As part of our annual procedures and the accounting policies for the Romspen Mortgage Investment Fund (“Fund”), a signification portion of the portfolio is appraised by independent third-party valuators. In addition, management reviews and updates projected cash flows and recovery assumptions for development and transitional loans.

As part of the December 2025 appraisal process, these reviews resulted in the recognition of additional loan-loss reserves totalling $110 million, representing $0.39 per Class A unit, which contributed to a decrease in the Fund’s NAV for the period.

The loan-loss reserves recorded are non-cash accounting items and are based on assumptions and market comparisons selected by the appraisers at the time the appraisals are prepared. These reserves do not represent realized losses.

It is important to note that third-party valuations inherently involve the application of significant professional judgement and assumptions. As a result, relatively small changes in key assumptions such as discount rates, timing of recoveries, or exit values, can lead to meaningful changes in estimated fair values.

The Fund is not a forced seller of its underlying collateral. In one case, management believes that the most recent appraisal is very conservative. In any event, the Fund would not be a seller at the values determined by the appraisal.

Any realized loss or gain will ultimately be determined only at such time as a transaction is completed between willing, arm’s-length market participants, and a sale price is agreed upon. Until that point, valuation and appraisal conclusions will fluctuate based on market conditions, asset-level execution, and timing.

The primary reasons that the appraisal reports’ conclusions were lower than expected include:

• Limited availability of recent, relevant comparable transactions to support appraised values, resulting in greater reliance on conservative assumptions.
• A broader slowdown in market sales activity, which has reduced pricing across comparable assets.
• Softening local real estate conditions, including elevated supply, weakened demand and lower transaction volumes. These conditions have extended project timelines, which, when reflected in discounted cash flow analyses, result in lower appraised values and internal forecasts.

We acknowledge that this outcome is disappointing, but valuation pressure continues to be experienced across the Canadian real estate and credit landscape.

Management remains focused on capital preservation, liquidity management, active oversight at the asset level, and the realization of long-term value for unitholders.

We recognize the importance of transparency and timely communication with our unitholders, and we will continue to provide updates on our progress.