Walton Westphalia Development Corporation Reports Second Quarter 2018 Fiscal Results
Aug. 30, 2018
CALGARY, Alberta--(BUSINESS WIRE)--Aug 29, 2018--Walton Westphalia Development Corporation (the “Corporation”) announced today its results for the second 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.
Second Quarter Highlights
During the period ended June 30, 2018, the Corporation continued to take steps toward its construction and financing activities. The key activities undertaken by the Corporation were as follows:
Construction ActivitiesCompleted final construction activities on the northern lots by installing water, sanitary sewer, and storm sewer; Began construction of the initial phase of the Westphalia Green central park; Continued installation of the dry utility conduit; and Continued with the design of the Pennsylvania Avenue / Woodyard Road interchange
Financing ActivitiesWalton International Group (USA), Inc. (“WUSA”) funded a US $1,000,000 capital injection on May 31, 2018, which will be documented, subject to consent of the other project lenders, by way of an increase to WUSA’s existing subordinated, unsecured loan, effective May 31, 2018. The capital injection was made in order to extend the Senior Loan repayment date from May 31, 2018 to July 15, 2018. The proceeds of the financing were used to pay construction costs incurred for the development of Phase 1 of the project. The Corporation continues to work with the County and its team to complete the due diligence requirements in order to market and sell the TIF bonds. The Corporation worked with the County Council to have a bill introduced and adopted to amend the Rate and Method of Apportionment of Special Taxes to incorporate the possibility of other future land uses; because of this amendment the expected timeframe for the issuance of the bonds shifted from July 2018 to October 2018; On July 13, 2018, the project refinanced and repaid the Senior Loan in full from the first advance of a new subordinated loan program with WWMN, LLC, an affiliated company of Walton Global Investments Ltd. (“WGI”) , for aggregate gross proceeds of $18,680,000 USD (the “New Loan Program”), maturing June 2021. The proceeds of the New Loan Program were used to repay the Corporation’s outstanding debt obligations due to its senior lender and to repay certain additional unsecured, subordinated debt of the Corporation.
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 is selling lots to three homebuilders, NVR, Inc., Mid-Atlantic Builders and Haverford Homes. As of July 31, 2018 NVR, Inc. had closed on 103 lots, Haverford Homes had closed on 73 lots, and Mid-Atlantic Builders had closed on 53 lots. NVR reported 124 home sales (contracts with future home owners), Haverford reported 74 home sales and Mid-Atlantic reported 56 home sales. There have been 161 occupancies; 81 for NVR, 53 for Haverford, and 27 for Mid-Atlantic.
Second Quarter Financial Results
During the three and six months ended June 30, 2018 and June 30, 2017, the Corporation recognized revenue on contracts of $3,924,368 (June 30, 2017 - $3,654,536) and $6,069,655 (June 30, 2017 - $5,905,491), respectively, from single family lot sales in Phase 1. The cost of sales relating to the lot sales was $3,979,294 (June 30, 2017 - $3,346,232) and $6,156,031 (June 30, 2017 - $5,311,266) with $54,926 and 86,376, respectively, relating to selling costs and commissions. The revenue and cost of sales recognized for the three and six months ended June 30, 2018 and 2017 was in respect to the sale of 36 (June 30, 2017 – 35 ) and 59 (June 30, 2017 – 57) Phase 1 single family lots to home builders, respectively.
An impairment of $5,842,968 ($4,525,617 USD) was recorded on Phase 1, as the expected realizable value of the phase was lower than the carrying value. The impairment was driven by the change in the strategy to focus on repayment of debt through bulk selling Phase 1A of development rather than servicing the lands and future sale to builders.
Total other expenses decreased by $145,929 from $341,697 for the three months ended June 30, 2017 to $195,838 for the three months ended June 30, 2018. The decrease in expenses was primarily due to a decrease in marketing expenses of $66,587 and an increase in interest income of $88,782, related to the cost-sharing agreement between the Corporation and WUSF1. The decrease was partially offset by an increase of $13,084 in director fees.
Total other expenses decreased by $146,110 from $605,045 for the six months ended June 30, 2017 to $458,935 for the six months ended June 30, 2018. The decrease in expenses was primarily due to a decrease in marketing expenses of $73,957 and an increase in interest income of $88,610, related to the cost-sharing agreement between the Corporation and WUSF1. The decrease was partially offset by an increase of $13,076 in director fees.
Total Other Items consists of foreign exchange gains and losses and has decreased by $1,168,206 from total other item loss of $632,665 for the three months ended June 30, 2017 to total other item gain of $535,541 for the three months ended June 30, 2018. The Canadian dollar has weakened in 2018 compared to 2017, resulting in the underlying Canadian Dollar intercompany debentures and the intercompany debt contracts in the U.S. Subsidiary reflecting a foreign exchange gain that is not eliminated upon consolidation.
Comprehensive loss decreased by $5,091,559 from $921,540 for the three months ended June 30, 2017 to $6,013,099 for the three months ended June 30, 2018. Comprehensive loss decreased by $4,823,562 from $1,245,457 for the six months ended June 30, 2017 to $6,069,019 for the six months ended June 30, 2018. The decrease is due to the items discussed above as well as a $454,909 and $903,314, respectively, decrease in other comprehensive income due to changes in the cumulative translation losses recorded on the translation of the U.S. Subsidiary accounts from a functional currency of U.S. dollars to Canadian dollars for reporting purposes.
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.
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 .
Except as otherwise noted, all amounts are in Canadian dollars, and are based on unaudited financial statements for the three and six months ended June 30, 2018 and related notes, prepared in accordance with International Financial Reporting Standards.
View source version on businesswire.com:https://www.businesswire.com/news/home/20180829005825/en/
CONTACT: Walton Westphalia Development Corporation
For media inquiries, please contact:
Bill Doherty, 1.866.925.8668
KEYWORD: NORTH AMERICA CANADA
INDUSTRY KEYWORD: PROFESSIONAL SERVICES REIT BANKING FINANCE COMMUNICATIONS PUBLIC RELATIONS/INVESTOR RELATIONS CONSTRUCTION & PROPERTY COMMERCIAL BUILDING & REAL ESTATE RESIDENTIAL BUILDING & REAL ESTATE
SOURCE: Walton Westphalia Development Corporation
Copyright Business Wire 2018.
PUB: 08/29/2018 08:56 PM/DISC: 08/29/2018 08:56 PM