Nexus Industrial REIT Announces Second Quarter 2025 Financial Results
TORONTO, Aug. 11, 2025 (GLOBE NEWSWIRE) -- Nexus Industrial REIT (the "REIT") (TSX:NXR) announced today its results for the second quarter ended June 30, 2025.
"The second quarter marked our first as a pure-play industrial REIT, and our strong operating results continued. Compared to a year ago, our normalized FFO per unit grew 5.6%, and industrial SPNOI grew 2.8%" said Kelly Hanczyk, CEO of Nexus Industrial REIT.
"Over the past 12 months we have simultaneously grown NOI by 1.7%, while also completing the strategic disposition of 33 legacy retail, office, and non-core industrial properties. And, we will soon begin to realize the next phase of growth: we are nearing completion of two developments ahead of plan, which will add $6.6 million of annual stabilized NOI, representing unlevered returns of 9.4% on costs.
I am very pleased with the progress that we have made, and I am confident that our strategy will continue to be rewarding for our stakeholders" concluded Mr. Hanczyk.
Second Quarter 2025 Highlights:
Advanced construction on the 325,000 sq. ft. expansion project in St. Thomas, ON, and on the 115,000 sq. ft. new industrial small-bay complex in Calgary, AB. Combined, these projects will add annual stabilized NOI of $6.6 million when complete and stabilized. Completion of both projects is planned for the third quarter.
Completed 395,412 sf of leasing at an average spread of 38% over expiring and in-place rents.
Completed the sale of two non-core industrial properties for a total proceeds of $11.2 million.
Net loss was $7.6 million driven by fair value losses on Class B LP units and on investment properties, partially offset by net operating income ("NOI")(1) of $32.2 million and by fair value gains on derivative instruments.
NOI(1) increased 1.7% versus a year ago to $32.2 million from the acquisition of high-quality, tenanted income-producing industrial properties, and growth in industrial Same Property NOI(1), despite selling 33 legacy retail, office, and non-core industrial properties.
Industrial Same Property NOI(1) increased 2.8% year over year to $28.5 million.
Normalized FFO(1) per unit increased $0.009 versus a year ago to $0.188 and Normalized AFFO(1) per unit increased $0.011 versus a year ago to $0.160.
Year-to-Date 2025 Highlights:
Completed the transition to a pure-play industrial REIT by selling 15 legacy retail properties, one legacy office property and two non-core industrial properties for total proceeds of $62.1 million.
Advanced construction on the 325,000 sq. ft. expansion project in St. Thomas, ON, and on the 115,000 sq. ft. new industrial small-bay complex in Calgary, AB. Combined, these projects will add annual stabilized NOI of $6.6 million when complete. Completion of both projects is planned for the third quarter.
Completed 1,192,792 sf of leasing at an average spread of 82% over expiring and in-place rents.
Net income was $25.5 million driven by NOI(1) of $64.2 million and by fair value gains on Class B LP units, partially offset by fair value losses on derivative instruments and investment properties.
NOI(1) increased 5.0% versus a year ago to $64.2 million from the acquisition of high-quality, tenanted income-producing industrial properties, and growth in industrial Same Property NOI(1), despite selling 33 legacy retail, office, and non-core industrial properties.
Industrial Same Property NOI(1) increased 4.3% year over year to $54.5 million.
Normalized FFO(1) per unit increased $0.032 versus a year ago to $0.375 and Normalized AFFO(1) per unit increased $0.029 versus a year ago to $0.313.
Unitholders' equity increased by $5.6 million to $1.1 billion or $15.01 per unit. NAV per unit(1) of $13.17 decreased $0.02 or (0.2)% versus Q4 2024.
(1) This is a Non-IFRS Financial Measure.
Subsequent events:
On July 4, 2025, 2,764,464 Class B LP Units valued at $10.50 per unit were issued to 0768723 BC Ltd in settlement of the initial portion of the contractual construction obligations in respect of the construction of 52,000 additional square feet at the REIT's Richmond, BC property. The units are subject to trading restrictions until specific construction milestones are met. The restricted units will not accrue any distributions declared during the restriction period.
On August 5, 2025, the REIT increased the Unsecured Credit Facilities by $160 million, from $625 million to $785 million, increasing the term loan facility from $175 million to $200 million and the revolving facility from $440 million to $575 million. The REIT also amended the maturity date of the Unsecured Credit Facilities by extending the term loan facility and the revolving facility from March 1, 2027 to August 5, 2027 and August 5, 2028, respectively.
Summary of Results
(In thousands of Canadian dollars, except per unit amounts)
Three months ended June 30,
Six months ended June 30,
2025
2024
2025
2024
$
$
$
$
FINANCIAL INFORMATION
Operating Results
Property revenues
42,022
43,910
86,776
85,507
NOI (1)
32,150
31,617
64,240
61,154
Net (loss) income and comprehensive (loss) income
(7,625
)
43,525
25,526
87,196
Adjusted EBITDA (LTM) (1)
121,859
112,688
121,859
112,688
FFO (1)
18,157
16,576
35,200
30,931
Normalized FFO (1) (2)
17,744
16,712
35,323
32,091
AFFO (1)
15,449
13,770
29,846
25,358
Normalized AFFO (1) (2)
15,033
13,906
29,511
26,518
Distributions declared (3)
15,076
14,970
30,149
29,910
Same Property NOI (1)
28,842
28,401
55,423
53,724
Industrial Same Property NOI (1)
28,520
27,741
54,537
52,276
Weighted average units outstanding (000s):
Basic (4)
94,233
93,541
94,218
93,441
Diluted (4)
94,513
93,717
94,498
93,617
Per unit amounts:
Distributions per unit, basic (3) (4)
0.160
0.160
0.320
0.320
Distributions per unit, diluted (3) (4)
0.160
0.160
0.320
0.320
Normalized FFO per unit, basic (1) (2) (4)
0.188
0.179
0.375
0.343
Normalized FFO per unit, diluted (1) (2) (4)
0.188
0.178
0.374
0.343
Normalized AFFO per unit, basic (1) (2) (4)
0.160
0.149
0.313
0.284
Normalized AFFO per unit, diluted (1) (2) (4)
0.159
0.148
0.312
0.283
AFFO payout ratio (1) (3)
97.6%
108.7%
101.0%
118.0%
Normalized AFFO payout ratio, basic (1) (2) (3)
100.3%
107.7%
102.2%
112.8%
Normalized AFFO payout ratio, diluted (1) (2) (3)
100.6%
108.1%
102.6%
113.1%
Same Property NOI Growth % (1)
1.6%
3.3%
3.2%
1.4%
Industrial Same Property NOI Growth % (1)
2.8%
3.5%
4.3%
2.3%
(1)
This is a Non-IFRS Financial Measure.
(2)
Until Q1 2024, Normalized FFO and Normalized AFFO included adjustments for vendor rent obligation amounts due from the vendor of the REIT's Richmond, BC property, until certain conditions were satisfied. During Q2 2024, these conditions were satisfied and the vendor settled all outstanding amounts.
(3)
Includes distributions payable to holders of Class B LP Units which are accounted for as finance expense in the consolidated financial statements.
(4)
Weighted average number of units includes Class B LP Units.
June 30,
December 31,
2025
2024
(In thousands of Canadian dollars, unless stated otherwise)
$
$
PORTFOLIO INFORMATION
Total Portfolio
Number of Investment Properties (2)
88
106
Number of Properties Under Development
2
2
Investment Properties Fair Value (excludes assets held for sale)
2,480,540
2,458,174
Gross leasable area ("GLA") (in millions of sq. ft.) (at the REIT's ownership interest)
11.7
12.5
Industrial occupancy rate, in-place and committed (period-end) (3)
94%
96%
Weighted average lease term ("WALT") (years)
7.1
6.8
Industrial WALT (years)
7.1
7.0
Estimated spread between industrial portfolio market and in-place rents
18.5%
25.3%
FINANCING AND CAPITAL INFORMATION
Financing
Net debt (1)
1,258,770
1,279,538
Total Indebtedness Ratio (1)
48.9%
49.1%
Net Debt to Adjusted EBITDA (1)
10.3
10.9
Adjusted Net Debt to Adjusted EBITDA (1)
9.4
10.2
Debt service coverage ratio (times)
1.68
1.62
Secured Indebtedness Ratio
26.2%
27.4%
Unencumbered investment properties as a percentage of investment properties
40.6%
39.5%
Total assets
2,576,227
2,604,460
Cash
5,640
11,532
Capital
Total equity (per consolidated financial statements)
1,067,313
1,061,724
Total equity (including Class B LP Units)
1,240,836
1,241,747
Total number of Units (in thousands) (4)
94,233
94,159
NAV per Unit (1)
13.17
13.19
(1) See Non-IFRS Financial Measures.(2) Includes 2 properties (17 properties - December 31, 2024) classified as assets held for sale.(3) Includes committed new leases for future occupancy.(4) Includes Class B LP units.
Net (Loss) Income
Net loss for the three months ended June 30, 2025 was $7.6 million or $51.2 million lower than the prior year, primarily due to a decrease in the fair value adjustment of Class B LP units by $35.8 million, decrease in the fair value adjustment of investment properties by $24.7 million, partially offset by an increase in the fair value adjustment of derivative financial instruments by $7.7 million, a lower finance expense of $1.2 million and a higher NOI of $0.5 million.
Net income for the six months ended June 30, 2025 was $25.5 million or $61.7 million lower than the prior year, primarily due to decrease in the fair value adjustment of investment properties by $31.0 million, a lower gain on the fair value adjustment of Class B LP units by $27.6 million, and by a decrease in the fair value adjustment of derivative financial instruments by $7.7 million partially offset by a higher NOI of $3.1 million, a lower finance expense of $1.2 million and a higher foreign exchange gain by $1.1 million.
NOI
NOI for the three months ended June 30, 2025 was $32.2 million or $0.5 million higher than the prior year, which was primarily due to $1.5 million from lease termination and tenant reimbursed capital improvements, increase in NOI of $0.6 million from acquisitions of industrial income producing properties completed subsequent to Q2 2024, an increase in Same Property NOI by $0.4 million, $0.2 million relating to development projects and $0.1 million relating to lower tenant incentives and leasing costs amortization, partially offset by lower NOI of $2.2 million relating to dispositions completed since Q2 2024.
NOI for the six months ended June 30, 2025 was $64.2 million or $3.1 million higher than the prior year, which was primarily due to increased NOI of $2.8 million from acquisitions of industrial income producing properties completed subsequent to Q2 2024, $2.1 million from lease termination and tenant reimbursed capital improvements, an increase in Same Property NOI by $1.7 million and $0.4 million relating to development projects, partially offset by lower NOI of $3.7 million relating to dispositions completed since Q2 2024 and $0.2 million relating to lower straight-line rent adjustments.
Fair value adjustment of investment properties
The fair value loss on investment properties for the three months ended June 30, 2025, totaled $11.1 million. The REIT engaged external appraisers to value properties totaling $122.2 million in the quarter. Overall, fair value losses recorded for the REIT's portfolio primarily consists of $13.1 million relating to changes in stabilized NOI and capitalization rates, $2.9 million of capital expenditures that were not deemed to increase the fair value of the properties and therefore fair valued to zero and $0.1 million relating to investment property sale price adjustments prior to disposition, partially offset by $5.0 million gain relating to properties held for development based on development progress relative to the as-completed value.
The fair value loss on investment properties for the six months ended June 30, 2025, totaled $2.3 million. Overall, fair value losses recorded for the REIT's portfolio primarily consists $6.0 million of capital expenditures net of adjustments that were not deemed to increase the fair value of the properties and therefore fair valued to zero, $3.0 million relating to changes in stabilized NOI and capitalization rates, and $2.8 million relating to investment property sale price adjustments prior to disposition, partially offset by $9.5 million gain relating to properties held for development based on development progress relative to the as-completed value.
Outlook
The REIT is focused on delivering total unitholder return through profitable long-term growth, and by pursuing its strategy as a Canada-focused pure-play industrial REIT.
Overall, the REIT ...
