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Calloway Real Estate Investment Trust Releases Third Quarter

Calloway Real Estate Investment Trust Releases Third Quarter Results 
TORONTO, ONTARIO -- (Marketwire) -- 11/07/12 -- Calloway Real Estate
Investment Trust (TSX:CWT.UN) is pleased to report strong results for
the third quarter ended September 30, 2012. 
Highlights during the quarter: 


 
--  Maintained portfolio occupancy rate at or above the 99% level for the
    eleventh sequential quarter. 
--  Funds from operations ("FFO")(1) increased by 9.8% to $56.4 million and
    4.2% to $0.444 on a per unit basis compared to the same period in 2011. 
--  Achieved same property NOI increase of 1.2% in the third quarter over
    the same period last year. 
--  Acquired 400,358 square feet of retail space in two investment
    properties for $102.7 million. 
--  Invested $17.7 million in the quarter to grow the portfolio by
    completing the development and lease up of 56,414 square feet of
    leasable area at an average yield of 8.3%. 
--  Issued $150 million, eight-year unsecured debentures bearing interest at
    4.05% per annum. 
--  Renewed and increased revolving operating facility to $70.0 million. 
--  Monthly distributions are confirmed for the period of November to
    January at $0.129 per unit. 

 
Subsequent to the quarter end: 


 
--  Entered into an unconditional agreement to sell three retail centres for
    aggregate consideration of $59.8 million to close before year end. 
--  Entered into a 50:50 joint venture with SmartCentres to develop the 6.0
    million square foot Vaughan Metropolitan Centre. 
--  Negotiated the extension of nine mezzanine loans and the repayment of
    two mezzanine loans for a net increase of $111 million in new loan
    commitments. The loans have recourse provisions to the borrower. 
--  Established floor capitalization rates on certain Earnout properties
    resulting in the elimination of the $18.8 million contingent liability
    on Earnouts previously completed. 
--  SIFT legislation was tabled that introduces the previously announced
    amendments, which, when substantively enacted, will confirm the Trust's
    REIT Exemption. 

 
Al Mawani, President & CEO of Calloway Real Estate Investment Trust
(the "Trust"), said, "Our portfolio of 120 mostly Walmart anchored
retail centres continues to deliver reli
able performance and steady
growth. As of September 30, 2012, Calloway completed approximately
760,000 square feet of renewals, achieving an average uplift of
approximately 7% with almost no inducement payments. Demand for new
stores from existing tenants and new tenants required the addition of
about 56,000 square feet of new space during the quarter and 275,000
square feet during the nine month period - equivalent to acquiring a
new shopping centre at a 7.7% yield." 
The following table summarizes the Trust's portfolio information: 


 
                       September 30,     June 30,                           
                                2012         2012                Improvement
----------------------------------------------------------------------------
Fair value of real                                                          
 estate portfolio (in                                                       
 millions of dollars)        6,201.7      5,898.0                      303.7
Weighted average                                                            
 stabilized                                                                 
 capitalization rate            6.06%        6.21%                     -0.15
----------------------------------------------------------------------------
                                                                            
Built gross leasable                                                        
 area                                               26.2 million square feet
Future developable                                                          
 area                                                3.8 million square feet
                                                                            
Number of retail                                                            
 properties                                                              120
Number of other                                                             
 operating properties                                                      2
Number of development                                                       
 properties                                                                9

 
Developments completed during the quarter are as follows: 


 
----------------------------------------------------------------------------
Leasable area                                            56,414 square feet 
Cost                                                   $       17.7 million 
Yield                                                                   8.3%
----------------------------------------------------------------------------

 
During the quarter, the Trust issued $150.0 million in unsecured
debentures with an eight-year term and 4.05% interest rate. The funds
were used for the acquisition of investment properties and repayment
of maturing debt. The Trust also obtained $119.0 million in new
mortgages with an average term of 10.0 years and weighted average
interest rate of 3.65%. 
In addition, the Trust completed the acquisitions of two income
properties totalling 400,358 square feet for $102.7 million, which
consisted of 152,633 square feet in Dartmouth, Nova Scotia for a
purchase price of $26.5 million and 247,725 square feet in Duncan,
British Columbia for a purchase price of $76.2 million. 
The Trust maintained its debt to gross book value at 49.6% at
September 30, 2012, which is below the Trust's target range. The
Trust also maintained an interest coverage ratio of 2.3x which is one
measure of leverage used by credit rating agencies. In addition,
properties with an aggregate appraised value of $962.3 million are
unencumbered or debt-free. This will provide flexibility to the Trust
to address its committed obligations and to grow its portfolio. 


 
                                                 Excluding        Including 
                                               convertible      convertible 
                                                debentures       debentures 
----------------------------------------------------------------------------
Debt to gross book value                              49.6%            52.4%
Target range                                    55.0%-60.0%      60.0%-65.0%
----------------------------------------------------------------------------

 
The following table summarizes the Trust's key financial highlights: 


 
                                  Three Months     Three Months             
                                         Ended            Ended             
(in millions of dollars,         September 30,    September 30,   Increase/ 
 except per Unit information)             2012             2011  (decrease) 
----------------------------------------------------------------------------
Net income                               121.5            105.3        16.2 
Rental revenue                           133.0            124.9         8.1 
Net operating income                      89.9             85.1         4.8 
Cash flow as measured by FFO                                                
 (1)                                      56.4             51.4         5.0 
                                       
                                     
Per Unit Information                                                        
FFO excluding current income                                                
 tax (fully diluted)           $         0.444  $         0.426  $    0.018 
AFFO per Unit (fully diluted)  $         0.428  $         0.414  $    0.014 
Quarterly distribution         $         0.387  $         0.387           - 
Payout ratio (to AFFO)                    90.4%            93.5%       (3.1)

 
Net income for the quarter was $121.5 million compared to $105.3
million in the same quarter 2011. Excluding the impact of fair value
adjustments, loss on dispositions, and income tax provisions, net
income increased by $3.8 million in the current quarter compared to
the same period last year mainly due to an increase in net operating
income of $4.8 million offset by an increase in interest expense of
$1.4 million. 
The high occupancy level of 99.0%, as well as the Trust's acquisition
and development program, generated rental revenue of $133.0 million
during the quarter. NOI of $89.9 million increased by 5.6% over the
previous year including a 1.2% increase on a same properties basis. 
Subsequent to quarter end, the Trust announced an agreement with
SmartCentres to jointly develop up to 6 million square feet in the
Vaughan Metropolitan Centre ("VMC"). Al Mawani, President & CEO of
the Trust, said, "The newly formed 50:50 joint venture with
SmartCentres to develop VMC will increase Calloway's growth pipeline
to 7 million square feet of mixed use development opportunities. The
Vaughan subway station together with the new regional bus terminal
will connect the 905 to downtown Toronto and downtown Toronto to the
905. Also, the close proximity to the major roads and highway
infrastructure, namely Highways 400, 407 and 7, makes our property a
uniquely attractive location for corporate offices, retail and new
residential development." 
In addition, the government tabled proposed amendments to SIFT
legislation that introduces the previously announced amendments. Once
substantively enacted, the Trust will comply with the REIT Exemption
effective January 1, 2011 and provisions for current ($34.1 million)
and deferred ($625.1 million) income taxes totalling $659.2 million
will be reversed. The Trust has not been required to pay any current
tax during the intervening period. 
The non-IFRS measures used in this Press Release, including AFFO,
FFO, NOI, debt to gross book value, payout ratio and interest
coverage ratio do not have any standardized meaning prescribed by
International Financial Reporting Standards ("IFRS") and are
therefore unlikely to be comparable to similar measures presented by
other issuers. These non-IFRS measures are more fully defined and
discussed in the management discussion and analysis of the Trust for
the three and nine months ended September 30, 2012, available on
SEDAR website at www.sedar.com. 


 
(1)  Excludes current income taxes, which will be reversed when the proposed
     changes are enacted, and one-time adjustment relating to prepayment    
     penalty incurred on early repayment of term mortgages of $1.1 million. 

 
Full reports of the financial results of the Trust for the year ended
December 31, 2011 are outlined in the audited financial statements
and the related management discussion and analysis of the Trust,
available on the SEDAR website at www.sedar.com. In addition,
supplemental information is available on the Trust's website at
www.callowayreit.com. 
The Trust will hold a conference call on Thursday November 8, 2012 at
10:00 a.m. (ET). Participating in the call will be members of the
Trust's senior management. 
Investors are invited to access the call by dialing 1-877-974-0446.
You will be required to identify yourself and the organization on
whose behalf you are participating. A recording of this call will be
made available Thursday November 8, 2012 beginning at 11:00 a.m. (ET)
through to 11:59 p.m. (ET) on Thursday November 15, 2012. To access
the recording, please call 1-877-289-8525 and use the reservation
number 4568902#. 
Certain statements in this Press Release are "forward-looking
statements" that reflect management's expectations regarding the
Trust's future growth, results of operations, performance and
business prospects and opportunities as outlined under the headings
"Business Overview and Strategic Direction" and "Outlook". More
specifically, certain statements contained in this Press Release,
including statements related to the Trust's maintenance of productive
capacity, estimated future development plans and costs, view of term
mortgage renewals including rates and upfinancing amounts, timing of
future payments of obligations, intentions to secure additional
financing and potential financing sources, and vacancy and leasing
assumptions, and statements that contain words such as "could",
"should", "can", "anticipate", "expect", "believe", "will", "may" and
similar expressions and statements relating to matters that are not
historical facts, constitute "forward-looking statements". These
forward-looking statements are presented for the purpose of assisting
the Trust's Unitholders and financial analysts in understanding the
Trust's operating environment, and may not be appropriate for other
purposes. Such forward-looking statements reflect management's
current beliefs and are based on information currently available to
management. However, such forward-looking statements involve
significant risks and uncertainties, including those discussed under
the heading "Risks and Uncertainties" and elsewhere in the Trust's
Management's Discussion & Analysis for the year ended December 31,
2011 and under the heading "Risk Factors" in its Annual Information
Form for the year ended December 31, 2011. A number of factors could
cause actual results to differ materially from the results discussed
in the forward-looking statements. Although the forward-looking
statements contained in this Press Release are based on what
management believes to be reasonable assumptions, the Trust cannot
assure investors that actual results will be consistent with these
forward-looking statements. The forward-looking statements contained
herein are expressly qualified in their entirety by this cautionary
statement. These forward-looking statements are made as at the date
of this Press Release and the Trust assumes no obligation to update
or revise them to reflect new events or circumstances unless
otherwise required by applicable securities legislation. 
The Toronto Stock Exchange neither approves nor disapproves of the
contents of this Press Release. 
Contacts:
Calloway Real Estate Investment Trust
Al Mawani
President and Chief Executive Officer
(905) 326-6400 ext. 7649 
Calloway Real Estate Investment Trust
Bart Munn
Chief Financial Officer
(905) 326-6400 ext. 7631
www.callowayreit.com
 
 
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