Mr. Sean Morrison reports

DIVERSIFIED ROYALTY CORP. ANNOUNCES PRELIMINARY Q1 2022 RESULTS FOR ITS ROYALTY PARTNERS

Diversified Royalty Corp. has released the preliminary results for its royalty partners for the three months ended March 31, 2022 (Q1 2022).

Mr. Lube Canada LP first quarter results

Mr. Lube generated same-store sales growth (SSSG) (1) of 16.3 per cent for the Mr. Lube stores in the royalty pool for Q1 2022, compared with SSSG of 3.9 per cent for the three months ended March 31, 2021 (Q1 2021).

Diversified Royalty expects to report that aggregate royalty income and management fees of $4.8-million were generated from Mr. Lube in Q1 2022, an increase of 32 per cent compared with Q1 2021. The increase was due to a variety of factors, including continued growth in Mr. Lube's maintenance services, tire services and sales carried over from the fourth quarter of 2021, the effectiveness in Mr. Lube's targeted multimedia marketing campaigns, the addition of 13 new stores to the Mr. Lube royalty pool, and the 0.5-per-cent increase to the Mr. Lube royalty rate on May 1, 2021.

(1) SSSG is a supplementary financial measure (a non-IFRS (international financial reporting standards) measure).

Air Miles first quarter results

Diversified Royalty expects to report royalty income of $1.5-million from Air Miles in Q1 2022, which is flat compared with Q1 2021. Diversified Royalty's royalty payment is derived from several Air Miles metrics, with Air Miles reward miles issued being the primary metric and other metrics, including Air Miles reward miles redeemed, service revenue, commissions and promotional items, all of which affect quarterly variability.

Loyalty Ventures Inc., the parent company of LoyaltyOne Co., issued a news release earlier today regarding the Q1 2022 performance of the Air Miles reward program announcing that: (i) Air Miles reward miles issued decreased by 4.2 per cent in Q1 2022, primarily due to the non-renewal of two sponsors in the first quarter of 2021; and (ii) Air Miles reward miles redeemed increased by 43.0 per cent in Q1 2022, primarily reflecting pent-up demand for travel as COVID-19-related restrictions abated.

Loyalty Ventures also announced that in the first quarter, Air Miles renewed top-five sponsor American Express, activated a national marketing campaign to drive greater collector enrolment and engagement, and launched several additional marketing campaigns in conjunction with the Air Miles 30th anniversary.

In addition, Loyalty Ventures announced a leadership change at Air Miles. Shawn Stewart will join as the new president of Air Miles. Mr. Stewart was most recently senior vice-president, customer, at Canadian Tire, where he led the team responsible for enterprise loyalty, digital marketing, customer analytics and personalization, including the team that built and grew the Triangle Rewards loyalty program.

Sutton Group Realty Services Ltd. first quarter results

Diversified Royalty expects to report that royalty income and management fees of $1.1-million were generated from Sutton in Q1 2022, compared to $1.0-million in Q1 2021. The fixed royalty payable by Sutton increases at a rate of 2.0 per cent per year, with the most recent increase effective July 1, 2021.

Oxford Learning Centres Inc. first quarter results

Diversified Royalty expects to report that royalty income and management fees of $1.0-million were generated from Oxford in Q1 2022, compared with $900,000 million in Q1 2021.

Oxford locations in the Oxford royalty pool generated SSSG (on a constant-currency basis) of 14.2 per cent in Q1 2022, compared with SSSG of negative 19 per cent in Q1 2021. In March, 2022, most Ontario government-mandated COVID-19 restrictions were lifted (with Ontario being Oxford's largest market), including most mandatory vaccination, masking requirements and distance restrictions. During the quarter, Oxford saw a transition back to in-person tutoring for many locations. March, 2022, was the strongest March in Oxford's history and is the third strongest month ever on the basis of system sales (2).

(2) Systems sales is a supplementary financial measure (a non-IFRS financial measure).

Mr. Mikes first quarter results

SSSG in Q1 2022 for the Mr. Mikes restaurants in the royalty pool was 24.6 per cent, compared with Q1 2021, which included stores that were temporarily closed due to the COVID-19 pandemic.

Diversified Royalty expects to report that royalty income and management fees of $700,000 were generated from Mr. Mikes in Q1 2022, compared with $500,000 in Q1 2021. In Q1 2022, Diversified Royalty granted royalty and management fee relief to Mr. Mikes in connection with the COVID-19 pandemic, collecting 67 per cent of the contractual royalty amounts. In addition, in March, 2022, Mr. Mikes made a one-time payment of approximately $550,000 to Diversified Royalty and its subsidiary, MRM Royalties LP, representing partial payment of deferred contractual royalty fees and accrued management fees. Diversified Royalty expects to record the one-time payment as revenue in the quarter.

Most Mr. Mikes locations are in British Columbia and Alberta. In March, 2022, some B.C. government-mandated COVID-19 restrictions were lifted, including masking requirements in public indoor settings; however, the proof-of-vaccination requirements for restaurants remained in place until early April, 2022. In Alberta, the proof-of-vaccination program ended earlier in 2022 and the mask mandate was lifted on March 1, 2022, as part of the government's easing of COVID-19 restrictions. As such, the management team at Mr. Mikes expects a measured return of system sales toward prepandemic levels.

Diversified Royalty is in discussions with Mr. Mikes and its lender regarding additional royalty and management fee relief for Mr. Mikes, which Diversified Royalty expects may be required until such time as all government restrictions impacting the operation of Mr. Mikes restaurants are lifted and the business stabilizes.

Nurse Next Door Professional Homecare Services Inc. first quarter results

Diversified Royalty expects to report that the royalty entitlement to Diversified Royalty (3) from Nurse Next Door was $1.3-million in Q1 2022. The Diversified Royalty royalty entitlement from Nurse Next Door grows at a fixed rate of 2.0 per cent per annum during the term of the licence, with the most recent increase effective Oct. 1, 2021. In Q1 2022, Nurse Next Door signed 16 (Q1 2021 -- 17) new franchises, primarily in major metropolitan markets (three in Canada, 11 in the United States and two in Australia).

(3) Diversified Royalty royalty entitlement is a non-IFRS measure.

First quarter commentary

Sean Morrison, president and chief executive officer of Diversified Royalty, stated: "We are very encouraged with the strong start to 2022. Mr. Lube, our largest royalty partner, produced continued robust results, generating SSSG of 16.3 per cent for the period ended March 31, 2022. The outlook for Mr. Lube remains strong with tire and minor maintenance services continuing to drive growth. Oxford Learning had its third-best month in its history (based on system sales), in March, 2022, while dealing with COVID-19 spacing restrictions in Ontario up to March 21. These strong results are indicative of the pent-up demand for tutoring services and Oxford's strong outlook now that core COVID-19 restrictions in Ontario have been removed. With the recent removal of COVID-19 vaccine passports mandates in Alberta (February, 2022) and in B.C. (early April, 2022), Mr. Mikes is positioned to continue its recovery towards pre-COVID sales levels. Air Miles has stabilized, and Sutton and Nurse Next Door continue to make their fixed-growth royalty payments."

About Diversified Royalty Corp.

Diversified Royalty is a multiroyalty corporation, engaged in the business of acquiring top-line royalties from well-managed multilocation businesses and franchisors in North America. Diversified Royalty's objective is to acquire predictable, growing royalty streams from a diverse group of multilocation businesses and franchisors.

Diversified Royalty currently owns the Mr. Lube, Air Miles, Sutton, Mr. Mikes, Nurse Next Door and Oxford Learning Centres trademarks. Mr. Lube is the leading quick-lube-service business in Canada, with locations across Canada. Air Miles is Canada's largest coalition loyalty program with approximately two-thirds of Canadian households actively participating in the Air Miles program. Sutton is among the leading residential real estate brokerage franchisor businesses in Canada. Mr. Mikes currently operates casual steakhouse restaurants primarily in Western Canadian communities. Nurse Next Door is one of North America's fastest-growing home care providers with locations across Canada and the United States, as well as in Australia. Oxford Learning Centres is one of Canada's leading franchised supplemental education services in Canada and the U.S.

Diversified Royalty expects to increase cash flow per share by making accretive royalty purchases and through the growth of purchased royalties. Diversified Royalty expects to pay a predictable and stable dividend to shareholders and increase the dividend as cash-flow-per-share increases allow.

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