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Nexus Real Estate Investment Trust (TSE:NXR.UN)
TSX:NXR.UN

Nexus Real Estate Investment (NXR.UN) AI Stock Analysis

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Nexus Real Estate Investment

(TSX:NXR.UN)

78Outperform
Nexus Real Estate Investment demonstrates strong financial performance and an attractive valuation, with a low P/E ratio and high dividend yield appealing to investors. Strategic repositioning towards industrial assets is yielding positive results, though technical indicators suggest caution with potential bearish trends. The company's focus on industrial growth and asset management is a positive long-term catalyst, balancing risks from tenant credit issues and market slowdowns.
Positive Factors
Financial Performance
Q324 results were ahead of expectations, indicating strong performance.
Portfolio Management
NXR has made substantial progress on the planned disposition of its legacy retail and office properties, which will increase its industrial weighting to nearly 100%.
Negative Factors
Financial Stability
NXR's above-average leverage and payout ratio compared to peers reflect some financial concerns.
Legacy Properties
Lingering concerns exist with respect to certain legacy properties within the portfolio.

Nexus Real Estate Investment (NXR.UN) vs. S&P 500 (SPY)

Nexus Real Estate Investment Business Overview & Revenue Model

Company DescriptionNexus is a growth oriented real estate investment trust focused on increasing unitholder value through the acquisition, ownership and management of industrial, office and retail properties located in primary and secondary markets in North America. The REIT currently owns a portfolio of 73 properties comprising approximately 4.1 million square feet of rentable area. The REIT has approximately 109,910,000 units issued and outstanding. Additionally, there are Class B LP Units of subsidiary limited partnerships of Nexus REIT issued and outstanding, which are convertible into approximately 25,667,000 REIT Units.
How the Company Makes MoneyNexus Real Estate Investment Trust generates revenue primarily through rental income from its portfolio of commercial properties. The trust leases space to a variety of tenants, including businesses in the industrial, office, and retail sectors. Revenue is further supported by property management fees and potential capital appreciation from strategic property acquisitions and disposals. The company benefits from long-term lease agreements, which provide consistent cash flow, and actively manages its properties to enhance value and occupancy rates. Additionally, Nexus may engage in joint ventures or partnerships to expand its investment opportunities and leverage its expertise in real estate management.

Nexus Real Estate Investment Financial Statement Overview

Summary
Nexus Real Estate Investment exhibits strong financial performance with consistent revenue growth, solid profitability margins, and efficient cash flow management. Despite increased leverage, the company's financial health remains stable, focusing on maintaining a strong cash position and effective capital allocation. The 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.
Balance Sheet
74
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.
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.
Breakdown
Dec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
175.70M157.65M137.12M83.56M61.39M
Gross Profit
125.87M111.97M95.81M55.95M39.23M
EBIT
0.00103.32M142.28M-25.88M41.53M
EBITDA
145.87M201.67M142.37M-14.93M41.62M
Net Income Common Stockholders
90.88M160.03M91.75M146.36M14.84M
Balance SheetCash, Cash Equivalents and Short-Term Investments
11.53M5.92M11.53M82.28M13.99M
Total Assets
2.60B2.46B1.97B1.66B710.50M
Total Debt
1.25B1.19B827.11M679.55M342.72M
Net Debt
1.24B1.18B815.57M597.27M328.72M
Total Liabilities
1.54B1.46B1.09B968.67M410.92M
Stockholders Equity
1.06B1.00B872.54M689.48M299.58M
Cash FlowFree Cash Flow
24.70M32.08M30.32M19.62M18.69M
Operating Cash Flow
38.96M51.02M41.53M25.00M24.35M
Investing Cash Flow
-78.60M-345.99M-315.73M-469.25M-45.07M
Financing Cash Flow
45.26M289.36M203.45M512.54M26.84M

Nexus Real Estate Investment Technical Analysis

Technical Analysis Sentiment
Positive
Last Price6.92
Price Trends
50DMA
6.80
Positive
100DMA
7.05
Negative
200DMA
7.45
Negative
Market Momentum
MACD
0.05
Negative
RSI
57.03
Neutral
STOCH
69.11
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:NXR.UN, the sentiment is Positive. The current price of 6.92 is above the 20-day moving average (MA) of 6.67, above the 50-day MA of 6.80, and below the 200-day MA of 7.45, indicating a neutral trend. The MACD of 0.05 indicates Negative momentum. The RSI at 57.03 is Neutral, neither overbought nor oversold. The STOCH value of 69.11 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:NXR.UN.

Nexus Real Estate Investment Peers Comparison

Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
78
Outperform
$657.80M7.168.82%9.11%9.64%-45.71%
76
Outperform
C$4.33B19.064.50%7.23%10.06%-19.26%
70
Outperform
C$6.86B24.933.20%3.51%4.45%
60
Neutral
$2.81B11.310.21%8508.38%6.19%-15.39%
56
Neutral
C$2.57B-2.29%6.10%-6.92%-296.31%
* Real Estate Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
TSE:NXR.UN
Nexus Real Estate Investment
6.92
0.19
2.88%
RIOCF
RioCan Real Estate Investment
12.12
-0.13
-1.06%
TSE:CAR.UN
Canadian Apartment
42.44
-2.25
-5.03%
TSE:HR.UN
H&R Real Estate ate Staple
9.81
1.23
14.34%
TSE:SRU.UN
SmartCentres Real Estate Investment Trust
25.37
4.25
20.12%
APYRF
Allied Properties Real Estate Investment Trust
10.50
-0.82
-7.24%

Nexus Real Estate Investment Earnings Call Summary

Earnings Call Date:Mar 10, 2025
(Q4-2024)
|
% Change Since: -2.63%|
Next Earnings Date:May 15, 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.
Q4-2024 Updates
Positive Updates
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.
Negative Updates
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

M&A TransactionsBusiness Operations and Strategy
Nexus Industrial REIT Completes Strategic Asset Sale and Reports Leasing Success
Positive
Apr 8, 2025

Nexus Industrial REIT has announced the sale of its 50% ownership in 15 retail buildings and one office building in Quebec for a total of $51 million. The proceeds will be used to repay debt and fund development projects, marking the company’s transition to a pure-play industrial REIT in Canada. The company has also reported a strong start to its 2025 leasing activities, renewing over 80% of its expiring gross leasable area and securing significant rent increases, which will enhance its net operating income.

Spark’s Take on TSE:NXR.UN Stock

According to Spark, TipRanks’ AI Analyst, TSE:NXR.UN is a Outperform.

Nexus Real Estate Investment demonstrates strong financial performance with consistent revenue growth and a robust dividend yield, making it attractive for income-focused investors. However, technical indicators suggest potential bearish trends, and challenges such as tenant credit risks and market slowdowns present risks. The company’s strategic focus on the industrial sector is a positive long-term catalyst, balancing the risks and supporting a strong overall stock score.

To see Spark’s full report on TSE:NXR.UN stock, click here.

Financial Disclosures
Nexus Industrial REIT to Release Q1 2025 Financial Results
Neutral
Apr 2, 2025

Nexus Industrial REIT announced its plan to release the financial results for the first quarter of 2025 on May 15, 2025, before the opening of the TSX. The announcement includes a scheduled conference call to discuss the results and operations, highlighting the company’s ongoing commitment to transparency and stakeholder engagement.

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.

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.