Calloway Real Estate Investment Trust

Calloway Real Estate Investment Trust

August 06, 2009 18:58 ET

Calloway Real Estate Investment Trust Releases Second Quarter Results

TORONTO, ONTARIO--(Marketwire - Aug. 6, 2009) - Calloway Real Estate Investment Trust (TSX:CWT.UN) is pleased to report its results for the second quarter ended June 30, 2009.

Highlights of the Quarter:

- Achieved improved portfolio occupancy of 98.6%.

- Renewed 93.6% of leases expiring in the first half of the year at an average increase in rent of 7.7%, or $1.18 per square foot.

- Negotiated lease commitments for 60,000 square feet or over 20% of vacant space.

- Raised $292 million through the issuance of 2 unsecured debentures ($225 million) and term financing ($67 million).

- Repaid $154 million of unsecured debentures that were due to mature in September 2010.

- Invested $60.6 million to complete the development and lease up of 241,423 square feet of leaseable area.

- Net income from continuing operations increased by $1.2 million to $7.0 million over the same period in 2008, as a result of acquisitions and development offset by additional interest related to mortgages on the new properties acquired and the interest rate differential on the new unsecured debentures.

- Net income decreased by $18.6 million to $6.8 million over the same period in 2008 primarily due to a reduction in gains on property sales

- Cash provided by operating activities increased by $0.9 million to $34.5 million over the same period in 2008.

- Funds from operations (non-GAAP measure) increased slightly by $0.7 million to $40.9 million over the same period in 2008.

"In the second quarter, our centres continued to perform well," said Mr. Simon Nyilassy, President and CEO. "At 98.6%, we achieved occupancy levels that are close to our historic norms of 99% and higher. Strong relationships with our existing tenants enabled us to complete almost 120,000 square feet of lease deals on our vacant space in the quarter, and obtain forward commitments for over 60,000 square feet more." He added, "While business conditions remain unsettled, I am confident in the ability of Calloway's team and the strength of its properties to deal effectively in a challenging environment."

As at June 30, 2009, Calloway's $4.1 billion real estate portfolio includes 22.1 million square feet of built gross leasable area and 5.6 million square feet of future developable area in 116 operating and 10 development properties.

Developments completed during the quarter comprised approximately 241,423 square feet of leasable area at a cost of $60.6 million, including Calloway's first Lowes store which opened in Oshawa, Ontario.

Calloway raised $225 million in two transactions: the issuance of $150 million of 10.25% unsecured debentures, maturing in 2014, with the net proceeds being used to repay over 75% of the existing Series "A" unsecured debentures maturing in 2010 and $75 million of 7.95% unsecured debentures maturing in 2014, with the proceeds used to repay operating facilities. Calloway also closed $67 million in new term mortgages, with an average term of 5.4 years and weighted average interest rate of 6.24%.

Calloway's debt to gross book value (non-GAAP measure) of 55.2% (57.9% including convertible debentures) at June 30, 2009, is at the low end of 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 $0.9 million to $34.5 million over 2008 due to portfolio growth and changes in non-cash operating items. Net income for the second quarter totalled $0.071 per unit compared to $0.273 per unit in 2008, the decrease primarily the result of gains on asset sales in 2008 of $18.6 million. Net income from continuing operations totaled $0.073 per unit compared to $0.062 per unit in 2008, the increase primarily due to the growth in the portfolio.

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 $111 million in the second quarter, a $6.5 million increase over the prior year. Net operating income (non-GAAP measure) of $73.6 million increased $8.1 million or 12.3% over the previous year. Income from continuing operations increased $1.2 million over the previous year. Quarterly cash flow as measured by Funds from Operations (FFO - a non-GAAP measure) totaled $40.9 million, a slight increase of $0.7 million or 1.9% over 2008. The quarter-over-quarter results were positively impacted by completed acquisitions and developments generating revenues of $8.1 million, offset by a decrease in interest income on mezzanine loans ($1.7 million), higher interest expense ($3.4 million), increased amortization ($3.2 million), and increases in general and administrative costs ($0.3 million). FFO per unit (fully diluted) was $0.43 compared to $0.43 in the previous year. The Trust's quarterly distribution of $0.387 per unit represents a payout ratio (to FFO) of 90.7% compared to 89.8% 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 June 30, 2009, available on SEDAR website at

Full reports of the financial results of the Trust for the three months ended June 30, 2009 are outlined in the unaudited consolidated financial statements and the related management discussion and analysis of Calloway, available on the SEDAR website at In addition, supplemental information is available on Calloway's website at

Calloway will hold a conference call on Friday, August 7, 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 1-800-589-8577. 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 Friday, August 7, 2009 beginning at 12:00 p.m. (ET) through to 11:59 p.m. (ET) on Friday, August 14, 2009. To access the recording, please call 1-877-289-8525 and use the reservation number 21310977#.

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