Morguard Real Estate Investment Trust Announces Q4 2006 Results
Feb 22, 2007
TORONTO, Feb. 22 /CNW/ - Morguard Real Estate Investment Trust ("Morguard
REIT") (TSX: MRT.UN) today announced its financial results for the year ended
December 31, 2006.
Morguard REIT's 2006 Financial Statements and Management's Discussion and
Analysis 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 2006 increased to $99.0 million from
$97.5 million for the same period in 2005;
- Net income for 2006 totaled $53.2 million or $1.04 per unit compared
to $15.3 million or $0.34 per unit for the same period in 2005.
Included in net income for 2006 is a $32.5 million gain on sale of
real estate assets included in discontinued operations partially
offset by a charge of $3.7 million for the cost of early
extinguishment of mortgage bonds payable. Included in net income for
2005 is a $5.2 million gain on sale of real estate assets included in
discontinued operations offset by a charge of $8.7 million for the
cost of early extinguishment of mortgage bonds payable;
- Recurring distributable income for 2006 increased to $49.5 million
compared to $43.3 million in the prior year;
- Funds from operations ("FFO") for 2006 increased to $52.7 million
compared to $39.7 million in 2005;
- Overall occupancy levels remain high with office sector at 96% and
industrial sector at 100%. Retail occupancy is trending back to more
normal levels as former Wal-Mart spaces have been re-tenanted and
opened for business. Retail occupancy levels at December 2006 were 95%
compared with 92% at December 2005.
FINANCIAL HIGHLIGHTS
Net Income
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December 31,
(In thousands of dollars except per unit amounts) 2006 2005
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Income from real estate properties $ 175,976 $ 174,282
Net operating income $ 98,967 $ 97,497
Net income from continuing operations $ 17,435 $ 3,707
Income from discontinued operations 35,788 11,631
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Net income $ 53,223 $ 15,338
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Net income per unit
Basic and diluted
Continuing operations $ 0.34 $ 0.08
Discontinued operations 0.70 0.26
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$ 1.04 $ 0.34
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Distributable Income
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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, 2006
and 2005.
(In thousands of dollars except per unit
amounts and percentages) 2006 2005
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Net income 53,223 15,338
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Add (deduct)
Stepped rents - straight-line adjustment (2,132) (2,742)
Amortization - buildings 24,883 23,982
Amortization - intangibles 1,144 1,011
Amortization - above/below market rate leases, net 52 104
Amortization - issue costs convertible debentures 756 1,245
Accretion of convertible debentures 400 883
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Distributable income 78,326 39,821
Cost of early extinguishment of mortgage
bonds payable 3,679 8,742
Gain on sale of real estate properties (32,505) (5,218)
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Recurring distributable income $ 49,500 $ 43,345
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Distributed income $ 46,050 $ 40,332
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Payout Ratio:
Recurring distributable income 93.0% 93.0%
Per Unit:
Basic
Distributable income $ 1.54 $ 0.89
Recurring distributable income $ 0.97 $ 0.97
Diluted
Distributable income $ 1.54 $ 0.87
Recurring distributable income $ 0.97 $ 0.93
Weighted average number of units (in thousands) 50,985 44,802
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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:
2006
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(In thousands of dollars except Continuing Discontinued
per unit amounts) Operations Operations Total
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Net income $ 17,435 $ 35,788 $ 53,223
Add (deduct) items not
affecting cash:
Gain on sale of real estate
properties - (32,505) (32,505)
Amortization - buildings 19,466 5,417 24,883
Amortization - leasehold
improvements 4,012 324 4,336
Amortization - intangibles 1,144 - 1,144
Amortization - leasing costs 1,412 229 1,641
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Funds from operations $ 43,469 $ 9,253 $ 52,722
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Funds from operations per unit:
Basic $ 0.85 $ 0.18 $ 1.03
Diluted $ 0.85 $ 0.18 $ 1.03
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2005
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(In thousands of dollars except Continuing Discontinued
per unit amounts) Operations Operations Total
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Net income $ 3,707 $ 11,631 $ 15,338
Add (deduct) items not
affecting cash:
Gain on sale of real estate
properties - (5,218) (5,218)
Amortization - buildings 18,638 5,344 23,982
Amortization - leasehold
improvements 2,900 379 3,279
Amortization - intangibles 1,011 - 1,011
Amortization - leasing costs 1,146 188 1,334
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Funds from operations $ 27,402 $ 12,324 $ 39,726
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Funds from operations per unit:
Basic $ 0.61 $ 0.28 $ 0.89
Diluted $ 0.61 $ 0.28 $ 0.89
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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 68 retail, office, and industrial properties in
Canada with a book value of $1.3 billion and approximately 9.3 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