Good morning. My name is Joanna, and I will be your conference operator today. At this time, I would like to welcome everyone to the Morgant Corporation Annual Meeting Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.
Call. Thank you. Mr. Ray Sahi, Chairman and CEO, you may begin your conference.
Thank you. Good morning, everyone. I would like to welcome all shareholders, directors, staff and other attendees to our revenue meeting today. My name is Ray Savy, and I'm Chairman of the Board and Chief Executive Officer of the company. Thank you for joining us today by teleconference and webcast.
Here with me are Beverly Flynn, Secretary of the company. I'm sitting will now come to order. I will act as the Chairman and Dennis Flynn will act as the Secretary of the meeting. At my point, Amy Chen, then Conor Brazeau of Consumer Share Trust Company of Canada act as 2 years. The notice following this meeting for the shareholders may have known April 6, 2020.
I would ask the Secretary to read the report.
There are 2 shareholders present in person, representing 48 shareholders in person or by proxy, holding 9,809,365 shares, which represents a total of 87.12 percent of the issued and outstanding shares of Morgan Corporation.
Thank you. I propose to adopt this bookings report and declare this meeting's ongoing call and properly constituted for the transaction of business, the category will be an act of declaration of failing to the minutes. The first item of business is to receive financial statements. Can someone move the motion?
I move that the annual report of the corporation containing the audited financial statements of the corporation for the year ended December 31, 20 19, and the auditors' report thereon as presented to this meeting be and they are hereby received.
I second the motion. Thank you verbally, and You've heard the motion. All in favor?
Aye.
If any, I declare the motion carried. The next item of the business is to appointment of auditor.
I move Henderson Young LLP and they are hereby appointed auditor of the corporation until the close of the next annual meeting of the shareholders or until their successors are duly appointed. And the directors are hereby authorized to fix the auditors' remuneration.
Contrary to any, I declare the motion carried. You can now deal with the election of directors. The meeting is now open for nomination. There are 9 directors to be elected by the shareholders at this time. I have to ask the shareholder to nominate the person's name in Penman Information Network.
I nominate William Bradway, Chris Cahill, Graham Eady, David King, Michael Robb, Bruce Robertson, Angela Sagi, Ray Sagi and Pierre Schurter as Directors of the Corporation to hold office until the termination of the next annual meeting of shareholders or until their successors are duly elected or appointed subject to the provisions of the corporation's bylaws.
Thank you. Are there any further nominations? If not, I declare the nomination closed. Is there a second or third motion? May I second the motion?
Thank you. You've heard the motion. All in favor?
Aye.
Contrary to any, I declare the motion carried and that all persons previously nominated have been properly elected as directors of the corporation. With all the formalities of the team now concluded, I'm pleased to share with you some of our strategy and accomplishments from 2019. The question and answer will be a good follow-up.
An increase of 3%. Net operating income increased by 1.5% to 550 $6,200,000 an $8,200,000 increase over 2018. Up 4.8 percent over 2018. 4 of our corporation's revenue is We are committed to continuing improving our real estate portfolio. In 2019, Working collaboratively across our offices,
There are no questions on the phone. We will now go to any questions that may have arrived from the webcast.
Thank you. The first question is from an investor. Has Morgan Corporation considered in investing in sectors outside of real estate, I. E. Adopting a more opportunistic strategy?
No, I think we've been pretty focused on real estate in this entity, Morgar Corp. We have not looked at any other opportunity and we don't need to plan to have focus on real estate related business. So there were some real estate related business we might consider.
Next question from investor. Morgan's carrying value for commercial real estate properties could decline by as much as 20% due to changing consumer preferences in retail and office. Does morgards plan to update fair values in the balance sheet as we go along?
I suppose we reported. It's really not a choice no matter we do that now.
Also from a minister, Mr. Ray Saughey has been an incredible CEO and I hope he lives forever. That said, could you provide some clarity on who Morguard's next CEO will be?
Well, I agree with you. I don't think I don't live forever blessed either here. While we have a pretty strong premium theme and great board, the board is quite familiar with that. If something were to happen to me or if I decide to say go do something else, the Board would make a decision. They have an option from internal management team as well as that they have an option for MOSA.
Mr. Sai, with you owning 60 Mr.
Sai, with you owning 60% of the company, what is the end
game for Morguard? Would you consider selling to an institutional investor such as the Canadian pension plan?
Well, it's a public company. I suppose now we're standing in the way. My holding company owns close to 60%. There is no conversation going on with anybody. But as a public company, we will have to react to it if somebody did make an offer.
We are not going out to see any opportunity to sell the entertainment.
Given that you historically have made your best purchase from distressed sellers, do you think you will be taking advantage of any potential distressed opportunities this time around, including your publicly listed REITs?
So we are going to continue to do that. Now it is a different challenging time. I think we are more focused on trying to consolidate what we have as opposed to we do keep looking at it. If an opportunity came along, we may look at it, but that is now where we're presently focused.
Have you developed a longer term view of what the future may hold for the real estate asset class? We were already dealing with serious issues in the retail sector and in Alberta. How has the current financial and health crisis impacted your outlook strategy for the existing assets and potential new investments?
Well, that's a non moving analysis going on as we speak with this health issue unless there's some clarity on that. In the meantime, I think the whole organization including myself is focused on trying to keep the staff happy or tenants happy and healthy. And at this stage, I think that is where the whole team is focused on. We'll continue to do that. How do you
think of Motorhead's intrinsic value? What is the net asset value for the company's assets and asset management business?
I think the numbers are published at the board since you have to do an IFRS balance. And as to the valuation of the 3rd party, 3rd party business the impressive part of it's integrated and fees basically to manage its own $10,000,000 asset, another $5,000,000 for the more or $5,000,000 for the third party. So there is no separate valuation for that. Thank you.
Do you expect a material write down in value, especially when it comes to your retail properties, our collection rates are lower and likely to face continued operating pressures?
I think that happens every quarter. But those are the requirement, those are the rules for accounting value has to be done pretty well every quarter. And it will either go down, some will go up and some will go down. That is happening as we speak. Thank you.
Will the deferred tax liabilities on Moorhead's balance sheet be realized only on a sale of property?
That is an accounting issue in that if you don't realize what the foot is, it is booked as a property in the balance sheet. It's lies ahead and if you sell it NASA. Thank you.
Is part of your current strategy to sell buildings and improve liquidity and reduce debt to buyback stock?
Historically, we have to stop the back over the years. Place. You would take a look at it. Yes, and when something becomes available, there's no plan to go out and see to buy back the stock.
Trey, any comments on the plans for mortgage REITs given the trend of declining FFO and the recent fall in the value of the unit? Any comments on the plans for on your plans for Morguard REIT, given the trend of declining FFO and the recent fall in the value of the units?
Yes. I saw that we just continue to manage what we have and part of that is impacted by this health care at this time. And notwithstanding the retail asset, all over having this challenging time with some bankruptcy in the retail sector. We're trying to manage them within that. Some of them we will look at that whether it has any potential of different use or part of that whether it is a value for intensification.
At this stage, we're pretty well focused on how we come out of healthcare. So that is where we focus on.
Do you think it is a good time to increase real estate investment in Alberta?
I'm not actually from our point of view, we have enough exposure to full quarter. So we're not really revenue seeking any, but we will look at as something we thought would be available to not turn up, prepared to give a comment on that is all related to oil pricing. And I have no control over oil pricing. So we'll continue to manage the process. I hope and I wish Alberta does well.
And if Alberta does well, we do well. We have enough assets in Alberta at this stage.
Do any of your shopping centers need to be totally repurposed to a non retail use such as residential?
I don't think there's any that I'm aware that was totally and we're not even crafty. The biggest shopping centers have multiple tenants. So you're not going to have any job standards to totally demolish and all that. Some of them have opportunity for growth, particularly in Washington and Ottawa, part of asset land. But answering your question, I don't think we have any asset that we would know in the mall is under purpose.
Would you like to comment on the Temple Hotel acquisition, how you feel about hotel?
Well, I can look, we've been in the hotel for 8 or 10 years. We have bought 8 or 9 hotel over the years in GPA and we have one in Ottawa. And we have done quite well on those, those airlines have gone out. In hindsight, I wish we had not bought into Temple, but we are there now. So we're trying to figure out what the and that is now further impacted by this health issue now.
So we'll simply have to wait through to there may be some asset that we will look at that, that whether they could be converted into modular or not. But that is the one of the challenge that we face now. Thank you.
Quarter stock has taken a real beating due to retail and office exposure. Is it undervalued?
Well, the valuation is in the mind of the investments. Our valuation is published because of the accounting rules and everybody knows what that so called that mission is.
No further questions, but I will read a comment from the shareholder before we end and turn it back to the operator. Thank you to the Chairman of the Board and all executives for the incredible job and enhancing long term shareholder value of Motorrad. Hope that was a good way to end. You can terminate.
Okay. Thank you. No further questions, I declare the meeting terminated. And thank you for going to the panel meeting.
This concludes the annual meeting of Morgant Corporation Annual Meeting. After a short break, we will resume for the annual meeting of TWC Enterprises Limited at 11:30 am Eastern Time.