Nexus Industrial REIT (NXR-UN) Q2 2025 earnings summary

Executive summary

• Transitioned to a pure-play Canadian industrial REIT, completing the sale of 33 office, retail, and non-core industrial properties over the past year.

• Achieved strong operating results, with normalized FFO per unit up 5.6% and industrial Same Property NOI up 2.8% year-over-year for Q2 2025.

• Advanced multiple development projects, with two major completions expected in August/Q3 2025, set to add $6.6 million in annual stabilized NOI.

• Completed 395,412 sq. ft. of leasing in Q2 at a 38% average spread over expiring rents; 1.19 million sq. ft. leased YTD at an 82% spread.

• Over 90% of 2025 expiries renewed, with significant rent lifts on renewals.

Financial highlights

• Net operating income (NOI) increased 1.7% year-over-year to $32.2 million in Q2; six-month NOI up 5.0% to $64.2 million.

• Posted a net loss of $7.6 million in Q2, mainly due to lower fair value adjustments; YTD net income of $25.5 million.

• Normalized FFO per unit rose to $0.188 in Q2 (up $0.009) and $0.375 YTD (up $0.032); normalized AFFO per unit increased to $0.160 in Q2 and $0.313 YTD.

• NAV per unit was $13.17, a $0.04 decrease from last year.

• AFFO payout ratio improved to 97.6% in Q2 from 108.7% a year ago; normalized AFFO payout ratio at 100.3% in Q2.

Outlook and guidance

• Maintains mid-single-digit same-property NOI growth guidance for 2025, with strong renewal activity and embedded rent escalations.

• Anticipates $6.6 million in annual stabilized NOI from two development projects completing in Q3 2025, with going-in yields of 9.0% and 11%.

• Early progress on 2026 lease expiries, with about 40% already renewed and expectations for continued rent lifts, especially in Ontario.

• Management believes current distributions are sustainable despite payout ratios slightly above 100%.