Padlock Euro Storage Fund I (Re), 2026 CanLII 8135

January 15, 2026

In the Matter of the Securities Legislation of Ontario (the “Jurisdiction”)

and

In the Matter of the Process for Exemptive Relief Applications in Multiple Jurisdictions

and

In the Matter of Padlock Euro Storage Fund I (the “Filer”)

Decision

Background

The principal regulator in the Jurisdiction has received an application from the Filer for a decision under the securities legislation of the Jurisdiction of the principal regulator (the “Legislation”) exempting the Filer, pursuant to section 9.1 of Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions (“MI 61-101”), from the requirement in subsection 8.1(1) of MI 61-101 to obtain minority approval from the holders of every class of affected securities of the Filer, in each case, voting separately as a class, in connection with the proposed acquisition by QR Padlock GP Limited, in its capacity as general partner for and on behalf of QR CS Padlock LP (the “Purchaser”), of all of the interests held by a wholly-owned indirect subsidiary of the Filer, 1488778 B.C. Ltd. (“Holdco”, and such acquisition, the “Transaction”), and requiring instead that minority approval be obtained from all Disinterested Unitholders (as defined below) voting together as a single class (the “Exemption Sought”).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):

(a) the Ontario Securities Commission is the principal regulator for this application, and

(b) the Filer has provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System (“MI 11-102”) is intended to be relied upon in Alberta, Saskatchewan, Manitoba, Québec, and New Brunswick.

Interpretation

Terms defined in National Instrument 14-101 Definitions, MI 11-102, and MI 61-101 have the same meaning if used in this decision, unless otherwise defined.

Representations

This decision is based on the following facts represented by the Filer:

Overview of the Filer

1. The Filer’s head office is located at 199 Bay Street, Suite 4000, Commerce Court West, Toronto, Ontario, M5L 1A9.

2. The Filer is a reporting issuer in each province of Canada. The Filer is not in default of any requirement of the securities legislation in any jurisdiction in which it is a reporting issuer.

3. The Filer is an unincorporated investment trust established under, governed by, and in good standing under, the laws of the Province of Ontario, pursuant to a declaration of trust dated July 8, 2020, as most recently amended and restated as of May 13, 2025 and further amended as of December 19, 2025 (the “DOT”).

4. The Filer’s investment objectives are to: (i) provide holders of trust units (“Unitholders”) with an opportunity to invest in a portfolio of diversified income-producing commercial real estate properties in the United Kingdom (“UK”) and Spain, with a particular focus on self-storage and mixed-use properties; (ii) provide Unitholders with quarterly cash distributions; and (iii) enhance the potential for long-term growth of capital through rental escalations in tenant leases, acquisition and conversion opportunities, and a liquidity event by way of an exit into the public markets or other transaction.

5. Holdco’s interests consist of a 95% interest in each of Padlock UK Holdco 1 Limited, Padlock UK Holdco 2 Limited, Padlock UK Holdco 3 Limited, and Padlock UK Holdco 4 Limited (collectively, the “Padlock UK Holdcos”). The remaining 5% interest in the Padlock UK Holdcos is held by Padlock Capital Partners, LLC, Padlock Capital Partners II, LLC, Padlock Capital Partners III, LLC and Padlock Capital Partners IV, LLC, as applicable (collectively, the “UK Managers”) and members of management of the Filer.

6. The Padlock UK Holdcos collectively indirectly own 26 properties located in the UK (the “Properties”). Accordingly, the Filer has an approximate 95% indirect interest in the Properties (the “UK Holdco Interests”).

7. On July 31, 2024, Padlock Partners UK Fund I (“Fund I”), the predecessor entity of the Filer, completed a plan of arrangement (the “2024 Arrangement”) whereby it acquired all of the issued and outstanding trust units of Padlock Partners UK Fund II (“Fund II”), and Padlock Partners UK Fund III (“Fund III”).

8. On May 13, 2025, the Filer completed a plan of arrangement (the “2025 Arrangement” and together with the 2024 Arrangement, the “Previous Arrangements”) whereby it acquired all of the issued and outstanding trust units of Padlock Partners UK Fund IV (“Fund IV”, and together with Fund I, Fund II, and Fund III, the “Predecessor Funds”).

9. The beneficial interests in the Filer are divided into three (3) classes of units (each, a “Class”), each of which Class has four (4) series (each, a “Series” and all the securities of the Filer collectively, the “Units”) as follows:

(a) Class A units, Series 1, Class A units, Series 2, Class A units, Series 3, and Class A Units, Series 4 (collectively, the “Class A Units”);

(b) Class F units, Series 1, Class F units, Series 2, Class F units, Series 3, and Class F units, Series 4 (collectively, the “Class F Units”); and

(c) Class U units, Series 1, Class U units, Series 2, Class U units, Series 3, and Class U units, Series 4 (collectively, the “Class U Units”).

10. Pursuant to the Previous Arrangements:

(a) holders of trust units of Fund I were issued: Class A Units, Series 1; Class F Units, Series 1; and Class U Units, Series 1, corresponding to the applicable class of trust units of Fund I held by them;

(b) holders of trust units of Fund II were issued: Class A Units, Series 2; Class F Units, Series 2; and Class U Units, Series 2, corresponding to the applicable class of trust units of Fund II held by them;

(c) holders of trust units of Fund III were issued: Class A Units, Series 3; Class F Units, Series 3; and Class U Units, Series 3, corresponding to the applicable class of trust units of Fund III held by them; and

(d) holders of trust units of Fund IV were issued: Class A Units, Series 4; Class F Units, Series 4; and Class U Units, Series 4, corresponding to the applicable class of trust units of Fund IV held by them.

11. As at December 23, 2025, there were 15,999,960 Units outstanding, consisting of:

(a) 3,090,900 Class A Units, Series 1, representing 19.3% of the issued and outstanding Units;

(b) 2,419,140 Class A Units, Series 2, representing 15.1% of the issued and outstanding Units;

(c) 3,892,850 Class A Units, Series 3, representing 24.3% of the issued and outstanding Units;

(d) 2,507,420 Class A Units, Series 4, representing 15.7% of the issued and outstanding Units;

(e) 52,500 Class F Units, Series 1, representing 0.3% of the issued and outstanding Units;

(f) 409,450 Class F Units, Series 2, representing 2.6% of the issued and outstanding Units;

(g) 1,110,550 Class F Units, Series 3, representing 6.9% of the issued and outstanding Units;

(h) 1,612,250 Class F Units, Series 4, representing 10.1% of the issued and outstanding Units;

(i) 276,450 Class U Units, Series 1, representing 1.7% of the issued and outstanding Units;

(j) 301,550 Class U Units, Series 2, representing 1.9% of the issued and outstanding Units;

(k) 117,500 Class U Units, Series 3, representing 0.7% of the issued and outstanding Units; and

(l) 209,400 Class U Units, Series 4, representing 1.3% of the issued and outstanding Units.

12. None of the securities of the Filer are listed on a stock exchange.

13. Each Unit has the same rights and obligations, and no holder of Units is entitled to any privilege, priority or preference in relation to any other such holder, subject to the following:

(a) The Class A Units and Class F Units are denominated in Canadian dollars, while the Class U Units are denominated in pound sterling. The difference in currency denominations was intended to provide investors in the Predecessor Funds with the flexibility to invest and receive distributions in either Canadian dollars or pound sterling.

(b) At the time of the initial public offering of the applicable Predecessor Fund, holders of Class A Units paid an agents’ fee of C$0.575 per unit, holders of Class F Units paid an agents’ fee of $0.275 per unit, and holders of Class U Units paid an agents’ fee of £0.575 per unit.

(c) The proportionate entitlement of each Series (the “Proportionate Series Interest”) to participate in distributions made by the Filer, including distributions of Net Realized Capital Gains (as defined in the DOT) or income, if any, and to receive proceeds on a redemption of Units and/or upon termination of the Filer, is equal to the proportion that the net asset value that the particular Series represented at the time of the Previous Arrangements, adjusted for redemptions and disproportionate distributions that have occurred since that time.

(d) The proportionate entitlement of the holders of Class A Units, Class F Units, and Class U Units within a Series (the “Proportionate Class Interest” and together with the Proportionate Series Interest, the “Proportionate Interests”) to participate in distributions made by the Filer, including distributions of Net Realized Capital Gains (as defined in the DOT) or income, if any, and to receive proceeds on a redemption of Units and/or upon termination of the Filer, is equal to the proportion of (i) (A) the aggregate gross proceeds received by Fund I (in respect of Series 1), Fund II (in respect of Series 2), Fund III (in respect of Series 3), and Fund IV (in respect of Series 4) for the issuance of trust units of the relevant Class, less the agents’ fee paid in respect of such Units, less (B) the aggregate amount paid to redeem trust units of the relevant Class by the relevant Predecessor Fund prior to the applicable Previous Arrangement, or by the Filer subsequent to the applicable Previous Arrangement, divided by (ii) the gross subscription proceeds received by the applicable Predecessor Fund less the total agents’ fees paid in respect of such Predecessor Fund, less the aggregate amount paid to redeem trust units by the relevant Predecessor Fund prior to the applicable Previous Arrangement, or by the Filer subsequent to the applicable Previous Arrangement.

14. Section 9.7 of the DOT provides that Unitholders vote as a single Series and Class in respect of any matter to be voted upon unless the nature of the business to be transacted at the meeting affects holders of one Series or Class within a Series in a manner materially different from its effect on holders of another Series or Class within a Series, in which case the Units of the affected Series or Class within a Series will vote separately as a Series or Class within a Series.

15. Section 9.7 of the DOT also provides that, in the event the Filer enters into a transaction that is subject to MI 61-101 and, as a result, requires approval from each Series and/or Class within a Series, in each case voting separately as a Series or Class, the Filer will apply to applicable securities regulatory authorities for discretionary relief from such obligation given that (a) section 9.7 of the DOT provides that Unitholders will vote as a single Series and Class unless the nature of the business to be transacted at the meeting of Unitholders affects holders of one Series or Class within a Series in a manner materially different from its effect on holders of another Series or Class within a Series, (b) the relative returns of any proposed transaction to each Series or Class within a Series are fixed pursuant to the formula set out in the DOT, and (c) providing a Series or Class vote could grant disproportionate power to a potentially small number of Unitholders.

16. The Filer is managed by Clear Sky Capital Inc. (the “Canadian Manager”) and the UK Managers (collectively, the “Managers”). Each of the Managers are affiliates of Clear Sky Capital, Inc. (“Clear Sky”), an Arizona corporation.

Transaction

17. On December 19, 2025 the Purchaser entered into a sale and purchase agreement (the “Purchase Agreement”) evidencing the Transaction pursuant to which the Purchaser will acquire the UK Holdco Interests. The remaining 5% interest in the Padlock UK Holdcos held by the UK Managers and affiliates thereof will be retained in a joint venture arrangement between such parties and the Purchaser, and will not be monetized as part of the Transaction.

18. The terms of the Transaction, including the purchase price to be paid by the Purchaser to Holdco (the net proceeds of which will ultimately be distributed by the Filer to Unitholders), are the result of a focused and lengthy negotiation process that was undertaken by the Managers, on behalf of the Filer, under the oversight and direction of a committee consisting of Dale Williams and Abbas Osman, each of whom is independent of the Filer and the Managers for the purposes of MI 61-101 (the “Independent Committee”), with the participation of the Independent Committee’s and the Filer’s respective outside financial and legal advisors. In coming to the determination that the expected aggregate net cash consideration of approximately £93.6 million, inclusive of taxes, transaction costs, and other items as estimated by the Managers to be received Unitholders (other than Clear Sky and its affiliates) pursuant to the Transaction, is fair to such Unitholders, the Independent Committee considered, among other things: (a) the liquidity resulting from the Transaction; (b) the market checks the Filer conducted in connection with the Previous Arrangements; (c) the greater costs, inefficiencies and risks that would be involved in selling the Filer’s properties separately rather than in their entirety; and (d) the current conditions for sale transactions in the real estate market in the regions where the Filer operates. The Purchaser intends to satisfy the purchase price for the UK Holdco Interests with cash.

19. The Transaction is a “Liquidity Event” (as defined in the DOT) for the Filer.

20. The Independent Committee determined that it was necessary and/or desirable in the interests of Unitholders in connection with the Liquidity Event to (a) temporarily suspend redemptions in order to facilitate an orderly closing of the Transaction, and (b) grant a special redemption right permitting Unitholders to dissent in respect of the Transaction in a manner consistent with the dissent provisions of the Business Corporations Act (Ontario), and amended the DOT accordingly, pursuant to section 15.1 of the DOT, in connection with the entry of the Purchase Agreement.

21. The Independent Committee has determined that certain other amendments to the DOT are necessary and/or desirable in the interests of Unitholders in connection with the Liquidity Event (collectively, the “Additional DOT Amendments”), and following closing of the Transaction, the Filer is expected to adopt amendments to the DOT to: (a) provide for the ability of the Board of Trustees of the Filer (the “Board”) to appoint a corporate trustee of the Filer (which may be Canadian Manager or an affiliate thereof); (b) permit the issuance of a single unit of a new or existing class of trust units to the Canadian Manager or an affiliate thereof, for the sole purpose of keeping the Filer in existence following the Final Redemption (as defined below); (c) amend Article 17 of the DOT to provide for a liquidation of the Filer in connection with the Transaction, pursuant to which, following the final distributions of the remaining net proceeds (including any net proceeds received following the post-closing adjustment), the Units shall be redeemed for nominal consideration and be cancelled (the “Final Redemption”) (other than the newly issued unit held by the Canadian Manager or its affiliate); and (d) provide for certain other consequential amendments directly relating to the foregoing. None of the Additional DOT Amendments will impact or alter the economic entitlements of Unitholders under the DOT.

22. Following closing of the Transaction, the Filer will distribute the net proceeds from the sale of the UK Holdco Interests to Unitholders by declaring a special distribution on the Units and, following a post-closing period and any purchase price adjustments pursuant to the terms of the Purchase Agreement, the Filer will distribute any remaining net proceeds in connection with the Final Redemption.

23. The Transaction will not alter the entitlements of, or otherwise provide for the payment of cash or assets to, Unitholders in a manner that differs from their pre-established Proportionate Interests as set out in the DOT.

24. In connection with the Transaction, the “carried interest” payable to the UK Managers and certain members of management of the Filer will crystallize and be extinguished in return for a pro rata payment from the consideration payable by the Purchaser based on the pre-existing carried interest formulas set out in the share terms of the applicable Padlock UK Holdco.

25. Concurrent with entering into the Transaction, the Filer and an affiliate of the Managers, among others, entered into a letter agreement (the “Letter Agreement”) providing for, among other things: (a) a re-determination of the pro rata purchase price allocation under the Purchase Agreement to the extent necessary to account for purchase price adjustments made under such agreement; (b) an obligation of such affiliate to compensate the Filer for shortfalls in the purchase price under the Purchase Agreement beyond specified thresholds to account for purchase price adjustments made under such agreement; and (c) the proposed allocation of certain rights to receive payment or obligations to make payments of such parties under the Purchase Agreement, in each case to mitigate against any potential reduction in the net proceeds available to the Filer from the Transaction.

26. In connection with the Proposed Transaction, the Purchaser or an affiliate thereof will also enter into a joint venture agreement and certain management agreements with Clear Sky or its affiliates and members of management of the Filer.

27. The Board, the Independent Committee and the Managers have each determined that:

(a) no aspect of the Transaction will affect holders of one Series or Class within a Series in a manner materially different than holders of another Series or Class within a Series as all Unitholders will receive the formulaic and pre-established treatment as specified by their respective Proportionate Interest determined at the time of the relevant Predecessor Fund’s initial public offering when investors selected their preferred class of trust units of the relevant Predecessor Fund and purchased or acquired those trust units; and

(b) no separate Series or Class of a Series vote is required for any aspect of the Transaction under the terms of the DOT.

Minority Approval

28. The Transaction is a business combination and is therefore subject to the applicable requirements of MI 61-101. The Transaction is a business combination because: (a) in accordance with the terms of the DOT, as proposed to be amended pursuant to the Additional DOT Amendments, the interest of a Unitholder may be terminated without such Unitholder’s consent; and (b) related parties of the Filer are party to certain connected transactions as a result of (i) the “carried interest” of the Filer being realized in exchange for cash, (ii) the Letter Agreement, and (iii) the entry into certain joint venture and management agreements with the Purchaser.

29. The requirements of MI 61-101 applicable to business combinations include, among other things, obtaining approval for the Transaction by a majority of the votes cast by the holders of each of the twelve (12) Series, on a Series-by-Series basis, excluding the votes attached to Units beneficially owned, or over which control or direction is exercised, by any party specified in Section 8.1(2) of MI 61-101 (the Unitholders that do not need to be excluded, the “Disinterested Unitholders”) at a meeting of Unitholders of the particular Series called to consider the Transaction.

30. The Filer has called a special meeting of Unitholders to be held on January 30, 2026 to consider the Transaction (the “Meeting”).

31. As at the record date for the Meeting, no interested party of the Filer, being the Managers, the executive officers of the Filer, Marcus Kurschat, as principal of the Canadian Manager and a trustee of the Filer, or related party or joint actor of any of them, hold any Units, and accordingly, the Disinterested Unitholders hold 100% of each of the twelve (12) Series.

32. The Filer is exempt from the formal valuation requirement in MI 61-101 in respect of the Transaction on the basis of paragraph 5.5(b) of MI 61-101 as no securities of the Filer are listed on a specified market.

33. The Transaction is, and was, subject to a number of mechanisms, which the Board and the Independent Committee each believe ensures that the collective interests of the Unitholders are protected, and that the Unitholders are treated fairly and in accordance with their voting and economic entitlements under the DOT. These include that:

(a) Negotiation of the Transaction was overseen by the Independent Committee who took an active role in supervising all material strategic decisions with respect to the Transaction and provided oversight and guidance with respect to the negotiations involving the Transaction.

(b) The Independent Committee retained Wildeboer Dellelce LLP to act as its independent legal advisor.

(c) The Independent Committee retained Blair Franklin Capital Partners Inc. (“Blair Franklin”) to act as its independent financial advisor in respect of the Transaction.

(d) The Independent Committee supervised the preparation of a fairness opinion by Blair Franklin with respect to the Transaction (the “Fairness Opinion”). The Fairness Opinion concluded that, based upon and subject to the limitations, qualifications, assumptions and other matters set out therein, the aggregate net cash consideration of approximately £93.6 million, inclusive of taxes, transaction costs, and other items as estimated by the Managers to be received Unitholders (other than Clear Sky and its affiliates) pursuant to the Transaction is fair, from a financial point of view, to such Unitholders. The Fairness Opinion was included in the management information circular of the Filer dated December 23, 2025 in respect of the Transaction (the “Information Circular”) that was prepared and sent to Unitholders.

(e) The Board exercised the requisite standard of care in accordance with the terms of the DOT with respect to the Transaction. Marcus Kurschat, as principal of the Canadian Manager, has and will continue to recuse himself from any Board deliberations and the passing of any resolutions in connection with the Transaction.

(f) The Independent Committee concluded that the Transaction is in the best interests of the Filer, unanimously recommended that the Board approve the Transaction, and unanimously recommended that Unitholders vote in favour of the Transaction.

(g) The Transaction will be put before the Unitholders for approval, which will be determined on the basis of (i) a two-thirds vote of Unitholders voting as a single class, and (ii) a majority of the votes cast by Disinterested Unitholders, voting together as a single class.

(h) The Information Circular included disclosure that the Filer has applied for the Exemption Sought and described the implications of the Exemption Sought, if granted.

34. Separate Series votes by Unitholders would have the effect of granting disproportionate importance to a small group of Disinterested Unitholders of each of the:

(a) Class F Units, Series 1 (0.3% of the issued and outstanding Units);

(b) Class F Units, Series 2 (2.6% of the issued and outstanding Units);

(c) Class F Units, Series 3 (6.9% of the issued and outstanding Units);

(d) Class U Units, Series 1 (1.7% of the issued and outstanding Units);

(e) Class U Units, Series 2 (1.9% of the issued and outstanding Units);

(f) Class U Units, Series 3 (0.7% of the issued and outstanding Units); and

(g) Class U Units, Series 4 (1.3% of the issued and outstanding Units).

Despite their relatively small holdings, Disinterested Unitholders in each of these Series would be afforded a de facto veto right in respect of the Transaction that could be exercised against all other Unitholders. Because quorum for a meeting of a Series of Unitholders is only 10% for each Series, it is possible that a holder of less than 0.03% of the Units could effectively veto the Transaction. Such an outcome would not be in accordance with the reasonable expectations of Unitholders.

35. To the best of the knowledge of the Filer and the Managers, there is no reason to believe that the holders of Units of any particular Series or Class of the Filer would not approve the Transaction where the holders of Units of any other Series or Class are in favour.

36. As of January 12, 2026, neither the Filer nor the Managers have received any complaints or expressions of concern about the Transaction or the Exemption Sought.

Decision

The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.

The decision of the principal regulator under the Legislation is that the Exemption Sought is granted provided that:

(a) a special meeting of the Unitholders is held in order for the Disinterested Unitholders to consider and, if deemed advisable, approve the Transaction, such approval to be obtained with the Disinterested Unitholders voting together as a single class;

(b) the Filer issues and files a press release announcing receipt of the Exemption Sought prior to the Meeting and describes the implications of same; and

(c) none of the Additional DOT Amendments impact or alter the economic entitlements of Unitholders under the DOT.

“David Mendicino”

David Mendicino

Head, Mergers & Acquisitions

Ontario Securities Commission

Application No. 2025/0746; SEDAR #6378084