Large Halifax landlords report double-digit operating income growth in first quarter of 2024

Two landlords owning thousands of apartments in Halifax have reported strong growth for the first three months of 2024 in net operating income, or revenues after subtracting the expenses of operating a building.

In its latest public financial reports released last week, Killam Apartment REIT reported about $15.24 million in net operating income for its Halifax apartments — an increase of nearly 12 per cent versus last year. Meanwhile, CAPREIT reported a nearly 14 per cent increase to about $9.26 million.

Both companies said higher rents and lower utility costs overall have driven income increases. For Halifax, Killam’s management discussion report noted lower natural gas prices this quarter.

“It’s a good time to be a landlord,” said Neil Lovitt, a vice-president with real estate consultancy Turner Drake.

Lovitt added that as large apartment operators, Killam and CAPREIT’s financial results “really seem to reflect what the general market trends are.”

The two companies’ financial results are the first since Nova Scotia’s rent cap increased to five per cent in January. 

Excluding the effects of buying and selling properties, Killam reported an average monthly rent of $1,370 in Halifax — up 5.7 per cent from last year. CAPREIT reported a 7.2 per cent increase to $1,525. 

Much higher rent increases when new tenants move into a unit pushed the averages above the rent cap. Nationally, Killam increased rents by 19.6 per cent on units that turned over to new tenants, while CAPREIT reported about a 23 per cent increase.

Killam has said it’s a provider of affordable housing in Halifax, and the company noted in a 2023 year-end report it “invests in its communities … including partnering with non-profit housing agencies to provide more than 950 apartment units with a long-term affordability commitment” across Canada. 

The report also noted, “Killam’s average rent in each market is well below the 30 per cent [affordability] threshold of median household income for that specific market.” 

This definition of affordability might not be applicable to everyone, said a Cape Breton University associate professor.

“That’s very different from the affordability from the tenant’s perspective,” said Catherine Leviten-Reid, who researches affordable rental housing. In a followup email, she added that “tenants typically have lower median incomes than what you would find in a local area as a whole.”

CAPREIT has said the company helps address the housing crisis by contributing new housing supply. And in CAPREIT’s first quarter earnings call on Thursday, CEO Mark Kenney told analysts his company’s rents are below the national average. 

“We remain the provider of affordable living in many of Canada’s least affordable cities.”

CBC News asked both companies for further details about their apartment portfolios’ affordability, but did not receive a response in time for publication.

In Nova Scotia, Killam now owns 5,731 residential units, entirely in Halifax. The company bought some properties in the first quarter of 2024, and sold all its Sydney properties and some Halifax properties last year.

In June 2023, CAPREIT bought 52 units in Dartmouth, bringing their total in Halifax up to 3,340.