Killam Apartment Reit · TSX:KMP.UN
Killam Apartment Reit — Q3 2017 Earnings Presentation
23 slides from Killam Apartment Reit's earnings presentation, Nov 8, 2017
Slide 1: Killam Apartment REIT Q3-2017 Results Conference Call
Killam Apartment REIT Q3-2017 Results Conference Call November 8, 2017 11am Eastern 1
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: 2017 Strategic Targets: Solid Progress
Killam Apartment Solid Progress REIT 2017 Strategic Targets Towards 3.2% Same Property NOI growth in the Grow Same Property NOI by 1% to 3% first nine months of 2017 Acquire a minimum of $75 million of $180 million of assets purchased or assets agreed to acquire 79% of acquisitions completed in 2017
Slide 4: Financial Highlights – Q3-2017
Financial Highlights Highlights – Q3-2017 from Q4-2015 • Generated funds from operations (FFO) per unit of $0.25, 4.2% ahead of Q3-2016 • Adjusted funds from operations (AFFO)* of $0.21, 10.5% higher than Q3-2016 • Managed debt to 51.4% of assets and increased interest coverage to 3.12x • Increased
Slide 5: Financial Highlights – FFO Per Unit Growth
Financial 9.7% FFOHighlights Per Share–Growth Q3-20172015 • FFO/unit is ahead of Q3-2016 due to strong operating performance Q3 FFO & AFFO Per Unit Debt as a Percentage of Assets AFFO FFO 53.2% 53.5% $0.25 51.4% $0.24 $0.21 $0.19 Q3-2016 Q3-2017 YTD FFO & AFFO Per Unit Interest Coverage Ratio AFFO F
Slide 6: Financial Highlights – Q3-2017
Killam Apartment Financial HighlightsREIT – Q3-2017 • Same property revenues are ahead of • Total Occupancy up 110 bps the prior year periods due to stronger − Calgary – 500 bps occupancy and higher rents − Saint John – 370bps − Fredericton – 290bps − Halifax – 140bps Historic Same Property 97.0% Sa
Slide 7: Same Property Results
Financial Highlights – Q3-2017 Same Property Results Three and nine months ended September 30, 2017 4.9% 2.9% 0.5% 3.2% 2.1% (0.6%) Q3 YTD Revenue Expenses NOI 7
Slide 8: Historical Revenue and NOI Growth
Financial Highlights – Q3-2017 Historical Revenue and NOI Growth Revenue NOI Benefited from lower heating 10.0% fuel prices and consumption due to warmer than normal 8.0% winter weather 6.0% 4.0% 2.0% % Growth 0.0% Sep 12 Jul 13 Sep 13 Jul 14 Sep 14 Jul 15 Sep 15 Jul 16 Sep 16 Jul 17 Sep 17 May 13 M
Slide 9: Financing Activity: Apartment Mortgage Maturities by Year
Financial Highlights – Financing Activity Apartment Mortgage Maturities by Year As at September 30, 2017 Mortgage Maturities Weighted Average Interest Rate (Apartments) 5 year rate 10 year rate $275 8% 7% $225 Mortgage Maturities ($M) 6% $175 5% Interest Rate $125 3.54% 4% 3.28% 2.88% 2.98% 2.48% 2.
Slide 10: Killam's Apartment Strategy for Growth
Killam Killam’sApartment Strategy forREIT Growth Killam’s strategy to maximize value and profitability is focused on three priorities: #1 #2 #3 Increasing earnings from Expanding the portfolio and Developing high-quality existing portfolio diversifying geographically properties in its core markets t
Slide 11: Increasing Revenues to Grow NOI
Increasing Revenues to Grow NOI 2017 Same Property Performance Revenue Growth NOI Growth 16.4% 8.4% 9.9% 5.4% 5.5% 5.6% 4.8% 3.8% 3.0% 3.0% 1.9% 2.5% 1.9% 4.8% 0.3% 0.6% (1.3%) (1.7%) 11
Slide 12: Managing Expenses to Grow NOI
Killam Apartment Managing ExpensesREIT to Grow NOI a 30 cent reduction in $/F2 = $4.3M in expenses = 6 cents in FFO/Unit Five Year Plan 2017 – 2021 Energy and Water Project Budget and Energy Intensity $/SF $3,750 $1.50 $3,000 $1.40 $2,250 $1.30 Energy Intensity ($/SF) Energy Project Budget $1,500 $1
Slide 13: Managing Expenses – Kanata Lakes, Ottawa
Managing Expenses – Kanata Lakes, Ottawa The Property • Five-building, 739-unit property, with a shared clubhouse • Constructed – 2011 – 2017 The Project • Retrofit 2,036 fixtures with LED bulbs • Energy Savings – 66kW/annum • Capital investment – $136,000 • Annualized savings – $69,000 • Payback –
Slide 14: Recap of 2017 Acquisitions
Killam Recap Apartment REIT of 2017 Acquisitions • Killam has acquired ~$180 million of apartments and development sites in 2017 Acquisition Cost Property City Units ($ millions) Spruce Grove Calgary, AB 66 $12.8 Kanata Lakes Ottawa, Ont 134 $49.2 Innovation Drive Halifax, NS 134 $31.6 Waybury Park
Slide 15: The Alexander, Halifax
The Alexander, Halifax Rental Units: 240 units, 6,500 sf of retail space Ownership: Killam 50%, Partners 50% Start Date: Q3-2015 Projected Completion: Podium level completed October 1, 2017, tower completion in Q2-2018 Location: Downtown Halifax across from the waterfront Cost: $37 million (Killam’s
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Slide 17: Future Developments: Saginaw Park, Cambridge
Future Developments Saginaw S a g i n a w 2 ,Park, Cambridge Cam bri dge , O N Rental Units: 93 units Start Date: Q3-2016 Projected Completion: Q2-2018 Location: Adjacent Saginaw Gardens, Saginaw Parkway, Cambridge Cost: $25.5 million ($274,000/door) Expected Yield: 5.4% Expected Value: 4.75% cap ra
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Slide 19: Gloucester City Centre (Phase 1), Ottawa
Gloucester City Centre (Phase 1), Ottawa Rental Units: 227 units Ownership: Killam 50%, RioCan 50% Start Date: Q2-2017 Projected Completion: mid-2019 Location: Ottawa’s East End, adjacent Ottawa’s Light Rail Transit (LRT) Blair Station. Cost: $36 million (Killam’s cost) ($327,000/ residential door)
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Slide 21: Development Pipeline
Development Pipeline Development Potential in Property City Units Development Opportunities - 2018 Carlton Terrace Halifax, NS 104 Silver Spear* Mississauga, ON 64 Future Development Opportunities - 2018 and beyond The Governor (Phase 2 of the Alexander) Halifax, NS 48 Cameron Heights Edmonton, AB 1
Slide 22: Carlton Terrace, Halifax
Carlton Terrace, Halifax Rental Units: 104 units Ownership: Killam 100% Start Date: Q2-2018 Projected Completion: mid-2020 Location: Downtown Halifax, NS Preliminary Budget: $39 million Expected Yield: 5.4% Expected Value: 4.5% cap rate 22
Slide 23: Silver Spear, Mississauga
Silver Spear, Mississauga Rental Units: 128 units Ownership: Killam 50%, Partners 50% Start Date: Q2-2018 Projected Completion: mid-2020 Location: Mississauga, ON Preliminary Budget: $39 million Expected Yield: 5.4% Expected Value: 4.0% cap rate 23
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