Mr. David Giraud reports
INOVALIS REAL ESTATE INVESTMENT TRUST REPORTS STRONG FINANCIAL RESULTS FOR THE FOURTH QUARTER AND THE YEAR ENDED DECEMBER 31, 2014
Inovalis Real Estate Investment Trust has released its financial results for the fourth quarter and the year ended Dec. 31, 2014. Inovalis REIT's management team will be holding a conference call on Monday, March 30, 2015, at 10 a.m. Eastern Standard Time 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
- Funds from operations (FFO) of $3.2-million (or 21 cents per unit) for the three-month period ended Dec. 31, 2014, and of $11.5-million (or 85 cents per unit) for the 12-month period ended Dec. 31, 2014;
- Adjusted funds from operations (AFFO) of $3.5-million (or 23 cents per unit) for the three-month period ended Dec. 31, 2014, and of $12.4-million (or 92 cents per unit) for the 12-month period ended Dec. 31, 2014;
- AFFO cash payout ratio of 91.6 per cent for the three-month period ended Dec. 31, 2014, and 89.4 per cent for the 12-month period ended Dec. 31, 2014; payout ratios reflect the fact that the REIT has $24-million of cash available for future acquisitions; it will decrease when additional cash is generated from these acquisitions; AFFO payout ratio would fall below 75 per cent if the cash available were used to buy back and cancel units;
- As at Dec. 31, 2014, overall occupancy rate of 88.4 per cent with a weighted average lease term of 6.6 years and a diversified high-quality tenant base; subsequent to the year-end, the signature in January, 2015, of two new leases on the Courbevoie and Vanves properties with an international tenant brought overall occupancy rate to 90.9 per cent;
- On Nov. 6, 2014, closed a public offering of 3,978,500 trust units, on a bought-deal basis, at a price of $9.30 per unit for total gross proceeds of $37.0-million; at the same time, Inovalis SA increased its commitment in the REIT with the purchase of 453,766 exchangeable securities for an additional investment of $4.1-million;
- The net proceeds from the above-mentioned public offering invested as follows: approximately $17-million for the acquisition of two office properties located in the greater Paris region (the Baldi and Sabliere properties), $18-million to finance a loan to Inovalis SA for the purpose of acquiring a property in Paris (the Metropolitan property), and the balance for future acquisitions and general trust purposes;
- As of Dec. 31, 2014, the debt-to-book value standing at 52.2 per cent, in line with the trust's long-term targeted range of 50 to 55 per cent; net of the cash available, this debt-to-book value stands at 49.0 per cent;
- Subsequent to the year-end, on Jan. 21, 2015, the REIT announced that it had entered into an agreement to purchase a 50-per-cent interest, on a joint venture basis, in an office property located in Germany for an all-in-cost of approximately $25-million.
"Over the last year, we are very pleased to have bought a property in Germany and to have successfully raised $41-million through an equity offering, which gave us the ability to buy two additional office properties in greater Paris area and to fund an acquisition loan with respect to a third office property located in Paris. Granting such a loan is a strategic way for the REIT to benefit from a right of first opportunity to purchase at a discount a downtown Paris office property once it meets its investment criteria. In January, 2015, we also significantly increased the occupancy rate in two of our French properties with the signature of two leases with an international tenant, increasing overall occupancy rate of our portfolio from 88.4 per cent to 90.9 per cent. Looking ahead, we are working on strategically deploying our cash available on future acquisitions, including in the short term the completion of the recently announced acquisition of a 109,100-square-foot office property located in Bad Homburg (greater Frankfurt area, Germany) on a 50:50 co-ownership arrangement basis with another strategic and global institutional investor," said Stephane Amine, chairman of the board of Inovalis REIT.
OPERATING AND FINANCIAL SUMMARY
(thousands of dollars except per unit and other data)
Dec. 31, 2014 Dec. 31, 2013
Operational information
Number of properties 7 4
Gross leasable area (square feet) 834,529 529,267
Occupancy rate (end of period) 88.4% 96.0%
Weighted average lease term 6.6 years 7.5 years
Average capitalization rate 7.3% 7.6%
Financing information
Level of debt (debt-to-book value) 52.2% 44.2%
Level of debt (debt-to-book value, net of cash) 49.0% 42.8%
Weighted average term of principal repayments of debt 7.2 years 4.2 years
Weighted average interest rate 1.98% 1.44%
Interest coverage ratio 4.7x 4.0x
Three-month period ended 12-month period ended
Dec. 31, 2014 Dec. 31, 2013 Dec. 31, 2014 Dec. 31, 2013
Operating results
Rental income $4,846 $4,630 $18,682 $12,523
Net rental earnings 5,167 4,394 17,926 12,125
Earnings for the period 21,374 3,955 16,545 17,381
Funds from operations (FFO) 3,242 2,555 11,474 7,054
Adjusted funds from operations (AFFO) 3,484 3,073 12,390 8,446
FFO per unit (diluted) 0.21 0.20 0.85 0.56
AFFO per unit (diluted) 0.23 0.24 0.92 0.67
Distributions
Declared distributions on
Units and exchangeable securities 3,255 2,602 11,131 7,523
Declared distribution per unit (diluted) 0.21 0.21 0.83 0.60
AFFO payout ratio 91.6% 84.7% 89.4% 89.1%
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