TSX:WRK.DB.K - Post by User
Post by
baudelaireon Mar 27, 2007 9:48pm
121 Views
Post# 12501093
Quebec properties sale
Quebec properties saleFWIW, the profit is a bit exaggerated if you go by the numbers in the news release, which mentions that they are before closing costs and adjustments. The Sept 30/06 MD&A lists the gross book value of the three properties as $48.72 million (versus $46.6 million in the news release). The actual profit is closer to $3 million. Based on GBV that’s about a 6.2% gain. If you want to look at the return on the equity component only, it is higher, of course, due to the approx 70% leverage. But still, the $3 million is less than one year’s net op income from the properties. This sale removes these properties from any portfolio premium that the REIT receives in a sale. Further, the high leverage at Whiterock produces a sensitivity to small movements in the ultimate capitalization rate for the sale (trusterz RBC report has details) and these three properties could have made 25bps of difference to a buyer (and extra $$$ to unitholders). They were some of the highest quality properties in the portfolio and leased mostly to SIQ, CGI and Le Soleil. The news release indicated that Whiterock initiated the sale – I wonder why they would have as they would almost assuredly get more by holding on to them until the end.