Nexus Industrial REIT T.NXR.UN

Q1 results

[Milo1952]

Nexus Industrial REIT Announces Q1 2022 Results and Annual Meeting Voting Results

 

TORONTO and MONTREAL, May 12, 2022 (GLOBE NEWSWIRE) -- Nexus Industrial REIT (the “REIT”) (TSX: NXR.UN) announced today its results for the quarter ended March 31, 2022.

Highlights

• Completed $236.4 million of industrial property acquisitions during Q1 2022, increasing NOI from industrial properties to approximately 84.4% of NOI for the quarter. To partially fund the acquisitions the REIT completed $127.3 million of new mortgage financing at a weighted average interest rate of 3.25% and a term of 7.8 years.
• On January 1, 2022 the 100,000 square foot expansion at the REIT’s co-owned Ajax industrial property was completed by the vendor, with the tenant in-place and paying rent.
• As part of its capital-recycling program, the REIT has determined to sell five non-industrial properties with a carrying value of $54.9 million that are under negotiation or being marketed.
• Occupancy of 97% at March 31, 2022, increased from 96% at December 31, 2021 and 94% at March 31, 2021.
• Q1 2022 net operating income of $22.0 million increased by $11.5 million or 108% as compared to $10.6 million for Q1 2021 and by $3.0 million or 15% as compared to $19.1 million for Q4 2021.
• Q1 2022 Same Property NOI⁽¹⁾ of $10.1 million decreased by $0.3 million or 3.2% as compared to Q1 2021 and by $0.3 million or 3.2% as compared to Q4 2021. The decreases are primarily attributable to vacancies at one of the REIT’s office properties and an industrial property in Regina. Efforts to re-lease the spaces are underway, and discussions are being held with prospective new tenants.
• As at March 31, 2022, the REIT had $150 million of recently acquired properties which were unencumbered. Once these properties are financed and the proceeds are deployed to acquire additional properties, the proceeds of 2021 equity raises will be fully deployed.
• Q1 2022 Normalized FFO⁽¹⁾ per unit of $0.192, as compared to $0.194 for Q4 2021 and $0.203 for Q1 2021.
• Q1 2022 Normalized AFFO⁽¹⁾ per unit of $0.165, as compared to $0.173 for Q4 2021 and $0.183 for Q1 2021.
• Q1 2022 Normalized AFFO payout ratio⁽¹⁾ of 96.7%, as compared to 96.5% for Q4 2021 and 87.7% for Q1 2021.
• General and administrative expense for the quarter included a $0.6 million RSU expense with RSUs granted and 1/3 vested in the quarter. Q2 2022 RSU expense is anticipated to decrease to $0.15 million.
• Weighted average interest rate on mortgages of 3.29% at March 31, 2022, compared to at 3.28% at December 31, 2021, as the REIT managed acquisition financing in a rising interest rate environment, and down from 3.62% at March 31, 2021. At the same time, the weighted average term to maturity increased to 6.71 years at March 31, 2022 from 6.61 years at December 31, 2021 and 3.76 years at March 31, 2021.
• NAV⁽¹⁾ per unit increased to $12.35 at March 31, 2022 as compared to $12.18 at December 31, 2021 and $10.09 at March 31, 2021.
• Management of the REIT will host a conference call on Friday May 13^th at 11AM EST to review results and operations

(1)

Non-IFRS Financial Measure

“We acquired $236.4 million of industrial properties, on average half-way through the 1^st quarter, and we will see the full positive impact of these acquisitions in the second quarter. We are extremely pleased with the quality of the properties acquired and the opportunities for expansion and rental rate increases that several of these properties offer. These properties were under contract prior to cap rate contraction, and we financed them prior to recent interest rate hikes,” commented Kelly Hanczyk, the REIT’s Chief Executive Officer. “We are realizing significant lift in renewal rental rates in our London and Montreal industrial portfolios that will begin to show in the 3^rd and 4^th quarters of this year. There are 5 retail and office properties that are currently being marketed or under negotiation for disposition and we are preparing to launch on the sale of a sixth retail property shortly. As we continue to grow our asset base we have recently added depth to our management team as there are a number of acquisition opportunities we are actively pursuing. We expect to continue to increase our industrial weighting in 2022.”

Summary of Results

Included in the tables that follow and elsewhere in this news release are non-IFRS financial 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. Certain additional disclosures for these non-IFRS financial measures have been incorporated by reference and can be found on page 3 in the REIT’s Management’s Discussion and Analysis for the three months ended March 31, 2022, available on SEDAR at www.sedar.com and on the REIT’s website under Investor Relations. See Appendix A of this earnings release for a reconciliation of the non-IFRS financial measures to the primary financial statement measures.

 

 

(In thousands of Canadian dollars, except per unit amounts)		Three Months ended March 31,
		2022	2021
Financial Results		$	$
Property revenues		31,699	16,588
Net operating income (NOI)		22,024	10,566
Net income		18,064	10,209
Financial Highlights
Funds from operations (FFO)(1)		14,724	6,684
Normalized FFO(1) (2)		14,879	7,321
Adjusted funds from operations (AFFO)(1)		12,678	5,954
Normalized AFFO(1) (2)		12,833	6,591
Same Property NOI(1)		10,052	10,385
Distributions declared(3)		12,412	5,777
Weighted average units outstanding (000s) - basic(4)		77,560	36,041
Weighted average units outstanding (000s) - diluted(4)		77,720	36,124
Per unit amounts:
Distributions per unit - basic(3) (4)		0.160	0.160
FFO per unit - basic(1) (4)		0.190	0.185
Normalized FFO per unit - basic(1) (2) (4)		0.192	0.203
AFFO per unit - basic(1) (4)		0.163	0.165
Normalized AFFO per unit - basic(1) (2) (4)		0.165	0.183
NAV per unit(1)		12.35	10.09
Normalized AFFO payout ratio - basic(1) (2) (3)		96.7%	87.7%
Debt to total assets ratio		45.4%	45.8%

 

	(1)	Non-IFRS Financial Measure
	(2)	See Appendix A – Non-IFRS Financial Measures
	(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.