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Summary of 2024 Results and Operations

Achieved Same Property NOI Growth of 8.4%

Killam achieved an 8.4% increase in same property NOI during the year, with an 8.5% increase from the apartment portfolio, a 7.5% increase from the MHC portfolio and a 6.3% increase from the commercial portfolio. Same property revenue growth of 6.0% was driven by higher rental rates across all three business segments and increased ancillary revenue, partially offset by a 40 basis-point (bps) decrease in same property apartment occupancy. Killam's turnover levels have stabilized, down 30 bps to 18.3% in 2024, compared to 18.6% in 2023. The average rental rate increase on unit turns in 2024 was 19.8%, resulting in a blended weighted-average increase in rental rates of 7.0%.

Total same property operating expenses increased modestly by 1.7%, below the average rate of inflation of 2.4% in Canada during 2024. This was mainly the result of a 5.0% reduction in same property utility and fuel expenses, driven by lower natural gas pricing in the first half of the year coupled with savings in both electricity and oil costs. These savings were offset by a 5.9% increase in property tax expense, due to higher assessments and mill rates across the portfolio and no property tax subsidies in Prince Edward Island, which had been provided in 2023. Same property general operating expenses increased 2.5% as a result of higher wages, service contract costs, increased repairs and maintenance and general and administrative expenses, partially offset by lower insurance and advertising costs. Killam's strong NOI performance resulted in an operating margin improvement of 150 bps for the same property portfolio compared to 2023.

Delivered FFO per Unit Growth of 2.6% and AFFO per Unit Growth of 2.1%

Killam's FFO per unit was $1.18 in 2024, a 2.6% increase from $1.15 in 2023. AFFO per unit increased 2.1% to $0.99, compared to $0.97 in 2023. The growth in FFO and AFFO was attributable to increased NOI from Killam's same property portfolio, partially offset by higher interest costs, lower capitalized interest and short-term vacancy related to the lease-up of recently completed developments.

Generated Net Income of $667.8 Million

Killam earned net income of $667.8 million in 2024, compared to $266.3 million in 2023. The increase in net income is primarily due to a deferred tax recovery of $279.0 million, the result of an internal reorganization that was accomplished by way of a plan of arrangement. This reflects the reversal of previously booked deferred taxes that related to Killam's corporate structure prior to the completion of the plan of arrangement. Additionally, Killam recognized $252.4 million in fair value gains on investment properties in 2024, compared to $174.2 million in fair value gains in 2023. The fair value gains in 2024 reflect robust NOI growth in the year.

Strengthened Balance Sheet

During 2024, Killam decreased its debt as a percentage of total assets to 40.4% as at December 31, 2024, down 250 bps from 42.9% as at December 31, 2023. Killam's variable rate debt as a percentage of total debt decreased to 2.5% at the end of 2024, compared to 3.0% as at December 31, 2023. Killam's focus on strengthening its balance sheet and strong NOI growth has resulted in its debt to normalized EBITDA improving to 9.69x as at December 31, 2024, compared to 10.29x as at December 31, 2023.

Completed $59.2 Million in Property Dispositions

During 2024, Killam completed a total of 10 property dispositions for gross proceeds of $59.2 million. Proceeds were used to strengthen our balance sheet and to fund ongoing developments. The sale of these properties aligns with Killam's strategy to optimize value from its portfolio and to increase geographical diversification outside Atlantic Canada (75% of the units sold were located in Atlantic Canada). This has supported Killam's diversification strategy, with the percentage of NOI generated outside of Atlantic Canada totalling 38.9% in 2024, up 150 bps from 37.4% in 2023.

Broke Ground on Two New Developments

Killam continues to advance its development pipeline, investing $40.7 million in 2024 and breaking ground on two new developments: Eventide, a 55-unit property located in Halifax, NS, and Wissler, a 128-unit property located in Waterloo, ON, both expected to be completed in 2026. Killam's third ongoing project, The Carrick, a 139-unit property located in Waterloo, ON, is expected to be completed in Q2-2025. In addition, during the year Killam reached full lease-up on its three developments completed in 2023.

Higher Interest Expense

The maturity dates of Killam's mortgages are staggered to help mitigate interest rate risk. During 2024, Killam refinanced $299.7 million of maturing mortgages with $371.0 million of new debt at a weighted average interest rate of 4.28%, 122 bps higher than the weighted average interest rate of the maturing debt. Overall, Killam's weighted average mortgage interest rate increased 23 bps at the end of 2024 to 3.45%, compared to 3.22% at December 31, 2023. The weighted average term to maturity is 4.0 years.

Progress on Killam's ESG Initiatives

To date, Killam has installed photovoltaic solar arrays at 26 buildings across its portfolio, with an expected 2,700 megawatt hours ("MWh") of annual energy production. In 2024, Killam also exceeded its goal of certifying 50% of its apartment portfolio with green building health and operating certifications. These certifications provide tenants with confidence that by renting with Killam, they are choosing a housing provider committed to upholding rigorous standards in health and safety, tenant relations, and sustainability. In 2024, Killam invested $6.8 million in energy projects with a focus on reducing operating expenses, including the installation of PV solar panels, window replacements, building and insulation upgrades, and the installation of new boilers and heat pumps in various buildings across the portfolio.

Financial Statements
Killam's Annual Consolidated Financial Statements, including the notes thereto, and its Annual Management's Discussion and Analysis (the "MD&A") for the year ended December 31, 2024, are posted under Financial Reports in the Investor Relations section of Killam's website at www.killamreit.com and are each filed on SEDAR+ at www.sedarplus.ca. Readers are directed to these documents for financial details and a discussion of Killam's results.

Results Conference Call

Management will host a webcast and conference call to discuss these results and current business initiatives on Thursday, February 13, 2025, at 9:00 AM Eastern Standard Time. The webcast will be accessible on Killam's website at the following link: http://www.killamreit.com/investor-relations/events-and-presentations. A replay of the webcast will be available for one year after the event at the same link.

The dial-in numbers for the conference call are as follows:
North America (toll-free): 1-888-699-1199
Overseas or local (Toronto): 1-416-945-7677

Profile

Killam Apartment REIT, based in Halifax, Nova Scotia, is one of Canada's largest residential real estate investment trusts, owning, operating, managing 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) increase earnings from existing operations; 2) expand the portfolio and diversify geographically through accretive acquisitions, targeting newer properties and dispositions of non-core assets; and 3) develop high-quality properties in its core markets.

Non-IFRS Measures

Management believes the following non-IFRS financial measures, ratios and supplementary information are relevant measures of the ability of Killam to earn revenue and to evaluate Killam's financial performance. Non-IFRS measures should not be construed as alternatives to net income or cash flow from operating activities determined in accordance with IFRS, or as indicators of Killam's performance or the sustainability of Killam's distributions. These measures do not have standardized meanings under IFRS and, therefore, may not be comparable to similarly titled measures presented by other publicly traded organizations.

• FFO is a non-IFRS financial measure of operating performance widely used by the Canadian real estate industry based on the definition set forth by REALPAC. FFO, and applicable per unit amounts and payout ratios, are calculated by Killam as net income adjusted for fair value gains (losses), interest expense on Exchangeable Units, gains (losses) on disposition, deferred tax expense (recovery), restructuring costs, unrealized gains (losses) on derivative liability, internal commercial leasing costs, depreciation on an owner-occupied building, change in principal related to lease liabilities, and non-controlling interest. Restructuring costs is a new FFO adjustment related to the internal reorganization that was accomplished by way of a plan of arrangement (the "Arrangement"). FFO is calculated in accordance with the REALPAC definition, with the exception of the restructuring costs.

• Adjusted funds from operations ("AFFO") is a non-IFRS financial measure of operating performance widely used by the Canadian real estate industry based on the definition set forth by REALPAC. AFFO, and applicable per unit amounts and payout ratios, are calculated by Killam as FFO less an allowance for maintenance capex (a three-year rolling historical average capital investment to maintain and sustain Killam's properties), internal and external commercial leasing costs and commercial straight-line rents. AFFO is calculated in accordance with the REALPAC definition. Management considers AFFO an earnings metric.

• Adjusted earnings before interest, tax, depreciation and amortization ("adjusted EBITDA") is calculated by Killam as net income before fair value adjustments, gains (losses) on disposition, deferred tax (recovery) expense, financing costs, restructuring costs, depreciation and amortization.

• Normalized adjusted EBITDA is calculated by Killam as adjusted EBITDA that has been normalized for a full year of stabilized earnings from recently completed acquisitions, dispositions and developments, on a forward-looking basis. Transaction costs associated with the Plan of Arrangement are excluded from EBITDA.

• Net debt is a non-IFRS measure used by Management in the computation of debt to normalized adjusted EBITDA. Net debt is calculated as the sum of mortgages and loans payable, credit facilities and construction loans (total debt) reduced by the cash balances at the end of the period. The most directly comparable IFRS measure to net debt is debt.

Supplementary Financial Measures

• Same property NOI is a supplementary financial measure defined as NOI for stabilized properties that Killam has owned for equivalent periods in 2024 and 2023. Similarly, same property revenue is a supplementary financial measure defined as revenue for stabilized properties that Killam has owned for equivalent periods in 2024 and 2023. Same property apartment occupancy is a supplemental financial measure defined as actual residential rental revenue, net of vacancy, as a percentage of gross potential residential rent for stabilized properties that Killam has owned for equivalent periods in 2024 and 2023. Same property results represent 95.6% of the fair value of Killam's investment property portfolio as at December 31, 2024. Excluded from same property results in 2024 are acquisitions, dispositions and developments completed in 2023 and 2024, and non-stabilized commercial properties linked to development projects.

• Same property average rent is calculated by taking a weighted average of the total residential rent for the last month of the reporting period, divided by the relevant number of the units per region for stabilized properties that Killam has owned for equivalent periods in 2024 and 2023. For total residential rents, rents for occupied units are based on contracted rent, and rents for vacant units are based on estimated market rents if the units were occupied.

Non-IFRS Ratios

• Interest coverage is calculated by dividing normalized adjusted EBITDA by mortgage, loan and construction loan interest and interest on credit facilities.

• Per unit calculations are calculated using the applicable non-IFRS financial measures note above, i.e. FFO and AFFO, divided by the basic or diluted number of units outstanding at the end of the relevant period.

• Payout ratios are calculated using the distribution rate for the applicable period divided by the applicable per unit amount, i.e. AFFO per unit.

• Debt to normalized adjusted EBITDA is calculated by dividing net debt by normalized adjusted EBITDA.

Capital Management Financial Measure

• Total debt as a percentage of total assets is a capital management financial measure and is calculated by dividing total debt by total assets, excluding right-of-use assets. This measure is reconciled in note 28 of Killam's Annual Consolidated Financial Statements for the year ended December 31, 2024.

Non-IFRS Reconciliation (in thousands, except per unit amounts)

For information, please contact:
Claire Hawksworth, CPA
Senior Manager, Investor Relations
chawksworth@killamREIT.com
(902) 442-5322

Note: The Toronto Stock Exchange has neither approved nor disapproved of the information contained herein. Certain statements in this press release may constitute forward-looking statements. In some cases, forward-looking statements can be identified by the use of words such as "may," "will," "should," "expect," "plan," "anticipate," "believe," "commit," "estimate," "potential," "continue," "remain," "forecast," "opportunity," "future" or the negative of these terms or other comparable terminology, and by discussions of strategies that involve risks and uncertainties. Such forward-looking statements may include, among other things, statements regarding: the benefits of the plan of arrangement completed by Killam; Killam's capital allocation priorities; the amount of dispositions in 2025; Killam's expected growth drivers; Killam's strategy to optimize value from its portfolio and to increase geographical diversification outside Atlantic Canada; Killam's development pipeline; the occupancy rate of Killam's properties; the effects of acquisitions and development projects on Killam's earnings and financial condition and the timing thereof; the continued expansion of Killam's portfolio, including through developments, and the timing thereof; the completion, costs, capacity, total investment and timing of development projects; Killam's investment in energy projects; the anticipated energy production from Killam's PV solar arrays; and Killam's priorities.

Readers should be aware that these statements are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those anticipated or implied, or those suggested by any forward-looking statements, including: the effects and duration of local, international and global events, any government responses thereto and the effectiveness of measures intended to mitigate any impacts thereof; competition; global, national and regional economic conditions (including interest rates and inflation); and the availability of capital to fund further investments in Killam's business. For more exhaustive information on these risks and uncertainties, readers should refer to Killam's most recently filed annual information form, as well as Killam's most recently filed MD&A, each of which are available on SEDAR+ at www.sedarplus.ca. Given these uncertainties, readers are cautioned not to place undue reliance on any forward-looking statements contained in this press release. By their nature, forward-looking statements involve numerous assumptions, inherent risks and uncertainties, both general and specific, that contribute to the possibility that the predictions, forecasts, projections and various future events may not occur. Although 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. Further, a forward-looking statement speaks only as of the date on which such statement is made and should not be relied upon as of any other date. While Killam anticipates that subsequent events and developments may cause Killam's views to change, Killam does not intend to update or revise any forward-looking statement, whether as a result of new information, future events, circumstances, or such other factors that affect this information, except as required by law. The forward-looking statements in this press release are provided for the limited purpose of enabling current and potential investors to evaluate an investment in Killam. Readers are cautioned that such statements may not be appropriate and should not be used for any other purpose. The forward-looking statements contained in this press release are expressly qualified by this cautionary statement.

SOURCE Killam Apartment Real Estate Investment Trust

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