Morguard Corporation Announces 2025 Second Quarter Results and Regular Eligible Dividend

MISSISSAUGA, ON, Aug. 6, 2025 /CNW/ - Morguard Corporation ("Morguard" or the "Company") (TSX: MRC) is pleased to announce its financial results for the three and six months ended June 30, 2025.

Operational and Balance Sheet Highlights

• The Company ended the second quarter in a strong liquidity position with $307.0 million, comprised of cash, available credit facilities and additional net mortgage financing received subsequent to June 30, 2025, and has a $1.1 billion pool of unencumbered properties and other investments.
• As at June 30, 2025, the Company's total assets were $11.8 billion, consistent compared to $11.8 billion at December 31, 2024.
• During the second quarter, the Company incurred $23.2 million of development expenditures, predominantly at the Company's residential project comprising 431 suites located in Mississauga, Ontario. The project is anticipated to commence occupancies in the second half of 2027.

Reporting Highlights

• Total revenue from real estate properties increased by $1.7 million, or 0.7%, to $256.6 million for the three months ended June 30, 2025, compared to $254.9 million for the same period in 2024.
• Normalized funds from operations⁽¹⁾ ("Normalized FFO") was $56.0 million, or $5.24 per common share, for the three months ended June 30, 2025. This represents an increase of $4.8 million, or 9.3%, compared to $51.2 million, or $4.74 per common share for the same period in 2024.
• Comparative NOI⁽¹⁾ decreased by $2.1 million or 1.5% to $138.7 million for the three months ended June 30, 2025, compared to $140.8 million for the same period in 2024.
• Adjusted NOI⁽¹⁾ decreased by $1.0 million, or 0.7%, to $141.3 million for the three months ended June 30, 2025, compared to $142.3 million for the same period in 2024.
• Net income decreased by $0.5 million to $54.9 million for the three months ended June 30, 2025, compared to $55.4 million for the same period in 2024, primarily due to increase in provision for taxes, partially offset by a decrease in non-cash net fair value loss.

1) Refer to Specified Financial Measures

Financial Highlights

	Three months ended  June 30		Six months ended June 30
(in thousands of dollars)	2025	2024	2025	2024
Revenue from real estate properties	$256,589	$254,858	$519,638	$511,947
Revenue from hotel properties	9,142	8,826	14,516	19,263
Management and advisory fees	10,417	10,522	19,908	20,179
Interest and other income	4,271	4,325	8,556	8,808
Total revenue	$280,419	$278,531	$562,618	$560,197
Revenue from real estate properties	$256,589	$254,858	$519,638	$511,947
Revenue from hotel properties	9,142	8,826	14,516	19,263
Property operating expenses	(102,951)	(99,841)	(276,602)	(262,985)
Hotel operating expenses	(5,800)	(5,964)	(10,498)	(15,598)
Net operating income ("NOI")	$156,980	$157,879	$247,054	$252,627
Net income attributable to common shareholders	$54,001	$53,858	$112,136	$184,304
Net income per common share – basic and diluted	$5.05	$4.98	$10.47	$17.04
Funds from operations^(1)	$56,519	$47,381	$103,761	$79,324
FFO per common share – basic and diluted^(1)	$5.28	$4.38	$9.69	$7.33
Normalized funds from operations^(1)	$56,039	$51,270	$106,003	$103,846
Normalized FFO per common share – basic and diluted^(1)	$5.24	$4.74	$9.90	$9.60
(1) Refer to Specified Financial Measures.

Total revenue during the three months ended June 30, 2025, increased by $1.9 million to $280.4 million compared to $278.5 million in 2024, mainly due to an increase in revenue from real estate properties in the amount of $1.7 million, primarily due to higher average monthly rent ("AMR"), net of an increase in vacancy within the multi-suite residential segment and an increase in vacancy at Penn West Plaza, resulting from the expiry of Obsidian Energy's lease ("Obsidian Lease Expiry"). In addition, revenue increased from the change in foreign exchange rate and from the net impact of acquisition and disposition of properties.

Net income for the three months ended June 30, 2025 was $54.9 million, compared to $55.4 million in 2024. The decrease in net income of $0.5 million for the three months ended June 30, 2025, was primarily due to the following:

• A decrease in NOI of $0.9 million, mainly due to a decrease in gross rent and an increase in vacancy costs at Penn West Plaza due to Obsidian Lease Expiry, and higher vacancy at multi-suite residential properties, partially offset by an increase in AMR at multi-suite residential properties, the change in foreign exchange rate and from the net impact of acquisition and disposition of properties;
• A decrease in amortization of hotel properties and other of $1.5 million;
• A decrease in non-cash net fair value loss of $7.2 million, mainly due to an increase in fair value gain on real estate properties and marketable securities, partially offset by an increase in fair value loss on Morguard Residential REIT units; and
• An increase in income tax expense (current and deferred) of $7.1 million, mainly due to a higher fair value gain recorded on the Company's Canadian and U.S. properties.

Total revenue during the six months ended June 30, 2025, increased by $2.4 million to $562.6 million compared to $560.2 million in 2024, mainly due to an increase in revenue from real estate properties in the amount of $7.7 million, primarily due to higher AMR, net of an increase in vacancy within the multi-suite residential segment and an increase in vacancy at Penn West Plaza. In addition, revenue increased from the change in foreign exchange rate and decreased from the net impact of acquisition and disposition of properties, which includes a decrease in revenue from the sale of 14 hotels on January 18, 2024 (the "Hotel Portfolio Disposition") in the amount of $4.7 million.

Net income for the six months ended June 30, 2025 was $109.6 million, compared to $172.2 million in 2024. The decrease in net income of $62.6 million for the six months ended June 30, 2025, was primarily due to the following:

• A decrease in NOI of $5.6 million, mainly due to a decrease in gross rent and an increase in vacancy costs at Penn West Plaza, resulting from the Obsidian Lease Expiry, and higher vacancy at multi-suite residential properties, partially offset by an increase in AMR at multi-suite residential properties, the change in foreign exchange rate and from the net impact of acquisition and disposition of properties;
• An increase in non-cash net fair value gain of $108.4 million, mainly due to an increase in fair value gain on real estate properties and marketable securities, and a decrease in fair value loss on other real estate funds investments, partially offset by an increase in fair value loss on Morguard Residential REIT units;
• A decrease in gain on sale of hotel properties of $150.6 million due to the Hotel Portfolio Disposition; and
• An increase in income tax expense (current and deferred) of $15.1 million, mainly due to a deferred tax increase from a higher fair value gain recorded on the Company's Canadian and U.S. properties, partly offset by a decrease in current taxes resulting from the disposal of properties in 2024.

Average Occupancy Levels

During the second quarter, occupancy was strong and consistent across the multi-suite residential and retail asset classes, supporting the Company's business objective of generating stable and increasing cash flow through its diversified portfolio of real estate assets.

The following table provides occupancy by asset class for the following periods:

	Suites/GLA Square Feet	Jun. 2025	Mar. 2025	Dec. 2024	Sep. 2024	Jun. 2024
Multi-suite residential	17,798	94.9 %	96.0 %	95.5 %	94.6 %	95.3 %
Retail	7,758,000 ^(1)	90.0 %	92.2 %	93.1 %	93.2 %	93.6 %
Office^(2)	8,689,000	84.9 %	86.9 %	89.4 %	88.9 %	88.3 %

(1)	Retail occupancy has been adjusted to exclude development space of 379,572 square feet of GLA.
(2)	Office includes industrial properties with 1,013,500 square feet of GLA.

On February 1, 2025, Obsidian Energy's lease expired at Penn West Plaza, an office building located in Calgary, Alberta. As at June 30, 2025, the occupancy percentage for Penn West Plaza was 79.4% compared to 100.0% at June 30, 2024.

Adjusted Net Operating Income ("Adjusted NOI")

The following table provides a reconciliation of Adjusted NOI to its closely related financial statement measurement for the following periods:

	Three months ended June 30		Six months ended June 30
(in thousands of dollars)	2025	2024	2025	2024
Multi-suite residential	$76,390	$73,081	$151,240	$143,502
Retail	31,181	32,065	62,039	64,352
Office^(1)	30,419	34,343	61,126	68,837
Hotel	3,342	2,862	4,018	3,665
Adjusted NOI	141,332	142,351	278,423	280,356
IFRIC 21 adjustment - multi-suite residential	13,210	12,627	(27,941)	(24,576)
IFRIC 21 adjustment - retail	2,438	2,901	(3,428)	(3,153)
NOI	$156,980	$157,879	$247,054	$252,627

(1)	Includes industrial properties with NOI for the three and six months ended June 30, 2025 of $2,720 (2024 - $2,639) and $5,524 (2024 - $5,116), respectively.

For the three and six months ended June 30, 2025, Adjusted NOI decreased by $1.0 million and $1.9 million, respectively, primarily due to decrease in office portfolio primarily due to Obsidian Lease Expiry, a decrease in the retail portfolio mainly due to lower percentage rent at three enclosed shopping centres and higher vacancy and bad debt expense, partially offset by an increase in AMR, net of higher vacancy within the multi-suite residential segment, and from the change in foreign exchange rate and the net impact of acquisition and disposition of properties.

Funds From Operations and Normalized FFO

The following tables provide a reconciliation of FFO and Normalized FFO to its closely related financial statement measurement for the following periods:

	Three months ended June 30		Six months ended June 30
(in thousands of dollars)	2025	2024	2025	2024
Multi-suite residential	$76,390	$73,081	$151,240	$143,502
Retail	31,181	32,065	62,039	64,352
Office	30,419	34,343	61,126	68,837
Hotel	3,342	2,862	4,018	3,665
Adjusted NOI Other Revenue	141,332	142,351	278,423	280,356
Management and advisory fees	10,417	10,522	19,908	20,179
Interest and other income	4,271	4,325	8,556	8,808
Equity-accounted FFO	656	573	1,212	1,648
	15,344	15,420	29,676	30,635
Expenses and Other
Interest	(63,610)	(63,234)	(126,595)	(128,116)
Principal repayment of lease liabilities	(654)	(382)	(1,143)	(783)
Property management and corporate	(21,789)	(21,609)	(46,714)	(44,940)
Internal leasing costs	1,095	932	2,731	2,137
Amortization of capital assets	(278)	(309)	(566)	(590)
Current income taxes	(1,617)	(5,772)	(4,254)	(4,820)
Non-controlling interests' share of FFO	(12,389)	(13,912)	(24,312)	(27,569)
Unrealized changes in the fair value of financial instruments	(881)	(6,272)	(3,503)	(26,906)
Other income (expense)	(34)	168	18	(80)
FFO	$56,519	$47,381	$103,761	$79,324
FFO per common share amounts – basic and diluted	$5.28	$4.38	$9.69	$7.33
Weighted average number of common shares outstanding (in thousands):
Basic and diluted	10,704	10,813	10,711	10,813

	Three months ended June 30		Six months ended June 30
(in thousands of dollars)	2025	2024	2025	2024
FFO (from above)	$56,519	$47,381	$103,761	$79,324
Add/(deduct): Unrealized changes in the fair value of financial instruments	881	6,272	3,503	26,906
SARs plan increase (decrease) in compensation expense	(541)	(547)	(218)	310
Lease cancellation fee and other	(1,098)	(2,399)	(1,363)	(3,436)
Tax effect of above adjustments	278	563	320	742
Normalized FFO	$56,039	$51,270	$106,003	$103,846
Per common share amounts – basic and diluted	$5.24	$4.74	$9.90	$9.60

Third Quarter Dividend

The Board of Directors of Morguard Corporation announced that the third quarterly, eligible dividend of 2025 in the amount of $0.20 per common share will be paid on September 29, 2025, to shareholders of record at the close of business on September 15, 2025.

Subsequent Events

The Company completed the CMHC-insured refinancing of a multi-suite residential property located in Toronto, Ontario, providing gross proceeds of $154.0 million at an interest rate of 4.05% for a term of 10 years. The maturing first and second mortgages amounted to $116.5 million and had a weighted average interest rate of 2.99%.

The Company completed the refinancing of a multi-suite residential property located in Chicago, Illinois, in the amount of $163.7 million (US$120.0 million) at an interest rate of 5.35% and for a term of 3 years. The maturing mortgage amounted to $153.6 million (US$112.6 million) and had an interest rate of 3.49%.

The Company completed the refinancing of an office property, in which the Company has 20% ownership, located in Vancouver, British Columbia, providing gross proceeds of $37.0 million (at ownership share) at an interest rate of 4.68% for a term of 5 years. The maturing mortgage amounted to $34.7 million (at ownership share) and had an interest rate of 3.40%.

Specified Financial Measures

The Company reports its financial results in accordance with International Financial Reporting Standards ("IFRS"). However, this earnings release also uses specified financial measures that are not defined by IFRS, which follow the disclosure requirements established by National Instrument 52-112 Non-GAAP and Other Financial Measures Disclosure for non-GAAP financial measures. Specified financial measures are categorized as non-GAAP financial measures, non-GAAP ratios, and other financial measures. Additional details on specified financial measures including supplementary financial measures, capital management measures and total segment measures are set out in the Company's Management's Discussion and Analysis for the three and six months ended June 30, 2025 and are available on the Company's profile on SEDAR+ at www.sedarplus.ca

The following non-GAAP financial measures do not have any standardized meaning prescribed by IFRS and are not necessarily comparable to similar measures presented by other reporting issuers in similar or different industries.

These measures should be considered as supplemental in nature and not as substitutes for related financial information prepared in accordance with IFRS. The Company's management uses these measures to aid in assessing the Company's underlying core performance and provides these additional measures so that investors may do the same. Management believes that the non-GAAP financial measures described below, which supplement the IFRS measures, provide readers with a more comprehensive understanding of management's perspective on the Company's operating results and performance.

A reconciliation of each non-GAAP financial measure referred to in this earnings release is provided above.

Adjusted NOI

Adjusted NOI is an important measure in evaluating the operating performance of the Company's real estate properties and is a key input in determining the fair value of the Company's properties. Adjusted NOI represents NOI (an IFRS measure) adjusted to exclude the impact of realty taxes accounted for under IFRIC 21 as noted below.

NOI includes the impact of realty taxes accounted for under the International Financial Reporting Interpretations Committee ("IFRIC") Interpretation 21, Levies ("IFRIC 21"). IFRIC 21 states that an entity recognizes a levy liability in accordance with the relevant legislation. The obligating event for realty taxes for the U.S. municipalities in which the REIT operates is ownership of the property on January 1 of each year for which the tax is imposed and, as a result, the REIT records the entire annual realty tax expense for its U.S. properties on January 1, except for U.S. properties acquired during the year in which the realty taxes are not recorded in the year of acquisition. Adjusted NOI records realty taxes for all properties on a pro rata basis over the entire fiscal year.

Comparative NOI

Comparative NOI is presented in this earnings release because management considers this non-GAAP financial measure to be an important measure of the Company's operating performance for properties owned by the Company continuously for the current and comparable reporting period and does not take into account the impact of the operating performance of property acquisitions and dispositions as well as properties subject to significant change as a result of recently completed development. In addition, Comparative NOI is presented in local currency, isolating any impact of foreign exchange fluctuations, and eliminates the impact of straight-line rents, realty taxes accounted for under IFRIC 21, lease cancellation fees and other non-cash and non-recurring items.

Funds From Operations and Normalized FFO

FFO (and FFO per common share) is a non-GAAP financial measure widely used as a real estate industry standard that supplement net income (loss) and evaluates operating performance but is not indicative of funds available to meet the Company's cash requirements. FFO can assist with comparisons of the operating performance of the Company's real estate between periods and relative to other real estate entities. FFO is computed in accordance with the current definition of the Real Property Association of Canada ("REALPAC") and is defined as net income (loss) attributable to common shareholders adjusted for: (i) deferred income taxes, (ii) unrealized changes in the fair value of real estate properties, (iii) realty taxes accounted for under IFRIC 21, (iv) internal leasing costs, (v) gains/losses from the sale of real estate or hotel property (including income tax on the sale of real estate or hotel property), (vi) transaction costs expensed as a result of a business combination, (vii) gains/losses on business combination, (viii) the non-controlling interest of Morguard North American Residential REIT, (ix) amortization of depreciable real estate assets (including right-of-use assets), * amortization of intangible assets, (xi) principal payments of lease liabilities, (xii) FFO adjustments for equity-accounted investments, (xiii) provision for (recovery of) impairment, (xiv) other fair value adjustments and non-cash items. The Company considers FFO to be a useful measure for reviewing its comparative operating and financial performance. FFO per common share is calculated as FFO divided by the weighted average number of common shares outstanding during the period.

Normalized FFO (and normalized FFO per common share) is computed as FFO excluding non-recurring items on a net of tax basis and other non-cash fair value adjustments. The Company believes it is useful to provide an analysis of Normalized FFO which excludes non-recurring items on a net of tax basis and other non-cash fair value adjustments excluded from REALPAC's definition of FFO described above.

Non-Consolidated Indebtedness to Gross Book Value Ratio

Non-consolidated indebtedness to gross book value ratio is a compliance measure and establishes the limit for financial leverage of the Company on a Non-Consolidated Basis. Non-consolidated indebtedness to gross book value ratio is presented in this earnings release because management considers this non-GAAP measure to be an important compliance measure of the Company's financial position.

Non-consolidated gross book value is a measure of the value of the Company's assets and is calculated as total assets less right-of-use assets accounted for under IFRS 16, Leases.

Non-consolidated indebtedness is defined as the sum of the current and non-current portion of: (i) mortgages payable, (ii) Unsecured Debentures, (iii) convertible debentures, (iv) bank indebtedness, and (v) loans payable.

The Company's unaudited condensed consolidated financial statements for the three and six months ended June 30, 2025, along with Management's Discussion and Analysis will be available on the Company's website at www.morguard.com and will be filed with SEDAR+ at www.sedarplus.ca.

About Morguard Corporation

Morguard Corporation is a real estate company, with total assets owned and under management valued at $19.1 billion. As at August 6, 2025, Morguard owns a diversified portfolio of 156 multi-suite residential, retail, office, industrial and hotel properties comprised of 17,798 residential suites, approximately 16.9 million square feet of commercial leasable space and 472 hotel rooms. Morguard also currently owns a 68.3% interest in Morguard Real Estate Investment Trust and a 48.4% effective interest in Morguard North American Residential Real Estate Investment Trust. Morguard also provides advisory and management services to institutional and other investors. For more information, visit the Company's website at www.morguard.com.

SOURCE Morguard Corporation

For further information, please contact: Morguard Corporation, K. Rai Sahi, Chief Executive Officer, T 905-281-3800; Angela Sahi, President , Chief Operating Officer, T 905-281-3800; Paul Miatello, Chief Financial Officer, Senior Vice President, T 905-281-3800