MISSISSAUGA, ON, April 30,
2019 /CNW/ - Morguard North American Residential REIT (the
"REIT") (TSX: MRG.UN) today announced its financial results for the
three months ended March 31,
2019.
Highlights
The REIT is reporting first quarter performance
of:
- Net operating income ("NOI") of $16.8
million for the three months ended March 31, 2019, a decrease of $0.3 million (or 1.6%), compared to 2018.
- Same Property Proportionate NOI in Canada increased by $0.7 million (or 5.9%), and in the U.S. increased
by US$0.4 million (or 3.1%), compared
to 2018.
- Basic funds from operations ("FFO") of $15.2 million for the three months ended
March 31, 2019, an increase of
$0.5 million (or 3.4%), over the same
period in 2018.
- Basic FFO of $0.30 per Unit for
the three months ended March 31,
2019, a 3.4% increase compared to $0.29 in 2018.
- FFO payout ratio for the three months ended March 31, 2019 of 56.7% compared to 57.0% in
2018.
- Net income of $3.7 million for
the three months ended March 31,
2019, a decreased of $76.7
million, compared to 2018.
The REIT is reporting the following corporate and portfolio
highlights:
- During and subsequent to the three months ended March 31, 2019, the REIT sold five properties
located in Louisiana, comprising
843 suites for net proceeds of $27.5
million, after the assumption and repayment of mortgages
payable. The disposition of the five Louisiana properties, having an average age of
40 years, follows the sale of the REIT's Alabama properties in July 2017 and is consistent with management's
strategy to dispose of non-core assets and to focus on
opportunities to acquire properties located in urban centres and
major suburban markets in Canada
and the United States.
- As at March 31, 2019, average
monthly rent ("AMR") in Canada
increased by 3.5% compared to March 31,
2018, while occupancy remained strong and stable at 99.3% at
March 31, 2019, compared to 99.2% at
March 31, 2018.
- As at March 31, 2019, AMR in U.S.
on a Same Property basis, increased by 3.1% compared to
March 31, 2018, while overall
occupancy improved to 95.3% at March 31,
2019, compared to 92.6% at March 31,
2018.
- As at March 31, 2019 and
December 31, 2018, the REIT's real
estate properties were valued at $2.9
billion.
- As at March 31, 2019,
indebtedness to gross book value ratio of 46.5%, was lower compared
to 47.9% as at December 31,
2018.
Financial and Operational
Highlights
|
March 31,
|
December
31,
|
March 31,
|
(In thousands of
dollars, except as noted otherwise)
|
2019
|
2018
|
2018
|
Operational
Information
|
|
|
|
Number of
properties
|
43
|
47
|
46
|
Total
suites
|
12,635
|
13,430
|
13,314
|
Occupancy percentage
– Canada
|
99.3%
|
99.1%
|
99.2%
|
Occupancy percentage
– U.S
|
95.3%
|
94.7%
|
92.3%
|
Average monthly rent
- Canada (in actual dollars)
|
$1,383
|
$1,373
|
$1,336
|
Average monthly rent
- U.S. (in actual U.S. dollars)
|
US$1,306
|
US$1,236
|
US$1,211
|
Summary of
Financial Information
|
|
|
|
Gross book
value
|
$2,956,962
|
$3,011,469
|
$2,766,375
|
Indebtedness
|
$1,373,881
|
$1,442,607
|
$1,388,655
|
Indebtedness to gross
book value ratio
|
46.5%
|
47.9%
|
50.2%
|
Weighted average
mortgage interest rate
|
3.48%
|
3.49%
|
3.51%
|
Weighted average term
to maturity on mortgages payable (years)
|
5.6
|
5.8
|
6.0
|
Exchange rates -
United States dollar to Canadian dollar
|
$1.34
|
$1.36
|
$1.29
|
Exchange rates -
Canadian dollar to United States dollar
|
$0.75
|
$0.73
|
$0.78
|
For the three
months ended March 31
|
|
(In thousands of
dollars, except per Unit amounts)
|
2019
|
2018
|
Summary of
Financial Information
|
|
|
Interest coverage
ratio
|
2.26
|
2.17
|
Indebtedness coverage
ratio
|
1.58
|
1.54
|
Revenue from real
estate properties
|
$62,258
|
$58,094
|
NOI
|
$16,837
|
$17,110
|
Proportionate
NOI
|
$31,920
|
$30,185
|
Same Property
Proportionate NOI
|
$31,265
|
$29,148
|
NOI margin –
IFRS
|
27.0%
|
29.5%
|
NOI margin –
Proportionate
|
53.2%
|
53.8%
|
Net income
|
$3,726
|
$80,406
|
FFO –
basic
|
$15,246
|
$14,749
|
FFO –
diluted
|
$16,200
|
$15,662
|
FFO per Unit –
basic
|
$0.30
|
$0.29
|
FFO per Unit –
diluted
|
$0.29
|
$0.28
|
Distributions per
Unit
|
$0.17
|
$0.165
|
FFO payout
ratio
|
56.7%
|
57.0%
|
Weighted average
number of Units outstanding (in thousands):
|
|
|
Basic
|
50,950
|
50,918
|
Diluted
|
55,183
|
55,491
|
Average exchange
rates - United States dollar to Canadian dollar
|
$1.33
|
$1.26
|
Average exchange
rates - Canadian dollar to United States dollar
|
$0.75
|
$0.79
|
Net Operating Income
For the three months ended March 31,
2019, NOI from the REIT's properties decreased by
$0.3 million (or 1.6%) to
$16.8 million, compared to
$17.1 million in 2018. The decrease
in NOI is due to a decrease from the disposition of four
Louisiana properties of
$0.4 million, partially offset by an
increase in Same Property NOI of $0.2
million (or 1.0%). The Same Property increase of
$0.2 million is due to an increase in
Canada of $0.7 million (or 5.8%), a decrease in the U.S. of
US$0.8 million (or 21.8%) and the
change in foreign exchange rate which increased NOI by $0.3 million.
For the three months ended March 31,
2019, Proportionate NOI from the REIT's properties increased
by $1.7 million (or 5.7%) to $31.9
million, compared to $30.2
million in 2018. The increase in Proportionate NOI is due to
an increase in Same Property Proportionate NOI of $2.1 million (or 7.3%), partially offset by a
decrease from the disposition of four Louisiana properties of $0.4 million. The Same Property increase of
$2.1 million is due to an increase in
Canada of $0.7 million (or 5.9%), an increase in the U.S.
of US$0.4 million (or 3.1%) and the
change in foreign exchange rate which increased Proportionate NOI
by $1.0 million.
Funds From Operations
Basic FFO for the three months ended March 31, 2019, increased by $0.5 million, or 3.4%, to $15.2 million ($0.30 per Unit), compared to $14.7 million ($0.29 per Unit) in 2018. The increase is mainly
due to higher Proportionate NOI of $1.7
million, partially offset by an increase in interest expense
of $0.9 million (excluding
distributions on Class B LP Units and fair value adjustments on the
conversion option on the convertible debentures) and an increase in
trust expenses of $0.3 million. The
increase in interest expense of $0.9
million includes lower amortization of mark-to-market
adjustments of $0.2 million and a
$0.5 million loss on extinguishment
of mortgages payable in connection with the disposal of four
Louisiana properties.
Basic FFO per Unit for the three months ended March 31, 2019, increased by $0.01 to $0.30 per
Unit, compared to $0.29 per Unit in
2018. The loss on extinguishment of mortgage payable in connection
with the disposal of four Louisiana properties had a $0.01 per Unit negative impact and the change in
the foreign exchange rate had a $0.01
per Unit positive impact.
Net Income
Net income of $3.7 million for the
three months ended March 31, 2019,
decreased by $76.7 million compared
to $80.4 million in 2018. The
decrease in net income was primarily due to the following:
- A decrease in net operating income of $0.3 million;
- An increase in interest expense of $2.9
million;
- An increase in trust expenses of $0.3
million;
- A decrease in equity income from investment of $0.2 million;
- An increase in foreign exchange loss of $1.0 million;
- A decrease in net fair value gain on real estate properties of
$43.6 million;
- An increase in fair value loss on Class B LP Units of
$44.3 million; and
- A decrease in income taxes (current and deferred) of
$15.9 million.
The REIT's unaudited condensed consolidated financial statements
for the three months ended March 31,
2019, along with the Management's Discussion and Analysis
will be available on the REIT's website at www.morguard.com and
will be filed with SEDAR at www.sedar.com.
Non-IFRS Measures
The REIT's condensed consolidated financial statements are
prepared in accordance with International Financial Reporting
Standards ("IFRS"). The following measures, NOI, Proportionate NOI,
Same Property NOI, Same Property Proportionate NOI, FFO,
indebtedness, gross book value, indebtedness to gross book value
ratio, interest coverage ratio, indebtedness coverage ratio and
Proportionate Basis (collectively, the "non-IFRS measures") as well
as other measures discussed elsewhere in this press release, do not
have a standardized definition prescribed by IFRS and are,
therefore, unlikely to be comparable to similar measures presented
by other reporting issuers. The REIT uses these measures to better
assess the REIT's underlying performance and financial position and
provides these additional measures so that investors may do the
same. Details on non-IFRS measures are set out in the REIT's
Management's Discussion and Analysis for the three months ended
March 31, 2019 and available on the
REIT's profile on SEDAR at www.sedar.com.
Conference Call Details
Morguard North American Residential Real Estate Investment Trust
will hold a conference call on Thursday,
May 2, 2019 at 3:00 p.m.
(ET) to discuss the financial results for the three
months ended March 31, 2019 and
2018. To participate in the conference call, please dial
416-764-8688 or 1-888-390-0546. Please quote
conference ID 72740994.
About Morguard North American Residential REIT
The REIT is an unincorporated, open-ended real estate investment
trust established under and governed by the laws of the Province of
Ontario. The Units of the REIT trade on the Toronto Stock
Exchange under the ticker symbol MRG.UN. With a strategic
focus on the acquisition of high-quality multi-suite residential
properties in Canada and
the United States, the REIT
maximizes long-term Unit value through active asset and property
management. Its portfolio consists of 12,587 residential
suites (as of April 30, 2019) located
in Alberta, Ontario, Colorado, Texas, Louisiana, Illinois, Georgia, Florida, North
Carolina, Virginia and
Maryland with an appraised value
of approximately $2.9 billion at
March 31, 2019. For more information,
visit the REIT's website at www.morguard.com.
SOURCE Morguard North American Residential Real Estate
Investment Trust