MISSISSAUGA, ON, May 4, 2016 /CNW/ - Morguard Real Estate Investment Trust ("the Trust") (TSX: MRT.UN) today is pleased to announce its financial results for the three months ended March 31, 2016 ("Q1"). These results have been prepared in accordance with International Financial Reporting Standards ("IFRS").
The Trust's fully diluted FFO for the three months ended March 31, 2016 was $27.3 million or $0.41 per unit, down $1.7 million or $0.01 per unit from the same period in 2015.
Total net operating income for the three months ended March 31, 2016 was $41.2 million, down $2.3 million from the same period in 2015. This reduction is partially offset by a decrease in interest expense of $0.8 million.
The Trust's 2015 disposition program reduced NOI by $0.5 million. The exit of Target Canada Corporation ("Target"), combined with the bankruptcy of Everest College, negatively impacted NOI by $0.6 million. During the quarter, the Trust received a one-time payment of $0.1 million from Safeway at Shoppers Mall, Brandon, MB. This payment was made to cancel their lease and make the space available for redevelopment. This Safeway space has now been combined with the Target and Everest College space to give the Trust 453,000 SF for re-development and remerchandising.
The remaining same asset NOI, before lease cancellation fees and step rent, is unfavourable $0.9 million over the same three months ended 2015. Performance in the enclosed retail segment is down $1.3 million, offset by improved performance in the office portfolio of $0.4 million. Reduced performance in the retail segment derives from a combination of increased non-recoverable operating costs due to deal restructuring/abatements, a slight increase in vacancy and reduced percentage rent at the Trust's fashion focused centres. The remaining reduction in NOI is the result of reduced step rents and lease cancellation fees.
The Trust's favourable variance in interest expense is the result of dispositions in 2015, regular amortizations and the payout of a small number of maturing mortgages during the current quarter. The Trust will keep these properties unleveraged in the near term.
While NOI has been challenged by vacancy, the Trust completed in excess of 400,000 SF of leasing during the quarter. In addition, after adjusting for the vacancy associated with the area under development, the Trust closed the quarter with 97% occupancy, unchanged from the previous quarter.
The 453,000 SF of area under development provides the Trust with the potential to increase FFO and secure a more stable and diversified tenant base.
Highlights from Management's Discussion and Analysis
- Funds from operations ("FFO") for the three months ended March 31, 2016 was $25.5 million, as compared to $27.2 million for the same period in 2015.
- On a per unit diluted basis, FFO for the three months ended March 31, 2016 was $0.41, as compared to $0.42 for the same period in 2015.
- Net operating income from same assets for the three months ended March 31, 2016, was $40.1 million, as compared to $41.0 million for the same period in 2015.
At March 31, 2016, the Trust's debt consisted of $1.2 billion of fixed-rate debt with weighted average interest rate of 4.1% and weighted average term to maturity of 5.2 years, $148.0 million of 4.85% fixed-rate convertible debentures and $14.8 million of utilization of the operating line of credit. The Trust has a debt to total assets ratio of 45.0%.
Net Operating Income, Funds from Operations
This press release and accompanying financial information make reference to net operating income and funds from operations on a total and per unit basis. Net operating income is defined as income from property operations after operating expenses have been deducted, but prior to deducting interest expense, general and administrative expenses and fair value gains/(losses). Funds from operations is defined as net income prior to extraordinary items, valuation adjustments, and certain other non-cash items, if any. Funds from operations is not a term defined under IFRS and may not be comparable to similar measures used by other Trusts.
Financial Statements and Management's Discussion and Analysis
The Trust's Q1 2016 Condensed Consolidated Financial Statements and Management's Discussion and Analysis along with its 2015 Annual Report are available on the Trust's website at www.morguard.com and have been filed with SEDAR at www.sedar.com
Conference Call Details:
Thursday, May 5, 2016 at 4:00 p.m. (ET)
647-427-7450 or 1-888-231-8191
About Morguard Real Estate Investment Trust
The Trust is a closed-end real estate investment trust, which owns a diversified portfolio of 50 retail, office and industrial income producing properties in Canada with a book value of $2.9 billion and approximately 8.8 million square feet of leasable space.
SOURCE Morguard Real Estate Investment Trust
For further information: Morguard Real Estate Investment Trust, K. Rai Sahi, President and Chief Executive Officer, T 905-281-4800; Pamela McLean, Chief Financial Officer, T 905-281-4800