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About Inovalis

Inovalis specializes in Real Estate Funds and Investments, Financial Assets Management, Real Estate Services and Wealth Management. Inovalis develops investment vehicles and provides advisory services for institutional and private investors.

Inovalis Headquarter Location

52 Rue de Bassano

Paris, 75008,

France

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Inovalis Real Estate Investment Trust Announces Financial Results for the Quarter Ended March 31, 2022

May 9, 2022

Author of the article: Article content TORONTO — Inovalis Real Estate Investment Trust (the “REIT”) (TSX: INO.UN) today reported strong financial results for the quarter ended March 31, 2022. The Consolidated Financial Statements and Management’s Discussion and Analysis (“MD&A”) for Q1 2022 are available on the REIT’s website at www.inovalisreit.com and at www.sedar.com 1. Advertisement 2 Article content Try refreshing your browser, or Inovalis Real Estate Investment Trust Announces Financial Results for the Quarter Ended March 31, 2022 Back to video “Our Q1 2022 entry into the Spain office market and further investment in Paris has increased the portfolio and added to the bottom line which will be evident in Q2. Management continues to advance on our Core+ strategy to reposition three other assets and unlock value for Unitholders by the end of 2022.” Net Rental Income For the portfolio that includes only assets owned entirely by the REIT (“IP Portfolio”), Net Rental Income for the three months ended March 31, 2022 (“Q1 2022”), was CAD$1.9 million (EUR€1.3 million) compared to CAD$4.4 million (EUR€2.9 million) for the three months ended March 31, 2021 (“Q1 2021”). This CAD$2.7 million (EUR€1.6 million) decrease is mainly attributable to the sale of Jeuneurs at the end of 2021 and the corresponding decrease of CAD$0.7 million (EUR€0.5 million), the lease terminations in the Baldi and Sabliere properties (CAD$0.8 million) in Q4 2021 (both properties are being repositioned in the asset recycling plan), the ongoing eviction process on the Courbevoie property (CAD$0.5 million) – under promise to sell, as well as negative foreign exchange impact of CAD$0.3 million and the remaining difference related to the IFRIC 21– Levies (“IFRIC 21”) increase due to the Gaia acquisition. The effect of the new acquisitions, completed at the very end of March 2022, will be evident in Q2 2022 for an aggregate additional contribution to the Net Operating Income (“NOI”) of CAD$1.3 million. In Q1 2022, Net Rental Income, adjusted for IFRIC 21 for the portfolio that includes the REIT’s proportionate share in joint ventures (“Total Portfolio”), was CAD$6.4 million (EUR€4.5 million), compared to CAD$8.6 million (EUR€5.7 million) for Q1 2021, a decrease for the same reasons described above for the IP Portfolio and a negative foreign exchange loss of CAD$0.6 million. _____________________ 1 This press release contains certain Non-GAAP and other financial measures. Refer to “Non-GAAP Financial Measures and Other Financial Measures” in this press release for a complete list of these measures and their meaning. Leasing Operations All of the REIT’s lease contracts in France, Germany and Spain have rental indexation that offsets the impact of inflation. Rental income is increased annually to reflect the rising cost of living which protects returns to Unitholders. In the REIT’s Total Portfolio, nearly 10,000 sq. ft. of previously vacant office space were leased over the first quarter of 2022, primarily in the Metropolitain property which is not 100% occupied, and in the Delizy building. The strategic lease terminations are progressing in the Veronese property to facilitate the sale of the property on the terms set out in the December 2020 promise to sell. Advertisement 3 Article content As at March 31, 2022, occupancy for the REIT’s IP Portfolio was 78.2% and the Total Portfolio was 82.6%. Seven of the properties are at, or close to, a 100% occupancy rate. The Investment Portfolio (joint-venture assets) had 95.1% occupancy at March 31, 2022. The weighted average lease term (“WALT”) of the Total Portfolio stands at 3.1 years, with two major lease maturities in 2023 for the main tenants of the Arcueil and Neu-Isenburg properties. The Total Portfolio occupancy rate of 82.6% is negatively impacted by the strategic lease terminations at the Courbevoie property. Excluding Courbevoie, the REIT’s Total Portfolio occupancy rate was 86.1%. Gaia’s occupancy rate of 84% belies the effective 100% rental revenue stream due to the 3-year rental guarantee on the vacant premises that the REIT received in advance at acquisition and which, for accounting purposes, was treated as a reduction in the acquisition price and not the rental income. This offset has an impact of 1.1% on Total Portfolio occupancy). Renewed interest from prospective tenants since Q2 2021 show growing confidence in our Parisian and German portfolio. To bolster leasing efforts, management will selectively complete capital expenditure improvements on vacant areas to attract tenants and maximize rent. Capital Market Considerations The REIT has reliably delivered above-average returns to unitholders, continuing to pay a stable, attractive distribution, providing a superior investment opportunity on the basis of: Investment diversification via exposure to selected European markets with a deeply experienced local asset manager. Compelling risk/return ratio for commercial real estate, given low rates on 10-year government bonds. Lower borrowing costs in the European community compared to Canada, fueled by the European Central Bank (“ECB”) policies; and A Euro-currency backed hedge on distributions paid in CAD$, with a benefit crystallized by a CAD$0.4 million finance income in the quarter. The REIT’s Unitholders’ equity on March 31, 2022 was CAD$328.4 million (EUR€237.2 million), which implies a book value per Unit at that date of CAD$10.08/Unit or CAD$10.05/Unit on a fully-diluted basis, using the weighted average number of outstanding Units for the three-month period, despite a $0.36/unit negative FX impact over Q4 2021 on a fully-diluted basis. Adjusted Funds From Operations Article content The REIT follows the recommendations of the Real Property Association of Canada (“REALPAC”) (February 2019 White Paper) with certain exceptions. Funds from Operations (“FFO”) per unit and Adjusted Funds from Operations (“AFFO”) per unit are Non-GAAP ratios. Non-GAAP ratios do not have standardized meaning under IFRS. These measures as computed by the REIT may differ from similar computations as reported by other entities and, accordingly, may not be comparable to other entities. Refer to the Non-GAAP Financial Measures and Other Measures section of this MD&A for a more detailed discussion on FFO and AFFO. In Q1 2022, the REIT reported FFO and AFFO of CAD$0.09 and CAD$0.10 per Unit, respectively, versus CAD$0.12 and CAD$0.11 for the same period last year2. The AFFO payout ratio, a non-GAAP measure of the sustainability of the REIT’s distributions, is 209.4% for the Q1 2022. Management has established the goal of reducing the AFFO payout ratio to <95% by the end of Q4 2022, by investing available cash in accretive assets, asset recycling, and improving global occupancy. The accretive effect of the deployment of the REIT’s available cash into two effectively fully occupied properties in March 2022 will be reflected in the Q2 2022 financial results. Financing Activity The REIT is financed almost exclusively with asset-level, non-recourse financing with an average term to maturity of 3.9 years for the Total Portfolio (4.5 years on the IP Portfolio). As at March 31, 2022, the weighted average interest rate across the Total Portfolio was 1.87% (1.92% for the IP Portfolio).Two new five-year mortgages for the Gaia and Delgado properties are financed at 1.91% and 1.99% interest rates, respectively. Although hikes of the ECB key lending rates are anticipated in the remainder of 2022 management is confident that the REIT will continue to access financing opportunities. Historically low interest rates in Europe are less costly than those offered by traditional financing in Canada and the REIT has leveraged this advantage through its access to banking networks in Europe, as evidenced by the latest transactions. Acquisition : Le Gaia, France On March 28th, 2022, the REIT closed on the GAIA property, a 119,499 sq. ft. office building located near La Defense, Paris, one of Europe’s leading business hubs. The property is 84% occupied by seven tenants and has an effective 100% rental revenue stream due to CAD$3.4 million (EUR€2.5 million) rental guarantee to cover 100% occupancy for the next 3 years. The purchase price was CAD$55.3 million (EUR€40.0 million), excluding CAD$5.5 million (EUR€3.7 million) acquisition costs and rental guarantee. This acquisition has been financed by a CAD$30.5 million(EUR€22.0) million mortgage loan over a 5-year term, at fixed interest of 1.91%. This investment is in line with the REIT’s Core+ strategy, to deploy available cash into assets that generate predictable cash flows on mature and consolidated markets. Furthermore, the property is in line with the REIT’s ESG objective, as the building is certified with Europe’s dual High Environmental Quality (HQE) and BBC Effinergie (Low-energy Building) certifications. Advertisement 5 Article content _____________________ 1 FFO and AFFO are non-GAAP measures. See the section “Non-GAAP Financial Measures and Other Measures” for more information on the REIT’s Non-GAAP measures. A reconciliation of FFO and AFFO to Net Income can be found under the section Non-GAAP Reconciliation (FFO and AFFO). Acquisition : Delgado, Spain On March 31, 2022, the REIT signed the final purchase agreement of a 119,922 sq. ft. office building in the Alcobenda area of Madrid, Spain. This 100% occupied property is leased to two high-credit rating tenants from the aeronautics sector, with a weighted average lease term of 4.9 years. The purchase price was CAD$40.7 million (EUR€29.4 million), excluding acquisition costs, financed through a CAD$22.5 million (EUR€16.2 million) mortgage loan at a fixed interest of 1.99% over five years. This entry into the Spain real estate market by the REIT was supported and made easier by the existing Inovalis S.A. asset and property management platform in Spain. The REIT believes that there is high potential in the Spain market for future investments. Bad Homburg, Germany A one-year extension of the in-place mortgage financing was signed in March 2022 on similar terms. The key operational objective for this property is to attain 85% occupancy by March 2023 and management will arrange for a longer-term financing at that time. Courbevoie (Veronese), France The pending sale of the Courbevoie asset for CAD$39.1 million (EUR€27.2 million) is contingent on the buyer obtaining a building permit and the REIT vacating the asset. At the end of March 2022, in line with the agreements signed in Q4 2021, two more tenants vacated the property. An extension to the commitment to sell has been agreed on with the buyers for a sale by the end of December 2022, once the permit recourses are cleared and vacancy conditions are fulfilled. Management has estimated the terminations will cost a total of CAD$3.4 million(EUR€2.3 million) to complete. Given the uncertainty related to the conditions attached to the promise to sell and the final timing of closing which has been deferred from Q1 2022 to the end of 2022, the Courbevoie property does not qualify for the presentation as an asset held for sale as of March 31, 2022. Duisburg, Germany The Duisburg property is 100% leased as at March 31, 2022, with a long Weighted Average Lease Term of 5.6 years, allowing for the refinancing of the in-place CAD$36.0 million (EUR€24.5 million) bullet mortgage loan. An agreement is now being finalized on a five-year term at 1.02% interest rate with a final repayment in 2027 and is expected to be finalized in May 2022. Advertisement 6 Article content Environmental, Social and Governance (ESG) Integrating ESG objectives and strategies into our business reflects the growing importance these factors play with many of our key stakeholders. Investors recognize the risks associated with changing regulatory requirements, tenants are including sustainability considerations in their leasing decisions, and employees want to work for responsible and socially-focused organizations. The REIT is working to improve its long-term environmental performance, and also invest in “human capital” for the implementation and monitoring of all ESG initiatives. Management is overseeing a portfolio-wide ESG independent audit of all assets, with the view to formalizing ESG priorities. The exercise will identify clear and measurable ESG practices and disclosures which we will apply and ensure are addressed by our third-party service providers. ABOUT INOVALIS REAL ESTATE INVESTMENT TRUST The REIT 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. FORWARD-LOOKING INFORMATION Although management believes that the expectations reflected in the forward-looking information are reasonable, no assurance can be given that these expectations will prove to be correct, and since forward-looking information inherently involves risks and uncertainties, undue reliance should not be placed on such information. Certain material factors or assumptions are applied in making forward-looking statements and actual results may differ materially from those expressed or implied in such forward-looking statements. The estimates and assumptions, which may prove to be incorrect, include, but are not limited to, the various assumptions set forth in this document as well as the following: i) Article content The REIT cautions that this list of assumptions is not exhaustive. Although the forward-looking statements contained in this press release are based upon assumptions that management believes are reasonable based on information currently available to management, there can be no assurance that actual results will be consistent with these forward-looking statements. When relying on forward-looking statements to make decisions, the REIT cautions readers not to place undue reliance on these statements, as forward-looking statements involve significant risks and uncertainties. Forward-looking statements should not be read as guarantees of future performance or results and will not necessarily be accurate indications of whether or not, or the times at or by which, such performance or results will be achieved. A number of factors could cause actual results to differ, possibly materially, from the results discussed in the forward-looking statements, including, but not limited to: the REIT’s ability to execute its growth and capital deployment strategies; the impact of changing conditions in the European office market; the marketability and value of the REIT’s portfolio; changes in the attitudes, financial condition and demand in the REIT’s demographic markets; fluctuation in interest rates and volatility in financial markets; the duration and ultimate impact of the COVID-19 pandemic and related government interventions as well as the geopolitical conflict in the Ukraine and Russia on the REIT’s business, operations and financial results; general economic conditions, including any continuation or intensification of the current economic downturn; developments and changes in applicable laws and regulations; and such other factors discussed under ‘‘Risk Factors and Uncertainties’’ in the REIT’s Annual Information Form. If any risks or uncertainties with respect to the above materialize, or if the opinions, estimates or assumptions underlying the forward-looking statements prove incorrect, actual results or future events might vary materially from those anticipated in the forward-looking statements. Forward-looking statements are provided for the purpose of providing information about management’s current expectations and plans relating to the future. Certain statements included in this press release may be considered a ‘‘financial outlook’’ for purposes of applicable Canadian securities laws, and as such, the financial outlook may not be appropriate for purposes other than this press release. All forward-looking statements are based only on information currently available to the REIT and are made as of the date of this press release. Except as expressly required by applicable Canadian securities law, the REIT assumes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. All forward-looking statements in this press release are qualified by these cautionary statements. Advertisement 8 Article content NON-GAAP FINANCIAL MEASURES AND OTHER MEASURES Information in this press release is a select summary of results. There are financial measures included in this press release that do not have a standardized meaning under IFRS. These measures include funds from operations, adjusted funds from operations, and other measures presented on a proportionate share basis. These measures have been derived from the REIT’s financial statements and applied on a consistent basis as appropriate. Management includes these measures as they represent key performance indicators to management, and it believes certain investors use these measures as a means of assessing relative financial performance. These measures, as computed by the REIT, may differ from similar computations as reported by other entities and, accordingly, may not be comparable to other such entities. These measures should not be considered in isolation or used in substitute for other measures of performance prepared in accordance with IFRS. The REIT has adopted the guidance under National Instrument 52-112 Non-GAAP and Other Financial Measures Disclosure for the purpose of this press release. These measures and ratios are defined below: “Accretive Assets” means that, at the time of the asset acquisition, the pro forma (post-deal) net income per Unit is forecast as higher than the REIT’s (pre-deal) net income per Unit. “Adjusted Funds From Operations” or “AFFO” is a meaningful supplemental measure that can be used to determine the REIT’s ability to service debt, fund expansion capital expenditures, fund property development, and provide distributions to unitholders after considering costs associated with sustaining operating earnings. AFFO calculations are reconciled to net income, which is the most directly comparable IFRS measure. AFFO should not be construed as an alternative to net income or cash flow generated from operating activities, determined in accordance with IFRS. AFFO is defined as FFO subject to certain adjustments, including adjustments for: (i) the non-cash effect of straight-line rents, (ii) the cash effect of the lease equalization loans, (iii) amortization of fair value adjustment on assumed debt, (iv) the non-cash portion of the asset management fees paid in Exchangeable securities, (v) capital expenditures, excluding those funded by a dedicated cash reserve or capex financing, and (vi) amortization of transaction costs on mortgage loans. Advertisement 9 Article content “Adjusted Funds From Operations / Unit” or “AFFO / Unit” is AFFO divided by the issued and outstanding Units, plus Exchangeable securities (fully diluted basis). “AFFO Payout Ratio” is the value of declared distributions on Units and Exchangeable Securities & promissory notes (if any), excluding any Participatory Distribution, divided by AFFO. “Fully diluted basis” refers to a nominal value divided by the issued and outstanding Units, plus Exchangeable securities. “Funds From Operations” or “FFO” follows the definition prescribed by REALPAC’s white paper on Funds From Operations & Adjusted Funds From Operations, dated January 2022. Management considers FFO to be a meaningful supplemental measure that can be used to determine the REIT’s ability to service debt, fund capital expenditures, and provide distributions to unitholders. As an exception, considering the significant amount of cash held in Euros in Canada and the volatility of the Canadian dollar against the Euro, the unrealized gain (loss) recognized for the quarters ended March 31, 2022, and 2021, have been excluded from the FFO calculation. Finally, non-recurring administrative expenses relating to items that are not reasonably likely to occur within two years prior to, or following the disclosure, are adjusted have also been excluded from FFO. FFO is reconciled to net income, which is the most directly comparable IFRS measure. FFO should not be construed as an alternative to net income or cash flow generated from operating activities, determined in accordance with IFRS. FFO for the REIT is defined as net income in accordance with IFRS, subject to certain adjustments including adjustments for: (i) acquisition, eviction and disposal costs, (ii) net change in fair value of investment properties, (iii) net change in fair value of derivative financial instruments at fair value through profit and loss, (iv) net changes in fair value of Exchangeable securities and private placement promissory notes in 2020, (v) finance costs related to distribution on Exchangeable securities and promissory notes in 2020, (vi) adjustment for property taxes accounted for under IFRIC 21 (if any), (vii) loss on exercise of lease option (if any), (viii) adjustment for foreign exchange gains or losses on monetary items not forming part of an investment in a foreign operation, (ix) gain or loss on disposal of investment properties or an interest in a subsidiary, (x) finance income earned from loans to joint ventures (if any), (xi) loss on extinguishment of loans, (xii) deferred taxes, (xiii) non-controlling interest, (xiv) goodwill / bargain purchase gains upon acquisition, and (xv) income taxes on sale of investment properties and provision for tax reassessment. Advertisement 10 Article content Exchangeable securities and promissory notes (2020 only) are recorded as liabilities. Exchangeable securities and promissory notes are recorded at fair value through profit and loss in accordance with IFRS. However, both are considered as equity for the purposes of calculating FFO and AFFO, as they are economically equivalent to the REIT’s Units, with the same features and distribution rights, that are economically equivalent to the distribution received by unitholders. “Funds From Operations / Unit” or “FFO / Unit” is FFO divided by the issued and outstanding Units, plus Exchangeable securities (fully diluted basis). “Investment Property Portfolio” or “IP Portfolio” refers to the six wholly owned properties of the REIT. “Net Rental Income Adjusted for IFRIC 21” refers to Net Rental Income excluding property taxes recorded under IFRIC 21 rules. “Net Rental Income” refers to the rental income plus operating cost recoveries income plus other property revenue, less property operating costs and other costs. “Participatory Distribution” means a special distribution paid to Unitholders based on 50% of the cash attributable to the excess of the sale price of assets over IFRS fair market value, in addition to the regular monthly distribution to Unitholders; “Total Portfolio” refers to the six properties referred to as the Investment Property Portfolio and the six properties of the REIT held in joint-ownership with other parties. “Units” means the issued and outstanding units in the capital of the REIT. “Weighted Average Lease Term” or “WALT” is a metric used to measure a property portfolio’s risk of vacancy and refers to the average period in which all leases in a property or portfolio will expire. It is calculated as the sum of the percentages of rentable area multiplied by the number of years in each remaining lease term. FFO and AFFO Calculation The reconciliation of FFO and AFFO for the three-month period ended March 31, 2022 and 2021, based on proportionate consolidation figures including REIT’s interest in joint ventures (please see section Consolidated statement of earnings – Reconciliation to consolidated financial statements), is as follows: Three months ended March 31, (in thousands of CAD$) Article content (1) In 2021, Other adjustments refers to administrative expenses related to the strategic review, including aborted asset acquisition costs and the SIF conversion. Due to their nature, management has decided to exclude these expenses from the FFO calculation, although REALPAC does not provide guidance on such exclusions. (2) REALPAC guidance suggest that the FX gain or loss be included in the FFO calculation. However, due to the volatility of the Canadian dollar against the Euro, the REIT has elected to exclude from the FFO calculation, the unrealized gain or loss on the REIT’s cash Euros which is domiciled in Canadian financial institutions. (3) (4) Excluding capex on properties that have a dedicated cash reserve or financing for capex (Trio, Duisburg, Stuttgart) Overview – GAAP and Non-GAAP These are set out below: March 31, 2022 (1) See the section “Non-GAAP Financial Measures” for more information on the REIT’s non-GAAP financial measures and reconciliations thereof. (2) The reconciliation of FFO and AFFO to Net Income can be found under the section Non-GAAP Reconciliation (FFO and AFFO). This press release should be read in conjunction with the REIT’s Management Discussion and Analysis (“MD&A”) and the consolidated statement of financial position and the accompanying notes for the quarters ended March 31, 2022 and 2021. See section “Discussion of Financial Performance, Non-GAAP Financial Measures and Other Measures” of the MD&A for a description of the Non-GAAP measures. View source version on businesswire.com: https://www.businesswire.com/news/home/20220509006015/en/ Contacts Inovalis Real Estate Investment Trust Tel: +33 1 5643 3323

Inovalis Investments

1 Investments

Inovalis has made 1 investments. Their latest investment was in HelloCare as part of their Seed on March 3, 2017.

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Inovalis Investments Activity

investments chart

Date

Round

Company

Amount

New?

Co-Investors

Sources

3/29/2017

Seed

HelloCare

$1.08M

Yes

1

Date

3/29/2017

Round

Seed

Company

HelloCare

Amount

$1.08M

New?

Yes

Co-Investors

Sources

1

Inovalis Team

1 Team Member

Inovalis has 1 team member, including current Founder, Stephane Amine.

Name

Work History

Title

Status

Stephane Amine

Founder

Current

Name

Stephane Amine

Work History

Title

Founder

Status

Current

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