Real Estate — August 6, 2009

Morguard Corporation Announces 2009 Second Quarter Results and Regular Dividend

    MISSISSAUGA, ON, Aug. 6 /CNW/ - Morguard Corporation (TSX: MRC) announced
its financial results for the three months ended June 30, 2009.

    Q2 2009 HIGHLIGHTS

    -   Total revenues for the three months ended June 30, 2009, increased to
        $86.0 million from $82.9 million for the same period in 2008;

    -   Net operating income in Q2 2009 increased to $37.7 million compared
        to $37.0 million in 2008;

    -   Net income from continuing operations for the three months ended June
        30, 2009, totaled $6.7 million compared to net income of $6.2 million
        in 2008;

    -   Funds from operations for the three months ended June 30, 2009,
        increased to $28.7 million or $2.04 per share compared to $27.0
        million or $1.92 per share in 2008;

    -   The Company has refinanced, or has commitments to refinance,
        virtually all of the mortgages maturing during 2009 at a weighted
        average interest rate of 4.57%.

    FINANCIAL HIGHLIGHTS

    -------------------------------------------------------------------------
                                      Three months ended    Six months ended
                                                 June 30             June 30
    (in thousands of dollars)             2009      2008      2009      2008
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    Income from real estate
     properties                        $70,118   $65,758  $142,178  $130,859
    Management and advisory
     fee revenue                        14,630    15,583    29,355    29,856
    Sales of product and land            1,293     1,605     2,539     3,115
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    Total revenues                     $86,041   $82,946  $174,072  $163,830
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    Income from real
     estate properties                 $70,118   $65,758  $142,178  $130,859
    Property operating expense         (32,442)  (28,717)  (66,344)  (58,899)
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    Net operating income               $37,676   $37,041   $75,834   $71,960
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    Funds from operations              $28,666   $27,041   $56,239   $52,535
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    Net income from continuing
     operations                         $6,723    $6,204   $11,552   $35,353
    -------------------------------------------------------------------------
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    Net income for the period           $6,723    $8,625   $11,552   $37,649
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    Income per share
      Basic - continuing
       operations                        $0.48     $0.44     $0.82     $2.54
      Diluted - continuing operations    $0.48     $0.44     $0.82     $2.51
      Basic - net income                 $0.48     $0.62     $0.82     $2.70
      Diluted - net income               $0.48     $0.62     $0.82     $2.68

    NET INCOME

    Net income for the three months ended June 30, 2009, was $6.7 million
($0.48 per share) compared to $8.7 million ($0.62 per share) in 2008. The
decrease in net income of $2.0 million was primarily due to a year over year
$2.5 million decrease in equity income from Morguard REIT's discontinued
operations.

    NET OPERATING INCOME ("NOI")

    -------------------------------------------------------------------------
                                      Three months ended    Six months ended
                                                 June 30             June 30
    (in thousands of dollars)             2009      2008      2009      2008
    -------------------------------------------------------------------------
    Multi-unit residential - Canada    $12,025   $12,887   $22,672   $23,872
    Multi-unit residential - U.S.        4,572     3,667     9,789     7,166
    Retail - Canada                      6,642     6,171    13,632    12,414
    Retail - U.S.                        5,905     5,541    12,358    10,754
    Office/Industrial                    8,532     8,775    17,383    17,754
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    Net operating income               $37,676   $37,041   $75,834   $71,960
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net operating income for the three months ended June 30, 2009, increased
to $37.7 million compared to $37.0 million in 2008 representing an increase of
1.9%. The increase was mainly due to the change in the U.S. dollar foreign
exchange rate which increased reported NOI by approximately $1.4 million. Net
operating income also increased as a result of higher occupancy levels in the
Canadian retail portfolio compared to 2008, offset by reductions in NOI from
the Canadian multi-unit residential and office & industrial portfolios.

    FUNDS FROM OPERATIONS ("FFO")

    FFO was calculated as follows:

    -------------------------------------------------------------------------
                                      Three months ended    Six months ended
                                                 June 30             June 30
    (in thousands of dollars)             2009      2008      2009      2008
    -------------------------------------------------------------------------
    Net earnings from
     continuing operations              $6,723    $6,204   $11,552   $35,353
    Items not affecting cash:
      Amortization                      16,420    14,907    33,691    30,395
      Future income taxes                1,295     1,141     1,857    12,922
      Non-controlling interest               -       (33)        -      (260)
    Equity income from Morguard
     REIT - continuing operations       (4,124)   (2,752)   (7,403)  (22,115)
    Morguard REIT's equity
     accounted FFO - continuing
     operations                          8,424     7,574    16,164    15,681
    Gain on pension valuation
     allowance                               -         -         -   (19,441)
    Gain on sale of property               (72)        -       (72)        -
     Other                                   -         -       450         -
    -------------------------------------------------------------------------
    Funds from operations              $28,666   $27,041   $56,239   $52,535
    -------------------------------------------------------------------------
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    Per share amount - basic             $2.04     $1.94     $4.00     $3.77
    Per share amounts - diluted          $2.04     $1.92     $4.00     $3.75

    For the three months ended June 30, 2009, the Company recorded FFO of
$28.7 million ($2.04 per diluted share) compared to $27.0 million ($1.92 per
diluted share) in 2008. The increase of $1.6 million, or 6.0%, in FFO was
primarily the result of increased NOI and an increase in Morguard REIT's
equity accounted FFO.

    FINANCING AND LIQUIDITY

    As announced in the Company's press release dated July 30, 2009,
virtually all of the mortgages maturing during 2009 have been successfully
refinanced or commitments to refinance have been obtained. As of today's date
one Canadian retail asset and two Canadian multi-unit residential assets had
been funded. A commitment to refinance a third Canadian multi-unit residential
asset has been received and is expected to be funded during the third quarter
of 2009. Gross proceeds from the four previously mentioned refinancings will
total $123 million which will be used to repay maturing mortgages of $57
million, repay bank indebtedness and for general corporate purposes. The
weighted average interest rate of the maturing mortgages was 6.33% while new
mortgages have been refinanced at a weighted average interest rate of 4.86%
for a five-year term. Upon funding the remaining multi-unit residential
mortgage, the Company expects to have cash and borrowing capacity under
existing credit facilities of approximately $165 million.

    THIRD QUARTER DIVIDEND

    The board of directors of Morguard Corporation announced today that the
third quarterly dividend of 2009 in the amount of $0.15 per common share will
be paid on September 30, 2009 to shareholders of record at the close of
business on September 15, 2009.
    The Company's unaudited financial statements for the three months ended
June 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 103 properties in Canada and the United States. Morguard's
portfolio has a book value of approximately $1.7 billion and comprises 6.7
million square feet of commercial space and 10,504 apartment suites. For more
information, visit the Company's website at www.morguard.com.

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

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