Release Date: May 15, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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Nexus Industrial REIT (EFRTF) completed the sale of 15 out of 16 retail properties, marking a strategic repositioning to focus solely on industrial real estate.
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The company’s industrial occupancy increased to 97% in the first quarter, demonstrating strong operational performance.
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Net operating income (NOI) for the industrial portfolio improved by 3.4% compared to the previous quarter, driven by acquisitions, organic growth, and development.
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Nexus Industrial REIT (EFRTF) has successfully renewed over 80% of the gross leasable area set to expire in 2025, with a 30% growth on expiring rents.
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The company is well-positioned to weather economic challenges, with only 6% of NOI related to the auto manufacturing supply chain and 85% derived from Canadian distribution and third-party logistics tenants.
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Net income decreased by $10.5 million compared to the previous year, primarily due to a higher loss on the fair value adjustment of derivative financial instruments.
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The company faces challenges in leasing a 115,000 square foot project in Hamilton, which has been difficult due to market conditions.
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Two tenants have entered creditor protection, potentially impacting 2025 results, although they have continued to pay rent through April.
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Interest expense increased by $200,000 compared to the same period last year, partly due to lower capitalization of interest expense on development properties.
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The company still holds 50% ownership in two office properties, which are expected to be a longer-term project to sell due to their low value and partnership agreements.
Q: Can you explain how the Class B issuance for the Richmond expansion will work in terms of payment milestones? A: The payments will be released as construction progresses, with milestones such as drawings, permits, and foundation completion. These will be released in increments, such as 5% or 10%, as the project advances. (Kelly Hanzick, CEO)
Q: What is the timeline for the Richmond expansion project? A: We expect to commence by the end of the third quarter, with completion anticipated in about one year. (Kelly Hanzick, CEO)
Q: With the portfolio rebalancing complete, should we expect further capital recycling or high grading on the industrial side? A: The portfolio quality is strong, but we have interest in some assets out west. We may recycle capital from about five assets and reinvest in opportunities, particularly in the Montreal area, which could provide positive growth. (Kelly Hanzick, CEO)