Killam Apartment REIT

Investor Presentation

January 2017

1

This presentation may contain forward‐looking statements with respect to Killam

Apartment REIT and its operations, strategy, financial performance and condition.

These statements generally can be identified by use of forward‐looking words such as

“may”, ”will”, “expect”, “estimate”, “anticipate”, “intends”, “believe” or “continue”

or the negative thereof or similar variations. The actual results and performance of

Killam Apartment REIT discussed herein could differ materially from those expressed

or implied by such statements. Such statements are qualified in their entirety by the

inherent risks and uncertainties surrounding future expectations. Important factors

that could cause actual results to differ materially from expectations include, among

other things, general economic and market factors, competition, changes in

government regulation and the factors described under “Risk Factors” in Killam'

annual information form and other securities regulatory filings. The cautionary

statements qualify all forward‐looking statements attributable to Killam Apartment

REIT and persons acting on its behalf. Unless otherwise stated, all forward‐looking

statements speak only as of the date to which this presentation refers, and the

parties have no obligation to update such statements.

Cautionary StatementCautionary Statement

2

Killam Apartment REIT is a growth‐oriented Canadian real estate investment trust. Killam owns, manages and develops multi‐family residential properties in Atlantic Canada, Ontario and Alberta. Killam's portfolio includes $1.9 billion in real estate assets, including 13,952 apartment units and 5,165 manufactured home community (MHC) sites.

Killam Apartment REIT

Market cap1 $860MAnnual distribution $0.60Distribution yield 5.0%Avg. daily volume 133K

1) Includes exchangeable units

About Killam Apartment REIT

89%

9% 2%

Net Operating Income (NOI) by Sector

ApartmentsMHCsCommercial

43%

22%

18%

8%

6%3%

NOI By Province

Nova ScotiaNew BrunswickOntarioNFLDPEIAlberta

3

Why Invest in Killam Clearly defined strategy – growth from same 

property portfolio, acquisitions and developments.

High‐quality portfolio with investment in newer properties.

Growing funds from operations (FFO) & adjusted funds from operations (AFFO) per unit.

Stable distributions with improving payout ratio.

Strengthened balance sheet with increased flexibility.

Interest saving opportunities on refinancings.

Established development program with robust development pipeline.

Positioned to benefit from economic growth in Atlantic Canada and population growth in Central Canada.

Why Invest in Killam

4

Killam Apartment REITClearly Defined StrategyKillam’s strategy is to maximize its value and long‐term profitability by concentrating on three key areas of growth:

#1

Increasing earnings from its existing portfolio

#2

Expanding the portfolio and diversifying geographically 

through accretive acquisitions, with an emphasis on newer 

properties

#3

Developing high‐quality properties in its core markets

5

Killam Apartment REITClearly Defined Strategy

#1) Increasing earnings from the existing portfolio.

Revenue Growth+

Expense Management

=Increased Net 

Operating Income (NOI)

2.9%

2.6%

1.9%

1.8%

1.7% 2.2%

1.8%

Historic Same Property Revenue Growth

• Improved occupancy• Growing rental rates• Reduced incentives• Capital upgrades• Quality product & service• 90% tenant satisfaction 

rating94

.3%

93.6

% 94.2

%

95.6

%

94.7

%

94.9

%

94.7

%

95.8

%

95.5

%

94.8

% 95.3

% 95.7

%

95.7

%

95.6

%

95.8

%

Apartment Quarterly Occupancy$ occupancy as a % of gross potential rents 1

95.1% Average

61. This measures dollar occupancy achieved and is typically  ~1% lower than occupancy on a unit count basis at the end of each quarter, but is better management information.

Killam Apartment REITClearly Defined Strategy

#1) Increasing earnings from the existing portfolio.

Revenue Growth+

Expense Management

=Increased NOI

• Energy initiatives• Water saving programs• Maximizing economies of 

scale

Killam has increased its same property NOI an average of 3.0% per year over the last 10 years.

7

5.1%

2.1%

8.4%

4.8%

0.3%

2.0%

(0.4

%)

(0.9

%)

4.2% 4.

7%

Same Property NOI Growth 2007-2016

Average Growth of 3.0%

* Record high natural gas prices in Atlantic Canada impacted NOI growth in 2013 & 2014.  

• Employee training• Investment in technology• Tenant education

Killam Apartment REITClearly Defined Strategy

#2) Expanding the portfolio and diversifying geographically through accretive acquisitions, with an emphasis on newer properties.

0

5,000

10,000

15,000

Units/site

s

Apartment Units & MHC Sites 

ApartmentUnits

MHC Sites

 $‐

 $20

 $40

 $60

 $80

 $100

Annual Apartment NOI$ millions

AlbertaOntarioAtlantic  Canada

Killam's strong operating platform can support a larger and more geographically diverse portfolio. Increased investment in core markets outside Atlantic Canada will enhance Killam's diversification and exposure to urban centres in Canada that have higher population growth.

Since its first acquisition in 2002, Killam’s portfolio has grown annually through acquisitions. Killam is expanding its portfolio by acquiring centrally located buildings in urban markets, increasing its ownership in Ontario and Alberta, and adding to its established portfolio in Atlantic Canada. 

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Killam Apartment REITClearly Defined Strategy

#3) Developing high-quality properties in its core markets.

$5 $8 $14 $8$15

$35$24

$19 $25

$25

$17

$0

$20

$40

$60

$80

Developments Completed Per Year$ millions

Killam augments its external growth opportunities with developments. Killam has invested over $130 million in developments since its first project was completed in 2011.

With an experienced team and a development pipeline of over 1,200 units, developments are an important component of Killam’s growth.

Killam can develop to yields higher than those achievable through acquisition, contributing to net asset value (NAV) growth per unit.

* forecast

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Killam Apartment REITClearly Defined StrategyOver $130 million of developments completed.

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49 units ‐ Charlottetown, PEI 63 units ‐ Halifax, NS 101 units ‐ Fredericton, NB

47 units – Charlottetown, PEI 71 units – St. John’s, NL 102 units – St. John’s, NL

122 units ‐ Cambridge, ON 70 units – Halifax, NS

High‐Quality Portfolio 

18%

19%

9%8%

23%

23%

Apartment NOI by Year of Construction

2010 and newer2000‐20091990‐19991980‐19891970‐1979Pre 1970

Killam has one of the newest apartment portfolios in Canada; 37% of Killam’s apartment NOI comes from properties built in 2000 or later. 

Management believes that increasing Killam’s ownership in new, high‐quality buildings will result in long‐term demand for its properties, reduce annual capital requirements related to deferred maintenance, and transform Killam’s portfolio into one of the highest quality portfolios in Canada.

$0

$1,000

$2,000

$3,000

2013 2014 2015

Average Capital Spend Per Unit by Building Age

For the years ended Dec 31

0 ‐ 10 years 11 ‐ 20 years 21 ‐ 30 years

31 ‐ 40 years 41 + years

Killam is growing its portfolio of high‐quality properties by focusing on developments and acquiring newer properties. 11

The annual capital spend per unit is lowerfor newer properties. For example, Killam’s average spend for properties 0 to 10 years old was $700 per unit in 2015 compared to $2,600 per unit for buildings over 40 years old.  

Overall, Killam’s average capital spend was $2,178 per apartment unit in 2015. 

9.7% FFO Per Share Growth 2015

$0.71 $0.72

$0.79

$0.60 $0.61

$0.68

2013 2014 2015

FFO & AFFO Per Unit

For the years ended Dec 31

FFO AFFO

Growing FFO & AFFO per Unit

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$0.54$0.59

$0.65

$0.46$0.51

$0.58

2014 2015 2016

YTD FFO & AFFO Per Unit

For the nine months ended Sept 30

FFO AFFO

FFO and AFFO per unit growth has been attributable to: • same property NOI 

growth 

• interest expense savings 

• accretive acquisitions 

• developments

$0.58 $0.60 $0.60 $0.60 $0.60

96%98%

88%

80%

75%

70%

75%

80%

85%

90%

95%

100%

$0.57

$0.58

$0.58

$0.59

$0.59

$0.60

$0.60

$0.61

2013 2014 2015 2016* 2017*

Killam’s Annual Dividend/Distribution & Payout Ratio

Dividend/Distribution AFFO Payout Ratio

88% AFFO Payout Ratio in 2015

*The 2016 and 2017 adjusted funds from operations (AFFO) payout ratio represents the consensus estimate based on the current annual distribution of $0.60.  

Improving AFFO Payout Ratio

81% AFFO Payout Ratio atSept 30, 2016

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Financial & Operating Performance

Stable Balance Sheet55

.2%

51.6

%

52.9

% 54.9

%

55.7

%

53.2

%

Debt as a % of Total Assets

At Dec 31

Sept 30, 2016

Dec 31,2015

Mortgage debt as a % of total assets 50.9% 50.4%

Weighted average interest rate on mortgage debt 3.08% 3.27%

Weighted average term to maturity  4.2 years 4.2 years

Debt service coverage ratio (rolling 12 months) 1.52 1.35

Interest coverage ratio (rolling 12 months) 2.81 2.34

CMHC‐insured apartment mortgages 76% 73%

Strengthened Balance Sheet with Increased Flexibility 

1.98

2.09

2.21

2.34

2.81

Interest Coverage RatioAt Dec 31

Killam completed a $98 million equity raise on June 2, 2016. Part of the proceeds were used to redeem $57.5 million of convertible debentures on July 4, 2016. The interest coverage estimate at July 4, 2016 normalizes for the impact of redeeming the $57.5 million of convertible debentures.

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Credit Facility Expanded : Following the all cash acquisition of Garden Park Apartments on June 30, 2016, Killam established a new $30M demand credit facility and increased its acquisition capacity to $100 million.

3.81% 3.69% 3.73%

2.92%2.59% 2.70%

3.16% 3.28% 3.13%

0%

1%

2%

3%

4%

5%

6%

7%

8%

$0$20$40$60$80$100$120$140$160$180$200

Interest Rate

Mortgage Maturities ($

M)

Mortgage Maturities by YearAs at Sept 30, 2016

Mortgage Maturities Weighted Average Interest Rate (Apartments)

5 year rate 10 year rate

Interest Saving Opportunities on Refinancings

Current rate for 5‐year CMHC insured debt is approximately 2.2%. 

Current rate for 10‐year CMHC insured debt is approximately 2.8%. 

15

Robust Development Pipeline

2014 & Q1 2015

Property CityDevelopments UnderwayThe Alexander - Phase 1* Halifax, NS

Saginaw Phase II Cambridge, ONDevelopment Opportunities - 2017Spring Garden Terrace Land Halifax, NSThe Governor (Phase 2 of the Alexander)* Halifax, NSSilver Spear* Mississauga, ON

Future Development Opportunities - 2018 and beyondGrid 5 Land* Calgary, ABCarlton Houses Halifax, NSMedical Arts (Spring Garden) Halifax, NS1335 Hollis Street Halifax, NSBlock 4 St. John's, NLTopsail Road St. John's, NL

Total Development Opportunities* Represents Killam's 50% interest in potential development units.

Future development

Future development

As of rightApproved development agreement

106 Approved development agreement

Future development

198 Future development

Under construction - 2017 completion

In design and approval processAs of right

Status

93 Start in Q3-2016

1,237

Development Opportunities

225

Development Potential in

Units

64

200

8030

70

121

50

Killam is targeting yields of 5.5% ‐ 6.0% on developments, and cap rate values upon completion of 4.5% ‐ 5.0%, contributing to NAV per unit growth.    16

Investment OpportunityImproved Economics in Atlantic CanadaBenefiting from Economic Growth in Atlantic Canada 

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Halifax is expected to have one of the fastest growing economies in Canada, with 2.9% growth expected in 2016, according to the Conference Board of Canada’s Winter 2016 Metropolitan Outlook. Approximately 36% of Killam’s NOI is generated in Halifax, the largest city in Atlantic Canada.

Commitment/Size ($)

1,000‑1,500 directup to 11,500 indirect

$2.1 bill ion(British Petroleum and Shell  Canada)

Various  Halifax Construction Projects

$1‑2 bill ion 3‑4 years Not available Investments  underway include the new convention centre, two new military facil ities, and various  real  estate projects  in Halifax.

New Brunswick

Saint John Mill  Upgrade

$450 million 3 years2014‐2017

600 direct The two‐phase upgrade began in 2014, corresponding with a 20% increase in the NB softwood that will  be made available to the forestry industry. 

Energy East Pipeline

$12 bil l ion (proposed total  project cost)

6 years (development phase)

3,700 during development

Application submitted to National  Energy Board in 2014.  An estimated $2.8 bill ion of GDP contribution for New Brunswick during the project.

Newfoundland and Labrador 

Muskrat Falls  Hydro Project

$7 bill ion 5 years2012‐2017

1,500 direct with peak of 3,100.

 Construction of the 824 megawatt hydroelectric dam is  underway, as  well  as  the transmission l ine between Muskrat Falls  and Churchill  Falls.

Maritime Link $1.6 bill ion 4 years2013‐2017

Average of 300 direct, with a peak of 600

Subsea cable designed to transport electricity from NL to NS. Construction began in 2014. First power is  planned for delivery in 2017. 

Hebron Oil  Project

$14 bil l ion 10 years2010‐2024

3,000 ‑ 3,500 direct The reserve estimate for Hebron is  over 700 million barrels of oil. The project started in 2010 and will  run unti l  2024. Suncor has reconfirmed its  commitment to Hebron (Jan 13, 2015) and expects  it to come online in 2017. Development dril l ing will  continue until  2024.

(1) Project details  including commitment, size, term and job growth are taken from various  sources, such as  company press releases, economic studies  and related websites.

Province Project(1) Term Estimated # of Jobs Comments

Nova Scotia 

Irving Shipbuilding Contract

$25 bil l ion 25‑year contract. Started in  2015

Irving finished a $350M modernization of the Halifax shipyard and began cutting steel  in September 2015 for phase I of the contract, 6 Arctic Offshore Patrol  Ships. The second and more significant phase of the contract, building ~15 surface combatant ships, is  expected to begin in 2020. 

  Energy Exploration off NS Coast

6 years (exploration phase)2013‐2019

Not available Shell  dril led its first exploration well  during 2015. BP expects  to dril l  its  first exploration well  in 2017. This offshore oil  activity has  the potential  for long‑term investment and employment opportunities  in the region.

Investment OpportunityImproved Economics in Atlantic Canada

3.8%

8.6%

5.7% 5.9%

4.6%

9.0%

3.0%3.4%

7.4%

5.5%

4.2% 4.7%

8.5%

3.5%

2.6%

6.0%

4.4%

1.7%

7.9% 8.5%

3.7%

CMHC Vacancy in Atlantic Canada2014 2015 2016

Atlantic Canada is experiencing improved apartment occupancy levels. In their Fall 2016 Rental Market Report, CMHC reported lower vacancies in four of six of Killam’s core marketsin Atlantic Canada, versus an overall increase for Canada. 

Source: CMHC Fall 2015 and Fall 2016 Rental Market Reports.

Benefiting from Improved Occupancy in Atlantic Canada 

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Rental Units: 70 

Start Date:  December 2014

Completion: August 2016Move‐ins started in Sept 2016

Location: Downtown Halifax

Lease‐up: 100%

Cost: $14.7 million ($210,000/door) 

Expected Yield: 5.5%

Expected Value: 4.75% cap rate

Average Unit Size: 636 sf

Average Rent: $1,400 ($2.20/sf)

Current Developments

Southport, Halifax, NSFocus on Developments

Southport – Completed August 2016

19

Current Developments

Southport, Halifax, NSFocus on Developments

Southport – Completed August 2016

20

Focus on Developments 

The Alexander ‐ 2017 Completion

21

Rental Units: 242 units, 6,500 sf of retail space

Ownership: Killam 50%, Partners 50% 

Start Date: Q3‐2015

Projected Completion: Q4‐2017

Location: Downtown Halifax across from the waterfront

Cost: $35 million (Killam’s cost) ($276,000/ residential door) 

Expected Yield: 5.5%

Expected Value:  4.75% cap rate

Average Unit Size: 740 sf

Average Rent: $1,740 ($2.35/sf)

Focus on Developments 

The Alexander ‐ 2017 Completion

22

View from upper floors

The Alexander, Halifax

23

The Alexander, Halifax

24

The Alexander, Halifax

25

The Alexander, Halifax

26

Future DevelopmentsSaginaw 2, Cambridge, ON

Rental Units:  93 units 

Start Date:  Q3‐2016

Projected Completion:Q1‐2018

Location: Adjacent Saginaw Gardens, Saginaw Parkway, Cambridge

Cost: $25.1 million ($269,000/door)

Expected Yield: 5.5%

Expected Value:  4.75% cap rate

Average Unit Size: 1,025 sf

Average Rent: $1,665 ($1.62/sf)

Focus on Developments 

Saginaw Gardens II – Started in Q3‐2016

27

Building Description: 246 apartment units8,195 sf of commercial space

Location: 1472 Martello Street, Halifax

2016 Acquisition:Remaining 51.0% interest$23.7 millionJune 2016 closing

2016 Acquisitions

Garden Park Apartments, Halifax2016 Acquisitions

Garden Park Apartments, Halifax

28

2016 Acquisitions

270 Parkside Drive, Fredericton

existing Killam properties

270 Parkside Drive is located in close proximity to 355 Killam units in Fredericton, and across from Killam’s regional office in the city. 

29

Building Description: 173 units3rd of a five‐building portfolio with a shared clubhouse

Location: 1047 Canadian Shield Ave, Kanata

2016 Acquisition:50% of building III$31.1 millionJune 2016 closing

Previous Purchases:2011 – 25% of building I

2014 – 50% of building II &additional 25% of building I

2016 Acquisitions

Kanata Lakes Apartments, Ottawa2016 Acquisitions

Kanata Lakes Apartments III

30

2016 Acquisitions

Kanata Lakes Apartments III

31

Well Positioned for Growth

32

Killam is well positioned for long‐term success with a focus on the follow key initiatives:• Attention to curb appeal and long‐term value enhancement with capital 

programs and customer‐focused service.  • Cost management with ongoing process improvements.• Growing the portfolio and expanding  geographically with accretive 

acquisitions.• Augmenting the quality of the portfolio with developments in core markets.• Strengthening its balance sheet with lower debt levels.• Increasing capital flexibility with an expanded line‐of‐credit, growing portfolio 

of unencumbered assets and improved AFFO payout ratio.

Contact Information

Philip FraserPresident & CEO902‐453‐4536pfraser@killamreit.com

Robert Richardson, FCPA, FCAExecutive Vice President & CFO902‐442‐9001rrichardson@killamreit.com

Dale Noseworthy, CPA, CA, CFAVice President, Investor Relations & Corporate Planning902‐442‐0388dnoseworthy@killamreit.com

33