Canada NewsWire
MISSISSAUGA, ON, May 8, 2018
MISSISSAUGA, ON, May 8, 2018 /CNW/ - Morguard Corporation ("Morguard" or the "Company") (TSX:MRC) today announced its financial results for the three months ended March 31, 2018.
Reporting Highlights
Operational and Balance Sheet Highlights:
Acquisitions Completed During 2018
The following table presents a summary of the company's acquisitions totalling $95.1 million during the three months ended March 31, 2018.
Date of Acquisition |
Asset Type |
Location |
Purchase Price | |
1100 and 1101 Polytek Street |
January 9, 2018 |
Industrial |
Ottawa, ON |
$43,422 |
5985 Explorer Drive |
February 5, 2018 |
Office |
Mississauga, ON |
51,711 |
$95,133 |
1100 and 1101 Polytek Street, a two-building, small-bay industrial portfolio in Ottawa, Ontario encompass 243,000 square feet on 15.5 acres and was constructed in 2010 and 2015, with minimal capital expenditures forecast for the near future. The recent construction offers best-in-class features including clear heights of 28 feet and flexible unit configuration. The acquisition increases Morguard's footprint in Ottawa, which has been amongst the strongest and most consistent real estate markets in Canada. In the Ottawa region, Morguard currently owns and/or manages approximately 4.8 million square feet of property, which allows for management synergies and reduced operating costs.
5895 Explorer Drive is a 128,000 square foot class A office building located in the Airport Corporate Centre in Mississauga, Ontario. The building is fully occupied by Federal Express Canada ("FedEx") with a current lease term that expires in May 2025. The building was purpose built for FedEx with large 42,000 square feet floorplates and modern office buildouts connected by an open staircase in the full-height atrium. The building backs onto a ravine on a sizeable 12.5 acres plot of land accommodating 621 parking stalls. Excess density at this property also allows for the potential to further develop the site and offers FedEx a chance to expand their square footage.
Financial Highlights
For the three months ended March 31 |
|||
(in thousands of dollars, except per common share) |
2018 |
2017 | |
Revenue from real estate |
$203,839 |
$196,518 | |
Revenue from hotel properties |
53,852 |
52,255 | |
Management and advisory fees |
14,437 |
18,964 | |
Interest and other income |
1,440 |
1,960 | |
Sales of product and land |
1,250 |
1,242 | |
Total revenue |
$274,818 |
$270,939 | |
Revenue from real estate properties |
$203,839 |
$196,518 | |
Revenue from hotel properties |
53,852 |
52,255 | |
Property operating expenses |
(115,176) |
(105,770) | |
Hotel operating expenses |
(42,770) |
(41,910) | |
Net operating income |
$99,745 |
$101,093 | |
Net income attributable to common shareholders |
$116,608 |
$15,742 | |
Net income per common share – basic and diluted |
$10.10 |
$1.32 | |
Funds from operations |
$49,911 |
$47,601 | |
FFO per common share – basic and diluted |
$4.32 |
$3.99 |
Net Income
Net income for the three months ended March 31, 2018, was $125.0 million compared to net income of $32.4 million in 2017. The increase in net income of $92.6 million for the three months ended March 31, 2018, was primarily due to the following:
Net Operating Income
NOI decreased by $1.3 million, or 1.3%, during the three months ended March 31, 2018, to $99.8 million, compared to $101.1 million generated in 2017, and is further analyzed by asset type below.
For the three months ended March 31 |
||||
(in thousands of dollars) |
2018 |
2017 | ||
Multi-suite residential |
$47,395 |
$44,110 | ||
Retail |
31,636 |
32,611 | ||
Office |
30,889 |
31,887 | ||
Industrial |
2,266 |
1,604 | ||
Hotels |
11,082 |
10,345 | ||
Adjusted NOI |
123,268 |
120,557 | ||
IFRIC 21 adjustment – multi-suite residential |
(19,673) |
(15,632) | ||
IFRIC 21 adjustment – retail |
(3,850) |
(3,832) | ||
NOI |
$99,745 |
$101,093 |
The decrease in NOI of $1.3 million is due to an increase in the IFRIC 21 adjustment of $4.1 million and the change in Adjusted NOI described below.
Adjusted NOI for the three months ended March 31, 2018, increased by $2.7 million to $123.3 million compared to $120.6 million in 2017 primarily due to the following:
Funds From Operations
For the three months ended March 31, 2018, the Company recorded FFO of $49.9 million ($4.32 per common share), compared to $47.6 million ($3.99 per common share) in 2017. The increase in FFO of $2.3 million is mainly due to the following:
The change in foreign exchange rates had a negative impact on FFO of $0.4 million ($0.03 per common share).
Normalized FFO for the three months ended March 31, 2018, was $49.5 million, or $4.29 per common share, versus $46.8 million, or $3.92 per common share, for the same period in 2017, which represents an increase of $2.7 million, or 5.9%. Normalized FFO is computed as FFO adjusted for the impact of non-recurring items net of tax.
Land Lease Arbitration Settlement
The Company is a lessee associated with the land underlying a mixed-use property located in Toronto, Ontario. On April 27, 2018, the Company reached an agreement on the fair market value of the land for the period July 1, 2010 through June 30, 2030 that resulted in the annual land rent increasing from $2.8 million to $8.8 million The Company settled and paid an amount of $15.8 million for arrears of rent and interest from July 1, 2010 to April 30, 2018. In accordance with the Majority Decision, for the period from July 1, 2010 to March 31, 2018, the Company recorded annual land rent of $11.0 million and will therefore reverse $17.1 million (pre-tax) of land rent previously expensed.
Second Quarter Dividend
The Board of Directors of Morguard Corporation announced that the second quarterly, eligible dividend of 2018 in the amount of $0.15 per common share will be paid on June 29, 2018, to shareholders of record at the close of business on June 15, 2018.
The Company's unaudited condensed consolidated financial statements for the three months ended March 31, 2018, along with 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.
Non-IFRS Measures
The Company's condensed consolidated financial statements are prepared in accordance with International Financial Reporting Standards ("IFRS"). The following measures, NOI, Adjusted NOI, Comparative NOI, FFO and Normalized FFO (collectively, the "non-IFRS measures") as well as other measures discussed elsewhere in this press release, do not have a standardized meaning prescribed by IFRS and are, therefore, unlikely to be comparable to similar measures presented by other reporting issuers in similar or different industries. The Company uses these measures to better assess the Company's underlying performance and financial position and provides these additional measures so that investors may do the same. Details on non-IFRS measures are set out in the Company's Management's Discussion and Analysis for the three months ended March 31, 2018 and available on the Company's profile on SEDAR at www.sedar.com.
About Morguard Corporation
Morguard Corporation is a real estate company, with total assets owned and under management valued at $21.3 billion. Morguard owns a diversified portfolio of 210 multi-suite residential, retail, office, industrial and hotel properties comprised of 18,129 residential suites, approximately 16.6 million square feet of commercial leasable space and 5,557 hotel rooms. Morguard also currently owns a 56.0% interest in Morguard Real Estate Investment Trust ("Morguard REIT" or "MRT"), a 46.9% effective interest in Morguard North American Residential Real Estate Investment Trust ("Morguard Residential REIT" or "MRG") and a 58.3% effective interest in Temple Hotels Inc. ("Temple"). Morguard also provides advisory and management services to institutional and other investors. For more information, visit the Company's website at www.morguard.com.
SOURCE Morguard Corporation
View original content: http://www.newswire.ca/en/releases/archive/May2018/08/c7439.html
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