Killam Apartment REIT Q2 2026 Earnings Report

Killam Apartment REIT EPS Results

• Actual EPS: C$0.53
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Killam Apartment REIT Revenue Results

• Actual Revenue: $99.16 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Killam Apartment REIT Announcement Details

• Quarter: Q2 2026
• Date: 8/5/2026
• Time: After Market Closes
• Conference Call Date: Thursday, August 6, 2026
• Conference Call Time: 9:00AM ET

Killam Apartment REIT (TSE:KMP.UN), based in Halifax, Nova Scotia, is one of Canada's largest residential real estate investment trusts, owning, operating and developing a $5.4 billion portfolio of apartments and manufactured home communities. Killam's strategy to enhance value and profitability focuses on three priorities: 1) increasing earnings from existing operations, 2) expanding the portfolio and diversifying geographically through accretive acquisitions which target newer properties and through the disposition of non-core assets, and 3) developing high-quality properties in its core markets.

Killam Apartment REIT Q2 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Apartment operating performance remained strong: same-property apartment NOI grew 4.6%, revenue increased 3.8%, and occupancy reached 97.6%. Management maintained its 2026 NOI growth targets of at least 3.5% for apartments and 2.5% for the consolidated portfolio.
• Positive Sentiment: Atlantic Canada continued to outperform, with occupancy above 98% across the region and Halifax same-property apartment NOI growth of 7%. Management highlighted federal defense spending, shipbuilding, hospital expansion, and other infrastructure projects as long-term demand drivers.
• Neutral Sentiment: FFO was CAD 39.6 million, up 0.5% year over year, while FFO per unit was unchanged at CAD 0.32. Results were pressured by higher interest expense and the CAD 900,000 temporary impact of the Westmount Place office vacancy, although redevelopment is expected to contribute meaningfully from 2028.
• Positive Sentiment: Killam strengthened its balance sheet through asset recycling, including a CAD 50.9 million Ontario manufactured-home-community disposition, reducing debt-to-assets to 42.2% after quarter-end. The company also repurchased 1.7 million units for CAD 31.3 million during the quarter and plans to remain active under its NCIB if the unit price stays below approximately CAD 19.
• Neutral Sentiment: Brightwood, a 128-unit Waterloo development, reached substantial completion ahead of schedule and below budget, but was only 45% leased at quarter-end; stabilization is expected in early 2027. Eventide in Halifax remains on track for Q4 completion, with 22% pre-leased and management expecting a relatively quick lease-up due to its location.

Presentation

[Operator]

Good morning, ladies and gentlemen. Welcome to the Killam Apartment Real Estate Investment Trust second quarter 2026 financial results conference call. At this time, all lines are in 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 August 6th, 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. Thank you for joining Killam Apartment REIT second 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, 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 operating results for the second quarter of 2026. We achieved 3% same property NOI growth across the portfolio, which included 4.6% same property NOI growth in our apartment portfolio. Our portfolio continues to demonstrate resilience, supported by strong demand for our apartments. Our Atlantic Canada markets continue to be our strongest markets and the driver of our outperformance this year. Same property apartment occupancy at the end of the second quarter was 97.6%, up from 97% in Q1. The increased federal defense spending commitments are positive for a number of our markets.

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

We are already seeing increased economic activity across our portfolio, reinforcing our confidence in the region's long-term growth outlook. Dale will now take us through our financial results, followed by Robert, who will discuss rental market fundamentals. 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 Q2 financial performance can be found on slide two. Killam delivered strong operating performance in the quarter, including 3.8% same property apartment revenue growth. The weighted average rental increase on renewed and turned apartment units shown on slide three was 3.6%, consistent with the first quarter. Increases averaged 5% on unit turns and 3% on renewals. As shown on slide four, in-place rents remain approximately 10% below current market rents across the portfolio. This mark-to-market opportunity, together with sustained demand and high occupancy, provides a visible runway for continued revenue growth. These fundamentals reinforce our confidence in the portfolio's ability to perform and support our same property apartment revenue growth target of at least 3.5% for the year.

[Dale Noseworthy, CFO at Killam Apartment REIT]

Turning to expenses, apartment same property expenses were up 2.1%, while operating expenses for the same property consolidated portfolio increased by 1.9%, as shown on slide five. We remain confident in our 2026 NOI growth targets, which were raised in Q1, of achieving at least 3.5% for the apartment portfolio and 2.5% for the consolidated portfolio. FFO was CAD 39.6 million in the quarter, a 0.5% increase from Q2 2025. While FFO per unit was unchanged at CAD 0.32. Same property NOI growth, contributions from The Carrick, and lower administrative costs were offset by higher interest expense and the temporary earnings impact of the Westmount Place vacancy following the departure of a large office tenant on April 1st. The Westmount vacancy reduced Q2 FFO by approximately CAD 900,000. Excluding this impact, FFO per unit would have increased 2.3% quarter-over-quarter.

[Dale Noseworthy, CFO at Killam Apartment REIT]

While this near-term vacancy tempered per unit growth, it reflects a temporary transition period as we reposition Westmount Place. We expect the redevelopment and re-leasing program to begin contributing to FFO growth in 2028. Our balance sheet remains well-positioned, with debt metrics highlighted on slide six. Total debt as a percentage of total assets was 42.8% at June 30th. Subsequent to quarter end, Killam completed the disposition of a portion of our Ontario MHC portfolio, and net proceeds were applied against the credit facility.

[Dale Noseworthy, CFO at Killam Apartment REIT]

Following this transaction, debt as a percentage of total assets improved by 60 basis points to 42.2%. As of June 30th, our total weighted average mortgage interest rate was 3.62%. Approximately 95% of our apartment mortgages are CMHC insured, which remains an important competitive advantage, providing access to lower cost, long-term financing relative to other asset classes. Looking at our debt maturity profile on slide seven, the path toward more stable interest expense growth is in sight.

[Dale Noseworthy, CFO at Killam Apartment REIT]

Apartment mortgages maturing in 2028 and 2029 would be renewed at rates similar to or lower than the current rates of 4% and 3.7%, respectively. With less pressure on interest expense, we expect a greater portion of NOI growth to flow through to FFO. Combined with continued same property NOI growth, the stabilization of recently completed developments, and the benefit of NCIB activity, we expect strong per unit earnings growth in the future. I will now turn it over to Robert.

[Robert Richardson, EVP at Killam Apartment REIT]

Thank you, Dale, and good morning, everyone. Our Q2 results reinforce the strength of Killam's Atlantic Canadian platform. High occupancy, sustained rent growth, and limited incentive activity continues to support strong same property performance. While major defense related investment in Halifax and across the region provides a durable long-term demand backdrop. Atlantic Canada continues to be Killam's strongest performing region, supported by high occupancy and above average rental rate growth. As shown on slide eight, Q2 occupancy remained above 98% across our Atlantic portfolio. Halifax, our largest market, continues to deliver particularly strong results. In Q2, Halifax same property apartment revenue increased 6.3%, while same property apartment net operating income increased to 7%. We also believe the region's growing defense presence represents a significant long-term advantage for Killam. Please refer to the map on slide nine, which highlights the locations of these investments.

[Robert Richardson, EVP at Killam Apartment REIT]

Halifax is home to Canadian Forces Base Halifax, Canada's largest military base by personnel, with a combined 10,000 military and civilian employees on-site. Nova Scotia is expected to receive approximately CAD 2 billion in defense-related investment, with CFB Halifax and CFB Greenwood receiving most of that capital. An additional CAD 1 billion is expected to be invested across Atlantic Canada, with CFB Gagetown, located near Fredericton, receiving the vast majority of those funds. Slide 10 provides additional detail on the National Shipbuilding Strategy, a cornerstone of Canada's defense program.

[Robert Richardson, EVP at Killam Apartment REIT]

Halifax remains the primary beneficiary of this initiative. Established in 2013, the program awarded Irving Shipbuilding the contract to modernize Canada's combat fleet at the Halifax shipyard, where more than 3,000 people are employed today. Most recently, Canada awarded the largest defense procurement contract in its history to ThyssenKrupp Marine Systems for the construction and long-term maintenance of up to 12 submarines.

[Robert Richardson, EVP at Killam Apartment REIT]

Six of these vessels are expected to be permanently stationed and serviced at CFB Halifax. This represents a CAD 24 billion procurement with an estimated national economic impact of up to CAD 86 billion over the next 30 to 50 years. The first submarines are expected to arrive in Halifax beginning in 2034. In summary, with more than 5,700 apartment units in Halifax alone, we view Atlantic Canada as a differentiated competitive advantage within Killam's portfolio. I'd also like to provide additional commentary on 50 Westmount Place. As Sun Life's decision to vacate approximately 200,000 sq ft at the start of Q2 weighed on same property NOI growth this quarter. Fortunately, due to its exceptional location, we believe 50 Westmount represents a compelling repositioning opportunity. Our plan is to transform the property into a mixed-use destination combining retail, office, and dining uses.

[Robert Richardson, EVP at Killam Apartment REIT]

The redevelopment will be completed in three phases with full completion expected in late 2028. This phased approach allows us to reposition the asset over time while continuing to advance leasing, design, and tenant mix decisions in a disciplined manner. While the reposition will take some time, we expect the property to begin contributing meaningfully to earnings in 2028. With that, I'll hand it back to Philip to discuss Killam's capital recycling and capital allocation strategy.

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

Thank you, Robert. Capital recycling remains a key focus during the second quarter and is a very important source of funding. On August the fourth, we completed the disposition of a portfolio of Ontario manufactured home communities containing approximately 746 sites, for gross proceeds of CAD 50.9 million. The portfolio consists of eight year-round communities and one seasonal park with an average rent of CAD 507 per month and an exit cap rate of approximately 5.9%. Net proceeds after debt were approximately CAD 40 million. In addition, we have a Nova Scotia portfolio of nine MHC communities containing roughly 1,300 sites under agreement of purchase and sale, and is expected to close in Q3.

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

A large 3,000 site portfolio of seasonal and year-round MHCs under contract with an expectation of closing in Q4 2026. Proceeds from dispositions and refinancing maturing first mortgage debt allows flexibility to allocate capital between NCIB repurchases, debt reductions, acquisitions, and development opportunities. During the quarter, Killam allocated CAD 31.3 million towards its NCIB activity, repurchasing 1.7 million trust units for cancellation. Year to date, through the end of July, Killam has repurchased a total of 2.7 million trust units, representing more than CAD 49.2 million of capital to unit repurchase, shown on slide three. We intend to continue unit repurchases as a key component of our capital allocation strategy during the second half of 2026.

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

In Waterloo, Ontario, Brightwood, our newest development, reached substantial completion on June 1st, 2026, ahead of schedule and below budget at a total development cost of CAD 55.1 million. The 128 unit property is currently 45% leased and is expected to reach stabilization occupancy in early 2027. Photos of the completed property can be seen on slide 14. Eventide, our 55 unit development in Halifax on slide 15, remains on track for completion in Q4 2026 and is currently 22% pre-leased. We also maintain a 10% interest in Nolan Hill phase III in Calgary, which is expected to be completed in the second half of 2027. In the current environment, we continue to prioritize flexibility and balance sheet strength and the highest return capital allocation opportunities.

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

To conclude, we are very pleased with our second quarter operating performance and the progress made across our strategic priorities listed on slide 17. We delivered strong apartment NOI growth, completed Brightwood ahead of schedule, advanced our Westmount Place repositioning plans, remain active under our NCIB, and continue to execute on capital recycling. I would like to thank our employees for their continued hard work and dedication. Thank you. We will now open up the call for questions.

[Operator]

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the one on your touch tone 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. If you are using a speakerphone, please lift the handset before pressing any keys. One moment please for your first question. 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.

[Jonathan Kelcher, Analyst at TD Cowen]

First question just on the same property NOI, on the apartment side. I know you didn't officially raise your target for the year, is there any reason to think that it won't stay above 4% in the back half of the year, are you just sort of concerned about weather in Q4? Would that be the bogey?

[Dale Noseworthy, CFO at Killam Apartment REIT]

Utilities would be the bogey. Just a reminder, we had a hefty increase in water rates in Nova Scotia that was approved earlier this year. In the third quarter, those are up about 18%, the rates alone. That's something we are modeling in as well as Q4, on the Natural gas side.

[Jonathan Kelcher, Analyst at TD Cowen]

Okay. Fair enough. Then for 2027, I don't recall if you put in the MD&A that you expect similar apartment, same property NOI growth. That seems kind of early to be putting something like that out. What's kind of driving that?

[Dale Noseworthy, CFO at Killam Apartment REIT]

Certainly the mark-to-market that we have when we look at our ability to increase rents, the strength in the occupancy. When we look at top line and we have insight generally into renewal, we're still seeing strength in terms of our ability to get rental growth on turns. We're seeing a reduced pressure on lower rates in some markets, including Alberta and Ontario in the last quarter. When we look out, we do expect that that should be more moderated. On the expense side, that does factor in a reasonable amount of expense growth. The outlook could change, but as of now, we are expecting similar growth next year.

[Jonathan Kelcher, Analyst at TD Cowen]

Perfect. Then just lastly on Westmount, looks like you're a little bit further along in your planning. Do you have a budgeted cost for the transformation there? Are you still targeting- I think at one point you were targeting CAD 1 million in NOI when all is said and done.

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

Jonathan, the CAD 1 million of NOI?

[Jonathan Kelcher, Analyst at TD Cowen]

I may have that wrong. I can go back and look.

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

The first part of the question?

[Jonathan Kelcher, Analyst at TD Cowen]

The cost for this year and next year.

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

The cost. We're between CAD 15 million and CAD 20 million is where we're looking at this point. Far, the demolition quotes have come in actually favorably, so that's good to see. We're well on our way.

[Jonathan Kelcher, Analyst at TD Cowen]

Okay, thanks. I'll turn it back.

[Operator]

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

[Sairam Srinivas, Director of Equity Research at ATB Cormark Capital Markets]

Thank you, operator. Phil, going back to your comment on the MHC disposition post-quarter, would you say the value of the dispositions is pretty much in line with the IFRS value? Even for the dispositions going ahead, would they be in line with what you expect there?

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

Sorry, could you just repeat that first part of the question about the sales of the MHCs?

[Sairam Srinivas, Director of Equity Research at ATB Cormark Capital Markets]

Yeah. Looking at the MHC dispositions announced post-quarter, would you say they're fairly in line with where you carry them at books at Q2? Going ahead to the comments you made about potential dispositions coming in, would they be somewhere in line there as well?

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

Yes.

[Sairam Srinivas, Director of Equity Research at ATB Cormark Capital Markets]

Okay.

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

Okay.

[Sairam Srinivas, Director of Equity Research at ATB Cormark Capital Markets]

Maybe looking at the more near-term leases that have been a drag overall, how should we be thinking about the cadence of this drag coming in? Do you see that heading down into the second half of next year?

[Dale Noseworthy, CFO at Killam Apartment REIT]

The drag on the turn on new leases, just to clarify your question?

[Sairam Srinivas, Director of Equity Research at ATB Cormark Capital Markets]

Yes.

[Dale Noseworthy, CFO at Killam Apartment REIT]

We do see it lessening and looking forward to expect it to moderate. Likely flat in the second half of next year, maybe earlier in terms of the terms. Closer to flat rents, I would say, rather than negative for those shorter, nearer-term leases.

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

We expect the overall increase on turn to be-.

[Dale Noseworthy, CFO at Killam Apartment REIT]

Oh, yes

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

In line with what we have seen.

[Dale Noseworthy, CFO at Killam Apartment REIT]

Absolutely.

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

Yeah.

[Sairam Srinivas, Director of Equity Research at ATB Cormark Capital Markets]

Okay. Thanks, guys. I'll jump back.

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

Thank you.

[Operator]

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

[Jimmy Shan, Managing Director at RBC Capital Markets]

Thanks. Good morning. The positive leasing momentum, did that continue into July and early August?

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

Sorry. Can you repeat that question, Jimmy?

[Jimmy Shan, Managing Director at RBC Capital Markets]

I'm just curious if the occupancy has further improved since the end of the quarter.

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

July, we saw a little bit of a dip in occupancy, but we're expecting to see that come back. Maybe not to the exact level we saw in May and June. It was very strong in the second quarter. Overall, probably a little bit down from what we saw in the second quarter, but still strong.

[Jimmy Shan, Managing Director at RBC Capital Markets]

Okay.

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

It's really just localized in a certain student-based assets and predominantly in the London area.

[Jimmy Shan, Managing Director at RBC Capital Markets]

Right. Okay. Likewise, on the rental incentives, now that occupancy is at that over 97%, do you see that plateauing or even trending down a little bit?

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

We actually in July, have seen it trend down slightly month-over-month. We're hoping to see that continue.

[Jimmy Shan, Managing Director at RBC Capital Markets]

To follow up on the Westmount question, you're spending CAD 15 million-CAD 20 million in reno costs. What's your expectation again in terms of projected NOI once everything is done?

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

Basically, when Sun Life was there, we were hitting about CAD 5.2 million in NOI, with the subtractions of space to create more parking in front of the building, then the addition that we're putting on of retail and changing the mix from 100% office to a big chunk of it being retail with a higher net rent. We think that basically it might be about CAD 200,000-CAD 300,000 less over that period of time once it's fully leased up. The flip side of that is that it creates another 80,000 sq ft of space that's not going to be on a building footprint. The thoughts are, in phases II and III, that there's going to be more retail built up the other side of the parking lot.

[Jimmy Shan, Managing Director at RBC Capital Markets]

Just lastly, on the NCIB, I know, Phil, you mentioned that continues to be a priority for you. You expect the same pace of NCIB activity in Q2 on a go-forward basis?

[Dale Noseworthy, CFO at Killam Apartment REIT]

Really depends on pricing. The last month, continuing to trade below CAD 19 million, we remained active. In these levels, we would expect to continue to be very active.

[Jimmy Shan, Managing Director at RBC Capital Markets]

Thank you.

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

Thank you.

[Operator]

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

[Mario Saric, Analyst at Scotiabank]

Hi. Good morning. Just maybe coming back to the occupancy and just looking at slide three of the call deck, which is great disclosure. I think you mentioned that July occupancy may dip a little bit versus June. If we go back historically, if you go back 20 years, typically Q3 occupancy is greater than Q2 occupancy, and I guess that kind of adjusts for some of the seasonality associated with the student building that you mentioned. Is that the expectation for this year, for Q3, September end occupancy to be higher than Q2?

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

I expect September, end of September occupancy probably to be generally in line with Q2. Not necessarily higher. It abnormally peaked kind of in that second quarter compared to historical trends.

[Mario Saric, Analyst at Scotiabank]

Okay, what do you think drove the abnormal peak earlier in the quarter?

[Dale Noseworthy, CFO at Killam Apartment REIT]

If we took out those few properties Erin mentioned, we would still be pretty high. It is still pretty high. I don't mean to say our occupancy is still very strong, but London is a market that is our most challenging at the moment. Some of those student-focused ones, and there is some new supply in that market. That's part of that. If you took out those few properties, we'd likely be looking quite stable.

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

Yeah. We're talking about CAD 180 million, and we've owned that building for 10-15 years or more, and we've seen this trend multiple times as the trend of every four years, or if there's new supply around there that it kind of dips in over the summer, but it comes back throughout the year. It's just a seasonality and a function of that market.

[Mario Saric, Analyst at Scotiabank]

Okay. When I look at that slide, if you look at the top chart, the line on the top chart, it generally kind of correlates with the bars on the bottom chart, meaning kind of the higher the occupancy goes, the better your lease spreads are, which is relatively intuitive. With the occupancy level kind of having come up and expected to kind of stay at the level that it is by the end of September, would you say that your renewal and new lease spreads have troughed at this point?

[Dale Noseworthy, CFO at Killam Apartment REIT]

I think new lease spreads, we're going to see similar spreads going forward. It's a bit of a different market that when, a few years ago, when occupancy was super high and there was a balance between pushing rents versus occupancy. Now we are favoring occupancy. We do want to get the most rent we can get, but because of new supply in certain markets, we can't just sit there and wait for the higher rent. We'll end up with vacant units for longer in many markets. It's a balancing act, but overall, what we've seen this year, we feel can continue for the next 12-18 months that we have insight.

[Mario Saric, Analyst at Scotiabank]

Okay. That would be the case for renewal spreads as well?

[Dale Noseworthy, CFO at Killam Apartment REIT]

For lease, yes.

[Mario Saric, Analyst at Scotiabank]

Okay.

[Dale Noseworthy, CFO at Killam Apartment REIT]

They're bumping around a little bit, but no sizable moves are expected.

[Mario Saric, Analyst at Scotiabank]

Okay. Just maybe the last one, a general question on kind of the defense spending in Atlantic Canada. I don't know if you've come across it in terms of, we see all the projects that you highlight and some of them are quite substantial, but in terms of the cadence of expected employment growth coming from those projects, have you seen anything that kind of gives the expected job growth over the next 10 years coming from these initiatives?

[Robert Richardson, EVP at Killam Apartment REIT]

Mario, we don't have that information. We do have the list of what's going to be invested here, and it's going to be over CAD 110 billion. The numbers are so large, it's almost like it's fanciful. The reality is this work is started on every one of these. There's 10 projects I have in front of me, and every one of them is underway. It's going to happen. I don't know the whole multiplier. I was thinking about it when I was in school. They talked about government spending and how it flows through the marketplace and we're seeing it, and our occupancy shows it, and so I think that that's pretty important.

[Robert Richardson, EVP at Killam Apartment REIT]

I was curious, I did a little snooping myself, I asked ChatGPT to go out and do a little work and find all the projects in Atlantic Canada, CAD 50 million or more that are not related to the defense. It came back with CAD 30 billion. For example, in Halifax right now, we have a CAD 7 billion build with our new hospital. There's more work to be done on Churchill, that's a couple of billion in Newfoundland. Every province has additional things on the go. It really is an incredible tailwind that we find ourselves in right now.

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

Yeah. Mario, as an example, to put a little bit of real data to your question. The Irving Shipyard now has been going on for 15+ years, thousands of people working there. Lockheed Martin, one of the larger subcontractors for that sort of program of the frigates being built, they basically came out and said they expect to hire another 300 people just to sort of match and keep up with the contracts they have for the river class battleships that are starting to be built in that shipyard. There's a lot of these defense contractors that are here or will be coming here, they have huge sort of demand for the employment base that they're going to need to help service all the real dollars being spent by the federal government.

[Mario Saric, Analyst at Scotiabank]

Okay. All right. Thanks for the color.

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

Thank you.

[Operator]

Your next question comes from Kyle Stanley, Desjardins Securities. Please go ahead.

[Kyle Stanley, Analyst at Desjardins Securities]

Thanks. Morning, everyone. You did some pretty attractively priced mortgage refinancing and then up financing so far in the first half. Is the expectation that the proceeds from the up financing, again, I think roughly a 3.7% rate, which is pretty attractive, I guess, versus maybe where rates are headed in the last couple of weeks. Will those proceeds be used to repay the maturities in the back half, kind of locking in that better rate than you can kind of get in today's environment?

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

I guess to date, most of those refis have been used for the NCIB program and just kind of our ongoing operations. In terms of repayments, I don't think we'd be looking specifically to any apartment mortgage repayments in the back half of the year. Obviously depending on what happens with rates, we'll keep an eye on it.

[Kyle Stanley, Analyst at Desjardins Securities]

Okay, fair enough. Just over to Eventide. How is the lease-up progressing there? Obviously, I understand it's still very early, but just given the kind of supply environment in Halifax, and the competitive pressures at the upper end of the market. I'm just curious how delivering a new project is going today and maybe where incentives might be, and just wanted a general view of how that's progressing.

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

I think I can honestly say that we're a little disappointed in the speed of it being finishing up over the last few months, and we still have our fingers crossed that we'll be able to have it complete, and people will be able to move in the first of October or the first of November. That said, the good news is it's only 55 units. The location is absolutely great, and the pre-leasing has been very strong. I think if it was open now, we'd have it basically well over half, if not three-quarters full. Today, we're sitting at in the mid-20s, and that there's leasing activity that's coming in on a weekly basis. We're just about ready to be able to have a show suite available to take people through.

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

That's one building I'm pretty sure is going to have a fairly fast lease up, and the rates are holding from a pro forma calculation.

[Kyle Stanley, Analyst at Desjardins Securities]

Okay. Thanks. I guess in that scenario, maybe not fully reflective of the market if you were delivering a new build elsewhere. This one, do you think location is one of the biggest drivers?

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

It's the location. Again, I'm sure you've seen it or at least know where the location is. It's just off Spring Garden. It's in sort of a quiet cul-de-sac in, but across the street is our building. Literally what Robert said, this expansion of the hospitals, this CAD 8.8 billion, is about a seven minute walk to it through a graveyard. On the other side, you basically have the medical school and all the sort of university-related employment facilities, plus Dalhousie. It's in a really good location.

[Kyle Stanley, Analyst at Desjardins Securities]

Okay. No, that makes sense. I do remember seeing it before. I believe it. That's it for me. I'll turn it back. Thanks.

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

Thank you.

[Operator]

Your next question comes from Matt Kornack with National Bank of Canada Capital Markets. Please go ahead.

[Matt Kornack, Analyst at National Bank of Canada Capital Markets]

Morning, guys. Maybe first, Dale, for the MHC and commercial mortgages that you have, I think it's CAD 110 million at almost a 5% interest rate. Would the bulk of that be on the MHC portfolio, or is there a component or a meaningful component on the commercial space as well?

[Dale Noseworthy, CFO at Killam Apartment REIT]

It would be a little more on the commercial.

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

Well, you said, what's the total?

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

100.

[Matt Kornack, Analyst at National Bank of Canada Capital Markets]

110.

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

100?

[Dale Noseworthy, CFO at Killam Apartment REIT]

Yeah, 110.

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

We have 30 on the mall over in PEI.

[Dale Noseworthy, CFO at Killam Apartment REIT]

In Brewery Market. Yeah.

[Matt Kornack, Analyst at National Bank of Canada Capital Markets]

On Brewery Market.

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

On Brewery Market.

[Dale Noseworthy, CFO at Killam Apartment REIT]

Top, maybe it's a little more.

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

About half at most, maybe CAD 40 million commercial.

[Matt Kornack, Analyst at National Bank of Canada Capital Markets]

Is it fair to say, though, that with the sale of the MHC portfolio, that the debt associated with it is at a bit higher interest rate, so it tempers kind of some of the dilution maybe of selling higher cap rate to MHC?

[Dale Noseworthy, CFO at Killam Apartment REIT]

Yes.

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

Yes.

[Dale Noseworthy, CFO at Killam Apartment REIT]

The debt levels are lower on it as a percentage of the value compared to our whole portfolio, but yes, debt would be higher.

[Matt Kornack, Analyst at National Bank of Canada Capital Markets]

I understand buying back stock at a discount to book when you're selling book. I guess it's price dependent, but it sounds like the sales are fairly certain. Let's say the stock trades higher, you don't buyback stock. Would the near-term view be to deleverage or would you get back to being more active on the development side or maybe even acquire assets on the apartment side?

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

I think the important thing you're asking is if the price does go up and it becomes less accretive from a buyback, do we go back looking at the other three alternatives? The answer would be yes, to whatever extent. It depends on the pricing. Obviously all those other avenues of growth or allocation of capital will be looked at.

[Matt Kornack, Analyst at National Bank of Canada Capital Markets]

If we look at the markets, it's pretty stark in Atlantic Canada versus the rest of your portfolio outside of Atlantic Canada in terms of performance today. Obviously, hopefully the West and Ontario will normalize. Is it attractive to look at opportunities? I look at Newfoundland. It also is doing quite well in those type markets. Is there the ability to buy at reasonable or higher cap rates in a market like Newfoundland or to build there? Just interested in how you're thinking about Atlantic versus the rest of the country.

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

Matt, you're asking what are the current opportunities for acquisitions in Atlantic Canada?

[Matt Kornack, Analyst at National Bank of Canada Capital Markets]

Yeah. If that would be of interest. Again, there's this kind of new versus old, build versus buy existing. Jury's out as to what's better, but interested in what your thoughts are from a capital allocation perspective on that.

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

Well, I think I'll answer that by saying we continue to look at all our markets across Canada, what kind of level of activity from an acquisition or disposition of other sort of owners of either apartments or That's all really what we're looking at. We are keeping a pretty good close eye on transaction and what's available, in Atlantic Canada for sure. Right now we're just lookers as opposed to saying that we want to buy something.

[Matt Kornack, Analyst at National Bank of Canada Capital Markets]

Sure. Makes sense. Then maybe lastly, just turning back to the operations side of things. Good to see new leasing spreads stabilize. Is that figure net of incentive? I know the incentives ticked up a little bit. Just trying to understand if that's a net number or if it's a gross number.

[Dale Noseworthy, CFO at Killam Apartment REIT]

That is gross. That is not net, incentives year-over-year for many of those units that turned have been pretty consistent. If we looked at incentives, it would not look very different.

[Matt Kornack, Analyst at National Bank of Canada Capital Markets]

Okay. Mark-to-market's stable, presumably, even though you're pushing through rents, it seems like you're getting some market rent growth in different segments of the market. Do you have, with your crystal ball, and I understand we're not going to hold you to this, have a sense as to what the cadence is going to be in terms of trajectory of market rents in Atlantic Canada versus maybe what you'd expect over the next couple of years in Ontario and Alberta?

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

We're all kind of shaking head, thinking I can't really come up with an answer for that one, Matt.

[Matt Kornack, Analyst at National Bank of Canada Capital Markets]

Is the hope that while Atlantic Canada maybe is normalizing and mark-to-markets are being achieved, that Ontario and Alberta will be turning in the opposite direction and you'll be pretty stable from here on out? That's pretty good.

[Dale Noseworthy, CFO at Killam Apartment REIT]

Yes.

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

I agree with that.

[Dale Noseworthy, CFO at Killam Apartment REIT]

Yes.

[Matt Kornack, Analyst at National Bank of Canada Capital Markets]

Okay. Low to mid-single digits NOI growth.

[Dale Noseworthy, CFO at Killam Apartment REIT]

Yes.

[Matt Kornack, Analyst at National Bank of Canada Capital Markets]

Okay. I won't ask you to delve any further into the future.

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

I mean, in fairness.

[Matt Kornack, Analyst at National Bank of Canada Capital Markets]

Appreciate the thought

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

Some weeks we actually see that in Alberta or Ontario that they turn positive. Consistently month-over-month, not there yet, but some weeks they do, depending on what is actually being released.

[Matt Kornack, Analyst at National Bank of Canada Capital Markets]

Fair enough. Thanks.

[Operator]

As a reminder, if you wish to ask a question, please press star one. You now have a question from Dean Wilkinson with CIBC. Please go ahead.

[Dean Wilkinson, Analyst at CIBC]

Thank you. Morning, everybody. Phil, maybe just a question more on the supply or potential supply response to all that activity that is going to happen in Atlantic Canada. If you consider the market balanced, maybe, is there enough juice for developers or yourself to put new shovels in the ground and build something? I look at Eventide and maybe it's a little on the higher end, but how do you think that dynamic looks going forward? Are cost pressures coming down, or would a spate of construction actually start to push things up and you see an inflationary spiral there and that ultimately flows through to rents as well?

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

I think the supply, this is only really my opinion, is that it's going to get tighter over the next couple of years until we get adjustments and more sort of contractors come into this market if the demand is truly there on the sort of the building out of housing. A lot of the labor is going to be concentrated on the defense, sort of the non-residential side of it. That basically even the hospital, for the last two years, they've been just pouring the concrete basement, the underground, and it's really just starting to come out, and then that's when you get all the trades moving in that have to get working there. I just see that the labor side of it is still very tight in Halifax in particular. The other markets, not so much.

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

It depends, and there's going to be real opportunities maybe in a sort of like a Fredericton or a Saint John, and then the one market that is undersupplied is St. John's, Newfoundland. That's really what I see. Eventually, once everything starts basically coming together, we're going to need more housing across metro here in Halifax. If you look at, and you read the papers, there's already slowdowns in Toronto, Kitchener, Waterloo, maybe not so much in Alberta, but we're going to need some housing in Ontario as well.

[Dean Wilkinson, Analyst at CIBC]

They'll, in all likelihood, as history has been kind of chasing that after the demand comes in and that's probably going to put some pressures there. Okay. That's good. Thanks.

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

Thank you.

[Operator]

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

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

Once again, thank you for participating and listening to our Q2 conference call today. We look forward to reporting Q3 financial results on November 4, 2026.

[Operator]

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.

Participants

Executives

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

Analysts

• Jonathan Kelcher, Analyst at TD Cowen
• Sairam Srinivas, Director of Equity Research at ATB Cormark Capital Markets
• Jimmy Shan, Managing Director at RBC Capital Markets
• Mario Saric, Analyst at Scotiabank
• Kyle Stanley, Analyst at Desjardins Securities
• Matt Kornack, Analyst at National Bank of Canada Capital Markets
• Dean Wilkinson, Analyst at CIBC