Killam Apartment REIT T.KMP.UN

Ink Research

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Morning Report: REIT insiders buy as interest rates head lower 

August 26, 2024

With interest rates heading lower, we are seeing more REITs hitting our screens. Today, we look at two REITs where insiders

have been buying. Killam Apartment REIT (KMP.UN), with a 3.57% prospective annual yield, has traditionally focused on Atlantic Canada, but it has recently been expanding across Canada. As of March 31st, New Brunswick and Nova Scotia properties generated 52% of its net operating income (NOI), PEI and Newfoundland combined contributed 8.9%, Ontario 26.3%, Alberta 9.0%, and BC 3.8%. Overall, the REIT boasts 18,835 apartment units and 0.97 million square feet of commercial property. Q2 NOI was $59.9 million, up 6.6% from Q2 2023, while property revenue was $90.8 million, up 4.5% from Q2 2023. NOI was driven by a 6.4% increase in apartment rental rates year-over-year and a 39% reduction in rental incentives. AFFO was $0.25 per diluted unit, unchanged from a year earlier as NOI growth from Killam's same property portfolio was partially offset by higher interest costs and other items. KMP reported an AFFO payout ratio of 69%, down from 70% in Q2 2023.

NorthWest Healthcare Properties REIT (NWH.UN) has an international portfolio of medical office buildings, clinics, and hospitals with interests in 186 income-producing properties representing 16.1 million sq ft of gross leasable area. In Q2, NOI was $94.0 million, down from $98.0 million in Q2 2023. However, the REIT indicates that same property NOI rose 4.2% to $86.0 million on higher lease rentals. After Q2 end, the REIT sold its UK portfolio for $885 million in a combination of cash and shares. Following the sale on a pro forma basis, the REIT indicated that North America contributes 38% to NOI, Australasia 26%, Brazil 21%, and Europe 16%. The REIT has a prospective 6.77% annual yield.