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Operator: Good morning, ladies and gentlemen, and welcome to the Killam Apartment Real Estate Investment Trust Fourth Quarter 2025 Financial Results Conference Call. [Operator Instructions] This call is being recorded on February 12, 2026. I would now like to turn the conference over to Mr. Philip Fraser, President and CEO. Please go ahead.
Philip Fraser: Thank you. Good morning, and thank you for joining Killam Apartment REIT's Fourth Quarter and Year Ending December 31, 2025 Conference Call. I'm here today with Robert Richardson, Executive Vice President; Dale Noseworthy, Chief Financial Officer; and Erin Cleveland, Senior Vice President of Finance. Slides 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.
Erin Cleveland: 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 SEDAR+. 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 statements unless otherwise required by applicable securities laws.
Philip Fraser: Thank you, Erin. We are very pleased with our strong financial and operating results for the fourth quarter and year ending December 31, 2025. We achieved our 2025 strategic targets, as shown on Slide 2, 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 shift, Killam 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 in 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 began 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 and our capital allocation strategy. I will now hand it over to Dale.
Dale Noseworthy: Thanks, Phil. Key highlights of Killam's 2025 financial performance are presented on Slide 3. For the full year, net income totaled $29.4 million, a decrease of $638 million year-over-year. This decline was primarily driven by $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 onetime deferred tax recovery of $279 million relating to the completion of the plan of arrangement. These factors more than offset strong underlying 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, Killam 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 improved to 69% from 71% in the prior year. Turning to Slide 4. 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 $0.30 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 5, 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 the competitively priced rents drive strong demand and leasing activity. Our teams remain focused on dynamically managing rents, 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 has 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 6, 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 and asking rents 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. Bridge 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 4 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 NOI 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 8, reflecting the fair value loss recorded in Q4. Importantly, debt-to-normalized EBITDA improved to 9.66x 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. In 2026, The Carrick 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 and lease-up, Brightwood and Eventide will generate additional FFO contributions. We continue to expect AFFO 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.
Robert Richardson: 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 decrease 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 2,062 repositioned suites over the past 5 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 Killam'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, Killam has built or under construction over 20 buildings totaling 2,363 suites. The strategic disposition of non-core capital-intensive assets also improves Killam's working capital flexibility. Killam's annual survey of residents is an important tool for Killam 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, Killam has engaged independent research firms to survey our residents. Narrative Research's 2025 Resident Survey report the following on 3 key metrics: resident satisfaction with condition of current apartment, 87% score; professionalism of maintenance staff, 91.4%; residents' likelihood to recommend Killam to friends and family, 87%. These results are consistent with prior years and are considered strong, particularly given current market uncertainty. Killam's commercial portfolio was very busy in 2025. Our commercial team leased 56,000 square feet of vacancy at an average base 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, Killam renewed 117,000 square feet at an average base rate of $20 per square foot and delivered a weighted average increase on in-place rents of 15%. Killam's 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 3 primary assets. Brewery Market contains 143,000 square feet and is a 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. Westmount 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 Killam'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 4-storey office buildings 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 Westmount Road. Westmount 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 potential 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. Royalty Crossing is an enclosed mall containing 419,000 square feet in Charlottetown. Killam acquired full majority ownership in phases from 2019 to 2021 and now hold 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. Killam has added 51,000 square feet of leasable area with another 15,000 square feet scheduled for occupancy this year bringing the 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 unitholders. I will now hand you back to Philip.
Philip Fraser: Thank you, Robert. During the fourth quarter, Killam completed the disposition of 1 small property in PEI. For the year, we completed the disposition of 23 properties totaling 1,139 units and 2 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 align with Killam's strategy to optimize value from its portfolio and to increase geographical diversification outside Atlantic Canada. Our disposition target for 2026 is to recycle a minimum 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. Killam 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 6 new solar panel installations planned for 2026, 5 in Ontario and 1 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. Killam continues to advance its development program in 2025. The Carrick, as shown on Slide 14, opened on June 1, 2025 and is now 95% leased. Brightwood, with 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 Westmount 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 and developments and to continue to execute our overall strategy and create value for all of our unitholders. I would like to thank our employees for their hard work and dedication. Thank you. I will now open up the call for questions.
Operator: [Operator Instructions] And we have our first question from Mike Markidis with BMO.
Michael Markidis: Phil, 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. I'm just trying to circle that and reconcile it with the weighted average capital you guys use on your Halifax portfolio.
Philip Fraser: Yes. Mike, it's Phil here. Yes, thanks for the question. I mean this is an asset that was built in 1973. So even when we started Killam 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 they got time to sell it, he gave us a call. So it's totally off market. We like the building and comes with 4.4-acre site, 108 units. The -- it's made up of 2s and 3s. The 2 bedrooms are 1,250 square feet. The 3 bedrooms are 1,400 square feet. And the interesting thing was that it is catered to an 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 -- like 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 will 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 5% cap, you look at the $30 million basically, you can figure out the NOI, but we can move up that sort of cap rates in the next couple of years, half of it on the operating side and half of it was just natural sort of increases in rents.
Michael Markidis: Okay. That's great. I was just curious, tying that in the acquisition market, if you could give us a sense of how you're seeing returns for acquisitions today versus developments. I guess you started Nolan Hill, and that seems like it's going to be finished in Q3 of '27. So dovetailing that to do you guys plan to start any other projects in the near term?
Philip Fraser: 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, not saying that we're going to buy them. But really, I think where pricing is, depending on the asset, some of this -- the product is up around a 5% all-cash yield in other markets. There's opportunities in Alberta that you could buy between 5% and 5.25%. 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 set it on the last conference call, the new developments if we can get them out of the ground and that's -- 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 than 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 cost on the CMHC financing.
Michael Markidis: 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 some -- a little bit of color on progress at Westmount and the commercial backfill that has to happen there. I think it was maybe 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.
Robert Richardson: Yes. So I would say to you that they may be pushed out a little bit. We've been working diligently for the last 6 months with our architects, the engineers and taking a look at the work we want to do to reposition the building, and it will 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.
Michael Markidis: 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?
Robert Richardson: Yes. So there's another good number. We're working our way through it. And it looks like it's going to be a total cost of $15 million and see how that goes.
Operator: Our next question is from Jonathan Kelcher with TD Cowen.
Jonathan Kelcher: Just turning to your targets for 2026. Just on the revenue target of 3% plus to the apartment portfolio, like 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 talked about market rent -- potentially see market rent growth in the second half of the year. Is any of that built into your rent growth assumption?
Dale Noseworthy: When we look at that -- the revenue number, you're right, it is a mix. Overall, probably close to 4% revenue growth. In terms of turns and renewals, we do renewals is probably in the -- around the 3% range, maybe 3.5% depending, and on the turns, 4 to 7. I mean it really does change based on which units are turning every month, and we're watching it closely, and it jumps around a bit. So -- but averaging approximately 4%, and then we've got incentives, which incentives are likely to increase a little bit. What we are seeing is in many markets where incentives have been used [ non-regularly ] over the last year, they're actually moderating in terms of number of units that are having incentives.
Philip Fraser: What we're saying is maybe 80 basis points to 90 basis points on the incentive side.
Dale Noseworthy: Yes.
Philip Fraser: So we're watching those closely per market per building.
Dale Noseworthy: And then the other piece, of course, is vacancy. And so we would have seen in Q4, we had a little bit of an uptick in vacancy, but that's we're seeing good leasing momentum. So in the second half of the year, we could see some year-over-year improvement there. So 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 -- 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 Newfoundland is 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 it's -- as we look to the spring leasing, we are feeling cautiously optimistic.
Jonathan Kelcher: That's good. That's helpful. 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 I -- can we take that to mean that you guys are generally happy with your geographic mix right now?
Philip Fraser: I'd 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 D.C. will start to pick up and even Alberta. I mean we still have a lot of things in Alberta as well. But what we tried to highlight as well this year for 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.
Jonathan Kelcher: Okay. That's helpful. And then just lastly on -- you've already done the one acquisition, which sounds like very opportunistic. Is the $50 million in dispositions, should we think about it as a net number? Or is it like you plan on selling about $50 million and you'll buy what you buy?
Philip Fraser: Yes. 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. And -- but there's -- again, right now, there's no certainty. So I'm sure that we can hit the $50 million this year.
Operator: And we have our next question from Kyle Stanley with Desjardins.
Kyle Stanley: Maybe just sticking with the dispositions for a second. $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?
Philip Fraser: 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 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's hard to find the next few.
Kyle Stanley: Okay. No, that makes sense. As we think about in-suite CapEx, I mean, obviously, with the 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 quicker lease up?
Dale Noseworthy: I don't think it's a little bit of the opposite right now because we have continued to invest throughout the piece on those -- on lease terms, in terms of our repositioning. 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 as if there's markets where we're completing [ pay ] 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.
Philip Fraser: I mean, another way to look at that, Kyle, is that we still have -- the 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 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 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.
Dale Noseworthy: So we are -- and we're looking opportunity building by building, unit by unit and what makes the most sense.
Robert Richardson: As well we've done over 2,000 repositionings in the last 5 years. So those assets, when they come up for renewal, don't really need that much work and we're seeing it.
Kyle Stanley: 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. Clearly, the affordability in Halifax is probably the 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 for the most part, that is probably one of the most affordable options in the market?
Philip Fraser: 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 2 or 3 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.
Operator: We have our next question from Jimmy Shan with RBC Capital Markets.
Khing Shan: Just in terms of the defense spending, are you actually starting to see the impact of that today? Or it sounded like when you were talking about it, it's more of a 2027 event. And I'm just curious what you're seeing on the ground.
Philip Fraser: 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 presort of construction work is being done. And even if you start to go around and look at the companies that have taken a position or open up an office in Halifax related to defense, there's a lot of new companies moving in.
Khing Shan: What about in terms -- like the Department of National Defense, I think part of the budget was to increase recruitment and pay increases. Is that already starting to happen.
Philip Fraser: 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 their best recruiting months in the last number of years.
Khing Shan: Okay. And then in terms of the supply in Halifax, sort of do you know kind of where we are in terms of the delivery cycle? Like when do you expect that we'll see -- we'll be sort of past the peak in delivery?
Philip Fraser: Well, I believe that this -- whatever is coming out of the ground now, which will get delivered in 3 or 4 years, it's probably a little 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. So -- and again, from -- you know, in 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 3 to 4 years, for sure.
Operator: [Operator Instructions] Our next question is from Sairam Srinivas with ATB Capital Markets.
Sairam Srinivas: So going back to comment on Halifax. How should we be tying that to the same property rent growth metrics? So over the last couple of -- obviously, 8 quarters, Halifax has been leading the -- 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?
Dale Noseworthy: 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 we will follow that same trend as back to the norm, except I do think with a stronger mark-to-market and with the 5% on renewal, Halifax should be a top performer in '26 -- and yes, and likely the '27 as well, when we look at those same -- I expect that we'll be in a similar situation in '27.
Operator: Our next question is from Matt Kornack with National Bank Capital Markets.
Matt Kornack: 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 there just isn't an option for these people to go to. I would have thought with a more competitive market that turnover would have maybe increased.
Philip Fraser: Well, I think it did from 20% to 22% for the year.
Matt Kornack: Yes, I think it was up slightly, but Q4, I think, was pretty flat to Q4.
Philip Fraser: Yes.
Erin Cleveland: There is definitely a focus though on trying to maintain the tenants that we have today.
Philip Fraser: But we have a pretty good leasing month too in December that kind of offset some of that.
Robert Richardson: We started that in September. We know what happens in the latter part of the year, and we really did work hard and we did the year before to make sure that we can capture as much as our existing base and not have them move elsewhere.
Matt Kornack: Okay. And then maybe as a follow-up, are we starting to kind of fully work through the above market or potentially above-market rents that would have been marked probably a year ago? Or is there still more of that kind of -- and is it turning in a higher propensity within your portfolio at this point?
Dale Noseworthy: Yes, I think we have, and we're looking at some of those buildings that were leased up in the last couple of years where market rents were -- units were leased at the peak, and we were looking at a couple that were above 50% churn in this last year. So when you look year-over-year, yes, some of them are getting flatter, yes.
Matt Kornack: And then third, last question. Can you give a sense on the Alexander, I guess that would be directly impacted by a new supplier or be competing with new supply, just how that property is performing at this point?
Erin Cleveland: Yes. I think we're seeing like a little bit more turnover, but there's still lots of opportunity in that building because it was least so long ago. There's a lot of market -- or rents that are still well below market in that particular building.
Robert Richardson: And it's centrally located.
Matt Kornack: And a beautiful product.
Operator: Our next question is from Dean Wilkinson with CIBC.
Dean Wilkinson: 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 talent might be buying back your own units at an implied cap rate north of 6%. What are your thoughts on just the priority of how you're looking at that and you were active in Q4. Could we expect some more of that?
Philip Fraser: I would -- yes, the answer is to expect more on the NCIB. I mean it is between that and paying down debt would be the first bucket of priorities.
Operator: And thank you. There are no further questions at this time. I will now turn the call over to Mr. Philip Fraser for closing remarks.
Philip Fraser: Thank you. This concludes Killam's Q4 2025 Analyst Call. Thank you for listening and participating today. We look forward to reporting Q1 2026 financial results on May 7. Thank you.
Operator: Ladies and gentlemen, this concludes today's conference call. We thank you for participating. You may now disconnect.