Nexus REIT is Poised to Increase Its Industrial Portfolio Weighting Through New Acquisitions
TORONTO and MONTREAL, Jan. 08, 2021 (GLOBE NEWSWIRE) — Nexus Real Estate Investment Trust (the “REIT”) (TSXV: NXR.UN) is pleased to announce that it has entered into a conditional agreement to purchase six industrial assets in London, Ontario, and a conditional agreement to purchase two industrial buildings in Edmonton, Alberta, and has completed the acquisition of a previously announced acquisition in Ajax, Ontario.
The REIT has entered into conditional agreements of purchase and sale for industrial properties totalling $117,500,000, which will add 1,299,340 square feet of gross leasable area (GLA) to its portfolio. Upon completion of these acquisitions, the REIT expects that the percentage of net rental income derived from its industrial portfolio will increase from approximately 61% to approximately 67%. Units issued as purchase price consideration in connection with these acquisitions are expected to increase the REIT’s market capitalization by approximately $73,000,000. The acquisitions are conditional upon the completion of financial and property related due diligence and stock exchange approval of the issuances of units contemplated in connection with these purchase agreements.“2021 is looking to be a breakout year for the REIT. We’re very excited about announcing these acquisitions and the prospects for the REIT’s near-term growth.” commented Kelly Hanczyk, the REIT’s Chief Executive Officer. “We’ve been in discussions with the vendors of the London portfolio and building a relationship with them for several years now, culminating in this sizeable off-market deal. The vendors have demonstrated their faith in the REIT, contracting to take back a significant portion of the purchase price in units. We look forward to a continued strong relationship with this vendor which will hopefully lead to additional acquisition opportunities in the future. We are also quite pleased to have completed the acquisition of our 50 percent interest in a well-tenanted Ajax, Ontario industrial property, which we now co-own with the vendor, who we’ve also developed an excellent relationship with over the years. We continue to have a strong pipeline of potential acquisitions and expect 2021 will be a solid year of growth for the REIT. We will continue to focus on the acquisition of industrial properties and believe that increasing the industrial weighting of the REIT’s portfolio will have a very positive impact on the valuation of the REIT’s units. We are also still very much committed to graduating to the TSX, combined with a 4-to-1-unit consolidation, and hope to provide an update on that front very shortly.”London Ontario PortfolioThe REIT has entered into a conditional agreement to acquire six well-tenanted and well-maintained industrial properties in London, Ontario totaling 1,191,184 square feet of GLA. The aggregate purchase price for the properties is $103,500,000, representing a 6% going-in capitalization rate, with $65,600,150 of the purchase price expected to be satisfied through the issuance of Class B LP Units of a subsidiary limited partnership of the REIT at a price of $1.91 per unit, which approximates the trading price of the REIT’s units at the time of entering into the agreement of purchase and sale. The REIT anticipates assuming existing debt and placing new financing on certain of the properties to fund the remainder of the purchase price. Proceeds of new financing in excess of cash required to close are anticipated to be redeployed to acquire other properties in the current acquisition pipeline. The acquisition is subject to the completion of due diligence, stock exchange and other approvals, and closing is contemplated for April 1, 2021. The vendor, who has long-standing relationships with many of the tenants of the properties and has excellent knowledge of the London market, will continue to manage the properties for the REIT. The REIT believes that there is an opportunity to grow the net rental income of these properties as leases renew in an environment of rising Ontario industrial lease rates.Edmonton, Alberta PropertiesThe REIT has entered into a conditional agreement to acquire two industrial buildings in Edmonton, Alberta with 108,156 sf of GLA for a purchase price of $14,000,000. $7,000,000 of the purchase price is expected to be satisfied through the issuance of Class B LP Units of a subsidiary limited partnership of the REIT at a price of $2.05 per unit. One of the two buildings under contract is single tenanted, while the other is multi-tenanted. The buildings are fully leased to tenants that are not in the oil and gas industry. The acquisition is subject to the completion of due diligence, stock exchange and other approvals, and closing is contemplated for March 1, 2021.Completion of Ajax, Ontario AcquisitionOn December 31, 2020, the REIT completed the acquisition of a 50 percent interest in an approximately 500,000 square foot industrial property in Ajax, Ontario for a purchase price of $28,500,000. Included in the 500,000 square feet is an approximately 95,000 square foot building to be newly constructed on the site to accommodate the expansion of the property’s major tenant. The vendor will be responsible for costs and management of the construction of the new building, and the REIT will receive an allocation of income from the closing date, on an as-completed basis.About Nexus REITNexus is a growth oriented real estate investment trust focused on increasing unitholder value through the acquisition, ownership and management of industrial, office and retail properties located in primary and secondary markets in North America. The REIT currently owns a portfolio of 75 properties comprising approximately 4.4 million square feet of rentable area. The REIT has approximately 112,175,000 units issued and outstanding. Additionally, there are Class B LP Units of subsidiary limited partnerships of Nexus REIT issued and outstanding, which are convertible into approximately 25,305,000 REIT Units.Forward Looking StatementsCertain statements contained in this news release constitute forward-looking statements which reflect the REIT’s current expectations and projections about future results. Often, but not always, forward-looking statements can be identified by the use of words such as “plans”, “expects” or “does not expect”, “is expected”, “estimates”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved. These forward-looking statements include, but are not limited to, the expected completion of the London, Ontario and Edmonton, Alberta acquisitions, the REIT’s prospects for growth, the potential for an increased industrial weighting of the REIT’s portfolio to have a positive impact on the valuation of the REIT’s units, the intended graduation to the TSX and concurrent unit consolidation, the ability to redeploy of excess cash towards the acquisition of additional properties and the opportunity to grow the new rental income of the London, Ontario properties. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the REIT to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including those risks, uncertainties and other factors discussed in the REIT’s materials filed with Canadian securities regulatory authorities from time to time. Actual results and developments are likely to differ, and may differ materially, from those expressed or implied by the forward-looking statements contained in this news release. Such forward-looking statements are based on a number of assumptions that may prove to be incorrect.While the REIT anticipates that subsequent events and developments may cause its views to change, the REIT specifically disclaims any obligation to update these forward-looking statements except as required by applicable law. These forward-looking statements should not be relied upon as representing the REIT’s views as of any date subsequent to the date of this news release. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. The factors identified above are not intended to represent a complete list of the factors that could affect the REIT.Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
For further information please contact:Kelly C. Hanczyk, CEO at (416) 906-2379 or
Rob Chiasson, CFO at (416) 613-1262.
The REIT has entered into conditional agreements of purchase and sale for industrial properties totalling $117,500,000, which will add 1,299,340 square feet of gross leasable area (GLA) to its portfolio. Upon completion of these acquisitions, the REIT expects that the percentage of net rental income derived from its industrial portfolio will increase from approximately 61% to approximately 67%. Units issued as purchase price consideration in connection with these acquisitions are expected to increase the REIT’s market capitalization by approximately $73,000,000. The acquisitions are conditional upon the completion of financial and property related due diligence and stock exchange approval of the issuances of units contemplated in connection with these purchase agreements.“2021 is looking to be a breakout year for the REIT. We’re very excited about announcing these acquisitions and the prospects for the REIT’s near-term growth.” commented Kelly Hanczyk, the REIT’s Chief Executive Officer. “We’ve been in discussions with the vendors of the London portfolio and building a relationship with them for several years now, culminating in this sizeable off-market deal. The vendors have demonstrated their faith in the REIT, contracting to take back a significant portion of the purchase price in units. We look forward to a continued strong relationship with this vendor which will hopefully lead to additional acquisition opportunities in the future. We are also quite pleased to have completed the acquisition of our 50 percent interest in a well-tenanted Ajax, Ontario industrial property, which we now co-own with the vendor, who we’ve also developed an excellent relationship with over the years. We continue to have a strong pipeline of potential acquisitions and expect 2021 will be a solid year of growth for the REIT. We will continue to focus on the acquisition of industrial properties and believe that increasing the industrial weighting of the REIT’s portfolio will have a very positive impact on the valuation of the REIT’s units. We are also still very much committed to graduating to the TSX, combined with a 4-to-1-unit consolidation, and hope to provide an update on that front very shortly.”London Ontario PortfolioThe REIT has entered into a conditional agreement to acquire six well-tenanted and well-maintained industrial properties in London, Ontario totaling 1,191,184 square feet of GLA. The aggregate purchase price for the properties is $103,500,000, representing a 6% going-in capitalization rate, with $65,600,150 of the purchase price expected to be satisfied through the issuance of Class B LP Units of a subsidiary limited partnership of the REIT at a price of $1.91 per unit, which approximates the trading price of the REIT’s units at the time of entering into the agreement of purchase and sale. The REIT anticipates assuming existing debt and placing new financing on certain of the properties to fund the remainder of the purchase price. Proceeds of new financing in excess of cash required to close are anticipated to be redeployed to acquire other properties in the current acquisition pipeline. The acquisition is subject to the completion of due diligence, stock exchange and other approvals, and closing is contemplated for April 1, 2021. The vendor, who has long-standing relationships with many of the tenants of the properties and has excellent knowledge of the London market, will continue to manage the properties for the REIT. The REIT believes that there is an opportunity to grow the net rental income of these properties as leases renew in an environment of rising Ontario industrial lease rates.Edmonton, Alberta PropertiesThe REIT has entered into a conditional agreement to acquire two industrial buildings in Edmonton, Alberta with 108,156 sf of GLA for a purchase price of $14,000,000. $7,000,000 of the purchase price is expected to be satisfied through the issuance of Class B LP Units of a subsidiary limited partnership of the REIT at a price of $2.05 per unit. One of the two buildings under contract is single tenanted, while the other is multi-tenanted. The buildings are fully leased to tenants that are not in the oil and gas industry. The acquisition is subject to the completion of due diligence, stock exchange and other approvals, and closing is contemplated for March 1, 2021.Completion of Ajax, Ontario AcquisitionOn December 31, 2020, the REIT completed the acquisition of a 50 percent interest in an approximately 500,000 square foot industrial property in Ajax, Ontario for a purchase price of $28,500,000. Included in the 500,000 square feet is an approximately 95,000 square foot building to be newly constructed on the site to accommodate the expansion of the property’s major tenant. The vendor will be responsible for costs and management of the construction of the new building, and the REIT will receive an allocation of income from the closing date, on an as-completed basis.About Nexus REITNexus is a growth oriented real estate investment trust focused on increasing unitholder value through the acquisition, ownership and management of industrial, office and retail properties located in primary and secondary markets in North America. The REIT currently owns a portfolio of 75 properties comprising approximately 4.4 million square feet of rentable area. The REIT has approximately 112,175,000 units issued and outstanding. Additionally, there are Class B LP Units of subsidiary limited partnerships of Nexus REIT issued and outstanding, which are convertible into approximately 25,305,000 REIT Units.Forward Looking StatementsCertain statements contained in this news release constitute forward-looking statements which reflect the REIT’s current expectations and projections about future results. Often, but not always, forward-looking statements can be identified by the use of words such as “plans”, “expects” or “does not expect”, “is expected”, “estimates”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved. These forward-looking statements include, but are not limited to, the expected completion of the London, Ontario and Edmonton, Alberta acquisitions, the REIT’s prospects for growth, the potential for an increased industrial weighting of the REIT’s portfolio to have a positive impact on the valuation of the REIT’s units, the intended graduation to the TSX and concurrent unit consolidation, the ability to redeploy of excess cash towards the acquisition of additional properties and the opportunity to grow the new rental income of the London, Ontario properties. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the REIT to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including those risks, uncertainties and other factors discussed in the REIT’s materials filed with Canadian securities regulatory authorities from time to time. Actual results and developments are likely to differ, and may differ materially, from those expressed or implied by the forward-looking statements contained in this news release. Such forward-looking statements are based on a number of assumptions that may prove to be incorrect.While the REIT anticipates that subsequent events and developments may cause its views to change, the REIT specifically disclaims any obligation to update these forward-looking statements except as required by applicable law. These forward-looking statements should not be relied upon as representing the REIT’s views as of any date subsequent to the date of this news release. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. The factors identified above are not intended to represent a complete list of the factors that could affect the REIT.Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
For further information please contact:Kelly C. Hanczyk, CEO at (416) 906-2379 orRob Chiasson, CFO at (416) 613-1262.
