Nexus Industrial REIT Q4 2025 Earnings Report

Nexus Industrial REIT EPS Results

• Actual EPS: C$0.43
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Nexus Industrial REIT Revenue Results

• Actual Revenue: $44.88 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Nexus Industrial REIT Announcement Details

• Quarter: Q4 2025
• Date: 3/6/2026
• Time: After Market Closes
• Conference Call Date: Friday, March 6, 2026
• Conference Call Time: 10:00AM ET

Nexus Industrial REIT (TSE:NXR.UN) 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.

Nexus Industrial REIT Q4 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Record 2025 financials: Net operating income was a record CAD 129M (+2.8%), adjusted EBITDA CAD 120M, FFO per unit rose to CAD 0.61 and NAV increased to CAD 13.22 while the REIT completed its transition to a pure‑play industrial portfolio after a CAD 47M retail sale.
• Positive Sentiment: Opportunistic Montreal acquisition added 283k sq ft for CAD 40M (~CAD 145/ft²) at a 6.6% going‑in cap rate, with a lease reset in 2028 implying a stabilized cap near ~10.4% and a ~CAD 23M year‑end mark‑to‑market uplift.
• Positive Sentiment: Completed and planned developments are accretive: 70 Dennis (325k sq ft) yields ~9% on CAD 55M, 102 Ave SE small‑bay project (~CAD 15M) targets ~11% cash return, and two new 2026 projects (Adams Road ~180k sq ft, CAD 47M; Savage Road +28k sq ft, CAD 19M) should drive further growth.
• Positive Sentiment: Operating momentum: industrial occupancy held at ~96%, the REIT completed ~1.2M sq ft of leasing YTD with an average lease spread of ~60%, and same‑property NOI grew ~2.6%, supporting mid‑single digit SPNOI guidance for 2026.
• Negative Sentiment: Leverage and deleveraging path: debt/EBITDA remains elevated near ~11x; management targets mid‑nines to achieve investment‑grade this year and plans further asset sales (Glover Road, Les Halles d'Anjou, Red Deer) and debt paydowns to reach that goal.

Presentation

[Operator]

Thank you for standing by. This is the conference operator. Welcome to the Nexus Industrial REIT fourth quarter 2025 results conference call. As a reminder, all participants are in listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press Star, then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing Star, then zero. I would now like to turn the conference over to Kelly Hanczyk, Chief Executive Officer. Please go ahead.

[Kelly Hanczyk, CEO and Trustee at Nexus Industrial REIT]

I'd like to welcome everyone to the 2025 fourth quarter results conference call for Nexus Industrial REIT. Joining me today is Mike Rawle, Chief Financial Officer of the REIT. Before we begin, I'd like to caution with regard to forward-looking statements and non-GAAP measures. Certain statements made during the conference call may constitute forward-looking statements which reflect the REIT's current expectations and projections about future results. During this call, we'll be discussing non-GAAP measures. Please refer to our MD&A and the REIT's other securities filings, which can be found on our website and at SEDAR+.com for cautions regarding forward-looking information and for information about non-GAAP measures. I'm delighted to share that we are entering 2026 with good momentum and well-positioned growth. Despite challenging economic backdrop, 2025 was a very successful year for us.

[Kelly Hanczyk, CEO and Trustee at Nexus Industrial REIT]

For the full year 2025, we delivered record net operating income of $129 million and an increase of 2.8% compared to last year. We generated record adjusted EBITDA of $120 million and also grew our per unit metrics compared to last year. FFO per unit increased to $0.61, and our NAV grew to $13.22 per unit. Impressively, we grew despite selling our retail portfolio at the beginning of the year, completing our transition to a pure-play industrial REIT. This sale raised $47 million and focused our business so that today 99% of our net operating income comes from industrial assets.

[Kelly Hanczyk, CEO and Trustee at Nexus Industrial REIT]

As a result, we fulfilled our vision to be Canada-focused pure-play industrial REIT and have now moved forward adopting our new purpose to be Canada's industrial building partner with a vision to be the first choice provider of high-quality industrial properties in Canada. During the year, we strengthened our industrial portfolio by completing two transformative developments and two opportunistic acquisitions. At 70 Dennis Road in St. Thomas, we added 325,000 sq ft for an existing tenant. We completed the project in September and are now earning a 9% contractual yield on the CAD 55 million of development costs. At 4750 102 Ave SE in Calgary, we completed construction in August of 115,000 sq ft of small bay industrial units on vacant land that we had adjacent to another building.

[Kelly Hanczyk, CEO and Trustee at Nexus Industrial REIT]

We have leased five of the nine units and have an additional lease for one more unit under negotiation and offers on two additional units. After a good start, the leasing progress slowed as a prospective large tenant unexpectedly retired. Interest remains high for the property, and I expect that we'll have it fully leased by late summer. Overall, the construction costs us CAD 15 million and will deliver a healthy 11% cash in cash return when stabilized. Turning to the acquisitions, at the end of November, we had a rare opportunity to acquire two high-quality industrial buildings well located in Montreal at a very attractive price. The opportunity arose due to our strong network and our reputation as a reliable partner.

[Kelly Hanczyk, CEO and Trustee at Nexus Industrial REIT]

A private equity firm that we've worked with in the past was acquiring an operating business. They didn't want the business real estate, they didn't want to have to pay for the real estate. We worked with them to acquire the two buildings and entered into a sale leaseback agreement under a long-term lease agreement. We acquired the buildings for CAD 40 million at a going-in cap rate of 6.6%. However, the lease rate resets to market in 2028, which at current rates works out to a stabilized cap rate of approximately 10.4%.

[Kelly Hanczyk, CEO and Trustee at Nexus Industrial REIT]

The buildings added 283,000 sq ft of high-quality real estate to our portfolio at a purchase price of approximately CAD 145 per sq ft, where similar real estate typically trades in the range of CAD 215-CAD 235 per sq ft. We had the buildings appraised at year-end and realized a significant mark-to-market lift of approximately CAD 23 million. We also sold several properties during the year. In October, after a complex land zoning and severance process, we sold surplus land at our last remaining retail property for CAD 8.5 million and used the proceeds to delever. The sale appeared well-timed as the land was zoned for condominium development, a segment of the market which has shown signs of slowing since the sale was completed.

[Kelly Hanczyk, CEO and Trustee at Nexus Industrial REIT]

Now that we have completed the land sale, we are soft marketing our 50% share of the retail mall for sale. It's a well-located, high-quality property that cash flows well for us, so we don't feel rushed to forced to make a sale. During the year, we opportunistically sold three industrial buildings. In April, we sold a vacant property in Fort St. John above our carrying value for CAD 7 million and used the proceeds to offset the acquisition of land surrounding our building at Kelowna, BC, where we saw a development opportunity. In June, we sold another small building in Edmonton that we viewed as non-core that had been vacant for nearly a year to an owner user for CAD 4.2 million, which was in line with our carrying value. We used the proceeds to reduce debt.

[Kelly Hanczyk, CEO and Trustee at Nexus Industrial REIT]

In September, we sold a third industrial building in St. Laurent, Quebec, to an owner user, for CAD 9.2 million. This exceeded our carrying value and equaled a 5.5% cap rate. After year-end, we closed on the sale of a fourth small industrial building. On February 20th, we sold a 35,000 sq ft building in Calgary at a 5.7% cap rate to the existing tenant for CAD 8.5 million. We have used the proceeds to pay down debt. We are currently working on three more asset sales. As I mentioned earlier, we are currently soft marketing our 50% share of our last retail property, Les Halles d'Anjou. In Hamilton, we're looking for a buyer or a tenant for our 115,000 sq ft new build on Glover Road.

[Kelly Hanczyk, CEO and Trustee at Nexus Industrial REIT]

We had a buyer lined up for the property, had it under contract at an attractive price. However, the deal fell through at the last minute. We own 80% of the property, and it has been a challenging market in Hamilton, but we have a brand-new state-of-the-art 40-foot clear LEED certified product. Once sold, it will contribute significantly to our AFFO per unit as we will immediately reduce the carrying costs and be able to use that equity to pay down debt. In Red Deer, Alberta, we have a firm sale contract for our 190,000 sq ft building at 40th Avenue. This building went vacant when Peavey Mart filed for CCAA in April 25. We have been marketing the building for lease and for sale, and we now have it under firm contract to close in April for a little over CAD 11 million.

[Kelly Hanczyk, CEO and Trustee at Nexus Industrial REIT]

We will also look to sell our 80% interest in development land on South Service Road in Hamilton in the near future and be able to utilize the proceeds to further reduce our debt. Turning to our operating performance, we had a strong fourth quarter. In total, we completed nearly 117,000 sq ft of renewals at an average rent lift of 2%. Year to date, we have completed a total of 1.2 million sq ft of leasing and realized an average leasing spread of 60% over expiring and in-place rents. In the fourth quarter, our industrial occupancy held steady at 96%, combined with embedded rent escalation in our leases.

[Kelly Hanczyk, CEO and Trustee at Nexus Industrial REIT]

Our leasing activities drove industrial same property NOI growth of 2.8% in the quarter and 2.6% for the full year in line with our guidance. Our financial results also improved in the quarter. Normalized FFO grew 3.3% versus Q3 to CAD 0.186 per unit, and our normalized AFFO rose 3.4% to CAD 0.151 per unit. In both cases, the increase was due to strong net operating income, which was up 2.5% or CAD 800,000 compared to last quarter and up 2.7% compared to the prior year. This NOI increase largely resulted from the completion of our development project in St.

[Kelly Hanczyk, CEO and Trustee at Nexus Industrial REIT]

Thomas, the two Montreal building acquisitions, as well as same property NOI growth, partially offset by foregone rent from properties we sold since Q4 of last year. At our cross-dock facility at 102 Avenue in Southeast Calgary, a new tenant that we had lined up for December 1 reneged on the deal after fully negotiating a lease agreement. Accordingly, we are marketing a 29,000 sq ft building for lease and anticipate renting it quickly. We had a lot of interest in the building and had recent follow-up showings, so we're pretty optimistic. Overall, while we saw strong growth in 2025, and we expect to realize an even bigger benefit in 2026 from our completed development projects, embedded rent steps, and lease up of a vacant space, and the re-leasing of space at market rents above expiring rents.

[Kelly Hanczyk, CEO and Trustee at Nexus Industrial REIT]

We are anticipating mid-single digit at same property NOI growth in our industrial portfolio for the year, and we expect our normalized AFFO payout ratio to average below 100%. We have made good progress on our 2026 renewals. In total, we had about 990,000 sq ft coming for renewal in 2026. Roughly 415,000 sq ft comes due in the first nine months and the remaining 575,000 sq ft in the fourth quarter, late in the fourth quarter. As of today, we have committed tenants for approximately 65% of the January through September expiries, and we're making good headway on our Q4 renewals. For Q4, 405,000 sq ft comprised of three large tenants, and we fully expect them all to renew.

[Kelly Hanczyk, CEO and Trustee at Nexus Industrial REIT]

A 140,000 sq ft are strategic vacancies. Another 140,000 sq ft are sort of strategic vacancies where we believe we can increase the rent on renewal. We also recently announced two additional development projects, which will get underway in the first half of 2026. We're going to build up to 180,000 sq ft of micro-industrial units on a vacant land surrounding our industrial building at Adams Road in Kelowna for a total estimated cost of approximately CAD 47 million. In our Savage Road property in Richmond, BC, we'll be adding another 28,000 sq ft time to the 52,000 sq ft that we announced in November for a total of 80,000 sq ft. Additional 28,000 sq ft expect to cost about CAD 19 million.

[Kelly Hanczyk, CEO and Trustee at Nexus Industrial REIT]

As I shared previously, the original 52,000 sq ft expansion is being paid in REIT units at CAD 10.50 per unit. We'll earn about 6% on the REIT units issued during the construction period, we will earn the contractual 6% yield upon completion. I expect construction will begin in the first half of 2026. In summary, we continue to advance our strategy in 2025 as Canada's industrial building partner. We will continue to realize organic growth through embedded rent steps and positive mark-to-mark on renewal. We will continue our track record of accretive capital recycling through opportunistic acquisition and development. I'll now pass the call over to Mike, who will give some more color on our financials.

[Mike Rawle, CFO and Secretary at Nexus Industrial REIT]

Thank you, Kelly. Good morning, everyone. Starting with headline earnings in the quarter, net income was CAD 30.6 million, a CAD 19.1 million decrease to last year. The fluctuation was due to a decrease in the fair value adjustment on Class B units by CAD 31 million and fair value losses on our Montreal office building joint venture of CAD 4.2 million, partially offset by an increase in fair value adjustments of investment properties of CAD 10.6 million and an increase in fair value adjustments on derivatives of CAD 3.9 million. As Kelly mentioned, our Q4 net operating income increased 2.7% or CAD 800,000 year-over-year to CAD 33 million. This was primarily due to the completion of our St.

[Mike Rawle, CFO and Secretary at Nexus Industrial REIT]

Thomas development and the Montreal building acquisitions, which combined added CAD 1.5 million in the quarter and an increase in same-property NOI of CAD 700,000 and higher straight-line rent adjustments of CAD 500,000. These increases were partially offset by CAD 1.4 million of NOI associated with properties that we have sold over the past year. Normalized AFFO for the period was CAD 0.151 per unit compared to CAD 0.153 a year ago, primarily due to the issuance of 2.8 million Class B LP Units for prepayment of the development in Richmond, BC. This was partially offset by higher Normalized AFFO by CAD 300,000, resulting from higher net operating income.

[Mike Rawle, CFO and Secretary at Nexus Industrial REIT]

Total general and administrative expenses for the quarter were CAD 2 million, which is CAD 200,000 higher than a year ago, primarily due to higher compensation, legal and professional fees. Net interest expense in the quarter was CAD 14 million, which was consistent with last year. The carrying value of our investment properties increased by CAD 31.3 million in the quarter, primarily due to the CAD 40.1 million acquisition of the two industrial properties in Montreal, CAD 18.7 million of fair value gains, and CAD 3.7 million of development expenditures, partially offset by CAD 34.8 million of investment properties that were reclassified to assets held for sale. At December 31st, our NAV per unit was CAD 13.22, a CAD 0.03 per unit increase from last quarter.

[Mike Rawle, CFO and Secretary at Nexus Industrial REIT]

Our weighted average cap rate increased by 3 basis points to 5.8% in the quarter, compared to 5.85% at September 30th. I'll now turn the call back to Kelly.

[Kelly Hanczyk, CEO and Trustee at Nexus Industrial REIT]

Thanks, Mike. With that, operator, open up the line to any questions.

[Operator]

We will now begin the question and answer session. To join the question queue, you may press Star, then one on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press Star then two. We will pause for a moment as callers join the queue. The first question comes from Pardon me, sir. Michael Markidis with BMO. Please go ahead.

[Michael Markidis, Managing Director of Global Markets at BMO Capital Markets]

No trouble, operator. It's a tricky one. Thank you, and good morning, Kelly and Mike. Kelly, you gave some pretty good color on the 2026 lease maturity, so I apologize if I've missed some of the detail, but did you mention an average spread expectation for the 2026 program?

[Kelly Hanczyk, CEO and Trustee at Nexus Industrial REIT]

We didn't. We didn't. I think at the end of the day when I'm looking at them, you know, in the last half of the year when I look at the. There's three large ones that make up, and I'd say they're on an average of about CAD 850 net, where I think we'll be somewhere around CAD 10, CAD 11 on those.

[Michael Markidis, Managing Director of Global Markets at BMO Capital Markets]

Okay.

[Kelly Hanczyk, CEO and Trustee at Nexus Industrial REIT]

One of them, 90,000 sq ft in Montreal was, is an intentional one. In that one, we worked out a deal with those guys because they had a very low rental rate, and they had three five-year option to renew at very little to no increase. We worked out a deal. We gave them a one-year renewal last year, at a higher rent, still below market, but at a higher rent, to get it back and to lose those renewals and be able to lease it at a decent rate. That makes up, I mean, that makes up about 500,000 sq ft, I believe.

[Kelly Hanczyk, CEO and Trustee at Nexus Industrial REIT]

I think on all of those, we're probably at CAD 1.50, maybe CAD 2, increase per square foot.

[Michael Markidis, Managing Director of Global Markets at BMO Capital Markets]

Sorry, that's for the 500 or for the full 900? I think you've got.

[Kelly Hanczyk, CEO and Trustee at Nexus Industrial REIT]

Yeah.

[Michael Markidis, Managing Director of Global Markets at BMO Capital Markets]

65% of the January to September done, right?

[Kelly Hanczyk, CEO and Trustee at Nexus Industrial REIT]

Yeah. There's like I don't know if I don't have the average spread of what we've completed.

[Michael Markidis, Managing Director of Global Markets at BMO Capital Markets]

Okay. No problem.

[Mike Rawle, CFO and Secretary at Nexus Industrial REIT]

I think, Mike, also another way of thinking about it is the SPNOI guidance we give in the mid-single digits will help anchor you.

[Michael Markidis, Managing Director of Global Markets at BMO Capital Markets]

No, that's fair. That's fair. Just on there's different methodologies around the space, and I haven't looked into your MD&A to confirm exactly, but, I'll just ask the question. For your SPNOI, does that include the contribution from intensifications, or is it a pure number?

[Mike Rawle, CFO and Secretary at Nexus Industrial REIT]

It includes that.

[Michael Markidis, Managing Director of Global Markets at BMO Capital Markets]

It includes that. Dennis Road and 102 Avenue Southeast would be in that.

[Mike Rawle, CFO and Secretary at Nexus Industrial REIT]

Sorry, I'm being corrected. It's excluded.

[Michael Markidis, Managing Director of Global Markets at BMO Capital Markets]

Excluded. Okay. Good to know.

[Mike Rawle, CFO and Secretary at Nexus Industrial REIT]

Yeah.

[Michael Markidis, Managing Director of Global Markets at BMO Capital Markets]

All right. Just I guess last question for you before I turn it back, just on the future developments. It looks like Adams Road is you're gonna commence construction, it sounds like. Is that one already under construction?

[Kelly Hanczyk, CEO and Trustee at Nexus Industrial REIT]

Yeah, it's not under construction yet. We're in the permitting phase.

[Michael Markidis, Managing Director of Global Markets at BMO Capital Markets]

Okay. Gotcha. Savage Road. You gave the detail on the yield for Savage Road, I guess 8% converting to 6% on completion. For Adams, I guess what's the anticipated yield on that? Just with both projects, where do you expect the completions to line up?

[Kelly Hanczyk, CEO and Trustee at Nexus Industrial REIT]

I think they would probably be complete some point next year. Depends on how fast we can get going. Adams, it's a little different because we are looking at building micro-industrial. Right now I'm working on the difference between either pre-leasing them or pre-selling or selling them as we go in funding the next batch. It's a little up in the air as we haven't really fully started the project, yet we're in the planning phase, and could be a mixture where we lease some and we sell some, because from a sale on a per square foot basis, we expect to get... Because they are micro-industrial and these are small units. It's a good owner user opportunity where I think we can hit better returns.

[Kelly Hanczyk, CEO and Trustee at Nexus Industrial REIT]

I'd say it's probably gonna be, let's call it a seven overall, between seven and 10.

[Mike Rawle, CFO and Secretary at Nexus Industrial REIT]

Understood. Thanks for that. I'll turn it back.

[Kelly Hanczyk, CEO and Trustee at Nexus Industrial REIT]

Okay, thanks.

[Operator]

The next question is from Sam Damiani with TD Cowen. Please go ahead.

[Sam Damiani, Manging Director of Equity Research at TD Cowen]

Thanks very much. Good morning. Maybe just on the debt-to-EBITDA remains elevated near 11 times. Just wondering if you have a year-end target for 2026?

[Mike Rawle, CFO and Secretary at Nexus Industrial REIT]

We haven't given guidance to that, but we do see it pretty rapid de-levering this year. Our goal is to hit investment grade balance sheet this year. The guidance we've been given from DBRS is that they're looking for mid-nines to achieve that. That's our target is to get to that IG rating.

[Sam Damiani, Manging Director of Equity Research at TD Cowen]

Is that something you're shooting for by the end of the year, sort of mid-nines?

[Mike Rawle, CFO and Secretary at Nexus Industrial REIT]

Yeah, I think that's fair to say. Like mid-nines would be our target, and that would get us the IG rating.

[Sam Damiani, Manging Director of Equity Research at TD Cowen]

Right. Just on the Belvedere Club, I'm just wondering if you could maybe expand on or go into some detail on what the expansion phase, what the scope of work for that latest expansion phase you've announced?

[Kelly Hanczyk, CEO and Trustee at Nexus Industrial REIT]

Yep. It's same like Adams. It's micro-industrial units on land that's available for us to build.

[Sam Damiani, Manging Director of Equity Research at TD Cowen]

So it's not part of the racket club?

[Kelly Hanczyk, CEO and Trustee at Nexus Industrial REIT]

No, no. Separate. We're decided to. We've redone the drawings to create a series of micro-industrial units.

[Sam Damiani, Manging Director of Equity Research at TD Cowen]

Got it. I guess last one for me on the fair value gains, there's a nice, a nice one on the Montreal acquisitions there. Just wondering, did you revisit the Voilà CFC in Montreal in light of Empire's announcement earlier this year?

[Kelly Hanczyk, CEO and Trustee at Nexus Industrial REIT]

Yeah. Actually, I was there last week, and did a tour and, it's my understanding the Montreal facility has the largest share of, market share of home delivery in Quebec. I think just a very different circumstance. The brand is pretty large in Quebec. From everything I see, it was full steam ahead. They were pretty busy.

[Sam Damiani, Manging Director of Equity Research at TD Cowen]

Excellent. Thank you. I'll turn it back.

[Mike Rawle, CFO and Secretary at Nexus Industrial REIT]

Yeah. Just a little more color on that is there's a long lease on that building too. This isn't one that we're concerned about.

[Sam Damiani, Manging Director of Equity Research at TD Cowen]

Clearly. Yeah, that's it. It couldn't get much longer. Okay. Thanks very much.

[Kelly Hanczyk, CEO and Trustee at Nexus Industrial REIT]

Yeah.

[Operator]

The next question is from Brad Sturges with Raymond James. Please go ahead.

[Brad Sturges, Managing Director and Equity Research Analyst at Raymond James]

Hey, good morning. Maybe switching gears a bit. Obviously you did the two acquisitions in Montreal. How do you think about acquisitions this year? Obviously, the focus is to de-lever and to get that investment grade.

[Kelly Hanczyk, CEO and Trustee at Nexus Industrial REIT]

Yeah.

[Brad Sturges, Managing Director and Equity Research Analyst at Raymond James]

How do you think about?

[Kelly Hanczyk, CEO and Trustee at Nexus Industrial REIT]

Yeah.

[Brad Sturges, Managing Director and Equity Research Analyst at Raymond James]

You know, opportunistically, on the growth side?

[Kelly Hanczyk, CEO and Trustee at Nexus Industrial REIT]

Yeah. I think reality is if we are looking, I am in the process of working through a bunch of different things, but they would be more geared towards unit deals. We wouldn't be purchasing anything from cash. It would be a unit transaction. If you see us do anything this year, it would 99% likely be a unit deal transaction.

[Brad Sturges, Managing Director and Equity Research Analyst at Raymond James]

How's that pipeline look today in terms of potential deals you're working on?

[Kelly Hanczyk, CEO and Trustee at Nexus Industrial REIT]

Yeah, I mean, I'm working on one. It's early phase, but it would be, you know, a three building that would fit nicely into the portfolio and see if I can get it done. It's tough when the units are trading down at this level, but we'll see what we can do.

[Brad Sturges, Managing Director and Equity Research Analyst at Raymond James]

Okay. I'll turn it back. Thanks.

[Operator]

Again, if you have a question, please press star then one. The next question is from Jimmy Shan with RBC Capital Markets. Please go ahead.

[Jimmy Shan, Canadian Real Estate and REIT Analyst at RBC Capital Markets]

Thanks. Just going back to that CAD 40 million Montreal deal, you gave pretty good color on sort of the deal dynamic. I'm still trying to get my head around, you know, how is it that you're able to still get a very low basis for it and kinda why would the PE firm be willing to accept? I guess ultimately this would be like a 10% cost for them, right? What are the other nuances that are part of the deal that way you're able to get such a good deal?

[Kelly Hanczyk, CEO and Trustee at Nexus Industrial REIT]

I don't think there's any other nuance in that. We've done a deal with them before. We actually purchased our Windsor, part of our Windsor portfolio, through them. I think it's A.P. Plasman. I think that was a four-building transaction. We closed and it was a smooth transaction, easy to complete. I think at the end of the day, they're just not focused on the real estate. We managed to negotiate a pretty sweet deal at CAD 145 a foot. We pounced on it. There's no other nuances to the deal, really.

[Jimmy Shan, Canadian Real Estate and REIT Analyst at RBC Capital Markets]

Okay. That's good. Then just on the swaps, I think you've got a total up about CAD 350 million of notional amount where it's callable by the counterparty. I just wondering, like, I guess rates have gone up since then. Like, are these likely to be called? The ones that have.

[Kelly Hanczyk, CEO and Trustee at Nexus Industrial REIT]

Not at this point. No. They're still out of the money for them.

[Jimmy Shan, Canadian Real Estate and REIT Analyst at RBC Capital Markets]

Got it.

[Kelly Hanczyk, CEO and Trustee at Nexus Industrial REIT]

Yeah, no.

[Jimmy Shan, Canadian Real Estate and REIT Analyst at RBC Capital Markets]

Okay. Okay. Maybe lastly, just on Glover, I guess what's the plan now? Is it still to try to market that property and or you're trying to fill a tenant?

[Kelly Hanczyk, CEO and Trustee at Nexus Industrial REIT]

Yeah.

[Jimmy Shan, Canadian Real Estate and REIT Analyst at RBC Capital Markets]

Yeah.

[Kelly Hanczyk, CEO and Trustee at Nexus Industrial REIT]

Absolutely. I mean our preference is to market it for sale. We have it listed right now, and all we do is wait to get an offer. We had it under contract, it seemed to be going fine, and then at the last minute, the purchaser just dropped out. It was an owner occupier, which is even more strange. Yeah, we're anxious to move that one because that frees up, quite frankly, a lot of capital and reduces the burn on our AFFO. It has a meaningful effect once we're able to unload it.

[Jimmy Shan, Canadian Real Estate and REIT Analyst at RBC Capital Markets]

Are you hopeful you'll be able to get something done this year on it?

[Kelly Hanczyk, CEO and Trustee at Nexus Industrial REIT]

I'm hopeful, for this year. I'm hopeful. I mean, it's, March. Maybe we could close something, I would think, in, I would say early fall. That, you know, that's what I'm hoping for.

[Jimmy Shan, Canadian Real Estate and REIT Analyst at RBC Capital Markets]

Yeah.

[Kelly Hanczyk, CEO and Trustee at Nexus Industrial REIT]

If we're lucky, maybe sooner.

[Jimmy Shan, Canadian Real Estate and REIT Analyst at RBC Capital Markets]

Yep. Okay, thanks.

[Operator]

The next question is from Tal Woolley with CIBC Capital Markets. Please go ahead.

[Tal Woolley, Executive Director and Institutional Equity Research at CIBC Capital Markets]

Hey, good morning. On the renewal rents in Q4, they were a little bit lower than where they've been for the rest of the year. Anything special about that or anything, you know, Sorry, was that just sort of like a one-off kind of lease situation that created that or just something we should be reading into the market?

[Kelly Hanczyk, CEO and Trustee at Nexus Industrial REIT]

I don't think there's anything to read into it there. I think it's just the nature of the leases that we had coming up. I think also we had, if we looked at some of the leasing that we did earlier in the year was, there was some really big lifts that we had, you know, really low rates coming up, so.

[Tal Woolley, Executive Director and Institutional Equity Research at CIBC Capital Markets]

Okay. Just when you look at your outlook for 2026, do you sort of see that as? Are there any big swing factors in there that could have you hit higher than that or not reach those targets? Are there any key, sort of things coming up throughout the year that we should be particularly paying attention to?

[Mike Rawle, CFO and Secretary at Nexus Industrial REIT]

I'd say, you know, Kelly can add color. I think it's a pretty volatile world out there. You know, I don't think, you know, I don't think anyone expected the geopolitical instability we saw last year. I think, you know, we obviously were happy with how our business performed during, you know, during all that upheaval. You know, the answer is, you know, last year we had two tenants file CCAA completely from left field, unaffected by the tariff. They just, you know, went bust, and that was three buildings that came back to us. I think we did a fantastic job of working through that. Like, we don't see that, anything like that on the horizon, but we didn't see it on the horizon last year. You know, I...

[Mike Rawle, CFO and Secretary at Nexus Industrial REIT]

Nothing that we're aware of, I think, to call out, but, you know, that doesn't mean things don't happen and, you know, just happy with how well the team has responded to the challenges that have come up over the last year.

[Kelly Hanczyk, CEO and Trustee at Nexus Industrial REIT]

Yeah. When, when I look out at the renewals in October, you know, we have a 150,000 sq ft, and I fully expect we have an offer out with them and we're negotiating back and forth right now. End of December, we have two larger ones, 175,000 and 80,000, and we expect both of them to renew. I don't see any issue there. There's decent lift there. The November 30th one, 90,000 sq ft, that's the one we knew was coming back to us.

[Kelly Hanczyk, CEO and Trustee at Nexus Industrial REIT]

We're hoping, we have that listed now, I mean, we're pretty hopeful. When I look at, you know, the balance of kind of what comes up in the end of the year, we have one in Ajax. You know, it's not a lot, they paid us an early termination fee that comes back, I think we'll get some lift on that one. An early termination fee takes them to the end of their lease, which is, I believe, end of September. We have another 20,000 square footer in Saskatchewan. That's just a vacated truck port. Like an exterior type space that they were renting.

[Kelly Hanczyk, CEO and Trustee at Nexus Industrial REIT]

We're actually going to, in the planning stage, to finish the space when we get it back in full and add to the GLA and be able to charge much higher rents. Saskatchewan seems to be a pretty solid market for us right now. On the new deals and in renewal deals, we're still pretty positive.

[Tal Woolley, Executive Director and Institutional Equity Research at CIBC Capital Markets]

Okay. I guess just on the financing side, you know, you guys have, you know, significant amount of your debt sitting on credit facilities and your desire to get to investment grade rating. You know, you've been very clear about that. Are you noticing any, like, change from lenders in terms of, like, the type of lending product they'd like you to take, like secured financing versus credit facilities? Is it just sort of been business as normal? I'm just trying to get a sense if the, you know, banks have really changed at all, sort of, over the last couple of years.

[Kelly Hanczyk, CEO and Trustee at Nexus Industrial REIT]

Yes, in a very good way. You know, it's interesting being at this end of the table, I guess. You know, when you start getting close to being an IG rated borrower, everyone wants to lend to you.

[Mike Rawle, CFO and Secretary at Nexus Industrial REIT]

Just before that because they weren't part of the debt deal, right? Absolutely. We have a huge amount of support from our banking syndicate and, more banks wanting to join than we had ever hoped. It's a very good position to be in as we're just on that kind of cusp. You know, we're pretty relaxed about the timing, of when we get there, other than it's obviously substantial savings and, additional flexibility to getting to IG. That's, that's the, that's the rush, not from a any kind of liquidity challenges. It's just there's tons of, tons of support for us out there from our group of bankers.

[Tal Woolley, Executive Director and Institutional Equity Research at CIBC Capital Markets]

That mid nine number, that would put you like, you think at like BBB- mid kind of rating?

[Mike Rawle, CFO and Secretary at Nexus Industrial REIT]

No, I think what we go with the BBB- is what we're trying to, you know, trying to get. Just trying to get IG and then go from there.

[Tal Woolley, Executive Director and Institutional Equity Research at CIBC Capital Markets]

Okay. Got it. Thanks very much, Mike.

[Mike Rawle, CFO and Secretary at Nexus Industrial REIT]

Thanks.

[Operator]

The next question is a follow-up from Mike Markidis with BMO. Please go ahead.

[Michael Markidis, Managing Director of Global Markets at BMO Capital Markets]

Thanks, guys. It's been a while. I just wanted to just recycle back on Savage Road. I don't see unit deal but I think you said micro-industrial units. Is that a similar plan to Adams where it might be a partial sale? I'm just trying to get a sense of how that works?

[Kelly Hanczyk, CEO and Trustee at Nexus Industrial REIT]

Less possible there, but possibly. It's possible.

[Michael Markidis, Managing Director of Global Markets at BMO Capital Markets]

Okay.

[Kelly Hanczyk, CEO and Trustee at Nexus Industrial REIT]

We, we-

[Michael Markidis, Managing Director of Global Markets at BMO Capital Markets]

And then-

[Kelly Hanczyk, CEO and Trustee at Nexus Industrial REIT]

There's a possibility of I do half rental, half for sale, so we're just working through that now.

[Michael Markidis, Managing Director of Global Markets at BMO Capital Markets]

Okay. Just so you're collecting as you issued the units or you will issue the units?

[Kelly Hanczyk, CEO and Trustee at Nexus Industrial REIT]

As we release the units. The distribution becomes payable, and then we effectively get the distribution back.

[Michael Markidis, Managing Director of Global Markets at BMO Capital Markets]

Got it. That really hasn't happened yet, right? Because you got only CAD 0.7 million.

[Kelly Hanczyk, CEO and Trustee at Nexus Industrial REIT]

I think we have one batch out.

[Michael Markidis, Managing Director of Global Markets at BMO Capital Markets]

Okay.

[Mike Rawle, CFO and Secretary at Nexus Industrial REIT]

Yeah. Well, just.

[Kelly Hanczyk, CEO and Trustee at Nexus Industrial REIT]

Yeah.

[Mike Rawle, CFO and Secretary at Nexus Industrial REIT]

Just under CAD 500,000. Yeah.

[Michael Markidis, Managing Director of Global Markets at BMO Capital Markets]

Right. Can you just remind me why you go from an 8% to a 6% yield, like 8% return on your units and then it goes down to 6% on completion?

[Kelly Hanczyk, CEO and Trustee at Nexus Industrial REIT]

Yeah. It's a 6 cap in Richmond is pretty attractive. you know, we're looking at stuff right now. Everything we see is in the high 4s, low 5s. It's still a fairly decent. It's a way to, I guess, build our market cap, using our currency. I guess that's as best as I can say.

[Michael Markidis, Managing Director of Global Markets at BMO Capital Markets]

No, no, I get that.

[Kelly Hanczyk, CEO and Trustee at Nexus Industrial REIT]

Yeah.

[Michael Markidis, Managing Director of Global Markets at BMO Capital Markets]

Stabilized yield and... What I'm trying to understand is I think, unless I misunderstood, like you're getting an 8% return on the units you advance, but then are you saying that the terminal value would be a 6% or are you saying but then the unlevered yield on completion is a 6%? I'm just trying to understand.

[Mike Rawle, CFO and Secretary at Nexus Industrial REIT]

No, it's six and six. We get a 6% yield.

[Michael Markidis, Managing Director of Global Markets at BMO Capital Markets]

Yeah.

[Mike Rawle, CFO and Secretary at Nexus Industrial REIT]

On the units. It's basically cash neutral to us.

[Michael Markidis, Managing Director of Global Markets at BMO Capital Markets]

You're 8% in the interim, 6% on completion.

[Mike Rawle, CFO and Secretary at Nexus Industrial REIT]

No, no, it's 6% in the interim.

[Kelly Hanczyk, CEO and Trustee at Nexus Industrial REIT]

No.

[Mike Rawle, CFO and Secretary at Nexus Industrial REIT]

6%.

[Michael Markidis, Managing Director of Global Markets at BMO Capital Markets]

Oh, 6%.

[Kelly Hanczyk, CEO and Trustee at Nexus Industrial REIT]

Yeah.

[Michael Markidis, Managing Director of Global Markets at BMO Capital Markets]

Okay. Minus the--. I apologize.

[Kelly Hanczyk, CEO and Trustee at Nexus Industrial REIT]

Yeah, yeah.

[Michael Markidis, Managing Director of Global Markets at BMO Capital Markets]

I apologize. Okay.

[Kelly Hanczyk, CEO and Trustee at Nexus Industrial REIT]

Yeah. It's not today's yield, right? It's at 10.50%.

[Michael Markidis, Managing Director of Global Markets at BMO Capital Markets]

Okay. I understand. I apologize. I misunderstood. Thank you so much.

[Kelly Hanczyk, CEO and Trustee at Nexus Industrial REIT]

Yeah, no worries.

[Operator]

The next question is a follow-up from Sam Damiani with TD Cowen. Please go ahead.

[Sam Damiani, Manging Director of Equity Research at TD Cowen]

Thank you. I think you mentioned, Kelly, there's a tenant that paid an early termination fee in Ajax.

[Sam Damiani, Manging Director of Equity Research at TD Cowen]

Taking the, I guess, the lease will wrap up in September. Will that late lease termination fee go into same property NOI for this year?

[Kelly Hanczyk, CEO and Trustee at Nexus Industrial REIT]

Well, I think what that does is it's, you know, we account for it as rent, I believe, up until the end of the term. If we lease it prior to that, I will let Mike answer that.

[Mike Rawle, CFO and Secretary at Nexus Industrial REIT]

Yeah, no, it won't go into the same property NOI.

[Sam Damiani, Manging Director of Equity Research at TD Cowen]

Okay. I appreciate that. Could you share with us what the expiring or expired rent is on that building or set of buildings?

[Kelly Hanczyk, CEO and Trustee at Nexus Industrial REIT]

It's one building. I cannot off my head remember what the expiry rent is at, but I know we'll have.

[Mike Rawle, CFO and Secretary at Nexus Industrial REIT]

CAD 13.50. CAD 13.50.

[Kelly Hanczyk, CEO and Trustee at Nexus Industrial REIT]

CAD 13.50.

[Mike Rawle, CFO and Secretary at Nexus Industrial REIT]

Yeah.

[Kelly Hanczyk, CEO and Trustee at Nexus Industrial REIT]

Yeah. I think we'll have a pretty decent lift on that one.

[Sam Damiani, Manging Director of Equity Research at TD Cowen]

Awesome. Thank you very much, and I'll turn it back.

[Operator]

This concludes the question and answer session. I would like to turn the conference back over to Kelly Hanczyk for any closing remarks.

[Kelly Hanczyk, CEO and Trustee at Nexus Industrial REIT]

All right, everybody. Thanks so much, and we will see you next quarter.

[Operator]

This brings to an end today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.

Participants

Executives

• Kelly Hanczyk, CEO and Trustee
• Mike Rawle, CFO and Secretary

Analysts

• Brad Sturges, Managing Director and Equity Research Analyst at Raymond James
• Jimmy Shan, Canadian Real Estate and REIT Analyst at RBC Capital Markets
• Michael Markidis, Managing Director of Global Markets at BMO Capital Markets
• Sam Damiani, Manging Director of Equity Research at TD Cowen
• Tal Woolley, Executive Director and Institutional Equity Research at CIBC Capital Markets