TORONTO, May 14, 2024 (GLOBE NEWSWIRE) -- Nexus Industrial REIT (the "REIT") (TSX:NXR) announced today its results for the first quarter ended March 31, 2024. "This quarter we continued to make progress as a Canada-focused pure-play industrial REIT" commented Kelly Hanczyk, CEO of Nexus Industrial REIT. "We completed construction at our Park St. intensification project in Regina on schedule, and the primary tenant has moved in. Our three other development projects remain on track and will begin cash flowing throughout the year. Notably, our Hubrey Rd. expansion in London, Ontario is now leased, effective July 1st. "As expected, this quarter was impacted by two temporary vacancies as our tenants transitioned to larger spaces within our portfolio, which impacted our payout ratio in the quarter. This presents another exciting growth opportunity for Nexus, as the properties will be re-tenanted shortly, while also freeing up prime development land. "I am confident in our strategy and look forward to realizing the benefits of our development projects, rent lift, and renewals over the next several years."First Quarter 2024 Highlights: Net income increased by $40.0 million year over year to $43.6 million, driven by an increase in the fair value of investment properties. Net operating income ("NOI")(1) increased 14.8% year over year to $29.5 million from the acquisition of high-quality, tenanted income-producing industrial properties. Completed construction of a new 312,000 sq. ft. built-to-suit distribution centre in Regina, Saskatchewan. The primary tenant took occupancy effective April 1, and the project is expected to deliver a 7.5% return. Announced a planned portfolio optimization by divesting $200 million of legacy office, retail, and non-core industrial properties in the second half of 2024. Completed the acquisition of a 102,000 sq. ft. industrial property in Kelowna BC for $35 million at a cap rate of 7.1%. Upsized its unsecured credit facility by $100 million to $625 million and extended the maturity to March 2027. Normalized FFO(1) per unit was $0.163 and Normalized AFFO(1) per unit was $0.134. NAV(1) per unit of $13.09 grew $0.96 or 7.9% versus a year ago. (1)   Non-IFRS Financial Measure Summary of Results Summary of Results                     (In thousands of Canadian dollars, except per unit amounts) Three months ended March 31     2024   2023   Financial Results $   $   Property revenues 41,597   37,476   Net operating income (NOI) 29,537   25,728   Net income (loss) 43,671   3,717                           Financial Highlights     Funds from operations (FFO) (1) 14,355   16,448   Normalized FFO (1)(2) 15,243   16,451   Adjusted funds from operations (AFFO) (1) 11,588   13,948   Normalized AFFO (1)(2) 12,476   13,951   Same Property NOI (1) 23,657   24,013   Distributions declared (3) 14,940   14,042                   Weighted average units outstanding (000s) - basic (4) 93,341   87,741   Weighted average units outstanding (000s) - diluted (4) 93,448   87,843           Per unit amounts:     Distributions per unit - basic (3)(4) 0.160   0.160   FFO per unit - basic (1)(4) 0.154   0.187   Normalized FFO per unit - basic (1)(2)(4) 0.163   0.187   AFFO per unit - basic (1)(4) 0.124   0.159   Normalized AFFO per unit - basic (1)(2)(4) 0.134   0.159           NAV per unit (1) 13.09   12.13           Normalized AFFO payout ratio - basic (1)(2)(3) 119.8 % 100.7 % Total Indebtedness Ratio 49.3 % 47.3 % Estimated spread between industrial portfolio market and in-place rents 25.3 % 21.8 %         (1)  Non-IFRS Financial Measure (2) See Appendix A – Non-IFRS Financial Measures (3) Includes distributions payable to holders of Class B LP Units which are accounted for as interest expense in the consolidated financial statements. (4) Weighted average number of units includes the Class B LP Units.     Non-IFRS Measures Included in the tables above and elsewhere in this news release are non-IFRS financial 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. Certain additional disclosures for these non-IFRS financial measures have been incorporated by reference and can be found on page 3 in the REIT's Management's Discussion and Analysis for the three-month ended March 31, 2024, available on SEDAR at www.sedarplus.ca and on the REIT's website under Investor Relations. See Appendix A of this earnings release for a reconciliation of the non-IFRS financial measures to the primary financial statement measures. NOI For the three months ended March 31, 2024, NOI of $29.5 million was $3.8 million higher than Q1 2023, which was primarily due to $4.4 million relating to acquisitions completed subsequent to Q1 2023, $0.2 million relating to higher straight-line rents largely attributed to recent acquisitions, partially offset by $0.7 million relating to dispositions made since Q1 2023, and a reduction in Same Property NOI of $0.4 million principally due to anticipated vacancy in the portfolio totaling approximately $0.5 million, partially offset by rental steps, CPI increase and lease renewals totaling $0.1 million. Fair value adjustment of investment properties The fair value adjustment of investment properties for the three months ended March 31, 2024, totaled $15.2 million, which was primarily due to: $8.4 million of fair value gains in respect of properties held for development based on development progress to date relative to the as-completed fair value, and $9.9 million of fair value gains relating to changes in stabilized NOI. Partially offsetting this was $2.9 million of capital expenditures fair valued to zero and $0.2 million of transaction costs due acquisitions completed during the quarter. Outlook The REIT is focused on delivering total unitholder return through profitable long-term growth, and by pursing its strategy as a Canada-focused pure-play industrial REIT. Through the remainder of 2024, the REIT expects to benefit from positive rental fundamentals in the markets in which it has leases expiring. Overall, the REIT anticipates mid-single digit same-property NOI growth in its industrial portfolio for the full year. In the first quarter of 2024, the REIT finalized construction at its Savage Rd. sports complex in Richmond, BC, and the primary tenant is expected to take occupancy shortly. In 2024, the REIT expects to benefit from the completion of four significant development projects. Combined, these properties will add annual stabilized NOI of over $10 million when complete: In the second quarter of 2024, the REIT completed the Park Street intensification project in Regina, SK. The primary tenant took possession on April 1st, and once fully tenanted, will contribute an estimated yield of 7.5% on total development costs of $48 million. In the third quarter of 2024, the REIT expects to complete the 96,000 sq ft Hubrey Rd. expansion project in London, ON, and ...