MISSISSAUGA, ON, May 2, 2023
/CNW/ - Morguard Corporation ("Morguard" or the "Company") (TSX:
MRC) is pleased to announce its financial results for the three
months ended March 31, 2023.
Reporting Highlights
- Normalized funds from operations ("Normalized FFO") was
$50.3 million, or $4.56 per common share, for the three months
ended March 31, 2023. This represents
an increase of $7.4 million, or
17.2%, compared to $42.9 million, or
$3.86 per common share for the same
period in 2022.
- Net income decreased by $263.1
million to a net loss of $31.4
million for the three months ended March 31, 2023, compared to net income of
$231.7 million for the same period in
2022, primarily due to a decrease in non-cash fair value gain,
partly offset by a decrease in deferred tax expense and an increase
in net operating income.
- Total revenue from real estate properties increased by
$23.8 million, or 10.7%, to
$246.4 million for the three months
ended March 31, 2023, compared to
$222.6 million for the same period in
2022.
- Total revenue from hotel properties increased by $3.1 million, or 11.1%, to $31.2 million for the three months ended
March 31, 2023, compared to
$28.0 million for the same period in
2022.
- Adjusted NOI increased by $20.5
million, or 17.7%, to $136.2
million for the three months ended March 31, 2023, compared to $115.7 million for the same period in 2022.
Operational and Balance Sheet Highlights
- During the first quarter, the Company acquired a multi-suite
residential property comprising 240 suites located in Chicago, Illinois, for a purchase price of
$113.0 million (US$83.2), including closing costs.
- Morguard Residential REIT issued $56.0
million of 6.0% convertible unsecured subordinated
debentures, and fully repaid $85.5
million of 4.5% convertible unsecured subordinated
debentures.
- During the quarter, occupancy was strong and consistent across
all commercial and residential asset classes, supporting the
Company's business objective of generating stable and increasing
cash flow through its diversified portfolio of real estate
assets.
- As at March 31, 2023, the
Company's total assets were $11.8
billion, compared to $11.7
billion at December 31,
2022.
Financial Highlights
For the three months
ended March 31
|
|
|
(in thousands of
dollars)
|
2023
|
2022
|
Revenue from real
estate properties
|
$246,372
|
$222,593
|
Revenue from hotel
properties
|
31,159
|
28,051
|
Management and advisory
fees
|
10,150
|
10,262
|
Interest and other
income
|
5,096
|
4,031
|
Total
revenue
|
$292,777
|
$264,937
|
|
|
|
Revenue from real
estate properties
|
$246,372
|
$222,593
|
Revenue from hotel
properties
|
31,159
|
28,051
|
Property operating
expenses
|
(156,829)
|
(142,750)
|
Hotel operating
expenses
|
(25,583)
|
(27,803)
|
Net operating
income
|
$95,119
|
$80,091
|
|
|
|
Net income (loss)
attributable to common shareholders
|
($34,690)
|
$206,269
|
Net income (loss) per
common share – basic and diluted
|
($3.15)
|
$18.58
|
|
|
|
Funds from
operations(1)
|
$32,652
|
$41,867
|
FFO per common share –
basic and diluted(1)
|
$2.96
|
$3.77
|
|
|
|
Normalized funds from
operations(1)
|
$50,266
|
$42,871
|
Normalized FFO per
common share – basic and diluted(1)
|
$4.56
|
$3.86
|
(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.
|
Specified Financial Measures
The Company 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 for non-GAAP financial
measures. 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 Company's Management's Discussion and Analysis for the three
months ended March 31, 2023 and
available on the Company'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
Company's management uses these measures to aid in assessing
the Company's underlying core performance and provides these
additional measures so that investors may do the same.
Management believes that the non-GAAP financial measures described
below, which supplement the IFRS measures, provide readers
with a more comprehensive understanding of management's perspective
on the Company's operating results and performance.
A reconciliation of each non-GAAP financial measure referred to
in this earnings release is provided below.
Adjusted Net Operating Income ("Adjusted NOI")
Adjusted NOI is an important measure in evaluating the operating
performance of the Company's real estate properties and is a
key input in determining the fair value of the Company's
properties. Adjusted NOI represents NOI (an IFRS measure)
adjusted to exclude the impact of realty taxes accounted for under
IFRIC 21 as noted below.
NOI includes the impact of realty taxes accounted for under the
International Financial Reporting Interpretations Committee
("IFRIC") Interpretation 21, Levies ("IFRIC 21"). IFRIC 21 states
that an entity recognizes a levy liability in accordance with
the relevant legislation. The obligating event for realty taxes for
the U.S. municipalities in which the REIT operates is
ownership of the property on January
1 of each year for which the tax is imposed and, as a
result, the REIT records the entire annual realty tax expense
for its U.S. properties on January 1,
except for U.S. properties acquired during the year in which
the realty taxes are not recorded in the year of acquisition.
Adjusted NOI records realty taxes for all properties on a pro
rata basis over the entire fiscal year.
The following table provides a reconciliation of Adjusted NOI to
its closely related financial statement measurement for the
following periods:
For the three months
ended March 31
|
|
(in thousands of
dollars)
|
2023
|
2022
|
Multi-suite
residential
|
$64,634
|
$54,779
|
Retail
|
32,965
|
27,398
|
Office
|
32,993
|
33,252
|
Hotel
|
5,576
|
248
|
Adjusted
NOI
|
136,168
|
115,677
|
IFRIC 21 adjustment -
multi-suite residential
|
(35,781)
|
(31,732)
|
IFRIC 21 adjustment -
retail
|
(5,268)
|
(3,854)
|
NOI
|
$95,119
|
$80,091
|
(1) Includes industrial
properties with NOI for the three months ended March 31, 2023 of
$1,507 (2022 - $2,120).
|
Funds From Operations and Normalized FFO
FFO (and FFO per common share) are non-GAAP financial measures
widely used as a real estate industry standard that supplement
net income (loss) and evaluates operating performance but is not
indicative of funds available to meet the Company's cash
requirements. FFO can assist with comparisons of the operating
performance of the Company's real estate between periods and
relative to other real estate entities. FFO is computed in
accordance with the current definition of the Real Property
Association of Canada ("REALPAC")
and is defined as net income (loss) attributable to common
shareholders adjusted for: (i) deferred income taxes, (ii)
unrealized changes in the fair value of real estate
properties, (iii) realty taxes accounted for under IFRIC 21, (iv)
internal leasing costs, (v) gains/losses from the sale of real
estate or hotel property (including income tax on the sale of real
estate or hotel property), (vi) transaction costs expensed as
a result of a business combination, (vii) gains/losses on business
combination, (viii) the non-controlling interest of Morguard
North American Residential REIT, (ix) amortization of depreciable
real estate assets (including right-of-use assets), *
amortization of intangible assets, (xi) principal payments of lease
liabilities, (xii) FFO adjustments for equity-accounted
investments, (xiii) provision for impairment, (xiv) other fair
value adjustments and non-cash items. The Company considers
FFO to be a useful measure for reviewing its
comparative operating and financial performance. FFO per
common share is calculated as FFO divided by the weighted average
number of common shares outstanding during the period.
Normalized FFO (and normalized FFO per common share) is computed
as FFO excluding non-recurring items on a net of tax basis and
other fair value adjustments. The Company believes it is useful to
provide an analysis of Normalized FFO which excludes
non-recurring items on a net of tax basis and other fair value
adjustments excluded from REALPAC's definition of FFO
described above.
The following tables provide a reconciliation of FFO and
Normalized FFO to its closely related financial statement
measurement for the following periods:
For the three months
ended March 31
|
|
(in thousands of
dollars)
|
2023
|
2022
|
Multi-suite
residential
|
$64,634
|
$54,779
|
Retail
|
32,965
|
27,398
|
Office
|
32,993
|
33,252
|
Hotel
|
5,576
|
248
|
Adjusted
NOI
|
136,168
|
115,677
|
Other
Revenue
|
|
|
Management and advisory
fees
|
10,150
|
10,262
|
Interest and other
income
|
5,096
|
4,031
|
Equity-accounted
FFO
|
1,388
|
1,162
|
|
16,634
|
15,455
|
Expenses and
Other
|
|
|
Interest
|
(62,727)
|
(54,884)
|
Principal repayment of
lease liabilities
|
(410)
|
(376)
|
Property management and
corporate
|
(21,906)
|
(20,514)
|
Internal leasing
costs
|
642
|
721
|
Amortization of capital
assets
|
(331)
|
(391)
|
Current income
taxes
|
138
|
(551)
|
Non-controlling
interests' share of FFO
|
(16,111)
|
(14,047)
|
Unrealized changes in
the fair value of financial instruments
|
(18,576)
|
(1,358)
|
Other income
(expense)
|
(869)
|
2,135
|
FFO
|
$32,652
|
$41,867
|
FFO per common share
amounts – basic and diluted
|
$2.96
|
$3.77
|
Weighted average number
of common shares outstanding (in thousands):
|
Basic and
diluted
|
11,022
|
11,101
|
For the three months
ended March 31
|
|
(in thousands of
dollars)
|
2023
|
2022
|
FFO (from
above)
|
$32,652
|
$41,867
|
Add/(deduct):
|
|
|
Unrealized changes in
the fair value of financial instruments
|
18,576
|
1,358
|
SARs plan increase
(decrease) in compensation expense
|
(675)
|
450
|
Lease cancellation fee
and other
|
(344)
|
(952)
|
Tax effect of above
adjustments
|
57
|
148
|
Normalized
FFO
|
$50,266
|
$42,871
|
Per common share
amounts – basic and diluted
|
$4.56
|
$3.86
|
Second Quarter Dividend
The Board of Directors of Morguard
Corporation announced that the second quarterly, eligible dividend
of 2023 in the amount of $0.15 per
common share will be paid on June 30,
2023, to shareholders of record at the close of business on
June 15, 2023.
The Company's unaudited condensed financial statements for the
three months ended March 31, 2023,
along with Management's Discussion and Analysis will be available
on the Company's website at www.morguard.com and will be filed
with SEDAR at www.sedar.com.
About Morguard Corporation
Morguard Corporation is a real estate company, with total assets
owned and under management valued at $18.8
billion. As at May 2, 2023,
Morguard owns a diversified portfolio of 178 multi-suite
residential, retail, office, industrial and hotel properties
comprised of 17,566 residential suites, approximately 17.1 million
square feet of commercial leasable space and 2,907 hotel rooms.
Morguard also currently owns a 64.2% interest in Morguard Real
Estate Investment Trust and a 44.9% effective interest in Morguard
North American Residential Real Estate Investment Trust. Morguard
also provides advisory and management services to institutional and
other investors. For more information, visit the Company's website
at www.morguard.com.
SOURCE Morguard Corporation