Morguard North American Residential REIT (MRG-UN) Q2 2025 earnings summary

Executive summary

• Net operating income for Q2 2025 was $56.9 million, up 4.1% year-over-year, with proportionate NOI rising 4.2%.

• Net income for Q2 2025 was $30.1 million, down from $50.6 million in Q2 2024, primarily due to a $23.6 million increase in fair value loss on Class B LP Units and lower net fair value gains.

• Basic funds from operations (FFO) per Unit increased 14.6% to $0.47, with total basic FFO up 9.2% to $24.8 million year-over-year.

• Total assets at June 30, 2025, were $4.5 billion, down from $4.6 billion at year-end 2024, mainly due to a lower U.S. dollar exchange rate.

Financial highlights

• Revenue from real estate properties for Q2 2025 was $88.5 million, up from $85.8 million in Q2 2024.

• NOI margin (IFRS) for Q2 2025 was 64.3%, while proportionate NOI margin was 54.9%.

• FFO payout ratio improved to 40.3% in Q2 2025 from 44.6% in Q2 2024, allowing for significant cash retention.

• Distributions per Unit for Q2 2025 were $0.18999, up from $0.18501 in Q2 2024.

• Cash on hand at quarter-end was $66 million, with $92.5 million advanced to Morguard Corporation.

Outlook and guidance

• Management expects market conditions to remain strong and stable, with housing demand outpacing supply in Canada.

• U.S. rental growth is targeted at 3–5% for both renewals and new leases, though some softness remains in select markets.

• Sufficient NOLs in the U.S. provide runway to shelter current tax for the balance of 2025 and into 2026.

• A refinancing agreement for a Chicago property was signed for $163.7 million at a 5.35% interest rate, with closing expected in Q3 2025.

• Q2 is considered a representative quarter for modeling taxes for the remainder of the year.