Killam Apartment Reit · TSX:KMP.UN
Killam Apartment Reit — Q4 2022 Earnings Presentation
27 slides from Killam Apartment Reit's earnings presentation, Feb 17, 2023
Slide 1: Q4-2022 Results Conference Call
Q4-2022 RESULTS CONFERENCE CALL February 17, 2023 | 9AM Eastern 1
Slide 2: Cautionary Statement
Q4-2022 | Cautionary Statement This presentation may contain forward-looking statements with respect to Killam Apartment REIT ("Killam") and its operations, strategy, financial performance and condition. These statements generally can be identified by use of forward-looking words such as "may", "wil
Slide 3: Focus on Long-Term Growth Drivers
Q4-2022 | Focus on Long-Term Growth Drivers NOI Contribution by Market (%) AB | 8.2% Calgary | Edmonton NL | 4.5% St. John’s BC | 3.3% Victoria PEI | 6.2% Charlottetown NS | 33.5% Halifax ON | 24.3% NB | 20.0% Ottawa | London Moncton | Fredericton Toronto | KWC Saint John Killam’s strategy to increa
Slide 4: 2022 Strategic Targets
Q4-2022 | 2022 Strategic Targets Grow Same Property NOI Grow •2022 Target: 2.0% - 3.0% •2022 Performance: 4.7% Expand the Portfolio through Acquisitions •2022 Target: Acquire a minimum of $150M. Expand •2022 Performance: $119 million with acquisitions in Halifax, Waterloo, Guelph, Victoria and Court
Slide 5: Financial Highlights
Q4-2022 | Financial Highlights $123M $1.11 4.7% 75% 45.3% Net Income FFO per Unit(1) Same Property NOI AFFO payout ratio(3) Total Debt as a % of Total Growth(2) Assets (4) Includes $206.9 million of net A 3.7% increase from $1.07 per AFFO payout ratio was 75%, a unit in 2021. AFFO per unit 4.7% grow
Slide 6: Financial Highlights
Q4-2022 | Financial Highlights Same Property Portfolio Performance Q4 FFO & AFFO Per Unit For the three months ended December 31, 2022 Q4-2022 Q4-2021 4.4% 4.9% 4.1% $0.27 $0.27 $0.23 $0.22 Revenue Expense NOI FFO AFFO Same Property Portfolio Performance Annual FFO & AFFO Per Unit For the year ended
Slide 7: Financial Highlights – Revenue
Q4-2022 | Financial Highlights – Revenue Weighted Average Rental Increases Achieved by Quarter Apt Same Property Avg Rental Upon Lease Renewal For tenants with lease renewals For new tenants moved in during Rate Increase Upon Unit Turn in Q4, rents increased by 2.1%. Q4, rents increased 12.0% 12% Co
Slide 8: Financial Highlights – Expenses
Q4-2022 | Financial Highlights – Expenses Total same property operating expenses were up 5.4% in 2022. The increase was driven by higher natural gas, oil, and propane prices which increased utility and fuel expenses by 13.3%. Same Property Expense Growth 5.4% 2.4% 2.1% 1.6% 1.4% 2018 2019 2020 2021
Slide 9: Debt Ladder
Q4-2022 | Debt Ladder Apartment Mortgage Maturities by Year As at December 31, 2022 Mortgage Maturities Weighted Average Interest Rate (Apartments) 5 year estimated CMHC insured interest rate 4.22% $375 6% 5% $300 Mortgage Maturities ($M) 4% $225 2.99% Interest Rate 3.48% 3.40% 2.56% 3% 2.35% 2.06%
Slide 10: Conservative Debt Metrics
Q4-2022 | Conservative Debt Metrics Total Debt as a % of Assets(1) Interest Coverage Ratio(2) Debt to Normalized EBITDA(3) 55% 50% 45% 40% 49.8% 43.4% 44.6% 45.0% 45.3% 3.22 3.20 3.36 3.53 3.31 10.62 10.15 10.78 11.33 11.21 35% 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 2018 2019 2020 2021 20
Slide 11: Financial Highlights – MHC
Q4-2022 | Financial Highlights – MHC Same Property MHC NOI Growth Revenue NOI 9.3% 6.8% 6.0% 5.8% NL 3.5% 3.5% (0.2%) 2.8% (0.8%) 2.6% ON NB NS 2018 2019 2020 2021 2022 MHC Site Count 5,975 5,875 5,875 5,786 5,427 5,165 Holiday Harbour, Ontario 2017 2018 2019 2020 2021 2022 Camper’s City, New Brunsw
Slide 12: Financial Highlights – Commercial
Q4-2022 | Financial Highlights – Commercial Total commercial occupancy increased 240 bps in 2022 to 92.4%. In Q4-2022, Killam signed several new commercial tenants, including Pet Valu, Sotheby’s International Realty, and Access PEI. Same Property Commercial NOI Growth Revenue NOI 40% 30% 17.6% 20% 7
Slide 13: Investing in our Properties
Q4-2022 | Investing in our Properties Northfield Gardens, Waterloo - After 2022 Program 617 suite repositions ~$19M investment ~$2.5M annualized revenue growth Total Opportunity 5,500 suite repositions ~$138-165M investment ~$21-23M annualized revenue 617 suites repositioned in 2022 Northfield Garde
Slide 14: Repositioning Program
Q4-2022 | Repositioning Program Quinpool Towers, Halifax Fitness Center Before 2022 retrofit After 2022 retrofit Social Room 14
Slide 15: Capital Projects
Q4-2022 | Capital Projects Brentwood, Halifax Belvedere, Charlottetown Before recladding Before recladding Recladding in progress After recladding 15
Slide 16: Halifax Market
Q4-2022 | Halifax Market • In Q2-2022, net interprovincial migration in Halifax was the highest in over 10 years and has been trending positive since 2016. • In 2022, for the third consecutive year, most newcomers to Halifax were in the 20–39 age group. Halifax Population Growth by Source (July-July
Slide 17: ESG Update
Q4-2022 | ESG Update 86% of tenants are satisfied with Killam as a Landlord. (1) 10 additional properties certified under the Certified Rental Building Program in 2022. Killam now has over 2,400 units certified. 160 additional units with a long-term affordable commitment. In total, Killam has over 1
Slide 18: Acquisitions
Q4-2022 | Acquisitions NOI Generated Outside Atlantic Canada 40% In 2022, 35.8% of Killam’s 33% 36% 30% 32% NOI was generated outside 27% of Atlantic Canada. 21% 23% 20% 15% 12% 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2025 Target Annual Acquisitions ($ millions) $399 $315 $200 $200 $191 $2
Slide 19: Strong Leasing of Developments Continue
Q4-2022 | Strong Leasing of Developments Continue 97% Latitude, Ottawa 100% The Kay, Mississauga 74% Luma, Ottawa leased (1) leased (1) leased (1) Opened January 2022 Opened April 2022 Opened June 2022 (1) As of February 14, 2023 19
Slide 20: Development Progress
Q4-2022 | Development Progress Killam currently has three developments underway, which will add an additional 320 new high-quality suites to Killam’s portfolio in the next two years.(1) Governor | 12 units Civic 66 | 169 units The Carrick | 139 units Halifax Kitchener Waterloo (1) Cost $24M $70M $84
Slide 21: Development Activity – The Governor, Halifax
Q4-2022 | Development Activity – The Governor, Halifax The Governor - 12 luxury suites and 3,500 square foot ground floor commercial development in downtown Halifax Progress shots as of February 2023 21
Slide 22: Development Activity – The Governor, Halifax
Q4-2022 | Development Activity – The Governor, Halifax Luxury suites adjacent to existing properties; The Alexander & Brewery Market Key Statistics Number of units 12 Start date Latitude (Phase II) Q1-2021 Est. completion date Q2-2023 Project budget ($M) $24.3 Expected yield 4.00%-4.25% THE ALEXANDE
Slide 23: Development Activity – Civic
Q4-2022 | Development Activity – Civic 66 Progress shots as of February 2023 23 23
Slide 24: Development Activity – Civic
Q4-2022 | Development Activity – Civic 66 CIVIC 66 – 169-unit development in Kitchener that broke ground in Q3-2020 and is expected to be completed in Q2-2023. Latitude (Phase II) GREEN FEATURES: Sub-metered water, Key Statistics geothermal heating and cooling. Number of units 169 Start date Q3-2020
Slide 25: Future Development Activity – Waterloo
Q4-2022 | Future Development Activity – Waterloo WESTMOUNT PHASE 1 (The Carrick) – Broke ground on the 139-unit development in Waterloo in Q2-2022. Key Statistics Number of units 139 Start date Q2-2022 Est. completion date 2024 Project budget ($M) $83.5 Cost per unit $601,000 Expected yield 4.00%-4.
Slide 26: Non-IFRS Measures
Non-IFRS Measures Management believes the following non-IFRS financial measures, ratios and supplementary information are relevant measures of the ability of Killam to earn revenue and to evaluate Killam's financial performance. Non-IFRS measures should not be construed as alternatives to net income
Slide 27: Q4-2022 Results Conference Call
Q4-2022 RESULTS CONFERENCE CALL 27
Killam Apartment REIT — Q4 2022 Earnings Presentation on 6ix