MISSISSAUGA, ON, Feb. 16, 2022 /CNW/ - Morguard Real Estate
Investment Trust ("the Trust") (TSX: MRT.UN) today is pleased
to announce its 2021 Fourth Quarter and Annual Results.
Summary of
Operations
|
Three Months Ended
December 31,
|
Year Ended December
31,
|
In thousands of
dollars, except per-unit amounts
|
2021
|
2020
|
2021
|
2020
|
Revenue from real
estate properties
|
$63,235
|
$67,495
|
$241,440
|
$253,764
|
Net operating
income
|
31,689
|
33,253
|
122,129
|
123,778
|
Net
(loss)/income
|
(796)
|
(67,934)
|
4,885
|
(357,419)
|
Funds from
operations 1
|
18,001
|
19,447
|
68,944
|
66,924
|
Adjusted funds
from operations 1,2
|
13,912
|
16,350
|
51,488
|
51,564
|
Amounts presented
on a per unit basis
|
|
|
|
|
Net (loss)/income –
basic
|
($0.01)
|
($1.07)
|
$0.08
|
($5.75)
|
Net (loss)/income –
diluted
|
($0.01)
|
($1.07)
|
$0.08
|
($5.75)
|
Funds from operations
– basic 1
|
$0.28
|
$0.31
|
$1.07
|
$1.08
|
Funds from operations
– diluted 1
|
$0.26
|
$0.30
|
$1.05
|
$1.06
|
Adjusted funds from
operations – basic 1,2
|
$0.22
|
$0.26
|
$0.80
|
$0.83
|
Adjusted funds from
operations – diluted 1,2
|
$0.21
|
$0.25
|
$0.80
|
$0.83
|
|
|
(1)
|
Represents a non-GAAP
financial measure/ratio that does not have any standardized meaning
prescribed by IFRS and is not necessarily comparable to similar
measures presented by other reporting issuers in similar or
different industries. This measure should be considered as
supplemental in nature and not as substitutes for related financial
information prepared in accordance with IFRS.
|
(2)
|
The Trust uses
normalized productive capacity maintenance expenditures to
calculate adjusted funds from operations.
|
SELECTED FINANCIAL INFORMATION
The table below sets
forth selected financial data relating to the Trust's 3 months and
fiscal years ended December 31, 2021 and 2020. This financial
data is derived from the Trust's consolidated statements which are
prepared in accordance with IFRS.
|
Three Months Ended
December 31,
|
Year Ended December
31,
|
For the year ended
December 31,
|
2021
|
2020
|
2021
|
2020
|
Revenue from real
estate properties
|
$63,235
|
$67,495
|
$241,440
|
$253,764
|
Bad debt
expense
|
(1,523)
|
(4,750)
|
(1,184)
|
(14,857)
|
Property operating
expenses
|
(16,423)
|
(15,916)
|
(61,213)
|
(59,314)
|
Property
taxes
|
(11,563)
|
(11,680)
|
(48,624)
|
(47,822)
|
Property management
fees
|
(2,037)
|
(1,896)
|
(8,290)
|
(7,993)
|
Net operating
income
|
31,689
|
33,253
|
122,129
|
123,778
|
Interest
expense
|
(13,313)
|
(13,712)
|
(53,281)
|
(56,376)
|
General and
administrative
|
(865)
|
(828)
|
(3,845)
|
(3,587)
|
Other
items
|
14
|
(20)
|
1,934
|
(82)
|
Fair value losses on
real estate properties
|
(18,306)
|
(85,804)
|
(60,974)
|
(419,766)
|
Net loss from
equity-accounted investment
|
(15)
|
(823)
|
(1,078)
|
(1,386)
|
Net
(loss)/income
|
($796)
|
($67,934)
|
$4,885
|
($357,419)
|
CONSOLIDATED OPERATING HIGHLIGHTS
Revenue from real
estate properties includes contracted rent from tenants along with
recoveries of property expenses (including property taxes).
The following is an analysis of revenue from real estate
properties by segment:
For the year ended
December
31,
|
2021
|
2020
|
Industrial
|
$3,649
|
$3,479
|
Office –
Single-/dual-tenant buildings
|
79,199
|
80,392
|
Office – Multi-tenant
buildings
|
27,610
|
29,787
|
Retail – Community
strip centres
|
37,005
|
37,701
|
Retail – Enclosed
regional centres
|
93,977
|
102,405
|
Total
|
$241,440
|
$253,764
|
The decline in enclosed regional centres revenue is due to the
enclosed mall tenant failures in 2020 and subsequent restructured
rent arrangements provided to certain retail tenants that are
struggling as part of the COVID-19 pandemic.
The following is an analysis of net operating income by asset
type:
For the year ended
December 31,
|
2021
|
2020
|
Enclosed regional
centres
|
$38,067
|
$39,347
|
Community strip
centres
|
23,272
|
23,107
|
Subtotal –
retail
|
61,339
|
62,454
|
|
|
|
Single-/dual-tenant
buildings
|
46,670
|
46,471
|
Multi-tenant
buildings
|
12,039
|
13,052
|
Subtotal –
office
|
58,709
|
59,523
|
|
|
|
Industrial
|
2,081
|
1,801
|
Net operating
income
|
$122,129
|
$123,778
|
The following is an analysis of revenue from real estate
properties by revenue type:
For the year ended
December 31,
|
2021
|
2020
|
Rental
revenue
|
$151,038
|
$155,433
|
CAM
recoveries
|
42,853
|
50,369
|
Property tax and
insurance recoveries
|
36,469
|
39,073
|
Other revenue and
lease cancellation fees
|
7,946
|
5,609
|
Parking
revenue
|
3,887
|
4,168
|
Amortized
rents
|
(753)
|
(888)
|
|
$241,440
|
$253,764
|
Included in other revenue and lease cancellation fees in the
twelve-month period ending December 31, 2021, is $2.3 million received from Lowe's at Pine Centre
in order to facilitate the Save-on-Foods development.
Property operating expenses include costs related to interior
and exterior maintenance, insurance and utilities. Property
operating expenses (excluding bad debt expense) for the year ended
December 31, 2021, increased 3.2% to
$61.2 million from $59.3 million for the same period in 2020.
This increase is primarily due to more normalized operating
expenses in 2021 as compared to 2020 when sharp reductions occurred
due to the pandemic.
Net operating income for the year ended December 31, 2021, decreased 1.3% as compared to
2020. This decrease was the result of restructured rent
arrangements provided to certain retail tenants that are struggling
as part of the COVID-19 pandemic, offset by an increase of
$2.3 million in lease cancellation
fees.
Interest expense for the year ended December 31, 2021, decreased 5.5% to $53.3 million from $56.4
million for the same period in 2020. This decline is
primarily due to the decline in the Trust's weighted average
interest rate on mortgages to 3.6% from 3.8% in the third quarter
of 2020, in addition to a $53.2
million reduction in overall debt on a year over year
basis.
The Trust records its income producing properties at fair value
in accordance with IFRS. The financial results include fair value
adjustments that are more significant than previous years. These
adjustments are a result of the Trust's regular quarterly IFRS fair
value process. In accordance with this policy, the following fair
value adjustments by segment have been recorded:
For the year ended
December 31,
|
2021
|
2020
|
Retail – enclosed
regional centres
|
($37,190)
|
($308,432)
|
Retail – community
strip centres
|
370
|
(16,439)
|
Office
|
(32,551)
|
(94,838)
|
Industrial
|
8,397
|
(57)
|
|
($60,974)
|
($419,766)
|
Reported net income for year ended December 31, 2021, was $4.9 million as compared to loss of $357.4 million in 2020. This change is due
to the fair value losses recorded in 2020, as described above.
LIQUIDITY AND FINANCING UPDATE
On December 7, 2021, the Trust issued $159.0 million principal amount of 5.25%
convertible unsecured subordinated debentures maturing on
December 31, 2026. These proceeds
were used to redeem the $175.0
million in convertible debentures issued in 2016.
The Trust has available liquidity of $184.8 million as of December 31, 2021 and also has a unencumbered
asset pool of $314.6 million in order
to raise necessary capital, if required. This compares to
liquidity as of December 31, 2020
which was $141.9
million.
FUNDS FROM OPERATIONS AND ADJUSTED FUNDS FROM
OPERATIONS
The Trust presents FFO and AFFO in accordance
with the current definition of the Real Property Association of
Canada ("REALpac") as follows:
FUNDS FROM OPERATIONS AND ADJUSTED FUNDS FROM
OPERATIONS
|
Three Months Ended
December 31,
|
Year Ended December
31,
|
In thousands of
dollars
|
2021
|
2020
|
2021
|
2020
|
Net
(loss)/income:
|
($796)
|
($67,934)
|
$4,885
|
($357,419)
|
Adjustments:
|
|
|
|
|
Fair value losses on
real estate properties
|
18,820
|
87,393
|
64,129
|
424,384
|
Amortization of
right-of-use assets
|
20
|
20
|
83
|
82
|
Payment of lease
liabilities, net
|
(43)
|
(32)
|
(153)
|
(123)
|
Funds from
operations - basic
|
18,001
|
19,447
|
68,944
|
66,924
|
Interest expense on
convertible debentures
|
2,287
|
1,985
|
8,177
|
7,875
|
Funds from
operations - diluted
|
$20,288
|
$21,432
|
$77,121
|
$74,799
|
|
|
|
|
|
|
|
|
|
|
Funds from operations
- basic
|
$18,001
|
$19,447
|
$68,944
|
$66,924
|
Adjustments:
|
|
|
|
|
Amortized stepped
rents
|
536
|
28
|
1,044
|
265
|
Normalized
PCME
|
(4,625)
|
(3,125)
|
(18,500)
|
(15,625)
|
Adjusted funds
from operations - basis
|
13,912
|
16,350
|
51,488
|
51,564
|
Interest expense on
convertible debentures
|
2,287
|
1,985
|
8,177
|
7,875
|
Adjusted funds
from operations - diluted
|
$16,199
|
$18,335
|
$59,665
|
$59,439
|
SPECIFIED FINANICAL
MEASURES
The Trust reports its financial results in
accordance with International Financial Reporting Standards
("IFRS"). However, this earnings release also uses specified
financial measures that are not defined by IFRS which follow the
disclosure requirements established by National Instrument 52-112
Non-GAAP and Other Financial Measures Disclosure. Specified
financial measures are categorized as non-GAAP financial measures,
non-GAAP ratios, and other financial measures. Additional details
on specified financial measures including supplementary financial
measures, capital management measures and total segment measures
are set out in the Trust's Management's Discussion and Analysis for
the year ended December 31, 2021 and
available on the Trust's profile on SEDAR at www.sedar.com.
The following Non-GAAP financial measures do not have any
standardized meaning prescribed by IFRS and are not necessarily
comparable to similar measures presented by other reporting issuers
in similar or different industries. These measures should be
considered as supplemental in nature and not as substitutes for
related financial information prepared in accordance with IFRS. The
Trust's management uses these measures to aid in assessing the
Trust's underlying core performance and provides these additional
measures so that investors may do the same. Management believes
that the non-GAAP financial measures, which supplement the IFRS
measures, provide readers with a more comprehensive understanding
of management's perspective on the Trust's operating results and
performance.
FUNDS FROM OPERATIONS ("FFO")
FFO is a non-GAAP
measure widely used as a real estate industry standard that
supplements net income and evaluates operating performance but is
not indicative of funds available to meet the Trust's cash
requirements. FFO can assist with comparisons of the operating
performance of the Trust's real estate between periods and relative
to other real estate entities. FFO is computed by the Trust in
accordance with the current definition of the Real Property
Association of Canada ("REALpac")
and is defined as net income adjusted for fair value changes on
real estate properties and gains/(losses) on the sale of real
estate properties. The Trust considers FFO to be a useful measure
for reviewing its comparative operating and financial
performance.
ADJUSTED FUNDS FROM OPERATIONS ("AFFO")
AFFO is a
non-GAAP measure that was developed to be a recurring economic
earnings measure for real estate entities. The Trust presents AFFO
in accordance with the current definition of the REALpac. The Trust
defines AFFO as FFO adjusted for straight-line rent and productive
capacity maintenance expenditures ("PCME"). AFFO should not be
interpreted as an indicator of cash generated from operating
activities as it does not consider changes in working capital.
Financial Statements and Management's Discussion and Analysis
The
Trust's Q4 2021 Consolidated Financial Statements and Management's
Discussion and Analysis will be made available on the Trust's
website at www.morguard.com and have been filed with SEDAR at
www.sedar.com.
Conference Call Details:
Date:
|
Thursday, February
17, 2022 4:00 p.m. (ET)
|
Conference Call #:
|
416-764-8688 or 1-888-390-0546
|
Conference ID #:
|
47659057
|
About Morguard Real Estate Investment Trust
The
Trust is a closed-end real estate investment trust, which owns a
diversified portfolio of 46 retail, office and industrial income
producing properties in Canada
with a book value of $2.5 billion and
approximately 8.3 million square feet of leasable space.
SOURCE Morguard Real Estate Investment Trust