Nexus Industrial REIT Announces Sale of Six Legacy Office Properties, Lease Update, and Credit Facility Extension

Strategic Insights -

Nexus Industrial REIT, a growth-oriented real estate investment trust focused on industrial properties in Canada, has made a significant move by selling its 50% ownership interest in six office buildings in Montreal, totaling 143,223 square feet of gross leasable area. This sale aligns with the REIT's strategy of concentrating on industrial assets, which now contribute 94% of its net operating income (NOI) on a proforma basis. The REIT plans to use the net proceeds from the sale to repay existing indebtedness on its credit facility. Additionally, Nexus has leased the remaining space in its recently completed Titan Park industrial property in Regina, SK, and has extended its credit facility with ATB Financial.

Key Takeaways:

  • Nexus Industrial REIT has sold its 50% ownership interest in six office buildings in Montreal, totaling 143,223 square feet of gross leasable area.
  • The sale is in line with the REIT's strategy of concentrating on industrial assets, which now contribute 94% of its NOI on a proforma basis.
  • The REIT plans to use the net proceeds from the sale to repay existing indebtedness on its credit facility.
  • Nexus has leased the remaining 109,000 sq. ft. of its Titan Park industrial property in Regina, SK for a 10-year term, subject to annual rent escalation.
  • The REIT completed construction of the Titan Park industrial property in April 2024 for development costs of $48 million.
  • The property is now expected to contribute annual stabilized NOI of $3.8 million, exceeding the original investment plan.
  • Nexus has extended its credit facility with ATB Financial, which consists of a $70 million secured committed revolving line of credit maturing on September 15, 2025.

Statistics:

  • Year-over-year NOI growth for Nexus Industrial REIT from 2023 to 2024: 23.1% (unaudited).
  • Total gross leasable area of the six office buildings sold in Montreal: 143,223 sq. ft.
  • Lease duration for the remaining 109,000 sq. ft. of the Titan Park industrial property: 10 years.
  • Annual rent escalation rate for the Titan Park industrial property lease: to be determined annually.
  • Development costs for the Titan Park industrial property: $48 million.
  • Current age of the Titan Park industrial property: since its completion in April 2024.

Sources:

  • Globe Newswire, "Nexus Industrial REIT Announces the Sale of Six Legacy Office Properties, Lease Update and Credit Facility Extension," September 11, 2024.
  • SEDAR, "Nexus Industrial REIT Management's Discussion and Analysis for the period ended June 30, 2024."