Opened a position this morning. GLTA
RBC’s Jimmy Shan bumped his Killam Apartment REIT (KMP.UN-T) target to $23.50 from $23 with an “outperform” rating. Other changes include: Desjardins Securities’ Kyle Stanley to $23 from $22 with a “buy” rating, National Bank’s Matt Kornack to $22.75 from $22 with an “outperform” rating, TD Securities’ Jonathan Kelcher to $23 from $21 with a “buy” rating and CIBC’s Dean Wilkinson to $22 from $20 with an “outperformer” rating. The average is $22.08.
“Q4 results were strong, particularly so on operations and margins as the REIT saw continued acceleration in turnover spreads, which is likely to be sustained in 2024 with higher allowable increases on renewal in rent-controlled geographies,” said Mr. Kornack. “Operating expense growth has been moderating despite persistent market rent growth and guidance is for inflationary increases in 2024 (with lower utilities offsetting higher property taxes). KMP’s initial guidance for FY24 is a ‘minimum of 6 per cent’ SPNOI growth, a figure which we believe has room to move higher, particularly given this year’s milder winter and the expectation for a moderation in expense growth. Despite turnover declining (17 per cent expected this year vs. 20+ per cent historically), Killam benefits from 43 per cent of its portfolio in non-rent control markets and step changes in allowable increase. The REIT was our top apartment pick heading into the quarter and these strong results reaffirm our positive bias.”