Killam Apartment Reit · TSX:KMP.UN
Killam Apartment Reit — Investor Presentation (January 2024)
58 slides from Killam Apartment Reit's investor presentation, January 2024
Slide 1: Investor Presentation January 2024
INVESTOR PRESENTATION January 2024 1
Slide 2: Cautionary Statement
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", "will", "expec
Slide 3: Portfolio Statistics
PORTFOLIO STATISTICS NOI Contribution by Market (%) NOI by Segment as of Sept 30, 2023 KMP Established Regions KMP Expansion Regions 6% Apartments MHCs 6% 88% Commercial AB | 8.3% NL | 4.5% Calgary | Edmonton St. John’s ON | 25.2% Ottawa | London PEI | 6.0% BC | 3.6% Toronto | KWC Charlottetown Vict
Slide 4: Key Investment Highlights
KEY INVESTMENT HIGHLIGHTS Growth High Quality Proven Capital Experienced ESG Strategy Portfolio Results Flexibility Developer Leader Disciplined and 35% of NOI earned Track record of Defensive balance Value creation Purpose driven proven approach from properties solid operating sheet and through inn
Slide 5: Long-Term Growth Strategy
LONG-TERM GROWTH STRATEGY Increase earnings from existing Expand the portfolio portfolio and diversify geographically by focusing on increasing Develop high-quality rental revenue and investing through accretive in sustainable energy acquisitions and dispositions, properties efficiency investments t
Slide 6: Capital Allocation
CAPITAL ALLOCATION DEVELOPMENT Invest in developing high-quality energy efficient assets. ACQUISITIONS Acquire high-quality multi-residential assets. INTENSIFICATION Intensify existing assets with multi-residential developments. DISPOSITIONS Dispose of select properties to provide capital to strengt
Slide 7: Continued Geographic Diversification
CONTINUED GEOGRAPHIC DIVERSIFICATION 4% 23% With a focus on developing in primary markets and divesting out of slower 2018 markets, Killam could increase the number of units outside Atlantic Canada to almost 73% 50% of the portfolio in the next 5 years. (1) ATL 10% 3% 3% 5% 66% 55% ON BRITISH COLUMB
Slide 8: Proven Record of Strong Growth
PROVEN RECORD OF STRONG GROWTH Revenues ($M) Net Income ($M) Investment Properties ($B) Investment Properties under Construction Investment Properties $2.8 $3.3 $3.7 $4.5 $4.8 $5.0 $216 $242 $262 $291 $329 $261 $175 $284 $146 $286 $123 $266 2018 2019 2020 2021 2022 YTD 2018 2019 2020 2021 2022 YTD 2
Slide 9: FFO & AFFO Per Unit Growth
FFO & AFFO PER UNIT GROWTH Q3 FFO & AFFO Per Unit Same Property Portfolio For the three months ended Sept 30, 2023 Q3-2023 Q3-2022 8.1% 5.6% 0.7% $0.32 $0.31 $0.28 $0.27 Revenue Expense NOI FFO AFFO YTD FFO & AFFO Per Unit Same Property Portfolio For the nine months ended Sept 30, 2023 2023 2022 7.5
Slide 10: Performance Against Strategic Targets
PERFORMANCE AGAINST STRATEGIC TARGETS Target: Average 3.0%–5.0% Performance: Killam achieved same property NOI growth of 7.5% for the nine months ended September 30, 2023. Target: Sell a minimum of $100 million of non-core assets. Performance: Killam completed 11 dispositions totaling over 1,000 uni
Slide 11: Strategic Portfolio Growth
STRATEGIC PORTFOLIO GROWTH NOI Generated Outside Atlantic Canada 40% 36% 37% Killam will end 2023 32% 33% 30% 27% with ~37% of NOI 21% 23% 20% generated outside of 15% 12% Atlantic Canada. 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 YTD 2025 2023 Target Net Annual Portfolio Growth ($ millions)
Slide 12: High Quality Portfolio
HIGH QUALITY PORTFOLIO 22% 1-10 55% 33% 11-20 of Killam’s Units by Age 21-30 portfolio has (years) 31-40 17% been built in 41-50 the last 5% 13% 50+ 30 years 9% Weighted Average Age of Portfolio in Years, by Province 16 25 31 41 43 27 21 AB BC NB NL NS ON PEI 12
Slide 13: Low Exposure to Rent Controlled Markets
LOW EXPOSURE TO RENT CONTROLLED MARKETS Province Rent Control Limit Killam’s NOI Exposure (2) Only British Columbia 3.5% 3% 35% (2) Ontario 2.5% 25% of Killam’s NOI is generated from Prince Edward Island 3.0% 6% markets restricted by provincial rent Nova Scotia (1) 5.0% 32% control, allowing for str
Slide 14: Consistent Portfolio Growth
CONSISTENT PORTFOLIO GROWTH Total Apartment Average Monthly Rent by Quarter $1,400 $1,300 $1,200 $1,355 $1,100 $1,318 $1,304 $1,289 $1,279 $1,260 $1,242 $1,227 $1,212 $1,202 $1,193 $1,184 $1,162 $1,149 $1,138 $1,000 $1,126 $1,114 $1,103 $1,082 $1,076 $1,067 $1,037 $900 $800 Killam’s Portfolio Distri
Slide 15: Growing Market Rents
GROWING MARKET RENTS Killam continues to see growing rental rates across the portfolio as units turnover and renew. We expect to see further growth in the coming year as recent announcements in Nova Scotia have allowed for 5.0% increase on renewals in 2024. Apartments Same Property Rental Rate Growt
Slide 16: Top Line Growth Opportunities
TOP LINE GROWTH OPPORTUNITIES Mark-to-Market Rent Spread by Region Q4-2022 Q1-2023 Q2-2023 Q3-2023 38% 40% 27% 30% 21% 20% 20% 19% 16% 16% 20% 10% 10% 10% 6% 0% 0% Halifax Moncton Fredericton Saint John Ottawa London KWC/GTA PEI St. John's Calgary Edmonton Victoria Overall Mark-to-Market Opportunity
Slide 17: Trending Turnover
TRENDING TURNOVER Annual Tenant Turnover (%) 33.3% 31.5% 30.5% 28.7% 25.9% 22.1% 2017 2018 2019 2020 2021 2022 Killam’s turnover was Annual Tenant Turnover by Region 22% in 2022 50% and expect turnover 2021 2022 YTD Oct 2023 for 2023 to be ~20%. 40% 30% 20% 10% 38% 30% 36% 26% 30% 23% 27% 19% 25% 14
Slide 18: Strong Occupancy Across Apartment Portfolio
STRONG OCCUPANCY ACROSS APARTMENT PORTFOLIO Apt Same Property Occupancy(1) by Region Q3-2022 Q3-2023 99% 98% 98% 99% 99% 98% 99% 99% 99% 98% 97% 96% Apt Same Property Occupancy(1) Apartment Same Property Occupancy(1) 98.50% 99% 98% 97% 96% 95% 97.1% 97.3% 96.7% 97.0% 98.3% 98.5% 94% Q2/18 Q3/18 Q4/1
Slide 19: Consistent Growth from Existing Portfolio
CONSISTENT GROWTH FROM EXISTING PORTFOLIO Killam achieved total same property NOI growth of 8.1% in Q3-2023, its 38th consecutive quarter of positive NOI growth. YTD-2023 Same Property Apartment Revenue and NOI Growth by Market Revenue NOI 12.8% 10.5% 9.5% 8.2% 7.3% 5.4% 5.8% 5.6% 6.7% 5.9% 4.4% 4.5
Slide 20: Revenue Optimization from Existing Portfolio
REVENUE OPTIMIZATION FROM EXISTING PORTFOLIO Northfield Gardens - After 2023 Program 400 suite repositions ~$15M investment ~$2.5M annualized revenue growth Total Opportunity 5,500 suite repositions ~$180-190M investment ~$28M annualized revenue 304 suites repositioned YTD Northfield Gardens - Befor
Slide 21: Moderating Expense Growth
MODERATING EXPENSE GROWTH Total same property operating expenses were up 1.9% at September 30, 2023. The increase was driven a 3.5% increase in general operating expenses, and a 4.3% increase in utility and fuel expenses. These increases were offset by a 2.1% decrease in property taxes. Same Propert
Slide 22: Strong Commercial Segment Results
STRONG COMMERCIAL SEGMENT RESULTS Commercial Portfolio 949,879 SF Commercial Same Property NOI Growth Revenue NOI Other 17.6% 15.5% Brewery Westmount 9.7% 7.9% 7.4% Place, 5.9% Market, (0.8%) (2.7%) Waterloo (5.8%) (1.9%) Halifax Royalty Crossing, Charlottetown 2019 2020 2021 2022 YTD 2023 Total Com
Slide 23: Manufactured Home Communities (MHC)
MANUFACTURED HOME COMMUNITIES (MHC) MHC Same Property Portfolio For the nine months ended Sept 30, 2023 Permanent Seasonal Consolidated 7.1% 5.9% 4.3% 4.2% 4.1% 4.0% 3.9% NL 3.1% 2.4% ON NB NS Revenues Expenses NOI MHC Operating Margins Permanent MHC Seasonal Resorts 68% 66% 64% 62% Holiday Harbour,
Slide 24: High Quality Developments Completed
HIGH QUALITY DEVELOPMENTS COMPLETED More than $695 million of developments completed. 102 units - St. John’s, NL 101 units - Fredericton, NB 122 units - Cambridge, ON 94 units - Cambridge, ON 70 units - Halifax, NS 71 units - St. John’s, NL 78 units – Charlottetown, PE 47 units - Charlottetown 240 u
Slide 25: Killam's Development History
KILLAM’S DEVELOPMENT HISTORY Killam’s Development History ($ millions) $200 $150 $100 $50 $63 $22 $16 $25 $111 $38 $22 $65 $152 $178 $0 2013 2014 2015 2016 2018 2019 2020 2021 2022 2023 KILLAM DEVELOPMENTS COST PER UNIT ($000) $571 $476 $418 $412 $354 $329 $274 $282 $274 $251 $236 $234 $236 $214 $20
Slide 26: Future Development Pipeline
FUTURE DEVELOPMENT PIPELINE Killam has a development pipeline of over 4,000 units, with almost 70% of future projects located in Ontario and Western Canada. AB | 400 units Calgary NL | 350 units St. John’s BC | 312 units PEI | 495 units Victoria Charlottetown NS | 420 units Halifax ON | 1,750 units
Slide 27: Strong Leasing of New Developments
STRONG LEASING OF NEW DEVELOPMENTS Fully leased Latitude, Ottawa The Kay, Mississauga Luma, Ottawa 42% 67% 54% leased leased leased Governor, Halifax Civic 66, Kitchener Nolan Hill Phase 2, Calgary 27 (1) As of January 8, 2024.
Slide 28: New Development Completed – Nolan Hill 2
NEW DEVELOPMENT COMPLETED – NOLAN HILL 2 Nolan Hill 2 Calgary, AB Nolan Hill 2 is the 234 units second phase of a six-building complex, comprising Completed 234 units across Q4-2023 three buildings. $65.0 million Progress shots as of October 2023 (1) Killam has a $65.0 million commitment to purchase
Slide 29: New Development Completed – Governor
NEW DEVELOPMENT COMPLETED – GOVERNOR The Governor Halifax, NS 12 luxury suites $24.3 million Completed Q3-2023 EV Chargers 29
Slide 30: New Development Completed – Civic 66
NEW DEVELOPMENT COMPLETED – CIVIC 66 Civic 66 Kitchener, ON 169 units Completed Q2-2023 $69.8 million Geothermal PV Solar Panels EV Chargers 30
Slide 31: Development Underway – The Carrick
DEVELOPMENT UNDERWAY – THE CARRICK THE CARRICK– Broke ground on the 139-unit development in Waterloo in Q2-2022. WESTMOUNT PHASE 1 (The Carrick) Broke ground on the 139-unit development in Waterloo in Q2-2022. Progress shots as of January 2024 Key Statistics Number of units 139 Start date Q2-2022 Es
Slide 32: Innovative Developments
INNOVATIVE DEVELOPMENTS CIVIC 66 Geothermal heating & cooling Heat pumps for domestic hot water PV solar panels 52% less energy 67% fewer emissions 32
Slide 33: Geographic Repositioning Through Dispositions
GEOGRAPHIC REPOSITIONING THROUGH DISPOSITIONS Nova Scotia In 2023, Killam 2023 PEI 16% completed over Dispositions Ontario $168.7 million based on $ value New Brunswick in strategic dispositions Total Sales Value and Units Sold by Region ($ 000’s) Market Value Unit Count $80,000 400 $60,000 300 $40,
Slide 34: Successful Disposition Program
SUCCESSFUL DISPOSITION PROGRAM Disposition Sale Price Property Location Units Date ($ 000’s) 266 Bronson Ave Ottawa, ON Mar 17, 2023 $9,800 43 The James Halifax, NS April 21, 2023 $33,000 108 Browns & University Charlottetown, PEI May 12, 2023 $21,320 122 Kristin Way Ottawa, NS May 16, 2023 $17,850
Slide 35: Defensive Balance Sheet
DEFENSIVE BALANCE SHEET Increasing value of investment properties with conservative debt metrics. Total Debt as a % of Assets(1) Interest Coverage Ratio(2) Debt to Normalized EBITDA(3) % % % % % % 43.4% 44.6% 45.0% 45.3% 42.8% 3.20 3.36 3.53 3.31 3.11 10.15 10.78 11.33 11.21 10.51 % 2019 2020 2021 2
Slide 36: Mitigating Debt Exposure
MITIGATING DEBT EXPOSURE Apartment Mortgage Maturities by Year As at September 30, 2023 Mortgage Maturities ($) 5 year estimated CMHC-insured rate 10 year estimated CMHC-insured rate Weighted average interest rate (apartments) $500 5% $450 $400 4% $350 3.68% 3.56% $300 3.28% 3% 3.09% $250 2.94% 2.65
Slide 37: Commitment to Green
COMMITMENT TO GREEN Killam successfully completed its 5th annual GRESB submission Geothermal Level II PV Solar Committed to Building Systems EV Chargers Panels Affordability Certifications 409 chargers across 23 installations to date Over 1,000 units with a Over 5,400 units certified Installed at 6
Slide 38: Electric Vehicle Charging Program
ELECTRIC VEHICLE CHARGING PROGRAM 409 Electric Vehicle charging stations installed to date across 50 properties 2021 – 2023 electric vehicle charger deployment of 381 with a budget of $2 million ($5k/charger) and 50% funding from National Resources Canada Targeting 8-10% ROI In several provinc
Slide 39: Solar Program
SOLAR PROGRAM PV solar installed at 23 properties with total potential production of ~2,395 MWh/year (equal to 432 apartment units) 3 x Nova Scotia | 289 kW 7 x Ontario | 1,037 kW 1 x Alberta | 97 kW 12 x Prince Edward Island | 742 kW Projecting +5% of operationally controlled electricity fo
Slide 40: Sustainable Communities
SUSTAINABLE COMMUNITIES Killam works towards minimizing its impact on the environment by investing in sustainable solutions, renovations, and technologies. 40
Slide 41: Long-Term ESG Targets
LONG-TERM ESG TARGETS Environmental © Long-Term Targets Reduce GHG emissions 15% by 2030.” Reduce carbon intensity 15% by 2030. Produce a minimum of 10% of electricity” consumed by its portfolio through renewable energy sources by 2025. Pursue green building health and operating certifications acros
Slide 42: Affordability and Value Delivery
AFFORDABILITY AND VALUE DELIVERY Killam delivers affordable, safe, clean and high-quality housing to our residents across Canada: 2023 Resident Survey Results(1) 52% of Killam’s portfolio rents for less than $1,200 per month. 82% of residents are pleased with the Average rent is $1.44 per SF acr
Slide 43: 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 44: Appendices
7 . Appendices .
Slide 45: Canadian Landscape
CANADIAN LANDSCAPE Population Growth in Canada Population growth Annual Immigration Target Population The Canadian Mortgage Housing 800,000 41,000,000 Corporation(CMHC) projects that Canada 600,000 39,000,000 will need to build an additional 400,000 37,000,000 3.5 million units by 200,000 35,000,000
Slide 46: Population Growth Across Canada
POPULATION GROWTH ACROSS CANADA Canada’s T H Epopulation S E V E N P increased U B L I C M by U L 430,635 T I - F A M people I L Y R E in S I Q3-2023, D E N T I A Loutpacing R E I T S Mhome starts. AKE U P 6 . 7 % O F T H E T O TA L C A N A D I A N R E N TA L M A R K E T 46
Slide 47: National Housing Completions
NATIONAL HOUSING COMPLETIONS T Haverage 10-year E S E V Eof184,000 N P U B L I C M U Lhouses T I - FA M I L Y R E S I per completed D E Nyear TIAL REITS MAKE UP 6 . 7 % O F T H E T O TA L C A N A D I A N R E N TA L M A R K E T Canada’s Housing Completions by Year 300,000 Condos Completions Rental Co
Slide 48: Interprovincial Migration by Province
INTERPROVINCIAL MIGRATION BY PROVINCE • International migration was the largest source of population growth for Halifax and all its benchmark cities in 2022. • Interprovincial migration’s contribution to population growth was much stronger in Halifax at 38.8% and Calgary at 21.9%. On the other hand,
Slide 49: Halifax: Second Fastest Growing City in Canada
HALIFAX: SECOND FASTEST GROWING CITY IN CANADA • In 2022, Halifax was the second-fastest growing city in Canada, behind Moncton, with population growing at a rate of 4.4% from July 1, 2021 to July 1, 2022 (+20,713). • Vacancy at historic lows in Halifax as demand for housing outpaces new rental supp
Slide 50: Halifax Supply vs. Population Growth
HALIFAX SUPPLY VS. POPULATION GROWTH Home Starts to Population Growth – Halifax Population growth Home Starts Vacancy Rate (CMHC) 25,000 10% 9% 20,000 8% 7% 15,000 6% 5% 10,000 4% 3% 5,000 2% 1% 0 0% Source: Canadian Mortgage Housing Corporation 50
Slide 51: Halifax | Growth by Source
HALIFAX | GROWTH BY SOURCE Halifax population rose to 480,523 in 2022, representing 47% of the provincial population Halifax experienced population growth of over 20,000 in 2021-22 Interprovincial migration overtakes international migration as source of growth Halifax Population Growth by Sour
Slide 52: Halifax | Permanent Residents
HALIFAX | PERMANENT RESIDENTS India top source of new permanent residents • India remains number one source of new permanent residents in Halifax • India and China together accounted for almost half of 2021 figure 52
Slide 53: Halifax | Age Profile
HALIFAX | AGE PROFILE 5k 2013 ie Ih 2014 2015 POPULATION GROWTH BY AGE Net Persons, Halifax, 2013 to 2022 2016 @ 0tc% @ 15to29 2017 2018 Source: Statistics Canada, Annual Demographic Estimates, Table 17-10-0135-01 2019 2020 9) 30to44 © 45054 @ 55t064 © 65+ rae Killam a. APARTMENT REIT 2021 2022 53
Slide 54: Halifax | Age Profile
ru HALIFAX | AGE PROFILE r4eKillam a. APARTMENT REIT MIGRATION BY AGE Net Migrants, Halifax, 2021-22 Wk o 6 0-14 15-29 30-44 45-54 Age Group 65+ ©@ International © Interprovincial = Intraprovincial Source: Statistics Canada, Annual Demographic Estimates, Table 17-10-0136-01 54
Slide 55: Halifax Housing Fundamentals
HALIFAX HOUSING FUNDAMENTALS New supply has been absorbed by population growth from immigration, migration, and shift in apartment rental demand. Halifax Halifax Housing Starts - Apt & Single Housing Starts & Vacancy Trend Total Apartments Total Singles Average Total Starts Total Starts Vacancy (CMH
Slide 56: New Brunswick Population Growth
NEW BRUNSWICK POPULATION GROWTH Moncton had the highest growth rate among Canadian cities, growing at a rate of 5.3% between July 1, 2021 and July 1, 2022. Moncton, Saint John & Fredericton Population Growth 2020-21 Saint John & Moncton Population Annual (July 1- June 30) Growth by Source Moncton Fr
Slide 57: New Brunswick Housing Fundamentals
NEW BRUNSWICK HOUSING FUNDAMENTALS New supply has been absorbed by population growth from immigration, migration, and shift in apartment rental demand. Saint John, Moncton, Fredericton Saint John, Moncton, Fredericton Housing Starts - Apt & Single Housing Starts & Vacancy Trend Total Apartments Tota
Slide 58: Investor Presentation
INVESTOR PRESENTATION January 2024 58
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