Killam Apartment Reit · TSX:KMP.UN
Killam Apartment Reit — Investor Presentation (June 2023)
42 slides from Killam Apartment Reit's investor presentation, June 2023
Slide 1: Investor Presentation
INVESTOR PRESENTATION June 2023 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 Best-in-class multi-family residential owner, operator and developer NOI Contribution by Market NOI by Segment as of March 31, 2023 (%) Apartments 4% 91% MHCs 6% Commercial AB | 8.4% NL | 4.8% Calgary | Edmonton St. John’s ON | 24.9% BC | 3.8% Ottawa | London PEI | 6.1% Victoria
Slide 4: Why Invest in Killam
WHY INVEST IN KILLAM Growing the portfolio and expanding geographically through Solid Operating Performance accretive acquisitions, growing FFO, AFFO and NAV per unit One of Canada’s highest-quality and youngest apartment High Quality Portfolio portfolios with 33% of NOI generated from apartments bu
Slide 5: Long-Term Growth Strategy
LONG-TERM GROWTH STRATEGY 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 high- quality properties
Slide 6: 2023 Strategy Targets
2023 STRATEGY TARGETS Target: Average 3.0%-5.0% Killam achieved 6.3% same property NOI growth in Q1. Based on results achieved to date, Killam expects same property NOI growth in 2023 to exceed 5.0%. Target: Sell a minimum of $100 million of non-core assets. Year-to-date Killam has completed $82 mil
Slide 7: Proven Record of Strong Growth
PROVEN RECORD OF STRONG GROWTH Revenues ($M) Net Income ($M) Investment Properties ($B) Investment Properties under Construction Investment Properties $2.8 $3.3 $3.7 $4.5 $4.8 $4.8 $216 $242 $262 $291 $329 $175 $284 $146 $286 $123 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 2018 2019 2020 2021
Slide 8: Capital Allocation
CAPITAL ALLOCATION DEVELOPMENT Invest in developing high-quality energy efficient assets. ACQUISITIONS Acquire high-quality multi-residential assets. JV INVESTMENT Invest in joint development opportunities to maximize growth potential. DISPOSITIONS Dispose of select properties to provide capital to
Slide 9: FFO & AFFO Per Unit Growth
FFO & AFFO PER UNIT GROWTH Same Property Portfolio For the three months ended March 31, 2023 6.3% 5.4% 4.1% Revenue Expense NOI Q1 FFO & AFFO Per Unit Q1-2023 Q1-2022 $0.25 $0.24 $0.21 $0.20 FFO AFFO 9 Luma, Ottawa – 168 units
Slide 10: Consistent Growth from Existing Portfolio
CONSISTENT GROWTH FROM EXISTING PORTFOLIO Overall, same property NOI grew by 6.3% and Killam's operating margin expanded by 50 bps for the three months ended March 31, 2023 Q1-2023 Same Property Apartment Revenue and NOI Growth by Market Revenue NOI 13.2% 13.7% 8.5% 6.9% 7.7% 6.4% 6.1% 5.5% 5.4% 6.3
Slide 11: Revenue Optimization
REVENUE OPTIMIZATION Northfield Gardens - After 2023 Program 450 suite repositions ~$15M investment ~$2.5M annualized revenue growth Total Opportunity 5,500 suite repositions ~$180-190M investment ~$28M annualized revenue 107 suites repositioned in Q1-2023 Northfield Gardens - Before 11
Slide 12: Strong Occupancy Across Apartment Portfolio
STRONG OCCUPANCY ACROSS APARTMENT PORTFOLIO Apt Same Property Apartment Same Property Occupancy(1) Occupancy(1) 98.60% 99% 98% 97% 96% 95% 97.1% 97.3% 96.7% 97.0% 98.3% 98.6% 94% 2018 2019 2020 2021 2022 Q1-2023 Apt Same Property Occupancy(1) by Region Q1-2022 Q1-2023 99% 99% 98% 98% 99% 99% 99% 99%
Slide 13: Growing Market Rents
GROWING MARKET RENTS Apartments Same Property Rental Rate Growth by Quarter Upon Lease Renewal For tenants with lease renewals in Q1, For new tenants moved in during Q1, Upon Unit Turn rents increased by 2.3%. rents increased 14.3% Combined Average Increase % 12% 10% 8% Q1-2023 weighted average 4.3%
Slide 14: 2023 Rent Control by Province
2023 RENT CONTROL BY PROVINCE Province(1) Apartments MHCs 2023 2023 British Columbia 2.0% 2.0% Ontario(2) 2.5% 1.2% Nova Scotia(3) 2.0% 2.2% Prince Edward Island 0% 1.0% New Brunswick None 3.8% Newfoundland None None Alberta None None Manitoba 0% None Saskatchewan None None Quebec(4) Note 4 Note 4 (
Slide 15: Fuel Costs Driving Expense Growth
FUEL COSTS DRIVING EXPENSE GROWTH Despite total same property operating expenses up 4.1% in Q1-2023 as a result of higher utility and fuel expenses; following a strong Q1, Killam has increased its 2023 NOI target to exceed 5% (from 3%-5%). Same Property Expense Growth 8.2% 8.0% 4.1% 3.0% 1.9% (0.1%)
Slide 16: Debt Ladder
DEBT LADDER Apartment Mortgage Maturities by Year As at March 31, 2023 Mortgage Maturities ($) 5 year estimated CMHC-insured rate 10 year estimated CMHC-insured rate Weighted average interest rate (apartments) 5% $350 $300 4% $250 3.48% 3.55% 3% $200 2.97% 2.85% 2.70% 2.55% $150 2.35% 2% 2.06% $100
Slide 17: Strong Balance Sheet
STRONG BALANCE SHEET Increasing value of investment properties with conservative debt metrics. Interest Coverage Ratio(2) Debt to Normalized EBITDA(3) Total Debt as a % of Assets(1) 47% 45% 43% 41% 39% 37% 3.20 3.36 3.53 3.31 3.20 10.15 10.78 11.33 11.21 11.08 43.4% 44.6% 45.0% 45.3% 44.6% 35% 2019
Slide 18: Commercial
COMMERCIAL Total commercial occupancy increased 270 bps in Q1-2023 to 95.1%. Killam's commercial property portfolio contributed $2.9 million, or 5.6% of Killam's total NOI for the three months ended March 31, 2023. Same Property Commercial NOI Growth Revenue NOI 17.6% 11.8% 9.1% 7.4% 7.9% 5.9% (1.9%
Slide 19: Manufactured Home Communities (MHC)
MANUFACTURED HOME COMMUNITIES (MHC) Same Property MHC NOI Growth Revenue NOI 9.3% 6.8% 6.0% 5.8% NL 3.5% 3.2% 2.6% 1.3% (0.8%) (0.2%) ON NB NS 2019 2020 2021 2022 Q1-2023 MHC Site Count 5,975 5,975 5,875 5,875 5,786 5,427 Holiday Harbour, Ontario 5,165 Camper’s City, New Brunswick 19
Slide 20: Accretive Acquisitions
ACCRETIVE ACQUISITIONS NOI Generated Outside Atlantic Canada 40% In 2022, 35.8% of Killam’s 36% 32% 33% NOI was generated outside 30% 27% of Atlantic Canada. 21% 23% 20% 15% 12% 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2025 Target Annual Acquisitions ($ millions) $315 $399 Average $135M $20
Slide 21: Capital Investment
CAPITAL INVESTMENT Total Capital Investment ($M/yr) Capital Investment per Apt Unit ($) $6,000 $100 $5,000 $80 $4,000 $60 $3,000 $40 $20 $2,000 $0 $1,000 2017 2018 2019 2020 2021 2022 $0 2017 2018 2019 2020 2021 2022 2022 Capital Investment Commercial 7% Suite Renovations Curb Appeal 31% 6% Energy 7
Slide 22: Capital Projects: Quinpool Towers, Halifax
CAPITAL PROJECTS Quinpool Towers, Halifax Fitness Center Before 2022 retrofit After 2022 retrofit Social Room 22
Slide 23: Capital Projects: Brentwood and Belvedere
CAPITAL PROJECTS Brentwood, Halifax Belvedere, Charlottetown Before recladding Before recladding Recladding in progress After recladding 23
Slide 24: High Quality Developments Completed
HIGH QUALITY DEVELOPMENTS COMPLETED More than $450 million of developments completed. 101 units - Fredericton, NB 122 units - Cambridge, ON 94 units - Cambridge, ON 70 units - Halifax, NS 102 units - St. John’s, NL 71 units - St. John’s, NL 78 units – Charlottetown, PE 47 units - Charlottetown 63 un
Slide 25: Strong Leasing of New Developments
STRONG LEASING OF NEW DEVELOPMENTS 100% Latitude, Ottawa 100% The Kay, Mississauga 96% Luma, Ottawa leased (1) leased (1) leased (1) 208 suites | January 2022 128 suites | April 2022 168 suites | June 2022 In 2023, these developments are expected to contribute approximately $5.7 million to NOI and $
Slide 26: Strong Development Leasing: The Kay
STRONG DEVELOPMENT LEASING THE KAY The Kay Leasing Activity Avg Rent: $3.04/ft2 24% 52% 73% 93% 100% 26
Slide 27: Strong Development Leasing: Latitude
STRONG DEVELOPMENT LEASING LATITUDE Avg Rent: $3.05/ft2 Geothermal 17,500 ft2 heating and of amenity cooling space LATITUDE – 208-unit development in Ottawa adjacent to the Frontier 27
Slide 28: Strong Development Leasing: Luma
STRONG DEVELOPMENT LEASING LUMA Luma Leasing Activity Avg Rent: $2.82/ft2 96% 84% 67% 50% 42% 26% Aug 22 Sept 22 Oct 22 Dec 22 Mar 23 May 23 LUMA – 168-unit development in Ottawa 28
Slide 29: Development Progress
DEVELOPMENT PROGRESS Killam currently has three developments underway, which will add an additional 320 new high-quality suites to Killam’s portfolio in the next two years.(1) Governor | 12 units Civic 66 | 169 units The Carrick | 139 units Halifax Kitchener Waterloo (1) Cost $24M $70M $84M Q2-2023
Slide 30: Development Activity – Halifax: The Governor
2022 | DEVELOPMENT ACTIVITY – HALIFAX THE GOVERNOR Luxury suites adjacent to existing properties; The Alexander & Brewery Market Key Statistics Number of units 12 Start date Latitude (Phase II) Q1-2021 Est. completion date Q2-2023 Project budget ($M) $24.3 Expected yield 4.00%-4.25% THE ALEXANDER Ex
Slide 31: Development Activity – Halifax
2022 | DEVELOPMENT ACTIVITY - HALIFAX The Governor - 12 luxury suites and 3,500 square foot ground floor commercial development in downtown Halifax Progress shots as of February 2023 31
Slide 32: Development Progress – Kitchener
2022 | DEVELOPMENT PROGRESS - KITCHENER Green features: - Sub-metered water - PV solar panels - Air-to-Water heat pumps - Geothermal heating & cooling Key Statistics Number of units 169 Start date Q3-2020 Est. completion date Q2-2023 Project budget ($M) $69.7 Cost per unit $412,000 Expected yield 4.
Slide 33: Development Activity – Waterloo
2022 | DEVELOPMENT ACTIVITY – WATERLOO WESTMOUNT PHASE 1 (The Carrick) – Broke ground on the 139-unit development in Waterloo in Q2-2022. Key Statistics Number of units 139 Start date Q2-2022 Est. completion date Q1-2025 Project budget ($M) $83.5 Cost per unit $601,000 Expected yield 4.00%-4.25% Exp
Slide 34: Disposition Activity
2022 | DISPOSITION ACTIVITY Killam is focused on identifying dispositions that will maximize value for our Unitholders and strengthen our balance sheet. These strategic dispositions are accretive to both NAV and FFO per unit and enhances capital flexibility. 2023 Target To recycle $100-150 million o
Slide 35: Affordability and Value Delivery
AFFORDABILITY AND VALUE DELIVERY Killam delivers affordable, safe, clean and high-quality housing to our residents across Canada: 52% of Killam’s portfolio rents for less than $1,200 per month. Average rent is $1.44 per SF across the portfolio. Killam supports affordable housing with more than
Slide 36: Commitment to Green
COMMITMENT TO GREEN 75 Knightsridge, Halifax Civic 66, Waterloo Increasing earnings from operations through energy efficiency. Includes increasing the installations of photovoltaic solar panels, smart metering, decreasing peak electric demand, water conservation projects and heating efficiencies at
Slide 37: Commitment to Green
COMMITMENT TO GREEN Killam earned a green, three-star designation for the 2022 GRESB real estate assessment. Killam achieved a 15% score improvement from its 2021 rating. Killam has also maintained its GRESB Public Disclosure survey rating of "A”. Geothermal Level II PV Solar Committed to Buil
Slide 38: Solar
SOLAR As of January 2023, a total of 18 online projects with 1,781 MWh of annual production – equivalent to the average annual consumption of ~171 single family homes $3.3M total capital invested in solar to date 8% estimated ROI in Year 1 based on expected annual production Four projects online for
Slide 39: Sustainable Communities
SUSTAINABLE COMMUNITIES Killam works towards minimizing its impact on the environment by investing in sustainable solutions, renovations, and technologies. 39 39
Slide 40: Long-Term Targets
LONG-TERM 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 across a m
Slide 41: 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 42: Investor Presentation
INVESTOR PRESENTATION May 2023 42
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