Killam Apartment REIT Q4 2025 Earnings Report

Killam Apartment REIT EPS Results

• Actual EPS: -C$1.17
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Killam Apartment REIT Revenue Results

• Actual Revenue: $96.26 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Killam Apartment REIT Announcement Details

• Quarter: Q4 2025
• Date: 2/13/2026
• Time: N/A
• Conference Call Date: Thursday, February 12, 2026
• Conference Call Time: 9:00AM ET

Killam Apartment Real Estate Investment Trust is an open-ended mutual fund trust. The company specializes in the acquisition, management, and development of multi-residential apartment buildings and manufactured home communities (MHC). It has three main operating segments, Apartment segment, MHC segment, and Commercial segments. Apartment segment acquires, operates, manages and develops multi-family residential properties across Canada. MHC segment acquires and operates MHC communities in Ontario and Eastern Canada, and Commercial segment includes more than seven commercial properties.

Killam Apartment REIT Q4 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Underlying operations were strong — Killam reported a 2025 same-property NOI increase (6.1% for the year; Q4 same-property NOI +4.5%), with FFO/unit up 4.2% to CAD 1.23 and AFFO/unit up 5.1%, improving the AFFO payout ratio to 69%.
• Negative Sentiment: Net income plunged year-over-year (CAD 29.4M for 2025) after a CAD 120.5M fair value loss on investment properties and the absence of 2024’s one-time CAD 279M deferred tax recovery, producing a CAD 638M decline in net income vs. 2024.
• Positive Sentiment: Management expects continued growth in 2026 (targeting ≥3% revenue and NOI for same-property apartments), cites a ~9% portfolio-wide mark-to-market spread (Halifax ~15%, BC ~10%), and sees financing headwinds easing with interest expense growth stabilizing toward 2027.
• Negative Sentiment: Commercial repositioning risks and timing at Westmount will delay NOI replacement until mid‑2027 and requires ~CAD 15M of capex, which will weigh on near-term commercial earnings despite a generally strong 97% portfolio occupancy.

Presentation

[Operator]

Good morning, ladies and gentlemen, and welcome to the Killam Apartment Real Estate Investment Trust fourth quarter 2025 financial results conference call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on February 12, 2026. I would now like to turn the conference over to Mr. Philip Fraser, President and CEO. Please go ahead.

[Philip Fraser, President and CEO at Killam Apartment REIT]

Thank you. Good morning, and thank you for joining Killam Apartment REIT's fourth quarter and year-ending December 31, 2025's conference call. I'm here today with Robert Richardson, Executive Vice President, Dale Noseworthy, Chief Financial Officer, and Erin Cleveland, Senior Vice President of Finance. Slides to accompany today's call are available on the investor relations section of our website under Events and Presentations. I will now ask Erin to read our cautionary statement.

[Erin Cleveland, SVP of Finance at Killam Apartment REIT]

Thank you, Philip. This presentation may contain forward-looking statements with respect to Killam Apartment REIT and its operations, strategy, financial performance, conditions, or otherwise. The actual results and performance of Killam discussed here today could differ materially from those expressed or implied by such statements. Such statements involve numerous inherent risks and uncertainties, and although Killam management believes that the expectations reflected in the forward-looking statements are reasonable, there can be no assurance that future results, levels of activity, performance, or achievements will occur as anticipated. For further information about the inherent risks and uncertainties in respect to forward-looking statements, please refer to Killam's most recent annual information form and other securities regulatory filings found online on SEDAR+.

[Erin Cleveland, SVP of Finance at Killam Apartment REIT]

All forward-looking statements made today speak only as of the date which this presentation refers, and Killam does not intend to update or revise any such statements unless otherwise required by applicable securities laws.

[Philip Fraser, President and CEO at Killam Apartment REIT]

Thank you, Erin. We are very pleased with our strong financial and operating results for the fourth quarter and year-ending December 31, 2025. We achieved our 2025 strategic targets, as shown on slide 2, which included a 6.1% total same property NOI increase for the year. This growth was driven by 5.4% revenue growth in our same property apartment portfolio and a 7.8 same property revenue growth in our MHC portfolio, and finally, a 4.4% increase in our same property commercial portfolio. As market demands shift, Killam is focused on occupancy, rental rates, and operating costs to achieve positive NOI growth. Our same property apartment occupancy for 2025 was 97.3%, 30 basis points lower than last year.

[Philip Fraser, President and CEO at Killam Apartment REIT]

Average monthly rental rate in our same property apartment portfolio increased 4.8% year-over-year. Balancing our occupancy levels with rent growth resulted in a strong 5.4% increase in the same property apartment revenue. Despite a 4.1% increase in operating costs, this top-line growth enabled us to realize a 40 basis point margin increase in our same property apartment portfolio. As we begin the new year, market rental rates will continue to stabilize in some markets, and we expect to produce solid results by capturing positive leasing spreads from the gap between in-place and market rents in 2026, with our target of both revenue and NOI increasing by at least 3% for our same property apartment portfolio.

[Philip Fraser, President and CEO at Killam Apartment REIT]

Dale will now take us through our financial results in more detail, followed by Robert, who will provide an update on our commercial segment. I will conclude with an update on our recent developments and our capital allocation strategy. I will now hand it over to Dale.

[Dale Noseworthy, CFO at Killam Apartment REIT]

Thanks, Phil. Key highlights of Killam's 2025 financial performance are presented on slide 3. For the full year, net income totaled CAD 29.4 million, a decrease of CAD 638 million year-over-year. This decline was primarily driven by a CAD 120.5 million fair value loss on our investment properties, reflecting higher cap rates in select markets and moderating market rents. This compares to CAD 252 million in fair value gains in 2024. In addition, 2024 included a one-time deferred tax recovery of CAD 279 million relating to the completion of the plan of arrangement.

[Dale Noseworthy, CFO at Killam Apartment REIT]

These factors more than offset strong underlying operating performance, including a CAD 14.3 million increase in net operating income, driven by same property growth and contributions from developments completed in 2023 that are now fully stabilized. As a result, Killam delivered solid growth in key performance metrics. FFO per unit increased 4.2% to CAD 1.23, while AFFO per unit rose 5.1%. We were also pleased to see our AFFO payout ratio improve to 69% from 71% in the prior year. Turning to slide 4, our fourth quarter results remained strong. Same property NOI increased 4.5%, supported by revenue growth of 4.1% and expense growth of 3.4%. FFO was CAD 0.30 per unit, representing a 3.4% increase over Q4 2024.

[Dale Noseworthy, CFO at Killam Apartment REIT]

Our performance in 2025 reflects a weighted average rental increase of 4.8% across the same property portfolio. With a healthy Mark-to-Market Spread, we continue to achieve rent growth on both renewals and new leasing. As shown on slide 5, rental rate growth moderated from the peak levels seen in 2024, consistent with broader trends across the Canadian apartment market in the last year. Our experience continues to demonstrate that competitively priced rents drive strong demand and leasing activity. Our teams remain focused on dynamically managing rents, occupancy, and incentives across our core markets to maximize revenue growth. We also saw a return to more typical leasing seasonality in the last year, with a slowdown in the winter. We have historically achieved peak occupancy in September.

[Dale Noseworthy, CFO at Killam Apartment REIT]

This pattern had largely disappeared between 2022 and 2024 due to elevated population growth. We'll be monitoring the upcoming spring and summer leasing season closely and look forward to providing further insight in future quarters. Looking ahead to 2026, we expect our Atlantic markets to continue to outperform, supported by attractive mark-to-market opportunities. As shown on slide 6, the portfolio-wide mark-to-market spread is approximately 9%. We've seen a decline from the peak mark-to-market in 2024, which reflects a combination of moderation in asking rents and quarterly rent increases we have achieved. Halifax continues to present the greatest opportunity at 15%, followed by St. John's, Newfoundland, and St. John, New Brunswick.

[Dale Noseworthy, CFO at Killam Apartment REIT]

British Columbia is also positioned to perform well in 2026, supported by strong recent leasing activity, improving occupancy, and a 10% mark-to-market spread. Higher interest rates have been a headwind to earnings over the last 4 years. While refinancing remained a drag in 2025, the impact was less pronounced than in 2024, with financing costs increasing 5.9% year-over-year. We believe we are now past the most significant financing headwinds, as illustrated on our debt ladder on slide 7. Year-over-year, interest expense growth is expected to begin stabilizing as early as 2027, allowing a greater portion of NOI to flow through to FFO. We've also continued to strengthen our debt profile, with CMHC insured mortgages representing 91% of total apartment mortgage debt at year-end, up from 83% last year.

[Dale Noseworthy, CFO at Killam Apartment REIT]

At year-end, debt as a percentage of total assets was 41.9%, shown on slide 8, reflecting the fair value loss recorded in Q4. Importantly, debt to normalized EBITDA improved to 9.66x, demonstrating that earnings growth continues to outpace increases in leverage. We remain focused on further improving this metric in 2026. Looking forward, we're optimistic about our ability to grow NOI and FFO per unit. In addition to same property performance and easing interest expense pressure, we expect increasing contributions from our development pipeline. In 2026, the Carrick is expected to contribute approximately CAD 800,000 of year-over-year FFO growth now that it is nearing full lease-up. In addition, upon completion and lease-up, Brightwood and Eventide will generate additional FFO contributions.

[Dale Noseworthy, CFO at Killam Apartment REIT]

We continue to expect AFFO growth to outpace FFO growth, as capital from asset dispositions is redeployed into newer, more efficient properties. I'll now turn the call over to Robert for operational highlights.

[Robert Richardson, EVP at Killam Apartment REIT]

Thank you, Dale, and good morning, everyone. I'll address Killam's capital investment strategy, share with you the results of Killam's annual resident survey, and highlight Killam's commercial portfolio. Killam's maintenance capital investment totaled CAD 82 million in 2025, down from CAD 90 million in 2024, a CAD 8 million year-over-year reduction. This decrease reflects several initiatives, including a portfolio-wide preventive maintenance program featuring energy-efficient upgrades such as solar panels and building automation systems that enable remote monitoring and early detection of problem areas. Investment in 2,062 repositioned suites over the past 5 years, improving asset quality while delivering 15%-20% returns. Continued focus on developing and acquiring newer assets. Based on 2026 forecasted NOI, 32% of Killam's apartments were built within the past 10 years.

[Robert Richardson, EVP at Killam Apartment REIT]

The portfolio's average age is 29 years, which supports lower maintenance CapEx requirements and allows capital to be redirected to value-enhancing projects. To date, Killam has built or under construction over 20 buildings, totaling 2,363 suites. The strategic disposition of non-core capital-intensive assets also improves Killam's working capital flexibility. Killam's annual survey of residents is an important tool for Killam, as it provides insight into our residents' priorities for their unit and building. Based on this, we can make informed decisions. For more than 15 years, Killam has engaged independent research firms to survey our residents. Narrative Research's 2025 resident survey report the following on three key metrics: resident satisfaction with condition of current apartment, 87% score; professionalism of maintenance staff, 91.4%;... Residents' likelihood to recommend Killam to friends and family, 87%.

[Robert Richardson, EVP at Killam Apartment REIT]

These results are consistent with prior years and are considered strong, particularly given current market uncertainty. Killam's commercial portfolio was very busy in 2025. Our commercial team leased 56,000 sq ft of vacancy at an average base rate of CAD 20 per sq ft net, and a net effective rate of CAD 12 per sq ft, allowing for costs of tenant inducements, fees, et cetera. As well, Killam renewed 117,000 sq ft at an average face rate of CAD 20 per sq ft and delivered a weighted average increase on in-place rents of 15%. Killam's commercial portfolio totals 1.2 million sq ft and is 97% occupied. Approximately 200,000 sq ft are ancillary or mixed-use retail within apartment properties, with financial results booked to the residential portfolio.

[Robert Richardson, EVP at Killam Apartment REIT]

The remaining 1 million sq ft are concentrated in three primary assets. Brewery Market contains 143,000 sq ft and is an historic Halifax property with a mix of retail and office tenants located on Lower Water Street, adjacent to Killam's 240-suite The Alexander, and The Governor, with 12 luxury suites. The Brewery Market is 96.1% occupied. Westmount Place is a 305,000 sq ft asset located in Waterloo on 18.1 acres. Acquired in 2018 for its location and multi-residential development potential, a testament to the location and quality of Killam's new builds is the 130-suite property, The Carrick. It opened in June 2025 and is now 95% leased. The Westmount site can support an additional 750-1,000 suites, depending on market demand.

[Robert Richardson, EVP at Killam Apartment REIT]

Westmount Place is anchored by a 33,000 sq ft T&T Supermarket, a 20,000 sq ft Michaels crafts store, and a 197,000 sq ft 4-story office building occupied by Sun Life, paying CAD 13.36 per sq ft as rent. As many on this call would know, Sun Life will vacate March 31, 2026. We have identified the opportunity to relocate an existing retail tenant to the ground floor of the office building and have toured the site with, and are pricing an offer for a highly regarded national retailer to take the dominant corner fronting Westmount Road. Westmount Place already has a roster of tenants that are medical-related, including dentistry, optical, pharmacy, a podiatrist, and a chiropractor, and we plan to build on this cohort. Additional inquiries include potential fitness, technology, and insurance tenants.

[Robert Richardson, EVP at Killam Apartment REIT]

Retail rental rates are expected to be in the CAD 20-CAD 25 per sq ft range, and offices in the CAD 15-CAD 20 per sq ft range. Royalty Crossing is an enclosed mall containing 419,000 sq ft in Charlottetown. Killam acquired full majority ownership in phases from 2019 to 2021, and now holds 75% alongside a 25% local JV partner. Since 2021, annual revenue has increased from CAD 4.6 million to CAD 6.8 million, a 48% increase, while NOI has grown from CAD 3 million to CAD 5.5 million, an 83% increase, representing a 12% return on investment. Killam has added 51,000 sq ft of leasable area with another 15,000 sq ft scheduled for occupancy this year, bringing the total to 434,000 sq ft.

[Robert Richardson, EVP at Killam Apartment REIT]

Enhancements include a premier food court with all new fixtures, ample sunlight, and a cohort of food offerings for the whole family. Under construction presently is the new 12,000 sq ft PEI Patient Medical Center. By applying the same focused, value-driven approach that produced such strong results at Royalty Crossing, we are confident in our ability to transform Westmount Place and deliver attractive long-term returns for unitholders. I will now hand you back to Philip.

[Philip Fraser, President and CEO at Killam Apartment REIT]

Thank you, Robert. During the fourth quarter, Killam completed the disposition of one small property in PEI. For the year, we completed the disposition of 23 properties, totaling 1,139 units and two parcels of land for a combined sale price of CAD 148 million, with net cash proceeds of CAD 87.8 million. Proceeds were used to fund CAD 168 million of property acquisitions containing 416 units, which is shown on slide 12. The sale of these Atlantic Canadian properties align with Killam's strategy to optimize value from its portfolio and to increase geographical diversification outside Atlantic Canada. Our disposition target for 2026 is to recycle a minimum of CAD 50 million in assets.

[Philip Fraser, President and CEO at Killam Apartment REIT]

These dispositions are in the early stages, and we will have more details by the time we release our Q1 results in May. The capital will be used to pay down our line of credit, used for our NCIB program or for acquisitions in our key markets. Killam invested CAD 6.8 million in energy initiatives during 2025, including CAD 2.1 million in Q4. At the end of 2025, our solar power production capacity was 3.66 megawatts per year, producing approximately 8.54% of our operationally controlled electricity. We have 6 new solar panel installations planned for 2026, 5 in Ontario and 1 in Halifax. Half of these will be completed in 2026, and the other half will be in 2027.

[Philip Fraser, President and CEO at Killam Apartment REIT]

These investments represent a total production capacity of 1.15 megawatts, or an additional 2.5% of our operationally controlled electricity. Killam continues to advance its development program in 2025. The Carrick, as shown in slide 14, opened on June 1, 2025, and is now 95% leased. Brightwood, the 128-unit development we started in January, is scheduled to be completed the first week of May 2026. Progress photos of the building are on slide 15. Leasing has started and at this property, and we are currently 7% leased. As shown on slide 16, construction continues at the Eventide, a 55-unit building located in Halifax, and it is expected to be completed by Q4 of this year. Pre-leasing has started.

[Philip Fraser, President and CEO at Killam Apartment REIT]

Slide 17 shows recent pictures of the construction site at Nolan Hill, phase 3, our 296-unit JV development in Calgary, that we have a 10% ownership interest. Completion is expected to be Q3 2027. In closing, 2025 was a strong year for Killam, highlighted by solid operating results. While we expect 2026 to deliver a more modest pace of growth, we believe it will be a positive year as we move beyond the peak of interest expense headwinds and start to reposition our Westmount commercial property. Looking further ahead into 2027, we see multiple areas for growth. Many of our key markets are positioned to benefit from increased federal defense spending and related economic activity. In Alberta and Newfoundland, the oil and gas industry will help support and grow their provincial economies.

[Philip Fraser, President and CEO at Killam Apartment REIT]

Also, as Canada works to reach 2% of GDP spending on defense, Victoria and especially Halifax will see large DND investments in growth. A full list of the recent announcements is shown on slide 18. Our geographical diversification continues to demonstrate its value, and we believe the portfolio is exceptionally well positioned. To conclude, we are very pleased with our 2025 performance and remain committed to investing in high quality assets and developments, and to continue to execute our overall strategy and create value for all of our unitholders. I would like to thank our employees for their hard work and dedication. Thank you. I will now open up the call for questions.

[Operator]

And thank you. Ladies and gentlemen, we will now begin our question and answer session. Should you have a question, please press the star followed by the one on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the two, and if you're using a speakerphone, please lift the handset first before pressing any keys. And we have our first question from Mike Markidis with BMO.

[Mike Markidis, Analyst at BMO Capital Markets]

Thanks, operator. Good morning, team Killam. Bill, I don't think you mentioned it in your remarks, but maybe you could just give us a little bit of color on, the recent acquisition that you announced. And specifically, I'm just curious on the Cap Rate of 5%, if that represents market, if it was off market, I'm just trying to circle that and reconcile it with the weighted average Cap Rate you guys use on your Halifax portfolio.

[Philip Fraser, President and CEO at Killam Apartment REIT]

Yeah. Hi, Mike. It's, it's Phil here. Yeah, thanks for the question. I mean, this is an asset that was built in 1973, so even when we started Killam in 2002, it was one of almost the key marquee sort of assets in the city. It was built by a local developer at the time, and he owned it right up until the day that we bought it from him. And he always knew that we were interested in it, and when it got time to sell it, he gave us a call. So it's totally off market. We like the building. It comes with 4.4 acre site, 108 units. It's made up of twos and threes. The two bedrooms are 1,250 sq ft.

[Philip Fraser, President and CEO at Killam Apartment REIT]

The three bedrooms are 1,400 sq ft. The interesting thing was, is that it's, it, it is catered to an older demographic, 55+. Very little wear and tear on the building, maintained at about the highest standard that we've ever seen it coming from a, like a, from a purchase. We just know that because the building is fully electric, meaning it's heated by electric and the size of the site, we'll be able, over the next year or so, to install solar panels. We're looking at it now on the roof, on the side, and into the parking lots, that we'll be able to reduce the operating costs down significantly over the next couple of years.

[Philip Fraser, President and CEO at Killam Apartment REIT]

On a 5 cap, you look at it at CAD 30 million, basically, you can figure out the NOI, but we can move up that sort of cap rate in the next couple of years, half of it on the operating side and half of it with just natural sort of increases in rents.

[Mike Markidis, Analyst at BMO Capital Markets]

Okay. That's great. Thanks. I was just curious, you know, tying that in the acquisition market, if you could give us a sense of how you're seeing returns for acquisitions today versus developments? You know, I guess you started Nolan Hill, and that seems like it's gonna be finished in Q3 of 2027. So dovetailing that to, do you guys plan to start any other projects in the near term?

[Philip Fraser, President and CEO at Killam Apartment REIT]

Well, to answer the first part of your question, we're, I mean, in terms of what's out there or what we're seeing, there are a few opportunities. Not saying that we're gonna buy them, but really, I think where pricing is, depending on the asset, some of this, the product is up around a 5% all-cash yield in other markets. There's opportunities in Alberta that you could buy between 5% and 5.25%. So you know what? I mean, it's, it's just a current reflection of where the market is, depending on the market you're in, versus, again, these are one-off deals with, with relationships or whatever.

[Philip Fraser, President and CEO at Killam Apartment REIT]

On the development side, which I said it on the last conference call, the new developments, if we can get them out of the ground, and then that's, there's an if there, because everything seems to be taking longer than our expectation. It would have to have all the current government-assisted funding to make these things work. And again, the biggest part of it that makes them work is if you have an affordable component, then your average rent that you're asking from a lease-up point of view is lower than what is pure market, and that is the key today to get these things up and built, and then all the other sort of advantages from an interest rate or less costs on the CMHC financing.

[Mike Markidis, Analyst at BMO Capital Markets]

Okay, got it. So it's achieving in excess of 5%, but with an affordable rent component. Got it. Okay. Just last one for me before I turn it back. Rob, you gave some, a little bit of color on, progress at Westmount and the, commercial backfill that has to happen there. I think it was maybe last part of the call before, you gave sort of a, a timeline of how you expected the lease-up to occur and the NOI replacement to occur. I was just wondering if you could give us some updated thoughts on that.

[Robert Richardson, EVP at Killam Apartment REIT]

Yes. So I would say to you that, they may be pushed out a little bit. We've been working diligently for the last six months with our architects, the engineers, and taking a look at the work we wanna do to reposition the building, and it'll probably take longer. We won't see any increase from the renovations until 2027. Summer of 2027 is what it's looking like. So we have identified one of our tenants that can take up some more additional space, but there's other things that need to be done to the building that are a bit more structural, and so we need time to get that done.

[Mike Markidis, Analyst at BMO Capital Markets]

Okay. So no, no replacement NOI until mid-2027, if I heard you correctly. And then just on the total cost, is there gonna be any change to the scope of expected CapEx?

[Robert Richardson, EVP at Killam Apartment REIT]

Yeah. So there is another good number. We're working our way through it, and it looks like it's gonna be a total cost of CAD 15 million, and see how that goes.

[Mike Markidis, Analyst at BMO Capital Markets]

That's great. Thanks so much for the color. I'll turn it back.

[Robert Richardson, EVP at Killam Apartment REIT]

Okay, thanks.

[Operator]

Thank you. Our next question is from Jonathan Kelcher with TD Cowen. Please go ahead.

[Jonathan Kelcher, Analyst at TD Cowen]

Thanks. Good morning. Just turning to your targets for 2026. Just on the revenue target of 3%+ for the apartment portfolio, how—like, can you give us a little bit of a breakdown between renewals versus turnover versus occupancy expectations? And then just, I guess, related to that, in the MD&A, you talked about market rent - potentially seeing market rent growth in the second half of the year. Is any of that built into your rent growth assumption?

[Dale Noseworthy, CFO at Killam Apartment REIT]

When we look at that, you know, the revenue number, you're right, it is a mix. You know, overall, probably close to 4% revenue growth. In terms of turns and renewals, we do, you know, renewals is probably in the around the 3% range, maybe 3.5, depending. And on the turns, 4-7. I mean, it really just changes based on which units are turning every month, and, you know, we're watching it closely, and it jumps around a bit. So, but averaging approximately 4%. And then we've got incentives, which, you know, incentives are likely to increase a little bit. What we are seeing is, in many markets where incentives have been used regularly over the last year, they're actually moderating in terms of number of units that are having incentives, but-

[Philip Fraser, President and CEO at Killam Apartment REIT]

What we're saying is maybe 80-90 basis points on the incentive side.

[Dale Noseworthy, CFO at Killam Apartment REIT]

Yeah.

[Philip Fraser, President and CEO at Killam Apartment REIT]

We're watching those closely, per market, per building.

[Dale Noseworthy, CFO at Killam Apartment REIT]

And then the other piece, of course, is vacancy. So, you know, you would have seen Q4, we had a little bit of an uptick in vacancy, but that's. You know, we're seeing good leasing momentum, so in the second half of the year, we could see some year-over-year improvement there. So it's, of course, all of those factors coming together. When we look at market rents increasing potentially in the second half of the year, I mean, as we see leasing momentum and we're having the discussions about, okay, well, we've only got a couple of leases, you know, units to lease, can we start moving those rents up? Those discussions are already starting, and it's February. So of course, spring and summer demand will be really important, but, you know, Newfoundland is one example that market rents have continued to move up.

[Dale Noseworthy, CFO at Killam Apartment REIT]

Even in cities like Halifax and across Atlantic and across the market, frankly, it really depends on the unit. And there's lots of demand for those affordable units, so we are looking asset by asset, market by market, but you know, it's. So as we look to the spring leasing, we are feeling cautiously optimistic.

[Jonathan Kelcher, Analyst at TD Cowen]

That's, that's good. That's helpful. Thank you. And then secondly, on the outlook, I didn't go back, but I guess I'd have to go back a bunch of years to find out, to find one where you didn't have a geographic diversification target. Can we take that to mean that you guys are generally happy with your geographic mix right now?

[Philip Fraser, President and CEO at Killam Apartment REIT]

I'd say for 2026, 2027, yes, because again, Atlantic Canada, I think, is going to outperform the other parts of the country, and we see a lot of strength here. But over time, depending on what happens with the trade and all the uncertainty that's in other parts of the country, eventually Ontario will start to show some good results. And, you know, BC will start to pick up, and even Alberta. I mean, we still have a lot of faith in Alberta as well. But, what we tried to highlight as well this year for this call was the strength in basically Newfoundland, New Brunswick, and especially Halifax, with all the sort of planning and actual spending that's happening because of the ramp up in defense for the country.

[Jonathan Kelcher, Analyst at TD Cowen]

Okay. That's helpful. And then just lastly on, you've already done the one acquisition, which was, sounds like very opportunistic. Is the CAD 50 million in dispositions, should we think of that as a, as a net number? Or is it like you plan on selling about CAD 50 million, and you, you buy what you buy?

[Philip Fraser, President and CEO at Killam Apartment REIT]

Oh, yeah. I mean, there's not a lot of sort of concentration on the acquisition side at this time. So really, from a disposition point of view, we have a few deals in early stages. I'll hopefully be able to give a lot more color in May. But again, these ones are, for us, they're fairly good size. But there's, again, right now there's no certainty. So I'm sure that we can hit the CAD 50 million this year.

[Jonathan Kelcher, Analyst at TD Cowen]

Okay. I'll turn it back. Thanks.

[Philip Fraser, President and CEO at Killam Apartment REIT]

Thank you.

[Operator]

We have our next question from Kyle Stanley with Desjardins.

[Kyle Stanley, Analyst at Desjardins]

Thanks. Morning, everyone. Maybe just sticking with, the dispositions for a second. You know, CAD 50 million is a little bit below what you, you've done in the last couple of years. Is that a reflection of you just being happier with where you are on the capital recycling front? Or has something changed in the market where you just see transaction activity slowing a bit?

[Philip Fraser, President and CEO at Killam Apartment REIT]

It's definitely happy with the assets we have. And it's taken longer to go through our portfolio and make that decision to sell. So, you know, you look at some of these assets, and I just think that from the top to the bottom, we've got a really good portfolio these days. So it is, it's hard to find the next few.

[Kyle Stanley, Analyst at Desjardins]

Okay. No, that makes sense. As we think about in-suite CapEx, I mean, obviously with a competitive leasing environment, are you having to invest more on suite turn today to just ensure that units remain competitive? Or I guess maybe looking from another way, are you seeing an opportunity to invest more in suites today, and that will allow for maybe greater rent or, you know, quicker lease-up?

[Dale Noseworthy, CFO at Killam Apartment REIT]

I almost think it's a little bit of the opposite right now because we have continued to invest throughout the piece on those, you know, on lease terms in terms of our repositionings. So now we're really looking to say, you know, when we're doing those more extensive repositionings, we have to make sure that that incremental rent we can get justifies the capital. And as if there's markets where we're completing, competing with new supply, you know, we might not be able to get the same high, high rent we could get a couple of years ago. So I would say overall, we'll likely see a slight decrease, but it reflects that we have continued to invest throughout the piece, and our units are in good shape.

[Philip Fraser, President and CEO at Killam Apartment REIT]

I mean, another way to look at that, Kyle, is that we still have if our average rent is CAD 1,600 across the country, there's at least 60% of all our units are below that number. And those are the ones today that are most sought after, the affordable ones. So sometimes, even if somebody moves, you got to go in and look at the current condition of that unit, and it might be a smaller, quicker sort of renovation, getting it ready for the next tenant. And we're, you know, we don't want to price those units to the point where they're going to take a long time or longer to lease than they could be in this market. So, the lower price point is what's being sought after right across the country.

[Dale Noseworthy, CFO at Killam Apartment REIT]

We are, and we're looking, you know, opportunity at building by building, unit by unit, what makes the most sense.

[Robert Richardson, EVP at Killam Apartment REIT]

As well, we've done over 2,000 repositionings in the last 5 years, so those assets, when they come up for renewal, don't really need that much work, and we're seeing it.

[Kyle Stanley, Analyst at Desjardins]

Okay. No, that's very helpful and definitely encouraging in terms of your CapEx outlook for the year ahead. Just lastly, maybe sticking with the affordability angle, you know, clearly the affordability in Halifax is probably a reason why you've been able to maintain such high occupancy. When you are seeing tenants move out of your assets in Halifax, what's the reason being given, if for the most part, you know, that is probably the one of the most affordable options in the market?

[Philip Fraser, President and CEO at Killam Apartment REIT]

It's the same reasons like pre-COVID. I mean, it's household formation, moving away, going into the next level of care, whether it's a nursing home or somewhere in between. I mean, they're all just the same reasons. I mean, people. And now, compared to even two or three years ago, with a little bit more vacancy in the whole marketplace, right across the country, including Halifax, people have choices. It's a more balanced market. So we're almost we go back, we are reverting back to the norms pre-COVID.

[Kyle Stanley, Analyst at Desjardins]

... Okay. Nope, that's very helpful. I will turn it back. Thank you.

[Philip Fraser, President and CEO at Killam Apartment REIT]

Thank you.

[Company Representative at Killam Apartment REIT]

Thank you.

[Operator]

We have our next question from Jimmy Shan with RBC Capital Markets.

[Jimmy Shan, Analyst at RBC Capital Markets]

Thank you. Just in terms of the defense spending, are you actually starting to see the impact of that today? Or it sounded like when you were talking about it, it's more of a 2027 event. I'm just curious what you're seeing on the ground.

[Philip Fraser, President and CEO at Killam Apartment REIT]

I think when you look around this town, and some of these projects have actually started, I mean, and if you drive by, maybe there's no activity on the actual site, but all the engineering work, all the pre-sort of construction work is being done. And even if you start to go around and look at the companies that have taken a position or opened up an office in Halifax related to defense, there's a lot of new companies moving in.

[Jimmy Shan, Analyst at RBC Capital Markets]

Hmm. What about in terms—like, the Department of National Defence? I think part of the budget was to increase recruitment and pay increases. That, is that already starting to happen?

[Philip Fraser, President and CEO at Killam Apartment REIT]

22% increase in pay for all military. That happened a few months ago, and I saw something in the news the other day that January was one of their best recruiting months in the last number of years.

[Jimmy Shan, Analyst at RBC Capital Markets]

Yeah. Okay. And then, in terms of the supply in Halifax, sort of, do you know kind of where we are in terms of the delivery, the delivery cycle? Like, when do you expect that we'll see, we'll be sort of past the peak in delivery?

[Philip Fraser, President and CEO at Killam Apartment REIT]

Well, I believe that this, whatever is coming out of the ground now, which will get delivered in three or four years, is probably about the peak. Because, again, from a pure, just all the local developers, I mean, and the pricing, I just think they're sort of, we're coming to the end of the big cycle, and now it's about absorption over time, so. And again, from a, you know, trying to anticipate this question from somebody here today, you also got to look at it about, we're Halifax. What submarkets do you have in your biggest nodes of existing apartments, and what's actually being built around that? And that really can sort of... You can almost kind of predict a little bit, better when you think about that, about how we're going to be impacted with all this new supply.

[Philip Fraser, President and CEO at Killam Apartment REIT]

I look at it, I think we're very defensive over the next 3-4 years, for sure.

[Jimmy Shan, Analyst at RBC Capital Markets]

Okay. Thanks.

[Operator]

Thank you. As a reminder, if you have a question, please press star one. Our next question is from Sairam Srinivas with ATB Capital Markets.

[Saran Srinivasan., Analyst at ATB Capital Markets]

Thank you, operator. So going back to comment on Halifax, how should we be tying that to the same property rent growth metrics? So over the last couple of, obviously, eight quarters, Halifax has been leading the, leading every other city. But over the last couple of quarters, we've seen that trend down a bit. So how should we marry that with your comment on the strength in the market there?

[Dale Noseworthy, CFO at Killam Apartment REIT]

I think Halifax will continue to do well, but as you said, it's been trending down, as has the whole country. So I think that as, you know, it will follow that same trend as back to the norm, except I do think with a stronger mark-to-market and with the 5% on renewal, Halifax should be a top performer in 2026. And yeah, and likely to 2027 as well when we look at those, you know, same. I expect that we'll be in a similar situation in 2027.

[Saran Srinivasan., Analyst at ATB Capital Markets]

Perfect. Thanks. I'll turn it back.

[Operator]

Thank you. Our next question is from Matt Kornack with National Bank Capital Markets.

[Matt Kornack, Analyst at National Bank Capital Markets]

Hey, good morning, guys. Just one quick one from me. Notwithstanding a more competitive market, your turnover has been kind of, at least for Q4, it was flat year-over-year, percentage-wise. Is that a function of you trying to keep tenants in place, or is it that there just isn't an option for these people to go to? I would have thought with a more competitive market, that turnover would have maybe increased.

[Philip Fraser, President and CEO at Killam Apartment REIT]

Well, I think it did from 2020-2022 for the year.

[Matt Kornack, Analyst at National Bank Capital Markets]

Yes, I think it was up slightly, but Q4, I think, was pretty flat.

[Philip Fraser, President and CEO at Killam Apartment REIT]

Yeah.

[Dale Noseworthy, CFO at Killam Apartment REIT]

There is definitely a focus, though, on trying to maintain the tenants that we have, today as well.

[Philip Fraser, President and CEO at Killam Apartment REIT]

We had a pretty good leasing month, too, in December. That kind of offset some of that.

[Company Representative at Killam Apartment REIT]

We started that in September. We know what happens in the latter part of the year, and we really did work hard, and we did it the year before, to make sure that we can capture as much of our existing base and not have them move elsewhere.

[Matt Kornack, Analyst at National Bank Capital Markets]

Okay. And then maybe as a follow-up, are we starting to kind of fully work through the above market, or potentially above-market, rents that would have been marked, call it a year ago? Or is there still more of that kind of, and is it turning in a higher propensity within your portfolio at this point?

[Dale Noseworthy, CFO at Killam Apartment REIT]

Yeah, I think we have, and we were looking at some of those buildings that were leased up in the last couple of years, where market rents were, you know, units were leased at the peak, and we were looking at a couple that were above 50% turn in this last year. So when you look year-over-year, yeah, some of them are getting flatter. Yes.

[Matt Kornack, Analyst at National Bank Capital Markets]

Okay. And then third, third last question. Can you give a sense on The Alexander? I guess that would be directly impacted by new supply or it would be competing with new supply. Just how that property is performing at this point.

[Dale Noseworthy, CFO at Killam Apartment REIT]

Yeah, I think there's been, like, a little bit more turnover, but there's still lots of opportunity in that building because it was leased so long ago. There's a lot of mark-to-market rent that is still well below market in that particular building.

[Philip Fraser, President and CEO at Killam Apartment REIT]

It's centrally located.

[Dale Noseworthy, CFO at Killam Apartment REIT]

Yeah. Yep.

[Matt Kornack, Analyst at National Bank Capital Markets]

Yep. And a beautiful product. Okay, thanks.

[Philip Fraser, President and CEO at Killam Apartment REIT]

Thanks.

[Dale Noseworthy, CFO at Killam Apartment REIT]

Thanks.

[Operator]

Thank you. Our next question is from Dean Wilkinson with CIBC.

[Dean Wilkinson, Analyst at CIBC]

Thank you. Morning, everyone. Phil, just as you look across your opportunity set and, and you know, you'll have money from recycling, it would appear to me that you can develop, you can buy assets, you can pay down debt, but the best deal in town might be buying back your own units at an implied cap rate north of six. What are your thoughts on just the priority of how you're looking at that? And, you know, you were active in Q4. Can we expect some more of that?

[Philip Fraser, President and CEO at Killam Apartment REIT]

Yes, the answer is to expect more on the NCIB. I mean, it is between that and paying down debt would be the first bucket of priorities.

[Dean Wilkinson, Analyst at CIBC]

Okay. That's it. That's easy. Thanks.

[Philip Fraser, President and CEO at Killam Apartment REIT]

Yep. Thank you.

[Operator]

Thank you. There are no further questions at this time. I will now turn the call over to Mr. Philip Fraser for closing remarks.

[Philip Fraser, President and CEO at Killam Apartment REIT]

Thank you. This concludes Killam's Q4 2025 analyst call. Thank you for listening and participating today. We look forward to reporting Q1 2026 financial results on May the seventh. Thank you.

[Operator]

Ladies and gentlemen, this concludes today's conference call. We thank you for participating. You may now disconnect.

Participants

Executives

• Dale Noseworthy, CFO
• Erin Cleveland, SVP of Finance
• Philip Fraser, President and CEO
• Robert Richardson, EVP
• Company Representative

Analysts

• Dean Wilkinson, Analyst at CIBC
• Jimmy Shan, Analyst at RBC Capital Markets
• Jonathan Kelcher, Analyst at TD Cowen
• Kyle Stanley, Analyst at Desjardins
• Matt Kornack, Analyst at National Bank Capital Markets
• Mike Markidis, Analyst at BMO Capital Markets
• Saran Srinivasan., Analyst at ATB Capital Markets