CALGARY, Alberta–(BUSINESS WIRE)–Walton Westphalia Development Corporation (the “Corporation”) announced
today its results for the fiscal year ended December 31, 2018 and fourth
quarter of 2018. Launched in March 2012, the Corporation was formed to
provide investors with the opportunity to participate in the acquisition
and development of the 310-acre Westphalia Property (the “Property or
the “Project”) located in Prince George’s County, Maryland, United
States of America.
2018 Highlights
During the period ended December 31, 2018, the Corporation continued to
take steps toward its construction and financing activities. The key
activities undertaken by the Corporation were as follows:
Construction Activities
-
Completed the construction of the initial phase of the Westphalia
Green central park and began the construction of the playground in the
second phase; - Continued installation of the dry utility conduit in Blocks F and G;
-
Continued installation of the privately maintained lighting located
within the alleys; -
Solicited bids from contractors for the remainder of the park
construction; -
Continued with the design of the Pennsylvania Avenue / Woodyard Road
interchange; and -
Requested bids from contractors for the construction of the Woodyard
Road interchange project.
Financing Activities
-
The Corporation has entered into the New Loan Program, a $30 million
USD loan agreement with WWMN LLC (“WWMN”), bearing interest at 12%,
payable semi-annually beginning January 15, 2019, with a maturity date
of June 30, 2021. -
On November 30, 2018, the Corporation refinanced the Mezzanine Loan
with a new $27 million USD secured loan (“New Senior Loan”) with a new
third-party lender at an interest rate of 11%, payable quarterly, and
a maturity date of November 30, 2019. The New Senior Loan is to be
repaid with 100% of the Corporation’s proceeds from the sale of the
Property. -
TIF bonds in the amount of $39,795,000 were issued by the County on
November 29, 2018 for the design and construction of Presidential
Parkway, and the MD4/MD223 interchange. The Corporation received
$721,907 at closing out of the Cost of Issuance. The Corporation
expects to receive an additional $1,642,908 as reimbursement for money
spent on planning, design, and permitting.
Sales Activities
-
The Corporation has entered into a conditional purchase and sale
agreement for a bulk sale of the Phase 1A lands. The transaction
remains conditional subject to due diligence being undertaken by the
purchaser and is expected to close in Q3 2019.
The single family market in the Washington, D.C. metropolitan
statistical area (“MSA”), and specifically in the Prince George’s County
submarket, continues to be strong. The Project has received commitments
to sell 346 lots to three homebuilders, NVR, Inc. (144 lots),
Mid-Atlantic Builders (99 lots) and Haverford Homes (103 lots). As of
April 15, 2019 NVR, Inc. had closed on all 144 lots, Haverford Homes had
closed on 87 lots, and Mid-Atlantic Builders had closed on 67 lots. NVR
reported 141 home sales (contracts with future homeowners), Haverford
reported 88 home sales, and Mid-Atlantic reported 74 home sales. There
have been 241 occupancies; 122 for NVR, 69 for Haverford, and 50 for
Mid-Atlantic.
Management continues to focus on strategies to maximize the returns of
the project, which include, but are not limited to:
-
Kimco, our retail joint venture partner, has received a fully executed
LOI for a grocer tenant. Discussions and negotiations are ongoing with
the goal of converting the LOI into a fully executed ground lease.
Many smaller retailers have expressed interest in both in-line stores
and individual pad sites. -
The Corporation continues to receive additional interest in the
parcels associated with Phases 2 and 3. The Corporation continues to
evaluate letters of intent for the purchase of, or joint venture in,
Phase 2 and 3.
Fourth Quarter and Year End Financial Results
During the fourth quarter of 2018, The Corporation recognized revenue of
$655,462 on Phase 1 single family lot sales in the fourth quarter of
2018. During the fourth quarter of 2017, The Corporation recognized
revenue of $1,629,185 on Phase 1 single family lot sales in the fourth
quarter of 2017.
During the twelve months ended December 31, 2018 and December 31, 2017,
the Corporation recognized revenue on contracts of $9,922,309 and
$9,272,423, respectively, from single family lot sales in Phase 1. The
revenue recognized for the years ended December 31, 2018 and 2017 was in
respect to the sale of 99 and 87 Phase 1 single family lots to home
builders, respectively.
During the three months ended June 30, 2018, a non-cash impairment of
$5,842,968 ($4,525,617 USD) was recorded on Phase 1. This non-cash
impairment was driven by a further evolution of the bulk sales strategy
to reduce debt by bulk selling Phase 1A lots rather than developing and
then selling the Phase 1A lots to homebuilders. The non-cash impairment
is the result of a change in the allocation of costs against specific
parcels of land rather than an increase in project costs. During the
three months ended December 31, 2018, an additional impairment of
$7,289,329 ($5,520,715 USD) was recorded on Phase 1 and 1A. The non-cash
impairment recorded during the fourth quarter of 2018 was a result of
the difference in the refinancing costs projected as at the year ended
December 31, 2017, and the actual financing terms agreed upon during the
year ended December 31, 2018.
For the year ended December 31, 2018 the Corporation generated a
comprehensive loss of $14,239,963 (December 31, 2017: comprehensive loss
of $33,684,215). The variance of $19,444,252 between the year ended
December 31, 2017, and December 31, 2018, is largely due to the decrease
of $18,979,412 in the non-cash impairment recognised during the year
ended December 31, 2018 as compared to the year ended December 31, 2017.
The non-cash impairment recognised has been included in the Cost of
Sales line item in the consolidated financial statements and all cash
received from the sale of land during the year was used to directly pay
off debt.
Additional Information
The Corporation is managed by Walton Global Investment Ltd and the
development of the project is managed by Walton Development & Management
(USA), Inc., both of which are members of the Walton Group of Companies.
The Walton Group of Companies (“Walton”) is a multinational real estate
investment, planning, and development group concentrating on the
research, acquisition, administration, planning and development of
strategically located land in major North American growth corridors.
Its communities are comprehensively designed in collaboration with local
residents for the benefit of community stakeholders. Its goal is to
build communities that will stand the test of time: hometowns for
present and future generations.
For more information about Walton Westphalia Development Corporation,
please visit www.sedar.com.
For more information about Walton, visit www.Walton.com.
This news release, required by Canadian laws, does not constitute an
offer of securities, and is not for distribution or dissemination
outside Canada. This news release contains forward looking information,
and actual future results may differ from what is disclosed in this news
release. Forward-looking information is based on the current
expectations, estimates and projections of the Corporation at the time
the statements are made. They involve a number of known and unknown
risks and uncertainties which would cause actual results or events to
differ materially from those presently anticipated. The risks,
uncertainties and other factors that could cause the Corporation’s
actual results and performance in future periods to differ
materially from the forward looking information contained in this news
release include, among other things, renegotiation of loans, refinancing
or extension of the existing loans, the amount and timing of the
financing received, the amount of, timing and terms of any tax increment
financing that may be received by the Corporation, the length of time it
takes to develop and sell the Property, the ability of the Corporation
to enter into joint ventures relating to, or to otherwise, vertically
develop portions of the Property, the availability and terms of other
construction financing required by the Corporation, the costs involved
in the horizontal and/or vertical development of the Property, the
prices at which the serviced lots and parcels from, or vertically
developed structures on, the Property can be sold, the rate at which
serviced lots and parcels from, or vertically developed structures on,
the Property are purchased in the marketplace, general economic and
market factors, including interest rates, a decline in the real estate
market, changes in government policies and regulations or in tax laws,
changes in municipal planning strategies and whether certain development
approvals are obtained and changes in the Canadian/U.S. dollar exchange
rate, in addition to those factors discussed or referenced in the
prospectus and other documents filed with Canadian securities regulatory
authorities and available online at www.sedar.com.
Except as otherwise noted, all amounts are in Canadian dollars, and
are based on audited financial statements for the year ended December
31, 2018 and related notes, prepared in accordance with International
Financial Reporting Standards.
Contacts
For media inquiries, please contact: Camila Roncancio
Office:
1.866.925.8668
Email: [email protected]
