annual general meeting - nexus reit 2017… · july 16, 2014: completes the acquisition of three...

NEXUS REIT BUILDING THE

FOUNDATION FOR THE NEXT CANADIAN

“BLUE CHIP” REIT

ANNUAL GENERAL MEETING

June 28, 2017NEXUS REAL ESTATE INVESTMENT TRUST

2INVESTOR PRESENTATION | JUNE 2017NEXUS

ABOUT THIS PRESENTATION

No reliance may be placed for any purpose whatsoever on the information contained in this presentation or the completeness or accuracy of such information. Norepresentation or warranty, express or implied, is given by or on behalf of Nexus REIT (the “REIT”), or its unitholders, trustees, officers or employees or any otherperson as to the accuracy or completeness of the information or opinions contained in this presentation, and no liability is accepted for any such information or opinions.

FORWARD-LOOKING INFORMATION

This presentation contains 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 notanticipate”, 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, occuror be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance orachievements 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 thispresentation. Such forward-looking statements are based on a number of assumptions that may prove to be incorrect, including, but not limited to: the ability of the REITto obtain necessary financing or to be able to implement its business strategies; satisfy the requirements of the TSX Venture Exchange with respect to the plan ofarrangement; obtain unitholder approval with respect to the plan of arrangement; the level of activity in the retail, office and industrial commercial real estate markets inCanada, the real estate industry generally (including property ownership and tenant risks, liquidity of real estate investments, competition, government regulation,environmental matters, and fixed costs, recent market volatility and increased expenses) and the economy generally. While the REIT anticipates that subsequent eventsand developments may cause its views to change, the REIT specifically disclaims any obligation to update these forward-looking statements. These forward-lookingstatements should not be relied upon as representing the REIT’s views as of any date subsequent to the date of this presentation. Although the REIT has attempted toidentify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be otherfactors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to beaccurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance onforward-looking statements. The factors identified above are not intended to represent a complete list of the factors that could affect the REIT.

This presentation includes industry data and forecasts obtained from independent industry publications, market research and analyst reports, surveys and other publiclyavailable sources and in certain cases, information is based on the REIT’s own analysis and information or its analysis of third-party information. Although the REITbelieves these sources to be generally reliable, market and industry data is subject to interpretation and cannot be verified with complete certainty due to limits on theavailability and reliability of raw data, the voluntary nature of the data gathering process and other limitations and uncertainties inherent in any statistical survey.Accordingly, the accuracy and completeness of this data is not guaranteed. The REIT has not independently verified any of the data from third party sources referred toin this presentation nor ascertained the underlying assumptions relied upon by such sources.

All figures in C$ unless otherwise noted.

NOTICE TO THE READER


NEXUS REIT

Picture of Nexus REIT as Section Divider

Evolution of Nexus REIT

2017 ANNUAL GENERAL MEETING


$0.0

$20.0

$40.0

$60.0

$80.0

$100.0

$120.0

$140.0

$160.0

$180.0

$200.0

13-Dec-12 13-May-13 13-Oct-13 13-Mar-14 13-Aug-14 13-Jan-15 13-Jun-15 13-Nov-15 13-Apr-16 13-Sep-16 13-Feb-17

Ne

xu

s M

ark

et

Ca

p (

$M

)Key Milestones

1.2.

3.

4. 5. 6.

7.

9.

8.

Key Events

Total return since

inception: 37.7%

Jan. 14, 2014: Completes the acquisition of 10 properties for $68.0M partly funded through a VTB to TriWest for $34.0M and the

conversion to a REIT

Feb. 4, 2014: Announces first monthly cash distribution in the amount of $0.00742 per unit

July 16, 2014: Completes the acquisition of three properties $36.7M partly funded by a $20.0M public offering

July - Aug. 2015: Completes the acquisition of three properties for $38.0M partly funded through a VTB of $14.3M

Dec. 17, 2015 Completes the acquisition of two properties for $12.1M partly funded through a VTB of $5.3M

Aug. 22, 2016: Completes the acquisition of a property for approximately $8.4M partly funded through a VTB of $1.9M

Apr. 3, 2017: Completes the merger of Edgefront and Nobel to create Nexus, a $300M diversified REIT

June 6, 2017: Announces a $147M strategic acquisition (the Sandalwood Portfolio), financed through a $55M bought deal

equity offering and a $15 concurrent private placement by RFA Capital

June 20, 2017 Pro-forma market cap after the Sandalwood Portfolio acquisition

1

2

3

4

5

6

7

8

9


1) Peer average is the simple average of Pro REIT, BTB REIT, True North Commercial REIT, Summit Industrial Income REIT, and Melcor REIT (where data is available)

2) AFFO payout ratio adjusted for unit based asset management and trustee fees

Weighted Average Lease Term (years)

OccupancyDecreasing AFFO Payout Ratio

Debt to Assets

(1)

(1) (1)

(1)

Consistent Financial & Operating Performance

59% 60%

58%

49%

51%

49%

2014 2015 2016

Peer Average

Edgefront

95%

92%

94% 95%

92%

83%

2014 2015 2016

Peer Average

Edgefront(2)

5.9 5.4

5.2

11.9

9.8

8.3

2014 2015 2016

Peer Average

Edgefront

95% 95%

95%

100% 100% 100%

2014 2015 2016

Peer Average

Edgefront


Nexus – Canada’s Next “Blue Chip” REIT



• Diversified sector exposure and introduction into new geographical markets

• Immediate synergies driven by internalization of experienced management team

• Combined portfolio possesses the ability to deliver solid AFFO/unit growth

• Robust pipeline of high quality acquisition assets sourced through strategic partners

Canada’s Next Blue Chip REIT

• Single tenant, industrial focused REIT with 20 properties located

throughout Canada

• Portfolio consisted of 100% occupied industrial real estate assets

that were care free with contractual rent increases

• Supported by TriWest Capital Partners, one of Canada’s leading

private equity firms with ~$1.3 billion in AUM

• Growth oriented REIT with 16 commercial properties, 15 of which

were located in the Greater Montreal Area and one in Ottawa-

Gatineau

• Primary market focus was unique among junior REITs

• Strategic relationship with RFA Capital Partners, a real estate

private equity firm which has invested in over $15 billion of

commercial mortgages and real estate since 1996

✓✓

✓

✓

✓

Nobel Real Estate Investment Trust (“Nobel”)Edgefront Real Estate Investment Trust (“Edgefront”)

$125M in Market Cap

36 Properties Across Canada


1

2

3

8

4

2

2

7 1

6

Edgefront Properties

Industrial

Office

Retail

Mixed-Use

Nobel Properties

Nexus consists of a diversified portfolio of 36 properties located across Canada, combining Nobel’s asset diversity

with Edgefront’s geographic diversity

16

20

Nationwide Asset Base


1.2

0.8 2.0

Edgefront Nexus

$7.9

$3.0

$1.1 $12.0

Edgefront Nexus

$13.4

$7.0 $1.1 $21.5

Edgefront Nexus

Tenant LocationRemaining Lease

Term (years)

% of

Total Revenues

AB, NWT, BC, SK 8.4 26%

Lethbridge, AB 12.1 9%

Calgary, AB 7.5 8%

Grand Prairie, AB 8.9 6%

Dorval, QC 12.5 5%

1) After stabilization of 2045 Stanley

2) Shown at ownership interests

(2)

(1)(1)

Nobel portfolioStabilization of

2045 Stanley

Nobel portfolio

& G&A

synergies

Stabilization of

2045 Stanley

Nobel portfolio

& G&A

synergies

Stabilized NOI ($M)

NOI by Sector(1)Key Tenants

Stabilized AFFO ($M) GLA (M Sq. Ft.) NOI by Province/Territory(1)

Robust, Diversified Portfolio with Broad Tenant Base

40.0%

37.7%

6.4%

6.2%

5.9%3.4% 0.4%

AB QC BC SK ON NWT PEI

76.7%

16.3%

4.9% 2.1%

Industrial Office Mixed-Use Retail


1) Bsaed on issue price

2) EBITDA after stabilization of 2045 Stanley

3) Based on consensus analyst estimates

Nexus – Financial Metrics

Unit Price(1) (C$) $2.10

Basic Units Outstanding (M) 59.7

Market Capitalization(1) (C$M) $125.4

Cash (C$M) $2.3

Debt (C$M) $165.0

Enterprise Value (C$M) $288.0

Debt to EBITDA(2) multiple 9.4x

Debt to Gross Book Value (%) 57.0%

Interest Coverage(2) multiple 3.1x

Annual Distribution per Unit ($) $0.16

Yield (%) 7.6%

Analyst Consensus Information(3)

Consensus Target Price ($) $2.38

Consensus NAV per Unit ($) $2.28

Consensus 2017E AFFO Payout Ratio (%) 78.0%


Overview:• Privately held real estate investment and

asset management firm • One of Canada’s leading private equity firms

Founded: • 1996 • 1998

Strategic Partner: • Nobel • Edgefront

Experience in

Real Estate:

• Invests in office, retail, industrial and

multi-family properties in the major

Canadian markets as well as mortgages

and CMBS

• Over the past 20 years, has invested in

over $15B of commercial mortgages

• Indirectly own a significant amount of real

estate through current ownership of 17

companies

• Primarily focused on the industrial sector

in Western Canada

Headquarters: • Toronto, ON • Calgary, AB

Other:• Canada’s first and largest investor in non-

investment grade CMBS

• 19 years experience investing in 38

companies representing a broad cross-section

of the economy

Sourced

Acquisitions:• 26 acquisitions sourced through RFA • 14 acquisitions sourced through TriWest

Strong partnerships to provide pipeline for accretive growth

Strategic Relationships with Access to Quality Assets


Name Title

Board of TrusteesManagement Team

Experience

1) Also serves as a trustee

2) Chair of the board of trustees of Nexus

Kelly

Hanczyk(1) Co-CEO

• Former CEO of Edgefront REIT

• Former CEO and Trustee of TransGlobe

Apartment REIT

• Extensive experience in all disciplines of

industrial, commercial and residential

real estate

Jean

Teasdale(1) Co-CEO

• Former CEO of Nobel REIT

• CEO and Founder of Maestri Terra, a

real estate management and

development company

• Served as VP, Real Estate and

Commercial Services at Aeroport de

Montreal

• Extensive experience in real estate

development, management and

financing

Robert

ChiassonCFO

• Former CFO of Edgefront REIT

• Former Corporate Controller of InStorage

REIT

• Former Director of Accounting and

Finance of Samuel Manu-Tech

• Obtained the CPA, CA designation while

articling with KPMG

Lorne

Jacobson(2) Edgefront

• Co-founder and Vice Chairman of TriWest

Capital Partners

• Former partner of Bennett Jones LLP

Mario

ForgioneEdgefront

• Principal and Managing Partner of

Windermere Realty Corp.

• President and Co-Founder of Edgemere

Capital

• Former Managing Partner and Governor to

the OHL, of the Mississauga Ice Dogs

Brad Cutsey Edgefront

• President of InterRent REIT

• Former Managing Director, Real Estate

Investment Banking at Dundee Capital

Markets

Ben Rodney Nobel

• Principal and Managing Partner of RFA

Capital

• Has structured and closed over $15B of

Canadian real estate and mortgage

transactions

Nick

Lagopoulosn/a

• Principal and Managing Partner of RFA

Capital

• Previously with GE Capital and Credit

Suisse

NameFormer

BoardExperience

Leadership Team


Internalized Asset Management Structure

InterRent

Allied PropertiesMainstreet

First Capital Realty

Pure Industrial

CREITRioCan

Pure Multi-Fam

Killam Apt

Choice Properties

SmartREIT

CTGranite

H&RDream Office

CrombiePlaza Retail

Northview Apt Artis

CominarOneREIT

CAPREIT

Boardwalk REIT

8.0x

11.0x

14.0x

17.0x

20.0x

23.0x

26.0x

$0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 $9,000

2017E

P /

AF

FO

Market Cap (C$M)

Automotive

Slate Retail

Slate OfficeSummit

Melcor

PROMorguard

Agellan

Dream Global

Inovalis

Dream Industrial

BTB

WPT

Morguard NAR

8.0x

9.0x

10.0x

11.0x

12.0x

13.0x

14.0x

15.0x

16.0x

$0 $200 $400 $600 $800 $1,000 $1,200 $1,400

201

7E

P/

AF

FO

Market Cap (C$M)

Internally Managed REITs

Externally Managed REITs

NAR

Nexus is partly benefiting from a valuation bump related to its recent internalization; REITs with internalized asset manager

functions typically trade ~5x higher (on a P/AFFO basis), even when considering size

<$1B Market CapAverage: 16.8x

<$1B Market CapAverage: 12.0x


10500 Avenue Ryan – Dorval, QC 10340 Cote de Liesse – Montreal, QC

955 Boulevard Michele-Bohec – Blainville, QC 1600 Rue Montgolfier – Laval, QC

❖ Located in Dorval in close proximity to the Trans Canada Highway; fully

occupied by Dicom Transportation Group Canada Inc. on a lease expiring

in December 2029

❖ Newly renovated office property located in the borough of Lachine in

Montreal, near the Pierre-Elliott-Trudeau international airport and Highways

20 & 40; tenants include Gestidev and HollisWealth Management

❖ Newly built office building located near Highway 15 in Blainville’s business

park; the main tenants are Above Security (part of the Hitachi Group),

Public Works and Government Services Canada, and Sun Life Financial

with leases expiring between May 2024 and May 2028

❖ Strategically located at the corner of Highway 13 and Boulevard Saint-Martin,

the fully occupied building includes the headquarters of Crescendo Systems

Corporation, occupying 21,031 sq. ft. under a lease expiring in 2025, and

Shimadzu Canada under a lease expiring in 2021

GLA (sq ft) 52,372

Type Office

Occupancy 100.0%

GLA (sq ft) 26,281

Type Office

Occupancy 95.0%

GLA (sq ft) 33,461

Type Office

Occupancy 100.0%

GLA (sq ft) 27,097

Type Office

Occupancy 100.0%

Select Nexus Properties


3501 Griffen Rd. North – Lethbridge, AB 4700 & 4750 102 Avenue – Calgary, AB

455 Welham Road – Barrie, ON 12104 & 12110, 17th Street – Edmonton, AB

❖ Acquired on July 15, 2014 and leased under a long-term lease to Triple M

housing that expires on July 14, 2029. Located in close proximity to

Highway 3.

❖ Located in close proximity to Highway 2 and acquired on August 25, 2015,

this property is leased under a long-term lease to Canada Cartage that

expires on December 31, 2024

❖ Located in close proximity to Highway 400 and acquired on July 17, 2015,

this property is leased under a long-term lease to Prodomax Automation

that expires on June 16, 2025

❖ Acquired on January 14, 2014 and leased under a long-term lease to

Westcan Bulk Transport that expires on November 14, 2025. Located in

close proximity to Highway 100.

GLA (sq ft): 229,000

Land (acres) 31.4

Occupancy: 100%

Built/Ren: 2008 / 2012

GLA (sq ft): 29,471

Land (acres) 13.5

Occupancy: 100%

Built/Ren: 2009

GLA (sq ft): 109,366

Land (acres) 7.3

Occupancy: 100%

Built/Ren: 1998 / 2015

GLA (sq ft): 116,582

Land (acres) 34.0

Occupancy: 100%

Built/Ren: 1973 / 2011

Select Nexus Properties


Overview of the Sandalwood Portfolio Acquisition



Asset Overview:

• 8 office properties (7 Class I office properties)

• 1 industrial property

• 17 retail properties

Acquisition Cap Rate: • 7.3% (Purchase price of ~$147M, $97 per sq. ft.)

NTM NOI: • $10.8 million

Debt / GBV: • 56.5%

GLA:• 1.5 million sq. ft. (at 100% interest in 2 properties

and 50% interest in 24 properties)

Financing:

• Assumption of $75.8M in debt and new mortgage

financing of $8.5M

• ~$55M bought deal public equity offering

• Concurrent $15M private placement with RFA Capital

• Vendor to receive a portion of purchase price in

Nexus units via VTB of $2.0M

Target AFFO Accretion: • 4.0% - 5.0% (at issue price of $2.10)

Background to Transaction

Sandalwood Transaction

Map of Quebec Properties

Asset / Transaction Highlights

Greater

Montreal Area

Greater

Quebec City

Area

• On June 5, 2017, Nexus announced and waived diligence and

certain other conditions in its agreements to acquire a portfolio

of assets located in GMA and GQCA from vending entities

associated with and/or related to Sandalwood Management Inc.

("Sandalwood"), a private real estate firm dually headquartered

in Austin, Texas and Montreal, Quebec


Sandalwood Portfolio Acquisition – Highlights

Immediate accretion of 4-5% to adjusted funds from operations per unit

1

2

3

4

5

Attractive valuation metrics

• Proportionate interest in Sandalwood is being acquired at an attractive 7.3% cap rate

• Off-market transaction sourced through Nexus’ strong relationship with RFA Capital

RFA Capital will invest an additional $15M in Nexus through a concurrent private

placement

Strong tenant roster with many investment grade credit-rated tenants

• Canadian Tire, Metro, Dollarama, Provigo, Staples, IBM, Xerox, BMO and National Bank

Significantly enhances Nexus’ position as a leading diversified REIT

• 78% increase in owned GLA

• ~50% increase in gross book value (~$450M)

• Increased presence in the stable GMA and GQCA markets

6Partnership with Sandalwood provides access to a proprietary pipeline of potential

future acquisitions (above and beyond the ROFO)


Overview of Select Properties

Select Old Montreal Properties

Select Greater Quebec City Area Properties


Portfolio and Tenant Information

Key TenantsPortfolio Overview

Pro Forma NOI

1) At Nexus ownership interests; Portfolio approximates ~2.5M sq. ft. at 100% interest

Tenant GLA % Credit Rating

9.5% BBB+

9.2% BBB

3.9% BBB

2.6% BB+

2.2% BBB

1.8% A+

0.7% AA-

0.5% A

0.2% A+

Total 30.5%

Property Name Location(2) Owned

%

GLA

(Sq. Ft.)(1)

Asset Class

LE Centre de Victoriaville GQCA 100% 375,788 Retail

400 Place St. John St John 100% 159,927 Office

Les Halles d'Anjou GMA 50% 52,699 Retail

Place L'Ormiere GQCA 50% 57,198 Retail

Place Liray GQCA 50% 22,310 Retail

LE Centre Nicolet GMA 50% 44,192 Retail

Place Sorel GMA 50% 58,174 Retail

LE Centre Sherbrooke GMA 50% 85,477 Retail

Place Orleans GQCA 50% 16,206 Retail

Galeries Orford GMA 50% 66,860 Retail

Galeries de L'Erable GQCA 50% 49,806 Retail

Place Mont-Marie GQCA 50% 21,638 Retail

LE Centre Ste-Anne GQCA 50% 44,313 Retail

Place Cote Joyeuse GQCA 50% 32,231 Retail

LE Centre la Pocatiere GQCA 50% 104,400 Retail

LE Centre Forestville Forestville 50% 27,981 Retail

Les Galeries Taschereau GMA 50% 106,991 Retail

LE Centre Brossard GMA 50% 21,675 Retail

329 de la Commune GMA 50% 10,563 Class I

353 St. Nicolas GMA 50% 17,816 Class I

410 St. Nicolas GMA 50% 77,466 Class I

360 Notre Dame GMA 50% 14,950 Class I

63 des Bresoles GMA 50% 19,839 Class I

321 de la Commune GMA 50% 5,751 Class I

127, 137 & 145 St. Pierre GMA 50% 16,839 Class I

425 Rue Guy GMA 50% 20,484 Industrial

1,531,571

51.3%

25.7%

19.7%

3.3%

Industrial Retail Office Mixed-Use

41.0%

34.9%

12.6%

3.9%

3.6%2.3% 1.7%

GMA

Western Canada

GQCA

ON

Maritime

NWT

GOA


Edgefront Nexus Nexus Pro Forma

Market Capitalization ($M) $87.1 $125.4 $197.4

Enterprise Value ($M) $171.0 $288.0 $449.8

Assets ($M) $176.0 $289.5 $446.9

Debt / Assets 48.1% 57.0% 57.0%

GLA (Sq. Ft. in Ms) - At Interest % 1.2 2.0 3.5

Number of Properties (1) 20 36 62

Nexus Market Metrics – Post Sandalwood Portfolio Acquisition

1) Includes 50%-owned properties


Focus for 2017

Lease up and

Repositioning of

2045 Stanley

Internal Growth

Opportunities

Integration of the

Edgefront and Nobel

Platforms and

Sandalwood

Portfolio

Identification and

Execution of Off

Market Pipeline

Acquisitions

1 2

34


Kelly HanczykCo-CEO

Phone: (416) 906-2379

Email: [email protected]

Jean TeasdaleCo-CEO

Phone: (514) 840-9339


Contact Information

Rob ChiassonCFO

Phone: (403) 817-9496


annual general meeting - nexus reit 2017… · july 16, 2014: completes the acquisition of three...

Documents