Nexus REIT Announces Q3 2018 Results and December 2018 Distribution

TORONTO and MONTREAL, Nov. 22, 2018 /CNW/ - Nexus Real Estate Investment Trust (the "REIT") (TSXV: NXR.UN) announced today its results for the quarter and nine months ended September 30, 2018 and the declaration of the December 2018 distribution.

Highlights

Q3 2018 property revenue increases to $13.5 million as compared from $13.1 million for the same quarter of the prior year.
Completed a $6.6 million acquisition in Beamsville, Ontario, with the vendor receiving 100% of the purchase price in units valued at the equivalent of $2.10 per REIT unit.
Subsequent to quarter end, completed a $8.5 million acquisition in Calgary, Alberta.
Debt to GBV reduced to 53.6% at the end of the quarter from 54.3% at June 30, 2018.
Normalized AFFO per unit of $0.048 for Q3 2018 as compared to $0.048 for Q2 2018 and $0.052 for Q3 2017. Q3 2017 included revenue from a termination fee in the amount of $150,000.
Adjusted normalized AFFO payout ratio for Q3 2018 of 82.6% is down from 83.4% for Q2 2018.
Management of the REIT will host a conference call on Thursday November 22^nd at 1PM EST to review results and operations.

"Quarter after quarter our results have been strong and consistent" commented Kelly Hanczyk, the REIT's Chief Executive Officer. "We have created a platform that has delivered consistent yet growing results, have completed $91.5 million in acquisitions to date in 2018, issuing 17.6 million units to vendors at $2.10 per unit, a premium to our trading price, and we look forward to future upside with the redevelopment of our Richmond, BC site. Recent leasing activity in our downtown Montreal office property, 2045 Rue Stanley, has been encouraging with committed or occupied space now sitting at 84%. In the fourth quarter, rent will commence on an additional approximately 18,000 square feet (9,000 square feet at our interest) of space in this building. With strong fundamentals, we have put the building blocks in place that will allow us to continue to grow both our NAV per unit and our AFFO per unit."

Summary of Results

Included in the tables that follow and elsewhere in this news release are non-IFRS measures that should not be construed as an alternative to net income / loss, cash from operating activities or other measures of financial performance calculated in accordance with IFRS, and may not be comparable to similar measures as reported by other issuers. Readers are encouraged to refer to the REIT's MD&A for further discussion of the non-IFRS measures presented.


	Three months ended September 30,		Nine months ended September 30,
	2018	2017	2018	2017
	$	$	$	$
Financial Results
Property revenue	13,450,841	13,122,113	39,876,326	23,989,149
Net operating income	8,595,042	8,551,826	24,760,638	17,104,054
Net income	4,157,032	3,359,029	15,080,859	3,385,877





	Three months ended September 30,		Nine months ended September 30,
	2018	2017	2018	2017
	$	$	$	$
Financial highlights
Funds from operations (FFO) ⁽¹⁾	5,291,330	5,619,179	15,335,086	10,621,496
Normalized FFO ^{(1) (7)}	5,961,831	5,619,179	16,458,691	10,621,496
Adjusted funds from operations (AFFO) ⁽¹⁾	4,655,651	4,871,315	13,478,346	9,528,171
Normalized AFFO ^{(1) (7)}	5,326,152	4,871,315	14,601,950	9,528,171
Distributions declared ⁽²⁾	4,398,590	3,764,086	12,384,685	8,434,583
Distributions declared on units issued June 30, 2017
on the closing of the bought deal and private placement ⁽⁴⁾	-	-	-	444,556
Distributions declared on units issued April 30, 2018
on the closing of an acquisition ⁽⁵⁾	-	-	128,857	-
Normalized distributions declared ^{(4) (5)}	4,398,590	3,764,086	12,255,828	7,990,027
Weighted average units outstanding – basic ⁽³⁾	109,956,419	94,049,376	102,075,732	65,392,717
Weighted average units outstanding – diluted ⁽³⁾	110,015,122	94,124,232	102,137,358	65,482,473
Distributions per unit, basic and diluted ^{(2) (3)}	0.040	0.040	0.121	0.129
Adjusted distributions per unit, basic and diluted ^{(2) (3) (4) (5)}	0.040	0.040	0.120	0.120
FFO per unit, basic ^{(1) (3)}	0.048	0.060	0.150	0.162
Normalized FFO per unit, basic ^{(1) (3) (7)}	0.054	0.060	0.161	0.162
AFFO per unit, basic ^{(1) (3)}	0.042	0.052	0.132	0.146
Normalized AFFO per unit, basic ^{(1) (3) (7)}	0.048	0.052	0.143	0.146
Normalized AFFO payout ratio, basic,
adjusted ^{(1) (2) (4) (5) (6) (7)}	82.6%	77.3%	83.9%	83.9%
Debt to total assets ratio	53.6%	54.8%	53.6%	54.8%

Excluding a termination fee received in the quarter ended September 30, 2017, FFO per unit, AFFO per unit, and Normalized AFFO payout ratio, basic, adjusted were $0.058, $0.050 and 79.7%, respectively, and $0.162, $0.143 and 85.2%, respectively.
	(1)	Non-IFRS Measure
	(2)	Includes distributions payable to holders of Class B LP Units which are accounted for as interest expense in the consolidated financial statements.
	(3)	Weighted average number of units includes the Class B LP Units.
	(4)	33,350,000 REIT units were issued on June 30, 2017 on the closing of an equity financing and private placement. These units were eligible to receive distributions for the month of June. Normalized distributions declared and Normalized AFFO payout ratio, basic, adjusted each exclude distributions declared on these units which were outstanding for only 1 day in the quarter.
	(5)	9,666,667 units were issued on April 30, 2018 on the closing of an acquisition. These units were eligible to receive distributions for the month of April. Normalized distributions declared and Normalized AFFO payout ratio, basic, adjusted each exclude distributions declared on these units for the month of April 2018.
	(6)	Calculated based on normalized distributions declared as presented in the table above.
	(7)	Normalized FFO and Normalized AFFO include a vendor rent obligation amount related to the Richmond Property which is received in cash from the vendor of the Richmond Property until the property build out is complete and all tenants are occupying and paying rent. The vendor rent obligation amount is not included in NOI for IFRS accounting purposes.

Revenues and Results from Operations

Q3 2018 property revenue of $13,450,841 was up as compared to $13,122,113 for Q3 2017 primarily due to the impact of acquisitions completed in the second and third quarters of 2018. Vendor rent obligations in the approximate amount of $670,000 related to our Richmond, BC acquisition were not included in property revenue in the period, while Q3 2017 property revenue included a $150,000 lease termination fee. Normalizing for these two items, Q3 2018 property revenue increased approximately $1,150,000 as compared to Q3 2017.

Net operating income of $8,595,042 for Q3 2018 compares to $8,551,826 for Q3 2017. Normalizing for the $150,000 of termination fees received in Q3 2017 and $670,000 of vendor rent obligations received in Q3 2018 but not included in net operating income for accounting purposes, net operating income was approximately $863,215 higher than Q3 2017.

General and administrative expense for the quarter of $673,684 was $50,713 lower than Q2 2018 general and administrative expense of $724,397 and compared to general and administrative expense of $707,943 for Q3 2017.

Earnings Call

Management of the REIT will host a conference call at 1:00 PM Eastern Standard Time on Thursday November 22^nd, 2018 to review the financial results and operations. To participate in the conference call, please dial 416-915-3239 or 1-800-319-4610 (toll free in Canada and the US) at least five minutes prior to the start time and ask to join the Nexus REIT conference call.

A recording of the conference call will be available until September 22, 2018. To access the recording, please dial 604-674-8052 or 1-855-669-9658 (toll free in Canada and the US) and enter access code 2687.

December Distribution

The REIT will make a cash distribution in the amount of $0.01333 per unit, representing $0.16 per unit on an annualized basis, payable January 15, 2019 to unitholders of record as of December 31, 2018.

The REIT's current distribution per unit continues to be $0.01333 per month. The REIT's distribution reinvestment program ("DRIP") entitles eligible unitholders to elect to receive all, or a portion of the cash distributions of the REIT reinvested in units of the REIT. Eligible unitholders who so elect will receive a bonus distribution of units equal to 4% of each distribution that was reinvested by them under the DRIP.

About Nexus REIT

Nexus 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 66 properties comprising approximately 3.7 million square feet of rentable area. The REIT has approximately 91,533,000 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 20,827,000 REIT units.

Forward Looking Statements

Certain 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. 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. 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.

SOURCE Nexus Real Estate Investment Trust

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