Q2 2024 Killam Apartment REIT Earnings Call
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Operator: Good morning, ladies and gentlemen.
Speaker Change: Good morning, ladies and gentlemen, welcome to the kill them apartment real estate investment Trust second quarter 2024 financial results Conference call.
Operator: Welcome to the Killam Apartment Real Estate Investment Trust 2nd Quarter, 2024 Financial Results Conference Call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session.
Speaker Change: At this time all lines are in a listen only mode.
Operator: Following the presentation, we will conduct a question and answer session.
Speaker Change: Following the presentation, we will conduct a question and answer session.
Operator: If at any time during this call you require immediate assistance, please press the RZRU for the operator.
Speaker Change: If at any time during this call if you require immediate assistance.
Speaker Change: Please press star zero for the operator.
Operator: This call is being recorded on August 8th, 2024.
Speaker Change: This call is being recorded in August eight 2024.
Philip Fraser: I would now like to turn the conference over to Mr. Philip Fraser, President and CEO. Please go ahead.
Operator: Presentation, we will conduct a If at any time during this call, you require immediate assistance, please press star zero for the operator. This call is being recorded on August 8th, 2024. I would now like to turn the conference over to Mr. Philip Fraser, President and CEO. Please go ahead.
Speaker Change: I would now like to turn the conference over to Mr. Philip Freezer, President and CEO. Please go ahead.
Philip Fraser: Thank you.
Philip Fraser: Thank you. Good morning, and thank you for joining Killam Apartment REITs' second quarter 2024 conference call. I'm here today with Robert Richardson, Executive Vice President, Dale Noseworthy, Chief Financial Officer, and Erin Cleveland, Senior Vice President of Finance. Slides to accompany today's call are available on the investor relations section of our website under events and presentations. I will now ask Erin to read our cautionary statement.
Philip Freezer: Thank you good morning, and thank you for joining killing apartment Reits.
Philip Fraser: Good morning, and thank you for joining Killam Apartment Reads. 2nd Quarter, 2024 Conference Call.
Philip Freezer: Second quarter 2024 conference call.
Philip Fraser: I'm here today with Robert Richardson, Executive Vice President, Dale Noseworthy, Chief Financial Officer, and hearing Cleveland Senior Vice President of Finance. Lides through a company today's call are available on the Investor Relations section of our website under Events and Presentations.
Speaker Change: I'm here today with Robert Richardson Executive Vice President.
Speaker Change: Noseworthy, Chief Financial Officer, and Aaron Cleveland, Senior Vice President of Finance.
Speaker Change: Slides to accompany today's call are available on the Investor Relations section of our website under events and presentations I will now ask Karen to read our cautionary statement.
Erin Cleveland: I will now ask Erin to read our cautionary statement.
Erin Cleveland: Thank you, Philip. This presentation may contain forward-looking statements with respect to Killam Apartment REITs and its operations, strategy, financial performance, conditions, or otherwise. The actual results and performance of Killam discussed here today could differ materially from those expressed or implied by such statements. Such statements involve numerous inherent risks and uncertainties, and although Killam 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.
Erin Cleveland: Thank you, Philip. This presentation may contain forward-looking statements with respect to Killam Apartment REIT and its operations, strategy, financial performance, or otherwise. The actual results and performance of Killam discussed here today could differ materially from those expressed or implied by such statements. Such statements involve numerous inherent risks and uncertainties, and although Killam 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.
Karen: Thank you Philip.
Karen: This presentation may contain forward looking statements with respect to kill them apartment, REIT and its operations strategy financial performance conditions or otherwise.
Karen: Actual results and performance of kill them discussed here today to differ materially from those expressed or implied by such statements such statements involve numerous inherent risks and uncertainties.
Karen: Although killen 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.
Erin Cleveland: For further information about the inherent risks and uncertainties in respect to forward-looking statements, please refer to Killam's most recent Annual Information Form and other securities regulatory filings found online on Cedar.
Erin Cleveland: For further information about the inherent risks and uncertainties in respect of forward-looking statements, please refer to Killam's most recent annual information form and other securities regulatory filings found online on CDAR. All forward-looking statements made today speak only as of the date to which this presentation refers, and Killam does not intend to update or revise any such statements unless otherwise required by applicable securities law.
Karen: For further information about the inherent risks and uncertainties with respect to forward looking statements. Please refer to <unk>. Most recent annual information form and other securities regulatory filings found online on SEDAR.
Erin Cleveland: All forward-looking statements made today speak only out of the date which this presentation refers, and Killam does not intend to update or revise any such statements unless otherwise required by applicable securities laws.
Karen: All forward looking statements made today speak only as of the date at which this presentation refers and kill them does not intend to update or revise any such statements unless otherwise required by applicable securities law.
Philip Fraser: Thank you, Erin. We are very pleased with our strong financial and operating results for the second quarter of 2024. Killam delivered FFO per unit of $0.30, in the quarter consistent with 30 cents per unit in Q2 2023. We achieved 8.5% same property NOI growth across the portfolio, including 8.8% same property NOI growth in our apartment portfolio. 7.4% same property NOI growth in our Manufactured Home Community Portfolio and 4.9 Same Property NOI Growth for Commercial Properties.
Philip Fraser: Thank you, Erin. We are very pleased with our strong financial and operating results for the second quarter of 2024. Killam delivered FFO pre-unit of $0.30 in the quarter, consistent with $0.30 per unit in Q2 2023. We achieved 8.5% same-property NOI growth across the portfolio. Included 8.8% same-property NOI growth in our apartment portfolio, 7.4% same-property NOI growth in our manufactured home community portfolio, and 4.9% same-property NOI growth in our commercial properties.
Karen: Thank you Eric we are very pleased with our strong financial and operating results for the second quarter of 2024.
Speaker Change: Hello, I'm delivering.
Speaker Change: Per unit <unk>.
Speaker Change: In the quarter consistent with 30 per unit in Q2 2023.
Speaker Change: We achieved eight 5% same property NOI growth across the portfolio.
Speaker Change: Included eight 8% same property NOI growth in our apartment portfolio.
Speaker Change: Seven 4% same property NOI growth.
Speaker Change: And our manufactured home community portfolio and $4 nine same property NOI growth.
Speaker Change: Our commercial properties.
Philip Fraser: In at the quarter with 41.2% in debt-to-total asset ratio, the lowest in our operating history, can you to focus on strengthening our balance sheet and the lease-up of our recently completed developments. Ten UDC strong rental demand for our properties, which shows in our same-property apartment occupancy that ended the quarter at 98.2%.
Philip Fraser: End of the quarter with a 41.2% debt-to-total asset ratio, the lowest in our operating history, continue to focus on strengthening our balance sheet and the lease up of a recently completed development, and continue to see strong rental demand for our properties, which shows in our same property apartment occupancy that ended the quarter at 98.2%. Dale will now take us through our financial results, followed by Robert, who will discuss progress made on a sustainability initiative. I will conclude with an update on our current and recent developments and our capital allocation strategy. I will now hand it over to you.
Speaker Change: We ended the quarter with 41, 2% debt to total asset ratio.
Speaker Change: The lowest in our operating history.
Speaker Change: Can you to focus on strengthening our balance sheet and the lease up.
Speaker Change: All of our recently completed developments.
Turning to see strong rental demand for our properties, which shows in our same property apartment occupancy.
Speaker Change: Debt ended the quarter at 98, 2%.
Philip Fraser: Kill will now take us through our financial results, followed by Robert. We will discuss progress made on our sustainability initiatives.
Dale Noseworthy: Killam delivered FFO per unit of $0.30. We achieved 8.5% same property NOI growth across the portfolio for Commercial Properties. End of the quarter with a 41.2% debt to total asset ratio. Dale will now take us through our financial results, followed by Robert.
Speaker Change: Dale will now take us through our financial results followed by Robert.
Robert Richardson: We will discuss progress made on our sustainability initiatives.
Philip Fraser: I will conclude with an update on our current and recent developments and our capital allocation technology.
Robert Richardson: I will conclude with an update on our current and recent developments in our capital allocation strategy.
Dale Noseworthy: I will now hand it over to Dale.
Robert Richardson: I will now hand, it over to Dale.
Dale Noseworthy: Thanks, Phil. Key highlights of Killam's Q2 financial performance can be found on slide 5. Killam achieved solid earnings growth in Q2, including fair value gains on investment properties of $85.5 million, reflecting strong and high growth. As shown on slide six, our focus on capturing market rents has resulted in our highest rental rate growth on turnover in our history, achieving an impressive 20.2% average lift on turns during the second quarter. Paired with a 4.5% increase in unit renewals, our Q2 weighted average increase in apartment rental rates was 8.2% across the same property portfolio. These strong rental increases highlight the strength of demand for apartment units across the country.
Dale Noseworthy: Thanks, Phil. Key highlights of Killam's Q2 financial performance can be found on slide 5. Killam achieves solid earnings growth in Q2, including fair value gains on investment properties of $85.5 million, reflecting strong and wide growth. As shown on slide 6, our focus on capturing market rent has resulted in our highest rental rate growth on turnover in our history, achieving an impressive 20.2% average lift on turns during the second quarter. Tared with a 4.5% increase on unit renewals, our Q2 weighted average increase on apartment rental rates was 8.2% across the same property portfolio. These strong rental increases highlight the strengths of demand for apartment units across the country.
Dale: Thanks, Phil key highlights of calendar Q2 financial performance can be found on slide five kilowatt chief solid earnings growth in Q2, including fair value gains on investment properties of $85 5 million.
Dale: <unk> strong NOI growth.
Robert Richardson: As shown on slide six, our focus on capturing market rent has resulted in our highest rental rate growth on turnover in our history, achieving an impressive 20.2% average lift on turns during the second quarter. Same property apartment operating margin improved 140 basis points, ending the quarter at 66.5%. However, operating expense growth remained muted, up only 0.4% across the total same property portfolio.
Dale: As shown on slide six our focus on capturing market rents has resulted in our highest rental rate growth on turnover in our history, achieving an impressive 22% average lift on turns during the second quarter.
Dale: Paired with a four 5% increase on unit renewal, our Q2 weighted average increase on apartment rental rates was eight 2% across the same property portfolio.
Dale: These strong rental increases highlight the strength of demand for apartment units across the country.
Dale Noseworthy: Slide 7 includes our market market spread for the portfolio and by region, doing a healthy spread of over 20% in over half of our core markets. Overall, we estimate a market market spread of approximately 25% across the portfolio, representing significant growth opportunity as units turn. Turnover year to date is 10.5%, and we anticipate approximately 18% turnover for the year. Same property apartment operating margin improved 140 basis points, ending the quarter at a 66.5%. This margin improvement is attributable to our strong rental growth paired with effective cost containment. In Q2, same property operating expenses increased modestly by 1.7% as detailed on slide 8.
Dale Noseworthy: Slide seven includes our mark-to-market spread for the portfolio and by region, showing a healthy spread of over 20% in over half of our core markets. Overall, we estimate a mark-to-market spread of approximately 25% across the portfolio, representing significant growth opportunity as units turn. Turnover year to date is 10.5%, and we anticipate approximately 18% turnover for the year.
Dale: Slide seven includes our mark to market spread for the portfolio and by region.
Dale: A healthy spread of over 20% and over half of our core markets overall.
Dale: Overall, we estimate a mark to market spread of approximately 25% across the portfolio representing significant growth opportunity as units turn.
Dale: Turnover year to date is 10, 5% and we anticipate approximately 18% turnover for the year.
Dale Noseworthy: Same property apartment operating margin improved 140 basis points, ending the quarter at 66.5%. This margin improvement is attributable to our strong rental growth paired with effective cost containment. In Q2, same property operating expenses increased modestly by 1.7%, as detailed on slide 8. The most significant cost pressures in the quarter were property taxes, up 6.6%.
Dale: Same property apartment operating margin improved 140 basis points ending the quarter at 66, 5%.
Dale: This margin improvement is attributable to our strong rental growth paired with effective cost containment.
Dale: In Q2 same property operating expenses increased modestly by one 7%.
Dale: Detailed on slide eight the.
Dale Noseworthy: The most significant cost pressures in the quarter was property taxes up 6.6%. This increase was offset by a 4% decrease in utility and fuel expenses. Overall, for the first six months of the year, operating expense growth remained muted, up only 0.4% across the total same property portfolio. Your to date kill and same property NOI is up 9.3%, and our 2024 NOI target remains over 8% growth for the year, up from our original target of over 6%. As still noted, we generated FFO per unit of 30 cents in the quarter, consistent with 30 cents per unit in Q2 2023.
Dale: The most significant cost pressures in the quarter was property taxes.
Speaker Change: Six 6%.
Dale Noseworthy: This increase was offset by a 4% decrease in utility and fuel expenses, overall for the first six months of the year. However, operating expense growth remained muted, up only 0.4% across the total same property portfolio. Year-to-date Killam Same Property NOI is up 9.3%, and our 2024 NOI target remains over 8% growth for the year, up from our original target of over 6%. As Phil noted, we generated FFO per unit of $0.30 in the quarter, consistent with $0.30 per unit in Q2 2023.
Dale: This increase was offset by a 4% decrease in utility and fuel expenses.
Dale: Overall for the first six months of the year.
Dale: Operating expense growth remains muted up only <unk>, 4% across the total same property portfolio.
Dale Noseworthy: Year-to-date Killam Same Property NOI is up 9.3%, and our 2024 NOI target remains over 8% growth for the year, up from our original target of over 6%. To quantify the impact, had these three properties been fully occupied during Q2, FFO per unit would have been $0.31, which would have reflected a 3.3% increase in FFO from Q2 last year. With this lease-up activity, these properties flipped to positive FFO contributors in July and will continue to increase their contributions to FFO as tenants move in and the remaining Nolan 2 units lease up.
Dale: Year to date kill them same property NOI is up nine 3% and our 2020 for NOI target remains over 8% growth for the year up from our original target of over 6%.
Dale: As Phil noted, we generated <unk> per unit of <unk> 30 in the quarter consistent with 30 per unit in Q2 2023.
Dale Noseworthy: Our strong NOI growth was offset by higher interest expense and vacancy in our new development. It's standard for new developments to be diluted during the lease-up phase as interest expense is no longer capitalized and properties carry high vacancy. Quantified the impact; had these three properties been fully occupied during Q2, FFO per unit would have been 31 cents, which would have reflected a 3.3% increase in FFO from Q2 last year. And please report that we've made significant leasing progress on all three properties during the second quarter, as highlighted on slide 10. With Civic 66 and the governor fully leased and NOI 2 at 74% leased.
Dale Noseworthy: Our strong NOI growth was offset by higher interest expense and vacancy in our new development. It's standard for new developments to be dilutive during the lease-up phase as interest expense is no longer capitalized, and properties carry high vacancy.
Dale: Our strong NOI growth was offset by higher interest expense and vacancy in our new developments.
kwan: It's standard for new developments to be dilutive during the lease up phase as interest expense is no longer capitalized and properties carry high vacancy Kwan.
Dale Noseworthy: To quantify the impact, had these three properties been fully occupied during Q2, FFO per unit would have been $0.31, which would have reflected a 3.3% increase in FFO from Q2 last year. I'm pleased to report that we've made significant leasing progress on all three properties during the second quarter, as highlighted on slide 10, with Civic 66 and the Governor fully leased and Nolan 2 at 74% lease. With these lease up activities, these properties flipped to positive FFO contribution contributors in July and will continue to increase their contributions to FFO as tenants move in and the remaining Nolan two units lease up.
Speaker Change: Quantify the impact had these three properties been fully occupied during Q2.
kwan: All per unit would have been 31, which would have reflected a three 3% increase in <unk> from Q2 last year.
Speaker Change: I am pleased to report that we've made significant leasing progress on all three properties during the second quarter as highlighted on slide 10 specific 66, and the government are fully leased and no one two at 74% leased with.
Dale Noseworthy: With this lease up activities, these properties flipped to positive FFO contributions to contributors in July and will continue to increase their contributions to FFO as tenants move in and the remaining NOI units lease up. By 10 outlines, the expected FFO growth from these properties on a quarterly and annual basis for 2024 and 2025. Year over year in 2025, we expect approximately $3.2 million of earnings growth or 2.6 cents in FFO per unit growth from these three developments compared to 2024. Higher interest expense also impacted FFO per unit growth in Q2, following higher mortgage rates on renewals during the year.
kwan: With this lease up activities. These properties flipped to positive <unk> contribution contributors in July and we will continue to increase their contributions to <unk> as tenants move in and the remaining Nolan to units lease up.
Dale Noseworthy: Slide 10 outlines the expected FFO growth from these properties on a quarterly and annual basis for 2024 and 2025. Year over year, in 2025, we expect approximately $3.2 million of earnings growth, or 2.6 cents in FFO per unit growth from these three developments compared to 2024. Higher interest expense also impacted FFO per unit growth in Q2, following higher mortgage rates on renewals during the year.
kwan: Slide 10 outlines the expected <unk> growth from these properties on a quarterly and annual basis for 2024 and 2025.
Dale Noseworthy: Year over year, in 2025, we expect approximately $3.2 million of earnings growth, or 2.6 cents in FFO per unit growth from these three developments compared to 2024. We continue to diligently manage our debt metrics and have reduced that to normalized EBITDA to below ten times. Our permanent MHC portfolio also turned in impressive results, generating 7.3% net operating income growth in the second quarter of 2024. This past June, Killam released its 2023 ESG report, which outlines our commitment to incorporate sustainability practices that enhance operational performance and optimize long-term value for our stakeholders.
kwan: Year over year in 2025, we expect approximately $3 $2 million of earnings growth or $2, six <unk> and <unk> per unit growth from these three developments compared to 2024.
kwan: Higher interest expense also impacted <unk> per unit growth in Q2, following higher mortgage rates on renewals during the year.
Robert Richardson: With recent Bank of Canada rate cuts and the easing of bond yields, we have successfully refinanced recent mortgages at attractive rates and expect to continue to do so as we finish our 2024 mortgage maturities over the next few months. Slide 11 includes average apartment mortgage rates by year versus prevailing CMHC insured mortgage rates. As part of our debt management strategy, we are leveraging CMHC programs as mortgages come due with a focus on increasing our CMHC insurance coverage, which is now at 79.4% for our apartment portfolio.
Dale Noseworthy: With recent Bank of Canada rate cuts and the easing of bond yields, we have successfully refinanced recent mortgages at attractive rates and expect to continue to do so as we finish our 2024 mortgage maturities over the next few months. By 11 includes average apartment mortgage rates by year versus prevailing CMHC-insured mortgage rates. As part of our debt management strategy, we are leveraging CMHC programs as mortgages come due, with a focus on increasing our CMHC insurance coverage, which is now at 79.4% for our apartment portfolio. Increasing our coverage of CMHC-insured mortgages is intended to help mitigate our interest expense exposure for the remainder of 2024 and 2025.
kwan: With recent bank of Canada rate cuts and the easing of bond yields we have successfully refinanced recent mortgages at attractive rates and expect to continue to do so as we finish our 2024 mortgage maturities over the next few months.
kwan: Slide 11 includes average apartment mortgage rates by year versus prevailing CMA insured mortgage rates.
kwan: As part of our debt management strategy, we are leveraging CMA programs at mortgages come due with a focus on increasing our <unk> insurance coverage, which is now at 79, 4% for our apartment portfolio.
Robert Richardson: Increasing our coverage of TMHC insured mortgages is intended to help mitigate our interest expense exposure for the remainder of 2024 and into 2025. We are pleased to show continued strengthening of our balance sheet at a slip, as shown on slide 12. At June 30th, the percentage of total assets was 41.2%, down 170 basis points from year-end. We continue to diligently manage our debt metrics and have reduced that to normalized EBITDA to below 10 times. I will now turn the call over to Robert, who will discuss our MHC performance and sustainability initiatives in more detail. Thank you, Dale. Good morning, everyone.
kwan: Increasing our coverage of <unk> insured mortgages is intended to help mitigate our interest expense exposure for the remainder of 2024 and 2025.
Dale Noseworthy: We are pleased to show continued strengthening of our balance sheets as looks shown on slide 12. At 2.30, as a percentage of total assets, was 41.2%, down 170 basis points from year end.
kwan: We are pleased to show continued strengthening of our balance sheet as slipped shown on slide 12.
kwan: At June 30.
kwan: Percentage of total assets was 41, 2% down 170 basis points from year end.
Dale Noseworthy: We continue to diligently manage our debt metrics and have reduced that to normalize the EBITDA to below 10 times.
kwan: We continue to diligently manage our debt metrics and have reduced debt to normalized EBITDA to below 10 times.
Robert Richardson: I will now turn the call over to Robert, who will discuss our MHC performance and sustainability initiatives in more detail.
kwan: Now I'll turn the call over to Robert who will discuss our MHC performance and sustainability initiatives in more detail. Thank you Bill and good morning, everyone.
Robert Richardson: Thank you today.
Robert Richardson: Good morning, everyone. The seasonal resorts delivered strong results for Q224, both string kilns manufactured home communities' performance. The seasonal resorts achieved 99% occupancy at the end of Q2 and recorded 7.6% NOI growth in the second quarter of 2004. Our permanent MHC portfolio also turned into an impressive result, generating 7.3% net operating income growth in the second quarter of 2024.
Robert Richardson: Killam's seasonal resorts delivered strong results for Q2-24, bolstering Killam's manufactured home community's performance. The seasonal resorts achieved 99% occupancy at the end of Q2 and recorded 7.6% NOI growth in the second quarter of 2024. Our permanent MAT portfolio also turned in impressive results, generating 7.3% net operating income growth in the second quarter of 2024. This past June, Killam released its 2023 ESG report, which outlines our commitment to incorporate sustainability practices that enhance operational performance and optimize long-term value for our stakeholders.
Robert Richardson: Total seasonal resorts delivered strong results for Q2, 'twenty Forbes bolstering films manufactured home communities performance.
Robert Richardson: The seasonal resorts achieved 99% occupancy at the end of Q2 and recorded seven 6% NOI growth in the second quarter of 'twenty four.
kwan: On the MH portfolio also turned in an impressive results generating seven 3% net operating income growth in the second quarter of 2024. This past June Tom released its 2023, ESG report, which outlines our commitment to incorporate sustainability practices and enhance operational performance and optimized.
Robert Richardson: This past June, Kilmer released its 2023 ESG report, which outlines our commitment to incorporate sustainability practices and enhance operational performance and optimize long-term value for our stakeholders. We have made significant progress over the past year. Highlights from our report can be seen on slide 14, where we note Kilmer's progress and all three key ESG metrics, namely environmental, social, and governance. Some sustainability initiatives are integrated with our overall business strategy. Having the ability to measure and monitor our impacts on the environment using leading indicators such as greenhouse gas emissions and energy consumption enables kilns to determine areas of focus and create opportunities for operational efficiencies.
kwan: Long term value for our stakeholders.
Robert Richardson: We have made significant progress over the past year. Highlights from our report can be seen on slide 14, where we note Killam's progress and all three key ESG metrics, namely environmental, social, and governance. Most sustainability initiatives are integrated with our overall business strategy.
Speaker Change: We have made significant progress over the past year highlights from our report can be seen on slide 14, where we note comes progress in all three key ESG metrics, mainly environmental social and governance.
Dale Noseworthy: Sustainability initiatives are integrated with our overall business strategy; having the ability to measure and monitor our impact on the environment using leading indicators such as greenhouse gas emissions and energy consumption enables Killam to determine areas of focus and create opportunities for operational efficiency. By investing in technologies such as tenant sub-metering or renewable energy production, Killam can help mitigate its exposure to rising energy costs and improve earnings. Since installation, this system has produced an average of 420,000 kilowatt hours per year, or approximately $55,000 in annual revenue.
Speaker Change: Our sustainability initiatives are integrated with our overall business strategy and I think the ability to measure and monitor our impact on the environment using leading indicators such as greenhouse gas emissions and energy consumption enables kiln to determine areas of focus and create opportunities for operational efficiencies.
Robert Richardson: Having the ability to measure and monitor our impact on the environment using leading indicators, such as greenhouse gas emissions and energy consumption, enables Killam to determine areas of focus and create opportunities for operational efficiency. By investing in technologies such as tenant sub-metering or renewable energy production, Killam can help mitigate its exposure to rising energy costs and improve earnings. This is the case at our property in Waterloo, Westmount Place, shown on slide 15.
Robert Richardson: By investing in technologies such as tenant submetering or renewable energy production, Kilmer can help mitigate its exposure to rising energy costs and improved earnings.
Robert Richardson: By investing in technologies, such as tenants sub metering or renewable energy production.
Robert Richardson: Can help mitigate this exposure to rising energy costs and improved earnings.
Robert Richardson: This is the case that our property in Waterloo, West Mountain Place, built on slide 15. In 2022, we installed photo-plotake solar panels covering the entire roof of the property. For a sub-medium company, Killam collects revenue on solar energy produced at this property by selling this clean energy to one of our commercial tenants at the building. In 2023, we produced 450,000 kilowatt hours' worth of energy, resulting in the revenue of $56,000. This equates to a 7.5% return on investment. Since installation, this system has produced an average of 420,000 kilowatt-hours per year, or approximately $55,000 in annual revenue.
Speaker Change: The case at our property in Waterloo westbound. Please note on slide 15 in 2022, we installed photovoltaic solar panels covering the entire roof of the property.
Robert Richardson: In 2022, we installed photovoltaic solar panels covering the entire roof of the property. Through a sub-metering company, Killam collects revenue on solar energy produced at this property by selling this clean energy to one of our commercial tenants at the building. In 2023, we produced 450,000 kilowatt hours of energy, resulting in a revenue of $56,000. This equates to a 7.5% return on investment. Since installation, this system has produced an average of 420,000 kilowatt-hours per year, or approximately $55,000 in annual revenue. Across our total portfolio, Killam has installed solar panels at 23 properties to date.
Speaker Change: There are some metering company film collect revenue on solar energy produced at this property by selling this clean energy to one of our commercial tenants at the building.
Speaker Change: In 2023, we produced 450000 kilowatt hours worth of energy, resulting in revenue of $56000. This equates to a seven 5% return on investment.
Speaker Change: Since installation. This system has produced an average of 420.
Speaker Change: Kilowatt hours per year or approximately $55000 in annual revenue.
Robert Richardson: Across our total portfolio, Killam has installed solar panels at 23 properties to date. In 2023, we estimated to have saved over $200,000 in energy cost for the year, which is targeted based on our actual production and the average utility rate for the respective regions.
Robert Richardson: Across our total portfolio currently has installed solar panels at 23 properties to date.
Philip Fraser: In 2023, we estimate to have saved over $200,000 in energy costs for the year, which is calculated based on our actual production and the average utility rate for the respective regions. As outlined in our 2023 ESG report, we have set an ambitious long-term target of self-generating 10% of operationally controlled electricity consumed by our portfolio. Renewable Energy Sources by 2025. At the end of 23, we had exceeded 5% and are working to meet our 10% goal.
Robert Richardson: Slide 23, we estimate to have saved over $200000 in energy cost for the year, which is calculated based on our actual production and the average utility rate for their respective regions.
Robert Richardson: At a build line in our 2023 ESG report, we have set an ambitious long-term target for self-generating 10% of operationally controlled electricity consumed by our portfolio for renewable energy sources by 2025. At the end of 23, we have exceeded 5% and are working to meet our 10% goal. These targets align with our mission to minimize our impact on the environment while creating value for our unit holders. We are contributing to revenue growth and cost savings.
Speaker Change: Wind in our 2023 ESG report.
Speaker Change: Set an ambitious long term targets for self generating 10% of operationally controlled electricity consumed by our portfolio.
Speaker Change: Our renewable energy sources by 2025.
Speaker Change: At the end of 'twenty, three we have exceeded 5% and are working to meet our 10% goal. These targets align with our mission to minimize our impact on the environment, while creating value for our unit holders. We are pleased with these investments and their contributions to revenue growth and cost savings I will now hand, it back to sell up to rather than up.
Philip Fraser: These targets align with our mission to minimize our impact on the environment while creating value for our unit holders. We are pleased with these investments and their contributions to revenue growth and cost savings. I will now hand you back to Philip to provide an update on our development and disposition activities.
Philip Fraser: I will now hand you back the cell up to rely on update on our development and disposition activity.
Selah: <unk> on our development and disposition activity.
Philip Fraser: Thank you, Robert. During the quarter, we completed one small land acquisition with a development partner for a total combined price of $4 million.
Philip Fraser: Thank you, Robert. During the quarter, we completed one small land acquisition with a development partner for a total combined price of $4 million. On June 17, we acquired 70% of a two and a half acre site located at 105 Elmira Road North in Guelph, Ontario. We have started work on the rezoning process for a six-story, 127-unit building, which we expect the approval process to take one to two years. On May 9th,
Speaker Change: Thank you Robert during the quarter, we completed one small land acquisition with a development partner for a total combined price of $4 million.
Philip Fraser: On June 17, we fired 70% of a 2.5 acre site located at 105 on Myro Road North in Guelph, Ontario. We have started work on the rezoning process for a six-story 127-unit building, which we expect the approval process to take one to two years.
Speaker Change: On June 17th we acquired 70% of the $2 five acre site located at <unk>.
Speaker Change: 105 Micro road North in Guelph, Ontario.
Speaker Change: We have started work on the rezoning process.
David Chrystal: for a six-story, 127-unit building, which we expect the approval process to take one to two years, an 84-unit building located in Guelph for $19.2 million, and PEI containing 66 units for $8.4 million. Design work continues on a 128-unit Whistler development in Waterloo and a 239-unit Phase II at Westmount, seen on slide 18. The Carrick, a 139-unit development in Waterloo, contains 33 one-bedroom units and 22 two-bedroom units.
Speaker Change: Six story 127 unit building, which we expect the approval process to take one to two years.
Philip Fraser: On May 9, we closed the cell of Woolwich Apartments, an 84-unit building located in Guelph for $19.2 million. Subsequent to the quarter end, we closed the cell of Braywood or Bridalwood Apartments and PEI containing 66 units for $8.4 million. We continue to see very good interests from a number of national and regional buyers for properties that are part of our disposition strategy and expected to exceed our $50 million target this year.
Speaker Change: On May nine.
Philip Fraser: We closed the sale of Woolridge Apartments, an 84-unit building located in Guelph for $19.2 million. Subsequent to the quarter end, we closed the sale of Brightwood, Brightlewood Apartments, and PEI, containing 66 units, for $8.4 million. We continue to see very good interest from a number of national and regional buyers for properties that are part of our disposition strategy and expected to exceed our $50 million target this year. We will have more visibility by the end of Q3.
Speaker Change: We closed the sale of we'll reach apartments.
Speaker Change: 84 unit building located in <unk> were $19 2 million.
Speaker Change: Subsequent to the quarter end, we closed the sale of Braidwood Briarwood.
Speaker Change: Brian Atwood apartments.
Speaker Change: In Pgi.
Speaker Change: Turning 66 units were $8 4 million.
Speaker Change: We continue to see very good interest from a number of national and regional buyers for properties.
Speaker Change: That are part of our disposition strategy and expect to exceed our $50 million target this year.
Philip Fraser: We will have more visibility by the end of Q3. The entitlement and design process continues to advance for our future developments in Calgary. The 296-unit Nolan Hill Phase 3 and a 235-unit building on our fourth and fifth site downtown. Design work continues on our 128-unit Whistler Development in Waterloo and the 239-unit Phase 2 at Westmount. The Westmount Square master plan designed document for the entire site was resummented to the City of Waterloo earlier this year. We are now engaged with the city to determine the final scale and the form of the redevelopment. These six potential developments contain over 1,100 units, and all are in great neighborhoods with strong local economies and strong population growth.
Speaker Change: We will have more visibility by the end of Q3.
Philip Fraser: The entitlement and design process continues to advance for our two future developments in Calgary, the 296 unit Nolan Hill Phase 3 and a 235 unit building on our fourth and fifth sites in the downtown core. Design work continues on a 128 unit Whistler development in Waterloo and a 239 unit phase two at Westmount. The West Nile Square master plan design document for the entire site was resubmitted to the City of Waterloo earlier this year.
Speaker Change: The entitlement and design process continues to advance our two development future developments in Calgary, The 296 unit Nolan Hilde Phase III and a 235 unit building on our fourth and fifth site.
Speaker Change: Downtown.
Speaker Change: Design work continues on our 128 unit Whistler development in Waterloo, and the 239 minutes phase II at Westwood.
Speaker Change: The westbound squared Master plan design document for the entire site was resubmitted to the city of Waterloo earlier this year.
Philip Fraser: We are now engaged with the city to determine the final scale and form of the redevelopment. These six potential developments contain over 1,100 units, and all are in great neighborhoods with strong local economies and strong population growth. We are also designing the buildings to contain above average unit sizes and a total development cost in the $400,000 to $450,000 per unit range. This will translate into more affordable rents for all future tenants.
Speaker Change: We are now engaged with the city to determine the final scale in form of the redevelopment.
Speaker Change: These six potential developments containing over 1100 units.
Speaker Change: And all are in great neighborhoods with strong local economies and strong population growth.
Philip Fraser: We are also designing the buildings to contain above average unit size and a total development cost in the $400 to $450,000 per unit range. This will translate into more affordable rents for all future tenants. In Halifax, we are working on an as-of-right 92-unit development at Victoria Gardens, as well as a right 150-unit development on vacant land in our Harlington Crescent community. As seen on slide 18, the Karek, a 139-unit development in Waterloo, which contains 89 one-bedroom units and 52 two-bedroom units, is progressing on time and on budget, and is expected to be completed next June.
Speaker Change: We are also designing the buildings to contain above average unit size.
Speaker Change: Total development cost in the 400 to $450000 per unit range.
Speaker Change: This will translate into more affordable rents for all future tenants.
Philip Fraser: In Halifax, we are working on an as-of-right 92-unit development at Victoria Gardens, as well as a 150-unit development on vacant land in our Harlington Crescent community, seen on slide 18. The Carrick, a 139-unit development in Waterloo, which contains 89 one-bedroom units and 52 bedroom units, is progressing on time and on budget and is expected to be completed next June. As shown on slide 19, we started the development of Eventide. An eight-story, 55-unit building in Halitax in February is expected to be finished in Q2 2026, and it contains 33 one-bedroom units and 22 two-bedroom units, with an average size of 764 square feet.
Speaker Change: And Halifax, we're working on and as of right 92 unit development at Victoria Gardens.
Speaker Change: As well as of right 150 unit developments on vacant land.
Chris: Chris and community.
Speaker Change: As seen on slide 18, the keurig or 139 unit development in Waterloo.
Chris: Which contains 89, one bedroom units and 52 bedroom units is progressing on time.
Speaker Change: On budget and is expected to be completed next June.
Philip Fraser: As shown on slide 19, we started the development of EvenTie, an eight-story, 55-unit building in Halifax in February. This is expected to be finished in Q2, 2026. It contains 33 one-bedroom units and 22 two-bedroom units, with an average size of 764 square feet.
Speaker Change: As shown on slide 19, we started the development of <unk>.
Speaker Change: The neat story 55 unit building and Halifax in February.
Speaker Change: This is.
Speaker Change: To be finished in Q2 2026.
James: James 33, one bedroom units in 'twenty two.
James: From units.
Speaker Change: With an average size of 764 square feet.
Philip Fraser: To conclude, the second quarter was a strong quarter, and we are very pleased with our financial performance. We'd like to thank our employees for their hard work and dedication. We will continue to execute our strategy and work to create value for all of our unit holders. Thank you. I will now open up the call for questions. Thank you.
Philip Fraser: The second quarter was a strong quarter, and we are very pleased for their financial performance.
Speaker Change: Conclude the second quarter was strong was a strong quarter.
Speaker Change: And we are very pleased with our financial performance.
Philip Fraser: We would like to thank our employees for their hard work and dedication. We will continue to execute our strategy and work to create value for all of our unit holders.
Speaker Change: I would like to thank our employees for their hard work and dedication.
Speaker Change: We will continue to execute our strategy.
Speaker Change: We work to create value for all of our unit holders.
Philip Fraser: Thank you.
Operator: I will now open up the call for questions.
Speaker Change: Thank you I will now open up the call for questions.
Operator: Thank you.
Speaker Change: Thank you.
Operator: Ladies and gentlemen, we will now begin the question-and-answer session. If you have a question, please press R1 on your touch-tone phone. You will hear a three-tone prompt acknowledging your request, and your questions will be pulled in the order they are received. If you would like to withdraw from the question queue, please press R2. If you are using a speaker phone, please lift the handset before pressing any keys. One moment, please, for your first question.
Operator: Ladies and gentlemen, we will now begin the question and answer session. If you have a question, please press star 1 on your touchtone phone. You will hear a three-tone prompt acknowledging your request, and your questions will be polled in the order they are received. If you would like to withdraw from the question queue, please press start. If you are using a speakerphone, please lift the handset before pressing any key. One moment, please, for your first question. The first question comes from Jonathan Kelcher of T.C. Cowen. Your line is already open.
Speaker Change: Ladies and gentlemen, we will now begin the question and answer session.
Speaker Change: If you have a question please.
Speaker Change: Please press star one on your Touchtone phone.
Speaker Change: You will hear a three ton prompt acknowledging your request and your questions will be pulled in the order they are received.
Speaker Change: If you would like to withdraw from the question queue.
Speaker Change: Please press star two.
Speaker Change: If you are using a speaker phone please lift the handset before pressing any case when.
Speaker Change: One moment. Please for your first question.
Jonathan Kelcher: Your first question comes from Jonathan Keltcher of TC Cowan. Your line is already open.
Speaker Change: Your first question comes from Jonathan <unk> of TC Cowen Your line is already open.
Jonathan Kelcher: Thanks.
Operator: Thanks. Good morning.
Jonathan Kelcher: Thanks. Good morning. I guess we're right into the heart of the student leasing season. Have you guys noted any change in demand from international students with the change in the rules?
Jonathan Kelcher: Good morning. First question, I guess we are right into the heart of the student leasing season. Have you guys noted any change in demand from international students with the change in the rules?
Speaker Change: Thanks, Good morning.
Speaker Change: So.
Speaker Change: First question.
Speaker Change: I guess, we're right into the heart of the student leasing season have you guys noted any change in demand from international students would be with the change in.
Speaker Change: Change in the rules.
Robert Richardson: Jonathan, we haven't noticed any notable change in any of our markets in terms of international students.
Philip Fraser: Jonathan, we haven't noticed any notable change in any of our markets in terms of international students.
Philip Fraser: Jonathan, we haven't noticed any notable change in any of our markets in terms of international students. Okay, that's quick and easy.
Speaker Change: Jonathan we haven't noticed any notable change in any of our markets in terms of international students.
Jonathan Kelcher: Okay, that's quick and easy. And secondly, second question: just the marked market, not down a lot, but it did start coming down this quarter. How much of that is a function of market rent growth slowing versus you guys just capturing the uplifts in it? And I guess related to that, can you maybe comment?
Philip Fraser: Okay, that's quick and easy. And secondly, second question: just the marked market, not down a lot, but it did start coming down this quarter. How much of that is a function of market rent growth slowing versus you guys just capturing the uplifts in it? And I guess related to that, you could maybe comment on your thoughts on market rent growth going forward.
Speaker Change: Okay.
Philip Fraser: And second question, just the marked market, not down a lot, but it did start coming down this quarter. How much of that is a function of market rent growth slowing versus you guys just capturing the uplifts? And I guess related to that, you may be comment on your thoughts on market rent growth going forward. I'd say it's more about capturing some over the last quarter, and over the last few quarters we've been expanding our analytics on trying to really narrow in on that market market. So part of its broadening our analytics work on that. So I'd say we're not seeing market rent come down.
Speaker Change: Quick and easy and secondly, the second question just.
Speaker Change: The mark to market.
Speaker Change: But it did start coming down this quarter, how much of that is a function of.
Speaker Change: Market rent growth slowing versus you guys, just capturing the uplifts and I guess related to that could you maybe comment.
Speaker Change: On your thoughts on market rents market rent growth going forward.
Philip Fraser: I'd say it's more about capturing some of that over the last quarter. And over the last few quarters, we've been expanding our analytics on trying to really narrow in on that mark to market. So part of it's broadening our analytics work on that.
Speaker Change: I'd say, it's more about capturing some over the last quarter and over the last few quarters, we've been expanding our analytics on trying to really narrow in on that mark to market. So part of it is broadening our analytics work on that so.
Philip Fraser: So I'd say we're not seeing market rents come down. I would say looking out a few months ago, we were looking at it more stabilized. I would say recent leasing activity, we're seeing it come back up. This is a really strong period for us, and we're seeing those rents continue to grow. So I would say, if anything, it's just us capturing, and we are still seeing some upward movement in
Speaker Change: I'd say.
Speaker Change: We're not seeing market rents come down I'd say looking out a few months ago. We were looking at it more stabilize I'd say recent last leasing activity. We're seeing it come back up this is a really strong period for us and we're seeing those ramps can continue to grow so I would tell you if anything it's just up to us cap.
Philip Fraser: I'd say looking out a few months ago, we were looking at it, you know, more stabilized. I'd say recent, last leasing activity. We're seeing it come back out. This is a really strong period for us, and we're seeing those rents continue to grow. So I'd say if anything, it's just us capturing, and we are still seeing some upward movement in market rents.
Speaker Change: Training and we are still seeing some upward movement in market rents.
Philip Fraser: Okay, is that consistent across the portfolio, or do some markets have better red growth than others?
Philip Fraser: Okay, and is that consistent across the portfolio, or do some markets have better rent growth than others?
Speaker Change: Okay and is that consistent across the portfolio or some submarkets got better rent growth than others.
Philip Fraser: I'm certainly just like the slide shows are a market to market spread being strongest in that Kitchen Waterloo, Toronto area, and Halifax. Those are the areas that we are seeing the strongest, but that's a very good picture of where we're seeing the most increase in terms of the market rents. But it would be pretty consistent over the last few quarters.
Philip Fraser: Certainly, just like the slide shows, our mark-to-market spread being strongest in Kitchener-Waterloo, the Toronto area, and Halifax. Those are the areas that we are seeing the strongest. That's a very good picture of where we're seeing the most increase in terms of market rents, but it would be pretty consistent over the last few quarters. Okay, thanks. I'll turn it back.
Speaker Change: Certainly just like the slide shows our mark to market spread being strongest in that.
Speaker Change: Waterloo Toronto area in Halifax, those are the areas that we are seeing the strongest but.
Speaker Change: That's a very good picture of where we're seeing the most increase in terms of the market rents, but it would be pretty consistent over the last few quarters.
Speaker Change: Okay. Thanks, I'll turn it back.
Jonathan Kelcher: I'll turn it back.
Goraz Musor: Your next question comes from Goraz Musor of Green Street. Your line is already open.
Speaker Change: Your next question.
Gaurav Mathur: Your next question comes from Gaurav Mathur of Greenstone. Your line is already open.
Gaurav <unk>: It comes from Gaurav <unk> of Green Street. Your line is already open.
Goraz Musor: Thank you and good morning, everyone. Dave, as far as you're prepared to comment, you mentioned that the turnover for the first half of the tenant ten and a half percent and for the year you're looking to be at around the 18th percent mark. Desired turnover rates up over the second half of the year. So that's just looking at what we historically know, what turns. So we're tracking just slightly below turnover from last year. So that's why we're expecting it to come down. We were at 19 percent last year. We're expecting to be around 18 this year.
Dale Noseworthy: Thank you and good morning, everyone. Dale, as far as your prepared comments go, you mentioned that turnover for the first half of the year was 10.5%, and for the year you're looking to be at around the 18% mark. This is how we ramp up our rates over the second half of the year.
Gaurav: Thank you and good morning, everyone.
Speaker Change: As for muscular prepared comments.
Jonathan Kelcher: You mentioned that turnover for the first half of the year was 10.5%.
Speaker Change: You mentioned that the China for the first half.
Operator: Good morning ladies and gentlemen. Welcome to the Killam Apartment Real Estate Investment Trust 2nd quarter, 2024 Financial Results Conference call. At this time, all lines are in listen only mode.
Speaker Change: And then the hospice patterns.
Speaker Change: And for the year, you are looking to be at around the 18% Mark.
Speaker Change: These high return already.
Speaker Change: Over the second half.
Robert Richardson: So that's just looking at what we historically know about turnover, so we're tracking just slightly below turnover from last year. So that's why we're expecting it to come down. We were at 19% last year. We're expecting it to be around 18 this year.
Dale Noseworthy: So that's just looking at what we historically know about turnover, so we're tracking just slightly below turnover from last year. So that's why we're expecting it to come down. We were at 19% last year. We're expecting it to be around 18 this year.
Operator: Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press the RZRU for the operator.
Speaker Change: So that's just looking at what we historically know what turns so we're tracking just slightly below turnover from last year. So that's why we're expecting it to come down we were at 19% last year, we're expecting to be around 18 this year.
Operator: This call is being recorded in August 8th, 2024.
Goraz Musor: I'm just switching gears here to be the position of the market. You know, you've been very active, and you are on track to meet your target as well for try 24. I'm just wondering if there's been any change, any material change in the buyer pool so far. Compared to the beginning of the year, are you seeing new buyers stepping in or the still mostly private buyers that are significant? I think the other interesting point on that is that it's a lot of the repeat buyers. So for the folks that we sold properties to last year, they still have a strong interest to continue to look for properties that would match well with their current portfolios.
Dale Noseworthy: And just switching gears here to the dispositions market, you know, you've been very active, and you are on track to meet your target as well for 2024. I'm just wondering if there's been any change, any material change, in the buyer pool so far compared to the beginning of the year. Are you seeing new buyers step in, or just still mostly private buyers that are seeking out?
Philip Fraser: I would now like to turn the conference over to Mr. Philip Fraser, President and CEO. Please go ahead. Thank you. Good morning and thank you for joining Killam Apartment Reads. 2nd quarter, 2024 Conference call. I'm here today with Robert Richardson, Executive Vice President, Dale Noseworthy, Chief Financial Officer, and hearing Cleveland Senior Vice President of Finance. Lides through a company today's call are available on the Investor Relations section of our website under events and presentations.
Speaker Change: And just switching gears.
Speaker Change: The disposition market.
Speaker Change: You've been very active and <unk>.
Speaker Change: You are on track to meet your target is once looked very plentiful I'm just wondering if there's been any change any material change in the buyer pool, so far compared to the beginning of the year are you seeing new buyers step in order to still mostly private buyers that powers NASA.
Dale Noseworthy: Um, I think the other interesting point on that is that it's a lot of repeat buyers. So for the folks that we sold properties to last year, they still have a strong interest in continuing to look for properties that would match well with their current portfolios. So it is the, when I said my common international or national and regional buyers, Essentially, well over half of them would be buyers from last year.
Speaker Change: I think.
Speaker Change: The other interesting point on that.
Speaker Change: It's a lot of repeat buyers.
Erin Cleveland: I will now ask Erin to read our cautionary statement. Thank you, Philip. This presentation may contain forward-looking statements with respect to Killam Apartment Reads and its operations, strategy, financial performance conditions or otherwise. The actual results and performance of Killam discussed here today could differ materially from those expressed are implied by such statements. Such statements involve numerous inherent risks and uncertainties, and although Killam 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.
Speaker Change: So for the folks that we sold properties to last year.
Erin Cleveland: For further information about the inherent risks and uncertainties in respect to forward-looking statements, please refer to Killam's most recent annual information form and other securities regulatory filings found online on Cedar. All forward-looking statements made today speak only out of the date which this presentation refers, and Killam does not intend to update or revise any such statements unless otherwise required by applicable securities laws.
Speaker Change: Are you still have a strong interest to continue to look for properties that would.
Speaker Change: Match, well with their current portfolios.
Goraz Musor: So it is the, when I said my common international or national and regional buyers, it's essentially well over half of them would be buyers from last year.
Speaker Change: It is the what I said in my comments international or National and regional buyers.
Speaker Change: Essentially well over half of them will be buyers from last year.
Goraz Musor: Okay, great. Thank you for the color.
Gaurav Mathur: Okay, great. Thank you for the call. I'll turn it back to the operator.
Speaker Change: Okay, great. Thank you for the color I'll turn it back to the operator.
Jimmy Shren: I'll turn it back. Your next question comes from Jimmy Shren of RBC Capital Markets. Your line is already open. Thank you, to.
Jimmy Shen: Your next question comes from Jimmy Shen of RBC Capital Markets. Your line is already open.
Speaker Change: Your next question comes from Jimmy Chen.
Jimmy Chen: RBC capital markets. Your line is already open.
Jimmy Shen: Thank you. So just to follow up on your comment, Dale, about seeing a bit of an upward movement in market rent, can you maybe give a range of kind of what sort of quantum you're seeing and sort of which markets we could be referring to?
Jimmy Chen: Thank you so just to follow up on your comment deal.
Jimmy Chen: A bit of an upward movement in market rent can you.
Speaker Change: Maybe.
Jimmy Chen: A range of kind of what what sort of quantum you are seeing in which markets.
David Chrystal: We could be referring to
Speaker Change: Would you be referring to.
Philip Fraser: Thank you, Erin. We are very pleased with our strong financial and operating results for the second quarter of 2024. Killam delivered FFO pre-unit of $0.30 in the quarter consistent with $0.30 per unit in Q2 2023. We achieved 8.5% same-property NOI growth across the portfolio. Included 8.8% same-property NOI growth in our apartment portfolio, 7.4% same-property NOI growth in our manufactured home community portfolio, in 4.9% same-property NOI growth, or commercial properties.
Jimmy Shren: Well, when I'm looking at recent activity, I'd say almost all markets over the last six weeks, but from a percentage perspective, I mean, it's, I'm going to say probably two to five percent. It's just, you know, it's based on recent activity, so. And this is two to five percent from the leases that are probably from, from probably where we were three months ago. Oh, I see the more. They would have seen it. Yeah. Okay. And then that's clarified to me, that's, that's what we're capturing on rent. So it depends a bit on what units are are leasing, but I’d say generally cross board, we’re seeing a little bit of not kick after having seen a bit of stability over a few months prior to that.
Dale Noseworthy: Well, when I'm looking at recent activity, I'd say almost all markets over the last six weeks, but from a percentage perspective, I mean, I'm going to say probably two to five percent. It's just, you know, it's based on recent activity, so.
Speaker Change: Well when im looking at recent activity I would say almost all markets over the last six weeks about from a percentage perspective, I mean, it stops I'm going to say publicly.
Speaker Change: 2% to 5% just based on recent activity so.
Dale Noseworthy: And this is 2% to 5% from the leases that are currently being...
Speaker Change: And this is a 2% to 5% from.
Speaker Change: The leases that probably.
Dale Noseworthy: From probably where we were.
Speaker Change: From probably where we were three months ago I see the market I would say we would have.
David Chrystal: Oh, I see the market right now. I would say we would have seen it. Gotcha. Okay. And that's just to clarify, Jimmy, that's what we're capturing on rent. So it depends a bit on what units are leasing, but I'd say, generally, across the board, we're seeing a little bit of an uptick after having seen a bit of stability over a few months prior to that.
Dale Noseworthy: Oh, I see the market, right? I would say we would have seen it.
Dale Noseworthy: Gotcha. Okay. To clarify, Jimmy, that's what we're capturing on rent. So it depends a bit on what units are leasing, but I'd say, generally, across the board, we're seeing a little bit of an uptick after having seen a bit of stability over a few months prior to that. And then the other question I had was just on the debt expiries next year. You do have a decent amount. How are you thinking of tackling the financing activity there given the movement of rates and where they are weighted to?
Speaker Change: Gotcha.
Speaker Change: Okay and then.
Speaker Change: And then to clarify Jimmy that's that's what we're capturing on rents.
Philip Fraser: In at the quarter with 41.2% in debt-to-total asset ratio, the lowest in our operating history can you to focus on strengthening our balance sheet and the lease-up of our recently completed developments. Ten UDC strong rental demand for our properties which shows in our same-property apartment occupancy that ended the quarter at 98.2%.
Jimmy Chen: So it depends a bit on what units are our leasing, but I'd say generally across the board, we're seeing a little bit of uptick after having seen a bit of stability over a few months prior to that.
Jimmy Shren: Okay.
Speaker Change: Okay.
Jimmy Shren: And then the other question I had was just on the debt expires next year. Sort of, you do have a decent amount. How are you thinking of tackling the refinancing activity there? Given the movement and rates and kind of, where they, where they waited to make sure. Yeah, there are a little more evenly distributed throughout the year next year. So, in terms of awaiting, we're actively kind of looking at that program now and reaching out to look at some opportunities to walk in early, potentially. So we'll, and we'll be looking at term, depending on where the rates are, but certainly liking some longer term and really pleased to see some of their rates come down.
Jimmy Chen: And then the other question I had was just on the debt.
Speaker Change: <unk> next year.
Speaker Change: So.
Speaker Change: You do have a decent amount of how you're thinking of tackling that refinancing activity there.
Dale Noseworthy: Kill will now take us through our financial results followed by Robert.
Speaker Change: Given the movement in rates and kind of where the.
Robert Richardson: We will discuss progress made on our sustainability initiatives.
Speaker Change: Were they waited too.
Speaker Change: Next year.
Philip Fraser: I will conclude with an update on our current and recent developments and our capital allocation Technology.
Dale Noseworthy: Yeah, they're a little more evenly distributed throughout the year next year. So in terms of waiting, we're actively kind of looking at that program now and reaching out to look at some opportunities, to walk in early, potentially, and we'll be looking at terms, depending on where the rates are, but certainly liking some longer terms and really pleased to see some of their rates come down. We would have seen some pricing, starting to see some sub-fours from CMHC insured on those rates for fives anyway, which we haven't seen in a while.
Speaker Change: Yes, there are a little more evenly distributed throughout the year next year. So in terms of a waiting.
Dale Noseworthy: I will now hand it over to Dale. Thanks, Phil. Key highlights of Killam's Q2 financial performance can be found on slide 5. Killam achieves solid earnings growth in Q2, including fair value gains on investment properties of $85.5 million, reflecting strong and wide growth. As shown on slide 6, our focus on capturing market rent has resulted in our highest rental rate growth on turnover in our history, achieving an impressive 20.2% average lift on turns during the second quarter.
Speaker Change: We're actively.
Speaker Change: Kind of looking at that program now and reaching out to look at some opportunities.
David Chrystal: to walk in early potentially, and we'll be looking at terms depending on where the rates are, but certainly liking some longer terms and really pleased to see some of their rates come down. We would have seen some pricing, starting to see some sub-fours from CMHC insured on those rates for fives anyway, which we haven't seen in a while.
Speaker Change: To lock in early potentially so we're.
Speaker Change: And we will be looking at term.
Speaker Change: Depending on where the rates are but certainly liking some longer term.
Speaker Change: Really pleased to see some of their rates come down we would have seen some pricing starting to see some sub floors from GMAC insurance on those.
Jimmy Shren: We would have seen some pricing. I'm going to see some sub-force from CMHC insurance on those, on those rates for five anyway, which we haven't seen in a while. But Jim, I mean, like everybody knows; you'll look at it. In the last 12 months, the five year bond has come down almost both 100 points and the 10 year bond has come down to 50 points. So trend is downward. We've sort of seen the peak from our point of view. You've got two rate cuts with sort of forecasting another two to four, even by the end of this year.
Dale Noseworthy: Tared with a 4.5% increase on unit renewals, our Q2 weighted average increase on apartment rental rates was 8.2% across the same property portfolio. These strong rental increases highlight the strengths of demand for apartment units across the country. Slide 7 includes our market market spread for the portfolio and by region, doing a healthy spread of over 20% in over half of our core markets. Overall, we estimate a market market spread of approximately 25% across the portfolio, representing significant growth opportunity as units turn.
Speaker Change: On those rates for $5 anyway, which we haven't seen in a while.
Dale Noseworthy: But, Jim, like everybody knows, in the last 12 months, a five-year bond has come down almost below 100 points, and the 10-year bond has come down to 50 points. So the trend is downward, we've sort of seen the peak from our point of view, you've got two rate cuts with, I'm forecasting another two to four, even by the end of this year. So everything points to our favor for 2025. In terms of what's remaining this year, we've got a lot done in the third quarter already. So we're looking out; we're quite positive and pretty happy to see where interest rates are going.
Dale Noseworthy: But, Jim, I mean, like everybody knows, you look at it.
David Chrystal: But Jim, I mean, like everybody knows, you look at it.
Speaker Change: Yes.
Speaker Change: And Jim I mean look everybody knows if youll look at it in the last 12 months. The five year bond has come down almost about 100 points.
Speaker Change: 10 year bonds come down about 50 points.
David Chrystal: So the trend is downward, we've sort of seen the peak from our point of view, you've got two rate cuts with, sort of
Speaker Change: So trend is downward we sort of seeing the peak from our point of view.
Speaker Change: Two rate cuts with sort of.
Speaker Change: Forecasting another two to four maybe even by the end of this year, so everything points to our favor.
Jimmy Shren: So everything points to our favor for 2025.
Speaker Change: For 2025.
Jimmy Shren: In terms of what's remaining in this year, we've got a lot done in the third quarter already. So we're looking, looking out; we're quite positive and pretty happy to see where interest rates are going.
Speaker Change: In terms of whats remaining in this year.
Dale Noseworthy: Turn over year to date is 10.5% and we anticipate approximately 18% turnover for the year. Same property apartment operating margin improved 140 basis points, ending the quarter at a 66.5%. This margin improvement is attributable to our strong rental growth paired with effective cost containment. In Q2, same property operating expenses increased modestly by 1.7% as detailed on slide 8. The most significant cost pressures in the quarter was property taxes up 6.6%. This increase was offset by a 4% decrease in utility and fuel expenses.
Speaker Change: We've had we've got a lock down in the third quarter already.
Speaker Change: So we're looking at.
Speaker Change: We are quite positive and pretty happy to see where interest rates are going.
Jimmy Shren: Yeah. Okay, thank you.
Speaker Change: Yes.
Speaker Change: Okay. Thank you.
Matt Kornak: Your next question comes from Matt Kornak of National Bank Financial. Your line is already open.
Matt Kornack: Your next question comes from Matt Kornack of National Bank Financial. Your line is already open.
Speaker Change: Your next question comes from Matt Korn Knack of National Bank financial.
Speaker Change: Your line is already open.
Matt Kornack: Good morning, guys. Sorry for the minutiae, but it sounds like you had some short-term vacancy in London, one property in London, and then a property adjacent to a building in lease up in Calgary. Can you give a sense as to whether that's a one-quarter sort of variance in occupancy in those properties, or will it take through the balance of the year?
Matt Kornak: Sorry for the minutiae, but it sounds like you had some short-term vacancy in London, one property in London, and then a property adjacent to a building in Leesup and Calgary. Can you give us a sense as to, is that a one-quarter sort of variance in occupancy in those properties? Or will it take through the balance of the air?
Speaker Change: Good morning, guys.
Speaker Change: Sorry for the new ship, but.
Speaker Change: Sounds like you had some short term vacancy in London, one property in London, and then a property adjacent to the building and lease up in Calgary can you give us a sense as to is that a one quarter sort of.
Dale Noseworthy: Overall, for the first six months of the year, operating expense growth remained muted up only 0.4% across the total same property portfolio. Your to date kill and same property NOI is up 9.3% and our 2024 NOI target remains over 8% growth for the year up from our original target of over 6%. As still noted, we generated FFO per unit of 30 cents in the quarter consistent with 30 cents per unit in Q2 2023.
Speaker Change: Variance in occupancy in those properties or will it take through the balance of the year.
Matt Kornak: Well, the one in London is 180 mil, and that is primarily a student's high-end building. And it's about every two to three years that there's a lot of term, more than the previous years. And so it looks pretty good for almost being a full building first of September, and that's typically the way that that building has performed for the last ten years that we've owned it.
Philip Fraser: Well, the one in London is 180 million, and that is primarily a student high-end building. And it's about every two to three years that there's a lot of turnover more than the previous years.
Speaker Change: Well the one in London was 180 mill.
Speaker Change: It's primarily a students hi.
Speaker Change: Hi, and building and it's about every two to three years that there is a lot of term more than the previous years.
Philip Fraser: And so it looks pretty good for almost being a full building at the first of September. And that's typically the way that that building has performed for the last 10 years that we've owned it. And then in terms of The one building in Calgary, again, it's part of the lease up of Nolan Hill Phase 2, which is across the street from the Trio and also the Nolan One. And that's basically it. Tenants are kind of moving a little bit from one of our buildings to a newer building.
Speaker Change: So we are.
Speaker Change: It looks pretty good for almost being a full buildings versus September and Thats typically the way that that building has performed well.
Dale Noseworthy: Our strong NOI growth was offset by higher interest expense and vacancy in our new development. It's standard for new developments to be diluted during the lease up phase as interest expense is no longer capitalized and properties carry high vacancy.
Speaker Change: For the last 10 years that we've owned it.
Matt Kornak: And then in terms of the one building in Calgary, again, as it's part of the lease-up of Noel and Hill, phase two, which is across the street from the trail, and also the Noel and One. And that's basically tenets kind of moving a little bit from one of our buildings to a Noel building.
Speaker Change: And then in terms of the.
Speaker Change: The one building.
Speaker Change: Calgary again is it's part of the lease up of no until phase two which is across the street to trio and also the only one.
Dale Noseworthy: Quantified the impact, had these three properties been fully occupied during Q2, FFO per unit would have been 31 cents, which would have reflected a 3.3% increase in FFO from Q2 last year.
Speaker Change: And Thats basically.
David Chrystal: Tenants are kind of moving a little bit from one of our buildings to a newer building.
Speaker Change: Tenants kind of moving a little bit from.
Speaker Change: One of our buildings to a newer building.
Matt Kornak: And then I guess on civics 66 in Noel and Hill, can you give us a sense of how those lease-ups are going, kind of in terms of the trajectory to get to stabilized occupancy, but also where rents are coming in relative to your performance? Noel and Hill, I mean, he said 74%, and that was, as of a couple days ago, there's continuing leasing on a weekly basis. We're averaging $1,500 for one bedroom, $2,000 for two, and $2,400 for three. Still within our performers, absolutely. 566. Basically, we got one or two left in a couple that have been rolling this time of the year.
Philip Fraser: I guess on Civic 66 and Nolan Hill. Can you give us a sense of how those lease-ups are going in terms of the trajectory to get stabilized occupancy but also where rents are coming in relative to your performance?
Speaker Change: Okay.
Speaker Change: And then I guess on 66 in Nolan Hill can you give us a sense of how those lease up.
Dale Noseworthy: And please report that we've made significant leasing progress on all three properties during the second quarter as highlighted on slide 10. With Civic 66 and the governor fully leased and NOI 2 at 74% leased. With this lease up activities, these properties flipped to positive FFO contributions to contributors in July and will continue to increase their contributions to FFO as tenants move in and the remaining NOI units lease up.
Speaker Change: Lease ups are going kind of in terms of the trajectory to get to stabilized occupancy, but also where rents are coming in relative to your performance.
Philip Fraser: No one helped. I mean, basically, he said 74%. And that was as of a couple days ago. There's continuing leasing on a weekly basis. We're averaging $1,500 for one bedroom, $2,000 for two, and $2,400 for three. Still within our pro formas, absolutely.
Lauren Hill: Lauren Hill.
Speaker Change: Basically you said, 74% and that was as of a couple of days ago. There's.
Speaker Change: Theres continuing leasing on a weekly basis.
Speaker Change: We're averaging $500.
Dale Noseworthy: By 10 outlines, the expected FFO growth from these properties on a quarterly and annual basis for 2024 and 2025. Year over year in 2025, we expect approximately $3.2 million of earnings growth or 2.6 cents in FFO per unit growth from these three developments compared to 2024. Higher interest expense also impacted FFO per unit growth in Q2 following higher mortgage rates on renewals during the year. With recent Bank of Canada rate cuts and the easing of bond yields, we have successfully refinanced recent mortgages at attractive rates and expect to continue to do so as we finish our 2024 mortgage maturities over the next few months.
Speaker Change: Our one bedroom 2002, and 2000 and 403.
Speaker Change: Still within our pro forma is absolutely to the 66.
Philip Fraser: Civic 66, basically, we got one or two left and a couple that are rolling this time of the year. Our ones are $1,900. Our twos are about $2,600. And we got a couple fours around $3,600, and that's within our pro forma.
Speaker Change: Basically we got one or two left.
Speaker Change: And a couple of weather.
Speaker Change: This time of the year.
Matt Kornak: Our ones are 1900, our twos, about 2600, and we got a couple of fours, around $3600, and that's within our performance. Okay.
Speaker Change: Our ones or 1900 twos or about 2600.
Speaker Change: We got a couple quarters around $3600 and thats within our pro forma.
Matt Kornack: Have you been able to lock in a rate for anything that's maturing in the back half of this year?
Matt Kornak: That's helpful.
Speaker Change: Okay. That's helpful. And then last one bill a follow up on I think it was Jimmy's question with regards to the debt maturity profile have you been able or would you be inclined to given the move in the bond yields.
Matt Kornak: And then the last one, they'll follow up on, I think it was Jimmy's question with regards to the deputy profile. Have you been able, or would you be inclined to, given the move and the bottom yields, to early kind of lock in a rate for anything that's maturing in the back after this year? Because I know you had fairly significant. Well, maturing in the back. Matt, I'm making the assumption, as we look at the potential for additional rate cuts, that we are going to continue to go down. That's a fair assumption.
Speaker Change: Early kind of lock in a rate for anything that's maturing in the back half of this year, because I know you had fairly significant chunk of maturities in the backup.
Dale Noseworthy: By 11 includes average apartment mortgage rates by year versus prevailing CMHC-insured mortgage rates. As part of our debt management strategy, we are leveraging CMHC programs as mortgages come due with a focus on increasing our CMHC insurance coverage, which is now at 79.4% for our apartment portfolio. Increasing our coverage of CMHC-insured mortgages is intended to help mitigate our interest expense exposure for the remainder of 2024 and 2025.
Philip Fraser: Matt, I'm making the assumption, as we look at the potential for additional rate cuts, that rates are only going to continue to go down. That's a fair assumption.
Speaker Change: Matt.
Speaker Change: I'm, making the assumption is as we look at the potential for additional rate cuts.
Matt: We're going to continue to go down.
David Chrystal: That's a fair assumption.
Matt Kornack: That's a fair assumption. Okay, thanks.
David Chrystal: That's our assumption. Okay. Thank you.
Matt: That's a fair assumption okay. Thanks, guys.
Matt: Thank you.
Matt: Yes.
Operator: Ladies and gentlemen, as a reminder, if you have a question, please press bar one.
Operator: Ladies and gentlemen, as a reminder, if you have a question, please press star 1.
Operator: Ladies and gentlemen, as a reminder, if you have a question, please press bar one. There are no further questions at this time.
Speaker Change: Ladies and gentlemen, as a reminder, if you have a question. Please press star one.
Dale Noseworthy: We are pleased to show continued strengthening of our balance sheets as looks shown on slide 12. At 2.30 as a percentage of total assets was 41.2% down 170 basis points from year end. We continue to diligently manage our debt metrics and have reduced that to normalize the EBITDA to below 10 times.
Speaker Change: There are no further questions at this time I would hand over the call to Phil at Fraser for closing comments. Please go ahead.
Philip Fraser: I would hand over the call to Philip Frazier for closing comments. Please go ahead. I would like to thank everyone today for listening, participating in our Q2. 2020-24 earnings call.
Speaker Change: I would like to thank everyone today for listening and participating in our Q2.
Speaker Change: 2024 earnings call.
Philip Fraser: And we look forward to reporting RQ-3 results on November 6, 2024. Thank you very much.
Speaker Change: And we look forward to reporting our Q3.
Robert Richardson: I will now turn the call over to Robert who will discuss our MHC performance and sustainability initiatives in more detail. Thank you today. Good morning, everyone. The seasonal resorts delivered strong results for Q224, both string kilns manufactured home communities performance. The seasonal resorts achieved 99% occupancy at the end of Q2 and recorded 7.6% NOI growth in the second quarter of 2004. Our permanent MHC portfolio also turned into an impressive result generating 7.3% net operating income growth in the second quarter of 2024.
Speaker Change: The results on November six 2024.
Phil: You very much.
Speaker Change: Ladies and gentlemen, this concludes today's conference call.
Speaker Change: Thank you for your participation you may now disconnect.
Robert Richardson: This past June, Kilmer released its 2023 ESG report which outlines our commitment to incorporate sustainability practices and enhance operational performance and optimize long-term value for our stakeholders. We have made significant progress over the past year. Highlights from our report can be seen on slide 14 where we note Kilmer's progress and all three key ESG metrics, namely environmental, social and governance. Some sustainability initiatives are integrated with our overall business strategy, having the ability to measure and monitor our impacts on the environment using leading indicators such as greenhouse gas emissions and energy consumption enables kilns to determine areas of focus and create opportunities for operational efficiencies.
Robert Richardson: By investing in technologies such as tenant submetering or renewable energy production, Kilmer can help mitigate its exposure to rising energy costs and improved earnings. This is the case that our property in Waterloo, West Mountain Place, built on slide 15. In 2022, we installed photo-plotake solar panels covering the entire roof of the property. For a sub-medium company, Killam collects revenue on solar energy produced at this property by selling this clean energy to one of our commercial tenants at the building.
Robert Richardson: In 2023, we produced 450,000 kilowatt hours worth of energy, resulting in the revenue of $56,000. This equates to a 7.5% return on investment. Since installation, this system has produced an average of 420,000 kilowatt hours per year, or approximately $55,000 in annual revenue. Across our total portfolio, Killam has installed solar panels at 23 properties to date. In 2023, we estimated to have saved over $200,000 in an energy cost for the year, which is targeted based on our actual production and the average utility rate for the respective regions.
Robert Richardson: At a build line in our 2023 ESG report, we have set an ambitious long-term target for self-generating 10% of operationally controlled electricity consumed by our portfolio for renewable energy sources by 2025. At the end of 23, we have exceeded 5% and are working to meet our 10% goal. These targets align with our mission to minimize our impact on the environment while creating value for our unit holders. We are contributing to revenue growth and cost savings.
Philip Fraser: I will now hand you back the cell up to rely on update on our development and disposition activity. Thank you, Robert. During the quarter, we completed one small land acquisition with a development partner for a total combined price of $4 million.
Philip Fraser: On June 17, we fired 70% of a 2.5 acre site located at 105 on myro road north in Guelph, Ontario. We have started work on the rezoning process for a six-story 127 unit building, which we expect the approval process to take one to two years. On May 9, we closed the cell of Woolwich Apartments, an 84 unit building located in Guelph for $19.2 million. Subsequent to the quarter end, we closed the cell of Braywood or Bridalwood Apartments and PEI containing 66 units for $8.4 million.
Philip Fraser: We continue to see very good interests from a number of national and regional buyers for properties that are part of our disposition strategy and expected to exceed our $50 million target this year. We will have more visibility by the end of Q3.
Philip Fraser: The entitlement and design process continues to advance for our future developments in Calgary. The 296 unit Nolan Hill Phase 3 and a 235 unit building on our fourth and fifth site downtown. Design work continues on our 128 unit Whistler Development in Waterloo and the 239 unit Phase 2 at Westmount. The Westmount square master plan designed document for the entire site was resummented to the city of Waterloo earlier this year. We are now engaged with the city to determine the final scale and the form of the redevelopment.
Philip Fraser: These six potential developments contain over 1,100 units, and all are in great neighborhoods with strong local economies and strong population growth. We are also designing the buildings to contain above average unit size and a total development cost in the $400 to $450,000 per unit range. This will translate into more affordable rents for all future tenants.
Philip Fraser: In Halifax, we are working on an as-of-right 92-unit development at Victoria Gardens, as well as a right 150-unit development on vacant land in our Harlington Crescent community. As seen on slide 18, the Karek, a 139-unit development and waterloo, which contains 89 one-bedroom units and 52-bedroom units, is progressing on time and on budget, and is expected to be completed next June. As shown on slide 19, we started the development of EvenTie, an eight-story 55-unit building in Halifax in February. This expected to be finished in Q2, 2026. It contains 33 one-bedroom units and 22 two-bedroom units with an average size of 764 square feet.
Philip Fraser: The second quarter was a strong quarter, and we are very pleased for their financial performance. We would like to thank our employees for their hard work and dedication. We will continue to execute our strategy and work to create value for all of our unit holders.
Philip Fraser: Thank you.
Operator: I will now open up the call for questions. Thank you.
Operator: Ladies and gentlemen, we will now begin the question and answer session. If you have a question, please press R1 in your touch-tone phone. You will hear a three-tone prompt acknowledging your request, and your questions will be pulled in the order they are received. If you would like to withdraw from the question queue, please press R2. If you are using a speaker phone, please lift the handset before pressing any keys. One moment please for your first question.
Jonathan Kelcher: Your first question comes from Jonathan Keltcher of TC Cowan. Your line is already open. Thanks.
Philip Fraser: Good morning. First question, I guess we are right into the heart of the student leasing season. Have you guys noted any change in demand from international students with the change in the rules? Jonathan, we haven't noticed any notable change in any of our markets in terms of international students.
Philip Fraser: Okay, that's quick and easy. And second question, just the marked market, not down a lot, but it did start coming down this quarter. How much of that is a function of market rent growth slowing versus you guys just capturing the uplifts? And I guess related to that, you may be comment on your thoughts on market rent growth going forward. I'd say it's more about capturing some over the last quarter and over the last few quarters we've been expanding our analytics on trying to really narrow in on that market market.
Philip Fraser: So part of its broadening our analytics work on that. So I'd say we're not seeing market rent come down. I'd say looking out a few months ago, we were looking at it, you know, more stabilized. I'd say recent, last leasing activity. We're seeing it come back out. This is a really strong period for us and we're seeing those rents continue to grow. So I'd say if anything, it's just us capturing and we are still seeing some upward movement in market rents.
Philip Fraser: Okay, is that consistent across the portfolio or some markets have better red growth than others? I'm certainly just like the slide shows are a market to market spread being strongest in that Kitchen Waterloo, Toronto area, and Halifax. Those are the areas that we are seeing the strongest but that's a very good picture of where we're seeing the most increase in terms of the market rents but it would be pretty consistent over the last few quarters.
Jonathan Kelcher: Okay, thanks.
Operator: I'll turn it back.
Goraz Musor: Your next question comes from Goraz Musor of Green Street. Your line is already open. Thank you and good morning everyone. Dave, as far as you're prepared comment, you mentioned that the turnover for the first half of the tenant ten and a half percent and for the year you're looking to be at around the 18th percent mark, desired turnover rates up over the second half of the year. So that's just looking at what we historically know, what turns. So we're tracking just slightly below turnover from last year. So that's why we're expecting it to come down. We were at 19 percent last year. We're expecting to be around 18 this year.
Goraz Musor: I'm just switching gears here to be the position of the market. You know, you've been very active and you are on track to meet your target as well for try 24. I'm just wondering if there's been any change, any material change in the buyer pool so far. Compared to the beginning of the year, are you seeing new buyers stepping or the still mostly private buyers that are significant? I think the other interesting point on that is that it's a lot of the repeat buyers.
Goraz Musor: So for the folks that we sold properties to last year, they still have a strong interest to continue to look for properties that would match well with their current portfolios. So it is the, when I said my common international or national and regional buyers, it's essentially well over half of them would be buyers from last year. Okay, great.
Goraz Musor: Thank you for the color.
Jimmy Shren: I'll turn it back Your next question comes from Jimmy Shren of RBC Capital Markets. Your line is already open Thank you, to. Well, when I'm looking at recent activity, I'd say almost all markets over the last six weeks, but from a percentage perspective, I mean, it's, I'm going to say probably two to five percent, it's just, you know, it's based on recent activity, so. And this is two to five percent from the leases that are probably from, from probably where we were three months ago.
Jimmy Shren: Oh, I see the more. They would have seen it. Yeah. Okay. And then that's clarified to me, that's, that's what we're capturing on rent. So it depends a bit on what units are are leasing, but I'd say generally cross board, we're seeing a little bit of not kick after having seen a bit of stability over a few months prior to that. Okay.
Jimmy Shren: And then the other question I had was just on the debt expires next year. Sort of, you do have a decent amount, how are you thinking of tackling the refinancing activity there? Given the movement and rates and kind of, where they, where they waited to make sure. Yeah, there are a little more evenly distributed throughout the year next year. So in terms of awaiting, we're actively kind of looking at that program now and reaching out to look at some opportunities to walk in early, potentially.
Jimmy Shren: So we'll, and we'll be looking at term, depending on where the rates are, but certainly liking some longer term and really pleased to see some of their rates come down. We would have seen some pricing. I'm going to see some sub-force from CMHC insurance on those, on those rates for five anyway, which we haven't seen in a while. But Jim, I mean, like everybody knows, you'll look at it. In the last 12 months, the five year bond has come down almost both 100 points and the 10 year bond has come down to 50 points.
Jimmy Shren: So trend is downward. We've sort of seen the peak from our point of view. You've got two rate cuts with sort of forecasting another two to four, even by the end of this year. So everything points to our favor for 2025. In terms of what's remaining in this year, we've got a lot done in the third quarter already. So we're looking, looking out, we're quite positive and pretty happy to see where interest rates are going. Yeah. Okay, thank you.
Matt Kornak: Your next question comes from Matt Kornak of National Bank Financial. Your line is already open. Sorry for the minutiae, but it sounds like you had some short-term vacancy in London, one property in London, and then a property adjacent to a building in Leesup and Calgary.
Matt Kornak: Can you give us a sense as to, is that a one-quarter sort of variance in occupancy in those properties? Or will it take through the balance of the air? Well, the one in London is 180 mil, and that is primarily a student's high-end building. And it's about every two to three years that there's a lot of term, more than the previous years.
Matt Kornak: And so it looks pretty good for almost being a full building first of September, and that's typically the way that that building has performed for the last ten years that we've owned it. And then in terms of the one building in Calgary, again, as it's part of the lease-up of Noel and Hill, phase two, which is across the street from the trail, and also the Noel and One. And that's basically tenets kind of moving a little bit from one of our buildings to a Noel building.
Matt Kornak: And then I guess on civics 66 in Noel and Hill, can you give us a sense of how those lease-ups are going kind of in terms of the trajectory to get to stabilize occupancy, but also where rents are coming in relative to your performance? Noel and Hill, I mean, we basically, he said 74% and that was, as of a couple days ago, there's continuing leasing on a weekly basis. We're averaging $1,500 for one bedroom, $2,000 for two, and $2,400 for three.
Matt Kornak: Still within our performers, absolutely. 566, basically, we got one or two left in a couple that have been rolling this time of the year. Our ones are 1900, our twos, about 2600, and we got a couple of fours, around $3600, and that's within our performance.
Matt Kornak: Okay. That's helpful.
Matt Kornak: And then the last one, they'll follow up on, I think it was Jimmy's question with regards to the deputy profile. Have you been able, or would you be inclined to, given the move and the bottom yields, to early kind of lock in a rate for anything that's maturing in the back after this year, because I know you had fairly significant. Well, maturing in the back. Matt, I'm making the assumption as we look at the potential for additional rate cuts that we are going to continue to go down. That's a fair assumption.
Matt Kornak: Okay.
Operator: Thank you. Ladies and gentlemen, as a reminder, if you have a question, please press bar one.
Operator: There are no further questions of this time.
Philip Fraser: I would hand over the call to Philip Frazier for closing comments. Please go ahead. I would like to thank everyone today for listening, participating in our Q2.
Philip Fraser: 2020-24 earnings call.
Philip Fraser: And we look forward to reporting RQ-3 results on November 6, 2024.
Philip Fraser: Thank you very much.