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Press release from CNW Group

Killam Properties Inc announces acquisition and development totalling $20 million in St. John's, Newfoundland

Monday, November 07, 2011

Killam Properties Inc announces acquisition and development totalling $20 million in St. John's, Newfoundland14:24 EST Monday, November 07, 2011HALIFAX, Nov. 7, 2011 /CNW/ - Killam Properties Inc. (TSX: KMP) is pleased to announce the acquisition of Rutledge Manor and the start of construction of Bennett House, a 71-unit apartment development, in St. John's, Newfoundland.Acquisition of Rutledge ManorKillam has acquired Rutledge Manor, a 53-unit building, for $6.65 million. The property is located at 2 The Boulevard, adjacent Quidi Vidi Lake and within two kilometers of downtown St. John's. Recently upgraded, Rutledge Manor contains 4 bachelor, 19 one-bedroom and 30 two-bedroom units and is currently 100% occupied. The average monthly rent, which includes 14 furnished executive units, is $1,030; the average rent for the 39 unfurnished suites is $766 and the average for the 14 furnished suites is $1,767.The purchase price of $6.65 million ($125,500 per suite) was satisfied with a $4.5 million mortgage at 3.95% and the balance in cash. The capitalization rate is approximately 6.1%.Development of Bennett HouseKillam is expecting to receive, within the next few weeks, municipal approval to begin construction of Bennett House, a 71-unit steel and concrete apartment building to be located at 66 Churchill Avenue, on land Killam purchased in March of this year. Bennett House is the first phase of a three phase development which will contain 210 units when completed. The site is adjacent Quidi Vidi Lake, close to Rutledge Manor.Marco Group of Companies, one of Atlantic Canada's largest construction firms, will act as the project manager and Studio Works International Inc. is the project's architectural design firm.The four-storey luxury building will be approximately 107,500 square feet and will have many amenities, including underground parking, a boardroom for tenants, a multi-purpose lounge and a movie theatre.The individual suites will be spacious, including 52 two-bedroom suites with an average size of 1,050 square feet and 19 one-bedroom suites with an average size of 750 square feet, and will include 6 appliances and high-quality finishes. The building will have 77 parking stalls, including 52 interior and 25 exterior stalls.Construction of Bennett House is expected to take approximately 14 months to complete. The construction costs are estimated to be approximately $14.4 million ($203,000 a suite) with an all-cash unlevered return expected of between 5.5% and 6.0%."We are pleased to expand our ownership in St. John's, which I believe is Canada's most attractive apartment market." noted Philip Fraser, Killam's President and CEO. "The economic growth in St. John's has been remarkable.""We look forward to beginning construction of Bennett House, the first of three planned developments in St. John's. We are optimistic about the demand for new rental suites in the city, a market that has seen virtually no new purpose-built rental construction for over fifteen years. The existing rental stock in St. John's is old, and the demand for housing is the strongest it has ever been, with average rents increasing by 5.7% and 9.4% in 2010 and 2011, respectively, as reported by CMHC in its Spring 2011 Rental Market Report."Corporate ProfileKillam 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 statements.Image with caption: "Killam Properties Inc expects to begin construction of Bennett House, a 71-unit apartment building to be located at 66 Churchill Avenue in the Pleasantville area of St. John's, Newfoundland, in December 2011. (CNW Group/KILLAM PROPERTIES INC.)". Image available at: http://photos.newswire.ca/images/download/20111107_C3335_PHOTO_EN_6209.jpgFor further information: Killam Properties Inc. Dale Noseworthy, CA, CFA Vice President, Investor Relations & Corporate Planning dnoseworthy@killamproperties.com Phone: (902) 442-0388