Think about gathering a gentle stream of passive revenue that lands in your brokerage account each single month. Then, think about that revenue comes from an organization whose enterprise is the spine of the economic system, like renting out warehouses and distribution centres that facilitate the move of products throughout Canada. That is the fact supplied by Nexus Industrial Actual Property Funding Belief (TSX:NXR.UN), a high-yield gem that has efficiently reinvented itself and is now primed for progress. The small $750 million Canadian REIT may very well be a compelling passive-income supply to purchase for October.

Nexus REIT’s strategic transformation unfolds

Over the previous yr, Nexus executed a dramatic and strategic makeover. It offered off 33 legacy properties, a mixture of retail, workplace, and non-core industrial belongings, to emerge as a pure-play industrial REIT. This sharpened focus is a giant deal. Industrial properties, particularly these within the logistics and warehousing sector, are among the many most in-demand actual property belongings as we speak.

This pivot has already began to pay dividends. The belief’s core profitability, measured by web working revenue (NOI), which is the money revenue from its properties after bills, grew 1.7% yr over yr within the second quarter of 2025 regardless of the smaller portfolio, showcasing the upper high quality and superior incomes energy of its remaining belongings.

The REIT’s remaining portfolio of 88 properties includes 11.7 million sq. ft in gross leasable space. It has a robust occupancy price at 94%, with a weighted common lease time period of seven.1 years, giving traders clear visibility into future income and distributable money move.

A safer 8.3% distribution yield

Essentially the most vital quantity for revenue traders is commonly the distribution payout ratio. Is the Canadian industrial REIT producing sufficient money move to soundly cowl the distributions it’s paying out each month? Right here, Nexus Industrial REIT not too long ago confirmed a outstanding enchancment.

Its AFFO payout ratio, which measures distributions as a proportion of adjusted funds from operations (AFFO), a key metric measuring the money move accessible to pay distributions, dramatically improved by June to 97.6% from 108.7% a yr in the past. On a normalized foundation, it sits at 100.3%, down from 102.2%. This implies the month-to-month distribution, which yields a juicy 8.3%, is on a lot firmer floor as we speak. The distribution is now well-covered by the REIT’s distributable working money move, making that prime yield seem considerably safer and extra sustainable.

The trail to additional distribution protection enchancment is evident. Going into the third quarter, Nexus Industrial REIT was nearing completion on two main improvement tasks which will add $6.6 million in annual NOI. Moreover, its in-place rents are a staggering 18.5% beneath present market charges. As leases expire, the REIT re-leased house at huge spreads averaging 38% larger throughout the second quarter. Its below-market in-place rents present a strong, built-in engine for future income and distributable money move progress.

Purchase a high-yield revenue asset at a 40% low cost

Maybe essentially the most thrilling a part of the Nexus Industrial REIT’s story is its sturdy potential for capital appreciation on high of hefty month-to-month revenue.

The belief’s web asset worth (NAV) per unit, an estimate of the underlying worth of its actual property, was $13.17 on the finish of June. Models traded round $7.78 on the time of writing. This suggests a reduction of roughly 40.9%. For revenue traders, this may very well be like having the prospect to purchase a greenback invoice for about 59 cents. The large hole between Nexus’s unit value and its intrinsic worth creates a considerable margin of security and a transparent path for value will increase because the REIT continues to execute its profitable technique.

With a weighted common lease time period of seven.1 years, Nexus enjoys distinctive income visibility, insulating it from near-term volatility. This stability, mixed with a 94% occupancy price, creates a reliable basis for month-to-month money move.

Most noteworthy, the ability of compounding might work wonders for Canadian Tax-Free Financial savings Account traders reinvesting their distributions. An 8.3% yield has the potential to double your funding in below 8.7 years if the unit value stays steady, in response to the Rule of 72. If the unit value rises to slender that NAV low cost, your whole returns may very well be extra spectacular.

Investor takeaway

Canadian traders on the hunt for an undervalued high-yield REIT to purchase in October for passive revenue might take a look at Nexus Industrial REIT as we speak. It presents a excessive yield and better-covered month-to-month distribution, has a transparent technique for progress, and a big valuation hole that gives the potential for substantial capital positive aspects.