lessthaniv

Yesterday morning Bloomberg was reporting that HL might not get state aid: http://www.bloomberg.com/apps/news?pid=20601100&sid=aFAAlQ0LkwPk However Lloyd's List reports this morning that parliment in Hamberg unanimously approved the decision to provide aid yesterday. So, now we wait to hear on the Federal Government Decision. http://www.lloydslist.com/ll/news/hamburg-votes-in-favour-of-hapag-lloyd-aid/20017699119.htm;.5fa4e8cc80be35e2653c9f87d8b8be45bf6ba69a <IV

Upgrade this morning from Bank of America. Target moved from $6 to $14. Perhaps explains some the move this morning. :o http://www.streetinsider.com/Upgrades/Bank+of+America+Upgrades+Seaspan+%28SSW%29+to+Buy/4951093.html <IV

Hi O, Here are the Coles Notes … I have had several conversations with colleagues about Seaspan and the common question that I receive is exactly yours. What about the oversupply of container ships? There is no doubt the industry is currently faced with an oversupply of ships. The oversupply coupled with weakening foreign trade has caused the spot charter rates to fall to the floor. But ... while concerning ... this is not central to my thesis because Seaspan has built in growth for the next several years and those charters were established prior to the market malaise when charter rates were much more favorable. Currently, Seaspan has about $7B in contracted revenue. In fact, Seaspan was founded by CEO Gerry Wang in the 1999 Shipping crisis. He used the market conditions successfully to acquire ships on the cheap and then subsequently charter them out on long term charters. Today Seaspan has a total of 68 ships in their fleet. 40 of those ships are floating and generating charter revenue. The remaining 28 ships are currently being built with various finish dates scattered throughout the next couple of years. As those ships become deliverable, Seaspan's revenue (as noted above), EBITDA and distributable cash will all rise accordingly. (They are working with the ship builders and the liners to extend some of the delivery dates given the large overcapacity.) Today; EBITDA = $200M Distributable Cash = $140M Upon completion of the 68th ship; EBITDA = $500M Distributable Cash = $300M Seaspan has been quite conservative in that a long term charter is secured concurrently with agreeing to build a new ship. I would have to check the date to be sure but I believe (from memory) they haven't written a deal for a new ship since late 2007. This picture above would be concerning to Seaspan when assessing counterparty risk. However, ships sitting in the water are the liners problem, not Seaspan’s. It doesn’t matter to Seaspan if the liners are using the ship or not. Seaspan still gets paid if the ship is ready to be used. The only times when they don’t get paid are when the boat has mechanical issues or during off-hire periods. Having said that … Seaspan has a historical utilization rate of 99.1%. Last quarter utilization was 99.9%. Outstanding. A few more bullets: • Seaspan secured all there debt financing in 2007 prior to the credit crunch. Their revenue base is largely Chinese and has allowed them to work successfully with Chinese banks to finance many of the new builds. • Debt has been SWAP’d out give the company cost certainly. 6.1% • Seaspan’s leverage is less than the industry. Many lessors will go to 80%-90% leverage. Seaspan has an internal target that they have managed to maintain of 65%. This has required them to raise some equity capital though. • They have successfully raised $1.7B in capital since the IPO over 6 financings • That capital has been successfully invested to provide shareholders with cumulative dividends of $6.29/share which by the way is close to my ACB!! • Seaspan is the largest provider of container ships into China given their close relationship with COSCO/China Shipping. The Chinese government which backs COSCO/China Shipping has very low exposure to ship coming in/out of Chinese ports. Especially compared to other countries. They are expected to grow significantly over time to increase this which should benefit Seaspan. • Since their IPO they have gained the most market share of any of their competitors. • SSW has very motivated and dedicated sponsor that make me worry much less about the equity financing. See my previous posts about the Washington’s. • Right now roughly 70M shares exist. Upon conversion of the preferred’s the company will have about 100M shares. They have stated equity needs of $180M - $240M by 2011. If you take the high end together with today’s market price, that will constitute another 27M shares. So, upon completion of the new builds we are likely to see dilution take the share count to somewhere around 130M. Put that share count up against $500M EBITDA and $300M in distributable income. Then consider that SSW will no longer need to fund their newbuilds organically. So, the dividend will likely rise back. Prior to cutting the dividend the company distributed $1.90/share. They should exist this period with about $2.30/share in distributable income based on my back of the envelope numbers. • While you wait for this story to develop you get paid about 5% in current dividends.

New SEC Filing out today dated showing more buying right up to September 9th. Dennis picked up another 600K shares in September thusfar: Now owns 12.81% of the common and upon conversion of the preferred shares he will have substantially more. If you follow the dates, Dennis has bought stock every day the markets have been open since August 11th. The only days no transactions occurred where on Sat/Sun/Labour Day. Disclosure: Seaspan is my largest holding. <IV _______________________ Schedule A Purchase Transactions of Common Shares By Deep Water Holdings, LLC during the last 60 days Date Transaction Number of Shares Approximate Price per Share August 11, 2009 BUY 25,406 $ 6.31 August 12, 2009 BUY 43,053 $ 6.36 August 13, 2009 BUY 41,500 $ 6.40 August 14, 2009 BUY 63,100 $ 6.37 August 17, 2009 BUY 46,000 $ 6.20 August 18, 2009 BUY 64,100 $ 6.29 August 19, 2009 BUY 100,000 $ 6.29 August 20, 2009 BUY 78,600 $ 6.33 August 20, 2009 Acquisition under dividend reinvestment plan 110,071 $ 6.33 August 21, 2009 BUY 111,100 $ 6.45 August 24, 2009 BUY 125,000 $ 6.45 August 25, 2009 BUY 128,518 $ 6.53 August 26, 2009 BUY 81,990 $ 6.53 August 27, 2009 BUY 100,000 $ 6.70 August 28, 2009 BUY 73,200 $ 6.90 August 31, 2009 BUY 77,100 $ 6.73 September 1, 2009 BUY 119,500 $ 6.70 September 2, 2009 BUY 95,139 $ 6.70 September 3, 2009 BUY 83,300 $ 6.88 September 4, 2009 BUY 100,000 $ 6.98 September 8, 2009 BUY 100,000 $ 7.21 September 9, 2009 BUY 100,000 $ 7.27

Last but not least (at least for today). Seaspan sucessfully took delivery of their fortieth charter ship on Aug 31. Press release below: Gone now for a nice labour day long weekend, <IV _______________________________ Seaspan Takes Delivery of Fortieth Containership 2009-09-04 17:51 ET - News Release HONG KONG, CHINA -- (MARKET WIRE) -- 09/04/09 Seaspan Corporation (NYSE: SSW) announced today that it accepted delivery of the MOL Eminence from Hyundai Heavy Industries Co., Ltd. on August 31, 2009. The 5100 TEU containership is Seaspan's fifth newbuilding in 2009 and expands the Company's fleet to 40 vessels. The MOL Eminence is chartered to Mitsui O.S.K. Lines, Ltd. under a twelve-year, fixed-rate time charter that requires MOL to pay all fuel, cargo-operating and related costs. Gerry Wang, Chief Executive Officer of Seaspan, said, "The MOL Eminence represents the fifth vessel we have taken delivery of in 2009 and fortieth overall. We continue to execute our business model and have further expanded our sizeable contracted revenue stream derived from major liner companies primarily based in Asia. Upon delivery of our full fleet of 68 vessels, Seaspan's contracted revenue stream is expected to grow by about 218% to approximately $7 billion and its annual revenue is anticipated to rise about 145% to approximately $700 million."

Gaf63, I think you have got it correct. Here is the link to the 6-k: http://www.sec.gov/Archives/edgar/data/1332639/000119312509016540/d6k.htm Excerpt: In general, the holders of the Preferred Shares will be entitled to vote together with the holders of the Common Shares on an as-converted basis on any matter submitted for a vote of Common Shares. In addition, the holders of the Preferred Shares, voting as a separate class, will have the right to approve any future issuance of senior or parity stock (except that the Company may freely issue additional Preferred Shares up to an aggregate amount of $115 million), any redemption of the Company’s capital stock, any amendment of the Company’s articles of incorporation, bylaws or the Statement of Designation or any share exchange, reclassification, merger, consolidation, liquidation, dissolution, asset sale or other disposition of all or substantially all of the assets of the Company. In addition, subject to certain exceptions, the holders of the Preferred Shares have preemptive rights to prevent dilution and the right to elect up to two members of the Company’s board of directors. A copy of the Statement of Designation is filed as Exhibit 3.1 to this report. On an "as converted basis" a $160M would represent about 10.67M shares. Together with common shares recently purchased I believe Dennis has just exceeded the 20% threshold so it now makes sense that the 13D was filed. Thanks for helping think that through. My mind got stuck. <IV

That could be? I'm really not sure what the rules are here with 13G's and 13D's. I'll keep digging as I'm interested in learning. I can't recall if the preferred's have voting rights or not? I'll check. If they do, then you may have it correct. If they aren't voting then I would question this more as I would think only voting shares over 20% would matter. If anyone happens to be a corporate lawyer and can help pls do. <IV

I was doing some investigation tonight into the recent filings by Dennis Washington. I found it interesting that Dennis was filing a 13D form instead of 13G forms (which I'm more accustomed to seeing) when reporting his holdings. (from investopedia): To be able to file a 13G instead of a 13D, the party must own between 5% and 20% in the company. It must also be clearly understood that the party acquiring the stake in the company is only a passive investor, and does not intend to exert control. If these criteria are not met, and if the size in the stake exceeds 20%, a 13D must be filed. I wonder if Dennis is looking to take this private? <IV

Yet more buying through the end of August by Dennis. He is now at 11.8% ownership. http://www.sec.gov/Archives/edgar/data/1206860/000119312509184752/dsc13da.htm Schedule A Purchase Transactions of Common Shares By Deep Water Holdings, LLC during the last 60 days Date Transaction Number of Shares Approximate Price per Share August 11, 2009 BUY 25,406 $ 6.31 August 12, 2009 BUY 43,053 $ 6.36 August 13, 2009 BUY 41,500 $ 6.40 August 14, 2009 BUY 63,100 $ 6.37 August 17, 2009 BUY 46,000 $ 6.20 August 18, 2009 BUY 64,100 $ 6.29 August 19, 2009 BUY 100,000 $ 6.29 August 20, 2009 BUY 78,600 $ 6.33 August 20, 2009 Acquisition under dividend reinvestment plan 110,071 $ 6.33 August 21, 2009 BUY 111,000 $ 6.45 August 24, 2009 BUY 125,000 $ 6.45 August 25, 2009 BUY 128,518 $ 6.53 August 26, 2009 BUY 81,990 $ 6.53 August 27, 2009 BUY 100,000 $ 6.70 August 28, 2009 BUY 73,200 $ 6.90

This link should help. http://brk.visualhash.com/search/index.cgi?query_type=sender&query_string=lessthanIV

Hi Gary, Yes, the 220k that I was referring to were the August purchases only. The total shares bought since Dec/08 is roughly 3.5M. I was delighted to see conviction in the form of open market transactions from the Washington's who are also involved in the recent $200M financing. <IV

Dennis Washington continues his insider buying at Seaspan through DeepWater Holdings: http://www.sec.gov/Archives/edgar/data/1206860/000119312509178760/dsc13da.htm Roughly another 220,000 shares around the $6.30/share mark. He now owns about 10.4% of the shares which is up from his 5.2% ownership in Dec/2008. He has roughly doubled down to date. Disclosure: Long SSW <IV

http://www.deepcapture.com/introducing-john-hempton-the-plunderer-from-down-under/ <iv

Bill Gregson is taking over as CEO (President + COO of Forzani). Paul Rivett gets a board seat. Brick Group names Gregson CEO, Rivett trustee 2009-07-10 14:48 ET - News Release Mr. Ron Barbaro reports THE BRICK GROUP INCOME FUND APPOINTS NEW CHIEF EXECUTIVE OFFICER AND TRUSTEE Brick Group Income Fund has named Bill Gregson president and chief executive officer of Brick, effective immediately. Mr. Gregson, a chartered accountant by training, has a long and distinguished record of over 25 years in retail operations. Most recently he consulted for Reebok United States. Prior to that, Mr. Gregson was the president and chief operating officer of the Forzani Group, where he worked for over 10 years. He joined Forzani at a time when it was losing money and he helped lead a successful turnaround of the company into a highly profitable and substantially larger and dominant retailer. "Mr. Gregson is a seasoned executive with extensive operational experience in the retail industry. He has an outstanding track record of both protecting and creating value and the board of trustees unanimously determined that he is the ideal person to address the challenges and opportunities Brick faces in the current environment. The board and management are looking forward to working with Bill to continue to improve our existing liquidity, take us through the current difficult retail environment, and ultimately build an even stronger and more successful company," said Ron D. Barbaro, chairman of the board. "On behalf of the board of trustees, I would like to thank Kim Yost for his leadership and important contributions in a variety of roles over his many years with Brick, particularly since our initial public offering. Kim is a superb retailer and dedicated friend of Brick and we wish him all the best as he pursues his next challenge," said Mr. Barbaro. Brick also announces that Paul Rivett, chief operating officer of Hamblin Watsa Investment Counsel, and vice-president and chief legal officer of Fairfax Financial Holdings, a major unitholder of Brick, has joined Brick's board of trustees. We seek Safe Harbor.

Looks like Dennis Washington has taken advantage of the slide in SSW's stocks due to the recent dividend cut. http://www.sec.gov/Archives/edgar/data/1206860/000119312509113195/dsc13da.htm <IV

"Jumping the Shark"

The trading volume yesterday was 11M shares. Roughly 27X the normal volume of the last month. In the past, Seaspan has preached to shareholders about their internal desire to provide value through consistent, ever-increasing dividends. Yesterday, the direction of the company changed and I think the shareholder base (who were happy collecting income) was caught off guard. I suspect that much of the selling volume yesterday and today is associated with these types of investors beit retail or institutional. The business of SSW just improved. Retaining more of the distributable income makes the company stronger not weaker and it reduces the amount of dilution to the shareholder base in the future. I was on the buy again today. This can certainly trade cheaper ... who knows... but the margin of safety at $7 is adequate for me. Also, a good article was published on Lloyd's List discussing the situtation with CSAV. As mentioned in the article, CSAV only accounts for 3% of Seaspans forward charter revenue. So, some of the recent press surrounding CSAV is likely overblown. http://lloydslist.com/ll/news/seaspan-confident-csav-will-meet-charter-commitments/20017644457.htm;jsessionid=250BBEEFDD8A21D1F70202FF4137D8BF

I spent the day on the buy button. This situation is very similar to the H&R Reit situation. The company, through the dividend cut, has effectively reduce and deferred the potential dilution until late 2010. And, the dilution will now be much less. I think the income oriented investor sold off heavily today, but for the long term minded shareholder willing to invest for capital appreciation, I believe the payoff will be handsome. <IV

Yesterday, the catalyst I mentioned earlier on H&R was finalized. They have secured the financing of "The Bow" project. The market has recieved the news favorably taking the stock to a $9.85 high today. I still believe the intrinsic value is much higher. Current NAV by my math is around $18/share. The market is sitting around a 35% discount to NAV at the moment so I feel the stock could continue to around the $11-$12/share mark. Happy Friday for me!

Surprise, Surprise! Fairfax is looking brilliant again! Good news for H&R REIT and hence FFH. They have announced the completion of their financing for The Bow project. H&R will forego building the South Tower (Nice job by Neil Downey - RBC Analyst who picked up on this some time ago). They are also actively looking to sell 50% to a joint venture partner with the goal of using that capital to payoff the project debt. http://www.google.com/hostednews/canadianpress/article/ALeqM5jVs9RoXaCpFzL69_f4WC6No8axGw H&R REIT obtains $425 million financing for Calgary "Bow" highrise project 8 hours ago TORONTO — H&R Real Estate Investment Trust (TSX:HR.UN) said late Wednesday that it had obtained $425 million worth of financing for a massive skyscraper project that is to serve as headquarters for one of the country's energy giants. H&R is building the 58-storey Bow, a $1.5-billion downtown office tower that will be EnCana Corp.'s (TSX:ECA) new headquarters. In documents filed with securities regulators earlier this week, the trust said it was deferring construction on the southern part of the complex and expressed concerns about obtaining future financing. H&R released details of the new funding in a statement released late Wednesday, adding financing was being provided through a syndicate of Canadian financial institutions led by RBC Capital Markets and TD Securities. "We are very pleased to have reached this important milestone in the development of what will be the largest office tower in Canada west of Toronto, and a magnificent addition to H&R's North American portfolio," trust chief executive Tom Hofstedter said in the statement. "This major financing is a testament to the confidence that Canadian financial institutions have in H&R's ability to build a landmark office tower successfully." H&R did not offer any details on whether the construction on the south tower would still be delayed. To date, the trust says it has spent about $402 million on the Bow and expects to incur another $375 million over the next year. The north block development and 1,361 parking spaces underneath the north and south towers are pre-leased to EnCana for a period of approximately 25 years. Construction on the north block development started in the spring of 2007 and is expected to be delivered in stages, with the first phases scheduled for completion in the second half of 2011. The rest of the office space is expected to be finished in 2012. H&R units closed down 10 cents at $7.60 on the Toronto Stock Exchange on Wednesday. Late last year, Fairfax Financial (TSX:FFH) agreed to buy $200 million worth of debentures issued by the REIT in a move to help fund the construction. Fairfax agreed to subscribe to the offering, but with certain conditions attached. Chief among those is a cut in the REIT's monthly distribution to six cents from 12 cents as well as the securing of construction financing commitments of at least $400 million for development of the Bow. The Toronto-based investment firm will also be granted warrants to buy 28.6 million stapled units at $7 each for a total $200 million, exercisable for five years. Copyright © 2009 The Canadian Press. All rights reserved.

Eric, Bob Drummond wrote a fantastic article sometime ago for bloomberg called "Corporate Voting Charade". Read it. http://www.rgm.com/articles/FalseProxies.pdf <IV

653211, I starting picking up H&R below $5 in the November carnage. I have bought right up to the current $7 feeling value is closer to $15 -$18 long term. Also has a catalyst on April 9th that may give the stock price a quick push. (In what direction depends on the nature of the news, but I am betting that it's good news.) I like the sector long term. Leverage tied to longer term maturities at current rates + tangible assets like property should do well in an inflationary enviorment. Good tennants/ long term leases/ long term fixed rate debt/ 99% occupancy/< 5X Forward AFFO/ 65% discount to NAV ... its appears to be a very solid collection of properties and tennants ... and ... I think the funding of The Bow project is as good as done now. As I mentioned above - Apr 9th is the due date for firm committments on the remaining syndicated debt. <IV

Granitepost, Thanks for highlighting this article. I would love to read Mr. Downey’s full comments given his employment at RBC Capital Markets which is also a co-lead in the financing. I am wondering how he arrived at a NAV of $12/units, in particular. That seems to imply a very high cap rate which in turn leads me to believe that Downey feels we could be entering an early 90’s scenario? However, I tend to disagree with this. I don’t think this environment has the same characteristics as the early 90’s at all. In the late 80’s and early 90’s excessive development led to an oversupply situation where national office vacancies exceeded 17%. According to CB Richard Ellis, at the end of Q4/08 we are sitting around 7%. H&R on the other hand has a 99% occupancy rate. In fact when you analyze the main markets where H&R owns property (in Canada) and compare today’s vacancy rates to the 90’s here is what I find: Town: 1990 Now Calgary 17.7% 6.2% Ottawa 9.6% 5.1% Edmonton 13.9% 5.1% Vancouver 9.5% 6.1% Certainly, I would agree that vacancies could still rise further. However, I don’t see us getting to levels felt in the early 1990’s. In the early 90’s the inventory supply growth was about 6.6%. The current office supply pipeline growth is projected to be around 3.6% through 2011. As many analysts have pointed out, the debt financing situation is also much different. In the early 90’s cap rates were 7% vs. debt financings which were averaging 11% creating a negative leverage spread. In the tail end of the 90’s the cap rates rose to 8%-9%. This is in contrast to recent years where low debt financings have allowed for a positive spread. Also, Canadian chartered banks have very low exposure to commercial mortgages. A recent stat I read suggested a sum of $25B or roughly 2% of their total loan book. In fact, since the freezing of the commercial mortgage backed securities market in 2007, roughly $4.5B of new commercial loans has been absorbed by the Canadian chartered banks. With very minimal loan book exposure, they have the ability to grow their commercial loans much further. This is a very different situation than the U.S. I am getting a NAV that is closer to $17-$18/unit. Not $12. The larger cap Canadian REIT sector is trading around 8X-10X adjusted funds from operations, which in most cases suggests a 35% discount to NAV using a 7% cap rate assumption. Assuming H&R can produce $1.25 in AFFO (which if very realistic) a relative valuation would suggest a trading range of $10/unit - $12.50/unit. But, in better times the value tends to move towards NAV which I believe (using a 7% cap rate assumption) is closer to $18/unit. Right now the market is implying a cap rate of 11% which in my mind unjustly values their superior portfolio of properties, security of the long term tenants, and strong financial position. IE: Debt/Gross Book Value = 59%. They can go as high as 65%. Weighted average term to maturity on their debt is over 9 years with a weighted average interest rate of less than 6.5%. They have minimal mortgage maturities coming up; 5% in 2009, 4% in 2010, 6% in 2011. As far as their U.S properties go – they have no material maturities coming up until 2012. It’s my opinion that the current stock price reflects the markets perception of the risks involved in financing The Bow. The risks are real. But I think this deal get done with a fairly high degree of certainty (say 80%). If you analyze the LVR that H&R is giving to the banks its less than 30%! From the banks perspective, they will get; high fees (assumption given credit market conditions); a very low loan to value ratio (LVR); and, the security of knowing the building is pre-leased to EnCana for 25 years. In addition, the bank facility will likely be one of the last funding sources put into the project. The 2009-2010 financings needs amount to $700M-$800M. H&R can accommodate this as follows: $200M from Fairfax Deb, $200M from lower distributions, $200M asset dispositions, $150M from cash and current operating facilities. Therefore, the value proposition being presented to the banks is attractive: High fees, low LVR, and last facility drawn. I believe this is what FFH sees. By giving H&R a $200M unsecured debenture, they have allowed H&R to offer the banks a great deal. For their troubles, they 11.5% on that money but I suspect the real dollars will be made through the warrants. If exercised (which I think they will be) it will add an additional $200M in cash to H&R further protecting their investment positions. When this is all said and done, the distribution cut, necessary to self finance, will be reinstated and the dividend will increase materially. I understand that April 9th is the day when firm commitment letters are due for the syndicated debt. I believe this will be a catalyst to remove the black financing cloud currently overhead. With the financings worries put to bed, I am hopefully that H&R will close the gap between the current market quotation and the real business value. Disclosure: Very long H&R. ;D <IV

90% of the way to completion of "The Bow". I think the units remain cheap. Fairfax is sitting pretty with their 11.5% debentures and their 5yr/ $7 warrants. ____________________ H & R REIT earns $77.61-million in 2008 2009-03-03 19:17 EST - News Release Mr. Larry Froom reports H&R INCREASED DISTRIBUTABLE CASH 7% IN 2008; PROVIDES UPDATE ON THE BOW CONSTRUCTION FINANCING H & R Real Estate Investment Trust and H&R Finance Trust's combined distributable cash increased by 3 per cent in the three months ended Dec. 31, 2008, and by 7 per cent for the year as a whole, compared with the same periods in the previous year. As previously announced on Oct. 1, 2008, and reported in Stockwatch, H & R Real Estate Investment Trust completed an internal reorganization which resulted in, among other things, each issued and outstanding H & R Real Estate Investment Trust unit trading together with a unit of H&R Finance Trust as a stapled unit on the Toronto Stock Exchange. Accordingly, H & R Real Estate Investment Trust and H&R Finance Trust are providing their financial summary presented herein on a combined basis as in management's view, the value of H & R Real Estate Investment Trust and H&R Finance Trust unitholders' investment is based on the combined financial performance of H & R Real Estate Investment Trust and H&R Finance Trust, and the combined financial information would therefore be the most useful information to unitholders. Financial results H & R Real Estate Investment Trust and H&R Finance Trust management considers H & R Real Estate Investment Trust and H&R Finance Trust's distributable cash to be an indicative measure in evaluating H & R Real Estate Investment Trust and H&R Finance Trust's performance. The following table includes non-generally accepted accounting principle information that should not be construed as an alternative to net earnings or cash flows from operations and may not be comparable with similar measures presented by other issuers as there is no standardized meaning of distributable cash under generally accepted accounting principle. Financial information for the periods ending after Oct. 1, 2008, is presented herein on a combined and/or stapled basis. Financial information for the periods ended prior to Oct. 1, 2008, is presented for H & R Real Estate Investment Trust. Three months 12 months ended Dec. 31, ended Dec. 31, 2008 2007 2008 2007 Combined distributable cash (millions)(*) $ 55.8 $ 54.1 $221.7 $206.2 Combined distributable cash per stapled unit (basic) $ 0.38 $ 0.40 $ 1.57 $ 1.57 Combined cash distributions (millions) $ 52.7 $ 46.3 $204.1 $180.0 Combined cash distributions per stapled unit $ 0.36 $ 0.34 $ 1.44 $ 1.37 (*) Reconciliations of combined distributable cash to combined net earnings and to combined cash provided by operations are included in H & R Real Estate Investment Trust and H&R Finance Trust's combined management's discussion and analysis. Combined distributable cash per stapled unit (basic) decreased 5 per cent in the fourth quarter 2008 (unchanged for the year) due to dilution resulting from the securities offering completed in June, 2008, and to costs associated with H & R Real Estate Investment Trust and H&R Finance Trust's internal reorganization. Combined cash distributions increased 14 per cent in the fourth quarter, and rose 13 per cent (5 per cent per stapled unit) for the 2008 year. RESULTS REPORTED IN ACCORDANCE WITH CANADIAN GAAP Three months 12 months ended Dec. 31, ended Dec. 31, 2008 2007 2008 2007 Rentals from income properties (millions) $156.9 $149.7 $608.7 $580.7 Combined net earnings (millions)(loss)(*) $ 46.0 $ 48.7 $ 98.5 ($2.2) Combined net earnings per stapled unit (loss)(basic) $ 0.32 $ 0.38 $ 0.71 ($0.02) Combined cash provided by operations (millions)(*) $ 73.8 $ 63.4 $235.1 $196.6 (*) Reconciliations of combined distributable cash to combined net earnings and to combined cash provided by operations are included in H & R Real Estate Investment Trust and H&R Finance Trust's combined management's discussion and analysis. H & R Real Estate Investment Trust and H&R Finance Trust reported a 5-per-cent increase in rental income in both the fourth quarter and full year 2008, due primarily to property acquisitions. Combined net earnings decreased 6 per cent (down 13 per cent per stapled unit) in the fourth quarter and increased to $98.5-million in 2008 from a loss of $2.2-million in 2007. Combined cash provided by operations rose 16 per cent in the fourth quarter and 20 per cent for the year. As at year end 2008, H & R Real Estate Investment Trust and H&R Finance Trust reported financial ratios of 54.7 per cent for debt to gross book value (calculated in accordance with H & R Real Estate Investment Trust's declaration of trust) versus 58.8 per cent as at Dec. 31, 2007, and 51.4 per cent for non-recourse debt to total debt (49.5 per cent at year end 2007). H & R Real Estate Investment Trust and H&R Finance Trust's audited combined financial statements and the notes thereto, and management's discussion and analysis relating thereto for the year ended Dec. 31, 2008, are available on H & R Real Estate Investment Trust's website and have been concurrently filed on SEDAR, as well as H & R Real Estate Investment Trust's audited consolidated financial statements and the notes thereto, and H & R Real Estate Investment Trust and H&R Finance Trust Finance Trust's audited financial statements and the notes thereto (each for the fiscal period ended Dec. 31, 2008) and management's discussion and analysis relating thereto. The Bow construction financing H & R Real Estate Investment Trust is pleased to announce that it has signed an engagement letter with RBC Capital Markets and TD Securities, which will collectively act as co-lead arrangers and co-bookrunners for a $425-million construction facility for H & R Real Estate Investment Trust's development project "The Bow" in Calgary on a reasonable best-efforts basis. RBC and TD have received all necessary internal approvals to commit up to $250-million of the financing contingent upon securing commitments for the remainder of the financing and certain other conditions. The marketing process for receiving commitments for the remainder of the financing is currently under way. If H & R Real Estate Investment Trust is successful in signing definitive agreements for the financing, it will have satisfied all of the conditions of the private placement with Fairfax Financial Holdings Ltd., pursuant to which Fairfax has agreed to purchase, at par, $200-million of debentures. In combination with the moneys arising from reduced distributions and the Fairfax debentures, and on the assumption that the other strategic initiatives which have been undertaken by H & R Real Estate Investment Trust will be successful, H & R Real Estate Investment Trust believes that the financing (if completed) will allow it to successfully complete construction of The Bow. H & R Real Estate Investment Trust is currently building a two-million-square-foot office building in Calgary's downtown financial district. The real estate investment trust spent $49-million on the $1.5-billion project during the fourth quarter 2008, bringing H & R Real Estate Investment Trust's total investment to $402-million by year end. H & R Real Estate Investment Trust expects to spend approximately $375-million on the trophy project over the next 12 months. Further information regarding the budgeted costs to complete The Bow and actual costs incurred as at Dec. 31, 2008, as well as the estimated moneys required and projected sources of moneys for the 2009 to 2011 period, is available in H & R Real Estate Investment Trust and H&R Finance Trust's combined management's discussion and analysis, and H & R Real Estate Investment Trust's management's discussion and analysis. Monthly distribution declared H & R Real Estate Investment Trust and H&R Finance Trust also announced a combined monthly cash distribution of six cents per stapled unit (representing 72 cents on an annualized basis). Record date Distribution date March, 2009 March 17 March 31 April, 2009 April 16 April 30 May, 2009 May 14 May 29 We seek Safe Harbor.

SFK Pulp just put out numbers for the 4th quarter and the year. Looks like the currency change and falling input costs have offset the lower sales (tonnes) and falling pulp prices for the time being. The reserve has now improved to $29.6M or about $.32/share. They are shutting down the mills for about a month including the spring maintenance shutdown to remove production capacity of 45,000 tonnes of NBSK and 25,000 tonnes of RBK. No intent to restate distributions at this time. Thanks in large part to the reduced input costs and falling C$ they were able to net $17M in 2008 ($.19/share). If SFK can survive the present pulp market turmoil, the stock is cheap. Market Cap today is about $39M. <IV ________________________________ SFK Pulp Fund earns $17.12-million in 2008 2009-02-25 17:10 EST - News Release Mr. Pierre Cote reports SFK PULP FUND REPORTS 2008 YEAR-END RESULTS AND PLANS FURTHER DOWNTIME TO FACE MARKET CONDITIONS SFK Pulp Fund has released results for the fourth quarter and year ended Dec. 31, 2008. Fourth quarter sales rose 0.6 per cent to $125.1-million, while earnings before amortization, financial charges and income taxes (EBITDA) reached $14.9-million, up from $8.9-million. Net earnings for the quarter totalled $4.0-million, compared with a net loss of $400,000 for the corresponding period of 2007. For the year, sales grew 4.3 per cent to $532.0-million, EBITDA remained relatively stable at $60.4-million and net earnings totalled $17.1-million, compared with a loss of $9.4-million in 2007. Fourth quarter highlights: EBITDA of $14.9-million, up from $8.9-million in the fourth quarter a year ago; Net earnings of $4.0-million, or four cents per unit, versus a loss of $400,000 last year; Reserve further increased to $29.6-million. Year-end highlights: EBITDA of $60.4-million, stable in comparison with $61.5-million a year ago; Net earnings of $17.1-million, or 19 cents per unit, versus year ago loss of $9.4-million; Solid financial position with debt-to-total capitalization ratio of 0.22 as at Dec. 31, 2008. "We have completed 2008 with a healthy balance sheet, a particularly noteworthy accomplishment in view of the industry's current market conditions and the global slowdown. While sales volume for the fourth quarter was down by some 28,000 tonnes compared to last year, reflecting lower demand, sales remained stable at $125-million, due in large part to the weakened Canadian dollar, and profitability improved following a reduction in input costs. SFK Pulp has been highly proactive in managing its balance sheet during the second half of the year. This has positioned us to better face the severe headwinds the entire industry is currently facing," stated Pierre Gabriel Cote, president and chief executive officer. Planned downtime In order to proactively align production with current market demand, SFK Pulp is also announcing today that it will be halting production at its Saint-Felicien, Que., mill for a six-week period and for a one-month period at its Fairmont, W.V., mill. These measures include the scheduled spring maintenance shutdowns that will immediately follow the respective downtime periods. These actions will take effect in March and will result in the temporary layoff of up to 225 workers at the Saint-Felicien mill. The measures will remove approximately an additional 45,000 tonnes of NBSK pulp and 25,000 tonnes of RBK pulp. Operating results Fourth quarter 2008 Consolidated sales rose to $125.1-million, an increase of 0.6 per cent when compared with sales of $124.4-million in the fourth quarter of 2007. This increase comprises a $10.5-million sales increase in RBK pulp sales, partially offset by a $9.8-million sales decrease in NBSK pulp. While pulp sales volume and pricing were both down during the quarter, the decrease in the value of the Canadian dollar in comparison with the United States currency had a favourable effect of $24-million on sales. EBITDA totalled $14.9-million, or 11.9 per cent of sales, an increase of $6.0 million over EBITDA of $8.9-million, or 7.1 per cent of sales, in the corresponding period of 2007. RBK pulp operations contributed $9.8-million to EBITDA, while NBSK pulp accounted for $5.1-million. Net earnings were $4.0-million, or four cents per basic unit (three cents diluted), compared with a net loss of $400,000, or nil per unit, both basic and diluted, for the corresponding period of 2007. Adjusted distributable cash SFK Pulp generated adjusted distributable cash of $5.3-million. Including the $27.1-million reserve at the end of the third quarter of 2008, total adjusted distributable cash available for the period amounted to $32.4-million. Of this amount, SFK Pulp declared distributions of $2.7-million (three cents per unit), compared with $3.6-million (four cents per unit) in the corresponding quarter a year ago and retained $29.6-million as its reserve. Although the year-end reserve is above the $20-million target set by the board of directors, management remains committed to prudently administer the level of the reserve through the difficult times currently being faced by the industry and SFK Pulp, and, as such, does not intend to reinstate the monthly distributions which were suspended in January, 2009, until market conditions substantially improve. Moreover, management believes it should continue improving its financial flexibility to protect and potentially further improve SFK Pulp's balance sheet. 2008 year-end Consolidated sales reached $532.0-million, an increase of $21.9-million, or 4.3 per cent, over sales of $510.1-million in 2007. This increase reflects an increase of nearly $26.9-million in RBK pulp sales, partially offset by a $5.0-million reduction in NBSK pulp sales. EBITDA amounted to $60.4-million, or 11.4 per cent of sales, compared with $61.5-million, or 12.1 per cent of sales, in 2007. EBITDA of NBSK pulp operations increased $300,000 to $39.5-million, while EBITDA for RBK pulp decreased $1.4-million to $20.9-million. Net earnings were $17.1-million, or 19 cents per basic unit (17 cents diluted), compared with a net loss of $9.4-million, or 11 cents per unit, both basic and diluted, in 2007. As at Dec. 31, 2008, SFK Pulp's balance sheet remained strong with a debt-to-total-capitalization ratio of 0.22, as per the fund's credit facility covenant. Adjusted distributable cash SFK Pulp generated adjusted distributable cash of $26.6-million. Including the $13.9-million reserve at the end of 2007, total adjusted distributable cash available for the period amounted to $40.5-million. Of this amount, SFK Pulp declared distributions of $10.9-million (12 cents per unit), compared with $39.8-million (44 cents per unit) last year and retained $29.6-million as its reserve. Segment review NBSK Pulp Fourth quarter sales totalled $50.2-million, compared with $60.0-million for the corresponding period of 2007. Sales volume was 64,895 tonnes, a decrease of 14,744 tonnes from 79,639 tonnes a year ago. This decrease is attributable to customers taking market-related downtime, which resulted in a three-week production shutdown at the Saint-Felicien mill that began on Dec. 19, 2008. NBSK market pulp prices (for pulp delivered in northern Europe) decreased by $152 (U.S.) per tonne or 18 per cent on average, compared with the fourth quarter of 2007. However, the year-over-year decline in the value of the Canadian currency versus the U.S. dollar (partly offset by an unfavourable market mix) resulted in an average sales price of $773 (Canadian) in the fourth quarter of 2008, compared with $753 (Canadian) in the fourth quarter of 2007. Sales for the year ended Dec. 31, 2008, were $251.4-million, compared with $256.4-million last year. Sales volume reached 321,501 tonnes, down 2,344 tonnes from 323,845 tonnes in 2007. NBSK market pulp prices (for pulp delivered in northern Europe) increased 4.9 per cent on average or $39 (U.S.) per tonne. This increase, combined with a slightly stronger Canadian dollar, on average, in 2008 and an unfavourable market mix, yielded an average sales price of $782 (Canadian) per tonne, $10 (Canadian) below the average sales price of $792 (Canadian) per tonne of 2007. RBK Pulp Sales of RBK pulp amounted to $75.0-million in the fourth quarter of 2008, compared with $64.4-million a year earlier. This increase is mainly attributable to higher sales prices, further supplemented by the decline in the value of the Canadian dollar, as sales volume was down between the two comparable periods. Fourth quarter sales volume was 86,073 tonnes, compared with 99,030 tonnes last year, a decrease related to a major equipment failure at the Fairmont mill on Oct. 16, 2008, that prematurely stopped production ahead of a scheduled shutdown, followed by resumption at a reduced operating rate for most of November. Two thousand eight sales were $280.7-million, compared with $253.7-million a year ago. This $27.0-million increase is attributable to higher sales prices, partially offset by a lower sales volume. Sales volume of RBK pulp in 2008 reached 358,674 tonnes, compared with 378,895 tonnes for 2007, and average sales price increased by 17 per cent compared with 2007. Outlook The difficult market conditions have resulted in a collapse of global pulp demand, an increase in world pulp inventories and, therefore, a reduction in pulp prices. SFK Pulp's practice is to balance its order book with manageable inventory levels and, accordingly, has taken market related downtime at all locations in December, 2008, and January, 2009, totalling approximately 32,000 tonnes (22,000 tonnes of NBSK pulp and 10,000 tonnes of RBK pulp). As noted above, further market-related downtimes will be taken during the first and second quarters this year. Management will continue taking appropriate actions as market conditions evolve. Pulp prices have been under significant pressure over the past number of months and declined rapidly in the fourth quarter of 2008. The current market conditions affected the carrying value of finished products and required a writedown of $3.5-million during the fourth quarter of 2008 to reflect their lower realizable value. "As part of our proactive management strategy, SFK Pulp has implemented additional cost-reduction measures in 2009 to further tighten the existing stringent cost controls at all sites, and to optimize margins and liquidity. Furthermore, we are already seeing that current economic conditions have resulted in cost reductions for commodities used in our production such as fuel, certain chemicals and wastepaper. "We expect 2009 will pose unprecedented difficulties. As such, we will continue to take all necessary measures to face these challenges by further protecting our strong balance sheet, as well as prudently managing our working capital and inventory levels," commented Mr. Cote. Conference call SFK Pulp will hold a conference call Thursday, Feb. 26, 2009, at 10 a.m. (Eastern Time), to discuss its results. President and chief executive officer, Mr. Cote, and Patsie Ducharme, vice-president and chief financial officer, will host the conference call, and a question-and-answer session to discuss earnings. To participate in the conference call, investment professionals and business media may dial 416-644-3428 (for all Toronto and overseas participants), or 1-800-587-1893 (for all other North American calls). Participants not able to listen to the live call can access a replay of the archived call by calling 1-877-289-8525, access code 21298334 (followed by the pound key). The replay will be available until 23:59 p.m. on Thursday, March 5, 2009. SFK PULP -- FINANCIAL HIGHLIGHTS (in thousands of Canadian dollars) Three months ended Year ended Dec. 31, Dec. 31, Dec. 31, Dec. 31, 2008 2007 2008 2007 Sales $ 125,132 $ 124,354 $ 532,033 $ 510,143 --------- --------- --------- --------- Cost of sales 114,164 111,110 468,163 424,692 Selling and administrative expenses 4,776 3,729 16,869 14,531 (Gain) loss on derivative instruments (149) 13 (1,351) 56 (Loss) on disposal of capital assets (14) - 4 624 (Gain) loss on foreign currency translation (8,537) 636 (12,026) 8,713 --------- --------- --------- --------- EBITDA 14,892 8,866 60,374 61,527 Amortization of capital assets 10,300 9,585 39,585 38,713 Financial charges 4,243 4,024 15,114 19,028 (Recovery of) provision for income taxes (3,615) (4,361) (11,445) 13,139 --------- --------- --------- --------- Net earnings (loss) $ 3,964 $ (382) $ 17,120 $ (9,353) ========= ========= ========= ========= Net earnings (loss) per unit Basic $ 0.04 $ (0.00) $ 0.19 $ (0.11) Diluted $ 0.03 $ (0.00) $ 0.17 $ (0.11) We seek Safe Harbor.