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Investing.com - Raymond James downgraded Killam Apartment REIT (TSX:KMP-U) (OTC:KMMPF) from Strong Buy to Outperform and lowered its price target to C$21.25 from C$22.00.
The rating adjustment reflects Raymond James’ concerns about a greater anticipated funds from operations (FFO) per unit drag from commercial vacancy at the REIT’s Westmount Plaza in Waterloo expected in the first quarter of 2026.
Raymond James noted the vacant space could take longer to backfill and may require Killam to incur greater redevelopment capital expenditures, potentially creating a modest near-term valuation overhang on the unit price.
Despite the downgrade, Raymond James maintained a positive outlook on Killam, citing its estimated deep net asset value (NAV) discount valuation, exposure to affordable Canadian rental markets, and above-average same-property net operating income (SP-NOI) growth prospects.
The firm highlighted Killam’s embedded rent mark-to-market growth opportunity, which was estimated at 13% as of June 30, as a supporting factor for its continued Outperform rating.
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