Market Overview

Morguard North American Residential REIT Announces 2012 Third Quarter Results



MISSISSAUGA, ON, Oct. 31, 2012 /CNW/ - Morguard North American Residential REIT (the 'REIT") (TSX:  MRG.UN) today announced its financial results for the three months ended September 30, 2012. The REIT completed its initial public offering of trust units on April 18, 2012.


  • On July 16, 2012, Village Crossing Apartments was acquired from Morguard Corporation for a purchase price of US$16,347 funded by mortgage financing of US$11,400.
  • On July 31, 2012, the REIT acquired Woodbine Apartments from a third party vendor for a purchase price of US$42,100 and on September 4, 2012, the REIT completed the financing on the property in the amount of US$29,470.
  • On August 29, 2012, the REIT acquired Blue Isle Apartments from a third party vendor for a purchase price of US$40,000 and on October 19, 2012, the REIT completed the financing on the property in the amount of US$26,000; and
  • On September 12, 2012, the REIT completed the offering of $150,732 for 12,720,000 trust units sold at a price of $11.85 per trust unit. The proceeds of the offering, after underwriters' commission, were $146,703.


    As at
As at
As at
Operational information        
Number of properties   20 17 17
Total suites   6,379 5,439 5,439
Occupancy %   97.1% 98.4% 97.5%
Weighted average in-place rent   $1,066 $1,193 $1,134
Summary of Financial Information        
(in thousands of dollars, except per unit amounts)        
Total Gross Book Value(1)   $859,883 $676,944 $614,662
Debt(2)   399,136 360,605 363,703
Debt to Gross Book Value(1)   46% 53% 59%
Weighted average mortgage interest rate   4.3% 4.4% 4.4%
Weighted average term to maturity   4.6 4.7 5.0
  Three months
ended September 30,
Nine months
ended September 30,
  2012 2011 2012 2011
Summary of Financial Information        
(in thousands of dollars, except per unit amounts)        
Interest coverage(3) 1.94 2.23 2.09 2.12
Revenue $20,316 $18,160 $57,065 $53,618
Net operating income $10,203 $9,366 $29,732 $27,072
Income before fair value changes $2,116 $5,163 $10,271 $14,265
Funds from Operations (FFO) $4,700 $4,888 $14,198 $13,520
FFO per unit - diluted (4) $0.17 $0.19 $0.53 $0.53
Adjusted Funds from Operations (AFFO) $4,470 $4,670 $13,542 $12,856
AFFO per unit - diluted(4) $0.16 $0.18 $0.50 $0.50
Distributions per unit (annualized)(4) $0.60 $0.60 $0.60 $0.60
FFO payout ratio (4) 88.24% 78.95% 84.91% 84.91%
AFFO payout ratio(4) 93.75% 83.33% 90.00% 90.00%
Weighted average number of units
outstanding during period (000's)(4)





(1)    Calculated as "Indebtedness" divided by "Gross Book Value", each as defined in the DOT
(2)    Represents outstanding principal amount of mortgages payable and Class C LP Units
(3)     Interest coverage ratio is defined as income before interest expense, income taxes, non-recurring gains or losses, amortization and interest income over interest expense excluding interest on Class B LP Units.
(4)   Units are defined to include the Class B LP Units. The 25,473 units issued through the IPO have been considered outstanding through the entire operating period

Certain measures in the above table are not defined by generally accepted accounting principles ("GAAP"). See "Net Operating Income, FFO, AFFO" below.


Net operating income ("NOI") is an additional GAAP measure that is used by industry analysts, investors and management to measure operating performance of the REIT's properties.  NOI represents income from real estate properties less property operating costs and realty tax expense as presented in the consolidated statement of operations.  Accordingly, NOI excludes certain expenses included in the determination of net income such as trust expenses, interest expense, fair market value adjustments and other indirect operating expenses.  NOI is not a recognized measure under IFRS and, accordingly, the term does not necessarily have a standardized meaning and may not be comparable to similarly titled measures presented by other publicly traded entities.

FFO is an industry standard for evaluating operating performance, but is not indicative of funds available to meet the REIT's cash requirements.  FFO is computed by the REIT in accordance with the current definitions of the Real Property Association of Canada ("REALpac") and is defined as net income before fair value gains/losses on real estate properties, fair value gains/losses on the redeemable Class B LP Units classified as liabilities, distributions on the Class B LP Units, gains/losses on the disposition of real estate properties and deferred income taxes on the U.S. properties.

AFFO is a non-IFRS financial measure used by most Canadian real estate investment trusts, but should not be considered as an alternative to net income, cash flow from operations or any other measure prescribed under IFRS.  The Trustees consider AFFO to be a useful measure of cash available for distributions.  AFFO is a supplemental measure to net income that is used in the real estate industry to assess the sustainability of future cash distributions paid to the REIT's unitholders.  AFFO should not be interpreted as an indicator of cash generated from operating activities as it does not consider changes in working capital.  AFFO is defined as FFO adjusted by (i) adding amortization of deferred financing costs assumed by the REIT on the 17 properties that were acquired concurrent with the completion of the IPO, amortization of free rent and amortization of cash flow hedges, (ii) deducting reserves for maintenance capital expenditures, and (iii) making such other adjustments as may be determined by the Trustees in their discretion.  Maintenance capital expenditures are estimated by management and represent capital expenditures that are required to maintain the existing earning potential of a property.  Significant judgment is required to classify capital investments.

The REIT's Q3 2012 Consolidated Financial Statement and Management's Discussion and Analysis are available on the REIT's website at and have been filed with SEDAR at

About Morguard North American Residential REIT

The REIT is an unincorporated, open-ended real estate investment trust established under the laws of the Province of Ontario.  It trades on the Toronto Stock Exchange under the ticker symbol MRG.UN.  With a strategic focus on the acquisition of high-quality multi-unit residential properties in Canada and the United States, the REIT maximizes long-term unit value through active asset and property management. Its portfolio currently consists of 6,379 residential suites located in Ontario, Alberta, Louisiana and Florida, with an IFRS value of approximately $860 million

SOURCE Morguard North American Residential Real Estate Investment Trust

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