Killam Properties Inc. announces 2007 second quarter results highlighting a 12.5% increase in normalized funds from operations per share and a 7.6% increase in same store net operating income



    HALIFAX, Aug. 8 /CNW/ - Killam Properties Inc. (TSX:KMP/KMP:DB) is
pleased to announce its financial results for the second quarter ended June
30, 2007. Killam continued to grow during the second quarter of 2007 with the
purchase of 178 apartment units and 447 manufactured home community (MHC)
sites. Killam's portfolio as at June 30, 2007, totaled 15,407 units,
consisting of 8,214 apartment units and 7,193 MHC sites, representing a mix of
approximately 80% and 20% of its net real estate assets, respectively. For the
six months ended June 30, 2007 Killam has grown its portfolio by 9.3%.
Subsequent to June 30, 2007 Killam closed five acquisitions representing six
properties and 937 units, increasing the portfolio count to 16,344 units,
including 8,506 apartment units and 7,838 MHC sites.
    Funds from operations ("FFO") for the second quarter of 2007 increased to
$4.9 million compared to $3.9 million in the same period last year
representing a 24.7% increase in quarterly performance year-over-year. FFO per
share was $0.18, compared to $0.19 in the second quarter of 2006; however FFO
in 2006 included a $0.7 million, or $0.03 per share, gain relating to the sale
of 1.8 acres of surplus land. Killam's FFO per share in 2007 improved 12.5%
over the same quarter in 2006 after excluding the land sale gain in 2006.
    Killam recorded a net loss of $0.02 per share in the second quarter of
2007 compared to a net loss of $0.01 per share for the second quarter of 2006.
The 2006 results included the impact of the sale of surplus land, as noted
above. Net loss per share in the second quarter of 2006, excluding the land
sale was $0.03. The net loss is after depreciation expense of $0.19 per share
in both periods. Killam's gross book value of real estate assets at the end of
June 30, 2007 was $668.8 million, representing an increase of 11.9% and 24.3%
compared to $597.7 million as at December 31, 2006, and $538.2 million at
June 30, 2006, respectively.

    
    Highlights of Killam's Q2 Financial Results

    - Increased rental revenue 22.1% to $20.1 million

    - Increased income from property operations 18.4% to $12.4 million

    - Increased FFO per share by 12.5% to $0.18 per share from $0.16 per
      share, when normalized for land sale in the second quarter of 2006

    - Successfully completed $65.4 million bought deal equity financing

    - Decreased debt to gross book value to 65.5% from 75.7% at December 31,
      2006


    Financial Highlights ($ thousands, except per share information)

    For the three months ended,         June 30,      June 30,     % Change
                                           2007          2006
    Rental revenue                      $20,107       $16,463          22.1%
    FFO                                  $4,885        $3,918          24.7%
    FFO/share                             $0.18         $0.19          (5.3%)
    FFO/share excluding land sales        $0.18         $0.16          12.5%


    As at                               June 30,  December 31,     % Change
                                           2007          2006
    Total Assets                       $692,347      $588,372          17.7%
    Total Liabilities                  $487,394      $480,719           1.4%
    Shareholders' Equity               $204,953      $107,653          90.4%


    Operational Highlights

    - Achieved 7.6% same store net operating income growth, including 8.5%
      for the apartment segment and 4.3% for MHCs. Same store results relate
      to properties that Killam owned for equivalent periods in 2007 and
      2006.

    - Implemented average rent increases of 1.6% year-to-date on same store
      properties.

    - Acquired $31.3 million of properties during the second quarter, and
      $59.8 million of properties during the six months ended June 30, 2007.

    - Continued the expansion of Birch Hill MHC in Halifax with the
      expectation of completing 42 additional lots by the end of the year.

    - Closed the first three MHC home sales, achieving an average margin of
      $14,000 per home. MHC home sales are expected to continue to generate
      internal growth as Killam expands its MHCs where surplus land and buyer
      demand permit. Killam expects to complete a total of 50 to 75 MHC home
      sales during 2007.

    On June 30, 2007, Killam's portfolio had an overall vacancy of 3.4%. The
apartment portfolio had a vacancy rate of 5.3% with an average monthly rent of
$701. The MHC portfolio had a vacancy rate of 1.3%, with an average monthly
rent of $207. Approximately 143 additional vacant apartment units were
undergoing renovation and therefore unavailable for renting compared to 237 at
June 30, 2006. These units are excluded in the table below which displays
information as at June 30, 2007.

                                          Units       Vacancy  Average Rent
                                   ------------- ------------- --------------
    APARTMENTS

      NOVA SCOTIA                         3,878           5.0%         $742

      NEW BRUNSWICK                       2,887           5.8%         $669

      NEWFOUNDLAND                          713           2.7%         $571

      PRINCE EDWARD ISLAND                  593           7.4%         $744
                                   ------------------------------------------
    APARTMENTS                            8,071           5.3%         $701
                                   ------------------------------------------
    MANUFACTURED HOME COMMUNITIES         7,193           1.3%         $207
                                   ------------------------------------------
    

    Commenting on the second quarter of 2007, Philip Fraser, Killam's
President and Chief Executive Officer noted: "We are very pleased to report
such a strong increase in normalized FFO growth and strong same store growth
numbers in the second quarter and for the first half of the year. It is
rewarding to see this portfolio of assets exceed our operating goals. We
expect to continue to benefit from the stable market in Atlantic Canada. We
are experiencing increased leasing activity this summer leading up to
September, our busiest rental period, so we expect to improve our already
strong occupancy numbers.
    "The equity raises we completed in February and June 2007 provide us with
the capital to continue our accretive growth. We completed $93.7 million of
acquisitions in the first seven months of the year and have reduced our
leverage to a more defensive level. We have approximately $25 million of cash
available for future acquisitions. We expect to achieve acquisitions in the
upper end of the range ($100 million -$125 million) of our targets in 2007"

    Financial Statements

    Killam's June 30, 2007 Financial Statements and Notes and Management's
    Discussion and Analysis can be found on our website at
    www.killamproperties.com

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

    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.

    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: Dale Noseworthy, CA, CFA, Director, Investor
and External Relations, Killam Properties Inc., (902) 442-0388, Fax: (902)
455-4525, dnoseworthy@killamproperties.com

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