MORGUARD REAL ESTATE
INVESTMENT TRUST
2018
ANNUAL
REPORT
TAKING ACTION.
FINDING OPPORTUNITY.
ON THE COVER
(LEF T TO RIGHT)
ST. L AURENT
OT TAWA, ON
SCOTIA PL ACE
EDMONTON, AB
The selected annual financial information in the 2018 Annual Report highlights certain key metrics for the Trust. As a result, this report
should be read in conjunction with the Trust’s Consolidated Financial Statements for the year ended December 31, 2018, related
Management’s Discussion and Analysis (“MD&A”) and the Annual Information Form (“AIF”). These documents are available on the Trust’s
website at www.morguard.com. All continuous disclosure documents required by securities regulators are also filed on the System for
Electronic Document Analysis and Retrieval (“SEDAR”) and can be accessed electronically at www.sedar.com.
NON-IFRS MEASURES
The Trust reports its financial results in accordance with IFRS. However, the MD&A also uses certain financial measures that are not defined
by IFRS. These measures do not have any standard 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 supplemental in nature, and
not as substitutes for related financial information prepared in accordance with IFRS. The Trust’s management uses these measures to
aid in assessing the Trust’s underlying core performance and provides these additional measures so that investors may do the same.
Management believes that the non-IFRS measures described further in the MD&A (and include NOI, FFO and AFFO), which supplement
the IFRS measures, provide readers with a more comprehensive understanding of management’s perspective on the Trust’s operating results
and performance.
FELLOW
UNITHOLDERS
Morguard Real Estate Investment Trust experienced a solid year of activity in 2018. We further strengthened the
portfolio by focusing on a number of development and leasing initiatives within our properties and in 2018 these
efforts generated solid income for the Trust. As a result, we continue to maintain a Canadian portfolio of high-quality
real estate assets and remain committed to delivering the benefits to our unitholders.
Given the slowdown of Alberta’s oil and gas sector as well as the retail sector, the Trust has still been able to maintain
high occupancy rates overall. Our Ottawa office properties are doing well, as are our strip centres and our enclosed
centres that are dominant in their respective markets. A diverse portfolio such as ours provides built-in resilience
to market fluctuations.
In 2018, the Trust continued to secure earning potential and income through the development and remerchandising
of our retail properties. We continued to look for opportunities to intensify underutilized assets, including the vacant
land around our retail centres as well as non-performing retail spaces. It’s a strategy that’s working. During the third
and fourth quarters of 2018, 170,500 square feet of development projects began generating income for the Trust.
We see these new streams of revenue as strong evidence that our development efforts will continue to grow in the future.
Intensification of select properties is being considered, and we will continue to look for opportunities to grow value for
our unitholders.
The consistency with which Morguard Real Estate Investment Trust performed in 2018 is due, as always, to our
excellent management team, committed employees, knowledgeable Trustees, and, of course, to you our loyal unitholders.
Thank you for your ongoing support, as we continue to take action and find more opportunities to grow.
Sincerely,
K. RAI SAHI
Chairman, President and Chief Executive Officer
1
MORGUARD REAL ESTATE INVESTMENT TRUST 2018 ANNUAL REPORT SECTION 1
REAL ESTATE PORTFOLIO
GROWING VALUE
THROUGH ACTIVE
MANAGEMENT
Active Management may be the best way to describe how Morguard Real Estate
Investment Trust performs, every day. 2018 saw the Trust maintain a solid real
estate portfolio of three asset classes – retail, office and industrial – with a view
to further enhance our properties and diversify our tenant base to maintain stable
and growing cash flow over the long term. Our goal is to derive the greatest value
possible from our extensive real estate portfolio. We apply innovative, forward
thinking to enhance our properties.
ST. L AURENT
OT TAWA, ON
3
MORGUARD REAL ESTATE INVESTMENT TRUST 2018 ANNUAL REPORTSECTION 1: REAL ESTATE PORTFOLIO SECTION 1
REAL ESTATE PORTFOLIO
SINCE INCEPTION, OUR STRATEGY HAS
BEEN TO PROVIDE STABLE CASH FLOW
OVER TIME BY BUILDING A DIVERSE
PORTFOLIO OF ASSETS.
OPPORTUNITIES AS
in British Columbia, Alberta,
our revenue stream. Our
Saskatchewan, Manitoba,
multi-tenant properties
Ontario and Quebec.
have well-distributed lease
expiration dates, helping
Within an already diversified
to minimize exposure to high
portfolio is further
diversification. Our 21 retail
tenant turnover in a given year.
assets, for example, include
And like our office assets,
two property categories:
our industrial assets are
enclosed full-scale shopping
diversified across single-
centres and community strip
and multi-tenant properties.
centres, providing the Trust
The Trust holds five industrial
with a broad base of tenants
properties in the provinces
to help to minimize exposure.
of Ontario and Quebec.
Likewise, our 23 office
assets comprise single-tenant
and multi-tenant properties.
Typically under long-term
leases, our single-tenant
properties help to stabilize
DIVERSE AS OUR
PORTFOLIO
Since our inception, our
strategy has been to provide
stable cash flow over time,
and from our experience, the
most effective way to achieve
this is through diversification
of assets. This is why the
Trust owns a mix of three asset
classes – retail, office and
industrial – located in six
provinces.
As at December 31, 2018,
the Trust owned 49 retail,
office and industrial properties
consisting of approximately
8.6 million square feet of
gross leasable area (“GLA”)
4
MORGUARD REAL ESTATE INVESTMENT TRUST 2018 ANNUAL REPORT
CITADEL WEST
CALGARY, AB
5
MORGUARD REAL ESTATE INVESTMENT TRUST 2018 ANNUAL REPORTSECTION 1: REAL ESTATE PORTFOLIO SECTION 1: REAL ESTATE PORTFOLIO
DIVERSIFICATION
The Trust maintains a portfolio of holdings in three asset classes – retail, office and
industrial – located in six Canadian provinces. Over the years, this diversification strategy
has proven to be effective in helping ensure more consistent overall performance in the
face of downturns that may occur in certain asset classes or markets.
• 1 ASSET CLASSES
23
OFFICE
21
RETAIL
5
INDUSTRIAL
13
10
SINGLE TENANT
MULTI TENANT
7
ENCLOSED
SHOPPING
CENTRES
14
COMMUNIT Y
STRIP CENTRES
• 2 GROSS LEASABLE AREA
BY ASSET CLASS
• 3 NET OPERATING INCOME
BY ASSET CLASS 1
4,630,500 SF
RETAIL
3,391,000 SF
OFFICE
534,500 SF
INDUSTRIAL
52%
$79 MILLION
RETAIL
46%
$70 MILLION
OFFICE
2%
$3 MILLION
INDUSTRIAL
6
MORGUARD REAL ESTATE INVESTMENT TRUST
2018 ANNUAL REPORT
1. Excluding equity-accounted investment
SECTION 1: REAL ESTATE PORTFOLIO
• 4 ASSETS BY PROVINCE
$3.0
6
BILLION IN REAL
ESTATE ASSETS
CANADIAN
PROVINCES
• 5 NET OPERATING INCOME
BY PROVINCE
15%
BRITISH COLUMBIA
5%
SASKATCHEWAN
37%
ONTARIO
29%
ALBERTA
8%
MANITOBA
6%
QUEBEC
1. Excluding equity-accounted investment
MORGUARD REAL ESTATE INVESTMENT TRUST
2018 ANNUAL REPORT
7
IN CANADA’S EVOLVING RETAIL MARKET,
THE TRUST CONTINUES TO ADAPT AND
ENHANCE ITS SHOPPING CENTRES TO
RESPOND TO CONSUMER DEMAND.
A NEW VISION FOR
In 2018, our retail
of new freestanding units now
intensification initiatives
being occupied by Cara brand
reactivated 160,800 square
restaurants.
feet in two of the Trust’s
shopping centres as well as
In Kanata, ON, the Trust
activating 22,700 square feet
constructed a new freestanding
in freestanding pad space.
pad space comprising 9,700
square feet of GLA at Market
The Trust completed the
Square, adding significantly
remerchandising of the former
to the community strip centre.
Target space at Cambridge
Centre in Cambridge, ON – a
total GLA of 126,800 square
feet. This included space for
Marshalls, Kingpin Bowling,
Sport Chek and Indigo, all of
The Trust is also investing
approximately $43 million
in renovation projects for
The Centre, in Saskatoon, SK.
These will include modernizing
which have helped contribute
the interior and exterior of
to the revitalization of this
the property, continuing the
regional centre.
development of a new Cineplex
pad, and continuing the
At Shoppers Mall, an enclosed
retrofitting of the former Target
regional shopping centre in
store to accommodate new
Brandon, MB, the Trust
retail tenants. Each of these
redeveloped 34,000 square
initiatives will help further
feet of GLA, remerchandising
establish The Centre as a
the remaining Target space to
retail and entertainment
house Shoppers Drug Mart and
destination for the community.
Ardene locations. An additional
This work is expected to
13,000 square feet of GLA was
be completed in phases –
also added with the construction
culminating in late 2020.
AN EVOLVING RETAIL
LANDSCAPE IN CANADA
The diversity of our retail
portfolio has enabled us to
implement creative ideas that
more closely align with current
market trends.
The Trust’s management team
has taken two approaches to
enhancing the retail portfolio.
The first is to undertake select
intensification initiatives to
maximize the gross leasable
area, thereby resulting in
diverse sources of revenue.
This means making the
shopping malls more experiential
as well as service oriented.
The second approach involves
the remerchandising of space
vacated by major retailers such
as Sears and Target. This has
increased revenues coming
from the same gross leasable
area. The results are a more
diverse tenant mix and
increases in foot traffic,
leading to more sales for
all tenants.
8
$50
MILLION IN
DEVELOPMENT
INITIATIVES
MORGUARD REAL ESTATE INVESTMENT TRUST 2018 ANNUAL REPORTSECTION 1: REAL ESTATE PORTFOLIO CAMBRIDGE CENTRE
CAMBRIDGE, ON
9
MORGUARD REAL ESTATE INVESTMENT TRUST 2018 ANNUAL REPORTSECTION 1: REAL ESTATE PORTFOLIO DEVELOPMENTS
Our development program is focused
on projects that are projected to create
additional long-term value for our real
estate portfolio, and that map to our
long-term strategic objectives. Current
development projects include initiatives
to expand leasable area, redevelop an
existing area, and retrofit existing facilities.
In 2018, we invested $50 million in
development initiatives.
• 1
10
• 2
SECTION 1: REAL ESTATE PORTFOLIOMORGUARD REAL ESTATE INVESTMENT TRUST 2018 ANNUAL REPORT PROPERT Y
ASSET CL ASS
DESCRIPTION
• 1
• 2
• 3
• 4
Scotia Place
Edmonton, AB
Heritage Place
Ottawa, ON
Shoppers Mall
Brandon, MB
The Centre
Saskatoon, SK
Office
Part of the ongoing transformation of downtown Edmonton, this 18-month
renovation of the 567,000 square foot class-A office complex comprising
two connected towers was completed in 2018. It was the Trust’s largest
project to date in the city.
Office
In 2015, it was announced that one of Ottawa’s new LRT stations would
be built into Heritage Place. Lobby renovations are currently underway
as is the construction of the Parliament Station east entrance, located at
155 Queen Street. Parliament Station is expected to open in the second
quarter of 2019.
Retail
The re-investment in the 367,000 square foot regional enclosed
shopping centre included remerchandising two large-scale spaces to
house a supermarket and gymnasium facility. Ninety per cent of the
GLA is now income producing, with plans to further increase density
with several new restaurants using the property’s parking lot.
Retail
A lease agreement with Cineplex for approximately 30,000 square feet has
been executed, representing a new prototypical pad building development.
The Cineplex pad building is scheduled to open late summer 2019.
Additionally, new GoodLife Fitness and Ardene locations opened in
the former Target space.
• 3
• 4
11
SECTION 1: REAL ESTATE PORTFOLIOMORGUARD REAL ESTATE INVESTMENT TRUST 2018 ANNUAL REPORT
WOODBRIDGE SQUARE
VAUGHAN, ON
12
MORGUARD REAL ESTATE INVESTMENT TRUST 2018 ANNUAL REPORTSECTION 1: REAL ESTATE PORTFOLIO PORTFOLIO SUMMARY
RETAIL
PROPERTY
CITY
PROV.
OWNERSHIP
INTEREST
(%)
TOTAL
AREA
(SF)
OWNERSHIP
AREA
(SF)
OCCU-
PANCY
(%)
TOP TENANTS
Burquitlam Plaza
Coquitlam
BC
100
68,000
68,000
Pine Centre Mall
Prince George
BC
100
476,500
476,500
89
99
Bosley’s Pet Food Plus, CIBC, Dollarama,
Shoppers Drug Mart, Value Village
B.C. Liquor, Dollarama, Lowe’s,
Shoppers Drug Mart, Sport Chek
Shelbourne Plaza
Victoria
Airdrie Co-op Centre
Airdrie
Airdrie RONA Centre
Heritage Towne Centre
Airdrie
Calgary
BC
AB
AB
AB
100
57,000
57,000
100
100
70,000
70,000
100
100
100
44,000
44,000
131,000
131,000
Prairie Mall
Grande Prairie
AB
50
263,000
131,500
Parkland Mall• 5
The Centre• 5
Shoppers Mall• 2
Red Deer
Saskatoon
Brandon
Charleswood Centre
Winnipeg
Southdale Centre
Winnipeg
Aurora Centre
Aurora
Cambridge Centre• 2
Cambridge
Market Square
Kanata
Wonderland Corners
London
AB
SK
MB
MB
MB
ON
ON
ON
ON
100
100
95
85
96
90
100
473,000
473,000
100
490,000
490,000
100
361,500
361,500
100
123,000
123,000
100
100
175,500
175,500
98
100
304,000
304,000
100
100
578,500
578,500
91
100
68,000
68,000
95
100
46,000
46,000
86%
Kingsbury Centre
Mississauga
ON
100
70,000
70,000
Hampton Park Plaza
Ottawa
Home Base
St. Laurent• 2
Ottawa
Ottawa
Woodbridge Square
Vaughan
ON
ON
ON
ON
100
102,000
102,000
100
100
10,000
10,000
795,000
795,000
50
112,000
56,000
98
96
0
98
96
TOTAL RETAIL (21)
4,818,000
4,630,500
95
A&W, Fairway Market, Liquor Distribution
Branch, Scotiabank, TD Canada Trust
Co-Op Grocery Store, Co-Op Liquor Store,
Heartland Veterinary Clinic, TD Canada Trust
Lubexx, Rona, Tim Hortons
Ashley Furniture, Country Furniture, Dollarama,
Home Outfitters, Perfect Home
Ardene, Dollarama, Marshalls, Shoppers Drug
Mart, Urban Planet
Business Depot, Dollarama, GoodLife Fitness,
Staples, The Keg Steakhouse, Walmart
Best Buy, GoodLife Fitness Centres, Saskatoon
Co-op Food Store, Shoppers Drug Mart, Sport Chek
Capitol Theatre, Dollarama, GoodLife Fitness,
Sobeys Extra, Sport Chek
Boston Pizza, Dollarama, Liquor Mart, Safeway,
Shoppers Drug Mart
Bank of Montreal, Dollarama, Pharma Plus,
Walmart
Canadian Tire, Cineplex Odeon, GoodLife Fitness,
PetSmart, Sobeys
Cambridge Ice Centre, Galaxy, Hudson’s Bay,
Indigo, Kingpin Cambridge, Marshalls,
Sport Chek
Anytime Fitness, Bulk Barn, Farm Boy, LCBO,
TD Canada Trust
Congee Chan, Federated Insurance, Swiss Chalet,
Wonder Sushi, YMCA of Western Ontario
Buduchnist Credit Union, Cordi Italian Bakery,
Longo’s, Pump On Rathburn, Shoppers Drug Mart
East Side Mario’s, Food Basics, Ontario Breast
Screening Program, Pharma Plus, Scotiabank
Vacant
Hudson’s Bay, Intact Financial Corp,
Sport Chek, Toys “R” Us, Willis College
Cucina Bella, Moose & Firkin, Nations Fresh
Foods, Scotiabank, Wellmedica
CERTIFICATIONS
• 1 BOMA Platinum • 2 BOMA Gold • 3 BOMA Silver • 4 BOMA Bronze • 5 BOMA Certified • 6 LEED Gold • 7 LEED Silver • 8 Energy Star • 9 Bullfrog Powered
13
MORGUARD REAL ESTATE INVESTMENT TRUST 2018 ANNUAL REPORTSECTION 1: REAL ESTATE PORTFOLIO
HERITAGE PL ACE
OT TAWA, ON
14
MORGUARD REAL ESTATE INVESTMENT TRUST 2018 ANNUAL REPORTSECTION 1: REAL ESTATE PORTFOLIO OFFICE
PROPERTY
CITY
PROV.
OWNERSHIP
INTEREST
(%)
TOTAL
AREA
(SF)
OWNERSHIP
AREA
(SF)
OCCU-
PANCY
(%)
TOP TENANTS
111 Dunsmuir• 1
Chancery Place• 2
Seymour Place
207 and 215 9th Avenue SW
• 2 • 8
505 3rd Street SW• 2 • 8
7315 8th Street NE
Centre 810
Citadel West
Deerport Centre• 3
Duncan Building
National Bank Building
Vancouver
Vancouver
Victoria
Calgary
Calgary
Calgary
Calgary
Calgary
Calgary
Calgary
Calgary
Petroleum Plaza
Edmonton
Scotia Place• 2
Edmonton
Ottawa
Ottawa
Ottawa
Ottawa
Ottawa
Ottawa
Ottawa
Toronto
Toronto
301 Laurier Avenue
525 Coventry
Green Valley Office Park• 3
Heritage Place• 3
St. Laurent Business Centre• 3
Standard Life• 3
Time Square• 3
200 Yorkland• 3
77 Bloor Street West• 2 • 6
Place Innovation• 2 • 3
TOTAL OFFICE (23)
BC
BC
BC
AB
AB
AB
AB
AB
AB
AB
AB
AB
AB
ON
ON
ON
ON
ON
ON
ON
ON
ON
100
222,000
222,000
100
100
142,500
142,500
100
Fatburger, Ricky’s All Day Grill, Stantec
Consulting Ltd, Wood Canada Limited
Blair Shapera Custom Clothier, Boston Pizza,
Ministry of Citizens’ Services, Studeo 55 Fitness Inc
235,500
235,500
100
Province of British Columbia
100
100
636,500
636,500
20
563,000
112,500
62
50
142,000
71,000
100
100
100
100
100
100
50
19,500
77,500
78,500
48,500
81,000
43,500
19,500
77,500
78,500
48,500
81,000
43,500
304,000
152,000
50
100
100
26,000
42,500
13,000
42,500
123,000
123,000
50
216,000
108,000
100
88,000
88,000
50
100
378,000
189,000
111,000
111,000
100
150,000
150,000
50
396,000
198,000
98
70
Downtown Dental, Engel & Volkers,
Obsidian Energy Ltd, Sukiyaki House Restaurant
Bank of China, Canadian Energy Pipeline
Association, Morguard Investments Ltd
100
Genesis Land Development Corp
80
Canadian Cattle Identification Agency,
CIMA Canada Inc, Skyplan Services Limited
100
CH2M Hill Canada Limited
59
100
100
99
Aerotek ULC, Colleaux Engineering Inc,
Young Living Canada ULC
RCMP
National Bank of Canada
Alberta Infrastructure, Olson’s Mercantile,
Servus Credit Union Ltd
APEGA, Bank of Nova Scotia, Davis Management
Limited, Duncan and Craig, Grant Thornton
19
Moores The Suit People
100
Assent Compliance Inc
Canadian Physiotherapy Association,
The Ottawa Fertility Centre Inc
Modis Canada Inc, PCL Constructors Canada Inc,
The Dominion of Canada General Insurance
CBI Limited Partnership, Intact Insurance
Company, RJR Innovations Inc, Syglam Inc
Public Works
BBB Urban Developments Ottawa Inc,
GRC Architects Inc, Le Droit, The Red Lion
AG Simpson Automotive Inc, Ferring Inc,
Investors Group Financial Services
Harry Rosen, TD Waterhouse Inv Serv Inc,
The Toronto Dominion Bank
Bombardier Inc, Ciena Canada Inc,
Lockheed Martin Canada Inc
84
91
76
98
85
90
96
97
93
Saint-Laurent
QC
50
896,000
448,000
5,020,500
3,391,000
INDUSTRIAL
PROPERTY
CITY
PROV.
1875 Leslie
2041-2151 McCowan
279 Yorkland
285 Yorkland
825 Des Érables
Toronto
Toronto
Toronto
Toronto
Salaberry-de-
Valleyfield
ON
ON
ON
ON
QC
OWNERSHIP
INTEREST
(%)
TOTAL
AREA
(SF)
OWNERSHIP
AREA
(SF)
OCCU-
PANCY
(%)
TOP TENANTS
100
100
100
100
50
52,000
52,000
100
Body and Soul Fitness Corp, Goose and Firkin
197,000
197,000
77
Every Green International Inc, Paragon Industrial
Photographic, TuxMat, Yao Yee Trading Inc.
18,000
25,000
18,000
25,000
485,000
242,500
100
100
100
Arz Fine Foods Express Ltd
The Mitchell Partnership Inc
Diageo
TOTAL INDUSTRIAL (5)
777,000
534,500
92
CERTIFICATIONS
• 1 BOMA Platinum • 2 BOMA Gold • 3 BOMA Silver • 4 BOMA Bronze • 5 BOMA Certified • 6 LEED Gold • 7 LEED Silver • 8 Energy Star • 9 Bullfrog Powered
15
MORGUARD REAL ESTATE INVESTMENT TRUST 2018 ANNUAL REPORTSECTION 1: REAL ESTATE PORTFOLIO
SECTION 2
FINANCIAL HIGHLIGHTS
GENERATING REVENUE
THROUGH A COMMITMENT
TO QUALITY
The REIT’s primary goal is to accumulate a Canadian portfolio of high-quality real
estate assets, delivering the benefits of its asset ownership to unitholders. Investing in
our properties, and responding intelligently to market demands will ensure positive
results for the long term.
SECTION 2
FINANCIAL HIGHLIGHTS
WE EXPECT TO SEE CONTINUING POSITIVE
IMPACT TO OUR REVENUE AS MORE OF OUR
DEVELOPMENT INITIATIVES BECOME ACTIVE.
NET OPERATING INCOME
STEADY PERFORMANCE
This includes having an
For 2018, our total net operating
FOR UNITHOLDERS
appropriate balance between
income was $152.0 million,
Throughout the year, we
different types of debt, and
compared with $157.0 million
continued to make monthly
maintaining an appropriate
in 2017. While many properties
distributions to our unitholders.
ratio of debt to total assets.
in our portfolio maintained
consistent performance as
they have year after year, we
continued to be challenged
Since inception, our
distributions have held steady
or increased, but have never
lessened. The Trust’s monthly
by the economic downturn in
distribution to unitholders in
Alberta. At the same time, our
2018 was $0.08 per unit,
development projects – a total
representing $0.96 per unit
of 170,500 square feet –
on an annualized basis. The
began generating revenue in
distributions represented
the third and fourth quarters of
84.2% of the adjusted funds
2018, helping to contribute to
from operations, compared to
overall revenue. We expect to
77.4% in 2017.
see even more positive impact
to our revenue as more of our
development initiatives come
on stream.
PRUDENT, MEASURED
PORTFOLIO OVERSIGHT
The ongoing objective for the
Trust is to manage the portfolio
as prudently as possible.
The Trust’s debt ratio at
December 31, 2018 was
45.1%, compared to 44.5%
in 2017. This slight increase
is due, in part, to the ongoing
development of many properties
within the portfolio, and the
two to three years it typically
takes to repurpose large-format
retail spaces such as those
vacated by Target in 2016
and 2017.
17
MORGUARD REAL ESTATE INVESTMENT TRUST 2018 ANNUAL REPORT FINANCIAL HIGHLIGHTS
• 1
• 2
• 3
• 6
• 4
• 5
AS AT DECEMBER 31
2014
2015
2016
2017
2018
Revenue from real estate properties
$298,461
$290,982
$280,726
$278,754
$276,473
Net operating income
169,739
165,930
160,500
157,025
152,078
Funds from operations
106,516
106,385
113,500
100,766
94,992
Adjusted funds from operations 1, 2
78,973
79,208
87,091
74,983
69,394
Funds from operations – Basic per unit
$1.71
$1.72
$1.87
$1.66
$1.56
Adjusted funds from operations 1, 2
– Basic per unit
$1.27
$1.28
$1.43
$1.24
$1.14
Cash Distributions per unit
$0.96
$0.96
$0.96
$0.96
$0.96
Total assets
$3,016,496
$2,920,155
$3,034,190
$2,921,091
$2,978,573
Total debt
$1,364,029
$1,349,254
$1,427,742
$1,300,102
$1,344,068
Total equity
$1,607,081
$1,556,140
$1,555,183
$1,565,591
$1,580,414
Weighted average number of units
as at year-end (in thousands) – Basic
62,168
61,779
60,750
60,622
60,705
1. Restated in accordance with REALpac white paper on FFO and AFFO effective January 1, 2017. The restatement required the inclusion of the one-time Target Corporation
settlement of $11.3 million, finalized in the second quarter of 2016.
2. The Trust uses normalized productive capacity maintenance expenditures to calculate adjusted funds from operations.
18
SECTION 2: FINANCIAL HIGHLIGHTSMORGUARD REAL ESTATE INVESTMENT TRUST 2018 ANNUAL REPORT
• 1
REVENUE FROM REAL
ESTATE PROPERTIES
IN MILLIONS OF DOLL ARS
• 2
NET OPERATING
INCOME
IN MILLIONS OF DOLL ARS
• 3
FUNDS FROM
OPERATIONS
IN MILLIONS OF DOLL ARS
8
9
2
$
1
9
2
$
1
8
2
$
9
7
2
$
6
7
2
$
0
7
1
$
6
6
1
$
1
6
1
$
7
5
1
$
2
5
1
$
7
0
1
$
6
0
1
$
4
1
1
$
1
0
1
$
5
9
$
14
15
16
17
18
14
15
16
17
18
14
15
16
17
18
• 4
TOTAL ASSETS
IN BILLIONS OF DOLL ARS
• 5
TOTAL EQUITY
IN BILLIONS OF DOLL ARS
• 6
CASH DISTRIBUTIONS
PER UNIT
.
0
3
$
.
9
2
$
.
0
3
$
.
9
2
$
.
0
3
$
.
6
1
$
.
6
1
$
.
6
1
$
.
6
1
$
.
6
1
$
.
6
9
0
$
.
6
9
0
$
.
6
9
0
$
.
6
9
0
$
6
9
0
$
.
14
15
16
17
18
14
15
16
17
18
14
15
16
17
18
19
SECTION 2: FINANCIAL HIGHLIGHTSMORGUARD REAL ESTATE INVESTMENT TRUST 2018 ANNUAL REPORT
BALANCE SHEETS
IN THOUSANDS OF CANADIAN DOLL ARS
AS AT DECEMBER 31,
ASSETS
Non-current assets
Real estate properties
Equity-accounted investment
Current assets
Amounts receivable
Loan receivable
Prepaid expenses and other
Cash
2018 FINANCIALS
2018
2017
$2,915,592
24,746
2,940,338
17,016
10,000
567
10,652
38,235
$2,861,816
27,080
2,888,896
16,601
—
842
14,752
32,195
Total assets
$2,978,573
$2,921,091
$913,490
168,814
4,282
1,086,586
194,104
49,809
—
67,660
311,573
1,398,159
1,580,414
$990,959
166,983
3,728
1,161,670
89,299
51,670
35,000
17,861
193,830
1,355,500
1,565,591
$2,978,573
$2,921,091
LIABILITIES AND UNITHOLDERS’ EQUITY
Non-current liabilities
Mortgages payable
Convertible debentures
Accounts payable and accrued liabilities
Current liabilities
Mortgages payable
Accounts payable and accrued liabilities
Loan payable
Bank indebtedness
Total liabilities
Unitholders’ equity
20
MORGUARD REAL ESTATE INVESTMENT TRUST 2018 ANNUAL REPORTSECTION 2: FINANCIAL HIGHLIGHTS
2018 FINANCIALS
STATEMENTS OF INCOME AND
COMPREHENSIVE INCOME
IN THOUSANDS OF CANADIAN DOLL ARS, EXCEPT PER UNIT AMOUNTS
FOR THE YEAR ENDED DECEMBER 31,
Revenue from real estate properties
Property operating costs
Property operating expenses
Property taxes
Property management fees
Interest expense
General and administrative
Other income
Income before fair value losses and net (loss)/income
from equity-accounted investment
Fair value losses on real estate properties
Net (loss)/income from equity-accounted investment
Net income and comprehensive income
NET INCOME PER UNIT
Basic
Diluted
2018
2017
$276,473
$278,754
64,137
51,083
9,175
152,078
55,648
4,781
(106)
62,218
50,345
9,166
157,025
55,087
4,517
(179)
91,755
97,600
(18,602)
(138)
$73,015
$1.20
$1.12
(31,225)
931
$67,306
$1.11
$1.05
21
MORGUARD REAL ESTATE INVESTMENT TRUST 2018 ANNUAL REPORTSECTION 2: FINANCIAL HIGHLIGHTS
STATEMENTS OF UNITHOLDERS’ EQUITY
IN THOUSANDS OF CANADIAN DOLL ARS, EXCEPT NUMBER OF UNITS
NUMBER
OF UNITS
ISSUE
OF UNITS
RETAINED
EARNINGS
EQUIT Y
COMPONENT OF
CONVERTIBLE
DEBENTURES
CONTRIBUTED
SURPLUS
TOTAL
UNITHOLDERS’
EQUIT Y
Unitholders’ equity, January 1, 2017
60,600,707
$610,499
$938,226
$6,120
$338
$1,555,183
CHANGES DURING THE YEAR:
Repurchase of units
2012 Debentures converted
2012 Debentures redeemed
Net income
Distributions to unitholders
Issue of units – DRIP1
(50,300)
(507)
(259)
731
—
—
—
18
—
—
—
—
—
67,306
(56,150)
140,591
2,053
(2,053)
—
—
—
—
(1,526)
1,526
—
—
—
—
—
—
(766)
18
—
67,306
(56,150)
—
Unitholders’ equity, December 31, 2017
60,691,729
612,063
947,070
4,594
1,864
1,565,591
CHANGES DURING THE YEAR:
Repurchase of units
Net income
Distributions to unitholders
Issue of units – DRIP1
(37,100)
(375)
(36)
—
—
—
—
73,015
(57,781)
39,424
495
(495)
—
—
—
—
—
—
—
—
(411)
73,015
(57,781)
—
Unitholders’ equity, December 31, 2018
60,694,053
$612,183
$961,773
$4,594
$1,864
$1,580,414
1. Distribution Reinvestment Plan (“DRIP”)
22
MORGUARD REAL ESTATE INVESTMENT TRUST 2018 ANNUAL REPORTSECTION 2: FINANCIAL HIGHLIGHTS
STATEMENTS OF CASH FLOWS
IN THOUSANDS OF CANADIAN DOLL ARS
FOR THE YEAR ENDED DECEMBER 31,
OPERATING ACTIVITIES
Net income
Add items not affecting cash
Distributions from equity-accounted investment
Additions to tenant incentives and leasing commissions
Net change in non-cash operating assets and liabilities
Cash provided by operating activities
FINANCING ACTIVITIES
Proceeds from new mortgages
Financing costs on new mortgages
Repayment of mortgages
Repayments on maturity
Principal instalment repayments
Net repayment of 2012 Debentures
Net proceeds from 2016 Debentures
Proceeds from bank indebtedness
Increase in loan receivable
Proceeds from loan payable
Repayment of loan payable
Distributions to unitholders
Units repurchased for cancellation
Cash used in financing activities
INVESTING ACTIVITIES
Capital expenditures on real estate properties
Expenditures on properties under development
Cash used in investing activities
Net change in cash
Cash, beginning of period
Cash, end of period
2018
2017
$73,015
20,910
2,196
(2,452)
(195)
93,474
118,241
(685)
(54,584)
(36,333)
—
—
49,799
(10,000)
42,500
(77,500)
(57,781)
(411)
(26,754)
(20,932)
(49,888)
(70,820)
(4,100)
14,752
$10,652
$67,306
31,494
2,052
(3,920)
3,885
100,817
53,000
(185)
(50,250)
(35,490)
(99,957)
7
17,861
—
35,000
—
(56,150)
(766)
(136,930)
(20,832)
(40,999)
(61,831)
(97,944)
112,696
$14,752
23
MORGUARD REAL ESTATE INVESTMENT TRUST 2018 ANNUAL REPORTSECTION 2: FINANCIAL HIGHLIGHTS CORPORATE INFORMATION
TRUSTEES
OFFICERS
INVESTOR INFORMATION
K. Rai Sahi
President and
Chief Executive Officer
Andrew Tamlin
Chief Financial Officer
Beverley G. Flynn
Senior Vice President,
General Counsel
and Secretary
Paul Miatello
Senior Vice President
Angela Sahi
Senior Vice President
Robert D. Wright
Vice President
Michael A.J. Catford1, 2, 3
Real Estate Consultant
Paul F. Cobb1, 2, 3
Corporate Director
Graeme M. Eadie1, 3
Senior Advisor, CPPIB
Edward C. Kress1, 2, 3
Corporate Director
Brookfield Group
Bart S. Munn1, 2
Corporate Director
K. Rai Sahi
Chairman and
Chief Executive Officer
Morguard Corporation
Antony K. Stephens 1, 3
Corporate Director
Timothy J. Walker 1, 2, 3
Corporate Director
1 Independent Trustee
2 Audit Committee
3 Human Resources and
Governance Committee
Head Office
Morguard Real Estate
Investment Trust
55 City Centre Drive,
Suite 1000
Mississauga, ON
L5B 1M3
T 905-281-4800 or
1-800-928-6255
info@morguard.com
Listing
Toronto Stock Exchange
Symbol
MRT.UN
MRT.DB
Eligibility RRSP
RRIF
DPSP
RPP
TFSA
Auditors
Ernst & Young LLP
Principal Bankers
Bank of Montreal,
Toronto-Dominion Bank
Transfer Agent
Computershare Trust
Company 1-800-564-6253
www.computershare.com
Investor Relations
Visit our website at
www.morguard.com or
view our filings on SEDAR
at www.sedar.com.
Annual Unitholder Meeting
Wednesday May 8, 2019
at 9:45 a.m.
Rattlesnake Point Golf Club,
5407 Regional Road 25,
Milton, ON
L9T 2X5
For Additional Information,
Contact
Beverley G. Flynn
Senior Vice President,
General Counsel
and Secretary
T 905-281-4800
info@morguard.com
Andrew Tamlin
Chief Financial Officer
T 905-281-4800
info@morguard.com
24
MORGUARD REAL ESTATE INVESTMENT TRUST
2018 ANNUAL REPORT
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M O RGUA RD RE A L ESTAT E
IN V EST MEN T T RUST
55 City Centre Drive
Suite 1000
Mississauga, ON
L5B 1M3
905-281-4800
MORGUARD.COM