Killam Apartment Reit · TSX:KMP.UN
Killam Apartment Reit — Q2 2020 Earnings Presentation
38 slides from Killam Apartment Reit's earnings presentation, Aug 6, 2020
Slide 1: Q2-2020 Results Conference Call
Q2-2020 RESULTS CONFERENCE CALL Aug 6, 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: Q2-2020 Highlights
Q2-2020 | Highlights FFO per Unit Growth $0.26 per unit, a 4.0% increase from $0.25 per unit in Q2-2019. 4.0% AFFO per Unit Growth 10% $0.22 per unit, a 10% increase from $0.20 per unit in Q2-2019. Debt to Total Assets Flexible capital structure with a 45.3% conservative balance sheet. Same Property
Slide 4: Financial Highlights
Q2-2020 | Financial Highlights Apt Same Property Apt Same Property Apt Same Property Avg Rental Rate Occupancy2 Incentive Offerings3 Increase1 95.7% 96.1% 96.9% 97.0% 96.8% 1.3% 1.6% 2.4% 3.2% 2.9% 0.8% 0.8% 0.4% 0.4% 0.4% Q2-16 Q2-17 Q2-18 Q2-19 Q2-20 Q2-16 Q2-17 Q2-18 Q2-19 Q2-20 Q2-16 Q2-17 Q2-18
Slide 5: Financial Highlights: Same Property Expenses
Q2-2020 | Financial Highlights Lower heating fuel and energy expenses Same Property Expense Growth drove expense savings in Q2 and YTD 2020. 2.7% 3.1% • Invested in energy and water conservation initiatives. • Reduced consumption due to mild winter. 0.9% (0.9%) • Lower natural gas and heating oil pr
Slide 6: Apartment Mortgage Maturities by Year
Q2-2020 | Financial Highlights Apartment Mortgage Maturities by Year As at June 30, 2020 Mortgage Maturities Weighted Average Interest Rate (Apartments) Current Weighted Five-year CMHC rate Ten-year CMHC rate Average $450 Interest Rate of $400 4% 2.83% 3.19% Mortgage Maturities ($M) $350 2.96% 2.68%
Slide 7: Financial Highlights: Debt Metrics
Q2-2020 | Financial Highlights Increasing value of investment properties with conservative debt metrics. Debt as a % of Assets Investment Properties ($B) Investment Properties under Construction Investment Properties 53.5% 48.7% 49.8% 43.4% 45.3% $1.9 $2.3 $2.8 $3.3 $3.5 Debt to Normalized Interest
Slide 8: Rent Collection Impact of COVID-19
Q2-2020 | Rent Collection Impact of COVID-19 Avg Monthly Rental Revenue Q2-2020 Commercial Rent Collection Outstanding Rents to be MHCs Collected, 4% 4% Commercial 6% CECRA, 8% Apartments Collected, 78% Deferred, 4% 90% Provision, 6% Monthly Rent Collection Killam’s Commercial Tenants Participating
Slide 9: Focusing on Long-term Growth Drivers
Q2-2020 | 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 Develop high-quality properties in acquisitions, tar
Slide 10: Revenue Drivers – Long-term Strength
Q2-2020 | Revenue Drivers – Long-term Strength With strong occupancy levels, rental rate growth through repositioning units and achieving market rents upon turn is a key focus for Killam. Apt Same Property Avg Rental Rate Increases (%) 7.0% Total % 5.9% 6.0% 5.6% On Renewal % 3.2% 5.0% On Turn % 2.9
Slide 11: Revenue Drivers – Mark-to-Market Opportunity
Q2-2020 | Revenue Drivers – Current Market With strong occupancy levels, rental rate growth on turnover is a key longer-term focus for Killam. Market vs. In-place Rent (per square foot) Jul-2020, $0.25 MTM $1.70 Jul-2019, $0.27 MTM Feb-2020, $0.18 MTM 60.0% Feb-2019, $0.21 MTM $1.50 50.0% Mark-to-Ma
Slide 12: Revenue Drivers - Renovations
Q2-2020 | Revenues Drivers - Renovations Revenue growth through unit repositions to meet market demand. YTD-2020 Actuals 2020 Program Total Opportunity Region Opportunity NS 3,000 NB 1,300 275 unit 450-500 unit 5,000 unit repositions repositions repositions ON 500 NL 150 AB 50 ~$12-14M ~$125-140M 13
Slide 13: Expense Management
Q2-2020 | Expense Management Increasing earnings from operations through energy efficiency. Includes photovoltaic solar panels, water conservation projects and heating efficiencies. $5.8 Million planned for 2020; 87 projects $0.65 Million potential annualized savings 8 year average payback Electric
Slide 14: Killam's Green Commitment
Q2-2020 | Killam’s Green Commitment Killam-managed GHG Emissions (tCO2e)* Quinpool Court, Halifax, NS 94 kW Array | 113 MWh produced annually 18,532 2019 30,329 2020 Solar Array Projects • 11 Solar array installs at various properties in NS & PEI 20,637 • $1.3M Investment 2018 • 800 Mega Watts hours
Slide 15: Acquisitions
Q2-2020 | Acquisitions Property Location Acquisition Date Ownership Property Type Purchase Price(1) Interest (%) ($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 16: 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 90% leased Average rent – $1,868/month ($2.61/sf) Closed: April 30, 2020 Crossing at Belmont Vibe Lofts, Edmont
Slide 17: Acquisitions
Q2-2020 | Acquisitions Annual Acquisitions ($ 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: Developments Completed
Q2-2020 | Developments Completed 101 units - Fredericton, NB 122 units - Cambridge, ON 94 units - Cambridge, ON 70 units - Halifax, NS Projects Completed 2013 – 2019 Value today - $348M Cost to build - $278M Gain - $70M (25%) 47 units - Charlottetown 63 units - Halifax, NS 102 units - St. John’s, NL
Slide 19: Develop High Quality Properties
Q2-2020 | Develop High Quality Properties Developing high-quality properties in core markets. • Over $600 million (~2,000 units) of developments The current pipeline of completed or underway. developments has an expected yield • Experienced in-house architect and engineers. of approximately 5%, cont
Slide 20: 2020 Development Projects
Q2-2020 | 2020 Development Projects 23 units – Calgary, AB(2) Killam currently has six developments underway, plus 84 units(1) – Ottawa, ON a 10% interest in a Calgary project, for a total of 624 apartment units at a total cost of ~$250 million and an expected yield of ~5%. 128 units – Mississauga,
Slide 21: Development Activity, Charlottetown
Q2-2020 | Development Activity, Charlottetown Shorefront anticipates opening in September 2020. Key Statistics Number of units 78 Start date Q4-2018 Estimated completion date Sept-2020 Project budget ($M) $22.0 Cost per unit $282,000 Expected yield 5.25-5.5% Expected value 4.75-5.0% *Killam’s 50% in
Slide 22: Development Activity, Charlottetown
Q2-2020 | Development Activity, Charlottetown Shorefront is scheduled for completion in September 2020 and is currently 25% pre-leased. *Killam’s 50% interest. Shorefront Development 22
Slide 23: Development Activity, Charlottetown
Q2-2020 | Development Activity, Charlottetown 10 Harley Street – 38-unit redevelopment in Charlottetown. Key Statistics Number of units 38 Latitude (Phase II) Start date Q3-2019 Estimated completion date Feb-2021 Project budget ($M) $10.4 Cost per unit $274,000 Expected yield 5.0-5.25% Expected valu
Slide 24: Development Activity, Calgary
Q2-2020 | Development Activity, Calgary Killam has a 10% interest in a 233-unit development project, Nolan Hill, in Calgary. Killam has a commitment to acquire the remaining 90% interest upon completion in Q1-2021. Key Statistics Number of units 233 Start date Q4-2019 Estimated Q1-2021 completion/pu
Slide 25: Development Activity, Ottawa
Q2-2020 | Development Activity, Ottawa Latitude (Phase II of Gloucester City Centre) Key Statistics Number of units 209 Start date Q2-2019 Estimated completion date Q4-2021 Project budget ($M)* $42.0 Cost per unit $402,000 Expected yield 4.75-5.0% Expected value cap-rate 4.0% Green Features: Sub-met
Slide 26: Development Activity, Ottawa
Q2-2020 | Development Activity, Ottawa Latitude, the second phase of the Gloucester City Centre development, is expected to be completed in late-2021. Frontier (Phase I) Completed in 2019 Latitude (Phase II) 26
Slide 27: Development Activity, Mississauga
Q2-2020 | Development Activity, Mississauga The Kay development broke ground in Q3-2019. Key Statistics Number of units 128 The Kay Start date Q3-2019 Estimated completion date Q1-2022 Project budget ($M) $57.0 Cost per unit $445,500 Expected yield 4.75-5.0% Expected value cap-rate 3.5% The Kay Silv
Slide 28: Development Activity, Mississauga
Q2-2020 | Development Activity, Mississauga The Kay 28 28
Slide 29: Development Activity, Mississauga
Q2-2020 | Development Activity, Mississauga The Kay, a 128-unit development, is expected to be completed in early 2022. 29
Slide 30: Development Activity, Ottawa
Q2-2020 | Development Activity, Ottawa Luma – 168-unit development in Ottawa 50/50 with Riocan REIT. Key Statistics Number of units 168 Latitude (Phase II) Start date Q3-2019 Estimated completion date Q1-2022 Project budget ($M)* $44.3 Cost per unit $527,000 Expected yield 4.0-4.25% Avg rent per squ
Slide 31: Development Activity, Kitchener
Q2-2020 | Development Activity, Kitchener Civic 66 – 169-unit development in Kitchener that broke ground in July 2020. Key Statistics Number of units 169 Start date Latitude (Phase II) Q3-2020 Estimated completion date Q3-2022 Project budget ($M) $69.7 Cost per unit $412,000 Expected yield 4.75-5.0%
Slide 32: Development Pipeline - ~$850 million
Q2-2020 | 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 (2) The Governor Halifax, NS 100% 12 In design and approval process 2023 West
Slide 33: 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 34: Appendices
Q2-2020 Appendices 34
Slide 35: Apt Performance | By Region: Nova Scotia, New Brunswick
Q2-2020 Apt Performance | By Region Nova Scotia New Brunswick Q2-2020 Q2-2020 % of NOI 34.3% % of NOI 19.0% Units 5,814 Units 4,631 Rental Rate Growth 3.5% Rental Rate Growth 3.5% 0.09% 0.05% Incentives/Discounts Incentives/Discounts (↓11 bps) (↓2 bps) 97.8% 97.9% Occupancy Occupancy (↓10 bps) (↑10
Slide 36: Apt Performance | By Region: Ontario, Alberta
Q2-2020 Apt Performance | By Region Ontario Alberta Q2-2020 Q2-2020 % of NOI 16.9% % of NOI 7.3% Units 2,557 Units 1,110 Rental Rate Growth 3.2% Rental Rate Growth 0.7% 0.11% 3.0% Incentives/Discounts Incentives/Discounts (↑5 bps) (↓70 bps) 95.9% 94.6% Occupancy Occupancy (↓150 bps) (↑390 bps) NOI G
Slide 37: Apt Performance | By Region: Newfoundland, PEI
Q2-2020 Apt Performance | By Region Newfoundland PEI Q2-2020 Q2-2020 % of NOI 4.3% % of NOI 4.7% Units 1,063 Units 1,072 Rental Rate Growth 1.2% Rental Rate Growth 1.4% 1.0% 0.03% Incentives/Discounts Incentives/Discounts (↑35 bps) (↑3 bps) 88.0% 99.4% Occupancy Occupancy (↓350 bps) (↑20 bps) NOI Gr
Slide 38: Results Conference Call
Q2-2020 RESULTS CONFERENCE CALL August 6, 2020 | 9AM EASTERN KILLAM APARTMENT REIT
Killam Apartment REIT — Q2 2020 Earnings Presentation on 6ix