Nexus Industrial REIT: Dividend Yield Is Now (Finally) Covered

2025-03-15 11:40:00 ET

Summary

• Nexus Industrial REIT's Q4 results show a fully covered dividend, with a 10% NOI increase and normalized AFFO of C$0.161 per share.
• The REIT's distribution of C$0.64 per share annually is now (barely) covered, with potential for rent hikes boosting future AFFO.
• Significant rental income growth is expected in Ontario and Quebec due to market rent increases, aiding in debt reduction and development funding.
• Investment thesis: Nexus offers over 9% dividend yield with potential capital gains, targeting C$10/share, despite trade war uncertainties.

Introduction

When I published my first article on Nexus Industrial REIT ( EFRTF ) ( NXR.UN:CA ) about two years ago, I argued that although the distribution was not fully covered , Nexus’ plans to increase its asset base and its ability to hike the rent on its assets indicated the REIT was on its way to fully cover the dividend. I’m quite happy to see the Q4 results indeed confirmed the distribution is fully covered, and the coverage ratio should improve in 2025 and 2026. ...

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