Halifax-based Killam Apartment REIT Reports Record Increase in Net Operating Income

According to Killam Apartment REIT’s 2024 year-end financial report, the Halifax-based landlord has experienced its largest increase in net operating income in the past five years. The company reported a total of $67.32 million in net operating income from its Halifax apartments, which represents revenues generated after deducting operating expenses.

Although net operating income does not directly equate to profit as it excludes expenses like mortgage payments, it is a key indicator of a company’s financial performance. Killam Apartment REIT owns a total of 5,600 apartments in Halifax and more than 18,000 units across Canada, making it one of the leading players in the real estate market.

Strong Markets in Halifax and Kitchener-Waterloo-Cambridge

During the company’s fourth-quarter earnings call with analysts on Feb. 13, executive vice-president Robert Richardson highlighted Halifax and the Kitchener-Waterloo-Cambridge region as two of Killam’s strongest markets. These areas have consistently contributed to the company’s overall success and growth.

One of the key topics discussed during the earnings call was the decline in Killam’s “mark-to-market spread,” which measures the difference between market rents and the company’s average rent. This metric is essential for landlords like Killam to capitalize on revenue growth opportunities by adjusting rents to match market rates.

As the gap narrows between Killam’s rents and market rates, the company faces challenges in further increasing rents. Neil Lovitt, a vice-president at real estate consulting firm Turner Drake, emphasized the importance of maintaining a competitive mark-to-market spread for sustained revenue growth.

Addressing the Need for Affordable Housing

In its year-end report, Killam Apartment REIT highlighted its partnerships with non-profits and governments to address the growing demand for affordable housing. The company remains committed to providing housing solutions that meet the needs of diverse communities across Canada.

Stabilizing market rents have contributed to the decline in Killam’s mark-to-market spread, signaling a shift in the real estate landscape. With market rents reaching a plateau, landlords like Killam must explore new strategies to drive revenue growth and maintain a competitive edge in the market.

Outlook for Halifax Market

Despite the challenges posed by narrowing differentials between market rents and average rents, Killam estimates that Halifax’s market rents are still approximately 25% higher than its average rent. This disparity highlights the potential for continued growth and profitability in the Halifax market.

Chief financial officer Dale Noseworthy expressed confidence in Killam’s ability to navigate changing market dynamics and capitalize on opportunities for rent increases. The company’s success in raising rents to market rates has positioned it well for sustained growth and stability in Halifax and other key markets.

Overall, Killam Apartment REIT’s record increase in net operating income reflects its strong performance and strategic positioning in the real estate sector. As the company continues to adapt to evolving market trends, it remains a key player in providing quality housing solutions for residents across Canada.