Killam Properties Inc. announces third quarter results of $0.22 FFO per share
and an 8.8% increase in same store net operating income
Highlights of Killam's Third Quarter Financial Results
- Achieved an 8.8% increase in net operating income ("NOI") from same store properties, compared to the third quarter of 2008. - Maintained high occupancy rates, ending the third quarter with total apartment occupancy of 98.2%, consistent with the record occupancy level achieved in September 2008. - Strengthened balance sheet with the successful completion of a $24.7 million public share offering, reducing total debt to gross book value of assets to 65.6%. - Increased funds from operations ("FFO") by 11.3% to $8.4 million from $7.5 million in the third quarter of 2008. - Notwithstanding a 14% increase in shares outstanding, maintained FFO per share of $0.22 per share (2008 - $0.22 per share). - Increased FFO per share for the 9 months ended September 30, 2009 by 12% to $0.56 per share (2008 - $0.50 per share). - Refinanced $12.3 million of mortgage debt that matured in the third quarter. Financial Highlights (in thousands, except per share information) For the three months ended September 30, 2009 2008 % Change Rental Revenue $26,808 $25,572 4.8% Net Operating Income $17,728 $16,302 8.7% Net Income Before Tax and Depreciation $7,861 $7,015 12.1% Net Income $597 $58 N/A Funds from Operations $8,405 $7,549 11.3% Funds from Operations per Share $0.22 $0.22 - Shares Outstanding (weighted average) 38,344 33,624 14.0% For the nine months ended September 30, 2009 2008 % Change Rental Revenue $77,679 $72,264 7.5% Net Operating Income $47,520 $42,914 10.7% Net Income Before Tax and Depreciation $18,096 $15,329 18.1% Net Loss ($1,671) ($3,315) (49.6%) Funds from Operations $19,923 $16,865 18.1% Funds from Operations per Share $0.56 $0.50 12.0% Shares Outstanding (weighted average) 35,493 33,509 5.9% Sept 30, Dec 31, Balance Sheet as at, 2009 2008 % Change Total Assets $752,491 $738,668 1.9% Total Liabilities $570,762 $565,475 0.9% Total Shareholders' Equity $181,729 $173,193 4.9% Gross Debt as a % of Gross Book Value 65.6% 67.7% (3.1%)
FFO Per Share of
Killam generated
Management considers FFO per share to be a key measure of operating performance. FFO per share for the third quarter of 2009 was
Same Store NOI Growth of 8.8% Compared to the Third Quarter of 2008
Killam achieved same store NOI growth of 8.8% during the third quarter of 2009. Same store properties account for 96% of the Company's portfolio. Consolidated operating revenue increased 3.2% quarter-over-quarter due primarily to increased monthly rental rates, which increased an average of 2.5% from the same period last year. Consolidated operating expenses decreased by 5.7% in the quarter as the Company benefited from decreased energy costs and operating efficiencies. Year-to-date, Killam has achieved same store NOI growth of 9.6%.
The apartment portfolio realized same store NOI growth of 7.1% in the quarter. An increase in rents drove a 3.0% increase in rental revenue. The apartment portfolio also benefited from a decrease in operating expenses, which fell by 3.4% during the third quarter, due primarily to a 40% decrease in natural gas and heating oil costs. Year-to-date, same store NOI for the apartment portfolio has increased 10.6%.
The manufactured home community ("MHC") portfolio realized same store NOI growth of 13.7% in the quarter. The MHCs benefited from a 3.8% increase in revenue, attributable to rent increases and higher traffic in the seasonal communities, and from a 13.2% reduction in operating expenses. The reduced expenses reflect lower water and sewer repairs in the third quarter of 2009 as well as a reduction in required general park maintenance. Year-to-date, same store NOI for the MHC portfolio has increased 6.6%.
Portfolio Vacancy at 1.3% at
Killam has maintained low vacancy rates throughout 2009, achieving consolidated vacancy of 1.3% at
The apartment portfolio had a vacancy rate of 1.8% with an average monthly rent of
Average Units Vacancy Rent --------- --------- --------- Apartments Nova Scotia 4,196 2.0% $805 New Brunswick 3,310 2.0% $712 Newfoundland 732 0.8% $611 Prince Edward Island 686 0.4% $793 --------- Total Apartment Portfolio 8,924 1.8% $754 ------------------------------ Total MHC Portfolio 8,796 0.9% $221 ------------------------------
New Home Sale Activity
Killam remains active in the sale of new manufactured homes; however, the Company experienced a decrease in home sales completed during the third quarter compared to the third quarter of 2008. During the third quarter of 2009 Killam completed 13 home sales and 3 partnership sales. This compares with the closing of 17 home sales and 10 partnership sales during the third quarter of 2008. During the first nine months of 2009 Killam completed a total of 28 home sales and partnership sales compared to 66 sales during the first nine months of 2008.
Home sale activity levels are largely dependent on the timing of completion of site expansions, as well as demand for new homes across the portfolio. Killam experienced a decrease in demand for new homes in Ontario and Western
Killam continues to anticipate that 2009 homes sales will be at the lower end of the original estimate of 40 to 60 homes. Killam currently has commitments for an additional 11 home sales expected to be completed during the year.
Balance Sheet Strengthened with Recent Equity Raise
Killam's balance sheet was strengthened following the July equity raise, ending the quarter with cash on hand of
Debt Financings
Killam is pleased to report that financing for its properties remains strong. During the first nine months of 2009 Killam refinanced
Subsequent to
The Company has
Management's Comments
"We are pleased to report continued strength in Killam's same store properties, realizing NOI growth of 8.8% during the third quarter and 9.6% for the first nine months of 2009", noted
"Killam continues to benefit from access to debt, having successfully refinanced
"The equity offering completed during the third quarter has resulted in increased liquidity and a stronger balance sheet, positioning us to take advantage of growth opportunities. We continue to be focused on growing the business through acquisitions, and look forward to completing accretive property purchases over the next few months."
Financial Statements
Killam's September 30, 2009 Financial Statements and Notes and Management's Discussion and Analysis can be found at www.killamproperties.com.
Third Quarter Conference Call
Management will host a conference call to discuss these results on
A live audio webcast of the conference call will be accessible on the Company's website at www.killamproperties.com and at www.newswire.ca.
A replay will be available by dialing 416-640-1917 (
Corporate Profile
Killam Properties Inc, based in
FFO is a generally accepted measure of operating performance of real estate companies; however, it is a non-GAAP measurement and readers are cautioned that Killam's calculation of FFO may be different than that used by other companies. Killam calculates FFO as net income plus depreciation and amortization, stock compensation, non-cash debenture interest and future income tax expenses.
Note: The
For further information: For further information: Dale Noseworthy, CA, CFA, Director, Investor and External Relations, Killam Properties Inc., (902) 442-0388, [email protected]
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