CALGARY, Alberta--(BUSINESS WIRE)--Walton Ontario Land L.P. 1 (the “Partnership”) and its general partner, Walton Ontario Land 1 Corporation (the “General Partner”) announced today the Partnership’s results for the fiscal year ended December 31, 2016 and for the fourth quarter of 2016. Launched in January 2010, the Partnership’s objective is to maximize returns to limited partners through the management of, concept planning on, and eventual sale of properties. The Partnership currently has an interest in a single parcel of land, comprised of 300 acres located in the southwest quadrant of the City of Ottawa (the “Property”).
In 2014, as part of its Municipal Comprehensive Review of the Official Plan, the City made a decision not to expand the urban boundary to include the Property. The Partnership filed an appeal of the Official Plan on May 15, 2015, and has actively participated in the appeal process including presenting supporting arguments at hearings with the Ontario Municipal Board (“OMB”).
On February 23, 2016, the OMB issued a favorable decision supporting the basis of management’s appeal. The OMB decision requires the City to complete a Land Evaluation and Area Review and an Employment Lands Study, including a full and proper review of these issues, before the OMB will reconvene a hearing. The City was also advised, as a part of the OMB decision, to review its planning horizons utilized to ensure consistency with the Provincial Policy Statements 2014 with a reference to a time frame of 2036, as opposed to the 2031 horizon utilized by the City in the Official Plan Amendment.
The City’s Planning and Growth Management Department undertook a work program in the second half of 2016 and completed the Land Evaluation and Area Review and Employment Lands Study. On behalf of the Partnership and as a stakeholder in the process, management reviewed the conclusions and recommendations of these reports and made a written submission to Planning Committee in November 2016 continuing to advocate for an appropriate range and mix of available lands and the need for the City to consider comprehensively planned mixed-use opportunities outside of the existing boundary as part of the qualitative and quantitative assessment to change the current designation for certain Employment and Enterprise Area lands to General Urban Area.
Planning Committee recommended that City Council adopt the population, household and employment projections to 2036, Ottawa Employment Land Review Final Report, Growth Projections for Ottawa 2014-2036, City of Ottawa Land Evaluation and Area Review for Agriculture and an Official Plan Amendment (“OPA”) that does not include an expansion to the urban boundary. These recommendations were presented and carried, as amended, by City Council on December 14, 2016. The OPA will be subsequently forwarded to the Ministry of Municipal Affairs and Housing (the “Ministry”) by the City for approval. Once a Notice of Decision has been received from the Ministry, all appeals, including the outstanding appeal and any new appeal filed by the Partnership, will be adjudicated by the OMB.
Management and the Partnership continue to share the view that the Ottawa Property has excellent attributes to accommodate a future employment and mixed-used development opportunity and is well suited for an urban boundary expansion.
As a result of the ongoing appeal and related planning processes associated with the Official Plan, the time frame for the Partnership to hold its interest in the Property as an investment has exceeded the original anticipated two to four year time horizon. Management has been working with CBRE as listing agent to seek market opportunities for the Property. With the Partnership filing and receiving creditor protection in the Companies Creditor Protection Act (“CCAA”), the Partnership in consultation with its advisors and the Court-appointed monitor, Ernst & Young Inc. (the “Monitor”), are currently reviewing the potential restructuring alternatives, including a sale and investment solicitation process to identify one or more purchasers and/or investors in the Partnership’s business and/or property. There is no assurance that these initiatives will be successful.
Year-End and Fourth Quarter Financial Results
During the fourth quarter and years ended December 31, 2016, and December 31, 2015, the Partnership did not recognize any revenue relating to land sales and incurred no cost of sales. The Partnership is not expected to generate significant revenues, except when the property is sold.
Total other expenses decreased by $17,184 from $848,755 at December 31, 2015, to $831,571 at December 31, 2016. The change is mainly due to a reduction of servicing fees, which was offset by an increase in director fees, as well as in office and other expenses. Servicing fees under Agency Agreements were incurred until June 2015. No further servicing fees were incurred on the Agency Agreements, which resulted in a total reduction of servicing fees of $49,293 compared to the prior year. Directors’ fees increased by $23,686 from $78,616 for the year ended December 31, 2015, to $102,302 for the year ended December 31, 2016. The increase in director fees was a result of incurring a full year of fees at the compensation rates approved part way through 2015 and due to having two independent directors throughout the entire year. In the year ended December 31, 2016, a one-time property maintenance expense was incurred, which resulted in office and other expenses increasing by $8,304 over 2015.
Total expenses increased by $15,533, from $194,143 for the fourth quarter of 2015 to $209,676 for the fourth quarter of 2016 due to an adjustment of $6,372 in 2015 relating to over-accrual of 2014 costs.
General Partner and Manager of the Project files for creditor protection under CCAA
On April 28, 2017, the General Partner of the Partnership, Walton International Group Inc. (“WIGI”) and certain affiliates (the
CCAA Entities”), including the general partner of Walton Development and Management LP (“WDM”) voluntarily filed and obtained creditor protection under the CCAA pursuant to an order (the “Initial Order”) granted by the Court of Queen’s Bench of Alberta. The Initial Order authorizes the CCAA Entities to begin a court-supervised restructuring and provides for a broad stay of proceedings against the CCAA Entities in order to provide the opportunity to finalize and present a CCAA plan to creditors for approval. While the Partnership is not a CCAA Entity, it is covered by a stay of proceedings. The stay of proceedings are currently in place until May 26, 2017. Under the terms of the Initial Order, Ernst & Young Inc. will serve as the Court-appointed monitor of the CCAA Entities.
At December 31, 2016, the balance payable to WIGI was $1,035,307 in respect to management fees. The General Partner has communicated to WIGI that it does not expect to make payments for the management fees until the Property is sold. WIGI has continued to provide services as manager of the Partnership; however, there is no guarantee that WIGI will continue to provide management services with the deferral of the payment of the management fees, or that WIGI will have the ability to defer those management fees under the CCAA proceedings or that the Partnership will continue to have WIGI provide administrative and management services.
Announcement of Interim Director
The Board has appointed Michelle Cameron as an interim director of the Corporation and a member of the Audit Committee effective May 1, 2017. Ms. Cameron is currently the Chief Financial Officer of the General Partner of the Partnership and Vice President Corporate Reporting of WIGI. Prior to joining Walton, Ms. Cameron was with PricewaterhouseCoopers for over 13 years in the Audit & Assurance Practice. Ms. Cameron is a member of the Chartered Professional Accountants of Alberta. She holds a Bachelor of Commerce degree from the University of Saskatchewan.
The Partnership is managed by WIGI which is a member 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 35 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.
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 audited financial statements for the year ended December 31, 2016 and related notes, prepared in accordance with International Financial Reporting Standards.