Nexus REIT to Acquire $64 Million of Western Canadian Properties

[SELLING $11.3 MILLION IN NON-CORE PROPERTY DISPOSITIONS]

TORONTO and MONTREAL, March 26, 2018 /CNW/ - Nexus Real Estate Investment Trust (the "REIT") (TSXV: NXR.UN) is pleased to announce that it has entered into conditional agreements to acquire three industrial properties for an aggregate purchase price of approximately $64 million, to be partially satisfied by the issuance to the vendors of approximately $22.7 million of units at a premium to market issue price of $2.10 per unit. The REIT has also entered into conditional agreements for the sale of two non-core properties in Kelowna, BC and Yellowknife, NWT for $11.3 million.

"We are extremely pleased to announce these acquisitions which we believe will not only generate increases in our AFFO per unit but should result in significant improvement in our NAV/unit once the repurposing associated with the Richmond assets is complete. The vendors realize the attractiveness of becoming long-term Nexus REIT unitholders as evidenced by a significant portion of the purchase price being paid in units (at a premium to today's trading price). With these acquisitions, purchased at a significant discount to appraised values, Nexus will grow its market capitalization by approximately $22.7 million without the need to raise equity in the public markets. We are currently in negotiations with several additional vendors for similar unit structured deals and hope that these are the first in a series of transactions that we will announce in the near future and complete in the second quarter." stated Kelly Hanczyk, the REIT's Chief Executive Officer.

The acquisitions remain subject to further due diligence and customary closing conditions, including TSXV and other necessary regulatory approvals. 

Highlights

• In partial satisfaction of the aggregate purchase price, approximately $22.7 million of units will be issued to the vendors at $2.10 per unit, which is a premium to the current market price of the REIT's units, increasing the REIT's market capitalization without the need to raise equity in the public markets.
  
  
• The Richmond, British Columbia properties are two industrial buildings being acquired for a contractual purchase price of $57.4 million with an attractive 6.5% capitalization rate. There is a current appraisal (March 2018) which values the assets at approximately $81 million. The acquisition has repurposing potential in 12-18 months' time that would further enhance the REIT's AFFO per unit and Net Asset Value per unit.
  
  
• The Regina, Saskatchewan asset is a multi-tenant industrial property which the REIT will acquire for a purchase price of $6.6 million and a going in cap rate of 7.5%. The property consists of two single buildings. The vendor will be taking $2.4 million in units at $2.10 per unit as partial consideration.
  
  
• Two non-core properties in Kelowna, BC and Yellowknife, NWT are being sold for a total of $11.3 million in two separate transactions; the sale price is $2.6 million greater than the total original purchase prices.
  
  
• $22.7 million of the approximately $64 million aggregate purchase price will be satisfied through the issuance of units, with the remainder payable in cash generated from approximately $6.9 million of net proceeds of the dispositions, and cash from new mortgage financing to be placed on the properties.

The acquisitions remain subject to further due diligence and customary closing conditions, including TSXV and other necessary regulatory approvals. 

Property Acquisitions

The Richmond Property

The Richmond property transaction is the culmination of a relationship building process between REIT management and the vendor that occurred over a three-year period. The asset is being purchased for $57.4 million, of which the vendor will be receiving $20.3 million in Class B LP units of a subsidiary limited partnership of the REIT, and will become a significant unitholder. The LP Units are intended to be economically equivalent to and exchangeable for REIT Units on a one-for-one basis, and will be accompanied by special voting units of the REIT that provide their holders with equivalent voting rights to holders of REIT Units. 

The site consists of two buildings:

• Building #1 is a 117,490 sq. ft industrial building that is currently being repurposed into a multi-tenant kids' sports mall concept that is generating premium rents in the tight greater Vancouver market.
  
  
• Building #2 is a 60,000 sq. ft industrial property with a single multinational tenant that manufactures and services power sources and other equipment in the marine and energy markets.

The REIT intends to enter into a construction management agreement with the vendor to repurpose building #2 in the near future, continuing with the sports mall concept and increasing the total gross leasable area. Upon completion, the REIT expects to see a significant increase in net operating income from the property, resulting in an increase in the fair value that the property is recorded on the REIT's books for, and in net asset value (NAV) per unit. The Vendor of the Richmond property transaction has contracted to acquire the Kelowna property from the REIT.

The Regina Property

The Regina Property is a 38,690 sq. ft, multi-tenant industrial property being acquired for a contractual purchase price of $6.6 million and a going in cap rate of 7.5%. The property consists of two buildings anchored by Day & Ross Shipping. The vendor will be taking $2.4 million in units at $2.10 per unit as partial purchase price consideration.

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 62 properties comprising approximately 3.5 million square feet of rentable area. The REIT has approximately 88,917,000 units issued and outstanding. Additionally, there are approximately 5,440,000 Class B LP units of subsidiary limited partnerships of the REIT issued and outstanding.

Forward Looking Statements

Certain statements contained in this new 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.

Non-IFRS Measures

Included in this news release are non-IFRS measures such as Adjusted Funds from Operations (or AFFO) 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.

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

please contact: Kelly C. Hanczyk, President and CEO at 416-906-2379 or Rob Chiasson, CFO at [phone]