MISSISSAUGA, ON, Aug. 5, 2015 /CNW/ - Morguard Real Estate
Investment Trust ("the Trust") (TSX: MRT.UN) today is pleased to
announce its financial results for the three and six months ended
June 30, 2015 ("Q2"). These results
have been prepared in accordance with International Financial
Reporting Standards ("IFRS").
The Trust's results for the second quarter reflect continuing
activities around the re-leasing and repositioning of its Target
Canada Corporation ("Target") locations. During the second
quarter the Trust successfully re-negotiated its Target leases at
Pine Centre, Southdale Shopping Centre and Aurora Centre. The
replacement of the Target stores with Lowes, Walmart and Canadian
Tire significantly improve the tenant strength and will help to
drive increased traffic to these centres. The successful
re-leasing of the Target space to Lowes at Pine Centre was
especially beneficial to the Trust, as this one location did not
have a rental guarantee from Target U.S. At The Centre at
Circle and 8th, the Trust successfully acquired the
Target lease to maintain control of the space in light of internal
discussions to improve the centre. At Cambridge Centre,
Brandon Shoppers Mall and Prairie Mall, Target disclaimed these
leases. The Trust is currently executing on re-merchandising the
Target units into multi-unit space; demanding higher rents and
improved returns on the funds to be re-invested. The space
vacated by Target equates to the early termination of 379,500
square feet and as a result, the Trust's retail occupancy has
decreased to 88%. Adjusting for the vacant Target space, the
Trust's retail portfolio occupancy rate has held firm at 96%.
The Trust has elected to stop recording revenue on the disclaimed
leases until all outstanding amounts under the Target U.S.
guarantee have been received. This has resulted in a negative
impact on the Trust's second quarter net operating income of
$0.4 million.
The renovation of St. Laurent Centre is complete. During
the term of the renovation, the centre experienced an increase in
vacancy due to the early termination of some fashion tenants and
the bankruptcy of Everest College. The timing of the
renovation puts the Trust in a better position to replace these
tenancies. During the second quarter of 2014 the Trust
accelerated the recovery of certain maintenance items at the St.
Laurent Centre to offset savings in other areas. This
acceleration improved the Trust's net operating income in
2014. This same acceleration was not required during
2015. As a result, the Trust's quarter over quarter net
operating income is lower by $0.9
million.
Putting the Target and St. Laurent Centre challenges aside, the
Trust's results for the second quarter 2015 versus the second
quarter 2014 were largely unchanged. The exit of Target from
our centres has had no impact on sales. In addition to the
renegotiation of the Target spaces the Trust completed over 385,000
square feet of leasing. The Trust was also able to close on
two more of the properties held for sale. These proceeds were
largely used to buy back units of the Trust. During the
second quarter the Trust repurchased 362,119 units.
Highlights from Management's Discussion and Analysis
- Funds from operations ("FFO") for the three and six months
ended June 30, 2015 was $25.1 million and $52.2
million, respectively, as compared to $27.0 million and $53.1
million, respectively, for the same periods in 2014.
- On a per unit diluted basis, FFO for the three and six months
ended June 30, 2015 was $0.40 and $0.82,
respectively, as compared to $0.42
and $0.83, respectively, for the same
periods in 2014.
- Net operating income from same assets for the three and six
months ended June 30, 2015 was
$40.3 million and $81.9 million, respectively, as compared to
$42.1 million and $83.1 million, respectively, for the same periods
in 2014.
- Acquisitions of Citadel West and 301 Laurier Avenue in 2014 add
$0.3 million and $0.7 million, respectively, to net operating
income for the three months and six months ended June 30, 2015.
- Dispositions of 5591-5631 Finch and 20-24 Lesmill completed
during Q2 2015, 350 Sparks and 361 Queen in February 2015 and Cedar Pointe Business Park in
July 2014, along with other assets
re-classified to "held for sale", reduces net operating income by
$1.1 million and $1.8 million, respectively, during the three and
six months ended June, 30, 2015.
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 June 30, 2015, 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 5.5 years, $147.1 million of 4.85% fixed-rate convertible
debentures and $5.4 million debt
associated with real estate properties held for sale. The
Trust has a debt to total assets ratio of 45.3%.
- On March 2, 2015, the Trust
entered into an agreement to sell 5591-5631 Finch for a total price
of $10.0 million. On April 1, 2015, the Trust completed the sale of
this property for net proceeds of $3.3
million, after settlement of mortgage and selling costs.
- On December 10, 2014, the Trust
entered into an agreement to sell 20-24 Lesmill for a total price
of $6.4 million. On May 15, 2015, the Trust completed the sale of
this property, for a total price of $6.4
million, less selling costs.
- The Trust's 2015 NCIB participation to-date totals 362,119
units, which were purchased for cancellation.
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 Management's Discussion and
Analysis
The Trust's Q2 2015 Condensed Consolidated
Financial Statements and Management's Discussion and Analysis along
with its 2014 Annual Report are available on the Trust's website at
www.morguard.com and have been filed with SEDAR at
www.sedar.com
Conference Call Details:
Date:
|
August 7, 2015 at
12:00 p.m. (ET)
|
Conference
Call#:
|
647-427-7450 or
1-888-231-8191
|
Conference
ID#:
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77126797
|
About Morguard Real Estate Investment Trust
The Trust
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.
SOURCE Morguard Real Estate Investment Trust