HALIFAX, June 1, 2012 /CNW/ - Killam Properties Inc. (TSX: KMP) ("Killam") today announced the expansion of its Ontario apartment portfolio with the purchase of a 25% ownership interest in a 199 unit apartment building in Toronto, Ontario. The building has been acquired through Killam's joint venture partnership.
Purchased from Canadian Apartment Properties Real Estate Investment Trust ("CAPREIT"), the fourteen-storey concrete apartment building is located at 1355 Silver Spear Road in Mississauga. The average monthly rent is $1,087 per unit, and includes 105 one-bedroom units, 92 two-bedroom units and 2 three-bedroom units. The building has extensive amenity space, including a pool, gym, outdoor terrace and underground parking. The building is located on a 3.6 acre parcel of land that includes surplus land for future development.
The purchase price was $33.5 million ($168,000 per suite), with Killam's 25% ownership interest being $8.375 million. The purchase was satisfied with cash. The capitalization rate on the acquisition is approximately 5.1% (5.7% excluding the value of the surplus land of $3.5 million). Killam's expected all-cash yield, including management fees associated with its partnership agreement, is approximately 6.0% (6.6% excluding the value of the surplus land).
Killam also announced the disposition of 2,032 sites in twelve non-core manufactured home communities ("MHCs"). The properties were sold to CAPREIT for a total price of $72.3 million. The Company's five communities in Western Canada were part of the transaction, plus seven communities in Ontario: Bayview Estates, Fergushill Estates, Golden Horseshoe Estates, Green Haven Estates, Parkside Estates, Silver Creek Estates and Sunny Creek Estates. CAPREIT assumed the existing mortgages totaling $38.4 million. The net proceeds of $33.9 million received by Killam from the sale will be used to fund future acquisitions and developments.
"We are pleased to acquire our first apartment building in the Greater Toronto Area, and our third joint venture asset with Kuwait Finance House", noted Philip Fraser, Killam's President and CEO. "This acquisition not only includes a well maintained and centrally located asset in Mississauga, but also has excess land for the potential construction of an adjacent apartment building of up to 110 units."
"The sale of twelve MHCs represents Killam's first asset divestiture. While we continue to value Killam's MHC business and its stable contribution to funds from operations, this sale crystallizes the appreciation in value on a portion of our MHC portfolio. The sale price for the MHCs represents the fair market value of the properties as measured under International Financial Reporting Standards."
"Over the last few years Killam has focused its strategy on increasing ownership in newer properties and expanding geographically. This transaction is in accordance with this focus, with the acquisition of our first apartment building in Toronto, which includes land for development. The liquidity from the transaction provides the opportunity to redeploy capital for additional acquisitions and developments in markets we have targeted for expansion."
About Killam Properties Inc.
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 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.
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