skip to content
  1. Home
  2. >
  3. Questions
  4. >
  5. NXR.UN: Hi, I would appreciate your thoughts regarding Nexus Industrial REIT. [Nexus Industrial REIT]
You can view 2 more answers this month. Sign up for a free trial for unlimited access.

Investment Q&A

Not investment advice or solicitation to buy/sell securities. Do your own due diligence and/or consult an advisor.

Q: Hi, I would appreciate your thoughts regarding Nexus Industrial REIT. It's my understanding that this REIT has effectively transitioned from a mixed properties REIT to a more purely industrial REIT, in recent years. Can you confirm if that is your belief as well? In reviewing the firm's dividend history, it looks to me as though they may have increased their monthly dividend by 300% in Feb/Mar of 2021, from a payment of $0.01333 to $0.05333. Is that correct? Does the REIT generate sufficient cash flow to cover its current dividend and are you please able to provide your opinion about how "secure" the current dividend might be, going forward? Lastly, do you have any information regarding the REIT's current debt and how much of that debt may be of a variable rate and/or due to mature and need to be refinanced over the next year or two? I'd be personally worried about the sustainability of the dividend if a large amount of very low interest debt were to need to be refinanced at what I'm hoping are temporarily much higher rates of interest. It' my opinion that interest rates might be half of what they are today, within two years time from now. Thank you!
Asked by Richard on July 30, 2023
5i Research Answer:

NXR.UN reverse split its stock 1:4 in February 2021and the distribution did not change. At the time it acquired several industrial properties and has acquired more since then. It has also sold retail properties so is certainly now skewed to industrial. Payout ratio in Q1 was 100.7% so there is not a big distribution cushion currently. Payout rose from 91% last year. Thus, we would not really consider the distribution 'safe' in the true sense of the word. Debt is $986M and operating cash flow was $44M last year. Debt to assets is 47.3%. The REIT certainly has variable credit lines, but uses swaps to manage risk and is in a good position: The weighted average interest rate, including deferred financing costs and interest rate swap agreements, of the mortgages payable is 3.20% (December 31, 2022 – 3.21%) and the weighted average term to maturity is 5.84 years (December 31, 2022 – 6.08 years).

Let us help YOU reach your financial goals today!

Start your FREE trial today and enjoy all the benefits of a 5i Membership including:

  • Access to a team of experts ready to answer your investments question 
  • Instant access to over 100,000 archived questions
  • A community of like-minded investors
  • Peace of mind knowing that 5i Research has only YOUR best interests in mind