Calloway Real Estate Investment Trust Releases Third Quarter Results

Real Estate — November 7, 2012

TORONTO, ONTARIO--(Marketwire - Nov. 7, 2012) - Calloway Real Estate Investment Trust (TSX:CWT.UN) is pleased to report strong results for the third quarter ended September 30, 2012.

Highlights during the quarter:

Maintained portfolio occupancy rate at or above the 99% level for the eleventh sequential quarter.
Funds from operations ("FFO")⁽¹⁾ increased by 9.8% to $56.4 million and 4.2% to $0.444 on a per unit basis compared to the same period in 2011.
Achieved same property NOI increase of 1.2% in the third quarter over the same period last year.
Acquired 400,358 square feet of retail space in two investment properties for $102.7 million.
Invested $17.7 million in the quarter to grow the portfolio by completing the development and lease up of 56,414 square feet of leasable area at an average yield of 8.3%.
Issued $150 million, eight-year unsecured debentures bearing interest at 4.05% per annum.
Renewed and increased revolving operating facility to $70.0 million.
Monthly distributions are confirmed for the period of November to January at $0.129 per unit.

Subsequent to the quarter end:

Entered into an unconditional agreement to sell three retail centres for aggregate consideration of $59.8 million to close before year end.
Entered into a 50:50 joint venture with SmartCentres to develop the 6.0 million square foot Vaughan Metropolitan Centre.
Negotiated the extension of nine mezzanine loans and the repayment of two mezzanine loans for a net increase of $111 million in new loan commitments. The loans have recourse provisions to the borrower.
Established floor capitalization rates on certain Earnout properties resulting in the elimination of the $18.8 million contingent liability on Earnouts previously completed.
SIFT legislation was tabled that introduces the previously announced amendments, which, when substantively enacted, will confirm the Trust's REIT Exemption.

Al Mawani, President & CEO of Calloway Real Estate Investment Trust (the "Trust"), said, "Our portfolio of 120 mostly Walmart anchored retail centres continues to deliver reliable performance and steady growth. As of September 30, 2012, Calloway completed approximately 760,000 square feet of renewals, achieving an average uplift of approximately 7% with almost no inducement payments. Demand for new stores from existing tenants and new tenants required the addition of about 56,000 square feet of new space during the quarter and 275,000 square feet during the nine month period - equivalent to acquiring a new shopping centre at a 7.7% yield."

The following table summarizes the Trust's portfolio information:

	September 30, 2012		June 30, 2012		Improvement
Fair value of real estate portfolio (in millions of dollars)	6,201.7		5,898.0		303.7
Weighted average stabilized capitalization rate	6.06	%	6.21	%	-0.15

Built gross leasable area					26.2 million square feet
Future developable area					3.8 million square feet

Number of retail properties					120
Number of other operating properties					2
Number of development properties					9

Developments completed during the quarter are as follows:

Leasable area		56,414 square feet
Cost	$	17.7 million
Yield		8.3	%

During the quarter, the Trust issued $150.0 million in unsecured debentures with an eight-year term and 4.05% interest rate. The funds were used for the acquisition of investment properties and repayment of maturing debt. The Trust also obtained $119.0 million in new mortgages with an average term of 10.0 years and weighted average interest rate of 3.65%.

In addition, the Trust completed the acquisitions of two income properties totalling 400,358 square feet for $102.7 million, which consisted of 152,633 square feet in Dartmouth, Nova Scotia for a purchase price of $26.5 million and 247,725 square feet in Duncan, British Columbia for a purchase price of $76.2 million.

The Trust maintained its debt to gross book value at 49.6% at September 30, 2012, which is below the Trust's target range. The Trust also maintained an interest coverage ratio of 2.3x which is one measure of leverage used by credit rating agencies. In addition, properties with an aggregate appraised value of $962.3 million are unencumbered or debt-free. This will provide flexibility to the Trust to address its committed obligations and to grow its portfolio.

	Excluding convertible		Including convertible
	debentures		debentures
Debt to gross book value	49.6	%	52.4	%
Target range	55.0%-60.0	%	60.0%-65.0	%

The following table summarizes the Trust's key financial highlights:

(in millions of dollars, except per Unit information)	Three Months Ended September 30, 2012			Three Months Ended September 30, 2011			Increase/ (decrease)
Net income		121.5			105.3			16.2
Rental revenue		133.0			124.9			8.1
Net operating income		89.9			85.1			4.8
Cash flow as measured by FFO ⁽¹⁾		56.4			51.4			5.0

Per Unit Information
FFO excluding current income tax (fully diluted)	$	0.444		$	0.426		$	0.018
AFFO per Unit (fully diluted)	$	0.428		$	0.414		$	0.014
Quarterly distribution	$	0.387		$	0.387			-
Payout ratio (to AFFO)		90.4	%		93.5	%		(3.1	)

Net income for the quarter was $121.5 million compared to $105.3 million in the same quarter 2011. Excluding the impact of fair value adjustments, loss on dispositions, and income tax provisions, net income increased by $3.8 million in the current quarter compared to the same period last year mainly due to an increase in net operating income of $4.8 million offset by an increase in interest expense of $1.4 million.

The high occupancy level of 99.0%, as well as the Trust's acquisition and development program, generated rental revenue of $133.0 million during the quarter. NOI of $89.9 million increased by 5.6% over the previous year including a 1.2% increase on a same properties basis.

Subsequent to quarter end, the Trust announced an agreement with SmartCentres to jointly develop up to 6 million square feet in the Vaughan Metropolitan Centre ("VMC"). Al Mawani, President & CEO of the Trust, said, "The newly formed 50:50 joint venture with SmartCentres to develop VMC will increase Calloway's growth pipeline to 7 million square feet of mixed use development opportunities. The Vaughan subway station together with the new regional bus terminal will connect the 905 to downtown Toronto and downtown Toronto to the 905. Also, the close proximity to the major roads and highway infrastructure, namely Highways 400, 407 and 7, makes our property a uniquely attractive location for corporate offices, retail and new residential development."

In addition, the government tabled proposed amendments to SIFT legislation that introduces the previously announced amendments. Once substantively enacted, the Trust will comply with the REIT Exemption effective January 1, 2011 and provisions for current ($34.1 million) and deferred ($625.1 million) income taxes totalling $659.2 million will be reversed. The Trust has not been required to pay any current tax during the intervening period.

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 and nine months ended September 30, 2012, available on SEDAR website at www.sedar.com.

⁽¹⁾	Excludes current income taxes, which will be reversed when the proposed changes are enacted, and one-time adjustment relating to prepayment penalty incurred on early repayment of term mortgages of $1.1 million.

Full reports of the financial results of the Trust for the year ended December 31, 2011 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 November 8, 2012 at 10:00 a.m. (ET). Participating in the call will be members of the Trust's senior management.

Investors are invited to access the call by dialing 1-877-974-0446. 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 November 8, 2012 beginning at 11:00 a.m. (ET) through to 11:59 p.m. (ET) on Thursday November 15, 2012. To access the recording, please call 1-877-289-8525 and use the reservation number 4568902#.

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, 2011 and under the heading "Risk Factors" in its Annual Information Form for the year ended December 31, 2011. 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.

Contact Information

Calloway Real Estate Investment Trust
Al Mawani
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
www.callowayreit.com

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