Morguard Real Estate Investment Trust Announces 2007 Results



    MISSISSAUGA, ON, Feb. 28 /CNW/ - Morguard Real Estate Investment Trust
("Morguard REIT") (TSX: MRT.UN) today announced its financial results for the
year ended December 31, 2007.
    Morguard REIT's 2007 Financial Statements, and Management's Discussion
and Analysis along with its 2006 Annual Report are available on Morguard
REIT's website at www.morguardreit.com and have been filed with SEDAR at
www.sedar.com.

    HIGHLIGHTS

    
    -   Net operating income for 2007 increased to $107.4 million from
        $97.9 million for the same period in 2006;
    -   Net income for 2007 totaled $63.3 million or $1.07 per unit compared
        to $53.2 million or $1.04 per unit for the same period in 2006;
    -   Recurring distributable income for 2007 increased to $56.8 million or
        $0.96 per unit compared to $49.5 million or $0.95 per unit (fully
        diluted) for the same period in 2006;
    -   Funds from operations ("FFO") for 2007 increased to $66.1 million or
        $1.12 per unit compared to $52.7 million or $1.03 per unit for the
        same period in 2006;
    -   Overall occupancy levels for 2007 remain high with the retail sector
        ending the year at 96% and the office sector ending at 95%.

    Fourth Quarter Transactions

        -  On October 15, 2007, the Trust acquired from a co-owner a 50%
           ownership interest in 505 - 3rd St. SW, a 140,000 square foot
           office building located in Calgary, Alberta. On October 16, 2007,
           the Trust entered into a definitive purchase and sale agreement to
           sell a 50% ownership interest in this property to a major Canadian
           pension fund organization;
        -  On October 19, 2007, the Trust entered into definitive purchase
           and sale agreement regarding the sale of an 80% co-ownership
           interest in Scotia Place, a 560,000 square foot office building
           located in Edmonton, Alberta;
        -  On December 28, 2007, the Trust acquired a 50% ownership interest
           in a mixed-use property complex in downtown Ottawa. The complex
           includes 350 Sparks Street, a 12-storey 171,311 square foot office
           building and 361 Queen Street, a Delta branded hotel, consisting
           of two towers containing 328 guest rooms. The hotel is under long-
           term lease to a major Canadian real estate investment trust. The
           property also includes an underground parking garage containing
           273 parking spaces.


    FINANCIAL HIGHLIGHTS

    Net Income
    ----------

    (In thousands of dollars except per unit amounts)      2007         2006
    -------------------------------------------------------------------------

    Income from real estate properties                $ 189,767    $ 173,774
    Net operating income                              $ 107,429    $  97,926

    Net income from continuing operations             $  26,957    $  20,225
    Income from discontinued operations                  36,367       36,677
    -------------------------------------------------------------------------
    Net income                                        $  63,324    $  53,223
                                                      -----------------------
                                                      -----------------------

    Net income per unit (basic and diluted)
      Continuing operations                           $    0.46    $    0.32
      Discontinued operations                              0.61         0.72
    -------------------------------------------------------------------------
                                                      $    1.07    $    1.04
                                                      -----------------------
                                                      -----------------------
    

    Distributable Income
    --------------------

    The Trust distributes a portion of its net income after adjusting for
amortization of buildings and intangible assets, and providing for any reserve
that the Trustees, in their discretion, consider reasonable. The adjusted net
income is referred to as distributable income and is computed as income, in
accordance with Canadian GAAP, before deduction for amortization of buildings
and intangible assets, less any reserves, provisions and allowances
established by the Trustees, plus any amount the Trustees, in their
discretion, determine to be appropriate.
    Recurring distributable income is distributable income excluding gain on
sales, unusual or non-recurring items and provisions for a diminution in value
of real estate properties.
    The following table outlines the Trust's distributable income, recurring
distributable income and payout ratios for the years ended December 31, 2007
and 2006.

    
    (In thousands of dollars except per unit amounts
     and percentages)                                      2007         2006
    -------------------------------------------------------------------------

    Net income                                        $  63,324    $  53,223
    -------------------------------------------------------------------------

    Add (deduct)
    Stepped rents - straight-line adjustment             (1,221)      (2,132)
    Amortization - buildings                             21,697       24,883
    Amortization - intangibles                            6,190        1,144
    Amortization - above/(below) market rate leases,
     net                                                   (910)          52
    Amortization - issue costs convertible debentures         -          756
    Accretion of convertible debentures                       -          400
    -------------------------------------------------------------------------

    Distributable income                                 89,080       78,326
    Provision for a diminution in value of real
     estate properties                                    2,150            -
    Cost of early extinguishment of mortgage bonds
     payable                                                242        3,679
    Gain on sale of real estate properties              (34,718)     (32,505)
    -------------------------------------------------------------------------

    Recurring distributable income                    $  56,754    $  49,500
                                                      -----------------------
                                                      -----------------------

    Distributed income                                $  53,164    $  46,050
                                                      -----------------------
                                                      -----------------------

    Payout Ratio:
      Recurring distributable income                       93.7%        93.0%

    Recurring distributable income - basic            $    0.96    $    0.97
    Recurring distributable income - diluted          $    0.96    $    0.95

    Weighted average number of units - basic
     (in thousands)                                      59,069       50,985
    Weighted average number of units - diluted
     (in thousands)                                      59,069       59,584
                                                      -----------------------
                                                      -----------------------


    Funds from Operations
    ---------------------

    The real estate industry has adopted a measure of funds from operations
("FFO") to supplement net income as an operating performance measurement. The
Trust's calculation of FFO is consistent with the definition provided by the
Real Property Association of Canada ("REALPac").
    FFO is defined as net income adjusted for amortization of buildings,
deferred leasing costs, intangible items and any gain or loss on sale of real
estate properties and any provisions against capital. FFO per unit is
calculated by dividing FFO attributable to unitholders by the weighted average
number of units outstanding for the year.
    FFO was calculated as follows:


                              2007                          2006
                  -----------------------------------------------------------
    (In thousands
    of dollars                Dis-                          Dis-
    except per    Continuing continued          Continuing continued
    unit amounts) Operations Operations  Total  Operations Operations  Total
    -------------------------------------------------------------------------

    Net income    $ 26,957  $ 36,367  $ 63,324  $ 16,546  $ 36,677  $ 53,223

    Add (deduct)
     items not
     affecting
     cash:
    Gain on sale
     of real
     estate
     properties          -   (34,718)  (34,718)        -   (32,505)  (32,505)
    Provision for
     a diminution
     in value of
     real estate
     properties          -     2,150     2,150         -         -         -
    Amortization
     - buildings    21,074       623    21,697    19,182     5,701    24,883
    Amortization
     - leasehold
     improvements    5,325        46     5,371     3,985       351     4,336
    Amortization
     - intangibles   6,190         -     6,190     1,144         -     1,144
    Amortization
     - leasing
     costs           2,030        35     2,065     1,425       216     1,641
    -------------------------------------------------------------------------
    Funds from
     operations   $ 61,576  $  4,503  $ 66,079  $ 42,282  $ 10,440  $ 52,722
                  -----------------------------------------------------------
                  -----------------------------------------------------------

    Funds from
     operations
     per unit:
      Basic and
       diluted    $   1.04  $   0.08  $   1.12  $   0.83  $   0.20  $   1.03
                  -----------------------------------------------------------
                  -----------------------------------------------------------
    

    Readers are cautioned that although the terms "Operating Income", "Funds
from Operations", "Distributable Income" and "Recurring Distributable Income"
are commonly used to measure, compare and explain the operating and financial
performance of Canadian real estate investment trusts and such terms are
defined in the Management's Discussion and Analysis, such terms are not
recognized terms under Canadian generally accepted accounting principles. Such
terms do not necessarily have a standardized meaning and may not be comparable
to similarly titled measures presented by the other publicly traded entities.

    Morguard is a closed-end real estate investment trust, which owns a
diversified portfolio of 50 retail, office, and industrial properties in
Canada with a book value of $1.2 billion and approximately 8.1 million square
feet of leasable space. For more information, visit the Trust's website at
www.morguardreit.com.





For further information:

For further information: Rai Sahi, President and Chief Executive
Officer, Tel: (905) 281-4800, or Tim Walker, Vice President and Chief
Financial Officer, Tel: (905) 281-4800


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