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Press release from CNW Group

Morguard North American Residential REIT Announces 2012 Third Quarter Results

Wednesday, October 31, 2012

Morguard North American Residential REIT Announces 2012 Third Quarter Results17:09 EDT Wednesday, October 31, 2012TSX: MRG.UNMISSISSAUGA, ON, Oct. 31, 2012 /CNW/ - Morguard North American Residential REIT (the 'REIT") (TSX:  MRG.UN) today announced its financial results for the three months ended September 30, 2012. The REIT completed its initial public offering of trust units on April 18, 2012.HIGHLIGHTSOn July 16, 2012, Village Crossing Apartments was acquired from Morguard Corporation for a purchase price of US$16,347 funded by mortgage financing of US$11,400.On July 31, 2012, the REIT acquired Woodbine Apartments from a third party vendor for a purchase price of US$42,100 and on September 4, 2012, the REIT completed the financing on the property in the amount of US$29,470.On August 29, 2012, the REIT acquired Blue Isle Apartments from a third party vendor for a purchase price of US$40,000 and on October 19, 2012, the REIT completed the financing on the property in the amount of US$26,000; andOn September 12, 2012, the REIT completed the offering of $150,732 for 12,720,000 trust units sold at a price of $11.85 per trust unit. The proceeds of the offering, after underwriters' commission, were $146,703.FINANCIAL HIGHLIGHTS    As at September 30, 2012As atDecember31,         2011As atSeptember30,2011Operational information    Number of properties 201717Total suites 6,3795,4395,439Occupancy % 97.1%98.4%97.5%Weighted average in-place rent $1,066$1,193$1,134     Summary of Financial Information    (in thousands of dollars, except per unit amounts)         Total Gross Book Value(1) $859,883$676,944$614,662Debt(2) 399,136360,605363,703Debt to Gross Book Value(1) 46%53%59%Weighted average mortgage interest rate 4.3%4.4%4.4%Weighted average term to maturity 4.64.75.0       Three monthsended September 30,Nine months ended September 30, 2012201120122011Summary of Financial Information    (in thousands of dollars, except per unit amounts)         Interest coverage(3)1.942.232.092.12Revenue$20,316$18,160$57,065$53,618Net operating income$10,203$9,366$29,732$27,072Income before fair value changes$2,116$5,163$10,271$14,265Funds from Operations (FFO)$4,700$4,888$14,198$13,520FFO per unit - diluted (4)$0.17$0.19$0.53$0.53Adjusted Funds from Operations (AFFO)$4,470$4,670$13,542$12,856AFFO per unit - diluted(4)$0.16$0.18$0.50$0.50Distributions per unit (annualized)(4)$0.60$0.60$0.60$0.60FFO payout ratio (4)88.24%78.95%84.91%84.91%AFFO payout ratio(4)93.75%83.33%90.00%90.00%Weighted average number of unitsoutstanding during period (000's)(4)28,10025,47326,92925,473(1)   Calculated as "Indebtedness" divided by "Gross Book Value", each as defined in the DOT(2)   Represents outstanding principal amount of mortgages payable and Class C LP Units(3)    Interest coverage ratio is defined as income before interest expense, income taxes, non-recurring gains or losses, amortization and interest income over interest expense excluding interest on Class B LP Units.(4)  Units are defined to include the Class B LP Units. The 25,473 units issued through the IPO have been considered outstanding through the entire operating periodCertain measures in the above table are not defined by generally accepted accounting principles ("GAAP"). See "Net Operating Income, FFO, AFFO" below.NET OPERATING INCOME, FFO, AFFONet operating income ("NOI") is an additional GAAP measure that is used by industry analysts, investors and management to measure operating performance of the REIT's properties.  NOI represents income from real estate properties less property operating costs and realty tax expense as presented in the consolidated statement of operations.  Accordingly, NOI excludes certain expenses included in the determination of net income such as trust expenses, interest expense, fair market value adjustments and other indirect operating expenses.  NOI is not a recognized measure under IFRS and, accordingly, the term does not necessarily have a standardized meaning and may not be comparable to similarly titled measures presented by other publicly traded entities.FFO is an industry standard for evaluating operating performance, but is not indicative of funds available to meet the REIT's cash requirements.  FFO is computed by the REIT in accordance with the current definitions of the Real Property Association of Canada ("REALpac") and is defined as net income before fair value gains/losses on real estate properties, fair value gains/losses on the redeemable Class B LP Units classified as liabilities, distributions on the Class B LP Units, gains/losses on the disposition of real estate properties and deferred income taxes on the U.S. properties.AFFO is a non-IFRS financial measure used by most Canadian real estate investment trusts, but should not be considered as an alternative to net income, cash flow from operations or any other measure prescribed under IFRS.  The Trustees consider AFFO to be a useful measure of cash available for distributions.  AFFO is a supplemental measure to net income that is used in the real estate industry to assess the sustainability of future cash distributions paid to the REIT's unitholders.  AFFO should not be interpreted as an indicator of cash generated from operating activities as it does not consider changes in working capital.  AFFO is defined as FFO adjusted by (i) adding amortization of deferred financing costs assumed by the REIT on the 17 properties that were acquired concurrent with the completion of the IPO, amortization of free rent and amortization of cash flow hedges, (ii) deducting reserves for maintenance capital expenditures, and (iii) making such other adjustments as may be determined by the Trustees in their discretion.  Maintenance capital expenditures are estimated by management and represent capital expenditures that are required to maintain the existing earning potential of a property.  Significant judgment is required to classify capital investments.The REIT's Q3 2012 Consolidated Financial Statement and Management's Discussion and Analysis are available on the REIT's website at www.morguard.com and have been filed with SEDAR at www.sedar.com.About Morguard North American Residential REITThe REIT is an unincorporated, open-ended real estate investment trust established under the laws of the Province of Ontario.  It trades on the Toronto Stock Exchange under the ticker symbol MRG.UN.  With a strategic focus on the acquisition of high-quality multi-unit residential properties in Canada and the United States, the REIT maximizes long-term unit value through active asset and property management. Its portfolio currently consists of 6,379 residential suites located in Ontario, Alberta, Louisiana and Florida, with an IFRS value of approximately $860 million. SOURCE: Morguard North American Residential Real Estate Investment TrustFor further information: Morguard Corporation K. (Rai) Sahi Chief Executive Officer (905) 281-3800 Paul Miatello Chief Financial Officer (905) 281-3800