MISSISSAUGA, ON, May 1, 2018 /CNW/ - Morguard North American
Residential REIT (the "REIT") (TSX: MRG.UN) today announced its
financial results for the three months ended March 31, 2018.
First Quarter Highlights
The REIT is reporting first quarter performance of:
- Net operating income ("NOI") of $17.1
million for the three months ended March 31, 2018, an increase of $0.2 million, or 1.1% compared to 2017.
- Proportionate net operating income ("Proportionate NOI") of
$30.2 million for the three months
ended March 31, 2018, an increase of
$1.5 million, or 5.1% compared to
2017.
- Net income of $80.4 million for
the three months ended March 31,
2018, an increase of $77.9
million compared to 2017. The increase was primarily due to
higher non-cash changes to fair value on income producing
properties and fair value on Class B LP Units compared to 2017,
partially offset by an increase in deferred income tax compared to
2017.
- Basic funds from operations ("FFO") of $14.7 million for the three months ended
March 31, 2018, a decrease of
$0.5 million, or 3.5% over the same
period in 2017.
- Basic FFO of $0.29 per Unit for
the three months ended March 31,
2018, a 3.3% decrease as compared to the $0.30 per Unit in 2017.
- FFO payout ratio for the three months ended March 31, 2018 of 57.0%.
The REIT is reporting the following corporate highlights:
- On February 13, 2018, the REIT
issued $75.0 million principal amount
of 4.50% convertible unsecured subordinated debentures maturing on
March 31, 2023. On February 21, 2018, an additional principal amount
of $10.5 million was issued pursuant
to the exercise of the over-allotment option.
- On February 26, 2018, the REIT
redeemed the remaining $60.0 million
of its outstanding 4.65% convertible unsecured subordinated
debentures in advance of their March 30,
2018 maturity date.
Financial and Operational Highlights
As
at (In thousands of dollars, except as noted
otherwise)
|
March 31,
2018
|
December 31,
2017
|
March 31,
2017
|
Operational
Information
|
|
|
|
Number of
properties
|
46
|
46
|
46
|
Total
suites
|
13,314
|
13,314
|
13,472
|
Occupancy
percentage
|
95.1%
|
94.4%
|
95.6%
|
Average monthly rent
- Canada (in actual dollars)
|
$1,336
|
$1,327
|
$1,299
|
Average monthly rent
- U.S. (in actual U.S. dollars)
|
US$1,211
|
US$1,203
|
US$1,033
|
Summary of
Financial Information
|
|
|
|
Gross book
value
|
$2,766,375
|
$2,651,097
|
$2,293,570
|
Indebtedness
|
$1,388,655
|
$1,363,228
|
$1,165,776
|
Indebtedness to gross
book value ratio
|
50%
|
51%
|
51%
|
Weighted average
mortgage interest rate
|
3.5%
|
3.5%
|
3.6%
|
Weighted average term
to maturity on mortgages payable (years)
|
6.0
|
6.2
|
5.7
|
Exchange rates -
United States dollar to Canadian dollar
|
$1.29
|
$1.25
|
$1.33
|
For the three
months ended March 31 (In thousands of dollars,
except per Unit amounts)
|
2018
|
2017
|
Summary of
Financial Information
|
|
|
Interest coverage
ratio
|
2.17
|
2.25
|
Indebtedness coverage
ratio
|
1.54
|
1.53
|
Revenue from income
producing properties
|
$58,094
|
$55,621
|
NOI
|
$17,110
|
$16,917
|
Proportionate
NOI
|
$30,185
|
$28,710
|
Same Property
Proportionate NOI
|
$27,255
|
$26,899
|
NOI margin -
IFRS
|
29.5%
|
30.4%
|
NOI margin -
Proportionate
|
53.8%
|
52.9%
|
Net income
|
$80,406
|
$2,510
|
FFO -
basic
|
$14,749
|
$15,277
|
FFO -
diluted
|
$15,662
|
$15,965
|
FFO per Unit -
basic
|
$0.29
|
$0.30
|
FFO per Unit -
diluted
|
$0.28
|
$0.29
|
Distributions per
Unit
|
$0.165
|
$0.160
|
FFO payout
ratio
|
57.0%
|
52.9%
|
Weighted average
number of Units outstanding (in thousands):
|
|
|
Basic
|
50,918
|
50,499
|
Diluted
|
55,491
|
54,370
|
Average exchange
rates - United States dollar to Canadian dollar
|
$1.26
|
$1.32
|
Net Income
Net income of $80.4 million for
the three months ended March 31,
2018, increased by $77.9
million compared to $2.5
million in 2017. The increase in net income was
primarily due to the following:
- An increase in net operating income of $0.2 million;
- An increase in interest expense of $0.5
million;
- An increase in trust expenses of $0.1
million;
- An increase in equity income from investment of $0.7 million;
- An increase in foreign exchange gain of $0.9 million;
- A decrease in other income of $0.3
million;
- An increase in net fair value gain on income producing
properties of $48.1 million;
- An increase in fair value gain on Class B LP Units of
$43.9 million; and
- An increase in income taxes (current and deferred) of
$15.0 million.
Net Operating Income
For the three months ended March 31,
2018, NOI from the REIT's properties increased by
$0.2 million (or 1.1%) to
$17.1 million, compared to
$16.9 million in 2017. The increase
in NOI is due to an increase in Same Property NOI of $0.2 million (or 1.3%). The Same Property
increase of $0.2 million is due to an
increase in Canada of $1.1 million (or 9.8%), a decrease in the U.S. of
US$0.3 million (or 8.4%) and the
change in foreign exchange rate which decreased NOI by $0.5 million.
For the three months ended March 31,
2018, Proportionate NOI from the REIT's properties increased
by $1.5 million (or 5.1%) to
$30.2 million, compared to
$28.7 million in 2017. The increase
in Proportionate NOI is due to an increase in Same Property
Proportionate NOI of $0.4 million (or
1.3%) and from acquisitions net of the disposal of properties of
$1.1 million. The Same Property
increase of $0.4 million is due to an
increase in Canada of $1.0 million (or 9.8%), an increase in the U.S.
of US$0.1 million (or 0.2%) and the
change in foreign exchange rate which decreased Proportionate NOI
by $0.7 million.
Funds From Operations
Basic FFO for the three months ended March 31, 2018, decreased by $0.5 million, or 3.5%, to $14.7 million ($0.29 per Unit), compared to $15.3 million ($0.30 per Unit) in 2017. The decrease is
mainly due to an increase in interest expense of $1.9 million (excluding distributions on Class B
LP Units and fair value adjustments on the conversion option on the
convertible debentures), an increase in trust expenses of
$0.1 million, and a decrease in other
income of $0.3 million, partially
offset by higher Proportionate NOI of $1.5
million.
Basic FFO per Unit for the three months ended March 31, 2018, decreased by $0.01 to $0.29 per
Unit, compared to $0.30 per Unit. The
change in the foreign exchange rate had a $0.01 per Unit negative impact.
Subsequent Events
Subsequent to March 31, 2018, the REIT completed the
refinancing of two U.S. multi-suite residential properties in the
amount of US$62.2 million at a
weighted average interest rate of 4.07% for a term of 10 years.
On April 5, 2018, the REIT
acquired a property comprising 116 suites located in New Orleans, Louisiana, for a purchase price
of $14.6 million (US$11.4 million), excluding closing costs. The
property, to be 100% vacant by May 31,
2018, is designated as a property under development and the
REIT plans to complete significant capital upgrades during the
remainder of 2018, at which point initial lease up will
commence.
The REIT's unaudited condensed consolidated financial statements
for the three months ended March 31,
2018, 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 condensed consolidated financial statements are
prepared in accordance with International Financial Reporting
Standards ("IFRS"). The following measures, NOI, Proportionate NOI,
Same Property NOI, Same Property Proportionate NOI, FFO,
indebtedness, gross book value, indebtedness to gross book value
ratio, interest coverage ratio, indebtedness coverage ratio and
Proportionate Basis (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, 2018 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 3, 2018 at 3:00 p.m.
(ET) to discuss the financial results for the three
months ended March 31, 2018 and 2017.
To participate in the conference call, please dial 647-427-7450
or 1-888-231-8191. Please quote conference ID #
9288758.
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 13,430 residential suites (as of May 1, 2018) located in Alberta, Ontario, Colorado, Texas, Louisiana, Illinois, Georgia, Florida, North
Carolina, Virginia and
Maryland with an appraised value
of approximately $2.7 billion at
March 31, 2018. For more information,
visit the REIT's website at www.morguard.com.
SOURCE Morguard North American Residential Real Estate
Investment Trust