MISSISSAUGA, ON, Oct. 30, 2013 /CNW/ - Morguard North American Residential REIT (the 'REIT") (TSX: MRG.UN) today announced its financial results for the three and nine months ended September 30, 2013.<br /><br />All amounts in CAD thousands, except suites and per unit amounts, unless otherwise noted.<br /><br />HIGHLIGHTS<br /><br />   -- Reflecting the significant activity that occurred during the first half <br />      of 2013, the REIT is reporting: <br /> <br />   -- Consolidated net operating income of $21.9 million for the three months <br />      ended September 30, 2013, an increase of $11.4 million over the same <br />      quarter in 2012 <br /> <br />   -- Funds from Operations ("FFO") of $10.4 million for the three months ended <br />      September 30, 2013, an increase of $5.7 million from the corresponding <br />      quarter in 2012 <br /> <br />   -- Adjusted Funds from Operations ("AFFO") of $0.20 per unit in the three <br />      months ended September 30, 2013, a 25% increase as compared to the $0.16 <br />      value generated in the corresponding quarter in 2012 <br /> <br />   -- Third quarter 2013 occupancy was 96.2%, up from Q2 of 2013 occupancy of <br />      95.5%. <br /> <br />   -- New CFO added to the REIT's Executive team - Mr. Robert Wright has been <br />      appointed as the Trust's Chief Financial Officer. <br /> <br />   -- FFO payout ratio for Q3 2013 was 68.2% (AFFO payout ratio - 75.0%). <br /> <br /> <br />FINANCIAL AND OPERATIONAL <br />HIGHLIGHTS <br />                                   September 30,  December 31,   September 30, <br />As at                                       2013           2012           2012 <br />Operational information <br />Number of properties                          44             20             20 <br />Total suites                              12,850          6,376          6,376 <br />Occupancy percentage                       96.2%          96.7%          97.1% <br />Monthly weighted average in-place <br /> rent - Canada                            $1,227         $1,202         $1,192 <br />Monthly weighted average in-place <br /> rent - US                                  $947           $908           $891 <br /> <br />Summary of Financial Information <br />Total gross book value                $1,637,057     $1,020,681       $955,756 <br />Debt                                    $919,708       $432,020       $408,093 <br />Debt to gross book value                     56%            42%            43% <br />Weighted average interest rate on <br /> mortgages payable                          4.2%           4.3%           4.3% <br />Weighted average term to maturity <br /> on mortgages payable (years)                4.5            4.7            4.6 <br /> <br /> <br /> <br />FINANCIAL AND OPERATIONAL HIGHLIGHTS (cont'd) <br />                              Three months ended         Nine months ended <br />                                  September 30,             September 30, <br />(in thousands of <br />dollars, except per unit <br />amounts)                                 2013     2012        2013      2012 <br />Summary of Financial <br />Information <br />Revenue from income <br /> producing properties                 $41,557  $20,737    $101,120   $58,321 <br />Net operating income                  $21,878  $10,439     $52,659   $30,449 <br />Net operating margin                      53%      50%         52%       52% <br />Interest coverage                        1.77     1.97        1.81      2.10 <br /> <br />Funds from Operations <br /> (FFO) - basic                        $10,443   $4,699     $25,013   $14,197 <br />Funds from Operations <br /> (FFO) - diluted                      $11,146   $4,699     $26,542   $14,197 <br />FFO per unit - basic and <br /> diluted                                $0.22    $0.17       $0.56     $0.53 <br /> <br />Adjusted Funds from <br /> Operations (AFFO) - <br /> basic                                 $9,409   $4,469     $22,779   $13,541 <br />Adjusted Funds from <br /> Operations (AFFO) - <br /> diluted                              $10,112   $4,469     $24,308   $13,541 <br />AFFO per unit - basic <br /> and diluted                            $0.20    $0.16       $0.51     $0.50 <br /> <br />FFO payout ratio                       68.18%   88.24%      80.36%    84.91% <br />AFFO payout ratio                      75.00%   93.75%      86.54%    90.00% <br /> <br />Weighted average number of units outstanding <br />during the period (000's) <br />- Basic                                46,505   28,100      44,287    26,929 <br />- Diluted                              50,376   28,100      47,123    26,929 <br /> <br /><br />Appointment of Chief Financial Officer<br /><br />Mr. Robert Wright has been appointed to succeed Mr. Paul Miatello as Chief Financial Officer effective October 29, 2013. Mr. Miatello has served as Chief Financial Officer since the REIT's initial public offering in April 2012 and will continue to serve as Chief Financial Officer of Morguard Corporation and as a Vice President of the REIT. Mr. Miatello will serve as a resource to Mr. Wright to ensure a smooth transition. Mr. Wright is a Chartered Accountant and has over 25 years of experience in finance, accounting and taxation matters including 12 years as Chief Financial Officer for various public entities. Mr. Wright has also served as Vice President of Morguard Corporation since July 23, 2012 and Vice President of ClubLink Enterprises Limited since December 28, 2007.<br /><br /> <br />NET OPERATING INCOME <br />                                    Three months ended    Nine months ended <br />                                       September 30,        September 30, <br />(In thousands of dollars)               2013       2012       2013      2012 <br />Revenue from income producing <br />properties <br />Same property                        $19,375    $19,001    $57,573   $56,585 <br />Acquisitions                          22,182      1,736     43,547     1,736 <br />Total revenue from income <br /> producing properties                 41,557     20,737    101,120    58,321 <br />Property Operating Expenses <br />Same property <br /> Operating expenses                   $5,207     $4,995    $14,385   $13,718 <br /> Utilities                             2,307      2,236      7,110     7,068 <br /> Taxes                                 2,051      2,234      6,514     6,253 <br />Same property                          9,565      9,465     28,009    27,039 <br />Acquisitions                          10,114        833     20,452       833 <br />Total property operating expenses     19,679     10,298     48,461    27,872 <br />Net Operating Income <br />Same property                         $9,810     $9,536    $29,564   $29,546 <br />Acquisitions                          12,068        903     23,095       903 <br />Total Net Operating Income           $21,878    $10,439    $52,659   $30,449 <br /> <br /> <br /><br />Consolidated net operating income increased by $11.4 million during the three months ended September 30, 2013, to $21.9 million, compared to $10.4 million in 2012 and increased by $22.2 million during the nine months ended September 30, 2013, to $52.7 million, compared to $30.4 million in 2012. The increase was predominantly due to the U.S. acquisitions (24 properties acquired during the current year and three properties acquired during the third quarter of 2012), which increased NOI by $11.1 million for the three months ended and $22.2 million for the nine months ended September 30, 2013. The positive impact of the acquisitions was complemented by an increase in NOI for the Canadian properties, mainly due to higher rental rates as a result of the Ontario guideline rent increase of 2.5% during the year which was partially offset by an increase in operating expenses mainly due to higher repairs and maintenance.<br /><br /> <br />FUNDS FROM OPERATIONS ("FFO") <br />                                    Three months ended     Nine months ended <br />                                       September 30,          September 30, <br />(In thousands of dollars, except <br />per unit amounts)                       2013       2012        2013       2012 <br />Net income for the period <br /> attributable to the <br /> unitholders                         $23,055    $37,966     $43,308   $134,738 <br />Add (deduct): <br />Fair value gain on income <br /> producing properties                (6,721)   (47,181)     (3,507)   (84,404) <br />Non-controlling interests' share <br /> of fair value gain on   income <br /> producing properties                    263      1,191         459      2,334 <br />Fair value (gain) loss on Class <br /> B LP Units                         (12,573)      9,817    (29,796)     30,313 <br />Fair value gain on conversion <br /> option of Debentures                    (7)          -         (7)          - <br />Distributions on Class B LP <br /> Units recorded as interest <br />  expense                              2,583      2,583       7,750      4,677 <br />Deferred income tax provision <br /> (recovery)                            3,843        323       6,806   (73,461) <br />Funds from operations                $10,443     $4,699     $25,013    $14,197 <br />Interest expense on convertible <br /> debentures                              703          -       1,529          - <br />Diluted FFO                          $11,146     $4,699     $26,542    $14,197 <br />FFO per unit - basic and diluted       $0.22      $0.17       $0.56      $0.53 <br /> <br /><br />FFO increased by $5.7 million or 122.2% during the three months ended September 30, 2013, to $10.4 million ($0.22 per unit) compared to $4.7 million ($0.17 per unit) in 2012 and increased by $10.8 million during the nine months ended September 30, 2013, to $25.0 million ($0.56 per unit) compared to $14.2 million ($0.53 per unit) in 2012. The increase in FFO is mainly attributable to the U.S. acquisitions which had a positive impact on NOI of $11.1 million for the three months ended and $22.2 million for the nine months ended September 30, 2013 and an increase in other income of $0.6 million and a decrease in current income taxes of $0.7 million for the nine months ended September 30, 2013. These items were partially offset by an increase in interest expense of $4.4 million for the three months ended and $9.8 million for the nine months ended September 30, 2013 due to the mortgages on the U.S. acquisitions and the convertible debentures issued during the first quarter of 2013. Trust expenses also increased by $1.1 million for the three months ended and $2.9 million for the nine months ended September 30, 2013 predominantly due to an increase in asset management fee on the acquisitions completed in 2013.<br /><br /> <br />ADJUSTED FUNDS FROM OPERATIONS ("AFFO") <br /><br />                                  Three months ended      Nine months ended <br />                                     September 30,           September 30, <br />(In thousands of dollars, <br />except per unit amounts)               2013      2012     2013            2012 <br />Funds from Operations               $10,443    $4,699  $25,013         $14,197 <br />Add (deduct): <br />Amortization of deferred <br /> financing costs assumed on <br />  Initial Properties                    367       385    1,099           1,074 <br />Non-controlling interests' <br /> share of amortization of <br /> deferred   financing costs <br /> assumed on Initial <br /> Properties                            (12)      (11)     (35)            (33) <br />Maintenance capital <br /> expenditures                       (1,442)     (657)  (3,456)         (1,851) <br />Amortization of cash flow <br /> hedge                                   53        53      158             154 <br />Adjusted funds from operations        9,409     4,469   22,779          13,541 <br />Interest expense on <br /> convertible debentures                 703         -    1,529               - <br />Diluted AFFO                        $10,112    $4,469  $24,308         $13,541 <br />AFFO per unit - basic and <br /> diluted                              $0.20     $0.16    $0.51           $0.50 <br /> <br /><br />AFFO increased by $4.9 million during the three months ended September 30, 2013, to $9.4 million ($0.20 per unit) compared to $4.5 million ($0.16 per unit) in 2012 and increased by $9.2 million for the nine months ended September 30, 2013, to $22.8 million ($0.51 per unit) compared to $13.5 million ($0.50 per unit) in 2012. The increase is mainly due to an increase in FFO of $5.7 million for the three months and $10.8 million for the nine months ended September 30, 2013, partially offset by an increase in maintenance capital expenditures of $0.8 million for the quarter and $1.6 million for the nine months as a result of the U.S. acquisitions completed in 2013.<br /><br />ABOUT MORGUARD NORTH AMERICAN RESIDENTIAL REIT<br /><br />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 12,850 residential suites (as of October 30, 2013) located in Ontario, Alberta, Alabama, Colorado, Florida, Georgia, Louisiana, North Carolina and Texas with an appraised value of approximately $1.6 billion at September 30, 2013. 