Inovalis Real Estate Investment Trust : REIT Q1 2026 Financial Statements

March 31, 2026

(Unaudited)

Disclosure of non-review of interim condensed consolidated financial statements for the quarters ended March 31, 2026 and 2025

Pursuant to National Instrument 51-102, Part 4, subsection 4.3(3)(a) issued by the Canadian Securities Administrators, if the external auditors have not performed a review of the financial statements, the financial statements must be accompanied by a notice indicating that they have not been reviewed by the external auditors.

The accompanying unaudited interim condensed consolidated financial statements of the REIT for the quarters ended March 31, 2026 and 2025 have been prepared in accordance with International Accounting Standard 34, Interim Financial reporting, and are the responsibility of the REIT’s management.

The REIT’s external auditors, Ernst & Young Audit, have not performed a review of these interim condensed consolidated financial statements in accordance with the standards established by Chartered Professional Accountants Canada for a review of the financial statements by the external auditors of an entity.

(All dollar amounts in thousands of Canadian dollars)

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

On behalf of the Board of Trustees of Inovalis Real Estate Investment Trust: Jean-Daniel Cohen Robert Waxman

Chairman and Trustee Audit Chair and Trustee

(All dollar amounts in thousands of Canadian dollars, except for per unit amounts)

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

Interim Consolidated Statements of Changes in Equity For the three months ended March 31,

(Unaudited)

(All dollar amounts in thousands of Canadian dollars, unless otherwise stated)

Note

Number of Units issued and outstanding

Trust Units

Retained earnings Accumulated other (deficit) comprehensive

income

Total attributable to the Unitholders’ of the Trust

Non-controlling interest

Total equity

As at December 31, 2024 33 206 180 296 206 (129 834) 15 666 182 038 67 182 105

Distributions declared to Unitholders 4 849 575 4 575 (6 100) – (1 525) – (1 525)

Consolidation of Units (4 849 575) – – – – – -Issuance of units for payment of trustee fees 17 96 127 78 – – 78 – 78

Foreign exchange impact on Non-controlling interest – – – – – 40 40

96 127 4 653 (6 100) – (1 447) 40 (1 407)

Net loss for the year – – (55 974) – (55 974) (1 227) (57 201)

Other comprehensive income (loss) – – – 14 190 14 190 (38) 14 152

Comprehensive (loss) income – – (55 974) 14 190 (41 784) (1 265) (43 049)

As at December 31, 2025 33 302 307 300 859 (191 908) 29 856 138 807 (1 158) 137 649

Issuance of units from payment of trustee fees 17 190 509 203 – – 203 – 203

Foreign exchange impact on Non-controlling interest – – – – – 117 117

190 509 203 – – 203 117 320

Net income for the period – – 12 768 – 12 768 818 13 586

Other comprehensive loss – – – (379) (379) (114) (493)

Comprehensive income (loss) – – 12 768 (379) 12 389 704 13 093

As at March 31, 2026 33 492 816 301 062 (179 140) 29 477 151 399 (337) 151 062

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

Interim Consolidated Statements of Cash Flows (Unaudited)

(All dollar amounts in thousands of Canadian dollars)

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

Notes to the condensed interim consolidated financial statements March 31, 2026

Note 1 – Organization

The Inovalis Real Estate Investment Trust (the “Trust”) is an open-ended real estate investment trust created pursuant to a Declaration of Trust dated February 8, 2013, under the laws of the Province of Ontario, Canada. These condensed interim consolidated financial statements include the accounts of the Trust and its subsidiaries (together the “REIT” or “The Group”). The REIT’s investment property portfolio, owned directly or through joint arrangements, is comprised of office rental properties located in France, Germany, and Spain.

The REIT’s head and registered office is located at 151 Yonge Street, 11th floor, Toronto, Ontario, M5C 2W7. The REIT’s units are listed on the Toronto Stock Exchange (“TSX”) under the symbol INO.UN.TO.

The REIT’s condensed interim consolidated financial statements as at and for the three months ended March 31, 2026, were authorized for issuance by the Board of Trustees on May 12, 2026.

The REIT has hired Inovalis S.A. (“Inovalis SA”), a real estate asset manager having operations in France, Germany, and Spain to manage certain functions. Refer to Note 1 of the 2025 annual consolidated financial statements for more information about the relationship between Inovalis SA and the REIT, and to Note 20 in these condensed interim consolidated financial statements, for information regarding the services provided by Inovalis SA to the REIT.

Inovalis SA is considered as a related party of the REIT as they share the same management. The founder and Chairman of Inovalis SA is the President of the REIT, the Chief Executive Officer (“CEO”) of Inovalis SA is also a part of the management team of the REIT, and the Deputy Chief Executive Officer of Inovalis SA is Chief Investment Officer (“CIO”) and Chief Financial Officer (“CFO”) of the REIT.

Note 2 – Basis of presentation and statement of compliance

These unaudited condensed interim consolidated financial statements have been prepared in accordance with International Accounting Standard (“IAS”) 34, Interim Financial Reporting, as issued by the International Accounting Standards Board (“IASB”), and thus do not contain all the disclosures applicable to the annual consolidated financial statements.

The REIT has prepared the financial statements on the basis that it will continue to operate as a going concern. Management believes that the REIT has adequate resources to remain operational for the foreseeable future. However, management has determined that there is a material uncertainty associated with the going concern assumption for the 12-month period following the release of the financial statements. This uncertainty arises from the need to complete the refinancing or extension of the bank debts maturing in March 2027, notably the debt secured by the Gaia property. See Note 4, section Going Concern Analysis for further details. These unaudited condensed interim consolidated financial statements use the same accounting policies and methods of their application as the REIT’s most recent annual consolidated financial statements and should be read in conjunction with the 2025 annual audited consolidated financial statements, which have been prepared in accordance with IFRS Accounting Standards (“IFRS”), as issued by the IASB.

The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group’s annual consolidated financial statements for the year ended 31 December 2025, except for the adoption of new standards effective as of 1 January 2026.

The REIT has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective.

Amendments to IFRS 7, Financial Instruments: Disclosures and IFRS 9, Financial Instruments

In May 2024, the IASB issued amendments to the Classification and Measurement of Financial Instruments to require entity to disclose qualitative description of the nature of contingent event, quantitative information about the possible changes to contractual cash flows resulting from contractual terms, and gross carrying amount of financial assets and the amortized cost of financial liabilities relating to the contract terms. The amendments allow users of financial statements to understand how the contractual terms could affect the amount of contractual cashflow based on the occurred or non-occurred contingent event.

The amendments to IFRS 7 and IFRS 9 are effective to annual reporting periods beginning on or after January 1, 2026.

The adoption of these amendments did not have a significant impact on the unaudited condensed interim consolidated financial statements of the Group.

Note 4 – Critical accounting judgments and estimates

In preparing these condensed interim consolidated financial statements, the significant judgments made by management in applying the REIT’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended December 31, 2025.

Going Concern Analysis

The REIT has prepared the financial statements on the assumption that it will continue to operate as a going concern. This implies that the REIT will continue its operations for the foreseeable future, enabling it to realize its assets and settle its obligations in the normal course of business. Management’s assessment of the going concern status includes forecasting cash flow requirements under various stress-tested scenarios in order to assess whether there exist any material risks as to the REIT’s ability to operate as a going concern. In doing so, management has determined that there is a material uncertainty associated with this going concern assumption, as it requires the completion of refinancing or extension of bank loans maturing within the 12 months following the release of the financial statements.

1. Availability of financing
   

   The mortgage loans financing the Stuttgart ($19,690), Neu-Isenburg ($17,137) and Kosching ($10,313) properties, held 50% in joint venture, mature on August 30, 2026, following a short-term extension obtained in February 2026. This extension provides the REIT with additional time to assess refinancing options or negotiate a potential sale. Management remains confident in its ability to secure refinancing or negotiate a further extension at the new maturity date. However, should repayment be required at maturity, any liquidity risk arising from a default would remain isolated at the entity level.

   The Gaia loan ($35,083) matures on March 27, 2027. Management is in ongoing discussions with the lender regarding the reletting or redevelopment strategy for the property, which has a 75% projected vacancy rate. Based on discussions held to date, management is confident in obtaining an extension of the loan at maturity or refinancing it; however, the lender may require deleveraging as part of the extension process.

   Note 4 – Recent accounting pronouncement adopted (cont’d)
   

   The Delgado loan ($22,847) matures on March 31, 2027. Given the 100% occupancy rate, the 53% LTV based on Q4’2025 external appraisal and the advanced negotiations regarding the extension of one significant lease, management is confident in its ability to obtain an extension or refinancing. In addition, this asset could be marketed and generate significant working capital that the REIT could use to mitigate any existing liquidity risk (see Note 21 – Liquidity Risk).

   The mortgage financing for Duisburg ($26,446), a property held 50% in a joint venture, matures on March 31, 2027. The property is 100% let and management is confident in obtaining an extension of the existing loan or in refinancing it. Shareholders have already suspended distributions in order to retain cash for tenant improvements and potential debt deleveraging. However, should repayment be required at maturity, the asset could be marketed, and any liquidity risk arising from a default would remain isolated at the entity level.

2. Risk mitigation Ability to unlock liquidity
   

   In addition to the above-mentioned possible disposition of Delgado and Duisburg properties, management also notes that the REIT has the ability to unlock liquidity as required through the disposal of other marketable and in-demand assets (notably Metropolitain). The sale of this asset would generate significant positive working capital that the REIT could use to mitigate any existing liquidity risk.

   Sale of the Arcueil property
   

   On December 18, 2024, the REIT signed an exchange contract for the sale of 88% of the Arcueil property for redevelopment. Over the year 2025 and the first quarter of 2026, the REIT completed administrative milestones, progressively waiving conditions precedent, such that the final closing sale is still anticipated for end 2026. The sale would generate net cash proceeds of $5.5 million.

   Management assessment
   

   Management expects that any remaining short-term liquidity requirements can be addressed through the active management of working capital and capital expenditure commitments. This includes the ability to defer certain tax payment deadlines, adjust capex schedules, and manage vendor payment terms. In forming this assessment, management also considered the REIT’s history of successfully implementing capital management strategies.

   Note 5 – Investment properties
   

   Reconciliations of the carrying amounts of investment properties at the beginning and end of the current financial period are as follows:

   	For the thre e months ended	For the year ended
   	March 31, 2026	December 31, 2025
   Balance, beginning of the period	275 916	327 789
   Capex	13	1 274
   Disposition of Baldi investment property held by Baldi SCI	–	(22 607)
   Change in capitalized letting fees	30	136
   Rent free periods	(115)	(518)
   Net change in fair value of investment properties	(572)	(40 568)
   Foreign currency translation adjustment	(644)	26 207
   Asset classified as held for sale	–	(15 797)
   Balance, end of the period	274 628	275 916

   All of the REIT’s investment properties with a fair value of $274,628 (December 31, 2025 – $275,916) are pledged as security for an amount of $169,816 (December 31, 2025 – $204,297) in mortgage loans and lease liabilities.

   Appraisal capitalization and discount rates
   

   The fair value of investment properties is determined by real estate valuation experts using recognized valuation techniques and the principles of IFRS 13. The REIT used the Direct Capitalization Method (“DC”) to measure the fair value of its investment property.

   Under the Direct Capitalization Method, the cash generated during the term of the lease as well as the cash generated at reversion, as estimated based on the normalized net operating income generated by the property, are capitalized using the same capitalization (discount) rate. The capitalization rates are determined based on recent real estate transactions with similar characteristics and location to those of the REIT assets. The group that determines the REIT’s valuation policies and procedures for property valuations comprises the CEO, CIO and CFO. Each year, Inovalis SA appoints an independent real estate valuation expert who is responsible for the valuation of the REIT’s properties. Selection criteria include market knowledge, reputation, independence and whether professional standards are maintained.

   In addition, the CEO and the CIO are responsible for the internal valuation department in charge of the evaluation of REIT’s properties. Inovalis SA’s internal valuation department comprises a certain number of employees that hold relevant internationally recognized professional qualifications and are experienced in valuing the types of property in applicable locations. External valuations are obtained every six months for all properties. The REIT’s investment properties were last appraised by an external evaluator as of December 31, 2025, except for the Gaia property on which an adjusted valuation report was requested as of March 31, 2026 pursuant to the main tenant’s departure confirmation. The adjusted market-value and stabilized capitalization rates by country are set out in the following table:

   As at March 31, 2026

   		France	Germany	Spain	Total
   Fair value of investment properties for financial reporting purposes
   Market value (in KEUR) as estimated by external appraisers		135 002	11 900	26 700	173 602
   Option costs		(2 760)	–	–	(2 760)
   Adjusted market value in EUR		132 242	11 900	26 700	170 842
   Exchange adjustment		80 337	7 229	16 220	103 786
   Adjusted market value in CAD$		212 579 19 129 42 920			274 628
   Principal method used to value property 1		DC DC DC
   Capitalization rate / discount rate		5.25% to 8.25% 6.30% to	8.00%	6,75%
   Terminal capitalization rate		6,63%	7,60%	6,75%
   Impact on the fair value of investme nt properties of : an increase of 25 bps on the cap rate and/or discount rate		(8 042)	(609)	(1 533)	(10 184)
   a decrease of 25 bps on the cap rate and/or discount rate		8 731	651	1 651	11 032
   (1) “DC” for Direct Capitalization Method

   	France	Germany 2	Spain		Total
   Fair value of investment properties for financial reporting purposes
   Market value (in KEUR) as estimated by external appraisers	135 300	21 700	26 700		183 700
   Option costs	(2 725)	–	–		(2 725)
   Adjusted market value in EUR	132 575	21 700	26 700		180 975
   Exchange adjustment	81 122	13 278	16 338		110 738
   Adjusted market value in CAD$	213 697	34 978	43 038		291 713
   Principal method used to value property 1	DC	DC	DC
   Capitalization rate / discount rate	5.25% to 8.25%	6.30% to 8.00%	6,75%
   Terminal capitalization rate	6,60%	7,78%	6,75%
   Impact on the fair value of investment properties of : an increase of 25 bps on the cap rate and/or discount rate	(8 109)	(1 090)	(1 537)		(10 735)
   a decrease of 25 bps on the cap rate and/or discount rate	8 804	1 162	1 655		11 621

   1. “DC” for Direct Capitalization Method

   2. Including the fair market value for the Trio property of €9,800 ($15,797) that is presented as an asset held for sale.

Right-of-use assets

The REIT leases various investment properties with a carrying amount of $171,088 (December 31, 2025 –

$168,725) under leases which begin to expire in approximately 1 year (December 31, 2025: 2 years).

Outlined below is a breakdown of the carrying amounts of the components of the investments in joint ventures:

1. The share of net income (loss) from investments includes the interest expense in relation to the loans granted to the joint ventures. The interest earned by the REIT in relation to these loans for the three months ended March 31, 2026, amounted to $775 (2025 –

   $727) and are included in “Finance income” (see note 16).

2. The REIT has only recognized a portion of its share of net loss from Delizy joint venture to bring its investment to nil. The REIT has not recognized a liability for any additional losses as it has no legal or constructive obligation to provide any additional funding to the Delizy joint venture as at March 31, 2026.

3. The REIT has only recognized a portion of its share of net loss from Delizy joint venture to bring its investment to nil. The REIT has not recognized a liability for any additional losses as it has no legal or constructive obligation to provide any additional funding to the Delizy joint venture as at March 31, 2026.

   The balance of investments in joint ventures as at March 31, 2026 included loans to joint ventures for an amount of $21,622 which is detailed as follows:

   Loans to joint venture s

   Duisburg

   Stuttgart

   Delizy1

   Isenburg

   Kosching

   Total

   Gross Balance – March 31, 2026	11 982	9 160	12 742	1 242	(762)	34 364
   Less: Cumulative ECL	–	–	(12 742)	–	–	(12 742)
   Net Balance – March 31, 2026	11 982	9 160	–	1 242	(762)	21 622
   Gross Balance – December 31, 2025	12 014	10 009	12 777	1 246	(764)	35 282
   Less: Cumulative ECL	–	(823)	(12 777)	–	–	(13 600)
   Net Balance – December 31, 2025	12 014	9 186	–	1 246	(764)	21 682

   1. Net balance for the REIT’s loan to Delizy as at March 31, 2026 and at December 31, 2025 has been entirely offset by losses from the REIT’s investment in joint venture upon inclusion of the loan as part of the REIT’s overall investment in the Delizy JV under IAS 28.

Note 7 – Trade receivables and other financial assets

The balance of ‘Provision for impairment of interest receivables from joint ventures – current’ represented the impairment related to interest receivables from SCI Delizy. A $164 impairment loss was recognized over the three months ended March 31, 2026.

On October 10, 2025, the REIT signed a preliminary exchange contract (“SPA”) for the sale of the Trio property located in Germany, notably subject to financing conditions, with a closing anticipated for Q1 2026 for purchase price of €9,800 ($15,797).

On January 30, 2026, the REIT completed the sale of Trio. The REIT incurred total transaction costs of €322 ($517) including €198 ($318) in fees paid to related parties comprising €100 ($161) in broker fees paid to Advenis Germany and €98 ($157) in disposition fees paid to Inovalis SA. These transaction costs are included in the Loss on disposal of investment properties line item in the statement of profit and loss.

Concurrently with the closing of the sale, the senior lender agreed to partially forgive the outstanding mortgage, in the amount of €10,600 ($17,020). The REIT recognized a gain on loan forgiveness of the above-mentioned amount in its condensed interim consolidated financial statements for the quarter ending March 31, 2026.

Mortgage loans and lease liabilities consist of the following:

As at March 31, 2026

The aggregate principal repayments and balances maturing on the mortgage loans during the period indicated, are as follows:

The aggregate principal repayments and balances maturing on the lease liabilities during the period indicated, are as follows:

Note 10 – Mortgage loans and lease liabilities (cont’d)

Stuttgart, Isenburg and Kosching – Loan Extension

On February 26, 2026, the REIT obtained a 6-month extension to the current mortgage loans financing the Stuttgart, Neu-Isenburg and Kosching properties (held 50% in joint ventures) representing a total amount of

$47,140. The new maturity set to August 30, 2026, grants Management with additional time to assess refinancing options and/or continue the asset management work to market these properties.

The Exchangeable Securities entitle the holder, Inovalis SA, to cash distributions from CCEU equal, on a per unit basis to the distributions paid to holders of units by the REIT. Since the suspension of distribution, Inovalis SA received interest on promissory notes from CCEU based on the contractual agreement, in the same way that the REIT received the interests on promissory notes from CCEU.

Note 12 – Trade and other payables

The year-on-year increase of trade payable is mainly due to IFRIC 21 (recognition of property taxes).

Note 13 – Provisions

As at March 31, 2026, provisions included €172 ($277) related to the Arcueil property. As at December 31, 2025, provisions included €165 ($278) related to the same property.

Revenue from investment properties consists of the following:

In accordance with IFRIC 21, the REIT recognizes the full amount of annual property tax liabilities at the point in time when the realty tax obligation is imposed. For the three months ending March 31, 2026, the amount recognized was $2,251 (2025 – $2,810).

General and administrative expenses consisted of the following:

For the closing of Trio property sale, the senior lender agreed to partially forgive the outstanding mortgage, in the

amount of €10,600 ($17,020) presented in “other finance income”.

Note 17 – Trust units

The REIT is authorized to issue an unlimited number of units and an unlimited number of Special Voting Units.

The beneficial interests of the REIT are comprised of a single class of units which represent unitholders proportionate undivided beneficial interest in the REIT. No unit has any preference over any other unit. Each unit confers the right to one vote at any meeting of unitholders and to participate on a pro rata basis in any distributions by the REIT and, in the event of the termination of the REIT, in the net assets of the REIT remaining after the settlement of all liabilities of the Trust. The units of the Trust are redeemable at the demand of the unitholders at the fair market value of the units at that time.

Special Voting Units have no economic entitlement in the REIT but entitle the holder to one vote per Special Trust Unit at any meeting of the unitholders of the REIT. Special Voting Units may only be issued in connection with or in relation to Exchangeable Securities (see Note 11 – Exchangeable Securities) for the purpose of providing voting rights with respect to the REIT to the holders of such securities. As of March 31, 2026, 392,892 Special Voting Units were issued and outstanding (December 31, 2025 – 392,892).

Note 18 – Accumulated other comprehensive income

Accumulated other comprehensive income 29 477 29 856

Change in cumulative translation adjustment account was $(379) attributable to the Unitholders of the Trust of which $(113) was attributable to minority interest.

The REIT through its Deferred Share Unit (“DSU”) Plan, grants DSU’s to its trustees and senior officers as non-cash compensation. These DSU’s are measured at fair value at the grant date and compensation expense is recognized consistent with the vesting features of the plan. The DSU plan is accounted for as a cash-settled award as the underlying REIT units are redeemable at the sole discretion of the unitholders for cash at market value of the units. For cash-settled awards, the REIT recognizes a liability measured at its fair value. At each reporting date until the liability is settled, the fair value of the liability is remeasured, with any changes in fair value recognised as compensation expense for the same period. Upon settlement of a DSU, the liability balance is reduced, and the resulting Trust Unit is recorded in equity.

Effective May 15, 2019, the REIT’s unitholders approved a DSU Plan to grant DSUs to its trustees and senior officers and reserved a maximum of 200,000 units for issuance under the plan. A DSU is a unit equivalent in value to one trust unit of the REIT. The DSU Plan permits the REIT’s trustees to defer receipt of all or a portion of their trustee fees until termination of the trustee service and to receive such fees in the form of trust units at that time (“Elected DU”). Elected DU will vest immediately upon grant.

The DSU Plan allows the Board of Trustees to grant DSUs to its senior officers at the Board’s discretion (“Granted DU”). The Granted DU will vest 1/3 over each anniversary date from date of grant over three years. The cost of Granted DU is recognized in the interim consolidated statement of earnings consistent with the vesting feature of each grant.

In addition, whenever cash distributions are paid on the REIT’s Trust Units, additional deferred units (“ADU”)

shall be granted based on aggregate number of vested DSUs as at the same date.

In February 2026, the Trustees approved the immediate vesting of all previously unvested Deferred Units held by Trustees. The Trustees also determined that, effective February 4, 2026, the Deferred Unit Plan will no longer be used as a form of Trustee compensation and that no further Deferred Unit grants will be made unless the Board determines otherwise. All outstanding Deferred Units will continue to be governed by the terms of the Deferred Unit Plan until settlement. Effective January 1, 2026, all Trustee compensation, including annual retainers, committee fees and meeting fees, will be paid solely in cash, with the annual cash retainer for each Trustee increased from $30,000 to $50,000 in lieu of Deferred Unit compensation.

As of March 31, 2026, 61,695 DSUs are outstanding and 190,509 DSUs were exercised during the quarter.

The total liability related to the DSU plan as of March 31, 2026, was $54 (2025: $161) and was included in Trade and other payables.

Inovalis SA – Asset manager

Pursuant to the Management Agreement, Inovalis SA is the asset manager of the REIT and provides the strategic, advisory, asset management, project management, construction management, property management and administrative services necessary to manage the operations of the REIT and its subsidiaries.

Unless otherwise stated, none of these transactions incorporated special terms and conditions. The amended management agreement allows for the management fees to be settled quarterly through the issuance of either exchangeable securities or in cash. During the three months ended March 31, 2026, the management fees were settled fully in cash.

(534) (662)

1. Asset management fees of $348 and $462 for the three months ended March 31, 2026, and 2025 respectively, correspond to the asset management fees earned for the entire portfolio, including $319 and $300 attributable to assets held through joint ventures. Fees are payable in cash and/or exchangeable securities, the exact composition of which is determined by the Board annually.

2. An annual property management fee in an amount between 3.0% and 3.5% of the gross revenue of the properties, approximately 90% of which is rebilled to tenants.

3. Trustees’ fees are incurred independently and are not linked to Inovalis SA.

Due from (to) Inovalis SA

Asse ts

Trade and other receivables 7 712 568

712 568

615 664

On January 30, 2026, the REIT completed the disposition of the Trio property. In conjunction with the sale, the REIT incurred disposition fees totaling €98 ($157) paid to Inovalis SA. Additionally, the REIT paid a portion of broker fees totaling €100 ($161) to Advenis Germany, a subsidiary of Inovalis SA. These broker fees were paid to secure the transaction and ensure that all parties involved were adequately compensated for their services. These transactions are considered related party transactions due to the affiliation between the REIT and Inovalis SA.

Joint ventures

The transactions and balances with joint ventures entities are summarized below:

Management fees invoiced to joint ventures Administration expenses A (319) (300)

Due from joint ventures

26 303 25 599

Liabilities

Balance of sale payable Trade and other payables 353 554

353 554

For more information on joint ventures, please refer to Note 6 – Investments in joint ventures.

Remuneration of key management personnel

The following table presents the remuneration of key management personnel, which for the purposes of this note are defined as the members of the board of trustees as well as the officers of CCEU. The appointed officers of the REIT are employed and remunerated by Inovalis SA rather than the REIT, and the costs of their services are not invoiced distinctly from the overall asset management fees.

Wages, fees and other benefits (193) (64)

(193) (64)

The following table shows an analysis of the fair values of financial instruments and non-financial assets measured at fair value on a recurring basis recognized on the consolidated balance sheet by the level of the fair value hierarchy. There are currently no items valued using Level 1 of the fair value hierarchy.

As at March 31, 2026

The REIT’s financial assets and liabilities comprise cash, trade receivables, trade payables and accrued liabilities, mortgages loans and exchangeable securities. Fair values of financial assets and liabilities and discussion of risks associated with financial assets and liabilities are presented as follows.

Fair value of financial assets and liabilities

The fair values of cash, trade receivables, trade payables and accrued liabilities approximate their carrying values due to the short-term maturities of these instruments.

1. Mortgage loans

   Mortgage loans are carried at amortized cost using the effective interest rate method of amortization. The estimated fair values of long-term borrowings are based on market information, where available, or by discounting future payments of interest and principal at estimated interest rates expected to be available to the REIT as at March 31, 2026.

   The fair value of the mortgage loans has been determined by discounting the cash flows of these financial obligations using March 31, 2026, market rates for debts of similar terms (Level 2). Based on these assumptions, the fair value as of March 31, 2026, of the mortgage loans has been estimated at $67,417 (December 31, 2025 –

   $99,153) compared with the carrying value before deferred financing costs of $65,863 (December 31, 2025 –

   $100,616). The fair value of the mortgages payable varies from the carrying value due to fluctuations in interest rates since their issue.

2. Exchangeable Securities

   The fair value of the Exchangeable Securities is based on the quoted price of the REIT’s own units, on the basis that they are exchangeable on a one-to-one basis throughout their life at the request of the unit holders. Other features of the Exchangeable Securities have no significant impact on their fair value.

   Risks associated with financial assets and liabilities
   

   The REIT is exposed to financial risks arising from its financial assets and liabilities. The financial risks include interest rate risk, credit risk and liquidity risk. The REIT’s overall risk management program focuses on establishing policies to identify and analyze the risks faced by the REIT, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the REIT’s activities. The REIT aims to develop a disciplined control environment in which all employees understand their roles and obligations.

   Market risk
   

   Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk consists of interest rate risk and currency risk.

   Interest rate risk
   

   Interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The REIT’s exposure to the risk of changes in market interest rates relates to the long-term debt obligations with floating interest rates related to leases and mortgage loans. The interest rate risk is mitigated by the REIT’s strategy using derivative financial instruments on mortgage loans and on the lease liabilities.

   Currency risk
   

   The REIT operates in France, Germany and Spain, and the functional currency for these operations is the Euro. The REIT’s distributions are paid to unitholders in Canadian dollars. Thus, the cash available for distribution to unitholders could be adversely impacted by currency variations. To ensure the predictability of distributions to unitholders, the REIT enters into foreign currency forward contracts to offset its exposure to currency risk.

   Liquidity Risk
   

   The REIT’s objective is to maintain a balance between continuity of funding and flexibility using bank deposits and loans. Liquidity risk inherent to the financial structure of the business is mainly managed through quarterly updates of short-term cash flow forecasts, follow-up of availability of funding through an adequate amount of committed credit facilities, as well as the status of the maturity of financial assets and liabilities.

   Specifically, as of March 31, 2026, current liabilities for the REIT exceeded current assets by $70,833 (December 31, 2025 – $39,326). The REIT is actively managing its liquidity risk with respect to these loans as follows:

   1. Gaia Loan – The $35,083 mortgage loan financing the Gaia property matures on March 27, 2027. Management is in ongoing discussions with the lender regarding the reletting strategy for the property, which has a 65% projected vacancy rate. Based on discussions held to date, management expects to secure an extension of the loan at maturity; however, the lender may require deleveraging as part of the extension process. As of March 31, 2026, the LTV and DSCR covenants of this loan were not respected, triggering a cash trap mechanism under which distributions to shareholders are frozen and the excess available cash, after property operating costs, administrative costs and debt service payment should be allocated to a cash reserve account, pledged in favour of the lender. This breach does not trigger any requirement for early repayment.

   2. 
      Walpur Loan – The 18-month mezzanine loan of €5,600 ($9,487) bears interest at 12% (6% paid quarterly and 6% at maturity) matures on November 12, 2026. Management’s objective is to refinance this mezzanine loan with conventional financing, depending on progress on the reletting strategy.
   3. 
      Delgado Loan – The $22,847 mortgage loan financing the Delgado property matures on March 31, 2027. Given the full occupancy of the property, Management is confident is extending the maturity of this loan or alternatively to sell the property before maturity, based on building’s criteria and the current dynamism of the Spanish real estate market.

Management also notes that the REIT has the ability to unlock liquidity as required through the disposal of other marketable and in-demand assets (Metropolitain, Delgado and Duisburg). The sale of either of these assets would generate significant positive working capital that the REIT could use to minimize any existing liquidity risk.

See Note 2 for key judgements made by management and Note 4, section Going Concern Analysis for further details

.

Fair value of financial assets and liabilities

The following table provides a comparison of the carrying amounts and fair value of the REIT’s financial assets

and liabilities that are not carried at fair value in the Consolidated Financial Statements.

Note 22 – Cash flow information

Adjustments for non-cash items and other reconciling items:

552 3 708

Cash and non-cash changes in liabilities arising from financing activities:

Corporate information

Head office

Inovalis REIT

151 Yonge Street, 11th floor Toronto, Ontario, M5C 2W7

Investor relations

E-mail: info@inovalis.com Website: https://www.inovalisreit.com

Stock exchange listing

The Toronto Stock Exchange Listing symbol: INO.UN.TO

Distribution Reinvestment Plan

On August 15, 2022, the REIT announced the suspension of its Distribution Reinvestment and Unit Purchase Plan (the “DRIP”) effective as of its September Distribution. The DRIP will remain suspended until further notice and commencing with the September 2022 Distribution, distributions of the REIT will be paid only in cash. The DRIP allowed eligible holders of units to reinvest their cash dividends paid in respect of their units in additional units, which, at the REIT’s election, were issued from treasury or purchased on the open market. If the REIT elected to issue units from treasury, such units were purchased under the DRIP at a three percent discount to the volume weighted average of the closing price for the units on the Toronto Stock Exchange (the “TSX”) for the five trading days immediately preceding the relevant dividend payment date. The REIT could, from time to time, in its sole discretion, change or eliminate the discount applicable to units issued from treasury.

INOVALIS REIT

151 Yonge Street, 11th floor Toronto, Ontario, M5C 2W7 https://www.inovalisreit.com