MORGUARD CORPORATION ANNOUNCES 2010 RESULTS AND REGULAR ELIGIBLE DIVIDEND

TSX: MRC

MISSISSAUGA, on, March 2 /CNW/ - Morguard Corporation (TSX: MRC) announced its financial results for the year ended December 31, 2010.

Highlights

• Funds from operations increased to $118.8 million, or $8.76 per share, compared to $114.3 million, or $8.14 per share in 2009;
• Net income increased $14.3 million, to $44.6 million in 2010 compared to $30.3 million in 2009;
• Total revenues for the year ended December 31, 2010, were $350.0 million compared to $348.8 million in 2009;
• Net operating income increased to $151.8 million compared to $150.9 million in 2009;
• On July 30, 2010, the Company and Morguard REIT, each acquired a 50% interest in an office property and excess land located in St. Laurent, Quebec for a purchase price of $165 million (100%).  The acquisition was funded by cash and a ten year mortgage payable of $88 million (100%) at an interest rate of 5.48%;
• During the year ended December 31, 2010, the Company repurchased and cancelled 905,850 common shares at a total cost of $40.4 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)		2010	2009
Income from real estate properties		$277,762	$280,202
Management and advisory fees		65,921	63,440
Sales of product and land		6,284	5,125
Total revenues		$349,967	$348,767
Income from real estate properties		$277,762	$280,202
Property operating expense		(125,932)	(129,276)
Net operating income		$151,830	$150,926
Funds from operations		$118,775	$114,256
Net income		$44,552	$30,291
Income per share:
	Basic and diluted  - net income	$3.28	$2.16

Net Income

Net Income increased by $14.3 million in 2010 to $44.6 million compared to $30.3 million in 2009. The increase is primarily due to an increase of  gains realized on the sale of real estate properties in the amount of $8,500, an increase in revenue from management and advisory fees of $2,481, an increase in net operating income of $904, an increase in interest and other income of $3,749, a decrease in interest expense of $2,732, a decrease in  amortization expense of $3,770 and a provision for impairment of real estate properties of $7,729 recorded in 2009 compared to $209 recorded in 2010. These items were partially offset by an increase in property management and corporate expenses of $3,484, and an increase in income taxes of $11,770.

Net Operating Income
(In thousands of dollars)	2010	2009
Net operating income - Canadian properties
Multi-unit residential - Canada	$51,030	$47,764
Retail - Canada	26,721	27,299
Office and industrial	37,546	35,311
	115,297	110,374
Net operating income - U.S. properties in U.S. dollars
Multi-unit residential - U.S.	US 16,006	US 15,293
Retail - U.S.	US 19,452	US 20,217
	US 35,458	US 35,510
Exchange amount to Canadian dollars	1,075	5,042
Net operating income - U.S. properties in Canadian dollars	36,533	40,552
Net operating income	$151,830	$150,926

Net operating income ("NOI") for the year ended December 31, 2010, increased by $904 to $151.8 million compared to $150.9 million in 2009.  The increase was predominantly the result of the following:

• higher NOI in Canadian multi-unit residential properties as a result of an increase in revenue due to lower vacancy rates 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 and an increase in the payment received in 2010 relating to a contract to purchase natural gas;
• higher office and industrial NOI as a result of the acquisition of Place Innovation which occurred on July 30, 2010, in the amount of $2,739;

Offset by:

• lower Canadian retail NOI due to the sale of a 50% interest in Prairie Mall, Grande Prairie, Alberta, on May 31, 2010, in the amount of $1,510; which was partially offset by an increase in revenue at other retail properties as a result of higher recoveries and temporary tenancies;
• a 9.8% decrease in the U.S. dollar foreign exchange rate, which decreased NOI by $3,967

Funds from Operations ("FFO")
FFO was calculated as follows:
		Years ended December 31
(In thousands of dollars except for per share amounts)		2010	2009
Net income for the year from continuing operations		$44,441	$29,131
Items not affecting cash:
	Amortization	61,639	65,707
	Future income taxes	2,312	(4,250)
	Non-controlling interest	(159)	(74)
Equity income from Morguard REIT - continuing operations		(12,960)	(12,788)
Morguard REIT's equity accounted FFO - continuing operations		33,097	30,105
Gain on sale of properties		(9,971)	(1,471)
Provision for impairment of real estate properties		209	7,729
Funds from continuing operations		$118,608	$114,089
Morguard REIT's equity accounted FFO from discontinued operations		167	167
Funds from operations		$118,775	$114,256
	Per share amounts - basic and diluted	$8.76	$8.14

For the year ended December 31, 2010, the Company recorded consolidated FFO from operations of $118.8 million ($8.76 per diluted share) compared to $114.3 million ($8.14 per diluted share) in 2009, representing an increase of $4,519 or 4.0%. 

FFO increased primarily due to an increase in NOI of $904, net profit from the sale of land and product of $651, an increase in management and advisory fee revenue of $2,481, an increase in Morguard REIT's equity accounted FFO of $2,992, an increase in interest and other income of $3,749, a decrease in interest expense of $2,732; partially offset by an increase in property management and corporate expenses of $3,484 and an increase in current income taxes of $5,208.  The change in foreign exchange rates decreased FFO by $1,294 ($0.09 per share).

FIRST QUARTER DIVIDEND

The board of directors of Morguard Corporation announced today that the first quarterly eligible dividend of 2011 in the amount of $0.15 per common share would be paid on March 31, 2011, to shareholders of record at the close of business on March 15, 2011.

The Company's audited financial statements for the year ended December 31, 2010, 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 properties in Canada and the United States.  Morguard's portfolio has a book value of approximately $1.6 billion and comprises 6.9 million square feet of commercial space and 10,303 apartment suites.  For more information, visit the Company's website at www.morguard.com.