Calloway Real Estate Investment Trust

Calloway Real Estate Investment Trust

January 04, 2011 10:19 ET

Calloway Real Estate Investment Trust Announces Update on SIFT Restructuring and Other Contract Negotiations

TORONTO, ONTARIO--(Marketwire - Jan. 4, 2011) -


Calloway Real Estate Investment Trust ("Calloway") (TSX:CWT.UN) announces update on SIFT restructuring and other contract negotiations.

SIFT Restructuring

Prior to the completion of Calloway's restructuring to meet the real estate investment trust rules ("REIT Exemption") under the Income Tax Act ("ITA"), the Department of Finance on December 16, 2010, announced proposed amendments to the provisions in the ITA concerning the income tax treatment of real estate investment trusts ("REITs"). This legislative proposal is open for comment until January 31, 2011 and when passed will be effective January 1, 2011. The Announcement provided clarity and new changes in the application of the REIT rules, particularly as they relate to certain aspects of Calloway's previously announced restructuring.

Among the new proposals, REITs will be permitted to hold up to 10% of its non-portfolio property as non-qualifying REIT property without losing its REIT status. As a result, Calloway's existing mezzanine loan portfolio will meet the REIT Exemption under the proposed amendments. Accordingly, Calloway and SmartCentres, the primary mezzanine loan borrower, have agreed not to restructure the loans as previously disclosed. An interest in one mezzanine loan property with a third party was acquired as the transaction had been completed prior to the Announcement. 

In addition, the previously announced restructuring of certain partnerships with SmartCentres that were used to acquire various properties is no longer required as the partnerships also will meet the proposed amendments and the parties have agreed not to proceed.

Other Contract Negotiations

Calloway had also previously announced that negotiations were in process with SmartCentres to extend its Earnout rights on retail tenants and to enter a 30% / 70% (Calloway/SmartCentres) joint venture for all non-retail density on the Calloway Vaughan SmartCentres property and in another separate transaction, to insert a "floor" capitalization rate in the Earnout agreement for various assets acquired in 2006.

The original completion date for these transactions has been extended from December 31, 2010 to February 23, 2011.

About Calloway

Calloway Real Estate Investment Trust is an unincorporated open-end real estate investment trust focused on the ownership and development of high quality retail properties.

The TSX 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 ext. 7649
    Calloway Real Estate Investment Trust
    Bart Munn
    Chief Financial Officer
    (905) 326-6400 ext. 7631