Killam Properties Inc. announces record fourth quarter and 2007 year-end results highlighting same store NOI growth of 6.1% in the quarter and a 10.5% increase in normalized FFO per share for the year

    HALIFAX, March 4 /CNW/ - Killam Properties Inc. (TSX:KMP/KMP:DB) is
pleased to announce its financial results for the fourth quarter and fiscal
year ended December 31, 2007.

    Highlights of Killam's Q4 Financial and Operational Results (compared to
    Q4 2006)

    - Increased funds from operations ("FFO") per share by 7.1% to $0.15 per
      share from $0.14 per share, when normalized for the loss on debt
      settlement in the fourth quarter of 2006.
    - Achieved 6.1% same store net operating income ("NOI") growth.
    - Increased operating revenue 22.7% to $22.9 million.
    - Increased income from property operations 24.4% to $13.3 million.
    - Completed $19.8 million in acquisitions to complete the year with
      $124.8 million in acquisitions.

    Highlights of Killam's 2007 Year-End Financial and Operating Results

    - Increased normalized year-over-year FFO by $6.8 million to
      $18.7 million, representing a 10.5% growth in normalized FFO per share.
    - Increased same store NOI by 5.1%.
    - Increased consolidated NOI by 21.6% to $50.5 million.
    - Initiated annualized dividend of $0.56 per share.
    - Completed $124.8 million in acquisitions, increasing total unit count
      by 23.6%.
    - Continued to add geographic diversification to the portfolio with
      $32 million of acquisitions outside of Atlantic Canada.
    - Reduced total debt to gross book value of assets to 66.7% from 75.8%.

    Financial Highlights ($ thousands, except per share information)

                                      December 31, December 31,
    For the three months ended,              2007         2006     % Change
    Net operating income                  $13,513      $10,782         25.3%
    FFO                                    $4,976       $2,666         86.6%
    FFO/share                               $0.15        $0.12         25.0%
    FFO/share excluding loss on
     debt settlement in Q4 2006             $0.15        $0.14          7.1%

                                      December 31,  December 31,
    For the year ended,                      2007          2006    % Change
    Net operating income                  $50,455       $41,479        21.6%
    FFO                                   $18,696       $12,498        49.6%
    FFO/share                               $0.63         $0.60         5.0%
    FFO/share excluding gain on
     land sales and loss on debt
     settlement in 2006                     $0.63         $0.57        10.5%

                                      December 31,  December 31,
    Balance Sheet as at,                     2007          2006    % Change
    Total Assets                         $723,680      $587,379        23.2%
    Total Liabilities                    $529,796      $479,726        10.4%
    Total Shareholders' Equity           $193,884      $107,653        80.1%
    Debt as a % of Gross Book Value          66.7%         75.8%      (12.1%)

    Normalized FFO per Share Increased 10.5%

    Management considers FFO per share a key measure of operating performance.
FFO per share for the fourth quarter of 2007 increased by 7.1% to $0.15 from
$0.14 in the same period last year, when adjusted for the $0.4 million debt
settlement charge relating to net refinancing expenses incurred during Q4
2006. The increase relates primarily to acquisitions, same store NOI growth,
and increased home sales. FFO per share for 2007 increased 10.5% to $0.63 from
$0.57 in 2006, after excluding land sale gains and debt settlement charges in

    Growth through Acquisitions Continued

    Killam continued to grow during the fourth quarter with the acquisition of
667 new units, including 229 apartment suites and 438 MHC sites for a total of
$19.8 million. Killam's portfolio as at December 31, 2007 totaled 17,422
units, consisting of 8,735 apartment suites and 8,687 MHC sites, representing
increases of 12.5% for apartments and 37.3% for MHC sites, following a total
of $124.8 million in acquisitions during the year. Killam's total assets at
the end of December 2007 were $723.7 million, representing an increase of
23.2% compared to $587.4 million as at December 31, 2006.
    Apartment acquisitions, representing 61.8% of total acquisitions in 2007,
on a dollar basis, were primarily focused in Halifax and Fredericton. The
purchase of 14 MHCs were geographically diverse, with the largest investments
in Ontario, Nova Scotia and Alberta.

    Same Store NOI Growth Highest in Killam's History

    During 2007 Killam demonstrated its ability to improve the performance of
its assets with same store NOI growth of 6.1% in the fourth quarter and 5.1%
for the year. This is the highest annual NOI growth in the Company's history
and compares to growth of 2.6% and 2.3% in 2006 and 2005, respectively.
Improvements in same store NOI were seen in both apartments, which increased
5.1% during the year, and MHCs, which increased 5.3%. The increase in
consolidated same store NOI was driven by 3.0% revenue growth combined with
Killam's ability to control operating costs. A total of 11,027 units,
representing 63% of Killam's portfolio, are included in the Company's 2007
same store results.

    Vacancy at 2.7%

    Killam's portfolio had an overall vacancy of 2.7% at December 31, 2007,
compared to 2.8% at year-end 2006. The apartment portfolio had a vacancy rate
of 4.5% with an average monthly rent of $710. The MHC portfolio had a vacancy
rate of 0.9% with an average monthly rent of $209. Eighty-six additional
vacant apartment units were undergoing renovation and therefore unavailable
for renting compared to 139 at December 31, 2006. In addition, approximately
124 MHC sites have not been previously rented, including recently expanded
sites at Birch Hill and Greenhill in Nova Scotia. These units are excluded in
the table below, which represents available units at December 31, 2007.

                                            Units       Vacancy        Rent
                                         ----------   ----------   ----------
      NOVA SCOTIA                           4,058           4.4%       $754
      NEW BRUNSWICK                         3,180           5.7%       $680
      NEWFOUNDLAND                            730           1.4%       $570
      PRINCE EDWARD ISLAND                    681           2.5%       $739
    MANUFACTURED HOME COMMUNITIES           8,563           0.9%       $209

    Increased Home Sales Seen in FFO Per Share

    New home sales contributed positively to FFO in 2007 with a total of 45
sales, compared to 11 in 2006. Management plans to grow this business to more
significant levels in the future.

    Ending 2007 with a Strong Balance Sheet

    The Company ended 2007 with a total debt to gross book value ratio of
66.7%, down considerably from 75.8% at year-end 2006. "We are comfortable with
our current debt levels", noted Robert Richardson, Killam's Executive Vice
President and Chief Financial Officer. "Reduced debt levels, along with cash
on hand, and an available acquisition line, provide Killam with the
flexibility to react to acquisition opportunities and better navigate 2008's
volatile capital markets."
    The Company has $462.3 million in mortgages and vendor financing,
$40.8 million, or 8.8%, of which matures in 2008. Management does not
anticipate any difficulty in refinancing this debt and has been able to obtain
new mortgages on refinancing and new acquisitions over the last few months at
attractive rates, benefiting from decreased bond yields and CMHC insured
financing for the Company's apartments. Killam's most recent refinancing was
for Sydney Arms on February 19, 2008, refinanced using a new CMHC insured
mortgage with an interest rate of 4.53% for a five-year term.
    Killam reduced its weighted average interest rate on total debt to 5.7%
at December 31, 2007, compared to 5.9% at year-end 2006. The Company's
interest coverage ratio has improved to 1.66 times from 1.49 year-over-year
given lower debt levels. Killam's weighted average years to maturity of
mortgage debt is 4.7 years.

    Dividend Initiated in 2007

    Killam initiated an annualized dividend of $0.56 per share, paid monthly,
during the first quarter of 2007. Killam has a dividend reinvestment plan
program, which had a participation level of 14.3% at year-end.

    Normal Course Issuer Bid

    The Company announced a normal course issuer bid ("NCIB") in August of
2007. Under the NCIB Killam may acquire up to 3,070,438 common shares, which
is 10% of the public float as at August 20, 2007. During 2007, Killam
purchased 48,000 shares at an average price of $8.67 per share for a total
market value of $0.4 million. Subsequent to year-end Killam has purchased
another 50,900 shares at an average price of $7.99.
    "We are pleased to report strong operating results in the fourth quarter
of 2007" commented Philip Fraser, Killam's President and CEO. "2007 was an
exceptional year for Killam as the Company improved every important measure of
its performance: FFO per share, same store NOI growth, portfolio growth, and
debt levels as a percentage of assets.
    "Our diverse portfolio, along with our established operating platform,
enabled Killam to have a successful 2007, most notably increasing our
normalized funds from operations per share by 10.5%, and our consolidated same
store NOI by 5.1%. We are very pleased with the performance and quality of our
portfolio, which we anticipate will be very stable in the current economic
    "Looking forward we expect to continue to improve our performance by
remaining focused on our strategy of growing our cash flow, the underlying
value of our assets, and our accretive acquisitions. We have developed a
strong operating platform which can support a larger and more geographically
diverse portfolio. Our MHC portfolio is established across the country and we
plan to do the same with the apartment side of our business.
    "We have cash on hand and access to our acquisition line, which will
allow us to execute on the best opportunities, but significant future growth
will depend on the availability of capital. We have a long-term focus and are
prepared to be patient with our acquisition strategy in the current

    Financial Statements

    Killam's December 31, 2007 Financial Statements and Notes and
    Management's Discussion and Analysis can be found on our website at

    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 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)

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