Mr. Philip Fraser reports

KILLAM APARTMENT REIT COMPLETES REDEMPTION OF $57.5 MILLION OF CONVERTIBLE DEBENTURES AND CLOSES $56.3 MILLION IN ACQUISITIONS

Killam Apartment Real Estate Investment Trust has completed the previously announced redemption of its $57.5-million, 5.65-per-cent convertible debentures. Proceeds from Killam's $98-million public offering of trust units, which closed on June 2, 2016, were used to finance the redemption.

Killam also closed two previously announced acquisitions, Kanata Lakes Apartments III and Garden Park Apartments. On June 10, 2016, Killam acquired a 50-per-cent interest in Kanata Lakes Apartments III, located at 1047 Canadian Shields Ave. in Ottawa. The new 173-unit apartment building is part of a five-building complex with a shared clubhouse. Killam and its 50/50 partner now own three of the buildings and have the two remaining buildings under contract with closings scheduled for the first quarter of 2017. The acquisition cost of $30.8-million for Killam's 50-per-cent interest in Kanata Lakes Apartments III was financed through a new 10-year CMHC-insured (Canada Mortgage and Housing Corp.) mortgage at 2.51 per cent ($18.4-million) and the remainder in cash.

On June 30, 2016, Killam acquired the remaining 51-per-cent interest in Garden Park Apartments in Halifax which it did not already own. The $23.7-million acquisition was financed with cash. Killam plans to pledge the unencumbered asset against a new acquisition line of credit, increasing Killam's acquisition line from $2-million to $30-million.

In addition to completing the previously announced acquisitions, Killam also acquired a 28-unit apartment building in Fredericton on July 17, 2016, for $1.8-million. The building, 270 Parkside Dr., is located adjacent existing Killam properties.

"We have strengthened our balance sheet during the first half of 2016," noted Philip Fraser, Killam's president and chief executive officer. "We used the proceeds from our recently completed equity raise to redeem $57.5-million in convertible debentures and to close $56.3-million in acquisitions. These transactions add high-quality assets to our real estate portfolio and improve our leverage ratios. The ability to acquire Garden Park Apartments mortgage free enables Killam to increase its acquisition line of credit, ensuring increased acquisition capacity and flexibility in the future."

We seek Safe Harbor.