Killam Apartment Reit · TSX:KMP.UN
Killam Apartment Reit — Q2 2015 Earnings Presentation
29 slides from Killam Apartment Reit's earnings presentation, Aug 6, 2015
Slide 1: Q2-2015 Results Conference Call
Q2-2015 Results Conference Call Aug 6, 2015 11 am EST
Slide 2: Cautionary Statement
Cautionary Statement This presentation may contain forward-looking statements with respect to Killam P r o p e r t i e s I n c . a n d i t s o p e r a t i o n s , s t r a t e g y, f i n a n c i a l p e r f o r m a n c e a n d c o n d i t i o n . These statements generally can be identified by use of
Slide 3: Highlights from Q2-2015
Highlights from Q2-2015 • Generated FFO per share of $0.21, a 16.7% increase from $0.18 in Q2-2014. • Increased same store rental revenue by 2.3%. • Achieved same store NOI growth of 4.0%. • Completed a $25.3 million development and an $8.3 million development. • Achieved interest expense savings, r
Slide 4: Saginaw Gardens, Cambridge, ON
Developments Saginaw Gardens, Cambridge, ON • $25.3 million total development cost • 122 apartment units • Completed June 2015 • 72% leased 4
Slide 5: Saginaw Gardens, Cambridge, ON
Developments Saginaw Gardens, Cambridge, ON 27 one-bedroom units • average size - 800 sf • average price - $1,170 95 two-bedroom units • average size -1,050 sf • average price - $1,520 5
Slide 6: 20 Technology Drive, Saint John
Acquisitions 20 Technology Drive, Saint John • $8.3 million • 59 units ($140,000 per unit) • 6.1% cap rate • Completed in late 2014 6
Slide 7: 20 Technology Drive, Saint John
Acquisitions 20 Technology Drive, Saint John • Insulated concrete form (ICF) construction • 19 one-bedroom units • 40 two-bedroom units • Average rent of $1,210 2014 & Q1 2015 7
Slide 8: Medical Arts Property, Halifax
Acquisitions Medical Arts Property, Halifax • $8.4 million • Closed Aug 5, 2015 • Development potential 2014 & for up to 200 units • 18,000 square feet Q1 2015 of office space at $25 per square foot (gross) 8
Slide 9: Medical Arts Property, Halifax
Acquisitions Medical Arts Property, Halifax Killam’s Spring Garden Terrace Building Medical Arts Building Site Killam’s Future Development, 98 units/18 storeys Carlton Houses Killam’s 1540/1546/1550 Carlton Street site 9
Slide 10: 2015 Targets
2015 Targets % of Acquisitions Outside Same Store Acquisitions Atlantic Canada 2014 & NOI Growth 2015 Target $75 Million +50% 0% ‐ 2% Q1 2015 YTD $36 Million 0% 4.4% Progress 10
Slide 11: 16% FFO Per Share Growth in Q2-2015
16% FFO Per Share Growth in Q2-2015 Q2 FFO Per Share YTD FFO Per Share For the 6 months ended June 30, $0.21 $0.35 $0.18 $0.17 $0.32 $0.31 Q2-2013 Q2-2014 Q2-2015 2013 2014 2015 11
Slide 12: 4.0% Same Store NOI Growth in Q2
4.0% Same Store NOI Growth in Q2 Same Store Results 3 months ended June 30, 2015 Revenue Expenses NOI 4.0% 4.3% 4.4% 4.2% 4.0% 2.1% 2.3% (0.6%) (0.1%) Apartments MHCs Consolidated 12
Slide 13: 4.4% Same Store NOI Growth YTD
4.4% Same Store NOI Growth YTD Same Store Results 6 months ended June 30, 2015 Revenue Expenses NOI 4.6% 4.3% 4.4% 3.7% 3.2% 2.2% 2.4% (0.6%) (0.2%) Apartments MHCs Consolidated 13
Slide 14: Strong NOI Growth in 2015
Strong NOI Growth in 2015 Historic Change in Same Store NOI 2010-2015 12.0% 10.0% Average quarterly NOI 8.0% growth of 1.7% from 2010-2015. 6.0% 4.0% 2.0% 0.0% Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2
Slide 15: 2.3% Same Store Revenue Growth in 2015
2.3% Same Store Revenue Growth in 2015 Historic Change in Same Store Revenue Growth 2010-2015 Average quarterly 4.0% same store revenue growth of 2.2% from 3.5% 2010-2015. 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 20
Slide 16: 60 Basis Point Occupancy Improvement
60 Basis Point Occupancy Improvement Apartment Quarterly Occupancy Levels 95.6% 95.8% 95.5% 95.5% 94.7% 94.9% 94.7% 94.3% 94.2% 93.6% Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 16
Slide 17: Continued Decrease in Incentives
Continued Decrease in Incentives Incentives as a Percentage of Rental Revenue Same Store Apartment Properties 1.4% 1.2% 1.0% 0.8% 0.6% 0.4% 0.2% 0.0% 17
Slide 18: Efficiency Projects = Savings
Efficiency Projects = Savings Water Consumption Initiatives • Installing low-flow toilets in 2,200 units in 9 properties will generate annualized savings of $270,000. • Payback of 2.7 years. Building System Controls • Installing smart automated controls in the boiler rooms of 10 properties, will con
Slide 19: Efficiency Projects = Savings
Efficiency Projects = Savings Natural Gas Boiler Replacements • Upgrading boilers at Brentwood Apartments (Phase 1 - 2014) decreased natural gas consumption by 15% with $45,000 in annual savings. • Installing Phase 2 replacements in 2015 will lower consumption by over 40% and provide an additional $
Slide 20: Halifax Apartment Rental Starts Peaked in 2011
Halifax Apartment Rental Starts Peaked in 2011 Halifax Rental Apartment Starts and Completions Rental Starts Rental Completions 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 YTD 2015 Source: CMHC 20
Slide 21: Total Starts in Halifax Were Down in 2014
Total Starts in Halifax Were Down in 2014 Halifax New Construction by Type Single Family Home Row & Semi‐Detached Total Apartment 3,500 Average total starts of 2,417 per year 3,000 from 1990-2014. 2,500 2,000 1,500 1,000 500 0 Source: CMHC 21
Slide 22: Mortgage Maturities ($M)
Interest Expense Savings Apartment Mortgage Maturities by Year Mortgage Maturities by Year Weighted Average Interest Rate $180 8% $160 7% Mortgage Maturities ($M) $140 6% $120 4.26% 5% 4.20% $100 3.68% 3.79% 3.43% 3.30% 3.33% 4% $80 3.16% 2.82% 2.70% 3% $60 2% $40 $20 1% $0 0% Current rate for 5-yea
Slide 23: Future Development Opportunities
Developments Future Development Opportunities Development Potential in Property City Units Status Developments Underway The Alexander - Phase 1* Halifax, NS 240 Expect to break ground in Q3-15 Southport - Barrington Street Halifax, NS 70 Under construction Q3-16 completion Development Opportunities
Slide 24: Southport, Halifax, NS
Developments Southport, Halifax, NS • $14.7 million development cost for 70 apartment units • Completion scheduled for Q3-2016 • Common amenities include a common room, fitness room, patio. 24
Slide 25: Southport, Halifax, NS
Developments Southport, Halifax, NS 25
Slide 26: Southport, Halifax, NS
Developments Southport, Halifax, NS 26
Slide 27: The Alexander (Phase I), Halifax, NS
Developments The Alexander (Phase I), Halifax, NS • 240 apartment units • 24 storeys • Units size from 550-1,470 square feet • 6,200 square feet of retail space • 230 underground parking stalls • Common amenities include fitness room, common rooms and landscaped roof-top deck on the five storey buil
Slide 28: The Alexander, Halifax, NS
Developments The Alexander, Halifax, NS Phase II 50 units Phase I 240 units + 6500 sf commercial 28
Slide 29: Q2-2015 Results Conference Call
Q2-2015 Results Conference Call Aug 6, 2015 11 am EST
Killam Apartment REIT — Q2 2015 Earnings Presentation on 6ix