Killam Apartment Reit · TSX:KMP.UN
Killam Apartment Reit — Investor Presentation (May 2020)
63 slides from Killam Apartment Reit's investor presentation, May 2020
Slide 1: Investor Presentation May 2020
Investor Presentation May 2020 KILLAM APARTMENT REIT
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: Best-in-class multi-family residential owner, operator and developer
Best-in-class multi-family residential owner, operator and developer Killam's portfolio includes ~$3.4 billion in real estate assets, comprised of 16,703 apartment units, 5,786 manufactured home community (MHC) sites and 0.7 million square feet of commercial space. NOI by Sector 5% 5% Apartments MHC
Slide 4: Portfolio Details
Portfolio Details Apartment Portfolio% Manufactured Home Community Portfolio Number of % of Total Number of % of Total Units Properties NOI(1) Sites Communities NOI(1) Nova Scotia Nova Scotia 2,749 17 3.0% Halifax 5,814 65 34.8% Ontario 2,284 17 1.5% Sydney 139 2 0.9% New Brunswick(2) 672 3 -0.2% 5,
Slide 5: Proven Record of Strong Growth
Proven Record of Strong Growth Net Operating Income FFO & Distribution Per Unit AFFO Payout Ratio1 $170 FFO Per Unit Distribution 120% $150 100% $0.90 $130 Millions 80% $0.80 $110 60% $0.70 $90 40% $0.60 $0.60 $0.60 $0.62 $0.64 $0.66 106% $0.79 $0.86 $0.90 $0.94 $0.98 $105 $115 $136 $152 $70 20% 91%
Slide 6: Why Invest in Killam
Why Invest in Killam Solid Operating Performance Growing the portfolio and expanding geographically with accretive acquisitions, growing FFO, AFFO and NAV per unit. High Quality Portfolio One of Canada’s highest-quality and youngest apartment portfolios with 33% of NOI generated from apartments buil
Slide 7: Accretive Capital Allocation
Accretive Capital Allocation Development JV Investment Acquisitions Invest in developing high-quality energy Invest in joint development opportunities Acquire high-quality multi-residential efficient assets. to maximize growth potential. assets. Intensification NOI Enhancing Cap Ex Dispositions Inte
Slide 8: COVID-19 | April Rent Collection
COVID-19 | April Rent Collection Avg Monthly Rental Revenue April 2020 Rent Collection (as of May 6, 2020) Commercial 6% MHCs 4% Apartments 98.9% 98.3% 72.0% 97.1% 90% Apartments MHCs Commercial Overall • Killam is working on April’s arrears and seeking rent deferrals arrangements with commercial an
Slide 9: COVID-19 | Killam's Commercial Portfolio
COVID-19 | Killam’s Commercial Portfolio Killam’s current gross commercial revenue = 6% of projected 2020 revenues. % of Commercial Commercial (% of total gross commercial revenue) Tenant Rent 1 SunLife Assurance 26.7% Sunlife, 27% 2 Loblaws 5.5% Grocery 3 Co-op Atlantic 4.7% Anchored, 12% 4 Labatt
Slide 10: COVID-19 | Strong Balance Sheet
COVID-19 | Strong Balance Sheet Killam is managing its balance sheet with conservative leverage. Debt as a % of Total Assets Interest Coverage Debt to Normalized Ratio EBITDA 56.4% 53.5% 48.7% 49.8% 43.4% 44.4% 10.63 10.51 10.50 10.62 10.15 10.31 2.34 2.70 3.13 3.22 3.20 3.27 Sources of Liquidity (a
Slide 11: COVID-19 | Mortgage Financing & Renewals
COVID-19 | Mortgage Financing & Renewals Current Weighted Mortgage financings and renewals have progressed on schedule with Average Interest Rate interest rates on renewals during April and May averaging 1.58%. of 2.86% Apartment Mortgage Maturities by Year 87% of Apartment As at March 31, 2020 Mort
Slide 12: Long-term Strategy to Grow FFO & NAV
Long-term Strategy to Grow FFO & NAV Killam’s long term strategy to increase FFO, NAV and maximize value is focused on three priorities: 1. Increase earnings from existing portfolio. 2. Expand the portfolio and diversify geographically through accretive acquisitions, targeting newer properties. 3. D
Slide 13: Roadmap to Same Property NOI Growth
Increasing earnings from existing portfolio Roadmap to Same Property NOI Growth Revenue Optimization Expense Management Energy Efficiencies Leading in Technology • Focused economics of • Energy and water • Data driven decisions • Data driven decisions scale strategies projects ↓ CO2 on revenue on re
Slide 14: Increasing earnings from existing portfolio
Increasing earnings from existing portfolio • Strong occupancy • 2019 same property occupancy was Killam’s highest • Rising rental rates • Rate increases on renewals (2.1%), regular turns (5.8%) and repositioned turns (28.5%) averaged 3.6% in 2019, up from 2.7% in 2018. Apartment Same Apartment Same
Slide 15: Same Property Rental Increases
Increasing earnings from existing portfolio. With continued high occupancy levels, increasing rental rates is a key focus for revenue optimization. Same Property Rental Increases (%) 5.8% 6.1% 5.7% 3.6% 5.6% 3.4% 3.4% 5.3% 5.0% 5.1% 3.2% 4.9% 4.6% 2.9% 2.7% 3.3% 3.4% 3.4% 2.5% 2.4% 2.2% 2.0% 2.0% 2.
Slide 16: Unit repositioning program
Increasing earnings from existing portfolio Driving revenues through unit repositions to meet market demand, maximize NOI growth and investment returns. Q1-2020 Actuals 2020 Program Total Opportunity • 95 unit repositions • 13% ROI • $25K avg investment • 300-500 unit repositions • ~$7-12M investmen
Slide 17: Expense management
Increasing earnings from existing portfolio Increasing earnings from existing operations through expense management. • Energy conservation initiatives • Economies of scale – Negotiating lower pricing for goods and services. • Employee training – Focusing on front-line repairs and maintenance staff.
Slide 18: Strong Q1-2020 Results
Strong Q1-2020 Results FFO and AFFO per unit growth from same property NOI growth, interest savings, accretive acquisitions and developments. Same Property Q1 FFO & AFFO Q1 Operating Margin Consolidated NOI Per Unit Expansion Growth For the three months Operating Margin For the three months ended Ma
Slide 19: 2019 & Q1-2020 Performance
2019 & Q1-2020 Performance 2019 Same Property 2019 Results by Market Performance Revenue Growth NOI Growth (1.5%) (1.4%) 1.1% (4.1%) 4.7% 5.2% 4.1% 5.6% 2.9% 5.8% 3.7% 5.5% 3.6% 4.5% 2.2% 2.6% 3.5% 2.9% 2.4% 3.5% 4.1% Revenue Expense NOI 20% Q1-2020 Results by Market Q1-2020 Same Property Performanc
Slide 20: Online functionality and technology
Increasing earnings from existing portfolio Killam’s online functionality is providing considerable benefits during this period of social distancing. Leasing agents, maintenance employees and all property management functions can be done virtually to deliver high-quality service to residents and pro
Slide 21: Killam's ESG Progress
Killam’s ESG Progress Killam continues to build on its current successes to make its buildings more sustainable and resilient to the impacts of climate change. Focused on increased disclosure and public reporting on ESG initiatives, issuing our 2019 ESG Report In accordance with GRI Standard: Co
Slide 22: Expand Portfolio Through Accretive Acquisitions
Expand Portfolio Through Accretive Acquisitions Expanding the portfolio and diversifying geographically through accretive acquisitions, with an emphasis on newer properties. Annual Acquisitions ($ millions) Average $118M $115 $106 $121 $160 $200 $315 $130 $167 $200 $103 $125 $191 $85 $54 $72 $16 $45
Slide 23: 2020 Acquisitions | Christie Point
2020 Acquisitions | Christie Point Description: Acquisition Details: Location: 161 units $54 million Victoria, BC 5 two-storey apartment buildings and 4 two-storey 4.1% capitalization rate townhouses with 2 and 3 bedroom units 99% occupied Average rent – $1,555/month ($1.67/sf) Closed: January 15, 2
Slide 24: 2020 Acquisitions | Halifax, NS
2020 Acquisitions | Halifax, NS Description: Acquisition Details: Location: 54 units $8.8 million ($163,000/unit) Halifax, NS 42 underground parking; 36 surface parking 5.3% capitalization rate Average rent – $1,176/month Closed: January 31, 2020 Occupancy – 100% 9 Carrington Vibe Lofts, Edmonton 24
Slide 25: 2020 Acquisitions | Langford, BC
2020 Acquisitions | Langford, BC Description: Acquisition Details: Location: 156 units; 2 five-storey apartment buildings; $60 million Langford, BC 156 underground parking stalls 4.4% capitalization rate Ground floor retail not included in purchase Closed: April 30, 2020 Average rent – $1,873/month
Slide 26: 2020 Acquisitions | Langford, BC
2020 Acquisitions | Langford, BC Victoria International Airport Crossing at Belmont Christie Point Crossing at Belmont Downtown Victoria
Slide 27: 2020 Acquisitions | Langford, BC
2020 Acquisitions | Langford, BC Vibe Lofts, Edmonton 27
Slide 28: 2020 Acquisitions
2020 Acquisitions Property Location Acquisition Date Ownership Property Type Purchase Interest (%) Price(1) ($M) 1 Christie Point Victoria, BC Jan 15, 2020 100% Apartment $54,000 2 9 Carrington Halifax, NS Jan 31, 2020 100% Apartment 8,800 3 Domaine Parlee Shediac, NB Mar 23, 2020 100% MHC 3,950 4 1
Slide 29: Develop High Quality Properties
Develop High Quality Properties Developing high-quality properties in core markets. • Over $400 million (1,500 units) of developments completed or underway. • Experienced in-house architect and engineers. • Development pipeline of approximately 2,600 units. Developments Completed and Underway $120 $
Slide 30: Develop High-Quality Properties
Develop High-Quality Properties Approximately $300 million of developments completed. 101 units - Fredericton, NB 122 units - Cambridge, ON 94 units - Cambridge, ON 70 units - Halifax, NS Projects Completed 2013 – 2019 Value today - $348M Cost to build - 278M Gain - $70M (25%) 47 units - Charlotteto
Slide 31: Development Activity | PEI
Development Activity | PEI Shorefront development broke ground in October 2018. Key Statistics Number of units 78 Start date Q4-2018 Estimated Completion date Q4-2020 Project Budget ($M) $22.0 Cost per unit $282,000 Expected Yield 5.6% Expected Value 4.75-5.0% *Killam’s 50% interest. Green Features:
Slide 32: Development Activity | Mississauga
Development Activity | Mississauga The Kay development broke ground in Q3-2019. Key Statistics Green Features: Sub-metered water, Number of units 128 geothermal heating and cooling Start date Q3-2019 Estimated Completion date Q2-2022 Project Budget ($M) $56.0 Cost per unit $437,500 Expected Yield 5.
Slide 33: Development Activity | Ottawa
Development Activity | Ottawa Latitude (Phase II of Gloucester City Centre) Frontier (Phase I) Latitude (Phase II) Key Statistics Number of units 209 Start date Q2-2019 Est. Completion date Q4-2021 Project Budget ($M)* $43.5 Cost per unit $416,000 Expected Yield 5.2% Expected Value Cap-rate 4.0% Ave
Slide 34: Development Activity | Charlottetown
Development Activity | Charlottetown 10 Harley Street – 38-unit redevelopment in Charlottetown. Key Statistics Number of units 38 Latitude (Phase II) Start date Q3-2019 Estimated Completion date Q4-2020 Project Budget ($M) $10.4 Cost per unit $263,000 Expected Yield 5.4% Expected Value 4.75-5.0% 5 H
Slide 35: Future Development | Kitchener
Future Development | Kitchener Weber Scott Pearl Description: 1.8 acre development site including a small commercial building and a heritage residence Opportunity to develop a 163-unit apartment building Commercial Building Future development Location: Downtown Kitchener Acquisition Details: $6.0 mi
Slide 36: Future Development | Waterloo
Future Development | Waterloo Westmount Place Development Opportunity: • ~1000 units • 3-phase development • Opportunity to create over $70 million of unitholder value through the development of ~1,000 units Future development, Westmount Place, Waterloo 36 36 36
Slide 37: Future Development | Waterloo
Future Development | Waterloo Westmount Place Development Opportunity – Building A: • 116 units; 98 parking spaces underground and a new parking garage for Sunlife Employees (175 spaces) Future development – Tower One, Westmount Place, Waterloo 37 37
Slide 38: Westmount Place | Waterloo
Westmount Place| Waterloo Description: Acquisition Details: 14.7 acre existing commercial site $77.8 million 189,000 sf office tower 5.7% yield 87,000 sf grocery anchored retail plaza 21,000 sf of second floor office space Purchased Date: 2.0 acre residential development site Mar 29, 2018 expected t
Slide 39: 2020 | Development Pipeline - ~$850 million
2020 | Development Pipeline - ~$850 million Future Development Opportunities Killam’s Potential # Est Year of Property Location Interest of Units(1) Status Completion Developments expected to start in the next 24 months The Governor Halifax, NS 100% 12 In design and approval process 2023 Weber Scott
Slide 40: High-Quality Portfolio
High-Quality Portfolio Killam operates one of Canada’s newest apartment portfolios. • 33% of apartment NOI is earned from properties built in the last 10 years. • Modern, high‐quality buildings are in greater demand and require less maintenance capital to operate. Apartment NOI by Year of Average Ca
Slide 41: Appendices
Appendices 41
Slide 42: Core Market Update
rcaeKillam 3.3 APARTMENT REIT Core Market Update
Slide 43: Halifax – 40% of NOI
Halifax – 40% of NOI The Halifax rental market is strong with overall occupancy of 98.6%. Current Market Conditions (per CMHC in Jan 2020) CMHC Market Stats1 • Strong demand as population growth from immigration, Halifax Vacancy intraprovincial migration and demographics continues to per CMHC 51,400
Slide 44: Halifax – 40% of NOI
Halifax – 40% of NOI New supply has been absorbed by population growth from immigration, migration and demographics. Halifax Housing Starts - Apt & Single Halifax Housing Starts & Vacancy Trend Total Singles/Semi-Detached/Row Total Apartments/Condos Total Starts Vacancy Average Total Starts 4,000 4,
Slide 45: Halifax – 40% of NOI
Halifax – 40% of NOI From January 2016 – June 2019, more than 18,000 new permanent residents have settled in Halifax. Halifax Population Growth Halifax Total Population Annually from July 1 – June 30 10,000 480,000 9,000 460,000 8,000 7,000 440,000 6,000 420,000 5,000 4,000 400,000 3,000 380,000 2,0
Slide 46: New Brunswick – 19% of NOI
New Brunswick – 19% of NOI Population growth coupled with limited construction has resulted in record high occupancy of 98.2% in Q1-2020. Current Market Conditions (per CMHC in Jan 2020) CMHC Rental Stats1 NB Vacancy 35,888 Rental Units • Population growth from increased interprovincial per CMHC 2.6
Slide 47: Ontario – 22% of NOI
Ontario – 22% of NOI Strong rental market driven by robust job market, international immigration and high housing prices. CMHC Rental Stats1 Current Market Conditions (per CMHC in Jan 2020) Ottawa (6.2% of NOI) 1.8% vacancy in 2019 Ontario Vacancy 1.6% vacancy in 2018 • Population growth from increa
Slide 48: St. John's & Charlottetown, 5% & 6% of NOI
St. John’s & Charlottetown, 5% & 6% of NOI St. John’s – Slow recovery of economic conditions as highly dependant on major oil investments. Market Fundamentals (per CMHC in Jan 2020) St. John’s Same St. John’s Vacancy Property Revenue • Uptick in vacancy in 2019 after a couple years of per CMHC1 Grow
Slide 49: Repositioning Program
Repositioning Program 49
Slide 50: Spruce Grove, Calgary repositioning
Increasing earnings from existing portfolio. Spruce Grove, Calgary (66 units) | Driving revenues through repositioning units Suite Repositionings • $27K - Average investment per unit • 22% - Average rent lift • 14.1% - Average ROI • $390 Avg monthly increase AFTER BEFORE 50
Slide 51: Westminster, London repositioning
Increasing earnings from existing portfolio. Westminster, London (106 units) | Growing revenues through repositioning units Suite Repositionings • $32K - Average investment per unit • 44% - Average rent lift AFTER • 13% - Average ROI • $350 Avg monthly increase BEFORE 51
Slide 52: Spring Garden Terrace, Halifax repositioning
Increasing earnings from existing portfolio. Spring Garden Terrace, Halifax (201 units)|Driving revenues through repositionings Suite Repositionings • $110K invested in 6 units in 2018 • 20% Avg ROI • 18% Avg rent lift AFTER BEFORE • $230 Avg monthly increase Common area upgrades 52
Slide 53: Quinpool Tower, Halifax common area upgrades
Increasing earnings from existing portfolio. Quinpool Tower, Halifax (233 units) | Investing in common area upgrades AFTER Common area upgrades BEFORE 53 53
Slide 54: 2019 Acquisitions
2019 Acquisitions rcaeKillam gh. APARTMENT REIT 54
Slide 55: 2019 Acquisitions | Harold Doherty
2019 Acquisitions | 11 Harold Doherty Description: Acquisition Details: Location: 59 units; 48 underground parking stalls $8.1 million ($137,000/unit) Fredericton, NB Average rent – $1,175/month ($1.40/sf) 5.8% capitalization rate 100% leased Built in 2017 Closed: April 18, 2019 Vibe Lofts, Edmonton
Slide 56: 2019 Acquisitions | Charlottetown Mall
2019 Acquisitions | Charlottetown Mall Description: Commercial/Retail Details: Acquisition Details: • 32 acre commercial site with • 5.42 year average lease term • $23.75 million (50% interest) apartment development opportunity • 89.2% occupied • 6.7% yield for ~300 units • 80% national tenants • Cl
Slide 57: Charlottetown Mall | Future Development
Charlottetown Mall | Future Development Development Potential • Zoned for multi-residential • ~100 unit buildings, 4-5 storeys each • Prime location to transit, trails, the universities and downtown business district University of PEI ↓ 57
Slide 58: 2019 Acquisitions | Grid 5 & Silver Spear
2019 Acquisitions | Grid 5 & Silver Spear Description: Acquisition Details: Location: Closed: June 14, 2019 Grid 5 – 50% of 307 units $69.9(1) million Calgary, AB Silver Spear – 50% of 199 units 4.2% capitalization rate Mississauga, ON Killam acquired its initial ownership interest in Silver Spear i
Slide 59: 2019 Acquisitions | Dieppe Village
2019 Acquisitions | Dieppe Village Description: Acquisition Details: Location: 3 residential apartment buildings Blended all cash yield of 5.7% Moncton, NB 1 mixed-use commercial & residential building 5.0% residential capitalization rate 127 units total 7.9% commercial capitalization rate 1 Co-op g
Slide 60: 2019 Acquisitions | Lian Street
2019 Acquisitions | Lian Street Description: Acquisition Details: Location: 48 units; 48 underground parking spots $9.25 million Fredericton, NB Four-storey apartment complex with large 2 & 3 5.40% capitalization rate bedroom units 100% occupied Average rent – $1,367/month ($1.00/sf) Closed: August
Slide 61: 2019 Acquisitions | Canaan
2019 Acquisitions | 145 Canaan Description: Acquisition Details: Location: 48 units $9.5 million Moncton, NB Underground parking 5.0% capitalization rate Four-storey apartment with large 1 & 2 bdrm units 100% occupied Average rent – $1,229/month ($1.06/sf) Closed: Nov 22, 2019 Vibe Lofts, Edmonton 6
Slide 62: 2019 Acquisitions | The Link
2019 Acquisitions | The Link Description: 105 units Underground parking Eight-storey apartment complex with 1 & 2 bdrm units Average rent – $1,627/month ($1.97/sf) Acquisition Details: Location: $31.5 million ($305,000/unit) Edmonton, AB 4.5% capitalization rate 88% leased Closed: November 25, 2019
Slide 63: Contact Information
Philip Fraser President & Chief Executive Officer 902-453-4536 [email protected] Robert Richardson, FCPA, FCA Executive Vice President 902-442-9001 [email protected] Dale Noseworthy, CPA, CA, CFA Chief Financial Officer 902-442-0388 [email protected] Nancy Alexander, CPA, CA V
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