Morguard Real Estate Inv. Q3 2026 Earnings Results & Report

Morguard Real Estate Inv. EPS Results

• Actual EPS: C$0.18
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Morguard Real Estate Inv. Revenue Results

• Actual Revenue: C$60.37 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

The Trust is a closed-end real estate investment trust, which owns a diversified portfolio of 45 high quality retail, office and industrial income producing properties in Canada consisting of approximately 8 million square feet of leasable space.

Morguard Real Estate Inv. Q3 2026 Earnings Call Transcript

Key Takeaways

• Negative Sentiment: Q3 net operating income fell to CAD 27.3 million from CAD 31.3 million a year earlier, primarily because the prior-year period benefited from a one-time property-tax refund.
• Positive Sentiment: Overall occupancy improved to 85.8%, up 100 basis points from March, with retail and office occupancy each rising 150 basis points. Management expects further gains as recently completed leasing deals are recorded.
• Positive Sentiment: Retail performance remained stable, supported by 2.5% year-to-date same-store growth in the community strip portfolio, effectively full occupancy, and positive traffic and sales trends.
• Positive Sentiment: The St. Laurent Centre remerchandising program is progressing, with Sephora and H&M open and Uniqlo, Sport Chek and Splitsville planned. The REIT expects to invest CAD 25 million–CAD 30 million through late 2027 or early 2028, while new No Frills and gym tenants should add income from 2027.
• Negative Sentiment: The REIT is still evaluating how to address its CAD 159 million convertible debenture maturity at year-end, including renewal or refinancing through unencumbered assets, while higher long-term interest rates are complicating the decision.

Presentation

[Operator]

Good afternoon, ladies and gentlemen, and welcome to the Morguard Real Estate Investment Trust 2026 third quarter results conference call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, October 29, 2026. I would now like to turn the conference over to Andrew Tamlin, Chief Financial Officer. Please go ahead.

[Andrew Tamlin, CFO at Morguard Real Estate Investment Trust]

Thank you. Good afternoon, everyone. My name is Andrew Tamlin, Chief Financial Officer of Morguard REIT. Welcome to the Morguard REIT's third quarter 2026 earnings conference call. I am joined this afternoon by John Ginis, Vice President of Retail Asset Management, Tom Johnston, Senior VP of Western Office Asset Management, and Todd Febbo, Senior VP of Office Asset Management of Eastern Canada. Thank you all for taking the time to join the call. Before we jump into the call, I would like to point out that our comments will mostly refer to the third quarter 2026 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 would also apply to any comments that we would make on this call. Our third quarter has produced results that have met expectations.

[Andrew Tamlin, CFO at Morguard Real Estate Investment Trust]

The REIT's net operating income for the third quarter was CAD 27.3 million, which was down from CAD 31.3 million in 2025. The major reason for this change was a one-time property tax refund received last year relating to mostly vacant space. Our third quarter net operating income was up slightly as compared to the second quarter NOI. Our retail results continue to be steady. We have had good success in continuing to add quality retail tenants in the last 12 months throughout the portfolio, and our community strip portfolio continues to produce solid same-store growth at 2.5% year-to-date and are effectively operating at 100% occupancy. Looking at the remainder of 2026, we expect our retail results to continue to remain stable. While we are working through the missing Bay income, we are still seeing positive retail fundamentals.

[Andrew Tamlin, CFO at Morguard Real Estate Investment Trust]

Further, we are working on some retail developments, which I will touch on in a few minutes. Both traffic and sales per square foot numbers in our portfolio have been solid and in general have been increasing over the last few years. Switching gears to our office results, our two larger vacant spaces from earlier this year at key assets in Vancouver and Ottawa represent a total of 84,000 sq ft of vacancy. We believe these two vacancies will be short-term in nature as both buildings are well located in favorable, in-demand urban areas. All of our other individual office assets are seeing either similar or improved occupancy from a year ago and is consistent with the larger trend of companies imposing back to the office policies.

[Andrew Tamlin, CFO at Morguard Real Estate Investment Trust]

There also continues to be solid growth in our Penn West Plaza results as we move past the initial period of 2025 inducements provided for the lease up of this building. Penn West Plaza's NOI has increased CAD 1.6 million to the end of the third quarter on a year-over-year basis and remains at approximately 80% occupancy. Turning to financing and liquidity, the trust has CAD 54 million in liquidity at the end of the third quarter, which is relatively unchanged from last quarter and down slightly from CAD 68 million at the end of 2025. The trust also has CAD 225 million in unencumbered assets along with some up-financing opportunities in 2026. During 2026, the trust has renewed five mortgages totaling CAD 114 million, with a slightly higher average rate upon renewal.

[Andrew Tamlin, CFO at Morguard Real Estate Investment Trust]

The trust has approximately 22% of its debt as variable at the end of the quarter, which has increased slightly from 21% at the end of the year. We do expect to see an opportunity for modest additional up-financing in 2026 as we are currently in discussions with lenders about these last few upcoming mortgage renewals. In general, we have seen the lending market continue to open up in the last year with lower spreads, especially on attractive assets, along with lenders being more open to looking at office financing opportunities. Management is also evaluating how to address the CAD 159 million convertible debenture maturity that will be coming up at the end of the year. We have been working with the investment bankers and have received a proposal for their full renewal.

[Andrew Tamlin, CFO at Morguard Real Estate Investment Trust]

While this is being considered, management is also considering other financing options to extinguish this obligation and will report to the markets at the appropriate time. As mentioned in past quarters, the trust operating capital reserve has been established to be CAD 35 million in 2026, which is unchanged from 2025. This equates to CAD 26,250,000 for the nine months year-to-date. Actual cash spent for the quarter amounted to only CAD 17.8 million. We do expect to spend close to the full amount of the reserve by the end of the year, as we typically have more capital spend skewed to the back part of the year. Our overall occupancy level of 85.8% at the end of Q3 2026 has increased 100 basis points from 84.8% at March 31st.

[Andrew Tamlin, CFO at Morguard Real Estate Investment Trust]

The retail occupancy has increased 150 basis points, mainly coming from the enclosed malls, and the office occupancy has also increased 150 basis points as well since the first quarter. We continue to expect this percentage to rise in the coming quarters as additional leasing deals get booked. We believe that the decline in industrial occupancy is temporary and will be reversing in the short term. In looking at the 610,000 in remaining sq ft for retail and office tenants that is coming up for renewal in the last quarter of 2026, we feel good about the vast majority of this space. Every tenant greater than 10,000 sq ft has already been renewed or will be renewing.

[Andrew Tamlin, CFO at Morguard Real Estate Investment Trust]

Looking quickly at 2027 for the same tenant threshold, it is a similar story with only a couple of smaller office industrial-type tenants that are at risk, none of which will be overly impactful. As mentioned in past quarters, we are now embarking on a strategic remerchandising program for St. Laurent Centre, which will see the addition of some new nationally recognized brand names being added to the tenant roster, along with expansion plans for other tenants on the existing rent roll.

[Andrew Tamlin, CFO at Morguard Real Estate Investment Trust]

The current development spend in the amount of approximately CAD 10 million includes build-outs for tenants such as Sephora and H&M. These are all now open, and we have received very positive reviews about their impact. We ultimately expect to spend in the range of CAD 25 million-CAD 30 million as we look to add more discriminating tenants and also look to activate the former Sears space at St. Laurent Centre.

[Andrew Tamlin, CFO at Morguard Real Estate Investment Trust]

This work will also include the demolition of the former Sears parking deck, which is no longer needed and has exceeded its useful life. We have completed the new Uniqlo premises, which is 12,600 sq ft, and is scheduled to open early in 2027. We are also pleased that the former Sears box will be re-tenanted and will include a new Sport Chek and Splitsville. The Sport Chek is a relocation of an existing tenant and will be a great complement to Splitsville, who is opening a new entertainment option at St. Laurent Centre. This work has been done, and both tenants are scheduled to open next summer or fall. The trust has also had two No Frills grocery deals which have been undertaken.

[Andrew Tamlin, CFO at Morguard Real Estate Investment Trust]

During the fourth quarter of 2025, a new No Frills grocery store opened at Parkland Mall in Red Deer, and we are now seeing the income for that space. This cost was CAD 1.5 million and activated previously vacant space. There is also a new No Frills opening at The Centre in Saskatoon in early 2027 with the cost of approximately CAD 5 million. The trust believes that both of these new popular grocery options will be strong additions to these malls. The trust will also be re-tenanting the old Peavey Mart box at our open-air retail asset in Airdrie, Alberta. The new tenant will be a gym operator and will represent a combined spend of approximately CAD 1.5 million and will be very accretive to the income of the REIT starting in 2027.

[Andrew Tamlin, CFO at Morguard Real Estate Investment Trust]

Wrapping up, we continue to believe that there are strong fundamentals in the retail leasing environment and that the office market is in full rebound mode. We are looking forward to continued positive leasing conversations for all of our assets. Most of our enclosed malls remain dominant in their geographical area, and our strip malls, which are largely grocery anchored, have performed steady. Beyond our retail assets, we have high-quality office buildings in Canada's largest markets with a high degree of government office tenants. We continue to be positive about our business and the objective of building value for our unitholders. We look forward to continuing to execute our strategy and thank you for your continued support. We will now open the floor to questions.

[Operator]

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star one on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Your first question comes from Jonathan Kelcher of TD Cowen. Your line is already open.

[Jonathan Kelcher, Analyst at TD Cowen]

Thanks. Good afternoon. First question, just on the St. Laurent, the CAD 25 million-CAD 30 million project there, can you maybe walk us through a little bit of it? What is your expected timeline on that, and what sort of return are you targeting on that capital?

[John Ginis, VP of Retail Asset Management at Morguard Real Estate Investment Trust]

Hey, Jonathan. John Ginis here. I will answer the question. As Andrew noted in his remarks, the program itself is, again, CAD 25 million-CAD 30 million. It was initiated in 2024, and it involves various components of the mall. By components, I mean both former anchor boxes, but also reworking space in the mall to accommodate large format users like the H&Ms of the world and Uniqlo, which will be opening in the spring of 2027. Again, backdating to when we started this program to when we expect to end it, the full program should come to its conclusion hoping by the end of 2027, early 2028.

[Jonathan Kelcher, Analyst at TD Cowen]

Okay. What sort of return are you targeting?

[Andrew Tamlin, CFO at Morguard Real Estate Investment Trust]

We typically don't give a lot of guidance out about that, Jonathan. It's not a simple answer because we are moving. One of the tenants that we're incorporating into the Sears premises is an existing tenant as well. We can have a sidebar chat on that if you like. But we typically don't--

[Jonathan Kelcher, Analyst at TD Cowen]

Okay

[Andrew Tamlin, CFO at Morguard Real Estate Investment Trust]

--provide that guidance.

[Jonathan Kelcher, Analyst at TD Cowen]

Fair enough. I think last quarter, when we were talking about HBC, you were hoping to be able to provide an update on at least the lower level at Cambridge. Is there anything to report on that, and where does that stand?

[John Ginis, VP of Retail Asset Management at Morguard Real Estate Investment Trust]

Yep. On that space for that shopping center, we have leased the lower level of the premises to Zellers. It's about a 65,000 sq ft footprint. They have taken occupancy, and we expect them to open before the end of November. It's for a five-year term.

[Jonathan Kelcher, Analyst at TD Cowen]

Okay. Any the upper floor there, how is that going to play out?

[John Ginis, VP of Retail Asset Management at Morguard Real Estate Investment Trust]

The shopping center is a single-level shopping center, albeit the HBC that connects to it was the two-level premises. The second level is not so straightforward. Right now we're just keeping it off stream. We're still evaluating options on it, but it remains vacant as we speak.

[Jonathan Kelcher, Analyst at TD Cowen]

Okay. Then just lastly for me on, and I haven't asked this in probably a couple of years, but Petroleum Plaza with the government lease, is there anything there, any update there?

[Andrew Tamlin, CFO at Morguard Real Estate Investment Trust]

Believe it or not, Jonathan, there is not. That continues to be in overhold. It's been maybe five years that it's been in overhold, but we have reached out to the government on a proactive basis on a number of times. They're continuing to pay the overhold rent, which is in our favor.

[Jonathan Kelcher, Analyst at TD Cowen]

Okay. I guess just last on the plans for the convert, you said you may renew it and may extinguish. Can you walk me through the second option, how that would play out? Unencumbered assets you can finance, or how would that play out?

[Andrew Tamlin, CFO at Morguard Real Estate Investment Trust]

I would say we're just looking at kind of all options there, Jonathan. It could include some unencumbered assets. There also could be some other financing options that we're looking at. Long-term interest rates have been escalating throughout the year, and that's just given us pause to reflect and making sure that we're giving considerations to all options. I'd prefer not to be too specific about it, and we'll be continuing to evaluate the options, and we'll be reporting here in the fourth quarter.

[Jonathan Kelcher, Analyst at TD Cowen]

Okay, thanks. I'll turn it back.

[Andrew Tamlin, CFO at Morguard Real Estate Investment Trust]

Okay. Thank you.

[Operator]

Ladies and gentlemen, as a reminder, if you have a question, please press star one. Your next question comes from [Steve Meachen], private investor. Your line is already open.

[Steve Meachen, Shareholder at Private Investor]

Hey there. Good afternoon. Just a couple of things. I am just wondering if there is any updates on the residential projects since, I guess, I have not heard anything in a while. The other question is whether or not you know whether the parent will continue with the DRIP. I think that is it. Oh, yeah. Also, the other thing with Petroleum Plaza, going back to that. Does the fact that it is an overhold, does that impact any of the refinancing, any refinancing when you refinance?

[Andrew Tamlin, CFO at Morguard Real Estate Investment Trust]

I will take the last one first, and thank you for the question, Steve. There is a financing attached to that asset, and that financing has been in kind of a short-term arrangement as well. Does that answer your question on--

[Steve Meachen, Shareholder at Private Investor]

Yeah. I guess basically you mentioned that you are getting kind of a positive, like the rate that they are paying right now is good. Maybe there is a bit of a negative on the financing. So you are paying a little bit more, and it is a little bit shorter term. Is that fair to say?

[Andrew Tamlin, CFO at Morguard Real Estate Investment Trust]

Yeah, that is kind of how we are looking at it as well. There has been probably a negative impact on the financing. But net, we are in a better position because of the higher overhold rent.

[Steve Meachen, Shareholder at Private Investor]

Okay, perfect.

[Andrew Tamlin, CFO at Morguard Real Estate Investment Trust]

In relation to the residential opportunities, those continue to kind of tick along. There is nothing really too active on any of those fronts. It is obviously not a good market right now, so we are-

[Steve Meachen, Shareholder at Private Investor]

Yeah.

[Andrew Tamlin, CFO at Morguard Real Estate Investment Trust]

--not really pushing the envelope on those. We are doing what we need to, but we're just kind of being mindful of the market as well.

[Steve Meachen, Shareholder at Private Investor]

Okay.

[Andrew Tamlin, CFO at Morguard Real Estate Investment Trust]

We've been told by our parent that they intend to DRIP until the end of this year at least.

[Steve Meachen, Shareholder at Private Investor]

Okay.

[Andrew Tamlin, CFO at Morguard Real Estate Investment Trust]

It'll be assessed on a year by year basis.

[Steve Meachen, Shareholder at Private Investor]

Perfect. All right. Thanks very much.

[Andrew Tamlin, CFO at Morguard Real Estate Investment Trust]

No problem.

[Operator]

There are no further questions at this time. I would hand over the call to Andrew Tamlin for closing comments. Please go ahead.

[Andrew Tamlin, CFO at Morguard Real Estate Investment Trust]

Thank you everybody for joining the call, and we will look forward to talking to everybody next time around. Thank you and have a good night.

[Operator]

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation, and you may now disconnect.

Participants

Analysts

• Andrew Tamlin, CFO at Morguard Real Estate Investment Trust
• Jonathan Kelcher, Analyst at TD Cowen
• John Ginis, VP of Retail Asset Management at Morguard Real Estate Investment Trust
• Steve Meachen, Shareholder at Private Investor