RE: 72.5% payout ratio for the third quarterMore Q3 Highlights:
" Acquisition and Development
During the third quarter of 2008, LREIT acquired two additional multi-family residential properties. “
Siena: $455,455.45 per apartment
Parsons: $395,000.00 per apartment
Most of LRT's Ft Mac assets are three/four story wood frame buildings with basic levels of finish despite the “luxury” adjective. Arni has loaded the REIT with debt to back up the truck at the height of the market. Two by fours are two by fours, and a debt to equity ratio of over 11:1 will make unitholders feel as if they've been whacked across the head with one.
“Related party transactions
Management agreement
The Trust incurred property management fees payable to Shelter Canadian Properties Limited
of $655,596 for the three months ended September 30, 2008 (2007 - $443,113) and $1,693,700
for the nine months ended September 30, 2008 (2007 - $1,107,109).
Services agreement
The Trust incurred service fees payable to Shelter Canadian Properties Limited of $417,103 for
the three months ended September 30, 2008 (2007 - $304,923) and $1,197,586 for the nine
months ended September 30, 2008 (2007 - $808,880).
Acquisition
The Trust has entered into a development agreement with Shelter Canadian Properties Limited
to develop Laird's Landing, a residential property located in Fort McMurray, Alberta. During the
three and nine months ended September 30, 2008, nil (2007 - $151,707) and $234,179 (2007 -
$347,801) respectively, was recorded to properties under development in regard to the
development and construction supervision services provided by Shelter Canadian Properties
Limited.”
These two agreements and the Laird's Landing construction contract earned Shelter $3.125-million for the first nine months of 2008. Shelter's not doing too bad, considering the REIT had the gall to generate itself cash from operations of $6.65-million for the same time period.
“Interest rate risk
The Trust has floating rate mortgages on income properties (excluding a floating rate
mortgages in the amount of $20,905,985 and $22,679,623, with interest rates fixed at
5.74% and 5.82% respectively by use of interest rate swap arrangements) comprised of
$80,500,000, or 19.8% of the total mortgage loans on income properties as at September
30, 2008 (2007 – 8.8%).”
Why do the guys at Boardwalk and CAP REIT shy away from floating rate debt? They must really be missing something ...
“Upward refinancing
On October 6, 2008 and November 5, 2008, advances of $3,000,000 and $3,500,000
respectively were received in regard to a $7,500,000 interim mortgage loan. The loan bears
interest at 11.75% and is due November 1, 2009. The final advance of $1,000,000 is expected
to be received in December 2008.”
Why doesn't someone at LRT just put it on her credit card and save some interest expense?