Whiterock REIT Announces 2009 Third Quarter Results

TORONTO, Nov. 9 /CNW/ - Whiterock Real Estate Investment Trust ("Whiterock") today announced financial results for the three and nine months ended September 30, 2009. 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 and nine months ended September 30, 2009. These will be available on Whiterock's website at www.whiterockreit.ca.

HIGHLIGHTS - September 30, 2009

    
    -   Solid FFO - FFO was $3.7 million or $0.78 per unit for the three
        months ended September 30, 2009. This represents a 93.7% FFO cash
        payout ratio for the three months ended September 30, 2009 and 91.8%
        for the nine months ended September 30, 2009.

    -   Ongoing AFFO - AFFO for the three months ended September 30, 2009 was
        $3.3 million or $0.70 per unit.

    -   Success in Renewing Tenants - Finished 2009 leasing with 21% increase
        in rates. Re-leased 52% of leases up for renewal in 2010 with 28%
        rate increases.

    -   Excellent Financial Flexibility - Issued $10.9 million of equity and
        renewed $42 million in credit facilities in a difficult financing
        environment. Subsequent to September 30, 2009, issued $23 million of
        new convertible debentures.

    -   High Quality Acquisition Pipeline - Over $11 million equity invested
        in properties providing in place AFFO yield in excess of 20% by
        acquiring managed interests in a 394,000 square foot industrial
        building in Regina Saskatchewan and a 411,000 square foot Class A
        office building in Toronto, Ontario. Entered into a binding agreement
        to acquire a managed interest in a 51,000 square foot government
        tenanted building in Fredericton, New Brunswick.

    -   Investment Grade Tenants on Long-Term Leases - 57% of revenues were
        from government and other investment grade tenants. Average lease
        term of the portfolio is 7.6 years, providing strong cash flow
        stability.

    -   Secure Top Ten Tenants - Average remaining lease term of top ten
        tenants, all investment grade and representing 43.7% of revenue, is
        10.9 years.

    -   Long-Term Fixed Rate Debt - Average 6.4 year term for mortgage debt
        at a weighted average interest rate of 5.7%, all at fixed rates.

    -   Geographically Balanced Portfolio - At September 30, 2009, 16% of the
        portfolio's property operating income was in Alberta, 17% in
        Saskatchewan, 29% in Ontario, 27% in Quebec and 11% in Atlantic
        Canada.

    -   Yield - Distribution yield of 12.1% annualized, based on per unit
        distribution for the three months ended September 30, 2009, totaling
        $0.42, and the November 6, 2009 Unit closing price of $13.89 (after
        taking into account the 2-for-1 unit split effective November 6,
        2009).

    -   Tax Efficient Distributions - 100% of the distributions made in 2008,
        2007 and 2006 were classed as return of capital for tax purposes.
    

Given the recent economic environment and potential acquisition opportunities as a result of the recession, Whiterock has bolstered its cash and facility reserves compared to a year ago. Whiterock currently has approximately $8 million of cash on hand and nothing drawn on its $42 million of acquisition facilities compared to $28.6 million drawn a year ago. In the last twelve months, Whiterock has increased its long-term mortgage borrowings by $22.2 million and used the proceeds to reduce its acquisition facilities. In addition, during the nine months ending September 30, 2009, Whiterock raised $10.9 million in a bought deal public offering and subsequent to September 30, 2009 Whiterock issued $23 million in new convertible debentures. Management intends to use this financial flexibility to fund future acquisitions and to reduce its leverage over time.

The impact of its uninvested funds together with short-term tenant vacancies at two properties totaling approximately 49,500 square feet adversely affected both FFO and AFFO in the third quarter. Management expects these impacts to be short-term in nature as both vacancies were filled by September 30th, as the full benefit of the September 1st West Mall acquisition is realized and as Whiterock further benefits from its acquisition pipeline, acquiring accretive interests in high quality properties.

"I continue to be excited about Whiterock's future. While our FFO and AFFO were impacted by the increased liquidity that was not fully invested in the quarter, we are very comfortable with our financial position. Our nine month FFO payout ratio on cash distributions is 92% and lease rate increases in 2010 continue to average 28% to date. Whiterock continues to be an investment with solid value, a secure distribution and growth potential," said Whiterock CEO Jason Underwood.

FINANCIAL HIGHLIGHTS

(including discontinued operations, except as noted)

    
                                      Three months ended  Three months ended
    (in $000's except per unit data)  September 30, 2009  September 30, 2008
    -------------------------------------------------------------------------

    Total revenue - continuing
     operations                                   15,364              14,758
    Property operating income
      - continuing operations                      9,343               9,334

    Funds from operations (FFO)                    3,699               4,036
    FFO per Unit
      - basic                                       0.78                1.04
      - diluted                                     0.78                0.99

    Adjusted funds from
     operations (AFFO)                             3,288               3,324
    AFFO per Unit
      - basic                                       0.70                0.86
      - diluted                                     0.68                0.81
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Balance sheet highlights for Whiterock as at September 30, 2009 and
    December 31, 2008 are as follows:

    (in $000's)                       September 30, 2009   December 31, 2008
    -------------------------------------------------------------------------

    Investment in real estate
     assets(1)                                   448,316             437,710
    Mortgages payable and facilities             279,552             284,154
    Convertible debentures
     (face value)                                 55,410              55,410
    Unitholders' equity                           78,109              80,069
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Excludes $7.3 million of mortgages receivable secured by real estate
        assets at December 31, 2008.


    Selected financial ratios for Whiterock as at, and for the nine months
    ended, September 30, 2009 and 2008 are as follows:

                                      September 30, 2009  September 30, 2008
    -------------------------------------------------------------------------

    Weighted average fixed mortgage
     rate                                            5.7%                5.5%
    Weighted average debenture rate                  6.8%                6.8%
    Interest coverage ratio (1)                      1.7                 1.9
    Occupancy level(2)                              96.0%               98.3%
    FFO cash payout ratio(3)                          92%                 72%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Interest coverage for the period is calculated based on property
        operating income and income from equity investments less G&A, divided
        by interest expense (including debentures and financing fee
        amortization) net of interest and other income.
    (2) Includes leases executed to date.
    (3) FFO cash payout ratio is calculated as cash distributions divided by
        FFO for the nine months ended September 30, 2009.
    

In the nine months ended September 30, 2009, Whiterock improved its FFO, AFFO and property operating income compared to a year ago.

Whiterock's financial results primarily reflect accretive acquisitions, the impact of new leases and rent escalations, partially offset by the impact of the increased liquidity generated from new mortgages and equity as these funds were not invested for the full period, by temporary vacancies and by provisions related to vacancies.

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 for the three and nine months ended September 30, 2009.

CONFERENCE CALL

Whiterock invites you to participate in its conference call with senior management on Monday November 9, 2009 at 11:00 a.m. E.S.T., to discuss the REIT's results and achievements for the three and nine months ended September 30, 2009. 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 and Conference Call 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 1-866-221-4491 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