Alexis Nihon Real Estate Investment Trust

Alexis Nihon Real Estate Investment Trust

October 24, 2006 12:41 ET

Alexis Nihon REIT's Investor Day Reviews Strategic Direction and Prospects for Accretive Growth

MONTREAL, QUEBEC--(CCNMatthews - Oct. 24, 2006) - At their fourth annual Investor Day with investors and analysts today, senior management of Alexis Nihon Real Estate Investment Trust (TSX:AN.UN) outlined the REIT's strategic direction, reviewed prospects for achieving long-term accretive growth and summarized key performance metrics. The day-long event was chaired by Paul J. Massicotte, President and CEO of the REIT.

A recurring theme of the presentations staged by six of the REIT's executives was the strategy needed for Alexis Nihon to continue the profitable growth it has achieved every year since the initial public offering in December 2002.

In his opening remarks, Mr. Massicotte noted that competition among commercial property buyers has pushed up prices to unprecedented levels. "In the current Montreal real estate market, finding accretive acquisitions has become a challenge," said Mr. Massicotte. "As market conditions change, we are examining avenues for growth in different places and in different ways. This search for value is now a central objective and it's a principal factor shaping our growth strategy."

Guy Charron, Executive Vice President and COO of the REIT, framed parameters for further acquisitions in terms of unitholder value. "Our main objective, as always, is to achieve profitable growth through accretive acquisitions that will deliver increased cash flow without compromising stability," he said. "This is where our search for value takes shape. We look for stable, income-producing properties that provide incremental net yields to unitholders."

David De Santis, Senior Vice President, Acquisitions and Development, provided a detailed update of the REIT's growth prospects in each of its markets.

"Our acquisition pipeline currently has products in greater Montreal, the National Capital Region, the Quebec City area and the Maritime provinces," he said. "The Maritimes intrigue us because yields are typically higher than other regions in Canada and competition for product is limited. We are confident of assembling a high quality, stable portfolio in this region."

Rene Fortin, Senior Vice-President and Chief Financial Officer, noted that funds from operations per unit, which is the most indicative measure of the REIT's overall operating performance, has been increasing every year since the creation of the REIT in 2002. "We believe our growth in FFO per unit has exceeded the average of our peer group," he added.

Mr. Fortin also pointed out the REIT has achieved the targets set out by management for payout ratio at last year's Investor Day. The year-to-date payout ratio at June 30, 2006 was 94.9% of distributable income, down from 99.3% in the same period in 2005. "Going forward, we aim to maintain the payout ratio within the 93% to 95% range or better as the full-year impact of new acquisitions takes effect, and as vacant space is leased up," he said.

During his presentation, Mr. Fortin set out some of the key changes in financial position for the REIT as at September 30, which include:

- Total debt of approximately $459 million;

- Ratio of debt to gross book value of 55.0% excluding convertible debentures and 61.4% including them;

- Ratio of floating-rate debt to gross book value of 6.9%. The REIT's allowable limit is 15.0%.

- The weighted average term to maturity on assumed hypothecs was 5.6 years;

- The weighted average interest rate was 6.1%; and

- The REIT's theoretical acquisition capacity is $86 million, providing it with flexibility for future investments and acquisitions, while still meeting its debt covenants.

In their presentations, leasing vice presidents provided updates on occupancy levels across the REIT's portfolio and within its four asset classes. As at September 30, the portfolio as a whole was 92.4% occupied. By asset class, office properties were 86.8% occupied, industrial buildings were 94.5% occupied, retail space was 96.1% occupied and residential assets were 98.8% occupied.

"Competition for tenants in both the office and industrial sectors continues to be intense," said Anne-Marie Dubois, Vice President, Office and Industrial Leasing. "That means our focus has been and will continue to be on two strategies: first, stay very close to the needs of our existing tenants that we expect our competition to target, and second, continue to focus on small to medium sized prospects and if necessary, split large floor spaces to accommodate them."

Celine Fournier, Vice President, Retail Leasing pointed to changing store formats and linked them to shifting consumer preferences and economic indicators. "In Quebec, there are approximately 400 retail centers, which includes over 70 regional centers and over 30 power centers. Continued population growth, a good employment outlook and a robust retail sales forecast are driving new construction, which is now concentrated in the power centre and big box categories," she said.

"In view of that, we believe that retailers will continue to view Montreal favourably for expansion plans in 2006 and 2007. Retailers of all sizes and formats are likely to look to greater Montreal to increase their presence."

An audio replay of the presentations will be archived in the Investor Relations section of

About Alexis Nihon REIT

The REIT currently owns interests in 65 office, retail and industrial properties, including a 426-unit multi-family residential property, located in the Greater Montreal Area and the National Capital Region. The REIT's portfolio has an aggregate of 9.1 million square feet of leasable area, of which 0.4 million square feet is co-owned.

This document may contain forward-looking statements, relating to Alexis Nihon REIT's operations or to the environment in which it operates, which are based on Alexis Nihon REIT's operations, estimates, forecasts and projections. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict, and/or are beyond Alexis Nihon REIT's control. A number of important factors could cause actual outcomes and results to differ materially from those expressed in these forward-looking statements. These factors include those set forth in other public filings. In addition, these forward-looking statements relate to the date on which they are made. Alexis Nihon REIT disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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