Killam Properties (Canada)??

The betting money is CAP Real Estate Investment Trust (CARu/TSX) is enamoured with Halifax-based Killam Properties Inc. The speculation is based on CAP REIT’s disclosure that it had made a $26-million investment in a public company.

CAP REIT has not identified where the money has been invested in. That means the REIT’s stake is below 10%, the threshold for reporting holdings of a public company under securities rules.

“While it is just speculation, it is clearly possible that CAP REIT’s investment is in Killam, said Mark Rothschild, an analyst with Genuity Capital Markets, in a note to investors.

Killam stock has returned almost 15% since CAP REIT made its disclosure in conjunction with its second quarter results, the analyst notes.

Mr. Rothschild says at a price of $10.50 per Killam share the acquisition could add 3¢ per share to adjusted funds from operations for CAP REIT in 2008. That estimate is based on CAP REIT issuing new equity for the purchase and some administrative savings being found from combining the two entities.