Melcor Developments

Melcor Developments

MRD

Last Updated On: October 12, 2018

Share Price On This Date: $14.02

Property developer in western Canada.

Summary

Melcor is a property developer based out of Calgary. They got side swiped by the downturn in the oil patch and the stock still has not recovered. You can pick it up now for half the net value of their property holdings (a lot of which is raw land that they are holding to develop). They have been solidly profitable for the past 16 years (which is as far back as I've looked) and have been in the business for decades. Their business model is to buy up undeveloped acreage, put in the roads, sewers and whatnot and then sell completed lots off to builders. They typically keep some of the prime land to develop into big box plazas and then keep some of the resulting retail and office space and stuff it into their pet REIT or hang on to it themselves and harvest the rental income. The Canadian housing market may be a bubble looking for a pin but Calgary, at least, doesn't have the million dollar crack shacks that Vancouver does. These guys have been around the block quite a few times so I am okay with backing this horse despite the risk of a housing bust 2.0.

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