Nexus Industrial REIT (NXR-UN) Q1 2025 earnings summary

Executive summary

• Completed sale of 15 out of 16 retail properties and one office property, finalizing transition to a Canada-focused pure-play industrial REIT, with industrial assets now over 99% of NOI on a pro forma basis.

• Proceeds from asset sales used to strengthen balance sheet, reduce debt, and fund development projects.

• Industrial occupancy increased to 97% in Q1, with robust leasing and pre-leasing activity.

• Renewed over 80% of expiring GLA, with value-add renewals contributing $2.6 million to NOI in 2025 and $2.9 million in 2026.

Financial highlights

• Net income for Q1 2025 was CAD 33.2 million, down CAD 10.5 million year-over-year due to higher loss on derivatives and lower gain on investment properties.

• Net operating income (NOI) rose 8.6% year-over-year to CAD 32.1 million, driven by acquisitions, organic growth, and development.

• Industrial Same Property NOI grew 6.6% year-over-year to $27.4 million.

• Normalized AFFO per unit increased to $0.154 from $0.135 year-over-year.

• NAV per unit at March 31, 2025, was $13.21, up $0.02 from last quarter.

Outlook and guidance

• Expectation of mid-single-digit industrial Same Property NOI growth for 2025.

• Two development projects to add $6.6 million in annual stabilized NOI upon Q3 2025 completion, with unlevered returns of 9.4%.

• St. Thomas, ON expansion to deliver a 9.0% yield on $54.9 million cost; Calgary, AB project to yield ~11% on $15.4 million.

• Continued capital recycling anticipated, with targeted asset sales and reinvestment in higher-growth opportunities, especially in Montreal.

• Ongoing focus on organic growth through embedded rent steps and mark-to-market renewals.