Morguard NA REIT UN (MRG.UN) AI Stock Analysis

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Morguard NA REIT UN

(TSX:MRG.UN)

Rating:75Outperform

Price Target:―

Morguard NA REIT UN demonstrates solid financial health with robust revenue and cash flow growth. Despite some concerns over declining ROE, the company's moderate leverage is typical for the industry. Technical indicators show positive momentum, and valuation metrics suggest the stock is undervalued with an attractive dividend yield, supporting a strong overall score.

Morguard NA REIT UN (MRG.UN) vs. iShares MSCI Canada ETF (EWC)

Market Cap

C$953.41M

Dividend Yield4.13%

Average Volume (3M)25.51K

Price to Earnings (P/E)8.6

Beta (1Y)0.77

Revenue Growth3.85%

EPS Growth-31.81%

CountryCA

EmployeesN/A

SectorReal Estate

Sector Strength64

IndustryREIT - Residential

Share Statistics

EPS (TTM)0.69

Shares Outstanding35,393,320

10 Day Avg. Volume27,036

30 Day Avg. Volume25,509

Financial Highlights & Ratios

PEG Ratio0.72

Price to Book (P/B)0.46

Price to Sales (P/S)0.00

P/FCF Ratio7.98

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

C$22.00

Price Target Upside19.05% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering2

Morguard NA REIT UN Business Overview & Revenue Model

Company DescriptionThe REIT is an unincorporated, open-ended real estate investment trust established under and governed by the laws of the Province of Ontario. The Units of the REIT trade on the Toronto Stock Exchange under the ticker symbol MRG.UN. With a strategic focus on the acquisition of high-quality multi-suite residential properties in Canada and the United States, the REIT maximizes long-term Unit value through active asset and property management. The REIT's portfolio is comprised of 13,275 residential suites (as of October 27, 2020) located in Alberta, Ontario, Colorado, Texas, Louisiana, Illinois, Georgia, Florida, North Carolina, Virginia and Maryland with an appraised value of approximately $3.1 billion at September 30, 2020.

How the Company Makes MoneyMorguard NA REIT UN generates revenue primarily through rental income from its portfolio of residential properties. The company leases apartments and residential units to tenants, collecting monthly rental payments that contribute to its revenue stream. Additionally, the REIT may earn ancillary income through services or amenities offered to tenants, such as parking fees, laundry facilities, and other property-related services. The REIT's earnings are also supported by strategic property acquisitions and management practices aimed at enhancing property value and maximizing occupancy rates. Morguard NA REIT UN benefits from its experienced management team and strategic geographic presence, which help mitigate risks and maintain a strong competitive position in the real estate market.

Morguard NA REIT UN Earnings Call Summary

Earnings Call Date:Apr 29, 2025

(Q3-2024)

% Change Since: 11.12%|

Next Earnings Date:Jul 29, 2025

Earnings Call Sentiment Neutral

The earnings call presented a mixed picture with strong asset growth and rent increases in Canada offset by significant net loss and decreased occupancy in the U.S. Interest expense rise and operational challenges contributed to a cautious outlook.

Q3-2024 Updates

Positive Updates

Increase in Total Assets

Total assets increased to $4.4 billion in Q3 2024, up from $4.1 billion at the end of 2023, due to a fair value increase on real estate properties and foreign exchange rate fluctuations.

Strong Canadian Rent Growth

Average monthly rent in Canada increased by 6% compared to 2023, with a 24.1% AMR growth on suite turnover.

Increase in Annual Cash Distribution

Annual cash distribution increased by $0.02 per unit, a 2.7% increase, to $0.76 per unit.

Negative Updates

Significant Net Loss

Net loss of $18.8 million for Q3 2024 compared to net income of $39.2 million in 2023, primarily due to noncash items such as a $99.7 million increase in fair value loss on Class B LP units.

Decrease in U.S. Occupancy

U.S. occupancy decreased to 91.7% from 93.7% in 2023, driven by turnover during the summer leasing season.

Interest Expense Increase

Interest expense increased by $5.5 million compared to Q3 2023, primarily due to higher principal and interest rates.

Decrease in Net Operating Income

IFRS net operating income decreased by $0.4 million or 0.7% compared to 2023, with NOI in the U.S. decreasing by 4%.

Company Guidance

During the Q3 2024 earnings call for MRG.UN.TO, several key financial metrics and guidance were provided. The REIT's total assets increased to $4.4 billion, up from $4.1 billion at the end of 2023, due to factors including a fair value increase in real estate properties. They reported $103.3 million in cash and a $1.7 billion long-term debt. Mortgage payables have a weighted average term of 5.1 years and an interest rate of 3.87%. The debt-to-gross book value ratio slightly increased to 38.9%. The REIT repurchased about 1.1 million units under the NCIB at an average price of $16.94, with an IFRS net asset value per unit at $41.30. The annual cash distribution was increased by 2.7% to $0.76 per unit. Despite a net loss of $18.8 million, mostly due to non-cash items, the REIT saw a net operating income of $52 million, a slight decrease from the previous year. In Canada, the average monthly rent rose by 6% to $1,754, while in the U.S., it increased by 2% to USD 1,911. Canadian occupancy was at 97.8%, and U.S. occupancy at 91.7%. The REIT also completed $31.8 million in capital expenditures. Looking ahead, the REIT plans to continue with its share buyback strategy and is exploring acquisition opportunities, particularly where cap rates are favorable.

Morguard NA REIT UN Financial Statement Overview

Summary

Morguard NA REIT UN presents a stable financial position with strong revenue growth and cash generation. Profitability is robust, despite EBIT fluctuations. The balance sheet shows moderate leverage with a declining ROE. Cash flow is strong with efficient cash conversion, offsetting balance sheet concerns.

Income Statement

Positive

The company shows consistent revenue growth from 2019 to 2024, achieving a revenue growth rate of 3.8% in 2024. Gross profit margin stands at 46.27%, and net profit margin at 29.6% in 2024, indicating strong profitability. However, the EBIT margin is notably fluctuating, with a substantial improvement to 52.72% in 2024 from negative levels in 2022. This suggests recovery in operational efficiency.

Balance Sheet

Positive

The debt-to-equity ratio is 0.89, indicating moderate leverage, which is typical for REITs. Return on equity (ROE) is 5.09%, showing a decline from previous years, suggesting weakening profitability on equity. The equity ratio is 43.78%, indicating a solid equity base, though slightly lower compared to peers.

Cash Flow

Positive

The company has demonstrated strong free cash flow growth, with consistent increases in operating cash flow. The operating cash flow to net income ratio of 0.96 suggests efficient cash generation relative to net income. However, the free cash flow to net income ratio also stands at 0.96, indicating a tight correlation between net income and cash flow.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
349.71M	344.19M	331.62M	278.49M	245.57M	248.68M
	Gross Profit
165.93M	181.42M	180.24M	131.86M	115.10M	120.30M
	EBIT
185.06M	181.42M	180.24M	-38.60M	129.50M	135.53M
	EBITDA
129.28M	179.27M	254.03M	149.68M	68.22M	139.29M
	Net Income Common Stockholders
114.19M	101.86M	176.34M	219.28M	242.09M	175.22M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
24.22M	51.26M	17.82M	14.64M	26.56M	27.30M
	Total Assets
4.11B	4.57B	4.10B	3.93B	3.47B	3.08B
	Total Debt
1.58B	1.79B	1.56B	1.48B	1.38B	1.31B
	Net Debt
1.56B	1.74B	1.55B	1.47B	1.36B	1.28B
	Total Liabilities
2.23B	2.46B	2.14B	2.08B	1.91B	1.74B
	Stockholders Equity
1.77B	2.00B	1.85B	1.75B	1.48B	1.27B
Cash Flow		Free Cash Flow
78.99M	97.50M	88.97M	75.17M	63.70M	50.13M
	Operating Cash Flow
78.99M	97.50M	88.97M	75.17M	63.70M	50.13M
	Investing Cash Flow
-54.04M	-59.40M	-209.01M	-11.06M	-31.30M	-28.06M
	Financing Cash Flow
6.32M	-6.74M	120.84M	-78.88M	-33.05M	-11.57M

Morguard NA REIT UN Technical Analysis

Technical Analysis Sentiment

Positive

Last Price18.48

Price Trends

50DMA

17.06

Positive

100DMA

16.88

Positive

200DMA

17.34

Positive

Market Momentum

MACD

0.37

Negative

RSI

70.69

Negative

STOCH

71.01

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:MRG.UN, the sentiment is Positive. The current price of 18.48 is above the 20-day moving average (MA) of 17.63, above the 50-day MA of 17.06, and above the 200-day MA of 17.34, indicating a bullish trend. The MACD of 0.37 indicates Negative momentum. The RSI at 70.69 is Negative, neither overbought nor oversold. The STOCH value of 71.01 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:MRG.UN.

Morguard NA REIT UN Peers Comparison

Overall Rating

UnderperformOutperform

Sector (61)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MRG.UN	75 Outperform	C$953.41M	8.55	5.83%	4.13%	3.85%	-31.81%
MI.UN	71 Outperform	C$545.60M	5.99	9.03%	3.55%	-0.29%	―
IIP.UN	71 Outperform	C$1.92B	―	-7.00%	2.83%	2.52%	-573.45%
DRM	70 Neutral	C$787.57M	4.60	11.76%	3.23%	13.04%	―
Sector *	61 Neutral	$2.81B	10.77	0.40%	8439.00%	5.73%	-20.81%
ARESF		$512.56M	―	-1.80%	8.20%	―	―
HOM.UN	66 Neutral	C$971.04M	―	-11.97%	4.24%	4.39%	56.33%

* Real Estate Sector Average

Performance Comparison

TSE:MRG.UN

Morguard NA REIT UN

18.48

3.44

22.87%

TSE:DRM

DREAM Un Cl A

18.96

1.04

5.80%

TSE:IIP.UN

InterRent REIT Un

13.60

1.72

14.48%

ARESF

Artis Real Estate Investment

4.94

0.54

12.27%

TSE:HOM.UN

BSR Real Estate Investment Trust

18.01

3.10

20.79%

TSE:MI.UN

Minto Apartment Real Estate Investment Trust

14.48

-0.65

-4.30%

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.