Mr. Philip Fraser reports

KILLAM PROPERTIES INC. ANNOUNCES $28 MILLION ACQUISITION IN HALIFAX

Killam Properties Inc. has acquired the Brewery Market and Keith Hall in Halifax, and land for future apartment developments.

Killam acquired the Brewery Market and Keith Hall, located in downtown Halifax, across from the waterfront, for $22.3-million, representing a capitalization rate of 7.0 per cent. The fully modernized heritage complex can trace its roots back to the early 1800s, and contains 158,000 square feet of office and retail space. The property is 95 per cent occupied.

Killam has also acquired a 50-per-cent interest in 47,650 square feet of vacant land located adjacent to the Brewery Market for $5.2-million. The site is approved, through a development agreement, for construction of a 240-unit multiresidential property, which will be known as the Alexander. The land also includes capacity for an additional 40 units. Killam and its 50-per-cent partner expect to begin construction during the second half of 2015.

The total purchase price of $27.5-million was based on the average of two independent appraisals. The purchase price was satisfied with the assumption of $8.7-million of existing mortgages with a weighted average interest rate of 5.2 per cent, $5.1-million in a vendor take-back loan at 3.0 per cent, the issuance of $12.0-million of common shares of Killam (1,092,548 common shares at $10.9835, based on the five-day volume-weighted average price at March 25, 2015) and the balance in cash. The vendor of the properties was Halkirk Properties Ltd., a company partially owned by James Lawley, a director of Killam.

"We are pleased to have completed this acquisition," noted Philip Fraser, Killam's president and chief executive officer. "This unique, historic property and development site is one of the best mixed-use locations in Atlantic Canada. We now own a landmark office and retail complex at a very attractive yield, and have partnered with the previous owner to build a new apartment building on a 50-50 basis. Once the apartment building is completed, our tenants will enjoy the benefit of a mixed-use property with dining, entertainment and office space, all contained in one complex, with incredible ocean views."

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