MISSISSAUGA, ON, May 2, 2013 /CNW/ - Morguard North American Residential REIT (the "REIT") (TSX: MRG.UN) today announced its financial results for the three months ended March 31, 2013.
- On February 19, 2013, six multi-unit residential properties were acquired from Morguard Corporation ("Morguard") for a purchase price of approximately US$94,009 partially funded by the assumption of the in-place mortgages of US$61,777.
- On March 15, 2013, the REIT completed the offering of $95,105 for 8,270,000 trust units sold at a price of $11.50 per trust unit and the issuance of $60,000 principal amount of 4.65% convertible unsecured subordinated debentures maturing on March 30, 2018. The proceeds of the offering, after underwriters' commission, were $149,639.
- On April 19, 2013, the REIT acquired six multi-unit residential properties, comprised of 1,793 suites located in Denver, Colorado, Tampa, Florida, Cary, North Carolina and Atlanta, Georgia, for US$218,000 financed by the assumption of in-place mortgages of US$81,800 and newly arranged mortgages of US$58,700.
On April 19, 2013, the REIT acquired six multi-unit residential properties from an institutional fund sponsored by Pearlmark Real Estate Partners, L.L.C. for US$218,000 (excluding closing costs). The six properties acquired are residential apartment and townhome complexes comprised of 1,793 suites located in Denver, Colorado, Tampa, Florida, Cary, North Carolina and Atlanta, Georgia. In connection with the purchase of four of the six properties, the REIT assumed in-place mortgage financing of US$81,800 with a weighted average interest rate of 4.86% with a weighted average term to maturity of 4.6 years. For the remaining two properties, the REIT, at closing, entered into first mortgage financing arrangements in an aggregate amount of US$58,700 with a weighted average interest rate of 3.51% for terms of 10 years.
|For the three months ended March 31||2013||2012(7)|
|Number of properties||26||20|
|Weighted average in-place rent(6)||$1,112||$1,122|
|Summary of Financial information|
(in thousands of dollars, except per unit amounts)
|Total Gross Book Value(1)||$1,230,995||$1,020,681|
|Debt to Gross Book Value(3)||45%||42%|
|Weighted average interest rate on mortgages payable||4.3%||4.3%|
|Weighted average term to maturity on mortgages payable||4.4||4.7|
|Net operating income||$12,629||$9,252|
|Comparative net operating income(5)||$9,606||$9,252|
|Income before fair value changes||$3,924||$4,853|
|Funds from Operations (FFO)||$6,377||$4,231|
|FFO per unit - diluted (6)||$0.16||$0.17|
|Adjusted Funds from Operations (AFFO)||$5,976||$4,054|
|AFFO per unit - diluted(6)||$0.15||$0.16|
|Distributions per unit (annualized)(6)||$0.60||$0.60|
|FFO payout ratio (6)||93.75%||88.24%|
|AFFO payout ratio(6)||100.00%||93.75%|
|Weighted average number of units outstanding during year (in thousands)(6)||40,842||25,473|
|(1)||Gross Book Value as defined in the DOT.|
|(2)||Represents outstanding principal amount of mortgages payable and Class C LP Units and convertible debentures of $60,000.|
|(3)||Calculated as Indebtedness as defined in the DOT divided by Gross Book Value.|
|(4)||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 but including interest on convertible debentures.|
|(5)||Comparative net operating income consists of the properties that were owned throughout both the current and comparative three month period.|
|(6)||Units are defined to include the Class B LP Units and convertible debentures. The 25,473 units (in thousands) issued through the IPO have been considered outstanding through the entire operating period.|
|(7)||Retroactively adjusted due to adoption of new IFRS standards (IFRS 10 and 11).|
Certain measures in the above table are not defined by International Financial Reporting Standards ("IFRS"). See "Net Operating Income, FFO, AFFO" below.
NET OPERATING INCOME, FFO, AFFO
Net operating income ("NOI") is an additional IFRS 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 income. 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 a non-IFRS financial measure, which 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.
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 consists of 9,201 residential suites (as of May 1, 2013) located in Ontario, Alberta, Louisiana, Florida, Colorado, Georgia, and North Carolina, with an IFRS value of approximately $1.2 billion.
SOURCE Morguard North American Residential Real Estate Investment Trust