/NOT FOR DISTRIBUTION TO U.S. NEWS SERVICES OR DISSEMINATION IN THE UNITED STATES/
TORONTO and MONTREAL, Aug. 16, 2021 (GLOBE NEWSWIRE) — Nexus Real Estate Investment Trust (TSX:NXR.UN) (“Nexus” or the “REIT”) announced today that it has waived conditions on the acquisition of a portfolio of three distribution centres located in Saskatchewan and New Brunswick for a purchase price of approximately $230.4 million (the “Distribution Centre Acquisition”). The purchase price is expected to be funded with the net proceeds from the REIT’s $75 million public offering of trust units (the “Units”) (see “The Offering” below) and up to approximately $172.4 million from new mortgage financing to be placed on the properties at closing.
The REIT also announced today entry into of, or the waiving of diligence conditions under, two purchase and sale agreements to acquire five industrial properties. Together with an Alberta industrial property which the REIT announced having waived conditions to acquire on August 12, 2021, the aggregate purchase price for the properties to be acquired is $128.6 million (the “Additional Industrial Acquisitions”). The REIT anticipates that the purchase price for certain of the Additional Industrial Acquisitions will be funded by the issuance of Class B LP Units, cash on hand, assumed mortgage financing on the properties and the proceeds from new mortgage financing.
In aggregate, Nexus expects to add approximately 2.5 million square feet of gross leasable area (“GLA”) to the REIT’s income producing portfolio from the acquisitions announced today and on August 12, 2021.
Kelly Hanczyk, the REIT’s Chief Executive Officer, stated that “This is truly a breakout year for the REIT. We are pleased with the significant progress we have made this year toward our goal of transforming into a pure play industrial REIT. Upon closing of the announced transactions, we will have completed over $640 million of industrial acquisitions since the beginning of 2021. Our industrial portfolio weighting will increase to approximately 80% of NOI, well surpassing our previously stated goal of 75%. The acquisition opportunities are highly compelling and consistent with our stated strategy. The pipeline of asset acquisition opportunities in exchange for units from our London Vendor reinforces their commitment to Nexus and their belief in the REIT’s strong growth fundamentals. We continue to see good industrial acquisition opportunities across Canada and expect strong fundamentals and momentum in the asset class to persist.”
Recent Investment Activity Highlights
Pro forma Nexus portfolio metrics assuming completion of the Acquisitions are set out below:
| Portfolio Metrics | ||||
| Current(1) | New Acquisitions(1) |
Pro Forma | ||
| Number of Properties | (#) | 91 | 8 | 99 |
| GLA (at Nexus’ Ownership Interest) | (square feet) | 7,188,829 | 2,321,483 | 9,510,312 |
| Occupancy | (%) | 96% | 99% | 96% |
| Weighted Average Lease Term | (years) | 5.0 | 8.7 | 5.9 |
| Industrial as % of Total Portfolio (by NOI) | (%) | 73% | 100% | ~80% |
Note: 1. “Current” metrics include 2 previously announced acquisitions in London, Ontario and Red Deer, Alberta for which the REIT has waived diligence conditions. “New Acquisitions” metrics exclude these two previously announced acquisitions.
In aggregate, the Acquisitions would represent a 5.7% effective going-in capitalization rate and after giving effect to the Acquisitions, the REIT expects its debt to gross book value ratio to be 47.8% based on its reported Q2 2021 financial results.
The Distribution Centre Acquisition
Pursuant to the Distribution Centre Acquisition, the REIT will acquire three single-tenant distribution centres, comprising total GLA of approximately 1.4 million square feet, for a combined purchase price of approximately $230.4 million. One property is located in Regina, Saskatchewan while two properties are located in Moncton, New Brunswick. The properties are occupied by a single investment grade rated company (BBB (high) / DBRS; BBB / S&P), under a triple-net lease with a weighted average lease term (“WALT”) of approximately 10.6 years. The Distribution Centre Acquisition is expected to close on or about October 1, 2021.
The Offering
The REIT also announced today in connection with the waiver of conditions on the Distribution Centre Acquisition that it has entered into an agreement to sell to a syndicate of underwriters led by BMO Capital Markets and Desjardins Capital Markets (collectively, the “Underwriters”), on a bought deal basis, 6,640,000 Units at a price of $11.30 per Unit (the “Offering Price”) for gross proceeds of approximately $75 million (the “Offering”). In addition, the REIT has granted the Underwriters an over-allotment option to purchase up to an additional 966,000 Units on the same terms and conditions, exercisable at any time, in whole or in part, up to 30 days after the closing of the Offering, which, if exercised in full, would increase the gross proceeds of the Offering to approximately $86 million (the “Over-Allotment Option”).
The REIT intends to use the net proceeds from the Offering to fund part of the purchase price for the Distribution Centre Acquisition and for general business purposes.
The Units under the Offering will be offered in Canada pursuant to a prospectus supplement filed under Nexus’s short form base shelf prospectus dated July 16, 2021. The Offering is expected to close on or about August 23, 2021 and is subject to customary conditions and receipt of all necessary approvals, including the approval of the Toronto Stock Exchange (“TSX”). The Offering is not conditional on the closing of the Distribution Centre Acquisition.
The Units have not been, nor will they be, registered under the United States Securities Act of 1933, as amended, (the “1933 Act”) and may not be offered, sold or delivered, directly or indirectly, in the United States, or to, or for the account or benefit of, “U.S. persons” (as defined in Regulation S under the 1933 Act), except pursuant to an exemption from the registration requirements of the 1933 Act. This press release does not constitute an offer to sell or a solicitation of an offer to buy any Units in the United States or to, or for the account or benefit of, U.S. persons.
The Additional Industrial Acquisitions
The REIT has entered into conditional purchase agreements or waived diligence conditions to acquire the following six properties for a combined purchase price of approximately $128.6 million:
About Nexus REIT
Nexus 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 89 properties comprising approximately 6.6 million square feet of gross leasable area. The REIT has approximately 33,788,000 Units issued and outstanding. Additionally, there are Class B LP Units of subsidiary limited partnerships of Nexus issued and outstanding, which are convertible into approximately 16,442,000 Units.
Non-IFRS Financial Measures
Certain financial measures disclosed in this press release do not have any standardized meaning prescribed by International Financial Reporting Standards (“IFRS”) and are therefore non-IFRS financial measures. The REIT’s method of calculating such non-IFRS financial measures may differ from other issuers’ methods and, accordingly, may not be comparable to such non-IFRS financial measures reported by other issuers.
AFFO is defined by the REIT as Funds From Operations (being net income in accordance with IFRS, excluding gains or losses on sales of investment properties, tax on gains or losses on disposal of properties, transaction costs expensed as a result of acquisitions being accounted for as business combinations, gain from bargain purchase, fair value adjustments of investment properties, warrants, unit options, restricted share units and derivative financial instruments, fair value adjustments and other effects of redeemable units classified as liabilities and the Class B LP Units, if any, amortization of right-of-use assets, lease principal payments, deferred income taxes, and amortization of tenant incentives and leasing costs, including adjustments for equity accounted entities), adjusted for certain items including differences resulting from recognizing ground lease payments and rental income on a straight-line basis, and reserves for normalized maintenance capital expenditures, tenant incentives and leasing costs. The REIT calculates AFFO in accordance with the Real Property Association of Canada. The REIT regards AFFO as an important performance measure of recurring economic earnings.
Debt to gross book value does not have any standardized meaning prescribed by IFRS and is therefore a non-IFRS financial measure. Debt to gross book value is calculated as Indebtedness (as defined in the declaration of trust governing the REIT, which is available under the REIT’s profile on SEDAR at www.sedar.com) divided by Gross Book Value (being, the acquisition cost of the assets of the REIT plus (i) the cumulative impact of fair value adjustments, (ii) acquisition related costs in respect of completed investment property acquisitions that were expensed in the period incurred, (iii) accumulated amortization on property, plant and equipment, and other assets, and (iv) deferred loan costs).
Forward Looking Statements
Certain statements contained in this news release constitute forward-looking statements which reflect the REIT’s current expectations and projections about future results, including with respect to the terms of, timing for completion of and source of funding for the Acquisitions, the expected benefits of the Acquisition and the timing thereof, the expected impact of the Acquisitions on the REIT’s AFFO per Unit and debt to gross book value, the satisfaction of conditions for the Acquisitions, including TSX and unitholder approval, as applicable, the waiver of due diligence conditions and statements regarding the satisfaction of other conditions. Often, but not always, forward-looking statements can be identified by the use of words such as “plans”, “expects” or “does not expect”, “is expected”, “estimates”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the REIT to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Actual results and developments are likely to differ, and may differ materially, from those expressed or implied by the forward-looking statements contained in this news release. Such forward-looking statements are based on a number of assumptions that may prove to be incorrect.
Although management believes the expectations reflected in such forward-looking statements are reasonable and represent the REIT’s internal expectations and beliefs at this time, such statements involve known and unknown risks and uncertainties and may not prove to be accurate and certain objectives and strategic goals may not be achieved. A variety of factors, many of which are beyond the REIT’s control, could cause actual results in future periods to differ materially from current expectations of events or results expressed or implied by such forward-looking statements, such as the risks identified in the REIT’s current annual information form available at www.sedar.com and other materials filed with the Canadian securities regulatory authorities.
While the REIT anticipates that subsequent events and developments may cause its views to change, the REIT specifically disclaims any obligation to update these forward-looking statements except as required by applicable law. These forward-looking statements should not be relied upon as representing the REIT’s views as of any date subsequent to the date of this news release. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward- looking statements. The factors identified above are not intended to represent a complete list of the factors that could affect the REIT.
For further information please contact:
Kelly Hanczyk, CEO at (416) 906-2379; or
Rob Chiasson, CFO at (416) 613-1262.
Canadian investors might come across a lot of arguments out there for or against index funds and stocks. When it comes to investing, some might believe clicking once and getting an entire index is the way to go. Others might believe that stocks provide far more growth.
So let’s settle it once and for all. Which is the better investment: index funds or stocks?
Index funds can be considered a great investment for a number of reasons. These funds typically track a broad market index, such as the S&P 500. By investing in them you gain exposure to a diverse range of assets within that index, and that helps to spread out your risk.
These funds also tend to have lower expense ratios compared to an actively managed fund. They merely passively track an index rather than a team of analysts constantly changing the fund’s mix of investments. This means lower expenses, and lower fees for investors.
Funds also tend to have more consistent returns compared to individual stocks, which can see significant fluctuations in value. You therefore may enjoy an overall market trending upwards over the long term. This long-term focus can then benefit investors from the power of compounding returns, growing wealth significantly over time.
That doesn’t mean that stocks can’t be a great investment as well. Stocks have historically provided higher returns compared to other asset classes over the long run. When you invest in stocks, you’re buying ownership of stakes in a company. This ownership then entitles you to a share of the company’s profits through returns or dividends.
Investing in a diverse range of stocks can then help spread out risk. Whereas an index fund is making the choice for you, Canadian investors can choose the stocks they invest in, creating the perfect diversified portfolio for them.
What’s more, stocks are quite liquid. This means you can buy and sell them easily on the stock market, providing you with cash whenever you need it. What’s more, this can be helpful during periods of volatility in the economy, providing a hedge against inflation and the ability to sell to make up income.
In some jurisdictions as well, even if you lose out on stocks you can apply capital losses, reducing overall tax liability in the process. And while it can be challenging, capital gains can also allow you to even beat the market!
I’m sure some people won’t like this answer, but investing in both is definitely the best route to take. If you’re set in your ways, that can mean you’re losing out on the potential returns which you could achieve by investing in both of these investment strategies.
A great option that would provide diversification is to invest in strong Canadian companies, while also investing in diversified, global index funds. For instance, consider the Vanguard FTSE Global All Cap Ex Canada Index ETF Unit (TSX:VXC), which provides investors with a mix of global equities, all with different market caps. This provides you with a diversified range of investments that over time have seen immense growth.
This index does not invest in Canada, so you can then couple that with Canadian investments. Think of the most boring areas of the market, and these can provide the safest investments! For instance, we always need utilities. So investing in a company such as Hydro One (TSX:H) can provide long-term growth. What’s more, it’s a younger stock compared to its utility peers, providing a longer runway for growth. And with a 3.15% dividend yield, you can gain extra passive income as well.
Former chief executive officer of RBC Dominion Securities Tony Fell is campaigning to require the Canadian financial industry to account for inflation in how it reports investment returns.Neville Elder/Handout
While the average Canadian is fixated on the price of gasoline and groceries, inflation may be quietly killing their investment returns.
Compounded across many years, even modest inflation can deal a powerful blow to a standard investment portfolio. And investors commonly underappreciate the threat.
But a legend of the Canadian investment banking industry is trying to change that.
Tony Fell, the former chief executive officer of RBC Dominion Securities, is campaigning to require the Canadian financial industry to account for inflation in how it reports investment returns.
“I think they will find this very hard to argue against,” he said in an interview. “It’s a matter of transparency and reporting integrity. But that doesn’t mean it will happen.”
Mr. Fell made his case in a recent letter to the Ontario Securities Commission, arguing that Canadian investors are being misled. He has not yet received a response from the regulator.
Canadians with an investment account receive a statement at least once a year detailing how their investments have performed. For the most part, rates of return are calculated on a nominal basis, meaning they have no inflation component factored in.
A real return, on the other hand, accounts for the hit to purchasing power from rising consumer prices.
These figures, Mr. Fell argues, would give investors a clearer picture of how much they have gained from a given investment.
And since Statistics Canada calculates inflation on a monthly basis, the investment industry would already have access to the data it needs to make the switch to real returns. It would be very little trouble and no extra cost, Mr. Fell said.
Still, he said he expects the investment industry will resist his proposal. “The mutual-fund lobby is so strong, and nobody wants to rock the boat too much.”
He points to the battle to inform Canadians of the investment fees they pay. For 30 years, investor advocates have been pushing for improvements to disclosure.
One major set of regulatory changes, which took effect in 2016, required financial companies to disclose how much clients paid for financial advice.
But the reforms left out one major component of mutual-fund fees. The cost of advice is there, but many investors still don’t see how much they pay in fund-management fees, which amount to billions of dollars paid by Canadians each year.
Total cost reporting, which should finally close the fee-disclosure gap, is set to come into effect in 2026. “It’s outrageous,” Mr. Fell said. “That should have been done years ago.”
So, it’s hard to imagine the industry warmly receiving his proposal, or the regulators enthusiastically pushing for its consideration.
The OSC said it agrees that retail investors need to be attuned to the effects of inflation, which is where investment advisers come in. “Professional advice requires an assessment of risk tolerance and risk appetite in order for an adviser to know their client, including the effect of the cost of living on achieving their financial objectives,” OSC spokesman Andy McNair-West said in an e-mail.
And yet, Mr. Fell said, the need exists for more formal reporting of inflation-adjusted performance.
Inflation often goes overlooked by the industry and investors alike. It can be seen in the celebration of stock indexes at all-time nominal highs, which wouldn’t look so great if inflation were factored in.
The inflationary extremes of the 1970s provide a stark illustration. In 1979, the S&P 500 index posted a total return of 18.5 per cent – a blockbuster year until you consider that inflation was 13.3 per cent.
That took the index’s real return down to a lacklustre 5.2 per cent.
More recently, investors in Canada and the United States piled into savings instruments promising 5-per-cent nominal rates of return. But the rate of inflation in Canada averaged 6.8 per cent in 2022, more than wiping out the return on things such as guaranteed investment certificates, in most cases.
“A lot of people don’t connect those dots,” said Dan Hallett, head of research at HighView Financial Group. “Over 10 years, even 2-per-cent inflation really eats away at purchasing power.”
He worries, however, that reporting after-inflation returns may confuse average investors, many of whom still fail to understand the basic investment fees they’re paying.
All the more reason to get Canadian investors thinking more about inflation, Mr. Fell argues.
“The impact of inflation on investing is sort of forgotten about,” he said. “The only way I can think of turning that around is to highlight it in investors’ statements.”
Capital gains tax hike a sure way to repel the tech sector
Published Apr 18, 2024 • Last updated 23 minutes ago • 4 minute read
If there’s an uncomfortable economic lesson of the past few years, it’s this: The vibes matter.
As much as economists point to data, the reality in politics and policy is that public expectations and perceptions are important too. And from a business perspective, the vibes of the 2024 federal budget are rancid.
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The budget document’s title is “Fairness For Every Generation” and in practice, what that meant was a “soak the rich” tax hike on capital gains.
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You can see how this looked like good politics. In her budget speech, Finance Minister Chrystia Freeland said that only 0.13 per cent of Canadians with an average annual income of $1.4 million will pay higher taxes — hardly a sympathetic lot, at a time when many Canadians are struggling to pay for food and housing.
The problem is that the proposed capital gains tax hike won’t only soak a handful of rich Canadians as advertised. In its current design, it broadly punishes individuals and families of small business owners, tech entrepreneurs, dentists and countless others who have often spent decades trying to build their businesses for a potential once-in-a-lifetime capital gains event. Together, our analysis suggests that those people represent closer to 20 per cent of Canadians.
This tax proposal simply amounts to a systemic tapping on the brakes on the investment in a productive and prosperous future, being made by innovative, hardworking Canadians. And it does so at the very time Canada needs them to accelerate their investing.
But among the innovators and business leaders I talk to in the Canadian tech sector, this week’s budget was a chilling shock. There is a sincere and widespread belief that if something does not change, the budget will do widespread and irreparable damage to Canada’s tech sector.
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That’s why more than 1,000 CEOs have signed a public letter to Prime Minister Trudeau and Deputy Prime Minister Freeland at ProsperityForEveryGeneration.ca, calling on the government to stop this tax hike. Innovators understand what’s at stake.
Firstly, we are at a moment when capital is harder to access than at any time in the past generation. Higher interest rates and economic uncertainty mean that many high-growth companies with innovative products struggle to secure growth capital on favourable terms.
South of the border, we’re seeing strong growth, driven by significant government investment through strong industrial policy, alongside significant growth in bleeding-edge artificial intelligence applications. The U.S. is an exciting place to invest right now.
And capital is highly mobile. If Canada is seen as an unfriendly place to invest, due to high taxes, investors will simply take their money elsewhere, and propel the growth of promising tech companies in other countries.
What’s more, highly skilled talent is more mobile than ever before, and among innovative high-growth companies, stock options — subject to capital gains tax — are a key form of compensation.
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We’re not talking purely about CEOs and tech founders here either. The dedicated early players of a promising tech startup earn their stock options with sweat equity. Their dedication, taking a risk in the prime of their career, is often the key ingredient for the success of future innovation champions.
Innovators are intimately aware of these concerns, because this isn’t the first time the Liberal government has tried to tax stock options. Nearly a decade ago, they promised to hike taxes on stock options in their 2015 campaign platform, and it took years of public advocacy from tech leaders to help the government understand the potential unintended damage that a reckless tax hike could do on the ability to attract and retain talent.
All along the way, we were assured by the government that they knew what they were doing, and there was nothing to worry about. In truth, after many frank conversations, they changed course.
In the days and weeks ahead, I’m expecting to hear the same kind of thing again. Already we’ve heard from government officials pointing to the “Canadian Entrepreneurs’ Incentive” carve-out, which will soften the blow of higher capital gains tax rates overall. The details of this carve-out are not yet fully clear, and it’s possible that the government will tinker with the thresholds to help mitigate the damage of a tax hike on capital gains.
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But the reality is that without a significant change in messaging, the danger to Canada’s economy is real.
Capital gains are taxed at a different rate because they are taxes on investment. Every investment comes with risk; you are not guaranteed to make a profit. The tax code takes this into account.
If the vibes are off, and the global perception of Canada is that we’re not a place where the investment risk is worth it, because the federal government is just going to tax you to death, then we simply won’t see capital or talent flow to Canada.
Innovation and entrepreneurship are about hope. You fundamentally need to be an optimist to risk it all, and invest yourself in growing a business. Right now, Canada’s federal government is not sending a hopeful vibe. And the vibes matter.
Benjamin Bergen is president, Council of Canadian Innovators.
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Jeremy Hansen – The Canadian Encyclopedia
UK Mulls New Curbs on Outbound Investment Over Security Risks – BNN Bloomberg
Save $700 Off This 4K Projector at Amazon While You Still Can – CNET
'Kingdom Come: Deliverance II' Revealed In Epic New Trailer And It Looks Incredible – Forbes
Auston Matthews denied 70th goal as depleted Leafs lose last regular-season game – Toronto Sun
Sick of Your Blue State? These Real Estate Agents Have Just the Place for You. – The New York Times
Supervised consumption sites urgently needed, says study – Sudbury.com
Canada's 2024 budget announces 'halal mortgages'. Here's what to know – National Post
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