Morguard North American Residential REIT Announces 2014 Third Quarter Results
Nov 5, 2014
MISSISSAUGA, ON, Nov. 5, 2014 /CNW/ - Morguard North American Residential REIT (the 'REIT") (TSX: MRG.UN) today announced its financial results for the three and nine months ended September 30, 2014.
All amounts in CAD thousands, except suites and per unit amounts, unless otherwise noted.
HIGHLIGHTS
The REIT is reporting same property quarterly performance of:
- Normalized net operating income (excluding the impact of IFRIC 21) of $22.6 million for the three months ended September 30, 2014, an increase of $0.7 million over the same period in 2013.
- Funds from Operations ("FFO") of $10.8 million for the three months ended September 30, 2014, an increase of $0.4 million over the same period in 2013.
- Adjusted Funds from Operations ("AFFO") of $0.17 per unit for the three months ended September 30, 2014, a 6% increase as compared to the $0.16 value generated in the third quarter of 2013.
- FFO payout ratio for the period was 65.2% (AFFO payout ratio – 88.2%)
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FINANCIAL AND OPERATIONAL HIGHLIGHTS |
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As at |
September 30, |
December 31, |
September 30, |
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Operational Information |
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Number of properties |
44 |
44 |
44 |
|
Total suites |
12,850 |
12,850 |
12,850 |
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Occupancy percentage |
96.4% |
95.7% |
96.2% |
|
Monthly weighted average in-place rent - Canada |
$1,241 |
$1,232 |
$1,227 |
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Monthly weighted average in-place rent - U.S. (in U.S. dollars) |
US$938 |
US$916 |
US$915 |
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Summary of Financial Information |
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Total gross book value |
$1,772,163 |
$1,671,233 |
$1,637,057 |
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Debt |
$983,290 |
$938,508 |
$919,708 |
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Debt to gross book value |
55% |
56% |
56% |
|
Weighted average interest rate on mortgages payable |
4.1% |
4.2% |
4.2% |
|
Weighted average term to maturity on mortgages payable (years) |
4.9 |
4.3 |
4.5 |
FINANCIAL AND OPERATIONAL HIGHLIGHTS
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Three months ended September 30, |
Nine months ended September 30, |
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(in thousands of dollars, except per unit amounts) |
2014 |
2013 |
2014 |
2013 |
|
Summary of Financial Information |
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Revenue from income producing properties (IPP) |
$43,828 |
$41,557 |
$129,679 |
$101,120 |
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Normalized net operating income(1) |
$22,601 |
$21,878 |
$67,627 |
$52,659 |
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Net operating income |
$25,324 |
$24,268 |
$64,748 |
$55,020 |
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Same property normalized net operating income(1) |
$22,601 |
$21,878 |
$39,051 |
$38,722 |
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Net operating margin(1) |
52% |
53% |
52% |
52% |
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Interest coverage(1) |
1.89 |
1.77 |
1.84 |
1.81 |
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Funds from Operations (FFO) - basic |
$10,808 |
$10,443 |
$33,034 |
$25,013 |
|
Funds from Operations (FFO) - diluted |
$11,512 |
$11,146 |
$35,121 |
$26,542 |
|
FFO per unit – basic |
$0.23 |
$0.22 |
$0.71 |
$0.56 |
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FFO per unit – diluted |
$0.23 |
$0.22 |
$0.70 |
$0.56 |
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Adjusted Funds from Operations (AFFO) - basic |
$7,895 |
$7,528 |
$23,889 |
$19,441 |
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Adjusted Funds from Operations (AFFO) - diluted |
$8,599 |
$8,231 |
$25,976 |
$20,970 |
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AFFO per unit – basic and diluted |
$0.17 |
$0.16 |
$0.51 |
$0.44 |
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FFO payout ratio |
65.22% |
68.18% |
63.38% |
80.36% |
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AFFO payout ratio |
88.24% |
93.75% |
88.24% |
102.27% |
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Weighted average number of units outstanding during the period (000's) |
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- Basic |
46,525 |
46,505 |
46,519 |
44,287 |
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- Diluted |
50,396 |
50,376 |
50,390 |
47,123 |
1 Excludes realty taxes accounted for under IFRIC 21.
NET OPERATING INCOME
|
2014 |
2013 |
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For the three months ended September 30, (In thousands of dollars) |
Reported NOI |
IFRIC 21 |
Normalized NOI |
Reported NOI |
IFRIC 21 |
Normalized NOI |
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Revenue from income producing properties |
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Same property |
$43,828 |
— |
$43,828 |
$41,557 |
— |
$41,557 |
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Property Operating Expenses |
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Same property |
||||||||||||
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Operating expenses |
12,374 |
— |
12,374 |
11,763 |
— |
11,763 |
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Utilities |
3,912 |
— |
3,912 |
3,521 |
— |
3,521 |
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Realty taxes |
2,218 |
2,723 |
4,941 |
2,005 |
2,390 |
4,395 |
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Same property |
18,504 |
2,723 |
21,227 |
17,289 |
2,390 |
19,679 |
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Net Operating Income |
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Same property |
$25,324 |
($2,723) |
$22,601 |
$24,268 |
($2,390) |
$21,878 |
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Normalized net operating income increased by $0.7 million during the three months ended September 30, 2014, to $22.6 million, compared to $21.9 million in 2013. The increase was predominantly due to the change in the U.S. foreign exchange rate which increased NOI by $0.6 million and an increase of US$0.2 million in NOI for the U.S. properties.
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2014 |
2013 |
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For the nine months ended September 30, (In thousands of dollars) |
Reported NOI |
IFRIC 21 |
Normalized NOI |
Reported NOI |
IFRIC 21 |
Normalized NOI |
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Revenue from income producing properties |
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Same property |
$77,874 |
— |
$77,874 |
$75,511 |
— |
$75,511 |
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Acquisitions |
51,805 |
— |
51,805 |
25,609 |
— |
25,609 |
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Total revenue from income producing properties |
129,679 |
— |
129,679 |
101,120 |
— |
101,120 |
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Property Operating Expenses |
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Same property |
||||||||||||
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Operating expenses |
20,752 |
— |
20,752 |
20,302 |
— |
20,302 |
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Utilities |
9,146 |
— |
9,146 |
8,110 |
— |
8,110 |
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Realty taxes |
9,813 |
(888) |
8,925 |
8,749 |
(372) |
8,377 |
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Same property |
39,711 |
(888) |
38,823 |
37,161 |
(372) |
36,789 |
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Acquisitions |
25,220 |
(1,991) |
23,229 |
8,939 |
2,733 |
11,672 |
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Total property operating expenses |
64,931 |
(2,879) |
62,052 |
46,100 |
2,361 |
48,461 |
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Net Operating Income |
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Same property |
38,163 |
888 |
39,051 |
38,350 |
372 |
38,722 |
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Acquisitions |
26,585 |
1,991 |
28,576 |
16,670 |
(2,733) |
13,937 |
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Total Net Operating Income |
$64,748 |
$2,879 |
$67,627 |
$55,020 |
($2,361) |
$52,659 |
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Normalized net operating income increased by $15.0 million during the nine months ended September 30, 2014, to $67.6 million, compared to $52.7 million in 2013. The increase was predominantly due to the U.S. acquisitions, which increased NOI by US$12.6 million in 2014, and the change in the U.S. foreign exchange rate which increased NOI by $2.8 million.
FUNDS FROM OPERATIONS ("FFO")
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Three months ended September 30, |
Nine months ended September 30, |
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(In thousands of dollars, except per unit amounts) |
2014 |
2013 |
2014 |
2013 |
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Net income for the period attributable to the unitholders |
$16,102 |
$23,055 |
$27,638 |
$43,308 |
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Add (deduct): |
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Realty taxes accounted for under IFRIC 21 |
(2,723) |
(2,390) |
2,879 |
(2,361) |
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Fair value gain on IPP |
(6,580) |
(4,331) |
(37,761) |
(1,146) |
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Non-controlling interests' share of fair value gain on IPP |
102 |
263 |
514 |
459 |
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Fair value (gain) loss on Class B LP Units |
(4,306) |
(12,573) |
13,951 |
(29,796) |
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Fair value gain on conversion option of convertible debentures |
(102) |
(7) |
(7) |
(7) |
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Distributions on Class B LP Units recorded as interest expense |
2,583 |
2,583 |
7,750 |
7,750 |
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Foreign exchange gain |
(576) |
— |
(361) |
— |
|
Deferred income tax provision |
6,308 |
3,843 |
18,431 |
6,806 |
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Funds from operations |
$10,808 |
$10,443 |
$33,034 |
$25,013 |
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Interest expense on convertible debentures |
704 |
703 |
2,087 |
1,529 |
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Diluted funds from operations |
$11,512 |
$11,146 |
$35,121 |
$26,542 |
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FFO per unit - basic |
$0.23 |
$0.22 |
$0.71 |
$0.56 |
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FFO per unit - diluted |
$0.23 |
$0.22 |
$0.70 |
$0.56 |
FFO increased by $0.4 million during the three months ended September 30, 2014, to $10.8 million ($0.23 per unit), compared to $10.4 million ($0.22 per unit) in 2013. The increase is mainly due an increase in normalized NOI of $0.7 million, partially offset by an increase in trust expenses of $0.3 million. The change in foreign exchange rates had a positive impact on FFO of $0.4 million.
FFO increased by $8.0 million during the nine months ended September 30, 2014, to $33.0 million ($0.71 per unit), compared to $25.0 million ($0.56 per unit) in 2013. The increase is mainly due an increase in normalized NOI of $15.0 million, partially offset by an increase in interest expenses of $4.2 million, an increase in trust expenses of $2.0 million and a decrease in other income of $0.7 million. The change in foreign exchange rates had a positive impact on FFO of $1.6 million.
ADJUSTED FUNDS FROM OPERATIONS ("AFFO")
|
Three months ended September 30, |
Nine months ended September 30, |
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(In thousands of dollars, except per unit amounts) |
2014 |
2013 |
2014 |
2013 |
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Funds from Operations |
$10,808 |
$10,443 |
$33,034 |
$25,013 |
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Add (deduct): |
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Amortization of deferred financing costs assumed on Initial Public Offering ("IPO") |
220 |
367 |
713 |
1,099 |
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Non-controlling interests' share of amortization of deferred financing costs assumed on IPO |
(9) |
(12) |
(33) |
(35) |
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Amortization of mark to market adjustments on mortgages |
(1,737) |
(1,881) |
(5,708) |
(3,338) |
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Maintenance capital expenditures |
(1,442) |
(1,442) |
(4,280) |
(3,456) |
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Amortization of cash flow hedge |
55 |
53 |
163 |
158 |
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Adjusted funds from operations |
7,895 |
7,528 |
23,889 |
19,441 |
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Interest expense on convertible debentures |
704 |
703 |
2,087 |
1,529 |
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Diluted AFFO |
$8,599 |
$8,231 |
$25,976 |
$20,970 |
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AFFO per unit – basic and diluted |
$0.17 |
$0.16 |
$0.51 |
$0.44 |
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AFFO increased by $0.4 million for the three months ended September 30, 2014, to $7.9 million ($0.17 per unit) compared to $7.5 million ($0.16 per unit) in 2013. The increase is mainly due to an increase in FFO of $0.4 million for the three months ended September 30, 2014.
AFFO increased by $4.4 million for the nine months ended September 30, 2014, to $23.9 million ($0.51 per unit) compared to $19.4 million ($0.44 per unit) in 2013. The increase is mainly due to an increase in FFO of $8.0 million for the nine months ended September 30, 2014, partially offset by an increase in amortization of mark to market adjustments on mortgages of $2.4 million and an increase in maintenance capital expenditures of $0.8 million for the period as a result of the U.S. acquisitions completed in 2013.
CONFERENCE CALL DETAILS
Morguard North American Residential Real Estate Investment Trust will hold a conference call on Friday, November 7, 2014 at 10:00 a.m. (ET) to discuss the financial results for the quarters ended September 30, 2014 and 2013. To participate in the conference call, please dial 647-427-7450 or 1-888-231-8191. Please quote conference ID# 25625373.
ABOUT MORGUARD NORTH AMERICAN RESIDENTIAL REIT
The 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 consists of 12,850 residential suites (as of November 5, 2014) located in Ontario, Alberta, Alabama, Colorado, Florida, Georgia, Louisiana, North Carolina and Texas with an appraised value of approximately $1.7 billion at September 30, 2014.
SOURCE Morguard North American Residential Real Estate Investment Trust
For further information: Morguard Corporation: K. (Rai) Sahi, Chief Executive Officer, (905) 281-3800; Robert Wright, Chief Financial Officer, (905) 281-3800