Calloway Real Estate Investment Trust
TSX : CWR.UN
TSX : CWT.DB

Calloway Real Estate Investment Trust

November 10, 2006 17:06 ET

Calloway Reports Third Quarter Results

TORONTO, ONTARIO--(CCNMatthews – Nov. 10, 2006) –

Attention Business/Financial Editors:

Calloway Real Estate Investment Trust (TSX:CWT.UN) is pleased to report it results for the quarter ending September 30, 2006.

Highlights of the Quarter:

- Acquired 534,000 square feet of retail space for $127.6 million, plus properties under development for $13.3 million; - Expanded existing centres by an additional 123,000 square feet of leaseable area, at a cost to Calloway of $22.8 million, providing an unleveraged initial yield of 7.95%; - Increased distributions per unit by 3.4% to $1.50 per unit.

As at September 30, 2006, Calloway's $2.8 billion real estate portfolio consists of 16.7 million square feet of gross leaseable area in 109 properties and 3.5 million square feet of future gross leaseable area almost 10% higher than the beginning of the year.

During the quarter Calloway issued 212,833 Trust units and 76,478 LP units, which were part consideration for third quarter acquisitions. In addition, 179,966 Trust units were issued under the distribution reinvestment plan and conversions of convertible debentures.

Calloway's debt to gross book value is a conservative 51% at quarter end. At Calloway's targeted debt to gross book value of 57.5%, it has the capacity to purchase an additional $470.0 million in assets. Subsequent to quarter end, the Trust issued $250 million of unsecured debentures, increasing the debt to gross book value to 53.6%

For quarter ended September 30, 2006, revenue totaled $76.7 million, a $3.0 million or 4.0% increase over the prior quarter. Base rental income increased by $2.8 million or 5.5% in the quarter. Net operating income increased $2.3 million or 4.6% over the prior quarter. The increase is due to acquisitions made in 2005 and 2006 as well as earnouts from SmartCentres. The Trust portfolio continues to be well-leased with vacant space of approximately 1%. High occupancy levels continue to exist in the portfolio with vacant space of only 1%. Quarterly cash flow as measured by adjusted funds from operations "AFFO" totaled $31.4 million, a 3.4% increase over second quarter reflecting the accretion from acquisitions and developments. "AFFO" per unit (dilutive) was $0.388 compared to $0.385 in second quarter. The REIT distributed $0.367 per unit, a 1.1% increase over the prior quarter due to the increase in distribution per unit from $1.45 to $1.50 in September 2006. Our pay out ratio was 94.6% of "AFFO", compared to 94.1% in second quarter.

Subsequent to the quarter end, the Trust reported the following events:

- On October 13, 2006, the Trust issued $250.0 million Series B unsecured debentures with a maturity date of October 12, 2016 and a coupon rate of 5.37%. The net proceeds to the Trust, after deducting underwriting fees, totaled $247.6 million, which was used to paydown outstanding credit facilities, fund future acquisitions and for general Trust purposes.

- The Trust entered into a conditional agreement with SmartCentres to acquire interests in sixteen (16) properties comprised of nine (9) income properties and seven (7) development properties for an initial purchase price of $425.5 million expected to close in December 2006. The acquisition is subject to due diligence and other matters.

- The Trust entered into a conditional agreement with SmartCentres to internalize management of the Trust's properties, at a cost of $14.0 million.

Full reports of the financial results are outlined in the unaudited financial statements and the management discussion and analysis, available on SEDAR. In addition, supplemental information is available on Calloway's website at www.callowayreit.com.

Calloway will hold a conference call on Monday November 13th, 2006 at 1:00 p.m. eastern standard time. Participating on the call will be members of Calloway's senior management staff.

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