MISSISSAUGA, ON,
Oct. 30,
2024 /CNW/ - Morguard
Real Estate Investment Trust ("the Trust")
(TSX: MRT.UN) today is pleased to announce its 2024 Third Quarter
Results.
|
In thousands of
dollars, except per-unit
amounts
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|
2024
|
2023
|
2024
|
2023
|
|
Revenue from real
estate properties
|
$63,293
|
$62,512
|
$191,737
|
$189,219
|
|
Net operating
income
|
32,248
|
30,551
|
94,985
|
92,564
|
|
Fair value
gains/(losses) on real estate properties
|
868
|
(52,047)
|
(65,597)
|
(88,885)
|
|
Net
income/(loss)
|
15,571
|
(39,665)
|
(23,430)
|
(46,650)
|
|
Funds from
operations 1
|
14,917
|
13,957
|
42,444
|
45,211
|
|
Adjusted funds from
operations 1,2
|
8,750
|
7,889
|
24,192
|
27,295
|
|
Amounts presented on
a per unit basis
|
|
|
|
|
|
Net income/(loss) –
basic
|
$0.24
|
($0.62)
|
($0.36)
|
($0.73)
|
|
Net income/(loss) –
diluted
|
$0.19
|
($0.62)
|
($0.36)
|
($0.73)
|
|
Funds from operations
– basic 1
|
$0.23
|
$0.22
|
$0.66
|
$0.70
|
|
Funds from operations
– diluted 1
|
$0.20
|
$0.19
|
$0.58
|
$0.61
|
|
Adjusted funds from
operations – basic 1,2
|
$0.14
|
$0.12
|
$0.38
|
$0.42
|
|
Adjusted funds from
operations – diluted 1,2
|
$0.13
|
$0.12
|
$0.36
|
$0.40
|
|
|
|
|
|
|
1.
|
The following
represents a non-GAAP financial measure/ratio that does not have
any standardized meaning prescribed by IFRS and is not necessarily
comparable to similar measures presented by other reporting issuers
in similar or different industries. This measure should be
considered as supplemental in nature and not as substitutes for
related financial information prepared in accordance with IFRS.
Additional information on this non-GAAP financial measure/ratio can
be found under the MD&A section Part I, "Specified Financial
Measures".
|
|
2.
|
The Trust uses
normalized productive capacity maintenance expenditures to
calculate adjusted funds from operations.
|
SELECTED FINANCIAL INFORMATION
The table below sets forth selected financial data relating to
the Trust's fiscal three and nine months ended September 30, 2024, and 2023. This financial data
is derived from the Trust's condensed consolidated statements which
are prepared in accordance with IFRS.
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|
2024
|
2023
|
%
Change
|
2024
|
2023
|
%
Change
|
|
Revenue from real
estate properties
|
$63,293
|
$62,512
|
1.2 %
|
$191,737
|
$189,219
|
1.3 %
|
|
Property operating
expenses
|
(16,593)
|
(17,714)
|
(6.3 %)
|
(52,941)
|
(53,774)
|
(1.5 %)
|
|
Property
taxes
|
(12,309)
|
(12,122)
|
1.5 %
|
(37,255)
|
(36,400)
|
2.3 %
|
|
Property management
fees
|
(2,143)
|
(2,125)
|
0.8 %
|
(6,556)
|
(6,481)
|
1.2 %
|
|
Net operating
income
|
32,248
|
30,551
|
5.6 %
|
94,985
|
92,564
|
2.6 %
|
|
Interest
expense
|
(16,839)
|
(16,072)
|
4.8 %
|
(50,958)
|
(45,672)
|
11.6 %
|
|
General and
administrative
|
(875)
|
(911)
|
(4.0 %)
|
(2,821)
|
(2,970)
|
(5.0 %)
|
|
Other items
|
(60)
|
(16)
|
275.0 %
|
(60)
|
(57)
|
5.3 %
|
|
Fair value
gains/(losses) on real estate properties
|
868
|
(52,047)
|
(101.7 %)
|
(65,597)
|
(88,885)
|
(26.2 %)
|
|
Net income/(loss) from
equity-accounted investment
|
229
|
(1,170)
|
(119.6 %)
|
1,021
|
(1,630)
|
(162.6 %)
|
|
Net
income/(loss)
|
$15,571
|
($39,665)
|
(139.3 %)
|
($23,430)
|
($46,650)
|
(49.8 %)
|
CONSOLIDATED OPERATING HIGHLIGHTS
The following is an analysis of net operating income by asset
type:
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|
2024
|
2023
|
%
|
2024
|
2023
|
%
Change
|
|
Enclosed regional
centres
|
$11,418
|
$9,994
|
14.2 %
|
$32,467
|
$31,386
|
3.4 %
|
|
Community strip
centres
|
5,102
|
5,779
|
(11.7 %)
|
16,417
|
17,180
|
(4.4 %)
|
|
Subtotal –
retail
|
16,520
|
15,773
|
4.7 %
|
48,884
|
48,566
|
0.7 %
|
|
|
|
|
|
|
|
|
Single-/dual-tenant
buildings
|
12,305
|
12,210
|
0.8 %
|
37,576
|
36,666
|
2.5 %
|
|
Multi-tenant
buildings
|
2,571
|
2,082
|
23.5 %
|
6,414
|
5,974
|
7.4 %
|
|
Subtotal –
office
|
14,876
|
14,292
|
4.1 %
|
43,990
|
42,640
|
3.2 %
|
|
|
|
|
|
|
|
|
Industrial
|
852
|
486
|
75.3 %
|
2,111
|
1,358
|
55.4 %
|
|
Net operating
income
|
$32,248
|
$30,551
|
5.6 %
|
$94,985
|
$92,564
|
2.6 %
|
The increase in enclosed regional centres net operating income
for the nine months ended September 30,
2024, is due to increases in basic rent of $2.2 million, increases in percentage rent of
$0.7 million, and decreased vacancy
costs of $0.6 million. These
increases were partially offset by a one-time prior year property
tax refund recorded in 2023 on an enclosed regional centre in the
amount of $2.8 million, primarily for
vacant space and space previously occupied by bankrupt or otherwise
failed tenants.
The decrease in community strip centres net operating income for
the nine months ended September 30,
2024, is due to the sale of Heritage Towne Centre during the
second quarter of 2024.
The increase in industrial net operating income for the nine
months ended September 30, 2024, is
due to increased basic rent at one of the Trust's industrial
properties, as well as increased occupancy.
The following is an analysis of revenue from real estate
properties by segment:
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|
2024
|
2023
|
%
|
2024
|
2023
|
%
|
|
Industrial
|
$1,304
|
$851
|
53.2 %
|
$3,412
|
$2,616
|
30.4 %
|
|
Office –
Single-/dual-tenant buildings
|
21,518
|
21,484
|
0.2 %
|
65,528
|
64,671
|
1.3 %
|
|
Office – Multi-tenant
buildings
|
6,269
|
6,154
|
1.9 %
|
18,786
|
18,389
|
2.2 %
|
|
Retail – Community
strip centres
|
8,202
|
9,312
|
(11.9 %)
|
26,738
|
27,924
|
(4.2 %)
|
|
Retail – Enclosed
regional centres
|
26,000
|
24,711
|
5.2 %
|
77,273
|
75,619
|
2.2 %
|
|
Total
|
$63,293
|
$62,512
|
1.2 %
|
$191,737
|
$189,219
|
1.3 %
|
The following is an analysis of revenue from real estate
properties by revenue type:
|
For the three months
ended September 30,
|
2024
|
2023
|
Variance
|
|
Rental
revenue
|
$39,023
|
$38,111
|
$912
|
|
CAM
recoveries
|
11,947
|
12,455
|
(508)
|
|
Property tax and
insurance recoveries
|
9,815
|
9,430
|
385
|
|
Other revenue and lease
cancellation fees
|
1,133
|
1,237
|
(104)
|
|
Parking
revenue
|
1,375
|
1,376
|
(1)
|
|
Amortized
rents
|
—
|
(97)
|
97
|
|
$63,293
|
$62,512
|
$781
|
|
|
|
|
|
|
|
|
|
For the nine months
ended September 30,
|
2024
|
2023
|
Variance
|
|
Rental
revenue
|
$117,590
|
$114,522
|
$3,068
|
|
CAM
recoveries
|
37,250
|
37,572
|
(322)
|
|
Property tax and
insurance recoveries
|
29,556
|
30,749
|
(1,193)
|
|
Other revenue and lease
cancellation fees
|
3,736
|
3,494
|
242
|
|
Parking
revenue
|
4,169
|
4,029
|
140
|
|
Amortized
rents
|
(564)
|
(1,147)
|
583
|
|
$191,737
|
$189,219
|
$2,518
|
Property operating expenses include costs related to interior
and exterior maintenance, insurance and utilities. Property
operating expenses for the three months ended September 30, 2024, decreased 6.3% to
$16.6 million from $17.7 million for the same period in 2023. This
decrease is primarily due to decreases in utility costs across the
portfolio.
Net operating income for the three months ended September 30, 2024, increased 5.6% as compared to
2023. This increase stems largely from increases in basic rent in
the enclosed mall portfolio, partially offset by the sale of the
retail community strip centre.
Interest expense for the three months ended September 30, 2024, increased 4.8% vs the same
period in 2023. This increase is primarily due to higher interest
rates on renewed fixed-rate debt, partially offset by a
$30.5 million decline in overall debt
levels.
The Trust records its income producing properties at fair value
in accordance with IFRS. These adjustments are a result of the
Trust's regular quarterly IFRS fair value process. In accordance
with this policy, the following fair value adjustments by segment
have been recorded:
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|
2024
|
2023
|
2024
|
2023
|
|
Retail – enclosed
regional centres
|
($807)
|
($1,394)
|
($17,502)
|
$72
|
|
Retail – community
strip centres
|
(1,242)
|
(701)
|
2,548
|
(4,754)
|
|
Office
|
2,582
|
(54,272)
|
(50,984)
|
(95,940)
|
|
Industrial
|
335
|
4,320
|
341
|
11,737
|
|
$868
|
($52,047)
|
($65,597)
|
($88,885)
|
Reported net income for three months ended September 30, 2024, was $15.6 million as compared to net loss of
$39.7 million in 2023. This change is
largely due to fair value losses on real estate properties recorded
in 2023.
FUNDS FROM OPERATIONS AND ADJUSTED FUNDS FROM
OPERATIONS
The Trust presents FFO and AFFO in accordance with the current
definition of the REALPAC.
|
In thousands of
dollars, except per unit
amounts
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|
2024
|
2023
|
%
|
2024
|
2023
|
% Change
|
|
Net
income/(loss)
|
$15,571
|
($39,665)
|
(139.3 %)
|
($23,430)
|
($46,650)
|
(49.8 %)
|
|
Adjustments:
|
|
|
|
|
|
|
|
Fair value
(gains)/losses on real estate properties 1
|
(641)
|
53,646
|
(101.2 %)
|
65,930
|
91,933
|
(28.3 %)
|
|
Amortization of
right-of-use assets
|
60
|
21
|
185.7 %
|
60
|
62
|
(3.2 %)
|
|
Payment of lease
liabilities, net
|
(73)
|
(45)
|
62.2 %
|
(116)
|
(134)
|
(13.4 %)
|
|
Funds from
operations – basic
|
14,917
|
13,957
|
6.9 %
|
42,444
|
45,211
|
(6.1 %)
|
|
Interest expense on
convertible debentures
|
2,104
|
2,104
|
— %
|
6,243
|
6,278
|
(0.6 %)
|
|
Funds from
operations – diluted
|
$17,021
|
$16,061
|
6.0 %
|
$48,687
|
$51,489
|
(5.4 %)
|
|
|
|
|
|
|
|
|
Funds from operations –
basic
|
$14,917
|
$13,957
|
6.9 %
|
$42,444
|
$45,211
|
(6.1 %)
|
|
Adjustments:
|
|
|
|
|
|
|
|
Amortized stepped rents
1
|
83
|
182
|
(54.4 %)
|
498
|
834
|
(40.3 %)
|
|
Normalized
PCME
|
(6,250)
|
(6,250)
|
— %
|
(18,750)
|
(18,750)
|
— %
|
|
Adjusted funds from
operations – basic
|
8,750
|
7,889
|
10.9 %
|
24,192
|
27,295
|
(11.4 %)
|
|
Interest expense on
convertible debentures
|
2,104
|
2,104
|
— %
|
6,243
|
6,278
|
(0.6 %)
|
|
Adjusted funds from
operations – diluted
|
$10,854
|
$9,993
|
8.6 %
|
$30,435
|
$33,573
|
(9.3 %)
|
|
1. Includes respective
adjustments included in net income from equity-accounted
investment.
|
SPECIFIED FINANCIAL MEASURES
The Trust reports its financial results in accordance with
International Financial Reporting Standards ("IFRS"). However, this
earnings release also uses specified financial measures that are
not defined by IFRS which follow the disclosure requirements
established by National Instrument 52-112 Non-GAAP
and Other Financial Measures Disclosure. Specified
financial measures are categorized as non-GAAP financial measures,
non-GAAP ratios, and other financial measures. Additional details
on specified financial measures including supplementary financial
measures, capital management measures and total segment measures
are set out in the Trust's Management's Discussion and Analysis for
the period ended September 30, 2024
and available on the Trust's profile on SEDAR+ at
www.sedarplus.ca
The following Non-GAAP financial measures do not have any
standardized meaning prescribed by IFRS and are not necessarily
comparable to similar measures presented by other reporting issuers
in similar or different industries. These measures should be
considered as supplemental in nature and not as substitutes for
related financial information prepared in accordance with IFRS. The
Trust's management uses these measures to aid in assessing the
Trust's underlying core performance and provides these additional
measures so that investors may do the same. Management believes
that the non-GAAP financial measures, which supplement the IFRS
measures, provide readers with a more comprehensive understanding
of management's perspective on the Trust's operating results and
performance.
FUNDS FROM OPERATIONS ("FFO")
FFO is a non-GAAP measure widely used as a real estate industry
standard that supplements net income and evaluates operating
performance but is not indicative of funds available to meet the
Trust's cash requirements. FFO can assist with comparisons of the
operating performance of the Trust's real estate between periods
and relative to other real estate entities. FFO is computed by the
Trust in accordance with the current definition of the Real
Property Association of Canada
("REALPAC") and is defined as net income adjusted for fair value
changes on real estate properties and gains/(losses) on the sale of
real estate properties. The Trust considers FFO to be a useful
measure for reviewing its comparative operating and financial
performance.
ADJUSTED FUNDS FROM OPERATIONS ("AFFO")
AFFO is a non-GAAP measure that was developed to be a recurring
economic earnings measure for real estate entities. The Trust
presents AFFO in accordance with the current definition of the
REALPAC. The Trust defines AFFO as FFO adjusted for straight-line
rent and productive capacity maintenance expenditures ("PCME").
AFFO should not be interpreted as an indicator of cash generated
from operating activities as it does not consider changes in
working capital.
Financial Statements and Management's Discussion and
Analysis
The Trust's Q3 2024 Consolidated Financial Statements and
Management's Discussion and Analysis will be made available on the
Trust's website at www.morguard.com and have been filed with SEDAR+
at www.sedarplus.ca
|
Conference Call Details:
|
|
Date:
|
Thursday, October
31, 2024, 4:00 p.m. (ET)
|
|
Conference Call
#:
|
1-437-900-0527 or
1-888-510-2154
|
|
Conference ID
#:
|
36166
|
About Morguard Real Estate Investment Trust
The Trust is a closed-end real estate investment trust, which
owns a diversified portfolio of 45 retail, office and industrial
income producing properties in Canada with a book value of $2.2 billion and approximately 8.1 million square
feet of leasable space.
SOURCE Morguard Real Estate Investment Trust