Morguard Real Estate Investment Trust announces 2013 second quarter results

TSX: MRT.UN

MISSISSAUGA, ON, Aug. 1, 2013 /CNW/ - Morguard Real Estate Investment Trust ("the Trust") (TSX: MRT.UN) today is pleased to announce its operating results for the three and six months ended June 30, 2013. ("Q2").  These results have been prepared in accordance with International Financial Reporting Standards ("IFRS").

Highlights

Funds from Operations (FFO)

• Funds from operations for the three and six months ended June 30, 2013 was $24.4 million and $49.3 million, respectively, as compared to $20.2 million and $39.5 million, respectively, for the same periods in 2012. On a per unit diluted basis, funds from operations for the three and six months ended June 30, 2013 was $0.37 and $0.75, respectively, as compared to $0.34 and $0.66, respectively, for the same periods in 2012.  The increase in FFO is primarily due to the increase in NOI resulting from acquisition completed by the Trust in October 2012.
• Funds from operations is not a term defined under IFRS and may not be comparable to similar measures used by other Trusts. A reconciliation of net income to funds from operations is included.

Net Operating Income (NOI)

• Net operating income for the three and six months ended June 30, 2013 was $39.2 million and $79.4 million, respectively, as compared to $32.9 million and $65.4 million, respectively, for the same periods in 2012.
• Net operating income is an additional GAAP measure, but not a term defined under IFRS and may not be comparable to similar measures used by other Trusts. A calculation of net operating income is included.

Net Income

• Net income for the three and six months ended June 30, 2013 was $51.3 million and $127.1 million, respectively, as compared to $46.9 million and $90.9 million, respectively, for the same periods in 2012.

Operations

• The portfolio occupancy remained stable and was 95% at June 30, 2013, 96% at March 31, 2013 and 95% at June 30, 2012.

At June 30, 2013, the Trust's total enterprise value was approximately $2.2 billion (based on the market closing price of the Trust's units on June 30, 2013 plus total debt outstanding). At June 30, 2013, the Trust had $1.2 billion of outstanding debt, equating to debt to total value ratio of 53.5%. The Trust's debt consisted of $981.7 million of fixed-rate debt with weighted average interest rate of 4.8% and weighted average term to maturity of 4.41 years, $144.9 million of 4.85% fixed-rate convertible debentures, $30.0 million in notes payable and $36.4 million utilization of the operating line of credit.

The Trust has a debt to gross book value of total assets ratio, as defined under the Declaration of Trust, of 43.1%.

NET OPERATING INCOME, FUNDS FROM OPERATIONS
This press release and accompanying financial information make reference to net operating income and funds from operations on a total and per unit basis.  Net operating income is defined as income from property operations after operating expenses have been deducted, but prior to deducting interest expense, general and administrative expenses and fair value gains (losses).  Funds from operations is defined as net income prior to extraordinary items, valuation adjustments, and certain other non-cash items, if any.

FINANCIAL STATEMENTS AND MORGUARD'S DISCUSSION AND ANALYSIS
Morguard REIT's Q2 2013 Condensed Interim Consolidated Financial Statements and Management's Discussion and Analysis along with its 2012 Annual Report are available on Morguard REIT's website at www.morguard.com and have been filed with SEDAR at www.sedar.com

ABOUT MORGUARD REAL ESTATE INVESTMENT TRUST
Morguard REIT is a closed-end real estate investment trust, which owns a diversified portfolio of 54 retail, office and mixed-use properties in Canada with a book value of $2.8 billion and approximately 9.1 million square feet of leaseable space.

Consolidated Balance Sheets

As at	June 30,	December 31,
(In thousands of Canadian dollars)	2013	2012
Assets
Real estate properties	$     2,684,277	$     2,592,740
Equity accounted investments	44,294	41,249
Amounts receivable	16,326	14,177
Other assets	11,966	1,531
Cash and cash equivalents	13,159	13,624
	$     2,770,022	$     2,663,321
Liabilities
Mortgages and bonds payable	$       981,672	$       956,069
Convertible debentures payable	144,879	144,356
Accounts payable and other liabilities	55,323	46,650
Notes payable	30,000	30,610
Bank indebtedness	36,392	54,853
	1,248,266	1,232,538
Unitholders' Equity	1,521,756	1,430,783
	$   2,770,022	$    2,663,321

Consolidated Statements of Income and Comprehensive Income

(In thousands of Canadian dollars)		Three months ended		Six months ended
		June 30, 2013	June 30, 2012	June 30, 2013	June 30, 2012
Revenue from real estate properties		$     67,155	$     58,926	$     137,584	$    118,423
Property operating expenses		25,723	24,101	53,744	49,191
Property management fees		2,188	1,928	4,421	3,871
Net operating income		39,244	32,897	79,419	65,361
Interest expense		14,639	12,576	29,825	25,366
General and administrative		1,115	1,145	2,237	2,502
Amortization expense		10	10	21	22
Other income		—	(1)	(5)	(39)
Income before fair value gains, gain on sale of real estate properties and net income from equity accounted investments		23,480	19,167	47,341	37,510
Fair value gains on real estate properties		24,843	26,926	74,241	52,246
Gain on sale of real estate properties		2,058	—	2,058	—
Net income from equity accounted investments		909	787	3,501	1,110
Net income for the period		$     51,290	$     46,880	$     127,141	$      90,866
Other comprehensive income
Items to be reclassified to profit or loss in subsequent periods:
	Amortization - cash flow hedge	247	242	493	483
Comprehensive income		$     51,537	$     47,122	$     127,634	$      91,349

Reconciliation of Net Income to Funds from Operations

(In thousands of Canadian dollars,except per-unit amounts)		Three months ended		Six months ended
		June 30, 2013	June 30, 2012	June 30, 2013	June 30, 2012
Net income for the period		$   51,290	$ 46,880	$  127,141	$   90,866
Add/(deduct) :
Fair value gains on real estate properties(1)		(24,787)	(26,693)	(75,793)	(51,389)
Gain on sale of real estate properties		(2,058)	—	(2,058)	—
Funds from operations		$ 24,445	$   20,187	$   49,290	$   39,477
Interest expense on convertible debentures		1,844	1,428	3,638	2,911
Diluted FFO		$   26,289	$   21,615	$   52,928	$ 42,388
Funds from operations per unit:
	Basic	$0.38	$0.35	$0.77	$0.68
	Diluted(2)	$0.37	$0.34	$0.75	$0.66
Weighted average units outstanding (in thousands)
	Basic	64,043	57,932	64,067	57,832
	Diluted(2)	70,141	64,125	70,165	64,025

(1) Includes fair value gains from equity accounted investments (2) Includes dilutive impact of convertible debentures

SOURCE: Morguard Real Estate Investment Trust