CALGARY, Alberta–(BUSINESS WIRE)–Walton Big Lake Development L.P. (the “Partnership”), and its
general partner, Walton Big Lake Development Corporation (the “General
Partner”), announced today the Partnership’s financial results for
the first quarter of 2019. Launched in 2010, the Partnership owns a
residential project in northwest Edmonton, Alberta. The project is being
developed in three phases over a fifteen-year time frame and marketed
under the name “Hawks Ridge at Big Lake”, (the “Project”).
Project Debt Update
The Partnership had received forbearance on the previously reported
defaults until February 1, 2019 for the Phase 2 Facility and March 15,
2019 for the Second Mortgage Loan. There have been no further extensions
to these forbearance periods. While the Partnership has not been
provided with any further notices of default, and is negotiating loan
maturity and forbearance extensions with its lenders, the expiry of the
forbearance periods means the loans are currently due and payable.
The expired forbearance extension terms of the Second Mortgage Loan and
Phase 2 Facility were conditional on the Partnership funding interest
costs and fees payable to the Second Mortgage Loan lender and Phase 2
Facility lender on a monthly basis due immediately. The Partnership has
been reliant on Walton Global Investments Ltd. (“WGIL”) funding
monthly interest payments, which WGIL has continued to do even after the
expiry of the forbearance period up to and including the most recent
interest payments on May 1, 2019 but there is no guarantee that this
financing will continue. The Partnership continues to work with its
lenders on strategies that result in repayment of debt including but not
limited to continuing development of the Project.
First Quarter Highlights
During the three months ended March 31, 2019, the key activities
undertaken by the Partnership were as follows:
-
Received Construction Completion Certificates from the City of
Edmonton (“CCC”) for Off-site Storm and Sanitary Sewers West,
Off-site Storm and Sanitary Sewers East, 215th Street Phase
1 Storm Sewers, Stage 1 On-site Storm and Sanitary Sewers, and On-site
Sanitary Forcemain; -
Received CCC for the Storm Water Management Facility, and the Creek
Re-alignment; -
Received CCC for the Off-site Water Distribution System Parts C, D, E
and F, and Stage 2 On-site Water Services; - Received Stage 2 On-site EPCOR Water rebate in the amount of $88,000;
-
Received reports from homebuilders indicating 5 third-party sales so
far in 2019.
Overall market conditions for new residential home construction have not
recovered from the recession period over the past several years with new
single permits in NW Edmonton still being below 50% of the 2014 peak.
Continued uncertainty in energy prices including the large discount
applied to Canadian oil producers versus global oil prices has adversely
impacted overall market conditions for suburban single-family
residential housing in Edmonton. Lingering pipeline and rail capacity
concerns continue to severely impact capital investment in Alberta’s
largest industry. The historical pace of sales and current sales
activity is well behind the original targeted sales pace for the
Project. Given management believes there will be continued muted demand
for new housing in Edmonton, management anticipates pricing discounts on
current and future lots may be necessary in order to capture market
share and increase existing sales velocity or, if the existing project
debt can be restructured and additional construction financing obtained,
obtain new builder commitments on future inventory.
Management will continue to provide regular updates on market conditions
and project performance based on the key economic indicators for
Edmonton.
First Quarter Financial Results
During the three months ended March 31, 2019, the Partnership generated
revenue of $197,766 (March 31, 2018 – $nil) and recorded cost of sales
of $197,766 (March 31, 2018 – $nil), thereby arriving at a $nil gross
margin. The revenue and cost of sales recognized in 2019 was in respect
to the sale of one Phase 2A single family lot, to a home builder.
Pursuant to the terms of the purchase and sales agreements for the lots,
final payment from the purchaser is typically due 365 days after receipt
of the second deposit, but varies based on negotiated terms including
market conditions, pricing and absorption factors. Due to the current
state of the new home building market in Edmonton, builders are pushing
for discounts on existing lots in order to move product and asking for
concessions in terms of reduced pricing and extended terms to enter new
commitments.
The Partnership generated a net and comprehensive loss for the three
months ended March 31, 2019 of $598,870 (March 31, 2018 – loss of
$535,653). This loss was driven by other expenses of $598,870 as
detailed in the Management Discussion and Analysis (“MD&A”).
Additional Information
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 Big Lake Development L.P., please
visit www.sedar.com.
For more information about Walton, visit www.Walton.com.
For information about Hawks Ridge at Big Lake visit www.hawksridge.ca.
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. The risks, uncertainties and other factors that could influence
results are described 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 unaudited financial statements for the three months ended
March 31, 2019 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 protected]
