 11-201.

14 -

Pursuant to the terms of the A&R LP Agreement, the holders of the Restricted Voting Units are entitled to vote on and receive notice of meetings on all matters requiring approval of the REIT LP’s unitholders (including any proposed extension to the Permitted Timeline and approval of the Qualifying Transaction if otherwise required under applicable law) other than the election and/or removal of directors of the General Partner and auditors of the REIT LP prior to closing of a Qualifying Transaction. With the inclusion of our Proportionate Voting Units forming part of the Class B Units purchases by our Sponsors (and assuming that our Founders have not purchased any Class A Restricted Voting Units), our Founders will hold approximately 22% voting interest to vote at any such meeting (other than approval of any proposed extension to the Permitted Timeline where only holders of Restricted Voting Units are entitled to vote). Accordingly, our Founders may significantly influence the vote at any such meeting. See “ Risk Factors ”.

Our Founders have purchased the Founders’ Proportionate Voting Units, being 58,820 Proportionate Voting Units (1,259 of which are Over-Allotment Relinquished Founders’ Proportionate Voting Units and were relinquished by our Sponsors without compensation). These Founders’ Proportionate Voting Units were purchased for an aggregate price of U.S.$25,000, or approximately $0.425 per Founders’ Proportionate Voting Unit (before taking into account the Proportionate Voting Units forming part of the Class B Units purchased for U.S.$10.00 each pursuant to the IPO Prospectus), and the number of Founders’ Proportionate Voting Units were determined based on the expectation that the Founders’ Proportionate Voting Units would represent 20% of the issued and outstanding units of the REIT LP (including all Restricted Voting Units and Proportionate Voting Units on an as-converted basis to Restricted Voting Units, but assuming no exercise of the Rights). In addition, our Sponsors purchased Class B Units at an offering price of U.S.$10.00 per Class B Unit for aggregate proceeds equal to U.S.$5,120,000, simultaneously with the IPO Closing. Our Sponsors purchased an additional 12,500 Class B Units at an offering price of U.S.$10.00 on the partial exercise of the Over-Allotment Option for aggregate proceeds equal to U.S.$125,000.

Our Founders will have economic interests in the Qualifying Transaction that may differ as compared to those of holders of Restricted Voting Units, given that, among other things, prior to the IPO Closing, each of our Founders agreed to certain transfer restrictions in respect of their Founders’ Proportionate Voting Units and Class B Units (or any of its Proportionate Voting Units or Rights forming part of its Class B Units), as applicable, as further described under “ Description of Capital Structure” .

Information regarding the Qualifying Transaction and the resulting entity following the completion of the Qualifying Transaction will be made available to unitholders in a prospectus prepared by the General Partner’s management. Such prospectus will contain disclosure of the resulting issuer assuming completion of the Qualifying Transaction and will be filed with applicable securities regulatory authorities and the Exchange. This prospectus would be either a nonoffering prospectus or provide for the issuance of securities required in connection with the completion of the Qualifying Transaction. Any such financing would not affect amounts held in the escrow account or amounts to be distributed to holders of the Restricted Voting Units therefrom. In the event that the REIT LP proposes to acquire target cannabis-related real estate businesses and/or assets that operate or have significant businesses or assets in an emerging market jurisdiction, additional securities regulatory requirements may apply, and any such transaction may warrant additional review and scrutiny of the applicable securities regulatory authorities.

Initial Listing Requirements

Unless exempted by the Exchange, the reporting issuer resulting from our Qualifying Transaction must satisfy the initial listing requirements of the designated stock exchange (likely the Exchange), as prescribed under the applicable policies of the Exchange or such designated stock exchange.

Exchange’s Escrow Policy

Upon completion of the Qualifying Transaction, the resulting issuer may be subject to the Exchange’s escrow policy, and the securities held by the founders of such resulting issuer, which may include the Founders’ Proportionate Voting Units or securities issued to our Founders in connection with the completion of the Qualifying Transaction, would be released from an escrow account that would restrict their disposition as follows:

On the closing date of the Qualifying Transaction 1/4 of the founding securities

15 -

6 months after the closing date of the Qualifying Transaction	1/3 of the remaining founding securities
12 months after the closing date of the Qualifying Transaction	1/2 of the remaining founding securities
18 months after the closing date of the Qualifying Transaction	the remaining founding securities

Redemption Rights

In connection with seeking to complete a Qualifying Transaction, we will provide holders of our Restricted Voting Units with the opportunity to redeem all or a portion of their Restricted Voting Units, provided that they deposit their units for redemption prior to the deadline specified by the REIT LP, following public disclosure of the details of the Qualifying Transaction and prior to the closing of the Qualifying Transaction, of which prior notice had been provided to the holders of the Restricted Voting Units by any means permitted by the Exchange, not less than 21 days nor more than 60 days in advance of such deadline, in each case, with effect, subject to applicable law, immediately prior to the closing of our Qualifying Transaction, for an amount per unit, payable in cash, equal to the pro-rata portion (per Restricted Voting Unit) of: (A) the escrowed funds available in the escrow account at the time immediately prior to the redemption deposit deadline, including interest and other amounts earned thereon; less (B) an amount equal to the total of (i) any applicable taxes payable by the REIT LP on such interest and other amounts earned in the escrow account, and (ii) actual and expected expenses directly related to the redemption, each as reasonably determined by the General Partner, subject to the limitations described in the IPO Prospectus. For greater certainty, such amount will not be reduced by the deferred underwriting commission per Restricted Voting Unit held in escrow. If approval of the Qualifying Transaction by unitholders is otherwise required under applicable law, holders of Restricted Voting Units shall have the option to redeem their Restricted Voting Units irrespective of whether they vote for or against, or do not vote on, the Qualifying Transaction at any Qualifying Transaction Meeting. Holders of Restricted Voting Units will be given not less than 21 days’ notice of the Qualifying Transaction Meeting (if such meeting is required under applicable law) and of the corresponding redemption deadlines if such Qualifying Transaction Meeting is required. Participants through CDS may have earlier deadlines for accepting deposits of Restricted Voting Units for redemption. If a CDS participant’s deadline is not met by a holder of Restricted Voting Units, such holder’s Restricted Voting Units may not be eligible for redemption.

The amount in the escrow account will initially be U.S.$10.00 per Class A Restricted Voting Unit. Based on the initial U.S.$200,000,000 placed in escrow (and the additional U.S.$25,000,000 on the partial exercise of the Over-Allotment Option), an interest rate of approximately 2% per annum, if the escrow account remains in place over the next 12 months (and no Qualifying Transaction has been completed and the Permitted Timeline is not otherwise extended), the cash held in escrow is expected to grow from the initial U.S.$10.00 per Class A Restricted Voting Unit sold to the public to approximately U.S.$10.20 per Class A Restricted Voting Unit, before applicable taxes, if any, and other permitted deductions.

On or following completion of our Qualifying Transaction, each of the remaining Restricted Voting Units shall be automatically renamed “Limited Partnership Unit” with no action taken on the part of the holders thereof as set forth in the A&R LP Agreement, and the residual escrow account balance would be available to the REIT LP and underwriters of the IPO, as applicable, to pay tax liabilities, if any, on amounts earned on the escrowed funds, to pay the underwriters of the IPO the deferred underwriting commission, the Upfront Deferred Amount and to otherwise use at its discretion, in accordance with the Escrow Agreement.

Notwithstanding the foregoing redemption rights, each holder of Restricted Voting Units, together with any affiliate of such holder or other person with whom such holder or affiliate is acting jointly or in concert, will not be permitted to redeem more than an aggregate of 15% of the number of Restricted Voting Units issued and outstanding following the IPO Closing. This limitation will not apply in the event a Qualifying Transaction does not occur within the Permitted Timeline, or in the event of an extension to the Permitted Timeline. By its election to redeem, each registered holder (other than CDS) and each beneficial holder of Restricted Voting Units shall be required to represent or shall be deemed to have represented to the REIT LP that, together with any affiliate of such holder and any other person with whom such holder or affiliate is acting jointly or in concert, he, she or it is not redeeming Restricted Voting Units

16 -

with respect to more than an aggregate of 15% of the number of Restricted Voting Units issued and outstanding following the IPO Closing.

We believe that this restriction will discourage unitholders from accumulating large blocks of units and subsequently attempting to use their ability to exercise their redemption rights against a proposed Qualifying Transaction as a means to force us or the General Partner’s management to engage in inappropriate transactions. Absent this provision, a holder of Restricted Voting Units holding more than an aggregate of 15% of the number of Restricted Voting Units issued and outstanding following the IPO could threaten to exercise its redemption rights if such holder is not otherwise satisfied with the Qualifying Transaction. By limiting our unitholders’ ability to redeem more than 15% of the number of Restricted Voting Units issued and outstanding following the IPO, we believe we will limit the ability of a small group of unitholders to unreasonably attempt to block our ability to complete a Qualifying Transaction that is favoured by our other unitholders, and particularly in connection with a Qualifying Transaction with a target that requires as a closing condition that we have a minimum net worth or a certain amount of cash available at the time of closing. However, we would not be restricting our unitholders’ ability to vote all of their units for or against our Qualifying Transaction.

Prior to our Qualifying Transaction, our A&R LP Agreement (which, among other things, provides for the various redemption rights of holders of Restricted Voting Units) may only be amended by a special resolution, which would require 66 2/3% of votes cast to be voted in favour of the proposed amendment. The REIT LP and our Founders have each agreed with the underwriters of the IPO that they will not proceed with any amendments to the A&R LP Agreement prior to the closing of a Qualifying Transaction which would materially adversely affect the redemption rights of the holders of Restricted Voting Units unless it has first amended the Escrow Agreement to provide that the escrow amount per unit will be released to redeeming holders of Restricted Voting Units upon such redemption, should such amendment of the A&R LP Agreement proceed, on terms that are substantially equivalent to the redemption rights that would apply to redemptions on the extension of the Permitted Timeline. In addition, consent of the Exchange to any such amendments would be required. The consent of the underwriters of the IPO and the Escrow Agent would also be required. Accordingly, any such amendments are considered extremely unlikely.

Notwithstanding the foregoing, in connection with our Qualifying Transaction, the A&R LP Agreement may be amended by the General Partner in its sole discretion and without the approval of unitholders, provided that such amendments are disclosed in the prospectus prepared and distributed to unitholders in connection with the Qualifying Transaction and, in the reasonable opinion of the General Partner, are not prejudicial to the interests of the limited partners and are necessary or desirable. The ability of our General Partner and unitholders to amend the A&R LP Agreement after our Qualifying Transaction will be described in such prospectus.

Automatic Redemption if No Qualifying Transaction

If we are unable to consummate a Qualifying Transaction within the Permitted Timeline of 12 months from the IPO Closing (or 15 months from the IPO Closing if we have executed a definitive agreement for a Qualifying Transaction within 12 months from the IPO Closing but have not completed the Qualifying Transaction within such 12-month period), we will be required to redeem, as promptly as reasonably possible, on an automatic redemption date specified by the REIT LP (such date to be within 10 days following the last day of the Permitted Timeline), each of the outstanding Restricted Voting Units. See “ Description of Capital Structure – Specific Description of Units” . Such redemption will completely extinguish the rights of holders of Restricted Voting Units as unitholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and the Rights will expire without value.

Our Founders will not be entitled to redeem the Founders’ Proportionate Voting Units in connection with a Qualifying Transaction or be entitled to access the escrow account upon our Winding-Up (including the underlying securities). In addition, our Founders will not be entitled to redeem their Class B Units (including the securities forming part of such Class B Units) in connection with the Qualifying Transaction or be entitled to access the escrow account upon our Winding-Up. Our Founders (including our Sponsors) will, however, be entitled to redeem any Restricted Voting Units they may acquire pursuant to the IPO, in privately negotiated transactions or in the open market.

The underwriters of the IPO will have no right to the deferred underwriting commission held in the escrow account in connection with our Winding-Up.

17 -

Contractual Rights of Action

The REIT LP expects that a contractual right of action for rescission or damages against the REIT LP (or its successor) and a contractual right for damages against the directors of the General Partner at the time of the deposit redemption deadline and against every person or company, including the Promoter, who signs the prospectus that is required to be prepared by the REIT LP at the time of its proposed Qualifying Transaction will be required to be granted to original purchasers of Class A Restricted Voting Units from the underwriters of the IPO in connection with the IPO in the event that there is a misrepresentation in such prospectus to be prepared in connection with the Qualifying Transaction. The contractual rights of action against such persons or companies are expected to be consistent with the rights (and defences) under section 130 of the Securities Act (Ontario). In addition, the REIT LP will indemnify the other parties granting such rights.

DESCRIPTION OF CAPITAL STRUCTURE

The REIT LP is authorized to issue an unlimited number of Proportionate Voting Units and an unlimited number of Restricted Voting Units.

General

The rights and obligations of the unitholders are governed by the A&R LP Agreement, and the rights and obligations of the holders of Rights are governed by the Rights Agreement.

As of the date hereof, the Founders hold 57,562 Proportionate Voting Units and 524,500 Class B Units. The Restricted Voting Units may be considered “restricted securities” within the meaning of such term under applicable Canadian securities laws.

General Description of Units

Except as otherwise stated in the IPO Prospectus, the Restricted Voting Units (or “Limited Partnership Units” following their automatic re-designation) and the Proportionate Voting Units have the same rights, are equal in all respects and are treated by the REIT LP as if they were units of one class only. The following is a general summary of certain material features of those units.

Interests of Unitholders

Each Proportionate Voting Unit and Restricted Voting Unit (or “Limited Partnership Unit” following their automatic re-designation) when issued shall vest indefeasibly in the holder thereof. The interest of each unitholder shall be determined by the number of Proportionate Voting Units and Restricted Voting Units (or “Limited Partnership Units” following their automatic re-designation), as applicable, registered in the name of the unitholder (with each Proportionate Voting Unit multiplied by 100 for this purpose).

Consideration for Units

No Proportionate Voting Units and Restricted Voting Units (or “Limited Partnership Units” following their automatic re-designation) shall be issued other than as fully paid and non-assessable. A unit shall not be fully paid until the consideration therefore has been received in full by or on behalf of the REIT LP. The consideration for any unit shall be paid in money or in property or in past services that are not less in value than the fair equivalent of the money that the REIT LP would have received if the Proportionate Voting Units and/or Restricted Voting Units (or “Limited Partnership Units” following their automatic re-designation) had been issued for money. In determining whether property or past services are the fair equivalent of consideration paid in money, the General Partner may take into account reasonable charges and expenses of organization and reorganization and payments for property and past services reasonably expected to benefit the REIT LP.

18 -

No Pre-Emptive Rights

Other than conversion rights as set forth in the A&R LP Agreement, holders of Proportionate Voting Units and Restricted Voting Units (or “Limited Partnership Units” following their automatic re-designation) will not have any pre-emptive or redemption rights.

Fractional Units

If any person becomes entitled to a fraction of a Proportionate Voting Unit or a Restricted Voting Unit (or “Limited Partnership Units” following their automatic re-designation), such person shall not be entitled to receive a certificate therefore. Fractional units shall entitle the holders thereof to notice of or to attend or to vote at, meetings of unitholders. Subject to the foregoing, such fractional units shall have attached thereto the rights, restrictions, conditions and limitations attaching to whole units in the proportion that they bear to a whole unit.

Allotment and Issue

The General Partner may allot and issue Proportionate Voting Units and Restricted Voting Units (or “Limited Partnership Units” following their automatic re-designation) at such time or times and in such manner (including, without limitation, pursuant to any plan from time to time in effect relating to reinvestment by unitholders of distributions of the REIT LP in units) and for such consideration and to such person or class of persons as the General Partner in its sole discretion shall determine. In the event that Proportionate Voting Units and the Restricted Voting Units (or “Limited Partnership Units” following their automatic re-designation) are issued in whole or in part for a consideration other than money, the resolution of the General Partner allotting and issuing such units shall express the fair equivalent in money of the other consideration received. The price or value of the consideration for which the respective units may be issued will be determined by the General Partner in its sole discretion, generally in consultation with investment dealers or brokers who may act as agents or underwriters in connection with offerings of units.

Transferability

The Restricted Voting Units (or “Limited Partnership Units” following their automatic re-designation) are freely transferable, except in limited circumstances set forth in the A&R LP Agreement. The General Partner shall use all reasonable efforts to obtain and maintain a listing for the Restricted Voting Units (or “Limited Partnership Units” following their automatic re-designation) on one more stock exchanges. Restrictions on the transfers of Proportionate Voting Units are as set out below.

Each of our Founders, however, have agreed pursuant to the Exchange Agreement and Undertaking not to transfer any of its Founders’ Proportionate Voting Units or Class B Units (or any Proportionate Voting Units or Rights forming part of the Class B Units) until after the closing of the Qualifying Transaction, in each case other than transfers required due to the structuring of the Qualifying Transaction or as otherwise permitted by the Exchange.

Subdivision or Consolidation

The Proportionate Voting Units shall not be consolidated or subdivided unless the Restricted Voting Units are simultaneously consolidated or subdivided utilizing the same divisor or multiplier. The Restricted Voting Units (or “Limited Partnership Units” following their automatic re-designation) shall not be consolidated or subdivided unless the Proportionate Voting Units are simultaneously consolidated or subdivided utilizing the same divisor or multiplier.

Distribution and Allocation of Income and Losses

While we do not intend to pay any distributions prior to our Qualifying Transaction, any such distribution shall occur in accordance with the A&R LP Agreement.

19 -

Distributions of Distributable Cash

As provided in the A&R LP Agreement, Distributable Cash shall be distributed, as cash flow permits, as follows:

(a) first, to the General Partner 0.01% of the Distributable Cash to a maximum of $100 per annum;
(b) as to the balance:
(i) the Restricted Voting Unit Percentage Interest of the balance shall be distributed to the holders of Restricted Voting Units, pro rata in accordance with their respective Proportionate Share; and
(ii) the Proportionate Voting Unit Percentage Interest of the balance shall be distributed to the unitholders of Proportionate Voting Units, pro rata in accordance with their respective Proportionate Share.

Payment of Distributions

Any distribution shall be made directly by the REIT LP or through Olympia Trust Company or through any other person or agent, as approved by the General Partner, to the unitholders as of the particular record date set for such distribution. Any taxes withheld or paid by the REIT LP or a subsidiary thereof in respect of a unitholder shall be treated either as a distribution to such unitholder or as a general expense of the REIT LP, as determined by the General Partner in its sole discretion, and the General Partner shall report to the unitholders on an annual basis the amount of such taxes withheld or paid. For greater certainty, distributions made shall constitute full payment and satisfaction of the REIT LP’s liability in respect of such distribution, regardless of any claim of any Person who may have an interest in such distribution by reason of an assignment or otherwise. In the event of any overpayment to a unitholder, such overpayment will be refunded by such unitholder to the REIT LP, and any underpayment will be paid by the REIT LP to the unitholders within 30 days of the final determination of such underpayment or overpayment. Notwithstanding the foregoing, the General Partner may in its sole and unfettered discretion elect to not make distributions in any period or to reduce the amount of any distributions in whole or in part.

Allocation of Income and Losses

Where Distributable Cash was paid in respect of a Fiscal Year, the Net Income and Taxable Income of the REIT LP in respect of that Fiscal Year shall be allocated among the General Partner and all holders of Restricted Voting Units (or “Limited Partnership Units”) and holders of the Proportionate Voting Units that were holders of Restricted Voting Units (or “Limited Partnership Units”) or holders of the Proportionate Voting Units, respectively, at any time in the Fiscal Year on the following basis:

(a) first, to the General Partner 0.01% of the Net Income and Taxable Income of the REIT LP to a maximum of $100 per annum;
(b) as to the balance:
(i) to the holders of Restricted Voting Units an amount equal to the balance multiplied by a fraction, the numerator of which is the sum of the distributions received by the holders of Restricted Voting Units in respect of the Fiscal Year and the denominator of which is the total distributions made by the REIT LP in respect of the Fiscal Year and the amount so determined shall be allocated among the holders of Restricted Voting Units pro rata based on the sum of distributions received by such holders of Restricted Voting Units with respect to such Fiscal Year relative to the aggregate amount of distributions made to the holders of Restricted Voting Units, as a group with respect to such Fiscal Year; and
(ii) to the holders of Proportionate Voting Units, as a class, an amount equal to the balance multiplied by a fraction, the numerator of which is the sum of the distributions received by the holders of the Proportionate Voting Units in respect of the Fiscal Year and the
20 -

denominator of which is the total distributions made by the REIT LP in respect of the Fiscal Year.

Where no Distributable Cash was paid in respect of a Fiscal Year, Net Income and Taxable Income of the REIT LP in respect of that Fiscal Year shall be allocated among the holders of Restricted Voting Units or Proportionate Voting Units on the following basis:

(a) first, to the General Partner 0.01% of the Net Income and Taxable Income of the REIT LP to a maximum of $100 per annum;
(b) as to the balance:
(i) to the holders of the Restricted Voting Units who were holders of units at the end of each month ending in such Fiscal Year, pro rata in accordance with their respective Proportionate Share, the Restricted Voting Unit Percentage Interest of the balance divided by 12; and
(ii) to the holders of Proportionate Voting Units who were holders of Proportionate Voting Units at the end of each month ending in such Fiscal Year, pro rata in accordance with their respective Proportionate Share, the Proportionate Voting Unit Percentage Interest of the balance divided by 12.

Net Loss and Taxable Loss of the REIT LP in respect of that Fiscal Year shall be allocated among the General Partner, and all holders of Restricted Voting Units (or “Limited Partnership Units”) and holders of the Proportionate Voting Units that were holders of Restricted Voting Units (or “Limited Partnership Units”) or holders of Proportionate Voting Units, respectively, at any time in the Fiscal Year on the following basis:

(a) to the Restricted Voting Units who were holders of the Restricted Voting Units at the end of each month ending in such Fiscal Year, pro rata in accordance with their respective Proportionate Share and to the extent of their capital accounts, the Restricted Voting Unit Percentage Interest of the Net Loss or Taxable Loss divided by 12;
(b) to the holders of the Proportionate Voting Units who were holders of Proportionate Voting Units at the end of each month ending in such Fiscal Year, pro rata in accordance with their respective Proportionate Share and to the extent of their capital accounts, the Proportionate Voting Unit Percentage Interest of the Net Loss or Taxable Loss divided by 12; and
(c) as to the balance, to the General Partner.

The General Partner shall have the discretion, but not the obligation, acting in good faith, to allocate revenue and expenses on a basis which ensures a fair distribution among holders of Restricted Voting Units and Proportionate Voting Units after taking into consideration any matters that may be relevant. Adjustments may be made in respect of revenue earned or expenses incurred prior to the time each holder of Restricted Voting Units or Proportionate Voting Units became a unitholder of the REIT LP and adjustments may be made in respect of fees paid in years prior to the year in which the partner became a partner. The General Partner shall also have the right, but not the obligation, to allocate revenues and expenses among holders of Restricted Voting Units or Proportionate Voting Units to ensure they are treated equitably taking into account differences that may arise as a result of the acquisition of Restricted Voting Units or Proportionate Voting Units at different times in a year or in different calendar years.

Each holder of Restricted Voting Units and Proportionate Voting Units at any time in each Fiscal Year will be allocated his, her or its share of such Net Income and Net Losses for such Fiscal Year in accordance with the A&R LP Agreement. Where a holder of a Restricted Voting Unit or Proportionate Voting Unit assigns a Restricted Voting Unit or Proportionate Voting Unit prior to the end of the Fiscal Year, the portion of Net Income or Net Losses which would have been attributed to such assigning partner shall continue to be so allocable in accordance with the A&R LP Agreement, instead of being allocated to the assignee who holds the Restricted Voting Units or Proportionate Voting Units at the end of the Fiscal Year. For greater certainty, any Person who was a holder of Restricted Voting Units or

21 -

Proportionate Voting Units at any time during a Fiscal Year but who has transferred all of such Person’s Restricted Voting Units or Proportionate Voting Units, as the case may be, before the last day of such Fiscal Year may be deemed to be a partner of the REIT LP on the last day of such Fiscal Year for the purposes of subsection 96(1) of the Tax Act. Where a Restricted Voting Unit or Proportionate Voting Unit was initially subscribed for after the beginning of the Fiscal Year, income and losses for the entire Fiscal Year will be allocated to the holder thereof in accordance with the mechanics of the provisions of the A&R LP Agreement on account of the portion of the Fiscal Year that the person was a holder of Restricted Voting Units or Proportionate Voting Units.

If any holder of Restricted Voting Units or Proportionate Voting Units has a negative balance in his, her or its capital account, the General Partner shall have the right to allocate Net Income to that unitholder in priority to other unitholders to the extent of the negative balance. The General Partner shall not allocate Net Losses to a holder of Restricted Voting Units or Proportionate Voting Units to the extent that such allocation results in a negative balance in his, her or its capital account.

The General Partner has been designated as the tax matters partner for all Canadian and United States federal income tax purposes, and state or provincial equivalents. The General Partner, acting as tax matters partner, in its reasonable discretion and from time to time may modify the manner in which Net Income, Taxable Income, Net Loss and Taxable Loss are allocated to or among the holders of Restricted Voting Units and Proportionate Voting Units and their capital accounts for tax purposes in order that in the reasonable judgment of the General Partner, and in its sole discretion, such allocations will reasonably reflect the purpose of the A&R LP Agreement and the intention of the parties; provided, however, that no such modification shall materially and adversely affect the amounts distributable to the General Partner or any holder of Restricted Voting Units or Proportionate Voting Units.

If applicable, for United States federal income tax purposes, allocations of Net Income, Taxable Income, Net Loss and Taxable Loss for each Fiscal Year or other relevant period of the REIT LP shall be allocated among the Restricted Voting Units and Proportionate Voting Units as set out in the A&R LP Agreement except to the extent: (i) that any such allocations would not have substantial economic effect or are not in accordance with the interests of the holders of the Restricted Voting Units and Proportionate Voting Units in the REIT LP (in each case, as determined pursuant to Section 704(b) of the Internal Revenue Code) or (ii) otherwise required by applicable law or by reason of tax elections made by the General Partner on behalf of the REIT LP, and, in the case of either clause (i) or (ii), the General Partner shall adjust allocations as necessary so as to comply with the requirements of Sections 704(b) and 704(c) of the Internal Revenue Code and the regulations promulgated thereunder, relevant provisions of law or elections made by the General Partner on behalf of the REIT LP (as applicable)].

SPECIFIC DESCRIPTION OF UNITS

Founders’ Proportionate Voting Units, Class A Restricted Voting Units and Class B Units

The Founders’ Proportionate Voting Units outstanding after giving effect to the IPO and at the conclusion of the OverAllotment Option period represent 20% of the issued and outstanding units of the REIT LP (including all Restricted Voting Units and Proportionate Voting Units on an as-converted basis to Restricted Voting Units, but assuming no exercise of the Rights).

The following units of the REIT LP are outstanding:

22,500,000 Class A Restricted Voting Units;
57,562 Proportionate Voting Units;
524,500 Class B Units; and
23,024,500 Rights.

Each Class A Restricted Voting Unit consists of one Restricted Voting Unit and one Right. Each Class B Unit consists of 1/100 of a Proportionate Voting Unit and one Right. It is anticipated that the Restricted Voting Units and Rights

22 -

comprising the Class A Restricted Voting Units will begin trading separately on February 18, 2020. However, no fractional Rights will be issued and only whole Rights will trade.

Each of our Founders have agreed, pursuant to the Exchange Agreement and Undertaking, not to transfer any of its Founders’ Proportionate Voting Units or Class B Units (or any Proportionate Voting Units or Rights forming part of the Class B Units) until after the closing of the Qualifying Transaction, in each case other than transfers required due to the structuring of the Qualifying Transaction or as otherwise permitted by the Exchange.

Restricted Voting Units and Limited Partnership Units

Pursuant to the A&R LP Agreement, on or following the closing of the Qualifying Transaction, each Restricted Voting Unit shall be automatically renamed “Limited Partnership Units” with no action taken on the part of the holders thereof, as set forth in the amended and restated A&R LP Agreement.

Pursuant to the terms of the A&R LP Agreement, each Limited Partnership Unit shall confer the right to one vote, and:

(a) prior to the Qualifying Transaction:
(i) the holders of the Restricted Voting Units will not be entitled to vote at (or receive notice of or meeting materials in connection with) meetings held only to consider the election and/or removal of the General Partner’s directors and auditors of the REIT LP (in lieu of holding an annual meeting prior to the closing of the Qualifying Transaction, the REIT LP is required to file an annual information form and issue a press release announcing the filing thereof and informing holders of Restricted Voting Units of the status of identifying and securing a Qualifying Transaction); and
(ii) the holders of the Restricted Voting Units will be entitled to receive notice of meetings on all matters requiring unitholder approval (including any proposed extension to the Permitted Timeline and approval of the Qualifying Transaction if otherwise required under applicable law) and to vote on such matters other than the election and/or removal of directors of the General Partner and auditors of the REIT LP; and
(b) following the Qualifying Transaction, the holders of Limited Partnership Units (being the Restricted Voting Units following the automatic renaming of such securities pursuant to the A&R LP Agreement) shall be entitled to receive notice of, and to attend and vote at all meetings of, the unitholders of the REIT LP (except where solely the holders of one or more other specified classes of units (other than the Limited Partnership Units) shall be entitled to vote at a meeting, in which case, only such holders shall be entitled to receive notice of, and attend and vote at, such meeting).

Only holders of Restricted Voting Units are entitled to have their units redeemed, as further described below, and receive the escrow proceeds (net of applicable taxes and other permitted deductions) in the event a Qualifying Transaction does not occur within the Permitted Timeline, in the event of a Qualifying Transaction, and in the event of an extension to the Permitted Timeline. Holders of Proportionate Voting Units (including holders of Class B Units), being our Founders, do not have access to, and cannot benefit from, any proceeds held in the escrow account, and as such, do not have any redemption rights with respect to their Proportionate Voting Units and/or Class B Units. Our Founders (including our Sponsors) will, however, be entitled to such redemption rights using proceeds from the escrow account with respect to any Restricted Voting Units they may have. The holders of Restricted Voting Units and Proportionate Voting Units have no pre-emptive rights or other subscription rights and there are no sinking fund provisions applicable to these units.

Consummation of the Qualifying Transaction will require approval by a majority of the General Partner’s directors unrelated to the Qualifying Transaction. In connection with seeking to complete a Qualifying Transaction, we will provide holders of our Restricted Voting Units with the opportunity to redeem all or a portion of their Restricted Voting Units, provided that they deposit their units for redemption prior to the deadline specified by the REIT LP, following public disclosure of the details of the Qualifying Transaction and prior to the closing of the Qualifying Transaction, of which prior notice had been provided to the holders of the Restricted Voting Units by any means

23 -

permitted by the Exchange, not less than 21 days nor more than 60 days in advance of such deadline), in each case, with effect, subject to applicable law and the terms of the A&R LP Agreement, immediately prior to the closing of our Qualifying Transaction, for an amount per unit, payable in cash, equal to the pro-rata portion (per Restricted Voting Unit) of: (A) the escrowed funds available in the escrow account at the time immediately prior to the redemption deposit deadline, including interest and other amounts earned thereon; less (B) an amount equal to the total of (i) any applicable taxes payable by the REIT LP on such interest and other amounts earned in the escrow account, and (ii) actual and expected expenses directly related to the redemption, each as reasonably determined by the General Partner, subject to the limitations described in the IPO Prospectus. For greater certainty, such amount will not be reduced by the deferred underwriting commission per Class A Restricted Voting Unit held in escrow. If approval of the Qualifying Transaction is otherwise required under applicable law, holders of Restricted Voting Units shall have the option to redeem their Restricted Voting Units irrespective of whether they vote for or against, or do not vote on, the Qualifying Transaction at any Qualifying Transaction Meeting, as further described in the IPO Prospectus. Holders of Restricted Voting Units will be given not less 21 days’ notice of the Qualifying Transaction Meeting (if such meeting is required under applicable law) and the corresponding redemption deposit deadline if such Qualifying Transaction Meeting is required. Participants through CDS may have earlier deadlines for accepting deposits of Restricted Voting Units for redemption. If a CDS participant’s deadline is not met by a holder of Restricted Voting Units, such holder’s Restricted Voting Units may not be eligible for redemption.

In connection with the Qualifying Transaction Meeting to vote on an extension to the Permitted Timeline, we will provide holders of our Restricted Voting Units with the opportunity to deposit for redemption all or a portion of their Restricted Voting Units provided that they deposit their units for redemption prior to the second business day before such meeting in respect of the extension. Upon the requisite approval of the extension of the Permitted Timeline, and subject to applicable law and the terms of the A&R LP Agreement, we will be required to redeem such Restricted Voting Units so deposited for redemption at an amount per unit, payable in cash, equal to the pro-rata portion (per Restricted Voting Unit) of: (A) the escrowed funds available in the escrow account at the time of the meeting in respect of the extension, including any interest and other amounts earned thereon, less (B) an amount equal to the total of (i) any applicable taxes payable by the REIT LP on such interest and other amounts earned in the escrow account, and (ii) actual and expected expenses directly related to the redemption, each as reasonably determined by the General Partner. For greater certainty, such amount will not be reduced by the deferred underwriting commission per Class A Restricted Voting Unit held in the escrow account.

Holders of Restricted Voting Units who redeem or sell their Restricted Voting Units will continue to have the right to exercise any Rights they may hold if the Qualifying Transaction is consummated.

As of the date hereof, there have been no redemptions and the amount of the original deposit to the escrow account, together with the additional deposit upon the closing of the Over-Allotment Option (U.S.$225,000,000) plus accrued interest but less applicable taxes and other permitted deductions is approximately U.S.$ 225,172,407.77.

The remaining unredeemed Restricted Voting Units would then be automatically renamed “Limited Partnership Units” on or following the closing of the Qualifying Transaction with no action taken on the part of the holders thereof as set forth in the A&R LP agreement, and the residual escrow account balance would be available to the REIT LP and the underwriters of the IPO, as applicable. Notwithstanding the foregoing redemption rights, each holder of Restricted Voting Units, together with any affiliate of such holder or any other person with whom such holder or affiliate is acting jointly or in concert, will not be permitted to redeem more than an aggregate of 15% of the number of Restricted Voting Units issued and outstanding following the IPO Closing. This limitation will not apply in the event a Qualifying Transaction does not occur within the Permitted Timeline, or in the event of an extension to the Permitted Timeline. By its election to redeem, each registered holder (other than CDS) and each beneficial holder of Restricted Voting Units shall be required to represent or shall be deemed to have represented to the REIT LP that, together with any affiliate of such holder and any other person with whom such holder or affiliate is acting jointly or in concert, he, she or it is not redeeming Restricted Voting Units with respect to more than an aggregate of 15% of the number of Restricted Voting Units issued and outstanding following the IPO Closing.

If we are unable to consummate a Qualifying Transaction within the Permitted Timeline, we will be required to redeem, as promptly as reasonably possible, on an automatic redemption date specified by the REIT LP (such date to be within 10 days following the last day of the Permitted Timeline), each of the outstanding Restricted Voting Units, for an amount per unit, payable in cash, equal to the pro-rata portion (per Restricted Voting Unit) of: (A) the escrow funds available in the escrow account including any interest and other amounts earned thereon, less (B) an amount

24 -

equal to the total of (i) any applicable taxes payable by the REIT LP on such interest and other amounts earned in the escrow account, and (ii) up to a maximum of U.S.$50,000 of interest and other amounts earned from the proceeds in the escrow account to pay actual and expected Winding-Up expenses and certain other related costs, each as reasonably determined by the General Partner. Holders of Proportionate Voting Units, being our Founders (and including our Sponsors), do not have any such redemption rights; however, the Founders will be entitled to such redemption payments from the escrow account with respect to any Restricted Voting Units they may have if we fail to complete our Qualifying Transaction or seek an extension to the Permitted Timeline.

Upon such redemption, the rights of the holders of Restricted Voting Units as unitholders will be completely extinguished (including the right to receive further liquidation distributions, if any) and the Rights will expire worthless.

Following the closing of the Qualifying Transaction, a holder of Limited Partnership Units may at any time, at the option of the holder and with the consent of the REIT LP, convert such Limited Partnership Units into Proportionate Voting Units on the basis of 100 Limited Partnership Units for one Proportionate Voting Unit.

Proportionate Voting Units

Conversion Rights and Transfers

Issued and outstanding Proportionate Voting Units, including fractions thereof, may at any time following the closing of the Qualifying Transaction, subject to the FPI Condition (as defined below), at the option of the holder, be converted into Limited Partnership Units at a ratio of 100 Limited Partnership Units per Proportionate Voting Unit with fractional Proportionate Voting Units convertible into Limited Partnership Units at the same ratio. Further, the General Partner’s board of directors may determine at any time following the closing of the Qualifying Transaction that it is no longer advisable to maintain the Proportionate Voting Units as a separate class of units and may cause all of the issued and outstanding Proportionate Voting Units to be converted into Limited Partnership Units at a ratio of 100 Limited Partnership Units per Proportionate Voting Unit with fractional Proportionate Voting Units convertible into Limited Partnership Units at the same ratio and the General Partner’s board of directors shall not be entitled to issue any more Proportionate Voting Units under the A&R LP Agreement thereafter.

The Proportionate Voting Units are not transferrable without approval of the General Partner’s board of directors, except to Permitted Holders and in compliance with U.S. securities laws.

Conversion Conditions

The right of the Proportionate Voting Units to convert into Limited Partnership Units is subject to certain conditions in order to maintain the REIT LP’s status as a “foreign private issuer” under U.S. securities laws. Unless otherwise waived by the board of directors of the General Partner, the right to convert the Proportionate Voting Units is subject to the condition that the aggregate number of Limited Partnership Units and Proportionate Voting Units (calculated as a single class) held of record, directly or indirectly, by residents of the United States (as determined in accordance with Rules 3b-4 and 12g3-2(a) under the Securities Exchange Act of 1934, as amended) may not exceed forty percent (40%) of the aggregate number of Limited Partnership Units and Proportionate Voting Units issued and outstanding after giving effect to such conversions (calculated as a single class) (the “ FPI Condition ”).

A holder of Limited Partnership Units may at any time following the close of the Qualifying Transaction, at the option of the holder and with the consent of the General Partner, convert such Limited Partnership Units into Proportionate Voting Units on the basis of 100 Limited Partnership Units for one Proportionate Voting Unit.

No fractional Limited Partnership Units will be issued on any conversion of any Proportionate Voting Units and any fractional Limited Partnership Units will be rounded down to the nearest whole number. For the purposes of the foregoing:

“ Affiliate ” means, with respect to any specified Person, any other Person which directly or indirectly through one or more intermediaries controls, is controlled by, or is under common control with such specified Person.

25 -

“ Permitted Holders ” means (i) the initial holders of Proportionate Voting Units, as applicable, on closing of the Qualifying Transaction; and (ii) any Affiliate or Person controlled, directly or indirectly, by one or more of the Persons referred to in clause (i) above.

“ Person ” means any individual, partnership, corporation, company, association, trust, joint venture or limited liability company. A Person is “controlled” by another Person or other Persons if: (i) in the case of a company or other body corporate wherever or however incorporated: (A) securities entitled to vote in the election of directors carrying in the aggregate at least a majority of the votes for the election of directors and representing in the aggregate at least a majority of the participating (equity) securities are held, other than by way of security only, directly or indirectly, by or solely for the benefit of the other Person or Persons; and (B) the votes carried in the aggregate by such securities are entitled, if exercised, to elect a majority of the board of directors of such company or other body corporate; or (ii) in the case of a Person that is not a company or other body corporate, at least a majority of the participating (equity) and voting units of such Person are held, directly or indirectly, by or solely for the benefit of the other Person or Persons; and “controls”, “controlling” and “under common control with” shall be interpreted accordingly.

Voting Rights

All holders of Proportionate Voting Units and Limited Partnership Units will be entitled to receive notice of any meeting of unitholders of the REIT LP, and to attend, vote and speak at such meetings, except those meetings at which only holders of a specific class of units are entitled to vote separately as a class under the A&R LP Agreement. A quorum for the transaction of business at a meeting of unitholders is present if unitholders who, together, hold not fewer than 25% of the votes attaching to the outstanding voting units entitled to vote at the meeting are present in person or represented by proxy.

On all matters upon which holders of Proportionate Voting Units and Limited Partnership Units are entitled to vote each Proportionate Voting Unit is entitled to 100 votes per Proportionate Voting Unit, and each fraction of a Proportionate Voting Unit is entitled to the number of votes calculated by multiplying the fraction by 100.

The number of votes represented by fractional Proportionate Voting Units will be rounded down to the nearest whole number. Unless a different majority is required by law or the A&R LP Agreement, resolutions to be approved by holders of Limited Partnership Unit and Proportionate Voting Units require approval by a simple majority of the total number of votes of all Limited Partnership Unit and Proportionate Voting Units cast at a meeting of unitholders at which a quorum is present based on the voting entitlements of each class of Units described above.

Issuance of Additional Proportionate Voting Units

The REIT LP may issue additional Proportionate Voting Units upon the approval of the board of directors of the General Partner. Approval of the holders of Proportionate Voting Units and Limited Partnership Units is not required in connection with a subdivision or consolidation on a pro rata basis as between the Limited Partnership Units and the Proportionate Voting Units.

Take-Over Bid Protection

If an offer is being made for Proportionate Voting Units (a “ PVU Offer ”) where: (i) by reason of applicable securities legislation or stock exchange requirements, the offer must be made to all holders of the class of Proportionate Voting Units; and (ii) no equivalent offer is made for the Limited Partnership Units, the holders of Limited Partnership Units have the right, pursuant to the A&R LP Agreement, at their option, to convert their Limited Partnership Units into Proportionate Voting Units for the purpose of allowing the holders of the Limited Partnership Units to tender to such PVU Offer, provided that such conversion into Proportionate Voting Units will be solely for the purpose of tendering the Proportionate Voting Units to the PVU Offer in question and that any Proportionate Voting Units that are tendered to the PVU Offer but that are not, for any reason, taken up and paid for by the offeror will automatically be reconverted into the Limited Partnership Units that existed prior to such conversion.

In the event that holders of Limited Partnership Units are entitled to convert their Limited Partnership Units into Proportionate Voting Units in connection with a PVU Offer pursuant to (ii) above, holders of an aggregate of Limited Partnership Units of less than 100 (an “ Odd Lot ”) will be entitled to convert all but not less than all of such Odd Lot of Limited Partnership Units into an applicable fraction of one Proportionate Voting Unit, provided that such

26 -

conversion into a fractional Proportionate Voting Unit will be solely for the purpose of tendering the fractional Proportionate Voting Unit to the PVU Offer in question and that any fraction of a Proportionate Voting Unit that is tendered to the PVU Offer but that is not, for any reason, taken up and paid for by the offeror will automatically be reconverted into the Limited Partnership Units that existed prior to such conversion.

Rights

There is an aggregate of 23,024,500 Rights (comprised of 22,500,000 Rights forming part of the Class A Restricted Voting Units to sold to the public and 524,500 Rights forming part of the Class B Units sold to our Sponsor) outstanding.

The Rights forming part of the Class A Restricted Voting Units and the Rights forming part of the Class B Units were issued at the IPO Closing and at the closing of the Over-Allotment Option. It is anticipated that the Rights and the Class A Restricted Voting Units will begin trading separately on February 18, 2020, the date that is 40 days following the IPO Closing. Each Right will entitle the holder to receive one-eighth (1/8) of a Restricted Voting Unit following the closing of the Qualifying Transaction (which at such time will represent one-eighth (1/8) of a Limited Partnership Unit, subject to adjustment under the terms of the Qualifying Transaction).

Rights will only be exercised for a whole number of units. No fractional units will be issued upon exercise of the Rights. If, upon exercise of the Rights, a holder would be entitled to receive a fractional interest in a unit, we will, upon exercise, round down to the nearest whole number of units to be issued to the Right holder. As a result, holders must hold Rights in multiples of 8 in order to receive Limited Partnership Units for all of his, her or its Rights following the closing of the Qualifying Transaction.

The Rights will expire if a Qualifying Transaction does not occur within the Permitted Timeline. The Rights will not have any access to, or benefit from, the proceeds in the escrow account, and will not possess any redemption or distribution rights. The Rights will expire worthless if we fail to consummate our Qualifying Transaction within the Permitted Timeline. Any Right that has not been exercised within two (2) years after the completion of our Qualifying Transaction shall be null and void.

Rights are excluded from voting in respect of the Qualifying Transaction. Holders of Rights will retain such Rights whether or not they redeem all or a portion of their Restricted Voting Units.

The Rights Agreement provides that the number of Limited Partnership Units issuable on exercise of the Rights may be adjusted in certain circumstances, including in the event of a recapitalization, reorganization, merger or consolidation. The Rights Agreement also provides the mechanism pursuant to which holders of Rights, including beneficial holders of Rights held through CDS, or its nominee, may exercise his, her or its Rights following the closing of the Qualifying Transaction.

In no event would the Rights be entitled to escrow account proceeds. The Right holders do not have the rights or privileges of holders of units or any voting rights until the Rights are exercised following the closing of the Qualifying Transaction and such holders receive corresponding Limited Partnership Units. After the issuance of the corresponding Limited Partnership Units upon exercise of the Rights, each holder is expected to be entitled to one vote for each Limited Partnership Unit held of record on all matters to be voted on by unitholders.

The Rights Agent shall, on receipt of a written request of the REIT LP or holders of not less than 25% of the aggregate number of Rights then outstanding, convene a meeting of holders of Rights upon at least 21 calendar days’ written notice to holders of Rights. Every such meeting shall be held in Toronto, Ontario or at such other place as may be approved or determined by the Rights Agent. A quorum at meetings of holders or Rights shall be two persons present in person or represented by proxy holding or representing more than 20% of the aggregate number of Rights then outstanding.

From time to time, the REIT LP and the Rights Agent, without the consent of the holders of Rights, may amend or supplement the Rights Agreement for certain purposes including curing defects or inconsistencies or making any change that does not adversely affect the rights of any holder of Rights. Any amendment or supplement to the Rights Agreement that adversely affects the interests of the holders of Rights may only be made by an “extraordinary resolution”, which is defined in the Rights Agreement as a resolution either (i) passed at a meeting of the holders of

27 -

Rights by the affirmative vote of holders of Rights representing not less than two-thirds of the aggregate number of the then outstanding Rights represented at the meeting and voted on such resolution, or (ii) adopted by an instrument in writing signed by the holders of Rights representing not less than two-thirds of the aggregate number of the then outstanding Rights.

Rights may only be exercised by U.S. Persons who are Qualified Institutional Buyers or accredited investors or where the REIT LP has otherwise availed itself of an exemption from registration under the U.S. Securities Act.

Make Whole Covenants

In order to protect the amounts held in the escrow account, prior to the IPO Closing, and pursuant to the Make Whole Agreement and Undertaking, our Sponsors agreed that, (A) in the event of the liquidation of the escrow account upon the occurrence of the automatic redemption by the REIT LP of the Restricted Voting Units resulting from the inability of the REIT LP to complete a Qualifying Transaction within the Permitted Timeline, or on a Winding-Up, or (B) in the event of an extension to the Permitted Timeline, or the completion of a Qualifying Transaction, they will be liable to us if and to the extent any claims by any third party (other than our auditors) for services rendered or products sold to us, or a prospective Qualifying Transaction target with which we have entered into, or discussed entering into a transaction agreement, reduce the amount of funds in the escrow account to below the lesser of (i) U.S.$10.00 (as adjusted for unit splits or combinations, distributions of units, reorganizations and recapitalizations, certain other nonordinary course distributions and the like) per Restricted Voting Unit, or (ii) such lesser amount per Restricted Voting Unit held in the escrow account as of the date of the full or partial liquidation of the escrow account, as applicable, due to reductions in the value of the assets held in escrow (other than due to the failure to obtain waivers from such third parties), in the case of both (i) and (ii), less the amount of interest which may be withdrawn to pay taxes, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the escrow account, and except as to any claims under our indemnity of the underwriters of the IPO against certain liabilities.

Other than as described herein, our Sponsors will not be liable to the REIT LP for any other reductions to the escrow account that would cause the REIT LP to pay less than U.S.$10.00 per Restricted Voting Unit to redeeming holders, including any amount on account of non-resident withholding tax applicable to any income earned by the REIT LP.

Our Sponsors are permitted to make direct payments or contributions to the escrow account in the matter it determines, for indemnity purposes or otherwise.

DISTRIBUTION POLICY

We have not paid any cash distributions on our units to date and we do not intend to declare or pay any cash distributions prior to the completion of our Qualifying Transaction. The payment of cash distributions in the future following the completion of our Qualifying Transaction will be dependent upon our revenues and earnings, if any, capital requirements and general financial condition and will be at the discretion of the General Partner’s board of directors at that time.

The General Partner shall deduct or withhold from distributions payable to any partner all amounts required or permitted by law to be withheld from such distribution and the REIT LP shall remit such taxes to the appropriate governmental authority within the times prescribed by law. Partners will be required to pay all withholding taxes payable in respect of any distributions of income by the REIT LP, whether such distributions are in the form of cash or additional partnership units. In the event of a distribution in the form of additional partnership units, the General Partner may sell the units of such partner to pay the withholding taxes and to pay all of the General Partner’s reasonable expenses with regard thereto and the General Partner shall have the power of attorney of such partner to do so. Any such sale shall be made on any stock exchange on which the Limited Partnership Units are then listed and upon such sale, the affected partner shall cease to be the holder of such partnership units. If the General Partner determines that the REIT LP does not have cash in an amount sufficient to make payment of the full amount of any distribution, the payment may include the issuance of additional Limited Partnership Units and Proportionate Voting Units having a value equal to the difference between the amount of such distribution and the amount of cash which has been determined by the General Partner to be available for the payment of such distribution.

28 -

MARKET FOR SECURITIES

Trading Price and Volume

On January 8, 2020, the REIT LP’s Class A Restricted Voting Units commenced trading on the Exchange under the symbol “SVX.UN”.

The following is a monthly summary of trading in the Class A Restricted Voting Units, as reported by the Exchange:

Month January 8, 2020 – February 8, 2020	High (U.S.$ per unit) 10.25	Low (U.S.$ per unit) 9.95	Volume
			3,235,924

Prior Sales

In connection with the establishment of the REIT LP, on November 12, 2019, (i) one Proportionate Voting Unit was issued to Subversive Sponsor in exchange for proceeds of U.S.$1.00, and (ii) one general partner interest was issued to the General Partner in exchange for proceeds of U.S.$10.00.

Concurrently with the IPO Closing, the REIT LP issued 512,000 Class B Units and, prior to the IPO Closing, 58,820 Founders’ Proportionate Voting Units as follows:

Date January 8, 2020 Date	Number of Class B Units Issue price per Class B Unit Number of underlying Proportionate Voting Units Number of underlying Rights 512,000 U.S.$10.00 5,120 512,000 Number of Founders’ Proportionate Voting Units Issue price per Founders’ Proportionate Voting Unit 58,820 U.S.$0.425	Number of Class B Units Issue price per Class B Unit Number of underlying Proportionate Voting Units Number of underlying Rights 512,000 U.S.$10.00 5,120 512,000 Number of Founders’ Proportionate Voting Units Issue price per Founders’ Proportionate Voting Unit 58,820 U.S.$0.425
	512,000
December 31, 2019		U.S.$0.425

In connection with the closing of the Over-Allotment Option, the REIT LP issued an additional 12,500 Class B Units as follows:

Date January 23, 2020	Number of Class B Units 12,500	Issue price per Class B Unit U.S.$10.00	Number of underlying Proportionate Voting Units Number of underlying Rights 125 12,500

29 -

ESCROWED SECURITIES AND SECURITIES SUBJECT TO CONTRACTUAL RESTRICTIONS ON TRANSFER

	Number of securities that are
	subject to a contractual
Designation of Class(1)	restriction on transfer	Percentage of class
Class B Units	524,500	100%
Proportionate Voting Units	57,562	100%

(1) Pursuant to the Exchange Agreement and Undertaking, the Founders have agreed not to sell or transfer their Founders’ Proportionate Voting Units or Class B Units (including any Proportionate Voting Units or Rights forming part of the Class B Units) prior to the closing of the Qualifying Transaction of the REIT LP, without the prior consent of the Exchange (except as may be required due to the structuring of the Qualifying Transaction or as otherwise permitted by the Exchange).

VOTING SECURITIES AND PRINCIPAL UNITHOLDERS

The REIT LP is authorized to issue an unlimited number of Proportionate Voting Units and an unlimited number of Restricted Voting Units. The Founders hold 57,562 Proportionate Voting Units and 524,500 Class B Units. The Restricted Voting Units may be considered “restricted securities” within the meaning of such term under applicable Canadian securities laws. See Description of Capital Structure– Specific Description of Units for the particulars on the voting rights attached to each such class.

The following tables disclose the names of the persons or companies who, to the knowledge of the REIT LP, as of the date hereof, beneficially own, or control or direct, directly or indirectly, 10% or more of any class or series of the voting securities of the REIT LP:

Name Subversive Sponsor CG IV Name General Partner	Number of Proportionate Voting Units Percentage of Proportionate Voting Units(%) Number of Class B Units Percentage of Class B Units(%) 34,625 60.2% 329,875 62.3% 14,840 25.8% 141,375 27% Number of General Partner Interests Percentage of General Partner Interest(%) 1 100%	Number of Proportionate Voting Units Percentage of Proportionate Voting Units(%) Number of Class B Units Percentage of Class B Units(%) 34,625 60.2% 329,875 62.3% 14,840 25.8% 141,375 27% Number of General Partner Interests Percentage of General Partner Interest(%) 1 100%	Percentage of Class B Units(%)
		100%

DIRECTORS AND OFFICERS

Name, Address, Occupation and Security Holding

The REIT LP has no directors or executive officers. Rather, the A&R LP Agreement provides for the governance and control of the REIT LP by the General Partner. The following are the names and municipalities of residence of the General Partner’s directors and officers, their positions and offices with the General Partner and corresponding start dates, and their principal occupations during the last five years.

30 -

Name and municipality of residence Michael B. Auerbach New York, NY USA Richard Acosta Los Angeles, California USA Michael Miller Los Angeles, California USA Eric Clarke Los Angeles, California USA Leland Hensch New York, NY USA Omar Mangalji London, England Scott Baker Bedford, Massachusetts USA Octavio Boccalandro New York, NY USA Craig Hatkoff New York, NY USA Anne Sullivan Darien, Connecticut USA	Office held with the General Partner Executive Chairman, Director Chief Executive Officer, Director Chief Financial Officer Chief Operating Officer Director Director Director Director Director Director	Director and/or Officer Since November 3, 2019 December 20, 2019 December 20, 2019 December 20, 2019 December 20, 2019 December 20, 2019 December 20, 2019 December 20, 2019 December 20, 2019 December 20, 2019	Present principal occupation and positions held(1)
			General Partner of Subversive Capital LLC Chief Executive Officer of the General Partner(2) Chief Financial Officer of the General Partner(3) Chief Operating Officer of the General Partner(4) Private Investor Founder and Advisor of Cap-Meridian Ventures Vice President at New England Development LLC(5) Founder of Andina Capital Inc. Non-executive director of Colony Capital, Inc. Chief Operating Officer for Saddle Point Management, L.P.(6)

(1) Each of the persons has held these positions for five years other than as described below.

(2) Mr. Acosta was previously the Chief Financial Officer of SBEEG Holdings, LLC from 2014-2017.

(3) Mr. Miller was previously the Project & Acquisitions Manager at Thomas Safran & Associates from 2014-2018.
(4) Mr. Clarke was previously the founder and CEO of Fashion Insights, LLC from 2010-2017.
(5) Mr. Baker has held the position as Vice President at New England Development LLC since 2015.
(6) Ms. Sullivan was previously partner at Marcato Capital Management from 2013-2017.

Richard Acosta indirectly owns all of the Class B Units and Proportionate Voting Units held by Inception Sponsor, being 6,397 Proportionate Voting Units, or 11.1% of the total Proportionate Voting Units outstanding, and 53,250 Class B Units, or 10.2% of the total Class B Units outstanding. Michael Auerbach indirectly owns all of the Class B Units and Proportionate Voting Units held by Subversive Sponsor, being 34,625 Proportionate Voting Units, or 60.2% of the total Proportionate Voting Units outstanding, and 329,875 Class B Units, or 62.3% of the total Class B Units

31 -

outstanding. As a group, the General Partner’s directors and officers beneficially own, or control or direct, directly or indirectly, 42,722 Proportionate Voting Units and 383,125 Class B Units.

All directors are elected on an annual basis, and unless re-elected, the term of office of the directors will expire at each annual meeting of unitholders.

Octavio Boccalandro, Scott Baker and Anne Sullivan are members of the Audit Committee.

The following are brief biographies of the directors and officers of the General Partner.

Directors and Officers

Michael B. Auerbach

Mr. Auerbach is an entrepreneur, investor, business consultant, and private diplomat. He founded Subversive Capital LLC as a vehicle to invest in radical companies whose core missions subvert the status quo and require sophisticated government and regulatory strategies for success. Michael is an expert in the global cannabis industry and is a significant shareholder and board director of both Tilray, Inc. and Privateer Holdings, Inc. Mr. Auerbach has served as Senior Vice President of Albright Stonebridge Group LLC, a global strategy firm since 2012, and he also serves as a General Partner of Subversive Capital, a venture capital firm and a private investment fund. From September 2009 to July 2012, he was Vice President, Social Risk Consulting at Control Risks Group Limited, a global risk consulting firm which acquired Social Risks, LLC, a consulting firm Mr. Auerbach founded in 2007. From 2005 to 2007, he was Associate Director for The Century Foundation, Inc., a progressive, non-partisan think tank. He began his career in technology in 1983 when he founded Panopticon Inc., a venture capital incubator concentrating on internet and mobile technology, and served as its Chief Executive Officer until January 2004. Mr. Auerbach also sits on the boards of Privateer Holdings, Inc., Tilray, Inc. and Duco Advisors, Inc. He also sits on the boards of Next for Autism and the KiDS Advisory Board of New York University’s Hassenfeld Children’s Hospital. He has an M.A. in International Relations from Columbia University and B.A. in Critical Theory from the New School.

Richard Acosta

Richard Acosta serves as Chief Executive Officer and director of the General Partner. Mr. Acosta is also the Chief Executive Officer and a member of the Board of Directors of Inception REIT, Inc. Mr. Acosta is an experienced real estate executive and private equity investor with 15 years of real estate investment and portfolio management experience across various commercial real estate asset types and investment structures having originated, underwritten or managed over $9 billion worth of direct real estate assets and real estate operating company investments. Prior to forming Inception REIT, he served as Chief Financial Officer of SBE Entertainment Group, LLC (“ SBE ”), a global lifestyle hospitality company best known for the SLS and Mondrian hotel brands, where he also sat on the company’s executive and investment committees. Mr. Acosta was responsible for SBE’s global financial, portfolio management and capital markets activities. Prior to SBE, he spent nearly a decade with Colony Capital, Inc. (“ Colony Capital ”), a global real estate private equity firm, where he last served as a Director. During his tenure at Colony Capital, Richard was involved in or responsible for the sourcing, underwriting and execution of equity and related structured investments, complex operations and financial restructurings on behalf of Colony Capital’s real estate opportunity funds with a focus on operationally intensive real estate, including hospitality and gaming. Mr. Acosta also spent several years developing Colony Capital’s deal sourcing and capital raising functions in the Middle East. He began his career in the Real Estate Merchant Banking Group at Wells Fargo Bank. He is a member of the Urban Land Institute (ULI) and is involved with various philanthropic causes including Vista Del Mar Child & Family Services where he serves as a member of the Board of Directors. Mr. Acosta is a graduate of the Marshall School of Business at the University of Southern California where he earned a B.S. in Business Administration with a concentration in real estate finance.

Michael Miller

Michael Miller serves as the Chief Financial Officer of the General Partner. Mr. Miller is a Vice President at Inception REIT and is an adept real estate professional with over a decade of industry experience spanning acquisitions, finance, development and asset management. He began his career in New York City at Lehman Brothers Holdings Inc. and Barclays PLC, where he worked in the Investment Banking and Global Debt Capital Markets (“ DCM ”) divisions.

32 -

Mr. Miller co-led the DCM Real Estate and Industrials investment grade bond origination business units, underwriting over $40 billion in financing for clients, while also identifying strategies to optimize client balance sheets and enhance corporate credit profiles. Following his tenure on Wall Street, he attended the University of California, Los Angeles’ Anderson School of Management Master of Business Administration program where he was a Consortium Fellow and a member of the Anderson Real Estate Association, the University of Texas at Austin Real Estate Case Competition Team and an undergraduate real estate teaching assistant. While at Anderson, Mr. Miller worked with the Brookfield Office Properties Inc. asset management team, facilitating the lease-up of the firm’s former MPG Office Trust, Inc. portfolio in downtown Los Angeles. From 2014-2018 he served as acquisitions and project manager at Thomas Safran & Associates Development, Inc. (“ TSA ”), an established affordable housing developer in Los Angeles, where he began in 2014. At TSA, Mr. Miller managed the acquisition, design, entitlement, finance and construction process of projects in development, while garnering considerable experience in cultivating public-private partnerships and complex deal structuring that use Low-Income Housing Tax Credits and/or Tax-Exempt bonds. Mr. Miller is a graduate of Stanford University where he earned a B.A. in International Relations and an M.A. in Sociology.

Eric Clarke

Eric Clarke serves as Chief Operating Officer of the General Partner. Mr. Clarke is a Vice President at Inception REIT and heads up its business development and operations and has a unique combination of business development, organizational management, and commercial real estate experience, including acquisitions, property management and development. He began his career at IDS Real Estate Group where he focused primarily on the $1 billion Metropolis mixed-use development in downtown Los Angeles, while also managing nearly 1 million square feet of industrial and office space in southern California. In addition to responsibilities encompassing underwriting and acquisitions, Mr. Clarke was the firm’s in-house “green building” expert as a LEED Accredited Professional. He was most recently a Director at TokenVault LLC (“ TokenVault ”), an innovative financial services company utilizing blockchain technology based in San Francisco backed by Franklin Templeton Investments Corp. While at TokenVault, Mr. Clarke led the initial international fundraising initiative which capitalized the business, and was also responsible for brand strategy and business development. Prior to TokenVault and from April 2010 to July 2017, he successfully built and Fashion Insights, LLC, which conducted business under the name “LVR Fashion” (“ LVR ”), an ethical and ecofriendly lifestyle apparel brand which he founded in 2010. At LVR, Mr. Clarke managed all business operations and directed marketing covering distribution to over 1,000 retailers globally, and was in charge of all real estate aspects of the business. He is involved in various non-profit organizations, including as a volunteer for US-based event fundraising for ARCAS Wildlife Rescue and Conservation Association, a Guatemalan wildlife rescue center and refuge. Mr. Clarke is a graduate of the Marshall School of Business at the University of Southern California where he earned a B.S. in Business Administration with a concentration in real estate finance.

Leland Hensch

Mr. Hensch is a private investor and a general partner of a private investment fund focused on investing primarily in publicly listed securities of issuers in the cannabis industry which are in the initial stages of raising funds. Mr. Hensch began his career in 1992 with Hull Trading Company, LLC as an equity derivatives trader on the Chicago Board Options Exchange, Inc. His first trading assignment was in the Frankfurt, Germany office from 1994 to 1998 where he traded on the Deutsche Borse AG. Mr. Hensch was hired by The Goldman Sachs Group, Inc. (“ Goldman Sachs ”) in London in 2001 to head the UK Derivatives desk. In 2004, he relocated to New York to run the Macro Derivatives Trading desk. In 2009, Mr. Hensch started Goldman Sachs’ Emerging Markets equity trading team in Sao Paulo and was later promoted to Head of Americas Equity trading in 2013. Mr. Hensch was named partner in 2012 and retired in 2016. Since leaving Goldman Sachs, Mr. Hensch has made a number of investments across cannabis, real estate, hospitality, media, and technology businesses. He has been an active investor/owner in the hospitality and media businesses. Mr. Hensch sits on the investment board of The Foundry Mezzanine Opportunity Fund LP and is still active in equity market trading. Mr. Hensch has a B.S. in Finance from The Kelley School at Indiana University.

Omar Mangalji

Omar R. Mangalji serves as a director on the General Partner’s board. He is a Founding Partner of The Inception Companies, a private opportunistic investment firm based in Los Angeles and London, with holdings in a variety of asset classes, including real-estate, consumer retail and business services, technology and legal cannabis. Founded in 2015, The Inception Companies has emerged as a leading investor in the legal cannabis space, with robust market

33 -

intelligence, a deep network of industry relationships, and a portfolio of direct investments totaling well over $5 billion in aggregated enterprise value. The Inception Companies has generally taken a hands-on approach with its investments through board representation, corporate strategy and operational oversight roles. The firm’s broad holdings include cultivation and manufacturing operations, retail and e-commerce platforms, consumer brands, vaporization technology and other ancillary strategic data aggregation investments. In 2013 and prior to The Inception Companies, Mr. Mangalji founded Cap-Meridian Ventures LTD (“ Cap-Meridian Ventures ”), a global private investment vehicle with a focus on innovation and a disciplined approach to find disruptive technologies and superior operations teams with which to partner. Cap-Meridian Ventures has actively invested in various-stage companies across verticals in North America, Europe, Africa, India and Brazil and Mr. Mangalji acts as an advisor. As a Mangalji family member, Mr. Mangalji remains involved in various parts of the family’s global multi-industry holding company, The Westmont Group, in both commercial and philanthropic endeavors. From 2014, he has been actively involved with the expansion of Westmont Industrials Group, leading the development of its South American steel assets.

Scott Baker

Scott Baker is a Vice President at New England Development, a corporation focused on delivering and sustaining value through a creative, entrepreneurial approach to real estate development and management services across the United States. Mr. Baker joined New England Development in 2015 with a primary role of overseeing all investment activities that fall outside the firm’s core real estate business, which has included several years of diligence and investing in businesses with operations in cannabis industries. In addition to investment into cannabis operating businesses, Mr. Baker has overseen the firm’s investment and diligence into real estate related to the cannabis industry, to include both single property and larger portfolio acquisition opportunities.

Prior to joining New England Development, Mr. Baker spent almost 10 years at Athena Capital Advisors LLC (“ Athena ”), serving a variety of functions, including as a Vice President working directly with ultra-high net worth families and institutions with a primary focus on designing and implementing customized strategic and tactical asset allocations. Prior to Mr. Baker’s role as a Vice President, he was an Analyst in Athena’s research group with responsibilities including private equity, private real estate, and hedge fund due diligence. Prior to joining Athena, Mr. Baker was with the State Board of Administration of Florida (Pension Board) where he was a Transaction Analyst within their Alternative Investments group.

Since 2014, Mr. Baker has been investing in and advising several cannabis businesses, both on a formal and informal basis. A number of these businesses have a multi-state and/or multi-national footprint with a focus on cultivation, production/processing, and dispensary/retail of cannabis.

In addition to board level positions within the cannabis industry, Mr. Baker currently holds several board level positions for private companies and organizations operating within real estate, hospitality, retail, and venture capital industries.

Mr. Baker received a B.S. in Finance and Entrepreneurship/Small Business Management from Florida State University. In 2008, Mr. Baker received the Chartered Alternative Investment Analyst designation and previously held the Series 65 license.

Octavio Boccalandro

Mr. Boccalandro is an entrepreneur, advisor and investor. In 2007, he founded Andina Capital Inc., an asset management firm based and licensed in Panama, and currently sits on the board. He founded PUNTO PAGO Inc., a digital payment system in Miami, and acted as its President until 2002 when the company was successfully sold to Emida Technologies Inc. From 2005-2010, he was President of Equitas Casa de Bolsa C.A., a brokerage house founded by him in Venezuela. From 2007-2014, Mr. Boccalandro served as board member of Bancamiga Banco Universal C.A., a micro-lending bank he founded in Venezuela, until it was sold in 2014. He currently serves as an advisor to Ben Oldman Loan Partners, an award winning hedge fund based in Luxembourg, Suma Financiera S.A., a micro-lending institution in Panama, Signafire Technologies, Inc., a large data company based in New York City, and Bodegas Convento de las Claras, S.L., an award-winning wine maker, and is a board member of Holler Technologies, Inc., an artificial intelligence communications platform based in New York City. Mr. Boccalandro has a Bachelor of Science in Business Administration from Universidad Metropolitana and a Masters of Business Administration from New York University.

34 -

Craig M. Hatkoff

Craig M. Hatkoff is a non-executive director of Colony Capital, Inc. Previously, Mr. Hatkoff founded and was the managing partner of Victor Capital Group, L.P. (“ Victor Capital ”) from 1989 until its acquisition by Capital Trust Group Limited in 1997. Prior to his service at Victor Capital, Mr. Hatkoff served as the Co-Head of the Real Estate Investment Banking Unit of Chemical Bank, where he was a pioneer in commercial mortgage securitization.

Since 2011, Mr. Hatkoff has also served as a member of the board of directors of SL Green Realty Corp., where he currently is the chair of the nominating and corporate governance committee and sits on the audit committee. Previously, Mr. Hatkoff served as a director of Taubman Centers, Inc. from 2004 to 2019 and Capital Trust, Inc. (“ Capital Trust ”) from 1997 to 2010 and the Vice Chairman of Capital Trust from 1997 to 2010. Mr. Hatkoff is the Chairman of Turtle Pond Publications LLC, which is active in children’s publishing and entertainment. Mr. Hatkoff also served as a Trustee of the New York City School Construction Authority from 2002 to 2005. Additionally, Mr. Hatkoff was a co-founder of the Tribeca Film Festival.

Mr. Hatkoff has previously sat on the board of directors of the following publically listed real estate investment companies: Blackstone Mortgage Trust, Inc. (formerly Capital Trust, Inc.) and Taubman Centers, Inc. He currently sits on the board of directors of Colony Capital, Inc. and SL Green Realty Corp.

Today, Mr. Hatkoff is an adjunct professor at Columbia Business School, where he teaches courses on entrepreneurship and innovation. Mr. Hatkoff received a Bachelor of Arts in Computer Science, Sociology and Anthropology from Colgate University in 1976 and an MBA from Columbia Business School in 1978.

Mr. Hatkoff’s in-depth expertise and knowledge of real estate, capital markets, finance, private investing, entrepreneurship and executive management provides a unique insight to our Board into the financial markets generally, valuation analysis, strategic planning, and unique financing structures and alternatives. He also possesses entrepreneurial, brand marketing, social media, technology and innovation, and senior leadership experience through his private investments and service on the Boards of numerous educational and charitable organizations. Mr. Hatkoff also has extensive experience as a current and former director at other public companies, which enables him to provide significant insight as to governance and compliance-related matters particular to real estate companies.

Anne Sullivan

Since October 2018, Anne Sullivan has served as Chief Operating Officer for Saddle Point Management, L.P., a registered investment advisory firm. Prior, Ms. Sullivan was Chief Operating Officer at Lanternback Capital Management, L.P.

Between 2013-2017, she was a Partner at Marcato Capital Management, LP (“ Marcato ”), a long/short equity hedge fund, where she oversaw the firm’s non-investment side of the business. She was charged with developing infrastructure, implementing best practices, and managing third party relationships across the enterprise. Prior to Marcato, Ms. Sullivan was a Senior Analyst at Mesirow Advanced Strategies, Inc. (“ Mesirow ”), a multi-billion dollar fund of funds. At Mesirow, she was focused on evaluating the operational viability of hedge fund managers. Prior to Mesirow, she was a Manager at Deloitte Touche Tohmatsu Limited overseeing audit engagements of financial services companies and publicly traded consumer businesses. Ms. Sullivan graduated Magna Cum Laude with a Bachelor of Science in Accounting from Bradley University and is also a Certified Public Accountant.

Indemnification and Insurance

Since completion of the IPO, the REIT LP has maintained a director and officer insurance program to limit the REIT LP’s exposure to claims against, and to protect, the General Partner’s directors and officers. In addition, since completion of the IPO, the REIT LP has entered into indemnification agreements with each of its directors and officers. The indemnification agreements generally require that the REIT LP indemnify and hold the indemnitees harmless to the greatest extent permitted by law for liabilities arising out of the indemnitees’ service to the REIT LP as directors and officers of the General Partner, provided that the indemnitees acted honestly and in good faith and in a manner the indemnitees reasonably believed to be in, or not opposed to, the REIT LP’s best interests and, with respect to criminal and administrative actions or proceedings that are enforced by monetary penalty, the indemnitees had no reasonable grounds to believe that his or her conduct was unlawful. The indemnification agreements also provide for

35 -

the advancement of defense expenses to the indemnitees by the REIT LP. Statutory indemnification rights also apply. The escrowed proceeds will not be accessible to cover any of the foregoing indemnities.

Cease Trade Orders, Bankruptcies, Penalties or Sanctions

Except as disclosed below, to the REIT LP’s knowledge, none of the General Partner’s directors and officers is, or within 10 years prior to the date hereof has been, a director, chief executive officer or chief financial officer of any company (including the REIT LP) that (i) was subject to a cease trade order, an order similar to a cease trade order, or an order that denied the relevant company access to any exemption under securities legislation, that was in effect for a period of more than 30 consecutive days, that was issued while the director or officer was acting in the capacity as director, chief executive officer or chief financial officer, or (ii) was subject to a cease trade order, an order similar to a cease trade order, or an order that denied the relevant company access to any exemption under securities legislation, that was in effect for a period of more than 30 consecutive days, that was issued after the director or officer ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as director, chief executive officer or chief financial officer. Mr. Auerbach was a director of CybAero AB (“ CybAero ”) which was suspended from trading on the Nasdaq First North Nordic on February 15, 2018 until it was subsequently delisted on June 19, 2018.

Except as disclosed below, to the REIT LP’s knowledge, none of the General Partner’s directors, executive officers and unitholders who hold a sufficient number of units to affect materially the control of the REIT LP (i) is, or within 10 years prior to the date hereof has been, a director or executive officer of any company (including the REIT LP) that, while that person was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets, or (ii) has, within ten years prior to the date hereof, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of the director or executive officer. Mr. Auerbach was a director of CybAero when it filed bankruptcy papers with the Linköpings District Court in Sweden on June 18, 2018.

None of the General Partner’s directors and executive officers has been subject to (i) any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority, or (ii) any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable securityholder in deciding whether to invest in the REIT LP.

INDEBTEDNESS OF DIRECTORS AND OFFICERS

None of the directors, officers or employees of the General Partner of REIT LP, and none of their associates, is or has, at any time since the beginning of the REIT LP’s most recently completed fiscal year, been indebted to the REIT LP. Additionally, the REIT LP has not provided any guarantee, support agreement, letter of credit or other similar agreement or understanding in respect of any indebtedness of any such person to any person or entity, except for routine indebtedness as defined under applicable securities legislation.

INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS

To the knowledge of the REIT LP, no director or executive officer of the REIT LP, no person or company that is the direct or indirect beneficial owner of, or who exercises control or direction over, directly or indirectly, more than 10% of the outstanding voting securities of the REIT LP, and no associate or affiliate of any of the foregoing persons or companies, has or has had any material interest, direct or indirect, in any transaction since inception of the REIT LP (up to the date hereof) that has materially affected or is reasonably expected to materially affect the REIT LP.

Related Party Transaction

36 -

expenses incurred by directors, officers and consultants of the REIT LP which are paid by Subversive Sponsor relating to certain activities on the REIT LP’s behalf, including identifying and negotiating a Qualifying Transaction.

DISCLOSURE OF CORPORATE GOVERNANCE PRACTICES

Board of Directors

All directors are elected on an annual basis, and unless re-elected, the term of office of the directors will expire at each annual meeting of unitholders. The board of directors is comprised of eight directors, four of whom are independent. Pursuant to National Instrument 52-110 – Audit Committees , as amended from time to time, an independent director is one who is free from any direct or indirect relationship which could, in the view of the board of directors, be reasonably expected to interfere with a director’s exercise of independent judgment.

The REIT LP has taken steps to seek to ensure that adequate structures and processes will be in place to permit the board of directors to function independently of the General Partner’s management team. It is contemplated that independent directors will hold in-camera sessions without management present at meetings of the board of directors, if considered necessary.

The directors and officers will devote such time and expertise as is required by the REIT LP. Time actually spent may vary according to the REIT LP’s needs.

Conflicts of Interest

The following potential conflicts of interest, among others, to which some of our Founders and/or the General Partner’s directors and officers will or may be subject in connection with our operations, exist:

None of our Founders or the General Partner’s directors or officers are required to commit their full time to our affairs and, accordingly, they may be susceptible to conflicts of interest in allocating their time among various business activities.
The General Partner’s officers and directors are, and may in the future become, affiliated with other companies. In order to minimize potential conflicts of interest which may arise from such other corporate affiliations, each of the General Partner’s officers and directors has contractually agreed, pursuant to a written agreement with us, until the earliest of our execution of a definitive agreement for a Qualifying Transaction, our liquidation or such time as he ceases to be an officer or director, to present to our company for our consideration, prior to presentation to any other entity, any suitable business opportunity which may reasonably be required to be presented to us, subject to any pre-existing fiduciary or contractual obligations he might have. Mr. Auerbach is currently a participant in the sponsor group of both Tuscan I and Tuscan II and a director of the latter. Tuscan II cannot commence a transaction until Tuscan I has successfully completed its qualifying acquisition. It is intended that Mr. Auerbach would be subject to confidentiality restrictions with respect to any potential business combination opportunities sourced for the REIT LP by someone other than Mr. Auerbach. He is also the Chairman of the Board of Directors at Subversive Capital Acquisition Corp. and has agreed to present all suitable Qualifying Transaction opportunities to Subversive Capital Acquisition Corp. prior to any other company (subject to any pre-existing fiduciary or contractual obligations). Accordingly, Mr. Auerbach will be required to present all suitable Qualifying Transaction opportunities to Subversive Capital Acquisition Corp., prior to presenting them to the REIT LP for consideration. In addition, Mr. Acosta and Mr. Mangalji may owe fiduciary or other duties to Inception REIT, and have agreed to present all suitable Qualifying Transaction opportunities to Inception REIT prior to any other company. Mr. Baker is currently the Vice President of New England Development. Mr. Baker has an obligation to present and evaluate opportunities on New England Development’s behalf prior to presenting them to the REIT LP.

37 -

Mr. Baker, respectively. Furthermore, we do not believe that any fiduciary duties or contractual obligations of our executive officers would materially undermine our ability to complete our Qualifying Transaction. Tuscan II and Subversive Capital Acquisition Corp. are blank check companies / special purpose acquisition corporations formed to pursue a transaction in the cannabis industry; however, they are not focused on acquiring real estate assets, and Tuscan II will not invest in or consummate a business combination with a target business that it determines has been operating in violation of U.S. federal laws. In addition, Inception REIT focuses on acquiring real estate assets that are significantly smaller in scale than those the REIT LP intends to target.

Unless and until we consummate our Qualifying Transaction, our Founders, the General Partner’s directors and officers, or their respective Affiliates or our Affiliates, will not receive reimbursement for any out of-pocket expenses incurred by them to the extent that such expenses exceed the amount of proceeds not deposited in the escrow account.
Affiliates of our Sponsors may act as underwriter in connection with offerings by one or more SPACs from time to time.

Other than the retainers to directors discussed under “ Compensation Discussion and Analysis ”, in no event will our Founders or any of the General Partner’s officers or directors be paid any fees or other compensation (for greater certainty, excluding reimbursement of expenses), including finder’s fees, consulting fees or other compensation on the closing of our Qualifying Transaction for services rendered in order to effectuate a Qualifying Transaction, unless expressly approved by a majority of the General Partner’s unconflicted directors, being the other directors who do not have a conflict of interest in respect of the proposed acquisition, and subject to any consent required by the Exchange.

We are not prohibited from pursuing a Qualifying Transaction with a company that is affiliated with any of our Sponsors, or the General Partner’s directors or officers. In the event we seek to complete our Qualifying Transaction with a company that is affiliated with any of our Sponsors or a director or officer, in accordance with applicable laws, any negotiations would be undertaken on behalf of the REIT LP by a committee of unconflicted directors. In addition, the committee of unconflicted directors may be required to seek unitholder approval of such Qualifying Transaction and in connection therewith, we, or a committee of independent directors, may be required to obtain an opinion from a qualified person concluding that our Qualifying Transaction is fair to us or our unitholders from a financial point of view. In addition, if the Qualifying Transaction involves a related party, the transaction may be subject to the minority unitholder protections of MI 61-101, which would, in certain circumstances, require approval by minority unitholders and/or an independent valuation. The Exchange may also impose additional requirements in such circumstances.

Additionally, Mr. Auerbach is a director of Privateer Holdings, Inc. and of Tuscan II and is an active investor in, and advisor to, multiple companies, some of which may be targets for a Qualifying Transaction. Mr. Auerbach’s association with other companies (including those in the cannabis industry) may result in situations where such companies may have an interest in transactions which could interfere with a possible Qualifying Transaction or may otherwise compete with the REIT LP. As such, Mr. Auerbach has undertaken to (i) recuse himself from, and not otherwise try to influence, any discussions between the board of directors or management of the General Partner regarding a transaction involving any of the businesses or companies in which Mr. Auerbach has any financial, control, officer, director or other material relationship; and (ii) not in any capacity be involved in any transaction with any business or company that is seeking to enter into negotiations with respect to, or otherwise considering taking action which would impede, a transaction which may be beneficial for the REIT LP; except in both cases, at the express request of the board of directors of the General Partner.

The A&R LP Agreement contains “conflict of interest” provisions similar to those applicable to corporations under Section 120 of the Canada Business Corporations Act which serve to protect unitholders without creating undue limitations on the REIT LP. The A&R LP Agreement requires each of the General Partner and its directors and officers to disclose to the REIT LP if he or she is a party to a material contract or transaction or proposed material contract or transaction with the REIT LP or the fact that such person is a director or officer of or otherwise has a material interest in any person who is a party to a material contract or transaction or proposed material contract or transaction with the REIT LP. Disclosure is required to be made by each of the General Partner’s directors or officers as soon as the director or officer becomes aware that a contract or transaction or proposed contract or transaction is to be, or has been, considered by the General Partner, as soon as the director or officer becomes aware of his or her interest in a contract or transaction or, if not currently a director or officer, as soon as such person becomes a director or officer.

38 -

In the event that a material contract or transaction or proposed material contract or transaction is one that in the ordinary course would not require approval by General Partner or unitholders, that director or officer is required to disclose in writing to the General Partner or request to have entered into the minutes of the meeting of the General Partner the nature and extent of his or her interest forthwith after the director or officer becomes aware of the contract or transaction or proposed contract or transaction. In any case, a director who has made disclosure to the foregoing effect is not entitled to vote on any resolution to approve the contract or transaction unless, among other things, the contract or transaction is one relating primarily to his or her remuneration for serving as the General Partner’s director, officer, employee or agent, or one for indemnity under the indemnity provisions of the A&R LP Agreement or the purchase of liability insurance. Certain directors or officers of the General Partner directors may have conflicts of interest as a result of their current full-time positions and these conflicts will be expressly acknowledged. See “ Risk Factors ” below.

Audit Committee

The General Partner has appointed an audit committee (the “ Audit Committee ”), composed of the following individuals: Octavio Boccalandro, Scott Baker and Anne Sullivan, each of whom is independent and financially literate. The relevant education and experience of each member of the Audit Committee is described as part of their respective biographies above under the heading “ Directors and Officers – Name, Address, Occupation and Security Holding ”.

The board of directors of the General Partner has adopted a written charter for the Audit Committee (the “ Charter of the Audit Committee ”), which sets out the Audit Committee’s responsibility in reviewing and approving the financial statements of the REIT LP and public disclosure documents containing financial information and reporting on such review to the board of directors of the General Partner, ensuring that adequate procedures are in place for the review of the REIT LP’s public disclosure documents that contain financial information, overseeing the work and reviewing the independence of the external auditors. The text of the Charter of the Audit Committee that has been adopted is attached to this AIF as Appendix A.

External Audit Service Fees

The fees billed to the REIT LP by its auditor, Deloitte LLP, for the financial year ended December 31, 2019, were as follows:

Year 2019	Audit fees Nil	Audit-related fees(1) Nil	Tax fees(2) Nil	All other fees(3)
				Nil

Notes:

(1) Audit‐related fees include fees paid to the company’s auditors for statutory audits, attestation services, quarterly reviews and due diligence services.

(2) Tax fees include fees paid for preparation of the company’s annual tax return.
(3) All other fees include fees incurred in connection with an initial review of the company and its operations and administrative expenses.
39 -

EXECUTIVE COMPENSATION AND OTHER PAYMENTS

Compensation Discussion and Analysis

Except as otherwise stated herein, there will be no salaries, consulting fees, management contract fees or directors’ fees, finder’s fees, loans, bonuses, deposits or similar payments to the General Partner’s officers or directors, directly or indirectly, for services rendered to us prior to or in connection with the completion of our initial Qualifying Transaction, or other payments to insiders prior to or in connection with the completion of our initial Qualifying Transaction, other than (i) repayment of unsecured loans, and any interest thereon, which may be made by our Sponsors, (ii) the payment of $10,000 (plus applicable taxes) per month for administrative and related services pursuant to an administrative services agreement entered into with Subversive Sponsor which, if applicable, may include payment for services of related parties or qualified Affiliates of related parties, for, but not limited to, various administrative, managerial or operational services or to help effect our Qualifying Transaction, reimbursement of reasonable out-of-pocket expenses incurred by our Sponsors and the above-noted persons in connection with certain activities performed on our behalf, such as identifying possible business and/or asset targets and Qualifying Transactions, performing business due diligence on suitable target businesses and Qualifying Transactions as well as traveling to and from the offices, plants or similar locations of prospective target businesses to examine their operations, and (iii) if approved by a majority of the General Partner’s unconflicted directors, being the other directors who do not have a conflict of interest in respect of the proposed acquisition, and subject to any consent required by the Exchange, payment of a customary finder’s fee, consulting fee or other similar compensation to our Founders, the General Partner’s officers, or directors, or to their Affiliates, for services rendered to us prior to or in connection with the completion of our Qualifying Transaction, none of which will be made from the proceeds of the IPO held in the escrow account prior to the completion of the Qualifying Transaction.

The General Partner’s board of directors will review and approve all reimbursements and payments made to our Founders, its officers or directors, or our Affiliates or associates or their respective Affiliates or associates, with any interested director abstaining from such review and approval.

Following completion of the Qualifying Transaction, it is anticipated that we will pay compensation to the General Partner’s officers and directors. Members of the General Partner’s management team who remain with the REIT LP following our Qualifying Transaction may be paid consulting, management or other fees from the resulting issuer of the Qualifying Transaction with any and all amounts being fully disclosed to unitholders, to the extent then known, in the prospectus prepared by the General Partner’s management in connection with the Qualifying Transaction.

RISK FACTORS

The risks and uncertainties described in this AIF are those the REIT LP currently believes to be material, but they are not the only ones it faces. If any of the following risks, or any other risks and uncertainties that the REIT LP has not yet identified or that it currently considers not to be material, actually occur or become material risks, our business, financial condition and operating results may be materially adversely affected. In that event, the trading price of our securities could be materially and adversely affected.

The General Partner is a newly incorporated corporation and we are a newly established limited partnership with no operating history and no revenues, and you have no basis on which to evaluate our ability to achieve our business objective.

We are a special purpose acquisition company with no operating activities. Because we, along with the General Partner, lack an operating history, you have no basis upon which to evaluate our ability to achieve our business objective of completing our Qualifying Transaction with one or more target cannabis-related real estate businesses and/or assets. We have not completed a Qualifying Transaction and although we have reviewed, and continue to review, a number of potential Qualifying Transaction targets, we are not able to determine at this time whether we will complete a Qualifying Transaction with any of the prospective targets that we have reviewed or with any other target. As a result, there is no assurance that we will be able to locate a target or that we will be able to effect a

40 -

Qualifying Transaction on favourable terms or at all. No assurance can be given that any discussions with prospective target cannabis-related real estate businesses and/or assets will lead to the entering of a binding acquisition agreement. Notwithstanding the foregoing, we intend to identify, evaluate and execute an attractive Qualifying Transaction by leveraging our network to find one or more attractive investment opportunities. We intend to execute a Qualifying Transaction which will aggregate a portfolio of properties with a focus on assets used in cannabis industries. Occupants may be involved in manufacturing, cultivation, extraction, processing, distribution, dispensaries, and/or retail cannabis. However, we are not limited to the acquisition of cannabis-related real estate businesses and/or assets or to a particular geographic region and may acquire other classes of real estate assets and/or non-real estate assets or businesses for purposes of completing our Qualifying Transaction.

We may be unable to complete our Qualifying Transaction within the Permitted Timeline. If we fail to complete our Qualifying Transaction, we will never generate any operating revenues.

The ability of our holders of Restricted Voting Units to redeem their Restricted Voting Units for cash may make our financial condition unattractive to potential Qualifying Transaction targets, which may make it difficult for us to enter into our Qualifying Transaction with a target.

We may enter into a transaction agreement with prospective cannabis-related real estate businesses and/or assets that require that the purchase price be satisfied in cash or as a closing condition that we have a minimum net worth or a certain amount of cash. If too many holders of Restricted Voting Units exercise their redemption rights, we may not be able to satisfy the cash purchase price or meet such closing condition, and as a result, would not be able to proceed with the Qualifying Transaction. If accepting all properly submitted redemption requests would cause our net cash or net tangible assets to be less than the amount necessary to satisfy the cash purchase price or a closing condition as described above, we would not be able to proceed with such redemption and the related Qualifying Transaction and may instead search for an alternate Qualifying Transaction. Prospective cannabis-related real estate businesses and/or assets would be aware of these risks and, thus, may be reluctant to enter into our Qualifying Transaction with us.

The requirement that we complete our Qualifying Transaction within the Permitted Timeline may give potential target cannabis-related real estate businesses and/or assets leverage over us in negotiating our Qualifying Transaction and may decrease our ability to conduct due diligence on potential cannabis-related real estate businesses and/or assets as we approach the end of the Permitted Timeline, which could undermine our ability to consummate our Qualifying Transaction on terms that would produce value for our unitholders.

Any potential target cannabis-related real estate businesses and/or assets with which we enter into negotiations concerning our Qualifying Transaction will be aware that we must consummate our Qualifying Transaction within 12 months from the IPO Closing (or 15 months from the IPO Closing if we have executed a definitive agreement for a Qualifying Transaction within 12 months from the IPO Closing but have not completed the Qualifying Transaction within such 12-month period). Consequently, such target cannabis-related real estate businesses and/or assets may obtain leverage over us in negotiating our Qualifying Transaction, knowing that if we do not complete our Qualifying Transaction with that particular target cannabis-related real estate business and/or asset, we may be unable to complete our Qualifying Transaction with any target cannabis-related real estate business and/or asset. This risk will increase as we get closer to the timeframe described above. In addition, we may have limited time to conduct due diligence and may enter into our Qualifying Transaction on terms that we would have rejected upon a more comprehensive investigation.

We may not be able to consummate our Qualifying Transaction within the Permitted Timeline, in which case we would redeem our Restricted Voting Units and our Rights would expire without any value.

We must complete our Qualifying Transaction within the Permitted Timeline; however, we may not be able to find a suitable target cannabis-related real estate business and/or asset and consummate our Qualifying Transaction within such time period. If we are unable to consummate our Qualifying Transaction within the Permitted Timeline, we will be required to redeem 100% of the outstanding Restricted Voting Units, as described herein.

If we are unable to complete our Qualifying Transaction, our Rights will expire without any value.

41 -

Holders of Rights will not have redemption rights.

If we are unable to complete our Qualifying Transaction within the Permitted Timeline, the Rights will expire worthless and holders will not have any access to, or benefit from, the proceeds in the escrow account.

Potential targets may be unwilling to effect a Qualifying Transaction with us.

While we believe that our status as a SPAC will make us an attractive business partner, some potential owners of target cannabis-related real estate businesses and/or assets may view the inherent limitations in our status as a SPAC and may prefer to effect a Qualifying Transaction with a more established entity or with a private company, or effect a traditional initial public offering.

Because of our limited resources and the competition for acquisition opportunities of target businesses, it may be difficult for us to complete our Qualifying Transaction.

We expect to encounter competition from other entities having a business objective similar to ours, including private investors, pension funds and private equity firms, other prospective SPACs and other entities, domestic and international, competing for the types of assets and/or businesses we intend to acquire. Many of these individuals and entities are well-established and have significant experience identifying and effecting, directly or indirectly, acquisitions of real estate businesses and/or assets. Some of these competitors may possess greater technical, human and other resources than we do and our financial resources will be relatively limited when contrasted with those of many of these competitors. While we believe there are numerous target assets and/or businesses we could potentially acquire with the net proceeds of the IPO, our ability to compete with respect to the acquisition of certain target assets and/or businesses that are sizeable will be limited by our available financial resources. This inherent competitive limitation gives others an advantage in pursuing the acquisition of certain target assets and/or businesses.

If the net proceeds of the IPO not being held in the escrow account are insufficient to allow us to operate for at least the period preceding the end of the Permitted Timeline, we may be unable to complete our Qualifying Transaction.

The funds available to us outside of the escrow account may not be sufficient to allow us to operate for the next 12 months from the IPO Closing and to fund the consummation of our Qualifying Transaction. If we are unable to borrow funds from our Sponsors or other sources in such circumstances, our Restricted Voting Units would be redeemed. Of the funds available to us, we could use a portion of the funds to pay fees to consultants to assist us with our search for a target cannabis-related real estate business and/or asset. We could also use a portion of the funds as a down payment with respect to a particular proposed Qualifying Transaction, although we do not have any current intention to do so. If we are unable to fund such down payments, our ability to close a contemplated transaction could be impaired.

If third parties bring claims against us, the proceeds held in the escrow account could be reduced and the per unit redemption amount received by holders of Restricted Voting Units may be less than U.S.$10.00 per unit.

Our placing of funds in the escrow account may not protect those funds from third party claims against us. Given that we will not have access to the escrowed funds except under certain permitted circumstances with respect to payment of taxes and of redemptions, and that the funds we hold which are not placed in escrow are intended to be used in accordance with our estimates in the IPO Prospectus, we may not have the financial resources to defend a potential claim, nor may we have the ability to sue to enforce a potential claim. Although we will seek, where practicable, to have material vendors, service providers, prospective cannabis-related real estate businesses and/or assets or other entities with which we do business execute agreements to waive any right, title, interest or claim of any kind in or to any monies held in the escrow account, such parties may not execute such agreements, or even if they execute such agreements they may not be prevented from bringing claims against the escrow account.

Prior to the IPO Closing, and pursuant to the Make Whole Agreement and Undertaking, our Sponsors agreed that (A) in the event of the liquidation of the escrow account upon the occurrence of the automatic redemption by the REIT LP of the Restricted Voting Units resulting from the inability of the REIT LP to complete a Qualifying Transaction within the Permitted Timeline, or on a Winding-Up, or (B) in the event of an extension to the Permitted Timeline or the completion of a Qualifying Transaction, they will be liable to us if and to the extent any claims by any third party (other than our auditors) for services rendered or products sold to us, or a prospective Qualifying Transaction target

42 -

with which we have entered into, or discussed entering into a transaction agreement, reduce the amount of funds in the escrow account to below the lesser of (i) U.S.$10.00 (as adjusted for unit splits or combinations, distributions of units, reorganizations and recapitalizations, certain other non-ordinary course distributions and the like) per Restricted Voting Unit, or (ii) such lesser amount per Restricted Voting Unit held in the escrow account as of the date of the full or partial liquidation of the escrow account, as applicable, due to reductions in the value of the assets held in escrow (other than due to the failure to obtain waivers from such third parties), in the case of both (i) and (ii), less the amount of interest which may be withdrawn to pay taxes, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the escrow account, and except as to any claims under our indemnity of the underwriters of the IPO against certain liabilities. Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, our Sponsors will not be responsible to the extent of any liability for such thirdparty claims.

The General Partner’s directors may decide not to enforce the indemnification obligations of our Sponsors, resulting in a reduction in the amount of funds in the escrow account available for distribution to holders of our Restricted Voting Units.

In the event that the proceeds in the escrow account are reduced below the lesser of (i) U.S.$10.00 (as adjusted for unit splits or combinations, distributions of units, reorganizations and recapitalizations, certain other non-ordinary course distributions and the like) per Restricted Voting Unit, or (ii) such lesser amount per unit held in the escrow account as of the date of the liquidation of the escrow account due to reductions in the value of the escrow assets, in the case of both (i) and (ii), less the amount of interest which may be withdrawn to pay taxes, except as to claims by a third party who executed a waiver, or by our auditors or the underwriters of the IPO, and our Sponsors assert that they are unable to satisfy their obligations or that they have no indemnification obligations related to a particular claim, the General Partner’s independent directors would determine whether to take legal action against our Sponsors to enforce their indemnification obligations. While we currently expect that the General Partner’s independent directors would take legal action on our behalf against our Sponsors to enforce their indemnification obligations to us, it is possible that the General Partner’s independent directors, in exercising their business judgment, may choose not to do so in any particular instance. If the General Partner’s independent directors choose not to enforce these indemnification obligations, the amount of funds in the escrow account available for distribution to holders of our Restricted Voting Units may be reduced below U.S.$10.00 per unit.

Our Founders will have significant influence in determining the outcome of the Qualifying Transaction Meeting (if required under applicable law), at which unitholder approval of the Qualifying Transaction would be sought, and accordingly, which transaction would ultimately be completed as our Qualifying Transaction.

Our Founders’ Proportionate Voting Units, which are held by our Founders, represent 20% of the issued and outstanding units of the REIT LP (including all Restricted Voting Units and Proportionate Voting Units on an asconverted basis to Restricted Voting Units, but assuming no exercise of the Rights). Accordingly, with the inclusion of our Proportionate Voting Units forming part of the Class B Units, our Founders will hold approximately a 22% voting interest to vote on the Qualifying Transaction even with the Over-Allotment Option not exercised in full. Further, given the forfeiture and transfer restrictions placed on the units held by our Founders until the completion of our Qualifying Transaction, our Founders may be incentivized to support and vote for a transaction even if not the most commercially beneficial to the REIT LP. Our Founders have agreed, if a vote is required, to vote their Proportionate Voting Units and any Restricted Voting Units purchased pursuant to or following the IPO in favour of the proposed Qualifying Transaction. For the foregoing reasons, our Founders may significantly influence the vote on the Qualifying Transaction, which they may be inclined to do given the difference in economic interests of our Founders as compared to the holders of Restricted Voting Units.

Our Founders, the General Partner’s directors, officers or their affiliates may elect to purchase Restricted Voting Units, which may influence a vote on a proposed Qualifying Transaction.

Our Founders (including our Sponsors), the General Partner’s directors, officers or their affiliates, may acquire Restricted Voting Units on the open market for investment or other purposes. Such Restricted Voting Units may be entitled to be voted at the Qualifying Transaction Meeting, if required, and could therefore increase the likelihood of obtaining unitholder approval of the Qualifying Transaction or of satisfying a closing condition in an agreement with a target that requires us to have a minimum net worth or a certain amount of cash at closing. This may result in the completion of a Qualifying Transaction that may not otherwise have been possible.

43 -

The General Partner’s key personnel may negotiate employment or consulting agreements with a target cannabis-related real estate business in connection with a Qualifying Transaction. These agreements may provide for them to receive compensation following our Qualifying Transaction and as a result, may cause them to have conflicts of interest in determining whether a particular Qualifying Transaction is the most advantageous.

The General Partner’s key personnel may choose to, or be asked to, remain with the company after the completion of our Qualifying Transaction, and if so, they may negotiate employment or consulting agreements in connection with the transaction. Such negotiations may take place simultaneously with the negotiation of the Qualifying Transaction and could provide for such individuals to receive compensation in the form of cash payments and/or our securities for services they would render to the entity after the completion of our Qualifying Transaction. The personal and financial interests of such individuals may influence their motivation in identifying and selecting a target cannabis-related real estate business and/or asset.

Since our Founders will lose their investment in us if our Qualifying Transaction is not completed, a conflict of interest may arise in determining whether a Qualifying Transaction target is appropriate.

Our Founders will not be entitled to redeem their Founders’ Proportionate Voting Units in connection with a Qualifying Transaction or be entitled to access the escrow account in respect thereof upon our Winding Up. Similarly, our Sponsors will also not be entitled to redeem their Class B Units (including the securities forming part of such Class B Units) in connection with the Qualifying Transaction or be entitled to access the escrow account in respect thereof upon our Winding Up. Simultaneously with the IPO Closing, our Sponsors purchased 512,000 Class B Units at an offering price of U.S.$10.00 per Class B Unit for aggregate proceeds equal to U.S.$5,120,000. On the partial exercise of the Over-Allotment Option, our Sponsors purchased an additional 12,500 Class B Units at a price of U.S.$10.00 per Class B Unit for aggregate proceeds equal to U.S.$125,000. As a result, the personal and financial interests of our Founders may influence the identification and selection of a Qualifying Transaction, the voting on the Qualifying Transaction, if required, and the operation of the entity following our Qualifying Transaction. Notwithstanding the foregoing, holders of Restricted Voting Units can elect to redeem all or a portion of their Restricted Voting Units in connection with the completion of our Qualifying Transaction, irrespective of whether they vote for or against, or do not vote on, the Qualifying Transaction.

There may be other companies with a business plan similar to ours seeking to effectuate a Qualifying Transaction, which may make it more difficult for us to complete a Qualifying Transaction.

SPACs may consummate a Qualifying Transaction in any industry they choose, including targeting cannabis-related real estate businesses and/or assets, and so we may be subject to competition from these and other companies seeking to execute a business plan similar to ours. Accordingly, we cannot assure investors that we will be able to successfully compete for an attractive Qualifying Transaction and, because of this competition, we cannot assure investors that we will be able to complete a Qualifying Transaction within the required time period.

Changes in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect our business, assets, investments and results of operations.

We are subject to laws and regulations enacted by national, regional and local governments. In particular, we will be required to comply with certain Canadian securities law, income tax law and the Exchange and other legal and regulatory requirements. Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming and costly. Those laws and regulations and their interpretation and application also may change from time to time and those changes could have a material adverse effect on our business, assets, investments and results of operations. In addition, a failure to comply with applicable laws or regulations, as interpreted and applied, could have a material adverse effect on our business, assets, investments and results of operations.

All of the General Partner’s directors and officers and certain of our Sponsors live or are organized outside of Canada; therefore investors may not be able to enforce applicable securities laws or their other legal rights against such parties.

All of the General Partner’s directors and officers and certain of our Sponsors reside or are organized outside of Canada. As a result, it may be difficult, or in some cases not possible, for investors to enforce their legal rights or to

44 -

enforce judgments of Canadian courts predicated upon civil liabilities under securities laws and/or criminal penalties against any person that resides or is otherwise organized outside of Canada even if the party has appointed an agent for service of process.

In the event the REIT LP acquires a United States entity or assets of a United States entity, it may have adverse tax consequences on holders of Restricted Voting Units and on the REIT LP.

In the event the REIT LP acquires a United States entity or assets of a United States entity, under certain circumstances, the REIT LP will be treated under section 7874 of the Internal Revenue Code of 1986, as amended (the “ Code ”) as a United States corporation for United States federal income tax purposes. There can be no assurances provided by the REIT LP that it will not engage in such an “inversion” transaction at the time of the Qualifying Transaction.

If the REIT LP engages in such an inversion transaction and the REIT LP is treated as a United States corporation, the REIT LP generally would be subject to United States federal income tax and the United States and Canadian federal income tax consequences to United States, Canadian and other non-United States holders of Restricted Voting Units (which, on or following the closing of a Qualifying Transaction, would, unless previously redeemed, be automatically renamed to “Limited Partnership Units”) may materially differ. Any such United States federal corporate tax liability could have a material adverse effect on the results of the REIT LP’s operations. If the REIT LP engages in such an inversion transaction, any distributions paid by the REIT LP to non-United States holders may be subject to United States federal income tax withholding at a 30% rate or such lower rate as provided in an applicable treaty. Because the Limited Partnership Units would be treated as units of a United States domestic corporation, the United States gift, estate and generation-skipping transfer tax rules generally would apply to a non-United States holder of Limited Partnership Units.

You will be unable to ascertain the merits or risks of any prospective Qualifying Transaction target or any particular target cannabis-related real estate business and/or asset’s operations.

Because we have not yet initiated any substantive discussions or entered into a written or oral binding acquisition agreement with respect to a prospective target cannabis-related real estate business and/or asset, there is no basis to evaluate the possible merits or risks of any such acquisition. To the extent we consummate our Qualifying Transaction, we may be affected by numerous risks inherent in the assets and/or business operations which we acquire. For example, if we acquire a real estate asset with a tenant that is financially unstable or lacking an established record of sales or earnings, we may be affected by the business of such tenant. Although the General Partner’s officers and directors will endeavor to evaluate the risks inherent in a particular acquisition, we may not properly ascertain or assess all of the significant risk factors or that we will have adequate time to complete due diligence. Furthermore, some of these risks may be outside of our control and leave us with no ability to control or reduce the chances that those risks will adversely impact our business. An investment in our Class A Restricted Voting Units may not ultimately prove to be more favourable to investors than a direct investment in an acquisition target, if such opportunity were available.

We may seek acquisition opportunities outside of the General Partner’s management’s area of expertise and the General Partner’s management may not be able to adequately ascertain or assess all significant risks associated with the target cannabis-related real estate business and/or asset with which we acquire in connection with our Qualifying Transaction.

We may be presented with a target Qualifying Transaction asset and/or business in a sector unfamiliar to the General Partner’s management team, but determine that such target offers an attractive acquisition opportunity for the REIT LP. In the event we elect to pursue an investment outside of the General Partner’s management’s expertise, the General Partner’s management’s experience may not be directly applicable to the target business or their evaluation of its operations.

Although we identified general criteria and guidelines that we believe are important in evaluating prospective target cannabis-related real estate businesses and/or assets, we may enter into our Qualifying Transaction to acquire a target that does not meet such criteria and guidelines, and as a result, the target cannabis-related real

45 -

estate business and/or asset with which we acquire may not have attributes entirely consistent with our general criteria and guidelines.

Although we have identified specific investment criteria and guidelines for evaluating prospective target cannabisrelated real estate businesses and/or assets, it is possible that a target cannabis-related real estate business and/or asset which we acquire will not have all of these positive attributes. If we acquire a target cannabis-related real estate business and/or asset that does not meet some or all of these guidelines, such acquisition may not be as successful as an acquisition with a target that does meet all of our general criteria and guidelines. In addition, if we announce our Qualifying Transaction with a target that does not meet our general criteria and guidelines, a greater number of holders of Class A Restricted Voting Units may exercise their redemption rights, which may make it difficult for us to pay a cash purchase price or meet any closing condition with a vendor that requires us to have a minimum net worth or a certain amount of cash. In addition, it may be more difficult for us to attain unitholder approval, which is a prerequisite to the closing of our Qualifying Transaction if the target does not meet our general criteria and guidelines.

We are not required to obtain an opinion from a qualified person, and consequently, an independent source may not confirm that the price we are paying for the target cannabis-related real estate business and/or asset is fair to us or our unitholders from a financial point of view.

Unless we consummate our Qualifying Transaction with a related party (within the meaning of applicable securities law), we may not be required to obtain an opinion from a qualified person that the price we are paying is fair to us or our unitholders from a financial point of view. Accordingly, our unitholders will be relying on the judgment of the General Partner’s management and board of directors.

Resources could be wasted in researching acquisitions that are not consummated, which could materially adversely affect subsequent attempts to locate and acquire an asset or merge with another entity.

We anticipate that the investigation of each specific target cannabis-related real estate business and/or asset and the negotiation, drafting, and execution of relevant agreements, disclosure documents, and other instruments will require substantial management time and attention and substantial costs for accountants, legal counsel and other experts. If we decide not to complete a specific Qualifying Transaction, the costs incurred up to that point for the proposed transaction likely would not be recoverable. Furthermore, if we reach an agreement relating to a specific target cannabis-related real estate business and/or asset, we may fail to consummate our Qualifying Transaction for any number of reasons, including those beyond our control. Any such event will result in a loss to us of the related costs incurred which could materially adversely affect subsequent attempts to locate and acquire an asset or merge with another business and/or entity.

After our Qualifying Transaction, it is possible that a majority of the General Partner’s directors and officers will live outside of Canada and all or the majority of our assets will be located outside of Canada; therefore investors may not be able to enforce applicable securities laws or their other legal rights.

It is possible that after our Qualifying Transaction, a number of the General Partner’s directors and officers will reside outside of Canada and all or the majority of our assets will be located outside of Canada. As a result, it may be difficult, or in some cases not possible, for investors in Canada to enforce their legal rights, to effect service of process upon all of the General Partner’s directors or officers or to enforce judgments of Canadian courts predicated upon civil liabilities and criminal penalties on the General Partner’s directors and officers under Canadian laws.

We are highly dependent upon the General Partner’s directors and officers and their loss could adversely affect our ability to operate and effect our Qualifying Transaction.

Our operations are dependent upon a relatively small group of individuals and, in particular, the General Partner’s directors and officers. We believe that our success depends on the continued service of the General Partner’s directors and officers, at least until we have consummated our Qualifying Transaction. In addition, the General Partner’s directors and officers are not required to commit any specified amount of time to our affairs and, accordingly, may have conflicts of interest in allocating management time among various business activities, including identifying potential Qualifying Transactions and monitoring the related due diligence. We do not have an employment agreement with, or key-man insurance on the life of, any of the General Partner’s directors and officers. The unexpected loss of

46 -

the services of one of more of the General Partner’s directors and officers could have a detrimental effect on us, our operations and our ability to effect our Qualifying Transaction.

Our ability to successfully effect our Qualifying Transaction and to be successful thereafter will be largely dependent upon the efforts of the General Partner’s key personnel, some of whom may remain with the General Partner following our Qualifying Transaction. The loss of key personnel could negatively impact the operations and profitability of our post-Qualifying Transaction business.

Our ability to successfully effect our Qualifying Transaction is dependent upon the efforts of the General Partner’s key personnel. The role of the General Partner’s key personnel in the REIT LP’s post-Qualifying Transaction business, however, cannot presently be ascertained. Although some of the General Partner’s key personnel may remain with the General Partner in senior management or advisory positions following our Qualifying Transaction, there can be no assurance that this will be the case. In addition, while we intend to closely scrutinize any individuals we engage after our Qualifying Transaction, our assessment of these individuals may not prove to be correct. As well, these individuals may be unfamiliar with the requirements of operating a public entity regulated as a reporting issuer under applicable Canadian securities laws, which could cause us to have to expend time and resources helping them become familiar.

Our Sponsors and the General Partner’s directors and officers may now be, and all of them may in the future become, affiliated with entities engaged in activities similar to those intended to be conducted by us and, accordingly, may have conflicts of interest in allocating their time and determining to which entity a particular business opportunity should be presented.

Until we consummate our Qualifying Transaction, we intend to engage in the business of identifying, acquiring and combining with one or more cannabis-related real estate businesses and/or assets. Our Sponsors and the General Partner’s directors and officers may now be, or may in the future become, affiliated with entities that are engaged in similar activities, including one or more SPACs that may seek to acquire businesses and/or assets similar to the businesses and/or assets that the REIT LP is seeking to acquire as part of its Qualifying Transaction. In addition, affiliates of our Sponsors may act as underwriter in connection with offerings by one or more SPACs from time to time.

Our Founders, the General Partner’s directors and officers also may become aware of business opportunities which may be appropriate for presentation not only to us but also to other entities to which they owe duties. In the course of their other business activities, our Founders, the General Partner’s directors and officers may owe fiduciary or other duties, and may have obligations, to other entities or pursuant to their outside business arrangements, including to seek and present investment and business opportunities to such other entities. Specifically, the General Partner’s executive chairman is also a director of Tuscan II and Subversive Capital Acquisition Corp. and has agreed to present all suitable Qualifying Transaction opportunities to Subversive Capital Acquisition Corp., prior to presenting them to the REIT LP for consideration. Tuscan II and Subversive Capital Acquisition Corp. are blank check companies/special purpose acquisition corporations formed to pursue a transaction in the cannabis industry; however, they are not focused on acquiring real estate assets, and Tuscan II will not invest in or consummate Qualifying Transactions with a target business that it determines has been operating in violation of U.S. federal laws.

Additionally, our General Partner’s other directors and officers are not required to present investment and business opportunities to the REIT LP in priority to other entities with which they are affiliated or to which they owe duties. For example, Mr. Acosta and Mr. Mangalji may owe fiduciary or other duties to Inception REIT, and have agreed to present all suitable Qualifying Transaction opportunities to Inception REIT prior to any other company. Since July 2015, Mr. Baker has been and is currently the Vice President of New England Development LLC (“ New England Development ”). Mr. Baker has an obligation to present and evaluate opportunities on New England Development’s behalf prior to presenting them to the REIT LP.

Our Sponsors and the General Partner’s directors, officers, security holders and their respective affiliates and associates may have interests that conflict with our interests.

We have not adopted a policy that expressly prohibits our Sponsors, the General Partner’s directors, officers, security holders, affiliates or associates from having a direct or indirect financial interest in any investment to be acquired or disposed of by us or in any transaction to which we are a party or have an interest. We are not acquiring a cannabisrelated real estate business and/or asset as part of our Qualifying Transaction from an entity that is affiliated with our

47 -

Sponsors, or the General Partner’s directors or officers. In the event that we did wish to enter into our Qualifying Transaction with a target cannabis-related real estate business and/or asset affiliated with our Sponsors, however, we would be required to obtain a fairness opinion from a qualified person, concluding that our Qualifying Transaction is fair to us or our unitholders from a financial point of view.

We may attempt to contemporaneously consummate Qualifying Transactions with multiple prospective target cannabis-related real estate businesses and/or assets, which may hinder our ability to consummate our Qualifying Transaction and give rise to increased costs and risks that could negatively impact our operations and profitability.

If we determine to contemporaneously acquire several cannabis-related real estate businesses and/or assets that are owned by different sellers, we will need each of such sellers to agree that our purchase of its business and/or assets is contingent on the contemporaneous closings of the other Qualifying Transactions, which may make it more difficult for us, and delay our ability, to complete the Qualifying Transaction. With multiple Qualifying Transactions, we could also face additional risks, including additional burdens and costs with respect to possible multiple negotiations and due diligence investigations (if there are multiple sellers) and the additional risks associated with the subsequent integration of the operations and services or products of the acquired entities in a single operating business. If we are unable to adequately address these risks, it could negatively impact our profitability and results of operations.

We may attempt to acquire an asset and/or business about which little information is available, which may result in us acquiring an asset and/or business that is not as profitable as we suspected, if at all.

In pursuing our acquisition strategy, we may seek to acquire an asset and/or business about which little information is available. By definition, very little public information exists about private assets and/or businesses, and we could be required to make our decision on whether to pursue a potential Qualifying Transaction on the basis of limited information, which may result in us acquiring an asset and/or business that is not as profitable as we suspected, if at all.

The REIT LP may lose “foreign private issuer status” in the future, which could result in significant additional costs and expenses.

Following our Qualifying Transaction, we expect to employ Proportionate Voting Units to meet the definition of “foreign private issuer,” as such term is defined in Rule 405 of Regulation C under the U.S. Securities Act. As a result, the REIT LP will be a “foreign private issuer,” and will not be subject to the same requirements that are imposed upon U.S. domestic issuers by the Securities and Exchange Commission (“ SEC ”). The REIT LP may in the future lose its foreign private issuer status if a majority of its Limited Partnership Units and Proportionate Voting Units are held “off record” by U.S. residents and it fails to meet the additional requirements necessary to avoid loss of foreign private issuer status, such as if: (1) a majority of the General Partner’s directors or executive officers are U.S. citizens or residents; (2) a majority of its assets are located in the U.S.; or (3) its business is administered principally in the U.S.

If the REIT LP loses its foreign private issuer status and decides, or is required, to register as a U.S. domestic issuer, the regulatory and compliance costs will be significantly more than the costs incurred as a foreign private issuer. In such event, the REIT LP would not be eligible to use foreign issuer forms and would be required to file periodic and current reports and registration statements on U.S. domestic issuer forms with the SEC, which are generally more detailed and extensive than the forms available to a foreign private issuer.

There is a potential for the limited partners to lose their limited liability status.

Limited partners may lose their limited liability in certain circumstances, including by taking part in the control of the REIT LP’s business. The principles of law in the various jurisdictions of Canada recognizing the limited liability of the limited partners of limited partnerships subsisting under the laws of one province, but carrying on business in another jurisdiction, have not been authoritatively established. If limited liability is lost, there is a risk that limited partners may be liable beyond their contribution and share of the REIT LP’s undistributed net income in the event of judgment on a claim in an amount exceeding the sum of the General Partner’s net assets and the REIT LP’s net assets. A transferee of a unit will become a limited partner and shall be subject to the obligations and entitled to the rights of limited partners under the A&R LP Agreement on the date on which the General Partner amends the REIT LP’s record of limited partners to reflect that the transferee is a limited partner.

48 -

We may not be able to maintain control of a target cannabis-related real estate business and/or asset after our Qualifying Transaction.

We may structure our Qualifying Transaction to acquire less than 100% of any real estate assets and/or businesses acquired. Even though we may own a majority interest in the target, our unitholders prior to the Qualifying Transaction may collectively own a minority interest in the post-Qualifying Transaction entity, depending on valuations ascribed to the target and us in the Qualifying Transaction. For example, we could pursue a transaction in which we issue a substantial number of new units in exchange for all of the outstanding capital of a target. In this case, even if we were to acquire a 100% interest in the target, as a result of the issuance of a substantial number of new units, our unitholders immediately prior to such transaction could own less than a majority of our outstanding units subsequent to such transaction. In addition, other minority unitholders may subsequently combine their holdings resulting in a single person or group obtaining a larger interest of the target cannabis-related real estate business and/or asset unitholdings than we initially acquired. Accordingly, this may make it more likely that we will not be able to maintain control of the target business(es) and/or asset(s). In the event that we structure our Qualifying Transaction to acquire less than 100% of any real estate assets and/or businesses acquired, specific securities regulatory requirements may apply to the Qualifying Transaction, including pursuant to National Policy 41-201 – Income Trusts and Other Indirect Offerings.

We may be unable to obtain additional financing to complete our Qualifying Transaction or to fund the operations and/or growth of a target cannabis-related real estate business and/or asset, which could compel us to restructure or abandon a particular Qualifying Transaction.

Although we believe that the net proceeds of our IPO, and the net proceeds of any loans we may incur from our Sponsors, as further described in the IPO Prospectus, will be sufficient to allow us to consummate our Qualifying Transaction, we have not yet initiated any substantive discussions or entered into a written or oral binding acquisition agreement with any prospective target cannabis-related real estate business and/or asset and thus we cannot ascertain the capital requirements for any particular transaction. If the net proceeds of our IPO prove to be insufficient, either because of the size of our Qualifying Transaction, the depletion of the available net proceeds in search of a target cannabis-related real estate business and/or asset, the obligation to redeem for cash a significant number of Restricted Voting Units from holders of Restricted Voting Units who elect redemption in connection with our Qualifying Transaction, or the terms of negotiated transactions to purchase units in connection with our Qualifying Transaction, we may be required to seek additional financing or to abandon the proposed Qualifying Transaction. Additional financing may not be available on acceptable terms, if at all. To the extent that additional financing proves to be unavailable when needed to consummate our Qualifying Transaction, we would be compelled to either restructure the transaction or abandon that particular Qualifying Transaction and seek an alternative target cannabis-related real estate business and/or asset candidate. In addition, even if we do not need additional financing to consummate our Qualifying Transaction, we may require such financing to fund the operations and/or growth of the target cannabis-related real estate business and/or asset. The failure to secure additional financing could have a material adverse effect on the continued development or growth of the target cannabis-related real estate business and/or asset. None of our Founders, the General Partner’s officers, directors or unitholders are required to provide any financing to us in connection with or after our Qualifying Transaction.

There may be tax consequences to our Qualifying Transaction that may adversely affect us.

While we expect to undertake any merger or acquisition so as to minimize taxes both to us and our unitholders, such Qualifying Transaction might not meet the statutory requirements of a tax-deferred rollover for the REIT LP or for unitholders. A Qualifying Transaction that does not qualify for a tax-deferred rollover could result in the imposition of substantial taxes, and may have other adverse tax consequences to us, the acquired business and/or assets and/or our unitholders.

The REIT LP will be deemed to be a non-resident person in respect of certain amounts paid or credited or deemed to be paid or credited to it.

The REIT LP will be deemed to be a non-resident person in respect of certain amounts paid or credited or deemed to be paid or credited to it by a person resident or deemed to be resident in Canada, including dividends or interest. Dividends or interest (other than interest not subject to Canadian federal withholding tax) paid or deemed to be paid by a person resident or deemed to be resident in Canada to the REIT LP will be subject to withholding tax under Part

49 -

XIII of the Tax Act at the rate of 25%. However, the CRA’s administrative practice in similar circumstances is to permit the rate of Canadian federal withholding tax applicable to such payments to a partnership to be computed by looking through the partnership and taking into account the residency of its partners (including partners who are resident in Canada) and any reduced rates of Canadian federal withholding tax that any non-resident partners may be entitled to under an applicable income tax treaty or convention, provided that the residency status and entitlement to the treaty benefits can be established. However, no assurances can be given that the CRA will apply its administrative practice to the REIT LP. Under the Treaty, in certain circumstances, a Canadian-resident payer is required to lookthrough fiscally transparent partnerships, such as the REIT LP, to the residency and Treaty entitlements of their partners and to take into account the reduced rates of Canadian federal withholding tax to which such partners may be entitled under the Treaty.

U.S. Tax Treatment of REIT LP.

There is a risk that the REIT LP does not meet a “qualifying income” exception to be treated as a partnership for U.S. federal income tax purposes, and is, thus, treated as a corporation for U.S. federal income tax purposes. Should the REIT LP be treated as a corporation for U.S. federal income tax purposes, the income tax consequences may differ significantly from those that would apply to a partnership that is a flow-through entity for U.S. federal income tax purposes and distributions to holders of Limited Partnership Units may be materially lower than if the REIT LP were treated as a partnership for U.S. federal income tax purposes.

Effectively Connected Income.

Under certain circumstances, following a Qualifying Transaction, it is possible that non-United States holders of Limited Partnership Units may be allocated income that is effectively connected with the conduct of a U.S. trade or business, including gain from the sale or other taxable disposition of United States Real Property Interests, and may be required to file a U.S. federal income tax return. Holders of Limited Partnership Units must obtain a U.S. taxpayer identification number in order to file a U.S. federal income tax return. In addition, U.S. withholding taxes may apply to sales or other taxable dispositions of Limited Partnership Units effected through brokers if certain U.S. Treasury Regulations are finalized in their current form, even if the Limited Partnership Units are regularly traded on an established securities market for U.S. federal income tax purposes.

Following our Qualifying Transaction, Limited Partnership Units may be United States Real Property Interests for U.S. federal income tax purposes. Non-United States holders of Limited Partnership Units that hold, actually or constructively, more than 5% of our Limited Partnership Units at any time during the 5-year period prior to disposing of Limited Partnership Units will not be eligible for the “regularly traded” exemption from the U.S. taxation of the disposition of United States Real Property that might otherwise be available.

A non-United States holder disposing of a United States Real Property Interest (a “ USRPI ”) is generally subject to United States tax on the gain recognized on the sale or other taxable disposition of such property and required to file a U.S. federal income tax return reporting this disposition. Subject to the exception described in the following sentence, following our Qualifying Transaction, a non-United States holder’s gain from a disposition of Limited Partnership Units may be treated as a gain from the disposition of a USRPI. So long as our Limited Partnership Units are regularly traded on an established securities market for U.S. federal income tax purposes, Limited Partnership Units held by a non-United States holder that does not hold, actually or constructively, more than 5% of our Limited Partnership Units at any time during the 5-year period ending on the date of disposition or such shorter period that the Limited Partnership Units were held (including the applicable portion of such period as occurs prior to our Qualifying Transaction) should not be treated as a USRPI and, accordingly, the sale or other taxable disposition of such nonUnited States holder’s Limited Partnership Units should not be subject to U.S. federal income taxes. However, there is no assurance that our Limited Partnership Units will be treated as regularly traded on an established securities market for U.S. federal income tax purposes.

50 -

Holders of Restricted Voting Units may not be afforded an opportunity to vote on our proposed Qualifying Transaction, which means we may complete our Qualifying Transaction even though a majority of our unitholders do not support such a transaction.

We do not intend to hold a unitholder vote to approve our Qualifying Transaction. Accordingly, we may consummate Qualifying Transaction even if holders of a majority of units do not approve of the Qualifying Transaction we consummate.

The only opportunity for holders of Restricted Voting Units to affect the investment decision regarding a potential Qualifying Transaction may be limited to the exercise of their right to redeem their Restricted Voting Units for cash.

Since the General Partner’s board of directors intends to complete a Qualifying Transaction without seeking approval from holders of the Restricted Voting Units, this means that the only opportunity for holders of the Restricted Voting Units to affect the investment decision regarding a potential Qualifying Transaction may be limited to exercising their redemption rights.

The ability of our unitholders to exercise redemption rights with respect to a large number of our Restricted Voting Units may not allow us to complete the most desirable Qualifying Transaction or optimize our capital structure.

At the time we enter into an agreement for our Qualifying Transaction, we will not know how many holders of our Restricted Voting Units may exercise their redemption rights, and therefore will need to structure the transaction based on our expectation as to the number of Restricted Voting Units that will be submitted for redemption. This consideration may limit our ability to complete the most desirable Qualifying Transaction available to us or optimize our capital structure.

Unitholders do not have all of the statutory rights normally associated with ownership of shares of a company.

Unitholders do not have all of the statutory rights normally associated with ownership of shares of a company including, for example, the right to bring “oppression” or “derivative” actions against the REIT LP. The units are not “deposits” within the meaning of the Canada Deposit Insurance Corporation Act and are not insured under the provisions of that Act or any other legislation. Furthermore, the REIT LP is not a trust company and, accordingly, is not registered under any trust and loan company legislation as the REIT LP does not carry on or intend to carry on the business of a trust company.

Risks Associated with Acquiring Real Estate Assets used in Cannabis Industries and/or those Closely Associated with Cannabis Industries

It is possible that some or all of our tenants will be start-up businesses and may be unable to pay rent with funds from operations or at all, which could adversely affect our operations or cash available to make distributions to our unitholders.

The success of our investments will be materially dependent on the financial stability of our tenants. It is possible that some or all of our tenants will be independent businesses operating in cannabis industries and/or those closely associated with cannabis about which there is generally little or no publicly available operating and financial information. In such event, we will rely on our management team to perform due diligence investigations of their tenants and their properties, operations and prospects. We may not learn all of the material information we need to know regarding these businesses through our investigations. As a result it is possible that we could enter into a saleleaseback arrangement with tenants or otherwise lease properties to tenants that ultimately are unable to pay rent to us, which could adversely impact our cash available for distributions.

It is possible that some or all of our tenants will be start-up businesses that have little or no revenue when they enter leasing arrangements with us and therefore, may be unable to pay rent with funds from operations. We expect that such tenants will make initial rent payments to us from proceeds from the sale of the property, in the case of saleleaseback transactions, or other cash on hand. In addition, in general, as start-up businesses, we expect such tenants

51 -

will be more vulnerable to adverse conditions resulting from federal, state and provincial regulations affecting their businesses or industries and may have limited access to traditional forms of financing.

Some of our tenants may have also been recently restructured using leverage acquired in a leveraged transaction or may otherwise be subject to significant debt obligations. Tenants that are subject to significant debt obligations may be unable to make their rent payments if there are adverse changes in their business plans or prospects, the regulatory environment in which they operate or in general economic conditions. Tenants that have experienced leveraged restructurings or acquisitions will generally have substantially greater debt and substantially lower net worth than they have prior to the leveraged transaction. In addition, the payment of rent and debt service may reduce the working capital available to leverage entities and prevent them from devoting the resources necessary to move from the startup phase of their business into actual operations and profitability. Furthermore, we may be unable to monitor and evaluate tenant credit quality on an on-going basis.

Any lease payment defaults by a tenant could adversely affect our cash flows and cause us to reduce the amount of distributions to unitholders. In the event of a default by a tenant, we may also experience delays in enforcing our rights as landlord and may incur substantial costs in protecting our investment and re-leasing our property as operators in cannabis industries and/or those closely associated with cannabis are generally subject to extensive federal, state or provincial licensing requirements. Furthermore, we will not operate any of the facilities that we purchase.

Our real estate portfolio may be concentrated in a limited number of properties, which may subject us to an increased risk of significant loss if any property declines in value or if we are unable to lease a property.

Our real estate portfolio may be concentrated in a limited number of properties. One consequence of a limited number of investments is that the aggregate returns we realize may be substantially adversely affected by the unfavorable performance of a small number of leases or a significant decline in the value of any single property. Lack of diversification will increase the potential that a single underperforming investment could have a material adverse effect on our cash flows and the price we could realize from the sale of our properties. We may also be subject to any adverse change in the political or regulatory climate in the jurisdictions where our properties are located that could adversely affect our properties and our ability to lease properties.

We will be subject to social, political and economic risks of doing business in the jurisdictions in which we may own property.

Circumstances and developments related to operations in the markets within which we operate that could negatively affect our business, financial condition, liquidity and results of operations include, but are not limited to, the following factors:

the responsibility of complying with multiple and likely conflicting federal, state or provincial laws, including with respect to cannabis industries and/or those closely associated with cannabis, licensing, banking and insurance;
difficulties and costs of staffing and managing operations;
unexpected changes in regulatory requirements and other laws;
potentially adverse tax consequences;
the impact of regional or state specific business cycles and economic instability; and
access to capital may be more restricted, or unavailable on favorable terms or at all in certain locations.
52 -

If our properties’ access to adequate water and power supplies is interrupted, it could harm our ability to lease the properties for cannabis cultivation and production, thereby adversely affecting our ability to generate returns on our properties.

In order to lease the properties for cannabis cultivation and production, these properties will require access to sufficient water and power to make them suitable for the cultivation and production of medical-use cannabis. Although we expect to acquire properties with sufficient access to water, should the need arise for additional wells from which to obtain water, we would be required to obtain permits prior to drilling such wells. Permits for drilling water wells are required by applicable regulations, and such permits may be difficult to obtain due to the limited supply of water in areas where we expect to acquire properties. Similarly, our properties may be subject to governmental regulations relating to the quality and disposition of rainwater runoff or other water to be used for irrigation. In such case, we could incur costs necessary in order to retain this water. If we are unable to obtain or maintain sufficient water supply for our properties, our ability to lease them for the cultivation and production of medical-use cannabis would be seriously impaired, which would have a material adverse impact on the value of our assets and our results of operations.

In addition, indoor cultivation of medical-use cannabis requires significant power for growing lights and heating, ventilation and air conditioning to remove the hot air generated by the growing lights. Any extended interruption of the power supply to our properties, particularly those using indoor cultivation methods, would likely harm our tenants’ crops, which could result in their inability to make lease payments to us for our properties. Any lease payment defaults by a tenant could adversely affect our cash flows and cause us to reduce the amount of distributions to unitholders.

Some of our tenants could be susceptible to bankruptcy, which would affect our ability to generate rents from them and therefore negatively affect our results of operations.

In addition to the risk of tenants being unable to make regular rent payments, certain of our tenants who may depend on debt and leverage could be especially susceptible to bankruptcy in the event that their cash flows are insufficient to satisfy their debt. Any bankruptcy of one of our tenants would result in a loss of lease payments to us, as well as an increase in our costs to carry the property.

Additionally, under applicable bankruptcy law, a tenant who is the subject of bankruptcy proceedings may have the option of continuing (“assuming”) or giving up (“rejecting”) any unexpired lease of non-residential real property. If a bankrupt tenant decides to give up (reject) a lease with us, any claim we might have for breach of the lease, excluding a claim against (a) collateral securing the lease, or (b) a guarantor guaranteeing lease obligations, could be treated as a general unsecured claim in the tenant’s bankruptcy case. Furthermore, any claim could be capped. In addition to the cap on our damages for breach of the lease, even if our claim is timely submitted to the bankruptcy court, there would be no guaranty that the tenant’s bankruptcy estate would have funds to satisfy the claims of general unsecured creditors. Finally, a bankruptcy court could re-characterize a net lease transaction as a disguised secured lending transaction. If that were to occur, we would not be treated as the owner of the property, but might have additional rights as a secured creditor. This would mean our claim in bankruptcy court could be limited to the amount we paid for the property, which could adversely impact our financial condition.

Our real estate investments may consist of primarily industrial properties suitable for cultivation and production of cannabis, which may be difficult to sell or re-lease upon tenant defaults or early lease terminations, either of which would adversely affect returns to unitholders.

While our business objectives consist of principally acquiring and deriving rental income from properties, we expect that at times we will deem it appropriate or desirable to sell or otherwise dispose of certain of the properties we acquire. Industrial properties may be relatively illiquid compared to other types of real estate and financial assets. This illiquidity could limit our ability to quickly dispose of properties in response to changes in regulatory, economic or other conditions. Therefore, our ability at any time to sell assets may be restricted and this lack of liquidity may limit our ability to make changes to our portfolio promptly, which could materially and adversely affect our financial performance. We cannot predict the various market conditions affecting the properties that we expect to acquire that will exist in the future. Due to the uncertainty of regulatory and market conditions which may affect the future disposition of the real estate assets we expect to acquire, we cannot assure you that we will be able to sell acquired assets at a profit in the future. Accordingly, the extent to which we will realize potential appreciation on the real estate investments we expect to acquire will depend upon regulatory and other market conditions.

53 -

Furthermore, we may be required to make expenditures to correct defects or to make improvements before a property can be sold and we cannot assure you that we will have funds available to correct such defects or to make such improvements. With these kinds of properties, if the current lease is terminated or not renewed, we may be required to make expenditures and rent concessions in order to lease the property to another tenant. In addition, in the event we are forced to sell or re-lease the property, we may have difficulty finding qualified purchasers who are willing to buy the property or tenants who are willing to lease the property. These and other limitations may affect our ability to sell or re-lease properties, which may adversely affect returns to our unitholders.

Liability for uninsured losses could adversely affect our financial condition.

While the terms of our leases with our tenants generally will require that they carry property and casualty insurance, losses from disaster-type occurrences, such as earthquakes, floods and weather-related disasters, may be either uninsurable or not insurable on economically viable terms. Should an uninsured loss occur, we could lose our capital investment or anticipated profits and cash flows from one or more properties.

Potential liability for environmental matters could adversely affect our financial condition.

We intend to purchase real estate and will be subject to the risk of liabilities under federal, state, provincial and/or local environmental laws. Some of these laws could subject us to:

responsibility and liability for the cost of removal or remediation of hazardous substances released on our properties, generally without regard to our knowledge of or responsibility for the presence of the contaminants;
liability for the costs of removal or remediation of hazardous substances at disposal facilities for persons who arrange for the disposal or treatment of these substances; and
potential liability for claims by third parties for damages resulting from environmental contaminants.

We seek to attempt to include provisions in our leases making tenants responsible for all environmental liabilities and for compliance with environmental regulations, and we will seek to require tenants to reimburse us for damages or costs for which we have been found liable. However, these provisions will not eliminate our statutory liability or preclude third party claims against us. Even if we were to have a legal claim against a tenant to enable us to recover any amounts we are required to pay, there are no assurances that we would be able to collect any money from the tenant. Our costs of investigation, remediation or removal of hazardous substances may be substantial. In addition, the presence of hazardous substances on one of our properties, or the failure to properly remediate a contaminated property, could adversely affect our ability to sell or lease the property or to borrow using the property as collateral. Additionally, we could become subject to new, stricter environmental regulations, which could diminish the utility of our properties and have a material adverse impact on our results of operations.

Contingent or unknown liabilities could materially and adversely affect our business, financial condition, liquidity and results of operations.

We may in the future acquire properties, subject to liabilities and without any recourse, or with only limited recourse, with respect to unknown liabilities. As a result, if a claim were asserted against us based on ownership of any of these properties, we may have to pay substantial amounts to defend or settle the claim. If the magnitude of such unknown liabilities is high, individually or in the aggregate, our business, financial condition, liquidity and results of operations would be materially and adversely affected.

We may own properties subject to ground leases that expose us to the loss of such properties upon breach or termination of the ground leases.

A ground lease agreement permits a tenant to develop and/or operate a land parcel (property) during the lease period, after which the land parcel and all improvements revert back to the property owner. Under a ground lease, property improvements are owned by the property owner unless an exception is created and all relevant taxes incurred during the lease period are paid for by the tenant. Ground leases typically have a long duration generally ranging from 50 to

54 -

99 years with additional extension options. As a lessee under a ground lease, we are exposed to the possibility of losing the property upon termination, or an earlier breach by us, of the ground lease, which may have a material adverse effect on our business, financial condition and results of operations, our ability to make distributions to our unitholders and the trading price of our securities.

Our involvement in cannabis industries and/or those closely associated with cannabis may make it difficult for us to obtain the various insurances that are desired to operate our business, which may expose us to additional risk and financial liabilities.

Insurance that is otherwise readily available, such as workers’ compensation, general liability, and directors’ and officers’ insurance, may be more difficult for us to find and more expensive, because we lease our properties to companies that operate in cannabis industries and/or those closely associated with cannabis. There are no guarantees that we will be able to find such insurances, or that the cost will be affordable to us. If we are forced to go without such insurances, it may prevent us from entering into certain business sectors, may inhibit our growth, and may expose us to additional risk and financial liabilities.

Tenants operating in cannabis industries and/or those closely associated with cannabis may be subject to significant regulatory risks, and new laws that are adverse to the business of our tenants may be enacted.

We are targeting for acquisition, properties that are owned by entities operating in cannabis industries and/or those closely associated with cannabis. Laws applicable to such entities may be amended or repealed, or new laws may be enacted in the future which may negatively impact such operations. If our tenants involved in operating in cannabis industries and/or those closely associated with cannabis are forced to close their operations, we would need to replace those tenants with tenants who are not engaged in such industries, who may pay lower rents. Moreover, any changes in applicable laws that negatively impacts entities operating in cannabis industries and/or those closely associated with cannabis would likely result in a high vacancy rate for the kinds of properties that we seek to acquire, which would depress our lease rates and property values. In addition, we would realize an economic loss on any and all improvements made to properties that were specific to operating in cannabis industries and/or those closely associated with cannabis.

Certain events or developments in the cannabis industry more generally may impact the REIT LP’s reputation.

Damage to an issuer’s reputation can be the result of the actual or perceived occurrence of any number of events, and could include any negative publicity, whether true or not. Cannabis has often been associated with various other narcotics, violence and criminal activities, the risk of which is that the business might attract negative publicity if it owns cannabis-related real estate businesses and/or assets. There is also risk that the action(s) of other participants, companies and service providers in the cannabis industry may negatively affect the reputation of the industry as a whole and thereby negatively impact the reputation of an issuer. The increased usage of social media and other webbased tools used to generate, publish and discuss user-generated content and to connect with other users has made it increasingly easier for individuals and groups to communicate and share opinions and views in regards to an issuer and its activities, whether true or not and the cannabis industry in general, whether true or not. The REIT LP does not ultimately have direct control over how it or the cannabis industry is perceived by others. Reputation loss may result in decreased investor confidence, increased challenges in developing and maintaining community relations and an impediment to the REIT LP’s overall ability to advance its business strategy and realize on its growth prospects.

Third parties with whom an issuer may do business may perceive themselves as being exposed to reputational risk as a result of their relationship with the REIT LP.

The parties with which the REIT LP may do business may perceive that they are exposed to reputational risk as a result of the REIT LP’s cannabis-related real estate activities. Failure to establish or maintain business relationships due to reputational risk arising in connection with the nature of the REIT LP’s cannabis-related real estate activities could have a material adverse effect on the REIT LP’s business, assets, financial condition and results of operations.

55 -

While cannabis is legal in many U.S. state jurisdictions, it continues to be a controlled substance under the United States federal CSA.

Unlike in Canada, which has federal legislation uniformly governing the cultivation, distribution, sale and possession of cannabis under the Cannabis Regulations and the Cannabis Act , cannabis is largely regulated at the state level in the United States. To the REIT LP’s knowledge, there are to date a total of 47 states, plus the District of Columbia, Puerto Rico and Guam that have legalized cannabis in some form. Notwithstanding the permissive regulatory environment of medical cannabis at the state level, cannabis continues to be categorized as a controlled substance under the CSA and as such, violates federal law in the United States.

The United States Congress has passed appropriations bills each of the last three years that have not appropriated funds for prosecution of cannabis offenses of individuals who are in compliance with state medical cannabis laws. American courts have construed these appropriations bills to prevent the U.S. federal government from prosecuting individuals when those individuals comply with state law. However, because this conduct continues to violate U.S. federal law, American courts have observed that should Congress at any time choose to appropriate funds to fully prosecute the CSA, any individual or business – even those that have fully complied with state law – could be prosecuted for violations of U.S. federal law. And if Congress restores funding, the government will have the authority to prosecute individuals for violations of the law before it lacked funding under the CSA’s five-year statute of limitations.

Violations of any U.S. federal laws and regulations could result in significant fines, penalties, administrative sanctions, convictions or settlements arising from civil proceedings conducted by either the U.S. federal government or private citizens, or criminal charges, including, but not limited to, disgorgement of profits, cessation of business activities or divestiture. This could have a material adverse effect on an issuer, including its reputation and ability to manage real estate assets in the cannabis industry, the listing of its securities on various stock exchanges, its financial position, operating results, profitability or liquidity or the market price of its publicly traded units. In addition, it is difficult to estimate the time or resources that would be needed for the investigation of any such matters or its final resolution because, in part, the time and resources that may be needed are dependent on the nature and extent of any information requested by the applicable authorities involved, and such time or resources could be substantial.

The approach to the enforcement of cannabis laws may be subject to change or may not proceed as previously outlined.

As a result of the conflicting views between state legislatures and the federal government regarding cannabis, investments in cannabis businesses in the United States are subject to inconsistent legislation and regulation. The response to this inconsistency was addressed in August 2013 when then Deputy Attorney General, James Cole, authored a memorandum (the “ Cole Memorandum ”) addressed to all United States district attorneys acknowledging that notwithstanding the designation of cannabis as a controlled substance at the federal level in the United States, several U.S. states have enacted laws relating to cannabis for medical purposes.

The Cole Memorandum outlined certain priorities for the Department of Justice relating to the prosecution of cannabis offenses. In particular, the Cole Memorandum noted that in jurisdictions that have enacted laws legalizing cannabis in some form and that have also implemented strong and effective regulatory and enforcement systems to control the cultivation, distribution, sale and possession of cannabis, conduct in compliance with those laws and regulations is less likely to be a priority at the federal level. Notably, however, the Department of Justice has never provided specific guidelines for what regulatory and enforcement systems it deems sufficient under the Cole Memorandum standard.

In light of limited investigative and prosecutorial resources, the Cole Memorandum concluded that the Department of Justice should be focused on addressing only the most significant threats related to cannabis. States where medical cannabis had been legalized were not characterized as a high priority. In March 2017, newly appointed Attorney General Jeff Sessions again noted limited federal resources and acknowledged that much of the Cole Memorandum had merit; however, he disagreed that it had been implemented effectively and, on January 4, 2018, Attorney General Jeff Sessions authored a memorandum (the “ Sessions Memorandum ”), which rescinded the Cole Memorandum. The Sessions Memorandum rescinded previous nationwide guidance specific to the prosecutorial authority of United States attorneys relative to cannabis enforcement on the basis that they are unnecessary, given the well-established principles governing federal prosecution that are already in place. Those principals are included in chapter 9.27.000 of the United States Attorneys’ Manual and require federal prosecutors deciding which cases to prosecute to weigh all relevant

56 -

considerations, including federal law enforcement priorities set by the Attorney General, the seriousness of the crime, the deterrent effect of criminal prosecution, and the cumulative impact of particular crimes on the community.

As a result of the Sessions Memorandum, federal prosecutors will now be free to utilize their prosecutorial discretion to decide whether to prosecute cannabis activities despite the existence of state-level laws that may be inconsistent with federal prohibitions. No direction was given to federal prosecutors in the Sessions Memorandum as to the priority they should ascribe to such cannabis activities, and resultantly it is uncertain how active federal prosecutors will be in relation to such activities. Furthermore, the Sessions Memorandum did not discuss the treatment of medical cannabis by federal prosecutors.

Former U.S. Attorney General Jeff Sessions resigned on November 7, 2018 and was replaced by Matthew Whitaker as interim Attorney General. On February 14, 2019, William Barr was sworn in as Attorney General. It is unclear what position the new Attorney General will take on the enforcement of federal laws with regard to the U.S. cannabis industry. However, in a written response to questions U.S. Senator Cory Booker made as a nominee, Attorney General Barr stated “I do not intend to go after parties who have complied with state law in reliance on the Cole Memorandum.”

Additionally, the Rohrbacher Farr Amendment has been adopted by Congress in successive budgets since 2015. The Amendment prohibits the Department of Justice from spending funds appropriated by Congress to enforce the tenets of the CSA against the medical cannabis industry in states that have legalized such activity. This Amendment has historically been passed as an amendment to omnibus appropriations bills, which by their nature expire at the end of a fiscal year or other defined term. The Rohrbacher Farr Amendment (now known colloquially as the “Joyce Leahy Amendment” after its most recent sponsors) was included in the Consolidated Appropriations Act of 2019, which was signed by President Trump on February 14, 2019 and funds the departments of the federal government through the fiscal year ending September 30, 2019. In signing the Act, President Trump issued a signing statement noting that the Act “provides that the Department of Justice may not use any funds to prevent implementation of medical marijuana laws by various States and territories,” and further stating “I will treat this provision consistent with the President’s constitutional responsibility to faithfully execute the laws of the United States.” While the signing statement can fairly be read to mean that the executive branch intends to enforce the Controlled Substances Act and other federal laws prohibiting the sale and possession of medical marijuana, the president did issue a similar signing statement in 2017 and no federal enforcement actions followed.

Any such proceedings could have a material adverse effect on the REIT LP’s business, assets, revenues, operating results and financial condition as well as the REIT LP’s reputation as the REIT LP will have cannabis-related real estate businesses and/or assets, even if such proceedings were concluded successfully in favour of the issuer. In the extreme case, such proceedings could ultimately involve the prosecution of key executives of the issuer or the seizure of corporate assets.

Any investments or acquisitions by the REIT LP may be subject to applicable anti-money laundering laws and regulations.

If the REIT LP were to have tenants operating in cannabis industries and/or those closely associated with cannabis, the REIT LP could be subject to a variety of laws and regulations domestically and in the United States that involve money laundering, financial recordkeeping and proceeds of crime, including the Currency and Foreign Transactions Reporting Act of 1970 (commonly known as the Bank Secrecy Act), as amended by Title III of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act), the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada), as amended and the rules and regulations thereunder, the Criminal Code (Canada) and any related or similar rules, regulations or guidelines, issued, administered or enforced by governmental authorities in the United States and Canada.

In February 2014, the Financial Crimes Enforcement Network of the Treasury Department issued a memorandum providing instructions to banks seeking to provide services to cannabis-related businesses (the “ FCEN Memorandum ”). The FCEN Memorandum states that in some circumstances, it is permissible for banks to provide services to cannabis-related businesses without risking prosecution for violation of U.S. federal money laundering laws. It refers to supplementary guidance that Deputy Attorney General Cole issued to U.S. federal prosecutors relating to the prosecution of U.S. money laundering offenses predicated on cannabis-related violations of the CSA. It is unclear at this time whether the current administration will follow the guidelines of the FCEN Memorandum.

57 -

In the event that the REIT LP’s investments, or any proceeds thereof, any distributions or distributions therefrom, or any profits or revenues accruing from investments in cannabis-related real estate businesses and/or assets in the United States were found to be in violation of money laundering legislation or otherwise, such transactions may be viewed as proceeds of crime under one or more of the statutes noted above or any other applicable legislation. This could restrict or otherwise jeopardize the ability of the REIT LP to declare or pay distributions, effect other distributions or subsequently repatriate such funds back to Canada.

Any investments or acquisitions by the REIT LP in the United States may be subject to heightened scrutiny.

Any future cannabis-related real estate investments or acquisitions by the REIT LP in the United States may become the subject of heightened scrutiny by regulators, stock exchanges and other authorities in Canada. As a result, the REIT LP may be subject to significant direct and indirect interaction with public officials. There can be no assurance that this heightened scrutiny will not in turn lead to the imposition of certain restrictions on the REIT LP’s ability to invest in the United States or any other jurisdiction.

To the extent we acquire cannabis-related real estate businesses and/or assets in the United States in connection with our Qualifying Transaction, we may be subject to measures that would restrict the ability of our investors to trade our securities.

As stated in the IPO Prospectus, subject to certain exceptions, registration of the Class A Restricted Voting Units and transfers thereof held through CDS, or its nominee, will be made electronically through the NCI system of CDS. Class A Restricted Voting Units registered in the name of CDS or its nominee were deposited electronically with CDS on an NCI basis on the IPO Closing.

CDS provides and facilitates reliable, cost-effective depository, clearing, regulatory and other information services to securities market participants. Among other things, CDS is used in connection with clearing and settling eligible Canadian exchange-traded and over-the-counter equity, debt and money market transactions, settling Canadian exchange-traded derivatives, broker-to-broker trade matching, depository and custodial services, ledger-keeping as well as real-time messaging and flexible interfaces to and from CDS and its participants.

Given the heightened risk profile associated with cannabis in the United States, CDS may implement procedures or protocols that would prohibit or significantly curtail the ability of CDS to settle trades for cannabis entities that have cannabis businesses or assets in the United States. It is not certain whether CDS will decide to enact such measures, nor whether it has the authority to do so unilaterally. Nevertheless, on February 8, 2018, following discussions with the Canadian Securities Administrators and recognized Canadian securities exchanges, the TMX Group announced the signing of a Memorandum of Understanding (the “ TMX MOU ”) with the Exchange, the Canadian Securities Exchange, the TSX and the TSX Venture Exchange. The TMX MOU outlines the parties’ understanding of Canada’s regulatory framework applicable to the rules, procedures, and regulatory oversight of the exchanges and CDS as it relates to issuers with cannabis-related activities in the United States. The TMX MOU confirms, with respect to the clearing of listed securities, that CDS relies on the exchanges to review the conduct of listed issuers. As a result, there is no CDS ban on the clearing of securities of issuers with cannabis-related activities in the United States. However, there can be no guarantee that this approach to regulation will continue in the future. If such a ban were to be implemented, it would have a material adverse effect on the ability of holders of Class A Restricted Voting Units to make and settle trades. In particular, the Class A Restricted Voting Units would become highly illiquid as until an alternative was implemented, investors would have no ability to effect a trade of the Class A Restricted Voting Units through the facilities of a stock exchange.

To the extent we acquire cannabis-related real estate businesses and/or assets in the United States in connection with our Qualifying Transaction, U.S. border officials could deny entry into the U.S. to employees of, or investors in companies with cannabis operations in the United States.

Since cannabis remains illegal under U.S. federal law, those employed at or investing in legal and licensed medical and recreational cannabis companies in other jurisdictions could face detention, denial of entry or lifetime bans from the U.S. for their business associations with U.S. cannabis businesses, including U.S. cannabis-related real estate businesses and/or assets. Entry happens at the sole discretion of the U.S. Customs and Border Protection officers on duty, and these officers have wide latitude to ask questions to determine the admissibility of a foreign national. The Government of Canada has started warning travelers on its website that previous use of cannabis, or any substance

58 -

prohibited by U.S. federal laws, could mean denial of entry to the U.S. In addition, business or financial involvement in the legal cannabis industry in the United States, including U.S. cannabis-related real estate businesses and/or assets could also be reason enough for U.S. border guards to deny entry. On September 21, 2018, U.S. Customs and Border Protection released a statement outlining its current position with respect to enforcement of the laws of the United States. It stated that U.S. Customs and Border Protection enforcement of United States laws regarding controlled substances has not changed and because cannabis continues to be a controlled substance under United States law, working in or facilitating the proliferation of the legal cannabis industry in U.S. states where it is deemed legal may affect admissibility to the U.S. As a result, U.S. Customs and Border Protection has affirmed that, a Canadian citizen coming to the U.S. for reasons related to the cannabis industry may be deemed inadmissible.

To the extent we acquire cannabis-related real estate businesses and/or assets in the United States in connection with our Qualifying Transaction, there may be difficulty accessing the services of banks, which may make it difficult for us to operate our business.

Financial transactions involving proceeds generated by cannabis-related conduct can form the basis for prosecution under the federal money laundering statutes, unlicensed money transmitter statute and the Bank Secrecy Act . Previous guidance issued by the FinCEN, a division of the U.S. Department of the Treasury, clarifies how financial institutions can provide services to cannabis-related businesses consistent with their obligations under the Bank Secrecy Act . Prior to the DOJ’s announcement in January 2018 of the rescission of the Cole Memorandum and related memoranda, supplemental guidance from the DOJ directed federal prosecutors to consider the federal enforcement priorities enumerated in the Cole Memorandum when determining whether to charge institutions or individuals with any of the financial crimes described above based upon cannabis-related activity. It is unclear what impact the rescission of the Cole Memorandum will have, but federal prosecutors may increase enforcement activities against institutions or individuals that are conducting financial transactions related to cannabis activities. The increased uncertainty surrounding financial transactions related to cannabis activities may also result in financial institutions discontinuing services to the cannabis industry.

Consequently, those businesses involved in the regulated medical-use cannabis industry continue to encounter difficulty establishing banking relationships, which may increase over time. The inability to maintain a bank account would make it difficult for any company to operate its business, increase its operating costs, and pose additional operational, logistical and security challenges and could result in its inability to implement its business plan.

To the extent we acquire cannabis-related real estate businesses and/or assets in the United States in connection with our Qualifying Transaction, there may be a restriction on the deduction of certain expenses.

Section 280E of the Code provides that, with respect to any taxpayer, no deduction or credit is allowed for expenses incurred during a taxable year “in carrying on any trade or business if such trade or business (or the activities which comprise such trade or business) consists of trafficking in controlled substances (within the meaning of Schedule I and II of U.S. Controlled Substance Act of 1970 (“ CSA ”)) which is prohibited by federal law or the law of any State in which such trade or business is conducted.” Because cannabis is a Schedule I controlled substance, Section 280E currently applies to businesses operating in the cannabis industry, irrespective of whether such businesses are licensed and operating in accordance with applicable state laws. If we acquire cannabis-related real estate business and/or assets in the United States, we will lease our properties to tenants who will engage in such activities, and therefore our tenants will likely be subject to Section 280E. If the Internal Revenue Service were to take the position that, through our rental agreements with our cannabis tenants, we are primarily or vicariously liable under federal law for “trafficking” a Schedule I substance (cannabis) under Section 280E of the Code or for any other violations of the CSA, the Service may seek to apply the provisions of Section 280E to us and disallow certain tax deductions, including for employee salaries, depreciation or interest expense. The application of Code Section 280E to us may adversely affect our profitability and, in fact, may cause us to operate at a loss. While recent legislative proposals, if enacted into law, could eliminate or diminish the application of Code Section 280E to cannabis businesses, the enactment of any such law is uncertain. Furthermore, if we hold any U.S. real estate assets through a real estate investment trust, we may be unable to meet the distribution requirements applicable to real estate investment trusts under the Code, which could cause us to incur U.S. federal income tax and fail to qualify as a real estate investment trust. Because we will not be engaged in the purchase and/or sale of a controlled substance, we do not believe that we will be subject to the disallowance provisions of Section 280E, and neither we nor our tax advisors are aware of any tax court cases or guidance from the Internal Revenue Service in which a taxpayer not engaged in the purchase or sale of a controlled

59 -

substance was disallowed deductions under Section 280E. However, there is no assurance that the Internal Revenue Service will not take such a position either currently or in the future.

To the extent we acquire cannabis-related real estate businesses or assets in the United States in connection with our Qualifying Transaction, there may be a lack of access to U.S. bankruptcy protections.

Because the use of cannabis is illegal under federal law, many courts have denied cannabis businesses bankruptcy protections, thus making it very difficult for lenders to recoup their investments in the cannabis industry in the event of a bankruptcy. If we or a cannabis-related real estate business and/or asset that we acquire as part of a Qualifying Transaction or a tenant of ours were to experience a bankruptcy, there is no guarantee that U.S. federal bankruptcy protections would be available, which could have a material adverse effect on the financial condition and prospects of such business and on the rights of lenders and securityholders.

To the extent we acquire cannabis-related real estate businesses or assets in the United States in connection with our Qualifying Transaction, there may be difficulty with the enforceability of contracts.

It is a fundamental principle of law that a contract will not be enforced if it involves a violation of law or public policy. Because cannabis remains illegal in the United States at a federal level, judges in multiple U.S. states have on a number of occasions refused to enforce contracts for the repayment of money when the loan was used in connection with activities that violate federal law, even if there is no violation of state law. There could thus be doubt and uncertainty that, following our Qualifying Transaction, we may be able to legally enforce contracts (including leases) we enter into if necessary, which means there can be no assurance that there will be a remedy for breach of contract, which would have a material adverse effect on our business, assets, revenues, operating results, financial condition and prospects.

The ability to grow any real estate business with ties to cannabis operations in the United States depends on state laws pertaining to the cannabis industry.

Continued development of the medical and/or recreational-use cannabis industry depends upon continued legislative authorization of cannabis at the state level. The status quo of, or progress in, the regulated medical and/or recreationaluse cannabis industry is not assured and any number of factors could slow or halt further progress in this area. While there may be ample public support for legislative action permitting the manufacture and use of cannabis, numerous factors impact the legislative process. For example, many states that voted to legalize medical and/or adult-use cannabis have seen significant delays in the drafting and implementation of industry regulations and issuance of licenses. In addition, burdensome regulation at the state level could slow or stop further development of the medical and/or recreational-use cannabis industry, such as limiting the medical conditions for which medical cannabis can be recommended by physicians for treatment, restricting the form in which medical cannabis can be consumed, imposing significant registration requirements on physicians and patients or imposing significant taxes on the growth, processing and/or retail sales of cannabis, which could have the impact of dampening growth for cannabis-related real estate businesses and/or assets and making it difficult for cannabis-related real estate businesses and/or assets to operate profitably in those states. Any one of these factors could slow or halt additional legislative authorization of medical and/or recreational-use cannabis, which could harm business prospects.

Risks Associated with Acquiring and Operating a Business Outside of Canada or the United States

If we acquire assets and/or businesses located outside of Canada or the United States, we could be subject to a variety of additional risks that may negatively impact our operations.

We are not limited to the acquisition of cannabis-related real estate businesses and/or assets or to a particular geographic region and may acquire other classes of real estate assets and/or non-real estate assets or businesses for purposes of completing our Qualifying Transaction. If we effect our Qualifying Transaction with an entity or assets located or operated outside of Canada or the United States, we could be subject to any special considerations or risks associated with companies operating in the target business’ home jurisdiction, including any of the following:

rules and regulations regarding currency redemption;
60 -
complex corporate withholding taxes on individuals;
laws governing the manner in which future transactions may be effected;
exchange listing and/or delisting requirements;
tariffs and trade barriers;
regulations related to customs and import/export matters;
longer payment cycles;
tax issues, such as tax law changes and variations in tax laws as compared to Canada;
currency fluctuations and exchange controls;
rates of inflation;
challenges in collecting accounts receivable;
cultural and language differences;
employment regulations;
crime, strikes, riots, civil disturbances, terrorist attacks and wars; and
deterioration of political relations with Canada or other governments or sanctions imposed by Canada or other governments.

We may also be subject to currency exchange risks in connection with any Qualifying Transaction. We may not be able to adequately address these additional risks. If we were unable to do so, our operations of the post-Qualifying Transaction business might suffer.

Because of the costs and difficulties inherent in managing cross-border business operations, our results of operations may be negatively impacted.

Managing a business, operations, personnel or assets in another country is challenging and costly. Any management that the General Partner may have (whether based abroad or in Canada) may be inexperienced in cross-border business practices and unaware of significant differences in accounting rules, legal regimes and labour practices. Even with a seasoned and experienced management team, the costs and difficulties inherent in managing cross-border business operations, personnel and assets can be significant (and much higher than in a purely domestic business) and may negatively impact the REIT LP.

If social unrest, acts of terrorism, regime changes, changes in laws and regulations, political upheaval, or policy changes or enactments occur in a country in which we may operate after we effect our Qualifying Transaction, it may result in a negative impact on our business.

Political events in another country may significantly affect our business, assets or operations. Social unrest, acts of terrorism, regime changes, changes in laws and regulations, political upheaval, and policy changes or enactments could negatively impact our business and/or assets in a particular country.

61 -

Many countries have difficult and unpredictable legal systems and underdeveloped laws and regulations that are unclear and subject to corruption and inexperience, which may adversely impact our results of operations and financial condition.

Our ability to seek and enforce legal protections, including with respect to intellectual property and other property rights, or to defend ourselves with regard to legal actions taken against us in a given country, may be difficult or impossible, which could adversely impact us.

Rules and regulations in many countries are often ambiguous or open to differing interpretations by responsible individuals and agencies at the municipal, state, provincial, regional and federal levels. The attitudes and actions of such individuals and agencies are often difficult to predict and can be inconsistent. Delay with respect to the enforcement of particular rules and regulations, including those relating to customs, tax, environment and labour, could cause serious disruptions to operations abroad and negatively impact us.

After our Qualifying Transaction, substantially all of our assets may be located in a foreign country and substantially all of our revenue may be derived from our operations in such country. Accordingly, our results of operations and prospects will be subject, to a significant extent, to the economic, political and legal policies, developments and conditions and the tax laws in the country in which we operate.

The economic, political and social conditions, as well as government policies and tax laws, of the country in which our operations are located could affect our real estate business and/or assets. If in the future such country’s economy experiences a downturn or grows at a slower rate than expected, there may be less demand for spending in certain industries. A decrease in demand for spending in certain industries could materially and adversely affect our ability to find an attractive target cannabis-related real estate business and/or asset with which to consummate our Qualifying Transaction and if we effect our Qualifying Transaction, the ability of that target cannabis-related real estate business and/or asset to become profitable.

In the event we acquire a non-Canadian target cannabis-related real estate business and/or asset, or a Canadian target cannabis-related real estate business and/or asset with material non-Canadian operations, some or all of our net income (including gain realized on a sale of the acquired target) may be subject to taxation (including income and withholding taxation) in the target cannabis-related real estate business and/or asset’s home jurisdiction. The resulting rate of taxation on such income may be materially higher than would have been applicable if such income had been earned by the REIT LP in Canada from Canadian operations or assets.

Currency policies may cause a business’ ability to succeed in the international markets to be diminished.

In the event we acquire a non-Canadian target cannabis-related real estate business and/or asset, or a Canadian target cannabis-related real estate business and/or asset with material non-Canadian operations, some or all of our revenues and income would likely be received in a foreign currency, and the dollar equivalent of our net assets and distributions, if any, could be adversely affected by reductions in the value of the local currency. The value of the currencies in our target regions fluctuate and are affected by, among other things, changes in political and economic conditions. Any change in the relative value of such currency against our reporting currency may affect the attractiveness of any target cannabis-related real estate business and/or asset or, following the closing of our Qualifying Transaction, our financial condition and results of operations. Additionally, if a currency appreciates in value against the Canadian dollar prior to the closing of our Qualifying Transaction, the cost of a target cannabis-related real estate business and/or asset as measured in dollars will increase, which may make it less likely that we are able to consummate such transaction.

The opportunity of holders of Class A Restricted Voting Units to affect the investment decision regarding a potential Qualifying Transaction may be limited to their exercise of the right to redeem their Class A Restricted Voting Units for cash.

Since the General Partner’s board of directors will not be seeking unitholder approval in connection with a Qualifying Transaction, holders of Restricted Voting Units will not have the right or opportunity to vote on the Qualifying Transaction. Accordingly, you will be relying on the judgment of the General Partner’s management and board of directors and your only opportunity to affect the investment decision regarding a potential Qualifying Transaction may be limited to exercising the redemption rights attaching to the Class A Restricted Voting Units.

62 -

Risks associated with the contractual right of action.

The contractual right of action expected to be provided at the time of a Qualifying Transaction could expose the REIT LP to one or more actions for rescission or damages, and costs, following a Qualifying Transaction if the applicable prospectus contains or is alleged to have contained a misrepresentation. In addition, as the REIT LP will indemnify the other parties granting such rights, it could suffer additional expenses. The REIT LP may seek to mitigate its exposure through insurance. These contractual rights could potentially have a material adverse effect on the REIT LP.

AUDITORS, TRANSFER AGENT, RIGHTS AGENT AND ESCROW AGENT

Our auditors, Deloitte LLP, Chartered Professional Accountants, Licensed Public Accountants, were first appointed on December 6, 2019. Deloitte LLP is independent of the REIT LP within the meaning of the Rules of Professional Conduct of the Chartered Professional Accountants of Ontario.

Olympia Trust Company, at its principal offices in Calgary, Alberta is the transfer agent and registrar for our Class A Restricted Voting Units and Restricted Voting Units and is the Rights Agent for our Rights under the Rights Agreement.

Olympia Trust Company, at its principal offices in Calgary, Alberta is the Escrow Agent.

PROMOTER

Our Sponsors are each considered a promoter of the REIT LP within the meaning of applicable securities legislation.

As of the date of this AIF, our Sponsors hold or are deemed to hold approximately 54,962 Proportionate Voting Units and 524,500 Class B Units (comprising 5,245 Proportionate Voting Units and 524,500 Rights), representing 21% of our issued and outstanding units (including all Restricted Voting Units and Proportionate Voting Units on an asconverted basis to Restricted Voting Units). Our Sponsors do not currently own any Class A Restricted Voting Units.

The REIT LP provides a payment of $10,000 per month to Subversive Sponsor for the utilization of office space, utilities and administrative support. The REIT LP further reimburses Subversive Sponsor for any out-of-pocket expenses incurred by directors, officers and consultants of the REIT LP which are paid by Subversive Sponsor relating to certain activities on the REIT LP’s behalf, including identifying and negotiating a Qualifying Transaction.

LEGAL PROCEEDINGS AND REGULATORY ACTIONS

Legal Proceedings

To the knowledge of the REIT LP there are no material legal proceedings to which the REIT LP is a party or to which its property is subject, nor were there any such proceedings during fiscal year 2019, and, to the REIT LP’s knowledge, no such proceedings are contemplated.

Regulatory Actions

We are not aware of any penalties or sanctions imposed by a court or securities regulatory authority or other regulatory body against us, nor have we entered into any settlement agreements before a court or with a securities regulatory authority.

MATERIAL CONTRACTS

The following are the only material contracts of the REIT LP (other than certain agreements entered into in the ordinary course of business):

(a) the A&R LP Agreement;
(b) the Voting Agreement;
63 -
(c) the Underwriting Agreement;
(d) the Relinquishment Agreement;
(e) the Exchange Agreement and Undertaking;
(f) the Make Whole Agreement and Undertaking;
(g) the Escrow Agreement; and
(h) the Rights Agreement.

Copies of these agreements are available for inspection at our offices, during ordinary business hours and are available on SEDAR at www.sedar.com.

ADDITIONAL INFORMATION

Additional information relating to the REIT LP may be found on SEDAR at www.sedar.com. Additional financial information is provided in our audited financial statements and Management’s Discussion & Analysis for the period ended December 31, 2019.

APPENDIX A

CHARTER OF THE AUDIT COMMITTEE OF SUBVERSIVE REAL ESTATE ACQUISITION REIT (GP) INC.

SECTION 1. PURPOSE

The audit committee (the “ Audit Committee ”) is a committee of the board of directors (the “ Board ”) of Subversive Real Estate Acquisition REIT (GP) Inc. (the “ General Partner ”), the general partner of Subversive Real Estate Acquisition REIT LP (the “ REIT LP ”). The primary function of the Audit Committee is to assist the directors of the General Partner in fulfilling their applicable roles by:

(a) recommending to the Board the appointment and compensation of the REIT LP’s external auditor;
(b) overseeing the work of the external auditor, including the resolution of disagreements between the external auditor and management;
(c) pre-approving all non-audit services (or delegating such pre-approval if and to the extent permitted by law) to be provided to the REIT LP by the REIT LP’s external auditor;
(d) satisfying themselves that adequate procedures are in place for the review of the REIT LP’s public disclosure of financial information, other than those described in (g) below, extracted or derived from its financial statements, including periodically assessing the adequacy of such procedures;
(e) establishing procedures for the receipt, retention and treatment of complaints received by the REIT LP regarding accounting, internal controls or auditing matters, and for the confidential, anonymous submission by employees of the REIT LP of concerns regarding questionable accounting or auditing matters;
(f) reviewing and approving any proposed hiring of current or former partner or employee of the current and former auditor of the REIT LP; and
(g) reviewing and approving the annual and interim financial statements, related Management Discussion and Analysis (“ MD&A ”) and other financial information provided by the REIT LP to any governmental body or the public.

The Audit Committee should primarily fulfill these roles by carrying out the activities enumerated in this Charter. However, it is not the duty of the Audit Committee to prepare financial statements, to plan or conduct internal or external audits, to determine that the financial statements are complete and accurate and are in accordance with International Financial Reporting Standards, to conduct investigations, or to assure compliance with laws and regulations or the REIT LP’s internal policies, procedures and controls, as these are the responsibility of management, and in certain cases, the external auditor.

SECTION 2. LIMITATIONS ON AUDIT COMMITTEE’S DUTIES

In contributing to the Audit Committee’s discharge of its duties under this Charter, each member of the Audit Committee shall be obliged only to exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. Nothing in this Charter is intended to be, or may be construed as, imposing on any members of the Audit Committee a standard of care or diligence that is in any way more onerous or extensive than the standard to which the directors are subject.

Members of the Audit Committee are entitled to rely, absent actual knowledge to the contrary, on (i) the integrity of the persons and organizations from whom they receive information, (ii) the accuracy and completeness of the information provided, (iii) representations made by management as to the non-audit services provided to the REIT LP by the external auditor, (iv) financial statements of the REIT LP represented to them by a member of management or

A-2

in a written report of the external auditors to present fairly the financial position of the REIT LP in accordance with generally accepted accounting principles, and (v) any report of a lawyer, accountant, engineer, appraiser or other person whose profession lends credibility to a statement made by any such person.

SECTION 3. COMPOSITION AND MEETINGS

The Audit Committee should be comprised of not less than three directors as determined by the Board, all of whom shall be independent within the meaning of National Instrument 52-110 – Audit Committees (“ 52-110 ”) of the Canadian Securities Administrators (or exempt therefrom), and free of any relationship that, in the opinion of the Board, would interfere with the exercise of his or her independent judgment as a member of the Audit Committee. All members of the Audit Committee should have (or should gain within a reasonable period of time after appointment) a working familiarity with basic finance and accounting practices. At least one member of the Audit Committee should have accounting or related financial management expertise and be considered a financial expert. Each member should be “financially literate” within the meaning of 52-110. The Audit Committee members may enhance their familiarity with finance and accounting by participating in educational programs conducted by the REIT LP or an outside consultant.

The members of the Audit Committee shall be elected by the Board on an annual basis or until their successors shall be duly appointed. Unless a Chair of the Audit Committee (the “ Chai r”) is elected by the full Board, the members of the Audit Committee may designate a Chair by majority vote of the full Audit Committee membership.

In addition, the Audit Committee members should meet all of the requirements for members of audit committees as defined from time to time under applicable legislation and the rules of any stock exchange on which the REIT LP’s securities are listed or traded.

The Audit Committee should meet at least four times annually, or more frequently as circumstances require. The Audit Committee should meet within 45 days following the end of the first three financial quarters to review and discuss the unaudited financial results for the preceding quarter and the related MD&A, and should meet within 90 days following the end of the fiscal year end to review and discuss the audited financial results for the preceding quarter and year and the related MD&A.

The Audit Committee may ask members of management or others to attend meetings and provide pertinent information as necessary. For purposes of performing their duties, members of the Audit Committee shall have full access to all corporate information and any other information deemed appropriate by them, and shall be permitted to discuss such information and any other matters relating to the financial position of the REIT LP with senior employees, officers of the General Partner and the external auditor of the REIT LP, and others as they consider appropriate.

For greater certainty, management is indirectly accountable to the Audit Committee and is responsible for the timeliness and integrity of the financial reporting and information presented to the Board.

In order to foster open communication, the Audit Committee or its Chair should meet at least annually with management and the external auditor in separate sessions to discuss any matters that the Audit Committee or each of these groups believes should be discussed privately. In addition, the Audit Committee or its Chair should meet with management quarterly in connection with the REIT LP’s interim financial statements.

A quorum for the transaction of business at any meeting of the Audit Committee shall be a majority of the number of members of the Audit Committee or such greater number as the Audit Committee shall by resolution determine.

Meetings of the Audit Committee shall be held from time to time and at such place as any member of the Audit Committee shall determine upon 48 hours’ notice to each of its members. The notice period may be waived by all members of the Audit Committee. Each of the Chair of the Board, the external auditor, the Chief Executive Officer, the Chief Financial Officer or the Secretary shall be entitled to request that any member of the Audit Committee call a meeting.

This Charter is subject in all respects to the REIT LP’s amended and restated limited partnership agreement from time to time.

A-3

SECTION 4. ROLE

As part of its function in assisting the Board in fulfilling its oversight role (and without limiting the generality of the Audit Committee’s role), the Audit Committee should:

(1) Determine any desired agenda items;
(2) Review and recommend to the Board changes to this Charter, as considered appropriate from time to time;
(3) Review the public disclosure regarding the Audit Committee required by 52-110;
(4) Review and seek to ensure that disclosure controls and procedures and internal control over financial reporting frameworks are operational and functional;
(5) Summarize in the REIT LP’s annual information form the Audit Committee’s composition and activities, as required; and
(6) Submit the minutes of all meetings of the Audit Committee to the Board upon request.

Documents / Reports Review

(7) Review and recommend to the Board for approval the REIT LP’s annual and interim financial statements, including any certification, report, opinion, undertaking or review rendered by the external auditor and the related MD&A, as well as such other financial information of the REIT LP provided to the public or any governmental body as the Audit Committee or the Board require.
(8) Review other financial information provided to any governmental body or the public as they see fit.
(9) Review, recommend and approve any of the REIT LP’s press releases that contain financial information.
(10) Seek to satisfy itself and ensure that adequate procedures are in place for the review of the REIT LP’s public disclosure of financial information extracted or derived from the REIT LP’s financial statements and related MD&A and periodically assess the adequacy of those procedures.

External Auditor

(11) Recommend to the Board the selection of the external auditor, considering independence and effectiveness, and review the fees and other compensation to be paid to the external auditor.
(12) Review and seek to ensure that all financial information provided to the public or any governmental body, as required, provides for the fair presentation of the REIT LP’s financial condition, financial performance and cash flow.
(13) Instruct the external auditor that its ultimate client is not management and that it is required to report directly to the Audit Committee, and not management.
(14) Monitor the relationship between management and the external auditor including reviewing any management letters or other reports of the external auditor and discussing any material differences of opinion between management and the external auditor.
(15) Review and discuss, on an annual basis, with the external auditor all significant relationships it has with the REIT LP to determine the external auditor’s independence.
(16) Pre-approve all non-audit services (or delegate such pre-approval as the Audit Committee may determine and as permitted by applicable Canadian securities laws) to be provided by the external auditor.

A-4

(17) Review the performance of the external auditor and any proposed discharge of the external auditor when circumstances warrant.
(18) Periodically consult with the external auditor out of the presence of management about significant risks or exposures, internal controls and other steps that management has taken to control such risks, and the fullness and accuracy of the financial statements, including the adequacy of internal controls to expose any payments, transactions or procedures that might be deemed illegal or otherwise improper.
(19) Communicate directly with the external auditor and arrange for the external auditor to be available to the Audit Committee and the full Board as needed.
(20) Review and approve any proposed hiring by the REIT LP of current or former partners or employees of the current (and any former) external auditor of the REIT LP.

Audit Process

(21) Review the scope, plan and results of the external auditor’s audit and reviews, including the auditor’s engagement letter, the post-audit management letter, if any, and the form of the audit report. The Audit Committee may authorize the external auditor to perform supplemental reviews, audits or other work as deemed desirable.
(22) Following completion of the annual audit and quarterly reviews, review separately with each of management and the external auditor any significant changes to planned procedures, any difficulties encountered during the course of the audit and, if applicable, reviews, including any restrictions on the scope of work or access to required information and the cooperation that the external auditor received during the course of the audit and, if applicable, reviews.
(23) Review any significant disagreements among management and the external auditor in connection with the preparation of the financial statements.
(24) Where there are significant unsettled issues between management and the external auditor that do not affect the audited financial statements, the Audit Committee shall seek to ensure that there is an agreed course of action leading to the resolution of such matters.

Financial Reporting Processes

(25) Review the integrity of the financial reporting processes, both internal and external, in consultation with the external auditor as they see fit.
(26) Consider the external auditor’s judgments about the quality, transparency and appropriateness, not just the acceptability, of the REIT LP’s accounting principles and financial disclosure practices, as applied in its financial reporting, including the degree of aggressiveness or conservatism of its accounting principles and underlying estimates, and whether those principles are common practices or are minority practices.
(27) Review all material balance sheet issues, material contingent obligations (including those associated with material acquisitions or dispositions) and material related party transactions.
(28) Review with management and the external auditor the REIT LP’s accounting policies and any changes that are proposed to be made thereto, including all critical accounting policies and practices used, any alternative treatments of financial information that have been discussed with management, the ramification of their use and the external auditor’s preferred treatment and any other material communications with management with respect thereto.
(29) Review the disclosure and impact of contingencies and the reasonableness of the provisions, reserves and estimates that may have a material impact on financial reporting.

A-5

(30) If considered appropriate, establish separate systems of reporting to the Audit Committee by each of management and the external auditor.
(31) Periodically consider the need for an internal audit function, if not present.

Risk Management

(32) Review program of risk assessment and steps taken to address significant risks or exposures of all types, including insurance coverage and tax compliance.

General

(33) With prior Board approval, the Audit Committee may at its discretion retain independent counsel, accountants and other professionals to assist it in the conduct of its activities and to set and pay (as an expense of the REIT LP) the compensation for any such advisors.
(34) Respond to requests by the Board with respect to the functions and activities that the Board requests the Audit Committee to perform.
(35) Periodically review this Charter and, if the Audit Committee deems appropriate, recommend to the Board changes to this Charter.
(36) Review the public disclosure regarding the Audit Committee required from time to time by applicable Canadian securities laws, including:
(a) the Charter of the Audit Committee;
(b) the composition of the Audit Committee;
(c) the relevant education and experience of each member of the Audit Committee;
(d) the external auditor services and fees; and
(e) such other matters as the REIT LP is required to disclose concerning the Audit Committee.
(37) Review in advance, and approve, the hiring and appointment of senior financial executives by the General Partner, if any.
(38) Perform any other activities as the Audit Committee deems necessary or appropriate including ensuring all regulatory documents are compiled to meet Committee reporting obligations under 52-110.

SECTION 5. AUDIT COMMITTEE COMPLAINT PROCEDURES

Submitting a Complaint

(1) Anyone may submit a complaint regarding conduct by the REIT LP or its employees or agents (including its independent auditors) reasonably believed to involve questionable accounting, internal accounting controls or auditing matters. The Chair should oversee treatment of such complaints.

Procedures

(2) The Chair will be responsible for the receipt and administration of employee complaints.
(3) In order to preserve anonymity when submitting a complaint regarding questionable accounting or auditing matters, the employee may submit a complaint confidentially.

A-6

Investigation

(4) The Chair should review and investigate the complaint. Corrective action will be taken when and as warranted in the Chair’s discretion.

Confidentiality

(5) The identity of the complainant and the details of the investigation should be kept confidential throughout the investigatory process.

Records and Report

(6) The Chair should maintain a log of complaints, tracking their receipt, investigation, findings and resolution, and should prepare a summary report for the Audit Committee.

The Audit Committee is a committee of the Board and is not and shall not be deemed to be an agent of the REIT LP’s securityholders for any purpose whatsoever. The Board may, from time to time, permit departures from the terms hereof, either prospectively or retrospectively, and no provision contained herein is intended to give rise to civil liability to securityholders of the REIT LP or other liability whatsoever.

AI assistant

Subversive Acquisition LP — Annual Report 2019

47872_rns_2020-02-12_3b9c9a79-b8ea-4920-8f4b-b788accc4e27.pdf

SUBVERSIVE REAL ESTATE ACQUISITION REIT LP

ANNUAL INFORMATION FORM

TABLE OF CONTENTS

SUBVERSIVE REAL ESTATE ACQUISITION REIT LP

ANNUAL INFORMATION FORM

GENERAL

FORWARD-LOOKING STATEMENTS

Readers are cautioned that the foregoing list of risk factors should not be construed as exhaustive.

GLOSSARY

“ Escrow Agent ” means Olympia Trust Company;

A ÷ (A + B)

CORPORATE STRUCTURE

Name, Address and Incorporation

DESCRIPTION OF THE BUSINESS AND GENERAL DEVELOPMENT OF THE BUSINESS

Initial Public Offering

Qualifying Transaction

General

Identifying Target

Conflicts of Interest

Additional Funding for General Ongoing Expenses

Permitted Timeline and Extension

Minimum Fair Market Value of Qualifying Transaction

Lack of Business Diversification

Limited Ability to Evaluate the Target’s Management Team

Completion of a Qualifying Transaction

Initial Listing Requirements

Exchange’s Escrow Policy

Redemption Rights

Automatic Redemption if No Qualifying Transaction

Contractual Rights of Action

DESCRIPTION OF CAPITAL STRUCTURE

General

General Description of Units

Interests of Unitholders

Consideration for Units

No Pre-Emptive Rights

Fractional Units

Allotment and Issue

Transferability

Subdivision or Consolidation

Distribution and Allocation of Income and Losses

Distributions of Distributable Cash

Payment of Distributions

Allocation of Income and Losses

SPECIFIC DESCRIPTION OF UNITS

Founders’ Proportionate Voting Units, Class A Restricted Voting Units and Class B Units

Restricted Voting Units and Limited Partnership Units

Proportionate Voting Units

Conversion Rights and Transfers

Conversion Conditions

Voting Rights

Issuance of Additional Proportionate Voting Units

Take-Over Bid Protection

Rights

Make Whole Covenants

DISTRIBUTION POLICY

MARKET FOR SECURITIES

Trading Price and Volume

Prior Sales

ESCROWED SECURITIES AND SECURITIES SUBJECT TO CONTRACTUAL RESTRICTIONS ON TRANSFER

VOTING SECURITIES AND PRINCIPAL UNITHOLDERS

DIRECTORS AND OFFICERS

Name, Address, Occupation and Security Holding

Directors and Officers

Michael B. Auerbach

Richard Acosta

Michael Miller

Eric Clarke

Leland Hensch

Omar Mangalji

Scott Baker

Octavio Boccalandro

Craig M. Hatkoff

Anne Sullivan

Indemnification and Insurance

Cease Trade Orders, Bankruptcies, Penalties or Sanctions

INDEBTEDNESS OF DIRECTORS AND OFFICERS

Subversive Acquisition LP Annual Report 2019