Walton Big Lake Development L.P. Reports Second Quarter 2016 Fiscal Results

CALGARY, Alberta--(BUSINESS WIRE)-- Walton Big Lake Development L.P. (the “Partnership”), and its general partner, Walton Big Lake Development Corporation (the “General Partner”), announced today the Partnership’s financial results for the second quarter of 2016. Launched in 2010, the Partnership owns a residential project in northwest Edmonton, Alberta. The project is being developed in three phases over a nine-year time frame and marketed under the name “Hawks Ridge at Big Lake.”

Second Quarter Highlights

During the second quarter of 2016, the Partnership undertook the following initiatives:

• completed construction on the sanitary lift station required to service both the Hawks Ridge Project and future development on adjacent lands, including the sewer connection to the existing sanitary mains in the neighbouring community, with commissioning into operation anticipated in August 2016;
• substantially completed construction of roadways in Phase 2A, with the remaining work completed in July 2016;
• completed the top-of-bank retaining wall construction on June 16, 2016;
• completed construction of shallow utilities, including streetlights and power, to service Phase 2A, with energization occurring on June 24, 2016;
• received final Phase 2B engineering drawing approval;
• commenced landscaping construction along 215th street, the wildlife passage and the Central Area Stormwater Pond, with anticipated completion in Q3 2016; and
• received a 20% deposit on a Phase 2A single family lot, with revenue of $288,563 and cost of sales of $238,391 being recognized.

As of July 24, 2016, there have been 26 single family third party sales year-to-date (175 out of 320 in total project to date). The construction program for 2016 includes completing the surface improvements in Phase 2A for the remaining 54 of the 162 single-family lots (substantially completed July 8, 2016) and landscaping of the central area, top-of-bank and 215 Street, which are currently underway.

Based on management’s review of the slope stability matter disclosed previously by the Partnership for Phase 3, it has been determined that options to stabilize the slope and reduce the setback are cost prohibitive when compared to reconfigured layouts to accommodate the recommended setback identified in the slope stability study. Management is evaluating various layouts relative to estimated costs and revenue assumptions to determine the most favorable option to proceed with.

While management remains optimistic that there will be continued demand for new housing in Edmonton, the current sales activity is behind the original targeted sales pace for the Project. Subject to the timing and extent of the projected economic recovery for Edmonton, the forecasted project duration for collection of final revenue and receipt of recoveries owing to the Partnership is anticipated to be 2019. We will continue to provide regular updates on market conditions and project performance based on the key economic indicators for Edmonton.

Second Quarter Financial Results

During the three and six months ended June 30, 2016, the Partnership recognized revenue of $288,563 and $19,300,030, respectively, from lot sales. The cost of sales relating to the lot sales was $238,391 and $16,039,551, resulting in a gross margin of $50,172 and $3,260,479. The revenue and cost of sales recognized in the three and six months ended June 30, 2016 was in respect to the sale of 1 Phase 2A single family lot and 119 Phase 2A single family lots, respectively, to home builders.

For the three months ended June 30, 2016, total other income/(expenses) decreased by $3,116 from $463,145 for the three months ended June 30, 2015 to $460,029 for the three months ended June 30, 2016. The decrease in other income/(expenses) is mainly due to the increase in management fees of $36,320 which has been determined in accordance with the management agreement, an increase in interest expense of $ 21,578 due to a higher outstanding loan balance in 2016 and an increase in director’s fees of $13,045 due to the entity having only one independent director during the second quarter of 2015, compared to two in 2016. These were offset by a decrease in servicing fees of $26,097 as this fee is no longer payable as part of the Management Services Agreement. Marketing fees also decreased by $47,360 as there were no additional costs incurred for the website re-launch, additional directional signage or a showhome grand opening like there was in 2015 during the second quarter of 2016.

For the six months ended June 30, 2016, total other income/(expenses) increased by $46,539 from $883,988 for the six months ended June 30, 2015 to $930,527 for the six months ended June 30, 2016. The increase in other expenses is mainly due to the increase in management fees of $118,436 and an increase in director’s fees of $25,849. In accordance with the terms of the management agreement, the determination of the management fee is based on the book value of the Property, which has increased as a result of continued construction. The increase in director’s fees is due to increased compensation paid to each independent board member. In addition, during the second quarter of 2015, there was only one independent director compared to two in 2016. These were offset by a decrease in professional fees of $18,650 due to legal costs incurred in 2015 relating to the Second Mortgage Loan Facility. Marketing fees also decreased by $69,409 as there were no additional costs incurred for special events like there was in 2015 (referred to above) during the first half of 2016.

Walton Asset Management LP (“WAM”), which manages the Partnership, continues to undertake that management notwithstanding that its management fees are being accrued and will not be paid until the Partnership has sufficient capital for the payments of such amounts. In the second quarter of 2016, a total of $144,517 in management fees were accrued. The total amount of management and servicing fees outstanding and payable to WAM as at June 30, 2016 is $2,587,394.

Additional Information

The Partnership is managed by WAM and the development of the property is managed by Walton Development and Management LP, 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.

Walton has been in business for over 30 years and takes a long-term approach to land planning and development. Walton’s industry-leading expertise in real estate investment, land planning and development uniquely positions Walton to responsibly transition land into sustainable communities where people live, work and play.

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 Big Lake Development L.P., please visit www.sedar.com. For more information about Walton, visit www.Walton.com. For information about Hawks Ridge at Big Lake visit www.hawksridge.ca.

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. The risks, uncertainties and other factors that could influence results are described 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 financial statements for the three and six months ended June 30, 2016 and related notes, prepared in accordance with International Financial Reporting Standards.

View source version on businesswire.com: http://www.businesswire.com/news/home/20160826005759/en/

For media inquiries, please contact:
Walton Big Lake Development L.P.
Tony Deegan, 1-403-750-2292
[email protected]

Source: Walton Big Lake Development L.P.

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