Melcor REIT reports significant net fair value losses and challenges in Alberta real estate market
From GlobeNewswire: 2024-11-04 23:13:47
Melcor Real Estate Investment Trust (Melcor REIT) reported results for the third quarter of 2024, citing ongoing challenges in the Alberta real estate market, particularly in the office sector. The REIT recorded net fair value losses of $22.89 million on investment properties, with significant losses in office and retail assets. Melcor remains committed to focusing on core Alberta assets to reduce overall debt. The REIT recently entered into an agreement with Melcor for the sale of unowned equity interest in REIT LP, subject to unitholder approval at a special meeting on November 26, 2024.
Financial highlights for the third quarter of 2024 showed a decline in revenue, NOI, FFO, and ACFO, primarily due to increased operating costs and leasing challenges. Melcor emphasized the importance of focusing on FFO and ACFO alongside liquidity, noting a significant impact from non-cash fair value adjustments on investment properties. The REIT is navigating challenges associated with inflation, rising operating and leasing costs, and higher interest rates affecting cash flow.
In terms of operational highlights, Melcor REIT completed new leasing and renewals, achieving an 86.8% retention rate. However, occupancy decreased slightly to 87.3%, with ongoing inflationary pressures impacting metrics like FFO and ACFO. The REIT continues to focus on leasing efforts amid challenges in the real estate market. Additionally, Melcor REIT provided details on its financing activities, including renewing mortgages and refinancing existing facilities to manage debt obligations.
The REIT also announced the suspension of monthly distributions in February 2024, impacting payout ratios for the year. Melcor REIT’s balance sheet highlights showed a decrease in total assets and increased indebtedness, with a focus on managing debt levels. The REIT’s forward-looking statements highlighted risks and uncertainties related to market conditions, leasing challenges, and completion of strategic transactions. Unitholders were encouraged to stay informed and engage with the REIT for further information.
Read more at GlobeNewswire: Melcor REIT announces third quarter 2024 results