Nexus Industrial REIT (NXR-UN) Q3 2024 earnings summary

Executive summary

• Completed 10 targeted acquisitions and advanced four development projects, with three now cash flowing.

• Industrial weighting increased to 94% of NOI, with near 100% expected after pending asset sales.

• Disposed of Old Montreal office portfolio and contracted sales for legacy retail and non-core industrial assets, targeting CAD 110 million in asset sales in H2 2024.

• Completed and leased up major development projects, adding over CAD 10 million in annual stabilized NOI.

• Entered a new phase focused on deleveraging and transitioning to a pure-play industrial REIT by selling legacy office, retail, and non-core industrial assets.

Financial highlights

• Normalized FFO per unit was CAD 0.188 and normalized AFFO per unit was CAD 0.158, with FFO up 5.6% and AFFO up 6.8% year-over-year in one report, but both down slightly in another.

• Net operating income increased 11% year-over-year to CAD 32.6 million, with acquisitions and industrial same property growth contributing.

• Net loss of CAD 46.0 million in Q3 2024, impacted by non-cash fair value adjustments and losses on Class B LP Units and derivatives.

• NAV per unit at CAD 13.06, a decrease of CAD 0.14 from last quarter but a 1.3% increase year-over-year.

• AFFO payout ratio (normalized) was 101.1% in Q3 2024, up from 97.2% a year ago.

Outlook and guidance

• Expects mid-single-digit same-property NOI growth for the industrial portfolio in 2024, with further rent lifts on renewals as market rents are 26% above in-place rents.

• Four major development projects to add over CAD 10 million in annual stabilized NOI upon completion.

• Anticipates normalized AFFO payout ratio to improve to a more sustainable level for the remainder of 2024.

• Proceeds from asset sales will be used to reduce debt.

• No formal guidance for 2025 yet; budgeting process underway.