Morguard Real Estate Investment Trust Announces Q3 2007 Results
Oct 26, 2007
TORONTO, Oct. 26 /CNW/ - Morguard Real Estate Investment Trust ("Morguard
REIT") (TSX: MRT.UN) today announced its financial results for the three and
nine month period ended September 30, 2007.
Morguard REIT's Q3 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 Q3 2007 increased to $27.3 million from
$24.7 million for the same period in 2006;
- Net income for Q3 2007 totaled $7.1 million or $0.12 per unit
compared to $5.8 million or $0.11 per unit for the same period
in 2006;
- Recurring distributable income for Q3 2007 increased to $14.9 million
or $0.25 per unit compared to $12.3 million or $0.24 per unit (fully
diluted) for the same period in 2006;
- Funds from operations ("FFO") for Q3 2007 increased to $17.1 million
or $0.29 per unit compared to $13.9 million or $0.27 per unit (fully
diluted) for the same period in 2006;
- Occupancy levels remained constant at 95% at September 30, 2007 and
September 30, 2006.
- 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 agreements regarding the sale of an 80% co-ownership interest in
Scotia Place, a 560,000 square foot office building located in
Edmonton, Alberta.
FINANCIAL HIGHLIGHTS
Net Income
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Three months ended
September 30,
(In thousands of dollars except per unit amounts) 2007 2006
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Income from real estate properties $46,618 $43,568
Net operating income $27,257 $24,647
Net income from continuing operations $ 5,642 $ 4,960
Income from discontinued operations 1,476 887
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Net income $ 7,118 $ 5,847
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Net income per unit (basic and diluted)
Continuing operations $ 0.10 $ 0.10
Discontinued operations 0.02 0.01
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$ 0.12 $ 0.11
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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 three-month period ended
September 30, 2007 and 2006.(In thousands of dollars except per unit amounts and
percentages)
Three month period ended September 30, 2007 2006
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Net income $ 7,118 $ 5,847
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Add (deduct)
Amortization - buildings 5,385 6,274
Amortization - intangibles 1,512 253
Amortization - above/below market rate leases, net (213) 26
Amortization - issue costs convertible debentures - 179
Stepped rents - straight-line adjustment (292) (389)
Accretion of convertible debentures - 122
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Distributable income 13,510 12,312
Provision for diminution in value of real estate
properties 2,150 -
Gain on sale of real estate properties (799) -
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Recurring distributable income $14,861 $12,312
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Distributed income $13,292 $11,617
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Payout Ratio:
Distributable income 98.4% 94.4%
Recurring distributable income 89.4% 94.4%
Per Unit (basic and diluted)
Distributable income $ 0.23 $ 0.24
Recurring distributable income $ 0.25 $ 0.24
Weighted average number of units (in thousands)
- basic and diluted 59,076 51,706
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---------------------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:
September 30, 2007 September 30, 2006
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(In thousands
of dollars
except per
unit amounts) Dis- Dis-
Three month Continuing continued Continuing continued
period ended, Operations Operations Total Operations Operations Total
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Net income $ 5,642 $ 1,476 $ 7,118 $ 4,960 $ 887 $ 5,847
Add (deduct)
items not
affecting
cash:
Amortization
- buildings 5,385 - 5,385 4,918 1,356 6,274
Amortization
- leasehold
improvements 1,286 - 1,286 1,023 117 1,140
Amortization
- intangibles 1,512 - 1,512 253 - 253
Amortization
- leasing
costs 407 - 407 291 55 346
Provision for
diminution in
value of real
estate
properties 2,150 - 2,150 - - -
Gain on sale
of real
estate
properties - (799) (799) - - -
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Funds from
operations $ 16,382 $ 677 $ 17,059 $ 11,445 $ 2,415 $ 13,860
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Funds from
operations
per unit:
Basic and
diluted $ 0.28 $ 0.01 $ 0.29 $ 0.22 $ 0.05 $ 0.27
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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 59 retail, office, and industrial properties in
Canada with a book value of $1.3 billion and approximately 8.9 million
square feet of leasable space. For more information, visit the Trust's
website at www.morguardreit.com.
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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