Morguard Real Estate Investment Trust Announces 2009 Results

MISSISSAUGA, ON, March 3 /CNW/ - Morguard Real Estate Investment Trust ("Morguard REIT") (TSX: MRT.UN) today announced its financial results for the year ended December 31, 2009.

Morguard REIT's 2009 Financial Statements, and Management's Discussion and Analysis along with its 2008 Annual Report are available on Morguard REIT's website at www.morguardreit.com and have been filed with SEDAR at www.sedar.com.

    
    HIGHLIGHTS FOR 2009

    -   On September 22, 2009, the Trust issued $90.0 million principal
        amount of 6.50% convertible unsecured subordinated debentures,
        maturing on September 30, 2014 with an underwriters' over-allotment
        option for additional issuance of debentures of $13.5 million. On
        September 29, 2009, the full amount of the underwriters' over-
        allotment option was exercised.

    -   On December 15, 2009, the Trust, together with a major Canadian
        pension fund, acquired a 50% co-ownership interest in a 370,000-
        square-foot Class A office building located in downtown Toronto, for
        a purchase price of $48.3 million plus other acquisition costs of
        $2.0 million.

    -   Overall portfolio occupancy levels were stable at 95%.

    FINANCIAL HIGHLIGHTS

    -   Net operating income for 2009 increased to $115.0 million from
        $114.5 million for the same period in 2008.

    -   Net income totaled $32.4 million or $0.56 per unit compared to
        $84.2 million or $1.43 per unit for the same period in 2008. In 2009,
        net income was significantly impacted by the expensing of $4.2
        million of issue costs relating to the issuance of the $103.5 million
        of 6.50% convertible unsecured subordinated debentures partially
        offset by $3.1 million in gains on sale of real estate properties. In
        2008, net income included gains on sale of real estate properties
        totalling $49.0 million and other income of $2.3 million relating to
        interest earned on capital invested to finance the acquisition of a
        50% interest in Scotia Place which was subsequently resold to a major
        Canadian pension fund organization.

    -   Recurring distributable income decreased to $61.1 million or $1.07
        per unit (basic) and $1.06 per unit (diluted) compared to $64.7
        million or $1.10 per unit (basic and diluted) for the same period in
        2008.

    -   Funds from operations ("FFO") decreased to $66.5 million or $1.16 per
        unit (basic) and $1.14 per unit (diluted) compared to $74.2 million
        or $1.26 per unit (basic and diluted) for the same period in 2008.
        FFO was significantly impacted by $4.2 million of issue costs ($0.07
        per unit, basic and diluted) relating to the issuance of the
        $103.5 million of 6.50% convertible unsecured subordinated
        debentures.

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

    (In thousands of dollars, except per-unit amounts)       2009       2008
    -------------------------------------------------------------------------

    Income from real estate properties                 $ 206,491   $ 201,105
    Property operating income                          $ 115,027   $ 114,514

    Net income for the year from continuing
     operations                                        $  28,934   $  71,551
    Income for the year from discontinued operations       3,420      12,671
    -------------------------------------------------------------------------
    Net income for the year                            $  32,354   $  84,222
                                                      -----------------------
                                                      -----------------------
    Net income per unit (basic and diluted)
      Continuing operations                            $    0.50   $    1.22
      Discontinued operations                               0.06        0.21
    -------------------------------------------------------------------------
                                                       $    0.56   $    1.43
                                                      -----------------------
                                                      -----------------------


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

Distributable income is net income after adjusting for the amortization of buildings and intangible assets, accretion and issue costs of convertible debentures and providing for any reserves, provisions and allowances established by the Board of Trustees ("Trustees") of the Trust plus any amount the Trustees, in their discretion, determine to be appropriate.

Recurring distributable income is distributable income excluding gain or loss on sale of real estate properties, unusual or non-recurring items and provisions for diminution in value of real estate properties. Distributed income, which is income distributed to unitholders, is expressed as a percentage of RDI to arrive at a payout ratio.

The following table outlines the Trust's distributable income, recurring distributable income and payout ratios for the year ended December 31, 2009 and 2008.

    
    (In thousands of dollars, except per-unit amounts
     and percentages)                                       2009        2008
    -------------------------------------------------------------------------

    Net income for the year                            $  32,354   $  84,222
    -------------------------------------------------------------------------

    Add/(deduct)
    Amortization - buildings                              25,141      24,737
    Amortization - intangibles                             3,848       5,868
    Amortization - above/(below) market-rate leases,
     net                                                    (904)     (1,028)
    Amortization - stepped rents                            (676)       (529)
    Accretion of convertible debentures                      260           -
    Issue costs - convertible debentures                   4,195           -
    -------------------------------------------------------------------------

    Distributable income                                  64,218     113,270
    Gain on sale of real estate properties                (3,141)    (48,959)
    Provision for diminution in value of real estate
     properties                                                -         400
    -------------------------------------------------------------------------

    Recurring distributable income                     $  61,077   $  64,711
                                                      -----------------------
                                                      -----------------------

    Distributed income - regular                       $  51,778   $  53,122
    Distributed income - special                       $       -   $  10,035
                                                      -----------------------
                                                      -----------------------

    Payout ratio: Recurring distributable income(1)        84.8%       82.1%

    Recurring distributable income - per unit (basic)  $    1.07   $    1.10
    Recurring distributable income - per unit
     (diluted)                                         $    1.06   $    1.10

    Weighted average number of units - (in thousands)
     (basic)                                              57,577      59,034
    Weighted average number of units - (in thousands)
     (diluted)                                            60,094      59,034
                                                      -----------------------
                                                      -----------------------


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

The real estate industry has adopted a measure of 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, leasehold improvements, intangible items, deferred leasing costs, accretion of convertible debentures and any gain or loss on sale of real estate properties as well as any 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 period.

    
    FFO was calculated as follows:

                                   2009                      2008
    (In thousands      ------------------------------------------------------
     of dollars,       Continu-  Discon-          Continu-  Discon-
     except per-            ing   tinued               ing   tinued
     unit                Opera-   Opera-            Opera-   Opera-
     amounts)             tions    tions    Total    tions    tions    Total
    -------------------------------------------------------------------------

    Net income for the
     year               $28,934  $ 3,420  $32,354  $71,551  $12,671  $84,222

    Add/(deduct) items
     not affecting cash:
    Gain on sale of
     real estate
     properties               -   (3,141)  (3,141) (36,981) (11,978) (48,959)
    Provision for
     diminution in
     value of real
     estate properties        -        -        -        -      400      400
    Amortization -
     buildings           25,083       58   25,141   24,545      192   24,737
    Amortization -
     leasehold
     improvements         5,708       17    5,725    5,742       17    5,759
    Amortization -
     intangibles          3,848        -    3,848    5,868        -    5,868
    Amortization -
     deferred leasing
     costs                2,332       14    2,346    2,169       14    2,183
    Accretion of
     convertible
     debentures             260        -      260        -        -        -
    -------------------------------------------------------------------------
    Funds from
     operations         $66,165  $   368  $66,533  $72,894  $ 1,316  $74,210
                       ------------------------------------------------------
                       ------------------------------------------------------
    Funds from
     operations per
     unit (basic)       $  1.16  $     -  $  1.16  $  1.24  $  0.02  $  1.26
    Funds from
     operations per
     unit (diluted)     $  1.14  $     -  $  1.14  $  1.24  $  0.02  $  1.26
                       ------------------------------------------------------
                       ------------------------------------------------------
    

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 mixed-use properties in
    Canada with a book value of $1.2 billion and approximately 7.8 million
    square feet of leasable space. For more information, visit the Trust's
    website at www.morguardreit.com.
    -------------------------------------------------------------------------

    ------------------------
    (1) Payout ratio is calculated using regular distributions as a
        percentage of recurring distributable income
    

SOURCE Morguard Real Estate Investment Trust

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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