CALGARY, Alberta--(BUSINESS WIRE)--Walton Westphalia Development Corporation (the “Corporation”) announced today its results for the first quarter of 2019. 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.
2019 Highlights
During the period ended March 31, 2019, the Corporation continued to negotiate the terms of the sales contract for the bulk sale of Phase 1A lands and marketing the opportunities available in Phases 2 and 3. The key activities undertaken by the Corporation were as follows:
Construction Activities
- Continued the construction of the second phase of the Westphalia Green central park;
- Completed installation of the dry utility conduit in Blocks F and G;
- Continued installation of privately maintained lighting located within the alley areas;
- Contracted with a new landscape contractor for the remainder of the park;
- Continued with the design of the Pennsylvania Avenue / Woodyard Road interchange including obtaining contractor bids for the construction.
Financing Activities
- The Corporation received $1,642,908 as reimbursement from Tax increment financing (“TIF”) bonds for money spent on planning, design, and permitting associated with the design and construction of Presidential Parkway, and the MD4/MD223 interchange.
Sales Activities
- The Corporation has entered into a conditional purchase and sale agreement for a bulk sale of the Phase 1A lands. The purchaser waived due diligence on January 29, 2019. The Corporation and the purchaser continued to work through conditions precedent as well as negotiated necessary reciprocal easement agreements.
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 May 15, 2019 NVR, Inc. had closed on all 144 lots, Haverford Homes had closed on 91 lots, and Mid-Atlantic Builders had closed on 75 lots. NVR reported 144 home sales (contracts with future homeowners), Haverford reported 90 home sales, and Mid-Atlantic reported 78 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 Development Feasibility period for Kimco ends on July 1, 2019.
- 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.
First Quarter Financial Results
During the three months ended March 31, 2019 and March 31, 2018, the Corporation recognized revenue on contracts of $3,909,747 and $2,145,287, respectively, from single family lot sales in Phase 1. The cost of sales relating to the lot sales was $3,958,927 and $2,176,737, respectively, with $49,180 and $31,450, respectively, relating to selling costs and commissions. The revenue and cost of sales recognized for the years ended March 31, 2019 and 2018 was in respect to the sale of 36 and 23 Phase 1 single family lots to home builders, respectively.
Total other expenses increased by $43,191 from $263,097 for the three months ended March 31, 2018 to $306,288 for the three months ended March 31, 2019. The increase is primarily due to an increase in financing costs of $74,373, an increase in marketing expenses of $15,943, and an increase in professional fees of $8,733. This is offset by a reduction in servicing fees of $34,493, and an increase in interest income of $20,667.
For the three months ended March 31, 2019 total other items consists of a foreign exchange loss amounting to $538,361. When compared to the three months ended March 31, 2018 gain of $687,032, there is a variance of $1,286,314 in total other items. As the Canadian dollar has strengthened, the underlying Canadian dollar intercompany debentures and intercompany debt contracts in the U.S. Subsidiary reflected a foreign exchange loss.
For the three months ended March 31, 2019, comprehensive loss was $290,198. When compared to the three months ended March 31, 2018 loss of $55,920, there is a variance of $234,278 between the respective period ends. The variance is due to the items discussed above as well as a $1,052,036 change in other comprehensive gain 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.
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 unaudited condensed interim consolidated financial statements for the three months ended March 31, 2019 and related notes, prepared in accordance with International Financial Reporting Standards.