Killam Apartment Reit · TSX:KMP.UN
Killam Apartment Reit — Q4 2020 Earnings Presentation
44 slides from Killam Apartment Reit's earnings presentation, Feb 11, 2021
Slide 1: Q4-2020 Results Conference Call
Q4-2020 RESULTS CONFERENCE CALL February 11, 2021 | 10AM EASTERN
Slide 2: 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”, “estimate”, “anticipate”, “i
Slide 3: 2020 | Focusing on Long-term Growth Drivers
2020 | Focusing on Long-term Growth Drivers Killam’s strategy to increase FFO, NAV and maximize value is focused on three priorities: Increase earnings from existing Expand the portfolio and Develop high-quality properties portfolio. diversify geographically through in Killam’s core markets. accreti
Slide 4: 2020 | Strategic Targets
2020 | Strategic Targets Develop High-Quality Properties • 2020 Target: Complete Shorefront and start Grow Same Property NOI two additional projects. • 2020 Target: 3% to 5% • 2020 Performance: Completed Shorefront, • 2020 Performance: 2.3% broke ground on Civic 66 and acquired 50% • 2021 Target: >2
Slide 5: 2020 | Highlights
2020 | Highlights $1.00 $210M Accretive Acquisitions Added 650 apartment units, FFO per Unit Growth 89 MHC sites, entered the $1.00 per unit, a 2.0% Victoria market and expanded increase from $0.98 per unit presence in Halifax and in 2019. $0.83 2.3% Moncton. AFFO per Unit Growth 44.6% Same Property
Slide 6: Five Year Lookback of Strong Growth
2020 | Five Year Lookback of Strong Growth Net Operating Income FFO & Distribution Per Unit AFFO Payout Ratio $190 FFO Per Unit Distribution 100% $170 90% $1.10 $150 80% Millions $0.95 70% $130 60% $0.80 50% $110 40% $90 $0.65 30% $0.60 $0.62 $0.64 $0.66 $0.68 $0.86 $0.90 $0.94 $0.98 $1.00 20% $105
Slide 7: Q4-2020 | Financial Highlights
Q4-2020 | Financial Highlights Completed the year with Q4 revenue and NOI growth • Generated FFO per unit of $0.25 and AFFO per unit of $0.21, both comparable to Q4- 2019. • Strong rental rate growth of 3.3%, partially offset by a 100 bps decrease in occupancy. • Expense growth of 4.4% due to higher
Slide 8: 2020 | Financial Highlights
2020 | Financial Highlights Achieved FFO, AFFO and NOI growth for the year • Generated FFO per unit of $1.00, increase of 2.0%, and AFFO per unit of $0.83, increase of 3.7% from 2019. • Strong rental rate growth in apartments were partially offset by lower seasonal MHC revenues during COVID restrict
Slide 9: 2020 | Financial Highlights
2020 | Financial Highlights 2020 Same Property Expense by Category ($M) 2020 2019 % Increase/(Decrease) $40 20.0% 15.0% $32 3.6% 4.6% 10.0% Utility and fuel expenses decreased due to: 5.0% • Reduced consumption from energy $24 (5.9)% 0.0% efficiency projects $16 (5.0)% (10.0)% • Decreases in natural
Slide 10: 2020 | Apartment Financial Highlights
2020 | Apartment Financial Highlights Apt Same Property Avg Apt Same Property Rental Rate Increase Incentive Offerings2 Apt Same Property Occupancy1 0.8% 0.7% 0.4% 0.3% 0.4% 1.6% 1.8% 2.7% 3.6% 3.4% 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 95.7% 96.6% 97.1% 97.3% 96.8% 1 Measured as dollar
Slide 11: Apartment Financial Highlights
2020 | Apartment Financial Highlights 7.0% Same Property Rental Increases (%) Approximately 70% of Killam’s 6.0% Total % residents renew each year with 5.0% On Renewal % 5.70% average increases of 1.8% - 2.5% 4.0% On Turn % pre COVID-19. Due to voluntary 3.0% 3.4% 3.6% 3.4% 3.4% rent freeze and dela
Slide 12: Apartment Mortgage Maturities by Year
2020 | Financial Highlights Apartment Mortgage Maturities by Year As at December 31, 2020 Current Weighted Mortgage Maturities Weighted Average Interest Rate (Apartments) Average Interest Rate Five-year CMHC rate Ten-year CMHC rate 2.69 % $525 $450 4% 3.19% Mortgage Maturities ($M) 2.68% 2.85% 2.83%
Slide 13: 2020 | Financial Highlights
2020 | Financial Highlights Increasing value of investment properties with conservative debt metrics. Debt as a % of Assets Investment Properties ($B) Investment Properties under 55% Construction 50% Investment Properties 45% 40% 53.5% 48.7% 49.8% 43.4% 44.6% $2.0 $2.3 $2.8 $3.3 $3.7 35% Interest Co
Slide 14: Growing our existing portfolio
2020 | Growing our existing portfolio Roadmap to Same Property NOI Growth Revenue Optimization •Data driven decisions on unit renewals and turns to maximize mark-to-market opportunities •Repositioning opportunities to meet market demand •Strong occupancy •Rising rental rates Expense Management •Focu
Slide 15: Affordability and Value Delivery
2020 | Affordability and Value Delivery Killam delivers affordable, safe, clean and high-quality housing to our residents across Canada. Region Killam’s Rent • Killam’s average rent varies between 15% - 25% of the median as a % of household income in each of its regions, well below the CMHC Median H
Slide 16: Revenue Growth - Halifax
2020 | Revenue Growth - Halifax With current resiliency in the Halifax market, rental rate growth on turnover is a key longer-term focus. Market vs. In-place Rent ($/SF) $1.70 Jul-20, $0.27 MTM 30.0% Feb-20, $0.21 MTM Feb-21, $0.18 MTM $1.50 25.0% Mark-to-Market Opportunity 20.2% $1.30 20.0% 15.6% $
Slide 17: Revenue - Renovations
2020 | Revenue - Renovations Revenue growth through unit repositions to meet market demand. 2020 Actuals 2021 Program Total Opportunity • 495 unit repositions • 550 unit repositions • 5,000 unit repositions • 13% ROI • ~$14-16M investment • ~$125-140M investment • $25k avg investment • ~$1.8-2.0M an
Slide 18: Revenue - Renovations
2020 | Revenue - Renovations Bronson, Ottawa | 43-unit property After Before Suite Repositioning at Bronson $31k Average investment per unit 35% Average rental lift $514 Average monthly rent increase 20% Average ROI 18
Slide 19: Revenue – Renovations
2020 | Revenue – Renovations Winner of CFAA’s best unit renovation for 2020. Cambridge Place | 63 units Moncton, New Brunswick 19
Slide 20: Capital Investment
2020 | Capital Investment ENERGY BUILDING IMPROVEMENTS CURB APPEAL HEATING PLANT UPGRADES AND MAINTENANCE 20
Slide 21: Capital Investment
2020 | Capital Investment Total Capital Investment Capital Investment per ($M/yr) Apt Unit ($) $70 $4,000 $60 $50 $3,000 $40 $2,000 $30 $20 $1,000 $10 $0 $0 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 2021 Capital Plan 2021 Energy Plan Commercial Suite 7% Curb Appeal Energy $5.9 Million planne
Slide 22: Killam's Green Commitment
2020 | Killam’s Green Commitment 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 Killam’s existing properties. K
Slide 23: Acquisitions
2020 | Acquisitions Purchase Acquisition Ownership Property Price(1) Property Location Date Interest (%) Type ($000’s) 1 Q1 Christie Point Victoria, BC Jan 15, 2020 100% Apartment $54,000 2 Q1 9 Carrington Halifax, NS Jan 31, 2020 100% Apartment 8,800 3 Q1 Domaine Parlee Shediac, NB Mar 23, 2020 100
Slide 24: Acquisitions - Moncton, NB
2020 | Acquisitions - Moncton, NB Description: Acquisition Details: Location: 171 & 181 Leopold Belliveau Drive $17.6 million Moncton, NB 107 units; 2 apartment buildings with 1 and 2 5.0% capitalization rate bedroom units 97% occupied Average rent – $1,214/month ($1.20/sf) Closed: October 26, 2020
Slide 25: Acquisitions - Moncton, NB
2020 | Acquisitions - Moncton, NB Description: Acquisition Details: 88 Sunset Blvd $55.0 million 162 units; 1,426 square feet (sf) average • 39 one bedrooms; 986 sf 4.5% capitalization rate • 116 two bedrooms; 1,499 sf 82% occupied • 7 three bedrooms; 2,663 sf Closed: Nov 13, 2020 Average rent – $1,
Slide 26: 2021 | Acquisitions - Calgary, AB
2021 | Acquisitions - Calgary, AB Description: Affordable Rent Details: Acquisition Details: • Nolan Hill development in • $49.5 million ($231k per unit)* • 78 units at 70% of market rates, avg. $1,014 northwest Calgary per unit or $1.20 per SF • 4.5% capitalization rate • Phase 1 consists of three
Slide 27: 2021 | Acquisitions - Calgary, AB
2021 | Acquisitions - Calgary, AB Nolan Hill | 233 units 27
Slide 28: 2021 | Acquisitions - Calgary, AB
2021 | Acquisitions - Calgary, AB Nolan Hill | 233 units Occupied/Leased (as of Feb 10th) 19% 27% 31% 6% Jan 2021 Feb 2021 Mar 2021 Apr 2021 28
Slide 29: 2021 | Acquisitions - Moncton, NB
2021 | Acquisitions - Moncton, NB Description: 54 Assomption Boulevard; built in 2004 23 units; 15 one bdrm and 8 two bdrm units Average rent – $1,369/month ($1.43 per SF) Acquisition Details: $5.6 million 4.2% capitalization rate 100% occupied Closed: February 1, 2021 54 Assomption Blvd | 23 units
Slide 30: Development Progress
2020 | Development Progress 84 units(1) | Ottawa, ON With Shorefront and Nolan Hill now open, Killam currently has six developments underway, which will add an additional 535 units to Killam’s portfolio in the next 18 months at a total cost of ~$240 million and an expected yield of ~5%. 128 units |
Slide 31: Develop High Quality Properties
2020 | Develop High Quality Properties Developments - Scheduled Completion $200 2021-2022 $millions Total $173M | 369 units $160 Developing high-quality properties $42 Latitude | 104 units (1) in core markets. • Over $600 million (~2,000 units) $120 $17 Governor | 12 units of developments completed
Slide 32: Development Activity - Charlottetown
2020 | Development Activity - Charlottetown Shorefront opened October 1, 2020 and this 78-unit property is currently 55% leased. Key Statistics Number of units 78 Start date Q4-2018 Completion date Oct-2020 Project cost ($M) $22.0 Cost per unit $282,000 Expected yield 5.25% Green Features: Sub-meter
Slide 33: Development Activity - Charlottetown
2020 | Development Activity - Charlottetown 10 Harley Street – 38-unit redevelopment in Charlottetown that is over 95% complete and opening in March. Key Statistics Number ofLatitude units (Phase II) 38 Start date Q3-2019 Estimated completion date Mar-2021 Project budget ($M) $10.4 Cost per unit $27
Slide 34: Development Activity - Charlottetown
2020 | Development Activity - Charlottetown 10 Harley, 38 units Progress shots as of January 2021 34
Slide 35: Development Activity - Ottawa
2020 | Development Activity - Ottawa Latitude (Phase II of Gloucester City Centre) Key Statistics Number of units 209 Start date Q2-2019 Estimated completion date Q1-2022 Project budget ($M)(1) $42.0 Cost per unit $402,000 Expected yield 4.75-5.0% Expected value cap-rate 4.0% Green Features: Sub-met
Slide 36: Development Activity - Ottawa
2020 | Development Activity - Ottawa Latitude, the second phase of the Gloucester City Centre development, is expected to be completed in Q1-2022. Latitude (Phase II) 209 units Frontier (Phase I) 228 units Completed in 2019 Progress shots as of January 2021 36
Slide 37: Development Activity - Mississauga
2020 | Development Activity - Mississauga Key Statistics The Kay development broke ground in Q3-2019 Number of units 128 and is expected to be completed in Q4-2021. Start date Q3-2019 The Kay | 128 units Est. completion date Q4-2021 Project budget ($M) $57.0 Cost per unit $445,500 Expected yield 4.7
Slide 38: Development Activity - Mississauga
2020 | Development Activity - Mississauga The Kay, 128-unit development is expected to be completed in Q4-2021. Progress shot as of October 2020 Progress shot as of January 2021 38
Slide 39: Development Activity - Ottawa
2020 | Development Activity - Ottawa Luma – 168-unit development in Ottawa 50/50 with RioCan REIT. Key Statistics Number of units 168 Latitude (Phase II) Estimated completion date Q2-2022 Project budget ($M)(1) $44.3 Cost per unit $527,000 Expected yield 4.0-4.25% Avg rent $2.90 per SF Avg unit size
Slide 40: Development Activity - Kitchener
2020 | Development Activity - Kitchener Civic 66 – 169-unit development in Kitchener that broke ground in Q3-2020 and is expected to be completed by Q4-2022. Key Statistics Civic 66 | 169 units Latitude (Phase II) Number of units 169 Start date Q3-2020 Est. completion date Q4-2022 Project budget ($M
Slide 41: Development Activity - Kitchener
2020 | Development Activity - Kitchener Civic 66 is expected to be completed in late 2022. Latitude (Phase II) 41
Slide 42: Development Pipeline - ~$1.0 billion
2020 | Development Pipeline - ~$1.0 billion Future Development Opportunities(3) Killam’s Potential # Est Year of Property Location Interest of Units(1) Status Completion Developments expected to start in 2021 The Governor(2) Halifax, NS 100% 12 Building permit 2022 Westmount Place (Phase 1) Waterloo
Slide 43: Non-IFRS Measures
Non-IFRS Measures Non-IFRS Measures Management believes these non-IFRS financial measures are relevant measures of the ability of the REIT to earn revenue and to evaluate Killam's financial performance. The non-IFRS measures should not be construed as alternatives to net income or cash flow from ope
Slide 44: Q4-2020 Results Conference Call
Q4-2020 RESULTS CONFERENCE CALL February 11, 2021 |10AM EASTERN
Killam Apartment REIT — Q4 2020 Earnings Presentation on 6ix