Calloway Real Estate Investment Trust
TSX : CWR.UN
TSX : CWT.DB

Calloway Real Estate Investment Trust

December 12, 2006 10:14 ET

Calloway Acquires an Additional Five Million Square Feet of Retail Space

TORONTO, ONTARIO--(CCNMatthews – Dec. 12, 2006) –

Attention Business Editors:

Calloway Real Estate Investment Trust (TSX:CWT.UN) announced it has completed the internalization of its property management business and the acquisition of seven properties and has entered into long-term leases on an additional four properties, partially completing its previously announced transaction with SmartCentres. Five shopping centres remain under contract and are scheduled to close by December 31, 2006.

Upon completion of the property acquisitions, Calloway will have acquired nine operating shopping centres, containing 1.6 million square feet of leased area and 0.6 million square feet of expansion potential, and 7 development properties with 1.8 million of potential leaseable area.

The total consideration of the transaction includes approximately $380 million for the operating properties at an estimated yield of approximately 6.1%, $46 million for the undeveloped land and $14 million for the property management business. Interests in five of the properties, for initial consideration of $219 million, will be by way of prepaid 80-year leases with the right to acquire the free-hold interest at the end of the lease term. The purchase price will be satisfied by the assumption of $230 million in existing mortgage financing, the issuance of approximately $41.4 million in Calloway LP Units that are convertible into Calloway REIT Units at a price per unit of $29.30, of which, Mr. Mitchell Goldhar will receive approximately $16.7 million, and the balance in cash and preferred debt. The consideration paid with respect to the initial eleven properties totals $235 million, including $10.2 million for future expansion and development lands.



The acquisitions comprise of the following properties:

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Property Prov. GLA Built GLA on Anchors
Completion
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Closed

Brampton ON - 280,235 Loblaws(1)
(Airport & Bovaird)
Fredericton (N) NB - 163,224 Wal-Mart(1)
Kirkland QC 207,216 207,216 Wal-Mart
Magog QC - 256,110 Wal-Mart
Milton (50%) ON 128,928 228,928 Wal-Mart(1),
Canadian Tire(1)
Mississauga
(Erin Mills)(2)(40%) ON 272,130 286,927 Wal-Mart,
No Frills
Mississauga
(Meadowvale)(3)(50%) ON 451,468 566,352 Wal-Mart, Rona,
Loblaws(1)
Pickering (2)(40%) ON 527,863 527,863 Wal-Mart,
Sam's Club,
Sobeys,
Canadian Tire(1)
Toronto
(147 Laird)(4)(50%) ON 95,700 234,844 Sobeys, Home
Depot(1)
Victoriaville QC - 42,440 Wal-Mart(1),
Maxi(1),
Home Depot(1)
Whitby (NE) ON 20,847 58,373

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Subtotal 1,704,152 2,852,512
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Closing by December 31, 2006

Carleton Place
(McNeely Ave) ON - 281,537 Wal-Mart
Oakville ON 311,153 518,821 Wal-Mart,
Loblaws
Oshawa(N)(2) ON 406,113 557,780 Wal-Mart,
Loblaws,
Home Depot(1)
Rockland ON - 176,436 Wal-Mart
Stouffville ON - 613,598 Wal-Mart(1),
Canadian Tire

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Subtotal 717,266 2,148,172
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Total 2,421,418 5,000,684
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(1) Shadow anchor
(2) Leased property
(3) 37.5% is leased
(4) 25.0% is leased


The 2.4 million square feet in future development potential in the 16 properties will be completed by SmartCentres under development agreements. Calloway estimates that it will invest an additional $555 million in these properties as new buildings are completed and as tenants lease new space, at an estimated yield of over 6.5%. SmartCentres will have the option to provide up to $130 million in financing for these developments, by subscribing for REIT units or Class "B" Exchangeable LP Units at a price per unit, ranging from $29.55 to $33.00.

In connection with the acquisition of the initial eleven properties, Mr. Mitchell Goldhar, the major vendor, president and CEO of SmartCentres, received 206,935 Class "B" Exchangeable Units of Calloway LP at a price of $29.30 per unit and 206,935 Special Voting Units of Calloway. In addition, Mr. Goldhar also received 2,550,000 Class "C" Exchangeable Units of Calloway LP and rights to acquire 351,416 units of the REIT on the completion and rental of certain properties. The Class "C" Exchangeable LP Units are exchangeable into Class "B" LP Units and have nominal value. Mr. Goldhar holds 9,157,389 units of the REIT, representing approximately 12.2% of the total issued and outstanding units which, together with the Class "B" and associated Special Voting Units represent a 22.5% voting interest in Calloway. Including prior rights to acquire Calloway units or Class "B" and associated Special Voting Units, Mr. Goldhar will be able to increase his economic and voting interest in Calloway to as much as 33.0% as such properties are completed and rented. Mr. Goldhar has no present intention of acquiring any additional units or securities convertible into units other than pursuant to the foregoing. A report under National Instrument 62-103 further detailing Mr. Goldhar's holdings in Calloway will be filed within two business days on the Canadian Securities Administrators' System for Electronic Document Analysis and Retrieval (SEDAR) at www.sedar.com.

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