/NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR DISSEMINATION IN THE
UNITED STATES/
TORONTO, Aug. 14, 2013 /CNW/ - Inovalis Real Estate Investment Trust (the "REIT") (TSX: INO.UN) today reported its quarterly financial results for the period ended June
30, 2013.
HIGHLIGHTS
The units of Inovalis REIT were successfully listed on the Toronto Stock
Exchange on April 10, 2013. Highlights of the REIT's initial quarter of
operations include:
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Listing on the Toronto Stock Exchange on April 10, 2013 under the ticker
"INO.UN" with an initial public offering of units for gross proceeds of
$105,000,000
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Exercise of over-allotment option on May 10, 2013 by the underwriters of
the initial public offering resulting in additional gross proceeds of
$8,700,000
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The proceeds of the offering were used to acquire four properties
totalling 529,267 sq.ft of office space in France and in Germany on
April 12 and 16, 2013
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Underlying properties are 95.8% let under long-term leases (weighted
average lease term of 8.1 years) to high quality tenants (81% of the
gross rental income comes from French public agencies or is guaranteed
by top-tier international banks)
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Funds from Operations (FFO) for the period of $2.0 million, $0.2 million
higher than the forecasted $1.8 million and Adjusted Funds From
Operations (AFFO) for the period of $2.4 million, $0.2 million higher
than the forecasted $2.2 million (both FFO and AFFO on a pro-rated
basis)
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Debt-to-book value of only 48.1% and strong interest coverage ratio of
3.9 x
"I am very pleased to announce our first quarterly financial report with
FFO and AFFO figures ahead of our initial forecasts. The French and
German real estate office markets, due to their maturity, depth and the
recovery phase they have now entered in, are offering outstanding
investment opportunities for which Inovalis REIT is ideally positioned" said Stéphane Amine, Chairman of the Board of Inovalis REIT.
OPERATING AND FINANCIAL SUMMARY
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(in thousands of CAD$ unless otherwise expressed and except for per Unit
amounts)
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For the period from April
16, 2013 to June 30,
2013
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Financial forecast
(pro-rated) (1)
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Operational information
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Number of properties
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4
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Gross leasable area
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529,267 sq.ft
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Occupancy rate (end of period) (2) |
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95.8%
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In-place rent per sq.ft per year
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34
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Operating results
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Rental income
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3,484
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3,396
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Net rental income
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3,457
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3,313
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Income (loss) and comprehensive income (loss)
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7,728
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8,001
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Funds from Operations (FFO) (3) (4) |
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1,958
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1,759
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Adjusted Funds from Operations (AFFO) (3) (4) |
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2,434
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2,179
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FFO per Unit (3) (4) (5) |
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0.16
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0.15
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AFFO per Unit (3) (4) (5) |
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0.19
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0.18
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Distributions
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Declared distributions (6) |
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2,328
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Distribution paid and payable in cash on Units and Exchangeable
Securities (6) |
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2,328
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Distribution per Unit (5) |
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0.19
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AFFO payout ratio (3) |
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95.6%
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Financing
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Debt-to-book value (7) |
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48.1%
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Weighted average interest rate (8) |
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1.46%
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Weighted average term to maturity of principal repayments of finance
leases
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4.8 years
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Interest coverage ratio (9) |
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3.9 x
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(1)
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Financial forecast - refers to the financial forecast for the
three-month period ended June 30, 2013 included in our prospectus dated
March 28, 2013, which has been pro-rated to reflect our ownership
starting on April 16, 2013
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(2)
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Does not take into account the impact of the vendor leases. Taking into
account the vendor leases (as described below under Occupancy), occupancy rate is 100.0%
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(3)
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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
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(4)
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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.
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AFFO is FFO adjusted for amortization of fair value on assumed debt, non
cash part of asset management fees paid in exchangeable securities and
capex net of cash subsidy
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(5)
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FFO per unit is based on 12,538,762 units. AFFO per unit is based on
12,556,250 units. Explanation for the number of units used in the
calculations can be found in the Equity subsection of the Presentation of our Capital section of our financial statements
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(6)
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Distributions of $2,328 pertain to the period starting on the date of
the REIT's initial public offering (April 10, 2013) and ending on June
30, 2013. This covers therefore a longer period than the financial
statements period that starts on April 16, 2013 and ends on June 30,
2013. Distributions for the period starting on April 16, 2013 and
ending on June 30, 2013 pro-rated would be $2,157
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Occupancy
The portfolio of properties has an occupancy rate of 95.8% as of June
30, 2013. Taking into account the 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%. No tenant has announced any lease
termination during the period.
In-place rents
The portfolio is on the average let at a $34 per sq.ft per year, i.e. at
an average 6.9% discount to market rent of $37 per sq.ft per year
(according to independent valuers).
Net income
Net income for the period reached $7.7 million. Acquisition costs of
$3.4 million are largely offset by the negative goodwill of $9.7
million
Funds from operations
FFO for the period amounted to $0.16 per unit, ahead of initial
forecasted FFO of $0.15 per unit.
Adjusted funds from operations
AFFO for the period amounted to $0.19 per unit, ahead of initial
forecasted AFFO of $0.18 per unit. AFFO payout ratio for the period was
95.6%.
CAPITAL HIGHLIGHTS
Equity
On June 30, 2013, the REIT had 11,370,000 units outstanding. At the June
30, 2013 closing price of $9.52 per unit, the REIT's market
capitalization was $108.2 million.
Financing
The REIT secured financing on the four leasehold properties with an
average all-in interest rate of 1.46% and an average weighted maturity
of 4.8 years. The REIT has a strong interest coverage ratio of 3.9 x.
APPOINTMENT OF CFO
On August 13, 2013, Antoine Tronquoy was appointed Chief Financial
Officer of Inovalis REIT. Mr. Tronquoy has 10 years of experience in
real estate financing in Europe and in Canada. Prior to joining
Inovalis, Mr. Tronquoy spent 3 years at Otéra Capital, the real estate
debt affiliate of Caisse de dépôt et placement du Québec. Before that,
he spent 7 years in the real estate structured finance group of Morgan
Stanley in Europe.
DRIP
Inovalis has implemented a Distribution Reinvestment Plan ("DRIP") starting from the July distribution. By participating in the Plan,
Unitholders will have cash distributions from Inovalis REIT reinvested
in additional units as and when cash distributions are made with a
"bonus" distribution of units equal to 3% of the amount of the cash
distribution reinvested pursuant to the Plan.
DISCLAIMER
Information appearing in this news release is a select summary of
resuts. The financial statements and managements'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 acquires and
owns 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
