Morguard Real Estate Investment Trust (MRT-UN) Q4 2024 earnings summary

Executive summary

• Achieved strong same-store net operating income (NOI) growth across all asset classes in Q4 2024, with positive leasing momentum and increased occupancy levels year-over-year.

• Revenue from real estate properties increased 2.4% in Q4 and 1.6% for the full year, reaching $259.2 million.

• Net operating income rose 0.2% in Q4 and 2.0% for the year, driven by higher basic rent and improved occupancy in industrial and office segments.

• Net loss narrowed to $58.8 million from $74.4 million in 2023, mainly due to lower fair value losses, though Q4 net loss increased to $35.4 million.

• Funds from operations (FFO) for Q4 increased 5.4% to $16.5 million, while adjusted funds from operations (AFFO) rose 8.4% to $10.5 million.

Financial highlights

• Q4 2024 net operating income increased slightly over 2023, with a 2.7% rise in same-asset NOI, offset by asset sales.

• Full-year NOI rose 2% over 2023, including a 5% increase in same-asset NOI; enclosed malls up 6.8% year-over-year.

• Fair value losses on real estate properties were $114.4 million for the year, down from $131.8 million in 2023.

• Interest expense for the year rose 7% to $67.4 million, but quarterly interest expense declined 4.4% year-over-year.

• FFO per unit (basic) for Q4 was $0.26, AFFO per unit (basic) was $0.16; AFFO payout ratio increased to 55.6%.

Outlook and guidance

• Expecting every expiring retail tenant over 10,000 sq ft to renew in 2025; positive outlook for industrial and most office renewals.

• Anticipate a $15 million decrease in NOI in 2025 at Penn West Plaza due to lease-up and vacancy costs, with an uptick of $4–$6 million expected in 2026 as inducements roll off.

• Strategic merchandising at Saint Laurent to add new national brands and expand existing tenants.

• Canadian GDP growth is projected at 1.5–1.7% for 2025, with moderate growth expected through 2027.

• The Trust plans to increase its productive capacity maintenance expenditure reserve to $35 million in 2025 due to rising construction and repair costs.