Morguard Real Estate Investment Trust Announces 2025 First Quarter Results
Apr 30, 2025
MISSISSAUGA, ON, April 30, 2025 /CNW/ - Morguard Real Estate Investment Trust ("the Trust") (TSX: MRT.UN) today is pleased to announce its 2025 First Quarter Results.
In thousands of dollars, except per-unit amounts | Three Months Ended March 31, | |
2025 | 2024 | |
Revenue from real estate properties | $60,347 | $64,398 |
Net operating income | 25,700 | 30,905 |
Fair value losses on real estate properties | (20,886) | (50,223) |
Net loss | (11,665) | (36,775) |
Funds from operations 1 | 9,162 | 13,419 |
Adjusted funds from operations 1,2 | 807 | 7,409 |
Amounts presented on a per unit basis | ||
Net loss – basic | ($0.18) | ($0.57) |
Net loss – diluted | ($0.18) | ($0.57) |
Funds from operations – basic 1 | $0.14 | $0.21 |
Funds from operations – diluted 1 | $0.13 | $0.18 |
Adjusted funds from operations – basic 1,2 | $0.01 | $0.12 |
Adjusted funds from operations – diluted 1,2 | $0.01 | $0.11 |
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, 2025, and 2024. 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, | 2025 | 2024 | % Change |
Revenue from real estate properties | $60,347 | $64,398 | (6.3 %) |
Property operating expenses | (19,655) | (18,409) | 6.8 % |
Property taxes | (12,926) | (12,866) | 0.5 % |
Property management fees | (2,066) | (2,218) | (6.9 %) |
Net operating income | 25,700 | 30,905 | (16.8 %) |
Interest expense | (16,014) | (16,876) | (5.1 %) |
General and administrative | (960) | (1,024) | (6.3 %) |
Other items | 12 | — | — % |
Fair value losses on real estate properties | (20,886) | (50,223) | (58.4 %) |
Net income from equity-accounted investment | 483 | 443 | 9.0 % |
Net loss | ($11,665) | ($36,775) | (68.3 %) |
CONSOLIDATED OPERATING HIGHLIGHTS
The following is an analysis of net operating income by asset type:
For the three months ended March 31, | 2025 | 2024 | % Change |
Enclosed regional centres | $9,148 | $10,171 | (10.1 %) |
Community strip centres | 5,459 | 5,801 | (5.9 %) |
Subtotal – retail | 14,607 | 15,972 | (8.5 %) |
Single-/dual-tenant buildings | 7,120 | 8,089 | (12.0 %) |
Multi-tenant buildings | 1,814 | 1,903 | (4.7 %) |
Penn West Plaza | 1,287 | 4,423 | (70.9 %) |
Subtotal – office | 10,221 | 14,415 | (29.1 %) |
Industrial | 872 | 518 | 68.3 % |
Net operating income | $25,700 | $30,905 | (16.8 %) |
The decrease in enclosed regional centres net operating income for the three months ended March 31, 2025, is due to increases in bad debt expense of $0.9 million, mostly for Comark Holdings Inc. ("Comark") and The Hudson's Bay Company ("The Bay"), coupled with a decrease of $0.3 million in percentage rent. Bad debt expense for the three months ended March 31, 2024, was a recovery in the amount of $0.3 million.
The decrease in community strip centres net operating income for the three months ended March 31, 2025, is due to the sale of Heritage Towne Centre during the second quarter of 2024.
The decrease in single-/dual tenant buildings net operating income for the three months ended March 31, 2025, is due to decreases in basic rent of $0.4 million, coupled with increased vacancy costs of 0.4 million. These decreases stem from a renewal at one of the Trust's BC properties, which included the downsizing of a tenant, and lower lease cancellation fees at the Trust's Quebec property.
The decrease in Penn West Plaza net operating income for the three months ended March 31, 2025, is due to decreased revenue of $3.2 million stemming from the expiry of the Obsidian Energy lease on February 1, 2025, and the reset of the above-market rents. The decrease at Penn West comprises $2.0 million in basic rent, $0.9 million in vacancy costs, and $0.3 million in recoveries from tenants.
The increase in industrial net operating income for the three months ended March 31, 2025, is due to increased basic rent at one of the Trust's industrial properties, as well as increased occupancy.
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, | 2025 | 2024 | Variance |
Industrial | $1,375 | $995 | $380 |
Office – Single-/dual-tenant buildings | 14,116 | 15,081 | (965) |
Office – Multi-tenant buildings | 6,586 | 6,373 | 213 |
Office – Penn West Plaza | 3,773 | 7,055 | (3,282) |
Retail – Community strip centres | 8,963 | 9,654 | (691) |
Retail – Enclosed regional centres | 25,534 | 25,240 | 294 |
Total | $60,347 | $64,398 | ($4,051) |
The following is an analysis of revenue from real estate properties by revenue type:
For the three months ended March 31, | 2025 | 2024 | Variance |
Rental revenue | $35,565 | $39,166 | ($3,601) |
CAM recoveries | 12,836 | 12,971 | (135) |
Property tax and insurance recoveries | 9,839 | 9,996 | (157) |
Other revenue and lease cancellation fees | 1,008 | 1,298 | (290) |
Parking revenue | 1,350 | 1,331 | 19 |
Amortized rents | (251) | (364) | 113 |
$60,347 | $64,398 | ($4,051) |
Property operating expenses include costs related to interior and exterior maintenance, insurance and utilities. Property operating expenses for the three months ended March 31, 2025, increased 6.8% to $19.7 million from $18.4 million for the same period in 2024. This increase is primarily due to bad debt expense for Comark and The Bay, both in the enclosed mall asset class.
Net operating income for the three months ended March 31, 2025, decreased 16.8% compared to 2024. This decrease results mainly from decreased revenue of $3.2 million at Penn West Plaza stemming from the expiry of the Obsidian Energy lease on February 1, 2025, and the reset of the above-market rents. The remaining decrease in NOI is due to a change in bad debt expense in the amount of $1.1 million, including Comark and The Bay, both in the enclosed mall portfolio, coupled with decreased income of $0.7 million from the sale of Heritage Towne Centre in the second quarter of 2024.
Interest expense for the three months ended March 31, 2025, decreased 5.1% compared to the same period in 2024. This decrease is primarily due to lower interest rates on both variable and new fixed rate debt, coupled with a $28.3 million decline in overall debt levels, both on a year-over-year basis.
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, | 2025 | 2024 |
Retail – enclosed regional centres | ($7,755) | ($22,164) |
Retail – community strip centres | 1,256 | 696 |
Office | (14,361) | (28,795) |
Industrial | (26) | 40 |
($20,886) | ($50,223) |
Reported net loss for the three months ended March 31, 2025, was $11.7 million as compared to a loss of $36.8 million in 2024. This change is mainly due to the lower fair value losses recorded, 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 REALPAC.
In thousands of dollars, except per unit amounts | Three Months Ended March 31, | ||
2025 | 2024 | % Change | |
Net loss | ($11,665) | ($36,775) | (68.3 %) |
Adjustments: | |||
Fair value losses on real estate properties 1 | 20,849 | 50,215 | (58.5 %) |
Amortization of right-of-use assets | 18 | — | — % |
Payment of lease liabilities, net | (40) | (21) | 90.5 % |
Funds from operations – basic | 9,162 | 13,419 | (31.7 %) |
Interest expense on convertible debentures | 2,058 | 2,058 | — % |
Funds from operations – diluted | $11,220 | $15,477 | (27.5 %) |
Funds from operations – basic | $9,162 | $13,419 | (31.7 %) |
Adjustments: | |||
Amortized stepped rents 1 | 395 | 240 | 64.6 % |
Normalized PCME | (8,750) | (6,250) | 40.0 % |
Adjusted funds from operations – basic | 807 | 7,409 | (89.1 %) |
Interest expense on convertible debentures | 2,058 | 2,058 | — % |
Adjusted funds from operations – diluted | $2,865 | $9,467 | (69.7 %) |
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 March 31, 2025 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 Q1 2025 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, May 1, 2025, 4:00 p.m. (ET) |
Conference Call #: | 1-416-945-7677 or 1-888-699-1199 |
Conference ID #: | 98112 |
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

For further information: For further information, please contact: 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