Morguard Real Estate Investment Trust Announces 2018 First Quarter Results

MISSISSAUGA, ON, May 2, 2018 /CNW/ - Morguard Real Estate Investment Trust ("the Trust") (TSX: MRT.UN) today is pleased to announce its financial results for the three months ended March 31, 2018. These results have been prepared in accordance with International Financial Reporting Standards ("IFRS").

The Trust's net income and comprehensive income for the three months ended March 31, 2018, was $17.6 million versus $37.9 million for the three months ended March 31, 2017.

The decrease of $20.3 million is largely the result of fair value changes. Fair value losses for the three months ended March 31, 2018, were $6.0 million, versus an overall gain of $12.0 million for the three months ended March 31, 2017.

Revenue from real estate properties was $69.3 million for the three months ended March 31, 2018, versus $71.3 million for the three months ended March 31, 2017.

The decrease in revenue of $2.0 million is largely the result of increased vacancy and lower base rents in the Trust's office portfolio.  In 2017, the office portfolio benefited from one-time lease cancellation fees of approximately $0.9 million.  Performance in the retail portfolio was generally flat.  Increased vacancy, including the impact of vacancy tied to the Sears Canada Inc. space (approximately $0.5 million), and reduced rental rates were offset by increased revenue from the Trust's development program.  During 2017, 290,700 square feet of development activity became income producing.  These projects contributed $1.4 million to revenue in the first quarter.

The Trust's fully diluted funds from operations ("FFO") for the three months ended March 31, 2018, was $25.5 million ($0.37 per unit) versus $27.9 million ($0.40 per unit) for the same three months ended March 31, 2017.  This represents a decrease of $2.4 million ($0.03 per unit). The decrease in FFO is largely attributed to the decrease in revenue from the office portfolio.

The Trust continues with its development program and expects an additional 210,500 square feet of new area under intensification and remerchandised area to become income producing by the end of 2018.  The Trust has secured commitments on 63% of the remerchandised area and 93% of the area under intensification.

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). The Trust presents FFO in accordance with the Real Property Association of Canada white paper on funds from operations and adjusted funds from operations for IFRS issued February 2018. FFO is a non-GAAP measure that is widely accepted as a supplemental measure of financial performance for real estate entities. In accordance with such white paper, the Trust defines FFO as net income adjusted for fair value changes on real estate properties and gains/(losses) on the sale of real estate properties.

Financial Statements and Management's Discussion and Analysis

The Trust's Q1 2018 Condensed Consolidated Financial Statements and Management's Discussion and Analysis along with its 2017 Annual Report are available on the Trust'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

The Trust is a closed-end real estate investment trust, which owns a diversified portfolio of 48 retail, office and industrial income producing properties in Canada with a book value of $2.9 billion and approximately 8.4 million square feet of leasable space.

SOURCE Morguard Real Estate Investment Trust