Killam Apartment REIT Completes Acquisition of 785-Unit Kitchener-Waterloo Portfolio

Nancy Alexander

Killam Apartment REIT (“Killam” or the “REIT”) (TSX: KMP.UN) is pleased to announce that it has completed the acquisition of 785 units from STAMM Investments Limited. The purchase price of $190.5  million was satisfied by new first mortgage financing of $123.9 million with the balance in cash from the proceeds of Killam’s recent equity offering, which closed on May 31, 2021. This acquisition builds on Killam’s existing presence in the Kitchener-Waterloo-Cambridge market and aligns with Killam’s strategic goals of accretive growth and geographic diversification.

The Estates is located at 188 Margaret Avenue, Kitchener. This 12-storey, 137-unit concrete apartment building comprises a mix of bachelor (5), 1-bedroom (24), 2-bedroom (97) and 3-bedroom (11) units with an average unit size of approximately 865 square feet. The current occupancy is 99% and the average in-place rent is $1,319 (approximately $1.53 per square foot). The Estates, built in 1959, has underground parking, shared laundry facilities and building amenities including a common room and fitness facilities. The units are air conditioned with natural gas baseboard heating.

Heritage Place consists of two concrete buildings totaling 160 units, located at 301 and 315 Heritage Drive in Kitchener. One building is nine-storeys and the other is six-storeys. Both buildings are concrete construction with a mix of 1-bedroom (16), 2-bedroom (142) and 3-bedroom (2) units with an average unit size of approximately 1,084 square feet. The current occupancy is 100% and the average in-place rent is $1,197 (approximately $1.10 per square foot). Heritage Place, built in 1986-87, has underground parking, a mix of shared and in-suite laundry facilities and outdoor amenity space. The units are air conditioned with electric baseboard heating.

Northfield Gardens consists of six 4-storey buildings totaling 274 units, located at 160-170 Wissler Road in Waterloo. The apartments in this amenity-rich north Waterloo neighborhood feature a mix of 1-bedroom (4) and 2-bedroom (269) units with an average unit size of approximately 800 square feet. The current occupancy is 100% and the average in-place rent is $1,195 (approximately $1.49 per square foot). Northfield Gardens, built in 1983-85, has surface parking, shared laundry facilities and outdoor building amenity spaces including BBQs, tennis courts, a playground and walking trails. The units are air conditioned with electric baseboard heating.

Ridgeway & Somerset comprise of two 9-storey buildings totaling 214 units located at 91 Franklin Street South and 100 Eighth Avenue in Kitchener. These concrete constructed buildings have a mix of bachelor (3), 1-bedroom (86), 2-bedroom (122) and 3-bedroom (2) units with an average unit size of approximately 740 square feet. The current occupancy is 99% and the average in-place rent is $1,169 (approximately $1.58 per square foot). Ridgeway & Somerset, built in 1967, have underground parking, shared laundry facilities and building amenity spaces including a common area lounge and fitness facilities. The units are heated with natural gas baseboard convectors.
“We are pleased to close our recently announced acquisition in Kitchener-Waterloo,” said Philip Fraser, President and CEO. “All of these apartments are well-located in desirable neighbourhoods of both Kitchener and Waterloo and have been very well maintained. With opportunities for modern upgrades and energy efficiencies, these properties fit well with our suite repositioning and energy efficiency programs.”

“Kitchener-Waterloo-Cambridge is one of Ontario’s strongest rental markets with a diverse and vibrant economy, and a growing population. This acquisition significantly increases our Ontario presence to 3,342 units, plus an additional 485 units under development. Looking forward, Ontario is expected to represent approximately 27% of Killam’s net operating income, compared to 22.6% in 2020.”

Additional acquisitions

On June 1, 2021, Killam acquired an additional 25% interest in Charlottetown Mall for $10.1 million, increasing its ownership to 75%. Charlottetown Mall is a stabilized, grocery-anchored, enclosed mall, located on 32 acres in the heart of Prince Edward Island’s busiest retail node and adjacent to the University of PEI campus. Killam’s former joint venture partner, RioCan REIT, sold their 50% interest to Killam and a local PEI real estate operator. The local presence will bring a regional leasing perspective, further development potential and community-level involvement to revitalize the centre. Killam has taken over the management of the mall and has identified opportunities to reduce the property’s operating expenses and carbon footprint in the near future.

On June 8, 2021, Killam purchased 38 Pasadena Crescent, a 40-unit, four-storey apartment building in St. John’s, Newfoundland and Labrador, for $4.2 million. This wood frame building consists of eight 1- bedroom and 32 2-bedroom units and is currently 100% leased.

“It has been a busy six months of acquisition growth for Killam and year-to-date, we have acquired $270 million of assets.” commented Philip Fraser. “We continue to look for opportunities in the second half of 2021 to grow our portfolio and diversify geographically.”

About Killam Apartment REIT

Killam Apartment REIT, based in Halifax, Nova Scotia, is one of Canada’s largest residential landlords, owning, operating and developing a $4.0 billion portfolio of apartments and manufactured home communities. Killam’s strategy to enhance value and profitability focuses on three priorities: 1) increasing earnings from existing operations, 2) expanding the portfolio and diversifying geographically through accretive acquisitions, with an emphasis on newer properties, and 3) developing high-quality properties in its core markets.

For information, please contact:

Philip Fraser
President & CEO
(902) 453-4536

Dale Noseworthy, CPA, CA, CFA
(902) 442-0388

Nancy Alexander, CPA, CA
Vice President, Investor Relations & Sustainability
(902) 442-0374

The Estates, Heritage Place, Forthfield Gardens, Ridgeway & Somerset


Note: The Toronto Stock Exchange has neither approved nor disapproved of the information contained herein. Certain statements in this press release may constitute forward-looking statements. In some cases, forward-looking statements can be identified by the use of words such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "intend", “continue”, “opportunity” or the negative of these terms or other comparable terminology, and by discussions of strategies that involve risks and uncertainties. Such forward-looking statements include, among other things, statements relating to the characteristics and expected occupancy rates of the newly acquired properties, the anticipated benefits and operating expense reductions related to Killam’s increased ownership and management of the Charlottetown Mall, and Killam’s acquisition plans in the second half of 2021. These forward- looking statements 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, including the effects of the evolving COVID-19 pandemic on Killam's performance; the effectiveness of measures intended to mitigate the impact of COVID-19 and any variants thereof; competition; national and regional economic conditions and the availability
of capital to fund further investments in Killam's business. For more detailed information on these and other risks and uncertainties, you should refer to our most recently filed annual information form and management's discussion & analysis, each of which is available at 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.