Killam Apartment REIT has made its second disposition of a non-core apartment property in the past month, closing on the sale of 108-unit The James in Halifax for $33 million.
In March, Killam (KMP-UN-T) had also sold 266 Bronson Ave., a 43-unit apartment building in Ottawa, for $9.8 million.
CEO and president Philip Fraser said in the announcement Killam plans to reinvest the net proceeds of the two transactions, which total about $27 million for the REIT, mainly into developments and future acquisitions.
"We continue to explore accretive disposition opportunities as we make progress towards our strategic target of recycling over $100 million of non-core assets in 2023," Fraser said in a statement announcing the sale. "We currently have an additional $100 (to) $150 million of dispositions under contract at various stages of due diligence; however, no assurance can be given that such transactions will be completed.”
Killam REIT, founded in 2015 and based in Halifax, is an owner, operator and developer of apartments and manufactured home communities. Its portfolio is valued at approximately $4.8 billion.
The James, on 5620 South St., offers studio as well as one- and two-bedroom units.
Killam did not identify the purchaser.
Killam’s acquisitions and developments
The dispositions come as Killam continues to act on a strategy to diversify its portfolio geographically outside of Atlantic Canada, as well as developing new properties.
In the first half of 2022, Killam invested $118.6 million in acquisitions – acquiring a total of 338 apartment units and 99 manufactured housing community sites.
Of those, 91 per cent of the units are outside of Atlantic Canada, primarily in Ontario and B.C.
“Killam slowed acquisition activity during the second half of the year following rising interest rates and focused on maintaining capital flexibility," Fraser said in a statement on Killam’s year-end results.
On the development front, the REIT has a steady stream of projects.
“Developments remain an important part of our capital allocation strategy, and in 2022 we completed three developments in Ontario, adding $243 million of high-quality buildings to our portfolio,” Fraser said in the year-end report statement. “All of these properties are approaching, or at full occupancy.
"Additionally, we have three development projects underway which will contribute an additional 320 units to our portfolio.”
During 2022 Killam invested $63.2 million into its developments, including Latitude (208 units) and Luma (168 units) in Ottawa, two joint-venture projects with RioCan Living. The third project was The Kay, a 128-unit building located in Mississauga.
Killam expects the three properties to generate $6 million in NOI annually, once stabilized (at Killam's share).
Killam also has two active projects totalling 181 units which are expected to be completed in mid-2023, and another 139-unit project underway expected to be completed in 2024.