BUILDING THE
FOUNDATION FOR
THE NEXT CANADIAN
“BLUE CHIP” REIT
January 2019
INVESTOR PRESENTATION
NEXUS REAL ESTATE INVESTMENT TRUST
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INVESTOR PRESENTATION | JANUARY 2019
NEXUS
ABOUT THIS PRESENTATION
No reliance may be placed for any purpose whatsoever on the information contained in this presentation or the completeness or accuracy of such information. No
representation or warranty, express or implied, is given by or on behalf of Nexus REIT (the “REIT”), or its unitholders, trustees, officers or employees or any other
person as to the accuracy or completeness of the information or opinions contained in this presentation, and no liability is accepted for any such information or opinions.
FORWARD-LOOKING INFORMATION
This presentation contains forward-looking statements which reflect the REIT’s current expectations and projections about future results. 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
presentation. Such forward-looking statements are based on a number of assumptions that may prove to be incorrect, including, but not limited to: the ability of the REIT
to obtain necessary financing or to be able to implement its business strategies; satisfy the requirements of the TSX Venture Exchange with respect to the plan of
arrangement; obtain unitholder approval with respect to the plan of arrangement; the level of activity in the retail, office and industrial commercial real estate markets in
Canada, the real estate industry generally (including property ownership and tenant risks, liquidity of real estate investments, competition, government regulation,
environmental matters, and fixed costs, recent market volatility and increased expenses) and the economy generally. 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. 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 presentation. Although the REIT has attempted to
identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other
factors that cause actions, events or results not to be as anticipated, estimated or intended. 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.
This presentation includes industry data and forecasts obtained from independent industry publications, market research and analyst reports, surveys and other publicly
available sources and in certain cases, information is based on the REIT’s own analysis and information or its analysis of third-party information. Although the REIT
believes these sources to be generally reliable, market and industry data is subject to interpretation and cannot be verified with complete certainty due to limits on the
availability and reliability of raw data, the voluntary nature of the data gathering process and other limitations and uncertainties inherent in any statistical survey.
Accordingly, the accuracy and completeness of this data is not guaranteed. The REIT has not independently verified any of the data from third party sources referred to
in this presentation nor ascertained the underlying assumptions relied upon by such sources.
All figures in C$ unless otherwise noted.
Notice to the Reader
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INVESTOR PRESENTATION | JANUARY 2019
NEXUS
➢ Opportunity to unlock occupancy growth from 2045 Stanley, the Sandalwood Portfolio
and development upside on the Richmond BC asset
Overview of Nexus REIT
Nexus REIT (“Nexus” or the “REIT”) is an open-ended REIT focused on unitholder value
creation through the acquisition and ownership of commercial properties across Canada
1
Poised for Unitholder
Value Creation
2
3
4
5
INTERNALIZED ASSET MANAGEMENT
QUALITY INDUSTRIAL AND COMMERCIAL PORTFOLIO
STRONG SPONSORSHIP – RFA CAPITAL AND TRIWEST CAPITAL
LONG AVERAGE LEASE TERM WITH LOW CAPITAL INTENSITY
➢ Fully aligned management team with meaningful direct ownership in the REIT
➢ Portfolio currently consists of 66 quality, commercial properties (industrial,
retail, office and mixed-use) with stable cash flows and intensification potential
➢ Vast pipeline of off-market, accretive acquisitions sourced through RFA
and TriWest along with potential for future capital commitments
➢ Above weighted-average lease term of ~6 years and low capital intensity vs. peers
LEASE-UP / DEVELOPMENT POTENTIAL
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INVESTOR PRESENTATION | JANUARY 2019
NEXUS
Market Metrics and Return Performance
Summary Capitalization
Unit Price (January 25, 2019) $1.98
Basic Units Outstanding 112.4
Market Capitalization ($M) $222.6
Add: Debt $282.4
Less: Cash ($3.7)
Enterprise Value $501.3
P / 2019E FFO 8.4x
P / 2020E FFO 8.1x
P / 2019E AFFO 9.5x
P / 2020E AFFO 9.1x
Premium/(Discount) to NAV (18.7%)
Market Metrics
(1)
Total Return Performance since IPO
(2)
14-Jan-14:
Completes the acquisition of 10 properties for
$68.0M partly funded through a VTB to TriWest
for $34.0M and the conversion to a REIT
04-Feb-14:
Announces first monthly cash
distribution of $0.00742 per unit
20-Jun-17:
Announces a $147M strategic acquisition (the Sandalwood
Portfolio), financed through a $55M bought deal equity offering
and a $15M concurrent private placement by RFA Capital
03-Apr-17:
Completes the merger of Edgefront and Nobel
to create Nexus, a $300M diversified REIT
16-Jul-14:
Completes the acquisition of 3 properties for
$36.7M partly funded by a $20.0M offering
1) Based on consensus equity research
2) Total return since IPO
26-Mar-18:
Announces acquisition of 3 industrial
properties in Western Canada for
$64.0M and the sale of 2 non-core
properties for $11.3M
22-Oct-18:
Announces a $18.5M acquisition of an industrial
property in Calgary, Alberta , financed through
issuance of 1.2M REIT units for $2.10 per unit
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INVESTOR PRESENTATION | JANUARY 2019
NEXUS
A Diversified and Defensive Portfolio
Industrial Portfolio Retail Portfolio Office Portfolio
Stable Cash Flows, Long-Term Leases,
and Embedded Rent Escalations
Investment Grade, High-Quality
National Tenants Offering Necessity-
Based Products
Urban Office Assets Located in the
Downtown Montreal Core
• Grocery-anchored retail assets located
in the Greater Quebec City and
Montreal areas
• Sandalwood provides property
management services to a significant
portion of the retail portfolio
• High-quality tenants such as Shopper’s,
Dollarama, Metro, National Bank, Super
C, Canadian Tire, and SAQ (Quebec’s
provincial liquor retailor)
• Very well-located office properties in the
downtown Montreal core
• Class I office properties (urban
properties that have been converted into
modern office buildings)
• Tenants primarily consist of TAMI
(technology, advertising, media and
information) businesses that typically
gravitate towards these properties
• Provides stability to Nexus as cash flows
are stable, long-term, and contain
embedded yearly rent escalations
• Properties are crucial and integral to the
day-to-day operations of tenants such as
Westcan Bulk Transport, Canada
Cartage and Northern Mat & Bridge,
reducing the re-leasing risk
• The majority of Nexus’ industrial portfolio
is located in high-demand industrial
nodes in Edmonton, Lethbridge, Calgary,
and Vancouver
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INVESTOR PRESENTATION | JANUARY 2019
NEXUS
Value Creation - Richmond, BC
Through the redevelopment and repositioning of the
Richmond asset, Nexus is expected to create ~$20-$28M in
unlocked value for unitholders
• Purchased an industrial asset (consisting of 2 buildings) in
Richmond, BC for $57.4M
• The asset has redevelopment potential in 12-18 months to
add additional GLA and repurpose the front building as a
multi-tenant sports facility, a highly desirable use given its
urban location
• Recently appraised at ~$80M (March 2018), highlighting the
significant inherent value of the newly acquired property
• 6.5% purchase cap rate; upon redevelopment, the Richmond
asset should benefit from cap rate compression to an
anticipated 4.5% cap rate
Overview
Asset Overview and Redevelopment Value Creation
1
Off-market transaction, sourced through Nexus’
long-standing relationship with the vendor
Key Transaction Highlights
2
Attractive risk-return development profile, with
high inherent value in the property
3
Accretive to AFFO with significant NAV creation
potential
4 Vendors took back $20.3MM in units at $2.10/unit
Purchase Price $57.4M
Acquisition Cap Rate 6.5%
In-Place NOI $3.7M
Development CAPEX $15M-$20.0M
Post-Development NOI $4.5M-$6M
Stabilized Cap Rate 4.5%
Stabilized Property Value $100M- $135M
Unitholder
Value Created $20MM-
$28MM
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INVESTOR PRESENTATION | JANUARY 2019
NEXUS
1) Based on 2018 Q3 YTD
Demonstrated Track Record of Success
Management has demonstrated its ability to successfully make and integrate accretive acquisitions resulting in
greater AFFOPU
• April 2017, Edgefront and Nobel merge to create a $300M
diversified REIT; immediately accretive to AFFOPU
• Management internalized, portfolio diversification increased,
capital markets presence enhanced and gained proprietary access
to a robust pipeline of acquisitions from RFA
• July 2017, Nexus completed the acquisition of a portfolio of assets
located in the greater Montreal and Quebec City areas from
vending entities associated with and/or related to Sandalwood
Management Inc
• The transaction was expected to be ~4.0% accretive to AFFOPU
Acquisition of SandalwoodMerger of Edgefront and Nobel
Delivering Strong Growth in 2018
• Completed $91,420,000 of off market acquisitions with vendors taking back $37,022,000 in REIT and LP units at a premium to the
current trading price.
99%
95%
89%
83%
84%
60.0%
70.0%
80.0%
90.0%
100.0%
2014 2015 2016 2017 2018
AFFO Payout Ratio
(1)
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INVESTOR PRESENTATION | JANUARY 2019
NEXUS
3501 Griffen Rd. North – Lethbridge, AB 4700 & 4750 102 Avenue SE – Calgary, AB
455 Welham Road – Barrie, ON 935-965 rue Reverchon – Saint-Laurent, QC
• Acquired on July 15, 2014 and leased under a long-term lease to Triple M
housing that expires on July 14, 2029. Located in close proximity to
Highway 3.
• The property is situated on 13.54 acres, and is located in the East Shepard
Industrial Park with convenient access to Deerfoot Trail South, Stoney Trail
SE, Barlow Trail SE and 52 Street SE. The property is 100% occupied by
Canadian Cartage and is a class A cross dock facility with trailer parking.
• Located in close proximity to Highway 400 and acquired on July 17, 2015,
this property is leased under a long-term lease to Prodomax Automation
that expires on June 16, 2025
• The property is located in the city of Montréal, close to the Pierre Elliott-
Trudeau International Airport and in one of Canada’s largest industrial area.
The main tenants are Sierra Flower Trading and Litron Canada with leases
expiring in November 2023 and March 2019, respectively.
GLA (sq ft) 229,000
WALT 10.8 years
Occupancy 100%
Built/Ren 2008/2012
GLA (sq ft) 29,471
WALT 6.3 years
Occupancy 100%
Built/Ren 2009
GLA (sq ft) 109,366
WALT 6.7 years
Occupancy 100%
Built/Ren 1998/2015
GLA (sq ft) 114,236
WALT 3.8 years
Occupancy 92%
Built/Ren
1972 / 1995
Select Industrial Properties
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INVESTOR PRESENTATION | JANUARY 2019
NEXUS
161 Route 230 Ouest – La Pocatière, QC
(1)
3856 boulevard Taschereau – Greenfield Park, QC
(1)
7500 Boulevard Les Galeries d’Anjou – Anjou, QC
(1)
401-571 boulevard Jutras Est – Victoriaville, QC
• The property is located outside the centre of the city, adjacent to a
Bombardier plant to the south with residential neighbourhoods to the north
and east. This is the main retail center servicing the surrounding
community.
• The property is located on the commercial artery of Taschereau Boulevard,
a well-established retail cluster, on the south shore, approximately 10
kilometers east of the Montréal city center
• The property consist of Les Halles d’Anjou, an enclosed retail mall, located
in a high-profile corner location at the SW corner of Jean-Talon Street E
and des Galeries d’Anjou Boulevard in Anjou, in a retail node with several
large retail developments in the surrounding neighbourhood
• The retail property is located in the city of Victoriaville, between Montréal and
Québec City, situated on the corner of Boulevard Jutras East and Boulevard
des Bois Francs South.
GLA (sq ft) 208,800
WALT 4.4 years
Occupancy 73%
Built/Ren 1976/2003
GLA (sq ft) 213,982
WALT 4.9 years
Occupancy 97%
Built/Ren 1974/2002
GLA (sq ft) 105,398
WALT 4.6 years
Occupancy 98%
Built/Ren 1981/2015
GLA (sq ft) 377,396
WALT 5.8 years
Occupancy 95%
Built/Ren 1975/2011
Select Retail Properties
1) Nexus owns a 50% interest
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INVESTOR PRESENTATION | JANUARY 2019
NEXUS
10500 Avenue Ryan – Dorval, QC 410 St-Nicolas – Montréal, QC
955 Boul. Michèle-Bohec – Blainville, QC 2045 rue Stanley – Montréal, QC
(1)
• Located in Dorval in close proximity to the Trans Canada Highway; fully
occupied by Dicom Transportation Group Canada Inc. on a lease expiring
in December 2029
• The property is a 6 storey Class I office property located in the heart of Old
Montreal leased to early-stage TAMI (technology, advertising, media and
information) businesses such as Ludia, ILSC Montreal, Café 410, and GPBL
Inc.
• Located in downtown Montreal; the building is currently being redeveloped,
with The Chambre des notaires du Quebec occupying a significant portion of
the property under a 20 years lease
GLA (sq ft) 52,372
WALT 11.2 years
Occupancy 100%
Built/Ren 2014
GLA (sq ft) 154,515
WALT 2.0 years
Occupancy 96%
Built/Ren 1902/2004
GLA (sq ft) 33,461
WALT 7.7 years
Occupancy 100%
Built/Ren 2012
GLA (sq ft) 113,714
WALT 17.6 years
Occupancy 67%
(2)
Built/Ren 1977/2005
Select Office Properties
1) Nexus owns a 50% interest
2) Total committed occupancy is 82%
• The property is located alongside Highway 15, in Blainville’s business
park. Main tenants include Sun Life Financial and Government Services
Canada.
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INVESTOR PRESENTATION | JANUARY 2019
NEXUS
1
1
1
11
5
2
2
8
18
13
1
1
Office14
Industrial
28
Retail20
4 Mixed-Use
66 properties located across Canada
Nationwide Asset Base
Base Rent by Province/Territory
(1)
Base Rent by Sector
(1)
2
1) As at September 30, 2018
42.2%
27.8%
17.7%
12.3%
Industrial Retail Office Mixed-use
50.7%
23.6%
11.1%
4.5%
3.9%
4.3%
1.6%
0.3%
Quebec Alberta
British Columia Saskatchewan
New Brunswick Ontario
Northwest Territories Prince Edwards Island
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INVESTOR PRESENTATION | JANUARY 2019
NEXUS
Overview:
• Privately held real estate investment and
asset management firm
• One of Canada’s leading private equity firms
Founded: • 1996 • 1998
Experience in
Real Estate:
• Invests in office, retail, industrial and
multi-family properties in the major
Canadian markets as well as mortgages
and CMBS
• Over the past 20 years, has invested in
over $15B of commercial mortgages
• Indirectly own a significant amount of real
estate through current ownership of 20
companies
• Primarily focused on the industrial sector
in Western Canada
Headquarters: • Toronto, ON • Calgary, AB
Other:
• Canada’s first and largest investor in non-
investment grade CMBS
• 19 years experience investing in 38
companies representing a broad cross-
section
of the economy
Sourced
Acquisitions:
• 27 acquisitions sourced through RFA • 14 acquisitions sourced through TriWest
Strong partnerships to provide pipeline for accretive growth
Strategic Relationships with Access to Quality Assets
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INVESTOR PRESENTATION | JANUARY 2019
NEXUS
Name Title
Board of TrusteesManagement Team
Experience
1) Also serves as a trustee
2) Chair of the board of trustees of Nexus
Kelly
Hanczyk
(1)
CEO
• Former CEO and Trustee of TransGlobe
Apartment REIT
• Extensive experience in all disciplines of
industrial, commercial and residential
real estate
Robert
Chiasson
CFO
•
Former Corporate Controller of InStorage
REIT
• Former Director of Accounting and
Finance of Samuel Manu-Tech
• Obtained the CPA, CA designation while
articling with KPMG
Lorne
Jacobson
(2)
• Co-founder and Vice Chairman of TriWest Capital
Partners
• Former partner of Bennett Jones LLP
Mario
Forgione
• Principal and Managing Partner of Windermere Realty
Corp.
• President and Co-Founder of Edgemere Capital
• Former Chairman of Nexus Realty, a predecessor to
Edgefront REIT
Brad Cutsey
• President of InterRent REIT
• Former Managing Director, Real Estate Investment
Banking at Dundee Capital Markets
Ben Rodney
• Principal and Managing Partner of RFA Capital
• Has structured and closed over $15B of Canadian real
estate and mortgage transactions
Nick
Lagopoulos
• Principal and Managing Partner of RFA Capital
• Previously with GE Capital and Credit Suisse
Name Experience
Leadership Team
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INVESTOR PRESENTATION | JANUARY 2019
NEXUS
Research Analyst Overview
DESJARDINS
23-NOV-18
“Financial results/ operating performance were in line with our expectations, and revisions to our NAV and earnings outlook
are not material. Rue Stanley is slowly but surely progressing toward stabilization. Although the timing of the potential
announcement has been pushed out, we continue to see the expansion/redevelopment of the sports mall complex as a
meaningful catalyst.”
Select Analyst Commentary
GMP
22-NOV-18
“In the context of recent volatility in the markets, we believe Nexus is a good combination of stable income and growth, and
a compelling small cap name within the real estate sector.
Nexus provides the stability of a high distribution yield of ~8% with an expected AFFO payout ratio of <85% in 2019. Value-
add initiatives like the Richmond property and 2045 Rue Stanley lease-up provide a significant potential NAV upside.”
1) Implied total return is calculated as the implied relative return to the target price plus the compounded annual distribution yield
Source: FactSet and Equity Research as at January 3, 2019
Strong Buy
PREMIUM
(DISCOUNT)
/ NAV
BROKER
ANALYST
DATE
RATING
TARGET
PRICE
IMPLIED
TOTAL
RETURN (%)
(1)
FFO/Unit
NAVPU
($)
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INVESTOR PRESENTATION | JANUARY 2019
NEXUS
Lease Expiry Schedule (Sq. Ft. ‘000s)
(1)
Debt Maturity Schedule ($M)
(1)
% of Total
Debt
% of Total
Leased GLA
Balanced Debt Maturities and Lease Expiries
$128.8
$39.0
$20.8
$19.3
$69.1
2019 2020 2021 2022 Thereafter
46.5% 14.1% 7.5%
7.0% 24.9%
281.2
497.4
293.2
300.0
2,033.0
2019 2020 2021 2022 Thereafter
8.3% 14.6% 8.6%
8.8% 59.7%
Note: Excludes debt and leases maturing in Q4 2018
1) As at Q3 2018 MD&A; debt maturities exclude debt related to proportionate interests
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INVESTOR PRESENTATION | JANUARY 2019
NEXUS
98.4%
98.1%
97.0%
94.0%
93.7%
90.3%
89.7%
SMU PRV TNT NXR ACR MR BTB
10.8%
10.5%
9.6%
8.9%
8.6%
5.7%
5.5%
PRV TNT BTB MR NXR ACR SMU
16.9x
13.6x
12.4x
11.0x
9.6x
9.5x
8.8x
SMU ACR BTB MR TNT NXR PRV
118.9%
100.7%
98.3%
95.5%
92.6%
78.0%
77.8%
BTB TNT MR PRV SMU NXR ACR
Occupancy
2019E AFFO Payout RatioP/2019 AFFO
Distribution Yield
Positioning of Nexus vs. Peers
Source: Company Filings
Nexus has all the characteristics of a quality REIT: high occupancy, high yield, a low payout
ratio and trades at an attractive valuation
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INVESTOR PRESENTATION | JANUARY 2019
NEXUS
Unitholder Value Creation
Capitalize on accretive acquisitions at the most opportune time
1
Lease-Up and Re-Positioning of Assets
2
Substantial Rent Increases in Western Canada Industrial Portfolio
3
Nexus expects to grow its unit price in the near term through the following:
➢ Acquisition criteria: strong security of cash flows, potential for capital appreciation, and potential for increasing value
through more efficient management of the assets in markets with positive industry fundamentals
➢ Acquisitions to be made when its cost of capital is low
➢ Off market acquisitions sourced through sponsorship partners
➢ Lease-up of the Stanley Property to increase Nexus’ NOI
➢ Re-positioning and intensification of properties to increase NAV (Richmond Asset)
Capital Markets Initiatives
4
➢ Greater capital markets presence (larger equity research and institutional investor following)
➢ Increase liquidity and float
➢ Linked to CPI and generates over $125K of incremental NOI annually
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INVESTOR PRESENTATION | JANUARY 2019
NEXUS
Key Takeaways
1. Internalized asset management function
2. High current distribution yield ~8.6%
3. Conservative capital structure with Debt to
Assets of ~54%
4. Strong sponsorship from RFA Capital and
TriWest Capital with vast pipeline of accretive
off-market acquisitions
5. Portfolio of high quality assets in markets with
positive industry fundamentals
6. Experienced management team, fully aligned
through direct ownership in the REIT
7. Strong historical performance with consistent
AFFOPU and NOI growth
8. Substantial rent increases in Western Canada
industrial portfolio
Nexus provides investors with
the opportunity to invest in an
investment vehicle that
acquires and operates quality
commercial real estate assets
across Canada at a valuation
that represents a significant
discount to NAV
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INVESTOR PRESENTATION | JANUARY 2019
NEXUS
Kelly Hanczyk
CEO
Phone: (416) 906-2379
Email: khancz[email protected]
Contact Information
Rob Chiasson
CFO
Phone: (416) 613-1262
Email: rchiasson@nexusreit.com