MISSISSAUGA, ON, Feb. 11,
2025 /CNW/ - Morguard North American Residential REIT
(the "REIT") (TSX: MRG.UN) today announced its financial results
for the year ended December 31,
2024.
Highlights
The REIT is reporting performance of:
- Net operating income ("NOI") of $181.4
million for the year ended December
31, 2024, an increase of $1.2
million, or 0.7% compared to 2023. The change in foreign
exchange rate increased NOI by $0.4
million.
- Same Property Proportionate NOI in Canada increased by $4.5 million (or 7.2%), and in the U.S. decreased
by US$3.4 million (or 4.0%), compared
to 2023.
- Net income of $99.4 million for
the year ended December 31, 2024, a
decrease of $85.9 million, or 46.4%
compared to 2023, predominantly due to a lower net fair value
gain.
- Basic funds from operations ("FFO") of $1.65 per Unit for the year ended December 31, 2024, as compared to the
$1.65 per Unit in 2023.
- Basic FFO of $89.9 million for
the year ended December 31, 2024, a
decrease of $2.1 million, or 2.3%
over the same period in 2023.
The REIT is reporting the following corporate and portfolio
highlights:
- During the year ended December 31,
2024, the REIT completed the refinancing of five Canadian
properties located in Mississauga,
Ontario, providing gross mortgage proceeds of $319.0 million at a weighted average interest
rate of 4.34%. The maturing mortgages had a balance at maturity of
$141.0 million at a weighted average
interest rate of 3.29%, resulting in net proceeds of $178.0 million, before financing costs.
- As at December 31, 2024, average
monthly rent ("AMR") in Canada
increased by 5.9% compared to December 31,
2023, while occupancy remained strong and stable at 97.2% at
December 31, 2024, compared to 98.7%
at December 31, 2023.
- As at December 31, 2024, AMR in
the U.S., increased by 1.7% compared to December 31, 2023, while occupancy was 93.8% at
December 31, 2024, compared to 94.2%
at December 31, 2023.
- As at December 31, 2024,
indebtedness to gross book value ratio of 39.7%, compared to 38.7%
as at December 31, 2023.
Financial and Operational Highlights
|
As at December
31
|
|
|
|
(In thousands of
dollars, except as otherwise noted)
|
2024
|
2023
|
|
Operational
Information
|
|
|
|
Number of
properties
|
43
|
43
|
|
Total suites
|
13,089
|
13,089
|
|
|
|
|
Occupancy percentage –
Canada
|
97.2 %
|
98.7 %
|
|
Occupancy percentage –
U.S.
|
93.8 %
|
94.2 %
|
|
Average monthly rent -
Canada (in actual dollars)
|
$1,772
|
$1,674
|
|
Average monthly rent -
U.S. (in actual U.S. dollars)
|
US$1,907
|
US$1,875
|
|
|
|
|
Summary of Financial
Information
|
|
|
|
Gross book
value(1)
|
$4,571,631
|
$4,095,931
|
|
Indebtedness(1)
|
$1,816,598
|
$1,583,311
|
|
|
|
|
Indebtedness to gross
book value ratio(1)
|
39.7 %
|
38.7 %
|
|
Weighted average
mortgage interest rate
|
3.88 %
|
3.72 %
|
|
Weighted average term
to maturity on mortgages payable (years)
|
5.2
|
4.9
|
|
(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 a substitute for related
financial information prepared in accordance with
IFRS.
|
|
Three months
ended
|
Year
ended
|
|
December
31
|
December
31
|
|
(In thousands of
dollars, except per Unit amounts)
|
2024
|
2023
|
2024
|
2023
|
|
Summary of Financial
Information
|
|
|
|
|
|
Revenue from real
estate properties
|
$87,888
|
$85,000
|
$344,188
|
$331,620
|
|
NOI
|
$54,153
|
$55,020
|
$181,420
|
$180,240
|
|
Proportionate
NOI(1)
|
$45,554
|
$47,675
|
$181,211
|
$178,756
|
|
Same Property
Proportionate NOI(1)
|
$45,554
|
$47,675
|
$176,852
|
$175,327
|
|
NOI margin –
IFRS
|
61.6 %
|
64.7 %
|
52.7 %
|
54.4 %
|
|
NOI margin –
Proportionate(1)
|
52.2 %
|
56.4 %
|
53.0 %
|
54.2 %
|
|
Net income
|
$42,878
|
$24,366
|
$99,396
|
$185,281
|
|
|
|
|
|
|
FFO –
basic(1)
|
$22,788
|
$24,341
|
$88,859
|
$91,942
|
|
FFO –
diluted(1)
|
$23,628
|
$25,188
|
$93,219
|
$95,550
|
|
FFO per Unit –
basic(1)
|
$0.42
|
$0.44
|
$1.65
|
$1.65
|
|
FFO per Unit –
diluted(1)
|
$0.42
|
$0.44
|
$1.64
|
$1.63
|
|
Distributions per
Unit
|
$0.18833
|
$0.18334
|
$0.74336
|
$0.72334
|
|
FFO payout
ratio(1)
|
44.3 %
|
41.4 %
|
45.0 %
|
43.8 %
|
|
Weighted average number
of Units outstanding (in thousands):
|
|
|
|
|
|
Basic
|
53,649
|
54,991
|
54,387
|
55,662
|
|
Diluted
|
55,968
|
57,310
|
56,706
|
58,501
|
|
(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 a substitute for related
financial information prepared in accordance with
IFRS.
|
For the three months ended December
31, 2024, NOI from the REIT's properties decreased by
$0.8 million (or 1.6%) to
$54.2 million, compared to
$55.0 million in 2023. The decrease
in NOI is due to an increase in Canada of $0.8
million (or 4.9%), a decrease in the U.S. of US$1.5 million (or 5.4%), and the change in
foreign exchange rate which decreased NOI by $0.1 million.
For the three months ended December 31,
2024, Proportionate NOI from the REIT's properties decreased
by $2.1 million (or 4.4%) to
$45.6 million, compared to
$47.7 million in 2023. The decrease
in Proportionate NOI is due to an increase in Canada of $0.8
million (or 4.9%), a decrease in the U.S. of US$2.7 million (or 11.7%), and the change in
foreign exchange rate which increased Proportionate NOI by
$0.2 million, due to the following
factors:
- In Canada, higher gross rental
revenue (5.8%) resulting from an increase in AMR, net of
higher vacancy, was partially offset by an increase in operating
expenses of $0.2 million (or 2.2%),
primarily from higher operating costs, net of a decrease in
utilities.
- In the U.S., an increase in operating expenses of US$2.8 million (or 14.6%), partially offset by an
increase in revenue of US$0.1 million
(or 0.1%) from higher gross rental revenue (1.7%) resulting from an
increase in AMR, net of higher vacancy. The increase in
operating costs is primarily due to higher realty taxes of
US$2.0 million (or 50.8%) from an
increase in assessed market value at certain properties, including
properties located in Chicago that
entered a new triennial property tax assessment cycle during 2024
as well as a favorable realty tax outcome recorded in the fourth
quarter of 2023 on final tax bills received amounting to
US$0.5 million.
Specified Financial Measures
The REIT 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 REIT's
Management's Discussion and Analysis for the year ended
December 31, 2024 and available on
the REIT's profile on SEDAR+ at www.sedarplus.ca.
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
REIT's management uses these measures to aid in assessing the
REIT'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 REIT's operating results and
performance.
A reconciliation of each non-GAAP financial measure referred to
in this earnings release is provided below.
Proportionate Share NOI ("Proportionate NOI") & Same
Property Proportionate NOI
Proportionate NOI and Same
Property Proportionate NOI are important measures in evaluating the
operating performance of the REIT's real estate properties and are
a key input in determining the fair value of the REIT's properties.
Proportionate NOI represents NOI (an IFRS measure) adjusted for the
following: i) to exclude the impact of realty taxes accounted for
under International Financial Reporting Interpretations Committee
("IFRIC") Interpretation 21, Levies ("IFRIC 21"). Proportionate NOI
records realty taxes for all properties on a pro rata basis
over the entire fiscal year; ii) to exclude the non-controlling
interest share of NOI for those properties that are consolidated
under IFRS ("NCI Share"); and iii) to include equity-accounted
investments NOI at the REIT's ownership interest ("Equity
Interest").
Same Property Proportionate NOI is presented in this earnings
release because management considers this non-GAAP measure to be an
important measure of the REIT's operating performance, representing
Proportionate NOI for properties owned by the REIT continuously for
the current and comparable reporting period and does not take into
account the impact of the operating performance of property
acquisitions and dispositions as well as development properties
until reaching stabilized occupancy. In addition, Same Property
Proportionate NOI is presented in local currency and by country,
isolating any impact of foreign exchange fluctuations.
The following table provides a reconciliation of Proportionate
Share NOI and Same Property Proportionate Share NOI to its closely
related financial statement measurement for the following
periods:
|
|
|
|
|
2024
|
|
|
|
|
2023
|
|
|
Non-GAAP
Adjustments
|
|
|
Non-GAAP
Adjustment
|
|
|
For the three months
ended
|
|
|
|
|
Proportionate
|
|
|
|
|
Proportionate
|
|
December
31
|
|
NCI
|
Equity
|
|
Basis
|
|
NCI
|
Equity
|
|
Basis
|
|
(In thousands of
dollars)
|
IFRS
|
Share
|
Interest
|
IFRIC
21
|
(Non-GAAP)
|
IFRS
|
Share
|
Interest
|
IFRIC
21
|
(Non-GAAP)
|
|
Revenue from
properties
|
$87,888
|
($4,733)
|
$4,085
|
$—
|
$87,240
|
$85,000
|
($4,453)
|
$4,045
|
$—
|
$84,592
|
|
Property operating
expenses
|
33,735
|
(1,680)
|
1,171
|
8,460
|
41,686
|
29,980
|
(1,266)
|
343
|
7,860
|
36,917
|
|
NOI
|
$54,153
|
($3,053)
|
$2,914
|
($8,460)
|
$45,554
|
$55,020
|
($3,187)
|
$3,702
|
($7,860)
|
$47,675
|
|
NOI
Margin
|
61.6 %
|
|
|
|
52.2 %
|
64.7 %
|
|
|
|
56.4 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2024
|
|
|
|
|
2023
|
|
Non-GAAP Adjustments
|
Non-GAAP
Adjustments
|
|
For the year
ended
|
|
|
|
Proportionate
|
|
|
|
|
Proportionate
|
|
December
31
|
|
NCI
|
Equity
|
Basis
|
|
NCI
|
Equity
|
|
Basis
|
|
(In thousands of
dollars)
|
IFRS
|
Share
|
Interest
|
(Non-GAAP)
|
IFRS
|
Share
|
Interest
|
IFRIC 21
|
(Non-GAAP)
|
|
Revenue from
properties
|
|
|
|
|
|
|
|
|
|
|
Same
Property
|
$334,414
|
($18,142)
|
$15,929
|
$332,201
|
$324,407
|
($17,361)
|
$15,551
|
$—
|
$322,597
|
|
Acquisition
|
9,774
|
—
|
—
|
9,774
|
7,213
|
—
|
—
|
—
|
7,213
|
|
Total revenue from
properties
|
344,188
|
(18,142)
|
15,929
|
341,975
|
331,620
|
(17,361)
|
15,551
|
—
|
329,810
|
|
Property operating
expenses
|
|
|
|
|
|
|
|
|
|
|
Same
Property
|
157,353
|
(9,067)
|
7,063
|
155,349
|
148,645
|
(7,857)
|
6,482
|
—
|
147,270
|
|
Acquisition
|
5,415
|
—
|
—
|
5,415
|
2,735
|
—
|
—
|
1,049
|
3,784
|
|
Total property
operating expenses
|
162,768
|
(9,067)
|
7,063
|
160,764
|
151,380
|
(7,857)
|
6,482
|
1,049
|
151,054
|
|
NOI
|
|
|
|
|
|
|
|
|
|
|
Same
Property
|
177,061
|
(9,075)
|
8,866
|
176,852
|
175,762
|
(9,504)
|
9,069
|
—
|
175,327
|
|
Acquisition
|
4,359
|
—
|
—
|
4,359
|
4,478
|
—
|
—
|
(1,049)
|
3,429
|
|
Total
NOI
|
$181,420
|
($9,075)
|
$8,866
|
$181,211
|
$180,240
|
($9,504)
|
$9,069
|
(1,049)
|
$178,756
|
|
NOI
Margin
|
52.7 %
|
|
|
53.0 %
|
54.4 %
|
|
|
|
54.2 %
|
Funds From Operations
FFO (and FFO per Unit) is a
non-GAAP financial 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
REIT's cash requirements. FFO can assist with comparisons of the
operating performance of the REIT's real estate between periods and
relative to other real estate entities. FFO is computed by the REIT
in accordance with the current definition of the Real Property
Association of Canada ("REALPAC")
and is defined as net income attributable to Unitholders adjusted
for fair value adjustments, distributions on the Class B LP Units,
realty taxes accounted for under IFRIC 21, deferred income taxes
(on the REIT's U.S. properties), gains/losses on the sale of real
estate properties (including income taxes on the sale of real
estate properties) and other non-cash items. The REIT considers FFO
to be a useful measure for reviewing its comparative operating and
financial performance. FFO per Unit is calculated as FFO divided by
the weighted average number of Units outstanding (including Class B
LP Units) during the period.
The following table provides a reconciliation of FFO to its
closely related financial statement measurement for the following
periods:
|
Three months
ended
December 31
|
Year ended
December 31
|
|
(In thousands of
dollars, except per Unit amounts)
|
2024
|
2023
|
2024
|
2023
|
|
Net income for the
period attributable to Unitholders
|
$48,602
|
$25,123
|
$101,858
|
$176,336
|
|
Add/(deduct):
|
|
|
|
|
|
Realty taxes accounted
for under IFRIC 21
|
(8,460)
|
(7,860)
|
—
|
(1,049)
|
|
Fair value gain on
conversion option on convertible debentures
|
(1,649)
|
(24)
|
(770)
|
(2,104)
|
|
Distributions on Class
B LP Units recorded as interest expense
|
3,244
|
3,158
|
12,802
|
12,458
|
|
Foreign exchange
loss
|
7
|
8
|
565
|
22
|
|
Fair value loss (gain)
on real estate properties, net
|
28,093
|
18,535
|
(70,530)
|
(80,179)
|
|
Non-controlling
interests' share of fair value gain (loss) on real estate
properties
|
(7,650)
|
(2,627)
|
(6,854)
|
4,213
|
|
Fair value loss (gain)
on Class B LP Units
|
(36,513)
|
(1,378)
|
40,991
|
(24,629)
|
|
Deferred income tax
expense (recovery)
|
(2,886)
|
(10,594)
|
11,797
|
6,874
|
|
FFO –
basic
|
$22,788
|
$24,341
|
$89,859
|
$91,942
|
|
Interest expense on
convertible debentures
|
840
|
847
|
3,360
|
3,608
|
|
FFO –
diluted
|
$23,628
|
$25,188
|
$93,219
|
$95,550
|
|
FFO per Unit –
basic
|
$0.42
|
$0.44
|
$1.65
|
$1.65
|
|
FFO per Unit –
diluted
|
$0.42
|
$0.44
|
$1.64
|
$1.63
|
|
|
|
|
|
|
Weighted average number
of Units outstanding (in thousands):
|
|
|
|
|
|
Basic
|
53,649
|
54,991
|
54,387
|
55,662
|
|
Diluted
|
55,968
|
57,310
|
56,706
|
58,501
|
Indebtedness and Gross Book Value
Indebtedness (as
defined in the REIT's Declaration of Trust) is a measure of the
amount of debt financing utilized by the REIT. Indebtedness is
presented in this earnings release because management considers
this non-GAAP financial measure to be an important measure of the
REIT's financial position.
Gross book value (as defined in the REIT's Declaration of Trust)
is a measure of the value of the REIT's assets. Gross book value is
presented in this earnings release because management considers
this non-GAAP financial measure to be an important measure of the
REIT's asset base and financial position.
The following table provides a reconciliation of gross book
value and indebtedness as defined in the REIT's Declaration of
Trust from their IFRS financial statement presentation:
|
As at December
31
|
|
|
|
(In thousands of
dollars)
|
2024
|
2023
|
|
Total Assets / Gross
book value
|
$4,571,631
|
$4,095,931
|
|
Mortgage
payable
|
$1,721,080
|
$1,495,362
|
|
Add: Deferred financing
costs
|
20,162
|
13,628
|
|
Mark-to-market adjustment
|
1,744
|
2,262
|
|
1,742,986
|
1,511,252
|
|
Convertible debentures,
face value
|
56,000
|
56,000
|
|
Lease
liabilities
|
17,612
|
16,059
|
|
Indebtedness
|
$1,816,598
|
$1,583,311
|
|
Indebtedness / Gross
book value
|
39.7 %
|
38.7 %
|
Non-GAAP Ratios
Non-GAAP ratios 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
REIT's management uses these measures to aid in assessing the
REIT's underlying core performance and provides these additional
measures so that investors may do the same. Management believes
that the non-GAAP ratios described below, provide readers with a
more comprehensive understanding of management's perspective on the
REIT's operating results and performance.
The following discussion describes the non-GAAP ratios the REIT
uses in evaluating its operating results.
Proportionate NOI Margin
Proportionate NOI margin is
calculated as Proportionate NOI divided by revenue (on a
Proportionate Basis) and is an important measure in evaluating the
operating performance (including the level of operating expenses)
of the REIT's real estate properties. Proportionate NOI margin is
presented in this earnings release because management considers
this non-GAAP ratio to be an important measure of the REIT's
operating performance and financial position.
FFO Payout Ratio
FFO payout ratio compares
distributions declared (including Class B LP Units) to FFO.
Distributions declared (including Class B LP Units) is calculated
based on the monthly distribution per Unit multiplied by the
weighted average number of Units outstanding (including Class B LP
Units) during the period and is an important metric in assessing
the sustainability of retained cash flow to fund capital
expenditures and distributions. FFO payout ratio is presented in
this earnings release because management considers this non-GAAP
ratio to be an important measure of the REIT's operating
performance and financial position.
Indebtedness to Gross Book Value Ratio
Indebtedness to
gross book value ratio is a compliance measure in the REIT's
Declaration of Trust and establishes the limit for financial
leverage of the REIT. Indebtedness to gross book value ratio is
presented in this earnings release because management considers
this non-GAAP ratio to be an important measure of the REIT's
financial position.
Subsequent Event
The REIT entered into a binding
commitment letter for the CMHC-insured refinancing of a multi-suite
residential property located in Kitchener, Ontario, providing gross proceeds
of up to $79.4 million for a term of
10 years. The maturing mortgage amounts to $30.8 million and has an interest rate of 2.25%.
The REIT expects to close the refinancing during the first quarter
of 2025.
The REIT's audited consolidated financial statements for the
years ended December 31, 2024, and
2023, 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.sedarplus.ca.
Conference Call Details
Morguard North American
Residential Real Estate Investment Trust will hold a conference
call on Thursday, February
13, 2025 at 3:00 p.m. (ET)
to discuss the financial results for the years ended December 31, 2024 and 2023. To participate in the
conference call, please dial 1-437-900-0527 or
1-888-510-2154. Please quote conference ID
90017.
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. The REIT's portfolio is comprised of 13,089 residential
suites and 239,500 square feet of commercial area (as of
February 11, 2025) located in Alberta, Ontario, Colorado, Texas, Louisiana, Illinois, Georgia, Florida, North
Carolina, Virginia and
Maryland with an appraised value
of approximately $4.3 billion at
December 31, 2024. For more information, visit the REIT's
website at www.morguard.com.
SOURCE Morguard North American Residential Real Estate
Investment Trust
