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 first quarter of 2017. 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 their Municipal Comprehensive Review of the Official Plan, the City of Ottawa made a decision not to expand the urban boundary of the City to include the Property. The Partnership filed an appeal of the Official Plan with the Ontario Municipal Board (“OMB”) on May 15, 2015, based on a number of planning and process related considerations identified by management as a part of the City review process. The Partnership has actively participated in the appeal process including presenting supporting arguments at hearings with the 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 the 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.
The 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.
Based in City Council’s direction to engage in settlement discussions with those appellants who appealed OPA 150 in its entirety, including the Partnership, a meeting was held with City staff on March 14, 2017. A settlement was not reached and the Partnership continues to reserve the rights under the outstanding appeal.
Management of the Partnership continue to believe 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.
Companies’ Creditor Arrangement Act (“CCAA”) Status Update
On April 28, 2017, the General Partner of the Partnership 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 “Court”). As at April 28, 2017, outstanding payables of $1,299,859, including $1,252,858 due to WIGI have been stayed. Amounts subsequent to April 28, 2017 incurred will be paid out of the remaining refundable expense reserve. Management believes the reserves are sufficient as at March 31, 2017 to cover the operating costs of the Partnership and the additional costs of the SISP. Under the terms of the Initial Order, Ernst & Young Inc., will serve as the Court-appointed Monitor of the CCAA Entities.
On May 9, 2017, the Partnership obtained a Court Order (the “Order”) for the implementation of a sale and investment solicitation process (the “SISP”) to be conducted within the CCAA proceedings under the supervision of the Monitor, which will be used to identify one or more purchasers and/or investors in the Partnership’s business and/or Ottawa Property or to identify potential alternative financing. The SISP is scheduled to commence on June 6, 2017. The SISP sets forth the manner which potential purchasers/investors must submit bids, including applicable deadlines for the submission bids. It is anticipated the SISP will be concluded by November 23, 2017. The May 9, 2017 Order also granted three secured Charges (Administrative Charge, KERP Charge and Note holder Charge) over to the Partnership for an amount of approximately $221,466. In addition, the initial stay period of May 26, 2017 was extended to August 15, 2017 on the Partnership’s assets and liabilities, as well as the other applicants’ assets and liabilities.
First Quarter Financial Results
During the three months ended March 31, 2017, and March 31, 2016, 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 increased by $11,205 from $212,771 at March 31, 2016, to $223,976 at March 31, 2017. The change was mainly due to a decrease in office and other expenses of $9,291 due to a one-time property maintenance expense incurred in 2016. This was offset by an increase of $10,936 in professional fees primarily relating to the Partnership engaging third party corporate secretary services that had previously been provided by WIGI for no additional charge and an increase of $9,560 for bad debt expense relating to amounts due from WIGI for lease income. The bad debt expense has been recorded as WIGI filed and received protection under CCAA on April 28, 2017. These amounts have been stayed and the Partnership will need to file a claim as an unsecured creditor. If WIGI is successful in its restructuring, and as new information becomes available indicating that the Partnership will recover the amounts owing, the allowance will be reversed up to the amount of the impairment. There is no assurance that WIGI’s restructuring plan will be successful or sufficient for the Partnership to recover the full amount of the receivable, if at all.
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 unaudited financial statements for the three months ended March 31, 2017 and related notes, prepared in accordance with International Financial Reporting Standards.