MISSISSAUGA, ON,
Feb. 12,
2025 /CNW/ -
Morguard Real Estate Investment Trust ("the Trust")
(TSX: MRT.UN) today is pleased to announce its 2024 Fourth Quarter
and Annual Results.
|
In thousands of
dollars, except per-unit amounts
|
Three Months Ended
December 31,
|
Year Ended December
31,
|
|
2024
|
2023
|
2024
|
2023
|
|
Revenue from real
estate properties
|
$67,437
|
$65,857
|
$259,174
|
$255,076
|
|
Net operating
income
|
33,476
|
33,409
|
128,461
|
125,973
|
|
Fair value losses on
real estate properties
|
(48,851)
|
(42,880)
|
(114,448)
|
(131,765)
|
|
Net
loss
|
(35,393)
|
(27,795)
|
(58,823)
|
(74,445)
|
|
Funds from
operations 1
|
16,530
|
15,685
|
58,974
|
60,896
|
|
Adjusted funds from
operations 1,2
|
10,478
|
9,670
|
34,670
|
36,965
|
|
Amounts presented on
a per unit basis
|
|
|
|
|
|
Net loss –
basic
|
($0.55)
|
($0.43)
|
($0.92)
|
($1.16)
|
|
Net loss –
diluted
|
($0.55)
|
($0.43)
|
($0.92)
|
($1.16)
|
|
Funds from operations
– basic 1
|
$0.26
|
$0.24
|
$0.92
|
$0.95
|
|
Funds from operations
– diluted 1
|
$0.22
|
$0.21
|
$0.80
|
$0.82
|
|
Adjusted funds from
operations – basic 1,2
|
$0.16
|
$0.15
|
$0.54
|
$0.58
|
|
Adjusted funds from
operations – diluted 1,2
|
$0.15
|
$0.14
|
$0.51
|
$0.54
|
|
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.
Additional information on this non-GAAP financial measure/ratio can
be found in the MD&A, Part I, "Specified Financial
Measures".
|
|
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 fiscal years
ended December 31, 2024, and 2023.
This financial data is derived from the Trust's condensed
consolidated statements which are prepared in accordance with
IFRS.
|
Three Months Ended
December 31,
|
Year Ended December
31,
|
|
2024
|
2023
|
% Change
|
2024
|
2023
|
% Change
|
|
Revenue from real
estate properties
|
$67,437
|
$65,857
|
2.4 %
|
$259,174
|
$255,076
|
1.6 %
|
|
Property operating
expenses
|
(19,757)
|
(18,292)
|
8.0 %
|
(72,698)
|
(72,066)
|
0.9 %
|
|
Property
taxes
|
(11,918)
|
(11,896)
|
0.2 %
|
(49,173)
|
(48,296)
|
1.8 %
|
|
Property management
fees
|
(2,286)
|
(2,260)
|
1.2 %
|
(8,842)
|
(8,741)
|
1.2 %
|
|
Net operating
income
|
33,476
|
33,409
|
0.2 %
|
128,461
|
125,973
|
2.0 %
|
|
Interest
expense
|
(16,420)
|
(17,173)
|
(4.4 %)
|
(67,378)
|
(62,845)
|
7.2 %
|
|
General and
administrative
|
(927)
|
(873)
|
6.2 %
|
(3,748)
|
(3,843)
|
(2.5 %)
|
|
Other items
|
2
|
(8)
|
(125.0 %)
|
(58)
|
(65)
|
(10.8 %)
|
|
Fair value losses on
real estate properties
|
(48,851)
|
(42,880)
|
13.9 %
|
(114,448)
|
(131,765)
|
(13.1 %)
|
|
Net loss from
equity-accounted investment
|
(2,673)
|
(270)
|
890.0 %
|
(1,652)
|
(1,900)
|
(13.1 %)
|
|
Net
loss
|
($35,393)
|
($27,795)
|
27.3 %
|
($58,823)
|
($74,445)
|
(21.0 %)
|
CONSOLIDATED OPERATING
HIGHLIGHTS
The following is an analysis of net operating
income by asset type:
|
Three Months Ended
December 31,
|
Year Ended December
31,
|
|
2024
|
2023
|
% Change
|
2024
|
2023
|
% Change
|
|
Enclosed regional
centres
|
$12,476
|
$12,220
|
2.1 %
|
$44,943
|
$43,606
|
3.1 %
|
|
Community strip
centres
|
5,624
|
6,052
|
(7.1 %)
|
22,041
|
23,232
|
(5.1 %)
|
|
Subtotal –
retail
|
18,100
|
18,272
|
(0.9 %)
|
66,984
|
66,838
|
0.2 %
|
|
|
|
|
|
|
|
|
Single-/dual-tenant
buildings
|
12,358
|
12,454
|
(0.8 %)
|
49,934
|
49,120
|
1.7 %
|
|
Multi-tenant
buildings
|
2,222
|
2,155
|
3.1 %
|
8,636
|
8,129
|
6.2 %
|
|
Subtotal –
office
|
14,580
|
14,609
|
(0.2 %)
|
58,570
|
57,249
|
2.3 %
|
|
|
|
|
|
|
|
|
Industrial
|
796
|
528
|
50.8 %
|
2,907
|
1,886
|
54.1 %
|
|
Net operating
income
|
$33,476
|
$33,409
|
0.2 %
|
$128,461
|
$125,973
|
2.0 %
|
The increase in enclosed regional centres net operating income for
the year ended December 31, 2024, is
due to increases in basic rent of $3.1
million, increases in percentage rent of $0.4 million, and decreased vacancy costs of
$0.9 million. These increases were
partially offset by a one-time prior year property tax refund
recorded in 2023 on an enclosed regional centre in the amount of
$2.8 million, primarily for vacant
space and space previously occupied by bankrupt or otherwise failed
tenants.
The decrease in community strip centres net operating income for
the year ended December 31, 2024, is
due to the sale of Heritage Towne Centre during the second quarter
of 2024.
The increase in industrial net operating income for the year
ended December 31, 2024, is due to
increased basic rent at one of the Trust's industrial properties,
as well as increased occupancy.
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,
|
|
2024
|
2023
|
% Change
|
2024
|
2023
|
% Change
|
|
Industrial
|
$1,242
|
$975
|
27.4 %
|
$4,654
|
$3,591
|
29.6 %
|
|
Office –
Single-/dual-tenant buildings
|
22,395
|
22,175
|
1.0 %
|
87,923
|
86,846
|
1.2 %
|
|
Office – Multi-tenant
buildings
|
6,902
|
6,476
|
6.6 %
|
25,688
|
24,865
|
3.3 %
|
|
Retail – Community
strip centres
|
8,831
|
9,320
|
(5.2 %)
|
35,569
|
37,244
|
(4.5 %)
|
|
Retail – Enclosed
regional centres
|
28,067
|
26,911
|
4.3 %
|
105,340
|
102,530
|
2.7 %
|
|
Total
|
$67,437
|
$65,857
|
2.4 %
|
$259,174
|
$255,076
|
1.6 %
|
The following is an analysis of revenue from real estate
properties by revenue type:
|
For the three months
ended December 31,
|
2024
|
2023
|
Variance
|
|
Rental
revenue
|
$40,330
|
$40,222
|
$108
|
|
CAM
recoveries
|
15,117
|
13,087
|
2,030
|
|
Property tax and
insurance recoveries
|
9,207
|
9,782
|
(575)
|
|
Other revenue and lease
cancellation fees
|
1,688
|
1,608
|
80
|
|
Parking
revenue
|
1,451
|
1,384
|
67
|
|
Amortized
rents
|
(356)
|
(226)
|
(130)
|
|
$67,437
|
$65,857
|
$1,580
|
|
|
|
|
|
|
|
|
|
For the year ended
December 31,
|
2024
|
2023
|
Variance
|
|
Rental
revenue
|
$157,920
|
$154,744
|
$3,176
|
|
CAM
recoveries
|
52,367
|
50,659
|
1,708
|
|
Property tax and
insurance recoveries
|
38,763
|
40,531
|
(1,768)
|
|
Other revenue and lease
cancellation fees
|
5,424
|
5,102
|
322
|
|
Parking
revenue
|
5,620
|
5,413
|
207
|
|
Amortized
rents
|
(920)
|
(1,373)
|
453
|
|
$259,174
|
$255,076
|
$4,098
|
Property operating expenses for the three months ended
December 31, 2024, increased 8.0% to
$19.8 million from $18.3 million for the same period in 2023. This
increase is primarily due to higher repairs and maintenance
expenses compared to 2023.
Net operating income for the three months ended December 31, 2024, increased 0.2% compared to
2023. This increase was the result of increases in basic rent in
2024 in the office and industrial asset classes, offset by the sale
of Heritage Towne Centre in the second quarter of 2024.
Interest expense for the three months ended December 31, 2024, decreased 4.4% to $16.4 million from $17.2
million for the same period in 2023. This decrease is
primarily due to lower interest rates on both variable and new
fixed rate debt on a year-over-year basis, coupled with a
$28.8 million decline in overall debt
levels on a year-over-year basis.
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,
|
|
2024
|
2023
|
2024
|
2023
|
|
Retail – enclosed
regional centres
|
($7,015)
|
($459)
|
($24,517)
|
($387)
|
|
Retail – community
strip centres
|
(14,563)
|
(4,083)
|
(12,015)
|
(8,837)
|
|
Office
|
(27,432)
|
(41,045)
|
(78,416)
|
(136,985)
|
|
Industrial
|
159
|
2,707
|
500
|
14,444
|
|
($48,851)
|
($42,880)
|
($114,448)
|
($131,765)
|
The Trust's net loss for the three months ended December 31, 2024, was $35.4 million versus net loss of $27.8 million for the three months ended
December 31, 2023. The change of
$7.6 million is largely the result of
fair value changes.
FUNDS FROM OPERATIONS AND ADJUSTED FUNDS FROM
OPERATIONS
The Trust presents FFO and AFFO in accordance
with the current definition of the REALPAC.
|
In thousands of
dollars, except per unit amounts
|
Three Months Ended
December 31,
|
Year Ended December
31,
|
|
2024
|
2023
|
% Change
|
2024
|
2023
|
% Change
|
|
Net loss
|
($35,393)
|
($27,795)
|
27.3 %
|
($58,823)
|
($74,445)
|
(21.0 %)
|
|
Adjustments:
|
|
|
|
|
|
|
|
Fair value losses on
real estate properties 1
|
51,943
|
43,500
|
19.4 %
|
117,873
|
135,433
|
(13.0 %)
|
|
Amortization of
right-of-use assets
|
18
|
14
|
28.6 %
|
78
|
76
|
2.6 %
|
|
Payment of lease
liabilities, net
|
(38)
|
(34)
|
11.8 %
|
(154)
|
(168)
|
(8.3 %)
|
|
Funds from
operations – basic
|
16,530
|
15,685
|
5.4 %
|
58,974
|
60,896
|
(3.2 %)
|
|
Interest expense on
convertible debentures
|
2,105
|
2,070
|
1.7 %
|
8,348
|
8,348
|
— %
|
|
Funds from
operations – diluted
|
$18,635
|
$17,755
|
5.0 %
|
$67,322
|
$69,244
|
(2.8 %)
|
|
|
|
|
|
|
|
|
Funds from operations –
basic
|
$16,530
|
$15,685
|
5.4 %
|
$58,974
|
$60,896
|
(3.2 %)
|
|
Adjustments:
|
|
|
|
|
|
|
|
Amortized stepped rents
1
|
198
|
235
|
(15.7 %)
|
696
|
1,069
|
(34.9 %)
|
|
Normalized
PCME
|
(6,250)
|
(6,250)
|
— %
|
(25,000)
|
(25,000)
|
— %
|
|
Adjusted funds from
operations – basic
|
10,478
|
9,670
|
8.4 %
|
34,670
|
36,965
|
(6.2 %)
|
|
Interest expense on
convertible debentures
|
2,105
|
2,070
|
1.7 %
|
8,348
|
8,348
|
— %
|
|
Adjusted funds from
operations – diluted
|
$12,583
|
$11,740
|
7.2 %
|
$43,018
|
$45,313
|
(5.1 %)
|
|
|
|
|
|
|
|
|
1. Includes respective
adjustments included in net income from equity-accounted
investment.
|
|
SPECIFIED FINANCIAL 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 period
ended December 31, 2024 and available
on the Trust'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
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 2024 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.sedarplus.ca
Conference Call Details:
Date:
Thursday, February 13, 2025,
4:00 p.m. (ET)
Conference Call #:
1-437-900-0527 or 1-888-510-2154
Conference ID #:
86878
About Morguard
Real Estate Investment Trust
The Trust is a
closed-end real estate investment trust, which owns a diversified
portfolio of 45 retail, office and industrial income producing
properties in Canada with a book
value of $2.2 billion and
approximately 8.1 million square feet of leasable space.
SOURCE Morguard Real Estate Investment Trust
