Melcor Developments Ltd., an Alberta based real estate development company achieved net earnings of $26,617,000 or $0.85 per share ($0.84 per share diluted) on revenue of $66,678,000 for the nine months ended September 30, 2008 compared to net earnings of $38,407,000 or $1.23 per share ($1.21 per share diluted) on revenue of $139,331,000 for the same period in 2007.
Earnings for the three months ending September 30, 2008 were $18,542,000 or $0.59 per share ($0.58 per share diluted) on revenue of $25,967,000 compared to earnings of $16,013,000 or $0.51 per share ($0.50 per share diluted) on revenue of $55,954,000 during the same period in 2007.
The comparatively lower levels of company revenues and operating earnings to date in 2008 is due to the continued slowdown that has occurred in the Alberta residential real estate sector for new homes. Earnings are behind the Company's 2008 business plan. While the Company expected lower single family lot sales for 2008, the drop in activity is steeper than expected. Earnings for the quarter were buoyed up by the sale of the Crowfoot West Business Centre, a recently completed 113,500 sq. ft. office building in northwest Calgary, Alberta. This sale generated a material gain of approximately $0.60 per share, enhanced the Company's cash position and has allowed for the redeployment of capital to other strategic opportunities.
The Board of Directors declared a semi-annual dividend of $0.17 per share payable on December 30, 2008 to Shareholders of record on December 16, 2008. Dividends for 2008 will total $0.42 per share compared to $0.40 in 2007 and $0.30 in 2006.
The company was active with its normal course issuer bid purchasing 133,000 common shares from early August to mid October. Further purchases will be made based on the Company's need for preserving cash, exploring expansion opportunities and paying down debt.
Previously, the Company has reported that the rebalancing of the overheated real estate markets will take some time (12 months or so) to absorb the excess housing inventory. The Company believes that the real estate markets will take longer to normalize than previously expected. This is also the current view of CMHC who predict housing starts for 2009 will be down modestly from 2008 with improvement in 2010. The Company remains confident that it has the appropriate assets, capital resources and experienced management team to handle the current real estate and economic adjustment that is taking place. -- www.cnxmarketlink.com
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