Melcor Real Estate Investment Trust (“Melcor REIT” or the “REIT”) (TSX: MR.UN) today announced results for the second quarter ended June 30, 2024. The second quarter Management Discussion & Analysis and Condensed Interim Financial Statements are available on our website (www.MelcorREIT.ca) under Financial Reports, or on SEDAR+ (www.sedarplus.ca)
Andrew Melton, CEO of Melcor REIT commented: “Our portfolio continues to show resiliency despite challenging market conditions. Our team continues to focus on leasing up vacant space and providing tenants with exceptional service.
The real estate market has shown mixed performance across different property sectors, influenced by several economic and market factors. While there are signs of recovery, pressures such as inflation and elevated interest rates continue to impact overall results. Despite these ongoing uncertainties, we continue to demonstrate resilience and adaptability, and remain focused on tenant retention and actively leasing vacant space.
Our office portfolio continues to be our biggest challenge, with an increase in supply coupled with a decrease in demand creating difficulties in leasing up vacant space. Inflationary pressures have led to rising costs of new deals and increases to capital expenditure required to maintain our buildings. To date in 2024, we have recorded net losses of $10.62 million on our office assets due to lower NOI and/or rising capitalization rates on certain properties, primarily in our office segment.
We remain committed to our strategic decision to focus on our core Alberta assets with a goal to reduce overall debt. We have classified four properties as asset held for sale (under IFRS accounting standards) which includes three retail properties in Regina, SK and one retail property in Grande Prairie, AB. Net cash from the sale of these assets is expected to be used to pay down the revolving credit facility and reducing our overall debt. On May 10, 2024, we closed on the sale of our Richter Street property, a 29,000 sf office property located in Kelowna, BC for gross proceeds of $7.80 million, resulting in net proceeds of $7.48 million.”
Ralph Young, Chairman of the REIT commented: “Earlier this year, the Board of Trustees established an Independent Committee (the “Independent Committee”) to oversee a broad-based strategic review with a focus on unlocking unitholder value. The Independent Committee has retained BMO Capital Markets as financial advisor and DLA Piper (Canada) LLP as legal counsel to evaluate a broad range of strategic alternatives to maximize unitholder value. The review process is ongoing, and at this time no additional information is available on the results of the review.”
About Melcor REIT
Melcor REIT is an unincorporated, open-ended real estate investment trust. Melcor REIT owns, acquires, manages and leases quality retail, office and industrial income-generating properties in western Canada. Its portfolio is currently made up of interests in 38 properties representing approximately 3.1 million square feet of gross leasable area located across Alberta and in Regina, Saskatchewan and Kelowna, British Columbia. For more information, please visit www.melcorREIT.ca.
Contact Information:
Investor Relations
ir@melcorREIT.ca
