Management’s Discussion and Analysis Dollar amounts are in thousands of Canadian dollars (except as noted) Summary of 2013 Results and Operations Acquisitions and Developments Drive Revenue Growth of 5.6% Consolidated Same Store Revenue Growth of 1.8% Killam completed $114.2 million in property acquisitions throughout 2013 and also completed $69.6 million of development projects in the first  half of 2013, adding 1,025 apartment units and 65 MHC sites to the portfolio. $84.8 million of acquisitions completed throughout 2012 also  contributed to revenue growth in 2013. This growth was partially offset by the disposition of ten MHC properties located in New Brunswick for  proceeds of $69.0 million during the fourth quarter of 2013 and the disposition of twelve MHCs during 2012 for $72.9 million. The development  projects completed in 2013 located in Halifax and Fredericton are expected to be substantially leased by mid‑2014 and will generate additional  revenue growth for the company in 2014. Killam’s same store portfolio posted a 1.8% increase in revenue growth compared to 2012, driven by an increase of 1.3% in rental rates related  to the apartment portfolio and a 3.7% increase in rental rates related to the MHC portfolio. These rental rate gains were partially offset by higher  vacancy during the first half of 2013, compared to 2012, and higher rental incentives due to increased competition in certain of the Company’s  core markets in Atlantic Canada as a result of increased supply.  The Halifax market, which comprises approximately 50% of the Company’s same store apartments, contributed to the rental growth, posting a  2.5% increase in residential rents. The improved top‑line growth in Halifax reflects the marketing and leasing changes implemented in 2013 and  the quality and location of the Company’s assets in the city. Growth in Halifax offset the Charlottetown and Saint John markets, which saw flat  revenues year‑over‑year and a decline of 2.4% in revenue, respectively.  During the first quarter of 2013 the Company experienced high natural gas prices as a result of supply constraints and high demand from utilities  in New England, which drove up pricing within Atlantic Canada. Unanticipated disruptions at the Sable Offshore Energy project and delays in the  Deep Panuke Project coming on‑line created a regional supply deficit and forced distributors to purchase the commodity at higher prices from  the day markets in the Northeastern United States. During the fourth quarter of 2013 Killam also saw a spike in pricing, specifically in the New  Brunswick market, as colder than normal weather increased demand from utilities in Northeast New England and placed added pressure on  day pricing in a market with a shortage of gas pipeline capacity. Pricing was more stable during the fourth quarter in Nova Scotia as the region’s  largest supplier had previously entered into a number of fixed gas‑supply contracts for the 2013‑2014 heating season.  Excluding energy and property taxes, Killam delivered an impressively modest 0.3% increase in same store operating expenses in 2013 compared  to 2012. Killam managed operating costs by renegotiating key contracts, including garbage and elevator contracts, and reducing repair and  maintenance and property administrative expenses through a company‑wide focus on minimizing discretionary spending. In addition, the  increase in same store property tax expense was managed to 2.8% as a result of successful assessment appeals. During 2013 Killam successfully refinanced $66.7 million of maturing apartment mortgages at a weighted average interest rate of 3.03%, 155  basis points (“bps”) lower than the weighted average interest rate prior to refinancing. The Company also refinanced $10.7 million of MHC  mortgages at a weighted average interest rate of 4.34%, 190 bps lower than the weighted average interest rate prior to refinancing. These  refinancings create interest savings of $1.2 million on an annualized basis. Killam generated FFo per share of $0.72 during 2013 consistent with FFo per share of $0.72 in 2012. lower interest costs, earnings associated  with new acquisitions and developments, and savings in administrative costs were offset by an unprecedented increase in natural gas pricing  in Atlantic Canada, a reduction in NOI related to the disposition of ten MHCs in December 2013 and twelve MHCs in May 2012, and an 8.9%  increase in the weighted average number of shares outstanding. the equity raise in late 2012 included funds to support development and  acquisitions, the full benefit of which was not realized until halfway through 2013. The Company also acquired land for future development of  $2.9 million and incurred costs related to two new developments projects in St. John’s and Cambridge totalling $12.7 million during 2013. The  benefit on FFO of the deployment of these funds will not be realized until the respective projects are completed in Q3 2014 and early 2015. Stable FFO Despite Pressures on Non‑Controllable Costs Interest Cost Savings on Refinancings  Stability in Controllable Operating Costs 14% Increase in Same Store Utility Costs Due to Pressure on Natural Gas Pricing  Killam ProPerties inc | 2013  25