Killam Apartment REIT T.KMP.UN

Alternate Symbol(s): KMMPF

Real Estate REIT - Residential

Killam Apartment Real Estate Investment Trust (Trust) is a Canada-based residential real estate investment trust. The Trust owns, operates, and develops a $5.3 billion portfolio of apartments and manufactured home communities (MCHs). Its segments include Apartment, MHC, and Commercial. Its Apartment segment acquires, operates, manages and develops multifamily residential properties across Canada. Its MHC segment acquires and operates MHC communities in Ontario and Eastern Canada. Its Commercial segment acquires and operates stand-alone commercial properties in Ontario, Nova Scotia and Prince Edward Island. Its apartment portfolio consists of over 18,801 units, including 1,343 units jointly owned with institutional partners. It owns over 5,975 sites in 40 MHCs, also known as land-lease communities or trailer parks, in Ontario and Atlantic Canada. It owns the land and infrastructure supporting these communities and leases sites to tenants who own their own homes and pay Killam site rent.

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Killam Apartment REIT

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Post by retiredcfon Feb 13, 2025 9:02am

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Post# 36451345

TD

Have a $22.00 target. GLTA

Q4/24 SLIGHT MISS; 2025 OUTLOOK LOOKS GOOD WITH ATLANTIC CANADA TO OUTPERFORM

THE TD COWEN INSIGHT

Q4 results were marginally below our expectations/consensus but did cap off a year of strong operational performance (+8.4% SPNOI growth) and an improved balance sheet. While recognizing slowing fundamentals, management's outlook appears favourable and appears largely in line with our forecast. Atlantic Canada is expected to generate the strongest revenue growth.

Impact: NEUTRAL
Q4 Results Miss Slightly. FFO/unit (f.d.) of $0.294 was +6% y/y and slightly below our estimate/consensus. AFFO/unit (our calculation) of $0.244 was also slightly below.

We view management's 2025 4%-7% SPNOI growth target as achievable. Our current forecast is for 6%+. Revenue growth is expected to be in the 5-6% range (m-t-m estimated at 15%) with expense growth of 5-7% (higher property taxes and utility expense). Atlantic Canada, with its more diversified portfolio, should outperform.

Q4/24 Operating Highlights

Apartment SPNOI (89% of SPNOI) growth was +7.4% with revenues +6.1% offset by 3.4% growth in operating expenses. SPNOI was positive in every region with standouts being New Brunswick (+10.1%) and Halifax (+9.2%). Strong AMR growth of +7.0% was slightly offset by an 80 bps decline in occupancy to 97.6% (Calgary down 590bps y/y and continues to be impacted by competing new supply). Apartment SPNOI margin was +80bps y/y to 66.4%.
MHC (5%) SPNOI growth was +11.2% (flat expenses and revenues +6.5%), while Commercial (6%) SPNOI growth was +6.0% (increased rates on renewals and lower opex).

Capital Recycling/Developments

Targeting $100-150mm in dispositions for 2025. Proceeds will be directed towards development, the NCIB, and acquisitions of newer properties. During Q4, Killam completed $11.5mm in asset sales ($59.2mm in 2024) to push past 2024's $50mm target.
2024 development lease ups should contribute nicely to 2025 FFO. Nolan Hill Phase II (completed in Dec/23), Civic 66 and The Governor are now all fully leased and
are expected to contribute $0.03/unit to FFO/unit in 2025. The Carrick (139-unit development in Waterloo) is expected to be completed in Q2/25.

Leverage (D/GBV) was -30bps q/q to 40.4%, representing an all-time low. Recorded a modest $0.7mm IFRS FV loss (cap rates unchanged). We expect NCIB activity to increase. Killam repurchased 35k units in 2024 for $56mm (avg $16.76). We expect this pace could increase given current valuations and increased capital recycling activity.

Conference call Feb. 13 at 9:00 AM (1-888-699-1199, webcast link)