Nexus REIT Announces Q1 2021 Results

Oakville, Ontario, CANADA


TORONTO and MONTREAL, May 13, 2021 (GLOBE NEWSWIRE) -- Nexus Real Estate Investment Trust (the "REIT") (TSX: NXR.UN) announced today its results for the quarter ended March 31, 2021.

Highlights

  • Occupancy of 94% at March 31, 2021 increased from 93% at December 31, 2020 and remained consistent as compared to Q1 2020.
  • Rent collections continue to be strong despite the challenges of COVID-19.
  • Graduated to the Toronto Stock Exchange on February 1, 2021, with a 1 for 4 consolidation of outstanding units. Comparative figures have been restated to reflect the consolidation.
  • Completed a $14MM acquisition of two industrial properties in Edmonton, Alberta on March 1, 2021.
  • Closed a $34.9MM bought deal equity offering on March 4, 2021 with 4,255,000 REIT Units issued (the “Offering”), including 555,000 units issued as part of a fully exercised overallotment. The incremental units outstanding following the Offering will negatively impact per unit measures and the REIT’s AFFO payout ratio until proceeds of the Offering are fully deployed to acquire industrial properties.
  • Q1 2021 net operating income of $10,565,713 increased by $792,078 or 8.1% as compared to Q1 2020 net operating income of $9,773,635 and by $867,412 or 8.9% as compared to Q4 2020 net operating income of $9,698,301.
  • Q1 2021 same property NOI of $9,501,869 increased by $19,044 or 0.2% as compared to Q1 2020 same property NOI of $9,482,825.
  • Q1 2021 normalized FFO per unit of $0.203, as compared to $0.219 for Q1 2020 and $0.206 for Q4 2020.
  • Q1 2021 normalized AFFO per unit of $0.183, as compared to $0.197 for Q1 2020 and $0.185 for Q4 2020.
  • Q1 2021 normalized AFFO payout ratio of 87.7%, as compared to 81.3% for Q1 2020 and 86.1% for Q4 2020.
  • Ended Q1 2021 with $52MM of cash and full availability of $5MM credit facility; debt to total assets of 45.8% compared to 48.2% at December 31, 2020.
  • Book NAV per unit, including Class B LP Units, of $10.09 at March 31, 2021 as compared to $10.16 at December 31, 2020 and $9.80 at March 31, 2020.
  • Acquired six industrial properties in London, Ontario for $103.5MM on April 1, 2021.
  • $144.9MM of industrial properties totalling 1.1MM square feet of gross leasable area under contract.
  • Upon closing of announced transactions, more than 70% of the REIT’s NOI will be generated by its industrial portfolio.
  • Management of the REIT will host a conference call on Friday May 14th at 1PM EST to review results and operations.

“The first quarter saw the REIT graduate to the TSX as well as the successful completion of our $35 million equity raise, which will allow us to acquire a number of industrial properties” commented Kelly Hanczyk, the REIT’s Chief Executive Officer. “We are putting our equity to work and have announced entering into industrial asset purchase and sale agreements totalling approximately $144.9 million. Upon closing of these transactions, our industrial weighting will have grown to over 70% of our NOI. We have additional deals that we are currently working on and the balance of the year will see further shifting of our portfolio weighting towards industrial. In the quarter, we closed on a $14 million acquisition in Edmonton, Alberta, with $7 million of the purchase price satisfied in units. On April 1st, we closed on a $103.5 million acquisition in London, Ontario with $65.6 million of the purchase price being satisfied in units. One of the purchase and sale contracts we recently entered into is with the vendors of the London, Ontario portfolio, and we’re quite pleased to see that relationship giving us access to another unmarketed industrial acquisition opportunity. This relationship has the potential to provide a very significant pipeline of acquisition opportunities for the REIT.”

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
March 31,
 20212020
Financial Results$$
Property revenues16,587,72415,592,759
Net operating income (NOI)10,565,7139,773,635
Net income10,207,77313,671,000


 Three months ended
March 31,
 20212020
Financial Highlights$$
Funds from operations (FFO) (1)6,684,0536,283,632
Normalized FFO (1) (2)7,321,3796,893,562
Adjusted funds from operations (AFFO) (1)5,953,5965,590,259
Normalized AFFO (1) (2)6,590,9226,200,189
Same property net operating income (1)9,501,8699,482,825
Distributions declared (3)5,777,0475,040,412
Weighted average units outstanding – basic (4)36,041,44831,435,903
Weighted average units outstanding – diluted (4)36,124,35931,465,380
Distributions per unit, basic and diluted (3) (4)0.1600.160
FFO per unit, basic (1) (4)0.1850.200
Normalized FFO per unit, basic (1) (2) (4)0.2030.219
AFFO per unit, basic (1) (4)0.1650.178
Normalized AFFO per unit, basic (1) (2) (4)0.1830.197
Normalized AFFO payout ratio, basic (1) (2) (3)87.7%81.3%
Debt to total assets ratio45.8%47.6%


(1)Non-IFRS Measure
(2)Normalized FFO and Normalized AFFO include adjustments for vendor rent obligation amounts related to the REIT’s Richmond and Ajax Properties, which are payable from the vendor of the property until the buildout of the property 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 three months ended March 31, 2021, 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 the 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.

COVID-19 Collections Update

The following table summarizes rent collections presented as a percentage of contractual gross rent:

 Q1 2021
Cash collected from tenants97.8%
Remaining to be collected2.2%
Total100.0%

Revenues and Results from Operations

Q1 2021 NOI of $10,565,713 was $792,078 higher than Q1 2020 NOI of $9,773,635. Properties acquired in 2021 and 2020 generated incremental NOI of approximately $930,000 in Q1 2021 as compared to Q1 2020. Partially offsetting was the impact of a vacancy at a REIT industrial property in Calgary, Alberta which reduced Q1 2021 NOI by approximately $150,000 as compared to Q1 2020. Occupancy remained stable at 94% at both March 31, 2020 and 2021.

Q1 2021 NOI of $10,565,713 was $867,412 higher than Q4 2020 NOI of $9,698,301. Properties acquired in 2021 and 2020 generated incremental NOI of approximately $512,000 in Q1 2021 as compared to Q4 2020. A reduction COVID-19 related expenses increased Q1 2021 NOI by $128,000 as compared to Q4 2020 NOI.

General and administrative expenses of $1,429,051 for the quarter was up $436,389 as compared to Q1 2020 and $655,834 as compared to Q4 2020. General and administrative expenses increased as compared to Q4 2020 primarily due to one-time TSX listing fees relating to graduation to the TSX of approximately $207,000, timing of expenses related to the REIT’s equity-settled RSU plan of approximately $210,000, other staffing costs and the timing of professional fees and public company costs.

Earnings Call

Management of the REIT will host a conference call at 1:00 PM Eastern Standard Time on Friday, May 14, 2021 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 June 14, 2021. 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 6814.

About Nexus REIT

Nexus is a growth-oriented real estate investment trust focused on increasing unitholder value through the acquisition, ownership and management of industrial, office and retail properties located in primary and secondary markets in North America. The REIT currently owns a portfolio of 82 properties comprising approximately 5.7 million square feet of gross leasable area. The REIT has approximately 33,582,000 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 14,701,000 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.