Calloway Real Estate Investment Trust
TSX : CWT.UN

Calloway Real Estate Investment Trust

February 25, 2009 18:41 ET

Calloway Real Estate Investment Trust Releases Fourth Quarter and Year End Results

TORONTO, ONTARIO--(Marketwire - Feb. 25, 2009) - Calloway Real Estate Investment Trust (TSX:CWT.UN) is pleased to report its results for the fourth quarter and year ended December 31, 2008.

Highlights of the Quarter:

- Raised $86.0 million through term financing ($58.4 million) and non-core asset sales ($27.6 million).

- Invested $57.7 million to complete the development and lease up of 128,085 square feet of leaseable area.

- Portfolio occupancy rate maintained at over 99.0%.

- Net income increased by $9.1 million to $16.4 million over the same period in 2007 primarily due to gains on property sales and portfolio growth.

- Net income from continuing operations increased by $6.1 million to $12.1 million over the same period in 2007.

- Cash provided by operating activities decreased by $23.1 million to $50.6 million over the same period in 2007, primarily due to higher investment in working capital.

- Funds from operations (non-GAAP measure) increased by $4.3 million to $44.7 million over the same period in 2007.

Highlights of the Year:

- Raised $0.5 billion through term financing ($337.4 million) and non-core asset sales ($162.5 million).

- Issued $125.0 million principal amount of 6.5% convertible debentures.

- Acquired six income properties for $272.1 million.

- Invested $222.9 million to complete the development and lease up of 918,718 square feet of leasable area.

- Portfolio occupancy rate maintained at over 99.0% throughout the year.

- Net income increased by $59.2 million to $89.6 million over the same period in 2007 primarily due to gains on property sales.

- Net income from continuing operations increased by $10.7 million to $36.7 million over the same period in 2007 primarily due to portfolio growth.

- Cash provided by operating activities decreased by $16.8 million to $144.1 million over 2007, primarily due to higher investment in working capital.

- Funds from operations (non-GAAP measure) increased by $9.4 million to $170.3 million over the same period in 2007.

Simon Nyilassy, President & CEO, said, "Our operating properties continued to produce solid, stable results throughout the year. It is comforting at this time to own a large portfolio of shopping centres built for value, most of them anchored by a Wal-Mart store."

As at December 31, 2008, Calloway's $4.1 billion real estate portfolio included 21.9 million square feet of built gross leasable area and 5.6 million square feet of future developable area in 119 operating and 10 development properties.

Developments completed during the year comprised approximately 918,718 square feet of leasable area at a cost of $222.9 million.

Calloway continued to execute its strategy of selling non-core real estate with the sale of 9 assets during the year yielding gross proceeds of $162.5 million and a gain of $48.1 million. In addition, a further 3 properties continue to be marketed for sale.

During the year the Trust received $337.4 million in new term mortgages with an average term of 6.0 years and weighted average interest rate of 5.5%. The Trust repaid $222.4 million of short term operating debt and negotiated a new $160.0 million operating line. A further 18 month facility of $105.0 million was arranged subsequent to the year end.

Calloway's debt to gross book value (non-GAAP measure) of 54.3% (57.0% including convertible debentures) at year end is below the Trust's target range of 55.0%-60.0% (57.5% to 62.5% including convertible debentures).

Net income for the year totalled $0.95 per unit compared to $0.33 per unit in 2007, primarily the result of gains on asset sales. Net income from continuing operations totaled $0.39 per unit compared to $0.28 per unit in 2007. The increase was due to lease renewals at higher rates and growth in the portfolio. Cash provided by operating activities decreased by $16.8 million to $144.1 million over the previous year due to portfolio growth being offset by changes in non-cash operating items.

Continued high occupancy levels of over 99% throughout the year, as well as Calloway's acquisition and development program, helped the income-producing portfolio to generate revenue of $413.7 million in the year, a $50.0 million increase over the prior year. Net operating income (non-GAAP measure) of $273.4 million increased $28.4 million or 11.6% over the previous year. Income from continuing operations increased $10.7 million over the previous year. Annual cash flow as measured by Funds from Operations (FFO - a non-GAAP measure) totaled $170.3 million, an increase of $9.4 million or 5.9% over 2007. The year-over-year results were positively impacted by completed acquisitions and developments generating income of $28.4 million, increased interest income on mezzanine loans ($5.2 million), offset by higher interest expense ($21.2 million), and increases in general and administration costs ($1.5 million). The year also includes a writedown of properties under development ($1.9 million). FFO per unit (fully diluted) was $1.81 compared to $1.75 in the previous year. The Trust's annual distribution of $1.55 per unit represents a payout ratio (to FFO) of 85.7% compared to 86.7% in 2007.

Callloway's acquisition and development program helped the income-producing portfolio to generate revenue of $109.1 million in the fourth quarter, a $13.5 million increase over the same period in the prior year. Net operating income (non-GAAP measure) for the fourth quarter of $72.5 million increased $9.1 million or 14.4% over the same period in the previous year. Income from continuing operations for the fourth quarter increased $6.1 million over the same period in the previous year. Quarterly cash flow as measured by Funds from Operations (FFO - a non-GAAP measure) totalled $44.7 million, an increase of $4.3 million or 10.7% over the same period in 2007. The year-over-year results were positively impacted by completed acquisitions and developments generating income of $13.5 million, increased interest income on mezzanine loans ($0.4 million), offset by higher interest expense ($5.1 million), and increases in general and administration costs ($0.4 million). The quarter also includes a writedown of properties under development ($0.2 million). FFO per unit for the fourth quarter (fully diluted) was $0.47 compared to $0.44 in the previous year. The Trust's quarterly distribution of $0.39 per unit represents a payout ratio (to FFO) of 83.0% compared to 88.5% in the same period in 2007.

Calloway also announced that the Board of Trustees has extended, for an indefinite period, the previously announced partial waiver of its blackout policy. As a result, related parties will be permitted to purchase units provided that they are not in possession of material undisclosed information and during certain periods such as when quarterly or annual financial statements are being prepared.

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 year ended December 31, 2008, available on SEDAR website at www.sedar.com.

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 February 26, 2009 at 10:00 a.m. (ET). Participating in the call will be members of Calloway's senior management.

Investors are invited to access the call by dialing 1-800-731-5774. 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, February 26, 2009 beginning at 12:00 p.m. (ET) through to 11:59 p.m. (ET) on Thursday, March 5, 2009. To access the recording, please call 1-877-289-8525 and use the reservation number 21295830#.

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
    (905) 326-0783 (FAX)