Alberta Real Estate: Melcor Developments Valuation

Melcor Developments is a residential and commercial property real estate development and management company that was founded in 1923. Melcor developments has land exposure in Western Canada and some in America, most in various energy “hot beds” and quickly growing areas.

Locations Shown Below:

Edmonton: 4,300 acres

Red Deer: 1,933 acres

Calgary: 3,400 acres

Regina: 680 acres

Kelowna: 700 acres

Denver: 1,100 acres

Houston: 2 acres

Phoenix: 86 acres

Melcor Developments operates in four integrated business units that are responsible for purchasing and developing raw land, community planning, construction and development of real estate, before managing leasing operations on finished residential and commercial properties. At the current share price of $15.59 I believe this is a company worth investing in for the long haul. As real estate has a built-in inflation protection component and properties are in higher growth areas with exposure to North America energy growth.

TTM P/E: 5.0

Market Cap: 470 Million

Basic E.P.S: 2.70

B/V per share: 21.28

Return on Equity: 18.2%

Annual Dividend: $0.46 cents (roughly 3%)

Terminal Capitalization Rate: 6.80%     (Avg. 6.56%)

Land Inventory Value: 580.23 Million (272.92 Million, raw land)

Dividends paid since: 1990 (22 years)

Melcor Developments also has a recreational properties unit specifically golf courses and recently reported a 7% increase from the number of rounds played in 2011. When further research is conducted as well as prior initial statistics you can see Melcor Developments does seem to be under valued currently and would expect share price to trade in the $21-25 range over the next 1-3 years while you get paid to wait.

Disclosure: I am long and received no compensation for writing this article.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s