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Morguard Real Estate Investment Trust Announces 2022 First Quarter Results - Apr 27, 2022

Morguard Real Estate Investment Trust Announces 2022 First Quarter Results

Apr 27, 2022

MISSISSAUGA, ON, April 27, 2022 /CNW/ - Morguard Real Estate Investment Trust ("the Trust") (TSX: MRT.UN) today is pleased to announce its 2022 First Quarter Results.

In thousands of dollars, except per-unit amounts

Three Months Ended March 31,

2022

2021

Revenue from real estate properties

$61,326

$60,970

Net operating income

28,544

31,058

Fair value gains/(losses) on real estate properties

24,965

(14,449)

Net income

39,909

4,850

Funds from operations 1

14,961

19,333

Adjusted funds from operations 1,2

9,105

14,750

Amounts presented on a per unit basis



Net income – basic

$0.62

$0.08

Net income – diluted

$0.44

$0.08

Funds from operations – basic 1

$0.23

$0.30

Funds from operations – diluted 1

$0.20

$0.29

Adjusted funds from operations – basic 1,2

$0.14

$0.23

Adjusted funds from operations – diluted 1,2

$0.13

$0.23




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 months ended March 31, 2022, and 2021. This financial data is derived from the Trust's condensed consolidated statements which are prepared in accordance with IFRS.

For the three months ended March 31,

2022

2021

Revenue from real estate properties

$61,326

$60,970

Property operating expenses

(18,096)

(15,107)

Property taxes

(12,614)

(12,749)

Property management fees

(2,072)

(2,056)

Net operating income

28,544

31,058

Interest expense

(12,991)

(13,272)

General and administrative

(1,094)

(915)

Other items

(21)

1,962

Fair value gains/(losses) on real estate properties

24,965

(14,449)

Net income from equity-accounted investment

506

466

Net income

$39,909

$4,850

 

CONSOLIDATED OPERATING HIGHLIGHTS

The following is an analysis of net operating income by asset type:

For the three months ended March 31,

2022

2021

%

Enclosed regional centres

$8,095

$9,711

(16.6%)

Community strip centres

5,622

5,828

(3.5%)

Subtotal – retail

13,717

15,539

(11.7%)

 

Single-/dual-tenant buildings

 

11,340

 

12,129

 

(6.5%)

Multi-tenant buildings

2,878

2,895

(0.6%)

Subtotal – office

14,218

15,024

(5.4%)

 

Industrial

 

609

 

495

 

23.0%

Net operating income

$28,544

$31,058

(8.1%)

 

Revenue from real estate properties includes contracted rent from tenants along with recoveries of property expenses (including property taxes).

The following is an analysis of revenue from real estate properties by segment:

For the three months ended March 31,

2022

2021

Variance

Industrial

$1,036

$891

$145

Office – Single-/dual-tenant buildings

20,373

19,607

766

Office – Multi-tenant buildings

7,201

6,919

282

Retail – Community strip centres

9,490

9,457

33

Retail – Enclosed regional centres

23,226

24,096

(870)

Total

$61,326

$60,970

$356

 

The decline in enclosed regional centres revenue is due to a decline in lease cancellation fees resulting from the $2.3 million received from Lowe's at Pine Centre in the first quarter of 2021 in order to facilitate the Save-On-Foods development.

The following is an analysis of revenue from real estate properties by revenue type:

For the three months ended March 31,

2022

2021

Variance

Rental revenue

$37,574

$37,484

$90

CAM recoveries

12,110

9,054

3,056

Property tax and insurance recoveries

9,798

9,473

325

Other revenue and lease cancellation fees

1,283

3,456

(2,173)

Parking revenue

1,008

954

54

Amortized rents

(447)

549

(996)


$61,326

$60,970

$356

 

Included in other revenue and lease cancellation fees in the three-month period ending March 31, 2021, is $2.3 million received from Lowe's at Pine Centre in order to facilitate the Save-on-Foods development.

In 2021, other items included $2.0 million in non-recurring settlement proceeds from Sears.

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:

For the three months ended March 31,

2022

2021

Retail – enclosed regional centres

$3,879

($7,109)

Retail – community strip centres

2,602

730

Office

10,697

(11,089)

Industrial

7,787

3,019


$24,965

($14,449)

 

Reported net income for three months ended March 31, 2022, was $39.9 million as compared to income of $4.9 million in 2021. This change is due to the fair value losses recorded in 2021, as described above.

FUNDS FROM OPERATIONS AND ADJUSTED FUNDS FROM OPERATIONS

The Trust presents FFO and AFFO in accordance with the current definition of the Real Property Association of Canada ("REALpac") as follows:

FUNDS FROM OPERATIONS AND ADJUSTED FUNDS FROM OPERATIONS

Three Months Ended March 31,

In thousands of dollars, except per unit amounts

2022

2021

Net income

$39,909

$4,850

Adjustments:



Fair value (gains)/losses on real estate properties 1

(24,929)

14,494

Amortization of right-of-use assets

21

21

Payment of lease liabilities, net

(40)

(32)

Funds from operations – basic

14,961

19,333

Interest expense on convertible debentures

2,058

1,942

Funds from operations – diluted

$17,019

$21,275

 

Funds from operations – basic

 

$14,961

 

$19,333

Adjustments:



Amortized stepped rents 1

394

42

Normalized PCME

(6,250)

(4,625)

Adjusted funds from operations – basic

9,105

14,750

Interest expense on convertible debentures

2,058

1,942

Adjusted funds from operations – diluted

$11,163

$16,692

 

1. Includes respective adjustments included in net income from equity-



 

SPECIFIED FINANICAL 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 March 31, 2022 and available on the Trust's profile on SEDAR at www.sedar.com.

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 Q1 2022 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.sedar.com

Conference Call Details:

Date:                                          Thursday, April 28, 2022 4:00 p.m. (ET)
Conference Call #:                     416-764-8688 or 1-888-390-0546
Conference ID #:                        59813712

About Morguard Real Estate Investment Trust

The Trust is a closed-end real estate investment trust, which owns a diversified portfolio of 46 retail, office and industrial income producing properties in Canada with a book value of $2.5 billion and approximately 8.3 million square feet of leasable space.

SOURCE Morguard Real Estate Investment Trust

For further information: Morguard Real Estate Investment Trust, K. Rai Sahi, President and Chief Executive Officer T 905-281-4800; Andrew Tamlin, Chief Financial Officer T 905-281-4800


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