TSX:KMP.UN - Post Discussion
Post by
retiredcf on Nov 07, 2024 7:21am
RBC
November 6, 2024
Killam Apartment REIT
Solid Q3; divvy increase; a positive tone for 2025
TSX: KMP.UN | CAD 18.10 | Outperform | Price Target CAD 24.50
Sentiment: Neutral
First Look: Killam Apartment REIT (“KMP”) reported FFO/unit of $0.33, +2% y/y, vs. RBCe/consensus of $0.33/$0.33. Results were solid with rent growth on turnover healthy at +20% and portfolio MTM opportunity at +22%. Its preliminary 2025 outlook struck a noticeably positive tone, noting expected “strong SP NOI growth”, margin expansion, and Atlantic Canada potentially outperforming ON and Western Canada.
Key points:
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SP NOI growth: +7.4% (SP-Rev +5.9%; SP-Exp +2.6%). Property tax +5%, general opex +3.6%, Utilities -4%. SP NOI margin: 68.7% (+100 bps y/y).
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Apartment SP-Occupancy: 97.9% (-30bps q/q, -50 bps y/y); SP Apartment rent +7.2% y/y
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2024 SP NOI growth target/guide maintained at >8% (+8.7% YTD)
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Rent growth on turnover: +20.4% vs.+20.2% in Q2/24, +19.6% in Q1/24, +19.8% in Q4/23, +16.8% in Q2/23. Renewal spread was 4.7% for a blended spread of +7.7%. 5.8% of suites (14% YTD) turned in Q3.
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Portfolio MTM opportunity: +22% (+25% in Q2)
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Market rent commentary: Market rents softening in Western Canada and higher end of ON, stable in NS, and accelerating across rest of Atlantic Canada
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Asset sales: Sold 144 units for $17.9M in Q3 and 60 units for $8.2M in Halifax ($137K/unit) post Q3. Targeting $100–150M in 2025.
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Distribution increased +2.9% to $0.72/unit annualized, starting November.
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Leverage: Debt to assets of 40.7% (-50 bps q/q). Net debt to EBITDA 9.86x (-0.14x q/q).
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IFRS BV (pre-tax) $24.85 (-0.5% q/q). Cap rates for its apartment and MHC portfolio were 4.61% (-1bps q/q) and 6.03% (-1 bps q/q), respectively.
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