Killam Apartment REIT Q1 2026 Earnings Report

Killam Apartment REIT EPS Results

• Actual EPS: C$0.41
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Killam Apartment REIT Revenue Results

• Actual Revenue: $96.68 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Killam Apartment REIT Announcement Details

• Quarter: Q1 2026
• Date: 5/7/2026
• Time: Before Market Opens
• Conference Call Date: Thursday, May 7, 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 Q1 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Killam reported strong Q1 results with net income of CAD 50.3M (including CAD 14.9M fair-value gains), same‑property apartment NOI +4%, same‑property revenue +3.6%, and AFFO +3.8% (AFFO/unit +4.3%), prompting management to raise the full‑year same‑property revenue target to above 3.5%.
• Positive Sentiment: Spring leasing momentum is building: April trends point to a ~60 bps occupancy improvement, portfolio mark‑to‑market rose to 10% (Halifax 18%), and management sees continued demand in Atlantic Canada driven by defence, energy and infrastructure investment.
• Negative Sentiment: Leverage and interest carry remain elevated—total debt is ~42.2% of assets and debt-to-normalized-EBITDA is 9.71x—and higher interest expense and refinancing headwinds (expected to ease by 2028) may constrain near‑term FFO flow‑through.
• Positive Sentiment: Capital allocation is active: Killam repurchased >CAD 6M under its NCIB (DRIP suspended), raised its disposition target to CAD 150M (up to CAD 200M/yr), and completed Brightwood under budget (leasing ramp underway), signaling a shift to recycle non‑core assets into higher‑quality apartments and buybacks.

Presentation

[Operator]

Good morning, ladies and gentlemen. Welcome to the Killam Apartment Real Estate Investment Trust first quarter 2026 financial results conference call. At this time, all lines are listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require assistance, please press star zero for the operator. This call is being recorded on May 7th, 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 first quarter 2026 conference call. I am 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, strategies, 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 statement involve numerous inherent risk 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 pleased with the financial results in the first quarter, and we are pleased with the progress we are making during the important spring leasing season. We are seeing increasing market rents, and we expect an additional 60 basis point improvement to the same property apartment occupancy based on April trends. During the first quarter, Killam generated same-property apartment NOI growth of 4%, driven by same-property revenue growth of 3.6%. Our portfolio continues to demonstrate resilience, supported by strong demand for our apartments across Atlantic Canada. With these results, we have increased both our same property revenue and NOI targets for the year. Updates to our strategic targets and performance to date are highlighted on slide two. Dale will take us through our financial results, followed by Robert, who will discuss the rental market fundamentals.

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

I will conclude with an update on 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 Q1 financial performance can be found on slide three. Killam earned net income of CAD 50.3 million, which includes CAD 14.9 million in fair value gains, driven by same property NOI growth across our portfolio. Funds from operations increased by 3% in the first quarter, which was primarily driven by consolidated same-property NOI growth of 3.9% and positive contributions from the lease-up of the Carrick. These gains were partially offset by higher interest expense. AFFO increased 3.8%, reflecting the effectiveness of our capital recycling strategy over the last three years. AFFO per unit increased 4.3%. Looking more closely at operating performance, rental growth remains healthy across the majority of our markets.

[Dale Noseworthy, CFO at Killam Apartment REIT]

Same-property apartment revenue increased 3.6% year-over-year, with gains on both renewal and turnover activity, as shown in the bottom graph on slide four. The weighted average rental increase combined for both renewed and turned suites was also 3.6% in the first quarter. In Q1, our average rental increase on new leases was 5%. This is typically a lower yielding period on rental increases due to the higher proportion of renewals in Q1, which were subject to rent control. With an average mark to market of 10% across our portfolio, we continue to see positive spreads on turnover. Based on spring leasing momentum, our outlook for same-property revenue growth has improved and is now expected to exceed our expectations from the start of the year.

[Dale Noseworthy, CFO at Killam Apartment REIT]

As a result, we have revised our targeted same-property revenue growth to above 3.5% for the year, up from a base of 3%. From a cost perspective, same-property operating expenses increased 3.2%, primarily driven by higher property taxes and wage-related operating costs. These increases were partially offset by lower utility and fuel expenses, as shown on slide five, benefiting from the removal of the consumer carbon tax. Slide six, highlights our debt metrics as at March 31, 2026. Total debt, a percentage of total assets, was 42.2%, up slightly from 41.9% at the end of 2025. Debt to normalized EBITDA was 9.71x, modestly higher than 9.66x at year-end, due primarily to the timing of development draws related to Brightwood.

[Dale Noseworthy, CFO at Killam Apartment REIT]

We expect our debt to normalized EBITDA leverage metric to improve in Q2 as stabilized NOI from Brightwood is added to normalized EBITDA.

[Dale Noseworthy, CFO at Killam Apartment REIT]

We remain comfortable with our debt profile and are focused on maintaining conservative debt levels. Our strategically staggered debt ladder, shown on slide seven, indicates we are in the final year of considerable refinancing headwinds. As we look ahead, year-over-year interest expense growth is expected to begin stabilizing in 2028, allowing a greater portion of NOI gains to flow through to FFO. I will now turn the call over to Robert, who will discuss operating performance across our markets in more detail.

[Robert Richardson, EVP at Killam Apartment REIT]

Thank you, Dale. Atlantic Canada once again led Killam's portfolio for earnings growth, as shown on slide eight. Revenue and NOI growth in Atlantic Canada remained above the portfolio average, utilized fewer incentives and outperformed our total same property apartment portfolio occupancy by 50 basis points, maintaining occupancy at or above 97.5%. In Halifax, we have not seen any meaningful impact from new multi-family supply on leasing activity year to date, nor do we expect the impact to be as pronounced as some have predicted. As we look more closely at the underlying housing data, approximately one-third of suites currently under construction in the Halifax census metropolitan area are located outside Halifax's core in sub-markets where Killam does not operate.

[Robert Richardson, EVP at Killam Apartment REIT]

In addition to a centralized portfolio, Killam's Halifax assets are primarily positioned within mid-market rent segments, as shown in the chart on slide nine, that do not compete directly with new apartments charging rents in the CAD 2,500 per month range. The geographic and price point advantages support Killam's strong leasing results in Halifax that require minimal, if any, use of incentives. The mark-to-market opportunity in Halifax, as shown on slide 10, is impressive, increasing 300 basis points to 18% versus the 15% spread reported at year-end 2025. Halifax, referred to as the Warden of the North during the Second World War, is experiencing a bit of a renaissance given its strategic location. It expects to benefit from long-term economic drivers that will support strong apartment fundamentals for decades.

[Robert Richardson, EVP at Killam Apartment REIT]

More than CAD 3.2 billion in total investments in Nova Scotia have already been announced by the federal government. Recently, the provincial government has highlighted additional investments across a number of sectors, including defense, energy, and critical mineral mining. Halifax, in particular, is emerging as a key hub within Canada's defense sector, which currently supports approximately 17,000 private sector jobs and CAD 2.6 billion in GDP. New infrastructure activity related to energy projects such as offshore wind are moving forward and could produce enough power to meet nearly a quarter of Canada's total demand while employing thousands. Oil and gas projects have estimated reserves of almost 50 billion barrels of oil and nearly 150 trillion cubic feet of natural gas.

[Robert Richardson, EVP at Killam Apartment REIT]

These developments are expected to generate and support permanent population and employment growth in Halifax, reinforcing the long-term stability of rental demand. In Ontario and Alberta, market conditions are more competitive. Calgary and Edmonton continue to experience softer rental markets relative to Atlantic Canada, which is reflected in Alberta's more competitive rental rate adjustments on turnover and a higher use of incentives. Importantly, we remain selective and market specific in our leasing approach, aligning pricing discipline with long-term value creation rather than short-term occupancy. Incentives across Killam's portfolio increased modestly and continue to represent a small portion of revenue at less than 90 basis points of total same property apartment revenue. Killam has not seen competitive leasing behavior that could materially impair long-term value.

[Robert Richardson, EVP at Killam Apartment REIT]

Despite elevated multi-family housing starts and slower Canada-wide population growth, Killam's portfolio mark-to-market opportunity increased for the first time quarter-over-quarter since Q3 2023. That's 2.5 years without an uptick. Albeit the increase is modest at 100 basis points, increasing from 9% in Q4 2025 to 10% in Q1 2026. This increase, plus subsequent leasing activity year-to-date in Q2 2026 may indicate that rental rates have normalized as the market approaches the peak leasing months, supporting a stable rental market that enables top-line growth of 3%-4% annually. Killam's property management platform continues to deliver admirably, attracting and housing discerning residents that are proud to call Killam property their home. I will now hand you back to Philip to take you through Killam's capital allocation strategy.

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

Thank you, Robert. Capital allocation remains a key focus for Killam. During Q1, we deployed over CAD 6 million under our NCIB, repurchasing units at a meaningful discount to NAV. We expect NCIB activity to increase for the remainder of 2026 alongside continued capital recycling. Given the persistent value disconnect, we also suspended our DRIP, effective April 24th. On March 24th, we announced the increase in our disposition target to CAD 150 million. We have a number of MHC properties under contract with closings expected in the second half of 2026. We see an opportunity to crystallize value and redeploy capital and focus on our high quality apartment portfolio. Importantly, this is not a short-term shift. We view capital recycling of non-core or low growth assets as a reoccurring component of our strategy, which will allow us to improve our portfolio.

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

Longer term, we are targeting annual dispositions of up to CAD 200 million per year, subject to market conditions and pricing. Over the past 15 years, Killam has developed over 2,300 high quality energy efficient apartment suites, which operate at some of the highest margins in our portfolio. Many of these properties offer suites with affordable rents by utilizing CMHC funding and programs beginning in 2011 with our Charlotte Court, and more recently with our Carrick development in Waterloo, Ontario. With an overall average portfolio of 29 years, our portfolio of newer assets allows for flexibility when it comes to value-enhancing opportunities as well as lower maintenance costs. Currently, we do not expect to start any new developments in the near term due to market conditions and policy changes in some of our key development locations.

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

For example, recent building restrictions imposed in Kitchener, Waterloo, and some parts of Cambridge due to shortage of water for the region have stopped all new development for the foreseeable future. Slides 12 and 14 highlight Brightwood, our 128-suite building in Waterloo, which was completed in record time. From start to finish, it took 16 months to complete and came in under budget. The property is currently 23% leased, and we welcomed our first tenants last Friday. We expect the property to be fully leased by the fourth quarter. In Halifax, construction of the Eventide, our 55-suite development on slides 15 and 16, is expected to be completed in Q4.

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

This leaves Eventide in our 10% interest in Nolan Three, located in Calgary, as our active developments and represents less than 1% of the total value of our portfolio. We believe our balanced approach to capital allocation heading into the promising leasing season positions Killam to deliver sustainable FFO per unit growth while maintaining flexibility as market conditions evolve. Higher for longer interest rates reinforce the importance of balance sheet discipline and capital allocation. To conclude, we are very pleased with our Q1 2026 performance and remain committed to investing in our portfolio, executing our overall strategy, and creating value for all of our unit holders. 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]

Thank you. Ladies and gentlemen, we now begin the question and answer session. Your first question comes from Jonathan Kelcher with TD Cowen. Please go ahead.

[Jonathan Kelcher, Analyst at TD Cowen]

Thanks, good morning.

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

Good morning.

[Jonathan Kelcher, Analyst at TD Cowen]

First question, just on the capital allocation and the MHC portfolio. I think you're carrying it at about CAD 240 million on the books right now. If you're targeting CAD 150 and a lot's targeted towards the MHC, how should we think about that segment of your business going forward?

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

Well, I think, over time it's going to be reduced. As we've mentioned, Jonathan, we've had a number of properties under contract. We've been working on these properties in terms of disposing of them since really late Q4 of 2025. There's two big tranches, and we expect them to close in the second half of the year.

[Jonathan Kelcher, Analyst at TD Cowen]

Okay. Once those close, will that get you to the low end of your disposition target or are you gonna have to sell some apartments too?

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

Well, we're looking at those two deals alone are over CAD 100 million. We're looking at other opportunities on the MHC side, and we're also looking at opportunities to dispose apartments as well.

[Jonathan Kelcher, Analyst at TD Cowen]

Okay. I guess the majority of the equity proceeds will be targeted towards the NCIB. Well, are you also looking at any acquisitions, any opportunities?

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

We are looking at no acquisitions at this time.

[Jonathan Kelcher, Analyst at TD Cowen]

Okay.

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

Okay.

[Jonathan Kelcher, Analyst at TD Cowen]

Just Sorry, go ahead.

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

Nope.

[Jonathan Kelcher, Analyst at TD Cowen]

Okay. Just one on the operations. The increase in occupancy in April, obviously pretty good start to the spring leasing season. Was that consistent across the portfolio or is it still mostly being driven by Atlantic Canada?

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

It's led by Atlantic Canada, but it's across the portfolio.

[Jonathan Kelcher, Analyst at TD Cowen]

Okay. That's it for me. I'll turn it back. Thanks.

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

Thank you.

[Operator]

Thank you. Your next question comes from Brad Sturges with Raymond James. Please go ahead.

[Brad Sturges, Analyst at Raymond James]

Hey, good morning. Just following on Jonathan's questions there, then would it be fair to say that I guess over the next few years you would, given you're reducing your operating scale on MHC, that you could potentially exit that segment altogether?

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

Well, I mean, we're into that sort of decline in terms of the percentage that it's going to produce for the company overall. It will take a couple of years to sort of finalize that if we choose to do it. There's such demand for these assets today that we're going to seize the opportunities in front of us.

[Brad Sturges, Analyst at Raymond James]

What you've got under contract now or looking to sell, is it, is there a specific region within that MHC portfolio or is it kind of broad across the broad cross-section across the markets you're in?

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

The deals tend to be focused regionally.

[Brad Sturges, Analyst at Raymond James]

I guess, just I guess on the question around, it sounds like the leasing, market for the spring season's, you know, been picking up. I guess how would the demand picture look today versus where you were last year? You know, are you seeing incremental, differences between this year and last year in the, in the spring leasing season?

[Dale Noseworthy, CFO at Killam Apartment REIT]

I'd say better. I think last spring, certainly when we were, you know, through the summer was more flat, and then we saw an increase in vacancy last fall. I'd say the momentum we're seeing this year is better than last year.

[Brad Sturges, Analyst at Raymond James]

Okay. Appreciate it. I'll turn it back.

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

Thank you.

[Operator]

Thank you. Your next question comes from Jimmy Shan with RBC Capital Markets. Please go ahead.

[Jimmy Shan, Analyst at RBC Capital Markets]

Thank you. I just wanted to get some context around the capital allocation shift, if you will. I guess the reason to get out of MHC, was that more of a function of demand? Did you get an unsolicited bid? Is that sort of why you decided to get out of the business? Then on the buyback-

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

Well, I mean, we're not out of the business. We're not out of the business. Over the last three years, we've concentrated on apartments in a lot of times in locations that were there was no future growth in those areas. We sold a couple MHCs last year, and the interest, the wave of interest was on the MHC, we started doing that at the end of last year. That's where that comes from. Over time, you know, you get to the point where we will sort of diversify and sell off a number of those assets.

[Jimmy Shan, Analyst at RBC Capital Markets]

Okay. Got it. Similarly, on the buyback, I think this is probably the most active we've seen Killam in terms of buyback, again, what sort of drove that shift?

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

Well, I think it's the persistent level of our share price and relative to where the sort of the acquisition market is, it makes the most sense to do it. Believing that there's not another war, another sort of economic event that we can't control, now is the time to do it.

[Jimmy Shan, Analyst at RBC Capital Markets]

Yeah. Sounds good. On the operating side, I think I read somewhere about in your MD&A about some of the urban core assets are being redeveloped, so it actually subtracts supply. Is that part of the reason you think that you haven't really seen kind of that supply impact and why you're seeing pretty good momentum in your market rent? Can you quantify sort of what that potential impact is?

[Dale Noseworthy, CFO at Killam Apartment REIT]

I don't think that alone is the reason we're seeing it. I think it has more to do with, you know, people wanna be in the core of the city, and the regions that we're located in are very good locations in the city, and our rents overall are affordable. That spread when the old versus new. Certainly there has been that redevelopment. It is a factor, but I wouldn't say that that's the reason we're not seeing the impact of new supply. I think it's the offering that we have compared to the rents.

[Jimmy Shan, Analyst at RBC Capital Markets]

Okay. Yeah. Okay. No, I mean, the market rent, mark-to-market rent, how fast moving from 15% to 18%. Pretty big move. Is that momentum in the market or did that surprise you at all?

[Robert Richardson, EVP at Killam Apartment REIT]

We're happy with the growth. Did it surprise us? A little bit. The market has been strong.

[Jimmy Shan, Analyst at RBC Capital Markets]

Yeah. Okay. Great. Thank you.

[Operator]

Thank you. Your next question comes from Kyle Stanley with Desjardins. Please go ahead.

[Kyle Stanley, Analyst at Desjardins]

Thanks. Morning, everyone. Just going back to the kind of the occupancy momentum, especially into April here. You've talked about it a little bit, but, you know, I'm just wondering what are the main drivers that you think are driving this, you know, strength in the underlying market? Obviously, you mentioned last year seeing the seasonality with things being relatively flat in the summer and then softening in the fall. Do you expect similar trajectory for the year ahead?

[Dale Noseworthy, CFO at Killam Apartment REIT]

I mean, I think we are back to a more seasonal, you know, the norm of having some seasonality. We're just getting going on this season, which tends to peak in September. You know, if you go back to historic norms, I think that that's reasonable to expect. I think when we see the momentum that we've had and where it's coming from, one is our leasing and property management teams being very nimble to make sure that we've got the right pricing and we're doing the right amount of upgrades. If required, we've actually slowed down the amount of repositionings we're doing. Affordability is absolutely where the biggest demand, you know, more affordable units. We are being strategic in terms of that.

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

Yeah. I mean, where the demand is coming from is really the Federal Government on the defense side. I mean, the announcements they actually have announced, there's a lot of sort of behind the scenes or early consulting, getting design work done on all those projects across not just Halifax, but also in New Brunswick and Newfoundland. That's as real as it gets. Money is being spent today on that. Even recently, I mean, the Federal Government picked up 540 acres of land over on the Dartmouth side. They also purchased an apartment building that was finished, that hadn't even started leasing for close to CAD 80 million, close to our properties, over there by Maplehurst. They're spending money, and we're gonna see the economic spinoff from that.

[Kyle Stanley, Analyst at Desjardins]

Okay. No, I mean, that kind of goes to my next question because, like, again, it's been touched on already on the call, but how strong Halifax was, and obviously we've seen all the announcements but was unsure if money was actually being spent and jobs created already. It's interesting to hear that and probably helps explain the strength. That's helpful. One thing you mentioned just on Kitchener, Cambridge, Waterloo, and kind of the halting of new development as it relates to lack of water. Is that something you see being an issue across the country or in some specific markets and maybe that is the, you know, the thing that gets supply a little bit more in check until we see a shift in population growth again?

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

I think it's all over the country in different sort of stages and levels. I mean, the most dramatic one is the Kitchener-Waterloo area that basically last November they said, No more permits for nothing. For a single-family home, for a new apartment building, everything is on hold. Here it is now, five months later, and nothing's getting done. That has a real impact on the local construction economy there. We're seeing signs of that in different ways, not so much on capacity of water, but in some areas in Halifax, they are relative to doing the testing because when they go to get your water permit, that there might not be enough water for the area.

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

We're also seeing it on the wastewater in terms of Halifax, where that capacity is very constrained in a number of areas of the city.

[Kyle Stanley, Analyst at Desjardins]

Okay. Okay. No, that's interesting. Thank you. Just the last one, anything you wanted to highlight on the kind of leasing or repositioning effort at Westmount?

[Robert Richardson, EVP at Killam Apartment REIT]

We just took possession of it on April 1st. We started demolition, and we're taking the leaseholds out and preparing for one tenant that we're working with that's gonna be moving so we can have additional retail to offer in the marketplace. We're making good progress on that, and we think that the program will take 24 months.

[Kyle Stanley, Analyst at Desjardins]

Okay.

[Robert Richardson, EVP at Killam Apartment REIT]

Yep. Okay.

[Kyle Stanley, Analyst at Desjardins]

Okay. Perfect. Thank you very much.

[Operator]

Thank you. Your next question comes from Mario Saric with Scotiabank. Please go ahead.

[Mario Saric, Analyst at Scotiabank]

Hi. Good morning. Coming back to the 60 basis point occupancy uplift, it's the first time I think since 2021 where we saw a sequential move Q2 versus Q1 or at least Q2 so far. Is it your sense that the 60 basis points, is that a Killam thing or is that a broader market thing in terms of the market that you operate in? Like how much of it is specific to what Killam is doing versus kind of just generally the broader market in these markets is showing sign?

[Dale Noseworthy, CFO at Killam Apartment REIT]

I think it's a bit of both. I'd say part of it is the way we're executing, but I'm also hearing that competitors around us have less vacancy, so a greater market. I think people are coming back, so I would say it's half and half.

[Mario Saric, Analyst at Scotiabank]

Got it. Okay. I think last quarter, Philip Fraser kind of outlined seven or eight projects in the Halifax area that should create jobs over time, and it sounds like maybe some of that's impacting the numbers right now. You know, high level, like if those seven or eight projects are gonna create, let's say 100 jobs over, I don't know, 15, 20 years, are we at five jobs created thus far? 20, 40? Can you just maybe provide a bit of context in terms of where we are in that game today in terms of job creation that may be impacting the occupancy on the ground?

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

We're at the very, very early stages, Mario, in that.

[Mario Saric, Analyst at Scotiabank]

Okay. I mean

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

Yeah.

[Mario Saric, Analyst at Scotiabank]

Some of these projects could be explaining what you're hearing or what you're seeing on the ground, but it's a far cry from ultimately what.

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

Absolutely.

[Mario Saric, Analyst at Scotiabank]

Great. Okay. The mark-to-market boost of 1% was surprising to us at the very least. You know, your occupied rent growth was up 1% quarter-over-quarter as well. That would kind of imply 2% market rent growth sequentially. I guess my question is the 2% kind of a same property basis or is some of that increase in market rent attributable to new supply coming into the market at a higher rent?

[Dale Noseworthy, CFO at Killam Apartment REIT]

The same property. Just remember, when we're doing our mark to market, it's being compared to December, which is not prime leasing season. That's part of it. We're always running it to say what could we have achieved at the end of the quarter versus what was in play. I do think time of year is an important factor, but we are using a same property mix, so it's like for like when we're looking at that.

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

I think what else is impacting it is the federal government has said to the Department of Defense they're gonna increase the wages by 25% for new recruits. They're starting to get more new recruits. They have more money in their pockets, and they can stay on the peninsula. I think that that is contributing to the increases that we're able to get in the marketplace.

[Dale Noseworthy, CFO at Killam Apartment REIT]

As we're seeing less vacancy, the conversations around the table are, "Okay, we're only dealing with two vacant units instead of eight at a certain property. Let's try moving the rents 25%." It's just starting. It's not across the board. It's strategic, depending on where the supply, you know, is coming from. Those are the conversations. It's different approach to leasing when you only have a few vacant units versus, you know, a runway of a couple, you know, a couple of months of more vacancy coming. It changes the conversation.

[Mario Saric, Analyst at Scotiabank]

Right. Okay. Then what % of the renewals in Halifax would you say are you hitting kind of the max allowable today?

[Dale Noseworthy, CFO at Killam Apartment REIT]

Sorry, I missed that.

[Mario Saric, Analyst at Scotiabank]

What percent of the lease renewals in Halifax are you hitting the allowable increase?

[Dale Noseworthy, CFO at Killam Apartment REIT]

Not as many as we were, but we're probably averaging closer to.

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

4.5%.

[Dale Noseworthy, CFO at Killam Apartment REIT]

4.5%. Yeah.

[Mario Saric, Analyst at Scotiabank]

Cool. Okay. My last question maybe sticking to Halifax, do you have a sense of how incentives are trending with respect to some of the larger developments that are currently under lease up?

[Dale Noseworthy, CFO at Killam Apartment REIT]

You're asking about incentives for new developments, not for not how we're using incentives?

[Mario Saric, Analyst at Scotiabank]

Yeah. No. Not necessarily for your portfolio, but there is kind of a larger development that's under lease up today and just other kind of developments that are under lease up in the market. Do you have a sense of what level of incentives being offered there and how that's changing?

[Dale Noseworthy, CFO at Killam Apartment REIT]

I do get that some incentives are. We keep a close eye on that, and some are offering one month free. It's not standard across all developments, but there are incentives out there at some properties that are being leased up.

[Mario Saric, Analyst at Scotiabank]

Okay. Great. Thank you.

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

Thank you.

[Mario Saric, Analyst at Scotiabank]

Thank you.

[Operator]

Thank you. Your next question comes from Sairam Srinivas with ATB Capital Markets. Please go ahead.

[Sairam Srinivas, Analyst at ATB Capital Markets]

Thank you, operator. Good morning, guys. Just going back to comments on, you know, how attractive the units are at these levels right now. Although Killam is not focusing on the acquisition market, are you actually seeing a lot more volume sharing these kind of assets in the market right now?

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

I think it's slightly down from maybe last year. What we're seeing is that in hearing CMHC or any type of financing is taking longer and longer. You, you've got to have a pretty good balance sheet to be a buyer these days.

[Sairam Srinivas, Analyst at ATB Capital Markets]

Going back to your comment on, you know, how attractive the MHC units look right now, especially in this market. Can you talk about the buyer pool as such? Are these more people looking at it as land opportunities, or are they essentially just looking to operate it as a cash flow model? How are they looking at it?

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

Well, the MHC side is cash flow. They want the assets. I think all the apartments are the same as well.

[Sairam Srinivas, Analyst at ATB Capital Markets]

Fair enough. Thanks, guys. I'll turn it back.

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

Thank you.

[Operator]

Thank you. Your next question comes from Dean Wilkinson with CIBC Capital Markets. Please go ahead.

[Dean Wilkinson, Analyst at CIBC Capital Markets]

Thanks. Morning, everyone. Phil, just on the buyback. Obviously, it's the best use of capital right now. I mean, you can sell assets at a five or better and buy back your units at, you know, an implied six. I guess even a sell side analyst could make that work. How tight would that have to come in before you become, say, indifferent between going back out into the market to buy assets or development and at which point it would say, "Okay, maybe, we've extracted all the capital that we can out of buyback units?

[Dale Noseworthy, CFO at Killam Apartment REIT]

I'll jump in for that one. I mean, it obviously depends what we're selling and what cap rate we're selling at. I'd say, you know, we'd love to see the unit price come back to CAD 20, and I think at that point, the math can look different depending what acquisition opportunities are and what that growth profile would be. It really does depend on both sides. Yeah.

[Dean Wilkinson, Analyst at CIBC Capital Markets]

Yep. That, I mean, it's just math, right? It makes sense. Just on the mark-to-market opportunity, do you think that it's more stabilized or perhaps, you know, looking at Halifax, looking at Saint John, looking at Saint John's, you know, if those trends continue, perhaps that mark-to-market opportunity does actually continue to increase from here? Do you think that 9%-10% range is maybe sort of, you know, call it the pre-pandemic normal that we're back to?

[Dale Noseworthy, CFO at Killam Apartment REIT]

It's a big question. I'd say based on the momentum we're seeing, it's not unlikely to see that continue to tick up a little bit over the next quarter or two. I don't think we're going back to 15% and 20% anytime soon. With the demand that we're seeing and this affordable offering that we have, and that's where the strongest demand is, we may see that continue to move up. It feels better than it has, and it does feel like I mean, we have seen an uptick more than stabilized. There's a good chance we see that continue to move up through this busy leasing season.

[Dean Wilkinson, Analyst at CIBC Capital Markets]

Fantastic. That's all I had. Thanks.

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

Thank you.

[Operator]

Thank you. Your next question comes from Matt Kornack with National Bank. Please go ahead.

[Matt Kornack, Analyst at National Bank]

Hi, guys. Just on the capital recycling front, these are assets that you've held for quite some time, and presumably the tax base has been ground down a bit. I know taxes have been an impediment in this country in terms of capital recycling. How will you kinda mitigate that? I know you can ultimately push it through to shareholders through special distributions, but we have heard some starting to complain about that process. If you could give a sense as to how to mitigate the capital gains tax implications.

[Dale Noseworthy, CFO at Killam Apartment REIT]

Yeah. With those particular assets, we would likely be modeling it out, but likely looking kind of at a special distribution potentially this year. It all depends exactly which assets close.

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

When the timing.

[Dale Noseworthy, CFO at Killam Apartment REIT]

It would be relatively small.

[Matt Kornack, Analyst at National Bank]

Makes sense. On the demand side, I mean, the population numbers that we continue to see don't look great. Now, it's hard to know whether the government is properly kind of measuring people departing the country. Based on what you're seeing, it seems like you've seen incremental increase in demand above and beyond kind of people making more money to pay higher rents. Just trying to square those two things. They seem counter. We would've thought we would see this but maybe in 2027 and 2028, not the spring of 2026. I don't know if you have any incremental color there as to why you're seeing better demand.

[Dale Noseworthy, CFO at Killam Apartment REIT]

I think some might be that a year ago we saw more people leaving. We would've heard from even some of those non-permanent residents, people's visas weren't being renewed. We had more exodus, more units to fill. We are seeing less of that, I don't know how much of that is to do with, you know, changes. Some of those people that had to leave the country have left. We have changed our approach in terms of making sure that we are communicating with tenants in advance before they leave also to negotiate where that opportunity exists. I would say we've seen less people leaving, there's, you know, there's less units to catch up on, which may be contributing as well.

[Matt Kornack, Analyst at National Bank]

Okay. No, that makes sense. It does seem like this is a broader theme and we're looking at the population numbers and just scratching our head a bit. Maybe population's not shrinking at the pace that the government's saying it's shrinking at.

[Robert Richardson, EVP at Killam Apartment REIT]

In Nova Scotia, our premier has made it clear that he wants to open up mining, the offshore in terms of the wind farms. He really is pushing forward. He has a majority government, the probability is that he can get it pushed through. I think that people are looking and saying, "Okay, we're gonna have some growth." If they were looking to leave, they probably are saying, "If I wait a little longer and see, we can see what's happening with that." The other one is Amazon. It's in the paper today that they're gonna have a 500,000 sq ft to 700,000sq ft fulfillment center, and they're gonna build it in Burnside. You know, that type of, you know, that size will have people able to find quite a few jobs.

[Robert Richardson, EVP at Killam Apartment REIT]

The mining alone, it could be massive, like in the hundreds and close to 1,000 sq ft. It is, it's people are talking about.

[Matt Kornack, Analyst at National Bank]

Maybe just on the supply side, I mean, the topography of Halifax and the infrastructure, they'll make it the easiest place to get around if the population's gonna grow substantially. Like, are there limitations at this point in terms of kind of incremental new supply? I know there's been a lot built, but it's not necessarily downtown.

[Robert Richardson, EVP at Killam Apartment REIT]

I was gonna make a joke earlier about the reason they're still here is they can't get off the peninsula. You've touched on it. I can go there. Yeah, without a doubt, we have some infrastructure issues. Well, here where we are located in Halifax, they're gonna be taking up a fair bit of the intersection to try and address some of that. We have to, I think, find a way to work with it because the people are here and more do wanna come.

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

Matt, just, again, you touched on the supply side. CMHC did a report there at the end of January talking about the units under construction in the region. Basically, their number for all of Halifax is 12,297 under construction over a four-year period. That's about 3,000 units. Really, there's a few larger developments will take all that time. Even 3,000 units is just slightly above what we've been able to absorb for the last 15 years. You're only looking at essentially a population of 7,000-8,000-9,000 people per year to absorb all that and still have the tight sort of conditions.

[Matt Kornack, Analyst at National Bank]

Yeah. No, that's fair. I think we've looked at supply, but it's really been a demand issue for the last little while.

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

Yeah.

[Matt Kornack, Analyst at National Bank]

It seems like demand is coming back. Okay. Thanks, guys. Appreciate it.

[Operator]

Thank you. Your follow-up question comes from Mario. Please go ahead.

[Mario Saric, Analyst at Scotiabank]

Hi. Sorry, one more from me. Just on the MHC side, given the scarcity of the product in the country, is it fair or is it reasonable to think that, potentially being sold in two large tranches, is it fair to think about perhaps a premium to IFRS in terms of valuation being targeted?

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

Sorry, I missed that last part. You're asking if they're close to IFRS?

[Dale Noseworthy, CFO at Killam Apartment REIT]

Should we expect a premium to IFRS?

[Mario Saric, Analyst at Scotiabank]

Yeah. Given their, like, kind of larger portfolio sales with a fairly scarce product, is it reasonable to expect a premium, a portfolio premium?

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

Well, I think you're asking the price.

[Dale Noseworthy, CFO at Killam Apartment REIT]

We would expect to be generally in line with IFRS.

[Mario Saric, Analyst at Scotiabank]

Okay. Thank you.

[Operator]

Thank you. There are no further questions on the phone line. I'll turn the call back to Mr. Fraser for closing remarks.

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

Thank you. Thanks for participating and listening to our call today, and we look forward to reporting our Q2 results on August the 5th, 2026. Thank you.

[Operator]

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines. Have a great day.

Participants

Executives

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

Analysts

• Brad Sturges, Analyst at Raymond James
• Dean Wilkinson, Analyst at CIBC Capital Markets
• Jimmy Shan, Analyst at RBC Capital Markets
• Jonathan Kelcher, Analyst at TD Cowen
• Kyle Stanley, Analyst at Desjardins
• Mario Saric, Analyst at Scotiabank
• Matt Kornack, Analyst at National Bank
• Sairam Srinivas, Analyst at ATB Capital Markets