NXR.UN:CC - Nexus Industrial REIT Announces Q1 2022 Results and Annual Meeting Voting Results

TORONTO and MONTREAL, May 12, 2022 (GLOBE NEWSWIRE) -- Nexus Industrial REIT (the “REIT”) (TSX: NXR.UN) announced today its results for the quarter ended March 31, 2022.

Highlights

• Completed $236.4 million of industrial property acquisitions during Q1 2022, increasing NOI from industrial properties to approximately 84.4% of NOI for the quarter. To partially fund the acquisitions the REIT completed $127.3 million of new mortgage financing at a weighted average interest rate of 3.25% and a term of 7.8 years.
• On January 1, 2022 the 100,000 square foot expansion at the REIT’s co-owned Ajax industrial property was completed by the vendor, with the tenant in-place and paying rent.
• As part of its capital-recycling program, the REIT has determined to sell five non-industrial properties with a carrying value of $54.9 million that are under negotiation or being marketed.
• Occupancy of 97% at March 31, 2022, increased from 96% at December 31, 2021 and 94% at March 31, 2021.
• Q1 2022 net operating income of $22.0 million increased by $11.5 million or 108% as compared to $10.6 million for Q1 2021 and by $3.0 million or 15% as compared to $19.1 million for Q4 2021.
• Q1 2022 Same Property NOI ⁽¹⁾ of $10.1 million decreased by $0.3 million or 3.2% as compared to Q1 2021 and by $0.3 million or 3.2% as compared to Q4 2021. The decreases are primarily attributable to vacancies at one of the REIT’s office properties and an industrial property in Regina. Efforts to re-lease the spaces are underway, and discussions are being held with prospective new tenants.
• As at March 31, 2022, the REIT had $150 million of recently acquired properties which were unencumbered. Once these properties are financed and the proceeds are deployed to acquire additional properties, the proceeds of 2021 equity raises will be fully deployed.
• Q1 2022 Normalized FFO ⁽¹⁾ per unit of $0.192, as compared to $0.194 for Q4 2021 and $0.203 for Q1 2021.
• Q1 2022 Normalized AFFO ⁽¹⁾ per unit of $0.165, as compared to $0.173 for Q4 2021 and $0.183 for Q1 2021.
• Q1 2022 Normalized AFFO payout ratio ⁽¹⁾ of 96.7%, as compared to 96.5% for Q4 2021 and 87.7% for Q1 2021.
• General and administrative expense for the quarter included a $0.6 million RSU expense with RSUs granted and 1/3 vested in the quarter. Q2 2022 RSU expense is anticipated to decrease to $0.15 million.
• Weighted average interest rate on mortgages of 3.29% at March 31, 2022, compared to at 3.28% at December 31, 2021, as the REIT managed acquisition financing in a rising interest rate environment, and down from 3.62% at March 31, 2021. At the same time, the weighted average term to maturity increased to 6.71 years at March 31, 2022 from 6.61 years at December 31, 2021 and 3.76 years at March 31, 2021.
• NAV ⁽¹⁾ per unit increased to $12.35 at March 31, 2022 as compared to $12.18 at December 31, 2021 and $10.09 at March 31, 2021.
• Management of the REIT will host a conference call on Friday May 13 ^th at 11AM EST to review results and operations

“We acquired $236.4 million of industrial properties, on average half-way through the 1 ^st quarter, and we will see the full positive impact of these acquisitions in the second quarter. We are extremely pleased with the quality of the properties acquired and the opportunities for expansion and rental rate increases that several of these properties offer. These properties were under contract prior to cap rate contraction, and we financed them prior to recent interest rate hikes,” commented Kelly Hanczyk, the REIT’s Chief Executive Officer. “We are realizing significant lift in renewal rental rates in our London and Montreal industrial portfolios that will begin to show in the 3 ^rd and 4 ^th quarters of this year. There are 5 retail and office properties that are currently being marketed or under negotiation for disposition and we are preparing to launch on the sale of a sixth retail property shortly. As we continue to grow our asset base we have recently added depth to our management team as there are a number of acquisition opportunities we are actively pursuing. We expect to continue to increase our industrial weighting in 2022.”

Summary of Results

Included in the tables that follow and elsewhere 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 to 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 months ended March 31, 2022, available on SEDAR at www.sedar.com and on the REIT’s website under Investor Relations. See Appendix A of this earnings release for a reconciliation of the non-IFRS financial measures to the primary financial statement measures.

For the three months ended March 31, 2022, NOI of $22.0 million was $11.5 million higher than Q1 2021 NOI of $10.6 million. Acquisitions completed in Q1 2022 generated $1.6 million of incremental NOI in Q1 2022 as compared to Q1 2021. Acquisitions completed in 2021 generated $9.5 million of incremental NOI in Q1 2022 as compared to Q1 2021. Incremental rental income from the completion of an expansion at the REIT’s Ajax property increased Q1 2022 NOI by $0.1 million as compared to Q1 2021. Q1 2022 Same Property NOI decreased $0.3 million as compared to Q1 2021, primarily driven by vacancy at one of the REIT’s office properties ($0.3 million) and an industrial property ($0.1 million), partially offset by rental steps and CPI increases at certain of the REIT’s industrial properties. Straight-line rents also contributed $0.7 million to the increase over Q1 2021, driven primarily by newly acquired properties with steps in rent. Occupancy remained strong at 97% at March 31, 2022 compared to 96% at December 31, 2021 and 94% at March 31, 2021. Acquisitions completed in Q1 2022 were on average completed mid-quarter and will contribute approximately twice as much NOI in Q2 2022.

Fair value adjustments of investment properties of $1.9 million for Q1 2022 reflects $8.9 million of fair value gains primarily related to compression of capitalization rates for industrial properties located in certain markets in Ontario and Western Canada, partially offset by $6.8 million related to transaction costs and acquisition accounting adjustments on properties acquired during the quarter with Class B LP Units issued as consideration or mortgages assumed.

Earnings Call

Management of the REIT will host a conference call at 11:00 AM Eastern Standard Time on Friday May 13, 2022 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 US) 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 June 13, 2022. To access the recording, please dial 604-674-8052 or 1-855-669-9658 (toll free in Canada and the US) and enter access code 8875.

Annual Meeting Voting Results

Each of the matters set out in the REIT’s management information circular dated March 28, 2022 (the “Circular”) for the annual meeting of unitholders held on May 12, 2022 (the “Meeting”) was approved by the requisite majority of unitholders.

Each of the trustee nominees listed in the Circular was elected as a trustee of the REIT. Voting results for the individual trustees are as follows:

Final results on all matters considered at the Meeting are reported in the Report of Voting Results as filed on SEDAR ( www.sedar.com ).

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 potentially including the United States, and the ownership and management of its portfolio of properties. The REIT currently owns a portfolio of 106 properties comprising approximately 10.5 million square feet of gross leasable area. The REIT has approximately 57,952,000 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 20,773,000 Units.

Forward Looking Statements

Certain statements contained in this news release constitute forward-looking statements which reflect the REIT’s current expectations and projections about future results. Often, but not always, forward-looking statements can be identified by the use of words such as “plans”, “expects” or “does not expect”, “is expected”, “estimates”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the REIT to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Actual results and developments are likely to differ, and may differ materially, from those expressed or implied by the forward-looking statements contained in this news release. Such forward-looking statements are based on a number of assumptions that may prove to be incorrect.

While the REIT anticipates that subsequent events and developments may cause its views to change, the REIT specifically disclaims any obligation to update these forward-looking statements except as required by applicable law. These forward-looking statements should not be relied upon as representing the REIT’s views as of any date subsequent to the date of this news release. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. The factors identified above are not intended to represent a complete list of the factors that could affect the REIT.

For further information please contact:
Kelly C. Hanczyk, CEO at (416) 906-2379 or
Rob Chiasson, CFO at (416) 613-1262.

APPENDIX A – NON-IFRS FINANCIAL MEASURES