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Morguard Real Estate Investment Trust Announces 2021 Second Quarter Results

CNW Group - Wed Jul 28, 4:02PM CDT

Morguard Real Estate Investment Trust Announces 2021 Second Quarter Results

Canada NewsWire

MISSISSAUGA, ON , July 28, 2021 /CNW/ - Morguard Real Estate Investment Trust ("the Trust") (TSX:MRT-UN.TO) today is pleased to announce its 2021 Second Quarter Results. These results have been prepared in accordance with International Financial Reporting Standards ("IFRS").

In thousands of dollars, except per-unit amounts

Three Months Ended June 30,

Six Months Ended June 30,

2021


2020


2021


2020

Revenue from real estate properties

$58,475


$59,300


$119,445


$125,673

Net operating income

28,975


27,200


60,033


62,028

Fair value losses on real estate properties

(20,837)


(111,430)


(35,286)


(232,547)

Net loss

(5,845)


(98,814)


(995)


(201,369)

Funds from operations

15,043


13,152


34,376


33,110

Adjusted funds from operations 

10,664


10,032


25,414


23,763

Amounts presented on a per unit basis





Net loss – basic

($0.09)


($1.60)


($0.02)


($3.29)

Net loss – diluted

($0.09)


($1.60)


($0.02)


($3.29)

Funds from operations – basic

$0.23


$0.21


$0.54


$0.54

Funds from operations – diluted

$0.23


$0.21


$0.53


$0.53

Adjusted funds from operations – basic 

$0.17


$0.16


$0.40


$0.39

Adjusted funds from operations – diluted 

$0.17


$0.16


$0.40


$0.39

Distributions per unit

$0.06


$0.16


$0.14


$0.40

CONSOLIDATED OPERATING HIGHLIGHTS FOR THE THREE MONTH PERIOD ENDED JUNE 30, 2021  

Revenue from real estate properties includes contracted rent from tenants along with recoveries of property expenses (including property taxes).

The following is an analysis of revenue from real estate properties by segment:


Three Months Ended June 30,

Six Months Ended June 30,


2021

2020

%

2021

2020

%

Industrial

$880

$897

(1.9 )

 

%

$1,771

$1,711

3.5

%

Office – Single-/dual-tenant buildings

19,748

19,295

2.3

%

39,355

40,422

(2.6)

%

Office – Multi-tenant buildings

6,983

6,946

0.5

%

13,902

15,017

(7.4)

%

Retail – Community strip centres

8,958

8,733

2.6

%

18,415

18,560

(0.8)

%

Retail – Enclosed regional centres

21,906

23,429

(6.5)

%

46,002

49,963

(7.9)

%

Total

$58,475

$59,300

(1.4)

%

$119,445

$125,673

(5.0)

%

The decline in enclosed regional centres revenue is due to the enclosed mall tenant failures and restructured rent arrangements provided to tenants that are struggling as part of the COVID-19 pandemic.

The following is an analysis of revenue from real estate properties by revenue type:

For the three months ended June 30,

2021


2020


Variance

Rental revenue

$37,099


$38,563


($1,464)

CAM recoveries

10,384


9,667


717

Property tax and insurance recoveries

8,815


9,474


(659)

Other revenue and lease cancellation fees

1,737


712


1,025

Parking revenue

908


1,080


(172)

Amortized rents

(468)


(196)


(272)


$58,475


$59,300


($825)









For the six months ended June 30,

2021


2020


Variance

Rental revenue

$74,583


$78,439


($3,856)

CAM recoveries

19,438


23,336


(3,898)

Property tax and insurance recoveries

18,288


20,156


(1,868)

Other revenue and lease cancellation fees

5,193


1,798


3,395

Parking revenue

1,862


2,369


(507)

Amortized rents

81


(425)


506


$119,445


$125,673


($6,228)

Included in other revenue and lease cancellation fees is $2.3 million received from Lowe's at Pine Centre in the six-month period ending June 30, 2021, in order to facilitate the Save-on-Foods development.

Under IFRS, the Trust is required to establish an expected credit loss which would include considerations for failed or restructuring tenants as well as doubtful account provisions for future expected credit losses on accounts receivable arrears, including rent abatements or rent forgiveness. The following is an analysis of the allowance for doubtful accounts for the six-month period ending June 30, 2021.

Six months ended June 30, 2021

Retail

Office

Industrial

Total

Opening allowance balance – January 1, 2021

$7,469

$1,335

$15

$8,819

Bad debt expense/(recovery) charged to income statement

697

(609)

17

105

Failed tenant writeoffs and abatements granted

(1,046)

(140)

(1,186)

Closing allowance balance – June 30, 2021

$7,120

$586

$32

$7,738

The following is an analysis of revenue and bad debt expense for the six months ended June 30, 2021 :

Six months ended June 30, 2021

Retail

Office

Industrial

Total

Revenue from real estate properties

$64,417

$53,257

$1,771

$119,445

Bad debt expense

697

(609)   

17

105

% of revenue from real estate properties

1%

(1%)     

1%

—%

The following is an analysis of revenue and bad debt expense for the six months ended June 30, 2020 :

Six months ended June 30, 2020

Retail

Office

Industrial

Total

Revenue from real estate properties

$68,523

$55,439

$1,711

$125,673

Bad debt expense

5,034

710

77

5,821

% of revenue from real estate properties

7%

1%

5%

5%

Property operating expenses include costs related to interior and exterior maintenance, insurance and utilities.

Property operating expenses (excluding bad debt expense) for the three months ended June 30, 2021 , increased 16.2% to $15.2 million from $13.1 million for the same period in 2020. This increase is primarily due to more normalized operating expenses in 2021 as compared to 2020 when sharp reductions occurred due to the pandemic.

Net operating income for the three months ended June 30, 2021 , increased 6.5% as compared to 2020. This increase was the result of a decrease in bad debt expense in 2021 as compared to 2020.

Interest expense for the three months ended June 30, 2021 , decreased 4.5% to $13.4 million from $14.0 million for the same period in 2020. This decline is primarily due to the decline in the Trust's weighted average interest rate on mortgages to 3.7% from 4.1% in the second quarter of 2020, in addition to a reduction in overall debt.

The Trust records its income producing properties at fair value in accordance with IFRS. The financial results include fair value adjustments that are more significant than previous years. These adjustments are a result of the Trust's regular quarterly IFRS fair value process and include the impact of COVID-19 on the enclosed regional centres from the challenging retail landscape. In accordance with this policy, the following fair value adjustments by segment have been recorded:


Three Months Ended June 30,

Six Months Ended June 30,


2021


2020


2021


2020


Retail – enclosed regional centres

($15,366)


($74,072)


($22,475)


($170,886)


Retail – community strip centres

(514)


(9,358)


216


(10,292)


Office

(10,419)


(26,652)


(21,508)


(50,204)


Industrial

5,462


(1,348)


8,481


(1,165)



($20,837)


($111,430)


($35,286)


($232,547)


Reported net loss for three months ended June 30, 2021 , was $5.8 million as compared to loss of $98.8 million in 2020. This change is due to the fair value losses recorded in 2020, as described above.

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). The Trust presents FFO in accordance with the Real Property Association of Canada white paper on funds from operations and adjusted funds from operations for IFRS. FFO is a non- GAAP measure that is widely accepted as a supplemental measure of financial performance for real estate entities. In accordance with such white paper, the Trust defines FFO as net income adjusted for fair value changes on real estate properties and gains/(losses) on the sale of real estate properties.

Financial Statements and Management's Discussion and Analysis
The Trust's Q2 2021 Consolidated Financial Statements and Management's Discussion and Analysis will be made available on the Trust's website at www.morguard.com and have been filed with SEDAR at www.sedar.com

Conference Call Details:


Date:           

Thursday July 29, 2021 4:00 p.m. (ET)

Conference Call #:      

416-764-8688 or 1-888-390-0546

Conference ID #:   

89004347

About Morguard Real Estate Investment Trust
The Trust is a closed-end real estate investment trust, which owns a diversified portfolio of 47 retail, office and industrial income producing properties in Canada with a book value of $2.5 billion and approximately 8.3 million square feet of leasable space.

SOURCE Morguard Real Estate Investment Trust

Cision View original content: http://www.newswire.ca/en/releases/archive/July2021/28/c6517.html

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