The initial investment on the deal is about $285 million, with another $86 million being given over three years as additional space is built and occupied in the properties. Calloway said in a statement that the centers, together, will generate net rents of about $18.7 million per year on initial closing, and about $26 million upon completion.

The company is the largest landlord of Wal-Mart-anchored centers in Canada, with about 75% of the firm's retail center portfolio featuring Wal-Mart as the main tenant. Simon Nyilassy, president and CEO of Calloway, tells GlobeSt.com that his firm believes Wal-Mart captures the biggest market share of shoppers. "They really appeal to the cross-section of middle-class shopper, that's what Canada has more than anything else," Nyilassy says. "There's a social safety net for the poor, and the tax system tends to eliminate larger, higher classes from forming. They hit a bulls-eye in terms of this market."

Portfolio properties are in Toronto, Burlington and Ottawa, ON; Sherbrooke and Surry, BC and Saskatoon, SK. Other tenants at the sites include Canadian Tire, Home Depot, Home Outfitters, Reitmans and Best Buy.

Calloway financed the properties with about $123 million of mortgage debt and loans against the centers, the issuance of 707,173 units of a subsidiary limited partnership, valued at $14.3 million, to Mitchell Goldhar, and the balance from cash reserves. Goldhar increases his interest in Calloway from 23.3% to 23.8% with the transaction.

Nyilassy says while the Canadian economy may start going south because of US troubles, he doesn't foresee problems with his properties. "The Wal-Mart centers tend to attract the value segment, which is what is the strong retail tenant right now," he says.

Instant Insights /

Calloway Closes on Wal-Mart Centers for $371M

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