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Nexus Real Estate Investment Trust (TSE:NXR.UN)
TSX:NXR.UN
RESEARCH TOOLSreports
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Nexus Real Estate Investment
(TSX:NXR.UN)
75Outperform
Positive Factors
Balance Sheet and Portfolio
Dispositions are favorably impacting the balance sheet and portfolio composition.
Development Projects
Lease-up/completion of several development projects is also a source of potential upside.
Financial Performance
Q324 results were ahead of expectations, indicating strong performance.
Negative Factors
Legacy Properties
Lingering concerns exist with respect to certain legacy properties within the portfolio.
Leverage and Payout Ratio
NXR's above-average leverage and payout ratio compared to peers reflect some financial concerns.
Nexus Real Estate Investment (NXR.UN) vs. S&P 500 (SPY)
Market Cap
$651.08M
Dividend Yield9.65%
Average Volume (3M)212.17K
Price to Earnings (P/E)7.1
Beta (1Y)1.29
Revenue Growth9.64%
EPS Growth-45.71%
CountryCA
Employees19
SectorReal Estate
Sector Strength73
IndustryREIT - Industrial
Share Statistics
EPS (TTM)0.97
Shares Outstanding70,949,550
10 Day Avg. Volume174,838
30 Day Avg. Volume212,173
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)2.80
Price to Cash Flow (P/CF)13.90
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$8.49Price Target Upside23.52% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering6
Nexus Real Estate Investment Business Overview & Revenue Model
Company DescriptionNexus Real Estate Investment (NXR.UN) is a Canadian real estate investment trust (REIT) that focuses on acquiring, owning, and managing a diversified portfolio of commercial properties. The company operates primarily in the industrial, office, and retail sectors, providing investors with opportunities to gain exposure to the real estate market through its income-generating properties. Nexus REIT aims to deliver stable and growing cash distributions to its unitholders by strategically expanding its property portfolio and optimizing property management.
How the Company Makes MoneyNexus Real Estate Investment makes money primarily through the acquisition, ownership, and management of commercial properties that generate rental income. The company's revenue model is centered around leasing its industrial, office, and retail properties to a variety of tenants, which provides a steady stream of rental income. This income is further enhanced by strategic property acquisitions that increase the portfolio's value and potential rent yields. Additionally, Nexus REIT may engage in property development and repositioning, adding value to its holdings over time. The company's earnings are influenced by factors such as occupancy rates, lease terms, property locations, and market demand. Significant partnerships with property management firms and real estate brokers also contribute to optimizing property performance and maximizing revenue.
Nexus Real Estate Investment Financial Statement Overview
Summary
Nexus Real Estate Investment shows strong financial performance with consistent revenue growth from $60 million in 2019 to $175.7 million in 2024, solid profitability margins, and efficient cash flow management. The company's leverage has increased, indicated by a Debt-to-Equity Ratio of 1.18 in 2024, but remains manageable within industry norms. Fluctuations in net income and ROE suggest potential areas for improved financial stability.Income Statement
Nexus Real Estate Investment has demonstrated robust revenue growth from 2019 to 2024, with a notable increase in total revenue from $60 million in 2019 to $175.7 million in 2024. The Gross Profit Margin improved significantly from 63.2% in 2019 to 71.6% in 2024. However, the Net Profit Margin fluctuated, peaking in 2021 due to a substantial net income but declining in subsequent years. EBITDA Margin remains strong, reflecting efficient operational performance.82
Very Positive
Balance Sheet
The company's Debt-to-Equity Ratio increased from 1.14 in 2019 to 1.18 in 2024, indicating higher leverage but manageable within the industry norms. Return on Equity (ROE) showed volatility, with a high of 21.7% in 2021, reflecting exceptional net income, followed by a decrease in subsequent years. The Equity Ratio declined slightly over the years, suggesting an increase in liabilities relative to total assets.74
Positive
Cash Flow
Operating Cash Flow remains strong, although it decreased from $51 million in 2023 to $38.96 million in 2024. Free Cash Flow was positive and stable, despite a slight decline from the previous year. The Free Cash Flow to Net Income Ratio was robust, highlighting the company's ability to convert net income into free cash flow effectively.78
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 175.70M | 157.65M | 137.12M | 83.56M | 61.39M | Gross Profit |
| 125.87M | 111.97M | 95.81M | 55.95M | 39.23M | EBIT |
| 0.00 | 103.32M | 142.28M | -25.88M | 41.53M | EBITDA |
| 145.87M | 201.67M | 142.37M | -14.93M | 41.62M | Net Income Common Stockholders |
| 90.88M | 160.03M | 91.75M | 146.36M | 14.84M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 11.53M | 5.92M | 11.53M | 82.28M | 13.99M | Total Assets |
| 2.60B | 2.46B | 1.97B | 1.66B | 710.50M | Total Debt |
| 1.25B | 1.19B | 827.11M | 679.55M | 342.72M | Net Debt |
| 1.24B | 1.18B | 815.57M | 597.27M | 328.72M | Total Liabilities |
| 1.54B | 1.46B | 1.09B | 968.67M | 410.92M | Stockholders Equity |
| 1.06B | 1.00B | 872.54M | 689.48M | 299.58M |
| Cash Flow | Free Cash Flow | |||
| 24.70M | 32.08M | 30.32M | 19.62M | 18.69M | Operating Cash Flow |
| 38.96M | 51.02M | 41.53M | 25.00M | 24.35M | Investing Cash Flow |
| -78.60M | -345.99M | -315.73M | -469.25M | -45.07M | Financing Cash Flow |
| 45.26M | 289.36M | 203.45M | 512.54M | 26.84M |
Nexus Real Estate Investment Technical Analysis
Negative
6.87
Price Trends
7.21
Negative
7.45
Negative
7.54
Negative
Market Momentum
-0.08
Positive
38.16
Neutral
42.78
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:NXR.UN, the sentiment is Negative. The current price of 6.87 is below the 20-day moving average (MA) of 7.06, below the 50-day MA of 7.21, and below the 200-day MA of 7.54, indicating a bearish trend. The MACD of -0.08 indicates Positive momentum. The RSI at 38.16 is Neutral, neither overbought nor oversold. The STOCH value of 42.78 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:NXR.UN.
Nexus Real Estate Investment Peers Comparison
Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | C$4.30B | 19.01 | 4.50% | 7.32% | 9.46% | -42.77% | |
75 Outperform | $651.08M | 7.12 | 8.82% | 9.65% | 9.64% | -45.71% | |
72 Outperform | C$7.01B | 24.86 | 3.20% | 3.41% | 4.45% | ― | |
68 Neutral | $5.11B | 10.92 | 6.34% | 6.75% | 11.62% | 1120.60% | |
63 Neutral | C$2.62B | ― | -2.29% | 6.01% | -6.92% | -310.05% | |
61 Neutral | $4.70B | 17.65 | -3.00% | 11.43% | 5.99% | -19.07% | |
53 Neutral | $2.32B | ― | -5.79% | 11.33% | 4.98% | 19.54% |
* Real Estate Sector Average
Performance Comparison
TSE:NXR.UN
Nexus Real Estate Investment
6.87
-0.08
-1.12%
TSE:REI.UN
RioCan Real Estate Investment
17.15
-0.20
-1.16%
TSE:AP.UN
Allied Properties Real Estate Investment Trust
16.39
0.72
4.61%
TSE:SRU.UN
SmartCentres Real Estate Investment Trust
25.29
3.97
18.62%
TSE:HR.UN
H&R Real Estate ate Staple
10.05
1.64
19.50%
TSE:CAR.UN
Canadian Apartment
43.14
-1.29
-2.90%
Nexus Real Estate Investment Earnings Call Summary
Earnings Call Date: Mar 10, 2025 | % Change Since: -4.10% | Next Earnings Date: May 14, 2025
Earnings Call Sentiment Neutral
The earnings call reflects a strong strategic repositioning to focus on the industrial sector, with substantial NOI growth and successful development projects. However, challenges such as tenant credit risks and market slowdowns in Hamilton pose potential risks. The overall sentiment is balanced by strong financial results and strategic achievements.Highlights
Strategic Repositioning to Pure Play Industrial REIT
Nexus Industrial REIT completed its transition to a Canada-focused pure play industrial REIT by selling legacy office, retail, and non-core industrial assets, resulting in nearly 100% industrial net operating income (NOI).
Strong Net Operating Income Growth
Total net operating income increased by 10% year-over-year to $32.1 million in Q4, driven by acquisitions, organic growth, and development.
Successful Industrial Developments
Key projects include the Hubrey Road industrial project yielding 8.4% in its first year and the Titan Park property with a 7.9% cap rate. The Glover Road new build in Hamilton is expected to yield $5.9 million annually.
Significant Lease Renewals and Rent Escalations
Renewals achieved 32% growth in expiring rents, adding $3.2 million of additional NOI. Industrial same property NOI growth reached 4.7% for the year.
Financial Performance and Market Position
Net income increased significantly to $49.7 million, and NAV per unit improved to $13.19. The REIT has a strong presence in desirable markets like London and Calgary.
Lowlights
Tenant Credit Risks
Two tenants have entered creditor protection, potentially impacting results in Q2 2025. The Peavey Mart tenancy could vacate, affecting Red Deer and London properties.
Challenges in Hamilton Market
The Hamilton market has slowed significantly, affecting the leasing of the 115,000 square foot Glover Road property, which remains vacant despite optimism for future leasing.
Increased Interest Expenses
Net interest expense increased by $1.6 million year-over-year, primarily due to higher average debt balances and lower capitalized interest.
Company Guidance
During the Nexus Industrial REIT's Fourth Quarter 2024 Results Conference Call, the company provided guidance highlighting several key metrics. In 2024, Nexus transitioned to a Canadian-focused pure play industrial REIT, completing three industrial development projects and advancing two more. This included the Hubrey Road project contributing $300,000 of NOI in its first quarter, yielding an 8.4% first-year return on a $14 million investment. The Titan Park project added $500,000 of NOI in the quarter with a stabilized annual NOI of $3.8 million, representing a 7.9% cap rate on a $48 million investment. The Glover Road development in Hamilton is expected to yield $5.9 million on a $25 million investment, though leasing has been slower than anticipated. The company also advanced the Dennis Road project, slated for completion in Q3 2025, with an estimated 9% yield on development costs of $55 million. On asset sales, Nexus sold properties totaling $120 million at a blended cap rate of 7.1%, using proceeds to reduce debt. The REIT reported Q4 normalized FFO growth of 2.7% to $0.192 per unit and a total NOI increase of 10% year-over-year, resulting in a $32.1 million NOI for the quarter. Looking ahead to 2025, the company expects mid-single-digit industrial same property NOI growth, with 65% of leases expiring this year already renewed or near renewal, representing $3.2 million of additional NOI.Nexus Real Estate Investment Corporate Events
Business Operations and StrategyFinancial Disclosures
Nexus Industrial REIT Achieves Record Growth in 2024
Positive
Mar 10, 2025
Nexus Industrial REIT reported a significant growth in net operating income for the fourth quarter and full year 2024, driven by strategic acquisitions and development projects. The company has advanced its transition to a pure-play industrial REIT by selling non-core assets and completing new developments, contributing to a record net income and increased unitholders’ equity, positioning itself strongly in the industrial real estate market.
Nexus Industrial REIT Sells Non-Core Assets to Focus on Industrial Portfolio
Jan 9, 2025
Nexus Industrial REIT announced the sale of four non-core industrial buildings in Saskatchewan and two legacy office buildings in Quebec and New Brunswick. This strategic move is aimed at concentrating its portfolio on high-quality industrial properties, which now constitute 96% of its Net Operating Income. The proceeds from the sale will be used to reduce existing debt, further solidifying Nexus’s positioning as a pure-play industrial REIT in Canada.
Nexus Industrial REIT Announces Q4 2024 Results Date and Declares Distributions
Jan 9, 2025
Nexus Industrial REIT has announced the release date for its fourth-quarter and year-end 2024 financial results, set for March 10, 2025, with a subsequent conference call to discuss the results. Additionally, the REIT declared cash distributions of $0.05333 per unit for January and February 2025, amounting to $0.64 per unit on an annualized basis, reinforcing its commitment to providing steady returns to its unitholders.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.