Killam Apartment Reit · TSX:KMP.UN
Killam Apartment Reit — Q4 2015 Earnings Presentation
30 slides from Killam Apartment Reit's earnings presentation, Feb 17, 2016
Slide 1: Q4-2015 Results Conference Call
Q4-2015 Results Conference Call Feb 17, 2016 12 pm EST
Slide 2: Cautionary Statement
Cautionary Statement This presentation may contain forward-looking statements with respect to Killam A p a r t m e n t R E I T a n d i t s o p e r a t i o n s , s t r a t e g y, f i n a n c i a l p e r f o r m a n c e a n d c o n d i t i o n . These statements generally can be identified by use of f
Slide 3: Highlights from 2015
Highlights from 2015 • Generated FFO per share of $0.79, a 9.7% increase from $0.72 in 2014. • Improved AFFO payout ratio to 87.7% in 2015 vs. 98.1% in 2014. • Increased same store rental revenue by 2.2%, including 40 basis point improvement in occupancy levels. • Achieved same store NOI growth of 4
Slide 4: Highlights from Q4-2015
Highlights from Q4-2015 • Generated FFO per share of $0.20, an 11.1% increase from $0.18 in Q4- 2014. • Increased same store rental revenue by 1.6%. • Achieved same store NOI growth of 3.9%. • Completed $9.4 million in acquisitions, further expanding Killam’s opportunities for future development. •
Slide 5: 9.7% FFO Per Share Growth 2015
9.7% FFO Per Share Growth 2015 Q4 FFO Per Share FFO Per Share For the years ended Dec 31, $0.20 $0.79 $0.18 $0.18 $0.72 $0.71 Q4-2013 Q4-2014 Q4-2015 2013 2014 2015 5
Slide 6: AFFO Payout Ratio
88% AFFO Payout Ratio in 2015 Killam’s Annual Dividend & Payout Ratio Dividend AFFO Payout Ratio $0.61 98% 99% 98% 100% 96% 96% $0.60 95% AFFO Payout Ratio $0.59 88% 90% $0.58 85% $0.57 80% $0.56 $0.55 75% $0.56 $0.57 $0.58 $0.58 $0.60 $0.60 $0.54 70% 2010 2011 2012 2013 2014 2015 6
Slide 7: Performance Vs. 2015 Targets
Performance Vs. 2015 Targets % of Acquisitions Same Store NOI Outside Atlantic Growth Acquisitions Canada 2015 0% ‐ 2% $75 Million +50% & 2014 Target Increased to 2% ‐ 4% Q1 2015 2015 4.2% $54 Million 13% Actuals 7
Slide 8: 2015 Developments: Saginaw Gardens, Cambridge, ON
2015 Developments Saginaw Gardens, Cambridge, ON • $25.3 million total development cost • 5.8% yield • 4.75% cap rate for IFRS • 122 apartment units • Completed June 2015 • Fully leased • Land for an additional 93 units located beside Saginaw Gardens 8
Slide 9: 2015 Developments: Chelsea Place, St. John's, NL
2015 Developments Chelsea Place, St. John’s, NL • 102 units • $21.8 million ($213,000/door) • 6% yield • 5.15% cap rate for IFRS • Completed March 2015 2014 & • Fully leased Q1 2015 9
Slide 10: Successful Developments in 2015
Successful Developments in 2015 Monthly Occupancy $5.2M of Fair Value Gains on 2015 Developments Chelsea II (April Start) Cost Value 100% Saginaw (July Start) $35 80% $30 60% $25 $20 40% $15 20% $10 0% $5 Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 $0 Saginaw Chelsea 10
Slide 11: 3.9% Same Store NOI Growth in Q4
3.9% Same Store NOI Growth in Q4 Same Store Results 3 months ended Dec 31, 2015 Revenue Expenses NOI 4.1% 3.9% 3.9% 2.7% 2.0% 1.5% 1.6% (1.8%) (1.4%) Apartments MHCs Consolidated 11
Slide 12: 4.2% Same Store NOI Growth YTD
4.2% Same Store NOI Growth YTD Same Store Results year ended Dec 31, 2015 Revenue Expenses NOI 4.2% 4.1% 4.2% 3.9% 3.5% 2.1% 2.2% (0.4%) (0.7%) Apartments MHCs Consolidated 12
Slide 13: Strong NOI Growth Throughout 2015
Strong NOI Growth Throughout 2015 Historic Change in Same Store NOI 2010-2015 12.0% 10.0% Average quarterly NOI growth of 1.8% 8.0% from 2010-2015. 6.0% 4.0% 2.0% 0.0% Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2
Slide 14: 2.2% Same Store Revenue Growth in 2015
2.2% Same Store Revenue Growth in 2015 Historic Change in Same Store Revenue Growth 2010-2015 Average quarterly 4.0% same store revenue growth of 2.2% from 3.5% 2010-2015. 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 20
Slide 15: Apartment Occupancy of 95.7% in Q4
Apartment Occupancy of 95.7% in Q4 Q4 Apartment Occupancy* Q4-2014 Q4-2015 98.8% 97.5% 96.0% 96.2% 97.2% 95.1% 95.6% 95.7% 93.9% 97.2% 98.4% 97.3% 97.4% 95.3% 96.1% 95.3% 96.6% 95.8% 93.8% 77.9% * Occupancy based on percentage of residential rent for stabilized properties during the quarter. (1) Kil
Slide 16: Improved Occupancy in 2015
Improved Occupancy in 2015 Apartment Quarterly Occupancy* Average of 95.0% for $ occupancy as a % of gross potential rents 2013-2015, 95.8% 95.5% 95.5% 95.6% 95.3% 95.7% 94.3% 94.7% 94.9% 94.7% 94.2% 93.6% Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 * Occupancy based on p
Slide 17: $530K Savings in Rental Incentive
$530K Savings in Rental Incentive 2015 Vs. 2014 Incentives as a Percentage of Rental Revenue Same Store Apartment Properties 1.4% 1.2% 1.0% 0.8% 0.6% 0.4% 0.2% 0.0% 17
Slide 18: 4.1% NOI Growth in Q4 for Apartments
4.1% NOI Growth in Q4 for Apartments Same Store NOI Growth by Core Market – Q4 2015 St. John's (0.3%) Ontario 0.1% Moncton 2.3% Halifax 4.1% Fredericton 4.3% Charlottetown 7.1% Saint John 14.1% 18 NOI for same store MHCs increased by 2.0% in Q4-2015
Slide 19: NOI Growth in All Markets-2015
NOI Growth in All Markets-2015 Same Store NOI Growth by Core Market Ontario 0.9% Halifax 3.0% Moncton 3.5% St. John's 3.6% Fredericton 6.3% Charlottetown 7.7% Saint John 10.1% 19
Slide 20: Lower Natural Gas Prices in 2015 Vs. 2014
Lower Natural Gas Prices in 2015 Vs. 2014 Commodity Charge per GJ Nova Scotia New Brunswick $20 $18 $16 $14 $ per GJ $12 $10 $8 $6 $4 $2 $0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Jan 2013 2013 2013 2013 2014 2014 2014 2014 2015 2015 2015 2015 2016 Commodity prices are fixed in Nova 20 Scotia and floati
Slide 21: Interest Expense Savings
Interest Expense Savings Apartment Mortgage Maturities by Year Mortgage Maturities by Year Refinanced in 2015 Weighted Average Interest Rate $180 8% $160 7% Mortgage Maturities ($M) $140 6% Interest Rate $120 4.17% 5% $100 3.64% 3.43% 3.43% 3.16% 3.30% 3.31% 4% $80 2.82% 2.56% 3% $60 $40 2% $20 1% $
Slide 22: Stable Balance Sheet with Improving Interest Coverage Ratio
Stable Balance Sheet with Improving Interest Coverage Ratio Debt as a % of Total Interest Coverage Ratio Assets Trailing 12 months at Dec 31, At Dec 31, 2.34 2.21 2.10 2.15 55.2% 54.9% 55.7% 51.6% 52.9% 1.98 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 22
Slide 23: Opportunities and Challenges in 2016
Opportunities and Challenges in 2016 Opportunities Challenges • Lower oil costs • Increased insurance premiums • Lower natural gas prices in Ontario • Slowdown in Alberta and New Brunswick • Rising construction costs • Milder winter • Increased apartment construction • Lower garbage costs in Halifax
Slide 24: Current Developments: Southport, Halifax, NS
Current Developments Southport, Halifax, NS Building Description: 142 units - 70 rental, 72 condo Ownership: Killam 50%, Urban Capital 50% Start Date: December 2014 Projected Completion: Q3-2016 Location: Downtown Halifax Construction Cost: $14.7 million, $210,000/door (Killam’s cost) Expected Yield
Slide 25: Current Developments: Southport, Halifax, NS
Current Developments Southport, Halifax, NS 25
Slide 26: The Alexander (Phase I), Halifax, NS
Current Developments The Alexander (Phase I), Halifax, NS Building Description: 242 units 24 storeys 230 underground parking stalls 6,200 square feet of retail space Ownership: Killam 50%, Partners 50% Start Date: Q3 2015 Projected Completion: 2017 Location: Downtown Halifax across from the waterfro
Slide 27: The Alexander (Phase 1), Halifax, NS
Current Developments T he Alexander (Phase 1), Halifax, NS Construction of The Alexander began in September 2015. 27
Slide 28: The Alexander (Phase I), Halifax, NS
Current Developments The Alexander (Phase I), Halifax, NS View from upper floors 28
Slide 29: Development Pipeline
Developments Development Pipeline Development Potential in Property City Units Status Developments Underway The Alexander - Phase 1* Halifax, NS 242 Under construction 2017 completion Southport - Barrington Street Halifax, NS 70 Under construction Q3-16 completion Development Opportunities - 2016 Si
Slide 30: Q4-2015 Results Conference Call
Q4-2015 Results Conference Call Feb 17, 2016 12 pm EST
Killam Apartment REIT — Q4 2015 Earnings Presentation on 6ix