Killam Apartment Reit · TSX:KMP.UN
Killam Apartment Reit — Investor Presentation (June 2021)
42 slides from Killam Apartment Reit's investor presentation, June 2021
Slide 1: Investor Presentation June 2021
INVESTOR PRESENTATION June 2021
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: Portfolio Statistics
Portfolio Statistics Best-in-class multi-family residential owner, operator and developer Market Annual Yield(2) Capitalization(1) Distribution 3.5% $2.1B $0.68 per unit Commercial Apartment Units MHC sites Properties 17,377 5,875 0.75 million SF Q1-2021 Portfolio Occupancy Average Age 96.6% 28 year
Slide 4: Portfolio Statistics
Portfolio Statistics Apartment Portfolio Manufactured Home Community Portfolio NOI By Province Number of % of Total NS NL Number of % of Total Sites Communities NOI(1) 39% 4% Units Properties NOI(1) Nova Scotia 2,749 17 2.8% Nova Scotia PE Ontario 2,284 17 1.3% Halifax 5,813 65 34.3% 5% New Brunswic
Slide 5: Long-term Strategy to Grow FFO & NAV
Long-term Strategy to Grow FFO & NAV Killam’s strategy to increase FFO, NAV and maximize value is focused on three priorities: Increase earnings from existing portfolio. Expand the portfolio and diversify Develop high-quality properties in geographically through accretive Killam’s core markets. acqu
Slide 6: Why Invest in Killam
Why Invest in Killam Solid Operating Performance Technology & Data Driven Decisions Growing the portfolio and expanding Revenue growth and operating efficiency geographically through accretive acquisitions, opportunities. growing FFO, AFFO and NAV per unit. High Quality Portfolio Commitment to ESG O
Slide 7: Proven Record of Strong Growth
Proven Record of Strong Growth Investment Properties ($B) FFO & Distribution Per Unit AFFO Payout Ratio Investment Properties under Construction FFO Per Unit Distribution 100% $1.10 90% Investment Properties $0.95 80% $0.80 70% $0.65 60% $0.60 $0.62 $0.64 $0.66 $0.68 50% $0.86 $0.90 $0.94 $0.98 $1.0
Slide 8: 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 9: 2021 Strategic Targets
2021 Strategic Targets Develop High-Quality Properties Grow Same Property NOI • 2021 Target: Complete 166 units (two • 2021 Target: >2%, subject to COVID-19 related buildings) and break ground on two additional restrictions being lifted by Q3-2021. developments (>150 units). • YTD 2021 Performance:
Slide 10: Q1-2021 Financial Highlights
Q1-2021 | Financial Highlights Strong FFO and Same Property NOI Growth • Generated FFO per unit of $0.23, a 4.5% increase from Q1-2020. • Produced AFFO per unit of $0.19, a 5.6% increase from Q1-2020. • Strong rental rate growth of 3.3%, partially offset by a 100 bps decrease in occupancy. • Modest
Slide 11: Q1-2021 Apartment Financial Highlights
Q1-2021 | Apartment Financial Highlights Same Property Occupancy(1) & Rental Incentives(2) (as a % of Revenue) Rental Incentives (as a % of Revenue) Occupancy % 97.7% 98.0% 97.6% 0.9% 97.3% 97.3% Rental Incentives (% of Revenues) 97.5% 97.0% 96.9% 97.1% 97.0% 0.8% 96.8% 96.8% 96.8% 0.7% 97.0% 96.5%
Slide 12: Mark-to-Market Opportunity
Q1-2021 | Apartment Mark-to-Market Potential Killam tracks the average monthly rent per square foot (SF) achieved on turnover compared to the average per SF rent in place for the portfolio, by region and on a property-by-property basis. This graphs highlights the spread between the SF rates achieved
Slide 13: Consistent Strong Growth from Existing Portfolio
Q1-2021 | Consistent Strong Growth from Existing Portfolio Strength in the Maritime provinces drove strong revenue and net operating income in Q1. Q1-2021 Same Property Apartment Growth by Market 8.0% 7.1% Revenue NOI 6.0% 4.7% 3.8% 3.4% 4.0% 2.5% 3.0% 3.1% 2.4% 2.0% 2.0% 1.3% 0.5% 0.0% (2.0%) Halif
Slide 14: Mortgage Financing and Renewals
Mortgage Financing and Renewals Current Weighted Average Apartment Mortgage Maturities by Year Interest Rate As at March 31, 2021 2.66 % Mortgage Maturities Weighted Average Interest Rate (Apartments) Five-year CMHC rate Ten-year CMHC rate $600 Weighted Average Term to Maturity 4% 4.5 $525 3.19% Mor
Slide 15: Strong Balance Sheet
Strong Balance Sheet Debt as a % of Assets Increasing value of investment properties with conservative debt metrics. 55% 50% Sources of Liquidity (as of May 5/21) 45% • $45 million in estimated upfinancing on 2021 mortgage renewals 40% 53.5% 48.7% 49.8% 43.4% 44.6% 45.5% • $95 million of additional
Slide 16: Increasing Earnings from Existing Portfolio
Increasing Earnings from Existing Portfolio Roadmap to Same Property NOI Growth • Data driven decisions on unit renewals and turns to maximize mark-to-market opportunities Revenue Optimization • Repositioning opportunities to meet market demand • Focused economies of scale strategies Expense Managem
Slide 17: Revenue – Renovations
Revenue – Renovations Revenue growth through unit repositions to meet market demand. Q1-2021 Actuals 2021 Program Total Opportunity Province Opportunity to Renovate • 149 unit repositions • 550 unit repositions • 5,000 unit repositions • 12% ROI • ~$14-16M investment • ~$125-140M investment NS 3,000
Slide 18: Affordability and Value Delivery
Affordability and Value Delivery • Killam’s average rent varies between 15% - 25% of the median Region Killam’s Rent as a % of household income in each of its regions, well below the CMHC Median maximum threshold of 30% for affordability. Household Income(1) Halifax 20.3% • 50% of Killam’s portfolio
Slide 19: Embracing Technology
Embracing Technology Killam’s online functionality is providing considerable benefits during this period of social distancing. Leasing agents, maintenance employees and all property management functions can be done virtually to deliver high-quality service to residents and prospective residents. Mob
Slide 20: Capital Investment
Capital Investment ENERGY BUILDING IMPROVEMENTS CURB APPEAL HEATING PLANT UPGRADES AND MAINTENANCE June 2021| Page 20
Slide 21: Capital Investment
Capital Investment Total Capital Investment ($M/yr) Capital Investment per Apt Unit ($) $70 $4,000 $60 $3,000 $50 $40 $2,000 $30 $20 $1,000 $10 $0 $0 2016 2017 2018 2019 2020 2021* 2016 2017 2018 2019 2020 *forecast 2021 Capital Plan Suite Commercial Curb Appeal 2021 Energy Plan Renovations 7% Energ
Slide 22: Killam's Green Commitment
Killam's Green Commitment Increasing earnings from operations through energy efficiency. Includes increasing the installations of photovoltaic solar panels, smart metering, decreasing peak electric demand, water conservation projects and heating efficiencies at Killam’s existing properties. Killam c
Slide 23: Killam's 2020 ESG Highlights
Killam's 2020 ESG Highlights June 2021| Page 23
Slide 24: Killam's ESG Targets
Killam's ESG Targets Killam has committed to ambitious but realistic ESG targets to work towards in the medium-term. These goals aim to mitigate Killam’s carbon footprint, maintain good corporate citizenship and create long-term value for its stakeholders. Killam’s 2020 ESG report can be found on Ki
Slide 25: Expand Portfolio Through Accretive Acquisitions
Expand Portfolio Through Accretive Acquisitions Expanding the portfolio and diversifying geographically through accretive acquisitions, with an emphasis on newer properties. Annual Acquisitions ($ millions) $315 $270 Average $122M $200 $200 $211 $191 $160 $191 Not yet closed $167 $125 $115 $106 $121
Slide 26: Expand Portfolio Through Accretive Acquisitions
Expand Portfolio Through Accretive Acquisitions Acquisition Ownership Property Purchase Property Location Date Interest (%) Type Price(1) ($000’s) 1 Q1 Nolan Hill(2) Calgary, AB Jan 21, 2021 100% Apartment 49,500 2 Q1 54 Assomption Moncton, NB Feb 1, 2021 100% Apartment 5,600 3 Q1 Various property/l
Slide 27: 2021 Acquisitions in Calgary and Moncton
2021 | Acquisitions in Calgary and Moncton NOLAN HILL | 233 units 54 ASSOMPTION BLVD | 23 units Description: Description: Northwest Calgary; new development Downtown Moncton; built in 2004 233 units; 84 one bdrms, 107 two bdrs and 42 three bdrms 23 units; 15 one bdrm and 8 two bdrm units • 78 units
Slide 28: Strong Leasing of Developments
Strong Leasing of Developments Shorefront | 78 units | Charlottetown, PE Shorefront Leasing Activity (as of June 7, 2021) 100% 91% 75% 50% 25% 0% Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month from Opening Date (Oct 2020) Nolan Hill | 233 units | Calgary, AB Nolan Hill
Slide 29: 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 78 units – Charlottetown, PE 47 units - Charlottetown 63 units - Halifax, NS 102 units - St. John’s, NL 228 unit
Slide 30: Develop High-Quality Properties
Develop High-Quality Properties With Shorefront, Harley and Nolan Developments - Scheduled Completion Hill now open, Killam currently has 2021-2022 five developments underway, which $millions will add an additional 497 units to Killam’s portfolio by the end of 2022. This current pipeline has a $200
Slide 31: Development Activity - Ottawa
Development Activity - Ottawa LATITUDE 209-unit second phase of the Gloucester City Centre development, is expected to be completed in Q1-2022. Key Statistics Number of units 209 Start date Q2-2019 Estimated completion date Q1-2022 Project budget ($M)(1) $43.5 Cost per unit $416,000 Expected yield 4
Slide 32: Development Activity - Mississauga
Development Activity - Mississauga THE KAY, 128-unit development broke ground in Q3-2019 and is expected to be completed in early 2022. Key Statistics Number of units 128 Start date Q3-2019 Est. completion date Q4-2021 Project budget ($M) $57.0 Cost per unit $445,000 Expected yield 4.75%-5.0% Expect
Slide 33: Development Activity - Ottawa
Development Activity - Ottawa LUMA – 168-unit development in Ottawa 50/50 with RioCan REIT. Key Statistics Number of units 168 Estimated completion date Q2-2022 Project budget ($M)(1) $44.3 Cost per unit $527,000 Expected yield 4.0%-4.25% Avg rent $2.90 per SF Progress shot as of May 2021 Avg unit s
Slide 34: Development Activity - Kitchener
Development Activity - Kitchener CIVIC 66 – 169-unit development in Kitchener that broke ground in Q3-2020 and is expected to be completed by Q4-2022. Key Statistics Latitude (Phase II) Number of units 169 Start date Q3-2020 Est. completion date Q4-2022 Project budget ($M) $69.7 Cost per unit $412,0
Slide 35: Development Activity - Halifax
Development Activity - Halifax THE GOVERNOR - 12 luxury units and 3,500 square foot ground floor commercial development adjacent The Alexander in downtown Halifax, NS. Latitude (Phase II) Key Statistics Number of units 12 Start date Q1-2021 Est. completion date Q3-2022 Project budget ($M) $21.5 Expe
Slide 36: Development Pipeline - ~$1.0 billion
Development Pipeline - ~$1.0 billion Future Development Opportunities Killam’s Potential # Est Year of Property Latitude (Phase II) Location Interest of Units(1) Status Completion Developments expected to start in 2021 Westmount Place (Phase 1) Waterloo, ON 100% 140 In design and approval process 20
Slide 37: 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 38: Appendix: Core Market Update
APPENDIX Core Market Update June 2021| Page 38
Slide 39: Halifax – 39% of NOI
Halifax – 39% of NOI From June 2017 – June 2020, more than 27,000 new permanent residents have settled in Halifax. Halifax Population Growth Halifax Total Population Annually from July 1 – June 30 460,000 10,000 9,000 440,000 8,000 7,000 420,000 6,000 5,000 400,000 4,000 380,000 3,000 2,000 360,000
Slide 40: Halifax – 39% of NOI
Halifax – 39% 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 Average Total Starts Total Starts Vacancy 4,000 4,
Slide 41: Halifax – 39% of NOI: Current Market Conditions
Halifax – 39% of NOI Current Market Conditions Halifax Vacancy CMHC Market Stats1 • Despite COVID-19 pandemic, demand for housing remains strong per CMHC 52,913 Rental Units as population growth from immigration, intraprovincial migration 1.9% Vacancy and demographics continues to outpace new supply
Slide 42: Contact Information
INVESTOR PRESENTATION June 2021 Contact Information Philip Fraser Dale Noseworthy, CPA, CA, CFA President & Chief Executive Officer Chief Financial Officer 902-453-4536 902-442-0388 [email protected] [email protected] Robert Richardson, FCPA, FCA Nancy Alexander, CPA, CA Executive Vice
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