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Nexus Real Estate Investment Trust Announces the Acceleration of Its Transition to a Pure Play Canadian – GlobeNewswire

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/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

  • Continued Increased Industrial Weighting – Upon closing of the Distribution Centre Acquisition and the Additional Industrial Acquisitions (collectively, the “Acquisitions”), Nexus’ portfolio weighting to the industrial asset class will increase from 73% to approximately 80% of NOI. The Acquisitions highlight Nexus’ continued commitment to enhance its weighting towards the industrial asset class.
  • Off-Market Transaction – The Acquisitions are being completed on an off-market basis, highlighting Nexus’ deep network of relationships within the Canadian real estate landscape.
  • High Quality Portfolio – The Acquisitions comprise high quality modern distribution industrial assets with an average clear height of 28 feet, site coverage of 30% and an average building size of approximately 279,000 square feet. 85% of the Acquisitions comprise single-tenant assets, on a net rent basis.
  • Positive Improvement in Key Operating Metrics – The Acquisitions possess strong operating metrics that will significantly enhance Nexus’ overall portfolio profile, including a WALT of approximately 8.7 years and weighted average occupancy of 99%.
  • Highly Accretive Transaction – The Acquisitions are expected to be immediately accretive to Adjusted Funds From Operations (“AFFO”) per Unit (see “Non-IFRS Financial Measures” below).

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:

  • A portfolio of five industrial properties located in Southwestern Ontario totaling approximately 0.9 million square feet for an aggregate purchase price of approximately $108.8 million (the “Southwestern Ontario Acquisition”). One of the properties is structured as a forward purchase agreement whereby Nexus will acquire the asset upon completion of a 150,000-square foot planned expansion. The vendor of the Southwestern Ontario Acquisition (the “London Vendor”) is the same counterparty from whom the REIT has acquired six industrial properties so far in 2021. Similar to these past transactions, the Southwestern Ontario Acquisition will be partially funded by the issuance of 5,460,275 Class B LP Units, valued at approximately $61.7 million, to the London Vendor as partial purchase price consideration. The REIT anticipates that balance of the purchase price for the Southwestern Ontario Acquisition will be funded by a combination of cash on hand, assumed mortgage financing on the acquired properties and the proceeds from new mortgage financing to be placed on the properties at closing. The Southwestern Ontario Acquisition is expected to close in January 2022, with the exception of the property under forward purchase agreement, which the REIT expects to close by the end of 2022. Closing of the Southwestern Ontario Acquisition is subject to various customary closing conditions, including satisfactory completion of the REIT’s due diligence, TSX approval and (if necessary) approval of the REIT’s unitholders.
  • The previously announced 189,625 square foot warehouse property in Red Deer, Alberta which the REIT has waived conditions on August 10, 2021, expected to close on or about September 9, 2021.

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.

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Canada’s third-largest pension fund beefs ups plan to cut carbon emissions

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CALGARY, Alberta/TORONTO (Reuters) – Ontario Teachers’ Pension Plan Board (OTPP), Canada‘s third-largest pension fund, announced on Thursday new interim targets to cut the carbon emissions intensity of its portfolio as part of a plan to reach net-zero emissions by 2050.

OTPP, which manages C$227.7 billion ($180.11 billion) in assets, plans to reduce emissions intensity by 45% by 2025 and 67% by 2030, from 2019 levels.

Fellow pension fund Caisse de dépôt et placement du Québec also has a net-zero target by 2050, but environmental campaigners said OTPP’s interim targets are the strongest climate commitment yet from a Canadian pension fund.

Ziad Hindo, OTPP’s chief investment officer, said the fund would be looking to invest more in clean-energy companies, as well as firms offering software and services that allow other companies to transition to a lower carbon economy.

“Climate change permeates the entire investing landscape. Tackling it requires substantial effort and massive amounts of capital,” said Hindo. He compared the climate sector today with the technology sector in the 1990s, and predicted it would cause huge disruption across every industry.

OTPP is increasing staffing across various asset classes to keep up with growing investment in the climate sector, Hindo added. The fund’s portfolio currently includes more than C$30 billion in green investments such as renewable energy, energy storage, electrification, electricity transmission, energy efficiency and green real estate.

Unlike some large pension funds in the United States, OTPP is not divesting from oil and gas altogether, although it stopped actively investing in listed exploration and production companies in 2019.

“OTPP will need to go further if it wants to be considered a global leader on climate,” said Adam Scott, director of pension activist group Shift. “While this announcement describes how the OTPP will invest in solutions to the climate crisis, it makes no mention of how it will eliminate its exposure to the causes of it, namely high-risk fossil fuels.”

($1 = 1.2642 Canadian dollars)

 

(Reporting by Maiya Keidan and Nia Williams; Editing by Peter Cooney)

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A16z in talks to back CoinSwitch Kuber in first India investment – TechCrunch

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A16z is inching closer to making its first investment in a startup in India, the world’s second largest internet market that has produced over two dozen unicorns this year.

The Menlo Park-headquartered firm is in final stages of conversations to invest in Indian crypto trading startup CoinSwitch Kuber, three sources familiar with the matter told TechCrunch. The proposed deal values the Bangalore-based firm at $1.9 billion, two sources said. Coinbase is also investing in the new round, one of the sources said.

CoinSwitch Kuber was valued at over $500 million in a round in April this year when it raised $25 million from Tiger Global. If the deal with A16z materializes, it will be CoinSwitch Kuber’s third financing round this year.

TechCrunch reported last week that CoinSwitch Kuber was in talks to raise its Series C funding at up to $2 billion valuation. The report, which didn’t identify a lead investor, noted that the Indian startup had engaged with Andreessen Horowitz and Coinbase in recent weeks.

Usual caveats apply: terms of the proposed deal may change or the talks may not result in a deal. The author reported some details about the deal on Wednesday.

The startup declined to comment. Coinbase and A16z as well as existing investors Tiger Global and Sequoia Capital India did not respond to requests for comment.

The investment talks come at a time when CoinSwitch Kuber has more than doubled its user base in recent months — even as local authorities push back against crypto assets. Its eponymous app had over 10 million users in India last month, up from about 4 million in April this year, the startup said in a newspaper advertisement over the weekend.

A handful of crypto startups in India have demonstrated fast-pace growth in recent years — while impressively keeping their CAC very low — as millions of millennials in the South Asian nation kickstart their investment journeys. Several funds including those with big presence in India such as Accel, Lightspeed, WEH and Kalaari recently began working on their thesis to back crypto startups, TechCrunch reported earlier.

B Capital backed CoinDCX, a rival of CoinSwitch Kuber that has amassed 3.5 million users, last month in a $90 million round that valued CoinDCX at about $1.1 billion.

Policymakers in India have been debating on the status of digital currencies in the South Asian market for several years. India’s central bank, Reserve Bank of India, has expressed concerns about private virtual currencies though it is planning to run trial programs of its first digital currency as soon as December.

About 27 Indian startups have become a unicorn this year, up from 11 last year, as several high-profile investors — and global peers of Andreessen Horowitz — such as Tiger Global and Coatue have increased the pace of their investments in the South Asian market. Apna announced earlier on Thursday that it had raised $100 million in a round led by Tiger Global at $1.1 billion valuation, becoming the youngest Indian firm to attain the unicorn status.

Groww, an investment app for millennials, is in talks to raise a new financing round that would value it at $3 billion, TechCrunch reported on Wednesday. The startup has engaged with Coatue in recent days, the report said.

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Why Canadians are still struggling to understand investment fees – The Globe and Mail

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Advisors can ensure investors understand as much as possible by avoiding ‘using all kinds of fancy terms for all the different types of fees,’ one expert says.

gustavofrazao/iStockPhoto / Getty Images

Financial advisory fees remain a confusing subject to the vast majority of Canadian investors despite a decades-long effort by the investment industry and its regulators to provide greater clarity and transparency. That means financial advisors remain in the ideal position to help close that comprehension gap.

According to the results of a survey the Mutual Fund Dealers Association of Canada (MFDA) released in June as part of a more expansive research report, fewer than one in five Canadian investors could identify correctly what types of costs are included in current fee summaries.

“The challenge we have today is that most investors don’t get a full picture of all the fees,” says Jean-Paul Bureaud, executive director of the Canadian Foundation for the Advancement of Investor Rights (FAIR Canada), “they only get a partial picture and they might not appreciate that it’s a partial picture.”

Advisors can clarify that to clients relatively easily by making clear that current fee summaries only include the fees for advice and trailing commissions on mutual funds, he says, and that other costs – such as fund management fees and operational costs – also apply.

Advisors can also ensure investors understand as much as possible by avoiding “using all kinds of fancy terms for all the different types of fees,” Mr. Bureaud says.

In fact, the MFDA’s report states, “Even experienced investors struggle to understand key terms and how their choices influence the type and amount of fees they pay.”

That means even when dealing with sophisticated clients, advisors should not assume “MER” is universally understood to stand for management expense ratio, or what it means. Breaking down jargon such as “trailing commissions” in simple terms – perhaps as an annual fee the advisor receives each year a client holds a particular investment – will also help avoid misunderstandings.

Instead of simply noting what fees are or are not included in existing disclosures, the MFDA report urges advisors to get as close to total cost reporting as possible.

London-based global firm The Behavioural Insights Team ran an experiment on behalf of the MFDA testing four formats of expanded cost reporting. Three of them specified investment fund charges while the fourth, known as the “control” option, included only a disclosure that other charges, such as fund management and operation costs, applied.

Only 23 per cent of investors exposed to the control option were able to identify their total cost of investing correctly, while between 54 per cent and 70 per cent of investors exposed to the other three options were able to do so.

Karen McGuinness, the MFDA’s senior vice president of member regulation and compliance, says part of the reason the experiment succeeded was a focus on using plain language.

“When we did the format, initially, we were using industry terminology because it was just second nature to us, but we brought in the behavioural research firm and they were the ones who said we need to set up this information in a way that’s more easily digestible for the average retail investor,” Ms. McGuinness says.

Nevertheless, the MFDA report warns that dealers and advisors shouldn’t assume sharing more cost information will always lead to better comprehension among clients as they will eventually hit a point of diminishing returns.

Rather, the report recommends they should “eliminate any information presented in the fee summary that is unlikely to be useful to investors. People have limited attention [and] this is especially significant when information is complex.”

To establish a baseline for how much any given client already understands – and therefore how much education advisors should attempt to provide – regulators have developed a number of quick and straightforward tools for that purpose.

For example, the B.C. Securities Commission runs the InvestRight website that includes fee calculators and a short quiz designed to gauge investors’ overall comprehension of investment fees.

“It only takes about five minutes to answer the questions, and a lot of people would be surprised at what they learn,” says FAIR Canada’s Mr. Bureaud.

The Ontario Securities Commission (OSC) operates a similar website – GetSmarterAboutMoney – that offers even more comprehensive tools and resources.

Meanwhile, regulators are working on a new set of disclosure rules to replace the second phase of the customer relationship model (CRM2) that has been in place since 2016. The goal of what’s being called CRM3 is to provide what the MFDA’s Ms. McGuinness calls “total cost reporting,” as it should get disclosures as close as possible to breaking down all the fees investors pay and not just those their advisor receives.

Although there’s no timeline for when CRM3 will be complete, Greg Pollock, president and chief executive of Advocis, says advisors will need to be more transparent with their clients on fees before the current bull market goes bust.

“Investors tend to look at the bottom line, and if they see that year-over-year returns are looking pretty good, they don’t get too focused on the fees simply because they’re satisfied with the overall performance,” he says. “But it does raise the question of what happens in a bear market when performance suffers. That really gets people’s attention.”

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