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Press release from Marketwire

Calloway Real Estate Investment Trust Releases Second Quarter Results

Thursday, August 04, 2011

Calloway Real Estate Investment Trust Releases Second Quarter Results17:56 EDT Thursday, August 04, 2011TORONTO, ONTARIO--(Marketwire - Aug. 4, 2011) - Calloway Real Estate Investment Trust (TSX:CWT.UN) is pleased to report strong results for the second quarter ended June 30, 2011.Highlights:Maintained portfolio occupancy rate above the 99% level. Renewed 95% of expiring leases with an average rent increase of 7.4%. Invested $38.8 million to complete the development and lease up of 154,954 square feet of leaseable area with a 7.4% yield. Funds from operations (non-IFRS measure) increased by $6.8 million to $49.5 million (1) compared to the same period in 2010. Raised $116 million in new Trust Units. Completed the sale of four non-core assets for gross proceeds of $41.6 million. Monthly distributions are confirmed for the period of August to October. Al Mawani, President & CEO, said, "We are pleased with our second quarter results generating steady growth over the same period last year. The recent equity raise has strengthened our balance sheet and improved liquidity. Funds from Operations continue to improve and our payout ratio continues to decline."As at June 30, 2011, Calloway's $5.3 billion real estate portfolio (at fair value) included 24.3 million square feet of built gross leasable area and 4.3 million square feet of future developable area in 116 operating and 10 development properties. The fair value of the portfolio increased $829.0 million over the same quarter in 2010.Developments completed during the quarter comprised approximately 154,954 feet of leasable area at a cost of $38.8 million and a 7.4% yield. During the quarter, the Trust issued 4,600,000 units (including a 600,000 unit over-allotment which was exercised by the underwriters) at $25.15 for total proceeds of $116 million.As a result of the Trust Unit issuance, Calloway reduced its debt to gross book value (non-IFRS measure) to 49.8% (53.2% including convertible debentures) at quarter end. This will provide flexibility to the Trust to address its committed financing obligations through to 2012.Net income for the quarter was $75.6 compared to $76.7 in the same quarter 2010. The decrease was primarily the result of fair value adjustments on investment properties and financial instruments which was a net gain of $53.1 million this quarter compared to $64.6 million in the same quarter 2010 as a result of the larger decrease in capitalization rates in 2010 compared to this year. Excluding the impact of fair value adjustments, interest expense related to the distributions on LP units considered debt in 2010 and income tax provisions, Net income would have increased by $6.7 million this quarter over the same quarter in 2010 mainly due to increases in net rental revenue of $5.5 million and a reduction of interest expense of $2.0 million mainly due to the refinancing of the 10.25% Series C unsecured debentures at the end of 2010. The high occupancy level of 99.1%, as well as Calloway's acquisition and development program, generated rental revenue of $125.6 million in the quarter, an $8.7 million increase over the prior year. Net operating income (non-IFRS measure) of $84.1 million increased $5.5 million or 6.9% over the previous year, on the same properties basis the increases was 1.4%. Cash flow as measured by Funds from Operations (FFO – a non - IFRS measure) totalled $49.5 million (1) in the quarter, an increase of $6.8 million or 16.0% over 2010. The year-over-year results were positively impacted mainly by completed acquisitions and developments generating additional net operating income of $5.5 million and a decrease in interest expense of $2.0 million (excluding distributions on LP units considered interest expense under IFRS). FFO per unit (fully diluted) was $0.415 compared to $0.419 in the previous year. AFFO per unit (fully diluted) was $0.406 compared to $0.397 in the previous year. The Trust's quarterly distribution of $0.387 per unit represents a payout ratio (to AFFO) of 95.3% compared to 97.5% in 2010.Calloway expects to meet the REIT Exemption effective January 1, 2011 once the Federal Budget proposals clarifying the application of the REIT Exemption are re-introduced and passed. The current ($8.7 million) and deferred ($341.4 million) income taxes totalling $350.1 million will be reversed at that time.The non-IFRS measures identified in this Press Release do not have any standardized meaning prescribed by International Financial Reporting Standards ("IFRS") and are therefore unlikely to be comparable to similar measures presented by other issuers. These non-IFRS measures are more fully defined and discussed in the management discussion and analysis of Calloway for the three and six months ended June 30, 2011, available on SEDAR website at www.sedar.com. (1) Excludes current income taxesFull 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 Friday August 5, 2011 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 1-800-814-4860. 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 5, 2011 beginning at 12:00 p.m. (ET) through to 11:59 p.m. (ET) on Friday, August 12, 2011. To access the recording, please call 1-877-289-8525 and use the reservation number 4452733#.FOR FURTHER INFORMATION PLEASE CONTACT: Al MawaniCalloway Real Estate Investment TrustPresident and Chief Executive Officer(905) 326-6400 ext. 7649ORBart MunnCalloway Real Estate Investment TrustChief Financial Officer(905) 326-6400 ext. 7631www.callowayreit.comThe Toronto Stock Exchange neither approves nor disapproves of the contents of this Press Release.