Mr. Philip Fraser reports

KILLAM APARTMENT REIT ANNOUNCES $85.2 MILLION PUBLIC OFFERING OF TRUST UNITS

Killam Apartment Real Estate Investment Trust has reached an agreement with a syndicate of underwriters led by RBC Capital Markets to issue to the public, subject to regulatory approval, on a bought deal basis, 7.1 million trust units for $12 per unit for gross proceeds of $85.2-million.

Killam has granted the underwriters an overallotment option for the purposes of covering the underwriters' overallocation position for an additional 1,065,000 units, exercisable up to 30 days after closing of the offering.

Killam intends to use the net proceeds from the offering to redeem its 5.65-per-cent convertible subordinated debentures (current outstanding balance of $57.5-million), which mature on Nov. 30, 2017, and which have a par call date of Dec. 1, 2015, and to partially finance the previously announced apartment acquisitions in Halifax and Ottawa. Killam intends to use the rest of the net proceeds, if any, to increase its portfolio of unencumbered assets, finance future property acquisitions and development activities, and for general trust purposes.

Killam intends to provide formal notice of redemption to holders of the 5.65-per-cent debentures following the closing of the offering.

"We are pleased to have the opportunity to replace one of Killam's two outstanding convertible debentures with equity," noted Philip Fraser, Killam's president and chief executive officer. "We are targeting a reduction in Killam's leverage during 2016, and the opportunity to redeem the 5.65-per-cent debentures in the first half of the year is a key step in achieving this goal."

Upon closing of the offering (excluding the effect of the overallotment option), the redemption of the 5.65-per-cent debentures and the two recently announced acquisitions, Killam's total-debt-to-total-asset ratio will decrease to approximately 53.2 per cent from 55.8 per cent at March 31, 2016.

Killam will, within the next few days, file with the securities commissions and other similar regulatory authorities in each of the provinces of Canada, excluding Quebec, a preliminary short-form prospectus relating to the issuance of the units. Closing of the offering is expected to take place on or about June 2, 2016, and is subject to customary closing conditions, including the approval of the Toronto Stock Exchange.

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