NXR.UN Nexus Industrial REIT

Nexus Industrial REIT (TSX:NXR.UN) (“Nexus” or the “REIT”) is pleased to announce that it has entered into an agreement to sell to a syndicate of underwriters led by BMO Capital Markets (the “Underwriters”), on a bought deal basis, 7,300,000 trust units of the REIT (“Units”) at a price of $10.30 per Unit (“Offering Price”) for gross proceeds to the REIT of approximately $75 million (the “Offering”). In addition, the REIT has also granted the Underwriters an option (the “Over-Allotment Option”), exercisable at any time, in whole or in part, for a period of 30 days following the closing of the Offering to purchase up to an additional 1,095,000 Units at the Offering Price, which, if exercised in full, would increase the gross proceeds of the Offering to approximately $86 million.

The REIT intends to use the net proceeds from the Offering to fund the acquisition of two new-build institutional-quality single tenant industrial distribution properties currently under contract (the “Acquisitions”) totaling approximately 330,000 square feet, and for general business purposes. The Acquisitions are located in the Greater Toronto Area and Greater Montreal Area and are currently under construction. The Acquisitions are estimated to be completed in the first half of 2023, upon rent commencement at each property. The REIT also announced today the acquisition of a newly expanded single tenant industrial distribution property located in Southwestern Ontario currently under contract (the “SW Ontario Acquisition”) totaling approximately 305,000 square feet.

Kelly Hanczyk, the REIT’s Chief Executive Officer, stated that “Nexus continues to execute on its strategy of aggregating an institutional quality portfolio of industrial assets within our target markets across Canada. We have been working diligently over the last several years to forge solid off market acquisition opportunities within the sector that are coming to fruition. The acquisitions announced today allow us to increase our presence in the highly desirable Greater Toronto and Greater Montreal markets and expand our footprint in the London node of Southwest Ontario, which continue to see very positive tailwinds in Industrial fundamentals. We anticipate the majority of our acquisition strategy going forward will focus on these areas, which we expect to provide an attractive blended going-in yield along with strong embedded annual rent growth in the existing leases.”

The Offering

The Units under the Offering will be offered in all of the provinces and territories of Canada, other than Québec, pursuant to a prospectus supplement 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 December 8, 2022.

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.

The Acquisitions and SW Ontario Acquisition

The REIT has entered into conditional agreements or waived diligence conditions to acquire the following three properties:

• Approximately 140,000 square foot brand new, single tenant industrial distribution property in the Greater Toronto Area (the “GTA Acquisition”). The GTA Acquisition features 32-foot clear heights, 28 loading doors, and two dock doors. The lease has a seven-year term, starting upon construction completion.
• Approximately 190,000 square foot brand new, single tenant industrial distribution property in the Greater Montreal Area (the “GMA Acquisition”). The GMA Acquisition features 32-foot clear heights, 28 truck-level doors and 1 drive-in door. The lease has a seven-year term, starting upon construction completion.
• Approximately 305,000 square foot single tenant industrial distribution property in Southwestern Ontario. The SW Ontario Acquisition includes a brand new ~160,000 square foot expansion. The SW Ontario Acquisition features 32-foot clear heights, 45 truck-level doors and 8 drive-in doors. The lease has a 10-year term, starting upon construction completion. The SW Ontario Acquisition will, subject to Toronto Stock Exchange approval, be funded by the issuance of 2,494,272 Class B LP units at the Offering Price and the assumption of existing mortgage financing.

The Acquisitions and SW Ontario Acquisition are being completed for a combined purchase price of approximately $173.3 million at a weighted average going-in capitalization rate of approximately 4.9% and weighted average annual rent escalations of approximately 3.2%.

About Nexus Industrial 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 113 properties (including two properties held for development in which the REIT has an 80% interest) comprising approximately 11.1 million square feet of gross leasable area. The REIT has approximately 59,041,000 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 20,534,749 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, the intended use of the net proceeds of the Offering, the terms of, timing for completion of and source of funding for the Acquisitions, the waiver of due diligence conditions and statements regarding the satisfaction of other conditions, including Toronto Stock Exchange approvals, the REIT’s expected acquisition strategy, and the expectations that future acquisitions will provide an attractive blended going-in yield. 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.

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.