Together, the acquisitions will add about 1.8 million square feet to the Nexus portfolio, including a new building to be constructed at a site in Ajax in the Greater Toronto Area.
The properties are:
– a portfolio of six properties in London, Ont., which total almost 1.2 million square feet, for $103.5 million;
– two industrial buildings in Edmonton with 108,156 square feet of GLA for $14 million; and
– a previously announced sale which closed on Dec. 31 for a 50 per cent interest in a 500,000 square foot industrial property in Ajax for $28.5 million.
The two portfolio sales remain conditional, but are expected to close in March and April.
“2021 is looking to be a breakout year for the REIT. We’re very excited about announcing these acquisitions and the prospects for the REIT’s near-term growth,” said Nexus CEO Kelly Hanczyk in the announcement. “We continue to have a strong pipeline of potential acquisitions and expect 2021 will be a solid year of growth for the REIT.
“We are also still very much committed to graduating to the TSX, combined with a 4-to-1-unit consolidation, and hope to provide an update on that front very shortly.”
The London portfolio
Nexus says in its announcement the six London properties are “well-tenanted and well-maintained”.
The price represents a going-in six per cent capitalization rate, with $65,600,150 to be satisfied by issuing Class B limited partnership units at $1.91 per unit. The REIT anticipates assuming existing debt and placing new financing on some of the properties to fund the remainder of the purchase price.
“We’ve been in discussions with the vendors of the London portfolio and building a relationship with them for several years now, culminating in this sizeable off-market deal,” Hanczyk said in the release. “The vendors have demonstrated their faith in the REIT, contracting to take back a significant portion of the purchase price in units. We look forward to a continued strong relationship with this vendor which will hopefully lead to additional acquisition opportunities in the future.”
The vendor, which Nexus says has long-standing relationships with many of the tenants of the properties and excellent knowledge of the London market, will continue to manage the properties. Nexus expects leasing income to increase as current leases expire and are renewed at market rates.
The Edmonton and Ajax properties
One of the two buildings under contract in Edmonton is single-tenanted, while the other is multi-tenanted. The buildings are fully leased to tenants not engaged in the oil and gas industry.
Nexus plans to satisfy $7 million of the purchase price by issuing Class B limited partnership units at $2.05 per unit.
At the Ajax property, which is located just east of Toronto, a new 95,000 square foot building is planned to bring the site up to the 500,000 square feet of leasable space. It will accommodate expansion for the property’s major tenant, with that firm taking responsibility for costs and construction management. The REIT will receive a share of income from the closing date.
“We are also quite pleased to have completed the acquisition of our 50 per cent interest in a well-tenanted Ajax, Ontario industrial property, which we now co-own with the vendor, who we’ve also developed an excellent relationship with over the years,” Hanczyk said in the release.
About Nexus REIT
Nexus is a growth-oriented real estate investment trust involved in the acquisition, ownership and management of industrial, office and retail properties in primary and secondary markets in North America.
It owns a portfolio of 75 properties comprising approximately 4.4 million square feet of rentable area.