MISSISSAUGA, ON, May 4, 2021 /CNW/ - Morguard Corporation
("Morguard" or the "Company") (TSX: MRC) today announced its
financial results for the three months ended March 31, 2021.
Morguard is pleased to report its financial and operating
results for the three months ended March 31,
2021, that demonstrate the resilient nature of the Company's
portfolio and also reflect the prudent actions taken by management
and staff in our continued response to the ongoing COVID-19
pandemic.
Reporting Highlights
- Net income increased by $26.8
million to $17.9 million for
the three months ended March 31,
2021, compared to net loss of $8.9
million for the same period in 2020. The increase was
primarily due to a higher net fair value gain of $75.7 million and a lower provision for
impairment of $23.9 million,
partially offset by a decrease in NOI of $16.1 million, an increase in property management
and corporate expense of $9.1 million
and an increase in deferred income tax expense of $64.9 million.
- Normalized FFO was $43.2 million,
or $3.89 per common share, for the
three months ended March 31, 2021.
This represents a decrease of $7.4
million, or 14.6% compared to $50.6
million for the same period in 2020.
- Total revenue from real estate properties decreased by
$16.9 million, or 7.4% to
$211.4 million for the three months
ended March 31, 2021, compared to
$228.3 million for the same period in
2020.
- Total revenue from hotel properties decreased by $25.7 million, or 53.7% to $22.1 million for the three months ended
March 31, 2021, compared to
$47.8 million for the same period in
2020.
- Net operating income ("NOI") decreased by $16.1 million, or 15.7%, to $86.5 million for the three months ended
March 31, 2021, compared to
$102.6 million for the same period in
2020, primarily due to higher vacancy at residential properties and
a decrease from the retail portfolio due to a decrease in basic
rent and higher bad debt expense. In addition, lower NOI from the
hotel portfolio was due to hotel closures and reduced occupancies
from the impact of COVID-19 and was partially offset by a provision
for CEWS.
Operational and Balance Sheet Highlights
- Rent collections from all commercial asset classes have been
strong with an average of approximately 95% collected since the
second quarter of 2020.
- During the year, occupancy was 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 March 31, 2021 and
December 31, 2020, the Company's
total assets were $11.1 billion.
Financial Highlights
For the three
months ending March 31
|
|
(in thousands of
dollars, except per common share)
|
2021
|
2020
|
Revenue from real
estate properties
|
$211,364
|
$228,266
|
Revenue from hotel
properties
|
22,148
|
47,805
|
Management and
advisory fees
|
10,126
|
12,197
|
Interest and other
income
|
3,324
|
4,042
|
Total
revenue
|
$246,962
|
$292,310
|
|
|
|
Revenue from real
estate properties
|
$211,364
|
$228,266
|
Revenue from hotel
properties
|
22,148
|
47,805
|
Property operating
expenses - excluding bad debt expense
|
(126,668)
|
(129,821)
|
Property operating
expenses - bad debt expense
|
(2,280)
|
(1,113)
|
Hotel operating
expenses
|
(18,090)
|
(42,536)
|
Net operating
income
|
$86,474
|
$102,601
|
|
|
|
Net income
attributable to common shareholders
|
$15,155
|
$33,412
|
Net income per common
share – basic and diluted
|
$1.37
|
$2.97
|
|
|
|
Funds from
operations
|
$44,351
|
$6,993
|
FFO per common share
– basic and diluted
|
$4.00
|
$0.62
|
|
|
|
Normalized funds from
operations
|
$43,224
|
$50,633
|
Normalized FFO per
common share – basic and diluted
|
$3.89
|
$4.50
|
Rental Collection Summary
As at May 4, 2021, the Company's collection of rental
revenues since January 1, 2020 is
summarized below by asset class as follows:
|
Q1
|
Q2
|
Q3
|
Q4
|
Q1
|
April
|
%
Rental
|
Asset
Class
|
2020
|
2020
|
2020
|
2020
|
2021
|
2021
|
Revenue
|
Residential
|
99.8%
|
99.6%
|
99.4%
|
99.2%
|
98.2%
|
95.8%
|
44.3%
|
Retail
|
98.3%
|
62.4%
|
85.6%
|
90.5%
|
86.5%
|
84.4%
|
27.1%
|
Office
|
99.9%
|
92.8%
|
98.1%
|
97.7%
|
97.7%
|
96.8%
|
27.3%
|
Industrial
|
100.0%
|
93.5%
|
96.9%
|
99.6%
|
98.0%
|
95.0%
|
1.3%
|
Total
|
99.4%
|
86.6%
|
95.0%
|
96.2%
|
94.7%
|
92.9%
|
100.0%
|
Liquidity
The Company has liquidity of approximately
$562 million comprised of
$121 million in cash and $441 million available under its revolving credit
facilities. In addition, the Company has approximately $1,315 million of unencumbered income producing
and hotel properties, and other investments which could be utilized
for financing. To further enhance liquidity, the Company has
narrowed down the scope of its capital expenditure program to
ensure the availability of resources, allocating an amount that
enables the Company to maintain the structural and overall safety
of the properties. Management has also implemented various
initiatives to reduce or defer operating expenses, property tax
instalments, hydro payments and corporate income tax instalments.
Management is also monitoring various government assistance
programs in Canada and the U.S.
structured to provide relief from personnel costs and commercial
rent subsidies.
The Company has approximately $875
million of mortgages payable maturing during 2021 and 2022
having an aggregate loan-to-value ratio of 42% and a
weighted-average interest rate of 3.9% which management expects to
be able to refinance at similar or favourable terms. In addition,
the Company has $200 million of
senior unsecured debentures maturing in May
2021. The Company expects to be able to issue new debt
instruments and use current liquidity sufficient to permit the
repayment of its 2021 and 2022 maturities.
Net Operating Income
NOI decreased by $16.1 million, or
15.7%, during the three months ended March
31, 2021, to $86.5 million,
compared to $102.6 million generated
in 2020, and is further analyzed by asset type below.
For the three
months ending March 31
|
|
(in thousands of
dollars)
|
2021
|
2020
|
Multi-suite
residential
|
$50,749
|
$58,632
|
Retail
|
28,222
|
33,834
|
Office
|
33,519
|
34,760
|
Industrial
|
1,781
|
1,956
|
Hotels
|
4,058
|
5,269
|
Adjusted
NOI
|
118,329
|
134,451
|
IFRIC 21 adjustment –
multi-suite residential
|
(27,859)
|
(27,656)
|
IFRIC 21 adjustment –
retail
|
(3,996)
|
(4,194)
|
NOI
|
$86,474
|
$102,601
|
Adjusted NOI for the three months ended March 31, 2021, decreased by $16.1 million, or 12.0% to $118.3 million, compared to $134.5 million in 2020, primarily due to the
following:
- A decrease in the Canadian residential portfolio of
$2.2 million, primarily due to
increased vacancy as a result of lower leasing traffic resulting
from social distancing restrictions and current economic
conditions;
- A decrease in U.S. residential portfolio of US$2.9 million, primarily from higher vacancy and
rental concessions at two properties located in Chicago, Illinois;
- A decrease in the Canadian retail portfolio of $5.2 million, mainly due to an increase in bad
debt expense of $2.2 million due to
higher bad debt expense resulting from an expected credit loss due
to the economic impact of COVID-19, as well as a decrease of
$5.6 million from higher vacancy,
lower recoveries of operating expenses and lower basic rent due to
conversion to percentage rent leases, partially offset by an
increase of $2.5 million in lease
cancellation fees;
- A decrease in the office portfolio of $1.2 million, primarily due to lower basic rent,
parking revenue, lower recoveries of operating expenses as well as
rent abatement at a property in Calgary,
Alberta, partially offset by an increase of $1.2 million due to a recovery of bad debt
provision at a property located in Saint-Laurent, Québec;
- A decrease in the hotel portfolio of $1.2 million, primarily due to a decrease of
$5.7 million resulting from hotel
closures, lower occupancy and lower average daily rate due to
current economic conditions experienced in all provinces as a
result of the COVID-19 pandemic, partially offset by an increase of
$4.5 million due to a provision for
CEWS; and
- A decrease of $3.1 million due to
the change in the U.S. dollar foreign exchange rate.
Funds From Operations
For the three months ended March 31,
2021, the Company recorded FFO of $44.4 million ($4.00 per common share), compared to $7.0 million ($0.62
per common share) in 2020. The increase in FFO of $37.4 million is mainly due to the following:
- A decrease in Adjusted NOI of $16.1
million, primarily due to higher vacancy at residential
properties and a decrease from the retail portfolio due to a
decrease in basic rent and higher bad debt expenses. In addition,
lower Adjusted NOI from the hotel portfolio was due to hotel
closures and reduced occupancies from the impact of COVID-19 and
was partially offset by a provision for CEWS;
- A decrease in management and advisory fees of $2.1 million;
- A decrease in equity-accounted FFO of $2.2 million, primarily due to the Company's
investment in Lumina Hollywood, which is under initial
lease-up;
- A decrease in interest expense of $5.4
million, mainly due to lower interest on mortgages payable,
bank indebtedness, loans payable and other, and lower amortization
of deferred financing cost;
- An increase in property management and corporate expenses of
$9.1 million, primarily due to an
increase in non-cash compensation expense related to the Company's
Stock Appreciation Rights plan of $11.2
million, partially offset by a provision for CEWS;
- A decrease in current income taxes of $1.7 million;
- A decrease in the non-controlling interests' share of FFO of
$1.3 million;
- An increase in unrealized changes in the fair value of the
Company's financial instruments of $56.4
million; and
- An increase in other income of $2.7
million, primarily due to settlement proceeds received on
four disclaimed leases from Sears Canada Inc.
The change in foreign exchange rate had a negative impact on FFO
of $1.0 million ($0.09 per common share).
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. Normalized FFO for the
three months ended March 31, 2021,
was $43.2 million, or $3.89 per common share, versus $50.6 million, or $4.50 per common share, for the same period in
2020, which represents a decrease of $7.4
million, or 14.6%.
Second Quarter Dividend
The Board of Directors of Morguard Corporation announced that
the second quarterly, eligible dividend of 2021 in the amount of
$0.15 per common share will be paid
on June 30, 2021, to shareholders of
record at the close of business on June 15,
2021.
The Company's unaudited condensed consolidated financial
statements for the three months ended March
31, 2021, 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, 2021 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 $19.2
billion. As at May 4, 2021,
Morguard owns a diversified portfolio of 203 multi-suite
residential, retail, office, industrial and hotel properties
comprised of 17,752 residential suites, approximately 16.9 million
square feet of commercial leasable space and 5,517 hotel rooms.
Morguard also currently owns a 60.9% 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