Melcor Reports First Quarter Results and Announces 12% Increase to
Semi-Annual Dividend
EDMONTON, ALBERTA--(Marketwired - May 9, 2014) - Melcor
Developments Ltd. (TSX:MRD), an Alberta-based real estate
development and asset management company, today reported results
for the quarter ended March 31, 2014. Revenue was $32.01 million in
Q1-2014 compared to $41.62 million in Q1-2013. The decrease in
revenue is primarily due to the timing of plan registrations and
land sales in the Community Development division. As a real estate
developer, quarterly comparison of results is not always
meaningful. Revenue and income can fluctuate significantly from
period to period due to the timing of plan registrations and land
sales, the cyclical nature of real estate and construction markets,
the mix of lot sales and product types, and the mix of joint
arrangement sales activity.
Melcor earned net income of $6.86 million or $0.22 per share
(basic) in Q1-2014, compared to $12.62 million and $0.42 per share
(basic) in Q1-2013. Adjusted earnings, which reflect our
proportionate interest in the earnings for the REIT, were $9.77
million, a decrease of 22.6% over Q1-2013. Management believes that
adjusted earnings are a more accurate measure of operational and
relative performance.
Funds from operations (FFO) was $0.20 per share in Q1-2014
compared to $0.31 per share in Q1-2013. FFO per share adjusts for
all non-cash earnings items included in income such as fair value
adjustments on investment properties and stock-based compensation
expense.
Brian Baker, Melcor's President and Chief Executive Officer
commented on the quarter: "We are pleased with our Q1-2014 results.
All operating divisions are experiencing strong activity and we
continue to execute successfully on our business plan. We have
grown our asset base both organically, through third-party
acquisition and via the synergies between Melcor and Melcor REIT.
We remain focused on obtaining planning approvals required for
future projects and we are well positioned for the 2014
construction season.
We remain confident in the year ahead and have increased our
semi-annual dividend by 12% to $0.28 per share."
First Quarter Highlights
- Community Development revenues declined versus the comparative
period due to the timing of plan registrations and commercial and
multi-family land sales. Results remain on budget for 2014 and
development activity is strong, with 38 projects presently under
active development.
- Investment Property revenue increased as a result of 71% growth
in portfolio gross leasable area (GLA). Melcor REIT revenue also
grew as a result of growth in portfolio GLA.
- Melcor REIT completed its third property acquisition since IPO
with the purchase of LC Industrial, a 67,610 sq. ft. industrial
warehouse in Lethbridge, Alberta, for $5.93 million.
- Melcor REIT paid distributions of $0.05625 per trust unit in
January, February and March. Distributions made during each of the
eleven months of the REIT's operations represent a payout ratio of
88%.
- Subsequent to the quarter, the REIT completed an offering of
1.9 million trust units for gross proceeds of $20.24 million. Part
of these proceeds were used to purchase two properties from Melcor
in exchange for $7.40 million in Class B LP Units and $6.10 million
in cash.
- We continued to invest in portfolio growth in our Investment
Properties and land inventory in the Community Development
division. Subsequent to the quarter, the following deals closed:
- Investment Properties acquired two commercial properties in
Arizona for $11.11 million. The office buildings have a total of
59,220 sq. ft. of GLA.
- Community Development purchased 73.86 acres in Calgary and
36.91 acres in Lethbridge.
- On May 9, 2014 we declared a semi-annual dividend of $0.28 per
share, payable on June 30, 2014 to shareholders of record on June
16, 2014. The dividend is an eligible dividend for Canadian tax
purposes.
Outlook
The majority of our assets are in Alberta, with steadily growing
inventory in the US. We believe the economic indicators in these
regions provide a strong business outlook for the foreseeable
future.
- Alberta fundamentals remain solid, with low unemployment rates,
high net in-migration, weekly earnings exceeding the national
average, strong capital investment, moderate inflation and relative
stability in the price of oil. These fundamentals create a
favorable environment for both residential and commercial property
development.
- The US continues its moderate economic recovery with some
lingering uncertainty, but with an increasing sense of
optimism.
Our key differentiators are our financial strength, diversified
business model, proven track record and the experience and
integrity of our personnel.
MD&A and Financial Statements
Information included in this press release is a summary of
results. It should be read in conjunction with Melcor's
consolidated financial statements and management's discussion and
analysis for the three-months ended March 31, 2014, which can be
found on the company's website at www.Melcor.ca or on SEDAR
(www.sedar.com).
About Melcor Developments Ltd.
Melcor is a diversified real estate development and management
company with a rich heritage of integrity and innovation in real
estate since 1923.
Through integrated operating divisions, Melcor manages the full
life cycle of real estate development: acquiring raw land,
community planning, construction and development, and managing
revenue-producing office, retail and residential assets. Melcor
develops and manages mixed-use residential communities, business
and industrial parks, office buildings, retail commercial centres
and golf courses.
Melcor is committed to building communities that enrich quality
of life - communities where people live, work, shop and play.
Melcor's headquarters are located in Edmonton, Alberta, with
regional offices throughout Alberta and British Columbia. Company
developments span western Canada and the US. Melcor has been a
public company since 1968 and trades on the Toronto Stock Exchange
(TSX:MRD).
Forward-Looking Statements
In order to provide our investors with an understanding of our
current results and future prospects, our public communications
often include written or verbal forward-looking statements.
Forward-looking statements are disclosures regarding possible
events, conditions, or results of operations that are based on
assumptions about future economic conditions, courses of action and
include future-oriented financial information.
This news release and other materials filed with the Canadian
securities regulators contain statements that are forward-looking.
These statements represent Melcor's intentions, plans,
expectations, and beliefs and are based on our experience and our
assessment of historical and future trends, and the application of
key assumptions relating to future events and circumstances.
Future-looking statements may involve, but are not limited to,
comments with respect to our strategic initiatives for 2014 and
beyond, future development plans and objectives, targets,
expectations of the real estate, financing and economic
environments, our financial condition or the results of or outlook
of our operations.
By their nature, forward-looking statements require assumptions
and involve risks and uncertainties related to the business and
general economic environment, many beyond our control. There is
significant risk that the predictions, forecasts, valuations,
conclusions or projections we make will not prove to be accurate
and that our actual results will be materially different from
targets, expectations, estimates or intentions expressed in
forward-looking statements. We caution readers of this document not
to place undue reliance on forward-looking statements. Assumptions
about the performance of the Canadian and US economies and how this
performance will affect Melcor's business are material factors we
consider in determining our forward-looking statements. For
additional information regarding material risks and assumptions,
please see the discussion under Business Environment and Risk in
our annual MD&A.
Readers should carefully consider these factors, as well as
other uncertainties and potential events, and the inherent
uncertainty of forward-looking statements. Except as may be
required by law, we do not undertake to update any forward-looking
statement, whether written or oral, made by the company or on its
behalf.
Business Contact: Melcor Developments Ltd.Brian BakerChief
Executive Officer780.423.6931info@melcor.caInvestor Relations:
Melcor Developments Ltd.Jonathan Chia, CAChief Financial
Officer1.855.673.6931ir@melcor.cawww.melcor.ca
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