Morguard Real Estate Investment Trust announces 2013 annual results

TSX: MRT.UN

MISSISSAUGA, ON, Feb. 26, 2014 /CNW/ - Morguard Real Estate Investment Trust ("the Trust") (TSX: MRT.UN) today is pleased to report 2013 annual operating results. These results have been prepared in accordance with International Financial Reporting Standards ("IFRS").

Highlights

Funds from Operations (FFO)

• Funds from operations for the year ended December 31, 2013 was $100.8 million, up 14.8 million from the $86.0 million reported for the prior year. On a per unit diluted basis, funds from operations for the year 2013 was $1.55, as compared to $1.44 reported for the prior year. The increase in FFO was primarily the result of modest growth achieved in Trust's core portfolio and a significant contribution from an 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 year ended December 31, 2013 was $161.3 million, up $24.3 million from the $137.0 million recorded 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 year ended December 31, 2013 was $212.4 million, compared to $228.4 million reported in 2012. The decrease in net income was the result of lower fair value gains on real estate properties recorded in 2013, offset by strong earnings performance from the Trust's portfolio.

Operations

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

At December 31, 2013, the Trust's total enterprise value was approximately $2.4 billion (based on the market closing price of the Trust's units on December 31, 2013 plus total debt outstanding). At December 31, 2013, the Trust had $1.3 billion of outstanding debt, equating to debt to total value ratio of 56.8%. The Trust's debt consisted of $1.2 billion of fixed-rate debt with weighted average interest rate of 4.43% and weighted average term to maturity of 5.84 years, $145.5 million of 4.85% fixed-rate convertible debentures and $5.0 million utilization of the operating line of credit. The Trust has a debt to total assets ratio of 45.7%.

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 Q4 2013 Consolidated Financial Statement 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 55 retail, office and mixed-use properties in Canada with a book value of $3.0 billion and approximately 9.6 million square feet of leaseable space.

Consolidated Balance Sheet
(In thousands of Canadian dollars)
As at December 31											2013					2012
Assets
Real estate properties									$		2,869,358			$		2,592,740
Equity accounted investments											44,857					41,249
Amounts receivable											14,505					14,177
Other assets											920					1,531
Cash and cash equivalents											13,159					13,624
									$		2,942,799			$		2,663,321
Liabilities
Mortgages and bonds payable									$		1,194,682			$		956,069
Convertible debentures payable											145,460					144,356
Accounts payable and other liabilities											44,919					46,650
Notes payable											—					30,610
Bank indebtedness											5,000					54,853
											1,390,061					1,232,538
Unitholders' Equity											1,552,738					1,430,783
									$		2,942,799			$		2,663,321

Consolidated Statements of Income and Comprehensive Income
(In thousands of Canadian dollars)
For the years ended December 31						2013					2012
Revenue from real estate properties				$		279,651			$		244,876
Property operating expenses						109,626					99,882
Property management fees						8,689					8,030
Net operating income						161,336					136,964
Interest expense						59,672					49,750
General and administrative						4,555					5,120
Amortization expense						38					43
Other income						(9)					(52)
Income before fair value gains, gain on sale of real estate properties and net income from equity accounted investments						97,080					82,103
Fair value gains on real estate properties						107,641					142,683
Gain on sale of real estate properties						2,058					—
Net income from equity accounted investments						5,602					3,660
Net income for the year				$		212,381			$		228,446
Other comprehensive income
Amortization - cash flow hedge						991					972
Comprehensive income				$		213,372			$		229,418

Reconciliation of Net Income to Funds from Operations
(In thousands of Canadian dollars, except per-unit amounts)						2013					2012
Net income for the year				$		212,381			$		228,446
Add/(deduct) :
Fair value gains on real estate properties(1)						(109,560)					(142,464)
Gain on sale of real estate properties						(2,058)					—
Funds from operations				$		100,763			$		85,982
Interest expense on convertible debentures						7,275					5,401
Diluted FFO				$		108,038			$		91,383
Funds from operations per unit:
Basic						$1.59					$1.44
Diluted(2)						$1.55					$1.44
Weighted average units outstanding (in thousands)
Basic						63,456					59,778
Diluted(2)						69,554					60,811

(1) Includes fair value gains from equity accounted investments

(2) Includes dilutive impact of convertible debentures

 

SOURCE Morguard Real Estate Investment Trust