The Globe and Mail

Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Globe Investor

News Sources

Take control of your investments with the latest investing news and analysis

Press release from CNW Group

Morguard Corporation Announces 2011 Third Quarter Results and Regular Eligible Dividend

Tuesday, November 08, 2011

Morguard Corporation Announces 2011 Third Quarter Results and Regular Eligible Dividend19:10 EST Tuesday, November 08, 2011TSX: MRCMISSISSAUGA, ON, Nov. 8, 2011 /CNW/ - Morguard Corporation (TSX: MRC) announced its financial results for the three months ended September 30, 2011.These results are, and all future results will be, reported under International Financial Reporting Standards (IFRS) and historical results have been restated to IFRS for comparison purposes.  Reconciliations between IFRS and Canadian Generally Accepted Accounting Principles have been included in the Company's unaudited interim consolidated financial statements for the period ended September 30, 2011.HIGHLIGHTSFunds from operations for the three months ended September 30, 2011, increased by 17.5% to $34.4 million, or $2.66 per share, compared to $29.3 million, or $2.21 per share in 2010;Total revenues in Q3 2011 increased by 6.2% to $96.6 million compared to $90.9 million in 2010;Total net operating income in Q3 2011 increased by 4.1% to $40.0 million compared to $38.4 million in Q3 2010;Net income attributable to common shareholders in Q3 2011 totalled $44.6 million compared to $71.5 million in 2010; the decrease is predominantly due to lower fair value gains recorded on real estate properties in the amount of $28.4 million (pre-tax).FINANCIAL HIGHLIGHTS                   Three months endedSeptember 30 Nine months endedSeptember 30(in thousands of dollars) 2011 2010 2011 2010Revenue from real estate properties $73,698 $71,970 $220,327 $211,957Management and advisory fees 17,483 15,161 51,469 46,745Interest and other 4,026 2,377 9,888 6,565Sales of product and land 1,378 1,419 4,468 3,728Total revenues $96,585 $90,927 $286,152 $268,995         Revenue from real estate properties $73,698 $71,970 $220,327 $211,957Property operating expense   (33,714) (33,572)   (99,700) (97,591)Net operating income $39,984 $38,398 $120,627 $114,366         Funds from operations $34,432 $29,313 $95,180 $81,453         Net income attributable to common shareholders $44,634 $71,532 $151,588 $134,093         Funds from operations, per share               Basic and diluted $2.66 $2.21 $7.34 $5.96NET INCOMENet income attributable to the shareholders for the three months ended September 30, 2011, was $44.6 million ($3.44 per share) compared to $71.5 million ($5.39 per share) in 2010. The decrease in net income of $26.9 million for the three months ended September 30, 2011, was primarily due to a decrease in fair value gains on real estate properties of $28.4 million and a decrease in the equity income from Morguard REIT of $7.4 million; these items were partially offset by an increase in net operating income of $1.6 million, an increase in management and advisory fees of $2.3 million, an increase in interest and other income of $1.6 million, a decrease in property management and corporate expenses of $0.7 million and a decrease in income taxes of $1.4 million.NET OPERATING INCOME    Three months endedSeptember 30 Nine months endedSeptember 30(in thousands of dollars) 2011 2010 2011 2010Net operating income - Canadian properties         Multi-unit residential - Canada $13,232 $12,382 $38,635 $36,812 Retail - Canada 7,548 7,007 22,647 24,021 Office and industrial 10,065 9,835 31,212 27,342   30,845 29,224 92,494 88,175Net operating income - U.S. properties in U.S. dollars         Multi-unit residential - U.S. US 3,987 US 4,080   US 12,757 US 11,641 Retail - U.S. US 5,331 US 4,745 US 16,006 US13,642   US 9,318 US 8,825 US 28,763 US 25,283Exchange amount to Canadian dollars (179) 349 (630) 908Net operating income - U.S. properties in Canadian dollars 9,139 9,174 28,133 26,191Net operating income $39,984 $38,398 $120,627 $114,366Net operating income ("NOI") for the three months ended September 30, 2011, increased by $1.6 million to $39.9 million compared to $38.4 million in 2010, representing an increase of 4.1%.  The increase was predominantly the result of the following:Higher NOI in Canadian multi-unit residential properties primarily as a result of higher rental rates and lower utility expenses;Higher NOI in Canadian retail properties primarily as a result of an increase in revenue at the Bramalea City Centre due to completion of the centre's redevelopment project;Higher NOI in office and industrial primarily as a result of the acquisition of 50% interest in Place Innovation, St. Laurent, Quebec on July 30, 2010, which increased NOI by $0.7 million; partially offset by a decrease in occupancy at two office properties and one industrial property due to tenants not renewing their leases; andHigher NOI in U.S. retail properties primarily as a result of the acquisition of Boynton Town Center, on February 28, 2011, which increased NOI by US$1,186. The change in the foreign exchange rate decreased reported NOI by $0.3 million.FUNDS FROM OPERATIONS ("FFO")FFO was calculated as follows:   Three months ended September 30 Nine months endedSeptember 30(In thousands of dollars, except for per share amounts) 2011 2010 2011 2010Net income attributable to common shareholders $44,634 $71,532 $151,588 $134,093Items not affecting cash:         Fair value gains on real estate properties (7,763) (36,155) (65,006) (48,797) Non-controlling interest's share of fair value loss on real estate property           (470) - (470) - Future income taxes 9,414 13,323 31,547 25,605 Depreciation on owner occupied property 26 26 78 78 Equity income from Morguard REIT (20,202) (27,561) (48,945) (53,041) Morguard REIT's equity accounted FFO 8,793 8,148 26,381 23,304 Loss on sale of property - - 7 211Funds from operations $34,432 $29,313 $95,180 $81,453Funds from operations   Per share amounts - basic and diluted $2.66 $2.21 $7.34 $5.96For the three months ended September 30, 2011, the Company recorded FFO of $34.4 million ($2.66 per share) compared to $29.3 million ($2.21 per share) in 2010, representing an increase of $5.1 million or 17.5%.  FFO increased primarily due to an increase in NOI of $1.6 million, an increase in management and advisory fee revenue of $2.3 million, an increase in interest and other income of $1.6 million, an increase in Morguard REIT's equity accounted FFO of $0.6 million and a decrease in property management and corporate expense of $0.7 million; partially offset by an increase in current income taxes of $2.5 million.FOURTH QUARTER DIVIDENDThe board of directors of Morguard Corporation announced today that the fourth quarterly, eligible dividend of 2011 in the amount of $0.15 per common share will be paid on December 30, 2011 to shareholders of record at the close of business on December 15, 2011.Readers are cautioned that although the terms "Net Operating Income", and "Funds From Operations" are commonly used to measure, compare and explain the operating and financial performance of Canadian real estate companies 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.The Company's interim unaudited financial statements for the three months ended September 30, 2011, along with Management's Discussion and Analysis are available on the Company's website at www.morguard.com and have been filed with SEDAR at www.sedar.com .Morguard Corporation is a real estate company, which owns a diversified portfolio of 100 retail, multi-unit residential, office and industrial properties comprising 10,317 multi-unit residential suites and approximately 7.1 million square feet of commercial leasable space. Morguard Corporation also owns a 45% interest in Morguard Real Estate Investment Trust. Morguard provides advisory and management services to institutional and other investors through Morguard Investments Limited and Morguard Residential. For more information, visit the Company's website at www.morguard.com.  For further information: Morguard Corporation   K. (Rai) Sahi      Paul Miatello Chief Executive Officer    Chief Financial Officer (905) 281-3800      (905) 281-3800