CALGARY, Alberta--(BUSINESS WIRE)--
Walton Westphalia Development Corporation (the “Corporation”) announced today its results for the second 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.
During the period ended June 30, 2019, the Corporation continued to work with the purchaser of Phase 1A to progress the activities necessary to close on the contract in November 2019. The Corporation continues marketing the opportunities available in Phases 2 and 3 and has received interest from several developers. The key activities undertaken by the Corporation were as follows:
- Continued the construction of the Westphalia Green central park;
- Continued installation of privately maintained lighting located within the alley areas;
- Continued with the design of the Pennsylvania Avenue / Woodyard Road interchange; and
- Continued to work with the State Highway Administration to obtain approval for the Woodyard Road interchange project.
- On August 21, 2019, the Corporation received the first advance of the loan agreement entered into with MCFI Global Fund Westphalia LLC.
- With regards to Phase 1A, the Corporation and the purchaser continued to work through conditions precedent as well as negotiated necessary reciprocal easement agreements. The purchaser continues to work with their engineers and the County to prepare and get their plans approved for construction. Additionally, reciprocal easements and miscellaneous agreements continue to be worked through between the purchaser and 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 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 July 31, 2019 NVR, Inc. had closed on all 144 lots, Haverford Homes had closed on 96 lots, and Mid-Atlantic Builders had closed on 81 lots. NVR reported 144 home sales (contracts with future homeowners), Haverford reported 96 home sales, and Mid-Atlantic reported 80 home sales. There have been 270 occupancies; 140 for NVR, 76 for Haverford, and 54 for Mid-Atlantic.
Management continues to focus on strategies to maximize the returns of the project, which include, but are not limited to:
- The Development Feasibility period for Kimco ended on July 1, 2019. The Corporation is working with Kimco to transition all LOIs, including the grocer, to Walton;
- The Corporation has received significant interest from several regional retail developers and has conducted meetings to discuss interest and shared due diligence information with two of them. The Corporation is working to set up additional meetings with at least one other developer in order to determine the best partner to move forward with;
- 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.
Second Quarter Financial Results
During the three and six months ended June 30, 2019 and June 30, 2018, the Corporation recognized revenue on contracts of $1,402,391 (June 30, 2018 - $3,924,368) and $5,312,138 (June 30, 2018 - $6,069,655), respectively, from single-family lot sales in Phase 1. The cost of sales relating to the lot sales for the two periods was $1,426,637 (June 30, 2018 - $9,763,474) and $5,385,564 (June 30, 2018 - $11,940,211), respectively, which includes selling and commission costs of $24,246 (June 30, 2018 – 54,926) and $73,426 (June 30, 2018 - $86,376), respectively. The revenue and cost of sales recognized for the three and six months ended June 30, 2019 and 2018 was in respect to the sale of 12 (June 30, 2018 – 36) and 48 (June 30, 2018 – 59) Phase 1 single-family lots to home builders, respectively.
The Corporation generated a comprehensive loss for the three and six month periods ended June 30, 2019, of $376,137 (June 30, 2018 – loss of $6,013,061) and $666,335 (June 30, 2018 – loss of $6,068,981) respectively. The losses were largely driven by other expenses as detailed in the Management Discussion & Analysis.
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 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 six months ended June 30, 2019 and related notes, prepared in accordance with International Financial Reporting Standards.