Melcor Developments announces results for 2019 and declares quarterly dividend of $0.10 per share

EDMONTON, Alberta, March 11, 2020 (GLOBE NEWSWIRE) --

Melcor Developments Ltd. (TSX: MRD), a real estate development and asset management company with operations across western Canada and in the United States, today reported results for the fourth quarter and year ended December 31, 2019. Softness in the residential markets where Melcor operates in Canada and timing of development in the US resulted in a revenue decrease of 22% to $207.97 million in 2019 compared to $267.43 million in 2018. Funds from operations (FFO) per share was down 32% to $1.15 per share in 2019 compared to $1.68 per share in 2018. FFO adjusts for all non-cash earnings items and management believes it better reflects true operating performance.

Net income was down 41% to $37.74 million or $1.13 per share (basic) in 2019, compared to $64.27 million or $1.92 per share (basic) in 2018.

Darin Rayburn, Melcor’s President and Chief Executive Officer, commented on the year: "On behalf of the Melcor team and our Board of Directors, it is my privilege to report on our 2019 results. The economic environment in Alberta remained challenging throughout the year. With continued uncertainty surrounding employment coupled with ongoing debate over pipelines and unstable oil prices, the residential housing market remained soft and contributed to the decline in revenue compared to 2018. We continued to focus on the right product type in the right areas in our community development division. We developed 57% fewer lots than in 2018, our second year of decline as we seek to maintain appropriate inventory levels. We continue to work through strategic marketing programs to reduce both our inventory and our builders' spec inventory. We sold 72 lots in our new community outside of Denver, CO. Sales velocity has been very positive in this new community and we have begun development of the second phase to meet builder demand for lots.

Our property development division remained active in 2019, with 99,794 square feet in new development transferred to investment properties. An additional 47,688 square feet is completed and awaiting lease up, while a further 96,797 square feet is under active development. All of this will eventually be added to our income producing asset portfolio, which in turn becomes potential acquisition targets for the REIT under its right of first offer. These new developments will contribute to further revenue diversification in the future. In 2019 the REIT completed third party acquisitions of over 339,000 square feet of gross leasable area in 2 retail properties and for the first time, retail comprises more than 40% of the portfolio. Melcor divested an office property in the US as part of our capital recycling strategy. At year end, we owned and managed 4.59 million square feet, a growth of 11% over 2018.