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
    ----------
                                                          Three months ended
                                                             September 30,
    (In thousands of dollars except per unit amounts)      2007         2006
    -------------------------------------------------------------------------
    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
    -------------------------------------------------------------------------
    Net income                                          $ 7,118      $ 5,847
                                                        ---------------------
                                                        ---------------------

    Net income per unit (basic and diluted)
      Continuing operations                             $  0.10      $  0.10
      Discontinued operations                              0.02         0.01
    -------------------------------------------------------------------------
                                                        $  0.12      $  0.11
                                                        ---------------------
                                                        ---------------------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
    -------------------------------------------------------------------------
    Net income                                          $ 7,118      $ 5,847
    -------------------------------------------------------------------------

    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
    -------------------------------------------------------------------------

    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)           -
    -------------------------------------------------------------------------

    Recurring distributable income                      $14,861      $12,312
                                                        ---------------------
                                                        ---------------------

    Distributed income                                  $13,292      $11,617
                                                        ---------------------
                                                        ---------------------

    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
                                                        ---------------------
                                                        ---------------------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
               --------------------------------------------------------------
    (In thousands
    of dollars
    except per
    unit amounts)               Dis-                          Dis-
    Three month   Continuing continued          Continuing continued
    period ended, Operations Operations  Total  Operations Operations  Total
    -------------------------------------------------------------------------
    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)        -         -         -
    -------------------------------------------------------------------------
    Funds from
     operations    $ 16,382  $    677  $ 17,059  $ 11,445  $  2,415  $ 13,860
                   ----------------------------------------------------------
                   ----------------------------------------------------------
    Funds from
     operations
     per unit:
      Basic and
       diluted     $   0.28  $   0.01  $   0.29  $   0.22  $   0.05  $   0.27
                   ----------------------------------------------------------
                   ----------------------------------------------------------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 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.
    -------------------------------------------------------------------------




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