KILLAM APARTMENT REIT ANNOUNCES STRONG Q2-2025 OPERATING PERFORMANCE AND FINANCIAL RESULTS

Executive Summary

• Killam Apartment REIT reported its financial and operating results for the three and six months ended June 30, 2025, highlighting strong same-property revenue and NOI growth driven by rental rate increases.
• The company achieved 6.7% growth in FFO per unit and 8.0% growth in AFFO per unit year-over-year, while maintaining high occupancy levels at 97.5%.
• Significant capital recycling activity occurred, with $127.9 million in dispositions completed or committed for 2025, funding new acquisitions in New Brunswick and Ottawa.

Key Details

• Financial Performance (Q2 2025):
  • Net Income: $33.1 million (down from $114.5 million in Q2 2024, primarily due to lower fair value gains on investment properties).
  • Net Operating Income (NOI): $64.1 million, a 6.9% increase from $59.9 million in Q2 2024.
  • FFO per Unit: $0.32, a 6.7% increase from $0.30 in Q2 2024.
  • AFFO per Unit: $0.27, an 8.0% increase from $0.25 in Q2 2024.
  • AFFO Payout Ratio (Rolling 12 Months): Improved by 400 basis points to 69% (from 73%).
• Same-Property Metrics:
  • Same-Property Revenue Growth: 6.0% year-over-year.
  • Same-Property NOI Growth: 6.7% year-over-year.
  • Same-Property Apartment Occupancy: 97.5% (a 30 bps decline from 97.8% in Q2 2024).
  • Weighted Average Rental Rate Increase: 6.1% on units that renewed and turned (13.0% on turns, 3.7% on renewals).
  • Rental Incentives: Less than 0.6% of total residential rent.
• Capital Recycling & M&A:
  • Dispositions (2025 YTD): Total disposition volume of $127.9 million.
    • Completed: Sale of two MHC sites in NL ($4.8M), two apartment properties in Grand Falls, NL ($13.7M), three apartment properties in Charlottetown, PEI ($15.9M), and a townhouse complex in PEI ($9.0M).
    • Committed: Sale of a portfolio of 521 units in PEI for net proceeds of $81.9 million, expected to close by August 8, 2025.
  • Acquisitions:
    • Purchased a 114-unit property in Fredericton, New Brunswick, for $28.7 million.
    • Purchased the remaining 50% ownership interest in three properties in Ottawa, Ontario, for $136 million.
• Debt & Financing:
  • Debt-to-Total Assets Ratio: 39.6% (improved from 40.4% at year-end 2024).
  • Debt-to-Normalized EBITDA: 9.58x (improved from 9.69x).
  • Weighted Average Mortgage Interest Rate: 3.53% (up 8 bps from Dec 2024).
  • Refinancing: Refinanced $94.6 million of maturing mortgages with $119.2 million of new debt at a weighted average rate of 3.52%.
• Development Update:
  • The Carrick in Waterloo, Ontario (138-suite development) began welcoming residents in June; currently 60% leased.
• Guidance:
  • Management expects same-property NOI growth above 6% for the full year 2025.

Notable Quotes

• "We are pleased with our strong financial and operating performance for the second quarter of 2025, which demonstrates Killam's established position in the market. Strong leasing in the second quarter delivered 6.0% same property revenue growth across all operating segments, resulting in a 6.7% increase in both same property NOI and FFO per unit compare to Q2-2024." — Philip Fraser, President and CEO
• "AFFO per unit increased by 8.0% from Q2-2024, and we expect this positive trajectory to continue as proceeds from the sale of older and more capital-intensive properties are used to purchase or build newer, more efficient buildings." — Philip Fraser, President and CEO
• "Finally, we are proud to deliver another quarter of improved debt metrics. Our debt-to-total assets ratio has improved for the sixth consecutive quarter, and as of June 30th sits at 39.6%." — Philip Fraser, President and CEO