Killam Apartment Reit · TSX:KMP.UN
Killam Apartment Reit — Q3 2022 Earnings Presentation
32 slides from Killam Apartment Reit's earnings presentation, Nov 9, 2022
Slide 1: Q3-2022 Results Conference Call
Q3-2022 RESULTS CONFERENCE CALL November 9, 2022 | 10AM Eastern 1
Slide 2: Cautionary Statement
Q3-2022 | 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
Q3-2022 | Focus on Long-Term Growth Drivers NOI Contribution by Market (%) AB | 8.2% NL | 4.5% Calgary | Edmonton St. John’s BC | 3.2% Victoria PEI | 6.1% Charlottetown NS | 33.6% Halifax ON | 24.3% NB | 20.1% Ottawa | London Moncton | Fredericton Toronto | KWC Saint John Killam’s strategy to increa
Slide 4: 2022 Strategic Targets
Q3-2022 | 2022 Strategic Targets Grow Same Property NOI Grow •2022 Target: 2.0% - 3.0% •2022 Performance to-date: 4.9% Expand the Portfolio through Acquisitions •2022 Target: Acquire a minimum of $150M. Expand •2022 Performance to-date: $119 million with acquisitions in Halifax, Waterloo, Guelph, Vi
Slide 5: Financial Highlights
Q3-2022 | Financial Highlights Belmont, Victoria $3.6M $0.31 5.1% 75% 45.0% Net Income FFO per Unit(1) Same Property NOI AFFO payout ratio(4) Total Debt as a % of Total Growth(3) Assets (2) Includes $56.8 million of net A 3.3% increase from $0.30 per AFFO payout ratio (rolling 12 unit in Q3-2021. AF
Slide 6: Financial Highlights
Q3-2022 | Financial Highlights Same Property Portfolio Performance Q3 FFO & AFFO Per Unit For the three months ended September 30, 2022 Q3-2022 Q3-2021 5.1% 5.2% 5.1% $0.31 $0.30 $0.27 $0.26 Revenue Expense NOI FFO AFFO Same Property Portfolio Performance YTD FFO & AFFO Per Unit For the nine months
Slide 7: Financial Highlights – Apartments
Q3-2022 | Financial Highlights – Apartments Same Property Occupancy(1) Apt Same Property 98.40% Occupancy(1) 99% 98% 97% 96% 95% 94% 97.1% 97.3% 96.6% 97.4% 98.4% 93% Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 Q3/19 Q4/19 Q1/20 Q2/20 Q
Slide 8: Financial Highlights – Revenue
Q3-2022 | 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 Q3, rents increased by 2.1%. Q3, rents increased 11.0% 12% Co
Slide 9: Financial Highlights – Expenses
Q3-2022 | Financial Highlights – Expenses Total same property operating expenses were up 5.2% in Q3-2022. The increase was driven by higher natural gas, oil, and propane prices across our core markets which increased our utility and fuel expenses by 9.8%. Same Property Expense Growth 5.2% 1.7% 2.1%
Slide 10: Debt Ladder: Mortgage Maturities
Q3-2022 | Debt Ladder Apartment Mortgage Maturities by Year As at September 30, 2022 Mortgage Maturities Weighted Average Interest Rate (Apartments) 5 year estimated CMHC insured interest rate 4.55% $450 6% $375 5% Mortgage Maturities ($M) $300 4% Interest Rate 2.71% 2.63% $225 2.55% 3.41% 3.23% 3%
Slide 11: Conservative Debt Metrics
Q3-2022 | Conservative Debt Metrics Increasing value of investment properties with conservative debt metrics. Total Debt as a % of Assets(1) Interest Coverage Ratio(2) Debt to Normalized EBITDA(3) 55% 50% 45% 40% 49.8% 43.4% 44.6% 45.0% 45.0% 3.22 3.20 3.36 3.53 3.42 10.62 10.15 10.78 11.33 11.20 35
Slide 12: Financial Highlights – MHC
Q3-2022 | Financial Highlights – MHC Same Property MHC NOI Growth Revenue NOI 12.8% 10.0% 7.7% 6.7% 5.9% 4.3% 3.2% NL 1.9% (6.1%) (5.9%) ON NB NS Q3-2018 Q3-2019 Q3-2020 Q3-2021 Q3-2022 MHC Site Count 5,975 5,875 5,875 5,786 5,427 Holiday Harbour, Ontario 5,165 2017 2018 2019 2020 2021 2022 YTD Camp
Slide 13: Financial Highlights – MHC
Q3-2022 | Financial Highlights – MHC Strong growth in revenue from Killam’s nine seasonal resort communities, including 12.7% increase in revenue for the three months ended September 30, 2022. Gains are being realized from both seasonal sites and short-term sites. Seasonal Resorts Revenue Q3 ($ thou
Slide 14: Financial Highlights – Commercial
Q3-2022 | Financial Highlights – Commercial Total commercial occupancy increased to 92.5% for Q3-2022, compared to 89.6% in Q3-2021. Royalty Crossing attracted two additional tenants, RW & Co. and Samuel & Co., during the quarter. Same Property Commercial NOI Growth Revenue NOI 27.9% 8.0% 6.6% 6.3%
Slide 15: Investing in our Properties
Q3-2022 | Investing in our Properties Northfield Gardens - After 2022 Program 600 suite repositions ~$15-18M investment ~$2.0-2.3M annualized revenue growth Total Opportunity 5,500 suite repositions ~$138-165M investment ~$18-21M annualized revenue 496 suites repositioned year-to-date Northfield Gar
Slide 16: Quinpool Towers Repositioning Program
Q3-2022 | Repositioning Program Quinpool Towers Fitness Center Before 2022 retrofit After 2022 retrofit Social Room 16
Slide 17: Halifax Market
Q3-2022 | Halifax Market • In Q2-2022, net interprovincial migration in Halifax was the highest in over 10 years and has been trending positive since 2016. • In 2021, for the second consecutive year, most newcomers to Halifax were in the 25–39 age group. Halifax Population Growth by Source Halifax P
Slide 18: Acquisitions
Q3-2022 | Acquisitions Annual Acquisitions ($ millions) Acquisitions $399 $315 $200 $200 $191 $211 $167 $160 $103 $125 $36 $115 $106 $121 $119 $16 $45 $3 $85 $72 $54 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 YTD 2022 NOI Generated Outside Atl
Slide 19: 2022 YTD Acquisitions
Q3-2022 | 2022 YTD Acquisitions The Residences, Courtenay BC The Shores, Courtenay BC Woolwich, Guelph ON Units 56 | 100% leased Units 94 | 100% leased Units 84 | 100% leased Avg Monthly Rent $1,608 Avg Monthly Rent $1,641 Avg Monthly Rent $1,218 Acquisition Date May 18, 2022 Acquisition Date May 18
Slide 20: Strong Leasing of Developments Continue
Q3-2022 | Strong Leasing of Developments Continue Latitude | 209 units The Kay | 128 units Luma | 168 units Opened Jan 2022 Opened April 2022 Opened June 2022 The above three developments are leasing ahead of expectations. They are forecasted to contributed over $5.5 million of NOI on an annualized
Slide 21: The Kay
Q3-2022 | The Kay The Kay Leasing Activity Avg Rent: $3.04/ft2 24% 52% 73% 93% 100% THE KAY – 128-unit development in Mississauga 21
Slide 22: Latitude
Q3-2022 | Latitude Avg Rent: $3.05/ft2 Geothermal 93% leased 17,500 ft2 heating and at of amenity cooling November 8 space LATITUDE – 208-unit development in Ottawa adjacent to the Frontier 22
Slide 23: Luma
Q3-2022 | Luma Luma Leasing Activity Avg Rent: $2.82/ft2 62% 50% 42% 26% 10% July 22 Aug 22 Sept 22 Oct 22 Nov 22 LUMA – 168-unit development in Ottawa 23
Slide 24: Development Progress
Q3-2022 | 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 three years.(1) Governor | 12 units Civic 66 | 169 units The Carrick | 139 units Halifax Kitchener Waterloo (1) Cost $24M $70M $
Slide 25: Development Activity – The Governor, Halifax
Q3-2022 | 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 November 2022 25
Slide 26: Development Activity – The Governor, Halifax
Q3-2022 | 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 Q1-2023 Project budget ($M) $24.3 Expected yield 4.00%-4.25% THE ALEXANDE
Slide 27: Development Activity – Civic 66
Q3-2022 | Development Activity – Civic 66 Progress shots as of October 2022 27 27
Slide 28: Development Activity – Civic 66
Q3-2022 | Development Activity – Civic 66 CIVIC 66 – 169-unit development in Kitchener that broke ground in Q3-2020 and is expected to be completed by Q1-2023. Latitude (Phase II) GREEN FEATURES: Sub-metered water, Key Statistics geothermal heating and cooling. Number of units 169 Start date Q3-2020
Slide 29: Future Development Activity – Waterloo
Q2-2022 | Future Development Activity – Waterloo WESTMOUNT PHASE 1 (The Carrick) – Broke ground on the 139-unit development in Waterloo in Q2-2022. Key Statistics Number of units 139 Start date Q2-2022 Est. completion date 2024 Project budget ($M) $83.5 Cost per unit $601,000 Expected yield 4.00%-4.
Slide 30: ESG Update
Q3-2022 | ESG Update Killam earned a green, three-star designation for the 2022 GRESB real estate assessment. Killam achieved a 15% score improvement from its 2021 rating. Killam has also maintained its GRESB Public Disclosure survey rating of "A”. Geothermal Waste Heat PV Solar Level II Build
Slide 31: 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 32: Q3-2022 Results Conference Call
Q3-2022 RESULTS CONFERENCE CALL November 9, 2022 | 10AM Eastern 32
Killam Apartment REIT — Q3 2022 Earnings Presentation on 6ix