Morguard Real Estate Investment Trust Announces 2007 Results
Feb 28, 2008
MISSISSAUGA, ON, Feb. 28 /CNW/ - Morguard Real Estate Investment Trust
("Morguard REIT") (TSX: MRT.UN) today announced its financial results for the
year ended December 31, 2007.
Morguard REIT's 2007 Financial Statements, and Management's Discussion
and Analysis along with its 2006 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 2007 increased to $107.4 million from
$97.9 million for the same period in 2006;
- Net income for 2007 totaled $63.3 million or $1.07 per unit compared
to $53.2 million or $1.04 per unit for the same period in 2006;
- Recurring distributable income for 2007 increased to $56.8 million or
$0.96 per unit compared to $49.5 million or $0.95 per unit (fully
diluted) for the same period in 2006;
- Funds from operations ("FFO") for 2007 increased to $66.1 million or
$1.12 per unit compared to $52.7 million or $1.03 per unit for the
same period in 2006;
- Overall occupancy levels for 2007 remain high with the retail sector
ending the year at 96% and the office sector ending at 95%.
Fourth Quarter Transactions
- On October 15, 2007, the Trust acquired from a co-owner a 50%
ownership interest in 505 - 3rd St. SW, a 140,000 square foot
office building located in Calgary, Alberta. On October 16, 2007,
the Trust entered into a definitive purchase and sale agreement to
sell a 50% ownership interest in this property to a major Canadian
pension fund organization;
- On October 19, 2007, the Trust entered into definitive purchase
and sale agreement regarding the sale of an 80% co-ownership
interest in Scotia Place, a 560,000 square foot office building
located in Edmonton, Alberta;
- On December 28, 2007, the Trust acquired a 50% ownership interest
in a mixed-use property complex in downtown Ottawa. The complex
includes 350 Sparks Street, a 12-storey 171,311 square foot office
building and 361 Queen Street, a Delta branded hotel, consisting
of two towers containing 328 guest rooms. The hotel is under long-
term lease to a major Canadian real estate investment trust. The
property also includes an underground parking garage containing
273 parking spaces.
FINANCIAL HIGHLIGHTS
Net Income
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(In thousands of dollars except per unit amounts) 2007 2006
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Income from real estate properties $ 189,767 $ 173,774
Net operating income $ 107,429 $ 97,926
Net income from continuing operations $ 26,957 $ 20,225
Income from discontinued operations 36,367 36,677
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Net income $ 63,324 $ 53,223
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-----------------------
Net income per unit (basic and diluted)
Continuing operations $ 0.46 $ 0.32
Discontinued operations 0.61 0.72
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$ 1.07 $ 1.04
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-----------------------Distributable Income
--------------------
The Trust distributes a portion of its net income after adjusting for
amortization of buildings and intangible assets, and providing for any reserve
that the Trustees, in their discretion, consider reasonable. The adjusted net
income is referred to as distributable income and is computed as income, in
accordance with Canadian GAAP, before deduction for amortization of buildings
and intangible assets, less any reserves, provisions and allowances
established by the Trustees, plus any amount the Trustees, in their
discretion, determine to be appropriate.
Recurring distributable income is distributable income excluding gain on
sales, unusual or non-recurring items and provisions for a diminution in value
of real estate properties.
The following table outlines the Trust's distributable income, recurring
distributable income and payout ratios for the years ended December 31, 2007
and 2006.(In thousands of dollars except per unit amounts
and percentages) 2007 2006
-------------------------------------------------------------------------
Net income $ 63,324 $ 53,223
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Add (deduct)
Stepped rents - straight-line adjustment (1,221) (2,132)
Amortization - buildings 21,697 24,883
Amortization - intangibles 6,190 1,144
Amortization - above/(below) market rate leases,
net (910) 52
Amortization - issue costs convertible debentures - 756
Accretion of convertible debentures - 400
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Distributable income 89,080 78,326
Provision for a diminution in value of real
estate properties 2,150 -
Cost of early extinguishment of mortgage bonds
payable 242 3,679
Gain on sale of real estate properties (34,718) (32,505)
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Recurring distributable income $ 56,754 $ 49,500
-----------------------
-----------------------
Distributed income $ 53,164 $ 46,050
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-----------------------
Payout Ratio:
Recurring distributable income 93.7% 93.0%
Recurring distributable income - basic $ 0.96 $ 0.97
Recurring distributable income - diluted $ 0.96 $ 0.95
Weighted average number of units - basic
(in thousands) 59,069 50,985
Weighted average number of units - diluted
(in thousands) 59,069 59,584
-----------------------
-----------------------
Funds from Operations
---------------------
The real estate industry has adopted a measure of funds from operations
("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,
deferred leasing costs, intangible items and any gain or loss on sale of real
estate properties 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 year.
FFO was calculated as follows:
2007 2006
-----------------------------------------------------------
(In thousands
of dollars Dis- Dis-
except per Continuing continued Continuing continued
unit amounts) Operations Operations Total Operations Operations Total
-------------------------------------------------------------------------
Net income $ 26,957 $ 36,367 $ 63,324 $ 16,546 $ 36,677 $ 53,223
Add (deduct)
items not
affecting
cash:
Gain on sale
of real
estate
properties - (34,718) (34,718) - (32,505) (32,505)
Provision for
a diminution
in value of
real estate
properties - 2,150 2,150 - - -
Amortization
- buildings 21,074 623 21,697 19,182 5,701 24,883
Amortization
- leasehold
improvements 5,325 46 5,371 3,985 351 4,336
Amortization
- intangibles 6,190 - 6,190 1,144 - 1,144
Amortization
- leasing
costs 2,030 35 2,065 1,425 216 1,641
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Funds from
operations $ 61,576 $ 4,503 $ 66,079 $ 42,282 $ 10,440 $ 52,722
-----------------------------------------------------------
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Funds from
operations
per unit:
Basic and
diluted $ 1.04 $ 0.08 $ 1.12 $ 0.83 $ 0.20 $ 1.03
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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.
Morguard is a closed-end real estate investment trust, which owns a
diversified portfolio of 50 retail, office, and industrial properties in
Canada with a book value of $1.2 billion and approximately 8.1 million square
feet of leasable space. For more information, visit the Trust's website at
www.morguardreit.com.
For further information:
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