Management’s Discussion and Analysis Dollar amounts are in thousands of Canadian dollars (except as noted) PART III 2013 Financial Overview Consolidated Results For the years ended December 31, Total property revenue for the year ended December 31, 2013, excluding the properties held through the Company’s joint ventures, was $141.1  million, a 5.6% increase in revenue over the same periods in 2012. The growth was generated through revenue from acquisitions, developments  and increased rental rates, partially offset by increased vacancy. Killam’s total property operating expenses increased 9.2% for 2013 compared to 2012, decreasing the operating margins by 140 bps during  the year. The overall decrease in the operating margin can be attributed to higher utility costs and new acquisitions and developments in the  lease‑up phase that were not yet stabilized during 2013. As well, 2013 had a higher percentage of apartment units versus MHC sites than 2012,  which operate with a slightly lower margin. Same store property NOI reflects the 172 stabilized properties that Killam has owned for equivalent periods in 2013 and 2012. The same store  analysis includes 15,848 units and sites, or 89% of Killam’s portfolio. Home sales are excluded from the analysis. Same store properties realized  net revenue growth of 1.8% in 2013. This growth was offset by a 5.0% increase in same store expenses. The main driver of the increased  property expenses was higher utility costs, generating a decrease in NOI of 40 bps compared to 2012. These variances are discussed in more  detail in the Apartment and MHC results sections of the MD&A. Non same store property NOI consists of properties acquired in both 2012 and 2013, MHC properties sold in Q2 2012 and Q4 2013, completed  development projects, other non‑stabilized properties and adjustments to normalize for non‑operational revenue or expense items. Details of  properties acquired in 2013 are found on page 48. For the years ended December 31, Killam ProPerties inc | 2013 35 Apartment Results Total Portfolio Same Store Non Same Store 2013 2012 %  change 2013 2012 %  change 2013 2012 %  change Property revenue $141,112 $133,641 5.6% $121,530 $119,390 1.8% $19,582 $14,251 37.4% Property expenses Operating expenses (23,611) (22,713) 4.0% (20,313) (20,250) 0.3% (3,298) (2,463) 33.9% Utility and fuel expenses (18,403) (15,915) 15.6% (16,189) (14,225) 13.8% (2,214) (1,690) 31.0% Property taxes (16,058) (14,569) 10.2% (13,902) (13,519) 2.8% (2,156) (1,050) 105.3% Total property expenses (58,072) (53,197) 9.2% (50,404) (47,994) 5.0% (7,668) (5,203) 47.4% noi $83,040 $80,444 3.2% $71,126 $71,396 (0.4)% $11,914 $9,048 31.7% Operating margin 58.8% 60.2% (2.3)% 58.5% 59.8% (2.2)% 60.8% 63.5% (4.3)% Total Portfolio Same Store Non Same Store 2013 2012 %  change 2013 2012 %  change 2013 2012 % change Property revenue $121,305 $110,463 9.8% $108,233 $106,503 1.6% $13,072 $3,960 230.1% Property expenses Operating expenses (19,144) (18,033) 6.2% (17,017) (16,891) 0.7% (2,127) (1,142) 86.3% Utility and fuel expenses (16,321) (13,463) 21.2% (14,897) (13,002) 14.6% (1,424) (461) 208.9% Property taxes (14,970) (13,392) 11.8% (13,343) (12,994) 2.7% (1,627) (398) 308.8% Total property expenses (50,435) (44,888) 12.4% (45,257) (42,887) 5.5% (5,178) (2,001) 158.8% noi $70,870 $65,575 8.1% $62,976 $63,616 (1.0)% $7,894 $1,959 303.0% Operating margin 58.4% 59.4% (1.7)% 58.2% 59.7% (2.5)% 60.4% 49.5% 22.0%