Killam Apartment Reit · TSX:KMP.UN
Killam Apartment Reit — Q1 2022 Earnings Presentation
32 slides from Killam Apartment Reit's earnings presentation, May 5, 2022
Slide 1: Q1-2022 Results Conference Call
Q1-2022 RESULTS CONFERENCE CALL May 5, 2022 | 9AM Eastern
Slide 2: Cautionary Statement
Q1-2022 | 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", "wil
Slide 3: Strategic Targets
Q1-2022 | Strategic Targets Grow Same Property NOI Grow •2022 Target: 2.0% - 3.0% •2022 Performance to-date: 3.1% Expand the Portfolio through Acquisitions Expand •2022 Target: Acquire a minimum of $150M. •2022 Performance to-date: $60.5 million, with a commit to acquire an additional $55.6 million
Slide 4: Financial Highlights
Q1-2022 | Financial Highlights $60.0M 43.3% 76% Net Income Total Debt as a % of Total AFFO payout ratio(4) $60.0 million, an increase of $32.6 Assets (2) AFFO payout ratio (rolling 12 million from Q1-2021 from fair Retaining a conservative balance months) was 76%, a 500-basis value gains realized on
Slide 5: Financial Highlights
Q1-2022 | Financial Highlights Same Property Portfolio Performance Q1 FFO & AFFO Per Unit For the three months ended March 31, 2022 Q1-2022 Q1-2021 5.1% 8.2% 3.1% $0.24 $0.23 $0.20 $0.19 Revenue Expense NOI FFO AFFO Same Property NOI growth is a result of rental rate growth from FFO and AFFO growth
Slide 6: Apartment Financial KPIs
Q1-2022 | Apartment Financial KPIs Apt Same Property Avg Rental Apt Same Property Apt Same Property Rate Increase Occupancy(1) Incentive Offerings(2) 0.4% 0.4% 0.5% 0.5% 0.6% 0.7% 0.7% 0.8% 0.7% 2.2% 2.9% 3.4% 3.3% 3.3% 96.8% 97.1% 97.6% 95.8% 98.0% Q1-2018 Q1-2019 Q1-2020 Q1-2021 Q1-2022 Q1-2018 Q1
Slide 7: Financial Highlights
Q1-2022 | Financial Highlights Total same property operating expenses were up 8.2% in Q1-2022. The increase was driven by a 21.2% increase in utility and fuel expenses due to increased natural gas prices and a colder winter in 2022. Same Property Expense by Category ($M) Same Property Expense Growth
Slide 8: Debt Ladder: Apartment Mortgage Maturities by Year
Q1-2022 | Debt Ladder Apartment Mortgage Maturities by Year As at March 31, 2022 Mortgage Maturities Weighted Average Interest Rate (Apartments) $375 5 year estimated CMHC insured interest rate 3.8% 6% 10 year estimated CMHC insured interest rate 3.9% 5% $300 Mortgage Maturities ($M) 4% $225 3.23% 2
Slide 9: Conservative Debt Metrics
Q1-2022 | Conservative Debt Metrics Increasing value of investment properties with conservative debt metrics. Total Debt as a % of Assets(1) Interest Coverage Ratio(2) Debt to Normalized EBITDA(3) 55% 50% 45% 40% 49.8% 43.4% 44.6% 45.0% 43.3% 3.22 3.20 3.36 3.53 3.58 10.62 10.15 10.78 11.33 10.94 35
Slide 10: Focus on Long-Term Growth Drivers
Q1-2022 | Focus on Long-Term Growth Drivers Q1-2022 NOI Contribution by Market (%) AB | 8.7% NL | 4.7% Calgary | Edmonton St. John’s BC | 2.7% Victoria PEI | 6.0% Charlottetown NS | 35.4% Halifax ON | 22.7% NB | 19.8% Ottawa | London Moncton | Fredericton Toronto | KWC Saint John Killam’s strategy t
Slide 11: Revenue Optimization
Q1-2022 | Revenue Optimization Revenue growth through suite repositions to meet market demand and optimize NOI growth and investment returns. Data driven decisions on leasing, unit renewals and turns to optimize mark-to-market opportunities Q1-2022 Same Property Revenue Growth by Suite Repositioning
Slide 12: Expense Management
Q1-2022 | Expense Management Increasing earnings from operations through: Focused economies of scale strategies and process improvement Risk management plans Continual property tax appeals Employee investment and training Property-level NOI enhancing technology Energy efficiency projects
Slide 13: Sustainable Communities
Q1-2022 | Sustainable Communities 13
Slide 14: Killam's 2021 ESG Highlights
Killam’s 2021 ESG Highlights 14
Slide 15: Killam's Commitment to ESG
Killam’s Commitment to ESG 2021 ESG Report Showcases our progress on our ESG long-term targets. Addresses all our material ESG topics. Highlights our 2021 work to enhance sustainability through our company, employees and residents. Details our climate-related oversight and future plans. Al
Slide 16: Acquisitions
Q1-2022 | Acquisitions Annual Acquisitions ($ millions) $399 Acquisitions Not closed $315 $200 $200 $211 $191 $167 $116 $160 $125 $115 $106 $121 $55 $103 $16 $85 $72 $3 $54 $61 $45 $36 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 YTD 2022 NOI Ge
Slide 17: Acquisition in Victoria, BC
Q1-2022 | Acquisition in Victoria, BC Craigflower House | Victoria 49 units | 100% occupied Avg Monthly Rent $1,123 per unit Acquisition Details: $14 million ($286,000/unit) 3.0% capitalization rate Acquisition date: March 31, 2022 17
Slide 18: Acquisition in Guelph, ON
Q1-2022 | Acquisition in Guelph, ON 671 & 665 Woolwich | Guelph 84 units | 98% leased Avg Monthly Rent $1,218 per unit Acquisition Details: $25.0 million • $21.0 million ($250,000/unit) • $4.0 million – development land 3.2% capitalization rate Acquisition date: April 29, 2022 18
Slide 19: Acquisition in Courtenay, BC
Q1-2022 | Acquisition in Courtenay, BC The Shores| Courtenay 94 units | 100% leased Avg Monthly Rent $1,641 per unit Acquisition Details: $33.7 million ($359,000/unit) 3.94% capitalization rate Expected closing: May 18, 2022 1849 & 1876 Riverside Lane, Courtenay 19 19
Slide 20: Acquisition in Courtenay, BC
Q1-2022 | Acquisition in Courtenay, BC The Residences | Courtenay 56 units | 100% leased Courtenay- Avg Monthly Rent $1,608 per unit Comox Vancouver Victoria Acquisition Details: $21.9 million ($391,000/unit) 3.75% capitalization rate Expected closing: May 18, 2022 621 Crown Island Blvd, Courtenay 2
Slide 21: Strong Leasing of Developments Continue
Q1-2022 | Strong Leasing of Developments Continue Latitude | 209 units The Kay | 128 units Luma | 168 units Opened Jan 2022 Opened April 2022 Opening June 2022 The above three developments are leasing ahead of expectations. They are forecasted to contributed $2.2 million to NOI in 2022 and over $5.5
Slide 22: Development Progress
Q1-2022 | Development Progress With Latitude and The Kay now open, Killam had three developments underway, which will add an additional 265 new high-quality suites to Killam’s portfolio in the next nine months.(1) Latitude | 104 units (2) The Kay | 128 units Luma | 84 units(2) Governor | 12 units Ci
Slide 23: Development Activity - Ottawa
Q1-2022 | Development Activity - Ottawa LUMA – 168-unit development in Ottawa that is expected to be completed in mid-2022. Key Statistics Number of units 168 Estimated completion date Q2-2022 Project budget ($M)(1) $45.8 Cost per unit $545,000 Expected yield 4.0%-4.25% Expected value cap-rate 3.5%
Slide 24: Development Activity – The Governor, Halifax
Q1-2022 | Development Activity – The Governor, Halifax Key Statistics Number of units 12 Start date Q1-2021 Latitude (Phase Est. completion date II) Q3-2022 Project budget ($M) $22.8 Expected yield 4.25%-4.75% Expected value cap-rate 3.5% GREEN FEATURES: Sub- metered water, geothermal Avg unit size
Slide 25: Development Activity – The Governor, Halifax
Q1-2022 | Development Activity – The Governor, Halifax THE GOVERNOR - 12 luxury suites and 3,500 square foot ground floor commercial development in downtown Halifax. THE GOVERNOR Progress shots as of April 2022 25
Slide 26: Development Activity - Kitchener
Q1-2022 | Development Activity - Kitchener CIVIC 66 – 169-unit development in Kitchener that broke ground in Q3-2020 and is expected to be completed by Q1-2023. Latitude (Phase II) Key Statistics Number of units 169 GREEN FEATURES: Sub- metered water, geothermal Start date Q3-2020 heating and coolin
Slide 27: Development Activity - Kitchener
Q1-2022 | Development Activity - Kitchener CIVIC 66 – 169 suites - progress photos as of April 2022 GREEN FEATURES: Sub- metered water, geothermal heating and cooling 27
Slide 28: Future Development Activity – Waterloo
Q1-2022 | Future Development Activity – Waterloo WESTMOUNT PHASE 1 (CARRICK) – Expect to break ground on the 139-unit development in Waterloo in Q2-2022. Key Statistics Number of units 139 Est. start date Q2-2022 Est. completion 2024 date 28
Slide 29: Future Development Activity - Halifax
Q1-2022| Future Development Activity - Halifax EVENTIDE & AURORA – Expect to break ground on the two building, 120-unit development in Halifax in mid-2022. Eventide & Aurora, exterior renderings Key Statistics Number of units 120 Est. start date 2022 Est. completion date 2024 29
Slide 30: Robust Development Pipeline - ~$1.7 billion
Q1-2022 | Robust Development Pipeline - ~$1.7 billion Future Development Opportunities Killam’s Potential # of Est Year of Property Location Interest Units(1) Status Completion Developments expected to start in 2022 Westmount Place Phase 1 Waterloo, ON 100% 139 As-of-right permit submission complete
Slide 31: 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 32: Q1-2022 Results Conference Call
Q1-2022 RESULTS CONFERENCE CALL May 5, 2022 | 9AM Eastern
Killam Apartment REIT — Q1 2022 Earnings Presentation on 6ix