Menu Close
Morguard Corporation Announces 2022 Third Quarter Results and Regular Eligible Dividend - Nov 2, 2022

Morguard Corporation Announces 2022 Third Quarter Results and Regular Eligible Dividend

Nov 2, 2022

MISSISSAUGA, ON, Nov. 2, 2022 /CNW/ - Morguard Corporation ("Morguard" or the "Company") (TSX: MRC) is pleased to announce its consolidated financial results for the three and nine months ended September 30, 2022.

Reporting Highlights
  • Net income decreased by $53.0 million to $55.8 million for the three months ended September 30, 2022, compared to $108.8 million for the same period in 2021.
  • Normalized funds from operations ("Normalized FFO") was $63.4 million, or $5.71 per common share, for the three months ended September 30, 2022. This represents an increase of $4.7 million, or 8.0%, compared to $58.7 million, or $5.29 per common share for the same period in 2021.
  • Excluding the receipt of a non-recurring, special dividend during the third quarter of 2021, Normalized FFO increased by $13.4 million, representing a 27.0% increase.
  • Total revenue from real estate properties increased by $24.3 million, or 11.5%, to $234.9 million for the three months ended September 30, 2022, compared to $210.6 million for the same period in 2021.
  • Total revenue from hotel properties increased by $11.7 million, or 30.2%, to $50.4 million for the three months ended September 30, 2022, compared to $38.7 million for the same period in 2021.
  • Net operating income ("NOI") increased by $22.6 million, or 16.7%, to $158.0 million for the three months ended September 30, 2022, compared to $135.4 million for the same period in 2021.
Operational and Balance Sheet Highlights
  • On September 15, 2022, the Company fully repaid $200.0 million of 4.333% Series C senior unsecured debentures on maturity.
  • On August 8, 2022, the Company acquired a multi-suite residential property comprising 350 suites located in Chicago, Illinois ("Echelon Chicago"), for a purchase price of $173.1 million (US$134.6 million), including closing costs and was partially funded by a mortgage in the amount of $96.0 million (US$74.7 million) at an interest rate of 4.71% for a term of seven years.
  • On September 26, 2022, the Company acquired a retail property ("Rockville Town Square") comprising 186,712 square feet of commercial area located in Rockville, Maryland, for a purchase price of $46.1 million (US$33.3 million), including closing costs. Rockville Town Square is part of a mixed-use complex that includes a 492-suite residential property, which the Company has owned since 2017.
  • On August 24, 2022, the Company sold a multi-suite residential property and a vacant parcel of land located in Slidell, Louisiana, comprising 144 suites, for gross proceeds of $34.1 million (US$26.2 million), including closing costs and repaid the mortgage payable secured by the property in the amount of $10.0 million (US$7.7 million).
  • During the quarter, the Company sold three hotels for gross proceeds of $29.6 million. At closing, the Company repaid a first mortgage loan totalling $19.5 million that were secured by the hotels. 
  • Subsequent to September 30, 2022, the Company sold a multi-suite residential property located in Coconut Creek, Florida, comprising 340 suites, for gross proceeds of $127.2 million (US$92.0 million), excluding closing costs and repaid the mortgage payable secured by the property in the amount of $28.3 million (US$20.4 million).
  • During the quarter, occupancy was strong and consistent across all commercial and residential asset classes, supporting the Company's business objective of generating stable and increasing cash flow through its diversified portfolio of real estate assets.
  • As at September 30, 2022 the Company's total assets were $12.4 billion, compared to $11.5 billion at December 31, 2021.
Financial Highlights

Three months ended

Nine months ended


September 30

September 30

(in thousands of dollars)

2022

2021

2022

2021

Revenue from real estate properties

$234,863

$210,557

$681,459

$630,612

Revenue from hotel properties

50,416

38,723

123,983

90,987

Management and advisory fees

10,018

10,424

30,441

32,050

Interest and other income

4,204

11,731

11,324

18,514

Total revenue

$299,501

$271,435

$847,207

$772,163






Revenue from real estate properties

$234,863

$210,557

$681,459

$630,612

Revenue from hotel properties

50,416

38,723

123,983

90,987

Property operating expenses

(94,775)

(86,047)

(330,044)

(299,053)

Hotel operating expenses

(32,470)

(27,788)

(95,537)

(66,082)

Net operating income

$158,034

$135,445

$379,861

$356,464






Net income attributable to common shareholders

$66,824

$102,626

$505,801

$134,279

Net income per common share – basic and diluted

$6.02

$9.25

$45.58

$12.10






Funds from operations(1)

$53,889

$52,817

$136,736

$144,048

FFO per common share – basic and diluted(1)

$4.86

$4.76

$12.32

$12.98






Normalized funds from operations(1)

$63,396

$58,673

$158,661

$143,266

Normalized FFO per common share – basic and diluted(1)

$5.71

$5.29

$14.30

$12.91

(1)

Represents a non-GAAP financial measure/ratio that does not have any standardized meaning prescribed by IFRS and is not necessarily comparable to similar measures presented by other reporting issuers in similar or different industries. This measure should be considered as supplemental in nature and not as substitutes for related financial information prepared in accordance with IFRS.

Specified Financial Measures

The Company reports its financial results in accordance with International Financial Reporting Standards ("IFRS"). However, this earnings release also uses specified financial measures that are not defined by IFRS, which follow the disclosure requirements established by National Instrument 52-112 Non-GAAP and Other Financial Measures Disclosure for non-GAAP financial measures. Specified financial measures are categorized as non-GAAP financial measures, non-GAAP ratios, and other financial measures. Additional details on specified financial measures including supplementary financial measures, capital management measures and total segment measures are set out in the Company's Management's Discussion and Analysis for the three and nine months ended September 30, 2022 and available on the Company's profile on SEDAR at www.sedar.com.

The following Non-GAAP financial measures do not have any standardized meaning prescribed by IFRS and are not necessarily comparable to similar measures presented by other reporting issuers in similar or different industries. These measures should be considered as supplemental in nature and not as substitutes for related financial information prepared in accordance with IFRS. The Company's management uses these measures to aid in assessing the Company's underlying core performance and provides these additional measures so that investors may do the same. Management believes that the non-GAAP financial measures described below, which supplement the IFRS measures, provide readers with a more comprehensive understanding of management's perspective on the Company's operating results and performance.

A reconciliation of each non-GAAP financial measure referred to in this earnings release is provided below.

Adjusted Net Operating Income ("Adjusted NOI")

Adjusted NOI is an important measure in evaluating the operating performance of the Company's real estate properties and is a key input in determining the fair value of the Company's properties. Adjusted NOI represents NOI (an IFRS measure) adjusted to exclude the impact of realty taxes accounted for under IFRIC 21 as noted below. 

NOI includes the impact of realty taxes accounted for under the International Financial Reporting Interpretations Committee ("IFRIC") Interpretation 21, Levies ("IFRIC 21"). IFRIC 21 states that an entity recognizes a levy liability in accordance with the relevant legislation. The obligating event for realty taxes for the U.S. municipalities in which the REIT operates is ownership of the property on January 1 of each year for which the tax is imposed and, as a result, the REIT records the entire annual realty tax expense for its U.S. properties on January 1, except for U.S. properties acquired during the year in which the realty taxes are not recorded in the year of acquisition. Adjusted NOI records realty taxes for all properties on a pro rata basis over the entire fiscal year.

The following table provides a reconciliation of Adjusted NOI to its closely related financial statement measurement for the following periods:


Three months ended

Nine months ended


September 30

September 30

(in thousands of dollars)

2022

2021

2022

2021

Multi-suite residential

$62,533

$50,058

$175,176

$152,084

Retail

29,277

29,160

85,513

85,294

Office

33,192

32,978

95,286

99,284

Industrial

2,591

2,052

6,822

5,548

Hotel

17,946

10,935

28,446

24,905

Adjusted NOI

145,539

125,183

391,243

367,115

IFRIC 21 adjustment - multi-suite residential

11,159

8,917

(10,159)

(9,299)

IFRIC 21 adjustment - retail

1,336

1,345

(1,223)

(1,352)

NOI

$158,034

$135,445

$379,861

$356,464

Funds From Operations and Normalized FFO

FFO (and FFO per common share) are non-GAAP financial measures widely used as a real estate industry standard that supplement net income (loss) and evaluates operating performance but is not indicative of funds available to meet the Company's cash requirements. FFO can assist with comparisons of the operating performance of the Company's real estate between periods and relative to other real estate entities. FFO is computed in accordance with the current definition of the Real Property Association of Canada ("REALPAC") and is defined as net income (loss) attributable to common shareholders adjusted for: (i) deferred income taxes, (ii) unrealized changes in the fair value of real estate properties, (iii) realty taxes accounted for under IFRIC 21, (iv) internal leasing costs, (v) gains/losses from the sale of real estate or hotel property (including income tax on the sale of real estate or hotel property), (vi) transaction costs expensed as a result of a business combination, (vii) gains/losses on business combination, (viii) the non-controlling interest of Morguard North American Residential REIT, (ix) amortization of depreciable real estate assets (including right-of-use assets), * amortization of intangible assets, (xi) principal payments of lease liabilities, (xii) FFO adjustments for equity-accounted investments, (xiii) provision for impairment, (xiv) other fair value adjustments and non-cash items. The Company considers FFO to be a useful measure for reviewing its comparative operating and financial performance. FFO per common share is calculated as FFO divided by the weighted average number of common shares outstanding during the period.

Normalized FFO (and normalized FFO per common share) is computed as FFO excluding non-recurring items on a net of tax basis and other fair value adjustments. The Company believes it is useful to provide an analysis of Normalized FFO which excludes non-recurring items on a net of tax basis and other fair value adjustments excluded from REALPAC's definition of FFO described above.

The following tables provide a reconciliation of FFO and Normalized FFO to its closely related financial statement measurement for the following periods:


Three months ended

Nine months ended


September 30

September 30

(in thousands of dollars)

2022

2021

2022

2021

Multi-suite residential

$62,533

$50,058

$175,176

$152,084

Retail

29,277

29,160

85,513

85,294

Office

33,192

32,978

95,286

99,284

Industrial

2,591

2,052

6,822

5,548

Hotel

17,946

10,935

28,446

24,905

Adjusted NOI

145,539

125,183

391,243

367,115

Other Revenue





Management and advisory fees

10,018

10,424

30,441

32,050

Interest and other income

4,204

11,731

11,324

18,514

Equity-accounted FFO

1,550

257

4,076

(847)


15,772

22,412

45,841

49,717

Expenses and Other





Interest

(57,692)

(54,909)

(167,878)

(166,122)

Principal repayment of lease liabilities

(316)

(504)

(1,037)

(1,377)

Property management and corporate

(20,316)

(16,535)

(57,619)

(60,179)

Internal leasing costs

1,524

620

3,482

2,319

Amortization of capital assets

(345)

(856)

(1,113)

(2,489)

Current income taxes

(4,220)

(1,537)

(5,764)

(6,990)

Non-controlling interests' share of FFO

(15,640)

(13,593)

(44,762)

(41,113)

Unrealized changes in the fair value of financial instruments

(9,882)

(7,636)

(26,435)

198

Other income (expense)

(535)

172

778

2,969

FFO

$53,889

$52,817

$136,736

$144,048

FFO per common share amounts – basic and diluted  

$4.86

$4.76

$12.32

$12.98

Weighted average number of common shares outstanding (in thousands):

Basic and diluted

11,095

11,100

11,098

11,100

 


Three months ended

Nine months ended


September 30

September 30

(in thousands of dollars)

2022

2021

2022

2021

FFO (from above)

$53,889

$52,817

$136,736

$144,048

Add/(deduct):





Unrealized changes in the fair value of financial instruments

9,882

7,636

26,435

(198)

SARs plan increase (decrease) in compensation expense

(13)

(1,195)

(3,413)

3,330

Sears settlement, net of non-controlling interest

(1,238)

Lease cancellation fee and other

(414)

(529)

(1,446)

(2,528)

Tax effect of above adjustments

52

(56)

349

(148)

Normalized FFO

$63,396

$58,673

$158,661

$143,266

Per common share amounts – basic and diluted

$5.71

$5.29

$14.30

$12.91

Fourth Quarter Dividend

The Board of Directors of Morguard Corporation announced that the fourth quarterly, eligible dividend of 2022 in the amount of $0.15 per common share will be paid on December 30, 2022, to shareholders of record at the close of business on December 15, 2022.

The Company's unaudited financial statements for the three and nine months ended September 30, 2022, 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.

About Morguard Corporation

Morguard Corporation is a real estate company, with total assets owned and under management valued at $19.5 billion. As at November 2, 2022, Morguard owns a diversified portfolio of 187 multi-suite residential, retail, office, industrial and hotel properties comprised of 17,326 residential suites, approximately 17.1 million square feet of commercial leasable space and 3,635 hotel rooms. Morguard also currently owns a 61.5% interest in Morguard Real Estate Investment Trust and a 44.7% effective interest in Morguard North American Residential Real Estate Investment Trust. 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

For further information: Morguard Corporation, K. Rai Sahi, Chief Executive Officer, T 905-281-3800; Paul Miatello, Chief Financial Officer, Senior Vice President, T 905-281-3800


ShareThis
 
Oops, an error : please select a service below to share to.
Help us prevent spam by entering the words below
Since your browser does not accept 3rd party cookies,
the system does not work as expected and captcha will be
requested every time.
Oops!
Looks like your browser doesn't accept
third party cookies!
cookie
You need to enable this feature to use the
ShareThis widget.
Here is how you can do so!
Share again » « Back « Back Successfully Shared!
« Back ShareThis
Share this with your friends
Close Select your email service
Import contacts:
Google | Yahoo!
Last Used
      117
      Morguard - Real Estate Ownership, Management and Investment

      Morguard is a fully integrated real estate company. We own, manage and invest in high-quality, well-located . . .

      https://www.morguard.com/#sthash.caSjKNwO

       
       

       

      What Worked:

      You successfully shared to

       

      What didn't work:

      Your message could not be shared to

       

      How to fix it:

      Log back in to complete your share:

      Your message was successfully shared to
      Your message could not be shared:   - Share again
      Your Facebook authorization has expired - log in.
      Log back in to complete your share:
      Pick one or more destinations:
      ... Cancel