Morguard Corporation Announces First Quarter Results

May 14, 2008


    MISSISSAUGA, ON, May 13 /CNW/ - Morguard Corporation (TSX: MRC) announced
financial results for the three months ended March 31, 2008.HIGHLIGHTS

    -   Net operating income was $34.7 million compared to $33.5 million for
        the same period in 2007.
    -   Morguard's share of continuing funds from operations was
        $23.6 million or $1.69 per common share (2007 - $15.6 million, $1.12
        per common share).
    -   Net earnings were $28.9 million as compared to a net loss of
        $2.2 million for the three months ended March 31, 2007.
    -   Income of $19.4 million was recorded due to the reversal of a
        previously recorded valuation allowance on surplus pension assets.
    -   Equity income from Morguard REIT continuing operations increased to
        $19.4 million (2007- $2.7 million), primarily due to realizing a
        $37 million pre-tax gain on the disposition of a real estate asset.
    -   A new $23.5 million mortgage was funded with an interest rate of
        5.5%.
    -   On April 2, 2008, the Company announced its intention to make an
        unsolicited take-over bid of RPCL by offering to purchase the common
        shares of Revenue Properties Company Limited ("RPCL") not already
        owned at a price of $12.00 cash per share or the option of receiving
        0.33 of a Morguard common share.


    Further financial highlights are detailed in the table below:

    -------------------------------------------------------------------------
                                                          Three months ended
    (in thousands of Canadian dollars, except per                   March 31,
     share amounts)                                        2008         2007
    -------------------------------------------------------------------------

    Net operating income                                $34,672      $33,509
    Interest expense                                    (17,947)     (19,721)
    Property management and administration              (12,947)     (12,154)
    Equity income from Morguard REIT - continuing
     operations                                          19,363        2,674
    Fees and other revenue                               14,273       13,554
    Sale of products and land, net of cost                  353          459
    -------------------------------------------------------------------------
    Income before the under noted                        37,767       18,321
    Amortization                                        (15,802)     (20,136)
    Gain on pension valuation allowance                  19,441            -
    Other income (expense)                                1,843       (1,284)
    -------------------------------------------------------------------------
    Operating income (loss)                              43,249       (3,099)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net earnings (loss)                                  28,924       (2,150)
    - per basic share                                      2.08        (0.15)
    - per diluted share                                    2.06        (0.15)

    Continuing funds from operations                     25,433       16,531
    - per basic share                                     $1.83        $1.19
    - per diluted share                                   $1.81        $1.17

    Continuing funds from operations -
     Morguard's Share                                    23,556       15,609
    - per basic share                                     $1.69        $1.12
    - per diluted share                                   $1.67        $1.10
    -------------------------------------------------------------------------REVIEW OF FINANCIAL RESULTS

    Revenue from real estate properties has increased by $0.7 million to
$65.1 million compared to $64.4 million in the first quarter of 2007. The
increase is primarily due to the acquisition of a 50% interest in 350 Sparks
Street, Ottawa and a 20% interest in 131 Queen Street, Ottawa, which together
contributed $2.5 million, and other Morguard entities, which contributed
$1.4 million. This was partially offset by a revenue decrease from RPCL's U.S.
assets of $3.2 million, which was caused by a change in foreign exchange
rates.
    Net earnings for the three months ended March 31, 2008 was $28.9 million
as compared to net loss of $2.2 million for the same period in 2007. The
increase in the earnings is primarily due to the reversal of a valuation
allowance recorded in prior years on surplus pension assets, resulting in a
non-cash pre-tax gain in the amount of $19.4 million, and increase in equity
income from Morguard REIT, in the amount of $16.7 million, primarily caused by
gains realized on the disposition of assets.-------------------------------------------------------------------------
                                                          Three months ended
                                                                    March 31,
                                                        ---------------------
    (in thousands of Canadian dollars)                     2008         2007
    -------------------------------------------------------------------------

    Property revenues                                   $65,101      $64,421
    Property operating expenses                          30,429       30,912
    -------------------------------------------------------------------------
    Net operating income                                $34,672      $33,509
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------Net operating income is used by industry analysts, investors and
management to measure operating performance at the Company's properties. Net
operating income represents total property revenues less property operating
expenses and maintenance expenses. Accordingly, net operating income excludes
certain expenses included in the determination of net income such as property
management and other indirect operating expenses, interest expense and
amortization. Net operating income is not a recognized measure under Canadian
generally accepted accounting principles and accordingly the term does not
necessarily have a standardized meaning and may not be comparable to similarly
titled measures presented by other publicly traded entities.
    Net operating income increased $1.2 million, or 3.5%, to $34.7 million
for the quarter ended March 31, 2008 as compared to $33.5 million for the same
period in 2007. The increase in net operating income in 2008 results primarily
from the acquisition of a 50% interest in 350 Sparks Street, Ottawa ($0.6
million) and the acquisition of a 20% interest in 131 Queen Street, Ottawa
($0.7 million), during the three months ended December 31, 2007. Net operating
income from RPCL's retail and apartment properties U.S. assets decreased
$2.0 million primarily due to the change in foreign exchange rates relative to
the three months ended March 31, 2007. This decrease was offset by improved
net operating income from Morguard Residential of $0.7 million primarily
achieved through higher occupancy and rents. Other Morguard assets contributed
approximately $0.6 million to the increase in net operating income.

    FUNDS FROM OPERATIONS - MORGUARD'S SHARE

    Funds from continuing operations ("FFO") for the three months ended March
31, 2008 are detailed in the table below. The consolidated FFO includes funds
available to non-controlling interests. To determine Morguard's share of
consolidated FFO, the non-controlling interest of RPCL is deducted and any
inter-company fees eliminated on consolidation added.-------------------------------------------------------------------------
                                                          Three months ended
                                                                    March 31,
                                                        ---------------------
    (in thousands of Canadian dollars)                     2008         2007
    -------------------------------------------------------------------------
    Net earnings (loss) from continuing operations      $29,119      $(2,756)
    Items not affecting cash:
      Non-controlling interest                             (227)      (3,387)
      Amortization                                       15,802       20,136
      Future income taxes                                11,781         (873)
    Equity income from Morguard REIT continuing
     operations                                         (19,363)      (2,674)
    Morguard REIT's equity accounted FFO                  7,762        6,109
    Gain on pension valuation allowance                 (19,441)           -
    Dilution impact from change in ownership of
     subsidiaries                                             -          (24)
    -------------------------------------------------------------------------
    FFO - Consolidated                                  $25,433      $16,531
          Non-controlling interest - RPCL                 1,877          922
    -------------------------------------------------------------------------
    FFO - Morguard's Share                              $23,556      $15,609
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------The Company uses Funds from Operations ("FFO") and Funds from Operations
- Morguard's Share in addition to net income to report operating results. FFO
is an industry standard for evaluating operating performance defined as net
income plus amortization and future income taxes, excludes gains or losses
from the sale of depreciable property and is not adjusted for gains realized
on the disposition of portfolio investments. FFO is not indicative of funds
available to meet the Company's cash requirements. The Company computes FFO in
accordance with the recently amended definitions of the Real Property
Association of Canada, formerly known as the Canadian Institute of Public and
Private Real Estate Companies. However, FFO is not a recognized measure under
Canadian generally accepted accounting principles and accordingly the term
does not necessarily have a standardized meaning and may not be comparable to
similarly titled measures presented by other publicly traded entities.
    FFO - Morguard's Share for the three months ended March 31, 2008 were
$23.6 million ($1.69 per common share) compared to $15.6 million ($1.12 per
common share) for the same period in 2007.  The increase of $8.0 million is
primarily a result of the RPCL refinancing program, including non-recurring
transaction and early extinguishment costs of $1.9 million, increase in
dividend and other income of $1.2 million and an increase in equity accounted
FFO from Morguard REIT of $1.7 million.

    FIRST QUARTER FINANCIAL STATEMENTS AND MANAGEMENT'S DISCUSSION AND
    ANALYSIS

    The Company's unaudited financial statements for the three months ended
March 31, 2008, along with the 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.




For further information:

For further information: Morguard Corporation: K. (Rai) Sahi, Chief
Executive Officer, (905) 281-3800; Paul Miatello, Chief Financial Officer,
(905) 281-3800