Melcor Developments Ltd. (TSX:MRD), an Alberta-based real estate
development company, today reported record results for the year
ended December 31, 2012. Melcor earned net income of $105.02
million or $3.49 per share (basic), an increase of 29% from 2011.
Revenue was $274.93 million, an increase of 25% from 2011. Total
assets grew 19% to 1.45 billion with fair value gains of $59.10
million or $1.96 per share (basic) compared fair value gains of
$41.70 million or $1.39 per share (basic) in 2011.
Record fourth quarter results contributed to Melcor's strong
performance for the full year. Fourth quarter net income was $55.47
million or $1.84 per share (basic) on revenue of $141.96 million
compared to net income of $51.82 million or $1.73 per share (basic)
on revenue of $129.43 million in the fourth quarter of 2011.
Funds from operations (FFO) was $2.22 per share in 2012, an
increase of $0.42 per share or 23% from 2011. FFO per share adjusts
for all non-cash items included in income such as fair value
adjustments on investment properties and stock based compensation
expense.
Brian Baker, Melcor's President and Chief Operating Officer
commented on the year: "Top and bottom line growth in 2012 was a
result of the coordinated efforts and diligence of all operating
divisions. Our company is comprised of the most talented and
hardest working team in the industry: a reality that is reflected
in our record results for 2012. As we enter our 90th year, we are
eager to compete and win in each of our divisions. With a solid
base of assets and a strong financial position, managed by
effective leaders and dedicated employees, we are well positioned
for continued growth and success."
2012 Highlights
-- Melcor achieved several records in 2012:
-- Record consolidated revenues of $274.93 million
-- Record basic earnings per share of $3.49
-- Fair value gains of $59.10 million or $1.96 per share
-- Total assets of $1.45 billion (up 19%)
-- Revenues were higher across all divisions in 2012 as a result of
increased activity and growth.
-- The Community Development division had a record year, starting four
new residential communities and continuing to build out existing
developments. They also acquired strategic land parcels to maintain
inventory levels and support future growth.
-- The Property Development division completed 11 buildings totalling
125,000 square feet. These projects have been leased predominantly
to well-recognized national and multinational tenants. In addition,
the Property Development division broke ground on three new large-
scale projects that will provide the division with a sustained
activity pipeline. The division was also successful in advancing
several future projects through the land use and development
approvals process.
-- Leasing activity in the Investment Properties division was strong
with portfolio-wide occupancy rates rising to 89%. The division
continues its capital expenditure strategies to enhance the
efficiency and market desirability of existing assets through on-
going improvements.
-- The Recreational Properties division increased both revenue and
earnings in 2012 through effective and efficient operations
management and an increased emphasis on its food and beverage
operation. The number of rounds played at its four championship golf
courses also increased by 3.4%.
-- Melcor paid an annual dividend of $0.45 per share to shareholders. The
company has been paying dividends since 1969.
-- Subsequent to the end of the year, Melcor announced that it had
initiated a strategic process to advance its business interests through
the potential creation of a Real Estate Investment Trust (REIT).
Investing in the Future
The company continues to invest in land inventory, develop
commercial properties and improve and lease its portfolio of
income-producing properties.
-- The Community Development division added several parcels of raw land for
future development including:
-- a 50% interest in 166 acres of land in St. Albert in the first
quarter; and
-- 233 acres of land in the third quarter, strategically located near
existing land holdings in St. Albert and Red Deer.
-- The Property Development division had projects totaling over $62 million
under development in 2012, compared to projects under development of $28
million in 2011. The division completed development of 125,000 sq. ft.
(11 buildings) in 2012 compared to 69,500 sq. ft. (9 buildings) in the
same period last year.
-- The Investment Property division acquired a multi-tenant industrial
warehouse in Lethbridge in the second quarter and took over management
of approximately 70,000 square feet (including four free-standing bank
buildings) transferred from the Property Development division.
Building Capacity
-- Brian Baker was appointed to the position of President and Chief
Operating Officer on June 1, 2012. Mr. Baker was previously Executive
Vice President and Chief Operating Officer.
-- The company expanded its production capacity in 2012 by expanding its
team via the addition of 18 new staff in 2012. This resulted in an
increase in overall headcount by 21%. This positions the company to
execute on its growth strategies.
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 focus on US expansion by increasing
its stable of residential rental properties, serviced lot inventory
and raw development land. These assets now comprise approximately
8.5% of the company's total assets. Management believes that the
economic indicators in its US regions provide a strong outlook for
overall business success for the foreseeable future. The US
continues its gradual economic recovery with clear signs of
strengthening in the housing market and capitalization rate
compression in the residential rental asset class.
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.
Annual Results
Complete financial statements, notes to the financial statements
and management's discussion and analysis will be filed on SEDAR
(www.sedar.com) on March 6, 2013 and is available at www.melcor.ca.
Melcor's information circular and other material will be mailed on
or about March 30, 2012.
Annual General Meeting
We invite shareholders to join us at Melcor's annual meeting on
April 25, 2013 at 11:00 am MDT. The meeting will be held at The
Fairmont Hotel Macdonald, Wedgewood Room, 10065 - 100 Street NW,
Edmonton, Alberta
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
owning and managing leasable office, retail and residential sites.
Melcor 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.
Contacts: Melcor Developments Ltd. Business Contact Brian Baker
President & COO 780-423-6931 Melcor Developments Ltd. Investor
Relations Jonathan Chia, CA CFO 780-423-6931 www.melcor.ca
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