Killam Properties Inc. announces strong first quarter results highlighting a
14.3% increase in FFO per share and 10.9% growth in same store net operating

HALIFAX, May 4 /CNW/ - Killam Properties Inc. (TSX:KMP/KMP:DB) today announced its financial results for the first quarter ended March 31, 2010.

Highlights of Killam's First Quarter

    - Increased funds from operations ("FFO") per share by 14.3% to $0.16 per
      share, from $0.14 per share generated during the first quarter of 2009.
    - Increased same store net operating income ("NOI") by 10.9% during the
      first quarter.
    - Achieved same store rental revenue increase of 3.4% during the first
    - Maintained high occupancy rates, ending the first quarter with
      apartment occupancy at 98.0%.
    - Completed a public share offering of 6.2 million common shares for
      gross proceeds of $50.6 million.
    - Debt as a percentage of the gross book value of assets was 61.5% at the
      end of the quarter.
    - Subsequent to the end of the first quarter Killam acquired its first
      apartment in Ontario with the purchase of Richmond Hill Apartments in
      London, Ontario.

Financial Highlights (in thousands, except per share information)

    For the three months ended,    Mar 31, 2010  Mar 31, 2009      % Change
    Rental Revenue                      $26,014       $25,017           4.0%
    Net Operating Income                $15,337       $13,684          12.1%
    Net Income Before Tax and
     Depreciation                        $5,845        $3,922          49.0%
    Net Loss                              ($569)      ($1,912)         70.2%
    Funds from Operations                $6,349        $4,685          35.5%
    Funds from Operations per Share       $0.16         $0.14          14.3%
    Shares Outstanding (weighted
     average)                            38,946        34,046          14.4%

    Balance Sheet as at,           Mar 31, 2010  Dec 31, 2009      % Change
    Total Assets                       $783,810      $739,373           6.0%
    Total Liabilities                  $563,558      $562,171           0.2%
    Total Shareholders' Equity         $220,252      $177,202          24.3%
    Debt as a % of Gross Book Value        61.5%         65.2%         (5.7%)

FFO Per Share Increased by 14.3% in the First Quarter

FFO per share for the first quarter of 2010 was $0.16 per share, a 14.3% increase from $0.14 per share earned during the first quarter of 2009. The increase was primarily attributable to the Company's same store NOI growth of 10.9% in the quarter, compared to the first quarter of 2009.

Killam's FFO increased by 35.5% during the first quarter, compared to the first quarter of 2009. This growth was not fully reflected in the FFO per share results due to the 14.4% increase in the weighted average share balance.

Management considers FFO per share to be a key measure of operating performance and believes that many of its analysts and shareholders also find this measure to be of value. The Company provides the components of FFO and a reconciliation between FFO and net income in its Management's Discussion and Analysis. FFO is a generally accepted measure of operating performance for 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 and non-cash debenture interest, less gains on debt retirement and future income tax recovery.

Consolidated Same Store NOI Growth of 10.9%

Killam achieved same store NOI growth of 10.9% during the first quarter of 2010, which accounted for 99% of the Company's portfolio in the first quarter. NOI growth was realized in both the apartment and manufactured home community ("MHC") portfolios, with increases of 12.4% and 6.4%, respectively.

Killam's apartment portfolio benefited from a 3.8% increase in rental revenue and a 5.3% decrease in operating costs compared to the first quarter of 2009. The revenue growth was primarily attributable to increased average rents and occupancy improvements. Decreased operating costs were primarily attributable to a 14.8% savings in utility costs. The variance was mainly related to decreased hedge settlement costs in the first quarter of 2010 ($29,000) compared to the first quarter of 2009 ($0.5 million).

Rental revenues for the MHC portfolio increased by 2.0% from the same period in 2009 due to increased rental rates. MHC operating costs decreased 4.9% from the same quarter of 2009 due primarily to lower snow clearing and water and infrastructure costs.

Vacancy Remained Low During Q1 2010

Killam maintained low vacancy throughout the first quarter of 2010, achieving consolidated vacancy of 1.5% at March 31, 2010, compared to 1.8% at March 31, 2009 and 1.6% at December 31, 2009.

The apartment portfolio had a vacancy rate of 2.0% with an average monthly rent of $762. The apartment vacancy was an 80 basis points improvement from the vacancy of 2.8% at March 31, 2009, with the strongest improvements in Moncton and Saint John, New Brunswick. The MHC portfolio had a vacancy rate of 0.9%, with an average monthly rent of $222. Not included in the MHC vacancy numbers are 167 MHC sites that had not been previously rented, including some recently expanded sites, and 376 transient sites in Killam's seasonal resort portfolio. These units are excluded from vacancy statistics in the table below.

                                          Units        Vacancy         Rent
                                      -----------    -----------  -----------
    Nova Scotia                           4,250           2.6%         $812
    New Brunswick                         3,310           1.5%         $720
    Newfoundland                            732           2.5%         $626
    Prince Edward Island                    686           0.6%         $802
    Total Apartment Portfolio             8,978           2.0%         $762
    Total MHC Portfolio                   8,745           0.9%         $222

New Home Sales in 2010

During the first quarter of 2010 Killam completed 6 home sales and 5 partnership sales, compared to 4 home sales and 1 partnership sale completed in the first quarter of 2009. In addition, Killam has commitments for 7 home sales, the majority of which are scheduled to close during the second quarter. The majority of sales activity has been in Nova Scotia, as demand in Ontario and Western Canada remains soft. Killam anticipates selling between 40 and 60 homes in 2010, of which approximately 70% should be new home sales.

Lower Debt Ratio

The Company strengthened its balance sheet during the first quarter of 2010, ending the quarter with total gross debt as a percentage of the gross book value of assets of 61.5%, compared to 65.2% at December 31, 2009 and 67.7% at March 31, 2009. Killam's annualized interest coverage ratio improved during the first quarter to 1.90 times, from 1.84 times as at December 31, 2009 and 1.76 times at March 31, 2009.

The lower debt to gross book value ratio reflects the impact of the $50.6 million public share offering of 6.2 million common shares that closed in March 2010. The proceeds were raised to fund acquisitions, repay indebtedness and for general corporate purposes.

Acquisition Activity in Ontario

Subsequent to the first quarter, in April 2010, the Company acquired its first apartment building in Ontario with the $33 million purchase of a newly constructed 137-unit building in London, Ontario. The Company continues to target acquiring between $100 million and $150 million of properties in 2010, with a focus on newer high-quality properties in both Ontario and Atlantic Canada.

Management's Comments

"We are pleased to report another strong quarter of operating results", noted Philip Fraser, Killam's President and Chief Executive Officer. "The Company's ability to keep occupancy levels high, and continue to pass through rental increases, has contributed to the growth in the quarter, as well as the year-over-year decrease in total energy costs."

"We ended the first quarter with a strong balance sheet, including cash on hand of $55 million, which will assist us in meeting this year's acquisition target. We are optimistic in continuing to grow our portfolio with new buildings and look forward to updating you on our acquisition activity through the year."

Financial Statements

Killam's March 31, 2010 Financial Statements and Notes and Management's Discussion and Analysis can be found at

First Quarter Conference Call

Management will host a conference call to discuss these results on Wednesday, May 5, 2010 at 11:00 AM Atlantic time (10:00 AM Eastern). The dial-in numbers for the conference call are 647-427-7450 (in Toronto) or 888-231-8191 (toll free, within North America).

A live audio webcast of the conference call will be accessible on the Company's website at and at

A replay will be available by dialing 416-849-0833 (Toronto) or 800-642-1687 (toll-free) and using the passcode 67643908 until May 12, 2010, or on the Company's website for 90 days after the conference call.

Annual Meeting

Killam's Annual Meeting of Shareholders will be held on Thursday, May 6, 2010 at 10:00 AM Atlantic Time (9:00 AM Eastern) at the Four Points Sheraton, 1496 Hollis Street, Halifax, Nova Scotia. A live audio webcast of the Annual Meeting will be accessible on the Company's website at or at

Corporate Profile

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.

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.

%SEDAR: 00014891E

SOURCE Killam Properties Inc.

For further information: For further information: Dale Noseworthy, CA, CFA, Director, Investor and External Relations, Killam Properties Inc., (902) 442-0388,

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Killam Properties Inc.

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