Melcor REIT (MR.UN) AI Stock Analysis

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TSE:MR.UN Dividends

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Melcor REIT

(TSX:MR.UN)

56Neutral

Melcor REIT's overall score is impacted by financial challenges, notably high leverage and negative profitability, despite positive cash flow. While technical indicators show upward momentum, the valuation suggests caution given the negative earnings. The absence of earnings call data and corporate events leaves financial performance and technical analysis as primary considerations.

Melcor REIT (MR.UN) vs. S&P 500 (SPY)

Market Cap

C$71.17M

Dividend Yield0.73%

Average Volume (3M)39.49K

Price to Earnings (P/E)―

Beta (1Y)0.80

Revenue Growth-2.12%

EPS Growth-287.56%

CountryCA

EmployeesN/A

SectorReal Estate

Sector Strength83

IndustryREIT - Diversified

Share Statistics

EPS (TTM)-2.36

Shares Outstanding13,152,000

10 Day Avg. Volume29,004

30 Day Avg. Volume39,486

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)0.00

Price to Cash Flow (P/CF)0.00

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price TargetN/A

Price Target UpsideN/A

Rating ConsensusN/A

Number of Analyst Covering0

Melcor REIT Business Overview & Revenue Model

Company DescriptionMelcor REIT (MR.UN) is a real estate investment trust headquartered in Canada. The company is primarily engaged in acquiring, owning, and managing a portfolio of high-quality, income-generating real estate assets. Melcor REIT focuses on retail, office, and industrial properties, providing tenants with well-maintained and strategically located spaces while delivering stable and growing distributions to its unitholders.

How the Company Makes MoneyMelcor REIT makes money primarily through rental income generated from its diversified portfolio of commercial properties. The company's revenue model hinges on leasing space to tenants across its retail, office, and industrial properties. Lease agreements, which are typically long-term, provide a stable and predictable income stream. Additionally, Melcor REIT may engage in property management services and strategic property acquisitions or divestitures to enhance its overall portfolio value. Key partnerships, such as those with property developers and management firms, contribute to the efficient operation and growth of the REIT's asset base. The trust's focus on maintaining high occupancy rates and optimizing rental terms is crucial to its financial performance.

Melcor REIT Financial Statement Overview

Summary

Melcor REIT's financial performance is weakened by net losses and high leverage. The income statement shows a negative net profit margin and declining revenue. The balance sheet indicates high debt levels and reduced equity, while the cash flow statement provides some positive signs with strong free cash flow growth.

Income Statement

Neutral

The income statement reveals a challenging financial picture. The TTM data shows a net loss, resulting in a negative net profit margin of -35.1%, compared to a positive margin in the previous year. Revenue has slightly decreased over the past year by 1.6%. EBITDA margin is low at 9.2%, indicating limited operating efficiency. While the gross profit margin remains healthy at 55.8%, overall profitability is a concern.

Balance Sheet

Neutral

The balance sheet shows a moderate level of financial stability. The debt-to-equity ratio of 2.77 indicates high leverage, but the equity ratio is 25.9%, providing some balance. The return on equity is negative due to net losses, highlighting profitability issues. The company's assets have decreased slightly, reflecting some concern over asset management.

Cash Flow

Neutral

The cash flow statement indicates mixed performance. The free cash flow growth rate is strong at 21.5%, showing improvement in cash generation. The operating cash flow to net income ratio is negative due to net losses, indicating challenges in covering net income with operating cash. Despite this, the free cash flow to net income ratio is positive, reflecting efficient capital expenditure management.

Dec 2023	Dec 2022	Dec 2021	Dec 2020	Dec 2019
Breakdown
Income Statement		Total Revenue
73.90M	74.11M	74.09M	74.57M	71.16M
	Gross Profit
42.65M	43.05M	43.75M	43.33M	42.39M
	EBIT
39.54M	43.66M	686.00K	85.27M	18.15M
	EBITDA
34.80M	47.06M	40.80M	23.58M	18.15M
	Net Income Common Stockholders
16.31M	29.61M	-1.69M	-65.11M	-6.79M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
3.29M	3.30M	7.25M	3.74M	2.28M
	Total Assets
701.00M	730.77M	735.67M	724.66M	783.53M
	Total Debt
418.64M	515.16M	441.63M	443.40M	446.41M
	Net Debt
415.35M	511.85M	434.37M	439.66M	444.13M
	Total Liabilities
501.71M	541.57M	569.83M	536.25M	594.82M
	Stockholders Equity
199.29M	189.20M	165.83M	188.41M	188.72M
Cash Flow		Free Cash Flow
11.99M	8.48M	14.88M	13.79M	9.31M
	Operating Cash Flow
11.99M	11.94M	14.88M	13.79M	9.31M
	Investing Cash Flow
14.56M	-4.45M	-2.32M	-573.00K	-70.69M
	Financing Cash Flow
-26.57M	-11.44M	-9.05M	-11.75M	62.08M

Melcor REIT Technical Analysis

Technical Analysis Sentiment

Positive

Last Price5.49

Price Trends

50DMA

5.41

Positive

100DMA

5.25

Positive

200DMA

4.50

Positive

Market Momentum

MACD

0.02

Negative

RSI

58.11

Neutral

STOCH

97.14

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:MR.UN, the sentiment is Positive. The current price of 5.49 is above the 20-day moving average (MA) of 5.44, above the 50-day MA of 5.41, and above the 200-day MA of 4.50, indicating a bullish trend. The MACD of 0.02 indicates Negative momentum. The RSI at 58.11 is Neutral, neither overbought nor oversold. The STOCH value of 97.14 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:MR.UN.

Melcor REIT Peers Comparison

Overall Rating

UnderperformOutperform

Sector (60)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
SRU.UN	76 Outperform	C$4.34B	19.18	4.50%	7.30%	9.46%	-42.77%
CAR.UN	68 Neutral	C$6.81B	24.24	3.20%	3.62%	4.45%	―
AP.UN	60 Neutral	$2.21B	―	-5.79%	11.43%	4.98%	19.54%
Sector *	60 Neutral	$2.73B	11.44	0.07%	8661.49%	5.94%	-15.68%
AX.UN	58 Neutral	$715.32M	―	-2.86%	8.22%	-10.56%	81.41%
MR.UN	56 Neutral	C$71.17M	―	-16.65%	0.73%	-2.12%	-287.56%
HR.UN	56 Neutral	C$2.58B	―	-2.29%	6.13%	-6.92%	-296.31%

* Real Estate Sector Average

Performance Comparison

TSE:MR.UN

Melcor REIT

5.49

2.71

97.48%

TSE:AX.UN

Artis Real Estate Investment

7.23

1.29

21.74%

TSE:AP.UN

Allied Properties Real Estate Investment Trust

15.34

0.18

1.20%

TSE:SRU.UN

SmartCentres Real Estate Investment Trust

25.49

4.59

21.96%

TSE:HR.UN

H&R Real Estate ate Staple

9.81

1.43

17.06%

TSE:CAR.UN

Canadian Apartment

42.10

<0.01

0.02%

Melcor REIT Earnings Call Summary

Earnings Call Date:Mar 06, 2025

(Q2-2024)

% Change Since: 1.29%|

Next Earnings Date:May 06, 2025

Earnings Call Sentiment Negative

The earnings call presents a mixed outlook. While there are positive developments such as successful asset sales and strong tenant retention, these are overshadowed by declines in key financial metrics, occupancy challenges, and increased costs. The strategic review and asset sales indicate a focus on restructuring and debt reduction, but financial pressures and distribution suspension pose significant concerns.

Q2-2024 Updates

Positive Updates

Sale of Richter Street Property

Melcor REIT closed the sale of a 29,000 square foot office building in Kelowna, BC, for net proceeds of $7.5 million, with $5 million reinvested in GICs and $2.5 million used to pay down the credit facility.

High Tenant Retention and New Leases

The REIT retained 89% of expiring leases, totaling over 271,000 square feet, and signed 50,000 square feet in new leases.

Strong Interest in Grande Prairie Asset

The Grande Prairie retail property has garnered strong institutional interest, with ongoing negotiations with a qualified buyer.

Negative Updates

Decline in Rental Revenue and NOI

Rental revenue and NOI declined slightly compared to Q2 2023, with same-asset NOI down 1% for the quarter.

Decreased FFO and ACFO

FFO decreased by 12% to $5.46 million, and ACFO decreased by 15% to $3.55 million, impacted by higher G&A and cash finance costs.

Occupancy and Office Leasing Challenges

Occupancy decreased from 88% to 87% due to lagging office leasing performance and a reduction in office lease rents during renewals.

Suspension of Monthly Distribution

Monthly distribution was suspended in February 2024 as part of a strategic review process.

Company Guidance

During the Melcor REIT Q2 2024 earnings call, Naomi Stefura highlighted several financial metrics indicating a challenging quarter for the company. Rental revenue and Net Operating Income (NOI) both experienced slight declines compared to the same period in 2023, with same-asset NOI decreasing by 1%. The Funds from Operations (FFO) dropped by 12% to $5.46 million, equating to $0.19 per unit, while Adjusted Cash Flow from Operations (ACFO) fell by 15% to $3.55 million or $0.12 per unit. These declines were attributed to increased General and Administrative (G&A) costs and higher cash finance costs linked to rising interest rates. The strategic sale of the Richter Street property generated net proceeds of $7.5 million, with a portion allocated towards debt repayment. The REIT also renewed part of its $50 million revolving credit facility, facing upcoming challenges with convertible debenture maturity. Operationally, the REIT retained 89% of expiring leases and signed new leases totaling 50,000 square feet, despite a drop in occupancy from 88% to 87% and downward pressure on office lease rents.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.