Morguard North American Residential REIT Announces 2014 Results

Feb 18, 2015

TSX: MRG.UN

MISSISSAUGA, ON, Feb. 18, 2015 /CNW/ - Morguard North American Residential REIT (the 'REIT") (TSX:  MRG.UN) today announced its financial results for the year ended December 31, 2014. 

All amounts in CAD thousands, except suites and per unit amounts, unless otherwise noted.

HIGHLIGHTS

The REIT is reporting performance of:

  • Normalized net operating income (excluding the impact of IFRIC 21) of $90.2 million for the year ended December 31, 2014, an increase of $16.8 million over 2013.
  • Funds from Operations ("FFO") of $44.7 million for the year ended December 31, 2014, an increase of $10.1 million over 2013.
  • FFO of $0.25 per unit for the three months ended December 31, 2014 ($0.22 per unit after excluding the one-time adjustment of $1.5 million for early debt extinguishments) compared to $0.21 per unit in the fourth quarter of 2013.
  • Adjusted Funds from Operations ("AFFO") of $0.67 per unit for the year ended December 31, 2014, a 16% increase as compared to the $0.58 value generated in 2013.
  • FFO payout ratio for 2014 was 62.50% (AFFO payout ratio – 89.55%)

 

FINANCIAL AND OPERATIONAL HIGHLIGHTS

    
     

As at December 31

2014

2013
     

Operational Information

    

Number of properties

44

44

Total suites

12,850

12,850

Occupancy percentage

96.0%

95.7%

Monthly weighted average in-place rent - Canada

$1,246

$1,232

Monthly weighted average in-place rent - U.S. (in U.S. dollars)

US$945

US$916
     

Summary of Financial Information

    

Total gross book value

$1,832,287

$1,671,233

Debt

$1,022,555

$938,508

Debt to gross book value

56%

56%

Weighted average interest rate on mortgages payable

3.9%

4.2%

Weighted average term to maturity on mortgages payable (years)

5.6

4.3
     

 

FINANCIAL AND OPERATIONAL HIGHLIGHTS (CONT'D)

  
   

For the years ended December 31

  

(in thousands of dollars, except per unit amounts)

2014

2013

Summary of Financial Information

    

Revenue from income producing properties (IPP)

$174,815

$142,939

Normalized net operating income (NOI)(1)

$90,217

$73,460

Net operating income

$90,217

$78,846

Same property normalized net operating income(1)

$52,399

$50,753

Net operating margin(1)

52%

51%

Interest coverage(1)

1.85

1.85
     

Funds from Operations (FFO) - basic

$44,726

$34,657

Funds from Operations (FFO) - diluted

$47,516

$36,889

FFO per unit – basic

$0.96

$0.77

FFO per unit – diluted

$0.94

$0.77
     

Adjusted Funds from Operations (AFFO) - basic

$31,031

$26,135

Adjusted Funds from Operations (AFFO) - diluted

$33,821

$28,367

AFFO per unit – basic and diluted

$0.67

$0.58
     

FFO payout ratio

62.50%

77.92%

AFFO payout ratio

89.55%

103.45%

Weighted average number of units outstanding during the year (000's)

    

-   Basic

46,522

44,847

-   Diluted

50,393

47,944

1 Excludes realty taxes accounted for under IFRIC 21.

 

NET OPERATING INCOME

      
       

For the years ended December 31

2014

  

2013

(In thousands of dollars)

Reported
NOI

  

IFRIC 21

  

Normalized
NOI

  

Reported
NOI

  

IFRIC 21

  

Normalized
NOI

Revenue from income producing properties

                        

Same property

$104,808

  

$—

  

$104,808

  

$101,049

  

$—

  

$101,049

Acquisitions

70,007

  

—

  

70,007

  

41,890

  

—

  

41,890

Total revenue from income producing properties

174,815

  

—

  

174,815

  

142,939

  

—

  

142,939

Property Operating Expenses

                      

Same property

                      
 

Operating expenses

28,033

  

—

  

28,033

  

27,731

  

—

  

27,731
 

Utilities

12,440

  

—

  

12,440

  

10,915

  

—

  

10,915
 

Realty taxes

11,936

  

—

  

11,936

  

10,794

  

856

  

11,650

Same property

52,409

  

—

  

52,409

  

49,440

  

856

  

50,296

Acquisitions

32,189

  

—

  

32,189

  

14,653

  

4,530

  

19,183

Total property operating expenses

84,598

  

—

  

84,598

  

64,093

  

5,386

  

69,479

Net Operating Income

                      

Same property

52,399

  

—

  

52,399

  

51,609

  

(856)

  

50,753

Acquisitions

37,818

  

—

  

37,818

  

27,237

  

(4,530)

  

22,707

Total Net Operating Income

$90,217

  

$—

  

$90,217

  

$78,846

  

($5,386)

  

$73,460
                             

 

Normalized net  operating  income  increased  by  $16.8 million  during  the  year  ended  December 31, 2014, to $90.2 million, compared to $73.5 million in 2013.  The increase was due to the U.S. acquisitions, which increased NOI by US$12.4 million in 2014, an increase of US$1.2 million in NOI for the remaining U.S. properties and the change in the U.S. foreign exchange rate which increased NOI by $3.9 million.  These items were partially offset by a decrease in NOI for the Canadian properties of $0.7 million.

 

FUNDS FROM OPERATIONS ("FFO")

        
         

For the years ended December 31

        

(In thousands of dollars, except per unit amounts)

2014

  

2013

  

Net income for the year attributable to the unitholders

$38,157

  

$56,381

  

Add (deduct):

        

Realty taxes accounted for under IFRIC 21

—

  

(5,386)

  

Fair value gain on income producing properties

(40,104)

  

(2,576)

  

Non-controlling interests' share of fair value gain on income producing properties

610

  

649

  

Fair value loss (gain) on Class B LP Units

10,506

  

(30,830)

  

Fair value gain on conversion option of debentures

(57)

  

(43)

  

Distributions on Class B LP Units recorded as interest expense

10,333

  

10,333

  

Foreign exchange gain

(830)

  

(2,399)

  

Deferred income tax provision

26,111

  

8,528

  

Funds from operations

$44,726

  

$34,657

  

Interest expense on convertible debentures

2,790

  

2,232

  

Diluted FFO

$47,516

  

$36,889

  

FFO per unit - basic

$0.96

  

$0.77

  

FFO per unit - diluted

$0.94

  

$0.77

  
         

 

FFO increased by $10.1 million during the year ended December 31, 2014, to $44.7 million ($0.96 per unit), compared to $34.7 million ($0.77 per unit) in 2013. The increase is mainly due an increase in normalized NOI of $16.8 million and increase in other income of $0.8 million, partially offset by an increase in interest expense of $5.2 million and an increase in trust expenses of $2.3 million.  The change in foreign exchange rates had a positive impact on FFO of $2.3 million.

 

ADJUSTED FUNDS FROM OPERATIONS ("AFFO")

        
         

For the years ended December 31

        

(In thousands of dollars, except per unit amounts)

2014

  

2013

  

Funds from Operations

$44,726

  

$34,657

  

Add (deduct):

        

Amortization of deferred financing costs assumed on Initial Properties

818

  

1,469

  

Non-controlling interests' share of amortization of deferred financing costs assumed on Initial Properties

(35)

  

(47)

  

Amortization of mark to market adjustments on mortgages

(7,457)

  

(5,257)

  

Maintenance capital expenditures

(5,722)

  

(4,898)

  

Gain from debt extinguishments

(1,517)

  

—

  

Amortization of cash flow hedge

218

  

211

  

Adjusted funds from operations

31,031

  

26,135

  

Interest expense on convertible debentures

2,790

  

2,232

  

Diluted AFFO

$33,821

  

$28,367

  

AFFO per unit - basic and diluted

$0.67

  

$0.58

  

 

AFFO increased by $4.9 million for the year ended December 31, 2014, to $31.0 million ($0.67 per unit) compared to $26.1 million ($0.58 per unit) in 2013.  The  increase is  mainly due  to an  increase in  FFO  of $10.1 million for the year ended December 31, 2014, partially offset by an increase in amortization of mark to market adjustments on mortgages of $2.2 million, the  gain  from  debt extinguishments of $1.5 million, an increase in maintenance capital expenditures of $0.8 million for the year as a result of the U.S. acquisitions completed in 2013 and a decrease in the amortization of deferred financing  costs  assumed  on  Initial  Properties  of  $0.6 million.

CONFERENCE CALL DETAILS

Morguard North American Residential Real  Estate  Investment  Trust  will  hold  a  conference  call  on  February 20, 2015 at 10:00 a.m. (ET) to discuss the financial results for the years ended December 31, 2014 and 2013. To participate in the conference call, please dial 647-427-7450 or 1-888-231-8191.  Please quote conference ID# 82762885.

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 February 17, 2015) located in Ontario, Alberta, Alabama, Colorado, Florida, Georgia, Louisiana, North Carolina and  Texas  with  an  appraised  value  of  approximately  $1.8 billion  at  December 31, 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