Killam Apartment Reit · TSX:KMP.UN
Killam Apartment Reit — Q1 2020 Earnings Presentation
37 slides from Killam Apartment Reit's earnings presentation, May 7, 2020
Slide 1: Q1-2020 Results Conference Call
Q1-2020 RESULTS CONFERENCE CALL May 7, 2020 | 9AM EASTERN KILLAM APARTMENT REIT
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: Q1-2020 Highlights
Q1-2020 | Highlights 4.8% 12.5% 44.4% 6.1% $70M FFO per Unit AFFO per Unit Debt to Total Same Property NOI Accretive Growth Growth Assets Growth Acquisitions $0.22 per unit, a 4.8% $0.18 per unit, a Debt metrics 6.1% growth and 160 Added 220 apartment increase from $0.21 12.5% increase from continue
Slide 4: Financial Highlights
Q1-2020 | Financial Highlights Strong FFO and same property NOI growth • Generated FFO per unit of $0.22, 4.8% increase from Q1-2019. • Produced AFFO per unit of $0.18, 12.5% increase from Q1-2019. • Strong rental rate growth and a reduction in operating expenses resulted in a 6.1% NOI increase and
Slide 5: Financial Highlights: Same Property Expense
Q1-2020 | Financial Highlights Lower heating fuel and energy expenses drove expense savings in Q1. • Invested in energy and water conservation initiatives. • Reduced consumption due to mild winter. • Lower natural gas prices. • Maximizing economies of scale. • Successfully appealing property tax ass
Slide 6: Apartment Mortgage Maturities by Year
Q1-2020 | Financial Highlights Apartment Mortgage Maturities by Year As at March 31, 2020 Mortgage Maturities Weighted Average Interest Rate (Apartments) Current Weighted Five-year CMHC rate Ten-year CMHC rate Average $450 Interest Rate of $400 4% 2.86% 3.19% Mortgage Maturities ($M) $350 2.96% 2.64
Slide 7: Investment Properties and Debt as a % of Assets
Q1-2020 | Financial Highlights Increasing value of investment properties with conservative debt metrics. Debt as a % of Assets Investment Properties ($ billions) Investment Properties under Construction Investment Properties 56.4% 53.5% 48.7% 49.8% 43.4% 44.4% $1.8 $2.0 $2.3 $2.8 $3.3 $3.4 2015 2016
Slide 8: Impact of COVID-19
Q1-2020 | Impact of COVID-19 Residents Operations Employees Commercial Tenants 8
Slide 9: Focusing on long-term growth drivers
Q1-2020 | Focusing on long-term growth drivers Killam’s strategy to increase FFO, NAV and maximize value is focused on three priorities: Increase earnings from existing portfolio. Expand the portfolio and diversify geographically through accretive acquisitions, targeting newer properties. Develop hi
Slide 10: Revenue Drivers – Long-term Strength
Q1-2020 | Revenue Drivers – Long-term Strength With strong occupancy levels, rental rate growth is a key longer-term focus for Killam. Apt Same Property Avg Short-term Longer-term Rental Rate Increase Limitations Opportunities • Suspend rental • Renovation program increases well established • Experi
Slide 11: Revenues Drivers - Renovations
Q1-2020 | Revenues Drivers - Renovations Driving revenues through unit repositions to meet market demand, maximize NOI growth and investment returns. Q1-2020 Actuals 2020 Program Total Opportunity • 95 unit repositions • 13% ROI • $25K avg investment • 300-500 unit repositions • ~$7-12M investment •
Slide 12: Importance of Technology Usage
Q1-2020 | Importance of Technology Usage Killam’s online functionality is providing considerable benefits during this period of social distancing. Leasing agents, maintenance employees and all property management functions can be done virtually to deliver high-quality service to residents and prospe
Slide 13: Killam's ESG Progress
Q1-2020 | Killam’s ESG Progress Killam continues to build on its current successes to make its buildings more sustainable and resilient to the impacts of climate change. Focused on increased disclosure and public reporting on ESG initiatives, issuing our 2019 ESG Report In accordance with GRI St
Slide 14: Rent Collection Impact of COVID-19
Q1-2020 | Rent Collection Impact of COVID-19 Avg Monthly Rental Revenue April 2020 Rent Collection Commercial 6% MHCs 4% Apartments 98.6% 98.2% 72.0% 96.9% 90% Apartments MHCs Commercial Overall Killam is working on April’s arrears and seeking rent deferrals arrangements with commercial and resident
Slide 15: Killam's Commercial Portfolio
Q1-2020 | Killam’s Commercial Portfolio Killam’s current gross commercial revenue = 6% of projected 2020 revenues. % of Commercial Commercial (% of total gross commercial revenue) Tenant Rent 1 SunLife Assurance 26.7% Sunlife, 27% 2 Loblaws 5.5% Grocery 3 Co-op Atlantic 4.7% Anchored, 12% 4 Labatt B
Slide 16: Acquisitions
Q1-2020 | Acquisitions Property Location Acquisition Date Ownership Property Type Purchase Price(1) Interest (%) ($M) 1 Christie Point Victoria, BC Jan 15, 2020 100% Apartment $54,000 2 9 Carrington Halifax, NS Jan 31, 2020 100% Apartment 8,800 3 Domaine Parlee Shediac, NB Mar 23, 2020 100% MHC 3,95
Slide 17: Acquisitions
Q1-2020 | Acquisitions Annual Acquisitions ($ millions) Average $118M $115 $106 $121 $160 $200 $315 $130 $167 $200 $103 $125 $191 $85 $54 $72 $16 $45 $36 $3 NOI Generated Outside Atlantic Canada Killam continues to expand the portfolio and diversify geographically through accretive acquisitions, tar
Slide 18: Q2-2020 Acquisitions | Langford, BC
Q2-2020 Acquisitions | Langford, BC Description: Acquisition Details: Location: 156 units $60 million Langford, BC 2 apartment buildings with 1 and 2 bedroom 4.4% capitalization rate units 88% leased Average rent – $1,868/month ($2.61/sf) Closed: April 30, 2020 Crossing at Belmont Vibe Lofts, Edmont
Slide 19: Q2-2020 Acquisitions | Langford, BC
Q2-2020 Acquisitions | Langford, BC Victoria International Airport Crossing at Belmont Christie Point Crossing at Belmont Downtown Victoria 19
Slide 20: Q2-2020 Acquisitions | Langford, BC
Q2-2020 Acquisitions | Langford, BC 20
Slide 21: Development Success
Q1-2020 | Development Success 101 units - Fredericton, NB 122 units - Cambridge, ON 94 units - Cambridge, ON 70 units - Halifax, NS Projects Completed 2013 – 2020 Value today - $348M Cost to build - $278M Gain - $70M (25%) 47 units - Charlottetown 63 units - Halifax, NS 102 units - St. John’s, NL 22
Slide 22: Development Activity, Ottawa
Q1-2020 | Development Activity, Ottawa Ottawa, ON - Phase II (Latitude) of Gloucester City Centre Frontier (Phase I) Latitude (Phase II) Key Statistics Number of units 209 Start date Q2-2019 Estimated completion date Q4-2021 Project budget ($M)* $43.5 Cost per unit $416,000 Expected yield 4.75-5.0%
Slide 23: Development Activity, Ottawa
Q1-2020 | Development Activity, Ottawa Latitude development has experienced slow downs during April. At this time, this second phase of the Gloucester City Centre is expected to be completed in late-2021. Frontier (Phase I) Latitude (Phase II) 23
Slide 24: Development Activity, Ottawa
Q1-2020 | Development Activity, Ottawa Latitude (Phase II) Frontier (Phase I) Latitude (Phase II) is actively underway and expected to be completed in late 2021. 24
Slide 25: Development Activity, Charlottetown
Q1-2020 | Development Activity, Charlottetown Shorefront development broke ground in October 2018. Key Statistics Number of units 78 Start date Q4-2018 Estimated completion date Q3-2020 Project budget ($M) $22.0 Cost per unit $282,000 Expected yield 5.25-5.5% Expected value 4.75-5.0% *Killam’s 50% i
Slide 26: Development Activity, Charlottetown
Q1-2020 | Development Activity, Charlottetown The Shorefront development has experienced slight delays during April and anticipates opening in September 2020. *Killam’s 50% interest. Shorefront Progress Photos Shorefront Development 26
Slide 27: Development Activity, Mississauga
Q1-2020 | Development Activity, Mississauga The Kay development broke ground in Q3-2019. Key Statistics Number of units 128 The Kay Start date Q3-2019 Estimated completion date Q1-2022 Project budget ($M) $56.0 Cost per unit $437,500 Expected yield 4.75-5.0% Expected value cap-rate 3.5% The Kay Gree
Slide 28: Development Activity, Mississauga
Q1-2020 | Development Activity, Mississauga The Kay development is currently experiencing some slow downs but still progressing and is expected to be completed in early 2022. The Kay 28
Slide 29: Development Activity, Mississauga
Q1-2020 | Development Activity, Mississauga The Kay 29 29
Slide 30: Development Activity, Charlottetown
Q1-2020 | Development Activity, Charlottetown 10 Harley Street – 38-unit redevelopment in Charlottetown. Key Statistics Number of units 38 Latitude (Phase II) Start date Q3-2019 Estimated completion date Q4-2020 Project budget ($M) $10.4 Cost per unit $274,000 Expected yield 5.0-5.25% Expected value
Slide 31: Development Pipeline - ~$850 million
Q1-2020 | Development Pipeline - ~$850 million Future Development Opportunities Killam’s Potential # Est Year of Property Location Interest of Units(1) Status Completion Developments expected to start in the next 24 months The Governor Halifax, NS 100% 12 In design and approval process 2023 Weber Sc
Slide 32: Appendices
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Slide 33: Performance | Halifax
Q1-2020 Performance | Halifax The Halifax rental market is strong with overall occupancy of 98.6%. Current Market Conditions (per CMHC in Jan 2020) Killam’s Same Property Performance • Strong demand as population growth from immigration, intraprovincial migration and demographics continues to outpac
Slide 34: Performance | New Brunswick
Q1-2020 Performance | New Brunswick Population growth coupled with limited construction has resulted in record high occupancy of 98.2%. Current Market Conditions (per CMHC in Jan 2020) Killam’s Same Property Performance • Population growth from increased interprovincial and international migration b
Slide 35: Performance | Ontario
Q1-2020 Performance | Ontario Strong rental market driven by robust job market, international immigration and high housing prices. Current Market Conditions (per CMHC in Jan 2020) Killam’s Same Property Performance • Strong economic growth. • Rising population due to immigration and intra-provincial
Slide 36: Non-IFRS Measures
Non-IFRS Measures Non-IFRS Measures Management believes these non-IFRS financial measures are relevant measures of the ability of the REIT to earn revenue and to evaluate Killam's financial performance. The non-IFRS measures should not be construed as alternatives to net income or cash flow from ope
Slide 37: Q1-2020 Results Conference Call
Q1-2020 RESULTS CONFERENCE CALL May 7, 2020 | 9AM EASTERN KILLAM APARTMENT REIT
Killam Apartment REIT — Q1 2020 Earnings Presentation on 6ix