MISSISSAUGA, ON, Aug. 4, 2015 /CNW/ – Morguard North American Residential REIT (the ‘REIT”) (TSX: MRG.UN) today announced its financial results for the three and six months ended June 30, 2015.
All amounts in CAD thousands, except suites and per unit amounts, unless otherwise noted.
Highlights
The REIT is reporting performance of:
- Adjusted net operating income (“Adjusted NOI”), excluding the impact of IFRIC 21, of $25.4 million for the three months ended June 30, 2015, an increase of $2.5 million over the same period in 2014.
- Funds from Operations (“FFO”) of $12.8 million for the three months ended June 30, 2015, an increase of $1.3 million over the same period in 2014.
- FFO of $0.28 per unit for the three months ended June 30, 2015, a 12% increase as compared to the $0.25 per unit for the second quarter of 2014.
- Adjusted Funds from Operations (“AFFO”) of $0.21 per unit for the three months ended June 30, 2015, a 17% increase as compared to the $0.18 value generated over the same period in 2014.
- FFO payout ratio for the three months ended June 30, 2015 was 53.57% (AFFO payout ratio â 71.43%).
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Financial and Operational Highlights |
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As at |
June 30, 2015 |
December 31, |
June 30, |
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Operational Information |
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Number of properties |
44 |
44 |
44 |
|
Total suites |
12,850 |
12,850 |
12,850 |
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Occupancy percentage |
95.8% |
96.0% |
95.9% |
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Monthly weighted average in-place rent â Canada |
$1,258 |
$1,246 |
$1,238 |
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Monthly weighted average in-place rent â U.S. (in U.S. dollars) |
US$961 |
US$945 |
US$929 |
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Summary of Financial Information |
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Total gross book value |
$1,932,933 |
$1,832,287 |
$1,761,000 |
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Debt |
$1,069,013 |
$1,022,555 |
$1,000,298 |
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Debt to gross book value |
55% |
56% |
57% |
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Weighted average interest rate on mortgages payable and retained debt |
3.8% |
3.9% |
4.0% |
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Weighted average term to maturity on mortgages payable (years) |
5.4 |
5.6 |
5.2 |
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Three months ended June 30 |
Six months ended June 30 |
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(in thousands of dollars, except per unit amounts) |
2015 |
2014 |
2015 |
2014 |
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Summary of Financial Information |
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Revenue from income producing properties (IPP) |
$47,530 |
$43,090 |
$95,217 |
$85,851 |
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Adjusted net operating income(1) |
$25,396 |
$22,895 |
$50,257 |
$45,027 |
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Net operating income |
$28,730 |
$25,662 |
$43,727 |
$39,424 |
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Net operating margin(1) |
53% |
53% |
53% |
52% |
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Interest coverage(1) |
1.97 |
1.85 |
1.99 |
1.81 |
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Funds from Operations (FFO) – basic |
$12,812 |
$11,485 |
$25,060 |
$22,227 |
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Funds from Operations (FFO) – diluted |
$13,508 |
$12,180 |
$26,444 |
$23,610 |
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FFO per unit â basic |
$0.28 |
$0.25 |
$0.54 |
$0.48 |
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FFO per unit â diluted |
$0.27 |
$0.24 |
$0.52 |
$0.47 |
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Adjusted Funds from Operations (AFFO) – basic |
$9,927 |
$8,403 |
$19,196 |
$15,995 |
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Adjusted Funds from Operations (AFFO) – diluted |
$10,623 |
$9,098 |
$20,580 |
$17,378 |
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AFFO per unit â basic and diluted |
$0.21 |
$0.18 |
$0.41 |
$0.34 |
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FFO payout ratio |
53.57% |
60.00% |
55.56% |
62.50% |
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AFFO payout ratio |
71.43% |
83.33% |
73.17% |
88.24% |
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Weighted average number of units outstanding during the period (000’s) |
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– Basic |
46,542 |
46,519 |
46,539 |
46,517 |
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– Diluted |
50,413 |
50,390 |
50,410 |
50,388 |
1 Excludes realty taxes accounted for under IFRIC 21.
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Net Operating Income |
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Three months ended June 30 |
Six months ended June 30 |
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(in thousands of dollars) |
2015 |
2014 |
2015 |
2014 |
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Revenue from income producing properties |
$47,530 |
$43,090 |
$95,217 |
$85,851 |
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Property Operating Expenses |
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Operating expenses |
13,363 |
11,972 |
25,712 |
23,316 |
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Utilities |
3,694 |
3,352 |
8,547 |
7,744 |
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Realty taxes |
1,743 |
2,104 |
17,231 |
15,367 |
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Total property operating expenses |
18,800 |
17,428 |
51,490 |
46,427 |
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Net Operating Income |
28,730 |
25,662 |
43,727 |
39,424 |
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Realty taxes accounted for under IFRIC 21 |
(3,334) |
(2,767) |
6,530 |
5,603 |
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Adjusted Net Operating Income |
$25,396 |
$22,895 |
$50,257 |
$45,027 |
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Adjusted net operating income increased by $2.5 million, or 10.9%, during the three months ended
June 30, 2015, to $25.4 million, compared to $22.9 million in 2014. The increase was mainly due to higher rental revenue due to rental increases in Canada and U.S. of $0.3 million and US$0.6 million, respectively, and the change in the U.S. foreign exchange rate which increased Adjusted NOI by $1.8 million.
Adjusted net operating income for the six months ended June 30, 2015, increased by $5.2 million, or 11.6% to $50.3 million, compared to $45.0 million in 2014. The increase was due to higher rental revenue due to rental increases in Canada and U.S. of $0.5 million and US$1.7 million, respectively, and the change in the U.S. foreign exchange rate, which increased Adjusted NOI by $3.6 million. The higher rental revenue was partially offset by an increase in utilities of $0.3 million and US$0.1 million in Canada and U.S., respectively.
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Funds from Operations (“FFO”) |
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Three months ended |
Six months ended |
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(In thousands of dollars, except per unit amounts) |
2015 |
2014 |
2015 |
2014 |
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Net income for the period attributable to the unitholders |
$31,627 |
$2,424 |
$21,488 |
$11,536 |
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Add (deduct): |
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Realty taxes accounted for under IFRIC 21 |
(3,334) |
(2,767) |
6,530 |
5,603 |
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Net fair value gain on IPP |
(13,712) |
(9,927) |
(17,916) |
(31,181) |
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Non-controlling interests’ share of fair value gain (loss) on IPP |
92 |
46 |
(145) |
412 |
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Fair value (gain) loss on Class B LP Units |
(13,951) |
12,401 |
(4,133) |
18,257 |
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Fair value (gain) loss on conversion option on debentures |
(88) |
18 |
(59) |
95 |
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Distributions on Class B LP Units recorded as interest expense |
2,584 |
2,584 |
5,167 |
5,167 |
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Foreign exchange loss (gain) |
206 |
246 |
(1,064) |
215 |
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Deferred income tax provision |
9,388 |
6,460 |
15,192 |
12,123 |
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Funds From Operations |
$12,812 |
$11,485 |
$25,060 |
$22,227 |
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Interest expense on convertible debentures |
696 |
695 |
1,384 |
1,383 |
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Diluted Funds From Operations |
$13,508 |
$12,180 |
$26,444 |
$23,610 |
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FFO per unit – basic |
$0.28 |
$0.25 |
$0.54 |
$0.48 |
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FFO per unit – diluted |
$0.27 |
$0.24 |
$0.52 |
$0.47 |
FFO for the three months ended June 30, 2015, increased by $1.3 million, or 11.6%, to $12.8 million ($0.28 per Unit), compared to $11.5 million ($0.25 per Unit) in 2014. The increase is mainly due to an increase in Adjusted NOI of $2.5 million, partially offset by an increase in interest expense of $0.9 million, and an increase in trust expenses of $0.3 million. The change in foreign exchange rates had a positive impact on FFO of $1.0 million.
FFO for the six months ended June 30, 2015, increased by $2.8 million, or 12.7%, to $25.1 million ($0.54 per Unit), compared to $22.2 million ($0.48 per Unit) in 2014. The increase is mainly due to an increase in Adjusted NOI of $5.2 million, partially offset by an increase in interest expense of $1.6 million, and an increase in trust expenses of $0.8 million. The change in foreign exchange rates had a positive impact on FFO of $2.1 million.
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Adjusted Funds from Operations (“AFFO”) |
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Three months ended |
Six months ended |
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June 30 |
June 30 |
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(In thousands of dollars, except per unit amounts) |
2015 |
2014 |
2015 |
2014 |
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Funds From Operations |
$12,812 |
$11,485 |
$25,060 |
$22,227 |
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Add (deduct): |
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Amortization of deferred financing costs assumed on Initial Properties |
110 |
244 |
219 |
493 |
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Non-controlling interests’ share of amortization of deferred financing costs assumed on Initial Properties |
(2) |
(12) |
(4) |
(24) |
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Amortization of mark to market adjustments on mortgages |
(1,622) |
(1,941) |
(3,353) |
(3,971) |
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Maintenance capital expenditures |
(1,427) |
(1,427) |
(2,838) |
(2,838) |
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Amortization of cash flow hedge |
56 |
54 |
112 |
108 |
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Adjusted Funds From Operations |
$9,927 |
$8,403 |
$19,196 |
$15,995 |
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Interest expense on convertible debentures |
696 |
695 |
1,384 |
1,383 |
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Diluted AFFO |
$10,623 |
$9,098 |
$20,580 |
$17,378 |
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AFFO per unit â basic and diluted |
$0.21 |
$0.18 |
$0.41 |
$0.34 |
AFFO increased by $1.5 million for the three months ended June 30, 2015, to $9.9 million ($0.21 per unit) compared to $8.4 million ($0.18 per unit) in 2014. The increase is mainly due to an increase in FFO of $1.3 million for the three months ended June 30, 2015 and the decrease in amortization of mark to market adjustments on mortgages of $0.3 million.
AFFO increased by $3.2 million for the six months ended June 30, 2015, to $19.2 million ($0.41 per unit) compared to $16.0 million ($0.34 per unit) in 2014. The increase is mainly due to an increase in FFO of $2.8 million for the six months ended June 30, 2015 and the decrease in amortization of mark to market adjustments on mortgages of $0.6 million.
Conference Call Details
Morguard North American Residential Real Estate Investment Trust will hold a conference call on Friday, August 7, 2015 at 11:00 a.m. (ET) to discuss the financial results for the quarters ended June 30, 2015 and 2014. To participate in the conference call, please dial 647-427-7450 or 1-888-231-8191. Please quote conference ID# 77143068.
About Morguard North American Residential REIT
The REIT is an unincorporated, open-ended real estate investment trust established under the laws of the Province of Ontario. It trades on the Toronto Stock Exchange under the ticker symbol MRG.UN. With a strategic focus on the acquisition of high-quality multi-unit 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 12,850 residential suites (as of August 4, 2015) located in Ontario, Alberta, Alabama, Colorado, Florida, Georgia, Louisiana, North Carolina and Texas with an appraised value of approximately $1.9 billion at June 30, 2015.
SOURCE Morguard North American Residential Real Estate Investment Trust
