Mr. K. Rai Sahi reports

MORGUARD CORPORATION ANNOUNCES 2023 RESULTS AND REGULAR ELIGIBLE DIVIDEND

Morguard Corp. has released its financial results for the year ended Dec. 31, 2023.

Reporting highlights:

• Normalized funds from operations (FFO) was $239.7-million, or $21.98 per common share, for the year ended Dec. 31, 2023. This represents an increase of $20.9-million, or 9.5 per cent, compared with $218.8-million, or $19.75 per common share, for the same period in 2022.
• Net income decreased by $54.0-million to $58.2-million for the year ended Dec. 31, 2023, compared with $112.2-million for the same period in 2022.
• Total revenue from real estate properties increased by $84.2-million, or 9.2 per cent, to $1.0-billion for the year ended Dec. 31, 2023, compared with $916.5-million for the same period in 2022.
• Adjusted net operating income (NOI) increased by $57.7-million, or 10.8 per cent, to $594.4-million for the year ended Dec. 31, 2023, compared with $536.7-million for the same period in 2022.

Operational and balance sheet highlights:

• The company acquired two multisuite residential properties for a purchase price of $223.8-million, including closing costs.
• The company issued $175.0-million of 9.5 per cent Series H senior unsecured debentures due on Sept. 26, 2026.
• The company repaid $175.0-million of 4.402 per cent Series G senior unsecured debentures on maturity.
• The company financed new and existing mortgages for additional net proceeds of $169.3-million at an average interest rate of 6.05 per cent and an average term of 4.4 years.
• The company ended the year in a strong liquidity position, with $318.0-million of cash and available credit facilities, and a $1.2-billion pool of unencumbered properties, hotels and other investments.
• As at Dec. 31, 2023, the company's total assets were $11.6-billion, compared with $11.7-billion at Dec. 31, 2022.
• Subsequent to Dec. 31, 2023, the company sold a portfolio of 14 hotels for gross proceeds of $410.0-million and repaid first mortgage debt totalling $48.7-million, resulting in net proceeds of $361.3-million before closing costs and customary adjustments.

Total revenue during the year ended Dec. 31, 2023, increased by $87.3-million to $1.2-billion compared with $1.1-billion in 2022, primarily due to an increase in revenue from real estate properties in the amount of $84.2-million due to higher average monthly rent (AMR) within the multisuite residential segment and an increase of $21.4-million from a change in foreign exchange rates.

Net income for the year ended Dec. 31, 2023, was $58.2-million, compared with $112.2-million in 2022. The decrease in net income of $54.0-million for the year ended Dec. 31, 2023, was primarily due to the following:

• An increase in non-cash net fair value loss of $94.4-million, mainly due to an increase in fair value loss on real estate properties, a decrease in fair value gain on the Morguard Residential REIT units and an increase in fair value loss on other real estate funds investments;
• An increase in net operating income of $58.8-million, primarily due to an increase in AMR at multisuite residential properties. In addition, higher NOI from the hotel portfolio due to an increase in transient and corporate demand compared with 2022;
• An increase in interest expense of $35.3-million, mainly due to higher interest on mortgages payable and bank indebtedness, partially offset by lower interest on the debentures, primarily due to the repayment of the Series C senior unsecured debentures on Sept. 15, 2022. The change in foreign exchange rate increased U.S. mortgage interest by $5.8-million;
• An increase in property management and corporate expenses of $9.5-million;
• A recovery of impairment on hotel properties of $11.0-million.

Average occupancy levels

During the year, occupancy was strong and 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.

An attached table provides occupancy by asset class.

Adjusted net operating income

An attached table provides a reconciliation of adjusted NOI to its closely related financial statement measurement.

Funds from operations and normalized FFO

An attached tables provide a reconciliation of FFO and normalized FFO to its closely related financial statement measurement.

First quarter dividend

The board of directors of Morguard announced that the first quarterly eligible dividend of 2024 in the amount of 15 cents per common share will be paid on March 28, 2024, to shareholders of record at the close of business on March 15, 2024.

Subsequent events

On Jan. 18, 2024, the company sold a portfolio of 14 high-quality hotels for gross proceeds of $410.0-million. Upon closing the transaction, Morguard repaid first mortgage debt totalling $48.7-million, resulting in net proceeds of $361.3-million, before closing costs and customary adjustments.

Subsequent to Dec. 31, 2023, the company fully repaid the Series E senior unsecured debentures on maturity in the amount of $225.0-million and $151.0-million on the company's operating lines of credit with net proceeds generated from the disposition of 14 hotel properties.

The company's audited condensed financial statements for the year ended Dec. 31, 2023, along with management's discussion and analysis, will be available on the company's website and will be filed with SEDAR+.

About Morguard Corp.

Morguard is a real estate company, with total assets owned and under management valued at $18.6-billion. As at Feb. 22, 2024, Morguard owns a diversified portfolio of 164 multisuite residential, retail, office, industrial and hotel properties comprising 17,798 residential suites, approximately 17.1 million square feet of commercial leasable space and 771 hotel rooms. Morguard also currently owns a 65.3-per-cent interest in Morguard Real Estate Investment Trust and a 46.1-per-cent effective interest in Morguard North American Residential Real Estate Investment Trust. Morguard also provides advisory and management services to institutional and other investors.