Management’s Discussion and Analysis Dollar amounts are in thousands of Canadian dollars (except as noted) Apartment Property Revenue Apartment Occupancy by Core Market total apartment property revenue for the year ended December 31, 2013, was $121.3 million, a 9.8% increase over 2012. this growth was  attributable to acquisitions, the completion of four development projects during the year and growth in rental rates. Same store apartment net revenue increased 1.6% for the year ended December 31, 2013. Despite lower occupancy in the first half of the year,  Killam achieved increased rental rates of 1.3%. Killam realized higher vacancy throughout 2013 compared to 2012 in its stabilized portfolio, but  succeeded in achieving higher occupancy than 2012 for each of the last four months of 2013. Based on current rents, an annualized 100 bps change in apartment vacancy rates would impact the annualized rental revenue by $1.3 million. as at December 31,  Killam experienced softer occupancy levels in its apartment portfolio during the first half of 2013 followed by a strong uptick in occupancy in  Q3 and a typical seasonal decrease in Q4. Overall Killam’s occupancy levels were down in both 2012 and 2013 compared to highs maintained  throughout 2010 and 2011. The decreased occupancy was primarily attributable to higher than normal amounts of new multi‑family rental  construction in Halifax, Moncton and Charlottetown, and softness in the Saint John economy. Offsetting an increase in supply was continued  strong demand for rental product, population growth in urban centres and an aging population with an increased tendency to rent. Despite a  decline in occupancy, Killam achieved an average rental rate increase in its apartment portfolio of 1.3% in 2013. Occupancy remains strong for  the company’s mHc business, ending the year with 98.1% occupancy. mHc rents increased an average of 3.7% during the year.  36  Killam ProPerties inc | 2013 Killam’s Historic Apartment Occupancy by Quarter 90.0%  92.0%  94.0%  96.0%  98.0%  100.0%  Q1‑07  Q2‑07  Q3‑07  Q4‑07  Q1‑08  Q2‑08  Q3‑08  Q4‑08  Q1‑09 $^{ }$Q2‑09  Q3‑09  Q4‑09  Q1‑10  Q2‑10 $^{ }$Q3‑10  Q4‑10  Q1‑11  Q2‑11  Q3‑11  Q4‑11  Q1‑12  Q2‑12  Q3‑12  Q4‑12  Q1‑13  Q2‑13  Q3‑13  Q4‑13  2013 2012 Units Occupancy (1) Average  Rent Units occupancy (1) average  rent change  occ.(bps) % change  avg rent Halifax, NS 4,970 96.0%  $923  4,822 96.6% $889 (60) bps 3.8% moncton, nB 1,593 97.1% 831 1,424 96.3% 800 80 bps 3.9% Fredericton, nB 1,394 96.3% 896 1,293 97.8% 846 (150) bps 5.9% saint John, nB 1,143 94.4% 746 1,143 93.6% 747 80 bps (0.1)% st. John’s, nl 813 97.0% 849 742 97.8% 776 (80) bps 9.4% Charlottetown, PE 906 95.6% 878 687 91.6% 871 400 bps 0.8% ontario 1,359 98.6% 1,254 1,078 93.1% 1,331 550 bps (5.8)% Other Atlantic 469 95.3% 798 431 96.1% 776 (80) bps 2.8% Total Apartments (weighted average) 12,647 96.3% $915 11,620 95.9% $888 40 bps 3.0% (1) Includes all stabilized properties.