Calloway Real Estate Investment Trust
TSX : CWT.UN

Calloway Real Estate Investment Trust

May 06, 2009 17:43 ET

Calloway Real Estate Investment Trust Releases First Quarter Results

TORONTO, ONTARIO--(Marketwire - May 6, 2009) - Calloway Real Estate Investment Trust (TSX:CWT.UN) is pleased to report its results for the first quarter ended March 31, 2009.

Highlights of the Quarter:

- Portfolio occupancy rate achieved of 98.4%.

- Renewed 97.4% of leases expiring in the quarter at an average increase in rent of 10%, or $1.62 per square foot.

- Negotiated lease commitments for 115,000 square feet, or over 30% of vacant space, including 50% of the space vacated as a result of the bankruptcy of Linens 'N' Things.

- Raised $138.9 million through term financing ($33.9 million) and a secured revolving operating facility ($105.0 million).

- Invested $26.9 million to complete the development and lease up of 132,230 square feet of leasable area.

- Net income decreased by $28.9 million to $2.3 million over the same period in 2008 primarily due to gains on property sales during 2008, and write-downs of tenant improvements and intangible assets in the first quarter of 2009.

- Net income from continuing operations decreased by $7.9 million to $2.0 million over the same period in 2008, as a result of the write-downs noted above.

- Cash provided by operating activities increased by $11.4 million to $34.4 million over the same period in 2008.

- Funds from operations (non-GAAP measure) decreased slightly by $0.5 million to $42.2 million over the same period in 2008.

"As the first quarter progressed, our operations held up well," said Mr. Simon Nyilassy, President and CEO. "We made good progress on dealing with space vacated by the small number of tenant failures announced over the past few months. This is a testament to the quality of both Calloway's tenants and our shopping centres. We remain vigilant, but cautiously optimistic that this success will continue for the balance of the year." He added, "We also enhanced our liquidity position substantially as the credit markets started to thaw. This was further evidenced by our ability to raise $150 million in unsecured debenture financing subsequent to the quarter end."

As at March 31, 2009, Calloway's $4.1 billion real estate portfolio includes 21.9 million square feet of built gross leasable area and 5.8 million square feet of future developable area in 115 operating and 11 development properties.

Developments completed during the quarter comprised approximately 132,230 square feet of leasable area at a cost of $26.9 million.

Calloway also made good progress during the quarter in challenging capital markets, negotiating a new 18-month $105.0 million operating line and receiving $33.9 million in new term mortgages with an average term of 3.8 years and weighted average interest rate of 5.52%. Proceeds from the latter financing were used to repay existing maturing term debt totalling $27.4 million. Subsequent to the quarter end, Calloway also completed the issuance of $150.0 million of 10.25% unsecured debentures, maturing in 2014, with the net proceeds being used to repay over 75% of the existing 4.51% unsecured debentures maturing in 2010.

Calloway's debt to gross book value (non-GAAP measure) of 54.4% (57.1% including convertible debentures) at March 31, 2009, is below the Trust's target range of 55.0%-60.0% (57.5% to 62.5% including convertible debentures) and provides a significant margin for growth compared to the maximums in Calloway's declaration of trust of 60% and 65% respectively.

Cash provided by operating activities increased by $11.4 million to $34.4 million over 2008 due to portfolio growth and by changes in non-cash operating items. Net income for the first quarter totalled $0.024 per unit compared to $0.338 per unit in 2008, the decrease primarily the result of gains on asset sales in 2008 of $19.1 million, and the write-down of tenant improvements and intangible assets in 2009 of $8.8 million related to tenant bankruptcies. Net income from continuing operations totaled $0.021 per unit compared to $0.107 per unit in 2008, the decrease primarily due to the write-down of tenant improvements and intangible assets of $8.8 million offset by income from the growth in the portfolio of approximately $0.9 million.

Continued high occupancy levels of over 98%, as well as Calloway's acquisition and development program, helped the income-producing portfolio to generate revenue of $116.6 million in the first quarter, a $10.8 million increase over the prior year. Net operating income (non-GAAP measure) of $71.3 million increased $6.5 million or 10.1% over the previous year. Income from continuing operations decreased $7.9 million over the previous year. Annual cash flow as measured by Funds from Operations (FFO - a non-GAAP measure) totaled $42.2 million, a slight decrease of $0.5 million or 0.1% over 2008. The year-over-year results were positively impacted by completed acquisitions and developments generating revenues of $11.8 million, offset by a decrease in interest income on mezzanine loans ($1.0 million), increased property operating costs associated with the overall portfolio growth ($5.2 million), higher interest expense ($3.9 million), increased amortization ($9.3 million), and increases in general and administrative costs ($0.3 million). FFO per unit (fully diluted) was $0.44 compared to $0.46 in the previous year. The Trust's quarterly distribution of $0.387 per unit represents a payout ratio (to FFO) of 88.0% compared to 83.8% in 2008.

The non-GAAP measures identified in this Press Release do not have any standardized meaning prescribed by Canadian generally accepted accounting principles ("GAAP") and are therefore unlikely to be comparable to similar measures presented by other issuers. These non-GAAP measures are more fully defined and discussed in the management discussion and analysis of Calloway for the three-months ended March 31, 2009, available on SEDAR website at www.sedar.com.

Full reports of the financial results of the Trust for the three months ended March 31, 2009 are outlined in the unaudited consolidated 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 7, 2009 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 1-800-591-7539. 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 7, 2009 beginning at 11:00 p.m. (ET) through to 11:59 p.m. (ET) on Thursday, May 14, 2009. To access the recording, please call 1-877-289-8525 and use the reservation number 21304035#.

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