HALIFAX, March 7 /CNW/ - Killam Properties Inc. (TSX:KMP/KMP:DB) is
pleased to announce its financial results for the fiscal year ended
December 31, 2006, reflecting Killam's growth in its asset base and funds from
operations over the past 12 months.
Killam's portfolio grew by 2,664 units to a total of 14,093 apartment and
manufactured home units at year-end 2006. In the fourth quarter of 2006,
Killam completed the purchase of 104 apartment units and 339 manufactured home
units, increasing its holdings at December 31, 2006 to 7,767 apartment units
and 6,326 manufactured home units representing approximately 80% and 20% of
its capital assets (by dollar value), respectively. Subsequent to year-end,
Killam has completed five property acquisitions, comprising 688 units, with
the result that Killam now owns a total of 14,781 units.
Funds from operations ("FFO") increased substantially to $12.5 million or
$0.15 per share in fiscal 2006, from $10.9 million or $0.14 per share in
fiscal 2005. FFO is a generally accepted measure of operating performance of
real estate companies; however, it is a non-GAAP measurement and readers are
cautioned that Killam's calculation of FFO may be different than that used by
other companies. Killam calculates FFO as net income plus depreciation and
amortization, stock compensation, non-cash debenture interest and future
income tax expenses.
Killam recorded a net loss of $3.8 million in 2006, after deducting
$8.5 million in building amortization expense (a non-cash expense) on its
buildings, compared to net income of $0.0 million for 2005, after deducting
$5.8 million in building amortization expense.
Total assets at the end of 2006 were $588.4 million, representing an
increase of 25.3% over the $469.5 million recorded at December 31, 2005.
Shareholders' equity increased to $107.7 million from $94.8 million over the
Highlights of Killam's Fourth Quarter 2006 Results
- Increased revenue 29.1% to $18.8 million
- Increase net operating income (NOI) 31.9% to $10.9 million
- Increased same store NOI by 5.8%
- Generated FFO of $2.7 million, or $.03 per share, after a one time
charge of $562,000 to retire debt early.
Year End Financial Highlights ($ thousands, expect per share information)
Year ended December 31 2006 2005 % Change
----------------------------- ------------- ------------- -------------
Revenue ..................... $70,846 $47,733 48.4%
FFO ......................... $12,498 $10,923 14.4%
FFO/share ................... $0.15 $0.14 7.1%
Net (loss) income ........... $(3,757) $5 -
Total Assets ................ $588,372 $469,516 25.3%
Shareholders' Equity ........ $107,653 $94,844 13.5%
Acquisition Activity Subsequent to December 31, 2006
Subsequent to December 31, 2006, Killam completed five previously
announced acquisitions consisting of 688 units for a total price
$28.5 million. The properties consist of 419 manufactured home community
("MHC") units over three communities and 269 apartment units. With these new
acquisitions Killam's total unit count as at March 7, 2007 is 14,781.
In New Brunswick, Killam acquired a newly built 231 unit residential
apartment portfolio, consisting of 135 units located in Moncton in close
proximity to other Killam properties, and 96 units in Miramichi. The portfolio
contains 52 one-bedroom units and 179 two-bedroom units, with an average rent
of $643/month. The buildings are electrically heated with the tenants
responsible for their own heating expense. The purchase price of $14.3 million
($61,700/unit) was satisfied by mortgages totaling $10.0 million at an average
combined interest rate of 4.9%, with the balance in cash.
Killam also acquired 31 Carrington Place, a 38 unit building in Halifax
containing 10 two-bedroom units and 28 three-bedroom units, with average rent
of $1,041/month. The nine year old, four-story building is located close to
other Killam properties in Clayton Park, and includes an elevator and
underground parking. The purchase price of $4.2 million ($110,000/unit) was
satisfied by assuming a CMHC insured first mortgage of $2.8 million at 4.7%,
with the balance in cash.
Killam has purchased Hillpark Estates, an 18.2 acre, 136 site community
located in Whitecourt, Alberta. Hillpark, Killam's second MHC in Alberta, is
located approximately one hour's drive from the Company's Lynwood Park MHC.
The community includes 136 sites, with an average rent of $270/month. The
purchase price of $4.4 million ($32,400/site) was satisfied by arranging a new
five-year mortgage of $2.9 million at 5.1%, with the balance in cash.
Killam has purchased Birchlee Court, a fully occupied, 175 site community
located in Halifax. This 43 acre community includes a development agreement
for a 47 site expansion that Killam plans to develop and sell homes on over
the next 12 months. The purchase price of $3.1 million ($17,800/existing site)
was satisfied by arranging a two-year construction loan for an initial
$2.2 million at a rate of bank prime plus 0.5%, with the balance in cash. The
average lot rent is $195/month.
Killam's latest acquisition, completed on March 5, 2007, was Stanley Park,
a 76 acre community in Erin, Ontario, located approximately 80 kilometers
northwest of Toronto. The community includes 108 MHC sites, with an average
rent of $251/month. The purchase price of $2.5 million ($23,100/site) was
satisfied by a new five-year mortgage for $1.9 million at 5.1%, with the
balance in cash.
The capitalization rates on the acquisitions were between 7.5% and 8.5%,
with the exception of Whitecourt in Alberta, where the capitalization rate is
projected to be 7.0%, after implementing rental increases.
Killam continues to evaluate the conversion to a real estate investment
trust, and management will provide the market with an update as the process
evolves. The government tax legislation continues to impact the process as a
firm timeline has not been provided by the government on the final legislation
related to the proposed taxation of certain income trusts and the related
exemption for REITs.
On December 31, 2006, Killam's portfolio had achieved an overall occupancy
level of 97.2%. The apartment portfolio had an occupancy level of 95.9% with
an average rent $685. The manufactured home community portfolio had an
occupancy level of 98.9%, with an average monthly rent of $203. Approximately
139 additional vacant apartment units were undergoing renovation and therefore
unavailable for renting, compared to 146 at September 30, 2006. These units
are not included in the table below which displays information as at December
Units Vacancy Average Rent
------------- ------------- -------------
NOVA SCOTIA 3,715 3.6% $720
NEW BRUNSWICK 2,617 4.4% $657
NEWFOUNDLAND 712 1.0% $550
PRINCE EDWARD ISLAND 584 9.9% $744
MANUFACTURED HOME COMMUNITIES 6,326 1.1% $203
Commenting on the past year, Philip Fraser, Killam's President and Chief
Executive Officer noted: "2006 was another important year of growth for
Killam. We continued to grow our asset base, our FFO per share, and
extensively upgraded our portfolio. We improved occupancy and generated
internal growth during 2006 with same-store net operating income improvements
and gains on land sales of $1.1 million.
"We are optimistic about what lies ahead in 2007. We have owned
approximately 80% of our portfolio for more than one year, which gives us
confidence in our ability to sustain our earnings and to improve profitability
going forward. Over the near-term, we see opportunity to grow our apartment
market share within our six key markets in Atlantic Canada from the current
level of approximately 10%. We know these markets well and recognize the
benefit of continuing to cluster our assets in these areas. In 2007, we will
focus on our acquisition pipeline and expect to acquire $100 million to
$125 million in additional properties. Simultaneously, we will fine tune our
properties and management team to maximize Killam's funds from operations."
Killam's December 31, 2006 Financial Statements and Notes and
Management's Discussion and Analysis can be found on our website at
Killam Properties Inc. is a leading real estate company based in Halifax,
Nova Scotia. Killam is the largest owner and manager of multi-family
residential rental properties and manufactured home communities in Atlantic
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 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.
For further information:
For further information: Please contact: Dale Noseworthy, CA, CFA,
Director, Investor and External Relations, Killam Properties Inc., (902)
442-0388, Fax: (902) 455-4525, firstname.lastname@example.org