Q4 2025 Nexus Industrial REIT Earnings Call

March 6, 2026

Operator: Thank you for standing by. This is the conference operator. Welcome to the Nexus Industrial REIT Q4 2025 Results Conference Call. As a reminder, all participants are in listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star then zero. I would now like to turn the conference over to Kelly Hanczyk, Chief Executive Officer. Please go ahead.

Speaker #3: Recorded. After the operator, by pressing star, then yep. Thank you for standing by. This is the conference. Over to Kelly Hansick, Chief. Zero.

Speaker #3: question queue, you may press

Speaker #3: I would now like to turn

Speaker #2: I'd like to welcome everyone to caution with regard to forward-looking statements and

Kelly C. Hanczyk: I'd like to welcome everyone to the 2025 Q4 Results Conference Call for Nexus Industrial REIT. Joining me today is Mike Rawle, Chief Financial Officer of the REIT. Before we begin, I'd like to caution with regard to forward-looking statements and non-GAAP measures. Certain statements made during the conference call may constitute forward-looking statements which reflect the REIT's current expectations and projections about future results. During this call, we'll be discussing non-GAAP measures. Please refer to our MD&A and the REIT's other securities filings, which can be found on our website and at SEDAR.com for cautions regarding forward-looking information and for information about non-GAAP measures. I'm delighted to share that we are entering 2026 with good momentum and well-positioned growth. Despite challenging economic backdrop, 2025 was a very successful year for us.

Kelly C. Hanczyk: For the full year 2025, we delivered record net operating income of CAD 129 million and an increase of 2.8% compared to last year. We generated record adjusted EBITDA of CAD 120 million, also grew our per unit metrics compared to last year. FFO per unit increased to CAD 0.61, and our NAV grew to CAD 13.22 per unit. Impressively, we grew despite selling our retail portfolio at the beginning of the year, completing our transition to a pure play industrial REIT. This sale raised CAD 47 million and focused our business so that today 99% of our net operating income comes from industrial assets.

Speaker #2: operating income of $129 28,000 square feet time to the 52,000 square feet that we announced in November for a total of 80,000 square feet.

Speaker #2: Compared to last year, we grew. FFO per unit increased to $120 million and also grew. We grew despite selling our retail portfolio at the beginning of the year, completing our transition to a pure-play industrial REIT.

Speaker #2: This sale raised $47 million and focused our business so that income comes from industrial—today, 99% of our net operating assets. Generated record adjusted EBITDA. As a result, we fulfilled our vision to be a Canada-focused, pure-play industrial REIT.

Kelly C. Hanczyk: As a result, we fulfilled our vision to be Canada-focused pure play industrial REIT and have now moved forward adopting our new purpose to be Canada's industrial building partner with a vision to be the first choice provider of high-quality industrial properties in Canada. During the year, we've strengthened our industrial portfolio by completing two transformative developments and two opportunistic acquisitions. At 7 Dennis Road in St. Thomas, we added 325,000 sq ft for an existing tenant. We completed the project in September and are now earning a 9% contractual yield on the CAD 55 million of development costs. At 4750 102 Ave in Calgary, we completed construction in August of 115,000 sq ft of small bay industrial units on vacant land that we had adjacent to another building.

Speaker #2: And have now moved forward, adopting our new purpose—to be Canada's industrial building partner, with a vision to be the first-choice provider of high-quality industrial properties in Canada.

Speaker #2: During the year, we strengthened our industrial portfolio by completing two transformative developments and two Dennis Road in St. Thomas, we had a $325,000 square feet for an existing tenant, we completed a project opportunistic acquisitions.

Speaker #2: Contractual yield on the $55 million of development costs. At 4750 102 Ave in Calgary, we completed construction in August of 115,000 square feet of small bay industrial units on vacant land that we had adjacent to another building.

Speaker #2: We have leased five of the nine units and have an additional lease for one more unit under negotiation and offers on two additional units.

Kelly C. Hanczyk: We have leased 5 of the 9 units and have an additional lease for 1 more unit under negotiation and offers on 2 additional units. After a good start, the leasing progress slowed as a prospective large tenant unexpectedly retired. Nevertheless, interest remains high for the property, and I expect that we'll have it fully leased by late summer. Overall, the construction costs us CAD 15 million and will deliver a healthy 11% cash and cash return when stabilized. Turning to the acquisitions, at the end of November, we had a rare opportunity to acquire 2 high quality industrial buildings well located in Montreal at a very attractive price. The opportunity arose due to our strong network and our reputation as a reliable partner. A private equity firm that we've worked with in the past was acquiring an operating business, and they didn't want the business real estate.

Speaker #2: After a good start, the leasing progress slowed as a prospective large tenant unexpectedly retired. Nevertheless, interest remains high for the property, and I expect that we'll have it fully leased by late summer.

Speaker #2: Overall, the construction costs us $15 million and will deliver a healthy at 70% stabilized. Turning to the acquisitions at the end of November, we had a rare opportunity to acquire two highly quality industrial buildings, well located in Montreal, at a very attractive price.

Speaker #2: The opportunity arose due to our strong network and our reputation as a reliable partner. A private equity firm that we've worked with in the past was acquiring and operating business and they didn't want the business real estate they didn't want to have to pay for the real estate.

Kelly C. Hanczyk: They didn't want to have to pay for the real estate. We worked with them to acquire the two buildings and entered into a sale leaseback agreement under a long-term lease agreement. We acquired the buildings for CAD 40 million at a going-in cap rate of 6.6%. However, the lease rate resets to market in 2028, which at current rates works out to a stabilized cap rate of approximately 10.4%. The buildings added 283,000 sq ft of high-quality real estate to our portfolio at a purchase price of approximately CAD 145 per square foot, where similar real estate typically trades in the range of CAD 215 to 235 per square foot.

Speaker #2: So we worked with them to acquire the two buildings and entered into a sale leaseback agreement under a long-term lease agreement. We acquired the buildings for $40 million at a going in cap rate of 6.6%.

Speaker #2: However, the lease rate resets to market in 2028. Which at current rates works out to a stabilized cap rate of approximately 10.4%. The buildings added $283,000 square feet of high-quality real estate to our portfolio.

Speaker #2: At a purchase price of approximately $145 per square foot. Where similar real estate typically trades in the range of $215 to $235 per square foot.

Speaker #2: We had the buildings appraised at year-end and realized a significant mark-to-market lift of approximately $23 million. We also sold several properties during the year.

Kelly C. Hanczyk: We had the buildings appraised at year-end and realized a significant mark to market lift of approximately CAD 23 million. We also sold several properties during the year. In October, after a complex land zoning and severance process, we sold surplus land at our last remaining retail property for CAD 8.5 million and used the proceeds to delever. The sale appeared well-timed as the land was zoned for condominium development, a segment of the market which has shown signs of slowing since the sale was completed. Now that we have completed the land sale, we are soft marketing our 50% share of the retail mall for sale. It's a well-located, high quality property that cash flows well for us, so we don't feel rushed to forced to make a sale. During the year, we opportunistically sold three industrial buildings.

Speaker #2: In October, after a complex land zoning and severance process, we sold surplus land at our last remaining retail property for $8.5 million. And used the proceeds to deliver.

Speaker #2: The sale appeared well-timed, as the land was zoned for condominium development—a segment of the market which has shown signs of slowing since the sale was completed.

Speaker #2: Now that we have completed the land sale, we are soft marketing our 50% share of the retail mall for sale. It is a well-located high-quality property that cash flows well for us so we don't feel rushed to forced to make a sale.

Speaker #2: During the year, we opportunistically sold three industrial buildings in April. We sold a vacant property in Fort St. John above our carrying value of for $7 million.

Kelly C. Hanczyk: In April, we sold a vacant property in Fort St. John above our carrying value for CAD 7 million and used the proceeds to offset the acquisition of land surrounding our building at Kelowna, BC, where we saw a development opportunity. In June, we sold another small building in Edmonton that we viewed as non-core that had been vacant for nearly a year to an owner user for CAD 4.2 million, which was in line with our carrying value. We used the proceeds to reduce debt. In September, we sold a third industrial building in St. Laurent, Quebec, to an owner user for CAD 9.2 million. This exceeded our carrying value and equaled a 5.5 cap rate. After year-end, we closed on the sale of a fourth small industrial building.

Speaker #2: And used the proceeds to offset the acquisition of land surrounding our building at Kelowna BC where we saw a development opportunity. In June, we sold another small building in Edmonton that we viewed as non-core that had been vacant for nearly a year.

Speaker #2: To an owner user for $4.2 million which was in line with our carrying value. We used the proceeds to reduce debt. In September, we sold a third industrial building in St.

Speaker #2: Laurent, Quebec. To an owner-user for $9.2 million; this exceeded our carrying value and equaled a 5.5% cap rate. After year-end, we closed on the sale of a fourth small industrial building.

Speaker #2: On February 20th, we sold a $35,000 square foot building in Calgary. At a $5.7% cap rate to the existing tenant for $8.5 million. We have used the proceeds to pay down debt.

Kelly C. Hanczyk: On 20 February, we sold a 35,000 sq ft building in Calgary at a 5.7% cap rate to the existing tenant for CAD 8.5 million. We have used the proceeds to pay down debt. We are currently working on 3 more asset sales. As I mentioned earlier, we are currently soft marketing our 50% share of our last retail property, Les Halles d'Anjou. In Hamilton, we're looking for a buyer or a tenant for our 115,000 sq ft new build on Glover Road. We had a buyer lined up for the property, had it under contract at an attractive price. However, the deal fell through at the last minute.

Speaker #2: We are currently working on three more asset sales, as I mentioned earlier. We are currently soft marketing our 50% share of our last retail property, LaSalle Down Zoo.

Speaker #2: In Hamilton, we're looking for a buyer or a tenant for our 115,000-square-foot new build on Glover Road. We had a buyer lined up for the property, had it under contract, and at an attractive price.

Speaker #2: However, the deal fell through at the last minute. We own 80% of the property and it has been a challenging market in Hamilton, but we have a brand new state-of-the-art 40-foot clear lead certified product.

Kelly C. Hanczyk: We own 80% of the property, and it's been a challenging market in Hamilton, but we have a brand-new state-of-the-art 40-foot clear LEED certified product. Once sold, it'll contribute significantly to our AFFO per unit as we will immediately reduce the carrying costs and be able to use that equity to pay down debt. In Red Deer, Alberta, we have a firm sale contract for our 190,000 sq ft building at 40th Avenue. This building went vacant when Peavey Mart filed for CCAA in April 2025. We have been marketing the building for lease and for sale, and we now have it under firm contract to close in April for a little over CAD 11 million.

Speaker #2: Once sold, it will contribute significantly to our AFFO per unit as we will immediately reduce the carrying costs and be able to use that equity to pay down debt.

Speaker #2: In Red Deer, Alberta, we have a firm sale contract for our $190,000 square foot building at 40th Avenue. This building went vacant when PV Mart filed for CCAA and April 2025.

Speaker #2: We have been marketing the building for lease and for sale. And we now have it under firm contract to close in April for a little over $11 million.

Speaker #2: We will also look to sell our 80% interest in development land on South Service Road in Hamilton in the near future and be able to utilize the proceeds to further reduce our debt.

Kelly C. Hanczyk: We will also look to sell our 80% interest in development land on South Service Road in Hamilton in the near future and be able to utilize the proceeds to further reduce our debt. Turning to our operating performance, we had a strong Q4. In total, we completed nearly 117,000 sq ft of renewals at an average rent lift of 2%. Year-to-date, we have completed a total of 1.2 million sq ft of leasing and realized an average leasing spread of 60% over expiring and in-place rents. In the Q4, our industrial occupancy held steady at 96%.

Speaker #2: Turning to our operating performance, we had a strong fourth quarter. In total, we completed nearly 117,000 square feet of renewals at an average rent lift of 2%.

Speaker #2: Year to date, we have completed a total of 1.2 million square feet of leasing and realized an average leasing spread of 60% overexpiring and in place rents.

Speaker #2: In the fourth quarter, our industrial occupancy held steady at 96%. Combined with embedded rent escalation in our leases, our leasing activities drove industrial same property NOI growth of 2.8% in the quarter and 2.6% for the full year in line with our guidance.

Kelly C. Hanczyk: Combined with embedded rent escalation in our leases, our leasing activities drove industrial same property NOI growth of 2.8% in the quarter and 2.6% for the full year in line with our guidance. Our financial results also improved in the quarter. Normalized FFO grew 3.3% versus two-three to CAD 0.186 per unit, and our normalized AFFO rose 3.4% to CAD 0.151 per unit. In both cases, the increase was due to strong net operating income, which was up 2.5% or CAD 800,000 compared to last quarter and up 2.7% compared to the prior year. This NOI increase largely resulted from the completion of our development project in St.

Speaker #2: Our financial results also improved in the quarter. Normalized FFO grew 3.3% versus Q3 to 18.6 cents per unit and our normalized AFFO rose 3.4% to 15.1 cents per unit.

Speaker #2: In both cases, the increase was due to strong net operating income which was up 2.5% or $800,000 compared to last quarter and up 2.7% compared to the prior year.

Speaker #2: This NOI increase largely resulted from the completion of our development project in St. Thomas the two Montreal building acquisitions as well as same property NOI growth partially offset by foregone rent from properties we sold since Q4 of last year.

Kelly C. Hanczyk: Thomas, the two Montreal building acquisitions, as well as same property NOI growth, partially offset by foregone rent from properties we sold since Q4 of last year. At our cross-dock facility at 102 Avenue in Southeast Calgary, the new tenant that we had lined up for 1 December reneged on the deal after fully negotiating a lease agreement. Accordingly, we are marketing a 29,000 sq ft building for lease and anticipate renting it quickly. We had a lot of interest in the building and had recent follow-up showings, so we're pretty optimistic. Overall, while we saw strong growth in 2025, and we expect to realize an even bigger benefit in 2026 from our completed development projects, embedded rent steps, and lease-up of a vacant space, and the re-leasing of space at market rents above expiring rents.

Speaker #2: At our cross-dock facility at 102 Avenue in southeast Calgary, a new tenant that we had lined up for December 1 reneged on the deal after fully negotiating a lease agreement.

Speaker #2: Accordingly, we are marketing a $29,000 square foot building for lease and anticipate renting it quickly. We had a lot of interest in the building and had recent follow-up showings, so we're pretty optimistic.

Speaker #2: Overall, while we saw strong growth in 2025 and we expect to realize an even bigger benefit in 2026 from our completed development projects, embedded rent steps, and lease-up of a vacant space, and the releasing of space at market rents above expiring mid-single digit same property NOI growth in our industrial portfolio for the year and we expect our normalized AFFO payout ratio to average below 100%.

Kelly C. Hanczyk: We are anticipating mid-single digit at same property NOI growth in our industrial portfolio for the year. We expect our normalized AFFO payout ratio to average below 100%. We have made good progress on our 2026 renewals. In total, we had about 990,000 sq ft coming for renewal in 2026. Roughly 415,000 sq ft comes due in the first nine months. The remaining 575,000 sq ft in Q4, late in Q4. As of today, we have committed tenants for approximately 65% of the January through September expiries. We're making good headway on our Q4 renewals. For Q4, 405,000 sq ft comprised of three large tenants. We fully expect them all to renew.

Speaker #2: We have made good progress on our 2026 renewals. In total, we had about 990,000 square feet coming for renewal in 2026. Roughly 415,000 square feet comes due in the first nine months and the remaining 575,000 square feet in the fourth quarter.

Speaker #2: Late in the fourth quarter. As of today, we have committed tenants for approximately 65% of the January through September expiries and we're making good headway on our Q4 renewals.

Speaker #2: For Q4, $405,000 square feet comprised of three large tenants and we fully expect them all to renew. And the $140,000 square feet are strategic vacancies and other rents.

Kelly C. Hanczyk: The 140,000 sq ft are strategic vacancies. Another 140,000 sq ft are sort of strategic vacancies where we believe we can increase the rent on renewal. We also recently announced two additional development projects, which will get underway in the first half of 2026. We're going to build up to 180,000 sq ft of micro-industrial units on a vacant land surrounding our industrial building at Adams Road in Kelowna for a total estimated cost of approximately CAD 47 million. In our Savage Road property in Richmond, BC, we'll be adding another 28,000 sq ft, timed to the 52,000 sq ft that we announced in November for a total of 80,000 sq ft. Additional 28,000 sq ft expect to cost about CAD 19 million.

Speaker #2: $140,000 square feet are sort of strategic vacancies where we believe we can increase the rent on renewal. We also recently announced two additional development projects which we'll get underway in the first half of 2026.

Speaker #2: We're going to build up to 1,880,000 square feet of micro-industrial units on We are anticipating at Adams Road in Kelowna. For a total estimated cost of approximately $47 million.

Speaker #2: Additional 28,000 square feet expected to cost about $19 million. As I shared previously, the original 52,000 square foot expansion is being paid in REIT units at 1050 per unit.

Kelly C. Hanczyk: As I shared previously, the original 52,000 sq ft expansion is being paid in REIT units at CAD 10.50 per unit. We'll earn about 6% on the REIT units issued during the construction period. We will earn the contractual 6% yield upon completion. I expect construction will begin in the first half of 2026. In summary, we continue to advance our strategy in 2025 as Canada's industrial building partner. We will continue to realize organic growth through embedded rent steps and positive mark-to-mark on renewal. We will continue our track record of accretive capital recycling through opportunistic acquisition and development. I'll now pass the call over to Mike, who will give some more color on our financials.

Speaker #2: We'll earn about 6% on the REIT units issued during the construction period and we will earn contractual 6% yield upon completion. I expect construction will begin in the first half of 2026.

Speaker #2: In summary, we continue to advance our strategy in 2025 as Canada's industrial building partner. We will continue to realize organic growth through embedded rent steps and positive mark-to-mark on renewal.

Speaker #2: And we will continue our track record of accretive capital recycling through opportunistic acquisition and development. And I'll pass the call over to Mike, who'll give some more color on our financials.

Speaker #1: Thank you, Kelly. And good morning, everyone. Starting with headline earnings in the quarter, net income was $30.6 million, a 19.1 million decrease to last year.

Mike Rawle: Thank you, Kelly. Good morning, everyone. Starting with headline earnings in Q4, net income was CAD 30.6 million, a CAD 19.1 million dollar decrease to last year. The fluctuation was due to a decrease in the fair value adjustment on Class B units by CAD 31 million dollars, and fair value losses on our Montreal office building joint venture of CAD 4.2 million dollars, partially offset by an increase in fair value adjustments of investment properties of CAD 10.6 million dollars, and an increase in fair value adjustments on derivatives of CAD 3.9 million dollars. As Kelly mentioned, our Q4 net operating income increased 2.7% or CAD 800,000 dollars year-over-year to CAD 33 million dollars. This was primarily due to the completion of our St.

Speaker #1: The fluctuation was due to a decrease in the fair value adjustment on Class B units by $31 million. And fair value losses on our Montreal office building joint venture of $4.2 million.

Speaker #1: Partially offset by an increase in fair value adjustments of investment properties of $10.6 million. And an increase in fair value adjustments on derivatives of $3.9 million.

Speaker #1: As Kelly mentioned, our Q4 net operating income increased 2.7% or $800,000 year over year to $33 million. This was primarily due to the completion of our St.

Speaker #1: Thomas development and the Montreal building acquisitions which combined added $1.5 million in the quarter. And an increase in same property NOI of $700,000 and higher straight-line rent adjustments of $500,000.

Mike Rawle: Thomas development and the Montreal building acquisitions, which combined added CAD 1.5 million in the quarter and an increase in same-property NOI of CAD 700,000 and higher straight-line rent adjustments of CAD 500,000. These increases were partially offset by CAD 1.4 million of NOI associated with properties that we have sold over the past year. Normalized AFFO for the period was CAD 0.151 per unit compared to CAD 0.153 a year ago. Primarily due to the issuance of 2.8 million Class B units for prepayment of the development in Richmond, BC. This was partially offset by higher normalized AFFO by CAD 300,000, resulting from higher net operating income.

Speaker #1: These increases were partially offset by $1.4 million of NOI associated with properties that we have sold over the past year. Normalized AFFO for the period was 15.1 cents per unit compared to 15.3 cents a year ago, primarily due to the issuance of 2.8 million Class B units for prepayment of the development in Richmond, BC.

Speaker #1: This was partially offset by higher normalized AFFO by $300,000 resulting from higher net operating income. Total general and administrative expenses for the quarter were $2 million.

Mike Rawle: Total general and administrative expenses for the quarter were CAD 2 million, which was CAD 200,000 higher than a year ago, primarily due to higher compensation, legal and professional fees. Net interest expense in the quarter was CAD 14 million, which was consistent with last year. The carrying value of our investment properties increased by CAD 31.3 million in the quarter, primarily due to the CAD 40.1 million acquisition of the 2 industrial properties in Montreal, CAD 18.7 million of fair value gains, and CAD 3.7 million of development expenditures, partially offset by CAD 34.8 million of investment properties that were reclassified to assets held for sale. At 31 December, our NAV per unit was CAD 13.22, a CAD 0.03 per unit increase from last quarter.

Speaker #1: Which is $200,000 higher than a year ago. Primarily due to higher compensation legal and professional fees. Net interest expense in the quarter was $14 million.

Speaker #1: Which was consistent with last year. The carrying value of our investment properties increased by $31.3 million in the quarter. Primarily due to the $40.1 million acquisition of the two industrial properties in Montreal $18.7 million of fair value gains and $3.7 million of development expenditures.

Speaker #1: Partially offset by $34.8 million of investment properties that were reclassified to assets held for sale. At December 31st, our NAV per unit was $13.22.

Speaker #1: A 3 cent per unit increase from last quarter. Our weighted average cap rate increased by 3 basis points to 5.88% in the quarter. Compared to 5.85% at September 30th.

Mike Rawle: Our weighted average cap rate increased by 3 basis points to 5.88% in the quarter compared to 5.85% at 30 September. I'll now turn the call back to Kelly.

Speaker #1: I'll now turn the call back to Kelly.

Speaker #2: Thanks, Mike. With that operator, open up the line to any questions.

Kelly C. Hanczyk: Thanks, Mike. With that, operator, open up the line to any questions.

Speaker #3: We will now begin the question and answer session. To join the question queue, you may press star, then one on your telephone keypad. You will hear a tone acknowledging your request.

Operator: We will now begin the question and answer session. To join the question queue, you may press Star then one on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press Star then two. We will pause for a moment as callers join the queue. The first question comes from, pardon me, sir, Mike Markidis with BMO. Please go ahead.

Speaker #3: If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star, then two. We will pause for a moment as callers join the queue.

Speaker #3: The first question comes from Mark Mc pardon me, sir. Mark Markitis with BMO. Please go ahead.

Speaker #1: No trouble. Operator, it's a tricky one. Thank you and good morning, Kelly and Mike. Kelly, just some pretty good color on the 2026 lease maturity.

Mike Markidis: No trouble, operator. It's a tricky one. Thank you, good morning, Kelly and Mike. Kelly, you gave some pretty good color on the 2026 lease maturity. I apologize if I've missed some of the detail. Did you mention an average spread expectation for the 2026 program?

Speaker #1: So I apologize if I've missed some of the detail. But did you mention an average spread expectation for the 2026 program?

Kelly C. Hanczyk: We didn't. I think at the end of the day when I'm looking at them, you know, in the last half of the year when I look at the there's three large ones that make up, and I'd say they're on an average of about CAD 850 net, where I think we'll be somewhere around CAD 10, CAD 11 on those.

Speaker #4: We didn't. We didn't. I think at the end of the day when I'm looking at them, in the last half of the year when I look at the there's three large ones that make up an I'd say they're on an average of about 850 net.

Speaker #4: Where I think we'll be somewhere around 1,011 on those. And then one of them, 90,000 square footer in Montreal, is an intentional one. And that one, we worked out a deal with those guys because they had a very low rental rate and they had three five-year options to renew at very little to no increase.

Mike Markidis: Okay.

Kelly C. Hanczyk: One of them, 90,000 square footer in Montreal was, is an intentional one. In that one, we worked out a deal with those guys because they had a very low rental rate, and they had three 5-year option to renew at very little to no increase. We worked out a deal. We gave them a 1-year renewal last year at a higher rent, still below market, but at a higher rent to get it back and to lose those renewals and be able to lease it at a decent rate. That makes up, I mean, that makes up about 500,000 square feet, I believe.

Speaker #4: So we worked out a deal we gave them a one-year renewal last year at a higher rent, still below market, but at a higher rent.

Speaker #4: To get it back and to lose those renewals and be able to lease it at a decent rate. So that makes up, I mean, that makes up about 500,000 square feet, I believe.

Kelly C. Hanczyk: I think on all of those, it, we're probably at CAD 1.50, maybe CAD 2, increase per square foot.

Speaker #4: So I think on all of those, we're probably at a dollar or a a dollar 50, maybe $2 increase per square foot.

Kelly C. Hanczyk: I think on all of those, it, we're probably at CAD 1.50, maybe CAD 2, increase per square foot.

Speaker #1: Sorry. And so that's for the 500 or for the full 900? Because I think you've got 65% of agenda September done, right?

Mike Markidis: Sorry, that's for the CAD 500 or for the full CAD 900? Because I think you've got,

Kelly C. Hanczyk: Yeah.

Mike Markidis: 65% of the Jan to September done, right?

Kelly C. Hanczyk: Yeah.

Mike Markidis: 65% of the Jan to September done, right?

Speaker #4: Yeah. There's Mike, I don't know if I I don't have the average spread of what we've completed.

Kelly C. Hanczyk: Yeah. There's like I don't have the average spread of what we've completed.

Speaker #1: Okay. Yeah. No, I don't have that. But I think Mike also another way of thinking about it is the SBNOI guidance we give and of mid-single digits will help anchor you.

Mike Markidis: Okay. No problem.

Mike Rawle: Yeah, no, I think that. I think, Mike, also another way of thinking about it is the SPNOI guidance we've given of mid-single digits will help anchor you.

Speaker #5: No, that's fair. That's fair. Just on the there's different methodologies around the space. And I haven't looked into your MDA to confirm exactly. But I'll just ask the question.

Mike Markidis: No, that's fair. That's fair. Just there's different methodologies around the space. I haven't looked into your MD&A to confirm exactly, but I'll just ask the question. For your SPNOI, does that include the contribution from intensifications, or is it a pure number?

Speaker #5: For your SBNOI, does that include the contribution from intensifications? Or is it a pure number? It includes that. So Denny Road and one or two avenues southeast would be in that?

Mike Rawle: It includes that.

Mike Markidis: It includes that. Denny Road and 102 Avenue Southeast would be in that.

Speaker #1: Sorry. I'm being corrected. It's excluded.

Mike Rawle: Sorry, I'm being corrected. It's excluded.

Speaker #5: Excluded. Okay. Good to know. All right. And then just I guess last question for you before I turn it back. Just on the future development.

Mike Markidis: Excluded. Okay. Good to know.

Mike Rawle: Yeah. Yeah.

Mike Markidis: All right. Just, I guess last question for you before I turn it back, just on the future developments. It looks like Adams Road is, you're gonna commence construction, it sounds like. Or is that one already under construction?

Speaker #5: So it looks like Adams Road is you're going to commence construction, it sounds like. Or is that one already under construction?

Kelly C. Hanczyk: Yeah, it's not, it's not under construction yet. We're in the permitting phase.

Speaker #4: Yeah, it's not. It's not under construction yet. We're in the permitting phase.

Kelly C. Hanczyk: Yeah, it's not, it's not under construction yet. We're in the permitting phase.

Speaker #5: Okay, gotcha. And then Savage Road—so, you gave the detail on the yield for Savage Road, I guess 8%, converting to 6% on completion.

Mike Markidis: Okay. Gotcha. Savage Road. You gave the detail on the yield for Savage Road, I guess 8% converting to 6% on completion. For Adams, I guess what's the anticipated yield on that? Just with both projects, where do you expect the completions to line up?

Speaker #5: And then so for Adams, I guess what's the anticipated yield on that? And just with both projects, where do you expect the completions to line up?

Speaker #4: I think they would probably be complete some point next year. And depends on how fast we can get going. Adams, it's a little different because we are looking at building micro-industrial.

Kelly C. Hanczyk: I think they would probably be complete some point next year, and depends on how fast we can get going. Adams, it's a little different because we are looking at building micro-industrial. Right now I'm working on the difference between either pre-leasing them or pre-selling or selling them as we go and funding the next batch. It's a little up in the air as we haven't really fully started the project yet. We're in the planning phase, and could be a mixture where we lease some and we sell some because from a sale on a per square foot basis, we expect to get. Because they are micro-industrial and and these are small units. So it's a good owner-user opportunity where I think we can hit better returns.

Speaker #4: And right now, I'm working on the difference between either pre-leasing them or pre-selling or selling them as we go. And funding the next batch.

Speaker #4: So it's a little up in the air, as we haven't really fully started the project yet. We're in the planning phase. And it could be a mixture where we lease some and we sell some.

Speaker #4: Because, from a sale on a per square foot basis, we expect to micro-industrial, and these are small units. So, it's a good user-owner-user opportunity where I think we can hit better returns.

Speaker #4: So I'd say it's probably going to be let's call it a 7 overall between 7 and 10.

Kelly C. Hanczyk: I'd say it's probably gonna be, let's call it a seven overall, between seven and 10.

Speaker #5: Understood. Thanks for that. I'll turn it back.

Jimmy Shan: Understood. Thanks for that. I'll turn it back.

Mike Markidis: Understood. Thanks for that. I'll turn it back.

Speaker #4: Yep. Okay. Thanks.

Kelly C. Hanczyk: Okay, thanks.

Speaker #3: The

Speaker #3: next question is from Sam Damiani with TD Cowen. Please go ahead.

Operator: The next question is from Sam Damiani with TD Cowen. Please go ahead.

Speaker #1: Thanks very much. Good morning. Maybe just on the debt to EBITDA, it remains elevated near 11 get because they are times. Just wondering if you have a year-end target for 2026.

Sam Damiani: Thanks very much. Good morning. Maybe just on the debt-to-EBITDA remains elevated near 11 times. Just wondering if you have a year-end target for 2026?

Speaker #5: We haven't given guidance to that. But we do see it pretty rapid de-levering this year. And so our goal is to maybe a way of thinking about it is our goal is to hit investment grade balance sheet this year.

Mike Rawle: We haven't given guidance to that, we do see it, pretty rapid de-levering this year. You know, our goal is to. Maybe a way of thinking about it is our goal is to hit investment grade balance sheet this year. The guidance we've been given from DBRS is that they're looking for mid-nines to achieve that. That's our target is to get to that IG rating.

Speaker #5: And the guidance we've been given from DBRS is that they're looking for mid-9s to achieve that. So that's our target. Just to get to that IG rating.

Speaker #1: So is that something you're shooting for by the end of the year? Sort of mid-9s?

Sam Damiani: Is that something you're shooting for by the end of the year, sort of mid-nines?

Speaker #5: Yeah, I think that's fair to say. Mid-9s would be our target. And that would get us the IG rating.

Mike Rawle: Yeah, I think that's fair to say. Like mid-nines would be our target. That would get us the IG rating.

Speaker #1: Right. And just on the Belvedere Club, I'm just wondering if you could maybe expand on or go into some detail on what the expansion phase, what the scope of work for that latest expansion phase you've announced?

Sam Damiani: Right. Just on the Belvedere Club, I'm just wondering if you could maybe expand on or go into some detail on what the scope of work for that latest expansion phase you've announced?

Speaker #4: Yep. So it's the same like Adams. It's micro-industrial units. On land that's available for us to build.

Kelly C. Hanczyk: Yep. It's the same like Adams. It's micro-industrial units on land that's available for us to build.

Speaker #1: Oh, so it's not part of the not part of the racket club?

Sam Damiani: Oh, it's not part of the racket club?

Speaker #4: No. No. Separate. We're outside to we've redone the drawings to create a series of micro-industrial units.

Kelly C. Hanczyk: No. No. Separate. We've redone the drawings to create a series of micro-industrial units.

Speaker #1: Got it. And I guess last one for me. On the fair value gains, there's a nice one on the Montreal acquisitions there. Just wondering, did you revisit the Voila CFC in Montreal in light of Empire's announcement earlier this year?

Sam Damiani: Got it. I guess last one for me on the fair value gains, there's a nice, a nice one on the Montreal acquisitions there. Just wondering, did you revisit the Voilà C-CFC in Montreal in light of Empire's announcement earlier this year?

Speaker #4: Yeah, actually. I was there last week. And did a tour. And it's my understanding the Montreal facility has the largest share of market share of home delivery in Quebec.

Kelly C. Hanczyk: Yeah. Actually, I was there last week and did a tour. It's my understanding the Montreal facility has the largest share of market share of home delivery in Quebec. I think just a very different circumstance. The brand is pretty large in Quebec. From everything I see, it's, it was full steam ahead. They were pretty busy.

Speaker #4: So, I think just a very different circumstance. The brand is pretty large in Quebec, so from everything I see, it was full steam ahead.

Speaker #4: They were pretty busy.

Speaker #1: Excellent. Thank you on all terms.

Sam Damiani: Excellent. Thank you. I'll turn it back.

Speaker #5: Yeah, just a little more color on that is there's a long lease on that building too, so this isn't one that we're concerned about.

Mike Rawle: Yeah. Another just a little more color on that is there's a long lease on that building too. This isn't one that we're concerned about.

Speaker #1: Clearly. Yeah. We couldn't get much longer. Okay, thanks very much.

Sam Damiani: Clearly. Yeah, that's it. It couldn't get much longer. Okay. Thanks very much.

Speaker #4: Yeah.

Kelly C. Hanczyk: Yeah.

Speaker #3: The next question is from Brad Sturges with Raymond James. Please go ahead.

Operator: The next question is from Brad Sturges with Raymond James. Please go ahead.

Speaker #6: Hey, good morning. Maybe switching gears a bit. Obviously, you did the two acquisitions in Montreal. How do you think about acquisitions this year? Obviously, the focus is to de-lever and to get that investment grade rating.

Brad Sturges: Hey, good morning. Maybe switching gears a bit. Obviously you did the two acquisitions in Montreal. How do you think about acquisitions this year? Obviously, the focus is to de-lever and to get that investment grade.

Speaker #6: How do you think about opportunistically on the growth side?

Kelly C. Hanczyk: Yeah.

Brad Sturges: How do you think about?

Kelly C. Hanczyk: Yeah.

Brad Sturges: You know, opportunistically, on the growth side?

Kelly C. Hanczyk: Yeah. I think reality is if we are looking and we are looking, I am in the process of working through a bunch of different things, but they would be more geared towards unit deals. We wouldn't be purchasing anything from cash. It would be a unit transaction. If you see us do anything this year, it would 99% likely be a unit deal transaction.

Speaker #4: So yeah, so I think reality is, if we are looking in, we are looking—I am in the process of working through a bunch of different things.

Speaker #4: But they would be more geared towards unit deals. So we wouldn't be purchasing anything with cash. It would be a unit transaction. So if you see us do anything this year, it would 99% likely be a unit deal transaction.

Speaker #6: And how's that pipeline look today in terms of potential deals you're working on?

Brad Sturges: How's that pipeline look today in terms of potential deals you're working on?

Speaker #4: Yeah, I mean, I'm working on one. It's early phase, but it would be a three-building project that would fit nicely into the portfolio. I'll see if I can get it done.

Kelly C. Hanczyk: Yeah, I mean, I'm working on one. It's early phase, but it would be, you know, a three building that would fit nicely into the portfolio and see if I can get it done. It's tough when the units are trading down at this level, but we'll see what we can do.

Speaker #4: It's tough when the units are trading down at this level, but we'll see what we can do.

Speaker #1: Okay. I'll turn it back, thanks.

Brad Sturges: Okay. I'll turn it back. Thanks.

Speaker #3: Again, if you have a question, please press star, then one. The next question is from Jimmy Shan with RBC Capital Markets. Please go ahead.

Operator: If you have a question, please press star then one. The next question is from Jimmy Shan with RBC Capital Markets. Please go ahead.

Speaker #5: Thanks. So just going back to that $40 million Montreal deal, you gave pretty good color on sort of the deal dynamic. But I'm still trying to get my head around how is it that you're able to still get a very low basis for it, and kind of why would the PE firm be willing to accept?

Jimmy Shan: Thanks. Just going back to that CAD 40 million Montreal deal, you gave pretty good color on sort of the deal dynamic. I'm still trying to get my head around, you know, how is it that you're able to still get a very low basis for it and kinda why would the PE firm be willing to accept? I guess ultimately this would be like a 10% cost for them, right? How kinda what are the other nuances that are part of the deal that way you're able to get such a good deal?

Speaker #5: I guess, ultimately, this would be like a 10% cost for them, right? And so, kind of, what are the other nuances that are part of the deal that you're able to get such a good deal?

Kelly C. Hanczyk: I don't think there's any other nuance in that. We've done a deal with them before. We actually purchased our Windsor, part of our Windsor portfolio, through them. I think it's A.P. Plasman. I think that was a four-building transaction. We closed, and it was a smooth transaction, easy to complete. I think at the end of the day, they're just not focused on the real estate. We managed to negotiate a pretty sweet deal at CAD 145 a foot. We pounced on it. There's no other nuances to the deal, really.

Speaker #4: I don't think there's any other nuance in that. So we've done a deal with them before. We actually purchased our Windsor—part of our Windsor portfolio.

Speaker #4: Through them, I think, is AP Plasmon. I think that was a four-building transaction. And we closed and it was a smooth transaction, easy to complete.

Speaker #4: And I think at the end of the day, they're just not focused on the real estate. And we managed to negotiate a pretty sweet deal.

Speaker #4: At a $145 a foot so we pounced on it. But there's no other nuances to the deal, really.

Speaker #5: Okay. Okay. That's good. And then just on the swaps, I think you've got I pulled up about 350 million of notional amount. Where it's the callable by the counterparty.

Jimmy Shan: Okay. Okay. That's good. Just on the swaps, I think you've got a total up about CAD 350 million of notional amount. Is it callable by the counterparty? I'm just wondering, like, I guess rates have gone up since then. Like, are these likely to be called?

Speaker #5: And I'm just wondering, I guess rates have gone up since then. Are these likely to be called—the ones that have? Not at this point.

Mike Rawle: The ones that...

Kelly C. Hanczyk: Not at this point. No, they're still out of the money for them. Yeah, no.

Speaker #5: No, they're still out of the—they're out of the, they're out of the money for them. So, yeah, no. Okay. Glover, I guess, what's the plan now?

Mike Rawle: Okay. Maybe lastly, just on Glover, I guess what's the plan now? Is it still to try to market that property and or are you trying to fill a tenant?

Jimmy Shan: Okay. Maybe lastly, just on Glover, I guess what's the plan now? Is it still to try to market that property and or are you trying to fill a tenant?

Speaker #5: Is it still to try to market that property and are you trying to fill a tenant?

Speaker #4: Yeah, yeah, absolutely. I mean, our preference is to market it for sale, so we have it listed right now. And all we can do is wait to get an offer.

Kelly C. Hanczyk: Yeah.

Mike Rawle: Yeah.

Kelly C. Hanczyk: Absolutely. I mean, our preference is to market it for sale. We have it listed right now, and all we do is wait to get an offer. We had it under contract. It seemed to be going fine. At the last minute, the purchaser just dropped out, and it was an owner occupier, which is even more strange. Yeah, we're anxious to move that one because that frees up, quite frankly, a lot of capital and reduces the burn on our AFFO. It has a meaningful effect once we're able to unload it.

Speaker #4: We had it under contract—it seemed to be going fine. And then, at the last minute, the purchaser just dropped out. And it was an owner-occupier, which is even more strange.

Speaker #4: But yeah, we're anxious to move that one because that frees up, quite frankly, a lot of capital and reduces the burn on our AFFO.

Speaker #4: So it has a meaningful effect once we're able to unload it.

Speaker #5: Are you hopeful you'll be able to get something done this year? On it?

Mike Rawle: Are you hopeful you'll be able to get something done this year on it?

Jimmy Shan: Are you hopeful you'll be able to get something done this year on it?

Speaker #4: Yeah. I'm hopeful for this year. I'm hopeful I mean, it's March. Maybe we could close something. I would think in, I would say, early fall.

Kelly C. Hanczyk: I'm hopeful for this year. I'm hopeful. I mean, it's March. Maybe we could close something, I would think, in, I would say, early fall. That, you know, that's what I'm hoping for.

Speaker #4: That's what I'm hoping for.

Speaker #5: Yeah.

Mike Rawle: Yeah.

Jimmy Shan: Yeah.

Speaker #4: If we're lucky, maybe sooner.

Kelly C. Hanczyk: If we're lucky, maybe sooner.

Speaker #5: Yeah. Okay. Thanks.

Mike Rawle: Yep. Okay, thanks.

Jimmy Shan: Yep. Okay, thanks.

Speaker #3: The next question is from Tal Wooley with CIBC Capital Markets. Please go ahead.

Operator: The next question is from Tal Woolley, with CIBC Capital Markets. Please go ahead.

Speaker #7: Hey, good morning. Just on renewal rents in Q4—they were a little bit lower than where they've been for the rest of the year.

Tal Woolley: Hey, good morning. Just on the renewal rents in Q4, they were a little bit lower than where they've been for the rest of the year. Anything special about that or anything, you know, Sorry, was that just sort of like a one-off kind of lease situation that created that? Or is there something we should be reading into the market?

Speaker #7: Anything special about that, or was that just sort of like a one-off kind of lease situation that created that? Or is there something we should be reading into the market?

Speaker #5: I don't think there's anything to read into it there. I think it's just the nature of the leases that we had coming up. I think also we had if we looked at some of the leasing that we did earlier in the year was there was some really big lifts that we had really low rates coming up.

Mike Rawle: I don't think there's anything to read into it there. I think it's just the nature of the leases that we had coming up. I think also we had, if we look at some of the leasing that we did earlier in the year was, there was some really big lifts that we had, you know, really low rates coming up. Yeah.

Speaker #5: So yeah.

Speaker #7: Okay. And then just when you look at your outlook for 2026, do you sort of see that as are there any big swing factors in there that could have you hit higher than that?

Tal Woolley: Okay. Just when you look at your outlook for 2026, like, do you sort of see that as, are there any big swing factors in there that could have you hit higher than that or not reach those targets? Are there any key, like, sort of things coming up throughout the year that we should be particularly paying attention to?

Speaker #7: Or not reach those things—not reach those targets? Are there any key sort of things coming up throughout the year that we should be particularly paying attention to?

Speaker #5: All right. Kelly can add color. I think it's a pretty volatile world out there. I don't think— I don't think anyone expected the geopolitical instability we saw last year.

Mike Rawle: I'd say, you know, Kelly can add color. I think it's a pretty volatile world out there. You know, I don't think, you know, I don't think anyone expected the geopolitical instability we saw last year. I think, you know, we obviously really happy with how our business performed during, you know, during all that upheaval. You know, the answer is, you know, last year we had 2 complete 2 tenants file CCA completely from left field, unaffected by the tariff. They just, you know, went bust, and that was 3 buildings that came back to us. I think we did a fantastic job of working through that. And, like, we don't see anything like that on the horizon, but we didn't see it on the horizon last year. You know, I...

Speaker #5: And I think we obviously were happy with how our business performed during all that upheaval. And so, but the answer is, last year, we had two tenants file CCAA, completely from left field.

Speaker #5: Unaffected by the tariffs. They just went bust. And that was three buildings that came back to us. And so I think we did a fantastic job of working through that.

Speaker #5: And we don't see anything like that on the horizon. But we didn't see it on the horizon last year, so nothing that we're aware of.

Mike Rawle: Nothing that we're aware of, I think, to call out, but, you know, that doesn't mean things don't happen and, you know, just happy with how well the team has responded to the challenges that have come up over the last year.

Speaker #5: I think to call out, but that doesn't mean things don't happen. And just happy with how well the team has responded to the challenges that have come up over the last year.

Speaker #4: Yeah. And when I look out at the renewals in October, we have 150,000 square feet, and I fully expect—we have an offer out with them.

Kelly C. Hanczyk: Yeah. When I look out at the renewals in October, you know, we have 150,000 sq ft. I fully expect we have an offer out with them and we're negotiating back and forth right now. End of December, we have two larger ones, 175,000 and 80,000, and we expect both of them to renew. I don't see any issue there. There's decent lift there. The 30 November one, 90,000 sq ft, that's the one we knew was coming back to us. We're hoping, and we have that listed now, I mean, we're pretty hopeful. When I look at, you know, the balance of kind of what comes up in the end of the year, we have one in Ajax.

Speaker #4: And we're negotiating back and forth right now. End of December, we have two larger ones—175,000 and 80,000. And we expect both of them to renew.

Speaker #4: I don't see any issue there. So there's decent lifts there. The November 30th one, 90,000 square feet—that's the one we knew was coming back to us.

Speaker #4: We're hoping and we have that listed now. So I mean, we're pretty hopeful and then when I look at the balance of kind of what comes up in the end of the year, we have one in Ajax.

Speaker #4: It's not a lot, but they paid us an early termination fee, and that comes back. But I think we'll get some lift on that one.

Kelly C. Hanczyk: You know, it's not a lot, but they paid us an early termination fee and that comes back, but I think we'll get some lift on that one. An early termination fee takes them to the end of their lease, which is, I believe, end of September. Then we have another 20,000 sq ft in Saskatchewan that's just a vacant, it's going to be a vacated truck port. Like an exterior type space that they were renting. We're actually going to, in the planning stage, to finish the space when we get it back in full and add to the GLA and be able to charge much higher rents. Saskatchewan seems to be a pretty solid market for us right now. On the new deals and renewal deals, we're still pretty positive.

Speaker #4: And an early termination fee takes them to the end of their lease which is, I believe, end of September. And then we have another 20,000 square footer in Saskatchewan.

Speaker #4: That's just a vacant—it's going to be a vacated truck court. So, an exterior-type space that they were renting. We're actually going into the planning stage to finish the space when we get it back in full and add to the GLA, and be able to charge much higher rents in Saskatchewan.

Speaker #4: Seems to be a pretty solid market for us right now. So, on the new deals and renewal deals, we're still pretty positive.

Speaker #7: Okay. And then I guess just on the financing side, you guys sitting on credit facilities and your desire to get to investment-grade rating. You've been very clear about that.

Tal Woolley: I guess just on the financing side, you know, you guys have, you know, a significant amount of your debt sitting on credit facilities and your desire to get to investment grade rating. You know, you've been very clear about that. Are you noticing any, like, change from lenders in terms of, like, the type of lending product they'd like you to take, like secured financing versus credit facilities? Is it just sort of been business as normal? I'm just trying to get a sense if the, you know, banks have really changed at all, sort of, over the last couple of years.

Speaker #7: Are you noticing any change from lenders in terms of the type of lending product they'd like you to take? Secured financing versus credit facilities?

Speaker #7: Or has it just sort of been business as normal? I'm just trying to get a sense of whether the banks have really changed at all over the last couple of years.

Mike Rawle: Yes, in a very good way. You know, it's interesting being at this end of the table, I guess. You know, when you start getting close to being an IG rate-rated borrower, everyone wants to lend to you just before that because they want part of the debt deal, right? Absolutely. We have a huge amount of support from our banking syndicate. More banks wanting to join than we had ever hoped, it's a very good position to be in as we're just on that kind of cusp. You know, we're pretty relaxed about the timing of when we get there other than it's obviously substantial savings and additional flexibility to getting to IG. That's the rush, not from any kind of liquidity challenges.

Speaker #5: Yes, in a very good way. And it's interesting being at this end of the table, I guess. When you start getting close to being an IG-rated lender, borrower, everyone wants to lend to you just before that because they want part of the debt deal, right?

Speaker #5: So, absolutely. We have a huge amount of support from our banking syndicate, and more banks wanting to join than we had ever hoped. And so it's a very good position to be in.

Speaker #5: And as we're just on that kind of cut, we're pretty relaxed about the timing when we get there, other than it's obviously substantial savings and additional flexibility to getting to IG.

Speaker #5: So that's the rush, not from any kind of liquidity challenges. It's just there's tons of support for us out there from our group of bankers.

Mike Rawle: It's just there's tons of support for us out there from our group of bankers.

Speaker #7: And that mid-nine number, that would put you, you think, at BBB mid? Kind of rating?

Rachel Smith: That mid 9 number, that would put you think at like Triple B mid kind of rating?

Mike Rawle: That mid 9 number, that would put you think at like Triple B mid kind of rating?

Speaker #5: No. I think when we go to BBB minus is where we're trying to get just trying to get IG. And then go from there.

Mike Rawle: No, I think when we go with the BBB- is what we're trying to, you know, trying to get, just trying to get IG and then go from there.

Speaker #7: Okay. Got it. Thanks very much, gentlemen.

Rachel Smith: Okay. Got it. Thanks very much, Joan.

Mike Rawle: Okay. Got it. Thanks very much, Joan.

Speaker #5: Thanks.

Mike Rawle: Thanks.

Speaker #3: The next question is a follow-up from Mike Markitis with BMO. Please go ahead.

Operator: The next question is a follow-up from Mike Markidis with BMO. Please go ahead.

Speaker #8: Thanks, guys. It's been a while. I just wanted to recycle back on Savage Road, but I don't see unit deal. But I think you said micro-industrial units.

Mike Markidis: Thanks, guys. It's been a while. I just wanted to just circle back on Savage Road. I don't see unit deal but I think you said micro-industrial units. Is that a similar plan to Adams where it might be a partial sale or just trying to get a sense of how that works?

Speaker #8: So is it a similar plan to Adams, where it might be a partial sale, or just trying to get a sense of how that works?

Kelly C. Hanczyk: Less possible there, but possibly. Yeah, it's possible.

Speaker #4: Less possible there, but possibly. Yeah, it's possible. There's a possibility I do half rental, half for sale. So just working through that now.

Kelly C. Hanczyk: Less possible there, but possibly. Yeah, it's possible.

Mike Markidis: Okay.

Kelly C. Hanczyk: We, we-

Mike Markidis: And then-

Kelly C. Hanczyk: There's a possibility of I do half rental, half for sale, we're just working through that now.

Speaker #8: Okay. And then, just so I’m clear, are you collecting as you issue the units, or will you issue the units?

Mike Markidis: Okay. Just so you're collecting as you issued the units or you will issue the units?

Kelly C. Hanczyk: As we release the units. The distribution becomes payable, then we effectively get the distribution back.

Speaker #4: the units. The distribution becomes payable. And then we effectively get the distribution back.

Speaker #8: Okay. Got it. But that really hasn't happened yet, right? Because you got only 0.7 million across.

Mike Markidis: Okay, got it. That really hasn't happened yet, right? You got only CAD 0.7 million.

Kelly C. Hanczyk: I think we have 1 batch out.

Speaker #4: I think we have one batch out.

Kelly C. Hanczyk: I think we have 1 batch out.

Speaker #8: Okay.

Mike Markidis: Okay.

Speaker #5: Yeah. Well, just under 500,000.

Mike Rawle: Yeah. Well,

Mike Markidis: Oh, yeah.

Mike Rawle: Just under CAD 500,000. Yeah.

Speaker #8: Right. So, can you just remind me why you go from an 8% to a 6% yield? Eight percent return on your units, and then it goes down to six on completion?

Mike Markidis: Right. Can you just remind me why you go from an 8% to a 6% yield, like 8% return on your units, and then it goes down to 6 on completion?

Speaker #4: Yeah, a 6 cap in Richmond is pretty attractive. We're looking at stuff right now, and everything we see is in the high 4s, low 5s.

Kelly C. Hanczyk: Yeah. It's a 6 cap in Richmond is pretty attractive. You know, we're looking at stuff right now, everything we see is in the high 4s, low 5s. It's still a fairly decent. It's a way to, I guess, build our market cap using our currency. I guess that's as best as I can say.

Speaker #4: So it's still a fairly decent it's a way to, I guess, build our market cap using our currency. I guess that's as best as I can say.

Speaker #8: No, no. I get that. It's an attractive, stabilized yield. But what I'm trying to understand is, I think—unless I misunderstood—you're getting an 8% return on the units you advance.

Mike Markidis: No, no, I get that. It's an attractive-

Kelly C. Hanczyk: Yeah.

Mike Markidis: What I'm trying to understand is I think, unless I misunderstood, like, you're getting an 8% return on the units you advance, but then are you saying that the terminal value would be a 6, or are you saying but then the unlevered yield on completion is a 6? I'm just trying to understand.

Speaker #8: But then, are you saying that the terminal value would be a 6? Are you saying, but then the unlevered yield on completion is a 6?

Speaker #8: I'm just trying to understand.

Mike Rawle: No. Six and six. We get a 6% yield-

Speaker #5: No, it's a six. Get a 6% yield on the units. So it's basically cash-neutral to us.

Kelly C. Hanczyk: Yeah.

Mike Rawle: On the units. It's basically cash neutral to us.

Speaker #8: So your 8% in the interim, 6% on completion?

Mike Markidis: you're 8% in the interim, 6% on completion?

Speaker #5: No. No. It's 6% in the interim. 6%.

Mike Rawle: No, no, 6% in the interim.

Kelly C. Hanczyk: No.

Mike Rawle: 6%.

Mike Markidis: Oh, 6%.

Speaker #8: Oh, 6%. Okay. Minus the— I apologize. Okay.

Kelly C. Hanczyk: Yeah.

Mike Markidis: Okay. I apologize.

Kelly C. Hanczyk: Yeah. No, no.

Mike Markidis: I apologize. Okay.

Speaker #4: Yeah. Because it's not today's yield, right? It's at 10.50.

Kelly C. Hanczyk: Yeah, 'cause it's not today's yield, right? It's at CAD 10.50.

Speaker #8: Okay. I understand. I apologize. I misunderstood. Thank you so much.

Mike Markidis: Okay. I understand. I apologize. I misunderstood. Thank you so much.

Speaker #4: Yeah. No worries.

Kelly C. Hanczyk: Yeah, no worries.

Speaker #3: The next question is a follow-up from Sam Damiani with TD Cowen. Please go ahead.

Operator: The next question is a follow-up from Sam Damiani with TD Cowen. Please go ahead.

Speaker #9: Thank you. Just on, I think you mentioned, Kelly, there's a tenant that paid an early termination fee in Ajax for taking the, I guess, the lease wrap-up in September.

Sam Damiani: Thank you. I think you mentioned, Kelly, there's a tenant that paid an early termination fee in Ajax for...

Kelly C. Hanczyk: Mm-hmm.

Sam Damiani: Taking the, I guess, the lease will wrap up in September. Will that late lease termination fee go into same property NOI for this year?

Speaker #9: Will that late lease termination fee go into same property NOI for this year?

Speaker #5: Well, I think what that does, we account for it as rent, I believe, up until the end of the term. And if we lease it prior to that, then I will let Mike answer that.

Kelly C. Hanczyk: Well, I think what that does is it's, you know, we account for it as rent, I believe, up until the end of the term. If we lease it prior to that, then I will let Mike answer that.

Speaker #1: Yeah. No. It won't go into the same property NOI.

Mike Rawle: Yeah, no, it won't go into the same property NOI.

Speaker #9: Okay, I appreciate that. And could you share with us what the expiring rent is on that building, or set of buildings?

Sam Damiani: Okay. I appreciate that. Could you share with us what the expired rent is on that building or set of buildings?

Kelly C. Hanczyk: It's one building. I cannot off my head remember what the expiry rent is at, but I know we'll have.

Speaker #8: It's one building. I cannot off my head remember what the expiry rent is at. But I know we'll have a.

Kelly C. Hanczyk: It's one building. I cannot off my head remember what the expiry rent is at, but I know we'll have.

Mike Rawle: CAD 13.50. CAD 13.50.

Speaker #5: It's 16.50. 13.50.

Kelly C. Hanczyk: CAD 13.50.

Speaker #9: 13.50. Yeah. So I think we'll have a pretty decent lift on that one. Awesome. Thank you very much. And I'll turn it back.

Mike Rawle: Yeah.

Kelly C. Hanczyk: Yeah. I think we'll have a pretty decent lift on that one.

Sam Damiani: Awesome. Thank you very much. I'll turn it back.

Speaker #3: This concludes the question and answer session. I would like to turn the conference back over to Kelly Hanzik for any closing remarks.

Operator: This concludes the question and answer session. I would like to turn the conference back over to Kelly C. Hanczyk for any closing remarks.

Speaker #8: All right, everybody. Thanks so much, and we will see you next quarter.

Kelly C. Hanczyk: All right, everybody, thanks so much, and we will see you next quarter.

Operator: This brings to an end today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.

Q4 2025 Nexus Industrial REIT Earnings Call

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