Morguard Corporation Announces 2011 Second Quarter Results and Regular Eligible Dividend

TSX: MRC

MISSISSAUGA, ON, Aug. 9, 2011 /CNW/ - Morguard Corporation (TSX: MRC) announced its financial results for the three months ended June 30, 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 unaudited interim consolidated financial statements for the period ended June 30, 2011.

HIGHLIGHTS

• Total revenues for the three months ended June 30, 2010, were $95.7 million compared to $91.6 million for the same period in 2010;
• Total net operating income in Q2 2011 increased to $41.1 million compared to $39.8 million in Q2 2010;
• Net income attributable to common shareholders in Q2 2011 totalled $49.7 million compared to $47.5 million in 2010;
• Funds from operations in Q2 2011 increased to $2.14 per share, compared to $2.06 per share in 2010, representing an increase of 3.9%.

FINANCIAL HIGHLIGHTS

	Three months ended June 30		Six months ended June 30
(in thousands of dollars)	2011	2010	2011		2010
Revenue from real estate properties	$73,980	$71,052	$146,629		$139,987
Management and advisory fees	17,226	16,965	33,986		31,584
Interest and other	3,039	2,465	5,862		4,188
Sales of product and land	1,424	1,099	3,090		2,309
Total revenues	$95,669	$91,581	$189,567		$178,068
Revenue from real estate properties	$73,980	$71,052	$146,629		$139,987
Property operating expense	(32,891)	(31,248)	(65,986)		(64,019)
Net operating income	$41,089	$39,804	$80,643		$75,968
Funds from operations	$27,695	$27,633	$60,748		$52,140
Net income attributable to common shareholders	$49,721	$47,536	$106,954		$62,561
Weighted average common shares outstanding -basic and diluted	12,966	13,432	12,966		13,724
Income per share
Basic and diluted- net income	$3.83	$3.54	$8.25		$4.56

NET INCOME

Net income attributable to the shareholders for the three months ended June 30, 2011, was $49.7 million ($3.83 per share) compared to $47.5 million ($3.54 per share) in 2010. The increase in net income of $2.2 million for the three months ended June 30, 2011, was primarily due to an increase in fair value gains on real estate properties of $4.9 million,  an increase in net operating income of $1.3 million and an increase in interest and other income of $0.6 million; these items were partially offset by a decrease in the equity income from Morguard REIT of $2.0 million, an increase in interest expense of $0.8 million and an increase in income taxes of $2.0 million.

NET OPERATING INCOME

	Three months ended June 30		Six months ended June 30
(in thousands of dollars)	2011	2010	2011	2010
Net operating income - Canadian properties
Multi-unit residential - Canada	$13,160	$13,293	$25,404	$24,429
Retail - Canada	7,981	9,125	15,097	17,011
Office and industrial	10,306	8,760	21,147	17,507
	31,447	31,178	61,648	58,947
Net operating income - U.S. properties in U.S. dollars
Multi-unit residential - U.S.	US 4,360	US 3,776	US  8,770	US   7,561
Retail - U.S.	US 5,601	US 4,613	US 10,676	US   8,897
	US 9,961	US 8,389	US 19,446	US 16,458
Exchange amount to Canadian dollars	(319)	237	(451)	563
Net operating income - U.S. properties in Canadian dollars	9,642	8,626	18,995	17,021
Net operating income	$41,089	$39,804	$80,643	$75,968

Net operating income ("NOI") for the three months ended June 30, 2011, increased by $1,285 to $41,089 compared to $39,804 in 2010, representing an increase of 3.2%.  The increase was predominantly the result of the following:

• Higher NOI in office and industrial primarily as a result of the acquisition of Place Innovation, St. Laurent, Quebec which occurred on July 30, 2010, in the amount of $1,874;
• Higher NOI in U.S. multi-unit residential properties primarily as a result of lower vacancy rates;
• Higher NOI in U.S. retail properties primarily as a result of the acquisition of Boynton Town Centre, which occurred on February 28, 2011, in the amount of $1,253;

Offset by:

• Lower NOI in the Canadian retail properties due to the sale of a 50% interest in Prairie Mall, Grande Prairie, Alberta, on May 31, 2010, in the amount of $578.  In addition, there was a decrease of $336 at a retail property whose NOI is based on a formula that includes cash flow and working capital; the decrease in NOI is primarily the result of changes in the property's working capital.

FUNDS FROM OPERATIONS ("FFO")

FFO was calculated as follows:

	Three months ended June 30		Six months ended June 30
(In thousands of dollars, except for per share amounts)	2011	2010	2011	2010
Net income attributable to common shareholders	$49,721	$47,536	$106,954	$62,561
Items not affecting cash:
Fair value gains on real estate properties	(21,379)	(16,432)	(57,243)	(12,642)
Future income taxes	9,035	8,999	22,133	12,282
Depreciation on owner occupied property	26	26	52	52
Equity income from Morguard REIT	(18,305)	(20,261)	(28,743)	(25,480)
Morguard REIT's equity accounted FFO	8,673	7,554	17,588	15,156
(Gain) loss on sale of property	(76)	211	7	211
Funds from operations	$27,695	$27,633	$60,748	$52,140
Funds from operations    Per share amounts - basic and diluted	$2.14	$2.06	$4.69	$3.80

For the three months ended June 30, 2011, the Company recorded FFO of $27.7 million ($2.14 per share) compared to $27.6 million ($2.06 per share) in 2010.

THIRD QUARTER DIVIDEND

The board of directors of Morguard Corporation announced today that the third quarterly, eligible dividend of 2011 in the amount of $0.15 per common share will be paid on September 30, 2011 to shareholders of record at the close of business on September 15, 2011.

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 interim unaudited financial statements for the three months ended June 30, 2011, along with Management's Discussion and Analysis are available on the Company's website at www.morguard.com and have been filed with SEDAR at www.sedar.com .

Morguard Corporation is a real estate company, which owns a diversified portfolio of 100 retail, multi-unit residential, office and industrial properties comprising 10,311 multi-unit residential suites and approximately 7.1 million square feet of commercial leasable space. Morguard Corporation also owns a 45% 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.