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Press release from CNW Group

Morguard Real Estate Investment Trust announces 2013 second quarter results

Thursday, August 01, 2013

Morguard Real Estate Investment Trust announces 2013 second quarter results

17:00 EDT Thursday, August 01, 2013

TSX: MRT.UN

MISSISSAUGA, ON, Aug. 1, 2013 /CNW/ - Morguard Real Estate Investment Trust ("the Trust") (TSX: MRT.UN) today is pleased to announce its operating results for the three and six months ended June 30, 2013. ("Q2").  These results have been prepared in accordance with International Financial Reporting Standards ("IFRS").

Highlights

Funds from Operations (FFO)

  • Funds from operations for the three and six months ended June 30, 2013 was $24.4 million and $49.3 million, respectively, as compared to $20.2 million and $39.5 million, respectively, for the same periods in 2012. On a per unit diluted basis, funds from operations for the three and six months ended June 30, 2013 was $0.37 and $0.75, respectively, as compared to $0.34 and $0.66, respectively, for the same periods in 2012.  The increase in FFO is primarily due to the increase in NOI resulting from acquisition completed by the Trust in October 2012.
  • Funds from operations is not a term defined under IFRS and may not be comparable to similar measures used by other Trusts. A reconciliation of net income to funds from operations is included.

Net Operating Income (NOI)

  • Net operating income for the three and six months ended June 30, 2013 was $39.2 million and $79.4 million, respectively, as compared to $32.9 million and $65.4 million, respectively, for the same periods in 2012.
  • Net operating income is an additional GAAP measure, but not a term defined under IFRS and may not be comparable to similar measures used by other Trusts. A calculation of net operating income is included.

Net Income

  • Net income for the three and six months ended June 30, 2013 was $51.3 million and $127.1 million, respectively, as compared to $46.9 million and $90.9 million, respectively, for the same periods in 2012.

Operations

  • The portfolio occupancy remained stable and was 95% at June 30, 2013, 96% at March 31, 2013 and 95% at June 30, 2012.

At June 30, 2013, the Trust's total enterprise value was approximately $2.2 billion (based on the market closing price of the Trust's units on June 30, 2013 plus total debt outstanding). At June 30, 2013, the Trust had $1.2 billion of outstanding debt, equating to debt to total value ratio of 53.5%. The Trust's debt consisted of $981.7 million of fixed-rate debt with weighted average interest rate of 4.8% and weighted average term to maturity of 4.41 years, $144.9 million of 4.85% fixed-rate convertible debentures, $30.0 million in notes payable and $36.4 million utilization of the operating line of credit.

The Trust has a debt to gross book value of total assets ratio, as defined under the Declaration of Trust, of 43.1%.

NET OPERATING INCOME, FUNDS FROM OPERATIONS
This press release and accompanying financial information make reference to net operating income and funds from operations on a total and per unit basis.  Net operating income is defined as income from property operations after operating expenses have been deducted, but prior to deducting interest expense, general and administrative expenses and fair value gains (losses).  Funds from operations is defined as net income prior to extraordinary items, valuation adjustments, and certain other non-cash items, if any.

FINANCIAL STATEMENTS AND MORGUARD'S DISCUSSION AND ANALYSIS
Morguard REIT's Q2 2013 Condensed Interim Consolidated Financial Statements and Management's Discussion and Analysis along with its 2012 Annual Report are available on Morguard REIT's website at www.morguard.com and have been filed with SEDAR at www.sedar.com

ABOUT MORGUARD REAL ESTATE INVESTMENT TRUST
Morguard REIT is a closed-end real estate investment trust, which owns a diversified portfolio of 54 retail, office and mixed-use properties in Canada with a book value of $2.8 billion and approximately 9.1 million square feet of leaseable space.

Consolidated Balance Sheets

As at June 30, December 31,
(In thousands of Canadian dollars) 2013 2012
       
Assets    
Real estate properties $     2,684,277 $     2,592,740
Equity accounted investments 44,294 41,249
Amounts receivable 16,326 14,177
Other assets 11,966 1,531
Cash and cash equivalents 13,159 13,624
  $     2,770,022 $     2,663,321
     
Liabilities    
Mortgages and bonds payable $       981,672 $       956,069
Convertible debentures payable 144,879 144,356
Accounts payable and other liabilities 55,323 46,650
Notes payable 30,000 30,610
Bank indebtedness  36,392 54,853
  1,248,266 1,232,538
     
Unitholders' Equity 1,521,756 1,430,783
  $   2,770,022 $    2,663,321



Consolidated Statements of Income and Comprehensive Income

(In thousands of Canadian dollars)

Three months ended

Six months ended

  June 30,
2013
June 30,
2012
June 30,
2013
June 30,
2012
 
         
Revenue from real estate properties $     67,155 $     58,926 $     137,584 $    118,423
Property operating expenses 25,723 24,101 53,744 49,191
Property management fees 2,188 1,928 4,421 3,871
Net operating income 39,244 32,897 79,419 65,361
         
Interest expense 14,639 12,576 29,825 25,366
General and administrative 1,115 1,145 2,237 2,502
Amortization expense 10 10 21 22
Other income (1) (5) (39)
Income before fair value gains, gain on sale of
real estate properties and net income from
equity accounted investments
23,480 19,167 47,341 37,510
         
Fair value gains on real estate properties 24,843 26,926 74,241 52,246
Gain on sale of real estate properties 2,058 2,058
Net income from equity accounted investments 909 787 3,501 1,110
Net income for the period $     51,290 $     46,880 $     127,141 $      90,866
         
Other comprehensive income        
Items to be reclassified to profit or loss in
subsequent periods:
       
  Amortization - cash flow hedge 247 242 493 483
Comprehensive income $     51,537 $     47,122 $     127,634 $      91,349



Reconciliation of Net Income to Funds from Operations

(In thousands of Canadian dollars,except per-unit amounts)

Three months ended

Six months ended

  June 30,
2013
June 30,
2012
June 30,
2013
June 30,
2012
 
         
Net income for the period $   51,290 $ 46,880 $  127,141 $   90,866
         
Add/(deduct) :        
Fair value gains on real estate properties (1)         (24,787) (26,693) (75,793) (51,389)
Gain on sale of real estate properties (2,058) (2,058)
Funds from operations      $ 24,445      $   20,187         $   49,290         $   39,477
         
Interest expense on convertible debentures 1,844 1,428 3,638 2,911
Diluted FFO      $   26,289      $   21,615      $   52,928     $ 42,388
         
Funds from operations per unit:        
  Basic $0.38 $0.35 $0.77 $0.68
  Diluted (2)          $0.37 $0.34 $0.75 $0.66
         
Weighted average units outstanding (in thousands)        
  Basic 64,043 57,932 64,067 57,832
  Diluted (2) 70,141 64,125 70,165 64,025

(1) Includes fair value gains from equity accounted investments
(2) Includes dilutive impact of convertible debentures

SOURCE: Morguard Real Estate Investment Trust

For further information:

K. (Rai) Sahi, President and Chief Executive Officer, Tel: 905.281.4800, or;
Tim Walker, Vice President and Chief Financial Officer, Tel: 905.281.4800.

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