Killam Apartment Reit · TSX:KMP.UN
Killam Apartment Reit — Q4 2023 Earnings Presentation
21 slides from Killam Apartment Reit's earnings presentation, Feb 15, 2024
Slide 1: Q4-2023 Results Conference Call
Q4-2023 Results Conference Call February 15, 2024 | 9am EDT 1
Slide 2: Cautionary Statement
Q4-2023 | Cautionary Statement Luma, Ottawa 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 a
Slide 3: 2023 | Focus on Long-Term Growth Drivers
2023 | Focus on Long-Term Growth Drivers NOI Contribution by Market (%) as at December 31, 2023 Same Property NOI Growth 15.8% 7.6% 3.5% Apartment MHC Commercial AB | 8.5% Calgary | Edmonton NL | 4.3% St. John’s BC | 3.7% PEI | 5.9% Victoria| Courtenay Charlottetown NS | 31.8% Halifax ON | 25.3% NB
Slide 4: 2023 | Successful Performance against Strategic Targets
2023 | Successful Performance against Strategic Targets Target: Achieve same property NOI growth averaging 3.0% to 5.0% (increased to over 7.0% in Q3-2023) Performance: Killam achieved same property NOI growth of 7.8%. Target: Sell a minimum of $100 million of non-core assets. Performance: Killam co
Slide 5: 2023 | Financial Highlights
2023 | Financial Highlights $266.3M $1.15 7.8% 72% 42.9% Net Income FFO per Unit(1) Same Property NOI AFFO payout ratio(3) Total Debt as a % of Total Growth(2) Assets (4) Includes $224.0 million of net 3.6% increase from $1.11 per unit in 2022. AFFO per unit 7.8% growth in 2023 includes AFFO payout
Slide 6: 2023 | Financial Highlights
2023 | Financial Highlights Q4 FFO & AFFO Per Unit Same Property Portfolio For the three months ended Dec 31, 2023 Q4-2023 Q4-2022 8.8% 5.4% (0.3%) $0.28 $0.27 $0.23 $0.23 Revenue Expense NOI FFO AFFO Same Property Portfolio Annual FFO & AFFO Per Unit For the year ended Dec 31, 2023 2023 2022 7.8% 5
Slide 7: Strong Top Line Growth Momentum
Q4-2023 | Strong Top Line Growth Momentum Apartments Same Property Rental Rate Growth by Quarter Upon Lease Renewal For tenants with lease renewals in Q4, For new tenants moved in during Q4, Upon Unit Turn rents increased by 3.4%. rents increased 19.8%. 25% Combined Average Increase % 20% 15% 7.5% 1
Slide 8: Moderating Expense Growth
Q4-2023 | Moderating Expense Growth Effective cost containment resulted in modest Same Property Expense Growth same property expense growth of 1.6% in 2023: Reduced insurance premiums in recognition of our enhanced internal risk management 5.4% practices. Savings in natural gas costs in second h
Slide 9: Debt Ladder
Q4-2023 | Debt Ladder Apartment Mortgage Maturities by Year As at December 31, 2023 Mortgage Maturities ($) 5 year estimated CMHC-insured rate 10 year estimated CMHC-insured rate Weighted average interest rate (apartments) $450 5% $400 4% $350 3.96% $300 3.63% 3.57% 3.26% 3% $250 2.91% 2.94% $200 2%
Slide 10: Conservative Debt Metrics for Enhanced Flexibility
Q4-2023 | Conservative Debt Metrics for Enhanced Flexibility Total Debt as a % of Assets(1) Interest Coverage Ratio(2) Debt to Normalized EBITDA(3) 47% 45% 43% 41% 39% 37% 43.4% 44.6% 45.0% 45.3% 42.9% 3.20 3.36 3.53 3.31 3.10 10.15 10.78 11.33 11.21 10.29 35% 2019 2020 2021 2022 2023 2019 2020 2021
Slide 11: Capturing Market Rents: Annual Turnover by Region
Q4-2023 | Capturing Market Rents Annual Turnover by Region Turnover was 2021 2022 2023 Avg 2023 Avg 2022 19% 50% in 2023 40% 30% 20% 10% 36% 28% 27% 25% 24% 23% 20% 18% 18% 16% 15% 10% 0% 11 *Regions with provincial rent control in place.
Slide 12: Robust Market Fundamentals lead to Wide MTM Spreads
Q4-2023 | Robust Market Fundamentals lead to Wide MTM Spreads Estimated Mark-to-Market Spread by Region 10% 33% 25% 25% 23% 21% 18% 17% 16% 9% 6% 0% KWC/GTA Halifax Saint John London Calgary Victoria Moncton Fredericton Ottawa Edmonton St. John's PEI Estimated Total Mark-to-Market Opportunity 35% 30
Slide 13: Exposure to Rent Control
Q4-2023 | Exposure to Rent Control Apartments MHCs Killam’s Province 2024 limit 2024 limit Exposure (1) Nova Scotia 5.0% 5.8% 30.3% (2) Ontario 2.5% 2.5% 19.0% (3) Prince Edward Island 3.0% N/A 4.2% British Columbia 3.5% N/A 3.7% Total Exposure to Rent Control 57.2% (1) As a percentage of total net
Slide 14: Nolan Hill Phase II – Calgary, AB
Q4-2023 | Nolan Hill Phase II – Calgary, AB Nolan Hill 2 Calgary, AB Nolan Hill Phase II, the second phase 234 units of a six-building 3 buildings complex, makes up 234 units across 3 buildings. Completed Q4-2023 $65.0 million (1) (1) Killam had a 10% interest in the Nolan Hill Phase II development
Slide 15: Leasing of Developments Continues
Q4-2023 | Leasing of Developments Continues Fully leased Latitude, Ottawa The Kay, Mississauga Luma, Ottawa 50% 72% 55% leased leased leased Governor, Halifax Civic 66, Kitchener Nolan Hill Phase 2, Calgary (1) As of February 13, 2024. 15
Slide 16: Successful Disposition Program
Q4-2023 | Successful Disposition Program Killam is focused on identifying dispositions that will maximize value for our Unitholders and strengthen our balance sheet. Our strategic target of recycling $100 million of non-core assets in 2023 is accretive to NAV and FFO. Sale Price Property Location Di
Slide 17: Geographic Repositioning through Dispositions
Q4-2023 | Geographic Repositioning through Dispositions In 2023, Killam Nova Scotia completed over 2023 PEI 16% $168.7 million Dispositions Ontario in strategic based on $ value New Brunswick dispositions Total Sales Value and Units Sold by Region ($ 000’s) Market Value Unit Count $80,000 400 $60,00
Slide 18: Development Activity: The Carrick – Waterloo, ON
Q4-2023 | Development Activity: The Carrick – Waterloo, ON Killam obtained attractive financing terms for The Carrick WESTMOUNT PHASE 1 (The Carrick) through CMHC’s Apartment Construction Loan Program Broke ground on the 139-unit development in Waterloo in Q2-2022. Progress shots as of February 2024
Slide 19: Development Activity: Eventide – Halifax, NS
Q4-2023 | Development Activity: Eventide – Halifax, NS Key Statistics Number of units 55 Start date Q1-2024 Est. completion date 2026 Project budget ($M) $33.6 Cost per unit $611,000 Expected yield 4.50%-5.00% Avg rent $3.75-$4.00 per SF Avg unit size 765 SF Eventide Development Site – February 2024
Slide 20: 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 21: Results Conference Call
Q4-2023 Results Conference Call 21
Killam Apartment REIT — Q4 2023 Earnings Presentation on 6ix