NRR-U: Niche residential play levered to Canadian resources; Initiate at Sector Perform

Research evidence excerpt

NRR-U: Niche residential play levered to Canadian resources; Initiate at Sector Perform

8.1x 7.6x

What makes NRR unique versus its residential peers is that it is effectively AFFO/Unit 1.15 1.40 1.64 1.76

a play on Canada’s resource economies. Given the current political and P/AFFO 14.3x 11.8x 10.1x 9.4x

Distribution/Unit 1.09 1.09 1.09 1.09 macro environment, we believe that on a net basis, its markets have Payout Ratio 95% 78% 67% 62%

positive tailwinds, especially its energy-related markets and its Northern

markets which should benefit from significant infrastructure investments FFO/Unit Q1 Q2 Q3 Q4

as the Federal Government looks to defend the Arctic. At the same time, 2025 0.40A 0.49A 0.48A 0.42A 2026 0.44A 0.54E 0.59E 0.47E

we believe NRR’s markets carry risks – they are cyclical given their small 2027 0.48E 0.57E 0.62E 0.50E

size and dependency on cyclical industries, while the property markets are

far less liquid and do not have bid depth, thus requiring a higher return. TheKingSettfollowing22%, AIMCoowners14%,collectivelyTDAM 11%,own Hazelview~80% of units5%). outstanding (Starlight 29%,

All values in CAD unless otherwise noted.

The main unknown with the NRR story is how the small float improves. Priced as of prior trading day's market close, EST (unless otherwise noted).

This depends on current institutional holders’ decision to liquidate their

positions – something we believe could happen over the next few years.

Because there are five separate institutions, each with their own cost basis,

unit structure, and exit objectives, their interests may not necessarily align

with existing minority unitholders and it is difficult to determine what the

likely outcome will be. A significantly increased float (e.g., via secondary