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UNITED STATES/
TORONTO, July 16, 2014 /CNW/ - Inovalis Real Estate Investment Trust
(the "REIT") (TSX: INO.UN) announced today that it has completed the acquisition,
on a 50-50 Joint-Venture basis ("JV"), of an office property (the "Property") located in Germany, for a total purchase price of $65.7 million (the
REIT's share being $32.8 million), representing a going-in
capitalization rate of 7.4%. The addition of the Property will be
immediately accretive to the REIT's AFFO per unit.
The Property is located in Duisburg, Germany, in the district of
Kasslerfeld, at the Innenhafen harbour. It is situated near the federal
motorways A40 to the North, A59 to the East and near the city centre of
Duisburg in the South. The Property is an eight-storey office building
developed in 2008 totalling 217,431 square feet of lettable space with
632 parking spaces and is fully let to Mitsubishi Hitachi Power Systems
Europe GmbH under a lease expiring on December 31, 2020.
The REIT is acquiring the Property in a 50-50 co-ownership arrangement
with Injazzat Real Estate Development Company K.S.C., a strategic,
global institutional investor that has had a long-standing relationship
with Inovalis SA, the manager of the REIT. The Property has been
acquired from a fund managed by a global European insurance company.
The acquisition has been financed with a first mortgage of $35.8 million
and equity investments of $29.9 million. The REIT's share of the equity
investment ($15.0 million) is coming from existing cash on hand and
increased financing on the REIT's existing French properties.
The $35.8 million first mortgage was granted by Pfandbrief Bank (one of
the largest German mortgage banks). It is an interest only 5-year term
facility at an all-in fixed interest rate of 2.28%. The Property was
valued by Jones Lang LaSalle as at November 1, 2013 at $73.0 million,
reflecting a loan to value of 49.0%.
Following the acquisition of the REIT's share of the Property, the
French properties and the German properties will represent 78% and 22%
respectively of Inovalis REIT's rental income for the next twelve
months.
David Giraud, Inovalis REIT's Chief Executive Officer, commented: "We are excited because the acquisition is consistent with our previously
stated growth strategy of acquiring high-quality well-tenanted assets
with a good location in stable markets at attractive relative
valuations. The REIT continues to see similar investment opportunities
in its targeted European markets, and thanks to the possibility of
pursuing JVs with global institutional investors, we will have
sufficient liquidity to continue buying assets through out 2014".
All amounts have been converted to Canadian dollars ($) using an
exchange rate of 1.46 C$ per €.
Non-GAAP Measures
The REIT's consolidated financial statements are prepared in accordance
with international financial reporting standards ("IFRS"). However, in
this press release a number of measures which do not have a meaning
recognized under IFRS or Canadian Generally Accepted Account Principles
("GAAP") are presented. AFFO is a non-GAAP financial measure widely
used in the real estate industry as a measure of operating
performance. AFFO is calculated by adjusting FFO for non-cash items
such as: straight-lining of contractual rent, the cash effect of the
lease equalization swap, amortization of fair value adjustments on
assumed debt and the non-cash portion of the asset management fees paid
in Exchangeable Securities. Non-recurring costs that impact operating
cash flow may be adjusted, and capital and tenant expenditures incurred
and capitalized in the period by the REIT are deducted. There is no
standard industry definition of AFFO.
Non-GAAP financial measures should not be construed as an alternative to
financial measures calculated in accordance with GAAP. Further the
REIT's method of calculating supplemental non-GAAP financial measures
may differ from the methods of other real estate investment trusts or
other issuers, and accordingly, these measures may not be comparable to
those measures presented by other real estate investment trusts or
issuers.
Forward-Looking Information
This news release contains forward-looking statements which reflect the
REIT's current expectations regarding future events. The
forward-looking statements involve risks and uncertainties, including
those set forth in the REIT's initial public offering prospectus dated
March 28, 2013 and in the 2013 annual report dated March 21, 2014 under
the sections "Risk Factors" a copy of which can be obtained at www.sedar.com. Actual results could differ materially from those projected herein.
The REIT disclaims any obligation to update these forward-looking
statements.
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. Further to the above-mentioned acquisition, the REIT
currently owns an interest in five office properties in France and
Germany, comprising 746,698 square feet (69,370 square metres) of gross
leasable area.
SOURCE Inovalis Real Estate Investment Trust
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