Q3 2025 Killam Apartment REIT Earnings Call
Speaker #4: Good morning , ladies and gentlemen , welcome to the Killam Apartment . Real Estate investment trust . Third quarter 2020 financial results conference call .
Speaker #4: At this time , all lines are in . Listen only mode . Following the presentation , we will conduct a question and answer session .
Speaker #4: If at any time during this call , you require immediate assistance , please press Star zero for the operator . This call is being recorded on November 6th of 2025 .
Speaker #4: I would now like to turn the conference over to Mr. Philip Fraser president and CEO . Please go ahead .
Speaker #5: Thank you . Good morning , and thank you for joining Killam apartment reads third Quarter 2025 conference call . I am here today with Robert Richardson , Executive Vice president Dale Noseworthy Chief Financial Officer and Erin Cleveland Senior vice president of finance .
Speaker #5: Slides two accompanies today's call are available on the Investor Relations section of our website under events and Presentations . I will now ask Aaron to read our cautionary statement .
Speaker #6: Thank you . Philip . This presentation may contain forward looking statements with respect to Killam Apartment REIT and its operations strategy , financial performance conditions , or otherwise .
Speaker #6: 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 .
Speaker #6: For further information about the inherent risks and uncertainties in respect of forward looking statements , please refer to KMS . Most recent annual Information Form and other securities regulatory filings found online at kdr+ .
Speaker #6: All forward looking statements made today speak only as 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 #5: Thank you . Erin . We are very pleased with our strong financial and operating results for the third quarter of 2025 . Killam delivered FFO of $0.34 per unit , a 3% increase from $0.33 per unit in Q3 2020 .
Speaker #5: For this quarter , we achieved 5.5% same property NOI growth across the portfolio , which included 5.5% same property NOI growth in our apartment portfolio .
Speaker #5: 7.5% same property NOI growth in our manufactured home community portfolio , and 3.2% same property NOI growth in our commercial properties . The multifamily fundamentals in Canada are still strong , and our same property , apartment occupancy for the third quarter was 97.2% , slightly lower than 97.7% in Q3 last year .
Speaker #5: During the third quarter , we made meaningful progress towards our strategic targets listed on slide three , and we are on track to meet these targets by the end of the year .
Speaker #5: We remain optimistic about the future of the Canadian economy and the need for more housing in every province , even as some markets continue to see declining market rent due to low levels of immigration .
Speaker #5: We will continue to focus on our growing our earnings , cash flow and the underlying value of our assets . Dale will now take us through our financial results , followed by Robert , who will provide an update on our operational results .
Speaker #5: I will conclude with an update on our current and recent developments and our capital allocation strategy . I will now hand it over to Dale .
Speaker #6: Thanks , Bill . Key highlights Kelmes Q3 .
Speaker #7: Financial performance can be found on slide four . KMB achieved solid earnings growth , including a 5.5% increase in same property revenue . Net income in the quarter was $41.9 million , compared to $62.7 million in Q3 2020 .
Speaker #7: For the quarter over quarter reduction is attributable to a $4.5 million fair value loss on investment properties , compared to a $50 million gain in Q3 last year .
Speaker #7: During the third quarter , we achieved a combined weighted average rental increase of 4.7% . As seen on slide five . The gains in Q3 included a 9.2% rent lift on units , which turned in the period , and an average 3.4% increase on renewals .
Speaker #7: This is in line with what we expected based on the trending of market rents from their peak in mid 2020 . For we remain confident in our ability to meet our 5 to 6% revenue growth target for this year .
Speaker #7: Slide six presents the mark to market spread for the portfolio , broken down by region . Halifax and Kitchener-Waterloo remain leaders , each with spreads of approximately 20% .
Speaker #7: The overall estimated mark to market spread across the portfolio stands at 12% . A figure that has moderated in recent quarters due to a slight decrease in asking rents and incremental quarterly rental rate increases in the third quarter .
Speaker #7: Total operating expenses for the same property portfolio increased by 4.7% . As outlined on slide seven , property taxes represented the largest cost pressure , rising by 6.2% during the period .
Speaker #7: Utility costs remain stable , with a modest increase of 0.8% in Q3 . General operating expenses grew by 5.1% , primarily due to elevated salary expenditures associated with the timing of new hires related to prior year , as well as variations in the timing of repair and maintenance activities .
Speaker #7: Year to date , net operating income for the same property portfolio has grown by 6.6% . The projection for NOI growth in 2025 is approximately 6% .
Speaker #7: As Phil noted , we generated FFO per unit growth of 3% in Q2 , driven by our strong same property NOI growth and contributions from developments .
Speaker #7: AFFO per unit was up 3.6% . We expect AFFO growth to continue to exceed FFO growth . Looking forward as capital from selling older properties is reinvested in newer , more efficient buildings , partially offsetting FFO gains in Q3 was higher interest expense , up 6.7% compared to Q3 24 .
Speaker #7: Looking out to 2026 and beyond , we are through the biggest headwinds from refinancing at higher interest rates than the rates on maturing debt .
Speaker #7: We expect year over year interest expense increases to begin moderating as early as 2027 , as early as next year . We expect the weighted average interest rate on CMHC insured mortgages refinance to be relatively close to our 2026 weighted average interest rate of 3.32% .
Speaker #7: Slide eight includes average mortgage rates by year versus prevailing CMHC insured mortgage rates . As part of our debt management strategy , we have also actively increased our use of CMHC insured coverage .
Speaker #7: At the end of Q3 , 88.3% of all mortgage debt across the portfolio was CMHC insured , up from 81.5% coverage this time last year .
Speaker #7: I will now turn the call over to Robert , who will discuss what we are seeing in the current rental market in more detail .
Speaker #5: Thank you .
Speaker #8: Dale , and good morning , everyone . Over the past year , the rental market has continued to evolve as it reverts to historic norms in terms of rental growth and unit turnover across the country .
Speaker #8: Market rents for apartments are more competitive for both renewals and new leasing , with new rental supply moderating demand pressures and giving rental renters more options .
Speaker #8: Gone are the unsustainable years of immigration fueled population growth that peaked from 2022 to 2024 . The Multi-residential mark market is now transitioning to a more typical and predictable environment .
Speaker #8: One where Killam is very adept at navigating occupancy remains a key performance metric for Killam and our teams . Teams prioritize balancing high occupancy across our portfolio with the pursuit of optimal rental rates .
Speaker #8: Slide ten shows our occupancy levels by quarter for the last ten years . During Q3 2025 . Occupancy was 97.2% , compared to 97.7% in the same period last year , indicating a slower reversion back to the long term average of 97% occupancy .
Speaker #8: As expected , with increased apartment supply , turnover rates are rising and we expect turnover rate to finish 2025 at approximately 22% . As shown at the bottom of slide ten , this slide also highlights the notable impact of population surge that began in 2020 had on suite turnover , which dropped from 29% in 2020 to 18% by 2024 .
Speaker #8: As with occupancy , Killam is on track to return to a more sustainable level of turnover again , likely closer to the turnover turnover rate in the past .
Speaker #8: Slide 11 . Highlights Killam's trend in rental rate growth by quarter since 2018 . Where sweet turns and lease renewals , as is evident in the chart , the rental growth on Sweet Turns is experiencing the largest correction from double digit highs of 20% in 2023 and 2024 .
Speaker #8: This rental growth speaks to KMS ability to capture mark to market opportunities . When available , and was further bolstered by rental increases earned from Killam's suite renovation program from Q3 2025 to combined weighted average rental growth rate was 4.7% .
Speaker #8: 50 basis points higher versus the seven year weighted average rental growth rate of 4.2% shown in this chart . On slide 12 , the top chart looks at the use of rental incentives on new leases signed .
Speaker #8: Film's primary focus remains consistent to provide exceptional service while maintaining high quality properties and competitive pricing . To remain competitive , we use incentives strategically , targeting incentives where they are most effective in meeting market demand for Q3 2025 , Ontario and Alberta accounted for the majority of same property rental incentives , with Ontario at 47% of incentives and Alberta at 34% .
Speaker #8: Slide 12 also demonstrates that incentive programs are predominantly allocated to suites with monthly rents exceeding $2,000 . However , it is important to highlight that although there has been an increase in the use of incentives , the value of incentives offered for same property portfolio remains less than 1% of revenue in Q3 2025 , at only 66 basis points , as shown on slide 13 , the average in-place rent for the portfolio in Q3 was $1.83 per square foot .
Speaker #8: The Blue line shows the average per square foot in Q3 , net of incentives was $2.19 , reinforcing that despite the use of incentives in certain markets , Killam continues to benefit from strong mark to market spreads due to the robust demand for our product offering , which balances quality , affordability and value for our residents .
Speaker #8: Looking ahead , we expect positive net operating income growth to continue , driven by proactive management , strategic investments and the ability and adaptability of our skilled leasing teams .
Speaker #8: Kiln will continue to deliver stable results . I will now hand you back to Philip to provide an update on our capital allocation strategy .
Speaker #5: Thank you . Robert . During the third quarter , we completed the disposition of $110.6 million of apartment buildings and purchased 168.8 million of apartment buildings .
Speaker #5: On July 3rd , Killam sold a 60 unit townhouse complex in P.E.I. for $9 million . On July 30th , we sold a 50% interest in a development site in Ottawa for 2.68 million .
Speaker #5: On August , seventh , we closed the sale of a portfolio of properties in P.E.I. containing 526 units for 81.9 million , with net proceeds of 41.6 million .
Speaker #5: On September 8th , we sold a 99 unit complex in Saint John , New Brunswick for 17 million with net proceeds of 10.3 million .
Speaker #5: During the quarter , we were very busy on the acquisition front . On July 22nd , Killam purchased three buildings containing 114 units in Fredericton , New Brunswick for 28.7 million .
Speaker #5: On July 30th , Killam completed the purchase of the remaining 50% interest in Frontier , latitude and Luma apartment buildings located in Ottawa .
Speaker #5: The combined purchase price was $138 million , which included the assumption of debt related to this transaction was the purchase of the commercial property on July 28th , in a development site .
Speaker #5: On July 30th for a combined price of $4 million from our former JV partner . On October 9th , Killam hosted a property tour in the Kitchener , Waterloo , Cambridge area and highlighted a number of our buildings , including two developments which are shown on slide 16 and 17 .
Speaker #5: The carrot , which opened on June 1st , 2025 , is now 80% leased , and the Brightwood 128 unit wood frame development .
Speaker #5: We started in January of 2025 . Adjacent our existing Northfield Garden property . Completion is scheduled for May 2026 , and Pre-leasing has commenced .
Speaker #5: Also highlighted on the tour was our solar panel installation program . We have installed solar panels at five different property locations , which currently has a 1.2MW of power capacity with an average electric rate of $0.13 per kilowatt plus HST .
Speaker #5: These projects are expected to yield over $170,000 in utility cost savings annually . We have five additional solar panel installations underway at the other four buildings at Northford Gardens in Brightwood , shown on slides 18 and 19 , increasing our total .
Speaker #5: Kitchener , Waterloo , Cambridge capacity to 1.9MW , producing approximately $260,000 in electricity cost savings annually , as shown on slide 20 . Construction continues at Eventide .
Speaker #5: Our 55 unit building in downtown Halifax . Completion is expected by Q3 2026 . And Pre-leasing is about to start in the next week .
Speaker #5: Slide 21 shows a recent picture of the construction site with Nolan Hill . Phase three . Our 296 unit JV development in Calgary that we have a 10% ownership interest .
Speaker #5: Completion is expected to be in Q4 2027 . We remain optimistic about the future and our ability to deliver earnings growth . Our results this year have highlighted the tremendous value of having a diversified portfolio , both geographically diversified and in terms of average rent and property age .
Speaker #5: Throughout history , we have consistently invested in our portfolio . Our employees and our service offerings . As Robert noted , we are now back in a more normalized rental environment .
Speaker #5: One of which we have a proven track record . We have built a well-diversified portfolio to create long term value for unitholders . It is gratifying to see the resilience of the portfolio , and we are excited about the continued earnings growth .
Speaker #5: It will provide in the future. To conclude, I would like to acknowledge and thank all of our employees for their hard work and dedication.
Speaker #5: I will now open up the call for questions .
Speaker #4: Thank you . Ladies and gentlemen , we will now begin the question and answer session to ask the question . You may press star , then one on your touchtone phone .
Speaker #4: If you are using a speakerphone , please pick up your handset before pressing the keys . To withdraw your question , please press the pound key .
Speaker #4: Thank you . Our first question comes from the line of Mike Marquis from BMO Capital Markets . Line is open .
Speaker #5: Operator .
Speaker #9: Good morning everyone . The your slides are great . Thanks . And I appreciate that . The resiliency of your portfolio . I would actually even say strength at the lower rent side of things .
Speaker #9: I'm just curious on your thoughts heading into 2026 , especially as we're kind of going through this sort of seasonally slower period of Q4 and Q1 , do you think that the pressure at the high end of the market will continue , just given the supply and the various markets and given that despite the strong performance of your lower rent apartments , do you think that incentives continue to go up and leasing spreads will continue to trend lower as we as we progress through 2026 ?
Speaker #7: Overall , we expect leasing spreads to be perhaps slightly lower , but quite consistent to what we have seen over this last quarter .
Speaker #7: Certainly , worth looking at . October and that trend has stayed stable . On from an incentive front . We are seeing seasonality come into play as we had historically with this time of year .
Speaker #7: You know , off the peak of July , August and early September . So we may see a continued uptick in incentives , but they continue to be on in select regions .
Speaker #7: And select assets . So overall , relatively stable with maybe a little bit on the downside , but still feeling the ability to capture positive rent growth similar to what we've seen recently .
Speaker #9: Okay . And I mean , I don't have it in front of me , but is the increase in turnover , is that starting to accelerate across the portfolio or is it just kind of modestly taking higher each quarter ?
Speaker #7: It is . We are seeing it . It really is across the portfolio that we would expect that to be . We will end the year .
Speaker #7: We expect approximately 22% , up from 18 . So and we think we expect that will continue to grow again next year .
Speaker #9: Okay . Last one for me . Looks like you started off Nolan Hill phase three . Not expected to be completed until 2028 , but I guess just a two part question .
Speaker #9: One just if you could comment on the timing given the fundamentals you're seeing in Calgary today . Number one , and then part two would just be if you could remind us , I think you would have a I don't know option or a or a put or a put to purchase the rest of the 90% .
Speaker #9: And if you could remind us on what the economics would look like going forward , if it's a fixed price or based on a cap rate on rents .
Speaker #9: Thank you .
Speaker #5: Yeah. I mean, the timing is that it's been in the planning for about a year and a half to two years.
Speaker #5: It's a larger project . But again from a from a balance sheet point of view , it's only 10% throughout this period . And we do have an option to purchase it from .
Speaker #5: It's just slightly over the cost of the project .
Speaker #9: So that's an option . It's just slightly over cost . Okay . That's that's very clear . Thanks so much . Appreciate it .
Speaker #4: Our next question comes from the line of Dean Wilkinson from CIBC . Your line is open .
Speaker #10: Thank you . Morning , everyone . Phil I want to come back to something . We've talked about a couple of times before .
Speaker #10: The MH , you know , just under 6000 sites . I think it might get lost that that Killam I think could be one of the larger MHC operators in the country .
Speaker #10: So when you look at the formal launch of the Build Canada homes and the focus that they've put around there , do you think that could open up some opportunities around that asset class , or how are you thinking about that longer term ?
Speaker #5: The way we're thinking about it is , is that as a percentage , as 5 or 6% of our sort of revenue or or our even our balance sheet .
Speaker #5: And last year we started to sell a couple of the parks , ones that were sort of outliers in Newfoundland . And as we look at it , I mean , there's some of these assets that I truly believe we would never sell .
Speaker #5: And some of them we might look at in the next year or two . And I think that , you know , it's basically just like our complete disposition program has been for the last three years .
Speaker #5: We are looking to sort of see which assets we could recycle the capital from them . And put it in a better use in the next couple of years .
Speaker #10: So that that would suggest that that MHC portfolio probably shrinks over time , doesn't grow .
Speaker #5: Yeah , shrinks over time . And really , when the other part of your question was like , where is the upside in terms of what the government's trying to sort of do in terms of creating new housing ?
Speaker #5: And it is still a very it's not easy to build a new one , you know , it's the cost of the land .
Speaker #5: You're competing with all the other types of housing , sort of multifamily , high rise . There typically outside the core urban areas where they're own or they're going to have to be on their own water and sewer systems .
Speaker #5: So it's , you know , you can take your own parks and expand them if they have surplus land . But it's really hard to start a new one from , like green filling it .
Speaker #10: Might not be as cheap as advertised , I guess is the point .
Speaker #5: There . And what we're finding that it's it's almost up to $70,000 a a pad to service it with water and sewer and prep it these days .
Speaker #10: Man , that's not surprising . That was it for me . Thanks . I'll hand it back .
Speaker #5: Thank you .
Speaker #4: Our next question is from Jonathan Coucher from TD Cohen . Your line is open .
Speaker #11: Thanks . Good morning . First question just on the the outlook on on NOI . I guess you've now sort of narrowed it to to 6% for for 2025 .
Speaker #11: And that implies about 4% or just over 4% for Q4 . Should we think about 2026 NOI growth at around that level ? When you when you say in the MDA , MDA that you expect steady same property NOI growth in the 26 .
Speaker #7: We'll provide more details with our Q4 results . In terms of outlook . But at this stage , that is a reasonable assumption .
Speaker #11: Okay . And when you're talking about steady state property , NOI , are you including the the upcoming vacancy at Westmount or is that separate ?
Speaker #11: And you're talking more the apartment portfolio .
Speaker #7: That would be looking at the apartment portfolio.
Speaker #11: Okay . And then secondly , just on the Correc , 80% seems seems pretty quick . I'm sure you guys are happy with that .
Speaker #11: How would that compare to the proforma ? And what about on rent levels that you're getting there ?
Speaker #7: It's close to our proforma . We were a couple this time last year . Leasing started a month or two later than we had originally anticipated .
Speaker #7: So the actual lease up speed is in line . And from a rent perspective , we've been very close to our pro forma .
Speaker #11: Okay , thanks . I'll I'll turn it back .
Speaker #4: Our next question is from Mario Saric from Scotiabank . Your line is open .
Speaker #12: Thank you for taking the questions . Just the first one . Not necessarily asking about 26 guidance but it did seem like in the MDA the tone or or the verbiage used was a bit more conservative than it was last quarter .
Speaker #12: So is that a fair statement . And if so , what's changed in the last three months to maybe temper those expectations a little bit ?
Speaker #8: Hi , Mario , the combination of a few factors we're seeing the turnover start to increase a little more . So that's that's happening .
Speaker #8: And and we're hearing from our leasing team that it's it's more of a negotiation than we were doing this time last year in terms of trying to find the right rate for the unit with tenants .
Speaker #8: So it's just , you know , being cautiously optimistic and , you know , it is it's the year is going very well .
Speaker #8: And but that tone you didn't run it through the CP bot anything did you . .
Speaker #12: Nope . That was me .
Speaker #8: All right .
Speaker #12: Okay . In Halifax . What what percentage of the renewals are you still hitting ? Kind of the 5% max on . Has that changed ?
Speaker #6: I would say it is the majority of .
Speaker #13: Them .
Speaker #12: Okay . And then maybe just my last one . The distribution was increased with Q3 results last year . It wasn't this year .
Speaker #12: Can you just maybe give us a bit of color in terms of the thought process ? There ?
Speaker #5: Well , I mean , I don't know . I wouldn't read too much into it . I mean , you know , it's discussed at every quarter , every board meeting .
Speaker #5: And I think that what we really want to sort of see is just digest a little bit more from the federal government and to see if they actually get this budget passed .
Speaker #5: And just like a little bit better clarity on the overall economy of the country. So I think we'll discuss that in the next, the fourth quarter, the first year.
Speaker #12: Okay . And just on the budget , Phil , any incremental thoughts on that in terms of surprises , either to the upside or the downside in terms of the impact ?
Speaker #5: Well , I mean , one that I found interesting , if you dig through it , is this generational infrastructure investment and the program is 17.2 billion over ten years .
Speaker #5: So just , you know . Simple math , it's 1.72 billion . And it's funding that the federal government will give us down to probably the municipalities .
Speaker #5: If the provincial government matches it . And so and it's the funding is going to support housing , enabling infrastructure , which is wastewater , sewer , health related infrastructure , roads .
Speaker #5: So if you think about it , everybody wants growth . But we still need an infrastructure right across the country in terms of lots of basically water and sewer , plus the ability to , you know , have grids with electricity that can sort of support all this growth .
Speaker #5: And so the interesting thing is , is that to access these funds , the provinces have to match what they just said , but they also have to agree to substantially reduce development charges and not levy any other taxes to hinder the housing supply .
Speaker #5: So that's a that's a long way to say that . You know what ? There's all this money available . The province has to match and the cities have to come on board and reduce these large development charges .
Speaker #5: So I find that quite interesting .
Speaker #12: Okay . Interesting . Okay . Thank you .
Speaker #4: Our next question is from Kyle Stanley. Kyle, your line is open.
Speaker #14: Thanks . Morning , everyone . Just wondering how in your view , how the student leasing season went this year and some of your more student heavy markets thinking more like Halifax and KW .
Speaker #14: And would you say your exposure has maybe changed to students since the federal government initially implemented the caps on foreign students last year ?
Speaker #14: I guess put another way , how important do you think the student segment is to Killam today versus maybe prior years ?
Speaker #5: Well , I'll give a couple comments . I think it's it's becoming less and less . And so the big sort of leasing period in this September , I mean , we really saw some good leasing activity , right across the board .
Speaker #5: And we're talking about cities like Fredericton and Saint John's , Newfoundland and the Kitchener-Waterloo . So is it an impact for the overall vacancy in all the markets that have students and universities ?
Speaker #5: Yes . But I think it's again , if you're diversified , it's just something that you quickly sort of look for other tenants that aren't students .
Speaker #5: And we're doing that . It's a little bit , you know , there's a little bit of a catch up , but it's going to happen and it looks like it's going to continue over the next couple of years .
Speaker #5: And that there's going to be less students around , foreign students and all the markets .
Speaker #14: Right , okay . Thank you for that . And then just secondly , on Westmount , you know , you've highlighted the strategy to get in the office space leased .
Speaker #14: Obviously we we recently toured , I guess two questions . Any updates since we were there last ? I don't suspect there were , but figured I'd ask .
Speaker #14: And then secondarily , can you remind us of what maybe the CapEx profile would be to do some of the conversion of the office space to multi-tenant and maybe ground floor retail ?
Speaker #8: Sure . So the inquiries continue to come in . Their quality inquiries . We're encouraged by the activity in terms of size of the square footage and also the quality of the potential tenants .
Speaker #8: So we're probably have on a list 20 solid ones , 30 in total , a few there you wouldn't want , but happy with the way we're going .
Speaker #8: I'm just trying to think what else for you ?
Speaker #5: Well , again , I think our our sort of goal is to actually have serious paper between now and the next 2 to 3 months on a number of these .
Speaker #5: Right .
Speaker #8: And then but on the capital spend , it's probably going to be 4 to $8 million in terms of all the work , including putting the tenants in .
Speaker #8: So we're the building itself now . Sunlife has removed all of its furniture that it had there , which was quite a bit .
Speaker #8: And we're getting it ready for demolition for the parts that we're going to do so we can make the elevators more accessible and accommodate a couple of tenants who have indicated they need some changes .
Speaker #14: Okay . Thank you for that . Very clear . I will turn it back .
Speaker #4: Our next question is from Jimmy Chan from RBC Capital Markets . Your line is open .
Speaker #15: Yeah , I just have one quick question on the incentives . You know , the fact that there concentrated in the 2000 a month bucket or higher , has there been any other times in the past where you've had to offer incentives in the more affordable rent buckets , like is this is this something normal that that has over time been the case ?
Speaker #8: I could go back 20 years . I remember that there was a time when vacancy had gone higher , but generally speaking , no .
Speaker #8: With the affordable ones , they can afford to take the smaller gains , especially in rent controlled markets . So that's typically not where we find ourselves giving incentives .
Speaker #8: . And for the most part , the incentives really relate to a lot of new leasing and new new product coming on . And in order to lease successfully in a market like that , you do have to give incentives .
Speaker #8: That's very typical . And it's been kind of a way for for the industry .
Speaker #15: Right ? Okay . And then on Halifax , I know you had mentioned before that you really haven't had the need to offer incentives in that market yet .
Speaker #15: Is that still the case ?
Speaker #6: Yes , that would that would generally still be still be the case .
Speaker #15: Okay . Okay . Thank you .
Speaker #4: Our next question is from Matthew Cornock from National Bank Capital Markets . Your line is open .
Speaker #12: Hey guys .
Speaker #11: Just just quickly , in terms of the nature of the turnover that you're seeing , has the increase been in markets where maybe the rental conditions are a bit looser or is it across the board ?
Speaker #16: I .
Speaker #7: It's across the board , but I do believe it's a little bit higher where those markets that we've highlighted , where there has been more new supply , for example , and where we have new assets that we've leased up in the last couple of years , for example , civic 66 is one asset .
Speaker #7: We know that the turnover of that asset has been much higher than average . The nature of leasing that up at peak rent .
Speaker #8: So and that's that's a phenomena of of new lease up that what you'll find is that some people move in . They would be leaving their house .
Speaker #8: They haven't lived in an apartment for a very long time if they ever lived in one . They get there and they realize within that first year that it's really not the set up that they are liking .
Speaker #8: So we do have that will be it. And that happens in the first and sometimes might go into the second year. But by the time you're making your way to the third year, everybody settles down and the turnover that impact on turnover goes away.
Speaker #5: And then of course , as Alberta .
Speaker #7: Yeah .
Speaker #16: Okay .
Speaker #11: Right . Makes sense . And then just maybe quickly on the Carrick it was transferred into IPP . I know it was probably not 80 .
Speaker #11: Well it wasn't 80% leased during the quarter . So was it actually a drag on results just given fixed costs versus the NOI generated or .
Speaker #11: Sorry , the revenue it generated ?
Speaker #6: Yes, it would have been a drag. Specifically in Q3, but we would expect that to change for Q4.
Speaker #11: Okay . And then when when would be the anticipated I guess full stabilization Q2 of 26 or .
Speaker #6: Yeah , I think that's reasonable .
Speaker #11: Okay . Thank you .
Speaker #4: There are no questions at this time . I would like to hand the call back to Mr. Fraser . Please go ahead .
Speaker #5: This concludes Killam's Q3 2025 . Analyst Call . Thank you for listening and participating today . We look forward to reporting our Q4 2025 financial results on February 11th , 2026 .
Speaker #5: Thank you .