96% FFO POR
SEDAR
HIGHLIGHTS – December 31, 20071
• Yield – Distribution yield of 11.6% annualized, based on per unit distributions for the year totaling $1.12,
and the March 20, 2008 Unit closing price of $9.70.
• Increasing Annual FFO – Recurring FFO increased 92% to $11.2 million for the year ended
December 31, 2007. Recurring FFO per unit (basic) increased 32% to $1.11 per unit in the same
period.
• Record Quarterly FFO – In the three months ended December 31, 2007, recurring FFO was $3.0
million or $0.29 per unit (basic). This represents a 96% FFO payout ratio.
• Record AFFO - Recurring AFFO for 2007 was up 92% to $9.1 million. 2007 recurring AFFO per unit
(basic) was $0.90, up 30% from $0.69 in 2006.
• Significant Rental Rate Increases – Rents on 2007 rollover of expiring tenancies increased 12%,
with Saskatchewan achieving an increase of 31%. Achieved positive net absorption during the year
of over 28,000 square feet. Expiring leases in 2008 and beyond remain below market.
• Same Property Growth – Property operating income for the year ended December 31, 2007
increased approximately 4.8% on a same property basis from the prior year comparative period.
• Investment Grade Tenants on Long-Term Leases – At December 31, 2007, 69% of revenues were
from government and other investment grade tenants. Average lease term of the portfolio is 8.6
years.
• Long-Term Fixed Rate Debt – Average 8.5 year term for mortgage debt term at a weighted average
interest rate of 5.4% with 100% at fixed rates.
• Continued Deleveraging – $4.0 million of convertible debentures converted to equity in the year
ended December 31, 2007. Subsequent to December 31, 2007, $0.3 million of debentures were
converted into equity.
1 Adjusted for the sale of 310 Henderson Drive. See “Disposition Completed Subsequent to December 31, 2007”.
Page 3
• Geographically Balanced Portfolio – 21% of the portfolio is in Saskatchewan, 28% in Ontario, 36%
in Quebec and 15% in Atlantic Canada.
• New Acquisitions – In addition to the newly constructed retail centre acquired in PEI in the first
quarter of 2007, Whiterock acquired in the fourth quarter, a 395,159 square foot facility in Regina, SK
(subsequently sold), as well as two office properties, also in Regina, SK, totaling approximately
41,000 square feet.
• Internal Property Management – Expanded internally operated management to thirteen properties,
including 655 Bay Street.
• Tax Efficient Distributions – 100% of the distributions made in 2007 and 2006 were classed as
return of capital for tax purposes.
UNIT CONSOLIDATION
On August 21, 2006, Whiterock consolidated its issued and outstanding units on the basis of one postconsolidated
Unit for every four pre-consolidated units. All references to units contained herein are
calculated on a post-consolidated basis.
BUSINESS OVERVIEW
Whiterock is a growth-oriented REIT focused on increasing Unitholder value through strategic
acquisitions, ownership and management of high quality office, industrial, and retail properties in select
markets across Canada which generally provide high returns while maintaining high tenant credit quality.
From June 28, 2005, when Whiterock began active operations to December 31, 2007, it has acquired 37
properties with gross book values (“GBV”) totaling approximately $404.3 million and sold 3 properties for
$51.8 million and a gain of $3.5 million.
Approximately 43% of Whiterock’s revenue stream is derived from government leases. Government
leases combined with other investment grade tenants supply 69% of the revenue stream (after adjusting
for the sale of 310 Henderson Drive on January 28, 2008). The average remaining lease term of this
portfolio is 8.6 years.
Page 4
At December 31, 2007, Whiterock operated in select urban markets as summarized below:
Province
Number of
Properties GLA (1)
Number of
Properties GLA (1)
Number of
Properties GLA (1)
7 978,078 - - 1 29,700
5 219,776 3 174,865 3 668,596
1 80,162 - - 2 134,704
1 75,990 1 33,857 1 115,773
2 326,774 - - 4 243,161
- - 3 69,431 - -
16 1,680,780 7 278,153 11 1,191,934
(1) Gross Leasable Area
Prince Edward Island
Saskatchewan
New Brunswick
Nova Scotia
Ontario
Total
Office Retail Industrial
Quebec
Management believes that there are significant leasing and operating synergies which can be derived
from a critical mass of properties in defined regions. Since its Initial Public Offering in June 2005,
management considered and completed acquisitions in Western Canada, Ontario, Quebec and Atlantic
Canada. Whiterock’s investment criteria is contained in its declaration of trust, as amended, (the
“Declaration of Trust”) a copy of which may be obtained at www.sedar.com.
While it has been Whiterock’s intention to acquire a geographically diversified mix of office, retail and
industrial properties, office buildings have comprised the majority of its acquisitions to date. Management
believes this segment has provided the most favourable acquisition opportunities to date.
OVERALL BUSINESS STRATEGY AND OBJECTIVES
Throughout 2007 Whiterock continued to operate a high quality diversified portfolio of office, industrial
and retail assets in select markets across Canada that produces an attractive and consistent return to
investors. Whiterock has an active acquisition program with an additional focus on internal growth
measures. Whiterock focuses on properties that are not the primary focus of larger institutional investors
while adhering to Whiterock’s real estate investment criteria.
The objectives of Whiterock are to: (i) enhance the value of Whiterock’s assets and maximize long-term
unit value through the active management of its assets; (ii) generate stable and growing cash distributions
on a tax-efficient basis; and (iii) expand Whiterock’s asset base and increase its income available for
distribution through an accretive acquisition program. Whiterock achieves its objectives by employing the
external and internal growth strategies set out below. Whiterock’s objective is to acquire well-located real
estate with a large proportion of investment grade tenants having long-term leases and matching these
acquisitions with fixed-rate debt of similar term.
Growth through Opportunistic and Disciplined Acquisitions
As of December 31, 2007, Whiterock has increased its GBV of real estate assets since its initial public
offering in June 2005 from $3 million to $355.5 million and increased its real estate portfolio from 26,000
square feet of GLA to 3.2 million square feet of Gross Leasable Area (GLA).
Whiterock’s growth strategy includes acquiring real estate at attractive capitalization rates which are
above national averages, while maintaining the high credit quality of its tenants and the physical condition
of the assets being acquired. By virtue of Whiterock’s relatively small size, each additional acquisition
can have a material impact on the REIT’s overall performance. Completing acquisitions at capitalization
Page 5
rates that have positive spreads to the asset level financing also serves to enhance the REIT’s
performance.
Whiterock has developed a national platform of diversified commercial real estate across Canada, with
target markets nationwide, including: the Greater Toronto Area; Regina; Saskatoon; Southwestern
Ontario; Ottawa; Halifax; Quebec City; and Montreal.
Management has utilized a geographically opportunistic growth strategy, allowing the REIT to participate
in any Canadian market where an opportunity exists to acquire assets that conform with its investment
criteria. As a competitive advantage, Whiterock not only focuses on properties in major market centres in
Canada, it also operates in markets that are generally not the primary focus of larger REITs and
institutional investors.
Management has an extensive network of real estate contacts across Canada, the necessary experience
to source properties directly from vendors or to purchase through traditional channels, as well as the
ability to move quickly to acquire high quality, accretive properties.
Whiterock engages in rigorous financial, physical and market due diligence, focusing on the acquisition
criteria set out below:
• Finding superior locations: Whiterock seeks assets that are well-located in their respective markets.
• Long-term leases: Whiterock attempts to secure long-term leases with high quality credit tenants.
• Limiting deferred capital expenditures: Whiterock attempts to acquire properties in good condition by
focusing on the average age of the building and the length of time since renovation.
• Acquiring properties below replacement cost: Management believes this provides a significant
advantage in retaining tenants.
Internal Growth through Active Asset and Property Management
Whiterock achieves internal growth by realizing market rate rents as existing below market rate leases
expire and by renewing or extending tenant leases, when possible. Renewals, in contrast to tenant
replacements, often minimize transaction costs associated with marketing, leasing and tenant
improvements, avoid costs of renovations and prevent interruptions in rental income resulting from
periods of vacancy. When an existing tenant chooses not to renew its lease, Whiterock attempts to
identify, as early as possible, a replacement tenant at the best available market terms and lowest possible
transaction costs.
As part of its internal growth initiatives, effective October 1, 2007, Whiterock began self-managing four
additional properties, including 655 Bay Street in Toronto, Ontario. As a result, Whiterock currently selfmanages
thirteen properties. Management believes that selective self management will further positively
contribute to operating results.