Calloway Real Estate Investment Trust
TSX : CWT.UN

Calloway Real Estate Investment Trust

May 18, 2011 18:06 ET

Calloway Real Estate Investment Trust Releases First Quarter Results

TORONTO, ONTARIO--(Marketwire - May 18, 2011) - Calloway Real Estate Investment Trust (TSX:CWT.UN) is pleased to report its results for the first quarter ended March 31, 2011.

Highlights:

  • Portfolio occupancy rate increased to 99.2%.
  • Renewed 96% of expiring leases with an average rent increase of 7.3%.
  • Invested $30.0 million to complete the development and lease up of 106,948 square feet of leaseable area with a 7.5% yield.
  • Funds from operations (non-IFRS measure) increased by $6.8 million to $47.7 million (1) compared to the same period in 2010.
  • Raised $116 million in new Trust Units that closed in April 2011.
  • Completed the sale of four non-core assets, which closed on May 6, 2011.
  • Monthly distributions are confirmed for the period of May to July.
  • Completed its first quarterly report under IFRS (International Financial Reporting Standards).

Al Mawani, the new President & CEO, said, "Our operating and financial performance during the quarter was in line with our expectations. Our well-positioned portfolio of shopping centres across the country ended the quarter with an occupancy that increased further to 99.2%. We have not experienced any significant tenant departures for over two years and retained over 96% of tenants whose leases expired in the quarter."

As at March 31, 2011, Calloway's $5.3 billion real estate portfolio (at fair value) included 24.4 million square feet of built gross leasable area and 4.5 million square feet of future developable area in 120 operating and 10 development properties. The value of the portfolio increased $873.8 million over the same quarter in 2010.

Developments completed during the quarter comprised approximately 106,948 feet of leasable area at a cost of $30.0 million and a 7.5% yield.

After quarter end, Calloway completed the sale of four non-core assets for $41.6 million, receiving cash proceeds of $28.3 million.

During the quarter, the Trust received $66.0 million in new term mortgages with a term of ten years and an interest rate of 5.52%. This financing was packaged in the first new Commercial mortgage backed securities in Canada in two years.

After the quarter end, the Trust issued $116 million in new Trust Units.

As a result of these financing activities, Calloway has reduced its debt to gross book value (non-IFRS measure) to 51.5% (55.0% including convertible debentures) at quarter end, and to 50.4% (53.8% including convertible debentures) after the equity issue. This will provide flexibility to the Trust to address its committed financing obligations through to 2012.

Net income for the quarter was $35.9 compared to $98.9 in the same quarter 2010. The decrease was primarily the result of fair value adjustments on investment properties and financial instruments which was a net gain of $14.1 million this quarter compared to $119.8 million in the same quarter 2010 as a result of the larger decrease in capitalization rates in 2010 compared to this year. Excluding the impact of fair value adjustments, interest expense related to the distributions on LP units considered debt in 2010 and income tax provisions, Net income would have increased by $6.6 million this quarter over the same quarter in 2010 mainly due to increases in net rental revenue of $4.9 million and a reduction of interest expense of $2.3 million mainly due to the refinancing of the 10.25% Series C unsecured debentures at the end of 2010.

The high occupancy level of 99.2%, as well as Calloway's acquisition and development program, generated rental revenue of $128.9 million in the quarter, a $9.5 million increase over the prior year. Net operating income (non-IFRS measure) of $82.6 million increased $4.9 million or 6.3% over the previous year. Cash flow as measured by Funds from Operations (FFO – a non - IFRS measure) totalled $47.7 million (1) in the quarter, an increase of $6.8 million or 16.6% over 2010. The year-over-year results were positively impacted mainly by completed acquisitions and developments generating additional rental income of $4.9 million and a decrease in interest expense of $2.3 million (excluding distributions on LP units considered interest expense under IFRS). FFO per unit (fully diluted) was $0.413 compared to $0.402 in the previous year. AFFO per unit (fully diluted) was $0.399 compared to $0.380 in the previous year. The Trust's quarterly distribution of $0.387 per unit represents a payout ratio (to AFFO) of 97.0% compared to 101.8% in 2010.

Calloway expects to become SIFT compliant effective January 1, 2011 once the Federal Budget proposals clarifying SIFT rules are re-introduced and passed. The current income tax provision of $4 million will be reversed at that time.

The non-IFRS measures identified in this Press Release 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 Calloway for the three-months ended March 31, 2011, available on SEDAR website at www.sedar.com.

(1) Excludes current income taxes

Full reports of the financial results of the Trust for the year are outlined in the audited financial statements and the related management discussion and analysis of Calloway, available on the SEDAR website at www.sedar.com. In addition, supplemental information is available on Calloway's website at www.callowayreit.com.

Calloway will hold a conference call on Thursday May 19, 2011 at 9:00 a.m. (ET). Participating in the call will be members of Calloway'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, May 19, 2011 beginning at 11:00 a.m. (ET) through to 11:59 p.m. (ET) on Thursday, May 26, 2011. To access the recording, please call 1-877-289-8525 and use the reservation number 4435578#.

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

Contact Information

  • Calloway Real Estate Investment Trust
    Al Mawani
    President and Chief Executive Officer
    (905) 326-6400 ext. 7649
    (905) 326-0783 (FAX)

    Calloway Real Estate Investment Trust
    Bart Munn
    Chief Financial Officer
    (905) 326-6400 ext. 7631
    (905) 326-0783 (FAX)
    www.callowayreit.com