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Press release from Marketwire

Calloway Real Estate Investment Trust Releases First Quarter Results

Wednesday, May 08, 2013

Calloway Real Estate Investment Trust Releases First Quarter Results

17:32 EDT Wednesday, May 08, 2013

TORONTO, ONTARIO--(Marketwired - May 8, 2013) - Calloway Real Estate Investment Trust (TSX:CWT.UN) is pleased to report strong results for the first quarter ended March 31, 2013.

Highlights for the quarter:

  • Maintained portfolio occupancy rate at or above the 99% level for the 13th sequential quarter
  • Acquired 218,479 square feet of retail space in two income properties for $56.8 million
  • Invested $12.4 million to complete the development and lease up of 40,165 square feet of leasable area at an average yield of 6.9%
  • Funds from operations ("FFO")(1) increased by 9.9% to $60.0 million and 3.9% to $0.451 on a per unit basis compared to the same quarter of 2012
  • Monthly distributions are confirmed for the period of May to July at $0.129 per unit

Huw Thomas, Interim President & CEO of Calloway Real Estate Investment Trust (the "Trust"), said, "I am pleased with our strong first quarter results. Our portfolio of 115 mostly Walmart-anchored retail centres continues to deliver reliable performance and steady growth. We have grown our portfolio in a balanced way with a combination of building out new space for existing and new tenants at an average investment yield of 6.9% and acquiring two Calloway-quality centres from third parties at a 5.9% yield. We have started 2013 having renewed or in final stages of renewal on 77% of 2013 lease expires. 2013 will be an exciting year for Calloway with the opening of the Toronto Premium Outlets® and construction commencement of the Montreal Premium Outlets®. In addition, construction on the KPMG tower, the first major development in the Vaughan Metropolitan Centre, is expected to commence in 2014."

The following table summarizes the Trust's portfolio information:

March 31, 2013 December 31, 2012 Improvement
Fair value of real estate portfolio (in millions of dollars) (2) 6,387.0 6,209.8 177.2
Weighted average stabilized capitalization rate 5.94% 6.02% -0.08
Built gross leasable area 26.2 million square feet
Future developable area 3.6 million square feet
Number of retail properties 115
Number of other operating properties 2
Number of development properties 11

Developments completed during the quarter are as follows:

Leasable area 40,165 square feet
Cost $12.4 million
Yield 6.9%

During the quarter, the Trust obtained $50.2 million in new and assumed mortgages with an average term of 10.9 years and weighted average interest rate of 4.53%.

In addition, the Trust completed the acquisitions of two income properties totalling 218,479 square feet for $56.8 million, which consisted of 133,265 square feet in Stoney Creek, Ontario for a purchase price of $27.6 million and 85,214 square feet in Whitby, Ontario for a purchase price of $29.2 million.

The Trust maintained its debt to gross book value at 49.2% at March 31, 2013, which is below the Trust's target range. The Trust also improved its debt to total assets ratio to 40.7% (December 31, 2012 - 40.9%), net interest coverage ratio (excluding capitalized interest) to 2.7X (December 31, 2012 - 2.6X) and interest coverage ratio to 2.4X (December 31, 2012 - 2.3X). In addition, properties with an aggregate appraised value of $1,160.0 million are unencumbered or debt-free. This will provide flexibility to the Trust to address its committed obligations and to grow its portfolio.

Subsequent to the quarter end, the Trust entered into four new term mortgages totalling $104.9 million with a weighted average term of 15.9 years and a 3.76% interest rate.

Excluding convertible debentures Including convertible debentures
Debt to gross book value 49.2 % 50.2 %
Target range 55.0%-60.0 % 60.0%-65.0 %

The following table summarizes the Trust's key financial highlights for the quarters ended March 31(2):

(in millions of dollars, except per Unit information) Three Months Ended March 31, 2013 Three Months Ended March 31, 2012 Improvement
Net income excluding income tax 153.6 142.4 11.2
Rental revenue 141.5 136.5 5.0
Net operating income 90.5 87.9 2.6
Cash flow as measured by FFO (1) 60.0 54.6 5.4
Per Unit Information
FFO excluding current income tax (fully diluted) $ 0.451 $ 0.434 $ 0.017
AFFO per Unit (fully diluted) $ 0.424 $ 0.413 $ 0.011
Quarterly distribution $ 0.387 $ 0.387 -
Payout ratio (to AFFO) 91.3 % 93.7 % (2.4 )%

Net income for the quarter (excluding income tax expense) was $153.6 million compared to $142.4 million in the same quarter of 2012. Excluding the impact of fair value adjustments, net income increased by $4.7 million compared to the same quarter of 2012 mainly due to an increase in net operating income of $2.6 million and a decrease in interest expense of $3.2 million offset by an increase in general and administrative costs of $0.6 million and a decrease in interest income of $0.4 million.

The high occupancy level of 99.0%, as well as the Trust's acquisition and development program, generated rental revenue of $141.5 million during the quarter. NOI of $90.5 million increased by 3.0% over the same quarter of the previous year including a 0.9% increase on a same properties basis.

The non-IFRS measures used in this Press Release, including AFFO, FFO, NOI, debt to gross book value, payout ratio and interest coverage ratio 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 the Trust for the three months ended March 31, 2013, available on SEDAR website at www.sedar.com.

(1) Excludes income tax expense and one-time adjustment relating to CEO transition costs of $0.6 million.
(2) Includes the Trust's share of investments in associates.

Full reports of the financial results of the Trust for the year ended December 31, 2012 are outlined in the audited financial statements and the related management discussion and analysis of the Trust, available on the SEDAR website at www.sedar.com. In addition, supplemental information is available on the Trust's website at www.callowayreit.com.

The Trust will hold a conference call on Thursday May 9, 2013 at 8:00 a.m. (ET). Participating in the call will be members of the Trust's senior management. Following the call, the Annual General Meeting of the Trust will be held at St. Andrew's Club and Conference Centre at 10:30 a.m. (ET).

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 Thursday May 9, 2013 beginning at 9:00 a.m. (ET) through to 11:59 p.m. (ET) on Thursday May 16, 2013. To access the recording, please call 1-877-289-8525 and use the reservation number 4611846#.

Certain statements in this Press Release are "forward-looking statements" that reflect management's expectations regarding the Trust's future growth, results of operations, performance and business prospects and opportunities as outlined under the headings "Business Overview and Strategic Direction" and "Outlook". More specifically, certain statements contained in this Press Release, including statements related to the Trust's maintenance of productive capacity, estimated future development plans and costs, view of term mortgage renewals including rates and upfinancing amounts, timing of future payments of obligations, intentions to secure additional financing and potential financing sources, and vacancy and leasing assumptions, and statements that contain words such as "could", "should", "can", "anticipate", "expect", "believe", "will", "may" and similar expressions and statements relating to matters that are not historical facts, constitute "forward-looking statements". These forward-looking statements are presented for the purpose of assisting the Trust's Unitholders and financial analysts in understanding the Trust's operating environment, and may not be appropriate for other purposes. Such forward-looking statements reflect management's current beliefs and are based on information currently available to management. However, such forward-looking statements involve significant risks and uncertainties, including those discussed under the heading "Risks and Uncertainties" and elsewhere in the Trust's Management's Discussion & Analysis for the year ended December 31, 2012 and under the heading "Risk Factors" in its Annual Information Form for the year ended December 31, 2012. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements. Although the forward-looking statements contained in this Press Release are based on what management believes to be reasonable assumptions, the Trust cannot assure investors that actual results will be consistent with these forward-looking statements. The forward-looking statements contained herein are expressly qualified in their entirety by this cautionary statement. These forward-looking statements are made as at the date of this Press Release and the Trust assumes no obligation to update or revise them to reflect new events or circumstances unless otherwise required by applicable securities legislation.

FOR FURTHER INFORMATION PLEASE CONTACT:

The Toronto Stock Exchange neither approves nor disapproves of the contents of this Press Release.

Contact Information:
Calloway Real Estate Investment Trust
Huw Thomas
Interim President and Chief Executive Officer
(905) 326-6400 ext. 7649


Calloway Real Estate Investment Trust
Mario Calabrese
Interim Chief Financial Officer
(905) 326-6400 ext. 7610

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