TSX: MRC
MISSISSAUGA, ON, March 6, 2013 /CNW/ - Morguard Corporation (TSX: MRC)
announced its financial results for the year ended December 31, 2012.
HIGHLIGHTS
-
Funds from operations increased by 10.4% to $142 million, or $11.05 per
share, compared to $128.6 million, or $9.92 per share in 2011;
-
Total revenues increased by 6.3% to $415.9 million compared to $391.1
million in 2011;
-
Total net operating income increased by 4.9% to $171.3 million compared
to $163.3 million in 2011;
-
Net income attributable to common shareholders totalled $389.4 million
compared to $288.0 million in 2011; the increase is predominantly due
to higher fair value gains recorded on real estate properties in the
amount of $45.8, a decrease in income taxes of $24.6 and a gain on sale
of marketable securities of $13.6 million;
-
During the year, the Company acquired three U.S. multi-unit residential
properties for a total purchase price of US$384.1 million and disposed
of a 50% interest in a development property for total sales proceeds of
$20.3 million;
-
On April 18, 2012, the Company completed an initial public offering
("IPO") of trust units of Morguard North American Residential Real
Estate Trust (the "Morguard Residential REIT" or the "REIT"). The IPO,
including the over-allotment option, raised gross proceeds of $82.5
million for 8,250,000 trust units at a price of $10.00 per trust unit;
and
-
On September 12, 2012, Morguard Residential REIT completed an additional
offering which raised gross proceeds of $150.7 million for 12,720,000
trust units sold at a price of $11.85 per trust unit.
All amounts in thousands of Canadian dollars, except for per share
amounts, unless otherwise noted.
FINANCIAL HIGHLIGHTS
|
|
Year ended December 31,
|
|
(In thousands of dollars)
|
2012
|
2011
|
Revenue from income producing properties
|
$313,715
|
$297,265
|
Management and advisory fees
|
75,858
|
73,556
|
Interest and other
|
20,982
|
14,347
|
Sales of product and land
|
5,362
|
5,977
|
Total revenues
|
415,917
|
391,145
|
|
|
|
Revenue from income producing properties
|
$313,715
|
$297,265
|
Property operating costs and realty tax expense
|
(142,372)
|
(133,922)
|
Net operating income
|
$171,343
|
$163,343
|
|
|
|
Funds from operations
|
$141,982
|
$128,609
|
|
|
|
Net income attributable to common shareholders
|
$389,443
|
$288,026
|
|
|
|
Income per share:
|
|
|
|
Basic and diluted - net income
|
$30.31
|
$22.22
|
NET INCOME
The Company's net income attributable to common shareholders for the
year ended December 31, 2012, was $389,443 ($30.31 per share) compared
to $288,026 ($22.22 per share) for the same period in 2011. The
increase in net income of $101,417 for the year ended December 31,
2012, was primarily due to an increase in fair value gains on real
estate properties of $45,844, an increase in net operating income of
$8,000, an increase in revenue from management and advisory fees of
$2,302, an increase in interest and other income of $6,635, an increase
in equity income from Morguard REIT of $9,776, a gain on sale of
marketable securities of $13,598, an increase in other income of $2,883
and a decrease in income taxes of $24,553. These items were partially
offset by an increase in property management and corporate expense of
$7,522 and a net fair value loss of $3,883 on the Residential REIT
Units.
NET OPERATING INCOME
Year ended December 31,
(In thousands of dollars)
|
2012
|
2011
|
Net operating income - Canadian properties
|
|
|
Multi-unit residential - Canada
|
$53,953
|
$52,341
|
Retail - Canada
|
32,832
|
30,931
|
Office and industrial
|
41,334
|
41,603
|
|
128,119
|
124,875
|
Net operating income - U.S. properties in U.S. dollars
|
|
|
Multi-unit residential - U.S.
|
US 19,623
|
US 16,983
|
Retail - U.S.
|
US 23,618
|
US 21,890
|
|
US 43,241
|
US 38,873
|
Exchange amount to Canadian dollars
|
(17)
|
(405)
|
Net operating income - U.S. properties in Canadian dollars
|
43,224
|
38,468
|
Net operating income
|
$171,343
|
$163,343
|
Net operating income ("NOI") for the year ended December 31, 2011,
increased by $8.0 million to $171.3 million compared to $163.3 million
in 2011, representing an increase of 4.9%. The increase was
predominantly the result of the following:
-
Higher NOI in Canadian multi-unit residential properties primarily as a
result of higher rental rates;
-
Higher NOI in Canadian retail properties predominantly due to increased
rental rates, higher percentage rent and an increase in revenue at the
redeveloped Bramalea City Centre;
-
Lower NOI in office and industrial primarily as a result of a decrease
in occupancy at three office properties; partially offset by an
increase in occupancy in the industrial portfolio;
-
Higher NOI in U.S. multi residential properties primarily as a result of
the acquisitions of three properties in 2012 and one property during
the latter part of 2011; partially offset by an increase in rent
concessions and expenditures incurred as a result of damages caused by
Hurricane Isaac;
-
Higher NOI in U.S. retail properties primarily as a result of the
acquisitions during the latter part of 2011; and
-
The change in the foreign exchange rate increased reported NOI by $0.4
million.
FUNDS FROM OPERATIONS ("FFO")
FFO was calculated as follows:
|
|
|
Year ended December 31,
(In thousands of dollars except for per share amounts)
|
2012
|
2011
|
Net income attributable to common shareholders
|
$389,443
|
$288,026
|
Items not affecting cash:
|
|
|
|
Fair value gains on real estate properties
|
(226,070)
|
(180,226)
|
|
Fair value gain on Residential REIT Units
|
(1,281)
|
-
|
|
Non-controlling interest's share of fair value gain (loss) on real
estate property
|
142
|
(470)
|
|
Future income taxes
|
21,163
|
53,361
|
|
Depreciation on owner occupied property
|
104
|
104
|
|
Equity income from Morguard REIT
|
(77,929)
|
(68,153)
|
|
Morguard REIT's equity accounted FFO
|
36,812
|
35,960
|
|
(Gain) loss on sale of property
|
(402)
|
7
|
Funds from operations
|
$141,982
|
$128,609
|
Funds from operations
|
|
|
|
|
Per share amounts - basic and diluted
|
$11.05
|
$9.92
|
For the year ended December 31, 2012, the Company recorded FFO of
$141,982 ($11.05 per share) compared to $128,609 ($9.92 per share) in
2011. The increase in FFO of $13,373 is mainly due to a gain on sale
of marketable securities of $13,598, an increase in NOI of $8,000, an
increase in management and advisory fees of $2,302, an increase in
interest and other income of $6,635 and an increase in other income of
$2,883. These items were partially offset by an increase in current
taxes of $7,645, an increase in property management and corporate
expenses of $7,522 and distributions of $5,164 to the Residential
REIT's unitholders. The change in foreign exchange rates had a negative
impact on FFO of $133 or $0.01 per share.
MORGUARD NORTH AMERICAN RESIDENTIAL REAL ESTATE INVESTMENT TRUST
On April 18, 2012, the Company completed an IPO of trust units of
Morguard Residential REIT. The offering, including the over-allotment
option, raised gross proceeds of $82.5 million. A total of 8,250,000
trust units were sold at a price of $10.00 per trust unit.
On September 12, 2012, the REIT completed the offering of $150.7 million
for 12,720,000 trust units sold at a price of $11.85 per trust unit.
Morguard acquired 4,220,000 of the trust units issued on September 12,
2012.
On February 25, 2013, the REIT reached an agreement with a syndicate of
underwriters to issue to the public, subject to regulatory approval, on
a bought deal basis, 8,270,000 trust units at a price of $11.50 per
Unit representing gross proceeds of $95,105 and $60,000 aggregate
principal amount of 4.65% convertible unsecured subordinated debentures
due March 30, 2018 (the "Debentures", collectively with the Units the
"Offering"). The Debentures are convertible at the option of the
holder, into trust units of the REIT at $15.50 per trust unit.
As part of the transaction, Morguard has agreed to purchase
approximately $10 million of the Units being offered, being 870,000
Units, at the offering price and $5 million aggregate principal amount
of the Debentures. At December 31, 2012, Morguard owned a 57.1%
effective interest in the REIT through ownership of Units and Class B
LP Units; after the Offering Morguard will hold an approximate 48.8%
effective interest in the REIT.
The net proceeds from the Offering will be used to partially fund the
acquisition of 3,752 multi-family residential units in the U.S. for
gross consideration of US$457.8 million, as previously announced on
January 9, 2013, and for general trust purposes. The Offering is not
conditional upon the closing of such acquisition.
FIRST QUARTER DIVIDEND
The board of directors of Morguard Corporation announced today that the
first quarterly eligible dividend of 2013 in the amount of $0.15 per
common share would be paid on March 28, 2013, to shareholders of record
at the close of business on March 15, 2013.
Readers are cautioned that although the terms "Net Operating Income",
and "Funds From Operations" are commonly used to measure, compare and
explain the operating and financial performance of Canadian real estate
companies and such terms are defined in the Management's Discussion and
Analysis, such terms are not recognized terms under Canadian generally
accepted accounting principles. Such terms do not necessarily have a
standardized meaning and may not be comparable to similarly titled
measures presented by the other publicly traded entities.
The Company's audited financial statements for the year ended December
31, 2012, along with the 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.
Morguard Corporation is a real estate company, which owns a diversified
portfolio of 103 retail, multi-unit residential, office and industrial
properties comprising of 12,110 multi-unit residential suites and
approximately 7.1 million square feet of commercial leasable space.
Morguard Corporation also owns a 42.9% interest in Morguard Real Estate
Investment Trust and a 57.1% effective interest in Morguard North
American Residential Real Estate Investment Trust. Morguard provides
advisory and management services to institutional and other investors
through Morguard Investments Limited and Morguard Residential. For more
information, visit the Company's website at www.morguard.com.
SOURCE: Morguard Corporation