U.S. Markets close in 36 mins

Edited Transcript of ED.UN.V earnings conference call or presentation 20-Nov-19 6:00pm GMT

Q3 2019 Nexus Real Estate Investment Trust Earnings Call

CALGARY Nov 25, 2019 (Thomson StreetEvents) -- Edited Transcript of Nexus Real Estate Investment Trust earnings conference call or presentation Wednesday, November 20, 2019 at 6:00:00pm GMT

TEXT version of Transcript

================================================================================

Corporate Participants

================================================================================

* Kelly Clark Hanczyk

Nexus Real Estate Investment Trust - CEO, President & Trustee

* Robert Paul Chiasson

Nexus Real Estate Investment Trust - CFO & Secretary

================================================================================

Conference Call Participants

================================================================================

* Bradley Sturges

Industrial Alliance Securities Inc., Research Division - Equity Research Analyst

* Stephan Boire

Echelon Wealth Partners Inc., Research Division - Analyst

* Terry Fisher

================================================================================

Presentation

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

Thank you for standing by. This is the conference operator. Welcome to the Nexus REIT Third Quarter 2019 Conference Call. (Operator Instructions) And the conference is being recorded. (Operator Instructions)

I would now like to turn the conference over to Kelly Hanczyk, Chief Executive Officer. Please go ahead, sir.

--------------------------------------------------------------------------------

Kelly Clark Hanczyk, Nexus Real Estate Investment Trust - CEO, President & Trustee [2]

--------------------------------------------------------------------------------

Thank you. First of all, I would like to welcome everyone to the 2019 third quarter results conference call for Nexus REIT. Joining me today is Robert Chiasson, 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 will 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.

So once again, this has been a solid quarter for the REIT. I feel like I'm a broken record sometimes, but the third quarter of 2019 continues the path it's followed since the inception of the REIT. It's steady as she goes. We have seen a considerable increase in the liquidity of the REIT's units, which is positive, and now have a 10% participation rate in the DRIP, which we believe will continue to grow.

Our payout ratio for the quarter once again has continued to drop to approximately 78.9% while keeping our debt to gross book value conservative at 51.4%. These are compelling best-in-class metrics, especially when combined with the current trading price well below our current NAV of $2.30 a unit.

In Richmond BC, 1771 Savage Road, we've entered into an agreement to terminate the Wärtsilä lease effectively -- effective December 15 of this year. And we are working on 2 new leases that have been agreed to in principle. We want to do it right and the development is in the details, and now we are currently working through in sorting out. It's anticipated that these leases once finalized would commence in the fall of next year.

On the disposition trend, we are under contract to sell 2 of our smaller properties in Montréal that represent approximately $7 million in selling price. One is expected to close in mid-December and one by mid-January.

On the acquisition front, we've been very active. We are in due diligence on the 230,000 square foot industrial deal in Saskatchewan, which we would -- be settled entirely in units. This would allow us to place debt on the property on favorable terms, which would provide cash we could use to complete additional acquisitions.

In addition, we are negotiating purchase and sale agreements on 2 acquisitions representing approximately 340,000 square feet of industrial products. There's been a robust pipeline of -- as we are in negotiations with several other vendors on additional acquisitions, all with similar balance of payment between the cash and the REIT units.

I'm going to pass it off to Rob Chiasson now to give greater detail of the REIT's financials.

--------------------------------------------------------------------------------

Robert Paul Chiasson, Nexus Real Estate Investment Trust - CFO & Secretary [3]

--------------------------------------------------------------------------------

Thanks, Kelly. While NOI was down slightly quarter-on-quarter linked to tenancy changes discussed in last quarter's call, our portfolio continues to deliver consistent results. Occupancy remained at 94% at September 30, consistent with June 30. Interest expense in the third quarter, it was down approximately $125,000 as compared to the second quarter when we backed out a $575,000 repayment fee in the second quarter on debt that was assumed on acquisitions completed in 2017. Lower deferred financing amortization charges with the maturity of our credit facility and lower principal and interest rates contributed to the savings in interest expense.

Our quarter-on-quarter AFFO payout ratio of 78.9% was lower than 80.5% for Q2 2019 and 82.6% for Q3 2018. Lower interest expense and higher contribution from our Rue Stanley property, which is owned in a joint venture, boosted AFFO in the quarter. And this, combined with an accretive acquisition completed in Q1 2019 boosted year-over-year AFFO per unit.

Looking to the balance sheet. Our debt to total assets decreased from 51.7% at June 30, 2019, to 51.4% at September 30. With respect to debt, we completed the refinancing of our $65 million credit facility on September 13, and we were able to achieve fixed interest rate of 3.15% by way of floating rate debt with a swap in place. $15 million of mortgages were renewed subsequent to quarter end, and approximately $5 million of mortgages were repaid in the third quarter with proceeds from refinancing the credit facility.

Bond yields continue to be at relatively low levels. However, they are up slightly from the recent lows they hit on August 15, which were discussed when we last spoke. We refinanced the majority of our mortgage maturities and have another $40 million that we will be refinancing in 2020 where we could benefit from positive pricing.

I'll now pass it back to Kelly.

--------------------------------------------------------------------------------

Kelly Clark Hanczyk, Nexus Real Estate Investment Trust - CEO, President & Trustee [4]

--------------------------------------------------------------------------------

Rob, I'm going to hand it over to open up the call to any questions.

================================================================================

Questions and Answers

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

(Operator Instructions) Our first question comes from Brad Sturges with IA Securities.

--------------------------------------------------------------------------------

Bradley Sturges, Industrial Alliance Securities Inc., Research Division - Equity Research Analyst [2]

--------------------------------------------------------------------------------

Just starting with Richmond. In terms of Phase 1, what's the timing there for completions? Is it still end of the year or does that flip into Q1 next year?

--------------------------------------------------------------------------------

Kelly Clark Hanczyk, Nexus Real Estate Investment Trust - CEO, President & Trustee [3]

--------------------------------------------------------------------------------

It will flip into Q1 of next year.

--------------------------------------------------------------------------------

Bradley Sturges, Industrial Alliance Securities Inc., Research Division - Equity Research Analyst [4]

--------------------------------------------------------------------------------

So would that be -- would the rents be fully reflected in Q1? Or there's still some work to be done, I guess, in the quarter?

--------------------------------------------------------------------------------

Kelly Clark Hanczyk, Nexus Real Estate Investment Trust - CEO, President & Trustee [5]

--------------------------------------------------------------------------------

Yes. In Phase 1, the rent is either paid by the tenants or by the vendor. So the rent is complete.

--------------------------------------------------------------------------------

Bradley Sturges, Industrial Alliance Securities Inc., Research Division - Equity Research Analyst [6]

--------------------------------------------------------------------------------

The construction, though, will end and effectively turned over to tenants rent in Q1?

--------------------------------------------------------------------------------

Robert Paul Chiasson, Nexus Real Estate Investment Trust - CFO & Secretary [7]

--------------------------------------------------------------------------------

I think what we'll see is at the end of Q1 and into April, we'll see the construction end and we'll see the other income that's -- we're currently reporting on our P&L replaced with NOI for the accounting rules as we start to collect the rents directly from the tenants.

--------------------------------------------------------------------------------

Bradley Sturges, Industrial Alliance Securities Inc., Research Division - Equity Research Analyst [8]

--------------------------------------------------------------------------------

Okay. And then for Phase 2. Phase 2, is the budget still roughly $7 million based on these expected tenants coming in?

--------------------------------------------------------------------------------

Kelly Clark Hanczyk, Nexus Real Estate Investment Trust - CEO, President & Trustee [9]

--------------------------------------------------------------------------------

Yes. It's kind -- in and around there. We're working through those details now.

--------------------------------------------------------------------------------

Bradley Sturges, Industrial Alliance Securities Inc., Research Division - Equity Research Analyst [10]

--------------------------------------------------------------------------------

And construction would start early next year, I guess?

--------------------------------------------------------------------------------

Kelly Clark Hanczyk, Nexus Real Estate Investment Trust - CEO, President & Trustee [11]

--------------------------------------------------------------------------------

I'd say would be -- yes, that's good. Yes. Yes. That's the plan assuming we can get everything done with the tenants and the leases finalized and all the details complete.

--------------------------------------------------------------------------------

Bradley Sturges, Industrial Alliance Securities Inc., Research Division - Equity Research Analyst [12]

--------------------------------------------------------------------------------

Okay. So the leases will be commencing theoretically in fall next year. Is that both rents and the occupancy starting at the time? Or would there be a gap between occupancy and then the rent payments?

--------------------------------------------------------------------------------

Kelly Clark Hanczyk, Nexus Real Estate Investment Trust - CEO, President & Trustee [13]

--------------------------------------------------------------------------------

It will depend on when construction finishes. But if it's early occupancy, there'd be a gap, a slight gap on occupancy and actual start of a lease date.

--------------------------------------------------------------------------------

Bradley Sturges, Industrial Alliance Securities Inc., Research Division - Equity Research Analyst [14]

--------------------------------------------------------------------------------

Okay. In terms of the pending acquisitions on the industrial side there, can you give an average cap rate you're expecting to achieve?

--------------------------------------------------------------------------------

Kelly Clark Hanczyk, Nexus Real Estate Investment Trust - CEO, President & Trustee [15]

--------------------------------------------------------------------------------

Yes. Actually, I can. So I think if I look at all of them combined, I would probably be slightly over 7% cap.

--------------------------------------------------------------------------------

Bradley Sturges, Industrial Alliance Securities Inc., Research Division - Equity Research Analyst [16]

--------------------------------------------------------------------------------

Okay. And on the asset sales, can you comment on cap rate?

--------------------------------------------------------------------------------

Robert Paul Chiasson, Nexus Real Estate Investment Trust - CFO & Secretary [17]

--------------------------------------------------------------------------------

I guess one of the assets is -- the purchaser has waived diligence. The other asset is still in diligence. So I don't know. It might be a little bit premature, but we're selling them at a gain to what we have them on the books for, and we're happy with the sale price.

--------------------------------------------------------------------------------

Operator [18]

--------------------------------------------------------------------------------

Our next question comes from Stephan Boire with Echelon Wealth Partners.

--------------------------------------------------------------------------------

Stephan Boire, Echelon Wealth Partners Inc., Research Division - Analyst [19]

--------------------------------------------------------------------------------

Okay. I just -- couple of questions for you. First, on the acquisition front again. Kelly, you mentioned, I believe, last quarter that you were -- there was roughly $15 million to $20 million property in the pipeline or you were in advanced negotiations on. Can you give us an update on that? Or is it -- I -- I'm guessing or I'm assuming it's part of the Saskatchewan and the other properties you mentioned earlier, right?

--------------------------------------------------------------------------------

Kelly Clark Hanczyk, Nexus Real Estate Investment Trust - CEO, President & Trustee [20]

--------------------------------------------------------------------------------

Yes. That one is on the Saskatchewan property, so it's about 230,000 square feet. It's a great little property. I would say, out west, non-oil and gas, has some development potential to it. So I think a strong property for us. So we're in due diligence on that, which would be expected to waive towards the end of December. So I guess closing would be towards the end of January or sometime in January.

--------------------------------------------------------------------------------

Stephan Boire, Echelon Wealth Partners Inc., Research Division - Analyst [21]

--------------------------------------------------------------------------------

Okay. So you don't necessarily expect anything to close before year-end. Is that right?

--------------------------------------------------------------------------------

Kelly Clark Hanczyk, Nexus Real Estate Investment Trust - CEO, President & Trustee [22]

--------------------------------------------------------------------------------

Yes. That's right.

--------------------------------------------------------------------------------

Stephan Boire, Echelon Wealth Partners Inc., Research Division - Analyst [23]

--------------------------------------------------------------------------------

Okay. Okay. And I guess in that sense, it seems like a few of the acquisitions this year either didn't materialize or there were delays, and I was just wondering if you could give us some details on what were the main factors or the main reasons behind that and if you can quantify the volume of acquisitions that's -- that you expect for next year.

--------------------------------------------------------------------------------

Kelly Clark Hanczyk, Nexus Real Estate Investment Trust - CEO, President & Trustee [24]

--------------------------------------------------------------------------------

I -- that's one we've been looking at. We've been in -- was in negotiation for a while. So it sometimes takes a while when it's a unit deal and especially if in it's for all units. It's a little bit of a different animal. But we did have one earlier in the year in Montréal area that we decided to drop at the end. Once we did our due diligence, we decided to drop it. So this one looks pretty good. I'm pretty sure we will close once we waive conditions on that. So that's a positive deal.

Other ones we've been working on for a while, and they've kind of -- now we're in the purchasing sale agreement stage of negotiating back and forth. So I would assume you would be looking at December, like January, February closing maybe on some of them, on a couple of them. And then there's 2 or 3 that we're in the LOI stage, on negotiating. So all combined, that's -- I mean take out the one -- well, actually, all combined, that'd be $80 million. So that would kind of be -- if we were lucky to do them all and went through due diligence and it was positive, it would probably be about $80 million in the first half of the year, I'd say first half, first 4 or 5 months.

--------------------------------------------------------------------------------

Stephan Boire, Echelon Wealth Partners Inc., Research Division - Analyst [25]

--------------------------------------------------------------------------------

Okay. And I don't want to put words in your mouth, but would roughly $150 million for next year, would this be reasonable?

--------------------------------------------------------------------------------

Kelly Clark Hanczyk, Nexus Real Estate Investment Trust - CEO, President & Trustee [26]

--------------------------------------------------------------------------------

Yes. I think $100 million to $150 million would be a pretty good number. Stock is really active lately, so there's a number of opportunity we're looking at.

--------------------------------------------------------------------------------

Stephan Boire, Echelon Wealth Partners Inc., Research Division - Analyst [27]

--------------------------------------------------------------------------------

Okay. Okay. Perfect. And still on the acquisition front, do you have a time horizon that you expect or -- yes, that you expect to acquire additional properties maybe from Sandalwood? Is it still something that's on the table?

--------------------------------------------------------------------------------

Kelly Clark Hanczyk, Nexus Real Estate Investment Trust - CEO, President & Trustee [28]

--------------------------------------------------------------------------------

Yes. It's something we always bounce around a little bit, especially from our side. But we haven't gotten anything. I don't know, it could be a year, it could be 2 years, 5 years. It really depends on their motivation.

--------------------------------------------------------------------------------

Stephan Boire, Echelon Wealth Partners Inc., Research Division - Analyst [29]

--------------------------------------------------------------------------------

Right. Okay. Makes sense. And on the -- as for last quarter also, you mentioned that you were looking to dispose of $6 million to $6.5 million in properties just in the Montréal area, and obviously you announced -- that you just announced 2 more, I think it links $7 million in Montréal plus the one in Mascouche for $3.7 million. So can you again quantify the amount of disposition you'd be looking at for the Montréal area and in general for the entire portfolio maybe for next year?

--------------------------------------------------------------------------------

Robert Paul Chiasson, Nexus Real Estate Investment Trust - CFO & Secretary [30]

--------------------------------------------------------------------------------

Right. So Stephan, it seems like maybe we have you double counting a little bit. The $6 million to $6.5 million that we talked about last quarter is actually the $7 million. We ended up getting pricing levels that we were happy with, that exceeded what was projected last quarter. And so it's really only the 2 properties that we're disposing of at this time.

--------------------------------------------------------------------------------

Stephan Boire, Echelon Wealth Partners Inc., Research Division - Analyst [31]

--------------------------------------------------------------------------------

Okay. Okay. And so no more dispositions or nothing planned in the next 12 months?

--------------------------------------------------------------------------------

Kelly Clark Hanczyk, Nexus Real Estate Investment Trust - CEO, President & Trustee [32]

--------------------------------------------------------------------------------

Well, nothing earmarked right now, but I would say in first quarter, we would probably look at it. And there are a couple of small outliers that perhaps we'd look at, but nothing from a major size.

--------------------------------------------------------------------------------

Stephan Boire, Echelon Wealth Partners Inc., Research Division - Analyst [33]

--------------------------------------------------------------------------------

Okay. Makes sense. And on the -- on a different topic. The G&A this quarter and also in Q2 was a bit higher than last year, which obviously seems to be attributable to salaries and professional fees. Just -- should we -- from a modeling standpoint, should we consider $2.5 million to be a good annual run rate going forward, first? And do you think that you are at a scalable level at this point where even if you make any additional acquisitions, they won't necessarily have a material impact on the G&A?

--------------------------------------------------------------------------------

Robert Paul Chiasson, Nexus Real Estate Investment Trust - CFO & Secretary [34]

--------------------------------------------------------------------------------

So I think $2.5 million might be a little bit low. I mean if you look at the $850 million and you annualize that, I think we're at $3.2 million, $3.4 million, somewhere there. So I think that might be a little bit light, and I think the darkness, at that point where we have some scale and we wouldn't have to add staff as we add properties. The other nice thing about the properties we tend to add is they tend to be triple-net and single-tenant care-free to us in many cases, and so they don't require a lot of overhead.

--------------------------------------------------------------------------------

Kelly Clark Hanczyk, Nexus Real Estate Investment Trust - CEO, President & Trustee [35]

--------------------------------------------------------------------------------

Yes. And Stephan, we ramped up staff a little bit, I'd say, the second half of this year in anticipation of a move to the TSX so that we're in a good position staff-wise.

--------------------------------------------------------------------------------

Stephan Boire, Echelon Wealth Partners Inc., Research Division - Analyst [36]

--------------------------------------------------------------------------------

Okay. Okay. Perfect. And just the last one before I turn it back. Can you give us some color on the same-property -- I'm sorry if I missed it, maybe, Rob, you mentioned it, but the same-property NOI growth in dollar and percentage term and also more specifically maybe on the Sandalwood portfolio?

--------------------------------------------------------------------------------

Robert Paul Chiasson, Nexus Real Estate Investment Trust - CFO & Secretary [37]

--------------------------------------------------------------------------------

Yes. So on the Sandalwood portfolio, in one property in particular, we had a turnover in tenancy where we had a furniture store that left and gateway to a brick, and the brick is in -- I think we talked a little about these last quarter, but the brick is in fit out right now, fixed ring period. So same-store NOI is actually down quarter-over-quarter by about $100,000 and so -- mostly linked to those temporary changes.

--------------------------------------------------------------------------------

Operator [38]

--------------------------------------------------------------------------------

(Operator Instructions) Our next question comes from Terry Fisher with CIBC Private Wealth.

--------------------------------------------------------------------------------

Terry Fisher, [39]

--------------------------------------------------------------------------------

Congratulations on another good quarter. I'd -- I also want to ask about the cap rate question, but that's been answered and it's nice to see that, that's the kind of targeting. But can I also ask about properties that you're looking at? Is there a theme in terms of your focus? I'm sensing maybe industrial is what you'd be targeting over perhaps other types of real estate?

--------------------------------------------------------------------------------

Kelly Clark Hanczyk, Nexus Real Estate Investment Trust - CEO, President & Trustee [40]

--------------------------------------------------------------------------------

Yes. Our focus is mainly industrial, so the stuff that we are looking at. So when I quote a pipeline of that $80 million, those are all industrial assets. Now -- and that's located right across Canada. In Montréal, we have a fairly strong operational staff. So we would look to do other type of deals in Montréal. If one comes along, that's a reasonable cap rate in our range. So I'd say the rest of Canada, we're more focused on the industrial market.

--------------------------------------------------------------------------------

Terry Fisher, [41]

--------------------------------------------------------------------------------

Yes. It's been a competitive space, though, and so it's nice to see those kind of cap rates going in if you -- in that space. And it's -- of course, it's a desirable space, I think, from an investor's point of view, certainly from mine. So the only other question I had was one of the things I find most intriguing, why I think we have invested in for our clients is the unit financing for these acquisitions and that being done at a premium to the market price. Is that something we can keep anticipating going forward?

--------------------------------------------------------------------------------

Kelly Clark Hanczyk, Nexus Real Estate Investment Trust - CEO, President & Trustee [42]

--------------------------------------------------------------------------------

So the one we have that we're -- closed on is an all-unit deal. So it's fairly significant. And then the other 4 or 5 or 6 that we're looking at are a mixture of units and cash, so the same structure, the same thing we've been executing on for the last, call it, 2 years. And we look to do them at a premium, and as our share price starts to creep up, which is starting to do, we'll look at increasing that -- the price that we're doing those transactions on.

--------------------------------------------------------------------------------

Terry Fisher, [43]

--------------------------------------------------------------------------------

Yes. I think it's a great formula, particularly the level of capitalization you're at now to build up to a level where people are going to finally take notice and then I think we're into whole different valuation set of metrics. And possibly, hopefully, some additional analyst coverage. I don't want to see competition for the guys on the call, but that will always help.

--------------------------------------------------------------------------------

Kelly Clark Hanczyk, Nexus Real Estate Investment Trust - CEO, President & Trustee [44]

--------------------------------------------------------------------------------

Yes. We're working on that, and hopefully, in the near future, we have a few more. And the unit acquisitions have been a huge positive for us. It's allowed us to grow really without doing dilutive equity raises at this point where our price is. So it's been very positive. We've managed to complete a number of them. They've all been relatively highly accretive to our AFFO per unit. So it's something that we'll continue to execute on.

--------------------------------------------------------------------------------

Terry Fisher, [45]

--------------------------------------------------------------------------------

Just as a parallel because it's in your industry and you like to look at other real estate, particularly publicly traded real estate businesses that would have a similar kind of approach. I recommend you look at -- if you haven't already, at something called Invesque. IVQ is the ticker. It's IVQ. U for the U.S. units. But they've just recently done the same thing where they've issued units -- preferreds actually, but at a premium in order to get the size of the business up. But just another -- so you're not out there alone doing this. You can see that there are other examples of it.

--------------------------------------------------------------------------------

Kelly Clark Hanczyk, Nexus Real Estate Investment Trust - CEO, President & Trustee [46]

--------------------------------------------------------------------------------

Yes. No, perfect. Yes, it really is...

--------------------------------------------------------------------------------

Terry Fisher, [47]

--------------------------------------------------------------------------------

Okay, cool. I'm done.

--------------------------------------------------------------------------------

Operator [48]

--------------------------------------------------------------------------------

Our next question comes from [Benjamin Grossman], a private investor.

--------------------------------------------------------------------------------

Unidentified Participant, [49]

--------------------------------------------------------------------------------

I have a question with regards to the dividend. Considering the AFFO payout has, picked up a little lower, which is good, can we expect in the near future some kind of increase in the dividend from $0.16 annually to maybe $0.18?

--------------------------------------------------------------------------------

Kelly Clark Hanczyk, Nexus Real Estate Investment Trust - CEO, President & Trustee [50]

--------------------------------------------------------------------------------

We haven't gone over that at a Board level yet. We're going to see how next year goes. We do have return -- a drop in our cash flow a little bit with vacating Wärtsilä to get ready for a new deal there. So that will be a temporary drag on our cash flow. But we do have positive momentum on leasing and others. So I think as we go along the year, we'll take another hard look at it. But for us at this point, we like to stay relatively conservative because you never know when you have that one tenant who vacates on you and then you're scrambling. So we put ourselves in a really good position to weather any kind of storm, and that's what we've done to date. So it's a little early. We will have a strategy meeting next -- early next year, and we'll take a look at it then.

--------------------------------------------------------------------------------

Operator [51]

--------------------------------------------------------------------------------

Our next question comes from Brad Sturges with IA Securities.

--------------------------------------------------------------------------------

Bradley Sturges, Industrial Alliance Securities Inc., Research Division - Equity Research Analyst [52]

--------------------------------------------------------------------------------

All right. Just going back on the G&A. I guess with the move to the TSX, there should be some onetime costs, I guess, creeping in the next couple of quarters. Do you have a rough estimate of what that cost would be?

--------------------------------------------------------------------------------

Robert Paul Chiasson, Nexus Real Estate Investment Trust - CFO & Secretary [53]

--------------------------------------------------------------------------------

Yes. The cost of graduation is going to be $200,000, and that will probably hit in Q1 2020.

--------------------------------------------------------------------------------

Bradley Sturges, Industrial Alliance Securities Inc., Research Division - Equity Research Analyst [54]

--------------------------------------------------------------------------------

Q1. Okay. And then in terms of same-property NOI, I guess for next year, are there any lease maturities you're expecting not to renew? Or how should we think about SP NOI next year?

--------------------------------------------------------------------------------

Robert Paul Chiasson, Nexus Real Estate Investment Trust - CFO & Secretary [55]

--------------------------------------------------------------------------------

Yes. So we do have a couple of changes in tenancy next year. We recently reviewed our budgets for next year, however, and we think our same-store NOI will hold. There will be some puts and takes, and it will be relatively stable.

--------------------------------------------------------------------------------

Operator [56]

--------------------------------------------------------------------------------

This concludes the question-and-answer session. I would like to turn the conference back over to Kelly Hanczyk for any closing remarks.

--------------------------------------------------------------------------------

Kelly Clark Hanczyk, Nexus Real Estate Investment Trust - CEO, President & Trustee [57]

--------------------------------------------------------------------------------

Well, I want to thank everyone for taking the time to be on the call, and I look forward to our next results call. And if anyone has any additional questions, please feel free to call either Rob or myself.

--------------------------------------------------------------------------------

Operator [58]

--------------------------------------------------------------------------------

This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.