December 10, 2018

Whiterock Real Estate Investment Trust (WRK)

The Whiterock Real Estate Investment Trust (WRK) is a Canadian REIT that is focused primarily on building a portfolio of assets within the Greater Toronto Area (GTA).  They have established themselves as a lead player within the region, and have steadily acquired high-quality office space, retail properties, and industrial holdings.  While Whiterock does own some properties across eight Canadian provinces, and a couple of American states, they are concentrated within the GTA, and the majority of their 78 properties are located there.  Over the last couple of years their major acquisitions have all been within the Southern Ontario region.  Like all Canadian REITs, Whiterock (WRK) aims to return value to their unit holders by owning and operating profitable real estate properties and using the beneficial tax structure as an income trust to efficiently distribute profits on a monthly basis.  The main feature that separates Whiterock from other REITs on the market, is its concentration within the Toronto market.  Although they are diversified real estate investment trust by definition, the majority of their capital expenditures has been aimed at high-quality office, industrial and retail properties that are in close proximity to Toronto.

 

The most recent news for Whiterock (WRK) was their recent purchase of a large office complex located near the Pearson International Airport.  The two-tower property cost the fund approximately $32 million.  In addition to the acquisition, Whiterock was able to refinance much of their mortgage costs for their new property, and other holdings, at much more beneficial rates.  Jason Underwood, the Chief Executive Officer of Whiterock (WRK) cheerily stated that, “We are especially pleased that this property, strategically located in close proximity to our existing Airway Centre property, adds to our growing market share in the GTA West/Pearson Airport corridor.  We continue to successfully execute on our disciplined and accretive growth strategy, building long-term value for our unitholders.”  The property is roughly 171,000 square feet, located on 4.6 acres, with 533 parking spaces.  It is already 95% leased, with solid long-term agreements in place for the majority of tenants.

 

The other major acquisition for the Trust was a Sobeys-anchored shopping centre in Tillsonburg, Ontario (about 50 km SE of London) for about $7.7 million.  The property is 8.7 acres, and the centre consists of just over 47,000 square feet.  The property is 100% leased, with around 90% of the available retail space being rented by Sobeys, which has a remaining lease of 12 years.  Mr. Underwood claimed that, “The acquisition of the Sobeys long-term leased shopping centre is consistent with our goal of acquiring high-quality, stable, and secure long-term rental cash flows.”

 

If you believe that manufacturing and business hub of Canada will continue to see growth and prosperity, then the Whiterock Real Estate Investment Trust (WRK) is a great way to invest in this trend.  The Trust currently has a great yield of 8.8%, and they have been aggressive on the acquisition front.  Personally, I’m not sure I want to take a large position in a REIT that is so focused on one area.  Especially when it has been speculated throughout the industry that the GTA maybe in for a bit of a real estate pullback after decades of inflation.