Killam Properties new multi-residential development

HALIFAX, Sept. 28 /CNW/ - Killam Properties Inc. ("Killam") (TSX:KMP/KMP:DB) today announced the start of construction of Charlotte Court, a two phase apartment complex in Charlottetown, Prince Edward Island. Phase I of the 98-unit apartment complex will consist of 49 units, which are expected to be ready for occupancy in July 2011. Phase II will consist of another 49 units, expected to be ready for occupancy in June 2012. The total construction cost is estimated to be $11 million, with an expected all cash return, or capitalization rate, of between 6.5% and 7%.

In March 2010 the PEI Government issued a tender for the redevelopment of the aging facility that is currently located on the site. Killam was awarded the contract, with Inc. ("APM") acting as project manager. APM is an entity controlled by Mr. Timothy Banks, a director of Killam. The development will provide a new, modern and energy-efficient apartment complex that will maximize the potential of the site and will provide a positive living environment for current and future tenants.

Phase I of Charlotte Court will be a three-storey building with amenities that include an elevator, social room, laundry facilities on each floor and a fitness room. The unit mix will consist of one and two-bedroom units, including twelve barrier-free units designed for seniors with disabilities. Phase I will offer units at affordable rental rates, subsidized and leased by PEI's Department of Community Services, Seniors and Labour, consistent with the program currently provided to tenants at the existing facility. In return for the subsidized rental rates, Killam will receive a $1.5 million capital contribution, paid for equally by the Federal and PEI governments, which will be forgivable over ten years.

Phase II of the development will be a 49-unit luxury building with spacious units of up to 1,200 square feet, having five appliances and upgraded kitchens with granite countertops and modern features. Other building amenities will include underground parking, a fitness room and a social room.

Charlotte Court is located at 300 North River Road, within two blocks of Killam's existing Queen Street and DesBarres apartment buildings. North River Road is a major arterial road two blocks west of University Avenue, which has been the focus of Charlottetown's commercial and retail development in recent years.

"We are pleased to be expanding our presence in Charlottetown" noted Philip Fraser, Killam's President and CEO. "We are focused on increasing our ownership of new and high-quality apartment properties through acquisitions and development. The Charlotte Court development is the first of several apartment projects we are planning to develop over the next few years."

Killam Properties Inc, based in Halifax, Nova Scotia, is one of Canada's largest residential landlords, owning and operating multi-family apartments and manufactured home communities.

This news release shall not constitute an offer to sell or the solicitation of an offer to buy securities in any jurisdiction. The common shares of Killam have not and will not be registered under the United States Securities Act of 1933, as amended (the "1933 Act"), or the securities laws of any state of the United States, and may not be offered or sold in the United States or to any U.S. person absent registration or an applicable exemption therefrom under the 1933 Act and the securities laws of all applicable states.