MORGUARD CORPORATION ANNOUNCES 2011 FIRST QUARTER RESULTS

TSX: MRC

MISSISSAUGA, ON, May 10 /CNW/ - Morguard Corporation (TSX: MRC) announced its financial results for the three months ended March 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 unaudited interim consolidated financial statements for the period ended March 31, 2011.

Highlights

• Funds from operations increased by 34.9% to $33.1 million, or $2.56 per share, compared to $24.6 million, or $1.77 per share in 2010;
• Total revenues increased by 9.1% to $93.4 million compared to $85.6 million in 2010;
• Total net operating income increased by 10.7% to $39.0 million compared to $35.2 million in 2010;
• Same property net operating income increased by 6.7% to $36.8 million compared to $34.5 million in 2010;
• Net income attributable to common shareholders increased $42.2 million, to $57.2 million in 2011 compared to $15.0 million in 2010;
• On February 28, 2011, the Company acquired Boynton Town Center, a retail, unenclosed shopping center in Boynton Beach, Florida for a purchase price of US$59 million.  The acquisition was funded with cash.

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

FINANCIAL HIGHLIGHTS

Three months ended March 31,
(in thousands of dollars)	2011	2010
Revenue from real estate properties	$72,108	$68,007
Management and advisory fees	16,760	14,619
Interest and other	2,823	1,723
Sales of product and land	1,666	1,210
Total revenues	$93,357	$85,559
Revenue from real estate properties	$72,108	$68,007
Property operating expense	(33,095)	(32,771)
Net operating income	$39,013	$35,236
Funds from operations	$33,137	$24,566
Net income attributable to common shareholders	$57,233	$15,025
Weighted average common shares outstanding - basic and diluted	12,966	13,868
Income per share:
Basic and diluted  - net income	$4.41	$1.08

Net Income

Net income attributable to common shareholders increased by $42,208 in 2011 to $57,233 compared to $15,025 in 2010. The increase is primarily due to an increase in fair value gains on real estate properties of $39,267, an increase in equity income from Morguard REIT of $5,219, an increase in net operating income of $3,777, an increase in revenue from management and advisory fees of $2,141 and an increase in interest and other income of $1,100; these items were partially offset by an increase in income taxes of $9,641.

Net Operating Income

Three months ended March 31,
(In thousands of dollars)	2011	2010
Net operating income - Canadian properties
Multi-unit residential - Canada	$12,247	$11,137
Retail - Canada	6,923	7,350
Office and industrial	10,616	8,507
	29,786	26,994
Net operating income - U.S. properties in US dollars
Multi-unit residential - U.S.	US 4,409	US 3,778
Retail - U.S.	US 4,953	US 4,146
	US 9,362	US 7,924
Exchange amount to Canadian dollars	(135)	318
Net operating income - U.S. Properties in Canadian dollars	9,227	8,242
Net operating income	$39,013	$35,236

Net operating income ("NOI") for the three months ended March 31, 2011, increased by $3,777 to $39,013 compared to $35,236 in 2010.  The increase was predominantly the result of the following:

• Higher NOI in Canadian multi-unit residential properties primarily as a result of lower vacancy and higher rental rates achieved, as well as a decrease in utility expenses as a result of lower consumption and rate reductions for natural gas;
• 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 $1,625;
• 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 Center, in the amount of $404 and an increase in revenues at other retail properties as a result of higher recoveries;

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 $822; which was partially offset by an increase in revenue at other retail properties as a result of lower vacancy rates.

Funds from Operations ("FFO")

FFO was calculated as follows:

Three months ended March 31
(In thousands of dollars except for per share amounts)	2011		2010
Net income attributable to common shareholder	$57,233		$15,025
Items not affecting cash:
Fair value (gains)/loss on real estate properties	(36,405)		2,862
Future income taxes	13,098		3,283
Amortization tenant incentives	604		991
Depreciation on owner occupied property	26		26
Equity income from Morguard REIT	(10,438)		(5,219)
Morguard REIT's equity accounted FFO	8,936		7,598
Loss on sale of property	83		-
Funds from operations	$33,137		$24,566
Per share amounts - basic and diluted	$2.56		$1.77

For the three months ended March 31, 2011, the Company recorded consolidated FFO of $33,137 ($2.56 per share) compared to $24,566 ($1.77 per share) in 2010, representing an increase of $8,571 or 34.9%.

FFO increased primarily due to an increase in NOI of $3,777, an increase in management and advisory fee revenue of $2,141, an increase in Morguard REIT's equity accounted FFO of $1,338, an increase in interest and other income of $1,100 and a decrease in current income taxes of $174.

The Company's interim unaudited financial statements for the three months ended March 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.

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.

Morguard Corporation is a real estate company which owns a diversified portfolio of 100 retail, multi-unit residential, office and industrial properties comprising 10,306 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.