Calloway Real Estate Investment Trust

Calloway Real Estate Investment Trust

November 06, 2008 19:06 ET

Calloway Real Estate Investment Trust Releases Third Quarter Results

TORONTO, ONTARIO--(Marketwire - Nov. 6, 2008) - Calloway Real Estate Investment Trust (TSX:CWT.UN) is pleased to report its results for the quarter ended September 30, 2008.

Highlights of the Quarter:

- Raised $157.0 million through term financing ($125.0 million) and non-core asset sales ($32.0 million)

- Invested $63.0 million to complete the development and lease up of 266,000 square feet of leaseable area.

- Portfolio occupancy rate maintained at over 99.0%.

- Net income increased by $9.3 million to $16.6 million over 2007 primarily due to gains on property sales.

- Net income from continuing operations increased by $2.6 million to $9.2 million over 2007.

- Cash provided by operating activities increased by $10.9 million to $36.8 million over 2007.

- Funds from operations (non-GAAP measure) increased by $1.3 million to $42.8 million over 2007.

Mr. Simon Nyilassy, President and CEO said, "Calloway has continued to successfully raise new capital and renew bank lines in one of the most difficult credit environments in the last 30 years. The over $300 million in new and replacement capital raised in the third quarter, through mortgage financing, bank loans and asset sales, brings the total for 2008 to date to over $750 million." Mr. Nyilassy added, "This is a testament to the quality of Calloway's assets, the strength of our tenants and the term of our leases, all of which make our properties desirable."

As at September 30, 2008, Calloway's $4.1 billion real estate portfolio included 21.9 million square feet of built gross leasable area and 5.7 million square feet of future developable area in 121 operating and 10 development properties.

Developments completed during the quarter comprised approximately 266,000 square feet of leasable area at a cost of $63.0 million. Calloway also advanced over $11.0 million on existing mezzanine loans during the quarter.

Calloway continues to execute its strategy of selling non-core real estate. The sale of 3 assets closed during the quarter yielding cash proceeds of $32.0 million and a gain of $6.8 million. In addition, a further 4 properties are under contract, with anticipated aggregate gross proceeds of $42.0 million and 3 properties are being marketed for sale.

During the quarter the Trust received $125.0 million in new term mortgages with an average term of 4.4 years and weighted average interest rate of 5.41% The Trust also repaid $231.0 million of short term operating debt and refinanced a further $160.0 million.

Calloway's debt to gross book value (non-GAAP measure) of 54.4% (57.0% including convertible debentures) at quarter end is below the Trust's target range of 55.0%-60.0% (57.5% to 62.5% including convertible debentures).

Net income for the third quarter totaled $0.175 per unit compared to $0.080 per unit in 2007, primarily the result of gains on asset sales. Net income from continuing operations totalled $0.097 per unit compared to $0.072 per unit in 2007. The increase was due to lease renewals at higher rates and growth in the portfolio. Cash provided by operating activities increased by $10.9 million to $36.8 million over the previous year due to portfolio growth and changes in non-cash operating items.

Continued high occupancy levels of over 99%, as well as Calloway's acquisition and development program helped the income-producing portfolio to generate revenue of $109.8 million in the third quarter, a $15.6 million increase over the prior year. Net operating income (non-GAAP measure) of $71.0 million increased $8.8 million or 14.1% over the previous year. Income from continuing operations increased $2.6 million over the previous year. Quarterly cash flow as measured by Funds from Operations (FFO - a non-GAAP measure) totaled $42.8 million, higher than the $41.5 million reported in 2007. The year-over-year results were positively impacted by completed acquisitions and developments generating income of $9.2 million, increased interest income on mezzanine loans ($1.4 million), offset by higher interest expense ($7.0 million), and increases in general and administration costs ($0.5 million). The quarter also includes a one-time charge included in interest expenses for bridge financing costs ($0.5 million). FFO per unit (fully diluted) was $0.451 compared to $0.454 in the previous year. The Trust's quarterly distribution of $0.387 per unit represents a payout ratio (to FFO) of 85.8% compared to 84.4% in 2007.

In comparison to the previous quarter, base rent increased by $5.3 million, operating cost recoveries increased by $0.3 million and interest income increased by $0.1 million, resulting in a net increase in revenues of $5.7 million. Net operating income increased by $5.8 million over the previous quarter. Income from continuing operations (excluding the previous quarter write-down of a property under development) increased $2.1 million over the previous quarter. Quarterly cash flow as measured by FFO increased by $9.2 million, or on a per unit basis (fully diluted) from $0.429 to $0.451 per unit in the current quarter representing a payment ratio (to FFO) of 87.0% and 85.8%, respectively.

Calloway also announced that the Board of Trustees has extended, for an indefinite period, the previously announced partial waiver of its blackout policy. As a result, related parties will be permitted to purchase units provided that they are not in possession of material undisclosed information during certain periods such as when quarterly or annual financial statements are being prepared.

The non-GAAP measures identified in this Press Release do not have any standardized meaning prescribed by Canadian generally accepted accounting principles ("GAAP") and are therefore unlikely to be comparable to similar measures presented by other issuers. These non-GAAP measures are more fully defined and discussed in the management discussion and analysis of Calloway for the second quarter, available on SEDAR website at

Full reports of the financial results of the Trust for the third quarter are outlined in the unaudited financial statements and the management discussion and analysis of Calloway, available on the SEDAR website at In addition, supplemental information is available on Calloway's website at

Calloway will hold a conference call on Friday November 7, 2008 at 10:00 a.m. (ET). Participating on the call will be members of Calloway's senior management.

Investors are invited to access the call by dialing 1-800-590-1508. 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 Friday, November 7, 2008 beginning at 12:00 p.m. (ET) through to 11:59 p.m. (ET) on Friday, November 14, 2008. To access the recording, please call 1-877-289-8525 and use the reservation number 21286626#.

This press release contains "forward looking statements" subject to various significant risks and uncertainties which may cause actual results, performances and achievements of Calloway to be materially different from any future results, performances or achievements, expressed or implied by such forward looking statements. Such risk factors include, but are not limited to, risks associated with real property ownership, availability of cash flow, restrictions on redemption, general uninsured losses, future property acquisition, environmental matters, tax related matters, debt financing, Unitholder liability, potential conflicts of interest, potential dilution, and reliance on key personnel. Calloway cannot assure investors that actual results will be consistent with these forward looking statements and Calloway assumes no obligation to update or revise them to reflect new events or circumstances.

The Toronto Stock Exchange neither approves nor disapproves of the contents of this Press Release.

Contact Information

  • Calloway Real Estate Investment Trust
    Simon Nyilassy
    President and Chief Executive Officer
    (905) 326-6400 x 7649
    Calloway Real Estate Investment Trust
    Bart Munn
    Chief Financial Officer
    (905) 326-6400 x 7631