Investment Q&A

Q: Hello 5i Team

Finally Melcor Developments (MRD) has offered to take Melcor REIT (MR-UN) private at $4.95 with a closing date of late Q4 2024.

I note there is a one month "go shop" for MR-UN to possibly find a better deal, however with MRD owing ~55 %; MRD being the manager of the REITs properties; and the year long Strategic Review Process - is it even a possibility that MR-UN could find another buyer?

With MR-UN trading ~$4.80 should I sell my holdings and move onto another REIT? With only a 3 % difference I think there are other opportunities in the REIT space to replace MR-UN.

What would be 5i top names in the REIT space to replace MR-UN (can be a different sub-sector from MR-UN's operations).

Thanks

Q: Hello 5i, as there is a takeover offer for Melcor REIT could you offer an opinion as to is the offer a fair price for current shareholders and the possibility of a competing take over offer.

Q: Recently an analyst specializing on REITs said "We believe the ability for select names to maintain current distribution levels is ‘below average’, including Dream Office REIT, European Residential REIT, Extendicare Inc.,, Melcor REIT, Northwest Healthcare Properties REIT, etc. "
Does this mean there is a strong possibility that the distributions will be cut for the above noted REITs ?
Thank you as always for your insight.

Q: Hello 5i Could you comment on MR.UN as the share price has been at a low price for awhile and the possibility and wise decision for MRD to takeover MR.UN

Q: Your updated analysis of this reit please.Thanks.

Q: Hello thinking of switching out of this stock. While there is a dividend it isn't large enough to offset in my opinion the geographic doldrums. Am thinking of switching to SIA or Milestone REIT. I do not need the income but want some dividend and some capital appreciation. Do you have a preference or another recommendation?? Thanks, Bill

Q: I hold Melcor REIT but am considering a switch to Milestone. Do you think this is a good idea or should I Continue to hold Melcor REIT and get paid to wait as they say. Thank you. Bill

Q: Melcor Developments (MRD) has a very long and distinguished reputation as a reliable and profitable developer and property manager based in Edmonton, Alberta. In 2013, MRD spun off some of its properties into Melcor REIT (MR.UN). The Reit’s stock price suffered a dramatic decline in 2015 from $10 to $7. Presumably this was due to “Alberta phobia” on Bay Street. However, the 2015 financial statements showed a 50% increase in net income. Debt remains around 55% of book value and the monthly distributions continue unaffected at a very sustainable 80% of net profits, for a current yield of 8.28%. The stock price has recovered somewhat to the $8 range. With oil prices seemingly stabilizing around $40 it would appear that the risk of property related defaults in Alberta is receding. While this is a small cap Reit, its management is top-notch and its financials seem sound.

What is your take on this stock ? Is it a Buy, sell or hold ? Too early to get in ?