Killam Apartment Reit · TSX:KMP.UN
Killam Apartment Reit — Q4 2021 Earnings Presentation
39 slides from Killam Apartment Reit's earnings presentation, Feb 17, 2022
Slide 1: Q4-2021 Results Conference Call
Q4-2021 RESULTS CONFERENCE CALL February 17, 2022 | 9AM Eastern
Slide 2: Cautionary Statement
2021 | Cautionary Statement Southport, Halifax 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 suc
Slide 3: Strategic Targets
2021 | Strategic Targets Develop High-Quality Properties • 2021 Target: Complete two developments and break ground on two additional developments. • 2021 Performance: Partially Met(1). Completed a Grow Same Property NOI 38-suite development, 10 Harley, and broke ground • 2021 Target: >2%. at the 12-
Slide 4: Financial Highlights
2021 | Financial Highlights $285.5M $1.07 45.0% 5.1% 76% Net Income FFO per Unit(1) Total Debt as a % of Same Property AFFO payout ratio(4) $285.5 million, an increase of $1.07 per unit, a 7.0% Total Assets (2) NOI Growth(3) AFFO per unit (4) increased $139.5 million from 2020 from increase from $1.
Slide 5: Five Year Lookback of Strong Growth
2021 | Five Year Lookback of Strong Growth Revenues ($M) Net Income ($M) Investment Properties ($B) Investment Properties under Construction Investment Properties $2.3 $2.8 $3.3 $3.7 $4.5 $187 $216 $242 $262 $291 $105 $175 $284 $146 $286 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 2017 2018 20
Slide 6: FFO & AFFO Per Unit Growth
2021 | FFO & AFFO Per Unit Growth FFO and AFFO growth due to strong same property performance and incremental contributions from recent acquisitions and completed developments. Q4 FFO & AFFO Per Unit Annual FFO & AFFO Per Unit Q4-2021 Q4-2020 1.1 2021 2020 0.9 0.7 $0.27 $0.25 $0.22 $0.21 $1.07 $1.00
Slide 7: Same Property NOI Growth
2021 | Same Property NOI Growth Same Property NOI Growth is a result of rental rate growth from the apartment, commercial and MHC business segments, an increase in occupancy and modest expense growth. Same Property Portfolio Performance Same Property Portfolio Performance For the three months ended
Slide 8: Apartment Financial KPIs
2021 | Apartment Financial KPIs Apt Same Property Avg Rental Apt Same Property Apt Same Property Rate Increase Occupancy(1) Incentive Offerings(2) 1.8% 2.7% 3.6% 3.4% 3.0% 96.5% 97.1% 97.3% 96.7% 97.2% 0.6% 0.3% 0.3% 0.4% 0.6% 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 2017 2018 2019 2020 202
Slide 9: Financial Highlights
2021 | Financial Highlights Total operating expenses were up 2.1% in 2021. Actively appealing tax assessments, and the continuous investment into energy efficiency initiatives helped to mitigate rising cost pressures. Same Property Expense Growth Same Property Expense by Category ($M) 2.4% 4.4% 2021
Slide 10: Apartment Same Property NOI
2021 | Apartment Same Property NOI Strength in the Atlantic provinces and Ontario drove strong revenue and net operating income in 2021. Same Property NOI Growth by Quarter 8.00% 7.4% 5.0% Average 4.1% 6.0% 6.1% 6.00% 5.0% 4.0% 4.9% 4.9% 4.8% 4.5% 4.5% 3.9% 4.3% 4.0% 5.8% 3.0% 3.7% 4.00% 3.0% 2.7% 3
Slide 11: Strong Population Growth Outpaces New Supply
2021 | Strong Population Growth Outpaces New Supply Halifax Population Growth Annual (July 1- June 30) 480,000 3.0% 2.5% • The most important long-term driver of multi- 2.3% 2.1% 2.5% residential real estate is population growth. Population Growth % 455,000 1.9% 1.9% 2.0% Population 1.5% • Canada we
Slide 12: Debt Ladder
2021 | Debt Ladder Apartment Mortgage Maturities by Year As at December 31, 2021 Mortgage Maturities Weighted Average Interest Rate (Apartments) 5 year estimated CMHC insured interest rate 2.7% $375 10 year estimated CMHC insured interest rate 2.9% 3.23% 2.99% 2.55% 2.85% $300 3% 2.68% Mortgage Matu
Slide 13: Conservative Debt Metrics
2021 | 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% 10.70 10.62 10.15 10.78 11.33 48.7% 49.8% 43.4% 44.6% 45.0% 3.13 3.22 3.20 3.36 3.53 35% (
Slide 14: Long-Term Growth Strategy
2021 | Long-Term Growth Strategy Killam’s strategy to increase FFO, NAV and maximize value is focused on three priorities: Quinpool Court, Halifax Nautical Suites, Edmonton The Kay, Mississauga Expand the portfolio and diversify Increase earnings from existing geographically through accretive Develo
Slide 15: Growing our Existing Portfolio
2021 | Growing our Existing Portfolio Revenue Optimization • Data driven decisions on leasing, unit renewals and turns to optimize mark-to- market opportunities • Repositioning properties and suites to meet market demand • Building communities Expense Management • Focused economies of scale strategi
Slide 16: Revenue – By Segment
2021 | Revenue – By Segment All property segments are contributing to the strong revenue growth 2021; specifically the demand for apartments across the country, the rebound of the seasonal parks and strong commercial leasing. 2021 Revenue Growth by Segment 3.6% 2.8% 15.7% 7.4% 4.0% Apartments MHCs -
Slide 17: Revenue - Renovations
2021 | Revenue - Renovations Revenue growth through suite repositions to meet market demand and optimize NOI growth and investment returns. 2021 Actuals • 551 suite repositions • 13% ROI • $28k avg investment 2022 Program • 600 suite repositions • ~$15-18M investment • ~$2.0-2.3M annualized revenue
Slide 18: Expense Management with Green Investments
2021 | Expense Management with Green Investments Shorefront, Charlottetown Increasing earnings from operations through capital investments, property-level technology and energy efficiency projects • Solar photovoltaic panels • Electric vehicle chargers (tenant-paid amenity offering) • Modern boilers
Slide 19: Affordable and Value Delivery
2021 | Affordable and Value Delivery Killam delivers affordable, safe, clean and high-quality housing to our residents across Canada. • 35% of Killam’s portfolio rents for less than $1,000 per month. • Average rent is $1.44 per SF across the portfolio. • Killam supports affordable housing with more
Slide 20: Acquisitions
2021 | Acquisitions Annual Acquisitions ($ millions) $399 $315 $200 $200 $211 $191 $167 $160 $125 $115 $106 $121 $103 $16 $85 $72 $45 $36 $3 $54 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 NOI Generated Outside Atlantic Canada 40% 33% 35% 30% 3
Slide 21: Largest Acquisition Year in Killam's History
2021 | Largest Acquisition Year in Killam’s History $399.4 million in Acquisitions 48% in Ontario| 30% in Alberta | 16% in Atlantic Canada 6% development land 21
Slide 22: Acquisition in Charlottetown, PEI
2021 | Acquisition in Charlottetown, PEI 140 Dale Drive | Charlottetown 61-units | 98% leased Acquisition Details: $15.3 million ($251,000/unit) 4.2% capitalization rate $11.1 million CMHC mortgage with 0.86% interest rate, 10-year term $900,000 forgivable loan Construction completed: 2021 Acquisiti
Slide 23: Acquisition in Moncton, NB
2021 | Acquisition in Moncton, NB Emma Place | 1321 Mountain Rd 118 units | Avg 1,035 SF | 91% leased Avg Mth Rent $1,402 per unit ($1.35/SF) Acquisition Details: $31.8 million ($269,500/unit) 3.9% capitalization rate Construction completed: 2020 Acquisition date: October 18, 2021 23
Slide 24: Acquisition in Edmonton, AB
2021 | Acquisition in Edmonton, AB The Heartwood | 11823 22nd Ave. 123 units | Avg 842 SF | 91% leased Avg Mth Rent $1,507 per unit ($1.79/SF) Acquisition Details: $28.9 million ($235,000/unit) 4.7% capitalization rate Construction completed: 2019 Acquisition Date: October 28, 2021 24
Slide 25: Acquisition in Edmonton, AB
2021 | Acquisition in Edmonton, AB Nautical Luxury Suites at Summerside 4203-4211 Savaryn Drive SW 180 units | Avg 875 SF | 98% leased Avg Mth Rent $1,525 per unit ($1.74/SF) Acquisition Details: $42.3 million ($235,000/unit) 4.9% capitalization rate $32.7 million mortgage with 2.3% interest rate, m
Slide 26: Strong Leasing of Developments Continue
2021 | Strong Leasing of Developments Continue 10 Harley | 38 units Nolan Hill | 233 units Shorefront | 78 units Charlottetown Calgary Charlottetown The above three newly completed developments were fully leased by mid-2021. They contributed $1.7 million to FFO in 2021 and are expected to contribute
Slide 27: Development Progress
2021 | Development Progress At year-end Killam had five developments underway, which will add an additional 497 suites to Killam’s portfolio in the next twelve months.(1) Latitude | 104 units (2) The Kay | 128 units Luma | 84 units(2) Governor | 12 units Civic 66 | 169 units Ottawa Mississauga Ottaw
Slide 28: Development Activity - Ottawa
2021 | Development Activity - Ottawa THE LATITUDE, 209-suite building is the second phase of the Gloucester City Centre development (50% interest) and opened in January 2022. GREEN FEATURES: Sub- metered water, geothermal heating and cooling Key Statistics Number of units 209 Start date Q2-2019 Comp
Slide 29: Development Activity - Mississauga
2021 | Development Activity - Mississauga THE KAY, 128-unit development in Mississauga that broke ground in Q3-2019 and is expected to be completed by April 2022 and is already 29% pre-leased. Key Statistics The Kay, progress photo as of November 2021 Number of units 128 Start date Q3-2019 Est. comp
Slide 30: Development Activity - Ottawa
2021 | Development Activity - Ottawa LUMA – 168-unit development in Ottawa that is expected to be completed in mid-2022. Key Statistics Number of units 168 Estimated completion date Q2-2022 Project budget ($M)(1) $45.8 Cost per unit $545,000 Expected yield 4.0%-4.25% Expected value cap-rate 3.5% Avg
Slide 31: Development Activity – The Governor, Halifax
2021 | Development Activity – The Governor, Halifax Key Statistics Number of units 12 Start date Q1-2021 Latitude (Phase Est. completion date II) Q3-2022 Project budget ($M) $22.8 Expected yield 4.25%-4.75% Expected value cap-rate 3.5% GREEN FEATURES: Sub- metered water, geothermal Avg unit size 2,3
Slide 32: Development Activity – The Governor, Halifax
2021 | 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 shot as of February 2022 32
Slide 33: Development Activity - Kitchener
2021 | Development Activity - Kitchener CIVIC 66 – 169-unit development in Kitchener that broke ground in Q3-2020 and is expected to be completed by Q4-2022. Latitude (Phase II) Key Statistics Number of units 169 GREEN FEATURES: Sub- metered water, geothermal Start date Q3-2020 heating and cooling E
Slide 34: Development Activity - Kitchener
2021 | Development Activity - Kitchener CIVIC 66 – 169 suites - progress shot as of February 2022 GREEN FEATURES: Sub- metered water, geothermal heating and cooling 34
Slide 35: Future Development Activity – Waterloo
2021 | Future Development Activity – Waterloo WESTMOUNT PHASE 1 (CARRICK) – Expect to break ground on the 139-unit development in Waterloo in Q1-2022. Key Statistics Number of units 139 Est. start date Q1-2022 Est. completion 2024 date 35
Slide 36: Future Development Activity - Halifax
2021 | Future Development Activity - Halifax EVENTIDE & AURORA – Expect to break ground on the two building, 120-unit development in Halifax in early 2022. Eventide & Aurora, exterior renderings Key Statistics Number of units 120 Est. start date 2022 Est. completion date 2024 36
Slide 37: Robust Development Pipeline - ~$1.3 billion
2021 | Robust Development Pipeline - ~$1.3 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 completed 2
Slide 38: 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 39: Results Conference Call
2021 RESULTS CONFERENCE CALL February 17th, 2021 | 9AM Eastern
Killam Apartment REIT — Q4 2021 Earnings Presentation on 6ix