Whiterock REIT Announces Solid 2010 First Quarter Results

TORONTO, May 5 /CNW/ - Whiterock Real Estate Investment Trust ("Whiterock") a growth oriented REIT with a significant presence in major markets and a high quality long-term leased revenue stream, today announced financial results for the three months ended March 31, 2010. The following comments and highlights should be read in conjunction with the unaudited consolidated financial statements and management's discussion and analysis for the three months ended March 31, 2010. These will be available on Whiterock's website at www.whiterockreit.ca.

    
    HIGHLIGHTS - March 31, 2010

    -   Increasing FFO - FFO was $5.0 million, up 29% from the prior year
        comparative period. FFO per unit was $0.43 for the three months ended
        March 31, 2010, which represents a 91.7% FFO cash payout ratio and is
        up 11% from the fourth quarter of 2009.

    -   Stable AFFO - AFFO for the three months ended March 31, 2010 was
        $4.0 million, up 24% from the prior year comparative period. AFFO per
        unit was $0.35, up 1% from the fourth quarter of 2009.

    -   Growing Portfolio in Major Markets - Acquired a 49.9% equity interest
        in $214 million of office buildings totaling 1.1 million square feet,
        in the Greater Toronto Area. Subsequent to March 31, 2010,
        acquired a 40% equity interest in $17.7 million of high quality, flex
        office assets in Regina, Saskatchewan.

    -   Accretive Acquisitions - In-place AFFO yield on first quarter 2010
        acquisitions of approximately 13%.

    -   Success in Renewals - To date, 52.2% of leases up for renewal in 2010
        have been re-leased with a 23.5% average rate increase.

    -   Decreasing Leverage - Quarter over quarter debt to gross book value
        leverage ratio improved from 73% at March 31, 2009 to 64% at March
        31, 2010.

    -   Improved Liquidity - In the three months ended March 31, 2010, issued
        $51.8 million of equity, primarily to finance 2010 year to date
        acquisitions. Equity market capitalization totaled $206 million at
        March 31, 2010 compared to $67.5 million at March 31, 2009.

    -   High Quality Acquisition Pipeline - The right of first opportunity to
        purchase, at fair market value, Whiterock's co-owner's $222 million
        current interest in co-owned properties provides a high quality
        potential pipeline of future acquisitions in major markets.

    -   Investment Grade Tenants on Long-Term Leases - 52% of revenues were
        from government and other investment grade tenants in the three
        months ended March 31, 2010. Average lease term of the portfolio was
        6.9 years, providing strong cash flow stability.

    -   Secure Top Ten Tenants - Average remaining lease term of top ten
        tenants, all investment grade and representing 37% of revenue, is
        10.7 years.

    -   Stable Occupancy - 95.3% occupancy rate at March 31, 2010.

    -   Long-Term Fixed Rate Debt - Average 6.0 year term for mortgage debt
        at a weighted average interest rate of 5.7%, all at fixed rates.

    -   Geographically Balanced Portfolio - At March 31, 2010, 42% of the
        portfolio's property operating income was in Ontario, 21% in Quebec,
        16% in Saskatchewan, 11% in Alberta and 10% in Atlantic Canada.

    -   Yield - Annualized distribution yield of 11.1%, based on per unit
        distributions for the three months ended March 31, 2010 totaling
        $0.42, and the May 4, 2010 Unit closing price of $15.14.

    -   Tax Efficient Distributions - 100% of the distributions made in 2005
        to 2009 were classed as return of capital for tax purposes.
    

In 2010, Whiterock continued to delever its balance sheet and significantly increased its equity market capitalization while managing to increase its FFO and AFFO through accretive acquisitions. "We are pleased with the progress made in these areas to date and continue to look forward to reporting further progress in all of these areas," said Whiterock CEO Jason Underwood.

    
    FINANCIAL HIGHLIGHTS

                                                 Three months ended March 31,
                                                -----------------------------
    (in $000's except per unit data)                  2010           2009
    -------------------------------------------------------------------------

    Total revenue - continuing operations              16,257         15,637
    Property operating income
      - continuing operations                           9,084          9,244

    Funds from operations (FFO)                         4,993          3,882
    FFO per Unit
      - basic                                            0.43           0.49
      - diluted                                          0.40           0.48

    Adjusted funds from operations (AFFO)               4,045          3,258
    AFFO per Unit
      - basic                                            0.35           0.41
      - diluted                                          0.33           0.39
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

Balance sheet highlights for Whiterock as at March 31, 2010 and December 31, 2009 are as follows:

    
                                                     March 31,   December 31,
    (in $000's)                                        2010         2009
    -------------------------------------------------------------------------
    Net equity investment in real estate(1)            59,925         17,741
    Investment in wholly owned real estate assets     436,136        436,638
    Mortgages payable and facilities                  263,883        266,482
    Convertible debentures (face value)                71,002         75,097
    Unitholders' equity                               126,570         77,939
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Whiterock's net investment in its co-ownership share of $370 million
        of real estate assets at March 31, 2010 (December 31, 2009 - $156
        million) net of debt, all accounted for using the equity method.
    

Selected financial ratios for Whiterock as at, and for the three months ended, March 31, 2010 and 2009 are as follows:

    
                                                     March 31,      March 31,
                                                       2010           2009
    -------------------------------------------------------------------------
    Weighted average fixed mortgage rate                 5.7%           5.7%
    Weighted average debenture rate                      6.8%           6.8%
    Interest coverage ratio(1)                           1.7x           1.8x
    Occupancy level                                     95.3%          97.1%
    FFO payout ratio(2)                                   99%            86%
    FFO cash payout ratio(3)                              92%            82%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Interest coverage for the period is calculated based on property
        operating income less G&A, divided by interest expense (including
        debentures and financing fee amortization) net of interest and other
        income.
    (2) FFO payout ratio is calculated as distributions divided by FFO for
        the three months ended March 31, 2010.
    (3) FFO cash payout ratio is calculated as cash distributions divided by
        FFO for the three months ended March 31, 2010.
    

FFO and AFFO are supplemental non-GAAP financial measures used by the real estate industry to measure and compare the operating performance of real estate organizations. Whiterock's method of calculating FFO and AFFO may be different from methods used by other REITs or corporations. A description of Whiterock's calculation of FFO and AFFO is included in Whiterock's Management's Discussion and Analysis ("MD&A") for the three months ended March 31, 2010.

Whiterock's consolidated Financial Statements and MD&A for the three months ended March 31, 2010 are posted on Whiterock's website. Readers are directed to these documents for a more detailed discussion of Whiterock's results.

CONFERENCE CALL

Whiterock invites you to participate in its conference call with senior management on Wednesday, May 5, 2010 at 11:00 a.m. E.D.T., to discuss the REIT's results and achievements for the three months ended March 31, 2010. A presentation to accompany management's comments during the call will be available on Whiterock's website. To view it, please go to www.whiterockreit.ca and click on the link for Quarterly Financial Statements on the homepage or access it directly using www.whiterockreit.ca/financial_reports.php.

You may participate in the live conference by calling 416-800-1066 or toll free at 1-866-212-4491. To ensure your participation, please call five minutes prior to the scheduled start of the call. The call will be archived on Whiterock's website and available after the call.

Forward-Looking Statements

This news release contains "forward-looking statements" within the meaning of applicable securities legislation. These forward-looking statements generally can be identified by the use of forward-looking terminology such as "may", "will", "expect" "estimate", "anticipate", "intend", "believe" or "continue", the negative forms thereof and similar expressions suggesting future outcomes or events. Such forward-looking statements reflect management's current beliefs and are based on information currently available to management. These statements are not guarantees of future events or performance and, by their nature, are based on Whiterock's estimates and assumptions, which are subject to known and unknown risks, uncertainties and other factors that may cause the actual events, results or prospects to be materially different from those expressed or implied herein. Readers are cautioned that a number of factors, including those discussed in the section entitled "Risk Factors" in Whiterock's Annual Information Form which can be obtained at www.sedar.com, could cause actual events, results or prospects to differ materially from those stated or implied. These factors should be considered carefully, and a reader should not place undue reliance on forward-looking statements, as there can be no assurance that actual events, results or prospects will be consistent with such statements. In particular, but without limitation, there can be no assurance that Whiterock will be to able to increase its AFFO. Material factors or assumptions that were applied in drawing a conclusion or making an estimate set out in the forward-looking information may include, but are not limited to: a less robust leasing environment than has been seen for the last several years; relatively stable interest costs; an increase in acquisition capitalization rates and more limited access to equity and debt capital markets to fund, at acceptable costs, Whiterock's growth plans, and to enable Whiterock to refinance its debts as they mature. Except as required by law, Whiterock does not undertake, and specifically disclaims, any obligation to update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise.

The Toronto Stock Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

%SEDAR: 00022234E

SOURCE WHITEROCK REAL ESTATE INVESTMENT TRUST

For further information: For further information: www.whiterockreit.ca; Frank Bucys, CFO, (416) 907-4864; Jennifer Kosloski, (416) 979-3026

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WHITEROCK REAL ESTATE INVESTMENT TRUST

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