Killam Apartment REIT ($KMPUN)

Good afternoon, everybody, and thank you for joining us today at our Annual General Meeting. My name is Philip Fraser, President and CEO and a Trustee of Killam. With us today representing the Board of Trustees are the following members: Robert Richardson, Andree Savoie, Shant Poladian, Karine MacIndoe; and 2 special directors, Manfred Walt and Aldea Landry, special in the sense that their time is almost up. After serving Manfred for 19 years as a trustee or director than a trustee and Aldea for the last 9 years as a trustee, they are technically still a member of the Board until this meeting is over in the next few minutes. So I'd like to say once again, thank you very much for your service over the years. I am pleased to chair this year's Annual Meeting of Unitholders. Welcome to Killam Apartment REIT's 2026 Annual Meeting. This is our 26th Annual Meeting, and we are broadcasting live via webcast with unitholders attending both virtually and in person. In order to ensure that the meeting covers the required business in an effective manner, we have prearranged with unitholders and proxy holders to move and to second the items of business. I welcome all guests attending by webcast, but note that only registered unitholders and duly appointed proxy holders physically present at the meeting are entitled to vote on matters before the meeting. The meeting of the unitholders of Killam Apartment REIT will now come to order. With the consent of the meeting, I will ask Ron Barron to act as Secretary of the meeting. Ron? Thank you. The first item of business will be the appointment of the scrutineer. I will ask Lesley Anne Alano of Computershare Investor Services, Inc. of Canada to act as scrutineer. Lesley here? Yes. Thank you. I have received the declaration prepared by the officer of the Computershare indicating that the notice calling this meeting with the accompanying management form of proxy, annual report and auditor's report were mailed to all unitholders of record at the end of the close of business on March 25, 2026. Accordingly, with the consent of the meeting, the reading of the notice of the meeting will be dispensed with, and I request the Secretary to keep a copy of the notice of meeting and proof of service with the minutes of the meeting. I would ask the scrutineer to summarize the scrutineer's report on attendance.

Mr. Chairman, I, the undersigned scrutineer from Computershare Investor Services Inc., hereby report that there are at least 9 unitholders and/or proxy holders present at this meeting, representing in person or by proxy, 79,603,482 units being 63.73% of the total outstanding units of Killam Apartment REIT. Thank you.

Thank you. Based on the scrutineer's report, I declare that the requisite quorum of unitholders is present and direct that the scrutineers' report be kept with the minutes of this meeting. I now declare the meeting has been regularly called and is properly constituted for the transaction of business. As the first matter of formal business, I table at this meeting the financial statements of Killam Apartment REIT for the year ending December 31, 2025, with the report of the auditors thereon. I do not propose to ask unitholders to approve the financial statements. We now will proceed with the election of trustees for the ensuing year. I am advised that Killam has not received notice of any further nominations pursuant to its declaration of trust. Accordingly, the only individuals eligible for nomination are as described in the management information circular, and unitholders will be asked to consider an ordinary resolution electing each of the proposed trustees as nominated or at the direction of the Board of Trustees. I now declare the meeting open for nominations.

Mr. Chairman, I nominate the following persons for election as trustees of the REIT to hold office until the close of the next annual meeting of the unitholders or until their successors are elected or appointed. Philip Fraser, James Lawley, Karine MacIndoe. Can you hear me? Better. I'll start with the list at the top. Philip Fraser, James Lawley, Karine MacIndoe, Laurie MacKeigan, Doug McGregor, Shant Poladian, Robert Richardson and Andree Savoie.

I will ask Robert Richardson to move and Erin Cleveland to second the resolution to elect those nominated as trustees.

Mr. Chair, I so move the motion.

Mr. Chair, my name is Erin Cleveland, and I second the motion.

You have heard the motion. And if there is no discussion, I ask for those in favor to signify by raising their hand. Any nays? I declare the resolution carried and those nominated to be duly elected trustees of the REIT to hold office until the close of the next annual meeting of the unitholder or until their successors are elected or appointed. Thank you. The next item of business is the appointment of the auditors. I will ask Ruth Buckle to move and Michael McLean to second the resolution appointing the auditors for the ensuing year.

Mr. Chair, my name is Ruth Buckle, and I move that Ernst & Young LLP, Chartered Professional Accountants, be appointed auditors of the REIT to hold office until the close of the next Annual Meeting of Unitholders at such remuneration as may be fixed by the trustees and the trustees be authorized to fix such remuneration.

Mr. Chair, my name is Michael McLean, and I second the motion.

You have heard the motion. And if there is no discussion, I ask for those in favor to signify by raising their hand. Any nays? I declare the resolution carried and Ernst & Young LLP to be appointed auditors of the REIT to hold office until the close of the next annual meeting of unitholders and such remuneration as may be fixed by the trustees and the trustees to be authorized to fix such remuneration. The next item of business is an advisory vote on Killam's approach to executive compensation as set forth in the management information circular in respect of this meeting. I will ask Robert Richardson to move and Colleen McCarville to second the resolution accepting on an advisory basis, Killam's approach to executive compensation.

Mr. Chair, my name is Robert Richardson, and I move that on an advisory basis and not to diminish the role and responsibilities of the Board of Trustees that the unitholders accept the approach to executive compensation disclosed in the management information circular in respect of this meeting.

Mr. Chair, my name is Colleen McCarville, and I second the motion.

You have heard the motion. And if there is no discussion, I ask for those in favor to signify by raising their hand. Any against? I declare the resolution carried. As there is no further formal business, may I please have a motion terminating the meeting.

Mr. Chair, I move that the meeting be terminated.

Do you second that? Thank you.

Mr. Chair, my name is Margaret Anderson, and I second the motion.

All those in favor, please signify by raising your hand. Contrary? I declare the motion carried and the meeting terminated. Thank you. The next part. And again, once again, the former trustees, you're more than welcome to stay around. I'm kidding. It's always a privilege to be here. And especially this year, if you think about the fact that we recently marked Killam's 25th anniversary and just had our 26th AGM. Reaching that milestone is something that we're proud of and as it reflects a long-standing commitment to provide quality rental housing and to the people who make that possible. When Killam was founded, the idea was straightforward, consolidate and manage rental housing with a long-term perspective. Over the last 26 years, that approach, steady growth, disciplined decision-making and taking care of both people and the properties has served us well. That philosophy continues to guide us today. We remain grounded, prudent and focused on the fundamentals even as we navigate market cycles and regulatory changes. Our focus has and always will be on doing the right thing for the long term. I will now ask Dale to come up and she will go through our financial highlights and performance of the year -- of last year in Q1 '26. Thank you.

Hi, everyone. I'm pleased to be here today to discuss Killam's operations and financial results. As Phil mentioned, this last year was a big one for us, celebrating 25 years. It was near 2000 that Killam was incorporated with a vision to build and create a public company focused on consolidating apartments in Atlantic, Canada. Fast forward to today, and Killam's portfolio has grown to $5.5 billion with properties across the country from Newfoundland to British Columbia. And our real estate portfolio has expanded significantly since these modest beginnings, not only geographically, but also in the range of buildings and rental offerings we provide. We have brand-new buildings with extensive amenities, and we also operate well-maintained affordable units. This diversity has helped us remain resilient through changing market conditions and shifting cycles in the Canadian multifamily housing market. In 2025, we saw a return towards more normalized conditions in the multifamily sector. With changes in immigration, we saw population growth moderate, and we saw asking rents decline from the highs we've seen in 2023 and 2024. Even against that backdrop, Killam continued to deliver strong operating and financial results. In 2025, we achieved same-property revenue growth of 5.5%. Same-property NOI was up 6.1% and funds from operations grew by 4.2%. We released our Q1 results last night, and I'm pleased to report that we delivered a very solid start to the year. We reported net operating income growth of 3.9% and adjusted funds from operations per unit were up 4.3%. These results were driven by same-property apartment revenue up 3.6% and healthy occupancy of 97%. With an affordable average rent of $1,616, Killam's portfolio is very well positioned to compete with new rental product coming into each of our core markets, supporting our continued ability to grow revenues. Occupancy has increased every month this year. Our leasing and property management teams are doing an excellent job adjusting rents and unit upgrade programs to respond to evolving market conditions. Following the leasing gains we've achieved so far and with fewer vacancies, we are now beginning to move market rents up strategically. After 2 years of declining and then flat market rents, it's encouraging to see market rents start to tick up in the right direction. Overall, the mark-to-market spread in our portfolio sits at 10%, up from 9% at year-end 2025. This reflects the difference between the current rents we have in place and how much we would be able to rent those units for if they were re-leased today. This healthy spread provides a clear runway for continued growth for rental rates over the future. With this positive momentum, I'm pleased to report that we've increased our same-property operating revenue targets for this year to up -- [indiscernible] exceed 3.5%. They were originally set at 3% as a base. And we've also increased our same-property operating targets for the year. Beyond pricing and leasing execution, Killam stands out as a quality landlord in Canada. We continue to invest in environmental and energy efficiency upgrades across our portfolio, investments that support long-term resilience, help mitigate rising operating costs and preserve the quality and durability of our assets. This reflects responsible capital investment and long-term asset stewardship. From the beginning, as Phil mentioned, Killam is focused on delivering quality service to residents and investing in its communities and its properties, recognizing that both are essential to long-term success, and that does remain true today. I'm very proud to be part of an organization that invests meaningful in its people, its properties and the communities it serves. This commitment is reflected in our strong resident satisfaction results and continued demand for our apartments. Killam's remained disciplined and consistent in its strategy to drive value for unitholders. We're focused on increasing earnings from our existing portfolio, expanding and diversifying through accretive acquisitions and the disposition of noncore assets and developing high-quality properties in our core markets. While this long-term strategy remains intact, our focus on value creation in the year ahead will be centered on unit buybacks through our normal course issuer bid. Today's unit price does not reflect the underlying value of our properties or our operating platform. This disconnect between public apartment REIT unit prices and the underlying portfolio value persists across the Canadian apartment REIT market. As market conditions normalize and we see Killam units trade more in line with underlying portfolio value, we expect [indiscernible] the portfolio. In March, we increased our property disposition target for the year to $150 million compared to our original target of up to $50 million. This reflects active deals underway with a focus on our manufactured home community portfolio. We have seen tremendous growth in the value of our MHC portfolio through Killam's history and the ability to crystallize the value allows Killam to further sharpen our focus on apartments and create value for unitholders. Killam has been developing its own properties since 2010 and has completed over 20 developments. Our most recently completed project is Brightwood in Waterloo, Ontario. This wood frame development was completed in an impressive 16 months, which is still hard to believe, ahead of schedule and under budget. We welcomed Brightwood's first residents only a week ago, and already the property is 23% leased. On the balance sheet side of things, our debt remains conservative with debt to total assets at 42%. We're very comfortable with our current debt levels, and we expect to operate in a range of 40% to 43% debt as a percentage of total assets going forward. This conservative leverage profile provides flexibility and helps mitigate the impact of higher interest rates. On the interest rate front, we have now had 4 years of absorbing higher interest rates on mortgage refinancing. 2026 is expected to be our last year of significant interest rate headwinds. Our debt ladder in 2027 and beyond shows maturing rates not far from today's levels. Looking out to 2028 and 2029, we have the potential to refinance at lower rates. As interest rate pressures ease, you can expect more of our growth from our net operating income to flow through to our funds from operation. Overall, we are optimistic as we look ahead. Over the last 25 years, we have assembled a truly irreplaceable portfolio that is well positioned to outperform, supported by a resilient operating platform and a disciplined approach to capital allocation. We have an exceptional team across the company that delivers strong service to residents, act with integrity and build communities in every one of our properties. We look forward to providing updates on Killam's progress over the coming quarters.

Thank you, Dale. I want to thank our employees, our trustees, unitholders for their continued engagement and commitment to Killam. I will now open up the floor for questions if you have any. And I'll basically say this is the end of the meeting, but we'll be around for follow-up and any questions that you can think of in the next little while. Thank you very much.

[indiscernible] rural areas, suburban areas that we need [indiscernible]

I think the -- well, the answer is we're in 16 unique markets. And inside those markets, they are downtown urban cores and sometimes they're actually out sort of in suburbia. But over the last 4 or 5 years, we have focused our portfolio and future acquisitions and developments in the larger urban areas. And so for instance, here in Atlantic Canada, it's 3 cities in New Brunswick, St. John's, Newfoundland and Halifax, and that's it. And then in Ontario, the 4 big ones that we're in, which is Toronto, which is gigantic, Kitchener, Waterloo, London and Ottawa, the 2 cities in Alberta and then Vancouver Island. Super. Thank you.