After putting up the property for sale, Melcor has jumped back into the Penhold real estate market enthusiastically, with work on Phase 1 of a new subdivision set to begin in the fall.
Having stocked up on capital selling about half the units of a new Real Estate Investment Trust (REIT) set up in the spring, the company decided against selling off the parcel of land it owns at the north end of the town and is moving forward at an even greater clip than originally planned.
“The decision to sell it has been reversed and it's back onto our active prospect roster,” said Guy Pelletier, vice-president of the Red Deer region for Melcor Developments. “The intent would be if all goes well to be out there grading the site in fall this year.”
Melcor hopes to start underground work and surface construction of Phase 1 in spring 2014, which would include about 50 units in a manufactured home park and between 20 and 30 single-family lots.
“It looks like we can manage it from a capital perspective,” Pelletier said. “We did sell off some of our revenue producing commercial properties.”
Melcor's new financial instrument, a REIT, which offers tax advantages to the company and pays investors 6.75 per cent of their original investment annually, was fully subscribed as of May 1.
“That put a bit of an injection of cash into the company,” he said. “In some cases we might buy more land or buy more buildings. In this case we'll develop land we already own.”
Pelletier thinks Penhold is a strong marketplace and is pleased to see commercial developments begin in the Hawkridge Estates area, and says Melcor is also leaving room for commercial and industrial business as part of its long-term six to nine years of work to complete the overall project.
“It's certainly a well-located community,” he said, noting the commercial space is not part of Phase 1 and would be located along Highway 42 across from the Penhold Regional Multiplex. “You put it in the plan and hopefully the market expresses the need for it.”
The company's original plans for Phase 1 called just for some manufactured home construction, but Pelletier says adding conventional single-family residences is an easy step further.
“Since we're building a lot of the infrastructure already it doesn't cost that much more,” he said. “It does seem to be a robust community.”
At full build-out, the Melcor project would increase Penhold's population by an estimated 1,400 people.
