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Melcor Developments Ltd., (TSX:MRD) Releases First Quarter Results

^{Published on 2009-05-07 13:59:48, Last Modified on 2009-11-02 11:32:31 - Market Wire}
 

 EDMONTON, May 7 /CNW/ - Melcor Developments Ltd., an Alberta based real estate development company recorded net earnings of $183,000 or $0.01 per share (basic) on revenue of $16,083,000 for the three months ended March 31, 2009 compared with net earnings of $4,373,000 or $0.14 per share (basic) on revenue of $20,932,000 for the same period in 2008. The Company has declared a semi-annual dividend of $0.10 per share, payable on June 30, 2009 to shareholders of record on June 16, 2009. This compares to a semi-annual dividend of $0.25 per share paid on June 30, 2008. The first quarter earnings and revenues are lower than during the same period in 2008 due to a decrease in sales in the Company's Community Development Division which has been impacted by the current recession. The division sold 78 single family lots compared to 53 sold during the same period in 2008, but did not record the sale of any multi-family sites. Divisional earnings were impacted by a reduction in the average selling price of single family lots, a sales promotion which discounted the selling prices of selected lots, an impairment provision of $760,000 to account for possible write downs of agreements receivable including penalty interest that has been accruing and a loss of $709,000 due to the abandonment of a land purchase option arrangement. While sales of single family lots were low during the first two months of 2009, a few communities have experienced stronger sales in March and April primarily in the affordable housing sector. The industry as a whole has seen an increase in demand for this product. On February 6, 2009 the City of Regina annexed 686 acres of land owned by Melcor. These lands are located in the NE quadrant of the City and are mainly planned for industrial development. Development activity in the Property Development Division is still good with all space under construction pre-leased except for 8,500 feet of office space in the Market at Magrath project. The market for office, commercial and industrial real estate remains strong and our Investment Property Division's results increasingly contribute to the Company's earnings. During the quarter, the division purchased a 15,000 square foot development site adjacent to the Company's Royal Bank Building and sold a small office building in Regina. The Company believes that Alberta residential real estate markets have stabilized and buyer confidence is returning. The increased supply of serviced lots and new and used housing inventory has put downward pressure on prices thereby making housing relatively affordable again. The combination of low mortgage interest rates, stronger commodity prices and government stimulus programs will positively influence real estate markets. We are cautiously optimistic that this trend will lead to increased sales and earnings for the Company in the future.

For further information: please contact the undersigned. Business Contact, Ralph B. Young, President & CEO, Melcor Developments Ltd., [ info@melcor.ca ], Tel: (780) 423-6931; Investor Relations, Michael D. Shabada, C.A., Vice-President, Finance & CFO, Melcor Developments Ltd., [ info@melcor.ca ], Tel: (780) 945-2819; [ www.melcor.ca ]