RE:Any new Reports out ?From CIBC:
February 18, 2021
Earnings Update
MORGUARD NORTH AMERICAN RESIDENTIAL REIT
Operating Results Converging With Peers, Yet Valuation Gap PersistsOur ConclusionMRG reported an in-line Q4/20, with rents holding up well across different regions (i.e., generally stable or higher on a Q/Q basis), and up modestly Y/Y in both the Canadian and U.S. portfolios. We do note a modest uptick in vacancies in both Canada and U.S. (not including a recent redevelopment), but overall see relatively low vacancy risk through 2021. Indeed, we would suggest that the REIT is positioned to deliver continued flat-to-modestly positive organic growth over the near term; given the moratorium on renewal rental rates in Ontario, the near-term rental growth in the region will be primarily dependant on the mark-to-market opportunity, which itself may be tempered by lower portfolio turnover. With that said, we would be remiss not to point out that this should ultimately be a temporary dynamic that should, and will in all likelihood, reverse in 2022 – “post pandemic.” As we look forward, we note that MRG’s operating results have largely converged with the peer group (i.e., through 2020), yet the historically prevalent valuation gap remains (MRG trading at 40% discount to NAV vs. peers at a ~10% discount), and this drives our Outperformer rating. Our NAV estimate increases to $25 (from $24), but we maintain our $20 price target (which is derived by applying a 20% discount to NAV – a discount that is roughly in line with its historical average).Key PointsEarnings Results: Q4/20 diluted FFO was $0.27/unit, essentially in line with our $0.26 estimate, but slightly below $0.30/unit a year ago. COVID-19 Update: As at February 16, the REIT had collected 98.7% of Q4 rental revenue and 97.5% (98.0% in Canada and 97.1% in the U.S.) of January rental revenue – in line with historical collection rates. Approximately 0.9% of residential tenants have been engaged in deferred payment plans at this time, in line with the level as at Q3 reporting. In Ontario, the enforcement of residential evictions was put on hold during the recent stay-at-home order, but as the province comes out of that order (i.e., this month), evictions can once again be carried out. In the U.S., a similar eviction moratorium has been extended to March 31, 2021. We note that while legislation in Ontario will preclude MRG from raising rents on lease renewals through 2021, the REIT is still able to achieve rental growth within the province: 1) on suite turns (i.e., turned suites can be brought to market rents), and 2) to a lesser extent, through AGIs (above-guideline increases). Debt And Liquidity Position: As at Q4/20, the REIT had a D/GBV of 42.8%, in line with leverage at Q3/20. MRG has no significant debt maturities until Q3/21, and has approximately $45.3MM of unencumbered assets. The REIT had $121MM of liquidity at Q4/20, as measured by undrawn facilities + current cash (not including restricted cash)