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Morguard Real Estate Investment Trust announces 2014 second quarter results

TSX: MRT.UN

MISSISSAUGA, ON, Aug. 5, 2014 /CNW/ - Morguard Real Estate Investment Trust ("the Trust") (TSX: MRT.UN) today is pleased to announce its financial results for the three and six months ended June 30, 2014 ("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, 2014 was $27.0 million and $53.1 million, respectively, as compared to $24.4 million and $49.3 million, respectively, for the same periods in 2013. On a per unit diluted basis, funds from operations for the three and six months ended June 30, 2014 was $0.42 and $0.83, respectively, as compared to $0.37 and $0.75, respectively for the same periods in 2013. The increase in FFO was primarily the result of the acquisition of Pine Centre completed by the Trust in December 2013.
  • 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, 2014 was $42.7 million and $84.3 million, respectively, as compared to $39.2 million and $79.4 million, respectively, for the same periods in 2013.
  • 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, 2014 was $34.2 million and $70.4 million, respectively, as compared to $51.3 million and $127.1 million, respectively, for the same periods in 2013. The decrease in net income was mainly the result of lower fair value gains on real estate properties recorded in 2014.

Operations

  • The portfolio occupancy remained stable and was 97% at June 30, 2014, 96% at December 31, 2013 and 97% at June 30, 2013.

At June 30, 2014, the Trust's total enterprise value was approximately $2.5 billion (based on the market closing price of the Trust's units on June 30, 2014 plus total debt outstanding). At June 30, 2014, the Trust had $1.4 billion of outstanding debt, equating to debt to total value ratio of 55.5%. The Trust's debt consisted of $1.2 billion of fixed-rate debt with weighted average interest rate of 4.2% and weighted average term to maturity of 6.22 years, $146.0 million of 4.85% fixed-rate convertible debentures and $13.8 million debt associated with real estate properties held for sale. The Trust has a debt to total assets ratio of 45.5%.

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 2014 Condensed Interim Consolidated Financial Statement and Management's Discussion and Analysis along with its 2013 Annual Report are available on Morguard REIT's website at www.morguard.com and have been filed with SEDAR at www.sedar.com

CONFERENCE CALL DETAILS:

    Date:      Thursday, August 7, 2014 at 4:00 p.m. (ET)
    Conference Call#:     647.427.7450 or 1.888.231.8191
    Conference ID#:     78885729

ABOUT MORGUARD REAL ESTATE INVESTMENT TRUST
Morguard REIT is a closed-end real estate investment trust, which owns a diversified portfolio of 53 retail, office and mixed-use income producing properties in Canada with a book value of $2.9 billion and approximately 9.1 million square feet of leaseable space.

Condensed Interim Consolidated Balance Sheet                
                 
(In thousands of Canadian dollars)       June 30,       December 31,
        2014       2013
                   
Assets                
Real estate properties      $      2,865,017      $      2,869,358
Equity accounted investments       46,102       44,857
Amounts receivable       15,374       14,505
Other assets       11,848       920
Cash and cash equivalents       42,424       13,159
        2,980,765       2,942,799
Real estate properties classified as held for sale       41,022      
       $      3,021,787      $      2,942,799
                 
Liabilities                
Mortgages and bonds payable      $    1,214,294      $      1,194,682
Convertible debentures payable       146,006       145,460
Accounts payable and other liabilities       55,202       44,919
Bank indebtedness              5,000
        1,415,502       1,390,061
Mortgages payable on real estate properties classified as held for sale       13,800      
Total liabilities       1,429,302       1,390,061
                 
Unitholders' Equity       1,592,485       1,552,738
       $      3,021,787      $    2,942,799

 

Condensed Interim Consolidated Statements of Income and Comprehensive Income
 
(In thousands of Canadian dollars)       Three months ended       Six months ended
        June 30,       June 30,       June 30,       June 30,
        2014       2013       2014       2013
                                   
Revenue from real estate properties     $      73,925     $      67,155     $      148,129     $     137,584
Property operating expenses       28,832       25,723       59,016       53,744
Property management fees       2,375       2,188       4,784       4,421
Net operating income       42,718       39,244       84,329       79,419
                                 
Interest expense       15,334       14,639       30,746       29,825
General and administrative       1,433       1,115       2,662       2,237
Amortization expense             10             21
Other income                         (5)
Income before fair value gains, gain on sale of
real estate properties and net income from
equity accounted investments
      25,951       23,480       50,921       47,341
                                 
Fair value gains on real estate properties       7,168       24,843       17,416       74,241
Gain on sale of real estate properties             2,058             2,058
Net income from equity accounted investments       1,032       909       2,087       3,501
Net income for the period     $      34,151     $      51,290     $      70,424     $      127,141
                                 
Other comprehensive income                                
Items to be reclassified to profit or loss in
subsequent periods:
                               
  Amortization - cash flow hedge       252       247       503       493
Comprehensive income     $      34,403     $      51,537     $      70,927     $       127,634

 

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,       June 30,       June 30,       June 30,
        2014       2013       2014       2013
                                 
Net income for the period     $    34,151     $    51,290     $   70,424     $   127,141
                                 
Add/(deduct) :                                
Fair value gains on real estate properties(1)       (7,129)       (24,787)       (17,362)       (75,793)
Gain on sale of real estate properties             (2,058)             (2,058)
Funds from operations     $     27,022     $         24,445     $         53,062     $         49,290
                                 
Interest expense on convertible debentures       1,814       1,844       3,608       3,638
Diluted FFO     $     28,836     $         26,289     $         56,670     $         52,928
                                 
Funds from operations per unit:                                
  Basic       $0.43       $0.38       $0.85       $0.77
  Diluted(2)       $0.42       $0.37       $0.83       $0.75
                                 
Weighted average units outstanding (in thousands)                                
  Basic       62,138       64,043       62,181       64,067
  Diluted(2)       68,235       70,141       68,279       70,165

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

SOURCE Morguard Real Estate Investment Trust

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