Inovalis REIT Announces Cash and Special Non-Cash Distribution
Inovalis Real Estate Investment Trust has announced details of its year-end distributions to unitholders, including both a regular cash distribution and a special non-cash distribution. The announcement reflects the REIT’s commitment to meeting its distribution obligations while efficiently managing taxable income generated during the 2025 fiscal year.
Regular Cash Distribution
The REIT declared a cash distribution of $0.04579 per unit in respect of the period ending December 31, 2025. Unitholders of record as of December 31, 2025 will be entitled to receive this distribution, which will be paid on January 15, 2026. This payment forms part of the REIT’s ongoing distribution policy and provides unitholders with regular income derived from the REIT’s real estate operations.
The cash distribution represents a portion of the income generated by the REIT’s portfolio during the year and is consistent with its objective of delivering stable and predictable returns to investors. As with prior distributions, the amount reflects the REIT’s assessment of cash flow, operating performance, and capital requirements.
Special Non-Cash Distribution Declared
In addition to the regular cash payment, Inovalis REIT also announced the declaration of a special non-cash distribution in the amount of $0.13738 per unit. This special distribution will be payable to unitholders of record as of December 31, 2025 and is being declared to distribute taxable income realized by the REIT from transactions completed during the year ended December 31, 2025.
The purpose of the special non-cash distribution is to ensure that the REIT complies with its obligation to distribute its taxable income to unitholders, while preserving liquidity and maintaining balance sheet flexibility. By issuing the distribution in a non-cash form, the REIT is able to satisfy tax distribution requirements without reducing available cash resources.
Mechanics of the Non-Cash Distribution
The non-cash distribution will be paid at the close of business on December 31, 2025 through the issuance of additional trust units. The number of units issued to each unitholder will have a fair market value equal to the dollar amount of the special non-cash distribution, based on the closing price of the REIT’s units on the Toronto Stock Exchange on December 31, 2025.
Immediately following the issuance of units related to the non-cash distribution, the REIT will consolidate its outstanding units. This consolidation will be structured so that the total number of units outstanding after the consolidation will be the same as before the special distribution. As a result, each unitholder will hold, following the consolidation, the same number of units as they held prior to the special non-cash distribution.
This process allows the REIT to distribute taxable income without causing dilution to unitholders or changing their proportional ownership interest in the REIT.
Tax Considerations for Unitholders
The REIT noted that the amount of the special non-cash distribution will generally increase the tax cost base of a unitholder’s consolidated units for Canadian federal income tax purposes. While the distribution does not involve a cash payment, it is expected to be taxable in the year it is declared, depending on the unitholder’s individual tax situation.
Inovalis REIT cautioned that tax consequences associated with both the cash and non-cash distributions may vary based on the tax status and residency of each unitholder. Unitholders who are not residents of Canada for Canadian federal income tax purposes will be subject to applicable withholding taxes in connection with the payment of the special non-cash distribution, in accordance with Canadian tax laws.
The REIT emphasized that the information provided is intended for general informational purposes only and should not be considered legal or tax advice. Given the potential complexity of the tax implications, unitholders are strongly encouraged to consult their own legal and tax advisors to fully understand how the distributions and related unit consolidation may affect their individual tax circumstances.
Commitment to Transparency and Responsible Capital Management
The declaration of both a regular cash distribution and a special non-cash distribution underscores Inovalis REIT’s focus on responsible capital management, regulatory compliance, and transparent communication with investors. By addressing taxable income through a structured non-cash distribution, the REIT aims to balance its distribution obligations with long-term financial flexibility.
As the REIT continues to manage its portfolio and capital structure, it remains focused on creating sustainable value for unitholders while adhering to applicable tax and regulatory requirements. The announced distributions reflect the REIT’s disciplined approach to financial management and its commitment to acting in the best interests of its investors.
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