Morguard North American Residential Real Estate Investment Trust (MNARF) Q3 2024 Earnings Call ...

GuruFocus News
4 min read

In This Article:

  • Total Assets: $4.4 billion as of Q3 2024, up from $4.1 billion at the end of 2023.

  • Cash on Hand: $103.3 million at the end of Q3 2024.

  • Long-term Debt: $1.7 billion at the end of Q3 2024.

  • Weighted Average Interest Rate: 3.87%, up from 3.72% at the end of 2023.

  • Debt to Gross Book Value Ratio: 38.9% as of September 30, 2024.

  • Net Loss: $18.8 million for Q3 2024, compared to net income of $39.2 million in Q3 2023.

  • IFRS Net Operating Income (NOI): $52 million for Q3 2024, a decrease of 0.7% from 2023.

  • Interest Expense: Increased by $5.5 million in Q3 2024 compared to 2023.

  • Funds From Operations (FFO): $21.9 million for Q3 2024, a decrease of 0.4% from 2023.

  • FFO Per Unit: $0.40 for Q3 2024, unchanged from 2023.

  • FFO Payout Ratio: 45.9% for Q3 2024.

  • Average Monthly Rent in Canada: $1,754, a 6% increase from 2023.

  • Average Monthly Rent in the US: USD 1,911, a 2% increase from 2023.

  • Occupancy in Canada: 97.8% at the end of Q3 2024.

  • Occupancy in the US: 91.7% at the end of Q3 2024.

  • Total CapEx: $31.8 million for the nine months ended September 30, 2024.

Release Date: October 31, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Morguard North American Residential Real Estate Investment Trust (MNARF) reported an increase in total assets to $4.4 billion, up from $4.1 billion at the end of 2023.

  • The REIT has a strong cash position with $103.3 million on hand and an additional $100 million available under its revolving credit facility.

  • The REIT announced an increase in annual cash distribution by $0.02 per unit, representing a 2.7% increase.

  • Average monthly rent in Canada increased by 6% compared to the previous year, reflecting the quality of the Canadian portfolio.

  • The REIT's FFO payout ratio remains conservative at 45.9%, allowing for significant cash retention.

Negative Points

  • The REIT reported a net loss of $18.8 million for the third quarter, a significant decrease from a net income of $39.2 million in the previous year.

  • Net operating income decreased by 0.7% compared to the previous year, with a notable decrease in the US due to higher vacancy rates.

  • Interest expenses increased by $5.5 million due to higher mortgage interest rates and refinancing costs.

  • Occupancy rates in the US decreased to 91.7% from 93.7% the previous year, attributed to aggressive rent increases and turnover during the summer leasing season.

  • The REIT's debt to gross book value ratio increased slightly to 38.9% from 38.7% at the end of 2023.

Q & A Highlights

Q: How is Morguard planning to allocate the $160 million from cash and up-financing on Canadian mortgages? Will it be used for share buybacks or acquisitions? A: Paul Miatello, Senior Vice President, stated that the NCIB (Normal Course Issuer Bid) will continue to be a feature, with daily purchase restrictions in place. The company is also exploring acquisition opportunities in both Canada and the US, with a disciplined approach to capital deployment.

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