Killam Apartment REIT (KMP-UN) Q3 2024 earnings summary

Executive summary

• Q3-2024 FFO per unit rose to CAD 0.33, up 3.3% year-over-year, with same-property NOI up 7.4% and operating margin expanding 100 bps.

• Net income for Q3-2024 was CAD 62.7 million, with fair value gains on investment properties and strong NOI growth.

• Annual distribution increased 2.9% to CAD 0.72 per unit, effective November 2024.

• Dispositions of non-core assets totaled CAD 47.7 million year-to-date, nearing the CAD 50 million capital recycling target.

• Broke ground on new developments in Halifax and Waterloo, with further projects in the pipeline.

Financial highlights

• Net operating income increased 6.4% to CAD 64.4 million in Q3-2024, with property revenue up 4.8% to CAD 93.8 million.

• AFFO per unit remained stable at CAD 0.28, with a 71% payout ratio on a rolling 12-month basis.

• Fair value gains on investment properties totaled CAD 51.3 million in Q3-2024.

• Same-property operating expenses increased 2.6% year-over-year, mainly due to property taxes and inflation, partially offset by lower utility costs.

• Positive FFO contributions from recently completed developments, with further growth expected as occupancy increases.

Outlook and guidance

• Expects same-property NOI growth for 2024 to exceed 8.0%.

• Anticipates 5%-6% same-property NOI growth in 2025, with detailed guidance to be provided with Q4 results.

• Positive earnings growth anticipated from new developments in Q4-2024 and 2025.

• Minimum of CAD 50 million in dispositions expected for 2024, supporting debt reduction and growth initiatives.

• Margin expansion expected in 2025, supported by top-line growth and portfolio mix improvements.