Investor Presentation April 2016
Cautionary Statement This presentation may contain forward-looking statements with respect to Killam Apartment REIT and its operations, strategy, financial performance and condition. These statements generally can be identified by use of forward-looking words such as “may”, ”will”, “expect”, “estimate”, “anticipate”, “intends”, “believe” or “continue” or the negative thereof or similar variations. The actual results and performance of Killam Apartment REIT discussed herein could differ materially from those expressed or implied by such statements. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations. Important factors that could cause actual results to differ materially from expectations include, among other things, general economic and market factors, competition, changes in government regulation and the factors described under “Risk Factors” in Killam' annual information form and other securities regulatory filings. The cautionary statements qualify all forward- looking statements attributable to Killam Apartment REIT and persons acting on its behalf. Unless otherwise stated, all forward-looking statements speak only as of the date to which this presentation refers, and the parties have no obligation to update such statements. 2
Killam Apartment REIT Killam Apartment REIT has $1.8 billion in residential real estate assets in Atlantic Canada, Ontario and Alberta. Apartment units 13,681 MHC * sites 5,165 Market cap $675M Distribution $0.60 Distribution yield 5.2% Avg. daily volume ** 185K *manufactured home community **30 day 3
Diversified Real Estate Portfolio Moncton, NB Halifax, NS Fredericton, NB Saint John, NB 5,090 units 1,629 units 1,394 units 1,202 units St. John’s, NL Charlottetown, PE Ottawa, ON Toronto, ON 915 units 906 units 780 units 378 units Calgary, AB London, ON Non-core Regions Cambridge, ON 264 units 469 units 347 units 307 units Killam’s MHC portfolio includes 5,165 units in Nova Scotia, Ontario, Newfoundland and New Brunswick. 4
Diversified Real Estate Portfolio NOI by Sector Apartment NOI by Type of Property Apartments MHCs Commercial 2% 9% high rise elevatored 33% mid-rise 35% 89% walk-ups town-houses 30% 2% 5
Diversified Real Estate Portfolio % of Apartment NOI by Core % of MHC NOI by Province Market New Brunswick NFLD Calgary Other 3% 2% 3% 3% Saint John 5% PEI 7% St. John's Halifax 8% 40% Ontario Nova 45% Scotia Fredericton 50% 9% Moncton Ontario 9% 16% Killam is the dominant Landlord in Atlantic Canada with a 14% market share of the region’s urban centres. 6
Killam’s Strategy Killam’s strategy is to maximize its value and long-term profitability by concentrating on three key areas of growth: 1) Increasing earnings from its existing portfolio 2) Expanding the portfolio and diversifying geographically through accretive acquisitions, with an emphasis on newer properties 3) Developing high-quality properties in core markets 7
Killam’s Strategy Maximizing Same Store Earnings Same Store NOI Growth 2006-2015 8.4% Record high natural gas prices in Atlantic Canada impacted NOI growth in 2013 & 2014. 5.1% 4.8% 4.2% 2.6% 2.1% 2.0% (0.9%) 0.3% (0.4%) 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 The average NOI growth from Killam’s same store portfolio from 2006 – 2015 was 2.8%. 8
$16 2002 Annual Growth Through Acquisitions Killam’s Strategy $45 2003 $167 2004 $200 2005 Annual Acquisitions $103 2006 $125 2007 $ millions $36 2008 $3 2009 $115 2010 $106 2011 $85 2012 $121 2013 $160 2014 $54 2015 9
Killam’s Strategy Active Development Program Developments Completed Per Year $ millions $80 $60 $16.7 $25.4 $40 $20 $25.3 $19.0 $35.0 $14.1 $7.7 $14.7 $7.6 $5.0 $0 * expectation Since completing its first development in 2011, Killam has invested over $120 million in developments. Killam expects to spend between $30 - $60 million 10 per year on apartment developments.
Killam’s Strategy Increased Geographic Diversification % of Apartment NOI Generated Outside Atlantic Canada 19% 14% 11% 8% 7% 5% 0% 2009 2010 2011 2012 2013 2014 2015 84% of the $160 million in acquisitions completed in 2014 were in Ontario and Alberta. 11
Financial & Operating Performance 9.7% FFO Per Share Growth in 2015 Highlights from 2015: FFO Per Share • 9.7% increase in FFO per share. $0.79 • Improved AFFO payout ratio to 87.7%. • 4.2% same store NOI growth. $0.72 $0.71 $0.71 • Completed and leased up two developments. $0.69 • $54 million in acquisitions. • Achieved interest expense savings, reducing the weighted average interest rate on mortgages to 3.27% at Dec 31, 2015 from 3.60% at Dec 31, 2014. • 99.5% shareholder approval for REIT conversion. 2011 2012 2013 2014 2015 12
Financial & Operating Performance 4.2% Same Store NOI Growth in 2015 Same Store Results Year Ended Dec 31, 2015 Revenue Expenses NOI 4.2% 4.2% 4.1% 3.9% 3.5% 2.2% 2.1% (0.4%) (0.7%) MHCs Apartments Consolidated 13
Financial & Operating Performance 2.2% Same Store Revenue Growth in 2015 Same Store Revenue Growth 2.9% 2.6% 2.2% 1.9% 1.8% 1.7% 2010 2011 2012 2013 2014 2015 Revenue growth in 2015 is attributable to occupancy gains, increased rents and a decrease in incentive offerings. 14
Financial & Operating Performance Above Average Revenue Growth in 2015 Quarterly Change in Same Store Revenue Growth 2010-2015 Average quarterly same store revenue 4.0% growth of 2.2% from 2010-2015. 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 15
Financial & Operating Performance Improved Occupancy in 2015 Quarterly Apartment Occupancy* Average of 95.0% for $ occupancy as a % of gross potential rents 2013-2015, 95.8% 95.7% 95.6% 95.5% 95.5% 95.3% 94.9% 94.7% 94.7% 94.3% 94.2% 93.6% Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 * Occupancy based on percentage of residential rent for stabilized properties during the quarter. 16
Financial & Operating Performance $530K Savings in Rental Incentives Incentives as a Percentage of Rental Revenue Same Store Apartment Properties 1.4% 1.2% 1.0% 0.8% 0.6% 0.4% 0.2% 0.0% 17
Financial & Operating Performance Strong NOI Growth Throughout 2015 Quarterly Change in Same Store NOI 2010-2015 12.0% Average 10.0% quarterly NOI growth of 1.8% 8.0% from 2010-2015. 6.0% 4.0% 2.0% 0.0% Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 -2.0% -4.0% -6.0% -8.0% 18
Financial & Operating Performance Lower Natural Gas Prices in 2015 Vs. 2014 Commodity Charge per GJ Nova Scotia New Brunswick $20 $18 $16 $14 $ per GJ $12 $10 $8 $6 $4 $2 $0 Commodity prices are fixed in Nova Scotia and floating in New Brunswick, 19 reflected in the price differences.
Financial & Operating Performance Efficiency Projects = Savings Water Consumption Initiatives • Installing low-flow toilets will generate annualized savings and a payback of 2.7 years. Building System Controls • Installing smart automated controls in the boiler rooms of 10 properties, will conserve $75,000 in natural gas costs each year. • Payback of 1.7 years. Efficiency NS Direct Install Program • Upgrading, in partnership with Efficiency Nova Scotia, over 20,000 LED light bulbs and thousands of low-flow showerheads in our largest buildings in Halifax will save tenants over $140,000 in electricity costs per year, and Killam over $40,000 in annual water costs. 20
Financial & Operating Performance Water Savings Initiatives Underway Killam’s Low-flow Toilet Installs 1000 $350,000 900 $300,000 800 $250,000 Cumulative Savings 700 Toilet Installs 600 $200,000 500 $150,000 400 300 $100,000 200 $50,000 100 0 $- Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Number of Toilet Installs Total Cumulative Savings 21
Financial & Operating Performance Stable Balance Sheet Dec � 31, � Dec � 31, 2015 2014 Debt as a % of Total Total gross debt as a % of total Assets 55.7% 54.9% assets At Dec 31 Mortgage debt as a % of total 50.4% 49.4% assets 55.7% Weighted average interest rate 55.2% 3.27% 3.60% 54.9% on mortgage debt Weighted average term to 4.2 years 4.4 years maturity 52.9% Debt service coverage ratio 1.35 1.34 51.6% (rolling 12 months) Interest coverage ratio (rolling 2.34 2.21 12 months) Percentage CMHC-insured 73% 75% apartment mortgages 2011 2012 2013 2014 2015 22
Investment Opportunity • Stable distributions with improving payout ratio. • Trading below net asset value. • Interest saving opportunities on refinancings. • Positioned to benefit from improved economic growth in Atlantic Canada. • High quality portfolio with increasing investment in newer properties and established development program. • Growth through acquisitions and development. 23
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