LETTER OF INSTRUCTION FOR ELECTING SHAREHOLDERS OF KILLAM PROPERTIES INC. ("Killam")

Dear Shareholders: LETTER OF INSTRUCTION FOR ELECTING SHAREHOLDERS OF KILLAM PROPERTIES INC. ("Killam") This package (the "Tax Election Package") is made available to all Electing Shareholders (as defined herein) who validly elect to exchange common shares of Killam ("Common Shares") for exchangeable units ("Exchangeable Units") of Killam Apartment Limited Partnership (the "Limited Partnership") and Ancillary Rights (as defined herein), as part of Plan of Arrangement (the "Arrangement") involving Killam, Killam Apartment Real Estate Investment Trust (the "REIT"), Killam Apartment General Partner Ltd. (the "General Partner"), and the Limited Partnership, announced on October 6, 2015, which will become effective on January 1, 2016 (the "Effective Date"). As described in the Management Information Circular with respect to the Arrangement (the "Circular"), an Electing Shareholder who receives Exchangeable Units and Ancillary Rights under the Arrangement potentially is entitled to make and file with the Canada Revenue Agency (the "CRA") a valid joint tax election ("Tax Election") with the Limited Partnership under subsection 97(2) of the Income Tax Act (Canada) (the "Tax Act") in connection with the Arrangement. Only Shareholders who are Electing Shareholders can potentially make a Tax Election. By making a Tax Election, an Electing Shareholder may be able to reduce the amount of the proceeds of disposition such Electing Shareholder otherwise may realize for Canadian income tax purposes under the Arrangement. For further information, see the section entitled "Certain Canadian Federal Income Tax Considerations" in the Circular. This matter requires your immediate attention. The deadline to submit documents for execution by the Limited Partnership is the third business day immediately preceding the date of the special meeting of shareholders in respect of the Arrangement (the "Meeting") or, if the Meeting is adjourned or postponed, such time on the second business day immediately preceding the date of such adjourned or postponed meeting (the "Election Deadline"). The Meeting is scheduled for December 8, 2015 and, accordingly, the anticipated Election Deadline is December 3, 2015. General Disclaimer The following instructions are of a general nature only, may not be exhaustive and are not intended to be, nor should they be construed as, legal or tax advice to any particular Electing Shareholder concerning the Tax Election. Furthermore, except as otherwise indicated herein, neither Killam nor the Limited Partnership has provided or will provide Electing Shareholders with any advice respecting the Tax Election or the manner of completion or execution of the required forms by virtue of the following: the following instructions; the enclosed partially completed CRA Form T2059; or the Limited Partnership's execution of said forms.

- 2 - Accordingly, Electing Shareholders are urged to consult with their own tax advisors for specific advice in respect of making the Tax Election and the proper completion and execution of the required forms, having regard to their personal circumstances. For further information, you may wish to review Information Circular 76-19R, and Interpretation Bulletins IT-413R and IT-291R3 issued by the CRA, the text of which can be found on CRA's website at www.cra-arc.gc.ca. Provincial Election Forms Electing Shareholders may be required to file additional elections in order to comply with provincial income tax laws analogous to or respecting subsection 97(2) of the "Tax Act". Electing Shareholders are urged to consult their own tax advisors for advice on any additional provincial filing requirements. Contents of this Package This Tax Election Package contains two copies of CRA Form T2059, "Election on Disposition of Property by a Taxpayer to a Canadian Partnership", applicable for Electing Shareholders. This package does not contain forms that may be required to be filed in compliance with provincial tax legislation. Electing Shareholders are responsible for obtaining and completing such provincial forms and must submit any such forms to the Limited Partnership for signature no later than the Election Deadline. Who is Eligible to File a Tax Election ONLY ELECTING SHAREHOLDERS ARE PERMITTED TO MAKE THIS ELECTION JOINTLY WITH THE LIMITED PARTNERSHIP. An Electing Shareholder is a Shareholder, other than an Excluded Person (as defined below), that elects to receive Exchangeable Units and Ancillary Rights for its Common Shares and files a duly completed letter of transmittal and Tax Election pursuant to, and in accordance with, the terms of the Plan of Arrangement. For further information, see the section entitled "Exchangeable Unit Election" in the Circular. An Excluded Person is a person: (i) that is not a resident of Canada for purposes of the Tax Act; (ii) that is exempt from tax under Part I of the Tax Act; (iii) that would acquire Exchangeable Units as a "tax shelter investment" for purposes of the Tax Act; (iv) an interest in which is a "tax shelter investment" for purposes of the Tax Act; or (v) that is not: (a) a "taxable Canadian corporation", (b) a "real estate investment trust", (c) a "SIFT trust", (d) a "SIFT partnership", or (e) an "excluded subsidiary entity" (as all such expressions are defined in the Tax Act). AN INDIVIDUAL SHAREHOLDER IS AN EXCLUDED PERSON AND, ACCORDINGLY, IS NOT PERMITTED TO BE AN ELECTING SHAREHOLDER. Purpose of the Election One of the transaction steps necessary to achieve the final structure under the Arrangement is to have Electing Shareholders exchange their Common Shares for Exchangeable Units, and, in respect of each Exchangeable Unit, (i) the embedded right in respect of the exchange of each Exchangeable Unit for one unit of the REIT, and (ii) related special voting units of the REIT (together the "Ancillary Rights").

- 3 - For Canadian federal income tax purposes, the exchange of Common Shares for Exchangeable Units and the Ancillary Rights would normally be a taxable event resulting in a capital gain (or capital loss) to the extent that the fair market value of the Exchangeable Units and the Ancillary Rights received is greater than (or less than) an Electing Shareholder's tax cost of the Common Shares plus any reasonable costs incurred by the Electing Shareholder in connection with the exchange. However, each Electing Shareholder has the option to elect to have the provisions of subsection 97(2) of the Tax Act apply to this exchange in order to defer all, or a portion of, the gain that would otherwise arise and be subject to Canadian federal income tax. Subsection 97(2) Election In order to have subsection 97(2) of the Tax Act apply to defer any potential gain on the exchange of Common Shares for Exchangeable Units and the Ancillary Rights, the Tax Act requires that a joint election be filed between the Electing Shareholder and the Limited Partnership. Each Electing Shareholder, under the Arrangement, will transfer its Common Shares held on January 1, 2016 to the Limited Partnership. In exchange for the Common Shares, the Limited Partnership will issue the Exchangeable Units and Ancillary Rights to each former Shareholder on the basis of (A) 1.0 Exchangeable Unit, and (B) the Ancillary Rights attached to such Exchangeable Unit, for each Common Share. If an Electing Shareholder chooses to have subsection 97(2) of the Tax Act apply to this exchange, it is necessary to complete a specific election form which is prescribed under Canadian tax law. This form is to be completed in part by the Electing Shareholder and in part by the Limited Partnership. Although the Limited Partnership must be a party to the election, determining the amount at which the disposition of Common Shares is deemed to occur for tax purposes (the "Elected Amount"), within the limits provided under the Tax Act, is the responsibility of each Electing Shareholder. To prevent any gain from being recognized, the Elected Amount will usually equal the Electing Shareholder's adjusted cost base or cost amount of the Common Shares for Canadian tax purposes. Prescribed Election Form The form prescribed under Canadian federal tax law which must be completed in order to make a subsection 97(2) election is CRA Form T2059 "Election on Disposition of Property by a Taxpayer to a Canadian Partnership". Unfortunately, this form is complex due to the inherent complexity of this section of the Tax Act and is usually prepared by tax professionals. However, as described below, we are attempting to simplify the process of completing these forms to the extent possible. There are no short-form versions of these forms available. The Limited Partnership and the General Partner agree only to execute any properly completed tax election, provide certain fair market value information, and to forward such elections by mail (within 30 days after the Effective Date) to the applicable Electing Shareholder. Timing of Election KILLAM MUST RECEIVE TWO (2) COPIES OF THE DULY COMPLETED ELECTION FORM (AND TWO (2) COPIES OF ANY APPLICABLE PROVINCIAL TAX ELECTIONS) NO LATER THAN THE ELECTION DEADLINE.

- 4 - Who Should File the Election Making the Tax Election to take advantage of the tax deferral is at the discretion of each Electing Shareholder. It is up to each Electing Shareholder to decide whether filing the Tax Election is in the Electing Shareholder's best interest. Since the effect of the Tax Election under these circumstances is to defer any income tax payable on the disposition of Common Shares, there is usually no need for residents of Canada to file a Tax Election in respect of Common Shares held in tax-deferred accounts including, trusts governed by registered retirement savings plans ("RRSPs"), registered retirement income funds ("RRIFs"), registered education savings plans ("RESPs") and tax-free savings accounts ("TFSAs"). Therefore, such tax-deferred plans cannot make a Tax Election. Elected Amount The most important piece of information to be provided by each Electing Shareholder on the Tax Election is the Elected Amount. An Electing Shareholder may elect an amount which, subject to certain limitations contained in the Tax Act, will be treated as the proceeds of disposition of the Electing Shareholder's Common Shares (the "Elected Amount"). For purposes of the Tax Act and the Tax Election the Elected Amount may not: (a) be less than the fair market value of the Ancillary Rights acquired on the exchange (which is assumed to be a nominal amount of $1.00 in the aggregate); (b) be less than the lesser of (i) the adjusted cost base ("ACB") to the Electing Shareholder of the Common Shares which are exchanged for Exchangeable Units and the Ancillary Rights, and (ii) the fair market value of such Common Shares; and (c) exceed the fair market value of the Common Shares that are exchanged for Exchangeable Units and the Ancillary Rights. The Elected Amount is then deemed to be the proceeds of disposition for purposes of calculating any gain on the disposition of the Common Shares to the Limited Partnership. Normally, to take maximum advantage of the tax deferral, an Electing Shareholder would choose an Elected Amount equal to the ACB of their Common Shares for Canadian tax purposes. If an Electing Shareholder is a participant in Killam's dividend reinvestment plan (or "DRIP"), (i) please take into account all Common Shares received with respect to such plan, and (ii) the Electing Shareholder will receive a cash dividend (which constitutes an "eligible dividend" for tax purposes if and when declared by Killam) for the dividend with a record date of November 30, 2015 which is expected to be paid on or about December 15, 2015. Adjusted Cost Base of the Common Shares Each Electing Shareholder's ACB calculation may be considerably complex. It is the sole responsibility of each Electing Shareholder to calculate the ACB of the Common Shares it holds. Electing Shareholders should consult their own tax advisors if they have any questions concerning this aspect of the Tax Election. The Limited Partnership will not provide assistance in determining an Electing Shareholder's ACB outside of the information already provided to the public.

- 5 - Initial Adjusted Cost Base of the Exchangeable Units and the Ancillary Rights Where an Electing Shareholder files a valid Tax Election form in respect of Common Shares that complies with the rules of the Tax Act, the initial adjusted cost base to the Electing Shareholder of the Exchangeable Units received on the exchange will equal the amount by which the Elected Amount exceeds the fair market value at the Effective Date of the Ancillary Rights received on the exchange (which is assumed to be a nominal amount of $1.00 in the aggregate). The cost to the Electing Shareholder of the Ancillary Rights received on the exchange will be equal to the fair market value thereof at the Effective Date (which is assumed to be a nominal amount of $1.00 in the aggregate). Fair Market Value of the Common Shares The fair market value of the Common Shares exchanged for Exchangeable Units and the Ancillary Rights must be determined on a reasonable basis. There is no specific method prescribed by the CRA for determining the fair market value of a share or unit, nor is there any clear published guidance in this respect. Killam has determined, based on the facts and circumstances of the Arrangement, that it is appropriate for Canadian federal and provincial tax purposes to value the disposition of the Common Shares using the 5 day volume weighted average price for the period immediately prior to the Effective Date of the Arrangement. Killam will post this information on its website at www.killamproperties.com. The Limited Partnership agrees to execute only those tax elections which use that value. Although Killam believes the above value is reasonable, it makes no explicit representation as to its accuracy and notes that the value is not binding on any party (including the CRA) and has not been pre-approved by the CRA. As of the Election Deadline this information will not be available, as the Effective Date of the Arrangement is expected to be January 1, 2016. However, Killam will enter this information in each Tax Election form prior to sending such form back to an Electing Shareholder. If the Elected Amount exceeds the fair market value of the Common Shares and the Ancillary Rights, Killam will also, in accordance with the Tax Act, reduce the Elected Amount accordingly to the maximum amount otherwise permitted. Instructions for Completing CRA Form T2059 Each Electing Shareholder who chooses to make a Tax Election is solely responsible for ensuring CRA Form T2059 is properly completed. The following section illustrates the information required to be included by Electing Shareholders on CRA Form T2059. The information should be typed or legibly printed on the form. Do not write the required information on these instruction pages. [the rest of this page is left intentionally blank]

- 6 - Page 1 of CRA Form T2059 Complete the information in this first box for the Electing Shareholder making the election: Taxpayer's name (transferor) Address Social insurance number or Business Number Postal Code Tax year of taxpayer Year Month Day / / End Year Month Day / / Tax services office Corporations may have taxation year-ends that do not coincide with the calendar year. The "Tax Services Office" is where the Electing Shareholder typically files its annual tax return. We will complete certain portions of the next section. Please do not mark this section. Partnership's name (transferee) Killam Apartment Limited Partnership Address 3700 Kempt Road, Suite 100, Halifax, Nova Scotia Taxation year of partnership for the period from Year Month Day 2016-01-01 to Year Month Day 2016-12-31 Business Number Killam will add this Postal code B3K 4X8 Tax services office Halifax Complete the next section, by filling in the name and telephone number of the representative or tax advisor of the Electing Shareholder that may be contacted for additional information. Name of person to contact for additional information Telephone number The last section of page 1 of CRA form T2059 relates to late filed elections and is to be completed only by those who submit an election form after the filing deadline prescribed in the Tax Act. This section should not be applicable to any Electing Shareholders, provided that they file their Tax Election form within the time prescribed by law (see below under the heading "Filing of CRA Form 2059"). Page 2 of CRA Form T2059 Questions 1-3 should be answered as follows: 1. Is there a written agreement relating to this transfer? Yes No 2. Does a price adjustment clause apply to any of the properties? (See Folio S4-F3-C1 for details) Yes No 3. Is the taxpayer a non-resident of Canada? Yes No

- 7 - Question 4 should be answered based on each Electing Shareholder's particular circumstances. Whether a Common Share was capital property to a particular Electing Shareholder is a question of fact and law that must be determined by each Electing Shareholder based on a consideration of all the surrounding circumstances. If you are unsure of whether your Common Shares were capital property, contact your tax advisor. Killam is unable to assist you in making this determination. 4. Are any of the properties transferred capital properties? Yes No Question 4(a) should be answered "No". If yes, a) have they been owned continuously since Valuation-Day (V-Day)? Yes No Question 4(b) should be answered based on each Electing Shareholder's particular circumstances. The Common Shares are likely not acquired in a non-arm's length transaction if they were acquired on the Toronto Stock Exchange. On the other hand, if the Common Shares have been transferred to a company which is controlled by the transferor (alone or with related or non-arm's length persons), the Common Shares have likely been acquired in a non-arm's length transaction. Please consult your own tax advisor if you are unsure how to answer this question. b) have they been acquired after V-Day in a transaction considered not to be at arm s length? Yes No The remaining questions should be answered as follows: c) since V-Day, has the taxpayer or any person from whom shares were acquired in a non-arm s length transaction received any subsection 83(1) dividends for transferred shares? (if yes, provide details of amounts and dates received, and attach a schedule.) Yes No 5. Is the Elected Amount of any of the transferred properties based on an estimate of fair market value on V-Day? Yes No 6. Has an election under subsection 26(7) of the Income Tax Application Rules (Form T2076) been filed by or on behalf of the taxpayer? Yes No The next section is not applicable leave this blank. Where shares of the capital stock of a private corporation are included in the property disposed of, provide the following: Name of corporation (print) Business number Paid up capital of shares transferred Page 3 of CRA Form T2059 The Effective Date of the transaction, January 1, 2016, has been entered in the following section: Date of sale or transfer of all properties listed below: Year Month Day 2016 January 1

- 8 - Complete the information in the following section according to the instructions below: Capital Property Excluding Depreciable Property Property Disposed of Elected Amount Limits Description (1) Killam Common Shares Fair Market Value A Agreed Amount B Amount to be reported B-A (if > 0 see Note 4) Consideration Received Description Fair Market Value (2) (3) (4) (5) (6) (7) Ancillary Rights (8) $1.00 (9) This section should be completed if the Common Shares were held as capital property. If the Common Shares were held as inventory, complete the section with the sidebar entitled "Inventory" in a similar manner. (1) Enter the number of Common Shares you owned immediately prior to the Arrangement. (2) This box contains the total fair market value of the Common Shares you owned immediately prior to the Arrangement (this amount will be posted on a per Common Shares basis at www.killamproperties.com). This value will not be known by the Election Deadline, so leave this space blank. Killam will enter this number for you when it returns the Election Form. (3) Enter your ACB (or cost amount in the case of inventory) in the Common Shares you owned immediately prior to the Arrangement. (4) Elected Amount: Electing Shareholders who wish to defer all tax arising on the exchange will typically choose an Elected Amount equal to the ACB of their Common Shares (or cost amount, if the Common Shares are inventory). However, the Elected Amount may not: (a) be less than the fair market value of the Ancillary Rights acquired on the exchange (which is assumed to be a nominal amount of $1.00 in the aggregate); (b) be less than the lesser of (i) the ACB to the Electing Shareholder of the Common Shares which are exchanged for Exchangeable Units and the Ancillary Rights, and (ii) the fair market value of such Common Shares; 1 and (c) exceed the fair market value of the Common Shares 1 Exchangeable Units and the Ancillary Rights. that are exchanged for (5) Subtract B A, and enter any positive result. (6) Enter the number of Exchangeable Units received. This number will equal the number of Common Shares you owned immediately prior to the Arrangement. (7) This box contains the total fair market value of the Exchangeable Units you received on the exchange. This will be the same number that will be entered in (2), less the fair market value received for the Ancillary Rights (which is assumed to be a nominal amount of $1.00 in the 1 As already noted, the fair market value of the Common Shares will not be known by the Election Deadline.

- 9 - aggregate, as described in (9)). Similar to "(2)" above, Killam will enter this number for you when it returns the Tax Election form. (8) Enter the number of Ancillary Rights you receive on the exchange. This number will equal the number of Exchangeable Units received. (9) Enter the total fair market value of the Ancillary Rights you received on the exchange. Killam is of the view that the Ancillary Rights have a nominal fair market value of $1.00 in the aggregate. Such, view, however, is not binding on the CRA and it is possible that the CRA could take a contrary view. The Electing Shareholder must sign in the last box as "transferor or authorized officer", as indicated, when the Election Form is returned back from the Limited Partnership. The Electing Shareholder should fill in the date which it signs the Election Form. ELECTION AND CERTIFICATION The taxpayer and all members of the partnership hereby jointly elect under subsection 97(2) in respect of the property specified above and certify that the information given in this election, and in any documents attached, is true, correct, and complete to the best of their knowledge. Date Signature of transferor or authorized officer Signature of authorized officer of transferee* *Attach a copy of the authorizing agreement Filing of CRA Form T2059 It will be the sole responsibility of each Electing Shareholder who wishes to make a Tax Election to duly complete CRA Form T2059 (and any applicable provincial or territorial election forms) and submit such forms to the Limited Partnership by the Election Deadline, and to subsequently sign and file such elections within the time prescribed by legislation. Once you have properly completed CRA Form 2059, you should submit two copies (and two copies of any applicable provincial or territorial election forms), no later than the Election Deadline directly to the following address: Attention: Erin Cleveland Killam Apartment Limited Partnership. c/o Killam Properties Inc. 3700 Kempt Road Suite 100 Halifax, NS B3K 4X8 Re: Tax Election Subject to the applicable Tax Election forms being correct and complete and complying with the provisions of the applicable income tax law and the Arrangement, the Limited Partnership will sign duly completed Tax Election forms received from an Electing Shareholder within 30 days following the Effective Date and return them to the Electing Shareholder for filing. The Limited Partnership will also fill in the information on fair market values that will only be known as of the Effective Date. It is the Electing Shareholder's sole responsibility to sign and file the Tax

- 10 - Election forms with the applicable governmental authority within the prescribed time in the Tax Act (or any provincial or territorial legislation). The Limited Partnership will not be responsible for the proper or accurate completion of the Tax Election forms or to check or verify the content of any election form and, except for the Limited Partnership's obligation to return duly completed Tax Election forms (which are received by it by the Election Deadline) within 30 days after the receipt thereof, the Limited Partnership will not be responsible for any taxes, interest or penalties or any other costs or damages resulting from the failure by an Electing Shareholder to properly and accurately complete or file the necessary Tax Election Forms in the manner and within the time prescribed by the Tax Act (or any applicable provincial or territorial legislation). In its sole discretion, the Limited Partnership may choose to sign and return Tax Election forms received after the Election Deadline, but the Limited Partnership will have no obligation to do so. For the CRA to accept a Tax Election form without a late filing penalty being paid by an Electing Shareholder, the election form, duly completed and executed by both the Electing Shareholder and the Limited Partnership must be received by the CRA on or before the date which any taxpayer making the election is required to file an income tax return for the taxation year which includes the Effective Date. The reference to taxpayer above would include the Electing Shareholder and any partner of the Limited Partnership. Once the Limited Partnership has received all the Tax Elections, more information about the filing deadlines will be posted on Killam's website. In any event, we would encourage an Electing Shareholder to sign and file the Election Form promptly (i.e., within 15 days) upon receiving the form back from the Limited Partnership to avoid any late filing penalties. If an Electing Shareholder has any questions regarding filing deadlines, please contact your own tax advisor. It is advisable to have the Election Forms sent to the CRA (or applicable provincial tax authority) by registered mail or have them hand delivered with a time stamped copy obtained for the Electing Shareholder's books and records.