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Inception REIT Enters Into Merger Agreement with Subversive Real Estate Acquisition REIT LP

LOS ANGELES–(BUSINESS WIRE)–Inception REIT (“I-REIT”) announced it has entered into a merger agreement with Subversive Real Estate Acquisition REIT LP (NEO: SVX.U) (NEO: SVX.RT.U) (OTCBB: SBVRF) (“Subversive REIT”). The transaction includes two properties, one retail and one industrial, and one retail mortgage across Southern California in downtown Los Angeles, Desert Hot Springs and Coachella, with a combined square footage of 45,850 square feet. All underlying properties are fully operational. The merger is expected to close on October 30, 2020, subject to satisfaction of various closing conditions.

“This positioning is only further enhanced by participating with Subversive REIT in this monumental transaction to give our investors additional options for scale, liquidity and a public market premium.”

Inception REIT was created in 2018 to serve as a way for retail and institutional investors to participate in the cannabis industry in a non-“plant-touching” capacity. I-REIT’s team brought strong, traditional real-estate underwriting discipline to build a portfolio of high-quality assets with top-tier operators and tenants.

“In an environment with broad global uncertainties, fears of future hyper-inflation and where yield is both rare and valuable, I-REIT investors have been in an inflation-protected asset-class within a high-growth industry,” said Omar Mangalji, The Inception Companies co-founder and Inception REIT sponsor. “This positioning is only further enhanced by participating with Subversive REIT in this monumental transaction to give our investors additional options for scale, liquidity and a public market premium.”

Mangalji continued, “We firmly believe that the diverse portfolio, strong tenants and talented team transitioning to its role at Subversive REIT will create a leader in not just the cannabis industry but as a best-in-class institutional real estate aggregation vehicle.”

The downtown Los Angeles property is a fully-operational 6,000 rentable square foot retail property. It is located in the Arts District and surrounded by multifamily, retail and flex industrial properties. The tenant is the largest independent, fully state- and local-licensed Southern California retail operator with six operational retail stores open or expected to open in the Los Angeles vicinity by the end of 2021.

The Desert Hot Springs Morongo property is a fully operational 37,000 rentable square foot industrial property, consisting of a 27,000 square foot premium glass light-deprivation greenhouse and 10,000 square feet for manufacturing and processing. It is operated by California’s top-selling luxury flower brand, which reportedly has over 50% store penetration in the state and positive operating cash flow.

Lastly, the Coachella property is a fully-operational 3,000 rentable square foot retail location. The Coachella retail property, located at the entrance of a planned high-end lifestyle hotel and resort that is more than half complete, was built in 2018. The tenant currently has an additional operational retail space in Palm Springs, California.

Special board committees were created for both I-REIT and Subversive to negotiate and approve the transaction. The merger must be approved by I-REIT stockholders and is subject to various other terms and conditions.

I-REIT was represented by Carlton Fields LLP as its legal counsel. The Special Committee and Board of Directors would like to thank Hunton Andrews Kurth LLP and Zukin Partners for providing valuable independent counsel and financial advice in support of the transaction process.

For more information on I-REIT, visit www.inceptionreit.com.

About Inception REIT

Inception REIT (“I-REIT”) is the first real estate investment trust (REIT) formed by an industry-leading investment firm that provides real estate debt and equity capital solutions to the regulated cannabis industry. I-REIT is sponsored by The Inception Companies (“Inception”), a private opportunistic investment firm based in Los Angeles and London with significant operating and investing experience across numerous industries, including the regulated cannabis industry. I-REIT focuses on originating, acquiring, financing, and managing a diversified portfolio of commercial real estate loans and net leased properties in the cannabis industry. I-REIT’s principals combine real estate, finance and cannabis expertise, having raised, invested, or managed over $13 billion in real estate and growth equity investments across various industries with prominent investment firms including Goldman Sachs (NYSE: GS), The Yucaipa Companies and Colony Capital (NYSE: CLNY). I-REIT neither owns, nor does it intend to own, a financial interest in cannabis businesses. For additional information, visit www.inceptionreit.com.

DISCLAIMER:

This press release contains forward-looking statements. Statements that are not historical facts, including statements about the beliefs and expectations of I-REIT, its management and its founders, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties, and a number of factors could cause actual results to differ materially from those contained in any forward-looking statement. These factors include, but are not limited to, (i) comments related to Subversive REIT and its future growth and/or liquidity prospects, (ii) economic conditions in general, and (iii) the future economics and business prospects of the Cannabis industry in particular. In some cases, forward-looking statements can be identified by words or phrases such as “may,” “will,” “expect,” “anticipate,” “target,” “aim,” “estimate,” “intend,” “plan,” “believe,” “potential,” “continue,” “is/are likely to” or other similar expressions. All information provided in this press release is as of the date of this press release, and I-REIT undertakes no duty to update such information, except as required under applicable law.

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