Market Overview

Walton Westphalia Development Corporation Reports Second Quarter 2018 Fiscal Results

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Walton Westphalia Development Corporation (the "Corporation") announced
today its results for the second quarter of 2018. Launched in March
2012, the Corporation was formed to provide investors with the
opportunity to participate in the acquisition and development of the
310-acre Westphalia Property (the "Property or the "Project") located in
Prince George's County, Maryland, United States of America.

Second Quarter Highlights

During the period ended June 30, 2018, the Corporation continued to take
steps toward its construction and financing activities. The key
activities undertaken by the Corporation were as follows:

Construction Activities

  • Completed final construction activities on the northern lots by
    installing water, sanitary sewer, and storm sewer;
  • Began construction of the initial phase of the Westphalia Green
    central park;
  • Continued installation of the dry utility conduit; and
  • Continued with the design of the Pennsylvania Avenue / Woodyard Road
    interchange

Financing Activities

  • Walton International Group (USA), Inc. ("WUSA") funded a US $1,000,000
    capital injection on May 31, 2018, which will be documented, subject
    to consent of the other project lenders, by way of an increase to
    WUSA's existing subordinated, unsecured loan, effective May 31, 2018.
    The capital injection was made in order to extend the Senior Loan
    repayment date from May 31, 2018 to July 15, 2018. The proceeds of the
    financing were used to pay construction costs incurred for the
    development of Phase 1 of the project.
  • The Corporation continues to work with the County and its team to
    complete the due diligence requirements in order to market and sell
    the TIF bonds. The Corporation worked with the County Council to have
    a bill introduced and adopted to amend the Rate and Method of
    Apportionment of Special Taxes to incorporate the possibility of other
    future land uses; because of this amendment the expected timeframe for
    the issuance of the bonds shifted from July 2018 to October 2018;
  • On July 13, 2018, the project refinanced and repaid the Senior Loan in
    full from the first advance of a new subordinated loan program with
    WWMN, LLC, an affiliated company of Walton Global Investments Ltd.
    ("WGI") , for aggregate gross proceeds of $18,680,000 USD (the "New
    Loan Program"), maturing June 2021. The proceeds of the New Loan
    Program were used to repay the Corporation's outstanding debt
    obligations due to its senior lender and to repay certain additional
    unsecured, subordinated debt of the Corporation.

The single-family market in the Washington, D.C. metropolitan
statistical area ("MSA"), and specifically in the Prince George's County
submarket, continues to be strong. The Project is selling lots to three
homebuilders, NVR, Inc., Mid-Atlantic Builders and Haverford Homes. As
of July 31, 2018 NVR, Inc. had closed on 103 lots, Haverford Homes had
closed on 73 lots, and Mid-Atlantic Builders had closed on 53 lots. NVR
reported 124 home sales (contracts with future home owners), Haverford
reported 74 home sales and Mid-Atlantic reported 56 home sales. There
have been 161 occupancies; 81 for NVR, 53 for Haverford, and 27 for
Mid-Atlantic.

Second Quarter Financial Results

During the three and six months ended June 30, 2018 and June 30, 2017,
the Corporation recognized revenue on contracts of $3,924,368 (June 30,
2017 - $3,654,536) and $6,069,655 (June 30, 2017 - $5,905,491),
respectively, from single family lot sales in Phase 1. The cost of sales
relating to the lot sales was $3,979,294 (June 30, 2017 - $3,346,232)
and $6,156,031 (June 30, 2017 - $5,311,266) with $54,926 and 86,376,
respectively, relating to selling costs and commissions. The revenue and
cost of sales recognized for the three and six months ended June 30,
2018 and 2017 was in respect to the sale of 36 (June 30, 2017 – 35 ) and
59 (June 30, 2017 – 57) Phase 1 single family lots to home builders,
respectively.

An impairment of $5,842,968 ($4,525,617 USD) was recorded on Phase 1, as
the expected realizable value of the phase was lower than the carrying
value. The impairment was driven by the change in the strategy to focus
on repayment of debt through bulk selling Phase 1A of development rather
than servicing the lands and future sale to builders.

Total other expenses decreased by $145,929 from $341,697 for the three
months ended June 30, 2017 to $195,838 for the three months ended June
30, 2018. The decrease in expenses was primarily due to a decrease in
marketing expenses of $66,587 and an increase in interest income of
$88,782, related to the cost-sharing agreement between the Corporation
and WUSF1. The decrease was partially offset by an increase of $13,084
in director fees.

Total other expenses decreased by $146,110 from $605,045 for the six
months ended June 30, 2017 to $458,935 for the six months ended June 30,
2018. The decrease in expenses was primarily due to a decrease in
marketing expenses of $73,957 and an increase in interest income of
$88,610, related to the cost-sharing agreement between the Corporation
and WUSF1. The decrease was partially offset by an increase of $13,076
in director fees.

Total Other Items consists of foreign exchange gains and losses and has
decreased by $1,168,206 from total other item loss of $632,665 for the
three months ended June 30, 2017 to total other item gain of $535,541
for the three months ended June 30, 2018. The Canadian dollar has
weakened in 2018 compared to 2017, resulting in the underlying Canadian
Dollar intercompany debentures and the intercompany debt contracts in
the U.S. Subsidiary reflecting a foreign exchange gain that is not
eliminated upon consolidation.

Comprehensive loss decreased by $5,091,559 from $921,540 for the three
months ended June 30, 2017 to $6,013,099 for the three months ended June
30, 2018. Comprehensive loss decreased by $4,823,562 from $1,245,457 for
the six months ended June 30, 2017 to $6,069,019 for the six months
ended June 30, 2018. The decrease is due to the items discussed above as
well as a $454,909 and $903,314, respectively, decrease in other
comprehensive income due to changes in the cumulative translation losses
recorded on the translation of the U.S. Subsidiary accounts from a
functional currency of U.S. dollars to Canadian dollars for reporting
purposes.

Additional Information

The Corporation is managed by Walton Global Investment Ltd. and the
development of the Project is managed by Walton Development & Management
(USA), Inc., 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.

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 Westphalia Development Corporation,
please visit www.sedar.com.
For more information about Walton, visit www.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, renegotiation of loans, refinancing or
extension of the existing loans, the amount and timing of the financing
received, the amount of, timing and terms of any tax increment financing
that may be received by the Corporation, the length of time it takes to
develop and sell the Property, the ability of the Corporation to enter
into joint ventures relating to, or to otherwise, vertically develop
portions of the Property, the availability and terms of other
construction financing required by the Corporation, the costs involved
in the horizontal and/or vertical development of the Property, the
prices at which the serviced lots and parcels from, or vertically
developed structures on, the Property can be sold, the rate at which
serviced lots and parcels from, or vertically developed structures on,
the Property are purchased in the marketplace, 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 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, 2018 and related notes, prepared in accordance with
International Financial Reporting Standards.

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