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On Monday, BMO Capital Markets updated its outlook on Nexus Industrial REIT (NXR-U:CN) (OTC: EFRTF), increasing the price target to Cdn$8.50 from the previous Cdn$8.00. The firm has maintained a Market Perform rating on the stock.
The revision in price target comes after Nexus Industrial REIT's second-quarter results, which exceeded expectations and reinforced confidence in the company's potential for earnings growth through 2025. The analyst noted the positive impact of the company's strategic capital recycling efforts, which involve Cdn$107 million in asset dispositions currently under contract. This move is expected to enhance the REIT's focus on industrial properties, aiming to increase its industrial portfolio weight from 93% closer to 100%.
The analyst also pointed out that the capital generated from these dispositions is anticipated to more than cover the additional capital expenditures required for ongoing development projects. The increased earnings visibility and the company's ability to fund its development pipeline were key factors influencing the raised price target.
BMO Capital's revised price target reflects an updated net asset value (NAV) and funds from operations (FFO) outlook for Nexus Industrial REIT. The analyst's statement underlined the positive trajectory for the REIT, "Reflecting increases to our NAV and FFO outlook, we've increased our target to $8.50 (from $8.00)."
Nexus Industrial REIT's focus on expanding and refining its industrial portfolio aligns with broader trends in the real estate market, where industrial properties have seen a surge in demand. The company's strategic dispositions and development efforts appear to be positioning it well to capitalize on this demand and enhance shareholder value.
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