Morguard Real Estate Investment Trust announces 2012 annual results

TSX: MRT.UN

MISSISSAUGA, ON, Feb. 28, 2013 /CNW/ - Morguard Real Estate Investment Trust ("the Trust") (TSX: MRT.UN) today is pleased to report 2012 annual operating results. These results have been prepared in accordance with International Financial Reporting Standards ("IFRS").

Highlights

Funds from Operations (FFO)

Funds from operations for the year ended December 31, 2012 was $83.4 million, up $3.9 million from the $79.5 million reported for the prior year. On a per unit diluted basis, funds from operations for the 2012 year was $1.40, as compared to $1.35 reported for the prior year.
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.

Net Operating Income (NOI)

Net operating income for the year ended December 31, 2012 was $142.4 million, up $8.6 million from the $133.8 million recorded in 2011.
Net operating income is an additional GAAP measure, but not a term defined under IFRS and may not be comparable to similar measures used by other Trusts. A calculation of net operating income is included.

Net Income

Net income for the year ended December 31, 2012 was $228.4 million, an increase of $70.1 million from the $ 158.3 million reported in 2011. The increase was significantly impacted by higher fair value gains on real estate properties recorded in 2012 and strong earnings performance from the Trust's property portfolio mainly resulting from the impact of acquisitions made by the Trust in late 2011.

Operations

The portfolio occupancy remains stable and was 96% at December 31, 2012, 95% at September 30, 2012, and at December 31, 2011.

Financial Results
FFO for the year ended December 31, 2012 was $83.4 million, up $3.9 million from the $79.5 million reported for the prior year. On a per unit diluted basis, funds from operations for the 2012 year was $1.40, as compared to $1.35 reported for the prior year.

Net income for the year ended December 31, 2012 was $228.4 million, an increase of $70.1 million from the $158.3 million reported in 2011. The increase was highly impacted by higher fair value gains on real estate properties recorded in 2012 and strong earnings performance from the Trust's property portfolio mainly resulting from the impact of acquisitions made by the Trust in late 2011.

At December 31, 2012, the Trust's total enterprise value was approximately $2.4 billion (based on the market closing price of the Trust's units on December 31, 2012 plus total debt outstanding). At December 31, 2012, the Trust had $1.2 billion of outstanding debt, equating to debt to total value ratio of 51.1%. The Trust's debt consisted of $995.8 million of fixed-rate debt with a weighted average interest rate of 4.9% and a weighted average term to maturity of 4.47 years, $54.9 million utilization of the operating line of credit, $30.6 million in notes payable and $144.4 million of 4.85% fixed-rate convertible debentures.

The Trust has a debt to gross book value of total assets ratio, as defined under the Declaration of Trust, of 45.3%.

Operating Results

Net Operating Income - Same Assets (in thousands of dollars)

(In thousands of dollars, except percentages)	2012	2011	Variance	%

Retail	$ 78,533	$ 78,096	$ 437	0.6
Office	47,704	48,833	(1,129)	-2.3
Other	4,788	5,101	(313)	-6.1
Net operating income - same assets ⁽¹⁾	131,025	132,030	(1,005)	-0.8

(1) Not a term defined under IFRS

The same-assets comparison consists of the 51 properties that were owned throughout both the current and comparative years. NOI, on a same-assets basis, decreased $1.0 million, or 0.8%, in relation to the comparable prior year.

Leasing Activity

The Trust's portfolio remains well leased. The portfolio occupancy remains stable and was 96% at December 31, 2012, 95% at September 30, 2012, and at December 31, 2011.

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 2012 Consolidated Financial Statement and Management's Discussion and Analysis along with its 2011 Annual Report are available on Morguard REIT's website at www.morguard.com and have been filed with SEDAR at www.sedar.com

ABOUT MORGUARD REAL ESTATE INVESTMENT TRUST
Morguard REIT is a closed-end real estate investment trust, which owns a diversified portfolio of 54 retail, office and mixed-use properties in Canada with a book value of $2.7 billion and approximately 9.1 million square feet of leaseable space.

Consolidated Balance Sheet

As at	December 31,	December 31,
(in thousands of Canadian dollars)	2012	2011

Assets
Real estate properties	$ 2,675,240	$ 2,119,084
Amounts receivable	14,262	8,851
Other assets	1,531	1,321
Cash and cash equivalents	15,152	8,134
	$ 2,706,185	$ 2,137,390

Liabilities
Mortgages and bonds payable	$ 995,776	$ 799,672
Convertible debentures payable	144,356	86,457
Accounts payable and other liabilities	49,807	34,496
Notes payable	30,610	—
Bank indebtedness	54,853	43,852
	1,275,402	964,477

Unitholders' Equity	1,430,783	1,172,913
	$ 2,706,185	$ 2,137,390

Consolidated Statements of Income and Comprehensive Income

(In thousands of Canadian dollars, except per-unit amounts)
For the years ended December 31		2012	2011

Revenue from real estate properties		$ 252,816	$ 235,693
Property operating expenses		102,184	94,238
Property management fees		8,245	7,676
Net operating income		142,387	133,779

Interest expense		51,249	50,689
General and administrative		5,165	4,682
Amortization expense		43	48
Other (income) / expense		(52)	5
Income before fair value gains on real estate properties		85,982	78,355

Fair value gains on real estate properties		142,464	79,947

Net income for the year		$ 228,446	$ 158,302

Other comprehensive income
Amortization - cash flow hedge		972	951
Comprehensive income		$ 229,418	$ 159,253

Net income per unit
	Basic	$ 3.82	$ 2.77
	Diluted	$ 3.81	$ 2.62

Reconciliation of Net Income to Funds from Operations

(in thousands of Canadian dollars,except per-unit amounts)
			2012	2011

Net income for the year			$ 228,446	$ 158,302

Add/(deduct) :
	Accretion of convertible debentures		(2,582)	1,121
	Fair value gains on real estate properties		(142,464)	(79,947)
Funds from operations			$ 83,400	$ 79,476

Funds from operations per unit:
		Basic	$1.40	$1.39
		Diluted	$1.40	$1.35