Melcor Developments Ltd.
TSX : MRD

Melcor Developments Ltd.

November 06, 2013 17:47 ET

Melcor Reports Third Quarter Results & Declares $0.25 Dividend

EDMONTON, ALBERTA--(Marketwired - Nov. 6, 2013) - Melcor Developments Ltd. (TSX:MRD), an Alberta-based real estate development company, today reported results for the quarter ended September 30, 2013. Revenue was $59.20 million in Q3-13 compared to $64.67 million in Q3-12. This is primarily a result of timing differences in sales within the Community Development division. All other divisions grew revenue compared to the prior period. Year-to-date revenue increased 14.0% to $151.55 million.

Melcor earned net income of $21.88 million or $0.72 per share (basic) in Q3-13, a decrease of 11.9% over Q3-12. Year-to-date net income was $44.71 million, a decrease of 9.8% over the first nine months of 2012. The decline in net income is primarily the result of one-time costs related to the formation of Melcor REIT.

Adjusted earnings, which excludes REIT transaction costs and unitholders' portion of the REIT's earnings, were $53.60 million year-to-date, an increase of 8.1% over the first nine months of 2012. Management believes that adjusted earnings provide a clearer measure of operational and relative performance.

Funds from operations (FFO) was $0.35 per share in Q3-13 compared to $0.53 per share in Q3-12. Year-to-date FFO was $0.87 per share compared to $0.97 per share in the first nine months of 2012. 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 continue to see strong performance across the company. We are pleased with both our Q3 and year-to-date results. We have had an active fall construction season leading us in to Q4 and year-end.

"All operating divisions are positioned for continued expansion, and the economies in the regions in which we operate are strong and growing stronger. Our development divisions are executing larger projects, both in terms of quantity and scale.

"Management remains focused on consistently providing industry-leading products and services to achieve our overall objective of returning corporate profit to shareholders and protecting and growing their investment. To that end, we are happy to report an 11% increase in our regular dividend payments this year."

Melcor's Board of Directors declared a semi-annual dividend of $0.25 per share, payable on December 31, 2013 to shareholders of record on December 17, 2013. The dividend is an eligible dividend for Canadian tax purposes.

Third Quarter Highlights

  • Revenues were higher across all divisions (except Community Development) in Q3-13 as a result of increased activity and continued execution of Melcor's growth strategy.
    • Due to timing differences of sales compared to last year, Community Development revenue declined 9.89% in the quarter; however, it is up 12.74% year-to-date.
Consolidated Sales Data Three Months Ended Nine Months Ended
(incl. joint ventures at 100%) 30-Sep-13 30-Sep-12 30-Sep-13 30-Sep-13
Single-family (lots) 289 345 682 613
Multi-family (acres) 6.56 7.45 16.77 18.29
Commercial & industrial (acres) 11.85 10.88 33.77 31.23
    • The Property Development division completed construction on 12 buildings (106,003 sq. ft.) in Q3-13 and recognized $10.21 million in fair value gains. This compares to fair value gains of $3.80 million in Q3-12. The Property Development division also continued construction on 9 projects across all regions.
    • Leasing activity in the Investment Properties division was strong with portfolio-wide occupancy rates of 91%. Higher rental rates and growth in rentable square footage drove higher revenues and net operating income for the division. Funds from operations grew 30% to $2.98 million in Q3-13. Year-to-date FFO was $8.35 million, up 42% from the first nine-months of 2012.
    • Leasing activity in the properties owned by Melcor REIT was also strong, with rental revenue increasing 7% over Q3-12 as a result of increases in base rents and higher average occupancy in the quarter.
  • On July 2, 2013 Brian Baker assumed the role of Chief Executive Officer of Melcor Developments Ltd.

Outlook

The majority of Melcor's business operations and assets remain focused on Alberta. Alberta economic fundamentals remain strong, with low unemployment rates, net in-migration, higher than the national average weekly earnings, strong capital investment, stabilizing inflation and relative stability in the price of oil. These fundamentals create a favorable environment for both residential and commercial property development.

The company continues its selective US expansion by increasing its stable of residential rental properties, serviced lot inventory and raw development land. These assets now comprise approximately 10% of the company's total assets in a strengthening real estate market. With Melcor's inventory of raw and developed land, financial resources and strong management group, the company is well positioned to take advantage of market opportunities

MD&A and Financial Statements

Melcor's consolidated financial statements and management's discussion and analysis for the three- and nine-months ended September 30, 2013 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 four integrated operating divisions, Melcor manages the full life cycle of real estate development: from acquiring raw land, to community planning, to construction and development, to managing leasable office, retail and residential sites. The company develops and manages mixed-use residential communities, business and industrial parks, office buildings, retail commercial centres and golf courses.

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 2013 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.

Contact Information

  • Melcor Developments Ltd. - Business Contact
    Brian Baker
    Chief Executive Officer
    780.423.6931
    info@melcor.ca

    Melcor Developments Ltd. - Investor Relations
    Jonathan Chia, CA
    Chief Financial Officer
    780.423.6931
    ir@melcor.ca
    www.melcor.ca