Killam Apartment Reit · TSX:KMP.UN
Killam Apartment Reit — Investor Presentation (November 2024)
66 slides from Killam Apartment Reit's investor presentation, November 2024
Slide 1: Investor Presentation November 2024
INVESTOR PRESENTATION November 2024 1
Slide 2: Cautionary Statement
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", "will", "expec
Slide 3: Portfolio Statistics
PORTFOLIO STATISTICS NOI Contribution by Market (%) as at September 30, 2024 KMP Established Regions Apartment Units KMP Expansion Regions 17,991 . Apt 3.1% MHC Sites Comm 1.6% 5,975 PEI 4.7% Commercial 0.97 million SF .Apt 4.2% Portfolio Avg Age MHC 0.2% 29 years NL 4.4% Market Cap (1) $2.2B Unit D
Slide 4: Key Investment Highlights
KEY INVESTMENT HIGHLIGHTS Strategy for Earnings High Quality Proven Capital Experienced ESG Growth Portfolio Results Flexibility Developer Leader Disciplined and 35% of NOI Track record of Defensive balance Value creation Purpose driven proven approach earned from solid operating sheet and through i
Slide 5: Long-Term Growth Strategy
LONG-TERM GROWTH STRATEGY Increase earnings from existing Expand the portfolio portfolio and by focusing on increasing diversify rental revenue and geographically Develop investing in sustainable energy efficiency through accretive high-quality investments acquisitions, targeting properties newer pr
Slide 6: Capital Allocation
CAPITAL ALLOCATION Capital Allocation Killam’s capital recycling program focuses on reinvesting proceeds from dispositions towards the most accretive and best use of funds to grow FFO and NAV. Strengthen Balance Sheet Developments & Acquisitions Focus on reducing debt Allocate proceeds from levels,
Slide 7: Continued Geographic Diversification
CONTINUED GEOGRAPHIC DIVERSIFICATION 4% Current Allocation With a focus on developing in primary 23% markets and divesting out of slower Target Allocation growth markets, Killam could increase 2018 the number of units outside Atlantic Canada to almost 50% of the portfolio 73% in the next 5 years. (1
Slide 8: Proven Record of Strong Growth
PROVEN RECORD OF STRONG GROWTH FFO & Distribution Per Unit (1)(2) Revenues ($M) FFO Per Unit Distribution 2023 $348 2022 $329 2021 $291 2020 $262 2019 $242 Net Income ($M) $0.66 $0.68 $0.69 $0.70 $0.70 $0.98 $1.00 $1.07 $1.11 $1.15 2023 $266 2022 $123 2019 2020 2021 2022 2023 2021 $286 2020 $146 201
Slide 9: FFO & AFFO Per Unit Growth
FFO & AFFO PER UNIT GROWTH Q3 FFO & AFFO Per Unit YTD FFO & AFFO Per Unit Q3-2024 Q3-2023 2024 2023 $0.88 $0.87 $0.75 $0.73 $0.33 $0.32 $0.28 $0.28 FFO AFFO FFO AFFO Same Property Portfolio Same Property Portfolio For the three months ended Sept. 30, 2024 For the nine months ended Sept. 30, 2024 1.1
Slide 10: Solid Results = Consistent Growth
SOLID RESULTS = CONSISTENT GROWTH 10YR FFO Growth Against Peer Group Killam’s solid and consistent results translates to a 10-year compounded annual Peer Avg* (3.5%) KMP (4.9%) FFO growth rate of 4.9%, outperforming 10yr CAGR 10yr CAGR the peer group average* of 3.5%. 2023 3.60% FFO & AFFO Per Unit
Slide 11: 2024 Strategic Targets
2024 STRATEGIC TARGETS Earnings Capital Geographic Development Balance Sustainability Growth Recycling Diversification Portfolio Sheet Investments Grow Same Sell a minimum Earn more than Break ground Maintain debt Invest a Property NOI of $50 million 38% of 2024 on two new as a minimum of $6 by mini
Slide 12: Q3-2024 Performance Against Targets
Q3-2024 PERFORMANCE AGAINST TARGETS Grow same property NOI Year-to-date, Killam achieved same property NOI growth of 8.7%. Based on the results achieved to date in 2024, Killam expects same by minimum 6% property NOI growth in 2024 to exceed 8.0%. Year-to-date, Killam completed five dispositions, to
Slide 13: Strategic Portfolio Growth
STRATEGIC PORTFOLIO GROWTH NOI Generated Outside Atlantic Canada 39% 40% 36% 37% 32% 33% 30% 27% 23% 20% 21% 15% 12% 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Q3-2024 2025 Target Net Annual Portfolio Growth ($ millions) Acquisitions Dispositions Developments I $500 $400 $300 $200 $100 $
Slide 14: High Quality Portfolio
HIGH QUALITY PORTFOLIO 22% 1-10 33% 33% 11-20 of Killam’s Units by Age 21-30 (years) portfolio has 31-40 17% been built in 41-50 the last 5% 13% 50+ 10 years 9% Weighted Average Age of Portfolio in Years, by Province 15 25 32 42 48 27 21 AB BC NB NL NS ON PEI 14
Slide 15: Low Exposure to Rent Controlled Markets
LOW EXPOSURE TO RENT CONTROLLED MARKETS Apartments MHCs Killam’s Province 2024 limit 2024 limit Exposure (1) Nova Scotia 5.0% 5.8% 27.9% (2) Ontario 2.5% 2.5% 19.0% (3) 55% of Killam’s NOI is Prince Edward Island 3.0% N/A 4.7% restricted by provincial rent British Columbia 3.5% N/A 3.6% control Tota
Slide 16: Continued Top Line Growth
CONTINUED TOP LINE GROWTH Killam continues to see growing rental rates across the portfolio as units turnover and renew. We expect to see further growth in 2025 as Nova Scotia’s allowable increase for 2025 is a 5.0% increase on renewals. Apartments Same Property Rental Rate Growth by Quarter Upon Le
Slide 17: Diversified Portfolio Outperforming
DIVERSIFIED PORTFOLIO OUTPERFORMING Q3-2024 | Diversified Portfolio Outperforming Apartments Same Property Rental Rate Growth by Region in Q3-2024 Upon Lease Renewal Upon Unit Turn Combined Average Increase % Overall Growth on Unit Turn 35% 30% 25% 20% 15% 10% 5% 0% Saint John Halifax Moncton Britis
Slide 18: Growth from Existing Portfolio
GROWTH FROM EXISTING PORTFOLIO 42nd consecutive Same Property Total NOI Growth by Quarter quarter of 7.4% positive NOI growth 12% 10% 8% 6% 4% 2% 0% Same Property Apartment Revenue and NOI Growth by Market For the nine months ended September 30, 2024 Revenue NOI 12.2% 10.0% 9.5% 8.4% 9.0% 6.4% 7.3%
Slide 19: Strong Runway for Top Line Growth
STRONG RUNWAY FOR TOP LINE GROWTH Estimated Total Mark-to-Market Opportunity 50% 40% 28% 28% 28% 30% 25% 25% 25% 22% 17% 18% 20% 11% 12% 10% 0% Q1-2022 Q2-2022 Q3-2022 Q4-2022 Q1-2023 Q2-2023 Q3-2023 Q4-2023 Q1-2024 Q2-2024 Q3-2024 Estimated Mark-to-Market Spread and YTD Turnover by Region MTM YTD T
Slide 20: Occupancy in Our Core Markets
OCCUPANCY IN OUR CORE MARKETS Annual Tenant Turnover (%) Apartment Same Property Occupancy(1) 32% 31% 100% 29% 26% 99% 97.9% 22% 19% 98% 97% 96% 95% 2018 2019 2020 2021 2022 2023 Apartment Same Property Occupancy(1) by Region Q3-2024 Q3-2023 99% 98% 99% 99% 98% 98% 99% 96% 96% 97% 96% 92% 20 (1) Mea
Slide 21: Consistent Portfolio Growth
CONSISTENT PORTFOLIO GROWTH Total Apartment Average Monthly Rent by Quarter Q4-2020 $1,184 Q1-2021 $1,193 Consistent Q2-2021 $1,202 quarterly growth Q3-2021 $1,212 in average Q4-2021 $1,227 monthly rent demonstrates Q1-2022 $1,242 Killam’s ability to Q2-2022 $1,260 capture market Q3-2022 $1,279 rent
Slide 22: Opportunity for Organic Growth
OPPORTUNITY FOR ORGANIC GROWTH Killam’s Rent-to-Income by Province (1) Rent-Income Ratio Overall Portfolio 40% 33% 30% 20% 10% 28% 33% 34% 27% 32% 38% 38% 0% Alberta New Brunswick Newfoundland Prince Edward Nova Scotia British Columbia Ontario Island With average rent across the entire portfolio of
Slide 23: Revenue Optimization from Existing Portfolio
REVENUE OPTIMIZATION FROM EXISTING PORTFOLIO After: The Estates – Kitchener, ON After: Northfield Gardens– Kitchener, ON Return on Investment ~20% Average Investment per Suite $38,230 Suites Repositioned YTD 2024 277 units Targeting 300 suites in 2024 Before: The Estates – Kitchener, ON 23
Slide 24: Effective Cost Containment
EFFECTIVE COST CONTAINMENT Total same property operating expenses increased by 2.6% in Q3-24 Driven by a 5.2% increase in property taxes due to increased assessment values across the portfolio, higher mill rates in Ontario and no property tax subsidies in PEI. Mitigated by a 4.0% decrease in uti
Slide 25: Strong Commercial Segment Results
STRONG COMMERCIAL SEGMENT RESULTS Commercial Same Property NOI Growth Revenue NOI 17.6% 15.8% 9.5% 7.9% 7.4% 6.4% 5.9% 4.7% (5.8%) (1.9%) 2020 2021 2022 2023 YTD 2024 Benjamin Wier House & The Governor - Halifax, NS Commercial Portfolio: 973,942 SF Other Brewery Market, Westmount Halifax Place, Wate
Slide 26: Manufactured Home Communities (MHC)
MANUFACTURED HOME COMMUNITIES (MHC) MHC Same Property Portfolio Revenue NOI 9.3% 6.8% 6.6% 6.0% 5.8% 3.5% 3.3% NL 2.6% (0.2%) (0.8%) ON NS NB 2019 2020 2021 2022 YTD 2024 26
Slide 27: High Quality Developments Completed
HIGH QUALITY DEVELOPMENTS COMPLETED More than $760 million of developments completed. 101 units - Fredericton, NB 122 units - Cambridge, ON 469 units – Calgary, AB 70 units - Halifax, NS 102 units - St. John’s, NL 71 units - St. John’s, NL 78 units – Charlottetown, PE 94 units - Cambridge, ON 47 uni
Slide 28: Killam's Development History
KILLAM’S DEVELOPMENT HISTORY Killam’s Development History ($ millions) $200 $150 $100 $50 $63 $22 $16 $25 $111 $38 $22 $65 $152 $94 $0 2013 2014 2015 2016 2018 2019 2020 2021 2022 2023 Killam Development Cost per Unit ($ thousands) $571 $476 $418 $412 $354 $329 $274 $282 $274 $251 $236 $234 $236 $21
Slide 29: Future Density Opportunities
FUTURE DENSITY OPPORTUNITIES Over 4,000 units with almost 70% of future projects located in Ontario and Western Canada. Victoria Gardens – Halifax, NS Nolan Hill Phase 3 – Calgary, AB KMP’s Grid 5 4th & 5th Dev’t Land 4th & 5th Land Purchase – Calgary, AB Wissler – Waterloo, ON Harlington Crescent –
Slide 30: Accretive Runway for New Developments
ACCRETIVE RUNWAY FOR NEW DEVELOPMENTS Upon full 89% lease up, developments LEASE UP(1) completed in INITIAL 2023 are expected to contribute ~$3.2M towards FFO in 2025. Estimated Quarterly FFO Estimated Annual FFO from Lease Up of New Developments from New Developments in Lease up (000’s) (000’s) Q3-
Slide 31: New Development Completed – Nolan Hill
NEW DEVELOPMENT COMPLETED – NOLAN HILL 2 Nolan Hill 2 Calgary, AB Nolan Hill Phase II is the second phase of a six- 234 units building complex, comprising 234 units across Completed three buildings. Q4-2023 $65.0 million Avg $2.59/SF Progress shots as of October 2023 (1) Killam had a 10% interest in
Slide 32: New Development Completed – Governor
NEW DEVELOPMENT COMPLETED – GOVERNOR The Governor Halifax, NS 12 luxury suites $24.3 million Completed Q3-2023 Avg $3.30/SF 32
Slide 33: New Development Completed – Civic
NEW DEVELOPMENT COMPLETED – CIVIC 66 Civic 66 Kitchener, ON 169 units Completed Q2-2023 $69.8 million Avg $2.98/SF Geothermal PV Solar Panels EV Chargers Sub-metered 33
Slide 34: Development Underway: The Carrick
DEVELOPMENT UNDERWAY: THE CARRICK Killam obtained attractive financing terms for The Carrick through CMHC’s Apartment Construction Loan Program Progress Shot – August 2024 Number of units 139 Start date Q2-2022 Est. completion date Second half of 2025 Project budget $89M Cost per unit $640,000 Expec
Slide 35: Development Underway: Eventide
DEVELOPMENT UNDERWAY: EVENTIDE Project Rendering Number of units 55 Start date Q1-2024 Est. completion date Q2-2026 Project budget $34.1M Cost per unit $620,000 Expected yield 4.50%-5.00% Avg rent $3.50-$3.75 per SF Avg unit size 765 SF Development Site – Halifax, NS (July 2024) 35
Slide 36: Upcoming Development Pipeline
UPCOMING DEVELOPMENT PIPELINE Wissler Victoria Gardens Harlington Nolan Hill Phase 3 Waterloo, ON Halifax, NS Halifax, NS Calgary, AB 128 units 95 units (Phase 1) 150 units 296 units 2026 Est. Completion 2026 Est. Completion 2027 Est. Completion 2028 Est. Completion Starting demolishing work Plannin
Slide 37: Upcoming Development: Wissler
UPCOMING DEVELOPMENT: WISSLER Demolition of the vacant commercial building on site has started. The Wissler development is a 128-unit apartment adjacent to Killam’s Northfield Gardens in Waterloo, ON. Northfield Gardens Wissler - Rendering Wissler 22
Slide 38: Upcoming Development: Victoria Gardens
UPCOMING DEVELOPMENT: VICTORIA GARDENS Victoria Gardens is a multi-phase development opportunity in Halifax, NS. Phase 1 will comprise of 95 units to 10 acres be built on a vacant parcel within the of land 10-acre site, resulting in minimal disruption to existing tenants. Victoria Gardens Phase I –
Slide 39: Upcoming Development: Nolan Hill
UPCOMING DEVELOPMENT: NOLAN HILL 3 Nolan Hill, Phases I and II Nolan Hill Phase 3 is the third phase of a multi-phase development in Calgary, AB. These two towers will comprise 296 units. The development includes a clubhouse with a fitness center, indoor court, and amenity room for the Nolan Hill No
Slide 40: Geographic Repositioning Through Dispositions
GEOGRAPHIC REPOSITIONING THROUGH DISPOSITIONS Nova Scotia In 2023, Killam PEI completed 2023 16% $168.7 million Dispositions Ontario in strategic based on $ value New Brunswick dispositions. Total Sales Value and Units Sold by Region ($ 000’s) Market Value Unit Count $80,000 400 $60,000 300 $40,000
Slide 41: Successful Capital Recycling Program
SUCCESSFUL CAPITAL RECYCLING PROGRAM Recycling capital, divesting of slow growth assets and lower yielding assets, while focusing on Killam’s development program and strengthening its balance sheet are key components of Killam’s strategy. 2024 Dispositions Sale Price Property Location Disposition Da
Slide 42: Defensive Balance Sheet
DEFENSIVE BALANCE SHEET Total Debt as a % of Assets 55% 45% 40.7% 35% 2014 2016 2018 2020 2022 Q3-2024 Debt to Normalized EBITDA(2) 10.78 11.33 11.21 10.29 9.87 2020 2021 2022 2023 Q3-2024 Interest Coverage Ratio(1) Q3-2024 2.97 2023 3.10 2022 3.31 2021 3.53 2020 3.36 The Alexander & The Governor –
Slide 43: Mitigating Debt Exposure
MITIGATING DEBT EXPOSURE Apartment Mortgage Maturities by Year As at September 30, 2024 (1) Mortgage Maturities ($) 5 year estimated CMHC-insured rate 10 year estimated CMHC-insured rate Weighted average interest rate (apartments) $500 5% $450 Weighted Avg Apartment $400 4% 3.45% Mortgage Interest R
Slide 44: Commitment to Green
COMMITMENT TO GREEN Geothermal THE KAY Level II Committed to Building Geothermal PV Solar EV Chargers Affordability Certifications Systems 401 chargers across Panels Installed at 6 properties Over 950 units with a Over 5,300 units certified 57 properties 24 installations to date long-term affordabil
Slide 45: Investing in Renewable Energy
INVESTING IN RENEWABLE ENERGY In November 2024, Killam will be installing its first virtual net metering solar panel project at Quinpool Tower in Halifax, NS. This will allow the surplus energy(1) generated to be transferred to its neighboring property, As at September 30, 2024 Quinpool Tower Quinpo
Slide 46: Renewable Energy at Westmount Place
RENEWABLE ENERGY AT WESTMOUNT PLACE In 2024, Killam is expected to save an estimated $230,000 in energy costs from our solar projects, resulting in an average ROI of 6.5%. Westmount Place is home to our largest PV solar array with an estimated annual production of 453,000 kWh/year. Killam generates
Slide 47: ESG Highlights
ESG HIGHLIGHTS Killam’s 2023 ESG Report was released in June 2024. Highlights from the year include the following: 47
Slide 48: Long-Term ESG Targets
LONG-TERM ESG TARGETS Environmental Social Governance • Reduce GHG emissions • Donate $3M to our • Continue to participate in 15% by 2030.(1) communities by 2030.(3) the GRESB survey annually, targeting a • Reduce carbon intensity • Maintain a score above 80% minimum increase of 5% 15% by 2030.(2) f
Slide 49: Affordability and Value Delivery
AFFORDABILITY AND VALUE DELIVERY Killam delivers affordable, safe, clean and high- quality housing to our residents across Canada: 2023 Resident Survey Results(1) Almost 40% of Killam’s portfolio rents for less than $1,250 per month. 82% Average rent is ~$1.75 per SF across the portfolio. of res
Slide 50: 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 51: Appendices
B MEEERAE EE Lana APARTMENT REIT peter a= ee — a? “Appendices =I | -? L 7 i :
Slide 52: Canadian Landscape
CANADIAN LANDSCAPE Growing International Migration to Canada Net Annual Population Growth Annual Immigration Target Population The Canadian Mortgage Housing 1,000,000 45,000,000 Corporation 40,097,761 (CMHC) projects 800,000 that Canada will 600,000 40,000,000 need to build an additional 400,000 35,
Slide 53: Population Growth Across Canada
POPULATION GROWTH ACROSS CANADA Canada’s T H Epopulation S E V E N P increased U B L I C M by U L T1.15 I - F Amillion M I LY people R E S I Din E N2023, T I A L outpacing R E I T S Mtotal A K E home U P 6 starts .7% O ofF224,000 THE in 2023. T O TA L C A N A D I A N R E N TA L M A R K E T 53
Slide 54: National Housing Completions
NATIONAL HOUSING COMPLETIONS THE SEVEN PU 10-year B L I C average I - F178,000 M U L T of A M I LY R E Shousing I D E N Tcompletions I A L R E I Tper S Myear A KisEnot UP keeping pace with the 6 . 7 % O F T H E T O T A10-year L C A Naverage A D I A population N R E N T Agrowth L M A ofR K420,000 ET
Slide 55: Components of Growth by City, Annual
COMPONENTS OF GROWTH BY CITY, ANNUAL Maritime Provinces and Alberta cities were the largest recipients of interprovincial migration in 2023. Annual Components of Growth by City 2023 Natural International Interprovincial migration Intraprovincial migration 100% 75% 50% 25% 0% 55 Source: Statistics Ca
Slide 56: Components of Growth by Province
COMPONENTS OF GROWTH BY PROVINCE Quarterly Components of Growth by Province Q2-2024 Net Interprovincial Net International 94,278 31,877 31,482 5,197 2,649 4,741 1,069 100% 75% 50% 25% 0% ON AB BC NB NS NL PEI 56 Source: Statistics Canada, Quarterly demographic estimates, provinces and territories: I
Slide 57: Halifax Continues to Outpace National Average Growth Rate
HALIFAX CONTINUES TO OUTPACE NATIONAL AVERAGE GROWTH RATE • In 2023, Halifax’s population surpassed 500,000 residents and grew by 3.96%. • Vacancy remains at historic lows in Halifax as demand for housing outpaces new rental supply. Halifax Population Growth Halifax Population Growth Annual (July 1-
Slide 58: Halifax: Components of Growth
HALIFAX: COMPONENTS OF GROWTH Data shows strong trending of positive population growth from both interprovincial and international origins as Halifax increasingly becomes a destination of choice for young professionals, retirees, and new Canadians. Historical components of population growth Halifax
Slide 59: Halifax Portfolio Distribution
HALIFAX PORTFOLIO DISTRIBUTION Killam’s Halifax Portfolio Distribution by Monthly Rent Buckets # Units % Revenue 2,000 40% 33% 1,500 30% 22% 1,000 20% 20% 16% 500 9% 10% 0 0% Under $1,000 $1,000-$1,250 $1,250-$1,500 $1,500-$1,750 Over $1,750 59
Slide 60: Halifax Housing Fundamentals
HALIFAX HOUSING FUNDAMENTALS New supply has been absorbed by population growth from immigration, migration, and shift in apartment rental demand. Housing Starts - Apt & Single Housing Starts & Vacancy Trend Halifax Halifax Total Apartments Total Singles Average Total Starts Total Starts Vacancy (CMH
Slide 61: Halifax Rental Supply
HALIFAX RENTAL SUPPLY Halifax Rental Universe against Halifax Population Rental Universe Population 80,000 518,711 600,000 60,000 400,000 40,000 55,519 200,000 20,000 0 - 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024F 2025F Halifax Starts & Completions Starts Completions There were 4,800
Slide 62: Halifax: Employment by Industry
HALIFAX: EMPLOYMENT BY INDUSTRY Young professionals are moving to Halifax for employment opportunities and relative affordability. 62
Slide 63: New Brunswick Population Growth
NEW BRUNSWICK POPULATION GROWTH Killam’s core markets in New Brunswick include Moncton, Fredericton and Saint John. All three markets are home to universities with approximately 15,000 student enrolments combined in 2022. New Brunswick is also a major transportation and logistics hub for the movemen
Slide 64: Moncton: Components of Growth
MONCTON: COMPONENTS OF GROWTH For the second consecutive year, Moncton had the highest growth rate among Canadian cities, growing at a rate of 6.1% in 2023 (5.3% in 2022). Historical components of population growth Moncton Net international mig. Net interprovincial mig. Net intraprovincial mig. Natu
Slide 65: New Brunswick Housing Fundamentals
NEW BRUNSWICK HOUSING FUNDAMENTALS New supply has been absorbed by population growth from immigration, migration, and shift in apartment rental demand. Housing Starts - Apt & Single Housing Starts & Vacancy Trend Saint John, Moncton, Fredericton Saint John, Moncton, Fredericton Total Apartments Tota
Slide 66: Investor Presentation
INVESTOR PRESENTATION 66
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