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

MONTREAL -- At their third annual meeting 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.

"When the REIT went public nearly three years ago, we declared to investors that our focus would be on stable cash flow, coupled with profitable growth," said Mr. Massicotte. "I'm pleased to report that starting with a strong and high quality portfolio of assets, we have indeed been growing the REIT. In addition to expanding in size, we are also continuing to successfully diversify our portfolio and bringing our well respected brand name into new markets and communities."

Guy Charron, Executive Vice President and COO of the REIT, was appointed late in 2004 and made his inaugural Investor Day address at this year's session. "The REIT's expansion initiatives over the past year have included both organic growth and acquisitions," he noted. "To date in 2005, the REIT has added five new properties totalling 1.3 million square feet to our portfolio and has announced an additional expansion at Centre Laval."

David De Santis, Senior Vice President, Acquisitions and Development provided an overview of the REIT's activities since its IPO and discussed prospects for future growth.

"When we went public in December 2002 the real estate portfolio's asset value was $374 million and our aim was to double the size of the REIT within five years," he said. "To date, in half that time we have increased the portfolio's asset value by 97%. You can expect the REIT to continue its rapid growth, and possibly attain or surpass the $1 billion mark in asset value by the time year five rolls around."

Rene Fortin, Senior Vice-President and Chief Financial Officer, provided an overview of the REIT's financial performance. "We see funds from operations per unit as the most indicative measure of the REIT's overall operating performance," he said, and noted FFO per unit has seen constant growth in March and June 2005, compared to the same periods in 2004.

Mr. Fortin also pointed out the year-to-date payout ratio at June 30, 2005 was 99.3% of distributable income and said the ratio is expected to improve further during the current fiscal year, moving closer to the REIT's longer-term target of 93 to 95%.

"Our recent financial results, including the acquisition activity, reflect the key characteristics of our performance. These include the high quality of our portfolio, the strong and accretive pace of our growth and the solid financial structure of the REIT," he said.

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

- Total debt of approximately $426 million;

- Ratio of debt to gross book value of 53.2% excluding convertible debentures and 60.1% including them;

- Ratio of floating-rate debt to gross book value of 5.3%. The REIT's allowable limit is 15%.

- The weighted average term to maturity on assumed hypothecs was 5.3 years;

- The weighted average interest rate was 6.2%; and

- The REIT's theoretical acquisition capacity is $110 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 90.5% occupied. By asset class, office properties were 87.5% occupied, industrial buildings were 90.4% occupied, retail space was 95.9% occupied and residential assets were 95.5% occupied.

"We see the coming six months as a testing period," said Anne-Marie Dubois, Vice President, Office and Industrial Leasing. "The high rate of absorption in both downtown and suburban office markets in the second and third quarters is encouraging. However, results from one quarter do not necessarily herald a new trend and we will be closely watching the data over the next couple of quarters."

Celine Fournier, Vice President, Retail Leasing said the retail landscape is changing dramatically. "As in the rest of Canada, large surface stores have become the fastest-growing retail format in Quebec," she said. "Some retailers are leaving conventional shopping centres, partly due to lower rental rates in power centres, but also because they offer a different ambiance, commercial services and restaurants that are geared to the more active consumer."

Mrs. Fournier added that the REIT's retail properties will continue to benefit from strategic locations, excellent physical characteristics, a quality tenant mix and a favourable economic environment.

An audio replay of the presentations will be archived in the Investor Relations section of www.alexisnihon.com.

About Alexis Nihon REIT

The REIT currently owns interests in 55 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 8.4 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.

Alexis Nihon Real Estate Investment Trust (TSX:AN.UN)