RE:comments on MRD in hereThanks for sharing!
It certainly is interesting to see the comparable NAV discounts across the sector.
The author makes some interesting points; however, I would tend to disagree with him regarding the REIT's future as a stand-alone unit. Even if you go back to the period before the pandemic, Melcor REIT stuggled to find capital outside of Melcor Development which led to Melcor Development putting up more money.
The current situation is less than ideal as Melcor itself carries a significant amount of invetment properties that from a tax flow-through perspective likely would be better served in the REIT.
My view is that Melcor either takes the REIT back in-house; or, it should spin out significantly more properties into the REIT to make it large enough to be viable and have a larger controlling interest. Continuing to have a lame duck REIT that limps along serves nobody.
Time will tell what happens but I am comfortable Melcor can pull something off if it wants to.
The big issue for both entities will ultimately be if the collective Boards can see past their blinders and find a way to close the significant valuation gap that exists. For example, Melcor Development could sell off the Harmony Project in Arizona and have a huge chunk of cash to either pay out to shareholders or buy back shares. They have a ton of land that is in high demand in Alberta as well and they have indicated that they are in "Harvest" mode. If they can see to it that the shareholders should see some of this money then the valuation gap can close. Either and SIB or a special dividend ($2.50 + per share) would be very nice to see in 2025.
LR