Mr. Kelly Hanczyk reports

NEXUS INDUSTRIAL REIT ANNOUNCES FOURTH QUARTER AND FULL YEAR 2023 FINANCIAL RESULTS

Nexus Industrial REIT has released its results for the fourth quarter and year ended Dec. 31, 2023.

"In our fourth quarter, we continued to benefit from our strategy as a Canada-focused pure play industrial [real estate investment trust], delivering another quarter of solid results," said Kelly Hanczyk, chief executive officer of Nexus Industrial.

"We acquired a 336,000-square-foot industrial property in London, Ont., and entered into a purchase agreement for another 82,500-square-foot property in Rocky View, Alta. In total, we acquired $378-million of high-quality income-producing industrial assets in the year.

"Looking forward to 2024, we can't help but be excited," continued Mr. Hanczyk. "We are nearing an inflection point as we benefit from contractual rent lift and renewals, cash-flowing development projects and further optimization of our portfolio of quality industrial assets. I am confident these factors will drive meaningful growth in our financial performance."

Fourth quarter 2023 highlights:

• Acquired a 336,448-square-foot industrial property in London, Ont., for $55.8-million; entered into a purchase agreement for an 82,500-square-foot industrial property in Rocky View, Alta., for $35.1-million;
• Net operating income increased 17.1 per cent year over year to $29.2-million, driven by the acquisition of income-producing industrial property and growth in same-property NOI;
• Same-property NOI increased 1.3 per cent year over year to $23.5-million driven by rental steps and renewal lease lift at industrial properties; industrial same-property NOI increased by 2.9 per cent to $21.1-million;
• Normalized funds from operations per unit were 18.0 cents, and normalized adjusted funds from operations per unit were 15.1 cents;
• Industrial occupancy improved to 99 per cent, a 1-per-cent increase from prior quarter;
• Net asset value per unit of $12.87 grew 68 cents or 5.6 per cent versus a year ago.

2023 highlights:

• Completed six strategic acquisitions of industrial income-producing properties with total gross leasable area in excess of 1.75 million square feet for a total purchase price of $377.7-million;
• Invested $53.5-million in industrial development projects; total GLA of projects under way of over 760,000 square feet;
• NOI increased 16.9 per cent to $112.0-million, supported by same-property NOI, which increased 3.5 per cent to $79.5-million; industrial same-property NOI increased by 4.3 per cent to $68.7-million;
• Normalized FFO per unit was 76.1 cents, and normalized AFFO per unit was 64.0 cents;
• Normalized AFFO payout ratio was 100.1 per cent; the REIT expects its normalized AFFO payout ratio to average in the low- to mid-90-per-cent range for 2024;
• Unencumbered asset pool grew to $842.4-million at year-end, an increase of $83.6-million quarter over quarter.

Outlook

The REIT is focused on delivering total unitholder return through profitable long-term growth and by pursing its strategy as a Canada-focused pure play industrial REIT.

The REIT anticipates slightly softer same-property NOI in the first quarter resulting from a key vacancy. Through the rest of 2024, the REIT expects to benefit from positive rental fundamentals in the markets in which it has leases expiring. Over all, the REIT anticipates mid- to high-single-digit same-property NOI growth for the full year.

In the first quarter of 2024, the REIT finalized construction at its Savage Road sports complex in Richmond, B.C. Occupancy from the primary tenant is anticipated to occur in the second quarter of the year.

In 2024, the REIT expects to benefit from the completion of four significant development projects. Combined, these properties will add annual stabilized NOI of approximately $11-million when complete:

• In the second quarter of 2024, the REIT expects to complete the Park Street intensification project in Regina, Sask. This project will contribute an estimated yield of 7.5 per cent on total development costs of $48-million.
• In the third quarter of 2024, the REIT expects to complete the Hubrey Road expansion project in London, Ont., and the Glover Road new development in Hamilton, Ont. These projects will contribute estimated going-in yields of 9 per cent and 5.6 per cent on total development costs of $15-million and $33-million, respectfully.
• In the fourth quarter of 2024, the REIT expects to complete the 240,000-square-foot Dennis Road expansion project in St Thomas, Ont. This project will contribute a contractual going-in yield of 9.0 per cent on total development costs of approximately $50-million.

The REIT will continue to prioritize unitholder distributions. The REIT expects its normalized AFFO payout ratio percentage to average in the low- to mid-90-per-cent range for the year.

The REIT is focused on building its industrial portfolio. As a result, the REIT is well under way in the process of disposing of its retail and office properties. In addition, the REIT is examining the potential sale of a group of non-core industrial buildings. In total, this equates to an approximate target of $200-million. The REIT expects the property sales to close in the second half of the year, and the proceeds to be used to reduce the REIT's debt balance.

Earnings call

Management of the REIT will host a conference call at 10 a.m. Eastern Standard Time on Thursday, March 14, 2024, 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 conference call.

A recording of the conference call will be available until April 14, 2024. To listen to the recording, please dial 604-674-8052 or 1-855-669-9658 (toll-free in Canada and the United States) and enter access code 0703.

March and April, 2024, 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 April 15, 2024, to unitholders of record as of March 29, 2024.

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 May 15, 2024, to unitholders of record as of April 30, 2024.

The REIT's distribution reinvestment plan 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 Industrial 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 117 properties (including two properties held for development in which the REIT has an 80-per-cent interest) comprising approximately 12.5 million square feet of gross leasable area. The REIT has approximately 93,379,000 voting units issued and outstanding, including approximately 68,768,000 REIT units and approximately 24,611,000 Class B limited partnership units of subsidiary limited partnerships of Nexus Industrial, which are convertible to REIT units on a one-to-one basis.

We seek Safe Harbor.