TORONTO, ONTARIO--(Marketwire - Nov. 2, 2011) - Calloway Real Estate Investment Trust (TSX:CWT.UN) is pleased to report strong results for the third quarter ended September 30, 2011.

Highlights:

• Maintained portfolio occupancy rate above the 99% level.
• Renewed 90% of expiring leases with an average rent increase of 8.1% (year to date).
• Acquired three Walmart anchored shopping centres comprising 580,300 square feet of leased area and future development of approximately 245,039 square feet for $140.7 million.
• Issued $90 million in unsecured debentures bearing interest at 4.7% per annum to finance the acquisition described above.
• Invested $46.6 million in the quarter to complete the development and lease up of 181,317 square feet of leaseable area with a 7.2% yield.
• Funds from operations (non-IFRS measure) increased by $8.5 million ($0.025 per unit) to $41.4 million ($0.426 per unit) ⁽¹⁾ compared to the same period in 2010.
• Renewed the existing $160 million operating line for a three year term and negotiated an additional one year $35 million operating line.

Al Mawani, President & CEO, said, "We are pleased with our third quarter results generating steady growth over the same period last year from same store growth, from refinancing debt and accretion from development, Earnout, and acquisition activity. Adjusted Funds from Operations "AFFO" continues to improve and our payout ratio has declined to 93.5%."

As at September 30, 2011, Calloway's $5.6 billion real estate portfolio (at fair value) included 25.3 million square feet of built gross leasable area and 4.4 million square feet of future developable area in 120 operating and 9 development properties. The total fair value of the portfolio increased $293.3 million over the previous quarter. The weighted average capitalization rate of the portfolio has declined to 6.45% as at September 30, 2011 from 6.55% in the previous quarter.

During the quarter, the Trust acquired 580,300 square feet of retail space in three retail properties for $140.7 million, which was satisfied by the issuance of Class B Series 5 LP III units with a value of $1.7 million and the balance in cash and other working capital adjustments.

Developments completed during the quarter comprised approximately 181,318 feet of leasable area at a cost of $46.6 million and a 7.2% yield.

During the quarter, the Trust issued $90 million in unsecured debentures bearing interest at 4.7% per annum. In addition, the Trust renewed its $160 million operating line for an additional three years and added a new $35 million unsecured operating line all at variable interest rates based on banker's acceptance rates plus 1.65% compared to banker's acceptance rate plus 3.25% on our previous operating line.

Calloway maintained its debt to gross book value (non-IFRS measure) at 50.2% (53.6% including convertible debentures) at quarter end which is below the Trust's target range of 55.0%-60.0% (60.0%-65.0% including convertible debentures). This will provide flexibility to the Trust to address its committed financing obligations through to 2012.

Net income for the quarter was $105.3 million compared to $238.0 million in the same quarter 2010. The decrease was primarily the result of fair value adjustments on investment properties and financial instruments which was a net gain of $98.3 million this quarter compared to $351.2 million in the same quarter 2010 as a result of the larger decrease in capitalization rates in 2010 compared to this year. Excluding the impact of fair value adjustments, interest expense related to the distributions on LP units considered debt in 2010, yield maintenance payment on repayment of Series C unsecured debentures in 2010 and income tax provisions, Net income would have increased by $8.3 million this quarter over the same quarter in 2010 mainly due to increases in net rental revenue of $5.0 million and a reduction of interest expense of $2.8 million mainly due to the refinancing of the 10.25% Series C unsecured debentures at the end of 2010.

The high occupancy level of 99.0%, as well as Calloway's acquisition and development program, generated rental revenue of $124.9 million in the quarter, a $7.6 million increase over the prior year. Net operating income (non-IFRS measure) of $85.1 million increased $5.0 million or 6.2% over the previous year, on the same properties basis the increases was 1.0%. Cash flow as measured by Funds from Operations (FFO – a non - IFRS measure) totalled $51.4 million ⁽¹⁾ in the quarter, an increase of $8.5 million or 19.7% over 2010. The year-over-year results were positively impacted mainly by completed acquisitions and developments generating additional net operating income of $5.0 million and a decrease in interest expense of $2.8 million (excluding distributions on LP units considered interest expense under IFRS). FFO per unit (fully diluted) was $0.426 compared to $0.401 in the previous year. AFFO per unit (fully diluted) was $0.414 compared to $0.364 in the previous year. The Trust's quarterly distribution of $0.387 per unit represents a payout ratio (to AFFO) of 93.5% compared to 106.3% in third quarter 2010.

Calloway expects to meet the REIT Exemption effective January 1, 2011 once the Federal Budget proposals clarifying the application of the rules for REIT Exemption from income tax are re-introduced and passed. The current ($12.1 million) and deferred ($381.1 million) income taxes totalling $393.2 million will be reversed at that time.

The non-IFRS measures identified in this Press Release do not have any standardized meaning prescribed by International Financial Reporting Standards ("IFRS") and are therefore unlikely to be comparable to similar measures presented by other issuers. These non-IFRS measures are more fully defined and discussed in the management discussion and analysis of Calloway for the three and nine months ended September 30, 2011, available on SEDAR website at [ www.sedar.com ].

⁽¹⁾ Excludes current income taxes

Full reports of the financial results of the Trust for the year are outlined in the audited financial statements and the related management discussion and analysis of Calloway, available on the SEDAR website at [ www.sedar.com ]. In addition, supplemental information is available on Calloway's website at [ www.callowayreit.com ].

Calloway will hold a conference call on Thursday November 3, 2011 at 10:00 a.m. (ET). Participating in the call will be members of Calloway's senior management.

Investors are invited to access the call by dialing 1-800-814-4860. You will be required to identify yourself and the organization on whose behalf you are participating. A recording of this call will be made available Thursday November 3, 2011 beginning at 12:00 p.m. (ET) through to 11:59 p.m. (ET) on Thursday November 10, 2011. To access the recording, please call 1-877-289-8525 and use the reservation number 4480979#.