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

CIBC on WRK

[roxy14]

Whiterock Real Estate Investment

Trust

Delivering On Growth Strategy; Leverage Moves

Lower; Attractively Valued

Q2/10 FD FFO was
.41/unit, up from
.39/unit a year ago and in line

with our
.41/unit estimate. Q2 results were boosted by 4.3% sameportfolio

cash-NOI growth in Q2 (3.4% on a GAAP basis) and acquisitions.

Strong internal growth was driven mainly by rental lifts on leasing.

Whiterock's overall occupancy was 95.9% at Q2/10 compared to 97.0% at

Q2/09 and 95.3% at Q1/10. The REIT has renewed or re-leased 64.4% of

2010 maturing leases, achieving an average rent increase of 27.3% over

expiring 2010 lease rates.

In June the REIT completed a $147 million GTA office property acquisition

and issued $39.1 mln. of equity at $14.00 per unit. Debt/GBV assets was

60.3% (incl. conv. debt and credit facilities) at Q2/10. EBITDA interest

coverage was 1.8x in the quarter.

At $14.75, WRK trades at 8.3x 2010E FD FFO, at an 8% discount to our

NAV estimate ($16.00/unit at a 7.75% cap rate) and yields 11.4%. Our 12-

to 18-month price target is $17.50 (from $16.50) or 9.5x-10.0x 2010E FD

FFO. We rate Whiterock REIT Sector Outperformer-Speculative