MISSISSAUGA, ON,
Feb. 15,
2023 /CNW/ - Morguard
Real Estate Investment Trust ("the Trust")
(TSX: MRT.UN) today is pleased to announce its 2022 Fourth Quarter
and Annual Results.
|
In thousands of
dollars, except per-unit amounts
|
Three Months Ended
December 31,
|
Year Ended December
31,
|
|
2022
|
2021
|
2022
|
2021
|
|
Revenue from real
estate properties
|
$59,664
|
$63,235
|
$242,629
|
$241,440
|
|
Net operating
income
|
33,539
|
31,689
|
122,199
|
122,129
|
|
Fair value losses on
real estate properties
|
(113,004)
|
(18,306)
|
(148,977)
|
(60,974)
|
|
Net
(loss)/income
|
(95,376)
|
(796)
|
(86,097)
|
4,885
|
|
Funds from
operations 1
|
19,002
|
18,001
|
66,823
|
68,944
|
|
Adjusted funds from
operations 1,2
|
12,745
|
13,912
|
42,721
|
51,488
|
|
Amounts presented on
a per unit basis
|
|
|
|
|
|
Net (loss)/income –
basic
|
($1.48)
|
($0.01)
|
($1.34)
|
$0.08
|
|
Net (loss)/income –
diluted
|
($1.48)
|
($0.01)
|
($1.34)
|
$0.08
|
|
Funds from operations
– basic 1
|
$0.30
|
$0.28
|
$1.04
|
$1.07
|
|
Funds from operations
– diluted 1,3
|
$0.25
|
$0.26
|
$0.89
|
$1.05
|
|
Adjusted funds from
operations – basic 1,2
|
$0.20
|
$0.22
|
$0.67
|
$0.80
|
|
Adjusted funds from
operations – diluted 1,2,3
|
$0.18
|
$0.21
|
$0.60
|
$0.80
|
|
|
|
|
|
|
1. The following
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.
Additional information on this non-GAAP financial measure/ratio can
be found under the MD&A section Part I, "Specified Financial
Measures".
|
|
2. The Trust uses
normalized productive capacity maintenance expenditures to
calculate adjusted funds from operations.
|
|
3. Includes the
dilutive impact of convertible debentures and presented on a cash
settlement basis for consistency with industry practice for
calculating FFO and AFFO.
|
SELECTED FINANCIAL
INFORMATION
The table below sets forth selected financial data relating to
the Trust's three months and fiscal years ended December 31, 2022, and 2021. 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,
|
|
2022
|
2021
|
%
Change
|
2022
|
2021
|
%
Change
|
|
Revenue from real
estate properties
|
$59,664
|
$63,235
|
(5.6 %)
|
$242,629
|
$241,440
|
0.5 %
|
|
Property operating
expenses
|
(17,193)
|
(17,946)
|
(4.2 %)
|
(68,801)
|
(62,397)
|
10.3 %
|
|
Property
taxes
|
(6,905)
|
(11,563)
|
(40.3 %)
|
(43,299)
|
(48,624)
|
(11.0 %)
|
|
Property management
fees
|
(2,027)
|
(2,037)
|
(0.5 %)
|
(8,330)
|
(8,290)
|
0.5 %
|
|
Net operating
income
|
33,539
|
31,689
|
5.8 %
|
122,199
|
122,129
|
0.1 %
|
|
Interest
expense
|
(14,097)
|
(13,313)
|
5.9 %
|
(53,523)
|
(53,281)
|
0.5 %
|
|
General and
administrative
|
(818)
|
(865)
|
(5.4 %)
|
(3,741)
|
(3,845)
|
(2.7 %)
|
|
Other items
|
1,029
|
14
|
7,250.0 %
|
967
|
1,934
|
(50.0 %)
|
|
Fair value losses on
real estate properties
|
(113,004)
|
(18,306)
|
517.3 %
|
(148,977)
|
(60,974)
|
144.3 %
|
|
Net loss from
equity-accounted investment
|
(2,025)
|
(15)
|
13,400.0 %
|
(3,022)
|
(1,078)
|
180.3 %
|
|
Net
(loss)/income
|
($95,376)
|
($796)
|
N/A
|
($86,097)
|
$4,885
|
(1,862.5 %)
|
CONSOLIDATED OPERATING HIGHLIGHTS
The following is an analysis of net operating income by asset
type:
|
Three Months Ended
December 31,
|
Year Ended December
31,
|
|
2022
|
2021
|
%
|
2022
|
2021
|
%
|
|
Enclosed regional
centres
|
$12,411
|
$11,075
|
12.1 %
|
$39,416
|
$38,067
|
3.5 %
|
|
Community strip
centres
|
5,719
|
5,674
|
0.8 %
|
22,670
|
23,272
|
(2.6 %)
|
|
Subtotal –
retail
|
18,130
|
16,749
|
8.2 %
|
62,086
|
61,339
|
1.2 %
|
|
|
|
|
|
|
|
|
Single-/dual-tenant
buildings
|
12,528
|
11,191
|
11.9 %
|
47,303
|
46,670
|
1.4 %
|
|
Multi-tenant
buildings
|
2,437
|
3,170
|
(23.1 %)
|
10,578
|
12,039
|
(12.1 %)
|
|
Subtotal –
office
|
14,965
|
14,361
|
4.2 %
|
57,881
|
58,709
|
(1.4 %)
|
|
|
|
|
|
|
|
|
Industrial
|
444
|
579
|
(23.3 %)
|
2,232
|
2,081
|
7.3 %
|
|
Net operating
income
|
$33,539
|
$31,689
|
5.8 %
|
$122,199
|
$122,129
|
0.1 %
|
The decrease in community strip centres net operating income for
the year ended December 31, 2022, is
due to the sale of Wonderland Corners in London, Ontario on September 29, 2021.
The decrease in multi-tenant office net operating income for the
year ended December 31, 2022, is due
to higher vacancy in this asset class.
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:
|
Three Months Ended
December 31,
|
Year Ended December
31,
|
|
2022
|
2021
|
%
|
2022
|
2021
|
%
|
|
Industrial
|
$828
|
$986
|
(16.0 %)
|
$3,944
|
$3,649
|
8.1 %
|
|
Office –
Single-/dual-tenant buildings
|
21,930
|
19,729
|
11.2 %
|
83,455
|
79,199
|
5.4 %
|
|
Office – Multi-tenant
buildings
|
6,442
|
7,224
|
(10.8 %)
|
27,080
|
27,610
|
(1.9 %)
|
|
Retail – Community
strip centres
|
8,768
|
9,310
|
(5.8 %)
|
35,983
|
37,005
|
(2.8 %)
|
|
Retail – Enclosed
regional centres
|
21,696
|
25,986
|
(16.5 %)
|
92,167
|
93,977
|
(1.9 %)
|
|
Total
|
$59,664
|
$63,235
|
(5.6 %)
|
$242,629
|
$241,440
|
0.5 %
|
The following is an analysis
of revenue from real estate
properties by revenue type:
|
For the three months
ended December 31,
|
2022
|
2021
|
Variance
|
|
Rental
revenue
|
$39,531
|
$38,804
|
$727
|
|
CAM
recoveries
|
13,125
|
13,023
|
102
|
|
Property tax and
insurance recoveries
|
4,570
|
9,254
|
(4,684)
|
|
Other revenue and lease
cancellation fees
|
1,355
|
1,503
|
(148)
|
|
Parking
revenue
|
1,232
|
1,047
|
185
|
|
Amortized
rents
|
(149)
|
(396)
|
247
|
|
$59,664
|
$63,235
|
($3,571)
|
|
|
|
|
|
|
|
|
|
For the year ended
December 31,
|
2022
|
2021
|
Variance
|
|
Rental
revenue
|
$153,685
|
$151,038
|
$2,647
|
|
CAM
recoveries
|
48,501
|
42,853
|
5,648
|
|
Property tax and
insurance recoveries
|
32,063
|
36,469
|
(4,406)
|
|
Other revenue and lease
cancellation fees
|
5,165
|
7,946
|
(2,781)
|
|
Parking
revenue
|
4,507
|
3,887
|
620
|
|
Amortized
rents
|
(1,292)
|
(753)
|
(539)
|
|
$242,629
|
$241,440
|
$1,189
|
The decline in property tax and insurance recoveries for the year
ended December 31, 2022 is due to
$5.6 million (2021 – $1.0 million) of prior year property tax refunds
processed during 2022 which also resulted in a decline in property
tax expense. Included in other revenue and lease cancellation fees
in the 12-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.
In 2022, other items included $1.1
million in non-recurring settlement proceeds relating to a
land expropriation at one of the Trust's British Columbia properties. In 2021, other
items included $2.0 million in
non-recurring settlement proceeds from Sears.
The Trust records its income producing properties at fair value
in accordance with IFRS. 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:
|
Three Months Ended
December 31,
|
Year Ended December
31,
|
|
2022
|
2021
|
2022
|
2021
|
|
Retail – enclosed
regional centres
|
($49,635)
|
($11,524)
|
($90,118)
|
($37,190)
|
|
Retail – community
strip centres
|
(3,465)
|
(2,700)
|
7,991
|
370
|
|
Office
|
(60,961)
|
(3,683)
|
(78,044)
|
(32,551)
|
|
Industrial
|
1,057
|
(399)
|
11,194
|
8,397
|
|
($113,004)
|
($18,306)
|
($148,977)
|
($60,974)
|
Reported net loss for the year ended December 31, 2022, was $86.1 million as compared to income of
$4.9 million in 2021. This
change is due to the increase in fair value losses recorded in
2022, as described above.
FUNDS FROM OPERATIONS AND ADJUSTED FUNDS FROM OPERATIONS
The Trust presents FFO and AFFO in accordance with the current
definition of the REALpac.
FUNDS FROM OPERATIONS AND ADJUSTED FUNDS FROM OPERATIONS
|
Three Months Ended
December 31,
|
Year Ended December
31,
|
|
2022
|
2021
|
%
|
2022
|
2021
|
%
|
|
Net
(loss)/income
|
($95,376)
|
($796)
|
11,881.9 %
|
($86,097)
|
$4,885
|
(1,862.5 %)
|
|
Adjustments:
|
|
|
|
|
|
|
|
Fair value losses on
real estate properties 1
|
115,499
|
18,820
|
513.7 %
|
154,104
|
64,129
|
140.3 %
|
|
Amortization of
right-of-use assets
|
21
|
20
|
5.0 %
|
83
|
83
|
— %
|
|
Payment of lease
liabilities, net
|
(42)
|
(43)
|
(2.3 %)
|
(167)
|
(153)
|
9.2 %
|
|
Expropriation proceeds
(other income)
|
(1,100)
|
—
|
— %
|
(1,100)
|
—
|
— %
|
|
Funds from
operations – basic
|
19,002
|
18,001
|
11.7 %
|
66,823
|
68,944
|
(3.1 %)
|
|
Interest expense on
convertible debentures
|
2,070
|
2,287
|
(9.5 %)
|
8,348
|
8,177
|
2.1 %
|
|
Funds from
operations – diluted
|
$21,072
|
$20,288
|
9.3 %
|
$75,171
|
$77,121
|
(2.5 %)
|
|
|
|
|
|
|
|
|
Funds from operations –
basic
|
$19,002
|
$18,001
|
5.6 %
|
$66,823
|
$68,944
|
(3.1 %)
|
|
Adjustments:
|
|
|
|
|
|
|
|
Amortized stepped rents
1
|
(7)
|
536
|
(101.3 %)
|
898
|
1,044
|
(14.0 %)
|
|
Normalized
PCME
|
(6,250)
|
(4,625)
|
35.1 %
|
(25,000)
|
(18,500)
|
35.1 %
|
|
Adjusted funds from
operations – basic
|
12,745
|
13,912
|
(8.4 %)
|
42,721
|
51,488
|
(17.0 %)
|
|
Interest expense on
convertible debentures
|
2,070
|
2,287
|
(9.5 %)
|
8,348
|
8,177
|
2.1 %
|
|
Adjusted funds from
operations – diluted
|
$14,815
|
$16,199
|
(8.5 %)
|
$51,069
|
$59,665
|
(14.4 %)
|
|
|
|
|
|
|
|
|
1. Includes respective
adjustments included in net income from equity-accounted
investment.
|
|
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, 2022 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 2022 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
16, 2023, 4:00 p.m. (ET)
Conference Call #:
416-764-8688 or 1-888-390-0546
Conference ID #:
18877454
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 $2.3 billion and approximately 8.3 million square
feet of leasable space.
SOURCE Morguard Real Estate Investment Trust
