Nexus Industrial, a Toronto-based REIT with an increasing focus on the industrial sector, has more than $300 million in new deals lined up, with the company's chief executive telling analysts he expects valuations to stay firm in the asset class.
The real estate investment trust also said it closed a deal on March 7 to buy a 532,000-square-foot industrial facility in Cassleman, outside of Ottawa, for $116.8 million, home to the Ford Motor Co. of Canada.
"We're always talking with guys. So it's just like I've always said, it's a longer process to get guys on board and comfortable with the story and what we do," said CEO Kelly Hanczyk on a call with analysts to discuss fourth-quarter results.
"There's no shortage of opportunities. Where we're focused right now is closing on what we have, getting the development going. Like I've always said, it's been a transition to get us to this institutional quality," Hanczyk said.
The chief executive said the REIT is also focused on development but has $199.5 million of existing properties under contract at an average capitalization rate of 5%.
Those deals include a 140,000-square-foot new, single-tenant industrial distribution property in the Greater Toronto Area, a 190,000-square-foot new, single-tenant industrial distribution property in the Greater Montreal Area, a 325,000-square-foot industrial property that includes a 175,000-square-foot newly constructed addition in London, Ontario, and an about 83,000-square-foot new, single-tenant industrial distribution property in the Calgary area.
"There is still strong demand in the industrial sector," said Hanczyk.
The Ford property is located about 55 kilometres east of Ottawa and was developed by Bertone Development and Rosefellow as part of a 3 million-square-foot hub in the area. The Ford building is the first phase of the project and includes a 15-year lease.
Nexus decided to change its focus to industrial in 2021, even changing the name of the REIT to add emphasis to its changed focus as it pursued Canada's hottest real estate investment class.
The publicly traded industrial sector lost one of its largest players in Canada last year when Summit Industrial REIT was taken private in a $5.9 billion deal.
"Nexus has several avenues to transform the quality and growth profile of its Canadian industrial portfolio through its various strategic initiatives," said Brad Sturges, an analyst with Raymond James, in a note.