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

recnet deals & "BUY" RATING

[canadafan]

recent wrk news and Cannccord "buy"

Note: Canncord is the most conservative of the estimtes. TD has them at $15.
if anyone wants the full PDF report , PM or in-box me. I do not know how to get it on this page.

Slowly Becoming a Dominant GTA West Office Landlord; BUY
Valuation $14.25

WRK currently trades at the lowest P/2011E FFO (10.3x) and P/2011E AFFO (12.1x) multiple of all of its Canadian peers. These multiples represent 2.3 and 3.1 multiple points discount to its Canadian Office Peer Average.
We think that this discount should dissipate for the following reasons: (1) continue to prove to investors that it’s indeed a sustainable growth story (2) leverage begins to fall in line with its peers and distribution is covered (3) steps are being take to eliminate perceived conflict of alignment issues. The REIT has been delivering on factors 1 and 2, however, the third factor, the perceived conflict of interests, is a work-progress
Target Price Justification- Target Price Unchanged
Our $14.25 target price is unchanged and is derived by applying a 12.0-12.5x multiple (down from 13.0-13.5 previous) to our new 2012E AFFO/unit estimate of $1.15. Our target multiple represents ~2.7 times multiple point discount to Whiterock's Canadian Office peer group average 2011 AFFO multiple of 15.2 times.

[Baer1]

So, what conflict of interest are they talking about? I've missed it....

[canadafan]

There is some concernt that Jason gets a bonus every time they buy new properties.meaning the conflict could be , his incentive to grow the REIT.It is a subtle thing and as was said, will be handled in due time.The point everyone is missing and is still availble on-line to hear.From the AGM "they only buy properties that will increase AFFO" , "the board must approve every deal"

[Baer1]

OK, I recall the renumeration issue being of some concern. I thought he addressed that in a recent announcement at the AGM. Anyway, still adding as cash come in!

[canadafan]

He did adress the compensation issue at the AGM,. What has not yet been completed is the "fix" for the concern.As an quick fix, they adjusted his bonus to be 2/3 upfront and a 1/3 to be paid later ( over the following 2 years), provided various targets are met.My understanding is that pending budget approvals and "compensation comittee" approvals, we will see a complete roll

[Baer1]

Thanks cfan! It all makes sense now. I apparently had all the pieces, but hadn't put them together. You did. Good work.