Mr. K. Rai Sahi reports

MORGUARD CORPORATION ANNOUNCES 2024 FIRST QUARTER RESULTS AND REGULAR ELIGIBLE DIVIDEND

Morguard Corp. has released its financial results for the three months ended March 31, 2024.

Reporting Highlights

• Normalized funds from operations(1) ("Normalized FFO") was $52.6 million, or $4.86 per common share, for the three months ended March 31, 2024. This represents an increase of $2.3 million, or 4.6%, compared to $50.3 million, or $4.56 per common share for the same period in 2023.
• Net income increased by $148.1 million to $116.8 million for the three months ended March 31, 2024, compared to a net loss of $31.3 million for the same period in 2023, primarily due to a gain on sale of hotel properties of $150.6 million.
• Total revenue from real estate properties increased by $10.7 million, or 4.3%, to $257.1 million for the three months ended March 31, 2024, compared to $246.4 million for the same period in 2023.
• Total revenue from hotel properties decreased by $20.7 million, or 66.5%, to $10.4 million for the three months ended March 31, 2024, compared to $31.1 million for the same period in 2023, primarily due to the sale of 14 hotel properties on January 18, 2024.
• Adjusted NOI(1) increased by $1.8 million, or 1.3%, to $138.0 million for the three months ended March 31, 2024, compared to $136.2 million for the same period in 2023.

Operational and Balance Sheet Highlights

• The Company sold the common shares of its subsidiary, Morguard Hotels Limited, and the beneficial interest in 14 hotels for net proceeds of $405.8 million, including closing costs and repaid three first mortgage loans totalling $48.6 million.
• An office property in Ottawa was sold for net proceeds of $125.2 million, including closing costs, and repaid the mortgage payable secured by the property in the amount of $57.7 million.
• The Company fully repaid $225.0 million of 4.715% Series E senior unsecured debentures on maturity.
• The Company ended the quarter in a strong liquidity position with $435.0 million of cash and available credit facilities, and a $1.2 billion pool of unencumbered properties, hotels and other investments.
• As at March 31, 2024, the Company's total assets were $11.4 billion, compared to $11.6 billion at December 31, 2023.

  
   Financial Highlights                                                       
For the three months ended March 31                                        
(in thousands of dollars)                              2024      2023     
Revenue from real estate properties                    $257,089  $246,372 
Revenue from hotel properties                          10,437    31,159   
Management and advisory fees                           9,657     10,150   
Interest and other income                              4,483     5,096    
Total revenue                                          $281,666  $292,777 
Revenue from real estate properties                    $257,089  $246,372 
Revenue from hotel properties                          10,437    31,159   
Property operating expenses                            (163,144) (156,829)
Hotel operating expenses                               (9,634)   (25,583) 
Net operating income ("NOI")                           $94,748   $95,119  
Net income (loss) attributable to common shareholders  $130,446  ($34,690)
Net income (loss) per common share - basic and diluted $12.06    ($3.15)  
Funds from operations(1)                               $31,943   $32,652  
FFO per common share - basic and diluted(1)            $2.95     $2.96    
Normalized funds from operations(1)                    $52,576   $50,266  
Normalized FFO per common share - basic and diluted(1) $4.86     $4.56    
(1) Refer to Specified Financial Measures.                                


  

Total revenue during the three months ended March 31, 2024, decreased by $11.1 million to $281.7 million compared to $292.8 million in 2023, primarily due to an decrease in revenue from hotel properties in the amount of $20.7 million, due to the sale of 14 hotel properties on January 18, 2024, partially offset by an increase in revenue from real estate properties in the amount of $10.7 million, primarily due to higher average monthly rent ("AMR") within the multi-suite residential segment and from the net impact of acquisition and disposition of properties.

Net income for the three months ended March 31, 2024 was $116.8 million, compared to a net loss of $31.3 million in 2023. The increase in net income of $148.1 million for the three months ended March 31, 2024, was primarily due to the following:

An increase in gain on sale of hotel properties of $150.6 million, due to the sale of 14 hotel properties;

An increase in non-cash net fair value loss of $19.3 million, mainly due to a decrease in fair value gain on real estate properties, a decrease in fair value loss on the Morguard Residential REIT units, and an increase in fair value loss on other real estate funds investments; and

A decrease in income tax expense (current and deferred) of $16.6 million, mainly due to a decrease in deferred income taxes resulting from the utilization of net operating losses, the derecognition of deferred taxes relating to a property disposition, and a lower fair value gain recorded on the Company's Canadian and U.S. properties, partially offset by an increase in current taxes related to the disposal of properties.

Average Occupancy Levels

During the first quarter, 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.

The following table provides occupancy by asset class for the following periods:

   Suites/GLA   Square Feet Mar.   2024 Dec.   2023 Sep.   2023 Jun.   2023 Mar.   2023
Multi-suite residential 17,798                   95.6 %      96.1 %      96.1 %      96.7 %      96.6 %     
Retail  7,868,000  (1)   93.8%                               94.0 %      93.5 %      93.2 %      92.9 %     
Office(2)   8,591,000  (2)   87.9%                           88.4 %      88.1 %      85.9 %      86.6 %     


  
   
  

Second Quarter Dividend

The Board of Directors of Morguard Corporation announced that the second quarterly, eligible dividend of 2024 in the amount of $0.15 per common share will be paid on June 28, 2024, to shareholders of record at the close of business on June 14, 2024.

Subsequent Events

As at March 31, 2024, the Company has entered into a binding agreement to sell a retail property for gross proceeds of $37.5 million, excluding closing costs and will repay the mortgage payable secured by the property in the amount of $17.0 million. The transaction is expected to close during the second quarter of 2024.

Subsequent to March 31, 2024, the Company entered into binding commitment letters for the Canada Mortgage and Housing Corporation ("CMHC") insured refinancing of three multi-suite residential properties located in Mississauga, Ontario, providing gross proceeds of up to $203.7 million. The Company expects to close the refinancing during the second quarter of 2024. The maturing mortgages amount to $90.9 million, and have a weighted average interest rate of 3.36%.

About Morguard Corporation

Morguard Corporation is a real estate company, with total assets owned and under management valued at $17.8 billion. As at May 7, 2024, Morguard owns a diversified portfolio of 160 multi-suite residential, retail, office, industrial and hotel properties comprised of 17,798 residential suites, approximately 16.9 million square feet of commercial leasable space and 472 hotel rooms. Morguard also currently owns a 65.3% interest in Morguard Real Estate Investment Trust and a 46.1% 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 .