Morguard Real Estate Investment Trust Announces 2009 Third Quarter Results

MISSISSAUGA, ON, Nov. 3 /CNW/ - Morguard Real Estate Investment Trust ("Morguard REIT") (TSX: MRT.UN) today announced its financial results for the three and nine months ended September 30, 2009.

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
    ----------

    (In thousands of dollars except per unit amounts)

    Three-month period ended September 30,                  2009        2008
    -------------------------------------------------------------------------

    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
    -------------------------------------------------------------------------
    Net income for the period                          $   3,527   $  15,886
                                                       ----------------------
                                                       ----------------------

    Net income per unit (basic and diluted)
      Continuing operations                            $    0.06   $    0.17
      Discontinued operations                                  -        0.11
    -------------------------------------------------------------------------
                                                       $    0.06   $    0.28
                                                       ----------------------
                                                       ----------------------


    Distributable Income
    --------------------
    

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 September 30, 2009 and 2008.

    
    (In thousands of dollars except
    per-unit amounts and percentages)
    Three months ended September 30,                        2009        2008
    -------------------------------------------------------------------------

    Net income for the period                          $   3,527   $  15,886
    -------------------------------------------------------------------------

    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           -
    -------------------------------------------------------------------------

    Distributable income                                  14,111      22,406
    Gain on sale of real estate properties                     -      (6,178)
    -------------------------------------------------------------------------

    Recurring distributable income                     $  14,111   $  16,228
                                                       ----------------------
                                                       ----------------------

    Distributed income                                 $  12,936   $  13,288
                                                       ----------------------
                                                       ----------------------

    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
                                                       ----------------------
                                                       ----------------------


    Funds from Operations
    ---------------------
    

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 Canada ("REALPac").

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
                                          -----------------------------------
    (In thousands of dollars              Continuing Discontinued
    except per unit amounts)              Operations   Operations      Total
    -------------------------------------------------------------------------
    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
    -------------------------------------------------------------------------
    Funds from operations                  $  12,445   $       -   $  12,445
                                          -----------------------------------
                                          -----------------------------------
    Funds from operations per unit (basic
     and diluted)                          $    0.22   $       -   $    0.22
                                          -----------------------------------
                                          -----------------------------------


    Three months ended,                        September 30, 2008
                                          -----------------------------------
    (In thousands of dollars              Continuing Discontinued
    except per unit amounts)              Operations   Operations      Total
    -------------------------------------------------------------------------
    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            -           -           -
    -------------------------------------------------------------------------
    Funds from operations                  $  18,844   $      65   $  18,909
                                          -----------------------------------
                                          -----------------------------------
    Funds from operations per unit (basic
     and diluted)                          $    0.32   $       -   $    0.32
                                          -----------------------------------
                                          -----------------------------------
    

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.

SOURCE Morguard Real Estate Investment Trust

For further information: 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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