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Press release from CNW Group

Morguard Real Estate Investment Trust Announces 2010 Results

Monday, February 28, 2011

Morguard Real Estate Investment Trust Announces 2010 Results17:43 EST Monday, February 28, 2011MISSISSAUGA, ON, Feb. 28 /CNW/ - Morguard Real Estate Investment Trust ("Morguard REIT") (TSX: MRT.UN) today announced its financial results for the year ended December 31, 2010.Morguard REIT's 2010 Financial Statements, and Management's Discussion and Analysis along with its 2009 Annual Report are available on Morguard REIT's website at www.morguardreit.com and have been filed with SEDAR at www.sedar.com.HIGHLIGHTS FOR 2010On June 1, 2010, the Trust acquired a 50% co-ownership interest in a 300,000-square-foot retail shopping centre located in Grande Prairie, Alberta for a purchase price of $40.8 million plus other acquisition costs of $1.5 million.On July 30, 2010, the Trust, together with Morguard Corporation, acquired a 50% co-ownership interest in a 890,000-square-foot Class A office building complex together with 56.0 acres of development land, located in Montreal, Quebec for a total purchase price of $82.5 million plus other acquisition costs of $2.2 million.Overall portfolio occupancy levels were stable at 95%.FINANCIAL HIGHLIGHTSNet operating income for 2010 increased to $123.7 million from $114.1 million for the same period in 2009.Net income totaled $29.3 million or $0.52 per unit compared to $32.4 million or $0.56 per unit for the same period in 2009.  In 2010, net income from continuing operations increased approximately by 3.0% over levels reported in 2009. The increase was mainly the result of increases in net operating income resulting from acquisitions made in late 2009 and during 2010, a significant reduction in issue costs offset somewhat by higher interest and amortization expense associated with acquisitions made by the Trust. In 2009, net income was significantly impacted by the expensing of $4.2 million of issue costs relating to the issuance of the $103.5 million of 6.50% convertible unsecured subordinated debentures partially offset by $3.1 million in gains on sale of real estate properties. Recurring distributable income ("RDI") increased to $63.8 million or $1.12 per unit (basic) and $1.10 per unit (diluted) compared to $61.1 million or $1.07 per unit (basic) and $1.06 (diluted) for the same period in 2009.Funds from operations ("FFO") increased to $73.1 million or $1.29 per unit (basic) and $1.24 per unit (diluted) compared to $66.5 million or $1.16 per unit (basic) and $1.14 per unit (diluted)  for the same period in 2009.  In 2009, FFO was significantly impacted by $4.2 million of issue costs ($0.07 per unit, basic and diluted) relating to the issuance of the $103.5 million of 6.50% convertible unsecured subordinated debentures.Net Income[In thousands of dollars, except per-unit amounts] 2010 2009     Income from real estate properties$     221,079$     204,996Property operating income$     123,659$     114,054   Net income for the year from continuing operations$      29,016$       28,177Income for the year from discontinued operations3234,177Net income for the year$      29,339$      32,354   Net income per unit (basic and diluted)   Continuing operations$       0.51$         0.49 Discontinued operations0.010.07 $       0.52$         0.56Distributable IncomeDistributable income is net income after adjusting for the amortization of buildings and intangible assets, accretion and issue costs of convertible debentures and providing for any reserves, provisions and allowances established by the Board of Trustees ("Trustees") of the Trust plus any amount the Trustees, in their discretion, determine to be appropriate.Recurring distributable income is distributable income excluding gain or loss on sale of real estate properties, unusual or non-recurring items and provisions for diminution in value of real estate properties.  Distributed income, which is income distributed to unitholders, is expressed as a percentage of RDI to arrive at a payout ratio.The following table outlines the Trust's distributable income, recurring distributable income and payout ratios for the year ended December 31, 2010 and 2009.(In thousands of dollars, except per-unit amounts and percentages) 2010 2009     Net income for the year$      29,339$    32,354     Add/(deduct)    Amortization - buildings 27,310 25,141Amortization - intangibles 7,249 3,848Amortization - above/(below) market-rate leases, net (1,116) (904)Amortization - stepped rents (251) (676)Accretion of convertible debentures 1,250 260Issue costs - convertible debentures — 4,195     Distributable income 63,781 64,218Loss/(Gain) on sale of real estate properties 8 (3,141)     Recurring distributable income$     63,789$   61,077     Distributed income - regular $    51,164$   51,778     Payout ratio:  Recurring distributable income1 80.2% 84.8%     Recurring distributable income - per unit (basic)$       1.12$      1.07Recurring distributable income - per unit (diluted)$       1.10$     1.06     Weighted average number of units - (in thousands) (basic) 56,848 57,577Weighted average number of units - (in thousands) (diluted) 64,256 60,094Funds from OperationsThe real estate industry has adopted a measure of FFO to supplement net income as an operating performance measurement.  The Trust's calculation of FFO is consistent with the definition provided by the Real Property Association of Canada ("REALPac").FFO is defined as net income adjusted for amortization of buildings, leasehold improvements, intangible items, deferred leasing costs, accretion of convertible debentures and any gain or loss on sale of real estate properties as well as any and any provisions against capital.  FFO per unit is calculated by dividing FFO attributable to unitholders by the weighted average number of units outstanding for the period.FFO was calculated as follows: 20102009In thousands of dollars, except per-unit amounts)ContinuingOperationsDiscontinuedOperationsTotalContinuingOperationsDiscontinuedOperationsTotal       Net income for the year$   29,016$       323$  29,339$     28,177$      4,177$  32,354       Add/(deduct) items not affecting cash:      Loss/(Gain) on sale of real estate properties—88 —(3,141)(3,141)Amortization - buildings27,2743627,31024,86727425,141Amortization - intangibles7,249—7,2493,848—3,848Amortization - leasehold improvements5,515—5,5155,708175,725Amortization - deferred leasing costs2,436—2,4362,332142,346Accretion of convertible debentures1,250—1,250260—260Funds from operations$  72,740$       367$  73,107$     65,192$        1,341$  66,533       Funds from operations per unit (basic)$      1.28$        0.01$     1.29$        1.14$          0.02$     1.16Funds from operations per unit (diluted)$      1.23$        0.01$      1.24$        1.12$          0.02$     1.14Readers are cautioned that although the terms "Operating Income", "Funds from Operations", "Distributable Income" and "Recurring Distributable Income" are commonly used to measure, compare and explain the operating and financial performance of Canadian real estate investment trusts and such terms are defined in the Management's Discussion and Analysis, such terms are not recognized terms under Canadian generally accepted accounting principles.  Such terms do not necessarily have a standardized meaning and may not be comparable to similarly titled measures presented by the other publicly traded entities.Morguard is a closed-end real estate investment trust, which owns a diversified portfolio of 51 retail, office, and mixed-use properties in Canada with a book value of $1.3 billion and approximately 8.3 million square feet of leasable space.  For more information, visit the Trust's website at www.morguardreit.com.___________________________________1 Payout ratio is calculated using regular distributions as a percentage of recurring distributable incomeFor further information: Rai Sahi, President and Chief Executive Officer, Tel: 905.281.4800, or; Tim Walker, Vice President and Chief Financial Officer, Tel: 905.281.4800