Whiterock REIT Announces 2010 Third Quarter Results

TSX: WRK.UN

TORONTO, Nov. 2 /CNW/ - Whiterock Real Estate Investment Trust today announced financial results for the three and nine months ended September 30, 2010.   

"Our strong results this quarter reflect our continued emphasis on disciplined growth," said Jason Underwood, CEO of Whiterock.  "AFFO per unit is up 10% from the second quarter this year, reflecting the accretive Airway Centre acquisition and property management business, and we continued to reduce leverage.

HIGHLIGHTS - Third Quarter ended September 30, 2010

• Increasing FFO - FFO per unit was $0.47 for the three months ended September 30, 2010, up 20% year over year and 10% from the second quarter of 2010.  This represents a 79% FFO cash payout ratio.
  
  
• Growing AFFO - AFFO per unit was $0.40 for the three months ended September 30, 2010, a third consecutive quarterly increase and up 15% from September 2009's AFFO per unit of $0.35 and 10% from the second quarter of 2010. 
  
  
• Decreasing Leverage - Debt to gross book value leverage ratio substantially improved to 60.1% at September 30, 2010 from 71.7% at September 30, 2009.
  
  
• Rising Occupancy - 96.3% occupancy rate at September 30, 2010, a 40 basis point increase as compared to June 30, 2010.
  
  
• Improved Interest Coverage - Interest coverage ratio was 2.0x, an 18% increase over the 1.7x coverage a year ago.
  
  
• Growing Portfolio in Major Markets - Whiterock has acquired an interest in $448.6 million of owned or long-term leased assets in 2010, 86% of which are in the Greater Toronto Area ("GTA").

OUTLOOK

In the third quarter of 2010, Whiterock strongly increased its AFFO per unit (to $1.60 annualized) as a result of accretive Class A office property acquisitions, primarily in the GTA. Third party property management which began on July 19, 2010 also added to the increase.  The addition of 219 Laurier on August 25, 2010 is expected to add almost $0.02 annualized in the fourth quarter. In addition, excluding one-time early termination costs, the completed refinancing of $14.25 million of mortgages is expected to add almost $0.03 to annualized AFFO on an ongoing basis, effective October 26, 2010. 

FINANCIAL HIGHLIGHTS  

			Three months ended September 30,
(in $000's except per unit data)			2010	2009
Total revenue - continuing operations			21,595	15,317
Property net operating income ("NOI")
		- continuing operations (accrual basis)	11,222	9,314
Funds from operations (FFO)			7,794	3,699
FFO per Unit
	- basic		0.47	0.39
	- diluted		0.45	0.39
Adjusted funds from operations (AFFO)			6,654	3,288
AFFO per Unit
	- basic		0.40	0.35
	- diluted		0.38	0.34

Balance sheet highlights for Whiterock as at September 30, 2010 and December 31, 2009 are as follows:

 

(in $000's)					September 30, 2010		December 31, 2009
Investment in real estate assets - wholly owned					476,154		436,638
Investment in real estate asets - equity accounted ^(1)					67,488		17,741
Investment in real estate assets - long-term leased^(2)					22,283		-
Mortgages payable and facilities					296,179		266,482
Convertible debentures (face value)					60,480		75,097
Unitholders' equity					157,299		77,939

(1)	Whiterock's net investment in its co-ownership share of $459 million of real estate assets at September 30, 2010 (December 31, 2009 - $164 million) net of debt, all accounted for using the equity method.
(2)	Includes prepaid rent related to the $117 million Airway Centre 2-4 under a 30 year lease (excludes $1.9 million of security deposits).

Selected financial ratios for Whiterock as at, and for the three months ended, September 30, 2010 and 2009 are as follows:

					September 30, 2010		September 30, 2009
FFO payout ratio ^(1)					90%		108%
FFO cash payout ratio ^(2)					79%		94%
Occupancy level					96.3%		96.0%
Interest coverage ratio ^(3)					2.0x		1.7x
Weighted average fixed mortgage rate					5.7%		5.7%
Weighted average debenture rate					6.7%		6.8%

(1)	FFO payout ratio is calculated as distributions per unit divided by FFO per unit for the three months ended September 30, 2010 and 2009
(2)	FFO cash payout ratio is calculated as cash distributions divided by FFO for the three months ended September 30, 2010 and 2009.
(3)	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.

FFO, AFFO and NOI 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, AFFO and NOI may be different from methods used by other REITs or corporations. A description of Whiterock's calculation of FFO, AFFO and NOI is included in Whiterock's Management's Discussion and Analysis ("MD&A") for the three and nine months ended September 30, 2010.

Whiterock's consolidated Financial Statements and MD&A for the three and nine months ended September 30, 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 Tuesday, November 2, 2010 at 11:00 a.m. E.D.T., to discuss the REIT's results and achievements for the three and nine months ended September 30, 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 for approximately 90 days after the call.

Whiterock's conference call will also be broadcast through a live, listen-only audio webcast, which can be accessed by clicking on the following link: http://www.meetview.com/whiterock20101102/. The webcast will be archived 24 hours after the end of the conference call and can be accessed for 90 days. Listeners who wish to participate in the Q&A session will not be able to do so through the webcast and must join the live conference 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. 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.

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, 2010.  These will be available on Whiterock's website at www.whiterockreit.ca

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

%SEDAR: 00022234E

For further information:

For further information: www.whiterockreit.ca

Frank Bucys, CFO, 416-907-4864
Esam El-Makkawy, 416-642-4726