MISSISSAUGA, ON, Aug. 3, 2016 /CNW/ - Morguard Real Estate Investment Trust ("the Trust") (TSX: MRT.UN) today is pleased to announce its financial results for the three months and six months ended June 30, 2016 ("Q2"). These results have been prepared in accordance with International Financial Reporting Standards ("IFRS").
The Trust's fully diluted FFO for the three months ended June 30, 2016, was $38.2 million or $0.57 per unit. This is an increase of $0.17 per unit over the same period in 2015. This increase is directly attributable to the Trust's settlement with Target Corporation ("Target"), associated with disclaimed leases at three of the Trust's enclosed regional centres.
Total net operating income for the three months ended June 30, 2016, was $39.5 million, a decrease of $0.5 million over the same period in 2015.
Improvements in the Trust's same asset NOI of $0.5 million for the three months ended June 30, 2016, is offset by decreased NOI from properties held for development ($0.2 million), reduced lease cancellation fees ($0.3 million) and area under development ($0.5 million), compared to the same period in 2015.
Improvements in the Trust's same asset NOI derives largely from the retail portfolio, where same asset NOI is $0.4 million higher for the three months ended June 30, 2016, than for the comparable period ended June 30, 2015. This increase is due to an overall increase in occupancy of 1% (after adjusting for area under development), compared to the same period ended June 30, 2015, combined with higher basic rent. The Trust closed the quarter with 98% occupancy in its retail portfolio.
While occupancy dropped in the Trust's office and industrial portfolios, this decrease is largely the result of temporary vacancy on space currently being fixtured for new tenants, including: National Bank, Sephora and Comfort Wheelchair Manufacturing. These tenants will take occupancy between August 2016 and January 2017. Overall, during the quarter, the Trust completed in excess of 200,000 square feet of leasing.
During the quarter, the Trust advanced leasing conversations for space associated with 496,000 square feet of area under development. These conversations have resulted in deal commitments sufficient for the Trust to confirm its development expectations. The Trust is now reporting over $100 million of projects approved and underway. These developments will 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 and six months ended June 30, 2016 was $36.4 million and $61.9 million, respectively, as compared to $25.1 million and 52.2 million, respectively, for the same periods in 2015.
- On a per unit diluted basis, FFO for the three and six months ended June 30, 2016 was $0.57 and $0.98,respectively, as compared to $0.40 and $0.82, respectively, for the same periods in 2015. The impact of the Target settlement proceeds on FFO was $0.17 for both the three and six months ended June 30, 2016.
- Net operating income from same assets for the three and six months ended June 30, 2016, was $40.1 million and $79.9 million, respectively, as compared to $39.6 million and $80.2 million, respectively, for the same periods in 2015.
- Dispositions of Centre de la Cité during the quarter, 5591-5631 Finch and 20-24 Lesmill completed in the second quarter of 2015, 350 Sparks and 361 Queen in February 2015 and Cedar Pointe Business Park in July 2014 had no impact on net operating income for the three months ended June 30, 2016, however, reduced net operating income by $0.5 million for the six months ended June 30, 2016.
At June 30, 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 5.1 years and $148.3 million of 4.85% fixed-rate convertible debentures. The Trust has a debt to total assets ratio of 44.4%.
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 Q2 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, August 4, 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 49 retail, office and industrial income producing properties in Canada with a book value of $2.9 billion and approximately 8.7 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