MISSISSAUGA, ON, Feb. 17, 2016 /CNW/ – Morguard Real Estate Investment Trust (“the Trust”) (TSX: MRT.UN) today is pleased to announce its 2015 annual financial results. These results have been prepared in accordance with International Financial Reporting Standards (“IFRS”).
The Trust’s fully diluted FFO for the three months ended December 31, 2015 of $0.45 is up $0.01 from the same period ended 2014. The Trust’s fully diluted FFO for the year ended December 31, 2015 of $1.67 is unchanged from the same year ended 2014.
During the quarter the Trust benefited from reduced interest expense of $0.5 million and reduced general and administrative expense of the same amount. These reductions were sufficient to offset a decrease in net operating income of $0.4 million and a decrease in other income of $0.1 million.
Lower interest expense is largely the result of properties sold during the year and regular amortizations on outstanding mortgages. The reduction in general and administrative expense derives from additional compensation costs in 2014 compared to the same three months ended 2015.
The Trust’s net operating income continued to be challenged by the exit of Target Canada Corporation (“Target”) from Canada ($0.8 million) and the bankruptcy of Everest College ($0.2 million). During the quarter the Trust made a strategic decision to redevelop the former Target space at Cambridge Centre, The Centre @ Circle & 8th, Brandon Shoppers Mall and Prairie Mall, as well as the former Everest College space at St. Laurent Centre. The Trust now classifies these spaces as under development.
After adjusting net operating income for the space under development as well as other one-time non-recurring items, net operating income for the three months ended December 31, 2015 was $43.3 million which is up $0.7 million from the same period ended 2014. Increases in the Trust’s same asset net operating income ($1.2 million) and properties under development ($0.1 million) were offset by decreases to net operating income due to dispositions ($0.6 million).
The favourable result in same asset net operating income was largely due to improved performance within the enclosed regional centres as a result of operating efficiencies. The recognition of these efficiencies in the fourth quarter allowed the Trust to accelerate the recovery of capital expenditures made in previous quarters.
Occupancy levels improved during the quarter (excluding the area under development) with the Trust completing over 278,000 square feet of leasing.
The Trust’s ability to close the year ended December 31, 2015 with fully diluted FFO equal to the same period ended December 31, 2014 demonstrates its strength. The challenges provided by Target and Everest College were overcome through a determined effort to improve operating efficiencies which have allowed for the accelerated recovery of capital expenditures and improvements in same asset net operating income. A strategic disposition program brought in additional funds ($29.6 million), which the Trust used to repurchase just over 1.3 million units ($20.0 million) and complete the revitalization project at St. Laurent Centre. As at December 31, 2015 the Trust had $26.3 million of cash available to: repurchase additional units, reinvest in the development projects or reduce debt levels.
Highlights from Management’s Discussion and Analysis
- Funds from operations (“FFO”) for the three months and the year ended December 31, 2015 was $28.7 million and $106.4 million, respectively, as compared to $28.2 million and $106.5 million, respectively, for the same periods in 2014.
- On a per unit diluted basis, FFO for the three months and the year ended December 31, 2015 was $0.45 and $1.67, respectively, as compared to $0.44 and $1.67, respectively, for the same periods in 2014.
- Net operating income from same assets for the three months and the year ended December 31, 2015, was $42.7 million and $163.6 million, respectively, as compared to $41.5 million and $162.5 million, respectively, for the same periods in 2014.
- Acquisitions of Citadel West and 301 Laurier Avenue in 2014 add $0.1 million and $0.8 million, respectively, to net operating income for the three months and the year ended December 31, 2015.
- Dispositions of 5591-5631 Finch and 20-24 Lesmill completed in the second quarter of 2015, 350 Sparks and 361 Queen in February 2015 and Cedar Pointe Business Park in July 2014, reduces net operating income by $0.6 million and $3.2 million, respectively, during the three months and the year ended December 31, 2015.
At December 31, 2015, the Trust’s debt consisted of $1.2 billion of fixed-rate debt with weighted average interest rate of 4.1% and weighted average term to maturity of 5.3 years and $147.7 million of 4.85% fixed-rate convertible debentures. The Trust has a debt to total assets ratio of 45.7%.
Net Operating Income, Funds from Operations
This press release and accompanying financial information make reference to net operating income and funds from operations on a total and per unit basis. Net operating income is defined as income from property operations after operating expenses have been deducted, but prior to deducting interest expense, general and administrative expenses and fair value gains/(losses). Funds from operations is defined as net income prior to extraordinary items, valuation adjustments, and certain other non-cash items, if any. Funds from operations is not a term defined under IFRS and may not be comparable to similar measures used by other Trusts.
Financial Statements and Management’s Discussion and Analysis
The Trust’s 2015 Consolidated Financial Statements and Management’s Discussion and Analysis along with its 2014 Annual Report are available on the Trust’s website at www.morguard.com and have been filed with SEDAR at www.sedar.com
Conference Call Details:
February 18, 2016 at 4:00 p.m. (ET)
647-427-7450 or 1-888-231-8191
About Morguard Real Estate Investment Trust
The Trust is a closed-end real estate investment trust, which owns a diversified portfolio of 49 retail, office and industrial income producing properties in Canada with a book value of $2.9 billion and approximately 8.8 million square feet of leasable space.
SOURCE Morguard Real Estate Investment Trust