Morguard Real Estate Investment Trust Announces 2021 Fourth Quarter and Annual Results

MISSISSAUGA, ON, Feb. 16, 2022 /CNW/ - Morguard Real Estate Investment Trust ("the Trust") (TSX: MRT.UN) today is pleased to announce its 2021 Fourth Quarter and Annual Results. 

SELECTED FINANCIAL INFORMATION
The table below sets forth selected financial data relating to the Trust's 3 months and fiscal years ended December 31, 2021 and 2020. This financial data is derived from the Trust's consolidated statements which are prepared in accordance with IFRS.

CONSOLIDATED OPERATING HIGHLIGHTS
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:

The decline in enclosed regional centres revenue is due to the enclosed mall tenant failures in 2020 and subsequent restructured rent arrangements provided to certain retail tenants that are struggling as part of the COVID-19 pandemic.

The following is an analysis of net operating income by asset type:

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

Included in other revenue and lease cancellation fees in the twelve-month period ending December 31, 2021, is $2.3 million received from Lowe's at Pine Centre in order to facilitate the Save-on-Foods development.

Property operating expenses include costs related to interior and exterior maintenance, insurance and utilities. Property operating expenses (excluding bad debt expense) for the year ended December 31, 2021, increased 3.2% to $61.2 million from $59.3 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 year ended December 31, 2021, decreased 1.3% as compared to 2020. This decrease was the result of restructured rent arrangements provided to certain retail tenants that are struggling as part of the COVID-19 pandemic, offset by an increase of $2.3 million in lease cancellation fees.

Interest expense for the year ended December 31, 2021, decreased 5.5% to $53.3 million from $56.4 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 3.6% from 3.8% in the third quarter of 2020, in addition to a $53.2 million reduction in overall debt on a year over year basis.

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. In accordance with this policy, the following fair value adjustments by segment have been recorded:

Reported net income for year ended December 31, 2021, was $4.9 million as compared to loss of $357.4 million in 2020. This change is due to the fair value losses recorded in 2020, as described above.

LIQUIDITY AND FINANCING UPDATE
On December 7, 2021, the Trust issued $159.0 million principal amount of 5.25% convertible unsecured subordinated debentures maturing on December 31, 2026. These proceeds were used to redeem the $175.0 million in convertible debentures issued in 2016.

The Trust has available liquidity of $184.8 million as of December 31, 2021 and also has a unencumbered asset pool of $314.6 million in order to raise necessary capital, if required.  This compares to liquidity as of December 31, 2020 which was $141.9 million.  

FUNDS FROM OPERATIONS AND ADJUSTED FUNDS FROM OPERATIONS
The Trust presents FFO and AFFO in accordance with the current definition of the Real Property Association of Canada ("REALpac") as follows:

FUNDS FROM OPERATIONS AND ADJUSTED FUNDS FROM OPERATIONS        

SPECIFIED FINANICAL MEASURES
The Trust reports its financial results in accordance with International Financial Reporting Standards ("IFRS"). However, this earnings release also uses specified financial measures that are not defined by IFRS which follow the disclosure requirements established by National Instrument 52-112 Non-GAAP and Other Financial Measures Disclosure. Specified financial measures are categorized as non-GAAP financial measures, non-GAAP ratios, and other financial measures. Additional details on specified financial measures including supplementary financial measures, capital management measures and total segment measures are set out in the Trust's Management's Discussion and Analysis for the year ended December 31, 2021 and available on the Trust's profile on SEDAR at www.sedar.com.

The following Non-GAAP financial measures do not have any standardized meaning prescribed by IFRS and are not necessarily comparable to similar measures presented by other reporting issuers in similar or different industries. These measures should be considered as supplemental in nature and not as substitutes for related financial information prepared in accordance with IFRS. The Trust's management uses these measures to aid in assessing the Trust's underlying core performance and provides these additional measures so that investors may do the same. Management believes that the non-GAAP financial measures, which supplement the IFRS measures, provide readers with a more comprehensive understanding of management's perspective on the Trust's operating results and performance.

FUNDS FROM OPERATIONS ("FFO")
FFO is a non-GAAP measure widely used as a real estate industry standard that supplements net income and evaluates operating performance but is not indicative of funds available to meet the Trust's cash requirements. FFO can assist with comparisons of the operating performance of the Trust's real estate between periods and relative to other real estate entities. FFO is computed by the Trust in accordance with the current definition of the Real Property Association of Canada ("REALpac") and is defined as net income adjusted for fair value changes on real estate properties and gains/(losses) on the sale of real estate properties. The Trust considers FFO to be a useful measure for reviewing its comparative operating and financial performance.

ADJUSTED FUNDS FROM OPERATIONS ("AFFO")
AFFO is a non-GAAP measure that was developed to be a recurring economic earnings measure for real estate entities. The Trust presents AFFO in accordance with the current definition of the REALpac. The Trust defines AFFO as FFO adjusted for straight-line rent and productive capacity maintenance expenditures ("PCME"). AFFO should not be interpreted as an indicator of cash generated from operating activities as it does not consider changes in working capital.

Financial Statements and Management's Discussion and Analysis
The Trust's Q4 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:

About Morguard Real Estate Investment Trust
The Trust is a closed-end real estate investment trust, which owns a diversified portfolio of 46 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