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
"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