Melcor Developments announces third quarter results, declares quarterly dividend of $0.13 per share

Executive Summary

• Melcor reported Q3 2025 revenue of $72.54 M (up 21.9% YoY) and FFO of $23.40 M (up 41.8% YoY), turning a $34.98 M loss in Q3 2024 into a $14.09 M profit.
• The Land division drove growth, posting $40.93 M revenue (+49.8% QoQ) and $63.52 M YTD earnings (+103.6%).
• The company completed several asset disposals (total net proceeds ≈ $62.5 M) and continued development of commercial properties, adding ~35 K sf of new space YTD.

Key Details

• Financial Highlights – Q3 2025
• Revenue: $72.54 M vs. $59.51 M (2024) → +21.9%
• Gross profit: $35.99 M vs. $28.61 M → +25.8%
• Funds from operations (FFO): $23.40 M vs. $16.51 M → +41.8%
• Basic EPS: $0.46 vs. a loss of $1.15 in Q3 2024

• Net income: $14.09 M vs. a loss of $34.98 M in Q3 2024

• Financial Highlights – YTD (9 months)

• Revenue: $223.43 M vs. $178.96 M → +24.8%
• Gross profit: $118.34 M vs. $87.31 M → +35.5%
• FFO: $73.31 M vs. $50.37 M → +45.5%

• Basic EPS: $0.87 vs. $0.04 in 2024

• Land Division

• Q3 revenue: $40.93 M (+$13.60 M YoY)
• YTD revenue: $132.36 M (+54.6% YoY)
• YTD earnings: $63.52 M (+103.6% YoY)

• Major driver: sale of 198.40 acres of subdivided lots in the U.S. for $62.20 M revenue, $39.09 M earnings.

• Properties Division

• Q3 revenue down 3.6% to $26.16 M (property sales and lower occupancy).
• Completed four new commercial buildings YTD (34,903 sf) and has 47,140 sf under construction/lease‑up.

• Net proceeds from property disposals:

  • Evans Business Centre (Scottsdale, AZ): $12.96 M
  • Melcor Crossing (Grande Prairie, AB): $47.63 M
  • Post‑quarter sales: Coast Home Centre ($14.85 M less costs) and Westgrove Common ($12.70 M less costs).

• Golf Division – Rounds up 4.0% YoY to 120,173; revenue $11.63 M YTD (+8.7%).

• Balance Sheet & Debt Management

• General debt reduced 2.8% despite a $71.30 M cash outlay for the REIT unit purchase (44.6% of REIT).

• Share repurchases: 257,580 shares cancelled at a cost of $3.46 M YTD.

• Dividend – Board declared quarterly dividend of $0.13 per share payable Dec 31, 2025 (record date Dec 15, 2025).

• REIT Transaction Summary

• Acquired remaining 44.6% equity in Melcor REIT LP for $5.50 per Class A unit ($71.30 M total).

• Transaction closed Apr 23 2025; resulted in $22.20 M increase in deferred tax liabilities and $7.08 M transaction costs (of which $5.88 M capitalized).

• Non‑Cash Items Impacting Net Income

• Fair value loss on investment properties: Q3 $6.30 M (vs. $17.64 M prior year).
• REIT unit price change: no Q3 impact; YTD fair value loss $3.24 M vs. $9.20 M prior year.

• Non‑cash financing costs: Q3 $0.97 M (vs. $4.01 M prior year).

• Key Ratios

• Gross margin Q3 2025: 49.6% (up from 48.1%).
• Net margin Q3 2025: 19.4% (versus –58.8% in Q3 2024).
• Book value per share: $41.38 (up 1.1%).

Notable Quotes

• Timothy Melton, Executive Chair & CEO: “Melcor is pleased to report results for the third quarter of 2025… Revenue … up 21.9%… Funds from operations were also up 41.8%… We continue to evaluate strategic asset sales to further strengthen our balance sheet and reduce our bank operating line.”

Materiality Assessment: Material – Positive (significant earnings turnaround, strong revenue/FFO growth, major REIT acquisition, dividend declaration).