Inovalis Real Estate Investment Trust Announces Third Quarter Results with Higher than Forecasted FFO and AFFO Per Unit

/NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR DISSEMINATION IN THE UNITED STATES/

TORONTO, Nov. 13, 2013 /CNW/ - Inovalis Real Estate Investment Trust (the "REIT") (TSX: INO.UN) today reported its quarterly financial results for the period ended September 30, 2013.

THIRD-QUARTER HIGHLIGHTS

  • Funds from Operations (FFO) for the period of $2.5 million (or $0.20 per unit on a fully diluted basis), higher than the forecasted $2.1 million (or $0.18 per unit)
  • Adjusted Funds From Operations (AFFO) for the period of $2.8 million (or $0.23 per unit on a fully diluted basis) higher than the forecasted $2.6 million (or $0.22 per unit). Payout ratio for the period stands at 90.9%
  • Improved occupancy ending the quarter at 96.0%, up 20 bps from 95.8% as at June 30, 2013
  • Debt-to-book value of only 44.2% and strong interest coverage ratio of 4.2 x

PERIOD FROM APRIL 10, 2013 TO SEPTEMBER 30, 2013 HIGHLIGHTS

  • FFO for the period of $4.4 million (or $0.35 per unit on a fully diluted basis), higher than the forecasted $3.9 million (or $0.33 per unit).
  • AFFO for the period of $5.3 million (or $0.42 per unit on a fully diluted basis) higher than the forecasted $4.8 million (or $0.40 per unit). Payout ratio for the period stands at 93.1%

"I am very pleased to announce our second quarterly financial report with FFO and AFFO figures higher than our initial forecasts. Looking ahead, we will focus on running our business efficiently through an active leasing program and on identifying growth opportunities in order to create long-term value for our Unitholders. We continue to believe that the French and German real estate office markets, due to their maturity, depth and the recovery phase they have entered in, are and will continue to be sought-after investment markets." said Stéphane Amine, Chairman of the Board of Inovalis REIT.

OPERATING AND FINANCIAL SUMMARY

         
    3-month period ended 
September 30, 2013
  Period from February 8, 2013
to September 30, 2013
(in thousands of CAD$ unless otherwise expressed and except for per
Unit amounts)
  Actual Financial
forecast(1)
  Actual Financial forecast
pro-rated(1)
             
Operational information            
Number of properties   4        
Gross leasable area   529,267 sq.ft        
Occupancy rate (end of period) (2)   96.0%        
In-place rent per sq.ft per year   35        
             
Operating results            
Rental income   4,409 4,098   7,893 7,494
Net rental income   4,275 3,998   7,731 7,311
Profit for the period   5,699 1,902   13,426 9,903
Funds from Operations (FFO) (3) (4)   2,467 2,134   4,424 3,893
Adjusted Funds from Operations (AFFO) (3) (4)   2,848 2,631   5,285 4,810
FFO per Unit (diluted) (3) (4) (5)   0.20 0.18   0.35 0.33
AFFO per Unit (diluted) (3) (4) (5)   0.23 0.22   0.42 0.40
             
Distributions            
Declared distributions on Units and Exchangeable Securities   2,596     4,924  
Distribution paid and payable in cash on Units and Exchangeable Securities   2,588     4,916  
Distribution declared per Unit (diluted) (5)   0.21     0.39  
AFFO cash payout ratio (3)   90.9%     93.0%  
             
Financing            
Level of debt (debt-to-book value) (6)   44.2%        
Level of debt (debt-to-book value, net of cash) (6)   42.2%        
Weighted average interest rate (7)   1.48%        
Weighted average term to maturity of principal repayments
   of finance leases
  4.5 years        
Interest coverage ratio (8)   4.2 x        
   
(1)      Financial forecast - refers to the financial forecast for the three-month period ended September 30, 2013 included in our prospectus dated March 28, 2013. The financial forecast for the period from April 16, 2013 to September 30, 2013 has been pro-rated to reflect our ownership of the properties starting on April 16, 2013
(2)      Does not take into account the impact of the Vendor Leases. Taking into account the Vendor Leases, occupancy rate is 100.0%
(3)      FFO and AFFO are key measures of performance used by real estate companies. However, they are not defined under IFRS, do not have standard meanings and may not be comparable with other industries or issuers
(4)      FFO is net income adjusted for acquisition costs, negative goodwill, valuation gain from investment properties, net change in fair value of financial instruments and change in fair value of exchangeable securities. AFFO is FFO adjusted with amortization of fair value on assumed debt, non cash part of asset management fees paid in exchangeable securities and capex net of cash subsidy
(5)      Based on the weighted average number of units (diluted) during the period of 12,575,340
(6)      Debt-to-book value is defined as total debt divided by total assets. Debt-to-book value, net of cash, is defined as total debt divided by total assets, each of which excludes $8.4 million of cash at September 30, 2013
(7)      Calculated as the weighted average interest rate paid on all the finance leases
(8)      Calculated as net rental income plus interest, less general and administrative expenses, divided by interest expense on the financial leases
   

Occupancy
The portfolio of properties had an occupancy rate of 96.0% as of September 30, 2013, 20 bps ahead of the occupancy rate of 95.8% as of June 30, 2013. Taking into account the vendor leases put in place by the vendors of the leasehold interests on the vacant areas on the Vanves property (for a three-year period from acquisition date) and on the Dubonnet property (for a one-year period from the acquisition date), the occupancy rate on the portfolio is 100.0%.

In-place rents
The portfolio is on the average let at a $35 per sq.ft per year ($41 per sq.ft per year for the French properties and $15 per sq.ft per year for the German property).

CAPITAL HIGHLIGHTS

Equity
On October 31, 2013, the REIT had 11,283,831 units outstanding.

Financing
The REIT has financings on the four leasehold properties with an average all-in interest rate of 1.48% and an average weighted maturity of 4.5 years. Interest coverage ratio is 4.2 x for the third quarter. Debt to book value as of September 30, 2013 is 44.2%.

DISCLAIMER

Information appearing in this news release is a select summary of resuts. The financial statements and management's discussion and analysis for the REIT are available at www.inovalisreit.com and on SEDAR at www.sedar.com.

ABOUT INOVALIS REAL ESTATE INVESTMENT TRUST

Inovalis Real Estate Investment Trust is an unincorporated, open-ended real estate investment trust established pursuant to a declaration of trust under the laws of the Province of Ontario. The REIT has been created for the purpose of acquiring and owning office properties primarily located in France and Germany but also opportunistically in other European countries where assets meet the REIT's investment criteria. The REIT currently owns an interest in four off ice properties in France and Germany, comprising 529,267 square feet (49,170 square metres) of gross leasable area.

 

SOURCE: Inovalis Real Estate Investment Trust

For further information:

David Giraud, Chief Executive Officer
Inovalis Real Estate Investment Trust
Tel: +33 1 5643 3323
david.giraud@inovalis.com

Antoine Tronquoy, Chief Financial Officer
Inovalis Real Estate Investment Trust
Tel: (416) 845-1483
antoine.tronquoy@inovalis.com


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