KILLAM APARTMENT REIT ANNOUNCES STRONG Q2-2025 OPERATING PERFORMANCE AND FINANCIAL RESULTS

HALIFAX, NS, Aug. 6, 2025 /CNW/ - Killam Apartment REIT (TSX: KMP.UN) ("Killam") today reported its results for the three and six months ended June 30, 2025.

"We are pleased with our strong financial and operating performance for the second quarter of 2025, which demonstrates Killam's established position in the market. Strong leasing in the second quarter delivered 6.0% same property revenue growth across all operating segments, resulting in a 6.7% increase in both same property NOI [net operating income] and FFO [funds from operations] per unit compare to Q2-2024," noted Philip Fraser, President and CEO. "Based on these results and our outlook for the second half of the year, we expect to achieve same property NOI growth above 6% for 2025.

"AFFO [adjusted funds from operations] per unit increased by 8.0% from Q2-2024, and we expect this positive trajectory to continue as proceeds from the sale of older and more capital-intensive properties are used to purchase or build newer, more efficient buildings.

"Momentum from our capital recycling program picked up after quarter-end with the sale of a townhouse complex in Prince Edward Island for $9 million, and conditions were waived on the sale of a portfolio of PEI properties for $81.9 million, expected to close by August 8, 2025. Once complete, total disposition volume for 2025 will be $128 million. Capital from our disposition program is being used to support acquisition activity in 2025. In July, Killam purchased a 114-unit property in Fredericton, New Brunswick, for $28.7 million and the remaining 50% ownership interest in three properties in Ottawa, Ontario, for $136 million.

"In June, we began welcoming residents at The Carrick, in Waterloo, Ontario. This 138-suite development, built with innovative sustainable features and resident-focused amenity spaces, is 60% leased. Waterloo remains a key focus for Killam, and this strong leasing demand highlights the strength of the market.

"Finally, we are proud to deliver another quarter of improved debt metrics. Our debt-to-total assets ratio has improved for the sixth consecutive quarter, and as of June 30th sits at 39.6%."

Q2-2025 Financial & Operating Highlights  

• Reported net income of $33.1 million compared to $114.5 million in Q2-2024. Killam recorded fair value gains on investment properties of $3.8 million in Q2-2025, compared to fair value gains of $85.5 million in Q2-2024.
• Generated net operating income of $64.1 million, a 6.9% increase from $59.9 million in Q2-2024.
• Achieved a 6.0% increase in same property revenue compared to Q2-2024 and generated 6.7% same property NOI growth compared to Q2-2024.¹
• Earned FFO per unit of $0.32, a 6.7% increase from the $0.30 earned in Q2-2024.²
• Earned AFFO per unit of $0.27, an 8.0% increase from $0.25 in Q2-2024³, and improved the rolling 12-month AFFO payout ratio by 400 basis points (bps) to 69%, from 73% in Q2-2024.²
• Same property apartment occupancy remained strong in Q2-2025 at 97.5%, compared o 97.8% in Q2-2024.¹
• Ended the second quarter with debt as a percentage of total assets of 39.6% and debt to normalized EBITDA of 9.58x , the lowest debt ratio levels in Killam's operating history.⁴

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(1) Same property revenue, same property NOI, and same property apartment occupancy are supplementary financial measures. An explanation of the composition of these measures can be found under "Supplementary Financial Measures." Occupancy represents actual residential rental revenue, net of vacancy, as a percentage of gross potential residential rent.

(2) FFO and AFFO, and applicable per unit amounts, are not defined by International Financial Reporting Standards (IFRS) and do not have a standardized meaning according to IFRS; therefore, they may not be comparable to similar measures presented by other companies. For information regarding non-IFRS measures, including reconciliations to the most comparable IFRS measure, if applicable, see "Non-IFRS Measures."

(3) The maintenance capital expenditures used to calculate AFFO and AFFO payout ratio for the three and six months ended June 30, 2024, were updated to reflect the maintenance capex reserve of $1,100 per apartment unit, $310 per manufactured home community (MHC) site and $1.10 per square foot (SF) for commercial properties that were used in the calculation for the 12 months ended December 31, 2024.

(4) Net debt to normalized adjusted earnings before interest, tax, depreciation and amortization (EBITDA) is a non-IFRS ratio. An explanation of the composition of this measure can be found under the heading "Non-IFRS Ratios." Debt as a percentage of total assets is a capital management financial measure. An explanation of the composition of this measure can be found under the heading "Capital Management Financial Measure."

	Three months ended June 30,			Six months ended June 30,
(000s)	2025	2024	Change	2025	2024	Change
Property revenue	$95,646	$90,776	5.4 %	$188,669	$178,281	5.8 %
Net operating income	$64,075	$59,923	6.9 %	$123,069	$114,944	7.1 %
Net income	$33,134	$114,452	(71.0) %	$135,045	$241,693	(44.1) %
FFO ^(1)	$39,400	$36,673	7.4 %	$73,640	$68,053	8.2 %
FFO per unit (diluted) ^(1)	$0.32	$0.30	6.7 %	$0.59	$0.55	7.3 %
AFFO ^(1)(2)	$33,643	$30,846	9.1 %	$62,190	$56,425	10.2 %
AFFO per unit (diluted)^(1)(2)	$0.27	$0.25	8.0 %	$0.50	$0.46	8.7 %
AFFO payout ratio – diluted ^(1)(2)	67 %	70 %	(300) bps	72 %	76 %	(400) bps
AFFO payout ratio – rolling 12 months^(1)(2)	69 %	73 %	(400) bps
Same property apartment occupancy ^(3)	97.5 %	97.8 %	(30) bps
Same property revenue growth ^(3)	6.0 %			6.3 %
Same property NOI growth ^(3)	6.7 %			7.2 %
(1) FFO, FFO per unit, AFFO, AFFO per unit, and AFFO payout ratio are non-IFRS measures. A reconciliation from net income to FFO and a reconciliation from FFO to AFFO can be found under the heading "Non-IFRS Reconciliation."
(2) The maintenance capital expenditures used to calculate AFFO and AFFO payout ratio for the three and six months ended June 30, 2024, were updated to reflect the maintenance capex reserve of $1,100 per apartment unit, $310 per MHC site and $1.10 per SF for commercial properties that were used in the calculation for the 12 months ended December 31, 2024.
(3) Same property apartment occupancy, same property revenue, and same property NOI are supplementary financial measures. An explanation of the composition of these measures can be found under the heading "Supplementary Financial Measures."

Debt Metrics as at	June 30, 2025	December 31, 2024	Change
Debt to total assets	39.6 %	40.4 %	(80) bps
Weighted average mortgage interest rate	3.53 %	3.45 %	8 bps
Weighted average years to debt maturity	3.8	4.0	(0.2) years
Interest coverage ratio^(1)	2.97x	2.94x	1.0 %
Debt to normalized EBITDA ^(1)	9.58x	9.69x	(1.1) %

(1) Interest coverage ratio and debt to normalized EBITDA are non-IFRS ratios. An explanation of the composition of these measures can be found under the heading "Non-IFRS Ratios."

Summary of Q2-2025 Results and Operations

Delivered 6.7% FFO per Unit Growth and 8.0% AFFO per Unit Growth
Killam delivered FFO per unit of $0.32 in Q2-2025, representing a 6.7% increase over $0.30 in Q2-2024. AFFO per unit grew 8.0% to $0.27, up from $0.25 in the same period in 2024. The growth in FFO and AFFO reflects strong same property NOI and contributions from recently completed developments, partially offset by higher interest and administrative expenses. The increase in AFFO per unit growth of 8.0% corresponds with the success of Killam's capital recycling program, which focuses on selling older, capital-intensive properties and replacing them with newer, more efficient buildings through acquisitions and development.

Achieved Same Property NOI Growth of 6.7%
Killam achieved same property NOI growth of 6.7% during the quarter and a 40 bps improvement to the same property operating margin. This growth was driven by a 6.0% increase in same property revenue, supported by a 6.0% year-over-year increase in apartment rental rates and higher ancillary revenue. This was partially offset by a modest 30 bps decline in same property occupancy to 97.5%, compared to Q2-2024. The weighted average rental rate increase on units that renewed and turned during the quarter was 6.1%, a combination of 13.0% growth from units that turned during the period and 3.7% on renewals. This growth compares to 8.2% in Q2-2024. Rental incentives have also increased quarter-over-quarter; however, they continue to be location and property specific and remain less than 0.6% of total residential rent.

Total same property operating expenses increased 4.5% in the quarter. Same property tax expense rose 5.0%, reflecting higher assessments and mill rate increases across the portfolio. Same property utility and fuel costs increased 3.2%, primarily due to higher natural gas pricing in Nova Scotia and New Brunswick, as well as higher water costs. Same property general operating expenses were up 4.8%, driven by higher salary costs and the timing of repairs and maintenance. Based on results to date, Killam expects same property NOI growth for the year to exceed 6.0%.

Generated Net Income of $33.1 Million
In Q2-2025, Killam generated net income of $33.1 million, compared to $114.5 million in Q2-2024. The decline in net income is primarily due to lower fair value gains on investment properties, with $3.8 million recognized in Q2-2025 compared to $85.5 million in Q2-2024. The reduction in fair value gains quarter-over-quarter reflects stabilization in rental rate growth and marginal capitalization rate expansion for select assets. These impacts were partially offset by a $4.2 million increase in NOI and a $12.7 million reduction in deferred tax expense related to the internal reorganization that was completed by way of a plan of arrangement effective November 30, 2024.

Progress on Killam's Capital Recycling Strategy
Killam's capital recycling program is focused on the disposition of non-core and slower-growth properties, or those that may be more capital or carbon intensive. During the quarter, Killam completed the sale of two MHC sites located in Gander and Corner Brook, Newfoundland and Labrador (NL), for gross proceeds of $4.8 million; two apartment properties located in Grand Falls, NL, for gross proceeds of $13.7 million; and three apartment properties located in Charlottetown, Prince Edward Island (PEI), for gross proceeds of $15.9 million. Subsequent to quarter-end, Killam completed the disposition of a 60-unit townhouse complex located in PEI for gross proceeds of $9.0 million and has a firm commitment to sell an additional 521 units located in PEI for net proceeds of $81.9 million, which is expected to close by August 8, 2025. Completion of these transactions will bring the 2025 disposition total to $127.9 million, in line with Killam's 2025 strategic target of disposing of $100–$150 million of assets.

Proceeds from these dispositions will be used to fund acquisitions subsequent to quarter-end, including 114 units in Fredericton, New Brunswick, and the remaining 50% interest in three assets held through a joint venture partnership located in Ottawa.

Refinanced Mortgages at 3.52%
Killam manages interest rate risk through the strategic staggering of mortgage maturities. During Q2-2025, Killam refinanced $94.6 million of maturing mortgages with $119.2 million of new debt at a weighted average interest rate of 3.52%, 165 bps higher than the weighted average interest rate of the maturing debt. Overall, Killam's weighted average mortgage interest rate increased 8 bps at the end of Q2-2025 to 3.53%, compared to 3.45% as at December 31, 2024. The weighted average term to maturity is 3.8 years.

ESG Update
Killam's 2024 ESG report was released on June 12, 2025, and can be accessed on its website at https://killamreit.com/esg. The report summarizes Killam's commitment to creating and maintaining sustainable communities and details its progress and future plans to achieve its long-term ESG targets. During the quarter, Killam completed its seventh annual GRESB submission, demonstrating commitment to transparent ESG disclosures.

Financial Statements

Killam's condensed consolidated interim Financial Statements and Management's Discussion and Analysis (MD&A) for the three and six months ended June 30, 2025, are posted under Financial Reports in the Investor Relations section of Killam's website at www.killamreit.com, and are available 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, August 7, 2025, at 9:00 AM Eastern 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 at the same link for one year after the event.

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 $5.5 billion portfolio of apartments and manufactured home communities. Killam's strategy to enhance value and profitability focuses on three priorities: 1) increase earnings from its existing portfolio; 2) expand the portfolio and diversify geographically through accretive acquisitions which target newer properties and through the disposition 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, 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.

Non-IFRS Financial Measures

• 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, are calculated by Killam as net income adjusted for fair value gains (losses), interest expense related to Exchangeable Units, gains (losses) on disposition, deferred tax expense (recovery), internal commercial leasing costs, depreciation on an owner-occupied building, and change in principal related to lease liabilities. FFO is calculated in accordance with the REALPAC definition. A reconciliation between net income and FFO is included below.
• 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 capital expenditures ("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. A reconciliation from FFO to AFFO is included below.
• Adjusted earnings before interest, tax, depreciation and amortization ("adjusted EBITDA") is a non-IFRS financial measure calculated by Killam as net income before fair value adjustments, gains (losses) on disposition, deferred tax (recovery) expenses, financing costs, restructuring costs, depreciation and amortization. A reconciliation between net income and adjusted EBITDA is included below.
• Normalized adjusted EBITDA is a non-IFRS financial measure 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 adjusted EBITDA. In addition, adjustments have been made to eliminate earnings associated with properties sold in the last twelve months. A reconciliation between adjusted EBITDA and normalized adjusted EBITDA is included below.
• 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 all interest bearing debt, being mortgages and loans payable, credit facilities and construction loans, reduced by the cash balances at the end of the period. The most directly comparable IFRS measure to net debt is debt. A reconciliation is included below.

Non-IFRS Ratios

• Interest coverage is calculated by dividing 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 noted above, i.e. FFO and AFFO, divided by the 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.

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 2025 and 2024. Same property revenue is a supplementary financial measure defined as revenue for stabilized properties that Killam has owned for equivalent periods in 2025 and 2024. Same property results represent 97.3% of the fair value of Killam's investment property portfolio as at June 30, 2025. Excluded from same property results in 2025 are acquisitions, dispositions and developments completed in 2024 and 2025.
• 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 2025 and 2024.

 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 23 of the unaudited condensed consolidated interim financial statements.

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

Reconciliation of Net Income to FFO	Three months ended June 30,		Six months ended June 30,
	2025	2024	2025	2024
Net income	$33,134	$114,452	$135,045	$241,693
Fair value adjustments	4,068	(91,946)	(64,468)	(205,769)
Internal commercial leasing costs	75	45	150	135
Deferred tax expense	—	12,689	—	29,658
Interest expense on Exchangeable Units ^(1)	638	682	1,339	1,364
Loss on disposition	1,459	721	1,526	913
Depreciation on owner-occupied building	23	24	47	48
Change in principal related to lease liabilities	3	6	1	11
FFO	$39,400	$36,673	$73,640	$68,053
FFO per unit – diluted	$0.32	$0.30	$0.59	$0.55
(1) "Exchangeable Units" are Class B limited partnership units of Killam Apartment Limited Partnership. Exchangeable Units are intended to be economically equivalent to and are redeemable on a one-for-one basis for Trust Units of Killam at the option of the holder and are accompanied by Special Voting Units of Killam that provide their holders with equivalent voting rights to holders of Trust Units.

Reconciliation of FFO to AFFO	Three months ended June 30,		Six months ended June 30,
	2025	2024	2025	2024
FFO	$39,400	$36,673	$73,640	$68,053
Maintenance capital expenditures^(1)	(5,577)	(5,667)	(11,202)	(11,373)
Commercial straight-line rent adjustment	(46)	(51)	(65)	(82)
Internal and external commercial leasing costs	(134)	(109)	(183)	(173)
AFFO	$33,643	$30,846	$62,190	$56,425
AFFO per unit – diluted	$0.27	$0.25	$0.50	$0.46
AFFO payout ratio – diluted	67 %	70 %	72 %	76 %
AFFO payout ratio – rolling 12 months^(2)	69 %	73 %
Weighted average number of units – diluted (000s)	124,396	122,980	124,180	122,795

(1) The maintenance capital expenditures for the three and six months ended June 30, 2024, were updated to reflect the maintenance capex-reserve of $1,100 per apartment unit, $310 per MHC site and $1.10 per SF for commercial properties that were used in the calculation for the 12-months ended December 31, 2024.

(2) Based on Killam's annual distribution of $0.71332 for the 12-month period ended June 30, 2025, and $0.69996 for the 12-month period ended
June 30, 2024.

Normalized Adjusted EBITDA	Twelve months ended,
	June 30, 2025	December 31, 2024	% Change
Net income	$561,196	$667,844	(16.0) %
Deferred tax recovery	(308,632)	(278,975)	10.6 %
Financing costs	81,309	79,712	2.0 %
Depreciation	1,056	1,065	(0.8) %
Loss on disposition	4,291	3,678	16.7 %
Restructuring costs	5,904	5,904	— %
Fair value adjustment on unit-based compensation	231	(931)	(124.8) %
Fair value adjustment on Exchangeable Units	8,953	(3,352)	(367.1) %
Fair value adjustment on investment properties	(124,528)	(252,361)	(50.7) %
Adjusted EBITDA	229,780	222,584	3.2 %
Normalizing adjustment ^(1)	(1,602)	2,352	(168.1) %
Normalized adjusted EBITDA	$228,178	$224,936	1.4 %
Total interest-bearing debt	$2,195,780	$2,193,881	0.1 %
Cash and cash equivalents	(10,826)	(13,211)	(18.1) %
Net debt	$2,184,954	$2,180,670	0.2 %
Debt to normalized adjusted EBITDA	9.58x	9.69x	(1.1) %

(1) Killam's normalizing adjustment includes NOI adjustments for recently completed acquisitions, dispositions and developments to account for the difference between NOI booked in the period and stabilized NOI over the next 12 months.

For information, please contact:

Claire Hawksworth, CPA                              
Senior Manager, Investor Relations
[email protected]
[phone]

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", "proposed" 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: Killam's same property NOI growth for 2025; Killam's AFFO; the use of proceeds of Killam's dispositions and the anticipated effect on Killam's business; Killam's capital recycling program; the amount, locations, timing and consideration for or proceeds of Killam's future acquisitions and dispositions, as applicable; Killam's key markets; Killam's commitment to environmental, social and governance (ESG) and sustainability; Killam's commitment to transparent ESG disclosures; investment in ESG initiatives and technology and their impact on Killam's energy consumption and costs; the installation of PV solar arrays and the expected annual energy production, annual return and emissions reductions from such PV 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; government legislation and the interpretation and enforcement thereof; litigation to which Killam may be subject; global, national and regional economic conditions (including interest rates and inflation); the availability of capital to fund further investments in Killam's business; and other factors identified under the "Risk Factors" section of Killam's most recently filed annual information form, under the "Risks and Uncertainties" of Killam's most recently filed MD&A, and in other documents Killam files from time to time with securities regulatory authorities in Canada, each of which is 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 its 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