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TORONTO, May 06, 2024 (GLOBE NEWSWIRE) — Timbercreek Financial (TSX: TF) (the “Company”) announced today its financial results for the three months ended March 31, 2024 (“Q1 2024”).
Q1 2024 Highlights1
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Published May 06, 2024 • 10 minute read
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- The net mortgage investment portfolio increased by $31.3 million to $977.5 million at the end of Q1 2024 from $946.2 million at the end of Q4 2023 (Q1 2023 – $1,149.1 million).
- Strong quarter of originations made possible by anticipated repayments: $198.5 million in net mortgage investments in the quarter. The repayments in the quarter are welcomed as delinquent loans repaid, positioning the Company for growth through the origination of loans based on re-set market fundamentals through 2024 and 2025.
- Distributed a total of $19.1 million in dividends to shareholders, comprising of a one-time special dividend of $4.8 million, or $0.0575 per share and regular monthly dividends of $14.3 million, or $0.17 per share, resulting in a payout ratio of 90.6%. After paying the special dividend, book value per share was $8.39 versus $8.37 in Q1 2023, demonstrating the Company’s ability to pay a special dividend and grow book value.
- Net investment income of $24.6 million compared to $32.7 million in Q1 2023.
- Net income and comprehensive income of $14.4 million (Q1 2023 – $18.1 million) or basic earnings per share of $0.17 (Q1 2023 – $0.22).
- Distributable income of $15.8 million (Q1 2023 – $18.3 million) or distributable income per share of $0.19 (Q1 2023 – $0.22 per share) representing a payout ratio of 90.6% (Q1 2023 – 79.1%) for the quarter.
- The quarterly weighted average interest rate on net mortgage investments was 9.9% in Q1 2024, compared to 10.0% in Q4 2023 (Q1 2023 – 9.7%). Interest rate exposure in the net mortgage investment portfolio was well protected at the end of Q1 2024 floating rate loans with rate floors representing 88.6% (Q1 2023 – 88.2%).
- Maintained conservative portfolio risk composition focused on income-producing commercial real estate:
- 64.4% weighted average loan-to-value;
- 85.7% first mortgages in mortgage investment portfolio; and
- 85.7% of mortgage investment portfolio is invested in cash-flowing properties.
- The Company continues to closely manage its Stage 2 and 3 assets and made material progress on resolutions during Q1 2024. The Company’s management team is very experienced in managing these situations and is well positioned to work through these loans to ensure the best outcomes in light of the current economic environment.
- The Company renewed its credit facility for 24 months extending the maturity date to February 8, 2026.
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“During the first quarter of 2024, we were able to generate solid income levels and deliver on our monthly distribution at a comfortable payout ratio while continuing to focus on re-deploying capital that is being generated from desired repayments,” said Blair Tamblyn, CEO of Timbercreek Financial. “The lower quarter-end portfolio balance reflects two quarters of significant repayments, including the desired repayment of the larger Quebec City portfolio of loans in early January 2024. This was the primary factor in the reduced top-line income versus last year’s first quarter, which represented a high-water mark for net investment income over the past two years. However, interest expense on the credit facility also declined on a smaller portfolio balance, allowing us to maintain net income margins. While we were intentionally cautious on new lending activity through much of 2023, our team remains optimistic that a stable interest rate environment in 2024 will promote increased commercial real estate activity and present attractive risk-adjusted opportunities for us to expand the portfolio back to historical levels. It was a strong first quarter for originations during what is typically a competitive period, which allowed us to grow the portfolio modestly from year-end levels.”
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Mr. Tamblyn added: “At the same time, our team continues to make headway on the Stage 2 and Stage 3 loans. We are adept and experienced at actively managing these situations to ensure the best outcomes for our shareholders – that remains a key focus in the coming quarters.”
Quarterly Comparison
| $ millions | Q1 2024 | Q1 2023 | Q4 2023 | |||||||||
| Net Mortgage Investments 1 | $ | 977.5 | $ | 1,149.1 | $ | 946.2 | ||||||
| Enhanced Return Portfolio Investments 1 | $ | 63.4 | $ | 59.4 | $ | 62.7 | ||||||
| Real Estate Inventory, net of collateral liability | $ | 92.8 | $ | 30.3 | $ | 92.6 | ||||||
| Net Investment Income | $ | 24.6 | $ | 32.7 | $ | 29.7 | ||||||
| Income from Operations | $ | 20.9 | $ | 28.3 | $ | 25.1 | ||||||
| Net Income and comprehensive Income | $ | 14.4 | $ | 18.1 | $ | 15.0 | ||||||
| –Adjusted Net Income and comprehensive Income | $ | 14.2 | $ | 18.0 | $ | 14.7 | ||||||
| Distributable income 1 | $ | 15.8 | $ | 18.3 | $ | 17.5 | ||||||
| Dividends declared to Shareholders2 | $ | 14.3 | $ | 14.5 | $ | 14.3 | ||||||
| $ per share | Q1 2024 | Q1 2023 | Q4 2023 | |||||||||
| Dividends per share | $ | 0.17 | $ | 0.17 | $ | 0.17 | ||||||
| Distributable income per share 1 | $ | 0.19 | $ | 0.22 | $ | 0.21 | ||||||
| Earnings per share | $ | 0.17 | $ | 0.22 | $ | 0.18 | ||||||
| –Adjusted Earnings per share | $ | 0.17 | $ | 0.21 | $ | 0.18 | ||||||
| Payout Ratio on Distributable Income 1 | 90.6 | % | 79.1 | % | 82.0 | % | ||||||
| Payout Ratio on Earnings per share | 99.7 | % | 79.8 | % | 95.8 | % | ||||||
| –Payout Ratio on Adjusted Earnings per share | 100.8 | % | 80.1 | % | 97.7 | % | ||||||
| Net Mortgage Investments | Q1 2024 | Q1 2023 | Q4 2023 | |||||||||
| Weighted Average Loan-to-Value | 64.4 | % | 68.5 | % | 65.6 | % | ||||||
| Weighted Average Remaining Term to Maturity | 0.8 | yr | 0.8 | yr | 0.7 | yr | ||||||
| First Mortgages | 85.7 | % | 92.0 | % | 88.9 | % | ||||||
| Cash-Flowing Properties | 85.7 | % | 89.0 | % | 86.0 | % | ||||||
| Multi-family residential | 54.6 | % | 50.8 | % | 56.5 | % | ||||||
| Floating Rate Loans with rate floors (at quarter end) | 88.6 | % | 88.2 | % | 86.1 | % | ||||||
| Weighted Average Interest Rate | ||||||||||||
| For the quarter ended | 9.9 | % | 9.7 | % | 10.0 | % | ||||||
| Weighted Average Lender Fee | ||||||||||||
| New and Renewed | 0.8 | % | 1.1 | % | 1.0 | % | ||||||
| New Net Mortgage Investment Only | 0.9 | % | 1.5 | % | 1.2 | % | ||||||
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- Refer to non-IFRS measures section below for net mortgages, enhanced return portfolio investments, adjusted net income and comprehensive income, distributable income and adjusted distributable income.
- Dividends declared exclude special dividends.
Quarterly Conference Call
Interested parties are invited to participate in a conference call with management on Tuesday, May 7, 2024 at 1:00 p.m. (ET) which will be followed by a question and answer period with analysts.
To join the Zoom Webinar:
If you are a Guest please click the link below to join:
https://us02web.zoom.us/j/82687372656?pwd=TU1KQ0g3QVdoUkVMNnVuRVlmV0ZUZz09
Webinar ID: 826 8737 2656
Passcode: 1234
Or Telephone:
Dial (for higher quality, dial a number based on your current location):
Canada: +1 204 272 7920, +1 438 809 7799, +1 587 328 1099, +1 647 374 4685, +1 647 558 0588, +1 778 907 2071, +1 780 666 0144
International numbers available: https://us02web.zoom.us/u/kcWEcyxzG7
Speakers will receive a separate link to the Webinar.
The playback of the conference call will also be available on www.timbercreekfinancial.com following the call.
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About the Company
Timbercreek Financial is a leading non-bank, commercial real estate lender providing shorter-duration, structured financing solutions to commercial real estate professionals. Our sophisticated, service-oriented approach allows us to meet the needs of borrowers, including faster execution and more flexible terms that are not typically provided by Canadian financial institutions. By employing thorough underwriting, active management and strong governance, we are able to meet these needs while generating strong risk-adjusted yields for investors. Further information is available on our website, www.timbercreekfinancial.com.
Non-IFRS Measures
The Company prepares and releases financial statements in accordance with IFRS. As a complement to results provided in accordance with IFRS, the Company discloses certain financial measures not recognized under IFRS and that do not have standard meanings prescribed by IFRS (collectively the “non-IFRS measures”). These non-IFRS measures are further described in Management’s Discussion and Analysis (“MD&A”) available on SEDAR+. Certain non-IFRS measures relating to net mortgages, adjusted net income and comprehensive income and adjusted distributable income have been shown below. The Company has presented such non-IFRS measures because the Manager believes they are relevant measures of the Company’s ability to earn and distribute cash dividends to shareholders and to evaluate its performance. The following non-IFRS financial measures should not be construed as alternatives to total net income and comprehensive income or cash flows from operating activities as determined in accordance with IFRS as indicators of the Company’s performance.
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Certain statements contained in this news release may contain projections and “forward looking statements” within the meaning of that phrase under Canadian securities laws. When used in this news release, the words “may”, “would”, “should”, “could”, “will”, “intend”, “plan”, “anticipate”, “believe”, “estimate”, “expect”, “objective” and similar expressions may be used to identify forward looking statements. By their nature, forward looking statements reflect the Company’s current views, beliefs, assumptions and intentions and are subject to certain risks and uncertainties, known and unknown, including, without limitation, those risks disclosed in the Company’s public filings. Many factors could cause actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by these forward looking statements. The Company does not intend to nor assumes any obligation to update these forward looking statements whether as a result of new information, plans, events or otherwise, unless required by law.
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OPERATING RESULTS1
| Three months ended March 31, |
Year ended December 31, |
||||||||
| NET INCOME AND COMPREHENSIVE INCOME | 2024 | 2023 | 2023 | ||||||
| Net investment income on financial assets measured at amortized cost | $ | 24,590 | $ | 32,709 | $ | 124,205 | |||
| Fair value gain and other income on financial assets measured at FVTPL | 337 | 282 | 1,282 | ||||||
| Net rental gain (loss) | 474 | (359 | ) | (595 | ) | ||||
| Fair value gain on real estate properties | — | 63 | 63 | ||||||
| Expenses | (4,498 | ) | (4,443 | ) | (19,140 | ) | |||
| Income from operations | $ | 20,903 | $ | 28,252 | $ | 105,815 | |||
| Financing costs: | |||||||||
| Financing cost on credit facility | (4,285 | ) | (7,898 | ) | (30,396 | ) | |||
| Financing cost on convertible debentures | (2,250 | ) | (2,250 | ) | (8,998 | ) | |||
| Net income and comprehensive income | $ | 14,368 | $ | 18,104 | $ | 66,421 | |||
| Payout ratio on earnings per share | 99.7 | % | 79.8 | % | 86.7 | % | |||
| ADJUSTED NET INCOME AND COMPREHENSIVE INCOME | |||||||||
| Net income and comprehensive income | 14,368 | 18,104 | 66,421 | ||||||
| Add: Net unrealized loss on financial assets measured at FVTPL | (166 | ) | (57 | ) | (342 | ) | |||
| Adjusted net income and comprehensive income1 | $ | 14,202 | $ | 18,047 | $ | 66,078 | |||
| Payout ratio on adjusted earnings per share1 | 100.8 | % | 80.1 | % | 87.2 | % | |||
| DISTRIBUTABLE INCOME | |||||||||
| Adjusted net income and comprehensive income1 | $ | 14,202 | $ | 18,047 | $ | 66,078 | |||
| Less: Amortization of lender fees | (1,405 | ) | (2,465 | ) | (8,279 | ) | |||
| Add: Lender fees received and receivable | 1,179 | 1,709 | 6,597 | ||||||
| Add: Amortization of financing costs, credit facility | 416 | 253 | 953 | ||||||
| Add: Amortization of financing costs, convertible debentures | 243 | 244 | 972 | ||||||
| Add: Accretion expense, convertible debentures | 113 | 113 | 454 | ||||||
| Add: Unrealized fair value loss (gain) on DSU | 153 | 75 | (67 | ) | |||||
| Add: Expected credit loss | 912 | 300 | 3,649 | ||||||
| Distributable income1 | $ | 15,813 | $ | 18,276 | $ | 70,357 | |||
| Payout ratio on distributable income1 | 90.6 | % | 79.1 | % | 81.9 | % | |||
| PER SHARE INFORMATION | |||||||||
| Dividends declared to shareholders | $ | 14,319 | $ | 14,451 | $ | 57,603 | |||
| Weighted average common shares (in thousands) | 83,010 | 83,970 | 83,509 | ||||||
| Dividends per share | $ | 0.17 | $ | 0.17 | $ | 0.69 | |||
| Earnings per share (basic) | $ | 0.17 | $ | 0.22 | $ | 0.80 | |||
| Earnings per share (diluted) | $ | 0.17 | $ | 0.21 | $ | 0.78 | |||
| Adjusted earnings per share (basic)1 | $ | 0.17 | $ | 0.21 | $ | 0.79 | |||
| Adjusted earnings per share (diluted)1 | $ | 0.17 | $ | 0.21 | $ | 0.78 | |||
| Distributable income per share1 | $ | 0.19 | $ | 0.22 | $ | 0.84 | |||
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- Refer to non-IFRS measures section
Net mortgage investments
(In thousands of Canadian dollars, except units, per unit amounts and where otherwise noted)
The Company’s exposure to the financial returns is related to the net mortgage investments as mortgage syndication liabilities are non-recourse mortgages with periodic variance having no impact on Company’s financial performance. Reconciliation of gross and net mortgage investments balance is as follows:
| Net Mortgage Investments | March 31, 2024 | December 31, 2023 | ||||||
| Mortgage investments, excluding mortgage syndications | $ | 976,474 | $ | 943,488 | ||||
| Mortgage syndications | 504,309 | 601,624 | ||||||
| Mortgage investments, including mortgage syndications | 1,480,783 | 1,545,112 | ||||||
| Mortgage syndication liabilities | (504,309 | ) | (601,624 | ) | ||||
| 976,474 | 943,488 | |||||||
| Interest receivable | (17,063 | ) | (14,585 | ) | ||||
| Unamortized lender fees | 5,026 | 5,226 | ||||||
| Expected credit loss | 13,112 | 12,093 | ||||||
| Net mortgage investments | $ | 977,549 | $ | 946,222 |
Enhanced return portfolio
| As at | March 31, 2024 | December 31, 2023 | ||||||
| Other loan investments, net of expected credit loss | $ | 47,560 | $ | 47,033 | ||||
| Finance lease receivable, measured at amortized cost | 6,020 | 6,020 | ||||||
| Investment in participating debentures, measured at FVTPL | 4,545 | 4,380 | ||||||
| Joint venture investment in indirect real estate development | 2,225 | 2,225 | ||||||
| Investment in equity instrument | 3,000 | 3,000 | ||||||
| Total Enhanced Return Portfolio | $ | 63,350 | $ | 62,658 |
Real estate inventory, net of collateral liability
| As at | March 31, 2024 | December 31, 2023 | ||||||
| Real estate land inventory | $ | 30,645 | $ | 30,577 | ||||
| Real estate properties inventory | 130,987 | 130,987 | ||||||
| Real estate inventory | $ | 161,632 | $ | 161,564 | ||||
| Real estate inventory collateral liabilities | (68,787 | ) | (69,008 | ) | ||||
| Total Real Estate Inventory, net of collateral liability | $ | 92,845 | $ | 92,556 |
SOURCE: Timbercreek Financial
For further information, please contact:
Timbercreek Financial
Blair Tamblyn, CEO
Tracy Johnston, CFO
416-923-9967
www.timbercreekfinancial.com
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