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

CIBC Q1 Report

[carswell]

 

Q1 Results As Expected; Acquisitions Continue;

Leverage Improving

 

Q1/10 FD FFO was
.40/unit, down from
.47/unit a year ago but above

our
.35/unit estimate. Included in Q1 FFO was a
.4 mln. interest rate

hedge gain (~
.03/unit). SP-NOI declined by 1.7% (on a GAAP basis) in

Q1, mostly due to recent vacancies, partly re-leased post Q1.

 

 

Whiterock's overall occupancy was 95.3% at Q1/10 compared to 97.1% at

Q1/09 and 96.2% at Q4/09. The REIT has renewed or re-leased 52.2% of

2010 maturing leases, achieving an average rent increase of 23.5% over

expiring 2010 lease rates.

 

 

In February the REIT acquired a 49.9% interest in a $214 mln. portfolio of

office properties in the Greater Toronto Area and issued $51.8 mln. of

equity at $14.95 per unit. Debt/GBV assets was 64.1% (incl. conv. debt and

LOCs) at Q1/10. EBITDA interest coverage was 1.7x in the quarter.

 

 

WRK trades at 8.5x 2010E FD FFO a 10.0x 2010E AFFO, and yields

11.2%. Our 12- to 18-month price target is $16.50, or 9.0x-9.5x 2010E FD

FFO. We rate WRK Sector Outperformer-Speculative, reflecting its discount

valuation, above-average leverage and prospects for strong growth.