Investor Presentation January 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 13,655 MHC* sites 5,165 Market cap $630 M Distribution $0.60 Dividend yield 5.9% Avg. daily volume 116 K *manufactured home community 3
Diversified Real Estate Portfolio Halifax, NS Moncton, NB Fredericton, NB Saint John, NB 5,064 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 London, ON Cambridge, ON Calgary, AB Non-core Regions 264 units 469 units 307 units 347 units Killam’s MHC portfolio includes 5,165 units in Nova Scotia, Ontario, Newfoundland and New Brunswick. 4
Diversified Real Estate Portfolio Apartment NOI by NOI by Sector Apartments MHCs Commercial Type of Property 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 Other Calgary 3% 3% 3% 3% Saint John 5% PEI 7% St. John's Halifax Nova 8% 40% Scotia Ontario 48% Fredericton 46% 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 1) Maximize earnings from the existing portfolio. 2) Expand the portfolio and diversify geographically through acquisitions. 3) Develop 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 & 5.1% 2014. 4.8% 4.3% 2.6% 2.1% 2.0% (0.9%) 0.3% (0.4%) 2006 2007 2008 2009 2010 2011 2012 2013 2014 Q1-Q3 2015 The average NOI growth from Killam’s same store portfolio from 2006 – 2014 was 2.7%. 8
$16 2002 Annual Growth Through Acquisitions Killam’s Strategy $45 2003 $167 2004 $200 Annual Acquisitions 2005 $103 2006 $125 2007 $ millions $36 2008 $3 2009 $115 2010 $106 2011 $85 2012 $121 2013 $160 2014 $53 2015 9
Killam’s Strategy Active Development Program Developments Completed Per Year $ millions $80 $60 $16.7 $21.5 $40 $25.4 $20 $25.3 $19.0 $33.0 $7.6 $14.1 $7.7 $14.7 $5.0 $0 * expectation Since completing its first development in 2011, Killam has invested over $100 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* * expectation 84% of the $160 million in acquisitions completed in 2014 were in Ontario and Alberta. 11
Financial & Operating Performance 9.3% FFO Per Share Growth YTD in 2015 FFO Per Share Growth Primary drivers of FFO growth Q1 – Q3 2015 in 2015: • 4.3% same store NOI $0.59 growth • Acquisitions and developments $0.54 $0.53 • Interest expense savings on refinancings Q1-Q3 '13 Q1-Q3 '14 Q1-Q3 '15 12
Financial Performance 4.3% Same Store NOI Growth YTD Same Store Results 9 months ended Sept 30, 2015 Revenue Expenses NOI 4.8% 4.2% 4.3% 4.2% 3.4% 2.4% 2.2% (0.4%) 0.0% MHCs Apartments Consolidated 13
Financial & Operating Performance 2.4% Same Store Revenue Growth in 2015 Same Store Revenue Growth 2.9% 2.6% 2.4% 1.9% 1.8% 1.7% 2010 2011 2012 2013 2014 Q1-Q3 2015 Revenue growth in 2015 is attributable to occupancy gains, increased rents and a decrease in incentive offerings. 14
Financial & Operating Performance Three Quarters of Above Average Growth Historic 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 15
Financial & Operating Performance Improved Occupancy Levels in 2015 Apartment Quarterly Occupancy Levels 95.8% 95.6% 95.5% 95.5% 95.3% 94.9% 94.7% 94.7% 94.3% 94.2% 93.6% Average apartment occupancy from 2013- 2015 is 94.9% Same store average rents are up 1.2% over the last year and incentives are down 50 basis points. 16
Financial & Operating Performance Improved Occupancy Levels in 2014 & 2015 Apartment Occupancy by Quarter 2013 2014 2015 96% 95% 94% 93% 92% Q1 Q2 Q3 Q4 60 basis point occupancy improvement in Q3 2015 Vs. Q3 2014. 17
Financial & Operating Performance $460K 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% A decrease in incentive offerings has contributed to same store revenue growth. 18
Financial & Operating Performance Lower Natural Gas Prices in 2015 Vs. 2014 Commodity Charge per GJ NS Natural Gas NB Natural Gas $20 $18 $16 $14 $ per GJ $12 $10 $8 $6 $4 $2 $0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2012 2012 2012 2012 2013 2013 2013 2013 2014 2014 2014 2014 2015 2015 2015 2015 19
Financial & Operating Performance Propane Offers Energy Saving Opportunities Per GJ Cost of Propane Vs. Natural Gas 1 NS Gas NB Gas Propane NS Savings Potential NB Savings Potential $40 70% $35 Percent Savings with Propane 60% $30 50% Fuel Price /GJ $25 40% $20 30% $15 20% $10 10% $5 $- 0% Aug Sept Oct Nov Dec Jan Feb Mar Apr May June Jul 2014 2014 2014 2014 2014 2015 2015 2015 2015 2015 2015 2015 1) Historic natural gas pricing is based on Killam’s total natural gas costs per month divided by total consumption per month. 20
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. 21
Financial & Operating Performance Water Savings Initiatives Underway Killam’s Low-flow Toilet Installs 1000 $350,000 900 $300,000 800 Cumulative Savings $250,000 700 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 22
Financial & Operating Performance Stable Balance Sheet Sept 30, Dec 31, 2015 2014 Debt as a % of Total Total gross debt as a % of total Assets 55.4% 54.9% assets At Dec 31, except 2015 Mortgage debt as a % of total 50.1% 47.6% 55.4% assets 55.2% 54.9% Weighted average interest rate 3.32% 3.60% on mortgage debt Weighted average term to 52.9% 4.3 years 4.4 years maturity Debt service coverage ratio 51.6% 1.37 1.34 (rolling 12 months) Interest coverage ratio (rolling 2.33 2.21 12 months) CMHC-insured apartment 74% 75% mortgages 2011 2012 2013 2014 Q3-15 23
Investment Opportunity • Killam is trading at a discount to net asset value. • Stable distributions with improving payout ratio • 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. 24
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