Morguard North American Residential Real Estate Investment Trust Q4 Earnings Call Highlights

Core Viewpoint - Morguard North American Residential Real Estate Investment Trust reported higher net income and funds from operations for the year 2025, despite facing challenges with occupancy rates in both Canada and the U.S. due to competitive leasing conditions [3][6][10]. Financial Performance - The REIT's net income rose to CAD 111.5 million in 2025, up from CAD 99.4 million in 2024, primarily due to a CAD 37.2 million decrease in fair value loss on Class B LP units [10]. - Basic funds from operations (FFO) increased to CAD 94.1 million, a rise of CAD 4.2 million or 4.7% compared to 2024, with FFO per unit growing to CAD 1.79 from CAD 1.65 [12][14]. - The REIT ended Q4 2025 with total assets of CAD 4.5 billion, down from CAD 4.6 billion at the end of 2024, attributed mainly to currency exchange rate fluctuations [2]. Occupancy and Rental Trends - Occupancy rates softened to 93.3% in Canada and 91.3% in the U.S., influenced by new supply and competitive leasing conditions, although average monthly rents increased (Canada +4.5% to CAD 1,851; U.S. +1.2% to $1,930) [4][17]. - Management expects leasing conditions to improve as new supply is absorbed and competition moderates, aiming for a return to approximately 95% occupancy by year-end [16]. Mortgage and Financing Activities - The REIT refinanced CAD 245.6 million of maturing mortgages at a weighted average interest rate of 4.92%, generating net proceeds of CAD 58.9 million [5][6]. - The REIT faces seven mortgage maturities in 2026, with a weighted average term to maturity of 4.8 years and a debt-to-gross debt value ratio of 39.5% at year-end [7][5]. Capital Expenditures and Renovation Plans - Total capital expenditures for 2025 amounted to CAD 64.1 million, covering various improvements and renovations [23]. - The REIT is actively pursuing a value-add renovation program, including extensive upgrades at Village Crossing Apartments, with plans to renovate approximately 70 to 75 additional units by year-end [22].