STRONG MARKET FUNDAMENTALS IN REIT’S KEY MARKETS, … · Investor Presentation: Q3 2018 Strong Market Fundamentals in REIT’s Key Markets, France and Germany Note: Key figures

Investing in Quality European Commercial Real Estate Assets

INVESTOR PRESENTATION – Q3 2018

Investor Presentation: Q3 2018

Strong Market Fundamentals in REIT’s Key Markets, France and Germany

Note : Key figures as at September 30, 2018. The closing EUR/CAD exchange rate as at this date was 1.5064.

(1) Represents weighted average lease term for end of lease period. Weighted average lease term including early termination rights equal to 4.0 years.

(2) Unit price, distribution yield and market cap have been calculated based on the unit price as at September 28, 2018

(3) Includes units related to the promissory notes

Why Invest in Inovalis REIT ?

1

Beneficial Relationship with Inovalis SA, the REIT’s External Manager2

Potential to Accretively Grow NAV through Joint Ventures and Asset Repositioning3

Inovalis’ High Quality Portfolio Trading at Attractive Valuation Level4

Attractive Distribution Yield Secured by Low AFFO Payout Ratio5

2

4.8 years

Office

$35.7M $10.46

$630M

1,333,386Unit Price (2)

Valuation

Gross Leasable Area(Sq. Ft.)

Asset Class

Projected NOI 2018 Weighted Average Lease Term (1)

93.0% 8.06%Distribution Yield (2)Occupancy Rate

$300.3M

50.7%Debt-to-book value

Market Cap (2) (3)

STRONG MARKET FUNDAMENTALS IN REIT’S KEY MARKETS, FRANCE AND GERMANY

Investor Presentation: Q3 2018 4

1. Investing in the Greater Paris Region and Germany

€650 billion

The GDP of the Paris region - 31% of the GDP of France

1,005Population density per km² 1,300

The number of identified areas of economic activity

1,054,800Companies87%

The share of employment concentrated in the service sector

53.1 million m²

Of leasable office space

12.1 million

The number of inhabitants, 18% of the French population

€3,467 billionGerman GDP. Share of EU’s GDP around 30%

0.5%Harmonized consumer price index. Eurozone average 0.2%

3.4%Unemployment rate. Fewer than 2.8 million unemployed

44.7 million

People in employment. Highest figures since reunification

€58.2 billion

Investment turnover. over 2017; +40%, best result since 2007

2.2%GDP growth. EU average 1.5%

82.7 million

Population

GermanyGreater Paris Region

Sources: Johan / BNPParibas Real Estate Research


Office Real Estate Inventory (M sq.ft)

▪ Largest economy in the Eurozone

▪ 4th largest economy and 3rd largest exporter in the world

▪ HQ for 32 Fortune 500 companies

▪ Historically low interest rates

▪ Product diversity matching a broad range of investment criteria

▪ Low rental price level leaves room for future upside

▪ Asset liquidity facilitates smooth entry and exit

▪ Strong investor appetite proves attractiveness of German property

▪ Structural stability minimizes external risks

Germany

▪ 2nd largest economy in the Eurozone

▪ 5th largest economy and 6th largest exporter in the world

▪ HQ for 31 Fortune 500 companies

▪ Historically low interest rates

▪ A diverse tenant base and a healthy level of occupier demand

▪ A strong investment market

▪ Limited office supply with potential rental growth

▪ A world leading high-end retail market

▪ Logistics hotspot, the place to be for hotels

France

5

2. Investing in the Largest Global Office Markets

Sources: Cushman & Wakefield LLP, C&W for USA GLA, CBRE for Canada GLA, JLL for New York GLA, Organisation Régionale de l’immobilier

d’entreprise for France GLA, BulwienGesa AG Statistic for German GLA, and JLL for Greater London GLA.


3. Overview of France and Germany’s economic conditionsFrance and Germany – GDP Growth

France and Germany – Unemployment Rates

1.9%

2.2%

0.3%

0.6%

1.0% 1.1%

1.2%

2.2%

1.7% 1.7% 1.6%

4.1%

3.7%

0.5% 0.5%

2.2%

1.7%

2.2% 2.2%

1.9% 1.8%

1.5%

3.1% 3.1%

1.8%

2.5%

2.9%

1.0%

1.4%

3.1%

2.1% 2.1%

1.7%

0%

1%

2%

3%

4%

5%

2010 2011 2012 2013 2014 2015 2016 2017 2018F 2019F 2020F

France Germany Canada

9.1% 9.3% 9.2%

9.8%

10.3% 10.3% 10.4% 10.1%

9.4%

9.0% 8.6%

8.1% 8.1%

7.7%

7.0% 6.8% 6.8% 6.7%

6.4% 6.1%

5.7%

5.2% 4.9% 4.8%

0%

2%

4%

6%

8%

10%

12%

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018F 2019F 2020F

France Germany

Unemployment rates in France andGermany have steadily declinedin recent years and are expected todecrease going forward.

The French and German economieshave grown at a resilient pace sincethe global financial crisis

Source: BMO Capital Markets, Bloomberg


4. Interest rate and inflation environment: France and GermanyFrance & Germany – Inflation Rates

France and Germany – Interest Rates

Interest rates in France andGermany have steadily declinedin recent years.

Rising inflation rates in the Frenchand German economies providetailwinds for future office rentgrowth.

Source: BMO Capital Markets, Bloomberg


5. Overview of Paris’ and Germany’s office marketGreater Paris Region – Office Cap Rates

Germany – Office Cap Rates

Office cap rates in all major Germancities have continued to declinesteadily since 2014 and arecurrently in the low-3% range

Office cap rates in the Greater ParisRegion continue to compress sinceInovalis REIT’s IPO,providing further upside to theREIT’s valuation

Source: BMO Capital Markets, Colliers


6. Portfolio Overview

Metropolitain

Hanover

Paris

FRANCE

Vanves

Jeûneurs

Courbevoie

Berlin

Munich

GERMANYDüsseldorf

Frankfurt

Hamburg

Existing Properties

Bad Homburg

Sabliere

Baldi

GREATER

PARIS

REGION

Duisburg

Arcueil

Cologne

IngolstadtStuttgart

Diamants

▪ Long lease terms | Stable revenue streams

▪ High quality tenants | Security of cash flow

▪ Capital appreciation & AFFO growth | Economic trends

▪ High asset liquidity | Financial flexibility

3

Rueil Malmaison

Portfolio Overview - As at September 30, 2018

Jeuneurs Courbevoie Vanves Sablière Baldi Metrop Arcueil Diamant France

Gross Leasable Area (GLA) (sq.ft)

50 407 95 903 258 673 41 043 123 657 78 818 83 633 71 627 803 761

WALT (end of lease) (Years) 2,3 3,2 3,2 4,3 3,7 6,8 4,4 3,3 3,9

Portfolio Overview - As at September 30, 2018

Hanover DuisburgBad

HomburgStuttgart Neu-Isenburg Kösching Germany

Gross Leasable Area (GLA) (sq.ft)

124 074 108 959 54 553 121 416 67 566 53 058 529 626

WALT (end of lease) (Years)

11,3 2,3 4,6 5,4 4,5 9,2 5,7

BENEFICIAL RELATIONSHIP WITH INOVALIS SA, THE REIT’S EXTERNAL MANAGER


1. Inovalis – a history of value creation

Since inception in 2013, Inovalis REIT is externally managed by Inovalis SA, which is a privately-owned-

European real estate and investment company with around C$10bn in real estate and financial assets under

asset management.

With its asset management team of professionals, which brings in a 20-year-experience in the European real

estate markets, it has extensive control of the value-added chain :

▪ Sourcing and managing core + assets in France, Germany and a selected number of other European

countries; teams with hands-on experience and knowledge of the local markets;

▪ Sourcing and managing development and forward financing deals, thus achieving high margins.

This has been the case on the Rueil Malmaison and Kösching deals;

▪ Raising funds worldwide

▪ either through joint-ventures or private placement, thus creating additional growth and diversification

opportunities for the REIT;

▪ but also profit enhancing deal structuring opportunities, as on the Arcueil deal.

Inovalis REIT has continued to distributed over 8% per annum, exceeding what most competitors are able to

deliver on comparable markets for the same category of products.


| Inovalis was established in 1998 in Paris

| Inovalis manages €7 billion ($10 billion) of real estate and financial assets, owing to its fully

integrated services. 1,000+ assets managed by our affiliates.

| Inovalis creates investment vehicles and provides advisory services through its Fund, Investment &

Asset Management, Real Estate services and Wealth Management teams comprising 350

professionals. 2nd largest French commercial property management team and 3rd wealth

management salesforce in France for private investors.

| With offices in Europe, America and Middle-East Inovalis partners with Institutional and Private

investors. Strong relationships with lenders, developers, property brokers, and tenants.

| Co-investment on average of 10% to 20% with mainly non-European partners: sovereign wealth

and pension funds, private banks, family offices

1998

CAD 10BN

350

12

2. Overview of Inovalis S.A. – A Major Local Market operator


1. Manager Inovalis SA and Inovalis SA’s founding partners

current ownership of 10.8%1 directly and indirectly

2. From April 1, 2018 asset management fees of 0.50% of the

book value of the assets for three years until April 2020| Asset Management Fees are payable in cash and/or exchangeable securities.

The composition of the payment will be determined by the Board annually

based on the REIT’s cash resources.

| Automatic renewal for two years under certain performance conditions

3. Acquisition fees of 1% paid in cash| No fees paid for assets acquired from an existing Inovalis Fund

4. REIT has right of first refusal and right of first

opportunity from assets from Inovalis S.A.

1Including the new promissory note from the recent private placement.

Management committed to the

REIT through an ongoing

equity ownership of 11%

11%

47%

42%

Ownership Breakdown

Management

Retail

Institutional

13

3. Fully Aligned Management Structure

Stéphane Amine, President Founded Inovalis in 1998 Over 20 years experience in European real estate

David Giraud, CEO

Over 20 years experience in real estate

investment and risk management,

Focused on European investment market and

real estate project development in France and

Germany

Khalil Hankach, CIO

15 years of experience in real estate acquisitions

and financing in France and Germany

Manages fund raising and acquisitions for all non

European partners of Inovalis Group

Anne Smolen, CFO

Over 25 years of international financing and

real estate experience including 13 years as

a Senior Manager at Ernst & Young


4. Summary of Management Agreement | Peer Benchmarking

REIT ManagerYear of

Agreement

Asset

Management

Fee

Property

Management

Fee

Incentive

Fee

Acquisition

Fee

Financing

Fee

Development

Fee

Leasing

Fee

Capex /

Construction

Mgmt. Fee

Initial Term

(Renewal

Term)

Internalization

Mechanism

Inovalis Inovalis SA

Renewed:

2018

(Original:

2013)

0.50% of GBV

3.0% of gross

property

revenue

No

1.0% of

purchase price

on third-party

properties

No No

10% of 1st

year annual

rent for lease

renewal; 20%

of 1st year rent

for leases

signed by new

tenants

5% of all hard

construction

costs

excluding

capex

3 years

(2 years)

Automatic internalization upon the

earlier of: (1) reaching a market

capitalization of $750mm (20-day

VWAP), or (2) April 1, 2023, the

fifth anniversary of the date of

closing; termination at no

additional cost

Slate OfficeSlate Asset

Management2012 0.30% of GBV

3.0% of gross

property

revenue

No

1.00% - first

$100mm;

0.75% - next

$100mm;

0.50% >

$200mm

0.25% of

principal &

associated

costs

No

5.0% of base

rent on new

leases; 2.0%

of base rent on

renewals

5.0% of all

hard and soft

construction

costs,

excluding

maintenance

capex

10 years

(5 years)

Option to internalize upon

reaching a fully diluted market

capitalization of $750mm; REIT

may be required to pay severance

costs equal to management fee

from the preceding 12 months

True North

Commercial

Starlight

Investments2012 0.35% of GBV No

15% of the

FFOPU; hurdle

determined by

Trustees,

increasing by

50% of

weighted

average CPI

1.00% - first

$50mm; 0.75%

- next

$100mm;

0.50% >

$200mm

No No No

5% of all hard

construction

costs in

excess of

$1mm

(excluding

maintenance

capex)

10 years

(5 years)n.a.

Morguard

NAR

Morguard

Corporation2012 0.25% of GBV 3.50%

15% of the

FFOPU

> $0.66 / unit

0.75% - first

$200mm;

0.50% >

$200mm; no

fees on

acquisition

from Morguard

Corp.

0.15% of

principal &

associated

costs

1.0% of total

development

costs where

property value

exceeds

$1mm

No No10 years

(5 years)n.a.

DREAM

Global

DREAM Asset

Management2011 0.35% of GBV

Subcontracted -

2.20%

15% of AFFO

> $0.93 / unit

(increase

annually by

50% of

increases in

CPI)

1.00% - first

$50mm; 0.75%

- next

$100mm;

0.50% >

$200mm

0.25% on

debt and

equity

financing

transactions

Subcontracted

- pay market

fee

Subcontracted -

pay market fee

5% of costs on

projects

>$1mm

(excluding TIs

& maintenance

capex)

10 years

(5 years)n.a.

Source: BMO Capital Markets, company filings

POTENTIAL TO ACCRETIVELY GROW NAV THROUGH JOINT VENTURES AND ASSET REPOSITIONING


1. Portfolio Highlights (1/2)

Located in Arcueil in the inner southern suburbs of

Paris. Built in 1969 as a turnkey project for France

Telecom with an H layout, the building was the first

and original building of the “Orange Village”

comprising six buildings in Arcueil. It is comprised

of nine upper levels and two basement levels.

▪ JV with Samsung (75% / 25%)

▪ REIT receives 75% of Samsung’s profit

▪ Possibility to consolidate the asset for the

REIT in 2020

▪ Fully air conditioned asset after Capex

Located in the central business district of Paris.

The building is elevated on a basement, a ground

floor and seven upper floors. The property benefits

from two entrances located at rue Saint Denis and

rue Greneta.

▪ Purchase of unsecured cash flow property

(WALT below 3 years)

▪ Negotiation with all tenants and reletting of

vacant spaces

▪ Latest rentals at €508/sqm when average

building rent is €401/ sqm

▪ Value increase from €46.2M (Q1 2016) to

€62.5M (Q2 2018)

Arcueil Property Metropolitan Property

Located in Rueil Malmaison’s business district, in

the western part of the Paris outskirts. The current

construction will be completely demolished and a

new building complex will be constructed with a

total lettable area of 24,232 sqm. The new building

complex will be dedicated mainly for office use.

▪ REIT preferred equity at 8.5% interest

▪ Permit of building for 25K sqm vs existing 11k

sqm

▪ Fully let as headquarters to Danone, one of

the world’s leading food and beverage

companies, with a 100-year heritage and deep

expertise in health and nutrition

▪ Baa I (Moody) and BBB+ (S&P) tenant

▪ CAC40 company representing a market

capitalization of €43bn

Rueil Property


2. Portfolio Highlights (2/2)

Located in the east of Hannover 3.5km from the

city center. The property, built in 2000, consists of

a basement, a ground floor and six upper floors

and benefits from modern fit-out office space.

▪ Recent negotiation of lease for new 10 years

with a higher quality tenant, Norddeutsche

Landesbank Girozentrale which is one of the

largest commercial banks in Germany

▪ Value increase from €20.2M (Q2 2013) to

€25.6M (Q2 2018)

Hannover Property

The Property is located in Neu-Isenburg, a key

mid-sized city in the greater Frankfurt area and

located less than 10km from downtown Frankfurt.

The Property is a Class A office building

constructed in 2013. The greater Frankfurt area is

a leading financial hub within Germany, and is

expected to experience continued growth.

▪ JV with Gulf investors allowing us to buy in the

Frankfurt area

▪ Expected certification to add value in both rent

and asset value

Neu-Isenburg Property

The new property complex consists of three

buildings for office, laboratory and parking use.

Located in Kösching, on the outskirts of Ingolstadt,

the property is well-located with the headquarter of

Audi close by. It is their largest production site and

consequently around 100 suppliers are based in

the region.

▪ Forward financing in 2016 to lock the asset

▪ Acquisition in 2018 with significant increase in

value after completion of the asset, from

€24,4M to €27.2M

Kösching Property


3. Advantages of Investing through a Joint Venture

Investing through a Joint Venture holds numerous advantages, namely:

1. Increase the REIT’s investment scope

▪ By reducing the equity amount required, the REIT can invest on much larger deals, which it would otherwise not have

access to.

▪ Access to a larger pipeline.

2. Mitigating Risk

▪ a JV investment enables to increase the number of investments with the same equity volume,

▪ and consequently diversify a portfolio quicker than on a standalone basis, while reducing

▪ the exposure on a given location, sector, type of asset, category of asset, tenant etc.

3. Stabilizing Cash Flow

▪ By reducing the weight of each investment, the impact of a given cash flow shortage is also reduced (free rent periods,

vacancy, capex & tenant improvements etc.)

4. Creating an Internal Pipeline

▪ As a JV partner, the REIT has privileged access to investment and divestment opportunities on the deal where it has

already invested.

▪ The REIT could, for example, increase/decrease its stake or even buy-out its JV partner and avoid having to launch a full

due diligence as on a new investment, executing quickly bought deals and capital deployment.

5. Increase profit / NAV

▪ The REIT may also have the opportunity to trigger a promote mechanism allowing it to reach distribution and capital gain

levels which it could otherwise not attain by investing alone on a deal.

INOVALIS’ HIGH QUALITY PORTFOLIO TRADING AT ATTRACTIVE VALUATION LEVEL


1. High quality portfolio

Portfolio Overview

Total Total Total Total Total

Portfolio Overview - As at September 30, 2018 100% Owned JVs France Germany France / Germany

Acquisition Price (REIT Ownership) (CAD) 362 255 172 491 382 982 151 763 534 745

REIT Ownership Valuation as at September 30, 2018 (1) (2) (CAD) 439 851 190 463 454 859 175 455 630 314

% of REIT's Portfolio Value (%) 70% 30% 72% 28% 100%

Mortgage balance (Excluding amortized costs) (1) (CAD) 237 398 101 319 247 421 91 296 338 717

LTV (%) 54% 53% 54% 52% 54%

Gross Leasable Area (GLA) (sq.ft) 772 574 560 812 803 761 529 626 1 333 386

Contribution to GLA (%) 58% 42% 60% 40% 100%

Projected NOI Annualized Basis (1) (CAD) 23 406 12 263 25 428 10 241 35 669

Contribution to NOI based on annualized basis (%) 66% 34% 71% 29% 100%

Projected Yield (Annualized NOI/Acq. Price) (%) 6,5% 7,1% 6,5% 6,6%

# of tenants 35 34 52 17 69

Occupancy rate (including VL) (%) 95,0% 99,5% 89,0% 99,4% 93,2%

WALT (end of lease) (Years) 5,2 4,5 3,9 5,7 4,8

Next break (Years) 3,8 4,0 2,4 5,6 4,0

(1) 1.5064 CAD/EUR closing foreign exchange rate as at September 30, 2018

(2) Excluding IFRS adjustments (Early payment of option, letting fees and IFRIC 21)


Summary Capitalization

Total Return Performance since IPO

21

2. Market Metrics and Return Performance

Unit Price (September 28, 2018) $10.46

Units Outstanding(1) 28.7

Market Capitalization ($M) $300.3

Add: Net Debt ($M) $323.9

Enterprise Value ($M) $624.2

Market Metrics

P / 2018E FFO 10.7x

P / 2019E FFO 10.4x

P / 2018E AFFO 10.9x

P / 2019E AFFO 10.6x

Implied Cap Rate 6.4%

Premium Discount to NAV (11.8%)

64.4%

37.3%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

10-Apr-13 26-Jan-14 13-Nov-14 31-Aug-15 17-Jun-16 04-Apr-17 20-Jan-18 07-Nov-18

Tota

l Ret

unrs

(%)

Inovalis S&P/TSX Capped REIT

17-Jan-18:

Acquired

Neu-Isenburg

for $57.6M

10-Apr-13:

Inovalis completed a

$96.3M IPO and acquires

Vanves, Jeuneurs,

Courbevoie and Hanover

properties 16-Jul-14:

Acquired

Duisburg for

$32.8M

06-Nov-14:

Completed a

$37M equity

offering.

Acquisition of

Baldi and Sabliere

for $61M

08-Apr-15:

Acquired

Bad Homburg

for $12M

08-Jul-15:

Acquired Arcueil

for $31.3M

03-Dec-15:

Acquired

Cologne property

for $15.8M

21-Mar-16:

Acquired

Metropolitan

for $70M

25-Jul-16:

Completed a

$46M equity

offering

10-Nov-16:

Agreement for the

forward acquisition

of Ingolstadt to be

completed in Q1

2018

10-May-13:

Inovalis SA announced

exercise of over-

allotment with the issue

of an additional 870,000

units at $10.00

30-Jun-14:

Completed the

refinancing of the

Vanves, Jeuneurs and

Courbevoie properties

31-Dec-15:

Completed the

refinancing of the

Hanover property

23-Dec-15:

Completed the

refinancing of the

Sablière property

09-Jun-17:

Acquired

Stuttgart for

$28.3M

26-Jun-17 to 4-Oct-

17:

Closed private

placements to non-

Canadian investor,

raising $24.5M in total

proceeds

14-Nov-16:

Announced $30.7M

acquisition and

redevelopment loan

for Rueil

28-Aug-17:

Acquired

Pantin in

Paris

08-Mar-18 to 15-Mar-18:

Acquired Kösching, sold

Cologne, and modifications to

management agreement

25-Apr-18:

Closed a C$22M private

placement to an institutional

investor

Source: BMO Capital Markets, Bloomberg, company filings

ATTRACTIVE DISTRIBUTION YIELD SECURED BY LOW AFFO PAYOUT RATIO


Compelling Investment Opportunity Given Attractive Valuation

| Implied distribution yield represents a 538 bps spread relative to the 10-year GCAN

23

1. Comparable Valuation

Canadian Comparables

Price

($)

Market

Cap

($M)

Distribution

Yield

Price / 2018E AFFO

Payout

Ratio(1)

AFFO

Yield(1)

Debt /

GBV(2)

Premium/

(Discount)

to NAV

Implied

Cap

RateFFO AFFO

H&R REIT $20.35 $6,138 6.8% 11.8x 13.9x 93.9% 7.2% 43.9% (17.9%) 6.2%

Allied Prop. REIT $44.15 $4,584 3.5% 20.4x 24.4x 86.1% 4.1% 34.2% 9.5% 5.2%

Cominar REIT $12.26 $2,231 5.9% 10.3x 12.8x 75.4% 7.8% 51.1% (17.9%) 7.1%

Artis REIT $12.38 $1,904 8.7% 9.6x 12.3x 107.4% 8.1% 47.2% (11.8%) 7.1%

Dream Office REIT $25.67 $1,679 3.9% 15.6x 22.0x 85.6% 4.6% 39.6% 5.0% 5.8%

Agellan Commercial REIT $14.15 $479 5.7% 12.3x 15.0x 85.9% 6.7% 33.3% 4.0% 7.5%

Total Average 5.8% 13.3x 16.7x 89.1% 6.0% 41.5% (4.9%) 6.5%

Average (Excluding High/Low) 5.6% 12.5x 15.9x 87.9% 6.3% 41.2% (5.2%) 6.5%

Dream Global REIT $15.37 $2,944 5.2% 14.8x 16.4x 85.4% 6.1% 46.2% 12.3% 5.7%

European Commercial $4.02 $67 8.7% 9.8x 11.3x n/a 8.9% 52.8% 18.2% 7.5%

Inovalis REIT $10.56 $303 7.8% 11.7x 11.5x 90.1% 8.7% 49.2% (6.0%) 6.4%

(1) Based on 2019E consensus estimates

(2) Debt component includes convertible debentures

Source: FactSet and consensus research as of September 21, 2018


2. Distributions

(1) Excluding the July 2016 Equity Offering.

Attractive distribution yield secured by low AFFO payout ratio :

1. Stable

▪ Monthly distribution of $0.06875 per unit translating into a yearly distribution of $0.825 per unit

▪ 7.74% yield on unit price of $10.46 (as at September 28, 2018)

▪ Distribution Re-investment Plan (DRIP) in place with a bonus distribution of units of 3%.

▪ As at September 30, 2018, approximately 10% of the REIT’s units were registered under the DRIP

2. Secured

▪ Low AFFO payout ratio (94.2% at Q3 2018 - Nine months ended)

▪ FX hedge at an average rate of 1.60 CAD per Euro until October 2020 ensuring steady future

distributions

▪ Rolling FX hedging program to maintain a 3-year coverage


3. Peer Benchmarking – Current Yield vs. AFFO Payout Ratio

Source: BMO Capital Markets, Bloomberg, company filings, SNL

--

20.0%

40.0%

60.0%

80.0%

100.0%

120.0%

--

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

BE

I.U

N

IIP

.UN

MI.

UN

CA

R.U

N

AP

.UN

MR

G.U

N

KM

P.U

N

D.U

N

FC

R

GR

T.U

N

AX

.UN

SM

U.U

N

HO

M.U

CR

T.U

N

DR

G.U

N

SR

U.U

N

AC

R.U

N

RE

I.U

N

WIR

.UN

RU

F/U

CH

P.U

N

NV

U.U

N

CU

F.U

N

CR

R.U

N

HR

.UN

PLZ

.UN

DIR

.UN

AP

R.U

N

INO

.UN

MR

T.U

N

SO

T.U

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Yield (LHS) 2019E AFFO Payout (RHS)

Inovalis REIT is among the highest yielding REITs in Canada while maintaining a safe AFFO payout ratio

SUMMARY


Inovalis REIT provides

risk diversification in

two leading European

economies while

capitalizing on deep,

recovering markets

1. Listed on the TSX (“INO.UN”) providing

investors with the opportunity to invest in

European commercial real estate with a

reputable, local operator

2. Currently yielding around 7.74%

3. Debt to book value 48.4%

4. 64.9% of tenants of high credit quality

5. 4.8 years WALT/ 93% occupancy rate (1)

6. Distributions hedged at an average rate of 1.60

CAD per Euro

7. European, experienced management team

8. French and German office markets are still

recovering after a severe price correction

9. Management fully aligned with and

subordinated to Unitholders

10. Vast growth pipeline via Inovalis S.A. and third

party relationships

(1) As at September 30, 2018. 4,8 years represents weighted average lease term for end of lease period. Weighted average lease term including early

termination rights equal to 4.0 years

27

Key Takeaways

SUMM

APPENDICES


Daniel Argiros, CALead Trustee

| Over 15 years of experience in financial

management and real estate

Co-founded Conundrum Capital Corporation

Former CEO and founder of Potentia Solar Inc.

Former CEO and founder of Acanthus REIT

Richard DansereauChairman of Compensation & Governance Committee

| Managing Director, Stonehenge Partners

Former President and COO of Cadim, a real estate

division of the Caisse de depot; oversaw international

portfolio, notably in France and Germany

Over 25 years of real estate experience

Marc Manasterski

| Partner and Head of Real Estate Investments at

Quilvest Real Estate

Previously CEO of Alliance Hospitality Group

(Europe), the management platform for various hotel

portfolios owned by Goldman Sachs’ Whitehall

funds

More than 20 years of direct experience in real

estate development

Jean Daniel Cohen

| Chairman of the Hoche Partners Group of Companies

Managing director at Laforêt Real Estate

Board Member of a French listed REIT, and a French

listed investment company

Former Managing Partner: Aurel-Leven & UFFI REAM

Former CEO of Louis Dreyfus Finance

29

2. Independent Board Providing Strong Guidance & Governance

Michael J Lagopoulos

| Former CEO, Head and Deputy Chairman of RBC

Wealth Management

Former Executive Vice President of the royal bank

of Canada

Over 30 years of experience in financial

management

Jo-Ann Lempert

| Partner and the leader of MNP’s Public Companies

practice as well as its Real Estate Services group in

Montréal.

Fellow of the Chartered Professional Accountants of

Quebec

Robert Picard

| Partner, Gardiner Roberts LLP

Experience in dealing with complex investment

arrangements, structured projects and public and

private financings

Over 25 years of experience as a partner


3. Property Overview: Key Data Presented in 000s (1/2)

30

France Total

Portfolio Overview - As at September 30, 2018 Jeuneurs Courbevoie Vanves Sablière Baldi Metropolitain Arcueil Diamant France

Acquisition Price (REIT Ownership) (CAD) 42 816 41 067 117 428 26 811 33 667 69 666 32 199 19 326 382 982

REIT Ownership Valuation as at September 30, 2018 (1) (2)

(CAD) 70 092 41 174 132 437 35 404 36 707 85 705 33 704 19 636 454 859

% of REIT's Portfolio Value (%) 11,1% 6,5% 21,0% 5,6% 5,8% 13,6% 5% 3% 72%

Mortgage balance (Excluding amortized costs) (1) (CAD) 43 806 11 556 71 814 18 752 21 147 51 543 16 775 12 028 247 421

LTV (%) 62% 28% 54% 53% 58% 60% 50% 61% 54%

Gross Leasable Area (GLA) (sq.ft) 50 407 95 903 258 673 41 043 123 657 78 818 83 633 71 627 803 761

Contribution to GLA (%) 3,8% 7,2% 19,4% 3,1% 9,3% 5,9% 6,3% 5% 60%

Projected NOI Annualized Basis (1) (CAD) 3 488 2 375 9 184 1 728 1 161 3 675 2 458 1 359 25 428

Contribution to NOI based on annualized basis (%) 9,8% 6,7% 25,7% 4,8% 3,3% 10,3% 6,9% 4% 71%

Projected Yield (Annualized NOI/Acq. Price) (%) 8,0% 5,7% 7,7% 6,3% 3,4% 5,2% 7,5% 6,9% 6,5%

# of tenants 1 6 5 6 9 7 1 17 52

Occupancy rate (including VL) (%) 100,0% 87,7% 80,5% 94,3% 80,9% 100,0% 100,0% 100,0% 89,0%

WALT (end of lease) (Years) 2,3 3,2 3,2 4,3 3,7 6,8 4,4 3,3 3,9

Next break (Years) 2,3 2,2 1,1 1,9 1,5 5,1 3,3 1,6 2,4

Date built/(refurbished)1890/(2006)

1970/(2010)

1982 1985 1991 19931969/(2013)

1992

Type of property Office Office Office OfficeOffice &

mixed useOffice Office Office




3. Property Overview: Key Data Presented in 000s (2/2)

31



Germany Total

Portfolio Overview - As at September 30, 2018 Hannover Duisburg Bad Homburg Stuttgart Neu-Isenburg Kösching Germany

Acquisition Price (REIT Ownership) (CAD) 30 798 30 881 12 428 28 762 28 848 18 352 151 763

REIT Ownership Valuation as at September 30, 2018 (1) (2)

(CAD) 38 331 39 170 16 881 32 280 28 685 18 249 175 455

% of REIT's Portfolio Value (%) 6,1% 6,2% 2,7% 5,1% 4,6% 3% 28%

Mortgage balance (Excluding amortized costs) (1) (CAD) 18 780 18 422 8 266 18 485 17 045 10 298 91 296

LTV (%) 49% 47% 49% 57% 59% 56% 52%

Gross Leasable Area (GLA) (sq.ft) 124 074 108 959 54 553 121 416 67 566 53 058 529 626

Contribution to GLA (%) 9,3% 8,2% 4,1% 9,1% 5,1% 4,0% 40%

Projected NOI Annualized Basis (1) (CAD) 1 795 2 492 1 157 2 074 1 725 998 10 241

Contribution to NOI based on annualized basis (%) 5,0% 7,0% 3,2% 5,8% 4,8% 2,8% 29%

Projected Yield (Annualized NOI/Acq. Price) (%) 5,7% 7,9% 9,1% 7,1% 5,9% 5,3% 6,6%

# of tenants 1 1 6 4 4 1 17

Occupancy rate (including VL) (%) 100,0% 100,0% 97,3% 98,6% 100,0% 100,0% 99,4%

WALT (end of lease) (Years) 11,3 2,3 4,6 5,4 4,5 9,2 5,7

Next break (Years) 11,3 2,3 4,3 5,4 4,5 9,2 5,6

Date built/(refurbished) 2000 2008 20041994/(2014)

2013 2017

Type of property Office Office Office OfficeOffice & Lab

Office


Debt-to-Book value (%)Occupancy Rates

32

4. Portfolio Evolution

Non-GAAP Rental Income and Net Rental Earnings FFO and AFFO per Unit


5. Lease and Debt Maturities

Lease Expiry Schedule (% of GLA)(1)

Staggered Debt Maturities(1)

Debt to GBV 42.3%

WA interest rate 2.15%

WA debt term to maturity 5.9 years

Interest coverage ratio 4.5x

(1) As At September 30, 2018

WALT 4.8 years(1)

WALT (Top 5 tenants) 5.1 years

Occupancy 93.2%


Analyst Date Recommendation Target price

GMP Securities Himanshu Gupta August 10, 2018 Buy $11.50

BMO Troy MacLean August 27, 2018 Buy $11.00

National Bank Matt Kornack August 14, 2018 Hold $11.00

Desjardins Securities Michael Markidis May 23, 2018 Hold $10.75

Echelon Partners Frederic Blondeau August 14, 2018 Hold $10.25

Consensus $11.02

Note: Research coverage for the REIT from CIBC has been suspended pending the appointment of a new analyst

34

6. Research Coverage Summary


Certain statements in this presentation may constitute "forward-looking" statements which involve known and

unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements

of Inovalis Real Estate Investment Trust (“Inovalis REIT” or the “REIT”), or industry results, to be materially

different from any future results, performance or achievements expressed or implied by such forward-looking

statements. When used in this presentation, such statements use such words as “may”, “would”, “could”, “will”,

“intend”, “expect”, “believe”, “plan”, "anticipate", "estimate" and other similar terminology. These statements

reflect the REIT's current expectations regarding future events and operating performance and speak only as of

the date of this presentation. Forward-looking statements involve significant risks and uncertainties, which

include, but are not limited to the factors discussed under “Forward-Looking Statements” and “Risk Factors” in

the Final Long Form Prospectus of the REIT dated March 28, 2013, in our Final Short Form Prospectus dated

October 30, 2014 and in our Annual Report dated March 23, 2016 and should not be read as guarantees of future

performance or results, and will not necessarily be accurate indications of whether or not such results will be

achieved. Although the forward-looking statements contained in this presentation are based upon what

management of the REIT believes are reasonable assumptions, the REIT cannot assure investors that actual

results will be consistent with these forward-looking statements. These forward-looking statements are made as

of the date of this presentation and are expressly qualified in their entirety by this cautionary statement. A number

of factors could cause actual results to differ materially from the results discussed in the forward-looking

statements, including, but not limited to the factors discussed in the REIT’s public filings available under the

REIT’s profile at http://www.sedar.com. Subject to applicable securities laws, the REIT assumes no obligation to

update or revise them to reflect new events or circumstances. This presentation is confidential and for internal

use only. Under no circumstances are the contents to be communicated, reproduced or distributed to the public

or the press. Securities legislation in all provinces of Canada prohibits such distribution of information. This

presentation should be read in conjunction with the Final Long Form Prospectus dated March 28, 2013, our Final

Short Form Prospectus dated October 30, 2014 and our Annual Report dated March 23, 2016. The information

contained herein, while obtained from sources that we believe to be reliable, is not guaranteed as to its accuracy

or completeness. Information contained herein may be amended. This presentation is for information purposes

only and does not constitute an offer to sell or a solicitation to buy the securities referred to herein.

CORPORATE OFFICE

INOVALIS SA

52 rue de Bassano

75008 Paris, France

T +33 1 56 43 33 23

F +33 1 56 43 33 24

TORONTO OFFICE

INOVALIS Real Estate Investment Trust

151 Yonge Street, 11th Floor

Toronto Ontario, M5C, Canada

T +1 647 775 8431

David Giraud, [email protected]

Tel: +33 1 56 43 33 27

Khalil Hankach, [email protected]

Tel: +33 1 56 43 33 13

Anne Smolen, [email protected]

Tel: +33 1 56 43 33 14

35

Disclaimer and Contact

Documents

STRONG MARKET FUNDAMENTALS IN REIT’S KEY MARKETS, … · Investor Presentation: Q3 2018 Strong Market Fundamentals in REIT’s Key Markets, France and Germany Note: Key figures