SIR Royalty Income Fund

Investor Presentation (TSX: SRV.UN)

March 2017

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Caution Concerning Forward-Looking Statements

Statements in this presentation, including the information set forth as to the future financial or operating performance of the
Fund or SIR, that are not current or historical factual statements may constitute forward-looking information within the
meaning of securities laws. Such forward-looking statements involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements of the Fund, the Trust, the Partnership, SIR, the SIR
Restaurants, or industry results, to be materially different from any future results, performance or achievements expressed or
implied by such forward-looking statements. When used in this presentation, such statements may include, among other
language, such words as may, will, should, would, expect, believe, plan, anticipate, intend, estimate and other
similar terminology. These statements reflect Managements current expectations, estimates and projections regarding future
events and operating performance and speak only as of the date of this presentation. Readers are cautioned that forward-looking
statements are not guarantees of future performance, and should not place undue reliance on them. The Fund and SIR expressly
disclaim any obligation or undertaking to publicly release any updates or revisions to any forward-looking statements contained
herein to reflect any change in expectations, estimates and projections with regard thereto or any changes in events, conditions or
circumstances on which any statement is based, except as expressly required by law.
In formulating the forward-looking statements contained herein, Management has assumed that business conditions affecting
SIRs restaurants and the Fund will continue substantially in the ordinary course, including without limitation with respect to
general industry conditions, general levels of economic activity (including in downtown Toronto), regulations (including those
regarding employees, food safety, tobacco and alcohol), weather, taxes, foreign exchange rates and interest rates, that there will
be no pandemics or other material outbreaks of disease or safety issues affecting humans or animals or food products, and that
there will be no unplanned material changes in its facilities, equipment, customer and employee relations, or credit
arrangements. These assumptions, although considered reasonable by Management at the time of preparation, may prove to be
incorrect. The Fund includes in publicly available documents filed from time to time with securities commissions and The Toronto
Stock Exchange, a discussion of the risk factors that can cause anticipated outcomes to differ from actual outcomes. For more
information concerning the Funds risks and uncertainties, please refer to the March 14, 2017 Annual Information Form which is
available under the Funds profile at www.sedar.com.

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SIR Investment Highlights

Diversified portfolio of well-known brands

Experienced management team with strong alignment of interests
Corporate ownership model increases flexibility
Consistent track record of investment in new and existing locations
Proven ability to generate long-term growth
Attractive yield
Unitholder distributions increased five times since Fund inception

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2 2
SIR Overview
SIR Corp.
SIR: Service Inspired Restaurants
A leading Canadian operator of casual
and fine dining restaurants
Founded in 1990 by Fowler family
Employees: ~5,000
SRV.UN 5-year unit price performance
SIR Royalty Income Fund
IPO: October 2004 (TSX: SRV.UN)
Market Cap: ~ $123 million
Recent close: $14.73 (March 15, 2017)
Units outstanding: 8.4 million
Annualized distribution per unit: $1.14
Effective current distribution yield: ~ 7.7%
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Experienced Management Team with
Strong Alignment of Interests
Experienced Management Team
Peter Fowler, President & CEO
Director of SIR Corp. since 1992
CEO since 2004 and the largest shareholder of
SIR Corp.
Helped create SIR Concepts and continues
to focus on Concepts
President of SIR GP Inc. and a trustee of the
SIR Royalty Income Fund since 2004
Jeff Good, CFO
Joined SIR Corp. in 2000
Helped launch SIR as an Income Fund
20 + years experience in Finance and
Accounting
Previous: VP Finance, Oliver Bonacini
Board of Trustees of the Fund:
Peter Fowler: CEO and Director of SIR Corp.
President of SIR GP Inc.
Kim van Nieuwkoop: Senior VP of Human
Resources and General Counsel, SIR Corp.
Paul Bognar, COO & EVP
Joined SIR Corp. in 2012
Head of Marketing, Human Resources, Finance,
IT and Purchasing Departments
Previous: President of Simmons Canada;
various senior positions with Maytag Canada
Bruce Elliott, VP, Business Development
Joined SIR Corp. in 2011 as COO and EVP
Appointed President of Jack Astors (March 2012)
Appointed VP, Business Development (Jan. 2014)
Previous: partner at Level 5 Strategic Brand
Advisors; President of Labatt Breweries; and
senior management positions at Second Cup
Independent Trustees:
Peter Luit: Managing Director, CXO Advisory Services Inc.;
Chairman of Audit Committee
John McLaughlin: President, Treasury Technologies
International; Chairman of Board of Trustees
William Rogers: President, The Commercial Capital
Corporation; Chairman of Corporate Governance Committee
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SIR Corporate Ownership Model

Implement best practices across restaurant network

Coordinate roll-out of new restaurant locations and
Control food & beverage offerings
Leverage supplier relationships and delivery logistics

Ability to change restaurant design with minimal lead

time
Flexibility Allows for constant menu innovation
Unlike franchises, business change can be affected
without lengthy approvals or negotiations

Consistency Consistent customer experience at all restaurant

locations creates superior brand value

Greater control enables rapid implementation of operational and growth

initiatives in response to consumer trends and competitive activity5 5
Royalty Pool Concept Restaurants

Royalty Pool Signature Restaurants

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57 Royalty Pooled Restaurants

32 1

8 1 Alberta
Quebec 1
6 1
4

Ontario

Nova Scotia

Newfoundland

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Royalty Pooled Restaurants

Revenue Contribution (for the 12 months ended December 31, 2016)

8.4%
7.5%

9.9%

74.2%

Note: The revenue contribution from Signature Restaurants (Reds and Loose Moose) also includes Far Niente/FOUR/Petit Four, which closed on Oct. 15,
2016. 8
Jack Astors

Pooled Revenue
$200,000 45
$180,000 40
$160,000 40
38 35

# of restaurants
37
$140,000 34 $199,709 $206,312 30
($000s)

$120,000
31 $194,723
$176,723 25
$100,000 $157,629
20
$80,000
15
$60,000
$40,000 10

$20,000 5

$- 0
2012 2013 2014 2015 2016

Same Store Sales

5.0%

1.7%
0.6%

2012 2013 2014 2015 2016

-0.2% 99
-1.1%
Consistent Track Record of Investment
in New and Existing Locations

All of the Jack Astors that existed at the time of the

Funds IPO have been Evolved

1010
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Consistent Track Record of Investment
in New and Existing Locations

SIR has commenced the next Evolution to

drive same store sales growth
Jack Astors locations renovated
8 in 2016-2017
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Canyon Creek

Pooled Revenue
$35,000 9
8 8 8 8 8
8
$30,000
7

# of restaurants
$25,000 $27,682 $26,794 $27,256 $27,321 $27,490
6
$20,000 5
$000s

$15,000 4

3
$10,000
2
$5,000
1

$- 0
2012 2013 2014 2015 2016

Same Store Sales

1.7%
0.6%
0.2%

2012 2013 2014 2015 2016

-1.0%

-3.2% 1212
Consistent Track Record of Investment
in New and Existing Locations

SIR has initiated a comprehensive plan to improve

the long-term performance of Canyon Creek
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Scaddabush Italian Kitchen & Bar
(& Alice Fazoolis)

# of restaurants currently in Royalty Pool

Pooled Revenue
$25,000 6
5
2
5 5
5
$20,000
4 4
($000s)

$18,540 $20,888 4
$15,000
$15,159 3
$13,610 $13,773
$10,000
2

$5,000
1

$- 0
2012 2013 2014 2015 2016

Same Store Sales

12.7%

1.2% 1.9%

2012 2013 2014 2015 2016

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-3.9%
-9.6%
1.) Alice Fazoolis on Adelaide St. in Toronto was closed during Q1 2012. SIR paid a make-whole payment to the
Fund from the date of closure to Dec. 31, 2012 (Class A GP units)
2.) A sixth restaurant was added to the royalty pool on January 1, 2017
3.) 2012 SSSG excludes the results of Alice Fazoolis on Adelaide St. 14
Scaddabush Conversions
& New Locations

Project Location Completion

Conversion Mississauga Opened (July 2013)

Conversion Richmond Hill Opened (Sept. 2015)

Downtown Toronto
New build Opened (Feb. 2014)
(Yonge & Gerrard)
Opened (July 2016)
New build Scarborough Added to royalty pool in
January 2017

Downtown Toronto Opened (Nov. 2016)

New build To be added to royalty pool in
(Front St.) January 2018

Conversion Oakville 2017

Conversion currently underway

Conversion Vaughan 2017

Remaining 2 Alice Fazoolis to be

converted to Scaddabush in 2017 15
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 Signature Group
Royalty Pooled Restaurants
Pooled Revenue1 4 4 4
$25,000 4

$23,345
$20,000 3 3 $22,126 $22,031
3

# of restaurants
$17,540
$15,000
($000s)

$15,352
2
$10,000

1
$5,000

$- 0
2012 2013 2014 2015 2016

Same Store Sales

14.3%
11.7%5
6.1%
5.5%4

2012 2013 2014 2015 3 2016

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-4.4% -0.4%
1) Pooled revenue includes contributions from Far Niente/FOUR/Petit Four up to the effective date of closure on
Oct. 15, 2016
2) Reds was closed for 32 days for a major renovation and repositioning
3) Far Niente was closed for 40 days to complete restoration work following a burst pipe on the premises
4) Adjusted same store sales, excluding results for Far Niente/FOUR/Petit Four, grew by 5.5% 16
5) Same store sales for 2016 do not include contribution from Far Niente/FOUR/Petit Four
Consistent Track Record of Investment in New and
Existing Locations

# of Royalty Pooled Cumulative Renovations &

60 Restaurants Enhancements Completed

50 50

40 40

30 30

20 20

10 10

34 34 34 36 38 39 45 45 46 47 49 53 55 57 0 20 26 30 32 32 35 40 43 47 50 54 57
0 0

Delivering on our commitment since inception 18

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SIR Royalty Income Fund Structure

Fund Unitholders

Monthly Distributions

Interest Income SIR Royalty

from SIR Loan Income Fund

Distribution Income

Restaurant Operations

6% Royalty on SIR Royalty

Pooled Revenue Limited Partnership1
NOTE: the above illustration is for descriptive purposes only and is qualified in its entirety by the description in the actual agreements and by the Funds prospectus on
SEDAR
1. As at December 31, 2016, SIR Corp. holds a 19.8% retained interest in SIR Royalty Limited Partnership. 18
Pooled Revenue Growth

Pooled Revenue Number of Royalty

(in $ millions) Pooled Restaurants

300 57 60
55
53
49 $278.0
250 47 $267.6 50
$257.9
$234.7
200 40
$215.8

150 30

100 20

50 10

0 0
2012 2013 2014 2015 2016

Pooled Revenue Restaurants in Royalty Pool

Average revenue contribution per restaurant increased by 6.2%

from 2012 to 2016 20
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1) As at September 30, 2016
Same Store Sales

2.8%

2.0%
1.6%

0.4%

1
2012 2013 2014 2015 2016

-0.8%
1) Same store sales in 2016 do not include Far Niente/FOUR/Petit Four, due to closure on Oct. 15, 2016

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Q4 2016 Financial Review

Pooled Revenue (in $ millions) Net Earnings (in $ millions)

80 $2.21
2.5 $2.11
$67.2 $67.5 2.0
70
1.5
1.0
60
55 57
0.5

50 0.0
Q4 2015 Q4 2016

40
Cash Distributions (in $ millions)
3.0 $2.12 $2.36
30 $2.17 $2.39 120.0%
2.5 100.0%

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2.0 102.5% 101.2% 80.0%
1.5 60.0%

10 1.0 40.0%
0.5 20.0%

0 0.0 0.0%
Q4 2015 Q4 2016 Q4 2015 Q4 2016

Restaurants in Royalty Pool Distributable Cash Cash Distributed Payout Ratio

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Historical Cash Distributions & Payout Ratio

The Funds payout ratio is intended to average 100%

SIFT Tax per annum over the long term. The Funds payout ratio
($ millions) from inception in 2004 through to 2016 is 99.4%.
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103.6% 104.9% 99.1%
9 100.1% 99.9% 100.5% 100.5%
95.1%

9.06
8.98
8.69
8.65
8

8.28
8.24
7.62
7
7.39

7.39
7.38

7.27
7.14

5.91
5.62
5.51
5 5.51
4
3
2
1
0
2 3
2009 2010 2011 2012 2013 2014 2015 2016
Distributable Cash Distributions Payout Ratio

1) The reduction in distributions beginning in 2011 was equal to the estimated SIFT tax payable on the Funds 2011 income.
2) The special year end distribution of $0.05/unit to unitholders of record as of December 31, 2012 is not included in the chart above.
3) Cash distributed to unitholders in 2013 includes the special year-end distribution of $0.05 per unit that was declared in December 2012 and paid on
January 11, 2013. The Fund also increased monthly distributions to $0.095 / unit effective for the June 2013 distribution. The payout ratio was significantly
affected by these items. 22
Attractive and Stable Yield with
History of Increases

Current monthly distribution of $0.095 / unit, current yield ~ 7.7%

Five distribution increases since IPO in 2004

$0.115
$0.110 SIFT Tax
$0.105
$0.100
$0.095
$0.088
$0.083

2004 June 2006 June 2007 June 2008 Feb. 2011 June 2012 June 2013
to to to to to to to
May 2006 May 2007 May 2008 Jan. 2011 May 2012 May 2013 Present
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Outlook

Ongoing Jack Astors renovation program to drive SSSG

Major renovations of eight locations completed in
2016-2017

New Scaddabush added to Royalty Pool effective January

2017, additional one to be added in January 2018

Two remaining Alice Fazoolis to be converted to

Scaddabush during 2017

Implementation of comprehensive plan to improve long-

term performance of Canyon Creek

Third Reds location scheduled to be opened during 2017

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