Morguard Real Estate Investment Trust Announces 2009 Results
Mar 3, 2010
MISSISSAUGA, ON, March 3 /CNW/ - Morguard Real Estate Investment Trust ("Morguard REIT") (TSX: MRT.UN) today announced its financial results for the year ended December 31, 2009.
Morguard REIT's 2009 Financial Statements, and Management's Discussion and Analysis along with its 2008 Annual Report are available on Morguard REIT's website at www.morguardreit.com and have been filed with SEDAR at www.sedar.com.
HIGHLIGHTS FOR 2009
- On September 22, 2009, the Trust issued $90.0 million principal
amount of 6.50% convertible unsecured subordinated debentures,
maturing on September 30, 2014 with an underwriters' over-allotment
option for additional issuance of debentures of $13.5 million. On
September 29, 2009, the full amount of the underwriters' over-
allotment option was exercised.
- On December 15, 2009, the Trust, together with a major Canadian
pension fund, acquired a 50% co-ownership interest in a 370,000-
square-foot Class A office building located in downtown Toronto, for
a purchase price of $48.3 million plus other acquisition costs of
$2.0 million.
- Overall portfolio occupancy levels were stable at 95%.
FINANCIAL HIGHLIGHTS
- Net operating income for 2009 increased to $115.0 million from
$114.5 million for the same period in 2008.
- Net income totaled $32.4 million or $0.56 per unit compared to
$84.2 million or $1.43 per unit for the same period in 2008. In 2009,
net income was significantly impacted by the expensing of $4.2
million of issue costs relating to the issuance of the $103.5 million
of 6.50% convertible unsecured subordinated debentures partially
offset by $3.1 million in gains on sale of real estate properties. In
2008, net income included gains on sale of real estate properties
totalling $49.0 million and other income of $2.3 million relating to
interest earned on capital invested to finance the acquisition of a
50% interest in Scotia Place which was subsequently resold to a major
Canadian pension fund organization.
- Recurring distributable income decreased to $61.1 million or $1.07
per unit (basic) and $1.06 per unit (diluted) compared to $64.7
million or $1.10 per unit (basic and diluted) for the same period in
2008.
- Funds from operations ("FFO") decreased to $66.5 million or $1.16 per
unit (basic) and $1.14 per unit (diluted) compared to $74.2 million
or $1.26 per unit (basic and diluted) for the same period in 2008.
FFO was significantly impacted by $4.2 million of issue costs ($0.07
per unit, basic and diluted) relating to the issuance of the
$103.5 million of 6.50% convertible unsecured subordinated
debentures.
Net Income
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(In thousands of dollars, except per-unit amounts) 2009 2008
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Income from real estate properties $ 206,491 $ 201,105
Property operating income $ 115,027 $ 114,514
Net income for the year from continuing
operations $ 28,934 $ 71,551
Income for the year from discontinued operations 3,420 12,671
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Net income for the year $ 32,354 $ 84,222
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Net income per unit (basic and diluted)
Continuing operations $ 0.50 $ 1.22
Discontinued operations 0.06 0.21
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$ 0.56 $ 1.43
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Distributable Income
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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.
Recurring distributable income 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 year ended December 31, 2009 and 2008.
(In thousands of dollars, except per-unit amounts
and percentages) 2009 2008
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Net income for the year $ 32,354 $ 84,222
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Add/(deduct)
Amortization - buildings 25,141 24,737
Amortization - intangibles 3,848 5,868
Amortization - above/(below) market-rate leases,
net (904) (1,028)
Amortization - stepped rents (676) (529)
Accretion of convertible debentures 260 -
Issue costs - convertible debentures 4,195 -
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Distributable income 64,218 113,270
Gain on sale of real estate properties (3,141) (48,959)
Provision for diminution in value of real estate
properties - 400
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Recurring distributable income $ 61,077 $ 64,711
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Distributed income - regular $ 51,778 $ 53,122
Distributed income - special $ - $ 10,035
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Payout ratio: Recurring distributable income(1) 84.8% 82.1%
Recurring distributable income - per unit (basic) $ 1.07 $ 1.10
Recurring distributable income - per unit
(diluted) $ 1.06 $ 1.10
Weighted average number of units - (in thousands)
(basic) 57,577 59,034
Weighted average number of units - (in thousands)
(diluted) 60,094 59,034
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Funds from Operations
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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 and 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:
2009 2008
(In thousands ------------------------------------------------------
of dollars, Continu- Discon- Continu- Discon-
except per- ing tinued ing tinued
unit Opera- Opera- Opera- Opera-
amounts) tions tions Total tions tions Total
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Net income for the
year $28,934 $ 3,420 $32,354 $71,551 $12,671 $84,222
Add/(deduct) items
not affecting cash:
Gain on sale of
real estate
properties - (3,141) (3,141) (36,981) (11,978) (48,959)
Provision for
diminution in
value of real
estate properties - - - - 400 400
Amortization -
buildings 25,083 58 25,141 24,545 192 24,737
Amortization -
leasehold
improvements 5,708 17 5,725 5,742 17 5,759
Amortization -
intangibles 3,848 - 3,848 5,868 - 5,868
Amortization -
deferred leasing
costs 2,332 14 2,346 2,169 14 2,183
Accretion of
convertible
debentures 260 - 260 - - -
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Funds from
operations $66,165 $ 368 $66,533 $72,894 $ 1,316 $74,210
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Funds from
operations per
unit (basic) $ 1.16 $ - $ 1.16 $ 1.24 $ 0.02 $ 1.26
Funds from
operations per
unit (diluted) $ 1.14 $ - $ 1.14 $ 1.24 $ 0.02 $ 1.26
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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.
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Morguard is a closed-end real estate investment trust, which owns a
diversified portfolio of 50 retail, office, and mixed-use properties in
Canada with a book value of $1.2 billion and approximately 7.8 million
square feet of leasable space. For more information, visit the Trust's
website at www.morguardreit.com.
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(1) Payout ratio is calculated using regular distributions as a
percentage of recurring distributable income
For further information: Rai Sahi, President and Chief Executive Officer, Tel: (905) 281-4800, or; Tim Walker, Vice President and Chief Financial Officer, Tel: (905) 281-4800