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

$80-Million of Alberta Accquisitions

[carswell]

STOCKWATCH

2008-06-23 09:09 ET - News Release

Mr. Jason Underwood reports

WHITEROCK REIT ANNOUNCES $80 MILLION OF ACQUISITIONS IN ALBERTA

Whiterock Real Estate Investment Trust has entered into a binding agreement to acquire approximately $80-million of commercial properties in Calgary and Edmonton. On completion of this acquisition, approximately 33 per cent of Whiterock's portfolio by net operating income will be in the high-growth Saskatchewan and Alberta markets. The transaction will be approximately eight cents accretive to funds from operations per unit and three cents accretive to Whiterock's adjusted funds from operations per unit, and is expected to close in July.

This portfolio is being acquired from one vendor and totals approximately 341,000 square feet of real estate (approximately 54 per cent office, 30 per cent industrial and 16 per cent retail) over eight properties. In total, these assets are currently 99 per cent leased with a 5.7-year average remaining lease term. Current market rents are on average 20 per cent above in-place leases.

The purchase price of $80-million, excluding closing and transaction costs, represents a going-in capitalization rate of approximately 7.0 per cent. The purchase price is expected to be satisfied by a $22.8-million private placement of new units and new convertible unsecured subordinated debentures to the vendor, with the balance of the funds provided by new and assumed mortgages and Whiterock's new $40-million revolving credit facility. The vendor will receive $11.4-million of new units issued at $11.50 per unit and $11.4-million of new convertible unsecured subordinated debentures with a 6.0-per-cent coupon, a four-year term and a conversion price of $13.22 per unit.

"Whiterock is pleased to renew its growth strategy with a strong acquisition. The portfolio is immediately accretive to both FFO and AFFO and has $1-million of below market rents, most of which can be captured over the near term. It is our first move into Alberta, which will be one of the key markets for us going forward. The issuance of the new units and the new convertible unsecured subordinated debentures at these levels to a sophisticated vendor is clearly a vote of confidence in the REIT's current value proposition and its future upside potential," said Whiterock chief executive officer Jason Underwood.

We seek Safe Harbor.

[Jimpossible]

Thanks, Carswell. Hmm. 80 million over 8 properties makes 10 million each, IMO they would be good sized properties. It will be interesting to see what they are. In any event, the vendor has shown confidence in Whiterock management.

[canadafan]

This is a major step in the right direction for WRK: maybe some day the investment community will wake up and understand the value of the WRK units.Look like the vendor did!The deal was done with units/take-back at a price of $11.50 now and $13.22 into the future.This is a clear indication of the direction of the unit price.I suspect the market will react over the next few days to this

[baudelaire]

I have my reservations about the way this deal is described, i.e., that 20% below market gap could disappear quite quickly in such an overheated market, and the tenant roster is yet to be revealed.  Underwood probably more than understands this rather steeply priced deal - and worked around the cost of capital to cost of Calgary real estate club membership obstacle by

[canadafan]

Jason Underwood as we all know is the key manager of White rock reithe owns 573000 units.I would be delighted of the western preperties jump start the unit price.!! and so would Jason.Perhaps that bothers you, not sure why you comments are so negative.I have been a unit holder of REITS for 17 years. So good times some bad.I learn't a long time ago , not to second guess or mirco manage the