INVESTOR PRESENTATION Q3 2018 Investing in Quality European - - PowerPoint PPT Presentation

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 Manager 2 Potential to Accretively Grow NAV through Joint Ventures and Asset Repositioning 3 Inovalis’ High Quality Portfolio Trading at Attractive Valuation Level 4 Attractive Distribution Yield Secured by Low AFFO Payout Ratio 5

2

4.8 years Office $35.7M $10.46 $630M 1,333,386

Unit 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

1,005

Population density per km²

1,300

The number of identified areas of economic activity

1,054,800

Companies

87%

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 billion

German 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.

• ver 2017; +40%, best

result since 2007

2.2%

GDP growth. EU average 1.5%

82.7 million

Population

Germany Greater Paris Region

Sources: Johan / BNPParibas Real Estate Research

Investor Presentation: Q3 2018

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.

Investor Presentation: Q3 2018

6

• 3. Overview of France and Germany’s economic conditions

France 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 and Germany have steadily declined in recent years and are expected to decrease going forward. The French and German economies have grown at a resilient pace since the global financial crisis

Source: BMO Capital Markets, Bloomberg

Investor Presentation: Q3 2018

7

• 4. Interest rate and inflation environment: France and Germany

France & Germany – Inflation Rates France and Germany – Interest Rates

Interest rates in France and Germany have steadily declined in recent years. Rising inflation rates in the French and German economies provide tailwinds for future

• ffice

rent growth.

Source: BMO Capital Markets, Bloomberg

Investor Presentation: Q3 2018

8

• 5. Overview of Paris’ and Germany’s office market

Greater Paris Region – Office Cap Rates Germany – Office Cap Rates

Office cap rates in all major German cities have continued to decline steadily since 2014 and are currently in the low-3% range Office cap rates in the Greater Paris Region continue to compress since Inovalis REIT’s IPO, providing further upside to the REIT’s valuation

Source: BMO Capital Markets, Colliers

Investor Presentation: Q3 2018

• 6. Portfolio Overview

Metropolitain Hanover Paris FRANCE Vanves Jeûneurs Courbevoie Berlin Munich GERMANY Düsseldorf Frankfurt Hamburg Existing Properties Bad Homburg Sabliere Baldi GREATER PARIS REGION Duisburg Arcueil Cologne Ingolstadt Stuttgart 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 Duisburg Bad Homburg Stuttgart 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

Investor Presentation: Q3 2018

11

• 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

• pportunities 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.

Investor Presentation: Q3 2018

| 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

Investor Presentation: Q3 2018

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

• f

first refusal and right

• f

first

• pportunity from assets from Inovalis S.A.

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

Management committed to the REIT through an

• ngoing

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

Investor Presentation: Q3 2018

14

• 4. Summary of Management Agreement | Peer Benchmarking

REIT Manager Year 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

• n third-party

properties No No 10% of 1st year annual rent for lease renewal; 20%

• f 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 Office Slate Asset Management 2012 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%

• f 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 Investments 2012 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 Corporation 2012 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 No 10 years (5 years) n.a. DREAM Global DREAM Asset Management 2011 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

Investor Presentation: Q3 2018

16

• 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

• riginal

building

• f

the “Orange Village” comprising six buildings in Arcueil. It is comprised

• f 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

Investor Presentation: Q3 2018

17

• 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

• ffice

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

• f

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

Investor Presentation: Q3 2018

18

• 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

Investor Presentation: Q3 2018

20

• 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)

Investor Presentation: Q3 2018

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

Total Retunrs (%)

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

• ffering.

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

• ffering

10-Nov-16: Agreement for the forward acquisition

• f Ingolstadt to be

completed in Q1 2018 10-May-13: Inovalis SA announced exercise of over- allotment with the issue

• f 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

Investor Presentation: Q3 2018

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 Rate FFO 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

Investor Presentation: Q3 2018

24

• 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

Investor Presentation: Q3 2018

25

• 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% BEI.UN IIP.UN MI.UN CAR.UN AP.UN MRG.UN KMP.UN D.UN FCR GRT.UN AX.UN SMU.UN HOM.U CRT.UN DRG.UN SRU.UN ACR.UN REI.UN WIR.UN RUF/U CHP.UN NVU.UN CUF.UN CRR.UN HR.UN PLZ.UN DIR.UN APR.UN INO.UN MRT.UN SOT.UN Yield (LHS) 2019E AFFO Payout (RHS)

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

SUMMARY

Investor Presentation: Q3 2018

27

Inovalis REIT provides risk diversification in two leading European economies while capitalizing on deep, recovering markets

1. Listed

• n

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

APPENDICES

Investor Presentation: Q3 2018

Daniel Argiros, CA

Lead 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 Dansereau

Chairman 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

• f 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

Investor Presentation: Q3 2018

• 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 1993 1969/ (2013) 1992 Type of property Office Office Office Office Office & mixed use Office Office Office

(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)

Investor Presentation: Q3 2018

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

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(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) 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 2004 1994/ (2014) 2013 2017 Type of property Office Office Office Office Office & Lab Office

Investor Presentation: Q3 2018

Debt-to-Book value (%) Occupancy Rates

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• 4. Portfolio Evolution

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

Investor Presentation: Q3 2018

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• 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%

Investor Presentation: Q3 2018

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

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• 6. Research Coverage Summary

Investor Presentation: Q3 2018

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

• f 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

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

• r 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

• r completeness. Information contained herein may be amended. This presentation is for information purposes
• nly 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, CEO

david.giraud@inovalis.com Tel: +33 1 56 43 33 27

Khalil Hankach, CIO

khalil.hankach@inovalis.com Tel: +33 1 56 43 33 13

Anne Smolen, CFO

anne.smolen@inovalis.com Tel: +33 1 56 43 33 14

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