Nexus Industrial REIT

Q2 net operating income rose 6.2% year over year, or CAD 2 million, to CAD 34.1 million. Normalized FFO was CAD 17.9 million, and normalized AFFO per unit was CAD 0.154 versus CAD 0.16 a year ago. Net loss was CAD 12.8 million versus a net loss of CAD 7.6 million last year, driven by lower fair value adjustments on derivatives and Class B LP units and higher net interest expense. NAV per unit was CAD 13.23, down CAD 0.06 from last quarter, and the weighted average cap rate moved to 5.95% from 5.94%. For the full year 2026, management reiterated mid-single-digit industrial same-property NOI growth and expects the normalized AFFO payout ratio to average well below 100%; Kelly Hanczyk also said the year-to-date payout ratio was 99.3% and the REIT remains on track for a full-year payout ratio below 100%.

Kelly Hanczyk said Q2 was an excellent quarter, emphasizing sequential and year-over-year growth in revenue, NOI, normalized FFO, and adjusted EBITDA. He framed the quarter around three strategic advances: gaining an investment-grade rating and issuing inaugural bonds, recycling capital through dispositions, and advancing development projects in British Columbia. His tone on the new Richmond and Kelowna opportunities was notably optimistic, describing them as a potential “diamond in the rough” and saying the company may have found a unique, high-return use for available power and existing infrastructure.

Mike Rawle focused on the drivers of the quarter’s financial performance: Q2 NOI of CAD 34.1 million, normalized AFFO per unit of CAD 0.154, and net interest expense of CAD 14.7 million, which was CAD 2 million higher than a year ago due to a higher debt balance and a non-cash write-off tied to early retirement of a CAD 200 million term loan. He also noted G&A of CAD 2.2 million, flat year over year, and explained that the carrying value of investment properties fell by CAD 15.7 million, mainly because of the CAD 14.1 million South Service Road land sale and other fair value adjustments. He highlighted NAV per unit of CAD 13.23 and said the Q2 straight-line rent run rate is more indicative of future performance than Q1, while also stating the portfolio’s underlying rent steps are typically 2%-3% per year.

Analysts focused heavily on the Richmond and Kelowna development pivot into data infrastructure, asking how advanced the plan is, what still needs to happen before details can be disclosed, and what kind of tenants are being targeted. Management said they are waiting for leases to be “papered,” pricing to be finalized on a kilowatt-hour basis, and additional progress on permitting and construction; they also said they have available power, have been approved for more power, and are speaking with a broad range of potential users from large tech companies to smaller colocation groups. Analysts also pressed on weak Alberta leasing spreads and the outlook for same-property NOI; management said the weak spread was an anomaly tied to an old MasTec lease and reiterated confidence in mid-single-digit same-property NOI growth this year, with possible acceleration in the back half.