Calloway Real Estate Investment Trust

Calloway Real Estate Investment Trust

August 07, 2008 19:02 ET

Calloway Real Estate Investment Trust Releases Second Quarter Results

TORONTO, ONTARIO--(Marketwire - Aug. 7, 2008) - Calloway Real Estate Investment Trust (TSX:CWT.UN) is pleased to report its results for the quarter ended June 30, 2008.

Highlights of the Quarter:

- Acquired six income properties for $285.0 million adding over 1,400,000 square feet of leaseable area.

- Invested $48.0 million to complete the development and lease up of 169,000 square feet of leaseable area.

- Disposed of three non-core asset for $63.0 million, realizing gains of $18.5 million.

- Issued $125.0 million 6.65% convertible debentures.

- Portfolio occupancy rate maintained at over 99.0%.

- Net income increased by $17.6 million to $25.4 million over 2007 primarily due to gains on property sales.

Mr. Simon Nyilassy, President and CEO said, "We continue to build for the future, raising almost $400 million in capital which we have invested in new and expanded 'Calloway Quality' shopping centres." Mr. Nyilassy added, "With a portfolio of 134, primarily Wal-Mart anchored, retail properties containing almost 22 million square feet of leaseable area, we are well positioned."

As at June 30, 2008, Calloway's $4.1 billion real estate portfolio included 21.8 million square feet of built gross leasable area and 6.1 million square feet of future developable area in 123 operating and 11 development properties.

During the quarter, the Trust completed the purchase of six new large-scale shopping centres for $285.0 million. Under the deal, Calloway will pay another $86 million over the next three years as additional space is built and occupied in the centres. The six new centres are all anchored by a Wal-Mart store or Wal-Mart Supercentre with three located in Calloway's core market of Ontario, while the others are in British Columbia, Quebec and Saskatoon.

Developments completed during the quarter comprised approximately 169,000 square feet of leasable area at a cost of $48.0 million. Calloway also advanced over $11.0 million on existing mezzanine loans during the quarter.

Calloway continues to execute its strategy of selling non-core real estate. The sale of 3 assets closed during the quarter yielding cash proceeds of $63.0 million and a gain of $18.5 million. In addition, 2 properties closed subsequent to the quarter end and a further 5 properties are under contract. A further five properties are being marketed for sale.

On May 2, 2008, the Trust raised $125 million through the successful issuance of 5-year 6.65% convertible debentures. The proceeds were used to partially repay an existing bridge loan and the balance to reduce operating lines.

Calloway's debt to gross book value (non-GAAP measure) of 54.4% (57.1% including convertible debentures) at quarter end remains at the low end of the Trust's target range of 55.0%-60.0%.

Net income for the second quarter totalled $0.273 per unit compared to $0.085 per unit in 2007, primarily the result of gains on asset sales. Net income from continuing operations totalled $0.062 per unit compared to $0.075 per unit in 2007. The decrease was due to a write down of property under development of $1.7 million or $0.02 per unit. Cash provided by operating activities decreased by $10.2 million to $33.7 million over the previous year due to changes in non-cash operating items.

Continued high occupancy levels of over 99%, as well as Calloway's active acquisition and development program helped the income-producing portfolio to generate revenue of $104.9 million in the second quarter, a $12.2 million increase over the prior year. Net operating income (non-GAAP measure) of $65.6 million increased $4.0 million or 6.5% over the previous year. Income from continuing operations increased $0.7 million over the previous year. Quarterly cash flow as measured by Funds from Operations (FFO - a non-GAAP measure) totaled $40.0 million, slightly lower than the $40.2 million reported in 2007. The year-over-year results were positively impacted by completed acquisitions and developments generating income of $5.8 million, increased interest income on mezzanine loans ($2.5 million), offset by higher interest expense ($5.4 million), and increases in general and administration costs ($0.7 million). The quarter also includes one-time charges in general and administration ($0.2 million) and in interest expenses for bridge financing costs ($0.3 million). It should be noted a further charge to interest expense of $0.5 million will be incurred in 2008. FFO per unit (fully diluted) was $0.429 compared to $0.441 in the previous year. The Trust's quarterly distribution of $0.387 per unit represents a payout ratio (to FFO) of 90.2% compared to 85.0% in 2007.

In comparison to the previous quarter, base rent increased by $1.2 million, operating cost recoveries decreased (seasonal fluctuation) by $3.2 million and interest income increased by $0.2 million, resulting in a net decrease in revenues of $1.8 million. Net operating income increased by $0.5 million over the previous quarter. Income from continuing operations decreased $0.7 million over the previous quarter, (excluding $2.0 million one-time expenses) primarily due to temporary dilution from the Trust's capital raising activities. For similar reasons, quarterly cash flow as measured by FFO decreased by $0.7 million (excluding the $2.0 million in one-time adjustments noted above), or on a per unit basis (fully diluted) from $0.462 to $0.449 per unit in the current quarter representing a payment ratio (to FFO) of 83.8% and 86.2%, respectively.

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 second quarter, available on SEDAR website at

Full reports of the financial results of the Trust for the second quarter are outlined in the unaudited financial statements and the 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 8, 2008 at 8:00 a.m. eastern time (ET). Participating on the call will be members of Calloway's senior management. Investors are invited to access the call by dialing 1-866-250-4892. 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 on Friday, August 8, 2008 beginning at 10:00 a.m. (ET) through to 11:59 p.m. (ET) on Friday, August 15, 2008. To access the recording please call 1-877-289-8525 and use the reservation number 21278850#.

This press release contains "forward looking statements" subject to various significant risks and uncertainties which may cause actual results, performances and achievements of Calloway to be materially different from any future results, performances or achievements, expressed or implied by such forward looking statements. Such risk factors include, but are not limited to, risks associated with real property ownership, availability of cash flow, restrictions on redemption, general uninsured losses, future property acquisition, environmental matters, tax related matters, debt financing, Unitholder liability, potential conflicts of interest, potential dilution, and reliance on key personnel. Calloway cannot assure investors that actual results will be consistent with these forward looking statements and Calloway assumes no obligation to update or revise them to reflect new events or circumstances.

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