Melcor Developments' Q3 Funds From Operations Fall 27% as Revenue Drops

Melcor Developments Ltd.'s third-quarter funds from operations fell 27% as revenue and gross profit contracted, while a steep decline in U.S. land revenue weighed on its nine-month results.

For the three months ended Sept. 30, funds from operations, or FFO, totaled C$17.09 million, down from C$23.40 million in the same period of 2025. FFO per share fell to C$0.56 from C$0.77. Revenue dropped 16.7% to C$60.42 million from C$72.54 million.

Gross profit declined 24.7% to C$27.11 million from C$35.99 million, while gross margin narrowed to 44.9% from 49.6%. Net income moved in the opposite direction, rising to C$17.75 million from C$14.09 million.

Noncash accounting items significantly affected net income. Melcor recorded a C$3.97 million fair-value loss on investment properties, compared with a C$6.30 million loss a year earlier. It also recorded C$2.08 million in noncash financing recoveries, versus C$0.97 million in noncash financing costs in the prior-year quarter.

FFO is a non-GAAP measure that excludes certain valuation, asset-sale and financing effects from net income. Melcor uses it to assess operating performance. The quarter's FFO decline reflected lower gross profit, partly offset by a reduction in general and administrative expenses.

U.S. revenue was C$19.59 million in the first nine months of 2026, down from C$71.40 million in the same period of 2025, primarily reflecting lower U.S. land sales activity. The region's share of total revenue fell to 11.7% from 32.0%.

Within U.S. operations, land revenue fell to C$11.66 million from C$62.20 million, while properties revenue eased to C$7.93 million from C$9.20 million. Canadian land revenue rose to C$70.55 million for the first nine months, partly offsetting the U.S. decline.

Companywide nine-month revenue fell 24.9% to C$167.77 million from C$223.43 million, while FFO fell 35.5% to C$47.32 million from C$73.31 million. Property disposals also reduced revenue. General debt declined 21% to C$469.10 million from C$593.93 million a year earlier.

Melcor declared a C$0.15-per-share quarterly dividend, up from C$0.13 per share in the year-earlier quarter. Shareholders of record on Dec. 15, 2026, will receive it Dec. 31, 2026.