NXR-U: Soft Q1 sets higher bar for mid-single-digit NOI growth

Research evidence excerpt

NXR-U: Soft Q1 sets higher bar for mid-single-digit NOI growth

Nexus Industrial REIT

Target/Upside/Downside Scenarios Investment summary

Our Sector Perform rating is primarily a function of our risk-Nexus Industrial REIT

adjusted total return expectations compared with the broader

10 125 Weeks 20DEC23 - 11MAY26 REIT/REOC sector. Key elements of the Nexus Industrial REIT

9 investment case are the following: TARGETTARGET 8.508.50

8 CURRENTCURRENT 8.068.06 An industrial play on Canadian secondary markets

6 Nexus Industrial REIT has focused its efforts on acquiring

5 industrial assets in secondary markets within Canada, differing

4 from its industrial REIT peers. Alberta, Quebec, and Ontario

4m composed over 75% of the REIT's NOI. Going in cap rates that

3m 2m can be achieved in its target markets are typically higher than

1m

2024 2025 2026 larger urban markets given lower long term growth profiles

D J F M A M J J A S O N D J F M A M J J A S O N D J F

M A M and lower competition for assets. NXR-U CN Rel. S&P/TSX COMP IDX MA 40 weeks

Source: Bloomberg and RBC Capital Markets estimates for Target

Industrial sector tailwinds to drive future earnings growthValuation

Our $8.50 price target is based on units trading at an 18% The strength of the industrial sector is well known and market

discount to our $10.25 NAVPU one year hence, which implies rent growth has been breaking records in many markets.

a 12x multiple to our 2027E AFFOPU. We believe our target Ecommerce adoption, retail sales, just-in-time to just-in-

valuation multiple reflects: 1) strong fundamentals relative to case inventory have been major demand drivers and likely

other property classes; 2) limited means through which to will continue to be. Despite concerns on slowing consumer