Westphalia Dev. Corp. Reports Second Quarter 2021 Fiscal Results
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CALGARY, Alberta--(BUSINESS WIRE)-- Westphalia Dev. Corp. (the “Corporation”) announced today its results for the second quarter ended June 30, 2021. Launched in March 2012, the Corporation acquired for development the 310-acre Westphalia Property (the “Property or the “Project”) located in Prince George’s County, Maryland, United States.
Review of Operations
The Corporation continues to actively seek purchasers and developers for the remaining lands associated with Phases 2 and 3 as well as other more immediate opportunities associated with the Phase 1 retail. The Corporation intends to renegotiate or refinance its senior debt with its lender, WWMN, LLC, and a potential new senior lender. The key activities undertaken by the Corporation during the three-months ended June 30, 2021, were as follows:
- Continued construction on the Woodyard Road Interchange project. Construction is on schedule and expected to be completed in June 2022.
- Continued construction on the Presidential Parkway West project, which is expected to be completed by Q3 2022.
Sales Activities & Financing
- The Corporation finalized and ratified a purchase and sale agreement with a top national builder for Phases 1 and 2 of the Project (picture below). The purchaser’s due diligence is expected to be complete by October 12, 2021, with a projected outside closing date in the first quarter of 2023.
- The Corporation finalized and executed a purchase and sale agreement with a national industrial building and leasing company for large parcels within the Project planned for future commercial industrial use in Phases 2 and 3 of the Project. The purchaser’s due diligence is expected to be complete by December 2021, with projected outside closing dates of November 2022 (Phase 3) and March 2023 (Phase 2).
The Corporation, through its broker, has been seeking and has engaged with a potential lead lender for the project. The potential senior lender continues to conduct its ordinary course due diligence and documentation process, which must be completed prior to any closing. This is expected to be completed within the next 30 to 60 days. As a result, an extension of the maturity date for the existing financing with WWMN, LLC, the senior secured lender, has been negotiated and executed, and the extended maturity date is October 31, 2021. The Corporation has also negotiated terms for subordinated financing from its existing lender, WWMN, LLC, a portion of which is expected to be funded concurrently with the new senior loan, and has obtained an unsecured loan with Walton Global Holdings, LLC, which is intended to be repaid in full concurrent with the refinancing of the senior loan.
The single-family market in the Washington, D.C. metropolitan statistical area, and specifically in the Prince George’s County submarket, continues to show strength which has led to increased builders’ interest in purchasing raw land for the development and construction of their own lots.
Management remains focused on strategies to maximize the returns of the Project, which include, but are not limited to:
- There are three additional sites in which a vertical strategy is being pursued to work with national or regional retail commercial and senior living builders. The Corporation has engaged a third-party consultant to complete a market analysis for these three sites which will help guide the Corporation & Management on next steps, which may include vertical building and leasing, in partnership with third party best in class commercial, residential and/or senior living companies.
- The Corporation continues to work with the local community, County leadership, and internal staff to re-plan additional development within the Westphalia Town Center. The Corporation also continues to work with the various consultants to implement a shift in the project’s scope after having received input from those detailed above by reducing the significant retail and office space that had been previously planned and adding residential and other uses.
Second Quarter Financial Results
During the three months ended June 30, 2021, the Corporation recognized revenue on contracts of $nil (June 30, 2020 - $880,735). The cost of sales relating to the lot sales was $nil (June 30, 2020 - $3,018,569), including selling costs and commissions.
For the three months ended June 30, 2021, the total comprehensive loss was $205,089. When compared to the three months ended June 30, 2020, total comprehensive loss of $2,269,927, there is a variance of $2,064,838 between the respective period ends. The variance is due to the items discussed in detail in the Management Discussion & Analysis.
The Corporation is managed by Walton Global Investments Ltd. and the development of the project is managed by Walton Development & Management (USA), Inc., both of which are members of Walton.
Walton is a privately owned, leading global real estate investment, land asset management and administration group that has focused on strategically located land in major growth corridors for more than 42 years. Walton manages and administers US$3.4 billion of real estate assets in North America, on behalf of its investors and business partners. Walton has more than 98,000 acres of land under ownership, management and administration in the United States and Canada. Key entities in Walton include Walton Global Holdings, Walton International Group and Walton Development and Management. For more information visit 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, the development of Westphalia Town Center, 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 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 June 30, 2021 and related notes, prepared in accordance with International Financial Reporting Standards.
Source: Westphalia Dev. Corp.
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