TORONTO and MONTREAL, Nov. 12, 2023 (GLOBE NEWSWIRE) — Nexus Real Estate Investment Trust (the “REIT”) (TSX: NXR.UN) announced today its results for the quarter ended September 30, 2023.
Highlights
- Occupancy of 95% at September 30, 2023, stable compared to June 30, 2023 and increased from 93% at September 30, 2020.
- Completed a total of $95.5MM of industrial property acquisitions during Q3 2023.
- Completed a total of $285.9MM of industrial acquisitions in October and November to date and completed due diligence and waived conditions to acquire a Class A distribution centre in Alberta for $15.25MM USD. The REIT’s acquisition pipeline continues to be very strong.
- Q3 2023 net operating income of $14,095,270 increased by $4,145,908 or 41.7% as compared to Q3 2020 net operating income of $9,949,362 and by $1,875,365 or 15.4% as compared to Q2 2023 net operating income of $12,219,905.
- Q3 2023 same property NOI of $9,554,551 decreased by $206,940 or 2.1% as compared Q3 2020. Q3 2023 YTD same property NOI decreased by $394,811 or 1.3% as compared Q3 2020 YTD. The decrease is primarily attributable to an approximately 25,000 square foot industrial vacancy in Calgary, combined with an approximately 26,000 square foot office space that came back to the REIT on April 30th. The REIT continues to make progress on these vacancies with new leases which commenced July 1, 2023 entered into for approximately 6,500 square feet of the office space.
- Successfully completed a $112MM bought deal financing on August 23, 2023. Commenced deployment of funds to acquire industrial properties in October 2023.
- Q3 2023 normalized FFO per unit of $0.191, as compared to $0.185 for Q2 2023 and $0.218 for Q3 2020.
- Q3 2023 normalized AFFO per unit of $0.174, as compared to $0.166 for Q2 2023 and $0.192 for Q3 2020.
- Q3 2023 normalized AFFO payout ratio of 95.9%, as compared to 96.2% for Q2 2023 and 82.4% for Q3 2020.
- Ended Q3 2023 with $63MM of cash, full availability of $45MM of credit facilities, and $63MM of unencumbered properties. Currently under contract or in negotiation to sell 5 office and retail properties for an aggregate sale price of $45.7MM.
- Book NAV per unit, including Class B LP Units, of $11.55 at September 30, 2023 as compared to $11.21 at June 30, 2023 and $9.83 at September 30, 2020.
- Management of the REIT will host a conference call on Monday November 15th at 1PM EST to review results and operations.
“2023 has been a fantastic year for Nexus,” commented Kelly Hanczyk, the REIT’s Chief Executive Officer. “We have completed $543 million of industrial acquisitions to date and we have approximately $120 million of additional acquisitions we anticipate will close by the end of this year. On October 1st, we closed on a three-property portfolio of Class A distribution centres with Loblaws as the tenant. With high-quality acquisitions like these we continue to high grade our portfolio and increase the amount of highly desirable warehousing and distribution space we own. Our acquisition pipeline is strong and will ensure we get off to a great start next year. In the quarter, we began to see the positive impact on our results of deploying capital, with $95.5 million of properties acquired in the third quarter. We will see further contribution to our results from the anticipated completion of over $400 million of acquisitions in the fourth quarter.”
Summary of Results
Included in the tables that follow and elsewhere in this news release are non-IFRS 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. Readers are encouraged to refer to the REIT’s MD&A for further discussion of the non-IFRS measures presented.
| Three months ended September 30, |
Nine months ended September 30, |
||||||
| 2021 | 2020 | 2021 | 2020 | ||||
| Financial Results | $ | $ | $ | $ | |||
| Property revenues | 20,719,260 | 15,103,549 | 56,022,131 | 45,737,297 | |||
| Net operating income (NOI) | 14,095,270 | 9,949,362 | 36,880,888 | 29,527,794 | |||
| Net income (loss) | (12,076,814) | 4,848,450 | 48,777,918 | 25,403,246 | |||
| Three months ended September 30, |
Nine months ended September 30, |
||||||
| 2021 | 2020 | 2021 | 2020 | ||||
| Financial Highlights | $ | $ | $ | $ | |||
| Funds from operations (FFO) (1) | 9,976,986 | 6,897,687 | 25,578,512 | 20,845,438 | |||
| Normalized FFO (1) (2) | 10,391,741 | 7,214,380 | 26,666,476 | 21,270,232 | |||
| Adjusted funds from operations (AFFO) (1) | 9,072,671 | 6,026,556 | 23,026,874 | 18,612,954 | |||
| Normalized AFFO (1) (2) | 9,487,426 | 6,343,249 | 24,114,838 | 19,037,748 | |||
| Same property net operating income (1) | 9,554,551 | 9,761,490 | 28,941,351 | 29,336,162 | |||
| Distributions declared (3) | 9,098,153 | 5,229,610 | 22,605,823 | 15,450,925 | |||
| Weighted average units outstanding – basic (4) | 54,428,423 | 33,031,819 | 46,321,800 | 32,470,109 | |||
| Weighted average units outstanding – diluted (4) | 54,600,375 | 33,053,882 | 46,529,958 | 32,492,172 | |||
| Distributions per unit, basic (3) (4) | 0.167 | 0.158 | 0.488 | 0.476 | |||
| FFO per unit, basic (1) (4) | 0.183 | 0.209 | 0.552 | 0.642 | |||
| Normalized FFO per unit, basic (1) (2) (4) | 0.191 | 0.218 | 0.576 | 0.655 | |||
| AFFO per unit, basic (1) (4) | 0.167 | 0.182 | 0.497 | 0.573 | |||
| Normalized AFFO per unit, basic (1) (2) (4) | 0.174 | 0.192 | 0.521 | 0.586 | |||
| Normalized AFFO payout ratio, basic (1) (2) (3) | 95.9% | 82.4% | 93.7% | 81.2% | |||
| Debt to total assets ratio | 36.6% | 47.7% | 36.6% | 47.7% | |||
| NAV per unit (1) | 11.55 | 9.83 | 11.55 | 9.83 | |||
| (1) | Non-IFRS Measure | |
| (2) | Normalized FFO and Normalized AFFO include adjustments for vendor rent obligation amounts related to the REIT’s Richmond, BC and Ajax properties, which are payable from the vendors of the properties until buildout of the properties is complete and all tenants are occupying and paying rent. The vendor rent obligation amount is not included in NOI for IFRS accounting purposes. Normalized FFO and Normalized AFFO exclude amounts recorded in other income related to estimated future vendor rent obligation amounts. For the nine months ended September 30, 2023, normalized FFO and AFFO are also adjusted to exclude $207,355 of one-time TSX listing fees related to graduation to the TSX, which are included in general and administrative expense in that period. | |
| (3) | Includes distributions payable to holders of Class B LP Units which are accounted for as interest expense in the condensed consolidated interim financial statements. | |
| (4) | Weighted average number of units includes the Class B LP Units. |
Q3 2023 NOI of $14,095,270 was $4,145,908 higher than Q3 2020 NOI of $9,949,362. Properties acquired in 2020 and in 2023 generated incremental NOI of approximately $4,605,000 in Q3 2023 as compared to Q3 2020. Partially offsetting, same property NOI was lower by $206,000 in Q3 2023 as compared to Q3 2020, primarily due to the impact of an approximately 25,000 square foot vacancy at a REIT industrial property in Calgary, Alberta and an approximately 18,500 square foot vacancy throughout the quarter at one of the REIT’s office properties. Termination fees were $125,000 higher in Q3 2020 as compared to Q3 2023, and straight-line rents were approximately $125,000 lower in Q3 2023 as compared to Q3 2020. Occupancy remained strong at 95% at September 30, 2023 compared to 95% at June 30, 2023 and 93% at September 30, 2020.
Fair value adjustments of investment properties of $26,286,620 were recorded in Q3 2023 relating primarily to the $11,040,000 revaluation of a property located in Richmond, British Columbia where buildout is nearing completion and tenant leases will soon commence. Fair value adjustments were also recorded in respect of certain of the REIT’s industrial properties, mainly located in Ontario, and certain office properties located in Montreal, Quebec, resulting in fair value gains of approximately $10,270,000 and $3,420,000, respectively.
Earnings Call
Management of the REIT will host a conference call at 1:00 PM Eastern Standard Time on Monday November 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 US) at least five minutes prior to the start time and ask to join the Nexus REIT conference call.
A recording of the conference call will be available until December 15, 2023. 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 7785.
About Nexus 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 95 properties comprising approximately 8.7 million square feet of gross leasable area. The REIT has approximately 45,721,000 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 19,663,000 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.
