Whiterock Real Estate Investment Trust T.WRK.DB.K

RE: from SEDAR

[baudelaire]

"WHITEROCK REAL ESTATE INVESTMENT TRUST 10 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued (unaudited) 10. Related Party Transactions Services and asset management agreements In June 2005, the Trust entered into exclusive agreements with Whiterock Real Estate Capital Inc. (“Whiterock Capital”) to provide the services of two officers of the Trust. The two officers are Trustees of the Trust and principals of Whiterock Capital. The remuneration for their services is an annual fee of 0.3% of the Adjusted Cost Base (“ACB”) of WR Trust’s assets, paid in arrears. Additionally, once the Trust’s ACB exceeds $50 million, a fee of 0.5% of ACB is payable on acquisitions, in arrears, in shares of the Trust. The Agreements have a five year term and may be cancelled with two years notice. In the three months ended March 31, 2006, $103,336 (2005 - $nil) was accrued in general and administrative expenses under these agreements and $293,436 (2005 - $nil) was accrued in the acquisition cost of income properties." Are these fees in addition to the the salaries and bonuses of the two officers or is this their sole compensation? Would also be interested to know who does the property management for Whiterock if anyone knows off the top of their head. The acquisition fee should at least be contingent on accretion/unit and be paid in cash. The 0.3% of assets fee. At $250 million in assets, this fee would take $0.75 million a year or $0.0325/unit based on 20 million units outstanding (I'm guessing this is very roughly representative of Whiterock). Didn't the "clean up crew" brought in at Retrocom recommend they cancel a similar sort of arrangement with RIMI that will save the REIT a bundle? O&Y Enterprise and Riocan were doing the property management so what sort of value was the REIT getting from the RIMI agreement? Are these fees necessary? Other than IPC REIT, what other REIT officers are compensated in this way? (IPC has an Management Advisory Agreement with a subsidiary of PRF Holdings Inc. for fees on acquisitions and dispositions (0.50%/0.25%).) Any comments?