MISSISSAUGA, ON, Feb. 17,
2016 /CNW/ - Morguard North American Residential REIT (the
"REIT") (TSX: MRG.UN) today announced its results for the year
ended December 31, 2015.
Highlights
The REIT is reporting performance of:
- Adjusted net operating income ("Adjusted NOI") of $103.7 million for the year ended December 31, 2015, an increase of $13.5 million, or 15.0% compared to 2014.
- Basic funds from operations ("FFO") of $51.1 million for the year ended December 31, 2015, an increase of $6.4 million, or 14.3% compared to 2014.
- Basic FFO of $1.10 per Unit for
the year ended December 31, 2015, a
14.6% increase as compared to the $0.96 per Unit for 2014.
- Basic adjusted funds from operations ("AFFO") of $0.85 per Unit for the year ended December 31, 2015, a 26.9% increase as compared
to the $0.67 per Unit generated over
the same period in 2014.
- FFO and AFFO payout ratios for the year ended December 31, 2015 of 54.6% and 70.5%,
respectively.
- Average monthly rent increased by 4.3% at December 31, 2015, compared to 2014. Occupancy
decreased to 94.8% at December 31,
2015 from 96.0% at December 31,
2014.
- Acquisition of a 51% interest in a garden-style property
comprising of 252 suites located in Cooper City, Florida (the "Monterra
Acquisition"), for a gross purchase price of $73.9 million (US$56.0
million). The acquisition was funded by cash on hand and a
mortgage of $41.3 million
(US$29.6 million) at an interest rate
of 3.86% for a term of seven years.
Financial and Operational Highlights
As at December
31,
|
|
|
|
(In thousands of
dollars, except as noted otherwise)
|
2015
|
|
2014
|
Operational
Information
|
|
|
|
Number of
properties
|
45
|
|
44
|
Total
suites
|
13,102
|
|
12,850
|
Occupancy
percentage
|
94.8%
|
|
96.0%
|
Average Monthly Rent
- Canada (in actual dollars)
|
$1,272
|
|
$1,246
|
Average Monthly Rent
- U.S. (in actual U.S. dollars)
|
US$1,002
|
|
US$945
|
Summary of
Financial Information
|
|
|
|
Gross book
value
|
$2,160,015
|
|
$1,832,287
|
Indebtedness
|
$1,186,131
|
|
$1,022,555
|
Indebtedness to gross
book value ratio
|
55%
|
|
56%
|
Weighted average
mortgage interest rate
|
3.8%
|
|
3.9%
|
Weighted average term
to maturity on mortgages payable (years)
|
5.1
|
|
5.6
|
Exchange rates -
Canadian dollar to United States dollar
|
$0.72
|
|
$0.86
|
Exchange rates -
United States dollar to Canadian dollar
|
$1.38
|
|
$1.16
|
|
|
|
|
Financial and Operational Highlights (Continued)
For the years
ended December 31,
|
|
(In thousands of
dollars, except per Unit amounts)
|
2015
|
2014
|
Summary of
Financial Information
|
|
|
Interest coverage
ratio
|
1.96
|
1.85
|
Indebtedness coverage
ratio
|
1.33
|
1.33
|
Revenue from income
producing properties
|
$198,442
|
$174,815
|
NOI
|
$104,182
|
$90,217
|
Adjusted
NOI
|
$103,710
|
$90,217
|
Net operating
margin
|
52%
|
52%
|
FFO -
basic
|
$51,112
|
$44,726
|
FFO -
diluted
|
$53,902
|
$47,516
|
FFO per Unit -
basic
|
$1.10
|
$0.96
|
FFO per Unit -
diluted
|
$1.07
|
$0.94
|
AFFO -
basic
|
$39,627
|
$31,031
|
AFFO -
diluted
|
$42,417
|
$33,821
|
AFFO per Unit -
basic
|
$0.85
|
$0.67
|
AFFO per Unit -
diluted
|
$0.84
|
$0.67
|
Distributions per
Unit
|
$0.60
|
$0.60
|
FFO payout
ratio
|
54.6%
|
62.5%
|
AFFO payout
ratio
|
70.5%
|
89.6%
|
Weighted average
number of Units outstanding (in thousands):
|
|
|
Basic
|
46,545
|
46,522
|
Diluted
|
50,416
|
50,393
|
Average exchange
rates - Canadian dollar to United States dollar
|
$0.78
|
$0.91
|
Average exchange
rates - United States dollar to Canadian dollar
|
$1.28
|
$1.10
|
Net Operating Income
For the years
ended December 31,
|
|
(In thousands of
dollars)
|
2015
|
2014
|
Revenue from
income producing properties
|
$198,442
|
$174,815
|
Property operating
expenses
|
|
|
|
Operating
costs
|
55,068
|
48,824
|
|
Realty
taxes
|
22,162
|
20,014
|
|
Utilities
|
17,030
|
15,760
|
Total property
operating expenses
|
94,260
|
84,598
|
NOI
|
104,182
|
$90,217
|
Realty taxes
accounted for under IFRIC 21
|
(472)
|
-
|
Adjusted
NOI
|
$103,710
|
$90,217
|
For the year ended December 31,
2015, consolidated Adjusted NOI increased by $13.5 million (or 15.0%) to $103.7 million, compared to $90.2 million in 2014. The increase was due
to an increase in Adjusted NOI in Canada and the U.S. of $2.0 million (or 5.6%) and US$2.3 million (or 4.7%), respectively, and the
change in the U.S. foreign exchange rate, which increased Adjusted
NOI by $9.2 million. The increase in
Adjusted NOI was due to higher rental revenue and lower overall
operating expense in Canada and
the Monterra Acquisition, partially offset by an increase in
operating cost in the U.S.
Funds from Operations ("FFO")
For the years
ended December 31,
|
|
(In thousands of
dollars, except per Unit amounts)
|
2015
|
2014
|
Net income
attributable to unitholders
|
$38,784
|
$38,157
|
Add
(deduct):
|
|
|
Realty taxes
accounted for under IFRIC 21
|
(241)
|
-
|
Fair value gain on
conversion option on the Debentures
|
(53)
|
(57)
|
Distributions on
Class B LP Units recorded as interest expense
|
10,333
|
10,333
|
Foreign exchange
gain
|
(2,882)
|
(830)
|
Fair value gain on
income producing properties, net
|
(38,804)
|
(40,104)
|
Non-controlling
interests' share of fair value gain on income producing
properties
|
(413)
|
610
|
Fair value loss on
Class B LP Units
|
11,195
|
10,506
|
Deferred income tax
provision
|
33,193
|
26,111
|
FFO -
basic
|
$51,112
|
$44,726
|
Interest expense on
the Debentures
|
2,790
|
2,790
|
FFO -
diluted
|
$53,902
|
$47,516
|
FFO per Unit -
basic
|
$1.10
|
$0.96
|
FFO per Unit -
diluted
|
$1.07
|
$0.94
|
|
|
|
Basic FFO for the year ended December 31,
2015, increased by $6.4
million, or 14.3%, to $51.1
million ($1.10 per Unit),
compared to $44.7 million
($0.96 per Unit) in 2014. The
increase is mainly due to an increase in Adjusted NOI of
$13.5 million, partially offset by an
increase in interest expense of $3.0
million (excluding distributions on Class B LP Units and
fair value adjustments), an increase in trust expenses of
$1.7 million and a decrease in other
income resulting from the 2014 gain on early extinguishment of
mortgage payable of $1.5
million. The change in foreign exchange rates had a
positive impact on FFO of $4.9
million, an amount that is predominantly included in the
increase to NOI and interest expense.
Adjusted Funds from Operations ("AFFO")
For the years
ended December 31,
|
|
(In thousands of
dollars, except per Unit amounts)
|
2015
|
2014
|
FFO -
basic
|
$51,112
|
$44,726
|
Add
(deduct):
|
|
|
Amortization of
mark-to-market adjustments on mortgages
|
(6,740)
|
(7,457)
|
Amortization of
deferred financing costs assumed on the Initial
Properties
|
440
|
818
|
Non-controlling
interests' share of amortization of deferred financing
costs
assumed on the
Initial Properties
|
(8)
|
(35)
|
Gain from early
extinguishment of mortgages payable
|
-
|
(1,517)
|
Amortization of
tenant incentive and cash flow hedge
|
565
|
218
|
Maintenance capital
expenditures
|
(5,742)
|
(5,722)
|
AFFO –
basic
|
39,627
|
31,031
|
Interest expense on
the Debentures
|
2,790
|
2,790
|
AFFO –
diluted
|
$42,417
|
$33,821
|
AFFO per Unit –
basic
|
$0.85
|
$0.67
|
AFFO per Unit –
diluted
|
$0.84
|
$0.67
|
Basic AFFO for the year ended December
31, 2015, increased by $8.6
million or 27.7%, to $39.6
million ($0.85 per Unit),
compared to $31.0 million
($0.67 per Unit) in 2014. The
increase was primarily driven by the increase in FFO and the 2014
deduction included in AFFO from the gain on early extinguishment of
mortgages payable of $1.5
million.
Subsequent Events
On January 26, 2016, the REIT
repurchased 70,400 Units under its NCIB for cash consideration of
$0.7 million at a weighted average
price of $10.45 per Unit.
On February 1, 2016, the REIT
acquired a multi-suite residential property comprising 370 suites
located in Ottawa, Ontario, from a
third party for a gross purchase price of approximately
$67.0 million. The acquisition was
partially financed by a new mortgage of $38.6 million at an interest rate of 2.88% for a
term of 10 years.
The REIT's audited consolidated financial statements for the
year ended December 31, 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 year ended
December 31, 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,
February 18, 2016 at 3:00 p.m.
(ET) to discuss the financial results for the year ended
December 31, 2015 and 2014. To
participate in the conference call, please dial 647-427-7450
or 1-888-231-8191. Please quote conference ID #
34555610.
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 13,472 residential suites (as
of February 16, 2016) located in Ontario, Alberta,
Alabama, Colorado,
Florida, Georgia, Louisiana, North
Carolina and Texas with an
appraised value of approximately $2.0
billion as at December 31, 2015. For more information,
visit the REIT's website at www.morguard.com.
SOURCE Morguard North American Residential Real Estate
Investment Trust