Whiterock REIT

WRK.UN-T

(Market Call Minute.) Thinks there are corporate governance issues

High yield of around 9%. Had been doing a lot of growth. Not much institutional support. Has been significant concern that the CEO has been taking very good care of himself on the financing. They claim they're going to be improving that. Looks safe right now but the market will be watching very carefully.

Doesn't like this REIT at all, basically because of management. Suspects that some of the net operating income from some of their recent acquisitions won't stand up over the test of time.

CEO’s contract is like no other. He takes fees both coming in and going out. Has pushed some good product and has done a lot of stuff well. Hasn't looked at this one closely although he has a little bit.

Recently sold a large part of his holdings. Bothers him that CEO’s compensation is based on growth rather than profitability. Also making more acquisitions outside of Canada and hopes they can transition these into accretive acquisitions. Doesn't expect much growth.

Has a fundamental difference with management on how the REIT should be managed. Assets are very good but the leverage is way too high and the distribution is not sustainable. Income is not as secure as in other REITs.

Company has had a chequered career and have now developed a reasonable and diversified portfolio. Yield of over 8%. Some questions on CEO’s compensation. If interest rates rise, there could be problems.

Over-paying distribution and have done so for a long time. Not a big fan of senior management. They are more financial engineers. Cautious of this name.

Have done a significant job of diversifying. Brought their payout ratio down from about 130% to 117%. A definite Caveat Emptor so don't invest too much.

Focuses out west on office, retail and industrial. Over distributes on incoming income so the question is can they grow big enough to offset this. I've made some accretive acquisitions over the last several months. Relatively inexpensive.

Have done some fancy financing that he was not comfortable with. Caveat emptor.

Over distribute over their AFFO (Adjusted Funds from Operations). Leverage is higher than industry standard. Good properties. Management is on target and appropriately aggressive. Will have to issue more equity or buy more properties to get the 12% distribution on side.

(Market Call Minute.) Likely to be challenged in the future. Still have some financing issues.

Just acquired a number of properties on the Hwy 427 corridor in the Toronto area. Don't own the entire asset, which enables them to boost returns by charging asset/management property fees. He would like to see a couple of quarters of them operating. Too much over distributing and over leveraging for him.

Core of their business is government offices in Regina and Quebec city. Many questions about how good their finances are and if there is another shoe to drop. Very high payout ratio so there is a real risk they may have to cut distributions.