Morguard Real Estate Investment Trust Announces 2014 Annual Results

TSX: MRT.UN

MISSISSAUGA, ON, Feb. 19, 2015 /CNW/ - Morguard Real Estate Investment Trust ("the Trust") (TSX: MRT.UN) today is pleased to announce its 2014 annual financial results. These results have been prepared in accordance with International Financial Reporting Standards ("IFRS").

Highlights

• Funds from operations ("FFO") for the year ended December 31, 2014 was $106.5 million, up $5.7 million from the $100.8 million reported in 2013
• On a per unit diluted basis, FFO for the year 2014 was $1.67, as compared to $1.55 reported for the prior year.
• Net operating income for the year ended December 31, 2014 was $169.7 million, up $8.4 million from the $161.3 million recorded in 2013.
• Acquisitions during the year and the acquisition of Pine Centre Mall in December 2013, add $8.9 million to net operating income.
• The disposition of Cedar Pointe Business Park, along with other assets re-classified to "held for sale", reduces net operating income by $5.4 million. However, this net operating income was replaced by operational improvements in the remaining portfolio where net operating income improved by $5.0 million.
• A focused re-financing program reduces interest on same debt levels, $5.0 million, during the year ended December 31, 2014.  The reduction in interest expense is the direct result of moving the weighted average interest rate from 4.4% (at December 31, 2013) to 4.2% (at December 31 2014).  These savings are offset by additional interest associated with higher debt levels.  These higher debt were the result of both the re-financing program and the additional debt required for acquisitions.  These activities increase interest expense $7.3 million.

Funds from operations is not a term defined under IFRS and may not be comparable to similar measures used by other Trusts. A reconciliation of net income to funds from operations is included.

At December 31, 2014, the Trust's debt consisted of $1.2 billion of fixed-rate debt with weighted average interest rate of 4.2% and weighted average term to maturity of 5.81 years, $146.5 million of 4.85% fixed-rate convertible debentures, $29.7 million debt associated with real estate properties held for sale and $4.9 million utilization of the operating line of credit.  The Trust has a debt to total assets ratio of 45.2%.

• On February 17, 2015, the Trust completed the sale of 350 Sparks and 361 Queen to Morguard Corporation, for a total price of $37.7 million.  The transaction includes an assumption of the existing mortgage debt of $17.8 million.

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.

FINANCIAL STATEMENTS AND MORGUARD'S DISCUSSION AND ANALYSIS
Morguard REIT's Q4 2014 Consolidated Financial Statement and Management's Discussion and Analysis along with its 2013 Annual Report are available on Morguard REIT's website at www.morguard.com and have been filed with SEDAR at www.sedar.com

CONFERENCE CALL DETAILS:

			Date:	Friday, February 20, 2015 at 12:00 p.m. (ET)
			Conference Call#:	647.427.7450 or 1.888.231.8191
			Conference ID#:	82745003

ABOUT MORGUARD REAL ESTATE INVESTMENT TRUST
Morguard REIT is a closed-end real estate investment trust, which owns a diversified portfolio of 49 retail, office and mixed-use income producing properties in Canada with a book value of $2.9 billion and approximately 8.6 million square feet of leaseable space.

Consolidated Balance Sheets

(In thousands of Canadian dollars)	December 31,		December 31,
		2014		2013
Assets
Real estate properties	$	2,866,235	$	2,869,358
Equity-accounted investments		30,770		44,857
Amounts receivable		42,635		14,505
Other assets		1,054		1,002
Cash and cash equivalents		12,612		13,077
		2,953,306		2,942,799
Real estate properties held for sale		63,190		—
	$	3,016,496	$	2,942,799
Liabilities
Mortgages payable	$	1,182,456	$	1,194,682
Convertible debentures payable		146,541		145,460
Accounts payable and other liabilities		45,761		44,919
Bank indebtedness		4,927		5,000
		1,379,685		1,390,061
Mortgages payable on real estate properties held for sale		29,730		—
Total liabilities		1,409,415		1,390,061
Unitholders' Equity		1,607,081		1,552,738
	$	3,016,496	$	2,942,799

Consolidated Statements of Income and Comprehensive Income

(In thousands of Canadian dollars)
For the years ended December 31		2014		2013
Revenue from real estate properties		$	298,461	$	279,651
Property operating expenses			119,139		109,626
Property management fees			9,583		8,689
Net operating income			169,739		161,336
Interest expense			62,000		59,672
General and administrative			5,414		4,555
Amortization expense			—		38
Other income			(375)		(9)
Income before fair value gains, (loss)/gain on sale of real estate properties and net (loss)/income from equity-accounted investments			102,700		97,080
Fair value gains on real estate properties, net			11,239		107,641
(Loss)/gain on sale of real estate properties			(37)		2,058
Net (loss)/income from equity-accounted investments			(20)		5,602
Net income for the year		$	113,882	$	212,381
Other comprehensive income
Items to be reclassified to profit or loss in  subsequent periods:
	Amortization – cash flow hedge		1,010		991
Comprehensive income		$	114,892	$	213,372

Reconciliation of Net Income to Funds from Operations

(In thousands of Canadian dollars, except per-unit amounts)		2014		2013
Net income for the year		$	113,882	$	212,381
Add/(deduct) :
Fair value gains on real estate properties^(1)			(7,403)		(109,560)
Loss/(gain) on sale of real estate properties			37		(2,058)
Basic funds from operations		$	106,516	$	100,763
Interest expense on convertible debentures			7,275		7,275
Diluted funds from operations		$	113,791	$	108,038
Funds from operations per unit:
	Basic		$1.71		$1.59
	Diluted^(2)		$1.67		$1.55
Weighted average units outstanding (in thousands)
	Basic		62,168		63,456
	Diluted^(2)		68,265		69,554

(1)	Includes fair value gains from equity-accounted investments
(2)	Includes dilutive impact of convertible debentures

SOURCE Morguard Real Estate Investment Trust

K. (Rai) Sahi, President and Chief Executive Officer, Tel: [phone], or; Pamela McLean, Chief Financial Officer, Tel: [phone].

Related Links

http://www.morguardreit.com