Killam finalizing Islamic bank venture

HALIFAX – The head of Killam Properties Inc. says his company is close to finalizing its joint venture with a major Islamic bank, shooting down suggestions the partnership isn’t moving along quickly.

Thursday also saw Killam’s chief financial officer say the company will likely sell some of its older apartment buildings as it buys up newer units.

Killam finalizing Islamic bank venture

During a conference call, Killam’s president and chief executive officer, Phil Fraser, said the company is still finalizing its partnership with Kuwait Finance House.

Killam announced plans to partner with the major Islamic bank earlier this year. The partnership could see the pair gobble up nearly a half billion dollars worth of Canadian apartment buildings.

On Thursday, an analyst asked Fraser about the state of the joint venture. Specifically, Fraser was asked why the partnership hasn’t moved along more quickly, and whether the potential perks were not as rich as initially expected.

In response, Fraser said the two sides continue to finalize the conditions of the partnership.

“It’s purely the finalization of the documents as opposed to the opportunities (available). We’ve seen a lot of good opportunities in the last four or five months,” he told analysts and reporters on the conference call. “We’re out looking to grow … what we have to … do is just announce an acquisition together in the near future.

“This partnership continues to evolve.”

The joint venture with Kuwait Finance House may still be developing, but that hasn’t stopped Killam (TSX:KMP) from buying up new properties.

In fact, Atlantic Canada’s biggest landlord spent $98.9 million on acquisitions during the recent second quarter.

That haul involved six apartment buildings in Halifax, Moncton, London, Ont., and Cambridge, Ont. So far, Killam has bought up $100.7 million worth of properties in 2010. That satisfies the low end of the company’s goal for 2010 – to buy between $100 million and $150 million worth of properties.

“The properties we have purchased are high quality apartment buildings, and represent the quality and type of building we plan to focus our acquisition strategy on,” Fraser said. “With approximately $40 million of acquisition capacity (left), we are maintaining our target and continuing to look for acquisition opportunities.”

The Killam management team was then asked if older buildings would be sold off as newer ones are bought up.

Probably, replied co-founder and chief financial officer Robert Richardson.

According to Richardson, the company is looking at “a number of assets that we call the orphans.”

“We would probably find ourselves selling some of those in 2011,” he said. “It wouldn’t be overly significant, but it would be a number of assets.”

Perhaps sensing Richardson’s comments would be inflated, Fraser added: “The headline locally will be: ‘Killam is ready to sell everything.'”

Based in Halifax, Killam bought its first property in 2002 and is now one of Canada’s largest residential landlords. The company holds apartment buildings in Atlantic Canada and Ontario, and owns 55 trailer parks across Canada.

On Wednesday, the company released its second-quarter financial results, which were described as “very solid” by Halifax-based Beacon Securities. The quarter saw Killam’s rental revenue climb 7.7 per cent to $27.8 million.

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