MORGUARD REAL ESTATE INVESTMENT TRUST ANNOUNCES ACCOUNTING IMPACT ON BOOKVALUE OF INVESTMENT PROPERTIES ON ADOPTION OF INTERNATIONAL FINANCIALREPORTING STANDARDS

MISSISSAUGA, ON, Jan. 13 /CNW/ - Morguard Real Estate Investment Trust ("MREIT") (TSX: MRT.UN) today announced the valuation of its investment properties for its opening balance sheet as at January 1, 2010 in accordance with its transition to International Financial Reporting Standards ("IFRS").

IFRS will become effective on January 1, 2011 and MREIT's financial statements will include comparative results for the periods commencing January 1, 2010. MREIT's first reporting period under IFRS will commence with its interim financial statements for the three months ended March 31, 2011.

MREIT has adopted the fair value model under IFRS with the initial increase in fair value on the transition date recorded in unitholders' equity as at January 1, 2010 and subsequent changes being recorded in the income statement on a quarterly basis in future periods.

The carrying value of MREIT's income properties and income properties under development will increase by approximately $400 million to $1.7 billion. This $1.7 billion value compares to the historical cost amount under current Canadian generally accepted accounting principles ("GAAP") of $1.3 billion as at January 1, 2010. The IFRS and GAAP carrying values both include straight-line rent, direct leasing costs, lease incentives and intangible liabilities (below market leases).

Valuation Process and Results

For its opening IFRS balance sheet at January 1, 2010, MREIT had its income property portfolio valued by the appraisal division of Morguard Investments Limited ("MIL"). MIL also provides property management services to MREIT and is a subsidiary of Morguard Corporation, who owns 45.5% of MREIT's units outstanding as at December 31, 2010. MIL's appraisal division is staffed with five accredited members of the Appraisal Institute of Canada who collectively in 2010 valued over $8.5 billion of real estate properties in Canada for institutional and corporate clients.

All income-producing properties were valued using standard appraisal techniques including discounted cash flow analysis, direct capitalization and direct comparison. Using the direct capitalization income approach as the measurement parameter, individual properties were valued using capitalization rates in the range of 6.5% to 9.8% applied to a stabilized net operating income ("NOI"), resulting in an overall weighted average capitalization rate of 7.3%.

The table below provides further details of the weighted average capitalization rates for certain sub categories of properties as at January 1, 2010:

About Morguard Real Estate Investment Trust

Morguard REIT is a closed-end real estate investment trust, which owns a diversified portfolio of 51 high quality retail, office and mixed-use properties in Canada comprising approximately 8.3 million square feet of leaseable space.