MISSISSAUGA, ON, May 2,
2017 /CNW/ - Morguard North American Residential REIT (the
"REIT") (TSX: MRG.UN) today announced its financial results for the
three months ended March 31,
2017.
First Quarter Highlights
The REIT is reporting performance of:
- Adjusted net operating income ("Adjusted NOI") of $29.4 million for the three months ended
March 31, 2017, an increase of
$0.9 million, or 3.3% compared to
2016.
- Basic funds from operations ("FFO") of $15.3 million for the three months ended
March 31, 2017, an increase of
$1.3 million, or 9.0% over the same
period in 2016.
- Basic FFO of $0.30 per Unit for
the three months ended March 31, 2017
and 2016.
- FFO payout ratio for the three months ended March 31, 2017 of 52.9%.
On January 9, 2017, the REIT
completed an offering for 4,370,000 Units sold for a price of
$13.75 per Unit for aggregate gross
proceeds of $60.1 million.
On February 1, 2017, the REIT
repaid on maturity, four mortgages in the amount of $59.3 million (US$45.3
million) secured by four multi-suite residential properties
located in Mobile, Alabama.
Financial and Operational Highlights
As
at
|
March
31,
|
December
31,
|
March 31,
|
(In thousands of
dollars, except as noted otherwise)
|
2017
|
2016
|
2016
|
Operational
Information
|
|
|
|
Number of
properties
|
46
|
46
|
46
|
Total
suites
|
13,472
|
13,472
|
13,472
|
Occupancy
percentage
|
95.6%
|
95.2%
|
95.0%
|
Average monthly rent
- Canada (in actual dollars)
|
$1,301
|
$1,296
|
$1,273
|
Average monthly rent
- U.S. (in actual U.S. dollars)
|
US$1,043
|
US$1,038
|
US$1,011
|
|
|
|
|
Summary of
Financial Information
|
|
|
|
Gross book
value
|
$2,293,570
|
$2,285,727
|
$2,141,201
|
Indebtedness
|
$1,165,776
|
$1,237,613
|
$1,199,692
|
Indebtedness to gross
book value ratio
|
51%
|
54%
|
56%
|
Weighted average
mortgage interest rate
|
3.6%
|
3.6%
|
3.7%
|
Weighted average term
to maturity on mortgages payable (years)
|
5.7
|
5.7
|
5.3
|
Exchange rates -
Canadian dollar to United States dollar
|
$0.75
|
$0.74
|
$0.77
|
Exchange rates -
United States dollar to Canadian dollar
|
$1.33
|
$1.34
|
$1.30
|
For the three
months ended March 31
|
|
(In thousands of
dollars, except per Unit amounts)
|
2017
|
2016
|
Summary of
Financial Information
|
|
|
Interest coverage
ratio
|
2.25
|
1.97
|
Indebtedness coverage
ratio
|
1.53
|
1.36
|
Revenue from income
producing properties
|
$55,621
|
$54,354
|
NOI
|
$16,917
|
$16,272
|
Adjusted
NOI
|
$29,426
|
$28,482
|
Same Property
Adjusted NOI
|
$28,659
|
$28,020
|
Net operating
margin
|
53%
|
52%
|
FFO -
basic
|
$15,277
|
$14,019
|
FFO -
diluted
|
$15,965
|
$14,713
|
FFO per Unit -
basic
|
$0.30
|
$0.30
|
FFO per Unit -
diluted
|
$0.29
|
$0.29
|
Distributions per
Unit
|
$0.16
|
$0.15
|
FFO payout
ratio
|
52.9%
|
49.8%
|
Weighted average
number of Units outstanding (in thousands):
|
|
|
Basic
|
50,499
|
46,528
|
Diluted
|
54,370
|
50,399
|
Average exchange
rates - Canadian dollar to United States dollar
|
$0.76
|
$0.73
|
Average exchange
rates - United States dollar to Canadian dollar
|
$1.32
|
$1.37
|
Net Operating Income
For the three
months ended March 31
|
|
(In thousands of
dollars)
|
2017
|
2016
|
Revenue from
income producing properties
|
|
|
Same
Property
|
$54,081
|
$53,419
|
Acquisitions
|
1,540
|
935
|
Total revenue from
income producing properties
|
55,621
|
54,354
|
Property operating
expenses
|
|
|
Same
Property
|
|
|
|
Operating
costs
|
14,002
|
14,110
|
|
Realty
taxes
|
18,903
|
18,411
|
|
Utilities
|
5,026
|
5,088
|
Same
Property
|
37,931
|
37,609
|
Acquisitions
|
773
|
473
|
Total property
operating expenses
|
38,704
|
38,082
|
NOI
|
|
|
Same
Property
|
16,150
|
15,810
|
Acquisitions
|
767
|
462
|
Total
NOI
|
16,917
|
16,272
|
Realty taxes
accounted for under IFRIC 21
|
12,509
|
12,210
|
Adjusted
NOI
|
$29,426
|
$28,482
|
For the three months ended March 31,
2017, consolidated Adjusted NOI increased by $0.9 million (or 3.3%) to $29.4 million, compared to $28.5 million in 2016. The increase was due
to a higher Adjusted NOI in Canada
and the U.S. of $0.6 million (or
6.2%) and US$0.7 million (or 5.4%),
respectively, partially offset by the change in the U.S. foreign
exchange rate, which decreased Adjusted NOI by $0.4 million. The increase in Adjusted NOI
was attributable to an acquisition completed during the three
months ended March 31, 2016 and an
increase in Same Property NOI in Canada and the U.S. mainly driven by higher
rental revenue, partially offset by an increase in overall
operating expenses.
Funds from Operations
For the three
months ended March 31
|
|
(In thousands of
dollars, except per Unit amounts)
|
2017
|
2016
|
Net income (loss)
attributable to unitholders
|
$2,028
|
($24,445)
|
|
|
|
Add
(deduct):
|
|
|
Realty taxes
accounted for under IFRIC 21
|
11,892
|
11,674
|
Fair value loss on
conversion option on the Debentures
|
879
|
124
|
Distributions on
Class B LP Units recorded as interest expense
|
2,756
|
2,583
|
Foreign exchange
loss
|
190
|
1,246
|
Fair value gain on
income producing properties, net
|
(23,351)
|
(6,189)
|
Non-controlling
interests' share of fair value gain on income producing
properties
|
695
|
311
|
Fair value loss on
Class B LP Units
|
20,324
|
21,013
|
Deferred income tax
provision (recovery)
|
(136)
|
7,702
|
FFO –
basic
|
$15,277
|
$14,019
|
Interest expense on
the Debentures
|
688
|
694
|
FFO –
diluted
|
$15,965
|
$14,713
|
FFO per Unit –
basic
|
$0.30
|
$0.30
|
FFO per Unit –
diluted
|
$0.29
|
$0.29
|
Basic FFO for the three months ended March 31, 2017, increased by $1.3 million, or 9.0%, to $15.3 million ($0.30 per Unit), compared to $14.0 million ($0.30 per Unit) in 2016. The increase is
mainly due to an increase in Adjusted NOI of $0.9 million, an increase in other income of
$0.2 million and a decrease in
interest expense of $0.3 million
(excluding distributions on Class B LP Units and fair value loss on
conversion option on the Debentures), partially offset by an
increase in trust expenses of $0.1
million. The change in foreign exchange rates had a
negative impact on FFO of $0.4
million.
Excluding the impact of the offering, basic FFO per unit
amounted to $0.32 per Unit for the
three months ended March 31, 2017.
The impact includes the dilution from additional Units of the
offering offset by two months of interest savings on the repayment
of mortgages on February 1, 2017.
Subsequent Event
The REIT entered into a binding
agreement to acquire a newly-constructed property comprising 60
rental townhomes located in Toronto,
Ontario, for a gross purchase price of $15.8 million. The acquisition is expected to
close during the second quarter of 2017.
The REIT's unaudited condensed consolidated financial statements
for the three months ended March 31,
2017, 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, Same Property
NOI, FFO, 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 three months ended
March 31, 2017 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,
May 4, 2017 at 3:00 p.m.
(ET) to discuss the financial results for the three
months ended March 31, 2017 and 2016.
To participate in the conference call, please dial 647-427-7450
or 1-888-231-8191. Please quote conference ID #
2341221.
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 May 2, 2017) located in
Alberta, Ontario, Colorado, Texas, Louisiana, Alabama, Georgia, Florida and North
Carolina with an appraised value of approximately
$2.2 billion as at March 31,
2017. For more information, visit the REIT's website at
www.morguard.com.
SOURCE Morguard North American Residential Real Estate
Investment Trust