Canada NewsWire
MISSISSAUGA, ON, Feb. 14, 2018
MISSISSAUGA, ON, Feb. 14, 2018 /CNW/ - Morguard North American Residential REIT (the "REIT") (TSX: MRG.UN) today announced its financial results for the year ended December 31, 2017.
Highlights
The REIT is reporting annual performance of:
The REIT is reporting the following corporate and portfolio highlights for 2017:
Financial and Operational Highlights
As at December 31 |
||
(In thousands of dollars, except as noted otherwise) |
2017 |
2016 |
Operational Information |
||
Number of properties |
46 |
46 |
Total suites |
13,314 |
13,472 |
Occupancy percentage |
94.4% |
95.2% |
Average monthly rent - Canada (in actual dollars) |
$1,327 |
$1,294 |
Average monthly rent - U.S. (in actual U.S. dollars) |
US$1,203 |
US$1,028 |
Summary of Financial Information |
||
Gross book value |
$2,651,097 |
$2,285,727 |
Indebtedness |
$1,363,228 |
$1,237,613 |
Indebtedness to gross book value ratio |
51% |
54% |
Weighted average mortgage interest rate |
3.5% |
3.6% |
Weighted average term to maturity on mortgages payable (years) |
6.2 |
5.7 |
Exchange rates - United States dollar to Canadian dollar |
$1.25 |
$1.34 |
Financial and Operational Highlights (Continued)
For the years ended December 31 |
||
(In thousands of dollars, except per Unit amounts) |
2017 |
2016 |
Summary of Financial Information |
||
Interest coverage ratio |
2.19 |
2.04 |
Indebtedness coverage ratio |
1.54 |
1.39 |
Revenue from income producing properties |
$226,495 |
$218,472 |
NOI |
$122,736 |
$115,294 |
Proportionate NOI |
$118,970 |
$112,620 |
Same Property Proportionate NOI |
$105,603 |
$103,111 |
NOI margin - IFRS |
54.2% |
52.8% |
NOI margin - Proportionate |
53.7% |
52.8% |
Net income |
$173,131 |
$31,978 |
FFO - basic |
$59,725 |
$57,591 |
FFO - diluted |
$62,515 |
$60,381 |
FFO per Unit - basic |
$1.18 |
$1.24 |
FFO per Unit - diluted |
$1.14 |
$1.20 |
Distributions per Unit |
$0.64 |
$0.61 |
FFO payout ratio |
54.7% |
49.0% |
Weighted average number of Units outstanding (in thousands): |
||
Basic |
50,802 |
46,510 |
Diluted |
54,673 |
50,381 |
Average exchange rates - United States dollar to Canadian dollar |
$1.30 |
$1.32 |
Net Income
Net income of $173.1 million for the year ended December 31, 2017, increased by $141.2 million compared to $32.0 million in 2016. The increase in net income was primarily due to the following:
Net Operating Income
For the year ended December 31, 2017, NOI from the REIT's properties increased by $7.4 million (or 6.5%) to $122.7 million, compared to $115.3 million in 2016. The increase in NOI is due to an increase from acquisitions net of the disposal of properties of $4.8 million and an increase in Same Property NOI of $2.6 million (or 2.5%). The Same Property increase of $2.6 million is due to an increase in Canada of $3.2 million (or 7.8%), an increase in the U.S. of US$0.5 million (or 1.1%) and the change in foreign exchange rate which decreased NOI by $1.1 million.
For the year ended December 31, 2017, Proportionate NOI from the REIT's properties increased by $6.4 million (or 5.6%) to $119.0 million, compared to $112.6 million in 2016. The increase in Proportionate NOI is due to an increase from acquisitions net of the disposal of properties of $3.9 million and an increase in Same Property Proportionate NOI of $2.5 million (or 2.4%). The Same Property increase of $2.5 million is due to an increase in Canada of $3.1 million (or 7.8%), an increase in the U.S. of US$0.5 million (or 1.0%) and the change in foreign exchange rate which decreased Proportionate NOI by $1.1 million.
Funds from Operations
Basic FFO for the year ended December 31, 2017, increased by $2.1 million, or 3.7%, to $59.7 million ($1.18 per Unit), compared to $57.6 million ($1.24 per Unit) in 2016. The increase is mainly due to higher Proportionate NOI of $6.4 million, partially offset by an increase in interest expense of $2.3 million (excluding distributions on Class B LP Units and fair value adjustments), an increase in trust expenses of $0.6 million and an increase in other expenses of $1.2 million.
Basic FFO per Unit for the year ended December 31, 2017, decreased by $0.06 to $1.18 per Unit, compared to $1.24 per Unit due to the following factors:
i) |
the change in the foreign exchange rate had a $0.01 per Unit negative impact; |
ii) |
the Downsview Acquisition under initial lease-up has not yet fully contributed to NOI as stabilized |
iii) |
the U.S. properties acquired during 2017 have incurred transitional elevated vacancies due to (a) new |
iv) |
the impact of selling the Alabama properties at a higher yield as compared to the yield achieved on |
Subsequent Events
On February 13, 2018, the REIT completed a public offering of convertible unsecured subordinated debentures on a bought deal basis, of $75.0 million aggregate principal amount of 4.50% convertible unsecured subordinated debentures due March 31, 2023 (the "4.50% Debentures"). The 4.50% Debentures are convertible, at the option of the holder, into Units at $20.20 per Unit. As part of the transaction, Morguard has agreed to purchase $5.0 million of the 4.50% Debentures.
The REIT had granted an over-allotment option exercisable at any time up to 30 days after closing, to acquire additional 4.50% Debentures up to $10.5 million.
The REIT will use the net proceeds from the offering to fund the redemption of all of the REIT's outstanding 4.65% convertible unsecured subordinated debentures on February 26, 2018, which mature on March 30, 2018 and which have a par call date of April 1, 2017. The REIT intends to use the remainder of the net proceeds, if any, to fund future acquisitions, for debt repayment and for general trust purposes.
The REIT's audited consolidated financial statements for the year ended December 31, 2017, along with the Management's Discussion and Analysis will be available on the REIT's website at www.morguard.com and will be filed with SEDAR at www.sedar.com.
Non-IFRS Measures
The REIT's consolidated financial statements are prepared in accordance with International Financial Reporting Standards ("IFRS"). The following measures, NOI, Proportionate NOI, Same Property NOI, Same Property Proportionate NOI, FFO, indebtedness, gross book value, indebtedness to gross book value ratio, interest coverage ratio, indebtedness coverage ratio and Proportionate Basis (collectively, the "non-IFRS measures") as well as other measures discussed elsewhere in this press release, do not have a standardized definition prescribed by IFRS and are, therefore, unlikely to be comparable to similar measures presented by other reporting issuers. The REIT uses these measures to better assess the REIT'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 REIT's Management's Discussion and Analysis for the year ended December 31, 2017 and available on the REIT's profile on SEDAR at www.sedar.com.
Conference Call Details
Morguard North American Residential Real Estate Investment Trust will hold a conference call on Thursday, February 15, 2018 at 3:00 p.m. (ET) to discuss the financial results for the years ended December 31, 2017 and 2016. To participate in the conference call, please dial 647-427-7450 or 1-888-231-8191. Please quote conference ID # 5966836.
About Morguard North American Residential REIT
The REIT is an unincorporated, open-ended real estate investment trust established under and governed by the laws of the Province of Ontario. The Units of the REIT trade on the Toronto Stock Exchange under the ticker symbol MRG.UN. With a strategic focus on the acquisition of high-quality multi-suite residential properties in Canada and the United States, the REIT maximizes long-term Unit value through active asset and property management. Its portfolio consists of 13,314 residential suites (as of February 13, 2018) located in Alberta, Ontario, Colorado, Texas, Louisiana, Illinois, Georgia, Florida, North Carolina, Virginia and Maryland with an appraised value of approximately $2.6 billion at December 31, 2017. For more information, visit the REIT's website at www.morguard.com.
SOURCE Morguard North American Residential Real Estate Investment Trust
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