Morguard Real Estate Investment Trust announces 2014 third quarter results

TSX: MRT.UN

MISSISSAUGA, ON, Nov. 4, 2014 /CNW/ - Morguard Real Estate Investment Trust ("the Trust") (TSX: MRT.UN) today is pleased to announce its financial results for the three and nine months ended September 30, 2014 ("Q3"). These results have been prepared in accordance with International Financial Reporting Standards ("IFRS").

Highlights

Funds from Operations (FFO)

• Funds from operations for the three and nine months ended September 30, 2014 was $25.3 million and $78.4 million, respectively, as compared to $24.3 million and $73.6 million, respectively, for the same periods in 2013. On a per unit diluted basis, funds from operations for the three and nine months ended September 30, 2014 was $0.40 and $1.23, respectively, as compared to $0.38 and $1.13, respectively for the same periods in 2013.  The increase in FFO was primarily the result of the acquisition of Pine Centre completed by the Trust in December 2013.
• Funds from operations is not a term defined under IFRS and may not be comparable to similar measures used by other Trusts. A reconciliation of net income to funds from operations is included.

Net Operating Income (NOI)

• Net operating income for the three and nine months ended September 30, 2014 was $41.6 million and $125.9 million, respectively, as compared to $39.6 million and $119.1 million, respectively, for the same periods in 2013.  Net operating income from same assets for the three and nine months ended September 30, 2014 was $39.5 million and $118.9 million, respectively, as compared to $38.3 million and $115.0 million, respectively, for the same periods in 2013.
• Net operating income is an additional GAAP measure, but not a term defined under IFRS and may not be comparable to similar measures used by other Trusts. A calculation of net operating income is included.

Net Income

• Net income for the three and nine months ended September 30, 2014 was $20.0 million and $90.4 million, respectively, as compared to $31.7 million and $158.8 million, respectively, for the same periods in 2013. The decrease in net income was mainly the result of lower fair value gains on real estate properties recorded in 2014.

Operations

• The portfolio occupancy remained stable and was 96% at September 30, 2014, 97% at December 31, 2013 and 96% at September 30, 2013.

At September 30, 2014, the Trust's total enterprise value was approximately $2.5 billion (based on the market closing price of the Trust's units on September 30, 2014 plus total debt outstanding). At September 30, 2014, the Trust had $1.4 billion of outstanding debt, equating to debt to total enterprise value ratio of 54.3%.  The Trust's debt consisted of $1.2 billion of fixed-rate debt with weighted average interest rate of 4.2% and weighted average term to maturity of 6.05 years, $146.3 million of 4.85% fixed-rate convertible debentures and $30.1 million debt associated with real estate properties held for sale.  The Trust has a debt to total assets ratio of 45.2%.

• On November 4, 2014, the Trust, upon the recommendation of a special committee comprised of independent trustees, executed an agreement to sell its 50% interest in 350 Sparks Street and 361 Queen Street, a mixed-use office and hotel complex located in downtown Ottawa to Morguard Corporation, the existing 50% co-owner of these properties.  The final sale price was $37,692, less selling costs, to be satisfied by cash and the assumption of the existing mortgage.  The closing date for this transaction is expected to be late 2014.

NET OPERATING INCOME, FUNDS FROM OPERATIONS
This press release and accompanying financial information make reference to net operating income and funds from operations on a total and per unit basis.  Net operating income is defined as income from property operations after operating expenses have been deducted, but prior to deducting interest expense, general and administrative expenses and fair value gains (losses).   Funds from operations is defined as net income prior to extraordinary items, valuation adjustments, and certain other non-cash items, if any.

FINANCIAL STATEMENTS AND MORGUARD'S DISCUSSION AND ANALYSIS
Morguard REIT's Q3 2014 Condensed Interim Consolidated Financial Statement and Management's Discussion and Analysis along with its 2013 Annual Report are available on Morguard REIT's website at www.morguard.com and have been filed with SEDAR at www.sedar.com

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ABOUT MORGUARD REAL ESTATE INVESTMENT TRUST
Morguard REIT is a closed-end real estate investment trust, which owns a diversified portfolio of 50 retail, office and mixed-use income producing properties in Canada with a book value of $2.9 billion and approximately 8.7 million square feet of leaseable space.

Condensed Interim Consolidated Balance Sheets

Condensed Interim Consolidated Statements of Income and Comprehensive Income

Reconciliation of Net Income to Funds from Operations

SOURCE Morguard Real Estate Investment Trust