Morguard Corporation Announces 2009 Third Quarter Results and Regular Dividend

Morguard Corporation (TSX: MRC) announced its financial results for the three months ended September 30, 2009.

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    Q3 2009 HIGHLIGHTS

    -   Total revenues for the three months ended September 30, 2009, were
        $87.1 million compared to $87.2 million for the same period in 2008;

    -   Net operating income increased to $38.0 million compared to $36.9
        million in the third quarter of 2008, with foreign exchange rate
        changes causing $0.5 million of the increase;

    -   Net income from continuing operations totalled $5.8 million
        compared to $7.3 million in the same period in 2008;

    -   Funds from operations in Q3 2009 increased to $28.2 million, or $2.01
        per share, compared to $27.4 million, or $1.96 per share in 2008;

    -   Three multi-unit residential properties were refinanced resulting in
        $82.9 million of gross proceeds at a weighted average interest rate
        of 4.1%.


    FINANCIAL HIGHLIGHTS

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                                      Three months ended   Nine months ended
                                            September 30        September 30
    (in thousands of dollars)             2009      2008      2009      2008
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    Income from real estate
     properties                        $69,628   $67,837  $211,806  $198,696
    Management and advisory
     fee revenue                        16,185    17,330    45,540    47,186
    Sales of product and land            1,328     1,987     3,867     5,102
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    Total revenues                     $87,141   $87,154  $261,213  $250,984
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    Income from real estate
     properties                        $69,628   $67,837  $211,806  $198,696
    Property operating expense         (31,637)  (30,912)  (97,981)  (89,811)
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    Net operating income               $37,991   $36,925  $113,825  $108,885
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    Funds from operations              $28,192   $27,364   $84,431   $79,899
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    Net income from continuing
     operations                         $5,828    $7,325   $17,380   $42,677
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    Net income for the period           $5,828    $9,667   $17,380   $47,315
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    Income per share
      Basic - continuing operations      $0.42     $0.52     $1.24     $3.06
      Diluted - continuing operations    $0.42     $0.52     $1.24     $3.03
      Basic - net income                 $0.42     $0.69     $1.24     $3.39
      Diluted - net income               $0.42     $0.69     $1.24     $3.36
    >>

NET INCOME

Net income for the three months ended September 30, 2009, was $5.8 million ($0.42 per share) compared to $9.7 million ($0.69 per share) in 2008. The decrease in net income of $3.9 million was primarily due to a decrease in equity income from Morguard REIT in the amount of $1.9 million and a $2.3 million decrease in equity income from Morguard REIT's discontinued operations.

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    NET OPERATING INCOME ("NOI")

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                                      Three months ended   Nine months ended
                                            September 30        September 30
    (in thousands of dollars)             2009      2008      2009      2008
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    Multi-unit residential - Canada    $13,443   $13,394   $36,116   $37,257
    Multi-unit residential - U.S.        4,128     4,225    13,697    11,390
    Retail - Canada                      6,262     5,824    20,106    18,253
    Retail - U.S.                        5,253     4,687    17,611    15,441
    Office/Industrial                    8,905     8,795    26,295    26,544
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    Net operating income               $37,991   $36,925  $113,825  $108,885
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Net operating income for the three months ended September 30, 2009, increased to $38.0 million compared to $36.9 million in 2008, representing an increase of 2.9%. The increase was primarily due to the change in the U.S. dollar foreign exchange rate which increased reported NOI by approximately $0.5 million. Net operating income also increased as a result of higher rents and occupancy levels in the Canadian retail portfolio compared to 2008.

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    FUNDS FROM OPERATIONS ("FFO")

    FFO was calculated as follows:

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                                      Three months ended   Nine months ended
                                            September 30        September 30
    (in thousands of dollars)             2009      2008      2009      2008
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    Net earnings from continuing
     operations                         $5,828    $7,325   $17,380   $42,677
    Items not affecting cash:
      Amortization                      16,463    15,213    50,154    45,608
      Future income taxes                2,042     1,254     3,899    14,176
      Non-controlling interest             (25)     (430)      (25)     (690)
    Equity income from Morguard REIT
     - continuing operations            (1,717)   (4,062)   (9,120)  (26,177)
    Morguard REIT's equity accounted
     FFO - continuing                    5,601     8,064    21,765    23,746
    Gain on pension valuation allowance      -         -         -   (19,441)
    Gain on sale of property                 -         -       (72)        -
    Other                                    -         -       450         -
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    Funds from operations              $28,192   $27,364   $84,431   $79,899
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    Per share amount - basic             $2.01     $1.96     $6.01     $5.73
    Per share amounts - diluted          $2.01     $1.94     $6.01     $5.68
    >>

For the three months ended September 30, 2009, the Company recorded FFO of $28.2 million ($2.01 per diluted share) compared to $27.4 million ($1.94 per diluted share) in 2008. Reported FFO for the three months ended September 30, 2009, has been increased by $0.02 per common share over the same period in 2008 due to the change in the foreign exchange rate (nine months ended September 30, 2008 - $0.11 per common share).

FINANCING AND LIQUIDITY

The Company has successfully refinanced all mortgages maturing during 2009. Gross proceeds from 2009 refinancings totaled $128.2 million which was used to repay existing mortgages in the amount of $58.9 million, repay bank indebtedness and for general corporate purposes. The weighted average interest rate of the maturing mortgages was 6.33% while the new mortgages have been refinanced at a weighted average interest rate of 4.86% for five-year terms. The Company has cash and existing borrowing capacity of approximately $180 million.

FOURTH QUARTER DIVIDEND

The board of directors of Morguard Corporation announced today that the fourth quarter dividend of 2009 in the amount of $0.15 per common share will be paid on December 31, 2009, to shareholders of record at the close of business on December 15, 2009.

The Company's unaudited financial statements for the three months ended September 30, 2009, along with Management's Discussion and Analysis are available on the Company's website at www.morguard.com and have been filed with SEDAR at www.sedar.com

Readers are cautioned that although the terms "Net Operating Income", and "Funds From Operations" are commonly used to measure, compare and explain the operating and financial performance of Canadian real estate companies and such terms are defined in the Management's Discussion and Analysis, such terms are not recognized terms under Canadian generally accepted accounting principles. Such terms do not necessarily have a standardized meaning and may not be comparable to similarly titled measures presented by the other publicly traded entities.

Morguard Corporation is a real estate company, which owns a diversified portfolio of 102 properties in Canada and the United States. Morguard's portfolio has a book value of approximately $1.6 billion and comprises 6.6 million square feet of commercial space and 10,504 apartment suites. For more information, visit the Company's website at www.morguard.com.

SOURCE: Morguard Corporation

Morguard Corporation, K. (Rai) Sahi, Chief Executive Officer, (905) 281-3800; Paul
Miatello, Chief Financial Officer, (905) 281-3800

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