30% GROWTH IN REVENUE YEAR OVER YEAR
111% GROWTH IN ADJUSTED NET INCOME(1) YEAR OVER YEAR
All amounts are stated in United States dollars
TORONTO, Aug. 23, 2019 (GLOBE NEWSWIRE) — Terra Firma Capital Corporation (TSX-V: TII) (“Terra Firma” or the âCompanyâ), a real estate finance company, today released its financial results for the three and six-month periods ended June 30, 2019.
Financial Highlights:
- Principal balance of loan and mortgage syndication increased by 2.8% to $69.2 million, year over year
- Aggregate Investments(2) increased by 4.3% to $125.8 million, year over year
- Revenue for the second quarter increased by 22.4% to $4.0 million, from the same period in the prior year
- Net income and comprehensive income for Q2 2019 is $867,000, or $0.01 per basic and diluted share
- Adjusted net income(1) and comprehensive income increased by $393,000, or 110.7% year over year
- Earnings per share for Q2 2019 amounted to $0.01 (basic and diluted)
- Quarterly dividend of $0.005 per share declared
âI am extremely pleased with our revenue and earnings growths in the second quarter which is a net result of the capital we have deployed across a number of very high quality projects during the past number of quarters. As expected, we had strong originations during the first half of the year, which will further the trend of income growth in the future,â commented Glenn Watchorn, Chief Executive Officer of Terra Firma Capital Corporation. âIn addition to a loan investment of $9.0 million which was funded subsequent to quarter-end, we had over $40.0 million of unfunded commitments at the end of the quarter, a substantial portion of which we expect to fund during the second half of the year. These commitments will be funded partially by our previously announced credit facility with a US Bank as well as from our pool of syndicated investors. Further, our loan pipeline has strengthened over the past couple of months, and this together with the unfunded commitments supports our expectation of significant growth in our investment portfolio by year end. Given our level of confidence in the business and our ability to steadily grow earnings (now at CDN$0.02 for the quarter), we recently declared a cash dividend for the third quarter of 2019.â
Results of operations â three and six months ended June 30, 2019
Net income attributable to common shareholders in the second quarter ended June 30, 2019 was $867,000 or $0.01 per basic and diluted share compared to $1,492,000 or $0.02 per basic and diluted share, in the second quarter ended June 30, 2018. The decrease in net income attributable to common shareholders was primarily due to, decrease in realized and unrealized foreign exchange gain, an increase in interest and financing costs and an increase in general and administrative expenses, which aggregate amount was partially offset by an increase in interest and fee income, decrease in share based compensation.
Net income attributable to common shareholders for the six months ended June 30, 2019 was $1,165,000 or $0.02 per basic and diluted share compared to $1,694,000 or $0.03 per basic and diluted share for the six months ended June 30, 2018. The decrease in net income was primarily due to a realized and unrealized foreign exchange loss compared to a realized and unrealized foreign exchange gain for the six months ended June 30, 2018, an increase in share based compensation, an increase in interest and financing costs, and an increase in general and administrative expenses which aggregate amount was partially offset by an increase in interest and fee income and decrease in realized and not incurring a loss on redemption of portfolio investment.
Adjusted net income(1) attributable to common shareholders for the quarter ended June 30, 2019 of $748,000 ($0.01 on a basic and diluted per share basis), increased by $393,000 compared to adjusted net income of $355,000 ($0.01 on a basic and diluted per share basis) for the quarter ended June 30, 2018. Adjusted net income(1) attributable to common shareholders for the six months ended June 30, 2019 of $1,087.000 ($0.02 on a basic and diluted per share basis), increased by $348,000 compared to $739,000 ($0.02 on a basic and diluted per share basis) in six months ended June 30, 2018.
Interest and fee income for the second quarter ended June 30, 2019 aggregated $3,919,000, an increase of 22.7% from the $3,193,000 for the same period in the previous year. Interest and fee income for the six months ended June 30, 2019 aggregated $7,787,000, an increase of 30.7% from the $5,957,000 for the same period in the previous year. The average interest rate on the loan and mortgage investments at June 30, 2019 was 13.4%, compared to 13.7% at December 31, 2018 and 14.0% at June 30, 2018.
Interest and financing costs for the second quarter ended June 30, 2019 were $2,047,000, compared to $1,919,000 for the comparative period last year. Interest and financing costs for the six months ended June 30, 2019 were $4,354,000 compared to $3,534,000 for the comparative period last year. The increase in interest and financing costs was primarily due to an increase in loan and mortgage syndications and the Companyâs credit facilities which are being used to fund loan and mortgage investments. The weighted average interest rate in the loan and mortgage syndications at June 30, 2019 was 9.9% compared to 10.2% at December 31, 2018 and 10.4% at June 30, 2018.
General and administrative expenses for the second quarter ended June 30, 2019 was $794,000 compared to $673,000 for the same period last year. The increase in general and administrative expenses was primarily due to increase in legal fees. General and administrative expenses for the six months ended June 30, 2019 was $1,575,000 compared to $1,239,000 for the same period last year.
The Companyâs Aggregate Investments(2) increased from $120.5 million at June 30, 2018 to $125.7 million at June 30, 2019, an increase of 4.3% or $5.2 million, primarily due to funding of investment in finance leases and equity investments in the real estate projects, which was partially offset by net repayments in loan and mortgage investments.
The principal balance of the Companyâs loan and mortgage syndications from $67.3 million at June 30, 2018 to $69.2 million at June 30, 2019, an increase of $1.9 million or 2.8%.
The Companyâs Managementâs Discussion & Analysis and Financial Statements as at and for the three and six months ended June 30, 2019 have been filed and are available under the Companyâs profile on SEDAR (www.sedar.com).
About Terra Firma
Terra Firma is a full service, publicly traded real estate finance company that provides real estate financings secured by investment properties and real estate developments in Canada and throughout the United States. The Company focuses on arranging and providing financing with flexible terms to real estate developers and owners who require shorter-term loans to bridge a transitional period of one to five years where they require capital at various stages of development or redevelopment of a property. These loans are typically repaid with lower cost, longer-term debt obtained from other Canadian financial institutions once the applicable transitional period is over or the redevelopment is complete, or from proceeds generated from the sale of the real estate assets. Terra Firma offers a full spectrum of real estate financing under the guidance of strict corporate governance, clarity and transparency. For further information please visit Terra Firmaâs website at www.tfcc.ca.
Non-IFRS Financial Measures
This press release refers to certain financial measures, such as Investment Portfolio, which are not measures defined under International Financial Reporting Standards (âIFRSâ) as prescribed by the International Accounting Standards Board, do not have standardized meanings prescribed by IFRS and should not be construed as alternatives to profit/loss or other measures of financial performance calculated in accordance with IFRS. These measures may differ from those made by other companies and accordingly may not be comparable to such measures as reported by other companies. These measures have been derived from the Companyâs financial statements and disclosed herein because the Company believes they are of assistance in the understanding of the operational and financial performance of the Company.
(1) Adjusted net income and comprehensive income, (as well as adjusted net income and comprehensive income attributable to common shareholders, adjusted net diluted income and comprehensive income attributable to common shareholders are calculated by adjusting the following (as applicable), irrespective of materiality:
- foreign exchange gains/losses related to the Companyâs net U.S. dollar denominated net assets;
- impairment losses/reversals;
- net gains/losses on the disposal of equity accounted investments;
- other unusual one one-time items; and
- the income tax impact of the items listed above.
(2) Aggregate Investments (excluding cash) consists of loan and mortgage investments, investment in finance leases, portfolio investments, investments in associates, convertible note receivables and an investment property held in joint operations.
The TSX-V has neither approved nor disapproved the contents of this press release. The TSX-V does not accept responsibility for the adequacy or accuracy of this press release.
This Press Release contains forwardâlooking statements with respect matters concerning the business, operations, strategy and financial performance of Terra Firma, successful implementation of effective currency exchange hedging strategies, the repayment in full of a restructured loan and realization of matters covered by current letters of intent. These statements generally can be identified by use of forward looking word such as âmayâ, âwillâ, âexpectsâ, âestimatesâ, âanticipatesâ, âintendsâ, âbelieveâ or âcouldâ or the negative thereof or similar variations. The future business, operations and performance of Terra Firma could differ materially from those expressed or implied by such statements. Such forwardâlooking statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations, including the matters covered by the non-binding letter of intent are not completed, as well as risks relating to market factors, competition, and dependence on tenantsâ financial conditions, environmental and tax related matters, and reliance on key personnel. Forwardâlooking statements are based on a number of assumptions which may prove to be incorrect, including that the general economy, local real estate conditions and interest rates are stable, the absence of significant changes in government regulation, and the continued availability of equity and debt financing. There can be no assurances that forwardâlooking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forwardâlooking statements. The cautionary statements qualify all forwardâlooking statements attributable to Terra Firma and persons acting on its behalf. Unless otherwise stated, all forward looking statements speak only as of the date of this Press Release and Terra Firma does not assume any obligation to update such statements, whether as a result of new information, future events or otherwise, except as required by applicable Canadian securities laws.
For further information, please contact:
Terra Firma Capital Corporation
Glenn Watchorn
Chief Executive Officer
Phone: 416.792.4702
gwatchorn@tfcc.ca
or
Terra Firma Capital Corporation
Y. Dov Meyer
Executive Vice Chairman
Phone: 416.792.4709
ydmeyer@tfcc.ca
or
Ali Mahdavi
Managing Director
Spinnaker Capital Markets Inc.
Phone: 416.962.3300
am@spinnakercmi.com
| Terra Firma Capital Corporation | |||||||||||||
| Consolidated Statements of Income and Comprehensive Income | |||||||||||||
| For the three and six months ended June 30, 2019 and 2018 | |||||||||||||
| (Unaudited) | |||||||||||||
| Three months ended | Six months ended | ||||||||||||
| June 30, 2019 |
June 30, 2018 |
June 30, 2019 |
June 30, 2018 |
||||||||||
| Revenue | |||||||||||||
| Interest and fees | $ | 3,918,877 | $ | 3,192,823 | $ | 7,787,366 | $ | 5,957,177 | |||||
| Rental | 37,715 | 39,067 | 75,665 | 78,949 | |||||||||
| 3,956,592 | 3,231,890 | 7,863,031 | 6,036,126 | ||||||||||
| Expenses | |||||||||||||
| Property operating costs | 12,983 | 13,415 | 26,036 | 27,066 | |||||||||
| General and administrative | 794,121 | 673,490 | 1,575,359 | 1,239,158 | |||||||||
| Share based compensation | 87,034 | 156,825 | 414,866 | 178,154 | |||||||||
| Interest and financing costs | 2,047,496 | 1,918,639 | 4,354,249 | 3,533,646 | |||||||||
| Provision for loan and mortgage investment loss | (151,900 | ) | – | (151,900 | ) | – | |||||||
| Realized and unrealized foreign exchange gain | (10,379 | ) | (1,720,468 | ) | 46,155 | (1,471,987 | ) | ||||||
| Loss on redemption of portfolio investment | – | 173,646 | – | 173,646 | |||||||||
| 2,779,355 | 1,215,547 | 6,264,765 | 3,679,683 | ||||||||||
| Income from operations before income taxes | 1,177,237 | 2,016,343 | 1,598,266 | 2,356,443 | |||||||||
| Income taxes | 309,784 | 524,560 | 433,647 | 662,895 | |||||||||
| Net income and comprehensive income | $ | 867,453 | $ | 1,491,783 | $ | 1,164,619 | $ | 1,693,548 | |||||
| Net income and comprehensive income attributable to: | |||||||||||||
| Common shareholders | 867,453 | 1,541,112 | 1,164,619 | 1,742,877 | |||||||||
| Non-controlling interest | – | (49,329 | ) | – | (49,329 | ) | |||||||
| $ | 867,453 | $ | 1,491,783 | $ | 1,164,619 | $ | 1,693,548 | ||||||
| Earnings per share | |||||||||||||
| Basic | $ | 0.01 | $ | 0.02 | $ | 0.02 | $ | 0.03 | |||||
| Diluted | 0.01 | 0.02 | 0.02 | 0.03 | |||||||||
| Terra Firma Capital Corporation | ||||||
| Consolidated Statements of Financial Position | ||||||
| As at June 30, 2019 and December 31, 2018 | ||||||
| June 30, 2019 |
December 31, 2018 |
|||||
| Assets | ||||||
| Cash and cash equivalents | $ | 3,999,233 | $ | 7,731,379 | ||
| Funds held in trust | 4,600,394 | 1,095,669 | ||||
| Amounts receivable and prepaid expenses | 900,721 | 1,013,935 | ||||
| Loan and mortgage investments | 101,425,751 | 121,675,979 | ||||
| Investment in finance lease | 15,640,964 | 2,819,915 | ||||
| Portfolio investments | 4,054,230 | 1,911,574 | ||||
| Investment in associates | 2,235,762 | 2,146,984 | ||||
| Investment property held in joint operations | 1,686,670 | 1,619,633 | ||||
| Convertible note receivable | 763,621 | – | ||||
| Right of use asset | 259,508 | – | ||||
| Income taxes recoverable | – | 130,741 | ||||
| Total assets | $ | 135,566,854 | $ | 140,145,809 | ||
| Liabilities | ||||||
| Accounts payable and accrued liabilities | $ | 7,033,284 | $ | 3,618,067 | ||
| Lease obligations | 258,391 | – | ||||
| Unearned income | 825,195 | 1,303,162 | ||||
| Income taxes payable | 20,132 | – | ||||
| Deferred income taxes payable | 780,016 | 753,089 | ||||
| Credit facilities | 18,126,660 | 19,464,106 | ||||
| Loan and mortgage syndications | 69,222,905 | 75,906,550 | ||||
| Mortgages payable | 1,075,160 | 1,047,809 | ||||
| Total liabilities | 97,341,743 | 102,092,783 | ||||
| Equity | ||||||
| Share capital | $ | 25,435,184 | $ | 26,533,950 | ||
| Contributed surplus | 3,370,620 | 3,264,388 | ||||
| Cumulative translation adjustment | (6,885,398 | ) | (6,885,398 | ) | ||
| Retained earnings | 16,304,705 | 15,140,086 | ||||
| Total equity | 38,225,111 | 38,053,026 | ||||
| Total liabilities and equity | $ | 135,566,854 | $ | 140,145,809 | ||