Killam Apartment REIT : Q1 2024 Management's Discussion and Analysis

Q1-2024 Management's Discussion and Analysis

Dollar amounts in thousands of Canadian dollars (except as noted)

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Q1-2024 Management's Discussion and Analysis

Dollar amounts in thousands of Canadian dollars (except as noted)

PART I

Business Overview and Strategy

Killam Apartment REIT ("Killam," the "Trust," or the "REIT"), based in Halifax, Nova Scotia (NS), is a Canadian multi-residential property owner, owning, operating, managing and developing a $5.2 billion portfolio of apartments, manufactured home communities (MHCs) and commercial properties across seven provinces. Killam was founded in 2000 to create value through the consolidation of apartments in Atlantic Canada and MHCs across Canada. Killam entered the Ontario (ON) apartment market in 2010, the Alberta (AB) apartment market in 2014, and the British Columbia (BC) apartment market in 2020. Killam broke ground on its first development in 2010 and has completed 18 projects to date, with projects in Waterloo, ON, and Halifax, NS, currently under construction.

Killam's strategy to drive value and profitability focuses on three priorities:

1. Increase earnings from the existing portfolio;
2. Expand the portfolio and diversify geographically through accretive acquisitions and dispositions, targeting newer properties; and
3. Develop high-quality properties in its core markets.

The apartment business is Killam's largest segment and accounted for 90.2% of Killam's net operating income (NOI) for the three months ended March 31, 2024. As at March 31, 2024, Killam's apartment portfolio consisted of 18,885 units, including 1,343 units jointly owned with institutional partners. Killam's 221 apartment properties are located in Atlantic Canada's six largest urban centres (Halifax, Moncton, Saint John, Fredericton, Charlottetown and St. John's), Ontario (Ottawa, London, Guelph and Kitchener-Waterloo-Cambridge-Greater Toronto Area (KWC-GTA)), Alberta (Edmonton and Calgary), and British Columbia (Greater Victoria and Courtenay). Killam is Atlantic Canada's largest owner of multi-residential apartments and plans to continue increasing its presence outside Atlantic Canada through acquisitions and developments; however, it will continue to invest strategically in Atlantic Canada to maintain its market presence.

In addition, Killam owns 5,975 sites in 40 MHCs, also known as land-lease communities or trailer parks, in Ontario and Atlantic Canada. Killam owns the land and infrastructure supporting these communities and leases sites to tenants who own their own homes and pay Killam site rent. The MHC portfolio accounted for 4.1% of Killam's NOI for the three months ended March 31, 2024. Killam also owns 973,942 square feet (SF) of stand-alone commercial space that accounted for 5.7% of Killam's NOI for the three months ended March 31, 2024.

Basis of Presentation

The following Management's Discussion and Analysis (MD&A) has been prepared by Management and focuses on key statistics from the annual consolidated financial statements, including the notes thereto, and pertains to known risks and uncertainties. This MD&A should be read in conjunction with the Trust's audited consolidated financial statements for the years ended December 31, 2023 and 2022, and in conjunction with the Trust's unaudited condensed consolidated interim financial statements for the three months ended March 31, 2024 and 2023, which have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). These documents, along with Killam's 2023 Annual Information Form (AIF), are available on SEDAR+ at www.sedarplus.ca.

The discussions in this MD&A are based on information available as at May 7, 2024. This MD&A has been reviewed and approved by Management and the REIT's Board of Trustees.

Declaration of Trust

Killam's investment guidelines and operating policies are set out in its Amended and Restated Declaration of Trust (DOT) dated November 27, 2015, which is available on SEDAR+ at www.sedarplus.ca. A summary of the guidelines and policies is as follows:

Investment Guidelines

• The Trust will acquire, hold, develop, maintain, improve, lease or manage income-producing real estate properties;
• Investments in joint ventures, partnerships (general or limited) and limited liability companies are permitted;
• Investments in land for development that will be capital property for Killam are permitted; and
• Investments that would disqualify Killam as a "mutual fund trust" or a "unit trust" as defined within the Income Tax Act (Canada) (the "Tax Act") are prohibited.

Operating Policies

• Overall indebtedness is not to exceed 70% of Gross Book Value, as defined by the DOT;
• Guarantees of indebtedness that would disqualify Killam as a "mutual fund trust" or a "unit trust" as defined within the Tax Act are prohibited; and
• Killam must maintain property insurance coverage in respect of potential liabilities of the Trust.

As at March 31, 2024, Killam was in compliance with all investment guidelines and operating policies.

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Q1-2024 Management's Discussion and Analysis

Dollar amounts in thousands of Canadian dollars (except as noted)

Forward-Looking Statements Disclaimer

Certain statements contained in this MD&A may contain forward-looking statements and forward-looking information (collectively, "forward-looking statements"), including within the meaning of applicable securities law.

In some cases, forward-looking statements can be identified by the use of words such as "may," "will," "should," "expect," "plan," "anticipate," "believe," "estimate," "potential," "continue," "target," "committed," "priority," "remain," "strategy," or the negative of these terms or other comparable terminology, and by discussions of strategies that involve risks and uncertainties.

Such forward-looking statements contained in this MD&A may include, among other things, statements regarding: Killam's expectations for market demand, rent growth, operating costs, occupancy levels, demand, and rental incentives; the effect of government-imposed rental rate restrictions; Killam's strategy and priorities, including increasing earnings from Killam's existing portfolio, expanding Killam's portfolio through acquisitions and capital recycling, developing high-quality properties in core markets and diversifying geographically through accretive acquisitions; top-line growth driving same property NOI growth; Killam's increased presence outside of, and maintained market presence in, Atlantic Canada through acquisitions and development; Killam's development pipeline and the qualities thereof; the amount and locations of future acquisitions; Killam's property developments, including cost and timing of completion thereof; short- and longer-term targets relating to same property NOI growth, capital recycling, dispositions, portfolio growth, geographic diversification and NOI generated outside of Atlantic Canada, development of high-quality properties, strengthening Killam's balance sheet and debt maintenance or reductions, investments in sustainability, return on investment (ROI) and affordable housing targets, and the factors that may affect the achievement of such targets; asset dispositions, including of capital and carbon intensive properties and the use of proceeds therefrom and the timing thereof, including debt reduction and unitholder returns; Killam's ability to mitigate cost increases and property taxes; maintenance and operating costs; the effect of completed developments on Killam's business, including funds from operations (FFO) per unit; the diversity of Killam's tenant base and its impact on stable occupancy; increasing the percentage of Killam's apartment mortgages with CMHC- insured debt; the expansion and optimization of Killam's repositioning program, the units eligible therefor and expected revenues generated thereunder; anticipated interest rates and the effects thereof; Killam's ability to mitigate interest rate risk; reduced debt levels and long-term debt reduction targets, including reducing variable rate debt and the related sources of funds; Killam's commitment to risk management and evolving its risk management program; the continued monitoring of the acquisition market and identification of capitalization rate (cap rate) changes; commodity prices and the impacts thereof on Killam's operating costs; seasonal revenue; the impact of efficiency initiatives on Killam's operating costs and NOI growth; credit availability; the effect of inflation on financing costs, including increased interest expenses; the pace and scope of future acquisitions, construction, development and renovation, renewals and leasing; the estimated population, migration, demographic, economic and other changes in key markets and the related effects on Killam's business; housing supply in Canada; the GDP growth across the country; the sufficiency of Killam's liquidity and capital resources, including of mortgage refinancing and construction loans to fund value- enhancing capex, principal repayments and developments; refinancing opportunities and the timing thereof; the availability and sources of capital to fund further acquisitions and investments in Killam's business; replacing construction financing with permanent mortgage financing; the impact of maintenance capex and value-enhancing upgrades; capital investment and the amount and timing thereof; annual investments in MHC sites; Killam's normal course issuer bid (NCIB) program and share purchases thereunder; the required expenditures to comply with environmental regulations; expiration of leases and the effect thereof on Killam's business; future distributions to unitholders and the amount and timing thereof; Killam's commitment to environmental, social and governance (ESG); investment in ESG initiatives and technology and their impact on Killam's energy consumption and costs and carbon footprint; the expected annual energy production and emissions reductions from Killam's photovoltaic (PV) solar arrays; augmenting Killam's sustainability programs and policies and Killam's actions thereunder; reducing Killam's impact on the environment; the installation of electric vehicle (EV) charging stations and other energy-related projects across Killam's portfolio; increasing climate change initiatives and reporting; and the impact of ESG practices on maximizing unitholder value.

Readers should be aware that these forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those anticipated or implied, or those suggested by any forward- looking statements, including: the effects and duration of local, international or global events, and any government responses thereto; national and regional economic conditions (including rising interest rates and inflation); the availability of capital to fund further investments in Killam's business and the risks, uncertainties and other factors found under the "Risk Management" section of Killam's MD&A for the year ended December 31, 2023, and under the "Risk Factors" section of Killam's most recent AIF, and identified in other documents Killam files from time to time with securities regulatory authorities in Canada, available on SEDAR+ at www.sedarplus.ca. Given these uncertainties, readers are cautioned not to place undue reliance on any forward-looking statements contained, or incorporated by reference, in this MD&A.

By their nature, forward-looking statements involve numerous assumptions, inherent risks and uncertainties, both general and specific, that contribute to the possibility that the predictions, forecasts, projections and various future events contained therein may not occur. Although 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.

While Killam anticipates that subsequent events and developments may cause this view to change, Killam does not intend to update or revise any forward-looking statement, whether as a result of new information, future events, circumstances, or such other factors that affect this information, except as required by applicable law. The forward-looking statements in this document are provided for the limited purpose of enabling current and potential investors to evaluate an investment in Killam. Readers are cautioned that such statements may not be appropriate and should not be used for any other purpose.

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Q1-2024 Management's Discussion and Analysis

Dollar amounts in thousands of Canadian dollars (except as noted)

Non-IFRS Financial Measures

Management believes the following non-IFRS financial measures, ratios and supplementary information are relevant measures of the ability of Killam to earn revenue and to evaluate Killam's financial performance. Non-IFRS financial measures should not be construed as alternatives to net income or cash flow from operating activities determined in accordance with IFRS, as indicators of Killam's performance or the sustainability of Killam's distributions. These measures do not have standardized meanings under IFRS and, therefore, may not be comparable to similarly titled measures presented by other publicly traded organizations.

Non-IFRS Financial Measures

• FFO is a non-IFRS financial measure of operating performance widely used by the Canadian real estate industry based on the definition set forth by REALPAC. FFO, and applicable per unit amounts, are calculated by Killam as net income adjusted for fair value gains (losses), interest expense related to Exchangeable Units, gains (losses) on disposition, deferred tax expense, unrealized gains (losses) on derivative liability, internal commercial leasing costs, depreciation on an owner-occupied building, interest expense related to lease liabilities, and non-controlling interest. FFO is calculated in accordance with the REALPAC definition. A reconciliation between net income and FFO is included on page 22.
• Adjusted funds from operations (AFFO) is a non-IFRS financial measure of operating performance widely used by the Canadian real estate industry based on the definition set forth by REALPAC. AFFO, and applicable per unit amounts and payout ratios, are calculated by Killam as FFO less an allowance for maintenance capital expenditures ("capex") (a three-year rolling historical average capital investment to maintain and sustain Killam's properties), commercial leasing costs and straight-line commercial rents. AFFO is calculated in accordance with the REALPAC definition. Management considers AFFO an earnings metric. A reconciliation from FFO to AFFO is included on page 23.
• Adjusted cash flow from operations (ACFO) is a non-IFRS financial measure of operating performance widely used by the Canadian real estate industry based on the definition set forth by REALPAC. ACFO is calculated by Killam as cash flow provided by operating activities with adjustments for changes in working capital that are not indicative of sustainable cash available for distribution, maintenance capital expenditures, commercial leasing costs, amortization of deferred financing costs, interest expense related to lease liabilities and non-controlling interest. Management considers ACFO a measure of sustainable cash flow. A reconciliation from cash provided by operating activities to ACFO is included on page 24. ACFO is calculated in accordance with the REALPAC definition.
• Adjusted earnings before interest, tax, depreciation and amortization ("adjusted EBITDA") is calculated by Killam as net income before fair value adjustments, gains (losses) on disposition, income taxes, interest, depreciation and amortization. A reconciliation is included on page 26.
• Normalized adjusted EBITDA is calculated by Killam as adjusted EBITDA that has been normalized for a full year of stabilized earnings from recently completed acquisitions and developments, on a forward-looking basis. A reconciliation is included on page 26.
• Net debt is a non-IFRS financial measure used by Management in the computation of debt to normalized adjusted EBITDA. Net debt is calculated as the sum of mortgages and loans payable, credit facilities and construction loans (total debt) reduced by the cash balances at the end of the period. The most directly comparable IFRS measure to net debt is debt.

Non-IFRS Ratios

• Interest coverage is calculated by dividing adjusted EBITDA by mortgage, loan and construction loan interest and interest on credit facilities. The calculation is included on page 26.
• Debt service coverage is calculated by dividing adjusted EBITDA by mortgage loan and construction loan interest, interest on credit facilities and principal mortgage repayments. The calculation is included on page 26.
• Per unit calculations are calculated using the applicable non-IFRS financial measures noted above, i.e., FFO, AFFO and/or ACFO, divided by the diluted number of units outstanding at the end of the relevant period.
• Payout ratios are calculated using the distribution rate for the period divided by the applicable per unit amount, i.e., AFFO and/or ACFO.
• Debt to normalized adjusted EBITDA is calculated by dividing net debt by normalized adjusted EBITDA. The calculation is included on page 26.

Supplementary Financial Measures

• Same property NOI is a supplementary financial measure defined as NOI for stabilized properties that Killam has owned for equivalent periods in 2024 and 2023. Same property results represent 95.7% of the fair value of Killam's investment property portfolio as at March 31, 2024. Excluded from same property results in 2024 are acquisitions, dispositions and developments completed in 2023 and 2024.
• Same property average rent is calculated by taking a weighted average of the total residential rent for the last month of the reporting period, divided by the relevant number of the units per region for stabilized properties that Killam has owned for equivalent periods in 2024 and 2023. For total residential rents, rents for occupied units are based on contracted rent, and rents for vacant units are based on estimated market rents if the units were occupied.

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Q1-2024 Management's Discussion and Analysis

Dollar amounts in thousands of Canadian dollars (except as noted)

Capital Management Financial Measure

• Total debt as a percentage of total assets is a capital management financial measure and is calculated by dividing total debt by total assets, excluding right-of-use assets. This measure is reconciled in note 22 of the condensed consolidated interim financial statements.

PART II

Key Performance Indicators

To assist Management and investors in monitoring Killam's achievement of its objectives, Killam utilizes a number of key performance indicators to measure the success of its operating and financial performance:

1. FFO per unit - A standard measure of earnings for real estate entities. Management is focused on growing FFO per unit.
2. AFFO per unit - A standard measure of earnings for real estate entities. Management is focused on growing AFFO per unit.
3. Payout Ratio - Killam monitors its FFO, AFFO and ACFO payout ratios and targets lower payout ratios. The ACFO payout ratio is a measure to assess the sustainability of distributions. The FFO and AFFO payout ratios are used as supplementary measures. Although Killam expects to sustain and grow distributions, the amount of distributions will depend on debt repayments and refinancings, capital investments, and other factors that may be beyond the control of the REIT.
4. Same Property NOI - This measure considers Killam's ability to increase its same property NOI, removing the impact of recent acquisitions, dispositions and developments.
5. Occupancy - Management is focused on maximizing occupancy, while also managing the impact of higher rental rates. This measure is a percentage based on gross potential residential rent less dollars of lost rent from vacancy, divided by gross potential residential rent.
6. Rental Increases - Management expects to increase average annual rental rates and tracks average annual rate increases.
7. Total Debt as a Percentage of Total Assets - Killam's primary measure of its leverage is total debt as a percentage of total assets. Total debt as a percentage of total assets is calculated by dividing total interest-bearing debt by total assets, excluding right-of-use assets. Killam's DOT operating policies stipulate that overall indebtedness is not to exceed 70% of Gross Book Value.
8. Weighted Average Interest Rate of Mortgage Debt and Total Debt - Killam monitors the weighted average cost of its mortgage and total debt.
9. Weighted Average Years to Debt Maturity - Management monitors the weighted average number of years to maturity on its debt.
10. Debt to Normalized Adjusted EBITDA - A common measure of leverage used by lenders, this measure considers Killam's financial health and liquidity. In normalizing recently completed acquisitions and developments, Killam uses a forward-looking full year of stabilized earnings. Generally, the lower the debt to normalized adjusted EBITDA ratio, the lower the credit risk.
11. Debt Service Coverage - A common measure of credit risk used by lenders, this measure considers Killam's ability to pay both interest and principal on outstanding debt. Generally, the higher the debt service coverage ratio, the lower the credit risk.
12. Interest Coverage - A common measure of credit risk used by lenders, this measure considers Killam's ability to pay interest on outstanding debt. Generally, the higher the interest coverage ratio, the lower the credit risk.

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Q1-2024 Management's Discussion and Analysis

Dollar amounts in thousands of Canadian dollars (except as noted)

Financial and Operational Highlights

The following table presents a summary of Killam's key IFRS and non-IFRS financial and operational performance measures:

Three months ended March 31,

1. Change expressed as a percentage, basis points (bps) or years.
2. FFO, AFFO, AFFO payout ratio, debt to normalized EBITDA ratio, debt service coverage ratio, interest coverage ratio and same property NOI are not defined by IFRS, do not have standard meanings and may not be comparable with other industries or entities (see "Non-IFRS Financial Measures").
3. The maintenance capital expenditures used to calculate AFFO and AFFO payout ratio for the three months ended March 31, 2023, were updated to reflect the maintenance capex reserve of $1,025 per apartment unit, $300 per MHC site and $1.00 per SF for commercial properties that were used in the calculation for the 12 months ended December 31, 2023.
4. Year-over-year,as at March 31.

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Q1-2024 Management's Discussion and Analysis

Dollar amounts in thousands of Canadian dollars (except as noted)

Summary of Q1-2024 Results and Operations

Same Property NOI Growth of 10.3% Drives Margin Expansion

Killam achieved same property NOI growth of 10.3% and an operating margin increase of 250 bps during the quarter. The gains were driven by a 5.9% increase in same property revenue and a 0.7% reduction in same property operating expenses. Revenue growth is attributed to a 5.8% increase in apartment rental rates year-over-year and a 51% reduction in rental incentives. Killam expects its same property weighted average rental rate increase to trend higher throughout the remainder of 2024.

The 0.7% reduction in total same property operating expenses is attributable to lower natural gas prices in Q1-2024, resulting in a 10.0% decrease in utility and fuel expenses. This was partially offset by an increase in general operating expenses of 1.6% and a 6.0% increase in property tax expense due to higher property taxes across the portfolio and the absence of property tax subsidies in Prince Edward Island (which were offered in 2023 to compensate apartment owners for rent control restrictions).

Earned Net Income of $127.2 Million

During the quarter, Killam earned net income of $127.2 million, compared to $83.5 million in Q1-2023. The increase in net income is primarily attributable to fair value gains on investment properties of $116.3 million, compared to fair value gains of $66.8 million in Q1-2023. The fair value gains in Q1-2024 were a direct result of strong NOI growth and operating margin expansion.

Generated 4.0% of FFO per Unit Growth and 5.0% of AFFO per Unit Growth

Killam generated FFO per unit of $0.26 in Q1-2024, a 4.0% increase from $0.25 per unit in Q1-2023. AFFO per unit increased 5.0% to $0.21, compared to $0.20 in Q1-2023. The growth in FFO and AFFO was attributable to strong NOI growth from Killam's same property portfolio, partially offset by rising interest costs. FFO per unit growth in Q1-2024 was also partially offset by Killam's three new developments currently in lease-up. As lease-up continues, these projects are expected to contribute positively to earnings growth during the second half of the year and during the first half of 2025.

Development Program Continues to Support Growth in New High-Quality Assets

During Q1-2024, Killam broke ground on Eventide, an 8-storey,55-unit building located in Halifax, NS. The project is expected to be completed in the second half of 2026 and has a development budget of $33.6 million. Killam also continued to advance The Carrick, a 139-unit development in Waterloo, ON, during the quarter, with development-related costs funded through a fixed-rate CMHC construction and permanent loan. This project is expected to be completed in mid-2025. As noted above, lease-up of Killam's three new developments continued in Q1-2024. The Governor and Civic 66, which both reached substantial completion in summer 2023, are currently at 75% and 88% leased, up from 40% and 66% as at December 31, 2023. Nolan Hill Phase II, which reached substantial completion in December 2023, is currently at 45% leased, up from 19% at year-end 2023.

Higher Interest Rates on Refinancings

The maturity dates of Killam's mortgages are staggered to mitigate interest rate risk. During Q1-2024, Killam refinanced

$12.0 million of maturing mortgages with $17.4 million of new debt at a weighted average interest rate of 4.32%, 132 bps higher than the weighted average interest rate of the maturing debt. Overall, Killam's weighted average mortgage interest rate increased 1 bps at the end of Q1-2024 to 3.23%, compared to 3.22% as at December 31, 2023.

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Q1-2024 Management's Discussion and Analysis

Dollar amounts in thousands of Canadian dollars (except as noted)

Strategic Targets

Growth in Same Property NOI

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Q1-2024 Management's Discussion and Analysis

Dollar amounts in thousands of Canadian dollars (except as noted)

Outlook

Strong Top-Line Rent Growth with Wide Mark-to-Market Spreads

Apartment fundamentals are set to remain strong in the foreseeable future with a shortage of housing across Canada. Following an acceleration of market rental rates over the last two years, Killam's mark-to-market spread averages approximately 25%-30% across its portfolio. Management expects to capture a portion of these spreads as units turn. Turnover rates have decreased over the last five years, Killam's apartment turnover was 19% in 2023 and Management expects turnover to remain above 17% in 2024, with rents moving closer to market as units turn. Market rents are expected to grow, but should market rents stabilize, Killam's opportunity to capture the mark-to-market spread on unit turns is expected to remain well above historic norms for the next three to five years.

Management expects rent growth on lease renewals to outpace 2023 renewal spreads of 2.8%. Approximately 45% of Killam's apartment portfolio is not restricted by rent control, while the remainder will benefit from higher approved rent control guidelines in

2024. The table below summarizes rent control restrictions in place for 2024 and 2025:

Moderating Operating Expenses

Killam experienced operating expense savings in Q1-2024 due to lower natural gas costs, partially offset by higher property tax expenses. These savings are not expected to be realized through the remainder of 2024 given the seasonality of natural gas costs, with the majority of costs occurring in the winter heating season. Investments in energy and water-saving initiatives, and the continued introduction of building automation controls across Killam's portfolio, are expected to further improve efficiencies of building heating systems. With moderating inflation across the country, Killam anticipates total operating expenses to be generally in line with inflation in 2024.

NOI Growth Remains Strong

With both strong rent growth and moderating expenses, Killam expects higher NOI growth in 2024 than its historic norms. With NOI growth of 10.3% in the first quarter, supported by top-line rent growth and savings in natural gas costs, Management expects to exceed the 2024 target of 6.0% NOI growth in 2024. In addition to Killam's apartment portfolio, Killam's MHC and commercial portfolios are also expected to generate strong NOI growth in 2024. Demand for home sales is expected to further enhance earnings for the MHC portfolio.

Capital Recycling Program to Continue

Killam expects to complete the disposition of Woolwich, an 84-unit apartment building located in Guelph, ON, for a sale price of

$19.2 million in early May, which will bring the total dispositions completed in 2024 to $22 million. Killam's capital recycling program is focused on non-core and slower growth properties, or those that may be more capital or carbon intensive. Killam expects to complete a minimum of $50 million of dispositions in 2024, with proceeds used to reduce variable rate debt, fund future development activity, support strategic acquisitions and potentially buy back Trust Units through Killam's NCIB program.

Increased Borrowing Costs on Mortgage Renewals

Killam has $298.6 million of mortgages maturing in the remainder of 2024, with an average interest rate of 2.89%, and a further $333.4 million maturing in 2025, with an average interest rate of 2.10%. With current interest rates above these levels, Management anticipates higher rates on refinancings. Management has diversified Killam's mortgages to avoid dependence on any one lending institution and has staggered maturity dates to mitigate the impact of increased interest rates. Killam's mortgage maturity schedule is included on page 27. Killam expects to maintain low variable rate debt levels in 2024 and remains committed to maintaining debt as a percentage of total assets below 45%. Currently, 74.2% of Killam's mortgages are CMHC insured. Looking forward, Killam expects to increase the percentage of its mortgages that are CMHC insured.

Developments to Remain a Key Strategic Priority

With three new developments currently in the lease-up phase (including Nolan Hill Phase II), FFO results are expected to be enhanced during the second half of 2024 and the first half of 2025, as the total of 415 units ($211.0 million in value) reach full occupancy. Development remains an important component of Killam's growth strategy. Despite higher interest rates and recent cost escalation, with 13 years of development experience, Killam is confident in its ability to create value through its development platform. In addition to the development pipeline listed on page 33, Killam has identified a potential 4,000 units of additional density across various parcels of large-acreage properties in its portfolio. Killam is excited to move forward with planning these opportunities, delivering to much-needed housing units.

Continued Geographic Diversification

Management has been successful in expanding Killam's portfolio outside of Atlantic Canada since its first acquisition in Ontario in 2010. Management targets over 38% of 2024 earnings to be generated in Ontario, Alberta and British Columbia, with a longer-term target of over 45% by 2028. Killam expects to grow its presence in each of its core markets within those provinces through a combination of acquisitions and developments. Killam has extensive opportunity to develop in the growing Waterloo market in particular, with over 1,300 units of future development potential. Killam's geographic diversification strategy will be further enhanced by its capital recycling program in select regions of Atlantic Canada.

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Q1-2024 Management's Discussion and Analysis

Dollar amounts in thousands of Canadian dollars (except as noted)

PART III

Portfolio Summary

The following table summarizes Killam's apartment, MHC and commercial portfolios by market as at March 31, 2024: Apartment Portfolio

1. Unit count includes the total unit count of properties held through Killam's joint arrangements. Killam has a 50% ownership interest in apartment properties in Ontario, representing a proportionate ownership of 672 units of the 1,343 units in these properties. Killam manages the operations of all the co-owned apartment properties.
2. For the three months ended March 31, 2024.
3. Killam's New Brunswick and Ontario MHC communities include seasonal operations, which typically commence in mid-May and run through the end of October.
4. Killam has 187,617 SF of ancillary commercial space in various residential properties across the portfolio, which is included in apartment results.
5. Square footage represents 100% of the commercial property located in PEI.
6. Square footage includes Killam's 50% ownership interest in two office properties that are third-party managed.

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