Slide 1: Q2-2018 Results Conference Call
Q2-2018 Results Conference Call August 9, 2018 9AM Eastern Home. F or all.
Slide 2: Cautionary Statement
Cautionary Statement This presentation may contain forward-looking statements with respect to Killam Apartment REIT and its operations, strategy, financial performance and condition. These statements generally can be identified by use of forward-looking words such as “may”, ”will”, “expect”, “estima
Slide 3: Q2-2018 Highlights
Q2-2018 | Highlights Amongst Highest Q2 Apt 6.0% in Debt to EBITDA of Occupancy of Same 96.9% Property 10.85 Growth 8.7% FFO Growth 2.4% Debt to Total Assets of Average $24M in 48.0% Increase in Fair Value Rents Gains 110 bps improvement AFFO Payout Ratio 3.18x Interest in NOI Margin of 79% Coverage
Slide 4: Strategic Achievements
Q2-2018 | Strategic Achievements 2018 Target YTD 2018 Performance Grow Same Property NOI by 1% to 2% 5.5% Same Property NOI growth in the first six months of 2018. REVISED: 3% to 5% Acquire a minimum of $125M of assets $124 million of assets purchased during the first six months of 2018. Addition
Slide 5: Financial Highlights
Q2-2018 | Financial Highlights Q2 FFO & AFFO Per Unit • Q2-2018 - FFO per YTD FFO & AFFO Per Unit unit up 8.7% & AFFO Q2-2017 Q2-2018 YTD-2017 YTD-2018 per unit up 5.3% • YTD-2018 – FFO per unit up 7.1% & AFFO $0.23 $0.25 $0.19 $0.20 $0.42 $0.45 $0.32 $0.36 per unit up 12.5% FFO AFFO FFO AFFO Same P
Slide 6: Financial Highlights
Q2-2018 | Financial Highlights Strong revenue growth to increase same property earnings. • Rising rental rates: Rate increases on renewals of 1.6% and turns of 4.9%, averaged 2.4% in Q2-2018. • Strong occupancy: Q2-2018 economic occupancy was amongst Killam’s highest. • Reduced incentives: 40 bps lo
Slide 7: Financial Highlights
Q2-2018 | Financial Highlights Managing expenses to increase same property earnings. • Investing in energy and water conservation initiatives. • Maximizing economies of scale. • Appealing rising property tax assessments. Q2-2018 Same Property YTD-2018 Same Property Expense Expense Growth Change by C
Slide 8: Financial Highlights
Q2-2018 | Financial Highlights Managing balance sheet with conservative leverage. Debt as a Percentage Interest Coverage Debt to EBITDA of Assets Ratio 2014 55.8% 2015 56.4% 2016 53.5% 2017 48.7% Q2-2018 48.0% 2014 12.47 2015 11.87 2016 11.00 2017 10.70 Q2-2018 10.85 2.70 2014 2.21 2015 2.34 2017 3.
Slide 9: Apartment Mortgage Maturities by Year
Q2-2018 | Financial Highlights Apartment Mortgage Maturities by Year As at June 30, 2018 Mortgage Maturities Weighted Average Interest Rate (Apartments) Five-year CMHC rate Ten-year CMHC rate $250 5% 3.76% Current 3.44% 4% Weighted Mortgage Maturities ($M) $200 3.18% 3.11% 3.10% 4% 2.87% Average 2.5
Slide 10: Increasing value of investment properties
Q2-2018 | Financial Highlights Increasing value of investment properties. Investment Properties ($ billions) Investment Properties under Construction Investment Properties $1.7 $1.8 $1.9 $2.3 $2.5 2014 2015 2016 2017 Q2-2018 Weighted Average Apartment Cap-Rates 5.52% 5.49% 5.37% 5.22% Q4-15 Q4-16 Q4
Slide 11: Growing FFO & NAV
Q2-2018 | Growing FFO & NAV Killam’s strategy to increase FFO, NAV and maximize value is focused on three priorities: Increase Expand the Develop high- earnings from portfolio and quality existing diversify properties in portfolio. geographically core markets. through accretive acquisitions. 11
Slide 12: Increase Value in Existing Portfolio
Q2-2018 | Increase Value in Existing Portfolio Advancing Technology & Analytics Providing Investing in Superior Energy Customer Efficiencies Service $ Increase FFO & Driving Maximizing NAV Expense rents on Mgmt renewals Practices Enhancing Other Reposition Revenue Units Streams 12
Slide 13: Increasing Revenues to Grow NOI
Q2-2018 | Increasing Revenues to Grow NOI Driving revenues through increased occupancy and rental rates, as well as less rental incentive offerings. Q2-2018 Q2-2017 Region SP Rent SP Rent % Change Halifax $1,023 $998 2.5% ↑ Moncton $853 $831 2.6% ↑ Fredericton $946 $923 2.5% ↑ Saint John $789 $764 3
Slide 14: Increasing Revenues to Grow NOI
Q2-2018 | Increasing Revenues to Grow NOI Driving revenues through unit repositionings to meet market demand. • Seeking higher rent lifts and ROI on each unit turns with an increased focus on unit repositioning. Total YTD 2018 2018 Target 2019 Target Opportunity • 70 Units vs 24 • 200 Unit • 300 Uni
Slide 15: Increasing Revenues to Grow NOI
Q2-2018 | Increasing Revenues to Grow NOI Accelerating capital investment in suites to maximum NOI growth and investment returns. 2018 Plus • 200 units additional 26 One Oak, Halifax Lorentz, Moncton • $3M properties • $0.6M Annual targeted in Revenue 2018 Silver Spear, Mississauga Tobin, Halifax 15
Slide 16: One Oak, Halifax Unit Repositioning
Q2-2018 | Increasing Revenues to Grow NOI One Oak (146 units), Halifax | Driving revenues through repositioning units $100k Increased Targeted Asset BEFORE 10% Avg Value 8 ROI repositioned units targeted in 2018 AFTER $23K Avg Investment 14% Avg Rent Lift $190 Avg Monthly Increase 16
Slide 17: Lorentz, Moncton Unit Repositioning
Q2-2018 | Increasing Revenues to Grow NOI Lorentz (102 units), Moncton | Driving revenues through repositioning units $270k Increased Targeted Asset 20% Avg Value BEFORE 12 ROI repositioned units targeted in AFTER 2018 $25K Avg Investment 22% Avg Rent Lift $415 Avg Monthly Increase 17
Slide 18: Tobin, Halifax Unit Repositioning
Q2-2018 | Increasing Revenues to Grow NOI Tobin (47 units), Halifax | Driving revenues through repositioning units $232k Increased Targeted Asset Value BEFORE 13% Avg 9 ROI repositioned units targeted in AFTER 2018 $25K Avg Investment 22% Avg Rent Lift $270 Avg Monthly Increase 18
Slide 19: Silver Spear, Mississauga Unit Repositioning
Q2-2018 | Increasing Revenues to Grow NOI Silver Spear (199 units), Mississauga | Driving revenues through repositioning units $1.5M Increased Targeted Asset 24% Avg Value ROI BEFORE 15 repositioned units AFTER targeted in 2018 $21k Avg Investment 30% Avg Rent Lift $420 Avg Monthly Increase 19
Slide 20: Managing Expenses to Grow NOI
Q2-2018 | Managing Expenses to Grow NOI Accelerating Killam’s 5-year, $25 million energy efficiency plan • Killam has invested $6 million to date in efficiency projects, including 8,400 low-flow toilets installs, boiler upgrades and lighting retrofits. • Original 2018 plan of $3.5 million – increase
Slide 21: Leading with Technology
Q2-2018 | Leading with Technology Coming in Mobile early 2019 Inspections Rent Mobile Maximizing Work Software Orders Online Online Property Seamless Tenant Online Portal Management Leasing Platform Coming in late 2018 Integrated Enhanced Credit Marketing Screening Analytics Coming in Customer late
Slide 22: Performance | Halifax
Q2-2018 | Performance | Halifax The Halifax rental market is strong with overall vacancy at its lowest level since 2003. Current Market Conditions Strong demand due to population growth from Halifax • immigration, intraprovincial migration and • demographics. Increasing supply with higher than avera
Slide 23: Performance | New Brunswick
Q2-2018 | Performance | New Brunswick Population growth coupled with limited construction has resulted in the lowest vacancy since 2009. Current Market Conditions • Emigration has slowed with an improving economy, New Brunswick • increasing population growth and rental demand. Fewer apartment starts
Slide 24: Performance | Ontario
Q2-2018 | Performance | Ontario Strong rental market driven by robust job market, international immigration and high housing prices. Current Market Conditions • Strong economic growth. Ontario • Rising population due to immigration and intra-provincial migration. Q2-2018 • Affordability of homeowner
Slide 25: Acquisition & Development Activity
Acquisition & Development Activity Quarter Property Region Month Total Atlantic Ontario & Canada Alberta Q1 The Killick Halifax, NS February $33,000 $33,000 Q1 4th Ave Land Calgary, AB February 7,200 $7,200 Q1 Weber Scott Pearl Kitchener, ON March 6,000 6,000 Q1 Westmount Place Wateroo, ON March 77,
Slide 26: Acquisitions | Vibe Lofts
Acquisitions | Vibe Lofts Description: Acquisition Details: • 178 units • $47.0 million ($267,000/unit) • Average rent of $1,444/month ($2.35 per square foot); • Construction completed in September 2017 • Occupancy at 78% Location: • 10620-116th Street NW Edmonton, Alberta Vibe Lofts, Edmonton 26
Slide 27: Acquisitions | Vibe Lofts
Acquisitions | Vibe Lofts ragKillam
Slide 28: Acquisitions | Nolan Hill
Acquisitions | Nolan Hill Description: Acquisition Details: • 10% interest in a 13.58-acre development site • $2.0 million for 10% interest • Located in Northwest Calgary • Agreed to purchase first phase of 233 units • Zoned for 829 units at a purchase price of $55 million • First phase – 233 units
Slide 29: Acquisitions | Nolan Hill
Acquisitions | Nolan Hill q €4 PHASE3 UT 1 FUT, BULONG 11 TOUT, BUILDING 08
Slide 30: Acquisitions | Mississippi Lake
Acquisitions | Mississippi Lake Description: 138 seasonal sites ~22.5 acres Location: 562 Townline Road West, Township of Beckwith, Ontario Acquisition details: $2.0 million ($14,500 per site) Future Development 30 Westmount Place, Waterloo
Slide 31: Development Activity
Q2-2018 | Development Activity Cambridge, ON - Saginaw Park completed April 2018. Saginaw Park – Cambridge 31
Slide 32: Development Activity
Q2-2018 | Development Activity Cambridge, ON - Saginaw Park Saginaw Park – Cambridge 32
Slide 33: Development Activity
Q2-2018 | Development Activity Cambridge, ON - Saginaw Park Saginaw Park – Cambridge 33
Slide 34: Development Activity
Q2-2018 | Development Activity Halifax, NS - The Alexander to be completed in Sept 2018. Key Statistics Number of units/ 240 units/ Commercial (SF) 6,350 SF Start date 2016 Completion date Q3-2018 Project Budget ($M)* $41.0 Cost per unit $320,000 Expected Yield 4.75% Expected Value 4.50% * Killam’s
Slide 35: Development Activity
Q2-2018 | Development Activity Ottawa, ON - Frontier, Phase One Key Statistics Number of units 227 Start date 2017 Completion date Q2-2019 Project Budget ($M)* $36.5 Cost per unit $320,000 Expected Yield 5.0% Expected Value 4.0% * Killam’s 50% interest. The Frontier, Ottawa 35
Slide 36: Development Activity
Q2-2018 | Development Activity Ottawa, ON – Gloucester City Centre, Phase Two Phase Two, ~200 units 36
Slide 37: Development Activity
Q2-2018 | Development Activity Silver Spear development to break ground in late 2018/early 2019. Key Statistics Number of units 128 Start date Q1-2019 Estimated Completion date Q1-2021 Project Budget ($M)* $23.7 Cost per unit $356,000 Expected Yield 5.25% Expected Value 3.50% *Killam’s 50% interest.
Slide 38: Development Activity
Q2-2018 | Development Activity Weber Scott Pearl Land - Future Development Description: 1.8 acre development site including a small commercial building and a heritage residence Opportunity to develop a 163-unit apartment building Location: Downtown Kitchener Acquisition Details: $6.0 million Commerc
Slide 39: Development Pipeline
Q2-2018 | Development Pipeline Killam has a $700 million development pipeline. Future Development Opportunities Westmount Place, Carlton Terrace, Waterloo Halifax Property City Units Silver Spear II(1) Mississauga, ON 64 Weber Scott Pearl Kitchener, ON 163 Gloucester City Centre (Ph 2-4)(1) Ottawa,
Slide 40: Investor Q2-2018 Presentation
Investor Q2-2018 Presentation Results January 2018Call Conference