In a report released today, Mark Rothschild from Canaccord Genuity maintained a Hold rating on Killam Apartment REIT Un, with a price target of C$20.00.
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Mark Rothschild’s rating is based on a combination of factors that reflect both the strengths and challenges facing Killam Apartment REIT. The REIT reported solid financial performance in the recent quarter, with a notable increase in funds from operations (FFO) per unit, driven by higher rental rates. However, this positive performance is partially offset by increased general and administrative costs and a slight decline in occupancy rates.
Despite healthy growth in rental income, the market fundamentals are softening, with new supply and slower population growth leading to higher vacancy rates in key markets. This has resulted in a narrowing gap between in-place and market rental rates, which could moderate future revenue growth. Consequently, Rothschild has adjusted the rating to Hold, reflecting a cautious outlook while acknowledging the REIT’s current valuation and market conditions.