REIT BUILDING THE FOUNDATION FOR THE NEXT CANADIAN BLUE CHIP REIT ANNUAL GENERAL MEETING REAL ESTATE INVESTMENT TRUST June 28, 2017
NOTICE TO THE READER 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, forwardlooking 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. 2
REIT 2017 ANNUAL GENERAL MEETING Evolution of Nexus REIT Picture of Nexus REIT as Section Divider 3
Nexus Market Cap ($M) Key Milestones $200.0 1 Jan. 14, 2014: Key Events 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 9. $180.0 2 Feb. 4, 2014: Announces first monthly cash distribution in the amount of $0.00742 per unit 3 July 16, 2014: Completes the acquisition of three properties $36.7M partly funded by a $20.0M public offering $160.0 4 5 July - Aug. 2015: Completes the acquisition of three properties for $38.0M partly funded through a VTB of $14.3M Dec. 17, 2015 Completes the acquisition of two properties for $12.1M partly funded through a VTB of $5.3M $140.0 6 7 Aug. 22, 2016: Apr. 3, 2017: Completes the acquisition of a property for approximately $8.4M partly funded through a VTB of $1.9M Completes the merger of Edgefront and Nobel to create Nexus, a $300M diversified REIT $120.0 8 9 June 6, 2017: June 20, 2017 Announces a $147M strategic acquisition (the Sandalwood Portfolio), financed through a $55M bought deal equity offering and a $15 concurrent private placement by RFA Capital Pro-forma market cap after the Sandalwood Portfolio acquisition 7. 8. $100.0 $80.0 $60.0 $40.0 3. 4. 5. 6. $20.0 1. 2. Total return since inception: 37.7% $0.0 13-Dec-12 13-May-13 13-Oct-13 13-Mar-14 13-Aug-14 13-Jan-15 13-Jun-15 13-Nov-15 13-Apr-16 13-Sep-16 13-Feb-17 4
Consistent Financial & Operating Performance Weighted Average Lease Term (years) Debt to Assets 11.9 9.8 59% 60% 58% 8.3 5.9 5.4 5.2 Peer Average Edgefront (1) 49% 51% 49% Peer Average Edgefront (1) 2014 2015 2016 Decreasing AFFO Payout Ratio Occupancy 2014 2015 2016 95% 95% 94% 100% 100% 100% 92% 92% Peer Average Edgefront (2) (1) (1) 95% 95% 95% Peer Average Edgefront 83% 2014 2015 2016 2014 2015 2016 1) Peer average is the simple average of Pro REIT, BTB REIT, True North Commercial REIT, Summit Industrial Income REIT, and Melcor REIT (where data is available) 2) AFFO payout ratio adjusted for unit based asset management and trustee fees 5
2017 ANNUAL GENERAL MEETING Nexus Canada s Next Blue Chip REIT 6
Canada s Next Blue Chip REIT Edgefront Real Estate Investment Trust ( Edgefront ) Single tenant, industrial focused REIT with 20 properties located throughout Canada Portfolio consisted of 100% occupied industrial real estate assets that were care free with contractual rent increases Supported by TriWest Capital Partners, one of Canada s leading private equity firms with ~$1.3 billion in AUM Nobel Real Estate Investment Trust ( Nobel ) Growth oriented REIT with 16 commercial properties, 15 of which were located in the Greater Montreal Area and one in Ottawa- Gatineau Primary market focus was unique among junior REITs Strategic relationship with RFA Capital Partners, a real estate private equity firm which has invested in over $15 billion of commercial mortgages and real estate since 1996 $125M in Market Cap 36 Properties Across Canada Diversified sector exposure and introduction into new geographical markets Immediate synergies driven by internalization of experienced management team Combined portfolio possesses the ability to deliver solid AFFO/unit growth Robust pipeline of high quality acquisition assets sourced through strategic partners 7
Nationwide Asset Base Nexus consists of a diversified portfolio of 36 properties located across Canada, combining Nobel s asset diversity with Edgefront s geographic diversity 16 Nobel Properties Industrial Retail 20 Edgefront Properties Office Mixed-Use 2 3 6 2 8 4 2 7 1 1 8
Robust, Diversified Portfolio with Broad Tenant Base Stabilized NOI ($M) Stabilized AFFO ($M) GLA (M Sq. Ft.) NOI by Province/Territory (1) Nobel portfolio & G&A synergies Stabilization of 2045 Stanley Nobel portfolio & G&A synergies Stabilization of 2045 Stanley Nobel portfolio 6.2% 5.9% 3.4% 0.4% 40.0% $7.0 $1.1 $21.5 (1) $3.0 $1.1 $12.0 (1) (2) 0.8 2.0 6.4% $13.4 $7.9 1.2 37.7% Edgefront Nexus Edgefront Nexus Edgefront Nexus AB QC BC SK ON NWT PEI Key Tenants NOI by Sector (1) Tenant Location Remaining Lease Term (years) % of Total Revenues 4.9% 2.1% AB, NWT, BC, SK 8.4 26% 16.3% Lethbridge, AB 12.1 9% Calgary, AB 7.5 8% 1) After stabilization of 2045 Stanley 2) Shown at ownership interests Grand Prairie, AB 8.9 6% Dorval, QC 12.5 5% 76.7% Industrial Office Mixed-Use Retail 9
Nexus Financial Metrics Unit Price (1) Basic Units Outstanding (C$) $2.10 (M) 59.7 Market Capitalization (1) Cash Debt Enterprise Value (C$M) $125.4 (C$M) $2.3 (C$M) $165.0 (C$M) $288.0 Debt to EBITDA (2) multiple 9.4x Debt to Gross Book Value (%) 57.0% Interest Coverage (2) multiple 3.1x Annual Distribution per Unit Yield ($) $0.16 (%) 7.6% Analyst Consensus Information (3) Consensus Target Price Consensus NAV per Unit ($) $2.38 ($) $2.28 Consensus 2017E AFFO Payout Ratio (%) 78.0% 1) Bsaed on issue price 2) EBITDA after stabilization of 2045 Stanley 3) Based on consensus analyst estimates 10
Strategic Relationships with Access to Quality Assets Overview: Privately held real estate investment and asset management firm One of Canada s leading private equity firms Founded: 1996 1998 Strategic Partner: Nobel Edgefront 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 17 companies Primarily focused on the industrial sector in Western Canada Headquarters: Toronto, ON Calgary, AB Other: Canada s first and largest investor in noninvestment grade CMBS 19 years experience investing in 38 companies representing a broad cross-section of the economy Sourced Acquisitions: 26 acquisitions sourced through RFA 14 acquisitions sourced through TriWest Strong partnerships to provide pipeline for accretive growth 11
Leadership Team Management Team Board of Trustees Name Title Experience Name Former Board Experience Kelly Hanczyk (1) Jean Teasdale (1) Robert Chiasson Co-CEO Co-CEO CFO Former CEO of Edgefront REIT Former CEO and Trustee of TransGlobe Apartment REIT Extensive experience in all disciplines of industrial, commercial and residential real estate Former CEO of Nobel REIT CEO and Founder of Maestri Terra, a real estate management and development company Served as VP, Real Estate and Commercial Services at Aeroport de Montreal Extensive experience in real estate development, management and financing Former CFO of Edgefront REIT 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) Mario Forgione Brad Cutsey Ben Rodney Nick Lagopoulos Edgefront Edgefront Edgefront Nobel n/a Co-founder and Vice Chairman of TriWest Capital Partners Former partner of Bennett Jones LLP Principal and Managing Partner of Windermere Realty Corp. President and Co-Founder of Edgemere Capital Former Managing Partner and Governor to the OHL, of the Mississauga Ice Dogs President of InterRent REIT Former Managing Director, Real Estate Investment Banking at Dundee Capital Markets Principal and Managing Partner of RFA Capital Has structured and closed over $15B of Canadian real estate and mortgage transactions Principal and Managing Partner of RFA Capital Previously with GE Capital and Credit Suisse 1) Also serves as a trustee 2) Chair of the board of trustees of Nexus 12
2017E P/ AFFO 2017E P / AFFO Internalized Asset Management Structure Nexus is partly benefiting from a valuation bump related to its recent internalization; REITs with internalized asset manager functions typically trade ~5x higher (on a P/AFFO basis), even when considering size Internally Managed REITs 26.0x <$1B Market Cap Average: 16.8x 23.0x 20.0x 17.0x 14.0x 11.0x Mainstreet InterRent Killam Apt Pure Multi-Fam Plaza Retail CAPREIT OneREIT Northview Apt Pure Industrial Granite Dream Office Crombie Artis Cominar CT Allied Properties CREIT Boardwalk REIT First Capital Realty Choice Properties SmartREIT H&R RioCan 8.0x $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 $9,000 Market Cap (C$M) Externally Managed REITs 16.0x 15.0x 14.0x 13.0x 12.0x 11.0x 10.0x PRO BTB Automotive Inovalis Summit Agellan Melcor WPT Slate Office Slate Retail NAR Morguard NAR Dream Industrial <$1B Market Cap Average: 12.0x Morguard Dream Global 9.0x 8.0x $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 Market Cap (C$M) 13
Select Nexus Properties 10500 Avenue Ryan Dorval, QC 10340 Cote de Liesse Montreal, QC GLA (sq ft) 52,372 GLA (sq ft) 26,281 Type Office Type Office Occupancy 100.0% Occupancy 95.0% 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 Newly renovated office property located in the borough of Lachine in Montreal, near the Pierre-Elliott-Trudeau international airport and Highways 20 & 40; tenants include Gestidev and HollisWealth Management 955 Boulevard Michele-Bohec Blainville, QC 1600 Rue Montgolfier Laval, QC GLA (sq ft) 33,461 GLA (sq ft) 27,097 Type Office Type Office Occupancy 100.0% Occupancy 100.0% Newly built office building located near Highway 15 in Blainville s business park; the main tenants are Above Security (part of the Hitachi Group), Public Works and Government Services Canada, and Sun Life Financial with leases expiring between May 2024 and May 2028 Strategically located at the corner of Highway 13 and Boulevard Saint-Martin, the fully occupied building includes the headquarters of Crescendo Systems Corporation, occupying 21,031 sq. ft. under a lease expiring in 2025, and Shimadzu Canada under a lease expiring in 2021 14
Select Nexus Properties 3501 Griffen Rd. North Lethbridge, AB 4700 & 4750 102 Avenue Calgary, AB GLA (sq ft): 229,000 GLA (sq ft): 29,471 Land (acres) 31.4 Land (acres) 13.5 Occupancy: 100% Occupancy: 100% Built/Ren: 2008 / 2012 Built/Ren: 2009 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. Located in close proximity to Highway 2 and acquired on August 25, 2015, this property is leased under a long-term lease to Canada Cartage that expires on December 31, 2024 455 Welham Road Barrie, ON 12104 & 12110, 17th Street Edmonton, AB GLA (sq ft): 109,366 Land (acres) 7.3 Occupancy: 100% GLA (sq ft): 116,582 Land (acres) 34.0 Occupancy: 100% Built/Ren: 1998 / 2015 Built/Ren: 1973 / 2011 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 Acquired on January 14, 2014 and leased under a long-term lease to Westcan Bulk Transport that expires on November 14, 2025. Located in close proximity to Highway 100. 15
2017 ANNUAL GENERAL MEETING Overview of the Sandalwood Portfolio Acquisition 16
Sandalwood Transaction Background to Transaction Map of Quebec Properties On June 5, 2017, Nexus announced and waived diligence and certain other conditions in its agreements to acquire a portfolio of assets located in GMA and GQCA from vending entities associated with and/or related to Sandalwood Management Inc. ("Sandalwood"), a private real estate firm dually headquartered in Austin, Texas and Montreal, Quebec Asset / Transaction Highlights Asset Overview: 8 office properties (7 Class I office properties) 1 industrial property 17 retail properties Acquisition Cap Rate: 7.3% (Purchase price of ~$147M, $97 per sq. ft.) Greater Quebec City Area NTM NOI: $10.8 million Debt / GBV: 56.5% GLA: Financing: 1.5 million sq. ft. (at 100% interest in 2 properties and 50% interest in 24 properties) Assumption of $75.8M in debt and new mortgage financing of $8.5M ~$55M bought deal public equity offering Concurrent $15M private placement with RFA Capital Vendor to receive a portion of purchase price in Nexus units via VTB of $2.0M Greater Montreal Area Target AFFO Accretion: 4.0% - 5.0% (at issue price of $2.10) 17
Sandalwood Portfolio Acquisition Highlights 1 2 3 Significantly enhances Nexus position as a leading diversified REIT 78% increase in owned GLA ~50% increase in gross book value (~$450M) Increased presence in the stable GMA and GQCA markets Attractive valuation metrics Proportionate interest in Sandalwood is being acquired at an attractive 7.3% cap rate Off-market transaction sourced through Nexus strong relationship with RFA Capital Immediate accretion of 4-5% to adjusted funds from operations per unit 4 5 Strong tenant roster with many investment grade credit-rated tenants Canadian Tire, Metro, Dollarama, Provigo, Staples, IBM, Xerox, BMO and National Bank RFA Capital will invest an additional $15M in Nexus through a concurrent private placement 6 Partnership with Sandalwood provides access to a proprietary pipeline of potential future acquisitions (above and beyond the ROFO) 18
Overview of Select Properties Select Old Montreal Properties Select Greater Quebec City Area Properties 19
Portfolio and Tenant Information Portfolio Overview Property Name Location (2) Owned % GLA (Sq. Ft.) (1) 1) At Nexus ownership interests; Portfolio approximates ~2.5M sq. ft. at 100% interest Asset Class LE Centre de Victoriaville GQCA 100% 375,788 Retail 400 Place St. John St John 100% 159,927 Office Les Halles d'anjou GMA 50% 52,699 Retail Place L'Ormiere GQCA 50% 57,198 Retail Place Liray GQCA 50% 22,310 Retail LE Centre Nicolet GMA 50% 44,192 Retail Place Sorel GMA 50% 58,174 Retail LE Centre Sherbrooke GMA 50% 85,477 Retail Place Orleans GQCA 50% 16,206 Retail Galeries Orford GMA 50% 66,860 Retail Galeries de L'Erable GQCA 50% 49,806 Retail Place Mont-Marie GQCA 50% 21,638 Retail LE Centre Ste-Anne GQCA 50% 44,313 Retail Place Cote Joyeuse GQCA 50% 32,231 Retail LE Centre la Pocatiere GQCA 50% 104,400 Retail LE Centre Forestville Forestville 50% 27,981 Retail Les Galeries Taschereau GMA 50% 106,991 Retail LE Centre Brossard GMA 50% 21,675 Retail 329 de la Commune GMA 50% 10,563 Class I 353 St. Nicolas GMA 50% 17,816 Class I 410 St. Nicolas GMA 50% 77,466 Class I 360 Notre Dame GMA 50% 14,950 Class I 63 des Bresoles GMA 50% 19,839 Class I 321 de la Commune GMA 50% 5,751 Class I 127, 137 & 145 St. Pierre GMA 50% 16,839 Class I 425 Rue Guy GMA 50% 20,484 Industrial 1,531,571 Key Tenants Tenant GLA % Credit Rating Total 30.5% Pro Forma NOI 25.7% 19.7% 3.3% 51.3% Industrial Retail Office Mixed-Use 9.5% BBB+ 9.2% BBB 3.9% BBB 2.6% BB+ 2.2% BBB 1.8% A+ 0.7% AA- 0.5% A 0.2% A+ 12.6% 2.3% 1.7% 3.6% 3.9% 34.9% 41.0% GMA Western Canada GQCA ON Maritime NWT GOA 20
Nexus Market Metrics Post Sandalwood Portfolio Acquisition Edgefront Nexus Nexus Pro Forma Market Capitalization ($M) $87.1 $125.4 $197.4 Enterprise Value ($M) $171.0 $288.0 $449.8 Assets ($M) $176.0 $289.5 $446.9 Debt / Assets 48.1% 57.0% 57.0% GLA (Sq. Ft. in Ms) - At Interest % 1.2 2.0 3.5 Number of Properties (1) 20 36 62 1) Includes 50%-owned properties 21
Focus for 2017 1 2 Integration of the Edgefront and Nobel Platforms and Sandalwood Portfolio Lease up and Repositioning of 2045 Stanley 4 Identification and Execution of Off Market Pipeline Acquisitions 3 Internal Growth Opportunities 22
Contact Information Kelly Hanczyk Co-CEO Phone: (416) 906-2379 Email: khanczyk@nexusreit.com Jean Teasdale Co-CEO Phone: (514) 840-9339 Email: jteasdale@nexusreit.com Rob Chiasson CFO Phone: (403) 817-9496 Email: rchiasson@nexusreit.com 23