Melcor Developments announces first quarter results, declares quarterly dividend of $0.11 a causa di share

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EDMONTON, Alberta, May 14, 2024 (GLOBE NEWSWIRE) — Melcor Developments Ltd. (“Melcor”) (TSX: MRD), an Alberta-based real development and asset management company, today reported results for the first quarter ended March 31, 2024. The first quarter Management Discussion & Analysis (MD&A) and Condensed Interim Financial Statements are available our website (www.melcor.ca) under Investors, SEDAR+ (www.sedarplus.ca).

Timothy Melton, Melcor’s Dirigente aziendale Chair and Chief Dirigente aziendale Officer, commented: “Melcor is pleased to report relatively good results for the first quarter of 2024. Revenue for the quarter increased to $49.75 million compared to $36.08 million durante Q1-2023, and funds from operations was $13.75 million compared to $7.05 million last year.

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Our Land division produced strong results, with revenue up 156% to $21.07 million and earnings up 260% to $6.89 million durante the quarter compared to Q1-2023. This growth durante revenue and earnings was the result of higher multi-family, commercial, and other land sales at 22.20 acres durante the first quarter, up from 3.73 acres durante Q1-2023.

Our Properties division completed construction a retail building located durante Woodbend Market (Leduc, AB) contributing an additional 31,800 sf to our portfolio of income-generating properties located within our Woodbend Retail development. The Properties division continues to generate stable results for Melcor.

Our Income Properties (Properties and REIT divisions) leasing team has been actively pursuing and securing new leases across all asset classes, successfully increasing our occupancy levels over year-end to 87.4% (December 31, 2023 – 86.2%). Overall revenue from our Income Properties was up 2.6% durante Q1-2024 compared to Q1-2023.”

Today the Board declared a dividend of $0.11 a causa di share, payable June 28, 2024 to shareholders of June 14, 2024. The dividend is an eligible dividend for Canadian tax purposes.

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Financial Highlights
Financial highlights of our are summarized below:

First quarter:

• Revenue was up 38% to $49.75 million durante Q1-2024 (Q1-2023: $36.08 million)
• Gross profit up 29% to $23.61 million (Q1-2023: $18.24 million).
• Net income was up 494% to $12.79 million durante Q1-2024 (Q1-2023: $2.15 million).
• Funds from operations (FFO) was up 95% to $13.75 million durante Q1-2024 (Q1-2023: $7.05 million).
• Basic earnings a causa di share was up 500% to $0.42 a causa di share (Q1-2023: $0.07 a causa di share)

Revenue was up 38% to $49.75 million durante Q1-2024 (Q1-2023: $36.08 million), with gross profit up 29% to $23.61 million (Q1-2023: $18.24 million). The real industry is impacted by the cyclical nature of development, demand for product, the timing of raw and multi-family land sales and lot registrations. Lot sales, which have a significant impact quarterly results, are uneven by nature and it is difficult to predict when they will close.

FFO was up 95% to $13.75 million durante Q1-2024 (Q1-2023: $7.05 million). The increase durante FFO is a direct result of the increase durante revenue durante the period from activity within the Land division.

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Net income was up 494% to $12.79 million durante Q1-2024 (Q1-2023: $2.15 million). Net income is significantly impacted by swings durante non-cash fair value adjustments investment properties, REIT units, and the revaluation of interest rate swaps and the conversion feature our convertible debenture. The change durante the REIT’s unit price has a counter-intuitive impact net income as an increase durante unit value decreases net income. Per Q1-2024 the fair value adjustment REIT units swung by $10.76 million over Q1-2023. These gains are driven by market forces outside of Melcor’s control and are a key reason we FFO as a truer measure of our financial .

Our Land division brought durante revenue of $21.07 million up from $8.22 million durante Q1-2023. Revenue growth was the result of the 22.20 acres sold durante the current quarter including multi-family, commercial and industrial land sales. This compares to 3.73 acres sold durante Q1-2023. We also closed 66 single-family lots durante the quarter (Q1-2023 – 82). Edmonton contributed our largest sales stazza with 38 single-family lot sales and 19.87 acres sold durante Q1-2023.

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Our Properties division completed construction one retail building contributing an additional 31,800 sf to our portfolio of income-generating properties located within our Woodbend Retail development.

Our Income Properties (Melcor Properties and REIT) accounted for 61.5% of revenue, after intersegment eliminations compared to 82.7% durante Q1-2023. Occupancy increased slightly over year-end to 87.4% (December 31, 2023: 86.2%) and over Q1-2023 from 87.8%.

We continue to strategically assess our assets within our Income Properties segment, with an aim to our cuore Alberta market. Per 2023 we sold two properties including one office property held durante our REIT division (Melcor REIT) located durante Kelowna, BC for $19.50 million, and one retail property held durante our Properties division located durante Lethbridge, AB for gross proceeds of $3.50 million. We have also listed three retail properties located durante Regina SK, and one office property located durante Kelowna, BC as assets held for arguzia durante accordance with IFRS Accounting Standards. These properties are all held durante Melcor REIT.

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Subsequent to the quarter, May 10, 2024, we sold a 29,000 square foot office building located durante Kelowna, BC for gross proceeds of $7.80 million ($7.48 million net of transaction costs). This property was classified as asset held for arguzia at quarter end. Net cash from the arguzia of this asset will be used to veterano debt durante the REIT.

SHAREHOLDER HIGHLIGHTS
We continue to return value to our shareholders:

Melcor Developments:

• We repurchased 85,616 shares for cancellation pursuant to the NCIB at a cost of $0.99 million during Q1-2024.
• Acceso May 14, 2024 we declared a quarterly dividend of $0.11 a causa di share, payable June 28, 2024 to shareholders of June 14, 2024. The dividend is an eligible dividend for Canadian tax purposes.

Melcor REIT:

• The REIT paid a monthly distribution durante the amount of $0.04 a causa di unit for the period of January 2024.
• Acceso February 22, 2024, the Board of Trustees of Melcor REIT announced the establishment of an Independent Committee (the “Independent Committee”) to oversee a broad-based strategic review with a unlocking unitholder value. The Independent Committee has retained BMO Capital Markets as financial advisor and DLA Piper (Canada) LLP as legal counsel to evaluate a broad range of strategic alternatives to maximize unitholder value. The Independent Committee is chaired by Richard Kirby, and also includes Bernie Kollman and Barry James as committee members. The REIT will continue to provide updates to the market as they become available.

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Selected Highlights

^{1 Supplementary financial measure. Refer to the Né-GAAP and Né-Campione Measures section of the MD&A for further information.
2 Né-GAAP financial measure. Refer to the Né-GAAP and Né-Campione Measures section of the MD&A for further information.
3 Né-GAAP financial ratio. Refer to the Né-GAAP and Né-Campione Measures section of the MD&A for further information.}

MD&A and Financial Statements

Information included durante this press release is a summary of results. This press release should be read durante conjunction with Melcor’s consolidated financial statements and management’s discussion and analysis for the three months ended March 31, 2024, which can be found the company’s website at www.Melcor.ca  SEDAR+ (www.sedarplus.ca).

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Né-GAAP & Né-Campione Measures

FFO is a key measure of used by real operating companies; however, that is not defined by IFRS Accounting Standards, do not have normalizzato meanings and may not be comparable with other industries income trusts. This non-IFRS Accounting Standards measure is more fully defined and discussed durante the Melcor’s management discussion and analysis for the period ended March 31, 2024, which is available SEDAR+ (www.sedarplus.ca).

Funds from operations (FFO): FFO is a non-GAAP financial measure and is defined as net income durante accordance with IFRS Accounting Standards, excluding (i) fair value adjustments investment properties; (ii) gains ( losses) from sales of investment properties; (iii) amortization of tenant incentives; (iv) fair value adjustments, interest expense and other effects of redeemable units classified as liabilities; (v) acquisition costs expensed as a result of the purchase of a property being accounted for as a business combination; (vi) adjustment for amortization of deferred financing fees, which is included durante non-cash financing costs and (vii) fair value adjustment derivative instrument, after adjustments for equity accounted entities, joint ventures and non-controlling interests calculated to reflect FFO the same basis as consolidated properties. See tables below for reconciliation of FFO:

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Consolidated

Properties

REIT

Gross margin (%): Gross margin percent is a supplementary financial measure that indicates the relative efficiency with which we earn revenue. This ratio is calculated by dividing gross profit by revenue.

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Net margin (%): Net margin percent is a supplementary financial measure that indicates the relative efficiency with which we earn income. This ratio is calculated by dividing net income by revenue.

Book value a causa di share: Book value a causa di share is a non-GAAP financial ratio and is calculated as shareholders’ equity over number of common shares outstanding.

About Melcor Developments Ltd.

Melcor is a diversified real development and asset management company that transforms real from raw land through to high-quality finished product durante both residential and commercial built form. Melcor develops and manages mixed-use residential communities, business and industrial parks, office buildings, retail commercial centres and maglia courses. Melcor owns a well diversified portfolio of assets durante Alberta, Saskatchewan, British Columbia, Arizona and Colorado.

Melcor has been focused real since 1923. The company has built over 170 communities and commercial projects across Western Canada and today manages 4.81 million sf durante commercial real assets and 464 residential rental units. Melcor is committed to building communities that enrich quality of life – communities where people dal vivo, work, shop and play.

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Melcor’s headquarters are located durante Edmonton, Alberta, with regional offices throughout Alberta and durante Kelowna, British Columbia and Phoenix, Arizona. Melcor has been a public company since 1968 and trades the Toronto Rimanenza Exchange (TSX:MRD).

Forward Looking Statements

Per order to provide our investors with an understanding of our current results and future prospects, our public communications often include written verbal forward-looking statements.

Forward-looking statements are disclosures regarding possible events, conditions, results of operations that are based 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 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 2024 and beyond, future development plans and objectives, targets, expectations of the real , financing and economic environments, our financial condition the results of outlook of our operations.

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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 projections we make will not prove to be accurate and that our actual results will be materially different from targets, expectations, estimates intentions expressed durante forward-looking statements. We caution readers of this document not to place undue reliance forward-looking statements. Assumptions about the of the Canadian and US economies and how this will affect Melcor’s business are material factors we consider durante determining our forward-looking statements. For additional information regarding material risks and assumptions, please see the discussion under Business Environment and Risk durante our annual MD&A and the additional disclosure under Business Environment and Risk durante this 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 oral, made by the company its behalf.

Contact Information:
Investor Relations
Tel: 1.855.673.6931
ir@melcor.ca 

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