Killam Apartment REIT

For full-year 2025, net income was $29.4 million, down $638 million year over year, mainly due to a $120.5 million fair value loss on investment properties versus $252 million of fair value gains in 2024 and a $279 million one-time deferred tax recovery in 2024. Underlying operating performance was stronger, with net operating income up $14.3 million, FFO per unit up 4.2% to $1.23, and AFFO per unit up 5.1%. In Q4 2025, same-property NOI rose 4.5%, revenue grew 4.1%, expenses grew 3.4%, and FFO was $0.30 per unit, up 3.4% year over year. Looking to 2026, management expects same-property apartment revenue and NOI to increase by at least 3%, sees about 9% portfolio-wide mark-to-market spread, and expects The Carrick to contribute about $800,000 of year-over-year FFO growth as it reaches full lease-up.

Philip Fraser emphasized that Killam met its 2025 strategic targets and is leaning into occupancy, rent growth, and cost control as market demand normalizes. He said the company is seeing strong underlying demand for affordable units, remains optimistic about Atlantic Canada, and expects 2026 to be positive even if growth is more modest. He also framed the portfolio as well positioned for 2027 and beyond, citing defense spending, Alberta energy activity, and continued geographic diversification.

Dale Noseworthy highlighted that full-year net income was pressured by non-cash fair value losses and the absence of last year’s one-time tax recovery, but said operating metrics were solid. He cited FFO per unit of $1.23, AFFO per unit growth of 5.1%, an AFFO payout ratio of 69%, and Q4 FFO of $0.30 per unit. He also pointed to a 5.9% increase in financing costs year over year, CMHC-insured mortgages at 91% of apartment mortgage debt, debt at 41.9% of total assets, and debt-to-normalized EBITDA improving to 9.66x.

Analysts focused on 2026 apartment revenue assumptions, with management saying the growth target is a mix of renewals, turns, occupancy and incentives, and that revenue growth could average close to 4% with renewals around 3% to 3.5% and turns around 4% to 7%. Questions also centered on Westmount, where management said the renovation and NOI lift would likely be delayed until summer 2027 and total CapEx would be about $15 million. Management reiterated that the recent acquisition was off-market, that the $50 million disposition target is still expected to be achievable, and that more NCIB buybacks should be expected, alongside debt paydown, as a capital allocation priority.