Thank you for standing by. This is the conference operator. Welcome to the Nexus Industrial REIT Third Quarter 2023 Results Conference Call. As a reminder, all participants are in listen-only mode. 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 and zero. I would now like to turn the conference over to Kelly Hanczyk, Chief Executive Officer. Please go ahead. Thank you. I would like to welcome everyone to the 2023 third quarter results conference call for Nexus Industrial REIT. Joining me today is Robert Chiasson, Chief Financial Officer of the REIT. Before we begin, I would like to caution with regard to forward-looking statements and non-GAAP measures. Certain statements made during this conference call may constitute forward-looking statements, which reflect the REIT's current expectations and projections about future results. Also, 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 at SEDAR.com, for cautions regarding forward-looking information and for information about non-GAAP measures. The third quarter has gone as expected, with the portfolio delivering 2.5% Same Property NOI growth as compared to Q3 2022. During the quarter, we purchased a 141,000 sq ft newly built distribution center in Burlington, Ontario, for CAD 48 million, and subsequent to the quarter, we closed on a 336,000 sq ft newly expanded distribution center in London, Ontario, in a unit deal priced at CAD 11.30 a unit with our largest unit holder. We have one more acquisition to close in mid-December, an 84,000 sq ft new build in Calgary, Alberta, for one of the REIT's existing tenants. After this, we'll be putting the brakes on acquisitions for the time being, until market conditions improve. Our industrial NOI weighting is now approximately 91%, and we will continue to grow in 2023 as we shrink the footprint of our remaining retail and office assets. Although there are no new dispositions to announce in the quarter, we are in various stages of due diligence on our three suburban Montreal office assets, as well as our office property, Plaza 400, located in Saint John, New Brunswick. I see about a 50% probability of completion of these deals in today's current market. On the development front, steel is up on the 96,000 sq ft, 40-foot clear height addition to our building at 1,285 Hubrey Road in London, Ontario, where we are continuing negotiations with several, several groups that we should provide us with an outside return of approximately 10% upon completion. It is scheduled to be in about May or June of next year. The Titan Industrial Site in Regina, Saskatchewan, that was acquired in February 2022, the walls are erected, the slab is poured, and interior finishes are being completed on the 312,000 sq ft new build we are constructing on 22 acres of excess land. As mentioned previously, we have a signed lease in place for 200,000 sq ft at the site and are in discussions with a few different groups on the balance of the space. This is still on schedule to be complete for an April 2024 delivery. As mentioned last quarter, we'll also be proceeding in the fall, late fall, with the expansion of an existing tenant in the Southwestern Ontario portfolio to add what was supposed to be an approximately 70,000 sq ft addition, but it looks likely to grow to a 240,000 sq ft addition. We're purchasing 18 acres of land adjacent to the site to accommodate the expansion, and upon completion, will earn somewhere around the 9%. It could be higher% cash-on-cash return and will not be a drag on earnings, as we'll generate a return throughout the construction process as we incur costs to build. In Richmond, B.C., we have received partial occupancy and are still waiting to receive full occupancy permits for the newly named Belvedere Sports Club. This has been a tedious process, but it looks like occupancy should be in hand by the end of November. We're working feverishly to get the tenant up and running so we can commence rental payments in the new year. This quarter, our NAV per unit has increased to CAD 12.89 versus CAD 12.49 last quarter. We engaged external appraisers to value properties totaling approximately CAD 489 million in the quarter, resulting in a net write-up of income-producing properties of approximately CAD 26.9 million. One property in particular accounted for approximately 84% of the CAD 26.9 million net write-up, resulting from external appraisals. In addition, an investment property in London, Ontario, acquired in the second quarter with in-place rents well, well below market and purchased approximately twenty-four, for approximately CAD 24 million less, and appraised value was also revalued, generating a fair value increase of approximately CAD 19.1 million in the quarter. In the development properties, we recorded gains of CAD 16.6 million, according to the percentage of construction complete as of September thirtieth, relative to the as-complete appraised value. Partially offsetting these fair value gains were adjustments totaling just over CAD 24 million, relating primarily to cap rate expansion, which we've applied to the REIT's properties in Calgary, Montreal, and B.C. In our transition to an unsecured borrower, we have built a sizable unencumbered asset pool, which will afford us financial flexibility for the long term. This will provide us with access to a wider range and deeper pool of capital resources, including the potential to pursue an investment-grade rating and issuance of public bond securities in the medium term. We successfully upsized our unsecured bank debt facility in the quarter to CAD 525 million, demonstrating continued institutional support for our portfolio and strategy. This bank debt facility is critical to our transition. We have also entered into swap agreements in order to reduce our overall cost of debt, CAD 440 million swapped at 5.2%... which removes our exposure to movements in interest rates in the near term. The swap represents the most cost-effective structure, while providing maximum flexibility to achieve our overarching strategy. I will now turn the call over to Robert Chiasson to discuss the financials further. Thanks, Kelly. As Kelly mentioned, we completed the CAD 48 million acquisition of the Burlington, Ontario property on July 4, funded with borrowings on our credit facility. We acquired the CAD 56 million London property at a%6 cap on November 1, with CAD 27.1 million of the purchase price settled in units issued at CAD 11.30 per unit, and the remainder with borrowings on our credit facility. Our properties performed well. Year-over-year same store NOI growth was 2.3% for the quarter, with some Western Canada vacancies putting pressure on the figure. Without those two tenant vacancies, same store NOI would have been 3.9%. G&A was stable for the quarter. FFO and AFFO were slightly impacted by an approximately CAD 175,000 unrealized foreign exchange loss in the quarter. For the remainder of 2023, we have approximately CAD 30 million of mortgages maturing at a weighted average 2.36% interest rate, including a CAD 15 million non-interest bearing VTB that brings the weighted average interest rate down. In 2024, we'll have approximately CAD 37 million of mortgages with a weighted average interest rate of 4.3% that will mature, with the bulk maturing March 31 of next year. In September 2024, a CAD 65 million credit facility fixed at 3.15% interest will mature. As Kelly mentioned, we've put in place a number of swaps between August and November, which immediately reduced our interest costs by approximately 130 basis points and significantly reduced variable rate exposure. I'll now turn the call back to Kelly. Thanks, Rob. I'll open up the line to any questions. Thank you. 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're using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press Star then Two. The first question comes from Frederic Blondeau with Laurentian Bank Securities. Please go ahead. Thank you, and good afternoon. Two quick questions for Kelly. First, just looking at your lease expiries, I guess, 816,000 and 1.5 million in 2024, 2025. Could you remind us, where does RTL-Westcan fit in your schedule today? And, I guess, what are your general views on expiries for the next two years? Yeah, so we have a pretty good handle on for the next two years. We have actually extended RTL-Westcan recently. We added five years of term. I believe they expire end of 2025. So we've added five years of term to their lease, with a continuation, so no step back in rent. So I believe it's just with the 2.5% increase year-over-year, that will just continue on in that portfolio. So we have that completed already, which bodes really well, because I think that will be one that we have marked for disposition. It doesn't really fit into our long-term strategy. And it's a solid portfolio, and I think the... where we struggled before on our thoughts of taking it to market, it only had two years left of term. So with seven years left of term on it, with renewal options that they've put in, I think it's very, very sellable, and we've got pretty good interest on it. The balance, I think, through next year, we're probably about 40% complete already on renewals next year. One of them in Cambridge, that's fairly big, I think 150,000 sq ft, where we're going to see about call it about just under CAD 5 of lift on that on renewal, which we've signed the offer to lease and there's just the lease amendment being drafted. So that's effectively done. So we've got pretty good progress. Another one for next year, that's a big one, is 238,000 sq ft with our partner in London, Ontario, which is about 99.9% likely to renew. We're just discussing rates with them on that. So, overall, next year, with that one, we'd probably be about 70% renewed already. And we're in discussions with everybody, already and have quite a few renewed, so it's looking pretty good. Yeah. Got it. And then just to be sure, there's no RTL-Westcan in the 2025 expiry, the CAD 1.5 million, and it's all been pushed to 2030, correct? There's only one site that we have, which is in, So Fred, the reported numbers for RTL-Westcan, they are in those, they are in the reported GLA numbers for, I believe they are in the reported GLA numbers for 2025, because as of that September thirtieth, the- Oh, yeah. Negotiation had been concluded. Yeah. Okay. Got it. Got it. Okay, and there's one remaining, correct? Or 2025- It's the only one. It's a small one, but it's contingent on them renewing next door to us, which is on a land lease that we don't own. So, there are negotiations on that, so we expect that one to renew as well. Okay, great. That, that's great. And then, just following up on Richmond, wanted to see if you're still on track for an exit, during summer next year or around summer, summer next year. Yeah, that's hopefully the plan. Working hard to try to get occupancy. We thought we had it, but they found some water in the elevator pit, which they need the elevator to work, so we have to do some special paint treatment on the elevator pits because there's a little water table there. But once that's done, I think that's the final little phase to get signed off by the authorities and to give occupancy. So it's the plan is to get it going, get it cash flowing, and then hopefully exit it summer or fall next year. Yeah, no, that's great. And then, maybe one last for, for Rob. What, what would be your target, net ratio for 2024? I guess it would be a function of, of dispositions, but, I was wondering if you had a, you know, kind of a target for 2024 anyway. Yeah, I'm not sure I can give a precise answer to that, because as you say, it will depend on dispositions. We've got the retail and the office properties, potentially, the Westcan portfolio that Kelly mentioned, but we should be comfortably below 50%. And, you know, depending on the success of some of those dispositions, you know, lower than that, but I can't give you a precise number except to say, you know, it should be comfortably below 50%. That's great. Thank you so much. Very helpful. Thank you. The next question comes from Mike Markidis with BMO Capital Markets. Please go ahead. Thanks, everyone. Apologies, there's an alert of an alarm here in our building, so I apologize for the background talking, but here goes. First one, just a housekeeping question. Rob, I think you guys had a pretty substantial increase in capitalized interest this quarter. If I'm not mistaken, I think it was CAD 1.3 million. But I think you only deployed about CAD 30 million or so of incremental capital development. So could you circle the square there in terms of what caused that, please? Yeah. So if there's, if there's any catch up, that's one quarter on the land related to the Regina property, but it's primarily development funds deployed in the quarter. Okay, maybe we could follow up on that one, if you don't mind. Just, you know, I know the environment, Kelly, is pretty tough for the dispositions right now, and that's put a little bit of a kink in your plan, so to speak, or so... But with all the, you know, RTL- Westcan, Richmond, I don't know where you stand on Sandalwood, if you're still thinking that gets done in 2024, you know, ballpark figure, you know, realizing the range could be wide, like, what do you think the total amount of capital would be for those properties that you've earmarked for disposition? Yeah, I mean, I would be pretty surprised if we couldn't move out the Westcan portfolio. It's generated pretty good response, and we're not even actively marketing it right now, because we did just get the extension. I believe value on that's probably somewhere around CAD 80 million, give or take. Sandalwood is, you know, the value is, well, it's in and around CAD 110 million, and, you know, I was working with a group to try to do an off-market deal. Kind of gone a little sideways, so we will be underwriting that right now. We do have some shake up on it. We've had, especially on the retail side, a lot of inquiries as to it, so I think we'll have some participation. It's really the office that I'm finding the real slowdown on the sale. We have it under contract with someone right now, but I see 50% chance of that being concluded on the end of the month, because I believe that's when the due diligence period expires. Plaza 400 in New Brunswick, we just put that under contract, so that's got a little bit of time on the due diligence. So I would be fairly confident that we could move through the Sandalwood portfolio next year, and I would think the RTL-Westcan portfolio. And the free office, if we can do, I'll be more than happy. But it's just, it's tough. I mean, they're good assets for us. They have term, they cash flow nicely, so it's not a desperation thing here for us. It's make sure we get a proper deal done. Of course. And, so if I add that all up, roughly RTL, Sandalwood, and the office, I think that's CAD 80, CAD 110, and CAD 30. And then Richmond, I think you've mentioned plans for that as well. So what would that roughly be? Yeah, that would probably be... It's, call it, just in and around 100, could be 100-130. Okay. Perfect. Okay, last one for me before I turn it back. Just, sounds like you made good progress on, you know, on your lease maturity heading into next year, 70% done or close to 70% done. Just given what you're seeing now and, and knowing what you have in the portfolio, what, what kind of upside do you see next year from a same property perspective? Don't have the number handy. It's a little hard to get, but when I'm looking at some of the renewals we have, we have fairly significant, but we do have that one we mentioned before, Canada Cartage, coming off that we'll have to re-lease, and that will make a dent on our same store. But from a renewal standpoint, even when I'm looking at Edmonton, we've completed one, you know, at a CAD 1 higher on 72,000 sq ft. We've got one at CAD 5 higher on 150,000 sq ft. So we're making pretty good progress here, but we did have the North Battleford that we renewed next year. Our huge, I think, our huge bump, so we do have, like, a decent bump next year overall on the same store, but our big, very large bump comes in 2025, where, the recently purchased one in London, sits at CAD 4.50 in rent and will probably end up somewhere around CAD 12 on that site. It's 260-something thousand sq ft. So, 2025 is the real big lift on the same store. Okay. Can you just remind me on the NOI coming off and when it comes off for Canada Cartage, please? I believe it we're in the transition, so we purchased their new facility, and then they moved from one to the other. I believe it'll come off at the end of December, is what I'm thinking, and then, that then they start paying rent on the new facility that we purchased. So, the good news is we do have someone interested that we're speaking with right now, so hopefully we can lease that sooner than later. Okay. That's... Sorry, go ahead, Rob. 2 million a year of NOI, give or take. Okay. Thank you for that. That's great. I'll turn it back. Thank you. Thank you. The next question comes from Brad Sturges with Raymond James. Please go ahead. Hey, guys. Just continuing on the line of questioning there from Mike. Just so I understand, beyond the Canada Cartage, I think there was reference last quarter to MasTec space that you're getting back as well. Is that the only other vacancy you're expecting at this point, or is there any other nonrenewals? Yeah. So we got MasTec back earlier this year, and we have a small, well, Grand & Toy, a small vacancy also, you know, in Alberta and Edmonton. But I think other than that, we're not expecting anything else. There's nothing I would say overly large. I would say nothing over 30,000 sq ft. I mean, we do have one end of next year, but it's a very, and it's like 30,000 sq ft that probably will vacate, but it gives us a lot of time to backfill. So there's nothing, the Cartage is the big that we have. Yeah. Yeah. And with the one in Cambridge and in London, there's, that's what the renewals, once you get that done, that's like, that there would be no downtime or transition to a new tenant. That's just with existing tenants. Yeah. Yeah. Cambridge is a renewal. And then the biggest one is in Chatham, and that is with our with E & E McLaughlin, and that we're in discussions with. So I there's a 99% likelihood of that obviously renewing. But yeah, those are the two big ones. That represents 200,000-300,000, almost 400,000 sq ft. Okay. Appreciate the comments just on the, I guess, the work or the effort on the disposition program. When you think about the potential buyer pool for Sandalwood, what would that composition look like in terms of profile of buyer or the types of groups that you could be talking to? Yeah. So the ones that have shown interest are private, private cos, so nothing from a public side, private equity, different groups like that. So that's who's kind of shown some interest or we've fielded calls from. Not sure if I'd have to, but between office and the retail, it's something that may have to happen. We may be lucky and have someone take the whole thing down, so we'll have to see how it goes. But we're underwriting right now, so that hopefully then we can, December's probably not the best time, so January, probably a launch, we would go to a market. From a, like, an industrial point of view, just beyond RTL-Westcan, would there be anything else that you would have in the non-core bucket that could be opportunistic for sale at this point? Or is it really the focus would be RTL-Westcan at this point? Yeah, I think it'd be RTL-Westcan. There may be one or two small ones as people inquire on them. You know, we have some smaller stuff by the airport in Edmonton that are well tenanted, and possibly could look at those if we had interest on them, but nothing right now that's targeted per se, other than that. Okay. Thanks a lot. I'll I'll turn it back. Thanks, Brad. The next question comes from Kyle Stanley with Desjardins. Please go ahead. Thanks, guys. Just taking a look at your development disclosure. Looks like the costs in Hamilton and Regina have ticked up a little bit this quarter, and there was a bit of an adjustment to the expected yield in Regina. I'm just wondering, you know, if you could walk through, you know, some of those changes? ... Yeah. So Regina, I think, was primarily an adjustment to, to later on PST, which wasn't previously included in the, in the construction costs. So I, I think that's really what it is, because we have a fixed price, contract there. And then the Glover Road was a couple of variables. We own-- We have an 80% interest in that property, and so we have to buy out the remaining 20% interest. And so there were some changes in the assumptions in terms of the model, in terms of, you know, rents are increasing, and so we're gonna be capping out a higher NOI on the purchase of the remaining 20%. And so that's, that's really what, led to the increase on Glover. Okay. No, that makes sense. And they weren't huge increases, just digging into it a bit. You made some commentary about, you know, potentially expanding the project in St. Thomas. You know, a nice size expansion there. And you mentioned, you know, a yield maybe in the 9% or better range. Just wondering, you know, how are those conversations going? And, you know, what would the potential cost be there and, you know, potential timing on breaking ground and delivery? Just a, I guess, a bigger update on what's going on in St. Thomas. Yeah. So, I'm in the thick of it. So they have requested 240, so we're in discussions. Originally, we had a 9% return on a 70,000 sq ft addition. That might have to increase a little to get to 240,000 sq ft, in my mind. So, it's what I'm working on right now. I think the intent would to be, have that all figured out in December, where I would think they would break ground January, February, weather permitted. So that's kind of the schedule for there. It's probably somewhere, right now, around CAD 40 million would be the cost. The good one on that is that we don't really have a drag, because we did negotiate a return on costs as construction is completed, so there'd be no real drag on our NOI from that. Would that negotiated return on your costs as the construction is completed line up with the, call it a, you know, at least 9% return you're talking about, or would it be any different? It would be a little lower. It would be lower than that. Okay. Well, that makes sense. Yeah. Last one for me. G&A was down sequentially this quarter. Rob, I'm just wondering, you know, could you provide us with what a good run rate might be going forward? Well, there's always seasonality, I guess, in the G&A. So, you know, our Q1 G&A is gonna be a little bit higher with the timing of RSU vests, et cetera, and it'll depend on the grants. But, we're not, I don't think we're significantly off this quarter, and we're probably at about run rate, all else being equal. Okay. Yeah, I would use our current run rate. I mean, ultimately, our staff levels are our staff levels, and we're doing well with what we have, so I don't see any huge change to the actual run rate. Yeah, I think we had a bit of a spike in Q2, more so than a reduction in Q3. But call it, you know, CAD 1.5 million, somewhere in around there is probably run rate. Okay. No, fair enough. Thank you for that. I will turn it back. Thanks. The next question comes from Himanshu Gupta with Scotiabank. Please go ahead. Thank you, and good afternoon. So just on the credit facility swaps, I think a fair bit of done during the quarter and post that, how much of these swaps, you know, the banks have one-year options on that? Right. So, there's a total of CAD 300 million that was done, where the banks have one-time options to cancel one year out. Okay. And that will be like September, or will that be like November? It's August 31st, September 30th, and October 31st, but primarily October 31st of next year. October thirty-first. What is the rate for one year, right now on that CAD 300 million swap? Sorry, what is the? What is the interest rate on CAD 300 million swap right now? Put it this way, what will be the expiring rate like one year from now when the banks, you know, if they decide to, you know, cancel the swap? Yeah. So including spread, we're at about 5.9%, let's say, on those swaps. Excluding spread, we're at about, give or take, about 4.2%. And so the question will be whether the four-year is greater than 4.2% a year out. If it is, we'll very likely get canceled. But the counter question is: Where does short-term money sit? You know, if we've seen some correction of the inversion in the curve, then short-term money could actually be cheaper than longer-term money, as it would be in a normal situation, I guess. But, yeah, hopefully that answers your question. ... Sure. No, it does. So thanks for that. And then maybe, you know, like a bigger picture, what are your thoughts on distribution or payout ratio next year? I mean, especially in the context of, you know, you're talking RTOS candidates position, Sandalwood disposition as well. I'm assuming they are a bit high yielding assets. So any thoughts on distribution or payout for next year? Yeah, I think we ran our, we're not done, but of course, probably the payout starts to drift towards the lower 90s. So, while we'll have maybe some short-term strain on that payout, it starts to come down fairly quickly as our developments come on and as the new rents kick in. So at the end of the day, it's not something that we've looked at to reduce for sure. So, everything right now is status quo. And it's not top of mind to look at, so I hear a lot of fumbling, but we haven't, we don't think it's something that we need to look at as it will naturally drift down towards the lower 90s throughout the year. Got it. Okay, awesome. Thank you. Maybe just one last question, that Calgary asset acquisition in December, I think that's Canada Cartage. Yeah. What capital should we expect on that asset? Yeah, it was lower. It was pretty done before, and I believe it's somewhere around the 5.2-5.25. Okay, thank you. Thank you, Kelly, and I'll join back. Thank you. The next question comes from Jimmy Shan with RBC Capital Markets. Please go ahead. Thanks. Yeah, so maybe just a broader question on market rents and kind of what you're -- how would you characterize the most recent trends that you're seeing in asking rates in some of your key markets? Yeah. So it's actually been pretty good. Montreal is still holding up pretty well. You know, we're asking in the CAD 16-CAD 18 dollar range in some of our assets there. Calgary and Edmonton, where I thought we would have a little pushback on some of the rents, possibly, we actually are getting bigger increases than what we originally anticipated. We thought we'd be flat on some of them, and we're actually getting some increases. So, the market's still pretty robust. While it is, I guess, I think peaking in when we talk about the increase, the continued increase of rental rates, it's stabilized. And so we have a bunch. I mean, forget Southwestern Ontario, rents are pushing, and I think they're still continuing to push because there is no available space down there. That's a different market in its entirety. But from what I see, rates are stabilizing as a whole, but that still gives plenty of room for lift on the in-place rents across the portfolio. So I think you're starting to see peak rental rates in GTA, Montreal. I would say London is probably going to peak out, hopefully a little higher, maybe around CAD 14. So we are talking to some people and with that number in mind. So depends on the facility, the building you have, but rental rates are still pretty strong right now. Okay. There is a bit of a narrative about kind of limited large bay requirements by tenants, but small- and mid-bay activity being pretty healthy. I don't know if that's a GTA comment or not, but I wondered if you had any thoughts there or if you're seeing any of that dynamic in your markets. It's actually interesting because, in Regina, we have the 112,000 sq ft, and we'd prefer to lease it as one, but, we have a couple of people that are each looking at perhaps half of it. So, it kind of does work. Same with London, with our 96,000 sq ft. We have, we have users for a bit, for the whole thing, that we're speaking with, and we have users for half. So, there has been, a resurgence, I think, in that, call it in that 40,000-50,000 sq ft niche, that I'm seeing lately. Yeah. Okay, great. Thanks. No problem. This concludes the question and answer session. I would like to turn the conference back over to Kelly Hanczyk for any closing remarks. Please go ahead. Perfect. Thank you. Thanks, everybody, for attending, and we will see you next quarter. This concludes today's conference call. You may disconnect your lines. Thank you for participating.