Morguard Real Estate Investment Trust Announces 2010 Second Quarter Results

MISSISSAUGA, ON, Aug. 5 /CNW/ - Morguard Real Estate Investment Trust ("the Trust") (TSX: MRT.UN) today announced its financial results for the three months and six months ended June 30, 2010 ("Q2").

Morguard REIT's Q2 2010 Financial Statements, and Management's Discussion and Analysis along with its 2009 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 Q2 2010 was $28.8 million compared to
       $29.3 million for the same period in 2009.
    -  Net income for Q2 2010 totaled $6.6 million or $0.12 per unit compared
       to $9.2 million or $0.16 per unit for the same period in 2009.
       Included in net income for Q2 2010 was $2.0 million in interest
       expense for the 6.50% convertible unsecured subordinated debentures
       issued on September 22, 2009.
    -  Recurring distributable income totaled to $14.6 million or $0.26 per
       unit (basic) and $0.25 per unit (diluted) compared to $16.9 million or
       $0.30 per unit (basic and diluted) for the same period in 2009.
    -  Funds from operations ("FFO") decreased to $16.8 million or $0.29 per
       unit (basic) and $0.28 per unit (diluted) compared to $18.7 million or
       $0.32 per unit (basic and diluted) for the same period in 2009.
    -  Overall portfolio occupancy levels were at 93%.


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

    (In thousands of dollars, except per-unit amounts)
    For the three months ended June 30,                     2010        2009
    -------------------------------------------------------------------------

    Income from real estate properties                  $ 52,154    $ 50,978
    Property operating income                           $ 28,753    $ 29,287

    Net income for the period from continuing
     operations                                         $  6,468    $  8,862
    Income for the period from discontinued operations       145         338
    -------------------------------------------------------------------------
    Net income for the period                           $  6,613    $  9,200
                                                       ----------------------
                                                       ----------------------

    Net income per unit (basic and diluted)
      Continuing operations                             $   0.11    $   0.15
      Discontinued operations                               0.01        0.01
    -------------------------------------------------------------------------
                                                        $   0.12    $   0.16
                                                       ----------------------
                                                       ----------------------

    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 three months ended June 30, 2010 and 2009.

    
    (In thousands of dollars, except per-unit amounts and percentages)
    For the three months ended June 30,                     2010        2009
    -------------------------------------------------------------------------

    Net income for the period                           $  6,613    $  9,200
    -------------------------------------------------------------------------

    Add/(deduct)
    Amortization - buildings                               6,594       6,698
    Amortization - intangibles                             1,428         972
    Amortization - above/(below) market-rate leases, net    (287)       (228)
    Amortization - stepped rents                            (112)        231
    Accretion of convertible debentures                      329           -
    Issue costs - convertible debentures                       5           -
    -------------------------------------------------------------------------

    Distributable income                                  14,570      16,873
    Loss on sale of real estate properties                     7           -
    -------------------------------------------------------------------------

    Recurring distributable income                      $ 14,577    $ 16,873
                                                       ----------------------
                                                       ----------------------

    Distributed income                                  $ 12,790    $ 12,888
                                                       ----------------------
                                                       ----------------------

    Payout ratio:
      Recurring distributable income                       87.7%       76.4%

    Recurring distributable income - per unit (basic)   $   0.26    $   0.30
    Recurring distributable income - per unit (diluted) $   0.25    $   0.30

    Weighted average number of units - (basic)
     (in thousands)                                       56,845      57,623
    Weighted average number of units - (diluted)
     (in thousands)                                       64,999      57,623
                                                       ----------------------
                                                       ----------------------


    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 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:

    Three months ended,       June 30, 2010              June 30, 2009
    (In thousands  ----------------------------------------------------------
     of dollars,                  Discon-                       Discon-
     except per-   Continuing     tinued         Continuing     tinued
     unit amounts) Operations Operations  Total  Operations Operations  Total
    -------------------------------------------------------------------------

    Net income for
     the period       $  6,468  $  145  $  6,613  $  8,862  $  338  $  9,200

    Add/(deduct)
     items not
     affecting cash:
    Loss on sale of
     real estate
     properties              -       7         7         -       -         -
    Amortization -
     buildings           6,594       -     6,594     6,628      70     6,698
    Amortization -
     leasehold
     improvements        1,320       -     1,320     1,199       4     1,203
    Amortization -
     intangibles         1,428       -     1,428       972       -       972
    Amortization -
     deferred leasing
     costs                 521       -       521       644       2       646
    Accretion of
     convertible
     debentures            329       -       329         -       -         -
    -------------------------------------------------------------------------
    Funds from
     operations       $ 16,660  $  152  $ 16,812  $ 18,305  $  414  $ 18,719
                     --------------------------------------------------------
                     --------------------------------------------------------

    Funds from
     operations per
     unit (basic)     $   0.29  $    -  $   0.29  $   0.31  $ 0.01  $   0.32
    Funds from
     operations
     per unit
     (diluted)        $   0.28  $    -  $   0.28  $   0.31  $ 0.01  $   0.32
                     --------------------------------------------------------
                     --------------------------------------------------------
    

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 $1.3 billion and approximately 7.9 million
    square feet of leasable space. For more information, visit the Trust's
    website at www.morguardreit.com.
    -------------------------------------------------------------------------
    

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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