Full Transcript: Morguard North American Q2 2026 Earnings Call

Morguard North American (TSX: MRG ) held its second-quarter earnings conference call on Thursday. Below is the complete transcript from the call. This transcript is brought to you APIs. For real-time access to our entire catalog, please visit for a consultation.

5 billion at the end of 2025, attributed to exchange rate changes, property value increases, and refinancing activities. 4 million of additional proceeds, with a total of $204 million cash on hand and $100 million available credit. 1 million, down from $30 million in 2025, primarily due to a decrease in NOI, increased interest expenses, and unfavorable foreign exchange impacts. 8%, allowing for significant cash retention.

, despite occupancy declines due to increased competition and market factors, with management expecting moderate occupancy and rent growth. Management discussed ongoing due diligence for a $1 billion investment in a Canadian residential real estate portfolio, with expectations to close in the second half of the year. S. were attributed to higher turnover and staffing, while incentives and competitive pricing strategies were used to manage Canadian portfolio occupancy.

Full Transcript OPERATOR Good evening, ladies and gentlemen, and welcome to the Morguard North American Residential REIT 2026 Second Quarter Results conference call. At this time, our 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 need assistance, please press star zero for the operator.

This call is being recorded on Thursday, July 30, 2026. I would now like to turn the call over to Chris Newman, CEO. Please go ahead. Chris Newman, CEO Thank you.

Paul Miatello, Chief Financial Officer Hi everyone. Welcome to the Q2 MRG conference call. S. Operations; and Ruth Grable, Vice President, Canadian Operations.

As is customary, I'll provide some comments on the REIT's financial position and performance. 5 billion at December 31, 2025. S. dollar exchange rate, a fair value increase on the REIT's income-producing properties, and an increase in cash from refinancings completed during the quarter.

2 years. 4% and for a term of five years. 4 million of additional proceeds, net of financing costs. The REIT finished the second quarter with approximately $204 million of cash on hand and $100 million available under the REIT's revolving credit facility with Morguard Corporation.

07% at December 31, 2025. 55. As previously announced, the REIT and Morguard Corporation agreed to jointly invest approximately $1 billion in a Canadian multi-suite residential real estate portfolio currently owned by TD Asset Management. We are actively progressing through due diligence, including determining individual property allocations to the REIT, and anticipate closing the transaction during the second half of the year.

1 million for the three months ended June 30, 2026 compared to $30 million in 2025. 9 million decrease in net income was primarily due to a decrease in NOI and offsetting net non-cash changes. 7% compared to 2025. 6%, mainly due to higher vacancy and a decrease in ancillary revenue, partially offset by an increase in AMR.

S. 4 million. 4 million for the three months ended June 30, 2026 compared to 2025, primarily due to an increase in interest on mortgages from higher principal and interest rates on the completion of the REIT's refinancings. 1% compared to 2025.

01 per unit negative impact. 8% for the three months ended June 30, 2026 represents a very conservative level which allows for significant cash retention. 5% increase compared to 2025, reflecting the quality of our Canadian portfolio. 8%.

2% at June 30, 2025 and was lower primarily due to increased competition from new rental buildings and lower immigration levels. Management believes market conditions will improve as new supply is absorbed and incentive-driven competition moderates. 8% compared to 2025, having an average monthly rent of US$1,933 at the end of the second quarter. S.

8% at June 30, 2025, primarily due to a combination of tenant relocations, affordability, and increased home buying. As we move into the busier summer leasing season, management expects occupancies to continue to grow moderately, which should be followed by modest AMR growth. 5 million. That included revenue-enhancing in-suite and tenant improvements; exterior building projects; garage renovations; common area, mechanical, plumbing and electrical projects; as well as energy initiative expenditures.

At this time, I'll turn the call back over to the moderator for any questions. OPERATOR Thank you, ladies and gentlemen. We will now begin the question and answer session. Should you have a question, please press the star followed by the one on your touchtone phone.

You will hear a prompt that your hand has been raised. If you wish to decline from the polling process, please press star followed by the two. If you are using a speakerphone, please pick up the handset before pressing any keys. First question comes from Jonathan Kelcher at TD Securities.

Please go ahead. Jonathan Kelcher, Analyst at TD Securities Thanks. Good afternoon. First question just on the Canadian portfolio occupancy.

I think in May you guys were talking about occupancy starting to improve. It ended up basically flat versus Q1. Could you maybe give us some color on what happened or changed in the market, and then how you see occupancy trending over the back half of this year? Ruth Grable, Vice President, Canadian Operations Hi, it's Ruth.

Right now we do see that the leasing activity has definitely increased during the past quarter. We did have some move-outs that are pretty typical for us. For our property in Ottawa, in Edmonton it's student-based. We have more move-outs.

But now what we're seeing is leasing activity has increased. 7%. That takes into account all the leases, not necessarily all the move-outs as yet. But overall our team is reporting a significant amount of interest in the units.

We have a lot of showings per day, and as well we see some groups coming back from, like, where we previously had our prospective tenants leasing out of buildings, or coming back, like from Cognizant and Citibank, some other groups as well. So the immigration for specific, you know, businesses have opened up, and we're seeing that translated into leases in Mississauga. But we are optimistic going forward, and the number of showings and leasing that we've completed and our availability is kind of dictating that.

Jonathan Kelcher, Analyst at TD Securities Okay, so if I put that all together, it sounds like maybe Q2 is the low point for occupancy, but not expecting huge, huge gains over the back half. Ruth Grable, Vice President, Canadian Operations Yeah, I would say that's a fair statement. Jonathan Kelcher, Analyst at TD Securities Okay, and then on the TDAM transaction, I know you're probably not going to give a lot of info here, but what approvals do you need for that to close? Is it just down to CMHC, or are there any others?

Paul Miatello, Chief Financial Officer Hi, Jonathan, it's Paul here. We're just working through what I would characterize as the final stages of due diligence. The vast majority of it is complete and behind us. So beyond, you know, just our internal work, it would be down to lender consents and, obviously, involving CMHC after that.

We've commenced the process with CMHC in anticipation of getting to a waiver of conditions. And I can't, you know—with CMHC it's hard to put a timeline on, if that's your next question. Jonathan Kelcher, Analyst at TD Securities No, no, but yeah, that would— Paul Miatello, Chief Financial Officer Yeah, CMHC and lender consents would be the only other approval required. Jonathan Kelcher, Analyst at TD Securities Okay, does this portfolio have—like, do all the assets have a similar amount of leverage?

And I'm kind of asking in that the assets that MRG takes on, how are you thinking about that in terms of your overall leverage profile for MRG? Paul Miatello, Chief Financial Officer The debt that will be taken on won't alter—not materially anyway—won't alter the leverage levels that are in place today. Jonathan Kelcher, Analyst at TD Securities Okay, so you're roughly 40% now. And then at the end of this, you won't be—like, you might be 42, 43, but not anywhere near 50.

Is that a way to think about it? Paul Miatello, Chief Financial Officer That's a fair statement. Yes. Jonathan Kelcher, Analyst at TD Securities Okay.

Yeah, I will turn it back. Thank you. OPERATOR Thank you. Jimmy Shan at RBC Capital Markets, please go ahead.

Jimmy Shan, Analyst at RBC Capital Markets Thanks. Just a follow-up on the Canadian portfolio. 7% number you referred to—that sounds like it's committed occupancy, but if you were to include the expected move-outs, what would that number look like? Ruth Grable, Vice President, Canadian Operations I don't know as yet what that number would look like.

We do have some properties—like in Alberta, they don't have to provide notice, but, you know, we can say fairly safe, fairly close to 92%. I'm not quite sure. Paul Miatello, Chief Financial Officer Yeah, it's probably no better, no worse than where we stand today. It's just—the point is there's a lot of leasing activity, there's a lot of momentum.

So we also have, you know, in Ontario you give two months' notice, but we definitely have two months of work ahead of us to kind of keep finding leases and tenants. So we think the positive momentum will lead to a net gain relative to our position at June 30th. Jimmy Shan, Analyst at RBC Capital Markets Okay. And I think in the MD&A you reference rent cuts, et cetera.

Can you maybe provide some color on what rental incentives or rent cuts that you're doing, and how do we think about the AMR growth on a go-forward basis for Canada? Ruth Grable, Vice President, Canadian Operations So right now we're offering, like, one or two months' free rent. We might be offering some signing bonuses between $500 and $1,000 just so we close a lease, finalize the lease. And on rents on select units, we have decreased some of our rents on one-bedrooms, maybe some two-bedrooms, just to again improve our occupancy.

Jimmy Shan, Analyst at RBC Capital Markets And more—again, more looking for trends—is it… have those incentives, selective rent decreases, have they been pretty well the same over the last three to four months, or has it gotten worse or better? Ruth Grable, Vice President, Canadian Operations So it's trending down. So we're not—not all units are being offered the two months. So we are seeing a gradual decrease in the amount of incentives that are being offered.

Jimmy Shan, Analyst at RBC Capital Markets Okay. S. S. portfolio for the year?

Paul Miatello, Chief Financial Officer John, do you want to answer that? I note that R&M and payroll are main culprits for the increase. Want to add some more information on that, John? S.

Operations Sure. I would say a lot of it—especially R&M—was tied to going into our busy leasing season. So we turned over 1,400 units over the quarter, so that went up significantly, obviously, when we're turning that many units. But payroll was up as well, and honestly that is tied to being fully staffed.

Part of our decreased payroll costs over the last several years has been the difficulty in maintaining maintenance staff on the properties, but we're in a much better position now, and I would say it's stabilized. I believe that those expenses are high for the quarter, but I don't foresee that those R&M expenses will continue throughout the rest of the year. Jimmy Shan, Analyst at RBC Capital Markets This high turnover—provide some context: at 1,400, is that a lot? S.

Operations Oh, no, no. I would say it's actually low for us, but it's a big number. It's just much higher than it was in the previous quarter because we're so busy, if that makes sense. S.

is between 55% and 60%. Nationally, we are in the 40% range on an annualized basis. Jimmy Shan, Analyst at RBC Capital Markets Okay. S.

Operations The way it hit. Right—the way the expenses hit in this quarter, rather than it being more normalized across Q1 and Q2. Jimmy Shan, Analyst at RBC Capital Markets Oh, I see. Okay, got it.

And then lastly, a lot of the debt refinancing that you did—now you've got $200 million of cash. Was that done pretty well towards the end of the quarter? So, in other words, the interest expense that we see here in Q2 is probably a good run rate. Is that fair?

Paul Miatello, Chief Financial Officer Yes. A lot of—well, all of them happened in the last 15 days at the quarter end. So we'll see the full impact next quarter on the higher interest expense. Jimmy Shan, Analyst at RBC Capital Markets And the cash that you have is sufficient to close on MRG's equity share of the TDAM deal, right?

Paul Miatello, Chief Financial Officer Predominantly. We might have to—based on timing of cash flows, we might have to temporarily leverage the mortgage facility by a smallish amount, but we don't expect it to be a large component. Jimmy Shan, Analyst at RBC Capital Markets Okay. Okay, that's it for me.

Thanks. OPERATOR Thank you. And as a reminder, if you have any questions, please press star one now. Alex Leon from Desjardins, please go ahead.

Alex Leon, Analyst at Desjardins Hey, good afternoon, everyone. Just wanted to circle back again on that Canadian portfolio increase in availability. I'm just wondering if there was any change in maybe how aggressive you guys were rolling down rents to pick up some of the demand, or if it was more just a function of some of the seasonal move-outs in Ottawa and Edmonton and a stronger demand profile. Ruth Grable, Vice President, Canadian Operations A bit of a combination of both.

So we did reduce our rent on select units, and we're able to get more traction on those units. It's very competitive right now.