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

Executive summary

• Achieved FFO per unit of CAD 0.33 in Q3 2024, up 3.3% year-over-year, with strong same-property NOI growth of 7.4% and a 100 bps operating margin expansion.

• Net income for Q3-2024 was $62.7 million, with fair value gains on investment properties of $51.3 million.

• 39% of NOI was generated outside Atlantic Canada as of September 30, 2024, surpassing the 38% target.

• Completed $47.7 million in non-core asset dispositions year-to-date, nearing the $50 million capital recycling target.

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

Financial highlights

• Property revenue rose 4.8% year-over-year to $93.8 million in Q3-2024.

• Net operating income increased 6.4% to $64.4 million; FFO grew 3.1% to $40.5 million.

• AFFO per unit remained stable at $0.28, with a 3.9% increase in total AFFO to $35.1 million and a 71% payout ratio.

• Same-property NOI grew 7.4% in Q3-2024, driven by a 5.9% increase in same-property revenue and a weighted average rental increase of 7.7%.

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

Outlook and guidance

• Targeting same-property NOI growth to exceed 8.0% for the full year 2024.

• Expects continued FFO growth in 2025, with an estimated CAD 3.5 million in additional earnings from new developments.

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

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

• On track to meet or exceed strategic targets for capital recycling, development, and debt management.