Good morning, ladies and gentlemen, and welcome to the annual shareholders' meeting for Melcor Developments Ltd. My name is Timothy Melton. I'm Executive Chairman of the Melcor Board of Directors, and it's my pleasure to chair this, our 53rd annual general meeting. We're presiding the meeting here in Melcor's head office boardroom in Edmonton. Joining me in the meeting is Naomi Stefura, Melcor's Executive Vice President and CFO. Assisting with the meeting and all the organization of this event is Nicole Forsythe. She is Director of Corporate Communications. We are hosting this meeting entirely online. I warmly welcome our webcast audience and look forward to being able to see you all again in person next year. Participants will be able to ask questions via chat. Nicole will provide more information on that shortly.
We will move very quickly through the formal requirements of the meeting with Nicole and Naomi acting as motioner and seconder. Following this formal component, Naomi will present our results for 2021 and our future prospects. I will now turn the meeting over to Nicole Forsythe to provide with some housekeeping remarks.
Good morning, everybody. In case you don't have notes, they are available by pressing the Materials button on the side of your screen. Note that all voting took place in advance of the meeting with all matters. Either Naomi Stefura or Timothy Melton were named as proxy holders, and we have reached quorum to pass all of today's motions. Following management's presentation, we will open the floor for questions and answers. To ask a question, please type your question in the text box at the bottom of the webcast screen, along with your name and send. You may enter a question at any time during the meeting. Note that questions may be moderated before they are repeated for brevity and clarity if necessary. Finally, I will remind you that certain statements made during this call may be forward-looking.
For a complete discussion of items that may cause actual results to differ, please refer to the Business Environment and Risk section of our MD&A. I'll turn the call back over to Tim now.
Thank you. The meeting is now called to order. I will chair this meeting, and Naomi Stefura will act as secretary. Gloria Gherasim of Odyssey Trust Company will act as scrutineer. However, all motions have already been passed. Notice of calling this meeting, of this annual meeting of shareholders was sent out to all shareholders of record. I have an affidavit of the meeting which indicates mailing date of April 19th, 2022, as proof that notice of this meeting has been properly served. It is certified by our transfer agents. As such, I request a motion dispensing with the reading of the notice.
I move that the reading of the notice be dispensed with.
I second the motion.
Motion is carried. I will ask the secretary to keep a copy of notice of proof of mailing with the records of this meeting. We have received a report on shareholder attendance at this meeting from the scrutineer. We have received 26,489,850 votes, or 80.7% of Melcor's issued and outstanding shares on record date and meet quorum requirements for the meeting. I now declare this meeting regularly called and properly constituted to conduct business. I now request a motion to dispense with the reading of the minutes of Melcor's last annual general meeting of shareholders held on May 20, 2021.
I move that the reading of the minutes of the last AGM be dispensed with and that the minutes be approved as written.
I second the motion.
Motion is carried. The next item of business is the presentation of financial statements for the period ending December 31, 2021, and the related auditor's report. When you received notice of the meeting, you also received instructions for accessing the Melcor annual report online or requesting that a printed copy be sent to you. This information is also available on our website at melcor.ca or SEDAR.com. It will be mailed to anyone who requests it. As you've already had ample opportunity to review this material, I would request a motion dispensing with the reading of the financial statements and the auditor's report.
I move that the reading of the financial statements for the period ending December 31, 2021, and the auditor's report be dispensed with.
I second the motion.
Motion carried. The next item of business is to appoint the external auditors and to authorize the directors to set their remuneration. I ask for a resolution in this regard.
I move that PricewaterhouseCoopers be appointed as Melcor's auditors until the next annual meeting or until a successor is appointed at remuneration to be determined by Melcor's board of directors.
I second the motion.
Motion carried. Oh, pardon me.
Next page.
The next item of business is to fix the number of directors to be elected at this meeting.
I move that eight directors be elected at this meeting.
I second the motion.
Motion carried. Next up, we have the election of the directors. All directors elected today will hold office until the next annual general meeting, unless their office is earlier vacated. At this time, I would like to thank Ross Grieve, who is not seeking re-election for his 19 years of dedicated service to Melcor. The eight nominees, as listed in the information circular, are proposed for election. They are Douglas Goss, Andrew Melton, Kathleen Melton, Timothy Melton, Bruce Pennock, Janet Riopel, Catherine Roozen, and Ralph Young. We have received sufficient proxies to individually elect these nominees, and we will not be seeking nominations from the floor.
I move that Douglas Goss, Andrew Melton, Kathleen Melton, Timothy Melton, Bruce Pennock, Janet Riopel, Catherine Roozen, and Ralph Young be individually elected to serve as directors of Melcor.
I second the motion.
Motion carried. This concludes the formal business of the annual general meeting as described in the information circular. I will now turn the meeting over to Naomi Stefura, who is and does a tremendous job in executing her duties and responsibilities as Executive Vice President and CFO, to give an overview and management's presentation on the company.
Thank you, Tim. While most of you know Tim and myself quite well, I'd like to take a quick moment to introduce you to the rest of our team. These are the people who are responsible for all of the development projects we build, the investment properties we run, and the communities we create. They really are a tremendously talented group of individuals that I'm proud to have as colleagues and friends. Our senior leadership team is comprised of Randy Ferguson, our Senior Vice President of Investment Properties, Leah Margiotta, our VP of Property Development, Susan Keating, our VP of Community Development in the Edmonton region, Graeme Melton, our VP of Community Development in the Calgary region, Guy Pelletier, VP of Community Development in our Red Deer region, and last, but certainly not least, Sinead O'Meara, our VP of Finance.
Thanks to each of you and your teams for contributing to our excellent results for 2021. Speaking of excellent results for 2021, this was in fact a record year for the company. This is something that feels extra special coming out of what felt like a very long few years of COVID. We achieved record revenue of CAD 316 million, with a 44% gross margin. Net income is shown here as it is an IFRS measure, but we prefer to focus on funds from operations, or FFO, which was a healthy CAD 81 million or 2.46 per share. We paid out dividends to shareholders of CAD 0.44 per share, up CAD 0.10 from the prior year. We've also increased our dividend again in the first quarter of 2022. Our current quarterly dividend is CAD 0.14 per share.
Because of all of the non-cash accounting items included in net income, management focuses on FFO to really review performance of the company. Taking a closer look at FFO over time, it has remained relatively stable throughout the years, but we have now returned to the levels of FFO we haven't seen since 2014. 2021 was our second-best year for FFO, behind only 2014, which was our last record year. We sold 1,261 lots in Canada and 280 in the U.S. We also sold 595 paper lots in the U.S., where we do the planning and get approvals in place, but do not complete the physical construction of the lot. All of these lots combined make it a record year for lot sales.
Our property development group completed the construction of 118,000 sq ft in income-producing buildings, which were transferred to our investment properties team for management. At year-end, we had 89% in committed occupancy compared to 88% in 2020. Our golf courses had an amazing year and achieved record revenue and broke records for rounds played, thanks to an early spring and favorable weather throughout the season. Our company currently has CAD 2.1 billion in assets. Community development has over 10,000 acres of raw land, 683 single-family lots in inventory, and 185 acres of multifamily or other commercial land in our current development inventory. Our managed GLA continues to grow as property development completes and transfers commercial properties to the investment properties division.
Investment properties and the REIT manage 4.75 million sq ft of commercial properties and 593 residential units. Finally, we have four championship golf courses around which many of our communities are built. Our 10,000 acres of raw land bank consists of 8,614 acres in Canada, with our major holdings in the Edmonton area, Red Deer area, Calgary area, and some holdings in Kelowna, Lethbridge, and Regina. Our U.S. land holdings are primarily in the Denver, Colorado area, where our Harmony community is growing. The land holdings in Arizona are intended to be sold as paper lots. Our focus in the U.S. is presently on harvesting these land assets. Our Canadian commercial assets are primarily concentrated in Alberta, with a diversified portfolio of office, retail, industrial, and residential, as well as a land lease property.
In the U.S., we own three office properties in the Denver area and three in the Phoenix area. We also own 200 residential units. How did we achieve record results in 2021? To answer that, we'll take a look at each of our operating divisions. Significant revenue growth from the community development division certainly played a role. We sold 1,541 lots in Canada and the U.S. compared to just over 1,000 lots in the prior year. We saw significant increases in lot sales in both Edmonton and Calgary. Our Denver project continues to be a major contributor with 280 lot sales coming from one community alone. Property development transferred 118,700 sq ft to investment properties with a fair value of CAD 43 million.
A further 30,000 sq ft is in development and/or awaiting lease-up to transfer. These completed projects were all over the province of Alberta, with buildings completed in our Clearview Market Square project in Red Deer, our Jensen Lakes Crossing project in St. Albert, and The District at North Deerfoot and Greenwich in Calgary. Our investment property team manages all of our commercial properties, including those owned by the REITs. We do, though, have some properties both here in the U.S. that Melcor owns directly, which are not owned by the REIT. As such, these properties achieved CAD 39 million in revenue on the 1.1 million sq ft they own directly. The REIT continues to produce stable results and contributed revenue of CAD 74 million on its 3.2 million sq ft.
Maintaining our occupancy levels at 87% through two very difficult years of COVID is something we are continued to be proud of. We worked hard alongside our tenants throughout the pandemic and as a result, had minimal tenant closures. Last but not least, our recreational properties also had a record year for both revenue and rounds played. The weather cooperated all year, and with limited activities to do during COVID, we saw a strong resurgence in the sport, with many new players taking up golf for the first time, who we now hope are players for life. That was then, and this is now. I'll provide a quick snapshot of our Q1 results, which were released just last week. Momentum continued in Q1 with 23% growth in revenue over the same quarter last year to CAD 53 million.
Community developments again contributed to this growth, with 288 single-family lot sales compared to 122 in the first quarter of 2021. Funds from operations was stable at CAD 10.7 million, and we paid a dividend of CAD 0.14 per share. We continue to actively purchase under our NCIB program, buying the maximum allowable shares under the plan on a daily basis. Through the first quarter, we purchased approximately 136,000 shares at a cost of CAD 1.9 million. We believe this continues to be a good use of our cash as the trading value of our shares is significantly below our valuation of the company. There are some trends that have been impacting our business over the past few years.
Most significantly influencing our lot sales, housing starts are up in Alberta by 28% since 2019, and MLS sales are up by 76%. Some of these trends continued through the first quarter of this year, with the new home construction faring better in Alberta than most other provinces during the first months of 2022. Alberta's housing starts were up 4.4% compared to the first quarter of 2021 and was the highest number of housing starts in the first quarter since 2015. Meanwhile, national housing starts fell 18% compared to the same period in 2021. On the also positive side, construction and servicing costs have been going up, with inflation on materials and increasing fuel costs impacting our construction and land development projects.
This risk is compounded by supply shortages, making it difficult for our teams to secure necessary materials. Interest rates have started to climb and will make our debt more expensive over time. Another concern over rising interest rates is that it may prevent people from entering the new home market as qualifying for a mortgage becomes more difficult. Energy costs are up and show no signs of slowing. Speaking of slow, municipal approvals remain lengthy. More specifically, the land titles operation in Alberta is exceedingly slow. It is currently taking approximately three months to process registrations, which could make it difficult for Melcor to physically register projects, resulting in a risk of not closing on some planned sales in the current year. Do not be alarmed by all these potential negative trends. Melcor is here and was built to last.
This chart shows Melcor's annual revenue since we first went public in 1968. Yes, our revenue has gone up and down based on various economic conditions, but overall, our business has remained stable and has survived all sorts of obstacles. Key themes for Melcor in 2022 and beyond are to harvest the raw lands and other assets that we have, focusing on developing our over 10,000 acres of raw lands and only looking to acquisitions in strategic areas where we already have active developments. The U.S. will continue to be a major revenue generator in 2022, with a very hot real estate market south of the border in the areas in which we operate. We will maintain our steady focus and discipline on building the right type of product at the right time to meet market demands.
While environmental, social, and governance standards and reporting have grown in importance to investors, the principles we follow at Melcor have been in place and evolving over many years. A company does not survive 99 years without focus and attention to purpose and people in addition to profits. We are committed to corporate sustainability in environmental practice, social responsibility, governance of our company, and as stewards of the area where we operate. Attaining best practice in all aspects of our business is our constant aspiration. Our history and our culture form our strong foundation. The authentic values of a family-run organization, building deep relationships with our clients, our business partners, our employees, and our communities. We were recognized by The Globe and Mail second annual Women Lead Here list, and today I'm proud to say that 63% of our management committee is female.
The physical and mental health of our staff are of utmost priority, and as such, we completed a mandatory mental health training program for all managers at Melcor. In 2021, we joined the Corporate Climate Leaders Program and completed our opening inventory. The next step is to set our reduction targets for 2025 and 2035, which should be completed by the end of this year. In the period from 2012 to 2021, we reduced greenhouse gas emissions by 46% and used an energy consultant to ensure that our buildings operate in an environmentally friendly manner. This brief overview today of some of our initiatives does not do justice to the historical efforts and the importance and prevalence we corporately put on these very relevant topics.
Melcor's senior leadership is committed to promoting diversity and inclusion and ensuring that Melcor continues to operate in a sustainable and responsible way with respect to the environment, social needs, and governance. This concludes the formal portion of our meeting. We'd now be happy to take your questions. Nicole will remind us how the questions will work.
Thanks, Naomi. You can enter a question in the text box along with your name and email, and then just hit the send button. Note that your questions may be monitored or, sorry, moderated for clarity and brevity. Our first question is from a long-term investor who truly appreciates Melcor being run similar to a family business, perfectly aligning management and shareholder values. However, in the last 15 years, the shareholder return has been subpar, and Melcor is valued at around 45% of book value today. A good reason, in their opinion, is due to low ROE, which is a reflection of high land inventory on the book. Can the board and management team comment on improving ROE to enhance shareholder returns?
Thank you for the question. Absolutely. I think return on equity is something that we have seen come down, over time. Another, I think, factor that needs to be remembered is that our properties are also now fair valued at this point, and so there is a fair component of our equity that is sort of a non-accounting, non-cash, basis that has kind of impacted that trend. If you're looking over time, historically, we did not have those fair values included in our equity.
You know, as management, like myself and Tim and the board, we have identified return on equity as something we would like to focus on, and as I think you heard throughout my presentation more than one time, I sort of indicated this focus on harvesting our current assets, and, you know, really working to get maximum potential out of the land that we currently own. That is definitely a focus for management and the board going forward.
Next question. I need to provide a little bit of a forward statement to this one. I note that the divisional FFO that is shown on page three of the year-end press release indicates CAD 21.9 million for investment properties and CAD 45 million for the REIT. Can you confirm that these divisional figures are before interest and income tax and therefore are not consistent with the consolidated FFO of CAD 81.3 million? Can you also explain why there is no FFO figure provided for the community development division?
Absolutely. That is a good question. Corporately, the way we view our financing at Melcor is that all financing activities are general debt and the financing that's, you know, taken out in one division may be going to profit another division. We don't allocate interest expense by division. Yes, you are correct. When looking at the divisional FFO that we put into our MD&A, there is no interest expense associated. When you look at FFO for the whole company, the entire interest expense is included in there. Yes, there is a bit of a distinguishment there. As relates community development and why we do not show FFO, it's because there would be no adjustments. The land division doesn't have any FFO related adjustments in the current period. Margin is FFO, I guess.
I hope that answers that question.
Okay. Another question here. For the current period, is Melcor's management satisfied with the 7.4% return on equity performance, particularly in a record year for lot sales?
Again, I think speaking to sometimes I think return on equity, depending on which metrics you're using, whether it's FFO or margin and what you're including or excluding out of our equity base, you can probably come out with a few different return on equity numbers. I couldn't state an exact ROE target to shareholders, but just to reassure everybody that it is very much a focus of management and the board this year. You know, we obviously intend and hope to see some increases in that going forward.
I'm seeing no further questions from our audience. I'm gonna turn it back over to Tim for some final remarks.
Well, thank you very much. I wanna start with thanking Naomi and Nicole, and I feel very privileged to be able to work with the two of you and also the rest of the great Melcor team. Just a little bit of a follow-up to the return on equity over the last two years. I think that's been a very good achievement, considering the very difficult market period we've been through. We do strive always to get the maximum return on shareholders' equity, and it's one of the big focuses of the board of directors. I'd like to also reiterate my thanks to Ross Grieve for his 19 years of tremendous service to the Melcor board of directors. I'd also like to welcome Janet Riopel to Melcor's board of directors.
Janet has a long, successful career in real estate development, and she also served as president and CEO of the Edmonton Chamber of Commerce over the last few years. I would also like to thank our current board personally and acknowledge the great contribution they make as directors for their guidance and counsel and good stewardship to Melcor Developments. I would like to thank Melcor's staff and leadership team for continuing to deliver very good results for Melcor, particularly in these challenging and uncertain times. Thank you very much all of our team for your dedication and your tremendous efforts. Finally, I would like to thank our shareholders for your ongoing support and commitment to the company.
I think, at this time it is in order that I can now declare this 53rd Melcor AGM meeting officially terminated. Thank you everybody, and look forward to seeing you again next year.