Morguard Corporation Announces 2011 Results and Regular Eligible Dividend

TSX: MRC

MISSISSAUGA, ON, March 7, 2012 /CNW/ - Morguard Corporation (TSX: MRC) announced its financial results for the year ended December 31, 2011.

These results are, and all future results will be, reported under International Financial Reporting Standards (IFRS) and historical results have been restated to IFRS for comparison purposes.  Reconciliations between IFRS and Canadian Generally Accepted Accounting Principles have been included in the Company's audited consolidated financial statements for the year ended December 31, 2011.

HIGHLIGHTS

• Funds from operations increased by 12.1% to $128.6 million, or $9.92 per share, compared to $114.7 million, or $8.46 per share in 2010;
• Total revenues increased by 7.5% to $391.1 million compared to $363.8 million in 2010;
• Total net operating income increased by 5.2% to $163.2 million compared to $155.1 million in 2010;
• Net income attributable to common shareholders totalled $288.0 million compared to $195.6 million in 2010; the increase is predominantly due to higher fair value gains recorded on real estate properties in the amount of $106.7 million partly offset by an increase in income taxes of $23.7 million; and
• During the year, the Company acquired one U.S. retail property, one U.S. multi-unit residential property and the remaining 50% interest in a U.S. retail property for a total purchase price of US$78.4 million.

All amounts in thousands of Canadian dollars, except per share amounts, unless otherwise noted.

FINANCIAL HIGHLIGHTS

Year ended December 31, (in thousands of dollars)		2011		2010
Revenue from real estate properties		$297,073		$284,184
Management and advisory fees		74,340		65,255
Interest and other		13,755		8,113
Sales of product and land		5,977		6,284
Total revenues		391,145		363,836
Income from real estate properties		$297,073		$284,184
Property operating expense		(133,922)		(129,062)
Net operating income		$163,151		$155,122
Funds from operations		$128,609		$114,692
Net income attributable to common shareholders		$288,026		$195,620
Income per share:
Basic and diluted  - net income		$22.22		$14.42

NET INCOME

Net income attributable to shareholders was $288.0 million ($22.22 per share) compared to $195.6 million ($14.42 per share) in 2010. The increase in net income of $92.4 million was primarily due to an increase in fair value gains on real estate properties of $106.6 million, an increase in net operating income of $8.0 million, an increase in management and advisory fees of $9.1 million and an increase in interest and other income of $5.6 million; these items were partially offset by a decrease in the equity income from Morguard REIT of $10.5 million, an increase in interest expense of $1.3 million, an increase in other expense of $1.0 million, an increase in property management and corporate expenses of $0.7 million and an increase in income taxes of $23.7 million.

NET OPERATING INCOME

Year ended December 31, (In thousands of dollars)	2011	2010
Net operating income - Canadian properties
Multi-unit residential - Canada	$52,007	$50,770
Retail - Canada	30,932	31,157
Office and industrial	41,809	37,582
	124,748	119,509
Net operating income - U.S. properties in U.S. dollars
Multi-unit residential - U.S.	US 16,925	US 16,052
Retail - U.S.	US 21,882	US 18,514
	US 38,807	US 34,566
Exchange amount to Canadian dollars	(404)	1,047
Net operating income - U.S. properties in Canadian dollars	38,403	35,613
Net operating income	$163,151	$155,122

Net operating income ("NOI") for the year ended December 31, 2011, increased by $8.0 million to $163.2 million compared to $155.1 million in 2010, representing an increase of 5.2%.  The increase was predominantly the result of the following:

• Higher NOI in Canadian multi-unit residential properties primarily as a result of higher rental rates and lower vacancy;
• Lower NOI in Canadian retail properties predominantly due to the sale on May 31, 2010 of a 50% interest in  Prairie Mall ; partially offset by an increase in revenue at the Bramalea City Centre due to completion of the centre's redevelopment project and an increase in revenue at a centre located in Toronto, Ontario due to an increase in the centre's occupancy rate;
• Higher NOI in office and industrial primarily as a result of the acquisition of 50% interest in Place Innovation, St. Laurent, Quebec on July 31, 2010, which increased NOI by $4.3 million; partially offset by a decrease in occupancy at two office properties and one industrial property due to tenants not renewing their leases;
• Higher NOI in U.S. multi residential properties primarily as a result of lower vacancy and higher rental rates achieved; partially offset by an increase in expenses due to a marketing initiative undertaken during 2011;
• Higher NOI in U.S. retail properties primarily as a result of the acquisition of Boynton Town Center, on February 28, 2011, which increased NOI by US$4.0 million; and
• The change in the foreign exchange rate decreased reported NOI by $1.5 million.

FUNDS FROM OPERATIONS ("FFO")

FFO was calculated as follows:

…

Year ended December 31, (In thousands of dollars except for per share amounts)	2011	2010
Net income attributable to common shareholders	$288,026	$195,620
Items not affecting cash:
Fair value gains on real estate properties	(180,226)	(73,578)
Non-controlling interest's share of fair value loss on real estate property	(470)	-
Future income taxes	53,361	38,293
Depreciation on owner occupied property	104	104
Equity income from Morguard REIT	(68,153)	(78,605)
Morguard REIT's equity accounted FFO	35,960	32,647
Loss on sale of property	7	211
Funds from operations	$128,609	$114,692
Funds from operations
Per share amounts - basic and diluted	$9.92	$8.46

For the year ended December 31, 2011, the Company recorded FFO of $128.6 million ($9.92 per share) compared to $114.7 million ($8.46 per share) in 2010, representing an increase of $13.9 million or 12.1%.  FFO increased primarily due to an increase in NOI of $8.0 million, an increase in management and advisory fee revenue of $9.1 million, an increase in interest and other income of $5.6 million and an increase in Morguard REIT's equity accounted FFO of $3.3 million; partially offset by an increase in interest expense of $1.3 million, an increase in other expense of $1.0 million, an increase in property management expenses of $0.7 million and an increase in current income taxes of $8.7 million.

FIRST QUARTER DIVIDEND

The board of directors of Morguard Corporation announced today that the first quarterly eligible dividend of 2012 in the amount of $0.15 per common share would be paid on March 30, 2012, to shareholders of record at the close of business on March 15, 2012.

Readers are cautioned that although the terms "Net Operating Income", and "Funds From Operations" are commonly used to measure, compare and explain the operating and financial performance of Canadian real estate companies 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.

The Company's audited financial statements for the year ended December 31, 2011, along with the Management's Discussion and Analysis will be available on the Company's website at www.morguard.com and will be filed with SEDAR at www.sedar.com.

Morguard Corporation is a real estate company, which owns a diversified portfolio of 101 retail, multi-unit residential, office and industrial properties comprising 10,508 multi-unit residential suites and approximately 7.1 million square feet of commercial leasable space. Morguard Corporation also owns a 44.8% interest in Morguard Real Estate Investment Trust. Morguard provides advisory and management services to institutional and other investors through Morguard Investments Limited and Morguard Residential. For more information, visit the Company's website at www.morguard.com.