Morguard Real Estate Investment Trust Announces 2009 Third Quarter Results
MISSISSAUGA, ON,
Morguard REIT's Q3 2009 Financial Statements, and Management's Discussion and Analysis along with its 2008 Annual Report are available on Morguard REIT's website at www.morguardreit.com and have been filed with SEDAR at www.sedar.com.
HIGHLIGHTS FOR Q3 2009
- On September 22, 2009, the Trust issued $90.0 million principal
amount of 6.50% convertible unsecured subordinated debentures ("2009
Debentures"), maturing on September 30, 2014 with an Underwriters'
over-allotment option for additional issuance of debentures of
$13.5 million. On September 29, 2009, the full amount of the
Underwriters' over-allotment option was exercised.
- Net operating income decreased to $27.6 million from $29.3 million
for the same period in 2008;
- Net income totaled $3.5 million or $0.06 per unit compared to
$15.9 million or $0.28 per unit for the same period in 2008. Net
income for Q3 2009 was affected by a charge of $4.1 million for the
issuance of the 2009 Debentures and net income for Q3 2008 included a
gain on sale of real estate properties of $6.2 million;
- Recurring distributable income decreased to $14.1 million or $0.25
per unit (basic and diluted) compared to $16.2 million or $0.27 per
unit (basic and diluted) for the same period in 2008;
- Funds from operations ("FFO") decreased to $12.4 million or $0.22 per
unit (basic and diluted) compared to $18.9 million or $0.32 per unit
(basic and diluted) for the same period in 2008. FFO was
significantly impacted by $4.1 million of issue costs ($0.07 per
unit, basic and diluted) relating to the issuance of the 2009
Debentures;
- Overall portfolio occupancy levels remained stable at 95%.
FINANCIAL HIGHLIGHTS
Net Income
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(In thousands of dollars except per unit amounts)
Three-month period ended September 30, 2009 2008
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Income from real estate properties $ 50,107 $ 50,234
Property operating income $ 27,574 $ 29,257
Net income for the period from continuing
operations $ 3,527 $ 9,643
Income for the period from discontinued operations - 6,243
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Net income for the period $ 3,527 $ 15,886
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Net income per unit (basic and diluted)
Continuing operations $ 0.06 $ 0.17
Discontinued operations - 0.11
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$ 0.06 $ 0.28
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Distributable Income
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The Trust distributes a portion of its net income after adjusting for amortization of buildings and intangible assets and providing for any reserve that the Trustees, in their discretion, consider reasonable. The adjusted net income is referred to as distributable income and is computed as income, in accordance with Canadian GAAP, before deduction for amortization of buildings and intangible assets, less any reserves, provisions and allowances established by the Trustees, plus any amount the Trustees, in their discretion, determine to be appropriate. Amounts considered appropriate by the Trustees currently include adjustments for the net of above/(below) market rate leases, amortization of stepped rents, accretion of convertible debentures and issue costs related to the liability portion of the convertible debentures.
Recurring distributable income is distributable income excluding gain/loss on sales, unusual or non-recurring items and provisions for diminution in value of real estate properties.
The following table outlines the Trust's distributable income, recurring distributable income and payout ratios for the three months ended
(In thousands of dollars except
per-unit amounts and percentages)
Three months ended September 30, 2009 2008
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Net income for the period $ 3,527 $ 15,886
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Add/(deduct)
Amortization - buildings 5,941 6,296
Amortization - intangibles 925 985
Amortization - above/(below) market rate leases, net (213) (239)
Amortization - stepped rents (237) (522)
Accretion of convertible debentures 23 -
Issue costs - convertible debentures 4,145 -
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Distributable income 14,111 22,406
Gain on sale of real estate properties - (6,178)
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Recurring distributable income $ 14,111 $ 16,228
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Distributed income $ 12,936 $ 13,288
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Payout ratio:
Recurring distributable income 91.7% 81.9%
Recurring distributable income - per unit
(basic and diluted) $ 0.25 $ 0.27
Weighted average number of units - (in thousands)
(basic and diluted) 57,498 59,061
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Funds from Operations
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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
FFO is defined as net income adjusted for amortization of buildings, leasehold improvements, intangible items, deferred leasing costs, accretion of convertible debentures, any gain or loss on sale of real estate properties and 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, September 30, 2009
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(In thousands of dollars Continuing Discontinued
except per unit amounts) Operations Operations Total
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Net income for the period $ 3,527 $ - $ 3,527
Add/(deduct) items not affecting cash:
Gain on sale of real estate properties - - -
Amortization - buildings 5,941 - 5,941
Amortization - intangibles 925 - 925
Amortization - leasehold improvements 1,471 - 1,471
Amortization - deferred leasing costs 558 - 558
Accretion of convertible debentures 23 23
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Funds from operations $ 12,445 $ - $ 12,445
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Funds from operations per unit (basic
and diluted) $ 0.22 $ - $ 0.22
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Three months ended, September 30, 2008
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(In thousands of dollars Continuing Discontinued
except per unit amounts) Operations Operations Total
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Net income for the period $ 9,643 $ 6,243 $ 15,886
Add/(deduct) items not affecting cash:
Gain on sale of real estate properties - (6,178) (6,178)
Amortization - buildings 6,296 - 6,296
Amortization - intangibles 985 - 985
Amortization - leasehold improvements 1,406 - 1,406
Amortization - deferred leasing costs 514 - 514
Accretion of convertible debentures - - -
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Funds from operations $ 18,844 $ 65 $ 18,909
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Funds from operations per unit (basic
and diluted) $ 0.32 $ - $ 0.32
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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.
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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