Killam Properties Inc. Announces $97 Million in Acquisitions in Ontario and Alberta and a $40 Million Public Offering of Common Shares

HALIFAX, NOVA SCOTIA--(Marketwired - Nov. 10, 2014) -

NOT FOR DISTRIBUTION TO THE UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

Killam Properties Inc. ("Killam") (TSX:KMP) is pleased to announce that it has reached an agreement with a syndicate of underwriters led by RBC Capital Markets to issue to the public, subject to regulatory approval, on a bought deal basis, 3,800,000 common shares (the "Shares") for $10.55 per Share for gross proceeds of $40,090,000. Killam also announced today the acquisition of interests in four apartments located in Mississauga, London, Ottawa and Calgary (the "Acquisitions"). Killam's portion of the purchase price for the Acquisitions is $97.1 million.

Killam has granted the Underwriters an over-allotment option for the purposes of covering the Underwriters' over-allocation position for an additional 570,000 Shares, exercisable up to 30 days after closing of the offering.

Killam intends to use the net proceeds from this offering to partially fund the Acquisitions and for general corporate purposes. Killam currently owns an interest in three of the four properties where interests are being acquired, and thus will be increasing its ownership position in these three properties with the Acquisitions. In the event Killam is unable to consummate one or more of the Acquisitions and the offering is completed, Killam would use the net proceeds of the offering otherwise allocated to such acquisitions to fund future acquisitions and for general corporate purposes.

Killam will, within the next few days, file with the securities commissions and other similar regulatory authorities in each of the provinces of Canada, excluding Quebec, a preliminary short form prospectus relating to the issuance of the Shares. Closing of the offering is expected to take place on or about November 28, 2014.

Increased Ownership Interest in Three Ontario Properties

Killam and an affiliate of KingSett Capital Inc. ("KingSett") and AIMCo Realty Investors LP, a limited partnership managed by Alberta Investment Management Corporation ("AIMCo") will acquire Kuwait Finance House's ("KFH") entire 75% interest in Kanata Lakes Apartments (146 units, located in Ottawa) and 1355 Silver Spear Road (199 units plus surplus land for approximately 110 additional units, located in Mississauga). Killam currently owns a 25% interest in each of these two properties and, as part of the Acquisitions, will acquire an additional 25% interest, thereby increasing Killam's ownership to 50% in each of these two properties. KingSett and AIMCo will, subject to their due diligence, acquire the remaining 50% interest of each of these two properties.

In addition, Killam will acquire KFH's entire 75% interest in 180 Mill Street (127 units, located in London), thereby increasing Killam's ownership to 100% in this property.

Currently, Killam's and KFH's effective interests in each of Kanata Lakes Apartments, 1355 Silver Spear Road and 180 Mill Street are held through a partnership between Killam and KFH. Upon completion of the disposition of KFH's effective interests in these three properties, the partnership between Killam and KFH will be dissolved.

The purchase price for the acquisition of KFH's 75% interest in the three properties equates to $88.9 million ($118.5 million on a 100% basis, representing $251,000 per suite). Killam's portion of the purchase price is $47.1 million. Killam will assume $27.6 million of existing mortgages with a weighted average interest rate of 3.64% upon acquisition. The capitalization rate is approximately 5.0%.

The acquisition of the three Ontario properties is expected to close before the middle of December 2014.

Killam to Acquire 307-Unit Apartment Building in Calgary

Killam has agreed to acquire a 50% interest in Grid 5 Apartments, a 307-unit building located in downtown Calgary, Alberta, from an affiliate of KingSett. The remaining 50% interest will be held by affiliates of KingSett and AIMCo, bringing the total joint venture assets to four. The acquisition represents Killam's entry into the Calgary apartment market.

Grid 5 Apartments, located at 618 5th Avenue SW, has recently completed its lease-up phase following an extensive redevelopment program. The building includes 44 bachelor units, 197 one-bedroom units and 66 two-bedroom units. The average monthly rent on the residential units is $1,390. The building also includes approximately 14,500 square feet of commercial space and five levels of parking, including 274 stalls, generating average revenue of $410 per stall per month.

The purchase price for Grid 5 Apartments is $100.0 million ($236,000 per rental suite, excluding value related to parking and commercial space) on a 100% basis, with Killam's interest being $50.0 million. The capitalization rate is approximately 5.0%. In conjunction with the acquisition, $60.0 million of new mortgage financing ($30.0 million on Killam's interest) for Grid 5 Apartments is expected to be obtained, bearing an interest rate of approximately 3.1%. The acquisition of Grid 5 Apartments is expected to close before the middle of December 2014.

In connection with the Grid 5 Apartments acquisition, Killam has agreed to issue common shares of Killam to a joint venture with affiliates of KingSett and AIMCo. The common shares of Killam issued will have a total value of $4.5 million and will be issued at a price of $10.56. Proceeds from the private placement (subject to a four month hold) will be used by Killam to partially fund its acquisition of the interest in the Grid 5 Apartments.

Killam will manage the acquired properties and will receive market property management fees from its investment partners.

"We are pleased to announce these acquisitions," noted Philip Fraser, Killam's President and CEO. "The ability to increase our ownership interest in buildings currently held through the JV with KFH allows us to invest $45 million in three high-quality assets that we already own and manage.

"We have been exploring opportunities to enter the vibrant Calgary market for the last two years and are pleased to have our first investment in the city be an interest in Grid 5 Apartments, a recently upgraded, centrally located, apartment catering to young professionals.

"These acquisitions meet our goal of increasing our investment in Ontario and Alberta and expanding the geographic diversification of Killam's portfolio."

This press release is not an offering of securities for sale in the United States. The Shares being offered have not been and will not be registered under the United States Securities Act of 1933, as amended, and state securities laws. Accordingly, the Shares may not be offered or sold in the United States absent registration or an exemption from the registration requirements of that Act.

Corporate Profile

Killam Properties Inc., based in Halifax, Nova Scotia, is one of Canada's largest residential landlords, owning, operating and developing multi-family apartments and manufactured home communities.

Note: The Toronto Stock Exchange has neither approved nor disapproved of the information contained herein. Certain statements in this report may constitute forward-looking statements relating to the offering, the Acquisitions, our operations and the environment in which we operate, which are based on our expectations, estimates, forecast and projections, which we believe are reasonable as of the current date. Such forward-looking statements involve risks, uncertainties and other factors which may cause actual results, performance or achievements of Killam to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. For more exhaustive information on these risks and uncertainties, you should refer to our most recently filed annual information form which is available at www.sedar.com. Readers, therefore, should not place undue reliance on any such forward-looking statements. Further, a forward-looking statement speaks only as of the date on which such statement is made and should not be relied upon as of any other date. Other than as required by law, Killam does not undertake to update any of such forward-looking statements.