MISSISSAUGA, ON, Nov. 4, 2015 /CNW/ - Morguard North American
Residential REIT (the "REIT") (TSX: MRG.UN) today announced its
financial results for the three and nine months ended September 30, 2015.
Third Quarter Highlights
Acquisition of a 51% interest in a garden-style property
comprising 252 suites located in Cooper
City, Florida, for $37
million. The acquisition was funded by cash on hand and an
advance from Morguard Corporation.
The REIT is reporting performance of:
- Third quarter adjusted net operating income ("Adjusted NOI") of
$26.4 million, which excludes realty
taxes accounted for under IFRIC 21, an increase of $3.8 million over the same period in 2014.
- Basic funds from operations ("FFO") of $13.3 million for the three months ended
September 30, 2015, an increase of
$2.5 million, or 22.8% over the same
period in 2014.
- Basic FFO of $0.29 per Unit for
the three months ended September 30,
2015, a 26% increase as compared to the $0.23 per Unit for the third quarter of
2014.
- Basic adjusted funds from operations ("AFFO") of $0.22 per Unit for the three months ended
September 30, 2015, a 29% increase as
compared to the $0.17 per Unit
generated over the same period in 2014.
- FFO and AFFO payout ratios for the three months ended
September 30, 2015 of 52.6% and
67.6%, respectively.
Financial and
Operational Highlights
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|
|
|
|
|
|
As
at
(In thousands of
dollars, except as noted otherwise)
|
September
30, 2015
|
|
|
December 31,
2014
|
|
September
30, 2014
|
Operational
Information
|
|
|
|
|
|
|
Number of
properties
|
45
|
|
|
44
|
|
44
|
Total
suites
|
13,102
|
|
|
12,850
|
|
12,850
|
Occupancy
percentage
|
95.7%
|
|
|
96.0%
|
|
3396.4%
|
Average monthly rent
– Canada (in actual dollars)
|
$1,267
|
|
|
$1,246
|
|
$1,241
|
Average monthly rent
– U.S. (in actual U.S. dollars)
|
US$994
|
|
|
US$945
|
|
US$938
|
Summary of
Financial Information
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|
|
|
|
|
|
Gross book
value
|
$2,040,922
|
|
|
$1,832,287
|
|
$1,772,163
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Indebtedness
|
$1,116,781
|
|
|
$1,022,555
|
|
$983,290
|
Indebtedness to gross
book value ratio
|
55%
|
|
|
56%
|
|
55%
|
Weighted average
mortgage interest rate
|
3.9%
|
|
|
3.9%
|
|
4.1%
|
Weighted average term
to maturity on mortgages payable (years)
|
5.1
|
|
|
5.6
|
|
4.9
|
Financial and
Operational Highlights (Continued)
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|
|
|
Three months
ended September
30
|
Nine months
ended September
30
|
(In thousands of
dollars, except per Unit amounts)
|
2015
|
2014
|
2015
|
2014
|
Summary of
Financial Information
|
|
|
|
|
Interest coverage
ratio(1)
|
1.96
|
1.89
|
1.95
|
1.84
|
Indebtedness coverage
ratio(1)
|
1.32
|
1.33
|
1.33
|
1.34
|
Revenue from income
producing properties
|
$50,310
|
$43,828
|
$145,527
|
$129,679
|
NOI
|
$29,857
|
$25,324
|
$73,584
|
$64,748
|
Adjusted
NOI(1)
|
$26,360
|
$22,601
|
$76,617
|
$67,627
|
Net operating
margin(1)
|
52%
|
52%
|
53%
|
52%
|
FFO -
basic
|
$13,277
|
$10,808
|
$38,337
|
$33,034
|
FFO -
diluted
|
$13,980
|
$11,512
|
$40,424
|
$35,121
|
FFO per Unit –
basic
|
$0.29
|
$0.23
|
$0.82
|
$0.71
|
FFO per Unit –
diluted
|
$0.28
|
$0.23
|
$0.80
|
$0.70
|
AFFO -
basic
|
$10,326
|
$7,895
|
$29,522
|
$23,889
|
AFFO -
diluted
|
$11,029
|
$8,599
|
$31,609
|
$25,976
|
AFFO per Unit – basic
and diluted
|
$0.22
|
$0.17
|
$0.63
|
$0.51
|
Distributions per
Unit
|
$0.15
|
$0.15
|
$0.45
|
$0.45
|
FFO payout
ratio
|
52.6%
|
65.2%
|
54.6%
|
63.4%
|
AFFO payout
ratio
|
67.6%
|
88.2%
|
70.9%
|
88.2%
|
Weighted average
number of Units outstanding (in thousands):
|
|
|
|
Basic
|
46,549
|
46,525
|
46,542
|
46,519
|
Diluted
|
50,420
|
50,396
|
50,413
|
50,390
|
Average exchange
rates – United States dollar to Canadian dollar
|
$1.31
|
$1.09
|
$1.26
|
$1.09
|
|
|
|
|
|
(1) Excludes realty taxes accounted for under IFRIC 21,
which have been adjusted on a pro-rata basis over the entire fiscal
year.
Net Operating
Income
|
|
|
|
Three months
ended September
30
|
Nine months
ended September
30
|
(In thousands of
dollars)
|
2015
|
2014
|
2015
|
2014
|
Revenue from
income producing properties
|
$50,310
|
$43,828
|
$145,527
|
$129,679
|
Property operating
expenses
|
|
|
|
|
|
Operating
costs
|
14,335
|
12,374
|
40,047
|
35,690
|
|
Realty
taxes
|
1,870
|
2,218
|
19,101
|
17,585
|
|
Utilities
|
4,248
|
3,912
|
12,795
|
11,656
|
Total property
operating expenses
|
20,453
|
18,504
|
71,943
|
64,931
|
NOI
|
29,857
|
25,324
|
73,584
|
64,748
|
Realty taxes
accounted for under IFRIC 21
|
(3,497)
|
(2,723)
|
3,033
|
2,879
|
Adjusted
NOI
|
$26,360
|
$22,601
|
$76,617
|
$67,627
|
For the three months ended September 30,
2015, consolidated Adjusted NOI increased by $3.8 million, or 16.6%, to $26.4 million, compared to $22.6 million in 2014. The increase was mainly
due to an increase in Adjusted NOI in Canada and the U.S. of $532 (or 5.8%) and US$388 (or 3.1%), respectively, and the change in
the U.S. foreign exchange rate which increased Adjusted NOI by
$2.8 million. The increase in NOI was
due to higher rental revenue and lower overall operating expenses
in Canada, partially offset by an
increase in operating costs in the U.S.
For the nine months ended September 30,
2015, consolidated Adjusted NOI increased by $9.0 million, or 13.3% to $76.6 million, compared to $67.6 million in 2014. The increase was due to an
increase in Adjusted NOI in Canada
and the U.S. of $1.3 million (or
4.9%) and US$1.2 million (or 3.3%),
respectively, and the change in the U.S. foreign exchange rate,
which increased Adjusted NOI by $6.5
million. The increase in NOI was due to higher rental
revenue, partially offset by an increase in utilities in
Canada and operating costs in the
U.S.
Funds from
Operations ("FFO")
|
|
|
|
Three months
ended September
30
|
Nine months
ended September
30
|
(In thousands of
dollars, except per Unit amounts)
|
2015
|
2014
|
2015
|
2014
|
Net income for the
period attributable to the unitholders
|
$15,005
|
$16,102
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$36,493
|
$27,638
|
Add
(deduct):
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|
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|
Realty taxes
accounted for under IFRIC 21
|
(3,557)
|
(2,723)
|
2,973
|
2,879
|
Fair value gain on
conversion option on the Debentures
|
(4)
|
(102)
|
(63)
|
(7)
|
Distributions on
Class B LP Units recorded as interest expense
|
2,583
|
2,583
|
7,750
|
7,750
|
Foreign exchange
gain
|
(1,121)
|
(576)
|
(2,185)
|
(361)
|
Net fair value gain
on income producing properties
|
(17,559)
|
(6,580)
|
(35,475)
|
(37,761)
|
Non-controlling
interests' share of fair value gain on income producing
properties
|
147
|
102
|
2
|
514
|
Fair value (gain)
loss on Class B LP Units
|
7,234
|
(4,306)
|
3,101
|
13,951
|
Deferred income tax
provision
|
10,549
|
6,308
|
25,741
|
18,431
|
FFO -
basic
|
$13,277
|
$10,808
|
$38,337
|
$33,034
|
Interest expense on
Debentures
|
703
|
704
|
2,087
|
2,087
|
FFO -
diluted
|
$13,980
|
$11,512
|
$40,424
|
$35,121
|
FFO per Unit -
basic
|
$0.29
|
$0.23
|
$0.82
|
$0.71
|
FFO per Unit -
diluted
|
$0.28
|
$0.23
|
$0.80
|
$0.70
|
Basic FFO for the three months ended September 30, 2015, increased by $2.5 million, or 22.8%, to $13.3 million ($0.29 per Unit), compared to $10.8 million ($0.23 per Unit) in 2014. The increase is mainly
due to an increase in Adjusted NOI of $3.8
million, partially offset by an increase in interest expense
of $1.0 million (excluding
distributions on Class B LP Units and fair value adjustments), and
an increase in trust expenses of $0.5
million. The change in foreign exchange rates had a positive
impact on FFO of $1.7 million, of
which amount is predominantly included in the increase to Adjusted
NOI and interest expense.
Basic FFO for the nine months ended September 30, 2015, increased by $5.3 million, or 16.1%, to $38.3 million ($0.82 per Unit), compared to $33.0 million ($0.71 per Unit) in 2014. The increase is mainly
due to an increase in Adjusted NOI of $9.0
million, partially offset by an increase in interest expense
of $2.6 million (excluding
distributions on Class B LP Units and fair value adjustments), and
an increase in trust expenses of $1.3
million. The change in foreign exchange rates had a
positive impact on FFO of $3.8
million, of which amount is predominantly included in the
increase to Adjusted NOI and interest expense.
Adjusted Funds
from Operations ("AFFO")
|
|
|
|
Three months
ended
September 30
|
Nine
months ended September
30
|
(In thousands of
dollars, except per Unit amounts)
|
2015
|
2014
|
2015
|
2014
|
FFO -
basic
|
$13,277
|
$10,808
|
$38,337
|
$33,034
|
Add
(deduct):
|
|
|
|
|
Amortization of mark
to market adjustments on mortgages
|
(1,671)
|
(1,737)
|
(5,024)
|
(5,708)
|
Amortization of
deferred financing costs assumed on Initial Properties
|
113
|
220
|
332
|
713
|
Non-controlling
interests' share of amortization of deferred financing costs
assumed on Initial Properties
|
(2)
|
(9)
|
(6)
|
(33)
|
Amortization of cash
flow hedge
|
56
|
55
|
168
|
163
|
Maintenance capital
expenditures
|
(1,447)
|
(1,442)
|
(4,285)
|
(4,280)
|
AFFO -
basic
|
10,326
|
7,895
|
29,522
|
23,889
|
Interest expense on
the Debentures
|
703
|
704
|
2,087
|
2,087
|
AFFO -
diluted
|
$11,029
|
$8,599
|
$31,609
|
$25,976
|
AFFO per Unit – basic
and diluted
|
$0.22
|
$0.17
|
$0.63
|
$0.51
|
Basic AFFO for the three months ended September 30, 2015, increased by $2.4 million or 30.8%, to $10.3 million ($0.22 per Unit) compared to $7.9 million ($0.17
per Unit) in 2014. The increase was primarily driven by the
increase in FFO.
Basic AFFO for the nine months ended September 30, 2015, increased by $5.6 million or 23.6%, to $29.5 million ($0.63 per Unit) compared to $23.9 million ($0.51 per Unit) in 2014. The increase was
primarily driven by the increase in FFO.
The REIT's unaudited financial statements for the three months
ended September 30, 2015, along with
the Management's Discussion and Analysis will be available on the
REIT's website at www.morguard.com and will be filed with
SEDAR at www.sedar.com.
Non-IFRS Measures
The REIT's consolidated financial statements are prepared in
accordance with International Financial Reporting Standards
("IFRS"). The following measures, NOI, Adjusted NOI, FFO, AFFO,
indebtedness, gross book value, indebtedness to gross book value
ratio, interest coverage ratio and indebtedness coverage ratio
(collectively, the "non-IFRS measures") as well as other measures
discussed elsewhere in this press release, do not have a
standardized definition prescribed by IFRS and are, therefore,
unlikely to be comparable to similar measures presented by other
reporting issuers. The REIT uses these measures to better assess
the REIT's underlying performance and financial position and
provides these additional measures so that investors may do the
same. Details on non-IFRS measures are set out in the REIT's
Management's Discussion and Analysis for the period ended
September 30, 2015 and available on
the REIT's profile on SEDAR at www.sedar.com.
Conference Call Details
Morguard North American Residential Real Estate Investment Trust
will hold a conference call on Thursday,
November 5, 2015 at 3:00 p.m.
(ET) to discuss the financial results for the three
months ended September 30, 2015 and
2014. To participate in the conference call, please dial
647-427-7450 or 1-888-231-8191. Please quote
conference ID # 55767084.
About Morguard North American Residential REIT
The REIT is an unincorporated, open-ended real estate investment
trust established under and governed by the laws of the Province of
Ontario. The Units of the REIT trade on the Toronto Stock
Exchange under the ticker symbol MRG.UN. With a strategic focus on
the acquisition of high-quality multi-suite residential properties
in Canada and the United States, the REIT maximizes
long-term Unit value through active asset and property management.
Its portfolio consists of 13,102 residential suites (as of
November 4, 2015) located in
Ontario, Alberta, Alabama, Colorado, Florida, Georgia, Louisiana, North
Carolina and Texas
with an appraised value of approximately
$2.0 billion at September 30, 2015. For more information, visit
the REIT's website at www.morguard.com.
SOURCE Morguard North American Residential Real Estate
Investment Trust