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

Calloway Real Estate Investment Trust

October 16, 2006 18:03 ET

Calloway Invests Over $500 Million in First Nine Months of 2006

TORONTO, ONTARIO--(CCNMatthews – Oct. 16, 2006) –

Attention Business Editors:

Calloway Real Estate Investment Trust (TSX:CWT.UN) announced today that it completed over $500 million of investments during the first nine months of 2006.

Mr. Simon Nyilassy, President and CEO of Calloway said, "Acquisitions, expansions and developments have increased our operating portfolio by over 2.2 million square feet so far this year, as well as adding approximately 600,000 square feet in future development potential.

Investing in 'Calloway quality' assets is a hallmark of our growth program. The addition of newly constructed premises housing successful retailers such as Wal-Mart, Canadian Tire, Sobeys and Best Buy in major markets which include Toronto (6 properties) and Montreal (2 properties), further strengthens Calloway's position as the largest owner of unenclosed, large format retail in Canada.

Our development pipeline is what sets us apart. It has never been stronger, with current expansion capabilities of approximately 4 million square feet, this pipeline alone provides Calloway with an equivalent of 16 new full-size shopping centres."

In aggregate, Calloway's 2006 investing activities to date may be summarized as follows (in millions of dollars):



9 Months
Ended
September 30, Under
Q3 2006 Contract(1) Total
--------------------------------------------------

Acquisitions 138 385 105(2) 490
Expansions/Developments 26 101 64 165
Loans (net) 25 41 0 41

Total 189 527 169 696

(1) new investments expected to close before the end of Q1 2007
(acquisitions/loans) or leases executed and rent to commence in 2006
(expansions/developments).
(2) includes $12.3 million acquisition that closed on October 5, 2006.


Details of Calloway's investing activities for the nine months ended September 30, 2006 are set out below.

Closed Acquisitions

During the third quarter, Calloway acquired interests in four (4) properties for $138 million. The acquired properties are located in the Greater Toronto Area (2), Southern Ontario and Montreal, and comprise of 580,000 square feet of leased area, 215,000 square feet of expansion potential and 24,000 square feet of future development.

For the nine months ended September 30, 2006, investments in newly acquired properties total $385 million in seventeen (17) properties, of which fourteen (14) properties are income producing and three (3), are land purchases. The income producing properties comprise approximately 1,700,000 square feet of existing leaseable area and 260,000 square feet of expansion potential. The lands will comprise approximately 340,000 square feet of leaseable area upon completion.

The fourteen shopping centres were acquired for a total of $361 million. The income producing portion of the centres account for $340 million of the acquisitions and generate $24.1 million annually in net revenues, providing a 7.1% yield. Five of these centres have 260,000 square feet of expansion potential and account for the other $21 million of investment.

The acquisitions were financed with the issuance of 815,348 limited partnership units, convertible into Trust units on a one-for-one basis, for proceeds of approximately $19.3 million, the assumption of $111 million in debt and the balance in cash.

Expansions and New Developments

During the third quarter, the REIT completed 120,000 square feet of expansions and new developments within its existing portfolio. The total investment in these activities was approximately $26.5 million.

For the nine months ending September 30, 2006, Calloway has completed 540,000 square feet of expansions and new developments, generating annual net revenues of $8.4 million and an aggregate yield of 8.3%. Of this retail space, the REIT developed 300,000 square feet and SmartCentres developed the balance. The total investment was approximately $101 million and was in part financed by the issuance of an aggregate of 1,234,156 REIT units and limited partnership units for proceeds of $21 million.

Loans

During the quarter, Calloway committed to an eight year 7.25% mezzanine financing of $28 million to SmartCentres and a partner on a Toronto property, of which, $24.5 million was advanced. The commitment provides Calloway with options to acquire the property on completion. The option price is based on a spread over the ten (10) year Government of Canada bond at the time the option is exercised. If Calloway acquires the property an additional 475,000 square feet of leaseable area would be added to the portfolio. The borrower may defer Calloway's option on 50% of the property for a period of up to 20 years.

For the year to date, financing commitments to SmartCentres total $69.1 million for four (4) mezzanine loans on properties located in Ontario (3) and Quebec. Advances of $40.9 million have been made under these commitments with an estimated yield of 7.3%. Calloway has the right to acquire interests in each of these centres with a total leaseable area of approximately 690,000 square feet upon completion (Calloway's interest).

Under Contract/Negotiation

Calloway has under contract $105 million in acquisitions that are expected to close prior to the end of Q1 2007. Included in these acquisitions is a property located in Peterborough, which closed on October 5, 2006 for $12.3 million. Another $64 million in new expansions and developments are expected to be added to the portfolio by year-end.

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