Mr. Kelly Hanczyk reports

NEXUS INDUSTRIAL REIT ANNOUNCES Q3 2023 RESULTS AND DECEMBER DISTRIBUTION

Nexus Industrial REIT today released its results for the quarter ended Sept. 30, 2023.

Highlights

• Nov. 1 -- Acquired a 336,448-square-foot industrial property located in London, Ont., for $55.8-million with $27.1-million of the purchase price being settled in units valued at $11.30 per unit.
• Sept. 12 -- Increased the REIT's unsecured credit facilities from $375-million to $525-million.
• July 4 -- Acquired a 141,534-square-foot industrial property located in Burlington, Ont., for $48.4-million.
• NOI (net operating income) from industrial properties anticipated to be approximately 91 per cent for Q4 as a result of these transactions.
• Occupancy of 97 per cent at Sept. 30, 2023, was consistent with 97 per cent at June 30, 2023, and Sept. 30, 2022.
• Q3 2023 net operating income of $29.3-million increased by $4.4-million and 17.9 per cent as compared with Q3 2022 net operating income of $24.9-million and by $1.6-million and 5.9 per cent as compared with Q2 2023 net operating income of $27.7-million.
• Q3 2023 same property NOI of $23.3-million increased by $600,000 and 2.5 per cent as compared with Q3 2022.
• Q3 2023 normalized FFO (funds from operations) per unit of 19.8 cents as compared with 19.6 cents for Q2 2023 and 20.9 cents for Q3 2022.
• Q3 2023 normalized AFFO (adjusted funds from operations) per unit of 16.5 cents as compared with 16.5 cents for Q2 2023 and 17.9 cents for Q3 2022.
• Q3 2023 normalized AFFO payout ratio of 97.2 per cent, as compared with 97.3 per cent for Q2 2023 and 88.9 per cent for Q3 2022.
• NAV (net asset value) per unit of $12.89 at Sept. 30, 2023, as compared with $12.49 at June 30, 2023, and $12.45 at Sept. 30, 2022.
• Debt to total assets of 48.5 per cent at Sept. 30, 2023, as compared with 48.0 per cent at June 30, 2023. At Sept. 30, 2023, $153.5-million was undrawn on the REIT's lines of credit and the REIT had a $758.8-million unencumbered asset pool.
• Management of the REIT will host a conference call on Wednesday, Nov. 15, at 1 p.m. ET to review results and operations.

"While the real estate market faces uncertainty within a heightened interest rate environment, the industrial sector is a stable and favoured asset class. Same store NOI continues to benefit from spreads between in-place and market rent," stated Kelly Hanczyk, chief executive officer of Nexus REIT. "We are focused on the completion of our committed developments that are expected to generate outsized returns, and we are patiently pursuing the sale of our retail and office assets, the proceeds of which will be used to strengthen our balance sheet. The 312,000-square-foot intensification of one of the REIT's Regina, Sask., properties and two other development projects totalling approximately 210,000 square foot that are currently under way in Hamilton and London, Ont., are progressing well, and we look forward to the incremental NOI they will generate on their expected completions in the spring and summer of next year. Recent acquisitions and developments have significantly high graded the quality of the REIT's portfolio. We have a newly constructed building in the Calgary area under contract, which is expected to close in December which adds another high-quality asset to the portfolio. With the 336,448-square-foot acquisition completed on Nov. 1, we increased our presence in the London, Ont., market, which is among the best performing industrial real estate markets in Canada."

NOI

Q3 2023 NOI of $29.3-million was $4.4-million higher than Q3 2022 NOI of $24.9-million. Acquisitions completed subsequent to July 1, 2022, generated $4.6-million of incremental NOI in Q3 2023 as compared with Q3 2022. Q3 2023 same property NOI increased $600,000 as compared with Q3 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 Q3 2022, driven primarily by newly acquired properties with steps in rent. The disposal of one small industrial and four retail properties between July, 2022, and September, 2023, reduced NOI by $1.0-million as compared with Q3 2022.

Fair value adjustment of investment properties

The fair value adjustment of investment properties for Q3 2023 totalled $30.1-million. The REIT engaged external appraisers to value properties totalling approximately $489-million in the quarter, resulting in a net write-up of income-producing properties of approximately $26.9-million. One of the properties appraised accounted for approximately 84 per cent of the $26.9-million net write-up. Additionally, an investment property acquired in the second quarter with in-place rents significantly below market and purchased for approximately $24-million less than appraised value was also revalued from its previous carrying value which approximated the purchase price, generating a fair value increase of approximately $19.1-million in the quarter. Fair value gains recorded in respect of properties held for development totalled $16.6-million for the quarter. The difference between the fair value of the properties held for development not considering development returns and the as completed fair value is recognized pro rata with costs incurred with date, excluding the cost of land, as compared with total budgeted development costs excluding the cost of land. Partially offsetting these fair value gains were fair value adjustments for the remainder of the REIT's portfolio totalling $24.4-million, relating primarily to cap rate expansion applied primarily to the REIT's properties in Calgary, Montreal and British Columbia, $5.9-million of capital expenditures fair valued to zero, and $2.2-million of fair value adjustments related to transaction costs in connection with an acquisition completed during the quarter.

Earnings call

Management of the REIT will host a conference call at 1 p.m. Eastern Standard Time on Wednesday, Nov. 15, 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 U.S.) 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 Dec. 15, 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 0526.

December, 2023, distribution

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 Jan. 15, 2024, to unitholders of record as of Dec. 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 116 properties (including two properties held for development in which the REIT has an 80-per-cent interest) comprising approximately 12.4 million square feet of gross leasable area. The REIT has approximately 93,038,000 voting units issued and outstanding, including approximately 68,427,000 REIT units and approximately 24,611,000 Class B LP units of subsidiary limited partnerships of Nexus, which are convertible to REIT units on a one-to-one basis.

We seek Safe Harbor.