Morguard Real Estate Investment Trust Announces 2010 Third Quarter Results

MISSISSAUGA, ON, Oct. 29 /CNW/ - Morguard Real Estate Investment Trust ("the Trust") (TSX: MRT.UN) today announced its financial results for the three months and nine months ended September 30, 2010 ("Q3").

Morguard REIT's Q3 2010 Financial Statements, and Management's Discussion and Analysis along with its 2009 Annual Report are available on Morguard REIT's website at www.morguardreit.com and have been filed with SEDAR at www.sedar.com.

HIGHLIGHTS

• Net operating income for Q3 2010 was $30.9 million compared to $27.2 million for the same period in 2009.
• Net income for Q3 2010 totaled $6.4 million or $0.12 per unit compared to $3.5 million or $0.06 per unit for the same period in 2009.  Net income for Q3 2009 was affected by a $4.1 million charge for issue costs related to the Trust's $103.5 million issue of 6.50% convertible unsecured subordinated debentures completed on September 22, 2009.
• Recurring distributable income ("RDI") totaled to $15.4 million or $0.27 per unit (basic and diluted) compared to $14.1 million or $0.25 per unit (basic and diluted) for the same period in 2009.
• Funds from operations ("FFO") increased to $17.8 million or $0.31 per unit (basic) and $0.30 per unit (diluted) compared to $12.4 million or $0.22 per unit (basic and diluted) for the same period in 2009.
• Overall portfolio occupancy levels were at 94%.

Net Income

(In thousands of dollars, except per-unit amounts) For the three months ended September 30,		2010	2009
Income from real estate properties		$ 55,396	$ 49,582
Property operating income		30,947	27,214
Net income for the period from continuing operations		6,417	3,294
Income for the period from discontinued operations		—	233
Net income for the period		$ 6,417	$ 3,527
Net income per unit (basic and diluted)
	Continuing operations	$ 0.12	$ 0.06
	Discontinued operations	—	—
		$ 0.12	$ 0.06

Distributable Income

Distributable income is net income after adjusting for the amortization of buildings and intangible assets, accretion and issue costs of convertible debentures and providing for any reserves, provisions and allowances established by the Board of Trustees ("Trustees") of the Trust plus any amount the Trustees, in their discretion, determine to be appropriate.

RDI is distributable income excluding gain or loss on sale of real estate properties, unusual or non-recurring items and provisions for diminution in value of real estate properties.  Distributed income, which is income distributed to unitholders, is expressed as a percentage of RDI to arrive at a payout ratio.

The following table outlines the Trust's distributable income, recurring distributable income and payout ratios for the three months ended September 30, 2010 and 2009.

(In thousands of dollars, except per-unit amounts and percentages) For the three months ended September 30,	2010	2009
Net income for the period	$     6,417	$     3,527
Add/(deduct)
Amortization - buildings	6,990	5,941
Amortization - intangibles	2,129	925
Amortization - above/(below) market-rate leases, net	(277)	(213)
Amortization - stepped rents	(152)	(237)
Accretion of convertible debentures	332	23
Issue costs - convertible debentures	—	4,145
Recurring distributable income	$    15,439	$   14,111
Distributed income	$    12,793	$   12,936
Payout ratio:
Recurring distributable income	82.9%	91.7%
Recurring distributable income - per unit (basic)	$       0.27	$      0.25
Recurring distributable income - per unit (diluted)	$       0.27	$      0.25
Weighted average number of units - (basic) (in thousands)	56,852	57,498
Weighted average number of units - (diluted) (in thousands)	64,245	57,704

Funds from Operations

The real estate industry has adopted a measure of FFO to supplement net income as an operating performance measurement.  The Trust's calculation of FFO is consistent with the definition provided by the Real Property Association of Canada ("REALPac").

FFO is defined as net income adjusted for amortization of buildings, leasehold improvements, intangible items, deferred leasing costs, accretion of convertible debentures and any gain or loss on sale of real estate properties as well as any provisions against capital.  FFO per unit is calculated by dividing FFO attributable to unitholders by the weighted average number of units outstanding for the period.

FFO was calculated as follows:

Three months ended,	September 30, 2010				September 30, 2009
(In thousands of dollars, except per-unit amounts)	Continuing		Discontinued		Continuing	Discontinued
	Operations		Operations	Total	Operations	Operations	Total
Net income for the period	$    6,417		$     —	$   6,417	$     3,294	$      233	$   3,527
Add/(deduct) items not affecting cash:
Amortization - buildings		6,990	—	6,990	5,871	70	5,941
Amortization - leasehold improvements		1,395	—	1,395	1,466	6	1,472
Amortization - intangibles		2,129	—	2,129	925	—	925
Amortization - deferred leasing costs		547	—	547	554	5	559
Accretion of convertible debentures		332	—	332	23	—	23
Funds from operations		$   17,810	$     —	$  17,810	$    12,133	$      314	$  12,447
Funds from operations      per unit (basic)		$      0.31	$      —	$     0.31	$        0.21	$     0.01	$     0.22
Funds from operations      per unit (diluted)		$      0.30	$      —	$     0.30	$        0.21	$     0.01	$     0.22

Readers are cautioned that although the terms "Operating Income", "Funds from Operations", "Distributable Income" and "Recurring Distributable Income" are commonly used to measure, compare and explain the operating and financial performance of Canadian real estate investment trusts and such terms are defined in the Management's Discussion and Analysis, such terms are not recognized terms under Canadian generally accepted accounting principles.  Such terms do not necessarily have a standardized meaning and may not be comparable to similarly titled measures presented by the other publicly traded entities.

Morguard is a closed-end real estate investment trust, which owns a diversified portfolio of 51 retail, office, and mixed-use properties in Canada with a book value of $1.3 billion and approximately 8.3 million square feet of leasable space.  For more information, visit the Trust's website at www.morguardreit.com.