TORONTO and MONTREAL, Nov. 15, 2021 (GLOBE NEWSWIRE) -- Nexus Real Estate Investment Trust (TSX:NXR.UN) (“Nexus” or the “REIT”) announced today that it and the vendor of the Richmond, British Columbia asset that the REIT acquired on April 30, 2018 (“Selling Unitholder”) have entered into an agreement to sell to a syndicate of underwriters led by BMO Capital Markets and Desjardins Capital Markets (collectively, the “Underwriters”), on a bought deal basis, 11,000,000 units of the REIT (the “Units”) at a price of $12.85 per Unit (the “Offering Price”) for gross proceeds of approximately $141 million (the “Offering”).
The Offering consists of a treasury offering by the REIT of 9,893,356 Units for gross proceeds to the REIT of $127 million (the “Treasury Offering”) and a secondary offering by the Selling Unitholder of 1,106,644 Units for gross proceeds to the Selling Unitholder of approximately $14 million (the “Secondary Offering”). The REIT has also granted the Underwriters an over-allotment option to purchase up to an additional 1,650,000 Units on the same terms and conditions, exercisable at any time, in whole or in part, up to 30 days after the closing of the Offering (the “Over-Allotment Option”), which, if exercised in full, would increase the gross proceeds of the Offering to approximately $163 million and the aggregate gross proceeds to the REIT to approximately $148 million.
The REIT intends to use the net proceeds from the Offering to fund the REIT’s future acquisitions and for general corporate purposes. The REIT will not receive any proceeds from the Secondary Offering.
“We continue to make significant strides in our transformation to a pure play industrial REIT,” Kelly Hanczyk, the REIT’s Chief Executive Officer stated. “Since the start of the year, Nexus has announced approximately $1.1 billion of industrial real estate acquisitions with a combination of core high quality credit tenanted assets under long term leases along with best-in-class industrial real estate in higher yielding markets. These acquisitions continue to strengthen the REIT’s long term cash flow stability at an attractive blended yield. The equity offering enables us to continue the REIT’s momentum and further execute on our robust pipeline.”
Acquisition Pipeline Update
The REIT also announced it is in negotiations on potential acquisitions of 7 industrial properties totalling approximately 1.7 million square feet for an aggregate purchase price of approximately $315 million (including two properties which are subject to conditional purchase agreements for purchase prices totalling $40.5 million) at a blended going-in capitalization rate of approximately 4.7%. The properties are high quality logistics and distribution assets, well-located in core industrial nodes within their respective markets, fully leased to quality tenants under long-term leases.
Inclusive of the aforementioned potential acquisitions, the REIT will have announced or completed approximately $1.1 billion of industrial acquisitions since the beginning of 2021 at a weighted average going-in capitalization rate of approximately 5.4%. These potential acquisitions, if completed, will increase its industrial portfolio weighting by NOI from 61% as at January 1, 2021 to 83%.
The Offering
The Offering consists of the Treasury Offering for gross proceeds to the REIT of $127 million and the Secondary Offering for gross proceeds to the Selling Unitholder of approximately $14 million. Following completion of the Secondary Offering, the Selling Unitholder will hold 760,851 Units in the REIT. The REIT has also granted the Underwriters the Over-Allotment Option, which, if exercised in full, would increase the gross proceeds of the Offering to approximately $163 million and the aggregate gross proceeds to the REIT to approximately $148 million. The REIT will not receive any proceeds from the Secondary Offering.
The Units under the Offering will be offered in Canada pursuant to a prospectus supplement to be filed under the REIT’s short form base shelf prospectus dated July 16, 2021, as amended by amendment no. 1 dated October 29, 2021. The Offering is subject to customary conditions and receipt of all necessary approvals, including the approval of the Toronto Stock Exchange. The Offering is expected to close on or about November 22, 2021. The completion of the Treasury Offering (and the Over-Allotment Option) is not conditioned upon the completion of the Secondary Offering.
The Units have not been, nor will they be, registered under the United States Securities Act of 1933, as amended, (the "1933 Act") and may not be offered, sold or delivered, directly or indirectly, in the United States, or to, or for the account or benefit of, "U.S. persons" (as defined in Regulation S under the 1933 Act), except pursuant to an exemption from the registration requirements of the 1933 Act. This press release does not constitute an offer to sell or a solicitation of an offer to buy any Units in the United States or to, or for the account or benefit of, U.S. persons.