January 22, 2022 - Melcor Developments is an asymmetric risk-reward situation with considerable upside and limited downside. The company trades at 0.44x P/BV with a substantial high-quality residential and commercial land portfolio as well as a stable, cash-flow generating investment property division and a majority stake in its REIT. The opportunity is obscured by Melcor’s consolidated balance sheet which includes the assets and liabilities of the REIT, hiding the land development division under the appearance of a lower margin investment property holder. The company has developments in several high-demand and growing markets across Alberta and the US where the current low-interest rate environment and shifting demographic trends will catalyze value realization.
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