/NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR DISSEMINATION IN THE
UNITED STATES/
TORONTO, March 21, 2014 /CNW/ - Inovalis Real Estate Investment Trust (the "REIT") (TSX: INO.UN) today reported its financial results for the fourth quarter and the year
ended December 31, 2013. Inovalis REIT's management team will be
holding a conference call on Monday March 24, 2014 at 10:00 am EST to
discuss the results. The dial-in numbers for the conference call are:
in Toronto 1-416-764-8688; outside Toronto (toll free, within North
America) 1-888-390-0546.
HIGHLIGHTS
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Financial results ahead of forecast with Funds from Operations (FFO) for
the fourth quarter of $2.6 million (or $0.20 per unit on a fully
diluted basis), higher than the forecasted $2.1 million (or $0.18 per
unit) and for the partial year ended December 31, 2013 of $7.1 million
(or $0.56 per unit on a fully diluted basis), higher than the
forecasted $6.0 million (or $0.51 per unit)
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Adjusted Funds From Operations (AFFO) for the fourth quarter of $3.1
million (or $0.24 per unit on a fully diluted basis), higher than the
forecasted $2.6 million (or $0.22 per unit) and for the partial year
ended December 31, 2013 of $8.4 million (or $0.67 per unit on a fully
diluted basis), higher than the forecasted $7.4 million (or $0.62 per
unit)
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The AFFO payout ratio stands at 84.7% for the quarter ended December 31,
2013 and at 89.1% for the partial year ended December 31, 2013
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Active acquisition pipeline with the recent announcement of the
acquisition of a 217,400 square feet property located in Duisburg
(Germany) on a 50-50 co-ownership arrangement basis with a global
institutional investor
"I am very pleased to announce our first year end results with FFO and
AFFO figures higher than our initial forecasts. Looking ahead, we will
focus on running our business efficiently, identifying growth
opportunities in order to create long-term value for our Unitholders.
We continue to believe that the French and German real estate office
markets, due to their maturity, depth and the recovery phase they have
entered in, are and will continue to be sought-after investment
markets. After a four years of suffering time, with a new rising era,
we now foresee for the next five years numerous opportunities to
upgrade properties and be rewarded with higher rents and significant
capital gains. We are convinced that owning properties on a
joint-venture basis with institutional partners, as it will be the case
for our next acquisition in Duisburg (Germany), is a value-enhancement
tool for our company with a better diversification of our risk profile"
said Stéphane Amine, Chairman of the Board of Inovalis REIT.
OPERATING AND FINANCIAL SUMMARY
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3-month period ended
December 31, 2013
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Period from February 8, 2013
to December 31, 2013
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(in thousands of CAD$ unless otherwise expressed and except for per
Unit amounts)
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Actual
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Financial
forecast(1)
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Actual
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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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96.0%
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Weighted average lease term
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7.5 years
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Average capitalization rate (3)
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7.6%
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Operating results
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Rental income
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4,630
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4,101
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12,523
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11,595
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Net rental income
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4,394
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4,001
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12,125
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11,312
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Profit for the period
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3,955
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1,863
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17,381
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11,822
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Funds from Operations (FFO) (4) (5)
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2,555
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2,099
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7,054
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5,991
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Adjusted Funds from Operations (AFFO) (4) (5)
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3,073
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2,582
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8,446
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7,392
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FFO per Unit (diluted) (4) (5) (6)
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0.20
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0.18
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0.56
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0.51
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AFFO per Unit (diluted) (4) (5) (6)
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0.24
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0.22
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0.67
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0.62
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Distributions
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Declared distributions on Units and Exchangeable Securities
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2,602
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7,523
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Declared distribution per Unit (diluted) (6)
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0.21
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0.60
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AFFO cash payout ratio (4)
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84.7%
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89.1%
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Financing
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Level of debt (debt-to-book value) (7)
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44.2%
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Level of debt (debt-to-book value, net of cash) (7)
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42.8%
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Weighted average interest rate (8)
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1.44%
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Weighted average term to maturity of principal repayments of finance
leases
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4.25 years
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Interest coverage ratio (9)
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4.0 x
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(1)
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Financial forecast refers to the financial forecast for the three-month
period ended December 31, 2013 included in our prospectus dated March
28, 2013. The financial forecast for the period from April 16, 2013 to
December 31, 2013 has been pro-rated to reflect our ownership of the
properties 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 them
into account, occupancy rate is 100.0%
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(3)
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Calculated on annualized rental income (based on rental income for the
quarter ended December 31, 2013)
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(4)
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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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(5)
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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. 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
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(6)
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Based on the weighted average number of Units during the period, i.e.
12,619,505 for the 3-month period ending December 31, 2013, and
12,579,625 for the period from February 8, 2013 to December 31, 2013
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(7)
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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 $6.1 million of cash at December
31, 2013
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(8)
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Calculated as the weighted average interest rate paid on all the finance
leases
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(9)
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Calculated as net rental income plus interest, less general and
administrative expenses, divided by interest expense on the financial
leases
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LOOKING AHEAD
Acquisition of a property in Duisburg (Germany)
The REIT recently announced the acquisition of an office property
located in Duisburg (Germany) on a 50-50 co-ownership arrangement basis
with a strategic, global institutional investor that has a
long-standing relationship with Inovalis SA. The property, located in
Duisburg, Germany, is an eight-storey office building developed in 2008
totalling 217,400 square feet of office space and is fully let to
Mitsubishi Hitachi Power Systems Europe GmbH under a lease expiring on
December 31, 2020.
Refinancing of the French properties
The REIT's share of the above-mentioned acquisition in Germany will be
funded through a combination of existing cash on hand, proceeds from
re-financing and up-financing of the REIT's French properties with
European banks and a first mortgage on the property. Upon the
completion of the Property acquisition (expected in May 2014), the
average LTV on the REIT will remain below 55%.
Development of partnerships
The REIT intends to develop partnerships with institutional investors
for the ownership, on a joint-venture basis, of investment properties
as a risk-diversification enhancement tool.
DISCLAIMER
Information appearing in this news release is a select summary of
results. 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 office properties
in France and Germany, comprising 529,267 square feet (49,170 square
metres) of gross leasable area.
SOURCE Inovalis Real Estate Investment Trust
