Morguard North American Residential REIT Announces 2017 First Quarter Results

MISSISSAUGA, ON, May 2, 2017 /CNW/ - Morguard North American Residential REIT (the "REIT") (TSX: MRG.UN) today announced its financial results for the three months ended March 31, 2017.

First Quarter Highlights

The REIT is reporting performance of:

• Adjusted net operating income ("Adjusted NOI") of $29.4 million for the three months ended March 31, 2017, an increase of $0.9 million, or 3.3% compared to 2016.
  
  
• Basic funds from operations ("FFO") of $15.3 million for the three months ended March 31, 2017, an increase of $1.3 million, or 9.0% over the same period in 2016.
  
  
• Basic FFO of $0.30 per Unit for the three months ended March 31, 2017 and 2016.
  
  
• FFO payout ratio for the three months ended March 31, 2017 of 52.9%.

On January 9, 2017, the REIT completed an offering for 4,370,000 Units sold for a price of $13.75 per Unit for aggregate gross proceeds of $60.1 million. 

On February 1, 2017, the REIT repaid on maturity, four mortgages in the amount of $59.3 million (US$45.3 million) secured by four multi-suite residential properties located in Mobile, Alabama.

Financial and Operational Highlights

 

 

Net Operating Income

 

For the three months ended March 31, 2017, consolidated Adjusted NOI increased by $0.9 million (or 3.3%) to $29.4 million, compared to $28.5 million in 2016.  The increase was due to a higher Adjusted NOI in Canada and the U.S. of $0.6 million (or 6.2%) and US$0.7 million (or 5.4%), respectively, partially offset by the change in the U.S. foreign exchange rate, which decreased Adjusted NOI by $0.4 million.  The increase in Adjusted NOI was attributable to an acquisition completed during the three months ended March 31, 2016 and an increase in Same Property NOI in Canada and the U.S. mainly driven by higher rental revenue, partially offset by an increase in overall operating expenses.

Funds from Operations

 

Basic FFO for the three months ended March 31, 2017, increased by $1.3 million, or 9.0%, to $15.3 million ($0.30 per Unit), compared to $14.0 million ($0.30 per Unit) in 2016.  The increase is mainly due to an increase in Adjusted NOI of $0.9 million, an increase in other income of $0.2 million and a decrease in interest expense of $0.3 million (excluding distributions on Class B LP Units and fair value loss on conversion option on the Debentures), partially offset by an increase in trust expenses of $0.1 million.  The change in foreign exchange rates had a negative impact on FFO of $0.4 million.

Excluding the impact of the offering, basic FFO per unit amounted to $0.32 per Unit for the three months ended March 31, 2017. The impact includes the dilution from additional Units of the offering offset by two months of interest savings on the repayment of mortgages on February 1, 2017.

Subsequent Event
The REIT entered into a binding agreement to acquire a newly-constructed property comprising 60 rental townhomes located in Toronto, Ontario, for a gross purchase price of $15.8 million. The acquisition is expected to close during the second quarter of 2017.

The REIT's unaudited condensed consolidated financial statements for the three months ended March 31, 2017, along with the Management's Discussion and Analysis will be available on the REIT's website at www.morguard.com and will be filed with SEDAR at www.sedar.com.

Non-IFRS Measures

The REIT's consolidated financial statements are prepared in accordance with International Financial Reporting Standards ("IFRS"). The following measures, NOI, Adjusted NOI, Same Property NOI, FFO, indebtedness, gross book value, indebtedness to gross book value ratio, interest coverage ratio and indebtedness coverage ratio (collectively, the "non-IFRS measures") as well as other measures discussed elsewhere in this press release, do not have a standardized definition prescribed by IFRS and are, therefore, unlikely to be comparable to similar measures presented by other reporting issuers. The REIT uses these measures to better assess the REIT's underlying performance and financial position and provides these additional measures so that investors may do the same. Details on non-IFRS measures are set out in the REIT's Management's Discussion and Analysis for the three months ended March 31, 2017 and available on the REIT's profile on SEDAR at www.sedar.com.

Conference Call Details

Morguard North American Residential Real Estate Investment Trust will hold a conference call on Thursday, May 4, 2017 at 3:00 p.m. (ET) to discuss the financial results for the three months ended March 31, 2017 and 2016. To participate in the conference call, please dial 647-427-7450 or 1-888-231-8191. Please quote conference ID # 2341221.

About Morguard North American Residential REIT

The REIT is an unincorporated, open-ended real estate investment trust established under and governed by the laws of the Province of Ontario.  The Units of the REIT trade on the Toronto Stock Exchange under the ticker symbol MRG.UN.  With a strategic focus on the acquisition of high-quality multi-suite 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 13,472 residential suites (as of May 2, 2017) located in Alberta, Ontario, Colorado, Texas, Louisiana, Alabama, Georgia, Florida and North Carolina with an appraised value of approximately $2.2 billion as at March 31, 2017. For more information, visit the REIT's website at www.morguard.com.

SOURCE Morguard North American Residential Real Estate Investment Trust

For further information: Morguard North American Residential REIT, K. Rai Sahi, Chief Executive Officer, (905) 281-3800; Robert Wright, Chief Financial Officer, (905) 281-3800

RELATED LINKS
www.morguard.com