MISSISSAUGA, ON, Nov. 3, 2015 /CNW/ – Morguard Real Estate Investment Trust (“the Trust”) (TSX: MRT.UN) today is pleased to announce its financial results for the three and nine months ended September 30, 2015 (“Q3”). These results have been prepared in accordance with International Financial Reporting Standards (“IFRS”).
The Trust’s fully diluted FFO for the three months ended September 30, 2015 of $0.40 is unchanged from the same period ended 2014. While net operating income in the Trust’s retail portfolio continued to be challenged by Target Canada Corporation’s (“Target”) exit from Canada ($1.0 million) and the bankruptcy of Everest College at St. Laurent Shopping Centre ($0.6 million), the Trust benefited from improved NOI in the office portfolio ($0.2 million) and lower interest expense ($1.6 million).
The improvement in office NOI is the result of modest uplifts in basic rents at several of the Trust’s office properties for deals completed in 2014. The lower interest expense continues to be the result of the 2014 refinancing program coupled with the Trust’s disposition program which reduced or eliminated $0.6 million and $1.0 million of interest expense, respectively.
The Trust’s overall occupancy rate for retail remains at 96% once adjusted for the Target vacancy of 8%. During the period the Trust completed over 150,000 square feet of leasing, retaining 73.4% of expiring tenants.
The Trust’s overall occupancy rate for office also remains at 96%. During the period the Trust completed just over 160,000 square feet of leasing, retaining 92.2% of expiring tenants.
On September 30, 2015, the Trust revised its view on 2041-2141 McCowan as a long-term hold. As a result, the Trust’s other portfolio now reflects the reallocation of 2041-2141 McCowan back into income producing properties. Same assets have been restated to include the McCowan property.
During the quarter, the Trust completed its refinancing of 111 Dunsmuir which resulted in net proceeds of $27.7 million. The Trust was able to secure $56.2 million of financing on maturities of $28.5 million. The refinancing was completed at an interest rate of 3.734%, a reduction of 1.798%, for a term of 10 years.
The Trust used a portion of these proceeds to repurchase 452,200 units, under the normal course issuer bid, at a cost of $6.8 million. This brings the total units purchased year to date to 814,319. The remaining proceeds of $20.9 million were used for capital projects ($7.9 million) with $13.0 million being advanced to Morguard Corporation. At September 30, 2015, the Trust had amounts receivable from Morguard Corporation of $33.0 million. These funds, combined with the Trust’s cash balances, remain available, when needed, to complete projects and repurchase units.
Highlights from Management’s Discussion and Analysis
- Funds from operations (“FFO”) for the three and nine months ended September 30, 2015 was $25.5 million and $77.7 million, respectively, as compared to $25.3 million and $78.4 million, respectively, for the same periods in 2014.
- On a per unit diluted basis, FFO for the three and nine months ended September 30, 2015 was $0.40 and $1.22, respectively, as compared to $0.40 and $1.23, respectively, for the same periods in 2014.
- Net operating income from same assets for the three and nine months ended September 30, 2015 was $40.1 million and $122.3 million, respectively, as compared to $41.6 million and $124.7 million, respectively, for the same periods in 2014.
- Acquisitions of Citadel West and 301 Laurier Avenue in 2014 add $0.1 million and $0.7 million, respectively, to net operating income for the three months and nine months ended September 30, 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, along with other assets re-classified to “held for sale”, reduces net operating income by $0.4 million and $2.6 million, respectively, during the three and nine months ended September 30, 2015.
At September 30, 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 5.5 years and $147.4 million of 4.85% fixed-rate convertible debentures. The Trust has a debt to total assets ratio of 45.1%.
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 Q3 2015 Condensed 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:
November 5, 2015 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 50 retail, office and mixed-use 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