NXR.UN Nexus Industrial REIT

Nexus Real Estate Investment Trust (TSX:NXR.UN) (“Nexus” or the “REIT”) announced today that it and the vendor of the Richmond, British Columbia asset that the REIT acquired on April 30, 2018 (“Selling Unitholder”) have entered into an agreement to sell to a syndicate of underwriters led by BMO Capital Markets and Desjardins Capital Markets (collectively, the “Underwriters”), on a bought deal basis, 11,000,000 units of the REIT (the “Units”) at a price of $12.85 per Unit (the “Offering Price”) for gross proceeds of approximately $141 million (the “Offering”).

The Offering consists of a treasury offering by the REIT of 9,893,356 Units for gross proceeds to the REIT of $127 million (the “Treasury Offering”) and a secondary offering by the Selling Unitholder of 1,106,644 Units for gross proceeds to the Selling Unitholder of approximately $14 million (the “Secondary Offering”). The REIT has also granted the Underwriters an over-allotment option to purchase up to an additional 1,650,000 Units on the same terms and conditions, exercisable at any time, in whole or in part, up to 30 days after the closing of the Offering (the “Over-Allotment Option”), which, if exercised in full, would increase the gross proceeds of the Offering to approximately $163 million and the aggregate gross proceeds to the REIT to approximately $148 million.

The REIT intends to use the net proceeds from the Offering to fund the REIT’s future acquisitions and for general corporate purposes. The REIT will not receive any proceeds from the Secondary Offering.

“We continue to make significant strides in our transformation to a pure play industrial REIT,” Kelly Hanczyk, the REIT’s Chief Executive Officer stated. “Since the start of the year, Nexus has announced approximately $1.1 billion of industrial real estate acquisitions with a combination of core high quality credit tenanted assets under long term leases along with best-in-class industrial real estate in higher yielding markets. These acquisitions continue to strengthen the REIT’s long term cash flow stability at an attractive blended yield. The equity offering enables us to continue the REIT’s momentum and further execute on our robust pipeline.”

Acquisition Pipeline Update

The REIT also announced it is in negotiations on potential acquisitions of 7 industrial properties totalling approximately 1.7 million square feet for an aggregate purchase price of approximately $315 million (including two properties which are subject to conditional purchase agreements for purchase prices totalling $40.5 million) at a blended going-in capitalization rate of approximately 4.7%. The properties are high quality logistics and distribution assets, well-located in core industrial nodes within their respective markets, fully leased to quality tenants under long-term leases.

Inclusive of the aforementioned potential acquisitions, the REIT will have announced or completed approximately $1.1 billion of industrial acquisitions since the beginning of 2021 at a weighted average going-in capitalization rate of approximately 5.4%. These potential acquisitions, if completed, will increase its industrial portfolio weighting by NOI from 61% as at January 1, 2021 to 83%.

The Offering

The Offering consists of the Treasury Offering for gross proceeds to the REIT of $127 million and the Secondary Offering for gross proceeds to the Selling Unitholder of approximately $14 million. Following completion of the Secondary Offering, the Selling Unitholder will hold 760,851 Units in the REIT. The REIT has also granted the Underwriters the Over-Allotment Option, which, if exercised in full, would increase the gross proceeds of the Offering to approximately $163 million and the aggregate gross proceeds to the REIT to approximately $148 million. The REIT will not receive any proceeds from the Secondary Offering.

The Units under the Offering will be offered in Canada pursuant to a prospectus supplement to be filed under the REIT’s short form base shelf prospectus dated July 16, 2021, as amended by amendment no. 1 dated October 29, 2021. The Offering is subject to customary conditions and receipt of all necessary approvals, including the approval of the Toronto Stock Exchange. The Offering is expected to close on or about November 22, 2021. The completion of the Treasury Offering (and the Over-Allotment Option) is not conditioned upon the completion of the Secondary Offering.

The Units have not been, nor will they be, registered under the United States Securities Act of 1933, as amended, (the "1933 Act") and may not be offered, sold or delivered, directly or indirectly, in the United States, or to, or for the account or benefit of, "U.S. persons" (as defined in Regulation S under the 1933 Act), except pursuant to an exemption from the registration requirements of the 1933 Act. This press release does not constitute an offer to sell or a solicitation of an offer to buy any Units in the United States or to, or for the account or benefit of, U.S. persons.

About Nexus REIT

Nexus is a growth-oriented real estate investment trust focused on increasing unitholder value through the acquisition of industrial properties located in primary and secondary markets in Canada and potentially including the United States, and the ownership and management of its portfolio of properties. The REIT currently owns a portfolio of 95 properties comprising approximately 8.7 million square feet of gross leasable area. The REIT has approximately 45,721,000 Units issued and outstanding. Additionally, there are Class B LP Units of subsidiary limited partnerships of Nexus issued and outstanding, which are convertible into approximately 19,663,000 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, including with respect to the timing and completion of the Offering and the intended use of the net proceeds therefrom by the REIT, the terms of, timing for completion of for any of the acquisitions in the REIT’s acquisition pipeline and the REIT’s ability to enter into definitive agreements for potential acquisitions subject to exclusive negotiations, the expected benefits of the acquisitions in the REIT’s acquisition pipeline and the timing thereof, the expected impact of the potential acquisitions on the REIT’s industrial portfolio weighting by NOI, the satisfaction of conditions for the acquisitions, the satisfaction or waiver of due diligence conditions and statements regarding the satisfaction of other conditions. 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.

Although management believes the expectations reflected in such forward-looking statements are reasonable and represent the REIT’s internal expectations and beliefs at this time, such statements involve known and unknown risks and uncertainties and may not prove to be accurate and certain objectives and strategic goals may not be achieved. A variety of factors, many of which are beyond the REIT’s control, could cause actual results in future periods to differ materially from current expectations of events or results expressed or implied by such forward-looking statements, such as the risks identified in the REIT’s current annual information form available at www.sedar.com and other materials filed with the Canadian securities regulatory authorities.

The completion of the acquisitions in the REIT’s acquisition pipeline are subject to, among other things, the negotiation and entry into definitive agreements or the terms of their respective definitive agreements (which are subject to the satisfaction of a number of closing conditions, including satisfaction or waiver of the REIT’s diligence). There can be no assurance that any exclusive negotiations will result in definitive agreements (and, if they do, what the terms or timing of such acquisition will be), that any of the acquisitions will be completed, or if completed, that they will be on terms or within timelines set forth in the respective definitive agreements.

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.

For further information please contact:Kelly Hanczyk, CEO at (416) 906-2379; orRob Chiasson, CFO at (416) 613-1262.