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

huge upgrade

[canadafan]

Cannacord Likes WRK/Huge upgrade from hold to buy $16.50 price

Selected from Cannacord recent upgrade:
Upgrading to BUY from Hold and raising target price to C$16.50 from
C$12.50. We are upgrading the stock to a BUY from a Hold for the first
time since we launched coverage in 2006. Our comfort level with the
story has taken a quantum leap forward, due to the following factors: (i)
deleveraging; (ii) high quality acquisitions; (iii) a near sustainable AFFO
payout ratio; and (iv) a management team that has persevered through a
very challenging downturn. Our target price is increased to C$16.50
from C$12.50 based on a modest premium to our $15.25 pre-tax NAV
estimate using a 7.50% portfolio cap rate (down 50 bp from our prior
estimate using an 8.0% cap rate).
Through prudently timed (and sized) financings and accretive joint venture acquisitions,
Whiterock has produced a much larger, well diversified portfolio of high quality assets,
lower leverage (to 66%, down from 74% at Q1/09) and an AFFO payout that is well on its
way to becoming sustainable (116% and112% on our 2010E and 2011E AFFO estimates).

[Jimpossible]

An interesting assessment from Cannacord, thanks Canadafan.I'm reminded of the time years ago, an analyst on tv said something like "these Whiterock managers aren't even real estate guys, they're financial guys."....... (not an exact quote and I forget who said it)Well, perhaps being "financial guys" has been an advantage, during the "financial crisis

[canadafan]

re Financial guys not real estate guys:Those who understand reits know that they are financial investments.They make $$$ on the spread between borrowing costs and rents.Very little of the $$$ is from buying and selling properties.It is the "financail packages" which make things workRioCan made billions on that simple formula.WRK , has been a long time coming. Once through the $15 wall it

[baudelaire]

 I couldn't agree with you more, Canadafan. (Man alive! I never thought I'd say that.) Spread. REITs' hands are so tied they have to be about spread, spread and more spread in the short to medium term. Older REITs (over ten years since inception date) have shown some management savvy beyond capturing yield, but that effect is eaten up by egregious management compensation issues. I