WALTON WESTPHALIA DEVELOPMENT CORPORATION REPORTS FIRST QUARTER 2018 FISCAL RESULTS
View Full Release, 2018/05/30
CALGARY, Alberta--(BUSINESS WIRE)--Walton Westphalia Development Corporation (the “Corporation”) announced today its results for the first 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.
First Quarter Highlights
During the period ended March 31, 2018, the Corporation continued to take steps toward its construction and financing activities. The key activities undertaken by the Corporation were as follows:
- Completed construction activities on the northern lots by installing water, sanitary sewer, and storm sewer;
- Completed the paving of Woodyard Road as well as the streets and alleys associated with townhome lots in Blocks F and G;
- Issued notice to proceed to the landscape contractor to construct the initial phase of the Westphalia Green in 2nd Quarter 2018;
- Continued installation of the dry utility conduit; and
- Continued with the design of the Pennsylvania Avenue / Woodyard Road interchange
- Walton Global Investment Ltd (“WGI”) intends to fund the US $1,000,000 to the senior lender required to extend the maturity of the Senior Loan to July 15, 2018 through increasing the existing loan facility provided by WUSA. Efforts are currently ongoing to fully document the terms of the loan extensions.
- The Corporation continues to work with the County to complete the due diligence requirements in order to market and sell the TIF bonds; bonds are expected sold by July 2018; and
- Management is currently in negotiations with alternative lenders to refinance the senior debt and management of WGI have launched a mezzanine loan program with an overseas affiliate of WGI with the intention of replacing existing subordinate debt. Concurrently, management has been actively discussing significant developed and bulk land sales opportunities with the intention of bringing forward cash flow to repay debt. The Corporation has executed a letter of intent in regards to the bulk sale of Phase 1A.
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 April 30, 2018 NVR, Inc. had closed on 96 lots, Haverford Homes had closed on 67 lots, and Mid-Atlantic Builders had closed on 42 lots. NVR reported 108 home sales (contracts with future home owners), Haverford reported 72 home sales and Mid-Atlantic reported 51 home sales. There have been 140 occupancies; 76 for NVR, 50 for Haverford, and 14 for Mid-Atlantic.
First Quarter Financial Results
During the three months ended March 31, 2018 and March 31, 2017, the Corporation recognized revenue on contracts of $2,145,287 and $2,250,955, respectively, from single family lot sales in Phase 1. The cost of sales relating to the lot sales was $2,176,737 and $1,936,381, with $31,450 and 28,653, respectively, relating to selling costs and commissions. The revenue and cost of sales recognized for the three months ended March 31, 2018 and 2017 was in respect to the sale of 23 and 22 Phase 1 single family lots to home builders, respectively.
Total expenses decreased by $181 from $263,278 for the three months ended March 31, 2017 to $263,097 for the three months ended March 31, 2018. The decrease in expenses was primarily due to a decrease in marketing expenses of $7,300 and was offset by an increase of $2,738 in professional fees and an increase of $4,209 in office and other expenses.
Total Other Items consists of foreign exchange gains and losses and has decreased by $874,008 from total other item loss of $186,976 for the three months ended March 31, 2017 to total other item gain of $687,032 for the three months ended March 31, 2018. The Canadian dollar has strengthened 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 loss that is not eliminated upon consolidation
Comprehensive loss decreased by $267,997 from $323,917 for the three months ended March 31, 2017 to $55,920 for the three months ended March 31, 2018. The decrease is due to the items discussed above as well as a $312,794 increase 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.