MISSISSAUGA, ON, July 28, 2026 /CNW/ -- Morguard North American Residential REIT (the "REIT") (TSX: MRG.UN) today announced its financial results for the three and six months ended June 30, 2026.
HIGHLIGHTS
The REIT is reporting second quarter performance of:
-- Net operating income ("NOI") of $54.2 million for the three months ended
June 30, 2026, a decrease of $2.7 million, or 4.7% compared to 2025.
-- Proportionate NOI for the three months ended June 30, 2026 decreased by
4.9% compared to 2025, comprised of a decrease in Canada of $1.1 million
(or 6.6%), a decrease in the U.S. of US$0.9 million (or 3.9%), and the
change in foreign exchange rate decreased Proportionate NOI by $0.4
million.
-- Net income of $26.1 million for the three months ended June 30, 2026, a
decrease of $3.9 million, or 13.0% compared to 2025, predominantly due to
a decrease in NOI and offsetting net non-cash charges.
-- Basic funds from operations ("FFO") of $0.42 per Unit for the three
months ended June 30, 2026, a 10.6% decrease as compared to $0.47 per
Unit in 2025.
-- Basic FFO of $22.0 million for the three months ended June 30, 2026, a
decrease of $2.7 million, or 11.1% over the same period in 2025.
The REIT is reporting the following corporate and portfolio highlights:
-- As at June 30, 2026, the REIT has liquidity of $304 million, comprised of
approximately $204 million in cash and $100 million in available credit
under its revolving credit facility with Morguard Corporation.
-- As previously announced on February 25, 2026, the REIT and Morguard
agreed to jointly invest approximately $1.0 billion in a Canadian
multi-suite residential real estate portfolio currently owned by TD Asset
Management Inc. ("TDAM"). This represents an approximate 20 percent
undivided interest in a portfolio of up to 106 properties valued at
approximately $5.0 billion. Management continues to progress through due
diligence review, including the determination of the allocation of
individual property ownership interests to the REIT. The transaction is
expected to close in one tranche during the second half of 2026, subject
to completion of due diligence and customary approvals and will be
financed through a combination of vendor financing, assumed mortgages,
cash on hand, and the remainder through short-term borrowings.
-- As at June 30, 2026, average monthly rent ("AMR") in Canada increased by
3.5% compared to June 30, 2025, while occupancy was 91.4% at June 30,
2026, compared to 95.2% at June 30, 2025.
-- As at June 30, 2026, AMR in the U.S. increased by 1.8% compared to June
30, 2025, while occupancy decreased to 92.8% at June 30, 2026, compared
to 94.8% at June 30, 2025.
-- As at June 30, 2026, indebtedness to gross book value ratio was 40.0%,
compared to 39.5% as at December 31, 2025.
FINANCIAL AND OPERATIONAL HIGHLIGHTS
As at June 30, December 31, June 30,
(In thousands of dollars, except 2026 2025 2025
as otherwise noted)
Operational Information
Number of properties 43 43 43
Total suites 13,089 13,089 13,089
Occupancy percentage -- Canada 91.4 % 93.3 % 95.2 %
Occupancy percentage -- U.S. 92.8 % 91.3 % 94.8 %
Average monthly rent -- Canada (in
actual dollars) $1,885 $1,851 $1,821
Average monthly rent -- U.S. (in US$1,933 US$1,930 US$1,898
actual U.S. dollars)
Summary of Financial Information
Gross book value(1) $4,774,394 $4,535,903 $4,536,576
Indebtedness(1) $1,908,443 $1,793,894 $1,793,811
Indebtedness to gross book value
ratio(1) 40.0 % 39.5 % 39.5 %
Weighted average mortgage interest
rate 4.18 % 4.07 % 3.90 %
Weighted average term to maturity
on mortgages payable
(years) 5.2 4.8 5.1
(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 a substitute
for related financial information prepared in accordance
with IFRS.
Three months ended Six months ended
June 30 June 30
(In thousands of dollars, except per 2026 2025 2026 2025
Unit amounts)
Summary of Financial Information
Revenue from real estate properties $87,214 $88,537 $173,680 $178,811
NOI $54,214 $56,897 $75,063 $77,720
Proportionate NOI(1) $45,989 $48,354 $91,061 $95,410
NOI margin -- IFRS 62.2 % 64.3 % 43.2 % 43.5 %
NOI margin -- Proportionate(1) 52.9 % 54.9 % 52.6 % 53.6 %
Net income $26,141 $30,059 $64,323 $68,381
FFO -- basic(1) $22,017 $24,765 $43,455 $47,966
FFO -- diluted(1) $22,857 $25,605 $45,135 $49,646
FFO per Unit -- basic(1) $0.42 $0.47 $0.83 $0.91
FFO per Unit -- diluted(1) $0.42 $0.47 $0.83 $0.90
Distributions per Unit $0.19749 $0.18999 $0.39498 $0.37998
FFO payout ratio(1) 46.8 % 40.3 % 47.4 % 41.9 %
Weighted average number of Units
outstanding (in thousands):
Basic 52,170 52,515 52,164 52,916
Diluted 54,489 54,834 54,483 55,235
(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 a substitute
for related financial information prepared in accordance
with IFRS.
SPECIFIED FINANCIAL MEASURES
The REIT reports its financial results in accordance with IFRS Accounting 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 three and six months ended June 30, 2026 and available on the REIT's profile on SEDAR+ at www.sedarplus.ca.
The following Non-GAAP financial measures do not have any standardized meaning prescribed by IFRS and are not necessarily comparable to similar measures presented by other reporting issuers in similar or different industries. These measures should be considered as supplemental in nature and not as substitutes for related financial information prepared in accordance with IFRS. The REIT's management uses these measures to aid in assessing the REIT's underlying core performance and provides these additional measures so that investors may do the same. Management believes that the non-GAAP financial measures, which supplement the IFRS measures, provide readers with a more comprehensive understanding of management's perspective on the REIT's operating results and performance.
A reconciliation of each non-GAAP financial measure referred to in this earnings release is provided below.
PROPORTIONATE SHARE NOI ("PROPORTIONATE NOI")
Proportionate NOI is an important measure in evaluating the operating performance of the REIT's real estate properties and are a key input in determining the fair value of the REIT's properties. Proportionate NOI represents NOI (an IFRS measure) adjusted for the following: i) to exclude the impact of realty taxes accounted for under International Financial Reporting Interpretations Committee ("IFRIC") Interpretation 21, Levies ("IFRIC 21"). Proportionate NOI records realty taxes for all properties on a pro rata basis over the entire fiscal year; ii) to exclude the non-controlling interest share of NOI for those properties that are consolidated under IFRS ("NCI Share"); and iii) to include equity-accounted investments NOI at the REIT's ownership interest ("Equity Interest").