Q2 2024 Morguard Real Estate Investment Trust Earnings Call Transcript
Key Points
- Net operating income for the quarter increased by almost 5% to $31.8 million compared to the previous year.
- Same asset net operating income for the six-month period rose by 4.6%, indicating strong performance across all asset classes.
- Retail results showed growth with increased traffic and sales in enclosed malls, reflecting a recovery post-pandemic.
- Overall occupancy levels improved to 90.8%, with retail occupancy up by 60 basis points and office occupancy up by over 100 basis points.
- The Trust successfully executed the sale of Heritage Towne Centre, generating $20 million in net proceeds to pay down debt.
- Interest expenses increased by 15% for the quarter, primarily due to higher interest costs on mortgage rollovers.
- Funds from operations (FFO) decreased by 6% to $14.1 million, impacted by the higher interest expenses.
- A $16 million fair value loss was recorded on real estate properties, mainly due to expanded cap rates in Toronto and Vancouver office assets.
- Elevated capital needs are expected to exceed reserve amounts due to increased leasing capital requirements and higher costs for capital projects.
- A decrease in net operating income of approximately $14 million to $15 million is anticipated in 2025 due to lease-up and vacancy costs at Penn West Plaza.
Good afternoon, ladies and gentlemen, and welcome to the Morguard REIT 2024 second-quarter results conference call. (Operator Instructions)
I would now like to turn the conference over to Andrew Tamlin. Please go ahead.
Thank you, and good afternoon, everyone. My name is Andrew Tamlin, Chief Financial Officer of Morguard REIT. Welcome to the Morguard REIT's second-quarter 2024 earnings conference call. I am joined this afternoon by John Ginis, Assistant Vice President of Retail Asset Management; Tom Johnston, Senior VP of Western Asset Management; Todd Febbo, VP of Eastern Office Management; along with Rai Sahi, CEO and Chairman of the Board. Thank you all for taking the time to join the call.
Before we jump to call, I would like to point out that our comments will mostly refer to the second-quarter 2024 MD&A and financial statements, which have been posted to our website. I refer you specifically to the cautionary language at the front of the MD&A, which
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