Calloway Real Estate Investment Trust
TSX : CWT.UN

Calloway Real Estate Investment Trust

May 07, 2014 16:43 ET

Calloway Real Estate Investment Trust Releases First Quarter Results

TORONTO, ONTARIO--(Marketwired - May 7, 2014) - Calloway Real Estate Investment Trust (TSX:CWT.UN) is pleased to report positive results for the first quarter ended March 31, 2014.

Highlights for the quarter:

  • Funds from operations ("FFO")(2) increased by 10.6% to $66.4 million and 8.6% to $0.490 on a per Unit basis compared to the same quarter of 2013
  • Excluding the impact of lease termination fees, FFO per Unit increased by 5.5% compared to the same quarter of 2013
  • Maintained portfolio occupancy rate at the 99% level for the 17th sequential quarter
  • Invested $20.1 million to complete the development and lease up of 104,515 square feet of leasable area at an average yield of 8.4%
  • Same properties NOI increased by 1.1% over the same quarter of 2013
  • Issued $150.0 million of 3.749% Series L senior unsecured debentures maturing in February 2021
  • Redeemed $100.0 million of the 5.10% Series E senior unsecured debentures and partially redeemed $50.0 million of the 5.37% Series B senior unsecured debentures
  • Commenced construction of the KPMG Tower at the Vaughan Metropolitan Centre ("VMC")
  • Monthly distributions are confirmed for the period of May to July 2014 at $0.129 per unit
  • Increased the unencumbered asset pool to $1,625.6 million

Huw Thomas, President & CEO of Calloway Real Estate Investment Trust (the "Trust"), said, "I am pleased with our positive first quarter results. Our portfolio of 123 mostly Walmart-anchored retail centres continues to deliver reliable performance and steady growth. We have grown our portfolio by building out new space for existing and new tenants at an average investment yield of 8.4%. We have started 2014 having renewed or in final stages of renewal on 68% of 2014 lease expiries. With respect to our emerging portfolio of growth initiatives, the Toronto Premium Outlets continues to exceed our expectations in terms of performance, and we continue to look for further sites to add to the portfolio in addition to our Montreal Premium Outlets location, which will open in the fall of 2014. For the most significant longer term opportunity, construction has begun on the first tower in the VMC and we are now turning our attention to the next possible development on the site."

The following table summarizes the Trust's portfolio information:

March 31, 2014 December 31, 2013 Change
Fair value of real estate portfolio (in millions of dollars) (1) 6,719.4 6,696.8 22.6
Weighted average stabilized capitalization rate 6.01 % 6.01 % - %
Built gross leasable area 27.5 million square feet
Future developable area 3.0 million square feet
Number of retail properties 123
Number of other operating properties 2
Number of development properties 8

Developments completed during the quarter are as follows:

Leasable area 104,515 square feet
Cost $20.1 million
Yield 8.4 %

The Trust issued $150.0 million (net proceeds including issuance costs - $149.0 million) of 3.749% Series L senior unsecured debentures due on February 11, 2021, with semi-annual payments due on February 11 and August 11 each year. The proceeds from the sale of the debentures were used to redeem $100.0 million of the 5.10% Series E senior unsecured debentures and partially redeem $50.0 million of $250.0 million aggregate principal amount of the 5.37% Series B senior unsecured debentures.

The Trust received a partial repayment of $25.4 million on one mortgage receivable with existing commitments of $68.8 million.

The Trust also repaid three term mortgages totalling $57.0 million.

The Trust's debt to gross book value was 50.9% at March 31, 2014 (December 31, 2013 - 51.6%), which is below the Trust's target range, and the debt to total assets ratio was 43.1% (December 31, 2013 - 43.8%). The decreases in the debt to gross book value and debt to total assets ratios are primarily due to repayments of term mortgages during the quarter, which resulted in a decrease in total indebtedness. The interest coverage ratio improved to 2.5X at March 31, 2014 from 2.4X at March 31, 2013 primarily due to an increase in net operating income and decrease in interest from the refinancing of existing debt and raising additional debt at lower interest rates. In addition, properties with an aggregate appraised value of $1,625.6 million are now unencumbered or debt-free. This will provide significant flexibility to the Trust to address its committed obligations and to grow its portfolio in future years. Finally, maturing mortgages for the balance of 2014 and into 2015 continue to present significant potential FFO benefit when refinancing due to the substantial rate differential.

Excluding convertible debentures Including convertible debentures
Debt to gross book value 50.9 % 51.8 %
Target range 55.0%-60.0 % 60.0%-65.0 %

The following table summarizes the Trust's key financial highlights for the quarters ended March 31(1):

(in millions of dollars, except per Unit information) Three Months Ended March 31, 2014 Three Months Ended March 31, 2013 Change
Net income excluding fair value adjustments (1) 55.1 58.0 (2.9 )
Rental revenue (1) 157.6 141.5 16.1
Net operating income (1) 100.2 90.5 9.7
Cash flow as measured by FFO (2) 66.4 60.0 6.4
Per Unit Information
FFO per Unit (fully diluted) (2) $ 0.490 $ 0.451 $ 0.039
AFFO per Unit (fully diluted) $ 0.460 $ 0.424 $ 0.036
Quarterly distribution $ 0.387 $ 0.387 -
Payout ratio (to AFFO) 84.1 % 91.3 % (7.2 )%

FFO for the quarter was $66.4 million compared to $60.0 million in the same period of 2013. The increase of $6.4 million is primarily due to an increase in net operating income ($9.7 million), which includes lease termination revenue of $2.7 million (three months ended March 31, 2013 - $0.7 million), partially offset by an increase in interest expense net of yield maintenance on early redemption of unsecured debentures ($3.9 million). On a per Unit basis, FFO increased by 8.6% over the same period of 2013. Excluding the impact of lease termination fees, FFO per Unit increased by 5.5% over the same period of 2013.

The high occupancy level of 99.0%, as well as the Trust's acquisition and development program, generated rental revenue of $157.6 million during the period. NOI of $100.2 million increased by 10.7% over the same period of 2013 including a 1.1% increase on a same properties basis.

The non-IFRS measures used in this Press Release, including AFFO, FFO, NOI, debt to gross book value, payout ratio and interest coverage ratio 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 the Trust for the three months ended March 31, 2014, available on SEDAR website at www.sedar.com.

(1) Includes the Trust's share of investments in associates.

(2) March 31, 2014 excludes yield maintenance fees on redemption of unsecured debentures and related write-off of unamortized financing costs. March 31, 2013 excludes CEO transition costs.

Full reports of the financial results of the Trust for the year ended December 31, 2013 are outlined in the audited financial statements and the related management discussion and analysis of the Trust, available on the SEDAR website at www.sedar.com. In addition, supplemental information is available on the Trust's website at www.callowayreit.com.

The Trust will hold a conference call on Thursday May 8, 2014 at 8:00 a.m. (ET). Participating on the call will be members of Calloway's senior management.

Investors are invited to access the call by dialing 1-800-814-4860. 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 8, 2014 beginning at 9:00 a.m. (ET) through to 11:59 p.m. (ET) on Thursday May 15, 2014. To access the recording, please call 1-877-289-8525 and use the reservation number 4677804#.

Certain statements in this Press Release are "forward-looking statements" that reflect management's expectations regarding the Trust's future growth, results of operations, performance and business prospects and opportunities as outlined under the headings "Business Overview and Strategic Direction" and "Outlook". More specifically, certain statements contained in this Press Release, including statements related to the Trust's maintenance of productive capacity, estimated future development plans and costs, view of term mortgage renewals including rates and upfinancing amounts, timing of future payments of obligations, intentions to secure additional financing and potential financing sources, and vacancy and leasing assumptions, and statements that contain words such as "could", "should", "can", "anticipate", "expect", "believe", "will", "may" and similar expressions and statements relating to matters that are not historical facts, constitute "forward-looking statements". These forward-looking statements are presented for the purpose of assisting the Trust's Unitholders and financial analysts in understanding the Trust's operating environment, and may not be appropriate for other purposes. Such forward-looking statements reflect management's current beliefs and are based on information currently available to management. However, such forward-looking statements involve significant risks and uncertainties, including those discussed under the heading "Risks and Uncertainties" and elsewhere in the Trust's Management's Discussion & Analysis for the year ended December 31, 2013 and under the heading "Risk Factors" in its Annual Information Form for the year ended December 31, 2013. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements. Although the forward-looking statements contained in this Press Release are based on what management believes to be reasonable assumptions, the Trust cannot assure investors that actual results will be consistent with these forward-looking statements. The forward-looking statements contained herein are expressly qualified in their entirety by this cautionary statement. These forward-looking statements are made as at the date of this Press Release and the Trust assumes no obligation to update or revise them to reflect new events or circumstances unless otherwise required by applicable securities legislation.

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

Contact Information

  • Calloway Real Estate Investment Trust
    Huw Thomas
    President and Chief Executive Officer
    (905) 326-6400 ext. 7649

    Calloway Real Estate Investment Trust
    Mario Calabrese
    Interim Chief Financial Officer
    (905) 326-6400 ext. 7610