Morguard Real Estate Investment Trust
Annual Report 2019

Plain-text annual report

ANNUAL REPORT MORGUARD 9 1 0 REIT2 OPPORTUNITY FROM DECISIVE ACTION N O , o t n o r o T , t s e W t e e r t S r o o l B 7 7 r e v o c e h t n O The selected annual financial information in the 2019 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, 2019, 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 We have always taken the view that prudent capital management alongside measured, strategic enhancement of our portfolio of properties results in consistent returns over the long term. As a result, the Trust remains committed to maintaining its portfolio of high-quality real estate assets, with the goal of providing the best possible outcome for our unitholders. The strength of a diverse portfolio is that it provides resilience to regional market fluctuations. Overall, our occupancy rates have remained high although we have seen a softening in both Alberta with the decline in the oil and gas sector and in the retail sector as well. In Ottawa and the Greater Toronto Area, our properties – office buildings and strip centres – are performing exceptionally well. We are always looking for ways to enhance the value of our portfolio and, through 2019, we sought opportunities to further develop our properties. In Saskatoon, for example, we have committed to invest in several multi-million dollar projects for The Centre Mall, further elevating the retail experience for shoppers and tenants alike. And in Calgary, we unveiled the Plus 15 Walkway extension at Penn West Plaza to help better serve tenants and visitors to the property. While we believe in a deliberate, measured approach to real estate portfolio management, that does not mean we are idle. We are constantly looking for ways to garner the most consistent returns possible over the long term. Our exceptionally talented management team, employees and Trustees are all committed to ensuring the Trust reliably provides consistent value to you, our valued unitholders. As always, we’ll continue to find opportunity from taking decisive action. Sincerely, K. RAI SAHI Chairman, President and Chief Executive Officer BREADTH Morguard REIT maintains a diverse and strong portfolio of high-quality retail, office and industrial assets throughout Canada. Working together with an integrated interdisciplinary network of real estate professionals within the Morguard group, we have the skills, financial strength and entrepreneurial drive that enables us to be opportunistic and ASSET MANAGEMENT OPERATIONS RESEARCH ACQUISITIONS LEASING MARKETING DEVELOPMENT SUSTAINABILITY CONNECTION to take decisive action. At the same time, we take a measured, conservative approach to every investment and initiative. With our breadth, connection and reach, we will continue to identify opportunities that further enhance our commercial real estate properties and diversify our tenant base. REACH BRITISH COLUMBIA ALBERTA SASKATCHEWAN MANITOBA ONTARIO QUEBEC 0 4 B A , n o t n o m d E , a z a l P m u e l o r t e P 1 9 2 $ 1 8 2 $ 9 7 2 $ 6 7 2 $ 3 7 2 $ 15 16 17 18 19 REVENUE FROM REAL ESTATE PROPERTIES IN MILLIONS OF DOLL ARS MORGUARD REIT OUR 2019 PERFORMANCE LONG-TERM RESULTS FROM A QUALITY PORTFOLIO Our focus is to deliver long-term value to shareholders with our portfolio of high-quality real estate assets located across Canada. Historically, our objective has been to strike a balance between managing distributions and retaining sufficient cash to meet fixed obligations while investing in the portfolio. By continually investing in our properties, and by monitoring and responding strategically to the marketplace, we have helped ensure positive results over the long-term. NET OPERATING INCOME Our 2019 net operating income (“NOI”) was $150 million, compared with $152 million in 2018. Although we are still experiencing the challenges of a slower economy in the Alberta market, the majority of our properties once again maintained consistent performance – the result of our significant investments in properties such as The Centre Mall in Saskatoon. 0 5 N O , o t n o r o T , t s e W t e e r t S r o o l B 7 7 6 6 1 $ 1 6 1 $ 7 5 1 $ 2 5 1 $ 0 5 1 $ 4 1 1 $ 6 0 1 $ 1 0 1 $ 5 9 $ 1 9 $ 15 16 17 18 19 15 16 17 18 19 NET OPERATING INCOME IN MILLIONS OF DOLL ARS FUNDS FROM OPERATIONS IN MILLIONS OF DOLL ARS 2019 ANNUAL REPORT VIGILANT AND PRACTICAL PORTFOLIO OVERSIGHT We have always believed in taking the long view regarding portfolio management. Our philosophy remains unchanged: invest in high-quality real estate assets that perform with consistency year over year. This prudent portfolio management style has proven effective, enabling us to maintain an appropriate debt to asset ratio. At December 31, 2019, the Trust’s debt ratio was 45.8%, compared to 45.1% in 2018. . 6 9 0 $ . 6 9 0 $ . 6 9 0 $ . 6 9 0 $ . 6 9 0 $ 15 16 17 18 19 DISTRIBUTIONS PER UNIT FINANCIAL HIGHLIGHTS IN THOUSANDS OF CANADIAN DOLL ARS, EXCEPT BASIC PER UNIT AMOUNTS AS AT DECEMBER 31 2015 2016 2017 2018 2019 Revenue from real estate properties Net operating income Funds from operations 0 6 Adjusted funds from operations 1, 2 Funds from operations – Basic per unit Adjusted funds from operations – Basic per unit 1, 2 Cash Distributions per unit $ $ $ $ 290,982 165,930 106,385 79,208 $1.72 $ $ $ $ 280,726 160,500 113,500 87,091 $1.87 $ $ $ $ 278,754 157,025 100,766 74,983 $1.66 $ $ $ $ $1.28 $0.96 $1.43 $0.96 $1.24 $0.96 276,473 $ 273,074 152,078 $ 149,961 94,992 69,394 $1.56 $1.14 $0.96 $ $ 90,894 66,063 $1.50 $1.09 $0.96 Total assets Total debt Total equity $ 2,920,155 $ 3,034,190 $ 2,921,091 $ 2,978,573 $ 2,937,341 $ 1,325,240 $ 1,435,735 $ 1,306,710 $ 1,349,724 $ 1,352,545 $ 1,556,140 $ 1,555,183 $ 1,565,591 $ 1,580,414 $ 1,537,468 Weighted average number of units as at year-end (in thousands) – Basic 61,779 60,750 60,622 60,705 60,711 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. MORGUARD REIT C Q , t n e r u a L - t n i a S , n o i t a v o n n I e c a l P 07 . 9 2 $ . 0 3 $ . 0 3 $ . 9 2 $ . 9 2 $ . 6 1 $ . 6 1 $ . 6 1 $ . 6 1 $ . 5 1 $ 15 16 17 18 19 15 16 17 18 19 TOTAL ASSETS IN BILLIONS OF DOLL ARS TOTAL EQUIT Y IN BILLIONS OF DOLL ARS 2019 ANNUAL REPORT 0 8 N O , e g d i r b m a C , e r t n e C e g d i r b m a C NET OPERATING INCOME BY ASSET CLASS $150 MILLION Retail 52% Office 46% Industrial 2% MORGUARD REIT MULTI-TENANT OFFICE SINGLE/DUAL TENANT OFFICE Action from Breadth. Our real estate portfolio comprises high-quality single- and multi-tenant office properties in major urban centres, dominant regional enclosed shopping centres, neighbourhood and community shopping centres, and a small group of industrial properties. Well located, our mix of quality properties in three asset classes helps us to ensure a stable return. INDUSTRIAL DOMINANT REGIONAL ENCLOSED SHOPPING CENTRES COMMUNITY SHOPPING CENTRES 0 9 A DIVERSE SET OF ASSET CLASSES From our experience, an effective way to achieve stable cash flow consistently over time is through diversification of assets. Over the years, this diversification strategy has proven to ensure more consistent overall performance in the face of downturns that may occur in certain asset classes or markets. Our mix of three asset classes – retail, office and industrial – comprising a total of 48 properties with approximately 8.5 million square feet of gross leasable area (“GLA”) are located in six provinces: British Columbia, Alberta, Saskatchewan, Manitoba, Ontario and Quebec. PORTFOLIO OCCUPANCY BY ASSET CLASS 93.8% RETAIL – ENCLOSED 98% RETAIL – COMMUNIT Y STRIP CENTRES 97.9% OFFICE – SINGLE /DUAL TENANT PROPERTIES 77.6% OFFICE – MULTI-TENANT PROPERTIES 90.7% INDUSTRIAL 93.5% TOTAL PORTFOLIO 2019 ANNUAL REPORT With two main property categories, there is diversification built into our retail portfolio. Our enclosed full-scale regional shopping centres are each dominant in their area and our strip centres are all well located in dense suburban communities. These two categories provide a broad base of tenants, helping to minimize exposure. Additionally, our 23 office assets represent two different property categories: single-tenant and multi-tenant. The majority of our single-tenant properties are under long-term leases to government tenants, helping to stabilize our revenue stream. And our multi-tenant properties help minimize exposure to high tenant turnover each year with well-distributed lease expiration dates. Our industrial properties are located in the Greater Toronto Area, and are diversified across single and multi tenancies. $2.9B VALUE OF PROPERTIES 10 B A , y r a g l a C , E N t e e r t S h t 8 5 1 3 7 NUMBER OF RETAIL PROPERTIES 7 ENCLOSED SHOPPING CENTRES 14 COMMUNIT Y STRIP CENTRES 21 TOTAL RETAIL CENTRES NUMBER OF OFFICE PROPERTIES 13 SINGLE-TENANT OFFICE PROPERTIES 10 MULTI-TENANT OFFICE PROPERTIES 23 TOTAL OFFICE PROPERTIES NUMBER OF INDUSTRIAL PROPERTIES 4 TOTAL INDUSTRIAL PROPERTIES N O , a w a t t O , e u n e v A r e i r u a L 1 0 3 MORGUARD REIT B A , y r a g l a C , t s e W l e d a t i C 11 GROSS LEASABLE AREA BY ASSET CLASS 4.8M SF RETAIL 3.4M SF OFFICE 0.3M SF INDUSTRIAL 2019 ANNUAL REPORT ONTARIO ALBERTA BRITISH COLUMBIA MANITOBA Action from Reach. Our properties are located throughout Canada, in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario and Quebec. With a deep knowledge of the Canadian marketplace – regional and national – we respond to our tenants’ needs by enhancing, upgrading and developing our properties for our tenants, which in turn helps increase shareholder value. SASKATCHEWAN QUEBEC 12 DEVELOPMENTS Our development program is focused on projects that will create long-term value for our real estate portfolio through high occupancy, and that map to our long-term strategic objectives. Current development projects include initiatives to expand leasable area and retrofit existing facilities. In 2019, we invested $34 million in development initiatives and $84 million over two years. Heritage Place – Office – Ottawa, ON The renovation of Heritage Place’s lobby, centrally located in the Capital, was undertaken to coincide with direct access to the new LRT Parliament Station east entrance announced by the City of Ottawa. Lobby renovations and building upgrades are complete as is the construction of the Parliament Station east entrance, located at 155 Queen Street. Pine Centre – Retail – Prince George, BC On July 31, 2019, the Trust announced the kickoff of a significant redevelopment project that will modernize the interior of Pine Centre Mall and will refit the former Sears space to welcome new retailers and service providers. The Trust is investing approximately $17 million in the renovation project for the shopping centre, which also includes a new mall entrance. B A , y r a g l a C , W S e u n e v A h t 9 5 1 2 d n a 7 0 2 MORGUARD REIT The Centre – Retail – Saskatoon, SK The Trust is investing approximately $30.0 million in current renovation projects for the shopping centre, including a modernization of the interior and exterior of the property, as well as a 29,500 square foot development of a new Cineplex pad. The new Cineplex pad opened in the fourth quarter of 2019 and the modernization is expected to be complete later in 2020. Plus 15 Walkway – Office – Calgary, AB In September 2019, The Trust celebrated the grand opening of the Plus 15 Walkway’s newest segment at Penn West Plaza. With a visually stunning LED-illuminated exterior and contemporary single-mast design, the walkway connects two major downtown buildings, and joins a system featuring 83 bridges and nearly 16 kilometres of elevated walkways around downtown Calgary. Parkland Mall – Retail – Red Deer, AB In the first quarter of 2019, the Trust opened 40,600 square feet of redeveloped GLA at Parkland Mall. This space is anchored by Winners and also includes Skechers. K S , n o o t a k s a S , e r t n e C e h T NET OPERATING INCOME BY PROVINCE $150 MILLION 38% Ontario 28% Alberta 14% British Columbia 9% Manitoba 6% Saskatchewan 5% Quebec 13 N O , a w a t t O , e c a l P e g a t i r e H 2019 ANNUAL REPORT ASSET MANAGEMENT LEASING OPERATIONS Action from Connection. Our Morguard network of deeply experienced real estate professionals gives us the ability to draw on knowledge and skills to explore, identify and act on new opportunities to further enhance our portfolio for existing and prospective tenants and, of course, our unitholders. MARKETING RESEARCH DEVELOPMENT 14 LOOKING FORWARD Portfolio diversification has provided the Trust with the ability to provide stable returns to its unitholders. With a range of property types and tenants in six provinces across Canada, we can guard ourselves against regional market fluctuations while maintaining the ability to deliver consistent value. For us, forward, long-term focusing management has proven to be successful management. As we move into 2020, we’ll continue to focus on opportunities to further strengthen our diversified portfolio of retail, office and industrial real estate, meet the needs of our tenants, and re-invest in our properties to help ensure their ongoing marketability. THE MORGUARD GROUP Morguard Real Estate Investment Trust often works in collaboration with the Morguard group to acquire, develop and manage our portfolio of Canadian properties. Morguard is an experienced, interdisciplinary network of real estate professionals with deep knowledge of the North American market. Leveraging their collective skills, knowledge and financial strength, we are able to take decisive action with every opportunity. B A , e i r i a r P e d n a r G , l l a M e i r i a r P MORGUARD REIT B A , y r a g l a C , g n i d l i u B k n a B l a n o i t a N 15 2019 ANNUAL REPORT N O , a w a t t O , t n e r u a L . t S 16 MORGUARD REIT (MRT.UN) Morguard Real Estate Investment Trust is a closed-end trust listed on the Toronto Stock Exchange (TSX) under the symbol MRT.UN. The Trust had total real estate assets of $2.9 billion as at December 31, 2019. The mandate of the Trust is to accumulate a Canadian portfolio of high-quality real estate assets – then actively manage the portfolio to generate steady, dependable returns for Unitholders, through a stable and increasing cash flow. This offers the potential for long-term capital appreciation. The Trust owns a diversified real estate portfolio of 48 commercial properties consisting of 8.5 million square feet of gross leasable area located in six provinces. The real estate portfolio primarily includes well-located, high-quality office properties in major urban centres, large enclosed full-scale regional shopping malls that are dominant in their respective markets, neighbourhood and community shopping centres and a small group of industrial properties. MORGUARD REIT 2019 FINANCIALS BALANCE SHEETS IN THOUSANDS OF CANADIAN DOLL ARS AS AT DECEMBER 31 ASSETS Non-current assets Real estate properties Right-of-use asset Equity-accounted investment Current assets Amounts receivable Morguard loan receivable Prepaid expenses and other Cash Total assets LIABILITIES AND UNITHOLDERS’ EQUITY Non-current liabilities Mortgages payable Convertible debentures Lease liabilities Accounts payable and accrued liabilities 18 Current liabilities Mortgages payable Lease liabilities Accounts payable and accrued liabilities Morguard loan payable Bank indebtedness Total liabilities Unitholders’ equity 2019 2018 $2,892,103 $2,915,592 324 23,705 — 24,746 2,916,132 2,940,338 14,314 — 1,112 5,783 21,209 17,016 10,000 567 10,652 38,235 $2,937,341 $2,978,573 $902,708 170,753 10,993 4,550 1,089,004 165,640 123 47,448 32,500 65,158 310,869 1,399,873 1,537,468 $2,937,341 $913,490 168,814 — 4,282 1,086,586 194,104 — 49,809 — 67,660 311,573 1,398,159 1,580,414 $2,978,573 MORGUARD REIT 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 Amortization expense Other income Fair value losses on real estate properties Net income/(loss) from equity-accounted investment Net and comprehensive income NET INCOME PER UNIT Basic Diluted 2019 2018 $273,074 $276,473 (66,800) (47,266) (9,047) 149,961 (58,006) (4,271) (83) 45 (73,850) 1,044 $14,840 $0.24 $0.24 (64,137) (51,083) (9,175) 152,078 (55,648) (4,781) — 106 (18,602) (138) $73,015 $1.20 $1.12 19 2019 ANNUAL REPORT STATEMENT 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, 2018 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) — — 39,424 — — 495 (36) 73,015 (57,781) (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 CHANGES DURING THE YEAR: Net income Distributions to unitholders Issue of units – DRIP 1 — — 41,486 — — 497 14,840 (57,786) (497) — — — — — — 14,840 (57,786) — Unitholders’ equity, December 31, 2019 60,735,539 $612,680 $918,330 $4,594 $1,864 $1,537,468 1. Distribution Reinvestment Plan (“DRIP”) 2 0 MORGUARD REIT 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, net 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 Payment of lease liabilities, net (Repayment of)/proceeds from bank indebtedness, net Increase in Morguard loan receivable Decrease in Morguard loan receivable Proceeds from Morguard loan payable Repayment of Morguard 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 Proceeds from sale of real estate properties, net Cash used in investing activities Net change in cash Cash, beginning of period Cash, end of period 2019 2018 $14,840 76,324 2,085 (3,955) 64 89,358 140,892 (667) (145,892) (34,237) (116) (2,502) — 10,000 63,500 (31,000) (57,786) — (57,808) (18,515) (33,818) 15,914 (36,419) (4,869) 10,652 $5,783 $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 21 2019 ANNUAL REPORT2019 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• 2 Prince George BC 100 482,500 482,500 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 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 Aurora Centre Cambridge Centre• 2 Winnipeg Aurora Cambridge Market Square Kanata Wonderland Corners London AB SK MB MB MB ON ON ON ON 100 444,500 444,500 100 518,000 518,000 100 361,000 361,000 100 123,000 123,000 100 100 100 175,500 175,500 304,000 304,000 100 719,000 719,000 94 98 92 100 68,000 68,000 100 100 46,000 46,000 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 100 102,000 102,000 100 100 100 10,000 10,000 797,500 797,500 – 97 50 112,000 56,000 100 TOTAL RETAIL 4,966,000 4,778,500 95 98 99 98 Bosley’s Pet Food Plus, CIBC, Dollarama, Shoppers Drug Mart, Value Village B.C. Liquor, Dollarama, Shoppers Drug Mart, Sport Chek, Winners (2020) A&W, Fairway Market, Liquor Distribution Branch, Scotiabank, TD Canada Trust 100 100 95 85 96 94 89 98 Co-Op Grocery Store, Co-Op Liquor Store, Orangetheory Fitness, TD Canada Trust Lubexx, Rona, Tim Hortons Ashley Furniture, Country Furniture, Dollarama, Perfect Home Ardene, Dollarama, Marshalls, Shoppers Drug Mart, Urban Planet Dollarama, GoodLife Fitness, Sketchers (2020), Staples, The Keg Steakhouse, Walmart, Winners Best Buy, Cineplex, GoodLife Fitness Centres, Saskatoon Co-op Food Store, Sport Chek Capitol Theatre, 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, Indigo, Kingpin Cambridge, Marshalls, Sport Chek Anytime Fitness, Bulk Barn, Farm Boy, LCBO, TD Canada Trust Congee Chan, Swiss Chalet, Sugar Marmalade, The Alley Bubble Tea, YMCA of Western Ontario Buduchnist Credit Union, Cordi Bakery, Longo’s, Pump On Rathburn, Shoppers Drug Mart East Side Mario’s, Food Basics, Ontario Breast Screening Program, Pharma Plus, Scotiabank Vacant GoodLife Fitness, Hudson’s Bay, Intact Financial, Sport Chek, Toys “R” Us, Willis College Cucina Bella, Moose & Firkin, Nations Fresh Foods, Scotiabank, Wellmedica 2 3 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 2019 ANNUAL REPORT  OFFICE PROPERTY CITY PROV. OWNERSHIP INTEREST (%) TOTAL AREA (SF) OWNERSHIP AREA (SF) OCCU- PANCY (%) TOP TENANTS 111 Dunsmuir• 1 Chancery Place• 2 • 8 Seymour Place 505 3rd Street SW• 2 • 8 7315 8th Street NE• 3 Centre 810 Citadel West Vancouver Vancouver Victoria Calgary Calgary Calgary Calgary Calgary Calgary National Bank Building Deerport Centre• 3 Duncan Building• 3 207 and 215 9th Avenue SW• 2 • 8 Calgary Petroleum Plaza• 3 • 7 Scotia Place• 2 Calgary Edmonton Edmonton 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 24 Ottawa Ottawa Ottawa Ottawa Ottawa Ottawa Ottawa Toronto Toronto 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, Wood Canada Limited Blair Shapera Custom Clothier, Boston Pizza, Min of Citizen’s Serv, Studeo 55 Fitness Inc 235,500 235,500 100 Ministry of Citizens’ Serv. 142,000 71,000 75 Bank of China, Morguard Investments Ltd., Strike Group LP, Wilmington Capital Management 100 50 100 100 100 100 100 100 100 19,500 77,500 78,500 48,500 81,000 43,500 19,500 77,500 78,500 48,500 81,000 43,500 636,500 636,500 50 304,000 152,000 20 565,000 113,000 50 100 100 26,000 42,500 13,000 42,500 123,000 123,000 50 216,000 108,000 100 88,500 88,500 50 100 378,000 189,000 111,000 111,000 100 150,000 150,000 100 Genesis Land Development Corp. 80 Canadian Cattle Identification Agency, CIMA Canada Inc, The MI Group Ltd 100 CH2M Hill Canada Limited 44 100 100 99 99 59 Arcardis Canada Inc., Plexina Inc., Pentagon Freight Services Canada Inc. RCMP National Bank of Canada Downtown Dental, Engel & Volkers, Obsidian Energy, Sukiyaki House Restaurant Alberta Infrastructure, Marlin Travel, Servus Credit Union Ltd. APEGA, Bank of Nova Scotia, Duncan and Craig, Grant Thornton 19 Moores The Suit People 100 Assent Compliance Inc. 75 86 47 98 84 94 The Ottawa Hospital, The Ottawa Fertility Centre Inc., AD Dynamics, Canadian Physiotherapy Association Her Majesty the Queen, Modis Canada Inc., The Dominion of Canada General Insurance, Winners Assent Compliance, RJR Innovations Inc., Positive Venture Group, CBI Limited Partnership Her Majesty the Queen Her Majesty the Queen, BBB Urban Developments Ottawa Inc., GRC Architects Inc., Embassy of Kuwait AG Simpson Automotive Inc., Ferring Inc., Investors Group Financial Services, Versa Systems Harry Rosen, Realstar Management, The Toronto Dominion Bank, Sephora Bombardier Inc., Accedian Networks Inc., Amdocs Canadian Managed Services, Ciena Canada 50 396,000 198,000 100 Saint-Laurent QC 50 896,000 448,000 5,023,000 3,392,000 96 92 INDUSTRIAL PROPERTY 1875 Leslie Toronto 2041-2151 McCowan Toronto 279 Yorkland 285 Yorkland TOTAL INDUSTRIAL Toronto Toronto CITY PROV. OWNERSHIP INTEREST (%) TOTAL AREA (SF) OWNERSHIP AREA (SF) OCCU- PANCY (%) TOP TENANTS ON ON ON ON 100 52,000 52,000 100 100 197,000 197,000 86 Body and Soul Fitness Corp, Goose and Firkin, Movie Poster Warehouse, Poolmaster Canada Every Green International Inc., Louise Kool & Galt Limited, TuxMat, Yao Yee Trading Inc. 100 100 18,000 25,000 18,000 25,000 292,000 292,000 100 100 91 Arz Fine Foods Express Ltd. The Mitchell Partnership Inc. 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 m o c . c n i s n o i t a c i n u m m o c p m u j . w w w : n g i s e D MORGUARD REIT  CORPORATE INFORMATION TRUSTEES OFFICERS INVESTOR INFORMATION K. Rai Sahi Chairman, 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. Catford 1, 2, 3 Real Estate Consultant Graeme M. Eadie 1, 3 Senior Advisor, CPPIB Edward C. Kress 1, 2, 3 Corporate Director Brookfield Group Bart S. Munn 1, 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 6, 2020 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 MORGUARD REAL ESTATE INVESTMENT TRUST 55 City Centre Drive Suite 1000 Mississauga, ON L5B 1M3 905-281-4800 MORGUARD.COM 

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