Killam Apartment Real Estate Investment Trust

Good morning, ladies and gentlemen, and welcome to the Killam Apartment Real Estate Investment Trust Fourth Quarter 2025 Financial Results Conference Call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on February 12, 2026. I would now like to turn the conference over to Mr. Philip Frazier, President and CEO. Please go ahead.

Thank you. Good morning, and thank you for joining Kellan Apartment REIT's fourth quarter and year-ending December 31st, 2025 conference call. I'm here today with Robert Richardson, Executive Vice President, Dale Noseworthy, Chief Financial Officer, and Aaron Cleveland, Senior Vice President of Finance. To accompany today's call, are available on the investor relations section of our website under events and presentations. I will now ask Erin to read our cautionary statement.

Thank you, Philip. This presentation may contain forward-looking statements with respect to Killam Apartment REIT and its operations, strategy, financial performance, conditions, or otherwise. The actual results and performance of Killam discussed here today could differ materially from those expressed or implied by such statements. Such statements involve numerous inherent risks and uncertainties, and although Killam 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. For further information about the inherent risks and uncertainties in respect to forward-looking statements, please refer to Killam's most recent annual information form and other securities regulatory filings found online on CDAR+. All forward-looking statements made today speak only as of the date which this presentation refers, and Killam does not intend to update or revise any such statement unless otherwise required by applicable securities law.

Thank you, Erin. We are very pleased with our strong financial and operating results for the fourth quarter and year ending December 31st, 2025. We achieved our 2025 strategic targets as shown on slide two. which included a 6.1% total same property NOI increase for the year. This growth was driven by 5.4% revenue growth in our same property apartment portfolio and a 7.8% same property revenue growth in our MHC portfolio. And finally, a 4.4% increase in our same property commercial portfolio. As market demand shifts, PILM is focused on occupancy, rental rates, and operating costs to achieve positive NOI growth. Our same-property apartment occupancy for 2025 was 97.3%, 30 basis points lower than last year. Average monthly rental rate in our same-property apartment portfolio increased 4.8% year-over-year. Balancing our occupancy levels with rent growth resulted and a strong 5.4% increase in the same property apartment revenue. Despite a 4.1% increase in operating costs, this top-line growth enabled us to realize a 40 basis point margin increase in our same property apartment portfolio. As we begin the new year, market rental rates will continue to stabilize in some markets, and we expect to produce solid results by capturing positive leasing spreads from the gap between in-place and market rents in 2026, with our target of both revenue and NOI increasing by at least 3% for our same property apartment portfolio. Dale will now take us through our financial results in more detail, followed by Robert, who will provide an update on our commercial segment. I will conclude with an update on our recent developments in our capital allocation strategy. I will now hand it over to Dale.

Thanks, Bill. Key highlights of Kiln's 2025 financial performance are presented on slide three. For the full year, net income totaled $29.4 million, a decrease of $638 million year over year. This decline was primarily driven by a $120.5 million fair value loss on our investment properties, reflecting higher cap rates in select markets and moderating market rents. This compares to $252 million in fair value gains in 2024. In addition, 2024 included a one-time deferred tax recovery of $279 million relating to the completion of the plan of arrangement. These factors more than offset strong underlining operating performance, including a $14.3 million increase in net operating income driven by same property growth, and contributions from developments completed in 2023 that are now fully stabilized. As a result, Kilham delivered solid growth in key performance metrics. FFO per unit increased 4.2% to $1.23, while AFFO per unit rose 5.1%. We were also pleased to see our AFFO payout ratio improve 69% from 71% in the prior year. Turning to slide four, our fourth quarter results remained strong. Same property NOI increased 4.5%, supported by revenue growth of 4.1% and expense growth of 3.4%. FFO was 30 cents per unit, representing a 3.4% increase over Q4 2024. Our performance in 2025 reflects the weighted average rental increase of 4.8% across the same property portfolio. With a healthy mark-to-market spread, we continue to achieve rent growth on both renewals and new leasing. As shown on slide five, rental rate growth moderated from the peak levels seen in 2024, consistent with broader trends across the Canadian apartment market in the last year. Our experience continues to demonstrate that competitively priced rents drive strong demand and leasing activity. Our teams remain focused on dynamically managing rent, occupancy, and incentives across our core markets to maximize revenue growth. We also saw a return to more typical leasing seasonality in the last year, with a slowdown in the winter. We have historically achieved peak occupancy in September. This pattern had largely disappeared between 2022 and 2024 due to elevated population growth. We'll be monitoring the upcoming spring and summer leasing season closely and look forward to providing further insight in future quarters. Looking ahead to 2026, we expect our Atlantic markets to continue to outperform, supported by attractive mark-to-market opportunities. As shown on slide six, the portfolio-wide mark-to-market spread is approximately 9%. We've seen a decline from the peak mark-to-market in 2024, which reflects a combination of moderation in asking rent and quarterly rent increases we have achieved. Halifax continues to present the greatest opportunity at 15%, followed by St. John's, Newfoundland, and St. John, New Brunswick. British Columbia is also positioned to perform well in 2026, supported by strong recent leasing activity, improving occupancy, and a 10% mark-to-market spread. Higher interest rates have been a headwind to earnings over the last four years. While refinancing remained a drag in 2025, the impact was less pronounced than in 2024, with financing costs increasing 5.9% year-over-year. We believe we are now past the most significant financing headwinds, as illustrated on our debt ladder on slide 7. Year-over-year, interest expense growth is expected to begin stabilizing as early as 2027, allowing a greater portion of NOIs to flow through to FFO. We've also continued to strengthen our debt profile, with CMHC insured mortgages representing 91% of total apartment mortgage debt at year end, up from 83% last year. At year end, debt as a percentage of total assets was 41.9%, shown on slide eight, reflecting the fair value loss recorded in Q4. Importantly, debt to normalized EBITDA improved to 9.66 times, demonstrating that earnings growth continues to outpace increases in leverage. We remain focused on further improving this metric in 2026. Looking forward, we're optimistic about our ability to grow NOI and FFO per unit. In addition to same property performance and easing interest expense pressure, we expect increasing contributions from our development pipeline. The CARIC is expected to contribute approximately $800,000 of year-over-year FFO growth now that it is nearing full lease-up. In addition, upon completion of lease-up, Brightwood and Eventide will generate additional FFO contributions. We continue to expect ASFO growth to outpace FFO growth as capital from asset dispositions is redeployed into newer, more efficient properties. I'll now turn the call over to Robert for operational highlights.

Thank you, Dale, and good morning, everyone. I'll address Killam's capital investment strategy, share with you the results of Killam's annual resident survey, and highlight Killam's commercial portfolio. Killam's maintenance capital investment totaled $82 million in 2025, down from $90 million in 2024, an $8 million year-over-year reduction. This decreased reflects several initiatives, including a portfolio-wide preventive maintenance program featuring energy-efficient upgrades, such as solar panels and building automation systems that enable remote monitoring and early detection of problem areas. Investment in 2062 reposition suites over the past five years, improving asset quality while delivering 15 to 20% returns. Continued focus on developing and acquiring newer assets. Based on 2026 forecasted NOI, 32% of Kiln's apartments were built within the past 10 years. The portfolio's average age is 29 years, which supports lower maintenance CapEx requirements and allows capital to be redirected to value-enhancing projects. To date, Kiln has built or under construction over 20 buildings totaling 2,363 suites. The strategic disposition of non-core capital-intensive assets also improves Kilham's working capital flexibility. Kilham's annual survey of residents is an important tool for Kilham as it provides insight into our residents' priorities for their unit and building. Based on this, we can make informed decisions. For more than 15 years, Kilham has engaged independent research firms to survey our residents. Narrative Research's 2025 resident survey reports the following on three key metrics. Resident satisfaction with condition of current apartment, 87% score. Professionalism of maintenance staff, 91.4%. Residents likelihood to recommend killing for friends and family, 87%. These results are consistent with prior years and are considered strong, particularly given current market uncertainty. Kiln's commercial portfolio was very busy in 2025. Our commercial team leased 56,000 square feet of vacancy at an average face rate of $20 per square foot net, and a net effective rate of $12 per square foot, allowing for cost of tenant inducements, fees, et cetera. As well, Kiln renewed 117,000 square feet at an average face rate of $20 per square foot, and delivered a weighted average increase on in-place rents of 15%. The owned commercial portfolio totals 1.2 million square feet and is 97% occupied. Approximately 200,000 square feet are ancillary or mixed-use retail within apartment properties, with financial results booked to the residential portfolio. The remaining 1 million square feet are concentrated in three primary assets. Brewery Market contains 143,000 square feet and is an historic Halifax property with a mix of retail and office tenants located on Lower Water Street, adjacent to Killam's 240 suite, the Alexander. And the governor with 12 luxury suites. The Brewery Market is 96.1% occupied. West Mound Place is a 305,000 square foot asset located in Waterloo on 18.1 acres. Acquired in 2018 for its location and multi-residential development potential, a testament to the location and quality of Kiln's new builds is the 130-suite property, the Carrick. It opened in June 2025 and is now 95% leased. The Westmount site can support an additional 750 to 1,000 suites, depending on market demand. Westmount Place is anchored by a 33,000-square-foot T&T supermarket, a 20,000-square-foot Michaels craft store, and a 197,000-square-foot four-story office building occupied by Sun Life paying $13.36 per square foot as rent. As many on this call would know, Sun Life will vacate March 31, 2026. We have identified the opportunity to relocate an existing retail tenant to the ground floor of the office building and have toured the site with and are pricing an offer for a highly regarded national retailer to take the dominant corner fronting West Mound Road. West Mound Place already has a roster of tenants that are medical related, including dentistry, optical, pharmacy, a podiatrist, and a chiropractor, and we plan to build on this cohort. Additional inquiries include Prudential, Fitness, Technology, and Insurance tenants. Retail rental rates are expected to be in the $20 to $25 per square foot range, and offices in the $15 to $20 per square foot range. Rolsey Crossing is an enclosed mall containing 419,000 square feet in Charlottetown. Kiln acquired full majority ownership in phases from 2019 to 2021, and that holds 75% alongside a 25% local JV partner. Since 2021, annual revenue has increased from 4.6 million to 6.8 million, a 48% increase, while NOI has grown from 3 million to 5.5 million, an 83% increase, representing a 12% return on investment. Kilham has added 51,000 square feet of leaseable area with another 15,000 square feet scheduled for occupancy this year, bringing a total of 434,000 square feet. Enhancements include a premier food court with all new fixtures, ample sunlight, and a cohort of food offerings for the whole family. Under construction presently is the new 12,000 square foot PEI patient medical center. By applying the same focused and value-driven approach that produced such strong results at Royalty Crossing, we are confident in our ability to transform Westmount Place and deliver attractive long-term returns for unit holders. I will now hand you back to Philip. Thank you, Robert.

During the fourth quarter, Killen completed the disposition of one small property in PEI. For the year, we completed the disposition of 23 properties totaling 1,139 units. and two parcels of land for a combined sale price of $148 million, with net cash proceeds of $87.8 million. Proceeds were used to fund $168 million of property acquisitions containing 416 units, which is shown on slide 12. The sale of these Atlantic Canadian properties aligned with Killam's strategy to optimize value from its portfolio and to increase geographical diversification outside the line of Canada. Our disposition target for 2026 is to recycle a minimal of $50 million in assets. These dispositions are in the early stages, and we will have more details by the time we release our Q1 results in May. The capital will be used to pay down our line of credit used for our NCIB program or for acquisitions in our key markets. Hillam invested $6.8 million in energy initiatives during 2025, including $2.1 million in Q4. At the end of 2025, our solar power production capacity was 3.66 megawatts per year, producing approximately 8.54% of our operationally controlled electricity. We have six new solar panel installations planned for 2026. five in Ontario, and one in Halifax. Half of these will be completed in 2026, and the other half will be in 2027. These investments represent a total production capacity of 1.15 megawatts, or an additional 2.5% of our operationally controlled electricity. Hillam continues to advance its development program in 2025. The Carrot, as shown in slide 14, opened on June 1, 2025, and is now 95% leased. Brightwood, the 128-unit development we started in January, is scheduled to be completed the first week of May 2026. Progress photos of the building are on slide 15. Leasing has started at this property, and we are currently 7% leased. As shown on slide 16, construction continues at the Eventide. the 55-unit building located in Halifax. And it is expected to be completed by Q4 of this year. Pre-leasing has started. Slide 17 shows recent pictures of the construction site at Nolan Hill Phase 3, our 296-unit JV development in Calgary that we have a 10% ownership interest. Completion is expected to be Q3 2027. In closing, 2025 was a strong year for Killam, highlighted by solid operating results. While we expect 2026 to deliver a more modest pace of growth, we believe it will be a positive year as we move beyond the peak of interest expense headwinds and start to reposition our Westbound commercial property. Looking further ahead into 2027, we see multiple areas for growth. Many of our key markets are positioned to benefit from increased federal defense spending and related economic activity. In Alberta and Newfoundland, the oil and gas industry will help support and grow the provincial economies. Also, as Canada works to reach 2% of GDP spending on defense, Victoria and especially Halifax will see large D&D investments in growth. A full list of the recent announcements is shown on slide 18. Our geographical diversification continues to demonstrate its value, and we believe the portfolio is exceptionally well positioned. To conclude, we are very pleased with our 2025 performance and remain committed to investing in high-quality assets in developments and to continue to execute our overall strategy and create value for all of our unit holders. I would like to thank our employees for their hard work and dedication. Thank you. I will now open up the call for questions.

And thank you. Ladies and gentlemen, we will now begin our question and answer session. Should you have a question, please press the star followed by the one on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the two. And if you're using a speakerphone, please lift the handset first before pressing any keys. And we have our first question from Mike Mercatus with BMO.

Thanks, operator. Good morning, Team Kiln. Bill, I don't think you mentioned it in your remarks, but maybe you could just give us a little bit of color on the recent acquisition that you announced. And specifically, I'm just curious on the cap rate of 5%, if that represents market, if it was off market, and just trying to Circle that and reconcile it with the weighted average cap that you guys use on your Halifax portfolio.

Yeah. Hi, Mike. It's Phil here. Yeah, thanks for the question. I mean, this is an asset that was built in 1973, so even when we started filming in 2002, it was one of almost the marquee sort of assets in the city. It was built by a local developer at the time, and he owned it right up until the day that we bought it from him. And he always knew that we were interested in it. And when it got time to sell it, he gave us a call. So it's totally off market. We like the building. It comes with 4.4 acre site, 108 units. It's made up of twos and threes. The two bedrooms are 1,250 square feet. The three bedrooms are 1,400 square feet. And the interesting thing was is that it is catered to a Older demographic, plus 55. Very little wear and tear on the building. Maintained at about the highest standard that we've ever seen it coming from a purchase. And we just know that because the building is fully electric, meaning it's heated by electric, and the size of the site, we'll be able over the next year or so to install solar panels. We're looking at it now on the roof, on the side. and into the parking lots, that we'll be able to reduce the operating costs down significantly over the next couple of years. And on a five cap, you look at it at $30 million, basically, you can figure out the NOI, but we can move up that sort of cap rate in the next couple of years, half of it on the operating side and half of it with just natural sort of increases in rates.

Okay. That's great. Thanks. I was just curious, you know, tying that in the acquisition market, if you could give us a sense of how you're seeing returns for acquisitions today versus developments. You know, I guess you started Nolan Hill, and that seems like it's going to be finished in Q3 of 27. So dovetailing that, do you guys plan to start any other projects in the near term?

Well, to answer the first part of your question, I mean, in terms of what's out there and what we're seeing, there are a few opportunities. I'm not saying that we're going to buy them, but really I think where pricing is, depending on the asset, some of the product is up around a 5% all-cash yield in other markets. There's opportunities in Alberta that you could buy between five and five and a quarter. So you know what? I mean, it's just a current reflection of where the market is. depending on the market you're in versus, again, these are one-off deals with relationships or whatever. On the development side, which I said it on the last conference call, the new developments, if we can get them out of the ground, and there's an if there because everything seems to be taking longer than our expectation, it would have to have all the current government-assisted funding to make these things work. And, again, the biggest part of it that makes them work is if you have an affordable component, then your average rent that you're asking from a lease-up point of view is lower than what is pure market, and that is the key today to get these things up and built, and then all the other sort of advantages from an interest rate or less costs on the CMHC financing.

Okay, got it. So it's achieving in excess of 5%, but with an affordable rent component. Got it. Okay. Just last one for me before I turn it back. Rob, you gave a little bit of color on progress at Westmount and the commercial backfill that has to happen there. I think it was maybe the last part of the call before you gave sort of a timeline of how you expected the lease up to occur and the NOI replacement to occur. I was just wondering if you could give us some updated thoughts on that.

Yes, so I would say to you that they may be pushed out a little bit. We've been working diligently for the last six months with our architects, the engineers, and taking a look at the work we want to do to reposition the building, and it'll probably take longer. We won't see any increase from the renovations until 2027, summer of 27. That's what it's looking like. So we have identified one of our tenants that can take up some more additional space, but there's other things that need to be done to the building that are a bit more structural, and so we need time to get that done.

Okay, so no replacement NOI until mid-27, if I heard you correctly. And then just on the total cost, has there been any change to the scope of expected capex?

Yeah, so there's another good number. We're working our way through it. It looks like it's going to be a total cost of $15 million, and see how that goes.

That's great. Thanks so much for the call. I'll turn it back. Okay. Thanks.

Thank you. Our next question is from Jonathan Kelcher with TD Collins. Please go ahead.

Thanks. Good morning. Just turning to your targets for 2026, Just on the revenue target of 3% plus for the apartment portfolio, can you give us a little bit of a breakdown between renewals versus turnover versus occupancy expectations? And then just, I guess, related to that, in the MD&A you talk about market rent, potentially seeing market rent growth in the second half of the year. Is any of that built into your rent growth assumptions?

When we look at that, you know, the revenue number, you're right, it is a mix. You know, overall, probably close to 4% revenue growth. In terms of turns and renewals, we do, you know, renewals is probably in the around the 3% range, maybe 3.5%, depending, and on the turns. Four to seven. I mean, it really just changes based on which units are turning every month. And, you know, we're watching it closely and it jumps around a bit. But averaging approximately 4%. And then we've got incentives, which, you know, incentives are likely to increase a little bit. What we are seeing is in many markets where incentives have been used, Regularly over the last year, they're actually moderating in terms of number of units that are having incentives.

What we're saying is maybe 80 basis points and 90 basis points on the incentive side. Yeah. So we're watching those closely per market, per building.

And then the other piece, of course, is vacancy. And so, you know, you would have seen Q4, we had a little bit of an uptick in vacancy, but that's you know, we're seeing good leasing momentum. So in the second half of the year, we could see some year-over-year improvement there. So it's, of course, all of those factors coming together. When we look at market rents increasing potentially in the second half of the year, I mean, as we see leasing momentum and we're having the discussions about, okay, well, we've only got a couple of leases, you know, units to lease, can we start moving those rents up? Those discussions are already starting and it's February. So Of course, spring and summer demand will be really important. But, you know, Newfoundland's one example that market rents have continued to move up. And even in cities like Halifax and across Atlantic and across the market, frankly, it really depends on the unit. And there's lots of demand for those affordable units. So we are looking asset by asset, market by market. But, you know, as we look to the spring leasing, we are feeling cautiously optimistic.

That's good. That's helpful. Thank you. And then secondly, on the outlook, and I didn't go back, but I guess I'd have to go back a bunch of years to find out, to find one where you didn't have a geographic diversification target. Can we take that to mean that you guys are generally happy with your geographic mix right now?

I say for 2026, 2027, yes, because again, Atlantic Canada, I think, is going to outperform the other parts of the country, and we see a lot of strength here. But over time, depending on what happens with the trade and all the uncertainty that's in other parts of the country, eventually Ontario will start to show some good results, and, you know, D.C. will start to pick up, and even Alberta. I mean, we still have a lot of faith in Alberta as well. But what we tried to highlight as well this year for this – this call was the strength in basically Newfoundland, New Brunswick, and especially Halifax with all the sort of planning and actual spending that's happening because of the ramp up in defense for the country.

Okay. That's helpful. And then just lastly on – you've already done the one acquisition, which was probably very opportunistic. Is – The $50 million in dispositions, should we think of that as a net number, or is it like you plan on selling about $50 million and you'll buy what you buy?

Oh, yeah. I mean, there's not a lot of sort of concentration on the acquisition side at this time. So, really, from a disposition point of view, we have a few deals early, early stages. I'll hopefully be able to give a lot more color in May. But, again, these ones are – For us, they're fairly good size, but there's, again, right now there's no certainty. So I'm sure that we can hit the $50 million this year.

Okay. I'll turn it back. Thank you.

Thank you.

And we have our next question from Kyle Stanley with Desjardins.

Thanks. Good morning, everyone. Maybe just sticking with the dispositions for a second, you know, $50 million is a little bit below what you've done in the last couple of years. Is that a reflection of you just being happier with where you are on the capital recycling front, or has something changed in the market where you just see transaction activity slowing a bit?

It's definitely happy with the assets we have, and it's taken longer to go through our portfolio and make that decision to sell. So, you know, you look at some of these assets, And I just think that from the top to the bottom, we've got a really good portfolio these days. So it is – it's hard to find the next few.

Okay. No, that makes sense. As we think about in-suite CapEx, I mean, obviously, with a competitive leasing environment, are you having to invest more on suite turn today to just ensure that units remain competitive, or – I guess maybe looking from another way, are you seeing an opportunity to invest more in suites today and that will allow for maybe greater rent or, you know, quicker lease up?

I almost think it's a little bit of the opposite right now because we have continued to invest throughout the piece on those, you know, on lease terms in terms of our repositionings. So now we're really looking to say, when we're doing those more extensive repositionings, we have to make sure that that incremental rent we can get justifies the capital. And if there's markets where we're competing with new supply, we might not be able to get the same high, high rent we could get a couple of years ago. So I would say overall, we'll likely see a slight decrease, but it reflects that we have continued to invest throughout the piece and our units are in good shape.

I mean, another way to look at that, Kyle, is that we still have, if our average rent is $1,600 across the country, there's at least 60% of all our units are below that number. And those are the ones today that are most sought after, the affordable ones. So sometimes, even if somebody moves, you've got to go in and look at the current condition of that unit, and it might be a smaller, quicker sort of renovation getting it ready for the next tenant. And we don't want to price change. those units to the point where they're going to take a long time or longer to lease than they could be in this market. So the lower price point is what's being sought after right across the country.

And we're looking, you know, opportunity building by building, unit by unit. What makes the most sense?

As well, we've done over 2,000 repositionings in the last five years. So those assets, when they come up for renewal, don't really need that much work. And we're seeing it.

Okay, no, that's very helpful and definitely encouraging in terms of your CapEx outlook for the year ahead. Just lastly, maybe sticking with the affordability angle, you know, clearly the affordability in Halifax is probably a reason why you've been able to maintain such high occupancy. When you are seeing tenants move out of your assets in Halifax, what's the reason being given if, for the most part, you know, that is probably one of the most affordable options in the market?

It's the same reasons like pre-COVID. I mean, it's household formation, moving away, going into the next level of care, whether it's a nursing home or somewhere in between. I mean, they're all just the same reasons. I mean, people – and now, compared to even two or three years ago, with a little bit more vacancy in the whole marketplace right across the country, including Halifax, people have choices. It's a more balanced market. So we're almost – we go back – we are reverting back to the norms pre-COVID.

Okay. Nope, that's very helpful. I will turn it back. Thank you. Thank you.

We have our next question from Jimmy Shan with RBC Capital Markets.

Thank you. Just in terms of the defense spending, are you actually starting to see the impact of that today? It sounded like when you were talking about it, it's more of a 2027 event. I'm just curious what you're seeing on the ground.

I think when you look around this town and some of these projects have actually started, I mean, if you can't and if you drive by, maybe there's no activity on the actual site, but all the engineering work, all the pre-sorted construction work is being done. And even if you start to go around and look at the companies that have taken a position or opened up an office in Halifax related to defense, there's a lot of new companies moving in.

What about in terms of the Department of National Defense? I think part of the budget was to increase recruitment and pay increases. Is that already starting to happen?

22% increase in pay for all military. That happened a few months ago. And I saw something in the news the other day that January was one of the best recruiting months in the last number of years.

Okay. Okay. And then in terms of the supply in Halifax, do you know kind of where we are in terms of the delivery cycle? When do you expect that we'll be sort of past the peak in delivery?

Well, I believe that whatever is coming out of the ground now, which will get delivered in three or four years, is probably the peak because, again, from a pure – just all the local developers, I mean, in the pricing. I just think they're sort of – we're coming to the end of the big cycle, and now it's about absorption over time. And, again, from, you know, trying to anticipate this question from somebody here today, you also got to look at it about – or Halifax, what submarkets do you have your biggest nodes of existing apartments, and what's actually being built around that? And that really can sort of – you can almost kind of predict a little bit better – when you think about that, about how we're going to be impacted with all this new supply. So I look at it, I think we're very defensive over the next three to four years, for sure. Okay.

Thanks. Thank you. As a reminder, if you have a question, please press star one. Our next question is from Saran Srinivas with ATB Capital Markets.

Thank you, operator. So going back to your comment on Halifax, how should we be tying that to the same property rent growth metrics? So over the last couple of, obviously, eight quarters, Halifax has been leading every other city. But over the last couple of quarters, we've seen that trend down a bit. So how should we marry that with your comment on the strength in the market there?

I think Halifax will continue to do well. But as you said, it's been trending down, as has the whole country. So I think that, you know, it will follow that same trend as back to the norm, except I do think with a stronger market to market and with the 5% on renewal, Halifax should be a top performer in 26. And, yeah, and likely the 27th as well when we look at those, you know, same, I expect that we'll be in a similar situation in 27th.

Perfect. Thank you. I'll turn it back.

Thank you. Our next question is from Matt Kornack with National Bank Capital Market.

Hey, good morning, guys. Just one quick one for me. Notwithstanding a more competitive market, your turnover has been kind of, at least for Q4, it was flat year over year, percentage-wise. Is that a function of you trying to keep tenants in place, or is it that they're just isn't an option for these people to go to. It would have thought with a more competitive market that turnover would have maybe increased.

Well, I think it did from 20 to 22 for the year.

Yes. I think it was up slightly to Q4. I think it was pretty flat to Q4. Yeah.

There is definitely a focus, though, on trying to maintain the tenants that we have today as well.

But we had a pretty good leasing month too in December that kind of offset some of that.

We started that in September. We know what happens in a lot of part of the year, and we really did work hard, and we did it the year before, to make sure that we can capture as much of our existing base and not have them move elsewhere.

Okay. And then maybe as a follow-up, are we starting to kind of fully work through – be above market or potentially above market rents that would have been marked, call it a year ago? Or is there still more of that kind of benefit turning in a higher propensity within your portfolio at this point?

Yeah, I think we have. I mean, we're looking at some of those buildings that were leased up in the last couple of years where market rents were You know, units were leased at the peak, and we were looking at a couple that were above 50% turn in this last year. So, when you look year over year, yeah, some of them are getting flatter. Yes.

And then third last question. Can you give a sense on the Alexander? I guess that would be directly impacted by a new supplier competing with new supply, just how that property is performing at this point.

Yeah, I think we're seeing a little bit more turnover, but there's still lots of opportunity in that building because it was leased so long ago. There's a lot of market or rent that is still well below market in that particular building.

And it's centrally located. And a beautiful product. Okay, thanks.

Thank you. Our next question is from Dean Wilkinson with CIBC.

Thank you. Morning, everyone. Phil, just as you look across your opportunity set and you'll have money from recycling, it would appear to me that you can develop You can buy assets, you can pay down debt, but the best deal in town might be buying back your own units at an implied cap rate north of six. What are your thoughts on just the priority of how you're looking at that? And, you know, you were active in Q4. Could we expect some more of that?

I would, yes. The answer is to expect more on the NCID. I mean, it is between that and paying down debt would be the first bucket of priorities.

Okay. That's it. That's easy. Thanks.

Thank you. And thank you. There are no further questions at this time. I will now turn the call over to Mr. Philip Frazier for closing remarks.

Thank you. This concludes Kellum's Q4 2025 analyst call. Thank you for listening and participating today. We look forward to reporting Q1 2026 financial results on May the 7th. Thank you.

Ladies and gentlemen, this concludes today's conference call. We thank you for participating. You may now disconnect.