Mr. Kelly Hanczyk reports

NEXUS INDUSTRIAL REIT ANNOUNCES FOURTH QUARTER AND YEAR END 2024 FINANCIAL RESULTS

Nexus Industrial REIT has released its results for the fourth quarter and year ended Dec. 31, 2024.

"Two thousand twenty-four was a formative year for Nexus Industrial and I am very pleased with the results. We executed a purposeful strategic reshaping, focusing our business as the Canada-focused pure-play industrial REIT. We made significant future investments, while also delivering strong organic growth," said Kelly Hanczyk, chief executive officer.

"During the year, we opportunistically sold our legacy office and non-core industrial properties, and have firm sales contracts for the majority of the retail portfolio, closing in March. We completed three development projects, adding 500,000 square feet of GLA, and have advanced two more, which will be finished mid this year. Combined, these five new developments will contribute over $13-million to NOI annually.

"Our industrial portfolio has continued to deliver strong results, growing NOI 12.4 per cent for the year to a record of $126-million and full-year SPNOI growth was an enviable 4.7 per cent," continued Mr. Hanczyk.

"I am very excited with the progress that we have made, and I am confident that our strategy will continue to be meaningful and rewarding for our stakeholders."

Fourth quarter 2024 highlights:

• Further advanced toward a pure-play industrial REIT by selling three legacy office properties, a mixed-use industrial property and four non-core industrial buildings for total proceeds of $48.2-million;
• Net income was $49.7-million, driven by net operating income (NOI) (1) of $32.1-million, and by fair value gains on Class B LP units and on investment properties, partially offset by financing expense;
• NOI increased 10.0 per cent versus a year ago to $32.1-million from the acquisition of high-quality, tenanted income-producing industrial properties and growth in industrial same-property NOI (SPNOI) (1);
• Industrial same-property NOI (1) increased 5.1 per cent year over year to $26.1-million;
• Normalized funds from operations (FFO) (1) per unit increased 1.3 cents versus a year ago to 19.2 cents and normalized AFFO (1) per unit increased 1.1 cents versus a year ago to 16.1 cents;
• Unitholders' equity increased by $61.4-million versus a year ago and net asset value (NAV) (1) per unit of $13.19 increased 32 cents or 2.5 per cent versus a year ago.

2024 highlights:

• Focused Nexus as a pure-play industrial REIT by selling legacy office assets and non-core industrial buildings for total proceeds of $72.9-million, and executing firm sales contracts for the legacy retail portfolio;
• Net income was $90.9-million, driven by NOI (1) of $125.9-million and by fair value gains on investment properties and on Class B LP units, partially offset by financing expense;
• NOI increased 12.4 per cent year over year to $125.9-million from the acquisition of high-quality, tenanted income-producing industrial properties and growth in industrial same-property NOI (1);
• Industrial same-property NOI (1) increased 4.7 per cent year over year to $87.8-million;
• Completed construction and tenanted a new 325,000-square-foot industrial building in Regina, Sask., and a new 96,000-square-foot industrial intensification project in London, Ont. Completed construction of a new 115,000-square-foot building in Hamilton, Ont.;
• Advanced construction on the 325,000-square-foot expansion project in St. Thomas, Ont., and on a 115,000-square-foot new industrial small-bay complex in Calgary, Alta.;
• Normalized FFO (1) per unit decreased 3.6 cents versus a year ago to 72.2 cents and normalized AFFO (1) per unit decreased 3.6 cents versus a year ago to 60.2 cents.

Subsequent event:

• On Feb. 21, 2025, the REIT completed the sale of an office property located in Laval, Que., for a selling price of $3.9-million. This property was previously classified as an asset held for sale. At the time of disposal, the REIT repaid a mortgage that was on the property of $2.4-million.

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

Non-IFRS measures

Included in the attached tables are non-IFRS financial measures that should not be construed as an alternative to net income or 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 year ended Dec. 31, 2024, available on SEDAR+ and on the REIT's website under investor relations.

NOI

NOI for the three months ended Dec. 31, 2024, was $32.1-million or $2.9-million higher than Q4 (fourth quarter) 2023, which was primarily due to $1.6-million from acquisitions of industrial income-producing properties completed subsequent to Q3 (third quarter) 2023 same-property NOI of $1.2-million from lease-up of 1751 to 1771 Savage Rd., Richmond, B.C., $500,000 relating to development projects and $200,000 relating to straight-line adjustments of rent, partially offset by $500,000 relating to dispositions completed since Q4 2023, and $100,000 relating to tenant incentives and leasing costs amortization.

NOI for the year ended Dec. 31, 2024, was $125.9-million or $13.9-million higher than the prior year, which was primarily due to $11.8-million from acquisitions of industrial income-producing properties completed subsequent to Q4 2023, an increase in same-property NOI of $3.3-million and $900,000 relating to development projects, partially offset by $1.8-million relating to dispositions completed since Q4 2023, and $300,000 relating to tenant incentives and leasing costs amortization.

Fair value adjustment of investment properties

The fair value adjustment of investment properties for the three months ended Dec. 31, 2024, totalled $8.1-million. The REIT engaged external appraisers to value properties totalling $125.6-million in the quarter. Over all, fair value gains recorded for the REIT's portfolio primarily consists of $13.4-million relating to properties held for development based on development progress relative to the as-completed appraisal value. Partially offsetting this is $3.0-million of capital expenditures that were not deemed to increase the fair value of the properties and therefore fair valued to zero, $1.7-million relating to investment property sale price adjustments, and $700,000 relating to changes in stabilized NOI and capitalization rates.

The fair value adjustment of investment properties for the year ended Dec. 31, 2024, totalled $47.9-million. The fair value adjustment reflects the net write-up of income properties primarily due to $35.7-million in respect of properties held for development, $22.3-million relating to changes in stabilized NOI and capitalization rates, $2.4-million relating to fair value gains from the sale of an excess land at Fort St. John, B.C., and $1.4-million from the remeasurement of Class B LP (limited partnership) units issued as part of an acquisition in Q3 2024. Partially offsetting this is $8.2-million of capital expenditures that were not deemed to increase the fair value of the properties and therefore fair valued to zero, $3.9-million relating to revaluation adjustments to investment properties prior to disposition, and $1.7-million of transaction costs from acquisitions completed during the year.

Outlook

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

Over all, the REIT anticipates mid-single-digit same-property NOI growth in its industrial portfolio for the full year.

In 2025, the REIT expects to benefit from the completion of two significant development projects. Combined, these properties will add annual stabilized NOI of approximately $6.8-million when complete:

• The REIT expects to complete its 325,000-square-foot Dennis Rd. expansion project in St. Thomas, Ont., in the second quarter of 2025. This project is being constructed for an existing tenant. The REIT earns 7.8 per cent on capital expenditures during the construction phase and will earn a contractual going-in yield of 9.0 per cent on the total development costs of $54.9-million upon completion.
• The REIT is constructing a 115,000-square-foot small-bay industrial building adjacent to an existing building that it owns in Calgary, Alta. The project is expected to be completed in the second quarter of 2025 and to earn a going-in yield of 12.0 per cent on total development costs of $15.4-million.

The REIT is focused on transitioning to a pure-play industrial REIT. The REIT has executed firm contracts to sell its legacy retail properties for approximately $47-million, which are anticipated to close in the first quarter of 2025. Following the dispositions, the REIT will no longer earn income from the sold properties. The REIT will use the sale proceeds to reduce debt and to finance existing development.

Earnings call

Management of the REIT will host a conference call at 10 a.m. Eastern Standard Time on Monday, March 10, 2025, to review the financial results and operations. To participate in the conference call, please dial 647-484-8814 or 1-844-763-8274 (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 April 10, 2025. To access the recording, please dial 1-412-317-0088 or 1-855-669-9658 (toll-free in Canada and the U.S.), and enter access code 9645419.

March and April 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 April 15, 2025, to unitholders of record as of March 31, 2025.

The REIT will also make a cash distribution in the amount of 5.333 per cents unit, representing 64 cents per unit on an annualized basis, payable May 15, 2025, to unitholders of record as of April 30, 2025.

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 105 properties (including one property 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 94,208,000 voting units issued and outstanding, including approximately 71,102,000 REIT units and approximately 23,106,000 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.