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 9:17am

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Post# 36451380

RBC

February 12, 2025

Killam Apartment REIT
A 2025 target/guide strong enough to mitigate bearish sentiment

TSX: KMP.UN | CAD 16.55 | Outperform | Price Target CAD 23.50

Sentiment: Positive

First Look: Killam Apartment REIT (“KMP”) reported FFO/unit of $0.294, +5.7% y/y, vs. RBC/consensus of $0.296/$0.298. Q4 operating metrics did show signs of a rental market coming off peak, with 8 of its 12 markets showing y/y occupancy decline, and MTM opportunity decelerating to +15%. That said, we think the resilient double digit rent growth on turnover in Q4 and the newly introduced 2025 SP NOI growth target/guide of +4% to +7% are strong enough to mitigate some of the bearish sentiment on the sector.

Key points:

SP NOI growth: +7.5% (SP-Rev +6.1%; SP-Exp +3.4%). Property tax +5.4%, general opex +3.4%, Utilities +0.6%. SP NOI margin: 65.6% (+90 bps y/y).
Apartment SP-Occupancy: 97.6%, -80 bps y/y (larger declines in Ottawa, London, Calgary, Victoria); SP Apartment rent +7.0% y/y
2025 SP NOI growth target/guide at +4% to +7% (SP revenue +5% to +6%, Opex +5% to +7%).
Rent growth on turnover: +19.5% vs. +20.4% in Q3/24, +20.2% in Q2/24, +19.6% in Q1/24, +19.8% in Q4/23. Renewal spread was 4.4% for a blended spread of +7.7%. 5.8% of suites (14% YTD) turned in Q3.
Portfolio MTM opportunity: +15% (+22% in Q3)
Market rent commentary: Market rent trends vary by product and region – seeing declines at high end of the market and expects Atlantic Canada to outperform ON and Western Canada.
Asset sales: Sold $59M totaling 338 units; Targeting $100-150M in 2025.
Leverage: Debt to assets of 40.4% (-30 bps q/q). Net debt to EBITDA 9.69x (-0.17x q/q).
IFRS BV (pre-tax) $25.56 (+0.2% q/q). Cap rates for its apartment and MHC portfolio were 4.62% (+1bps q/q) and 6.02% (-1 bps q/q).