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