- Real estate and property management company Morguard added C$410 million to its coffers with the sale of 14 hotels
- The company used the funds to pay down C$48.7 million in first mortgage debt and strengthen its balance sheet for future growth opportunities
- Morguard Corporation is a North American real estate and property management company with a diversified C$18.6 billion portfolio
- Morguard stock has lost about 47 per cent since its all-time high, just before the COVID pandemic hit the stock market in February 2020
Real estate and property management company Morguard (TSX:MRC) added C$410 million to its coffers with the sale of 14 hotels.
The company used C$48.7 million to repay first mortgage debt, leaving it with net proceeds of C$361.3 million before closing costs and customary adjustments.
Management views the transaction as a key step in “optimizing its real estate portfolio and sharpening its focus on core real estate investments,” according to a news release, defining core as “owning and managing a diversified real estate portfolio of office, industrial, retail, and multi-suite residential properties.”
When the deal was initially announced, K. Rai Sahi, Morguard’s chairman and chief executive officer, noted the high-demand environment for the hotels, granting the company a favorable price on the sale.
“The successful conclusion of this deal is a testament to the appeal of our hotel portfolio and the strength of Morguard’s management over the years,” Sahi went on to say. “We are pleased to have capitalized on the current market demand for high-quality hotels. This positions us well for future growth.”
Morguard’s divested hotel portfolio
| Property |
City |
Province |
TotalRooms |
| Courtyard Marriott Markham |
Markham |
ON |
144 |
| Residence Inn Marriott – Markham |
Markham |
ON |
100 |
| Courtyard Marriott Mississauga |
Mississauga |
ON |
144 |
| Hilton Garden Inn Toronto Airport West |
Mississauga |
ON |
152 |
| Cambridge Suites Mississauga |
Mississauga |
ON |
100 |
| Holiday Inn Express |
Ottawa |
ON |
115 |
| Towne Place Suites by Marriott |
Sudbury |
ON |
105 |
| Courtyard by Marriott Toronto Airport |
Toronto |
ON |
168 |
| Hotel Carlingview Toronto Airport |
Toronto |
ON |
112 |
| Residence Inn by Marriott Toronto Airport |
Toronto |
ON |
137 |
| Toronto Airport Marriott |
Toronto |
ON |
424 |
| Courtyard Marriott Vaughan |
Vaughan |
ON |
144 |
| Cambridge Suites Hotel Halifax |
Halifax |
NS |
200 |
| The Prince George Hotel |
Halifax |
NS |
203 |
|
|
Source: Morguard.
A profitable company bouncing back from the pandemic
Morguard has ended four out of its past five years with positive net income, demonstrating the company’s commitment to shareholder value in the face of black swan events such as the COVID pandemic.
The company’s quarterly net losses over the period, mostly because of property devaluations from COVID’s hindering of travel and the ongoing work-from-home phenomenon, have been weathered thanks to conservative debt well below total assets and robust access to capital, including C$350 million in cash as of Q3 2024, and about C$800 million in unencumbered properties after the hotel sale.
With management seeing the potential for a real estate rebound in 2024, interested investors should examine the value behind Morguard stock’s 38.97 per cent loss since 2019.
Morguard Corporation is a North American real estate and property management company with C$18.6 billion in retail, office, industrial, residential and investment holdings. It offers investment funds, including Morguard Real Estate Investment Trust and Morguard North American Residential REIT.
Morguard stock (TSX:MRC) last traded at C$111.31 per share. The stock is down by 1.49 per cent year-over-year, and has lost about 47 per cent since its all-time high, just before the COVID pandemic hit the stock market in February 2020.
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