Mr. Kelly Hanczyk reports

NEXUS INDUSTRIAL REIT ANNOUNCES Q2 2023 RESULTS AND AUGUST AND SEPTEMBER DISTRIBUTIONS

Nexus Industrial REIT has released its results for the quarter ended June 30, 2023.

Highlights:

• July 4: acquired a 141,534-square-foot industrial property located in Burlington, Ont., for $48.4-million;
• June 15: acquired a 304,323-square-foot industrial property located in London, Ont., for a contractual purchase price of $56.4-million, with $24.3-million of the purchase price settled through the issuance of 2,359,978 Class B LP units at a deemed price per unit of $10.30;
• June 5: acquired an 18-acre parcel of land in St. Thomas, Ont., for $4.5-million. The parcel acquired is adjacent to another property owned by the real estate investment trust (REIT);
• June 5: sold an industrial property located in Kamloops, B.C., for $4.2-million;
• June 1: acquired a 191,878-square-foot industrial property located in Laval, Que., for $64.7-million;
• April 26: sold a retail property located in Victoriaville, Que., for $41.6-million;
• April 21: acquired a 264,600-square-foot industrial property located in London, Ont., for $36.0-million;
• NOI (net operating income) from industrial properties anticipated to increase to approximately 91 per cent for Q3 as a result of these transactions;
• Occupancy of 97 per cent at June 30, 2023, was consistent with 97 per cent at March 31, 2023, and June 30, 2022;
• Q2 2023 net operating income of $27.6-million increased by $3.7-million or 15.3 per cent as compared with Q2 2022 net operating income of $24.0-million, and by $1.9-million or 7.4 per cent as compared with Q1 2023 net operating income of $25.7-million. The disposal of an industrial and four retail properties since 2022 reduced NOI by $900,000 and the REIT received a termination fee of $200,000 from a tenant at one of the REIT's office properties;
• Q2 2023 same-property NOI (1) of $23.1-million increased by $900,000 or 4.3 per cent as compared with Q2 2022, primarily driven by rental steps, CPI increases and new and renewal lease lift;
• Q2 2023 normalized FFO (funds from operations) (1) per unit of 19.6 cents, as compared with 18.7 cents for Q1 2023 and 20.3 cents for Q2 2022;
• Q2 2023 normalized AFFO (adjusted funds from operations) (1) per unit of 16.5 cents, as compared with 15.9 cents for Q1 2023 and 17.7 cents for Q2 2022;
• Q2 2023 normalized AFFO payout ratio (1) of 97.3 per cent, as compared with 100.7 per cent for Q1 2023 and 90.3 per cent for Q2 2022;
• NAV (net asset value) (1) per unit of $12.49 at June 30, 2023, as compared with $12.13 at March 31, 2023, and $12.41 at June 30, 2022;
• Debt to total assets of 48.0 per cent at June 30, 2023; $88.6-million undrawn on the REIT's lines of credit and $568.6-million unencumbered asset pool;
• Management of the REIT will host a conference call on Monday, Aug. 14, 2023, at 1 p.m. EST, to review results and operations.

(1) Non-IFRS (international financial reporting standards) financial measures.

"During the quarter, we continued with the high grading of our portfolio, acquiring two industrial properties in London, Ont., totalling 568,923 square feet, and a 191,878-square-foot industrial property in Laval, Que.," commented Kelly Hanczyk, the REIT's chief executive officer. "On July 4, we acquired a 141,534-square-foot industrial property in Burlington, Ont. The Burlington and Laval properties are brand-new construction Class A buildings with embedded annual rental steps averaging just over 4 per cent. Market rents for one of the London properties acquired are 175 per cent higher than in-place rents with the lease expiring in 2025. We also completed the sale of our Victoriaville, Que., retail property in the quarter, which will push our industrial weighting by NOI to over 90 per cent for Q3. Our same-property NOI increased by 4.3 per cent or $900,000 as compared to Q2 2022. While we will be very selective in evaluating further acquisition opportunities going forward, we are progressing well with our high-yielding development projects, having broken ground at two sites. Also in the quarter, we acquired an 18-acre parcel of land in St. Thomas, Ont., adjacent to another property we own, and we have signed an expansion agreement with our existing tenant to construct an additional 70,000 square feet of GLA. These projects are expected to deliver very attractive yields, and to generate sizable NAV, FFO and AFFO growth."

Non-IFRS measures

Included in this news release are non-IFRS financial measures that should not be construed as an alternative to net income/loss, cash from operating activities or other measures of financial performance calculated in accordance with IFRS, and may not be comparable with similar measures as reported by other issuers. Certain additional disclosures for these non-IFRS financial measures have been incorporated by reference and can be found on page 3 in the REIT's management's discussion and analysis for the three-month and six-month periods ended June 30, 2023, available on SEDAR and on the REIT's website under investor relations.

NOI

Q2 2023 NOI of $27.7-million was $3.7-million higher than Q2 2022 NOI of $24.0-million. Acquisitions completed subsequent to April 1, 2022, generated $3.2-million of incremental NOI in Q2 2023 as compared with Q2 2022. Q2 2023 same-property NOI increased $900,000 as compared with Q2 2022, primarily driven by rental steps and CPI increases at certain of the REIT's industrial properties, as well as new and renewal lease lift. Higher straight-line rents contributed $400,000 to the increase over Q2 2022, driven primarily by newly acquired properties with steps in rent. The REIT received a total of $200,000 of termination fees from two office tenants in the quarter. The disposals of one small industrial and four retail properties between April, 2022, and June 30, 2023, reduced NOI by $900,000 as compared with Q2 2022.

Fair value adjustment of investment properties

The REIT recorded a fair value adjustment of investment properties of $33.0-million for Q2 2023, which reflects $39.2-million of fair value gains related to the adjustment of stabilized NOI to market rates net of capitalization rate expansion for those properties where market rents exceeded in-place rents (of which approximately $37-million of net gains were recorded in the Ontario industrial portfolio and $14-million in the Quebec industrial portfolio), $4.4-million of fair value gains related to the remeasurement of Class B LP (limited partnership) units issued as part of the acquisition of an industrial property in London, Ont., partially offset by $5.3-million of fair value losses related to transaction costs and mark-to-market adjustments on mortgages assumed in connection with acquisitions completed during the quarter, $5.1-million of capital expenditures fair valued to zero, and $1.5-million of fair value losses relating to revaluation adjustments to investment properties prior to disposition.

Earnings call

Management of the REIT will host a conference call at 1 p.m. Eastern Standard Time on Monday, Aug. 14, 2023, to review the financial results and operations. To participate in the conference call, please dial 416-915-3239 or 1-800-319-4610 (toll-free in Canada and the United States) at least five minutes prior to the start time and ask to join the Nexus Industrial REIT conference call.

A recording of the conference call will be available until Sept. 14, 2023. To access the recording, please dial 604-674-8052 or 1-855-669-9658 (toll-free in Canada and the U.S.) and enter access code 0271.

August and September, 2023, distributions

The REIT will make a cash distribution in the amount of 5.333 cents per unit, representing 64 cents per unit on an annualized basis, payable Sept. 15, 2023, to unitholders of record as of Aug. 31, 2023.

The REIT will also make a cash distribution in the amount of 5.333 cents per unit, representing 64 cents per unit on an annualized basis, payable Oct. 16, 2023, to unitholders of record as of Sept. 29, 2023.

The REIT's distribution reinvestment plan (DRIP) entitles eligible unitholders to elect to receive all or a portion of the cash distributions of the REIT reinvested in units of the REIT. Eligible unitholders who so elect will receive a bonus distribution of units equal to 4 per cent of each distribution that was reinvested by them under the DRIP.

About Nexus Industrial REIT

Nexus is a growth-oriented real estate investment trust focused on increasing unitholder value through the acquisition of industrial properties located in primary and secondary markets in Canada, and the ownership and management of its portfolio of properties. The REIT currently owns a portfolio of 115 properties (including two properties held for development in which the REIT has an 80-per-cent interest), comprising approximately 12.1 million square feet of gross leasable area. The REIT has approximately 68,193,000 units issued and outstanding. Additionally, there are Class B LP units of subsidiary limited partnerships of Nexus issued and outstanding, which are convertible into approximately 22.22 million units.

We seek Safe Harbor.