Thank you. I'd like to welcome everyone to the 2026 Q2 results conference call for Nexus Industrial REIT.

Joining me today is Mike Rawle, Chief Financial Officer of the REIT. Before we begin, I'd 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 in the REIT's other securities filings, which can be found on our website and at SEDAR+.com for cautions regarding forward-looking information and for information about non-GAAP measures. The Q2 was an excellent quarter for Nexus.

We delivered sequential and year-over-year growth in revenue, net operating income, normalized FFO, and the last 12 months Adjusted EBITDA. These improvements reflect strong operating results, while we also advanced three transformative strategic initiatives.

First, early in the quarter, we obtained an investment-grade credit rating and completed an inaugural bond offering. Second, we advanced our capital recycling program by closing on the sale of surplus land and advancing two other dispositions.

Third, we advanced our development projects in British Columbia, which have the potential to be significant growth opportunities for Nexus. I will first review our operating performance, then provide an update on financing, capital recycling, and development before closing with our outlook for the balance of 2026.

In the quarter, we grew occupancy significantly to 97%. This improvement came primarily from two properties in Alberta: at 8th Street in Nisku, where we signed a lease for the full 40,000 sq ft at a 15% increase over expiring rent; in 40th Avenue in Red Deer, where we have sold 190,000 sq ft property, and the buyer is paying us a healthy 10% yield on the purchase price until they are able to close, which we expect to be any day now.

I am very happy with this progress, and I expect occupancy to improve further to our long-run average of 98%-99%. Apart from leasing up of these vacant units, we also made excellent headway on renewals, completing 380,000 sq ft of renewals at an average lift of 6% over expiring and in-place rents.

This demonstrates our continued ability to capture the market lift on lease renewals. At June 30th, we had an attractive average spread between market and in-place rents of 14.9%.

Looking at the remaining renewals for 2026, we have approximately 600,000 sq ft coming up for renewal in the second half of the year. Of this amount, we have already renewed or expect to renew over 400,000 sq ft.

The remaining space includes a 90,000 sq ft strategic vacancy in Montreal where the tenant is paying CAD 9 per sq ft, which is well below market rent. This lease comes due at the end of November.

The remaining space also includes 80,000 sq ft in London, where the tenant is paying CAD 8 per sq ft rent, also well below market rent, and the lease comes due at the end of December. It is early on this one, but we are in close discussions with a new tenant for this space in London.

The occupancy improvement, combined with our recent completed developments, expansions, and acquisitions, grew net operating income by 6.2% from a year ago to CAD 34.1 million. Normalized FFO increased to CAD 17.9 million, and on a last 12 months basis, adjusted EBITDA grew to CAD 121.8 million.

For the quarter, we posted normalized AFFO per unit of CAD 0.154, resulting in a year-to-date payout ratio of 99.3%, as we remain on track to deliver a full year 2026 payout ratio below 100%. Turning to our strategic initiatives.

At the beginning of the quarter, we received an investment-grade rating and completed an inaugural bond issuance of CAD 500 million. The debentures were issued in two tranches, CAD 300 million of three-year bonds with a coupon of 4.236% and CAD 200 million of five-year bonds with a coupon of 4.641%.

These issuances marked significant milestones in our evolution, and I am incredibly proud of this achievement. Looking forward, access to the bond market should help reduce financing costs, increase funding flexibility, and reduce financing risk over time.

We also have continued to make good headway on our capital recycling program. In the quarter, we sold our 80% interest in development land on South Service Road in Hamilton for CAD 14.1 million.

The property no longer fit into our plans, and we were able to use the sale proceeds to reduce debt. Since we are familiar with the project, we have agreed to guarantee the construction debt on a secured basis for a fee of 1%.

We have also entered into an agreement to sell nearly 14 acres of excess land in Blackfalds, Alberta. Previously, the land had been leased along with the building on an adjoining property.

Upon renewing the tenant, we severed off the unused land and have found a buyer at CAD 184,000 per acre, which we expect to close in October. We will use the proceeds of CAD 2.5 million to reduce our debt.

As mentioned earlier, our building at 40th Avenue in Red Deer, Alberta is under firm sale contract for CAD 11.25 million. This building went vacant when Peavey Mart filed for CCAA in April 2025.

The buyer is obtaining a development permit from the city, after which the sale will close, which we said will be any day. In the meantime, the buyer is paying us monthly rent, which is a great outcome for us.

In Hamilton, we are looking for a buyer or a tenant for our 115,000 sq ft new build on Glover Road. We own 80% of the property and it has been a challenging market in Hamilton.

In July, we advanced the sale by issuing our 20% partner with a right of first offer notice to acquire the property. They did not exercise the offer, and as a consequence, we now have the ability to market 100% of the property for sale.

Selling the building would contribute meaningfully to our FFO per unit, as the carrying costs are significant and sale proceeds could be used to pay down debt. Turning to development, we have launched a sub-strategy within our portfolio to consider development of data infrastructure projects where such investments meet our investment objectives and our disciplined approach to capital allocation.

We believe that 1751 Savage Road in Richmond and 555 Adams Road in Kelowna have the existing electrical infrastructure, available power capacity, and strategic locations that may provide a competitive advantage in pursuing possible digital infrastructure opportunities. At our Savage Road property in Richmond, B.C., we have transitioned the planned development from adding additional tennis courts to a combination of a tennis court and micro-industrial units that may be used individually or combined as data infrastructure.

At this time, we do not anticipate any change in the development cost of CAD 41.3 million, and we expect the project to continue to generate a minimum unlevered return on investment of 6%. In saying that, however, the project has a potential for much, much greater returns if the micro-industrial units are used as data infrastructure.

During the quarter, permitting was completed and construction commenced. At our Adams Road property in Kelowna, we are developing micro-industrial units as well, which may also be used individually or combined as data infrastructure.

We do not anticipate any change in development costs of CAD 47.3 million, and we expect the project to generate a minimum unlevered return on investment of 6%. The project has a much greater potential for returns if the micro-industrial units are used as data infrastructure.

The planning phase has been completed and the construction permit application has been submitted for review. Overall, our outlook for 2026 remains unchanged.

We continue to expect Nexus to deliver strong 2026, driven by our completed development projects, embedded rent steps to lease up a vacant space, and the re-leasing of space at market rents above expiring rents. We anticipate mid-single-digit industrial same property NOI growth for the year and expect our normalized AFFO payout ratio to average well below 100% for the full year.

With that overview, I will now turn the call over to Mike for more color on our financial results.

Thank you, Kelly, and good morning, everyone. Starting with headline earnings in the quarter, net loss was CAD 12.8 million, a CAD 5.2 million decrease compared to a net loss of CAD 7.6 million last year.

The fluctuation is due to lower fair value adjustments on derivative financial instruments and Class B LP units of CAD 5.5 million and CAD 3.2 million, respectively, and a higher net interest expense of CAD 2 million. These costs were partially offset by a higher fair value adjustment of investment property by CAD 3.5 million and a higher NOI of CAD 2 million.

As Kelly mentioned, our Q2 net operating income increased 6.2%, or CAD 2 million year-over-year to CAD 34.1 million. This was primarily due to the completion of our St.

Thomas and Calgary developments, which together added CAD 1.3 million, an increase in same property NOI, which added CAD 900,000, and the acquisition of the two Montreal buildings in November 2025, which added CAD 700,000. This was partially offset by lower termination fee income by CAD 1.2 million and CAD 200,000 relating to dispositions completed since Q2 2025.

Normalized AFFO for the period was CAD 0.154 per unit compared to CAD 0.16 from a year ago, primarily due to an increase in the weighted average number of units outstanding and higher interest expense due to having more debt outstanding. This was partially offset by the higher NOI that I just mentioned.

Total general and administrative expenses for the quarter were CAD 2.2 million, which was consistent with a year ago. Net interest expense in the quarter was CAD 14.7 million, which was CAD 2 million higher than a year ago, mainly due to a higher debt balance and the non-cash write-off of deferred financing costs associated with the CAD 200 million term loan that we retired early with the proceeds from our inaugural bond issuance in April.

In addition, capitalized interest in the quarter was CAD 300,000, or CAD 700,000 lower than a year ago. The carrying value of our investment properties decreased by CAD 15.7 million in the quarter, primarily due to the sale of our 80% interest in the development land at 1540 South Service Road for CAD 14.1 million, as well as fair value adjustments on properties of CAD 7.6 million, partially offset by investment in development and capital expenditures, tenant improvements, and leasing costs.

At June 30th, our NAV per unit was CAD 13.23, a CAD 0.06 per unit decrease from last quarter. Our weighted average cap rate increased by one basis point to 5.95% in the quarter compared to 5.94% at March 31st.

I will now turn the call back to Kelly.

Thanks, Mike. We're working hard at turning over every stone to create value for our unitholders.

We're advancing our strategy as Canada's industrial building partner by continuing to realize organic growth through embedded rent steps and positive mark-to-market on renewal. We'll continue our track record of accretive capital recycling through opportunistic acquisition, dispositions, and development.

With that, operator, please open the line to any questions.

Hey, good morning.

Morning.

Just, I guess hitting on the strategic updates on the development side, Richmond and Kelowna, I guess specifically with Richmond, you put in kind of new language around the potential for digital infrastructure use along with the micro industrial. I guess from the concept perspective today, it sounds like the plan is to build out the shell for now, and then I guess the leasing will dictate sort of what the use could be.

Just could you walk through that a bit more in terms of the initial plan and what to expect in terms of construction? Then, I just would like to understand how power would be procured for in case there is data center users.

Yeah. Okay.

I'll just I guess watch my words. I'm looking at it like miners trying to find the diamond in the rough.

We have broken ground. We've poured foundation, and shortly we'll begin framing on a very unique design, that I think we'll be able to deliver by the end of the year.

Our engineers discovered an opportunity, and we're exploring it very closely. I think what we have is, obviously, a great opportunity to create real value in the near term for the REIT.

I'd say it's a little early to give too much detail. But I can say if we're successful in landing the tenant, and we are speaking with a number, and the reception has been very positive, it's going to be a diamond.

I say let's see how it all plays out, but I hope to have some positive news within a month and a half. If all goes well, the early conversations are going extremely well, but it is a bit too early to make that call.

But we do have available power. We have been approved for additional power.

So from that perspective, it looks pretty positive.

I guess in the MD&A, you used similar language around Kelowna. I guess it does not appear or sound like it is as far advanced as Richmond.

Is that a fair assessment?

Yeah.

But it could be a similar opportunity?

Yeah, exactly. We are in for permit there on the same design.

When I am able to and ready, when we move closer and we land something, I will give a fulsome, probably press release on what we are doing. But it is very unique, very different.

I think what we have is something, I think looks like really good from what we are seeing right now. We kind of fell into it.

But at Richmond, we applied for additional power pretty early on, a while back. Things have been going pretty well.

Knock on wood, I do not want to jinx it and then come back and say, "Oh, we are just doing our standard 6% return." But I think right now it looks pretty positive.

Okay. I'll turn back.

Thank you.

Thanks.

Thanks. Morning, guys.

Morning.

Kyle, just sticking along the same lines as Brad Sturges' questions there about the data infrastructure and data center opportunity. You have the permit existing for Richmond.

You are in for permit in Kelowna. You mentioned giving us an update as you can.

What is it that you are waiting for to provide the update? Is it a change of use at the site?

Is it leasing discussions? I am just curious what it is that we need to wait for before we can learn more?

Yeah. It would be an update on leases, on having it papered in my hands.

Its pricing, it gets priced per kilowatt hour per month. What is the final pricing?

I think we have something really unique in our design that is going to become very popular. Let's face it, the actual ability to deliver quickly is imperative in that world because if you consider a traditional data center, it takes probably three, four years to finish off.

Probably more like four, to be honest. We are in a little bit of a unique position that I think we can deliver at the end of the year.

I am hoping. I do not want to say too much because I do not want everyone going crazy, and then all of a sudden we cannot secure the deal.

This is kind of new for us, but it is going pretty positive.

Okay. No, fair enough.

Just a follow-up there on the types of tenants that you might be engaging with. What are they?

Are they large tech companies? If you could just give us a bit of a sense of the type of tenant that would be looking for a smaller footprint data center like this.

To be honest, all of them. From very, very large to smaller co-locators to different types of groups.

There is just general overall interest, and there is a general shortage of available power to supply data right now that is available in the short term. When I say everyone, it is pretty much everyone right now.

Okay. Interesting.

I know I said one question, one follow-up, but I am going to ask one more quick one just on the actual industrial portfolio. Where do you see industrial same-property NOI trending over time?

Obviously, restated the mid-single digit. We have seen growth in the Q2 from the Q1.

Do you see that transitioning into a more mid to high single digit range, maybe aligning a little bit more directly with some of the other kind of Canadian peers at this point?

I think candidly, it is a little early for us to give longer term guidance outside of this year. I would say we are very comfortable with our guidance this year of the mid-single digits.

I think given where we are at today or on a year-to-date basis, fair to expect some acceleration from us in the back half of the year. But I think on the longer term, we do not want to give guidance into 2027, 2028 at this point.

Okay, fair enough. I will turn it back.

Thanks, guys.

Good morning, guys. Just maybe a follow-up to Kyle Stanley's line of questioning there, but on the straight line rent component.

I know you guys have done some pretty creative leasing deals, so we expected it to go up. How should we think of that translating into cash NOI over what period?

Because I know there were some steps in terms of the leasing that you did.

Yeah. I don't really know how to answer that other than to say we typically have pretty.

I think our average rent steps are in the order of 2%-3% per year on our portfolio overall. I think if you're looking to kind of see how the kind of cash or in-place rents grow, that's probably a fair number to use.

As you mentioned, there are a few where we've tried to call them out specifically where they're abnormal. For example, 1000 Clark Road in London, which had a big step at the beginning of this year.

The building we had in Calgary last year, in March of last year, which had a big rent step, which we disclosed individually. I think otherwise, fair to look at the portfolio as being kind of 2%-3% as an underlying rent step.

Okay. No, that's fair.

I was just thinking more in terms of, I think you have CAD 1.3 million in straight line rent, if I'm looking at this correctly. In this quarter, it was, what, CAD 400,000 last quarter?

Yeah. I think the Q2 run rate's pretty good.

If we take the-

Okay.

Straight line rent in Q1 was lower because we had some adjustments, some write-offs. This quarter is more indicative of a future run rate.

Yep. Makes sense.

Then maybe going back to the earlier discussion on the data center opportunity. Is it exclusive to those two properties that have been highlighted, or do you think this is something that you could roll out more broadly across the portfolio?

Yeah. I would say we have surveyed the entire portfolio.

We are in applications on a significant number of properties. We do have available power.

Our concept is unique, and it is something that could be rolled out right across the portfolio if warranted by a potential user.

Okay. Interesting.

Then I do not know if you disclosed it, but is there, from an incremental capital deployment standpoint, assuming a deal is to come forth, is it a significant amount of CAD on your side with high returns, or is it reasonable commitment from a capital standpoint from your side?

I think if we went that way, maybe the budget increases a little bit in Richmond, but the returns become quite large.

Okay.

Potentially. Again, it depends on what price per kilowatt, a number of different factors.

Okay. Makes sense.

Then maybe stepping back just high level in terms of capital allocation. You have been a little bit more active on the disposition front.

Obviously, you have got these opportunities that may take some of that capital, but what are you seeing on the acquisition side, or is their view towards kind of redeploying some of these disposition proceeds into new purchases as well, or just deleverage?

Yeah. I think we are focused on the deleveraging.

An opportunity may come that is just too good to be true, and we would pursue it, but right now I see the returns on allocating some of that capital to this new sub-strategy. The returns just are way higher, so it is a better use of our capital right now, and if it is successful, we will continue on, and that should free up free cash flow, et cetera.

So, we will just see how it all goes.

We also have, just to highlight too, Matt, we have some other internal projects, non-data related internal projects, just as we have had in the past, which are high return projects, which would, I think, take precedence in the capital allocation ahead of acquisitions. I mean, talking like our internal ones are 10% plus return on capital.

We would certainly put those first in line.

Okay. Makes sense.

Maybe I will ask one more, just because I think people are maybe busy figuring out what H&R REIT has done this morning. But, in terms of the known non-renewals or future leasing, either positive in terms of some of the vacant space or expected non-renewals, anything to note for the balance of the year?

Well, I think we noted the three, right? One is, I believe, Dubo Électrique.

That is the building that is coming back to us, so we will look to lease at that is end of the year. That is on a lower rent, I think CAD 8 a foot.

So hopefully we have positive there. The other one in 1002 in London, one which I believe it was 80,000 sq ft, I said.

But we are in pretty good discussions with the group that hopefully that one gets off the radar with either little or no downtime. And then that leaves us one more in London.

Mike, how many square feet was it?

88.

88,000 sq ft, but it was at a lower rent, I believe, as well.

CAD 6 bucks.

CAD 6 a foot. We should be able to do better on that as well.

Perfect. Thanks.

Appreciate the update, guys.

No problem.

Thank you. Good morning.

Just wanted to start on the leasing spreads in the quarter, which were quite weak, particularly in Alberta. I am just wondering, are there any other similar properties in the portfolio that come up for lease in the near term that might see similar reductions in their rent?

I do not believe in the near term there are any. That MasTec one, it was a company called MasTec, that was signed way back in the kind of the oil heyday, and then it was just coming off.

They had actually been subleasing, and we did a direct deal with the sublease tenant, so that was kind of an anomaly.

Actually, that was a good news story as well, Sam. That was one where as part of that renewal, we have partitioned off 14 acres of land, and that is under contract for sale.

So rent dropped, but we were able to peel off an asset there, which was unproductive, and now monetize it.

That was a CAD 2.3 million sale, I believe you said?

Yeah. That's it.

Yeah.

Yeah.

Okay. And I guess the other question is just on the data center disclosure last night.

How long had you been working on this sort of pivot on these two projects?

I would say it's probably been from where we kind of got the idea and applied for additional power was maybe six months ago, and then the real kind of harder pivot maybe about three months ago, where it looked pretty feasible. We're still in that earlier stage, but we altered our design, and it looks like it's going really well.

It kind of came up on us when we were just exploring opportunities to create bigger value.

Got it. Are there other assets in the portfolio that are maybe sort of further behind in the process that might come to fruition in the coming quarters?

I would say there are other assets that we definitely are looking at in the shorter term, yes. Correct.

Okay. Thank you.

I will turn it back.

Okay.

Awesome. All right.

Thanks, guys. We will see you next quarter.