TSX:WRK.DB.K - Post by User
Post by
baudelaireon Aug 14, 2009 9:32am
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Post# 16218789
Whiterock Advisors: Unleashed!!!
Whiterock Advisors: Unleashed!!!From the June 30, 2009 MD&A:
"On June 26, 2009, the Trust and another partner acquired 310 Henderson Drive. The Trust has invested 15% of the equity, has property management control and has a right of first opportunity in the event of a future sale of the property by the other owner. The Trust has significant influence over the investment and the investment is accounted for using the equity method.
Two members of management who are Trustees of the Trust (the “Executives”) have an indirect minority economic interest of less than 1% in the other owner of 310 Henderson. In addition, the Executives control an investment advisory business (the “Business”) that provides services to the other owner of 310 Henderson and receives market compensation for such services. The other owner that invested in 310 Henderson is a limited partnership and the Executives control the general partner of the limited partnership. Whiterock does not pay any fees to the Business or the other owner. The independent members of the Board of Trustees of Whiterock have reviewed the transaction, including the involvement of the Executives, and determined that the investment by the Trust in 310 Henderson was in the best interests of the Trust. "
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Whiterock acquired 310 Henderson in October 2007 and sold it in January 2008. The dynamic, multi-faceted, vertically integrated, full service real estate platform Jason developed -mostly in his imagination, I'd say - couldn't lease up this half empty property and gave up after only three months. Now that more details have come out, we learn management didn't really give up at all. They bought in. And created a second, "shadow" platform.
They put $14.75-million of debt and debt guarantees on a property that sold, at that time, twice in last three months for $14-million. For the time and money Whiterock spent on the due diligence process, all that was left to show for it was lending at >100% loan to value. Huh?
Whiterock buys it back, during a recession, for a prorated $18.4-million. A 31% gain in a year and a half using 100% leverage provided/guaranteed by Whiterock. What a sweetheart deal. How do the "independent" members of the Board of Trustees explain the CEO's "Business" to be in the best interests of the Trust?