Morguard Corporation Announces 2026 First Quarter Results and Regular Eligible Dividend
MISSISSAUGA, ON, May 5, 2026 /CNW/ - Morguard Corporation ("Morguard" or the "Company") (TSX: MRC) is pleased to announce its financial results for the three months ended March 31, 2026.
OPERATIONAL AND BALANCE SHEET HIGHLIGHTS
- On April 13, 2026, Morningstar DBRS upgraded the Company's issuer rating and senior unsecured debentures to an investment grade rating of BBB (low), stable trend from BB (high), positive trend.
- The Company ended the first quarter in a strong liquidity position with $488.5 million of cash and available credit facilities, and has a $1.1 billion pool of unencumbered properties and other investments.
- The Company has a binding commitment to sell its leasehold interest in an office property consisting of 328,500 square feet located in Ottawa, Ontario, for gross proceeds of $148.2 million (or $451 per square foot), excluding closing costs. The transaction is scheduled to close on August 31, 2026.
- On February 25, 2026, The Company announced, together with Morguard North American Residential REIT, a $1.0 billion investment in a Canadian multi-suite residential portfolio owned by TD Asset Management Inc. ("TDAM"), representing an approximate 20% interest in 106 properties. During the quarter, the Company progressed due diligence and continued to evaluate the allocation of ownership interests. The transaction is expected to close in the second half of 2026, subject to completion of due diligence and customary approvals. Subsequent to quarter end, the Company entered into property and asset management agreements with TDAM and commenced a phased transition of management services.
- During the first quarter, the Company refinanced maturing mortgages for gross proceeds of $106.2 million at an average interest rate of 4.50% and an average term of 3.4 years.
- As at March 31, 2026, shareholders' equity per common share was $419.33, compared to $410.70 at December 31, 2025.
REPORTING HIGHLIGHTS
- Total revenue from real estate properties decreased by $8.5 million, or 3.3%, to $254.5 million for the three months ended March 31, 2026, compared to $263.0 million for the same period in 2025.
- Normalized funds from operations(1) ("Normalized FFO") was $46.1 million, or $4.31 per common share, for the three months ended March 31, 2026. This represents a decrease of $3.9 million, or 7.8%, compared to $50.0 million, or $4.66 per common share for the same period in 2025.
- Adjusted NOI(1) decreased by $6.6 million, or 4.8%, to $130.5 million for the three months ended March 31, 2026, compared to $137.1 million for the same period in 2025.
- Comparative NOI(1) decreased by $7.2 million, or 5.3%, to $130.5 million for the three months ended March 31, 2026, compared to $137.7 million for the same period in 2025.
- Net income increased by $6.4 million to $61.2 million for the three months ended March 31, 2026, compared to $54.8 million for the same period in 2025, primarily due to an increase in non-cash net fair value gain, partially offset by lower NOI.
1) Refer to Specified Financial Measures |
FINANCIAL HIGHLIGHTS | ||
For the three months ended March 31 | ||
(in thousands of dollars) | 2026 | 2025 |
Revenue from real estate properties | $254,489 | $263,049 |
Revenue from hotel properties | 6,907 | 5,374 |
Management and advisory fees | 9,060 | 9,491 |
Interest and other income | 4,590 | 4,285 |
Total revenue | $275,046 | $282,199 |
Revenue from real estate properties | $254,489 | $263,049 |
Revenue from hotel properties | 6,907 | 5,374 |
Property operating expenses | (168,720) | (173,651) |
Hotel operating expenses | (5,795) | (4,698) |
Net operating income ("NOI") | $86,881 | $90,074 |
Net income attributable to common shareholders | $58,471 | $58,135 |
Net income per common share – basic and diluted | $5.48 | $5.42 |
Funds from operations(1) | $39,639 | $47,242 |
FFO per common share – basic and diluted(1) | $3.71 | $4.41 |
Normalized funds from operations(1) | $46,071 | $49,964 |
Normalized FFO per common share – basic and diluted(1) | $4.31 | $4.66 |
(1) Refer to Specified Financial Measures. | ||
Total revenue during the three months ended March 31, 2026, decreased by $7.2 million, or 2.5%, to $275.0 million compared to $282.2 million in 2025, mainly due to a decrease in revenue from real estate properties in the amount of $8.5 million, primarily due to an increase in vacancy within the office segment and an increase in vacancy, net of higher average monthly rent ("AMR") within the multi-suite residential segment as well as a change in foreign exchange rate, partially offset by an increase in revenue from hotel properties in the amount of $1.5 million from an increase in occupancy and increase in average daily daily rate ("ADR").
Net income for the three months ended March 31, 2026 was $61.2 million, compared to $54.8 million in 2025. The increase in net income of $6.4 million for three months ended March 31, 2026 was primarily due to the following:
- An increase in non-cash net fair value gain of $10.6 million, mainly due to an increase in fair value gain on Morguard Residential REIT units and an increase in fair value gain on marketable securities, partially offset by a decrease in fair value gain on real estate properties and an increase in fair value loss on other real estate investments; and
- A decrease in NOI of $3.2 million, mainly due to higher vacancy within the office and multi-suite residential segments, and the change in foreign exchange rate, partly offset by a lower IFRIC 21 adjustment.
AVERAGE OCCUPANCY LEVELS
The following table provides occupancy by asset class for the following periods:
Suites/GLA Square Feet | Mar. 2026 | Dec. 2025 | Sep. 2025 | Jun. 2025 | Mar. 2025 | |
Multi-suite residential | 17,798 | 91.9 % | 92.4 % | 93.5 % | 94.9 % | 96.0 % |
Retail | 7,512,000 (1) | 89.9 % | 89.7 % | 90.6 % | 90.0 % | 92.2 % |
Office(2) | 8,706,500 | 80.1 % | 82.6 % | 82.7 % | 84.9 % | 86.9 % |
(1) Retail occupancy has been adjusted to exclude development space of 416,637 square feet of GLA. |
(2) Office includes industrial properties with 1,014,500 square feet of GLA. |
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:
For the three months ended March 31 (in thousands of dollars) | 2026 | 2025 |
Multi-suite residential | $71,956 | $74,850 |
Retail | 30,186 | 30,858 |
Office(1) | 27,198 | 30,707 |
Hotel | 1,112 | 676 |
Adjusted NOI | 130,452 | 137,091 |
IFRIC 21 adjustment - multi-suite residential | (38,483) | (41,151) |
IFRIC 21 adjustment - retail | (5,088) | (5,866) |
NOI | $86,881 | $90,074 |
(1) Includes industrial properties with NOI for the three months ended March 31, 2026 of $2,227 (2025 - $2,804). |
For the three months ended March 31, 2026, Adjusted NOI decreased by $6.6 million, primarily due to an increase in vacancy, net of an increase in average monthly rent ("AMR") within the multi-suite residential portfolio and a decrease in the office portfolio due to higher vacancy and lower basic rent, partially offset by an increase in hotel portfolio due to an increase in occupancy and ADR.
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:
For the three months ended March 31 (in thousands of dollars) | 2026 | 2025 |
Multi-suite residential | $71,956 | $74,850 |
Retail | 30,186 | 30,858 |
Office | 27,198 | 30,707 |
Hotel | 1,112 | 676 |
Adjusted NOI | 130,452 | 137,091 |
Other Revenue | ||
Management and advisory fees | 9,060 | 9,491 |
Interest and other income | 4,590 | 4,285 |
Equity-accounted FFO | 671 | 556 |
14,321 | 14,332 | |
Expenses and Other | ||
Interest | (63,799) | (62,985) |
Principal repayment of lease liabilities | (451) | (489) |
Property management and corporate | (24,391) | (24,925) |
Internal leasing costs | 630 | 1,636 |
Amortization of capital assets | (338) | (288) |
Current income taxes | (212) | (2,637) |
Non-controlling interests' share of FFO | (10,784) | (11,923) |
Unrealized changes in the fair value of financial instruments | (3,772) | (2,622) |
Other income (expense) | (2,017) | 52 |
FFO | $39,639 | $47,242 |
FFO per common share amounts – basic and diluted | $3.71 | $4.41 |
Weighted average number of common shares outstanding (in thousands): | ||
Basic and diluted | 10,678 | 10,718 |
For the three months ended March 31 (in thousands of dollars) | 2026 | 2025 |
FFO (from above) | $39,639 | $47,242 |
Add/(deduct): | ||
Unrealized changes in the fair value of financial instruments | 3,772 | 2,622 |
SARs plan increase (decrease) in fair value | (96) | 323 |
SOP increase in fair value | 413 | -- |
Lease cancellation fee and other | 2,658 | (265) |
Tax effect of above adjustments | (315) | 42 |
Normalized FFO | $46,071 | $49,964 |
Per common share amounts – basic and diluted | $4.31 | $4.66 |
SECOND QUARTER DIVIDEND
The Board of Directors of Morguard Corporation announced that the second quarterly, eligible dividend of 2026 in the amount of $0.20 per common share will be paid on June 30, 2026, to shareholders of record at the close of business on June 15, 2026.
SUBSEQUENT EVENT
The Company entered into agreements for the CMHC-insured refinancing of four Canadian multi-suite residential properties, providing gross proceeds of up to $252.4 million for a weighted average term of 10.8 years. The maturing mortgages amount to $117.6 million and have a weighted average interest rate of 2.92%. The Company expects to close the refinancings during the second quarter of 2026.
SPECIFIED FINANCIAL MEASURES
The Company reports its financial results in accordance with IFRS Accounting 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 months ended March 31, 2026 and 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), (x) 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) construction financing payable, (v) bank indebtedness, and (vi) loans payable.
The Company's unaudited condensed consolidated financial statements for the three months ended March 31, 2026, 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 $18.7 billion. As at May 5, 2026, Morguard owns a diversified portfolio of 156 multi-suite residential, retail, office, industrial and hotel properties comprised of 17,798 residential suites, approximately 16.7 million square feet of commercial leasable space and 472 hotel rooms. Morguard also currently owns a 68.7% interest in Morguard Real Estate Investment Trust and a 48.6% 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, Executive Chairman, T 905-281-3800; Angela Sahi, Chief Executive Officer, T 905-281-3800; Paul Miatello, Chief Financial Officer, Senior Vice President, T 905-281-3800
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