Killam Apartment REIT Reports Strong First Quarter 2024 Results By Investing.com

Killam Apartment REIT Reports Strong First Quarter 2024 Results By Investing.com
Killam Apartment REIT Reports Strong First Quarter 2024 Results By Investing.com

Killam Apartment Real Estate Investment Trust (REIT) showed strong financial and operational performance in the first quarter of 2024, with a significant increase in funds from operations (FFO) per unit and net operating income (NOI). During the results presentation, the company revealed a 34% increase in FFO per unit, to $0.26, and a 10.3% growth in NOI for the same properties, driven by good market conditions and the strategic management of properties.

The strength of the Canadian rental market was demonstrated by a high apartment occupancy rate of 98.2%. Killam also revised its 2024 NOI growth target to above 8% and discussed its proactive debt management approach. The company completed real estate transactions and provided updates on developments across Canada, maintaining a positive outlook for the future and reaffirming its dedication to improving financial performance and asset value.

Main results

  • FFO per unit increased 34% to $0.26 in Q1 2024 compared to Q1 2023.
  • Same property NOI increased 10.3% across the entire portfolio.
  • High occupancy rate in apartments of 98.2%.
  • Revised 2024 NOI growth target above 8%.
  • Satisfactory refinancing of overdue mortgages and expansion of coverage insured by CMHC.
  • Two acquisitions and one property sale completed in the quarter.
  • A positive impact is expected from the recent federal budget addressing Canada’s housing shortage.
  • Development projects underway in Calgary, Waterloo and Halifax.

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Company Outlook

  • Optimism about the continued creation of value for unitholders.
  • Focused on development opportunities in Calgary, Kitchener, Waterloo, Cambridge and wholesale.
  • Plans to use as-of-right zoning for developments in Halifax and Burlington Crescent.

Bearish Highlights

  • Slight decrease in turnover compared to the previous year.
  • An increase in the differential between the market price and that of long-term tenants is expected.
  • Lower density associated with lower development costs.
  • Jurisdictions do not help defray the costs of building affordable housing.
  • Less capital allocated to suite renovations across the portfolio.

Bullish Highlights

  • 42% increase in non-leveraged annualized profitability on the cost of leasing and improvements.
  • Occupancy increased from 89% to 94% in the first quarter of 2024.
  • Positive influence of government programs on the speed and density of development.

Lack

  • There are no active plans to acquire new assets in the next three to six months.
  • Reduced incentives in Alberta could affect development plans.

Highlights

  • The company is exploring lower-cost development options, such as mid-rise concrete and wood buildings.
  • Government programs can speed up zoning and increase density for faster development.
  • Changes in immigration policy for non-permanent residents are not expected to impact market rental growth.
  • The correlation between tenant tenure and turnover frequency needs to be analyzed in more detail.

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In summary, Killam Apartment REIT (ticker: KMP.UN) is off to a strong start in 2024, with positive financial results and strategic property management contributing to its growth. The company is navigating the Canadian real estate market with a clear focus on developing and enhancing asset values, while effectively managing its debt and capital allocations. Despite some challenges, Killam’s management remains confident in its approach to sustain growth and support the interests of its unitholders.

This article has been generated and translated with the support of AI and reviewed by an editor. For more information, see our T&Cs.

 
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