MISSISSAUGA, ON, Feb. 13, 2024 /CNW/ – Morguard North American Residential REIT (the “REIT”) (TSX:MRG) today announced its financial results for the year ended December 31, 2023.
Highlights
The REIT is reporting performance of:
Net operating income (“NOI”) of $180.2 million for the year ended December 31, 2023, an increase of $29.0 million, or 19.2% compared to 2022. The change in foreign exchange rate increased NOI by $8.2 million.
Same Property Proportionate NOI in Canada increased by $7.1 million (or 13.0%), and in the U.S. increased by US$3.0 million (or 4.3%), compared to 2022.
Net income of $185.3 million for the year ended December 31, 2023, a decrease of $54.3 million, or 22.7% compared to 2022, predominantly due to a lower net fair value gain, partially offset by a decrease in deferred income tax.
Basic funds from operations (“FFO”) of $91.9 million for the year ended December 31, 2023, an increase of $9.1 million, or 11.0% over the same period in 2022.
Basic FFO of $1.65 per Unit for the year ended December 31, 2023, a 12.2% increase as compared to the $1.47 per Unit in 2022.
The REIT is reporting the following corporate and portfolio highlights:
During the first quarter of 2023, the REIT acquired from Morguard Corporation the remaining 50% interest in Fenestra at Rockville Town Square, comprising 492 residential suites, for a purchase price of $96.9 million (US$71.5 million), including closing costs, and assumed mortgages payable of $46.0 million (US$34.0 million).
During the first quarter of 2023, the REIT acquired Xavier, a multi-suite residential property comprising 240 suites located in Chicago, Illinois, for a purchase price of $113.8 million (US$83.8 million), including closing costs.
During the year ended December 31, 2023, the REIT completed the refinancing of four US properties and one Canadian property providing gross mortgage proceeds of $187.3 million at a weighted average interest rate of 4.86% for a weighted average term of 9.6 years. The maturing mortgages associated with the refinanced properties had a balance at maturity of $106.4 million at a weighted average interest rate of 3.36%, resulting in net proceeds of $80.9 million, before financing costs.
During the first quarter of 2023, the REIT issued $56.0 million of 6.0% convertible unsecured subordinated debentures, and fully repaid $85.5 million of 4.5% convertible unsecured subordinated debentures.
As at December 31, 2023, average monthly rent (“AMR”) in Canada increased by 5.4% compared to December 31, 2022, while occupancy increased to 98.7% at December 31, 2023, compared to 98.6% at December 31, 2022.
As at December 31, 2023, AMR in the U.S., on a Same Property basis, increased by 4.2% compared to December 31, 2022, while occupancy was 94.2% at December 31, 2023, compared to 95.3% at December 31, 2022.
As at December 31, 2023, indebtedness to gross book value ratio increased to 38.7%, compared to 38.0% as at December 31, 2022.
Financial and Operational Highlights
As at December 31
(In thousands of dollars, except as otherwise noted)
2023
2022
Operational Information
Number of properties
43
42
Total suites
13,089
12,849
Occupancy percentage – Canada
98.7 %
98.6 %
Occupancy percentage – U.S.
94.2 %
95.3 %
Average monthly rent – Canada (in actual dollars)
$1,674
$1,588
Average monthly rent – U.S. (in actual U.S. dollars)
US$1,875
US$1,771
Summary of Financial Information
Gross book value(1)
$4,095,931
$3,934,417
Indebtedness(1)
$1,583,311
$1,496,179
Indebtedness to gross book value ratio(1)
38.7 %
38.0 %
Weighted average mortgage interest rate
3.72 %
3.50 %
Weighted average term to maturity on mortgages payable (years)
4.9
4.9
Exchange rates – United States dollar to Canadian dollar
$1.32
$1.35
Exchange rates – Canadian dollar to United States dollar
$0.76
$0.74
(1)
Represents a non-GAAP financial measure/ratio that does not have any standardized meaning prescribed by IFRS and is not necessarily comparable to similar measures presented by other reporting issuers in similar or different industries. This measure should be considered as supplemental in nature and not as substitutes for related financial information prepared in accordance with IFRS.
For the years ended December 31
(In thousands of dollars, except per Unit amounts)
2023
2022
Summary of Financial Information
Revenue from real estate properties
$331,620
$278,491
NOI
$180,240
$151,215
Proportionate NOI(1)
$178,756
$154,109
Same Property Proportionate NOI(1)
$159,614
$145,293
NOI margin – IFRS
54.4 %
54.3 %
NOI margin – Proportionate(1)
54.2 %
54.2 %
Net income
$185,281
$239,563
FFO – basic(1)
$91,942
$82,803
FFO – diluted(1)
$95,550
$86,651
FFO per Unit – basic(1)
$1.65
$1.47
FFO per Unit – diluted(1)
$1.63
$1.43
Distributions per Unit
$0.7233
$0.7030
FFO payout ratio(1)
43.8 %
47.8 %
Weighted average number of Units outstanding (in thousands):
Basic
55,662
56,310
Diluted
58,501
60,543
Average exchange rates – United States dollar to Canadian dollar
$1.35
$1.30
Average exchange rates – Canadian dollar to United States dollar
$0.74
$0.77
(1)
Represents a non-GAAP financial measure/ratio that does not have any standardized meaning prescribed by IFRS and is not necessarily comparable to similar measures presented by other reporting issuers in similar or different industries. This measure should be considered as supplemental in nature and not as substitutes for related financial information prepared in accordance with IFRS.
Specified Financial Measures
The REIT reports its financial results in accordance with International Financial Reporting Standards (“IFRS”). However, this earnings release also uses specified financial measures that are not defined by IFRS, which follow the disclosure requirements established by National Instrument 52-112 Non-GAAP and Other Financial Measures Disclosure. Specified financial measures are categorized as non-GAAP financial measures, non-GAAP ratios, and other financial measures. Additional details on specified financial measures including supplementary financial measures, capital management measures and total segment measures are set out in the REIT’s Management’s Discussion and Analysis for the year …
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