TORONTO, Nov. 10, 2022 (GLOBE NEWSWIRE) — Timbercreek Financial (TSX: TF) (the “Company”) announced today its financial results for the three months and nine months ended September 30, 2022 (“Q3 2022”).
Q3 2022 Highlights1
- Q3 2022 results reflect a healthy and stable portfolio with lower turnover. Net new mortgage fundings were $54.2 million and advances on existing mortgages were $34.6 million, offset by net mortgage repayments of $41.2 million and syndications of $26.9 million. As noted last quarter, Management anticipated lower origination volumes in Q3 2022, however, the increase in interest income more than replaced the historical level of lender fees.
- At the end of the period, net mortgage investments were $1,255.4 million (versus $1,159.6 million at year-end 2021). The quarterly transaction volume resulted in a Q3 2022 turnover ratio of 3.3%.
- Declared $14.5 million in dividends to shareholders, or $0.17 per share, and delivered distributable income and adjusted distributable income of $16.8 million, or $0.20 per share, representing a payout ratio of 86.2% on both distributable income and adjusted distributable income which is well within Management’s target payout range.
- Net income and comprehensive income of $13.5 million. After adjusting for $0.4 million of fair value losses on mortgages and real estate properties measured at fair value through profit and loss, adjusted net income and comprehensive income was $13.9 million for the period, up from $13.7 million in the same period last year.
- Basic and diluted earnings per share were $0.16, and basic and diluted adjusted earnings per share were $0.17, reflecting a payout ratio of 104.3% (Q3 2021 – 102.3%) on an adjusted distributable income basis.
- There were no new additions to either Stage II or Stage III loans in Q3 2022, however, allowance for credit losses increased to $3.73 million due to increased provisions on an existing Stage III loan comprised of condominium units in Edmonton that are currently for sale.
- Maintained conservative portfolio risk position focused on income-producing commercial real estate
- 69.4% weighted average loan-to-value `
- 90.9% first mortgages in mortgage investment portfolio
- 89.3% of mortgage investment portfolio is invested in cash-flowing properties
- 8.5% quarterly weighted average interest rate on net mortgage investments
- In July, the Company partially exercised the accordion feature on its credit facility, increasing the facility size to $600.0 million (from $575.0 million).
“Our mortgage portfolio continued to perform well in the third quarter, demonstrating the durability through market cycles that has become a hallmark of our income-focused investment philosophy,” said Blair Tamblyn, CEO of Timbercreek Financial. “We generated strong distributable income in the quarter as our largely variable rate portfolio benefited from the rising rate environment, offsetting an anticipated reduction in repayments and origination volume. We anticipate a return to more typical transaction levels in the coming quarters, and we continue to be well positioned to act on these opportunities.”
Quarterly Comparison
| $ millions | Q3 2022 | Q3 2021 | Q2 2022 | |||||||||
| Net Mortgage Investments1 | $ | 1,255.4 | $ | 1,096.0 | $ | 1,235.0 | ||||||
| Enhanced Return Portfolio Investments1 | $ | 71.2 | $ | 97.6 | $ | 68.2 | ||||||
| Net Investment Income | $ | 30.0 | $ | 22.0 | $ | 25.8 | ||||||
| Income from Operations | $ | 22.6 | $ | 15.4 | $ | 21.7 | ||||||
| Net Income and comprehensive Income | $ | 13.5 | $ | 10.4 | $ | 14.7 | ||||||
| –Adjusted Net Income and comprehensive Income | $ | 13.9 | $ | 13.7 | $ | 15.2 | ||||||
| Distributable Income | $ | 16.8 | $ | 13.5 | $ | 15.9 | ||||||
| Dividends declared to Shareholders | $ | 14.5 | $ | 14.0 | $ | 14.5 | ||||||
| $ per share | Q3 2022 | Q3 2021 | Q2 2022 | |||||||||
| Dividends per share | $ | 0.17 | $ | 0.17 | $ | 0.17 | ||||||
| Distributable Income per share | $ | 0.20 | $ | 0.17 | $ | 0.19 | ||||||
| Adjusted distributable Income per share | $ | 0.20 | $ | 0.17 | $ | 0.19 | ||||||
| Earnings per share | $ | 0.16 | $ | 0.13 | $ | 0.17 | ||||||
| –Adjusted Earnings per share | $ | 0.17 | $ | 0.17 | $ | 0.18 | ||||||
| Payout Ratio on Distributable Income1 | 86.2 | % | 103.7 | % | 91.3 | % | ||||||
| Payout Ratio on Earnings per share | 107.2 | % | 134.7 | % | 98.7 | % | ||||||
| –Payout Ratio on Adjusted Earnings per share | 104.3 | % | 102.3 | % | 95.6 | % | ||||||
| Net Mortgage Investments | Q3 2022 | Q3 2021 | Q2 2022 | |||||||||
| Weighted Average Loan-to-Value | 69.4 | % | 69.6 | % | 69.9 | % | ||||||
| Weighted Average Remaining Term to Maturity | 0.9 yr | 0.9 yr | 1.0 yr | |||||||||
| First Mortgages | 90.9 | % | 90.2 | % | 92.5 | % | ||||||
| Cash-Flowing Properties | 89.3 | % | 87.1 | % | 90.8 | % | ||||||
| Multi-family residential | 55.4 | % | 49.4 | % | 55.4 | % | ||||||
| Floating Rate Loans with rate floors (at quarter end) | 87.3 | % | 82.7 | % | 87.5 | % | ||||||
| Weighted Average Interest Rate | ||||||||||||
| For the quarter ended | 8.5 | % | 7.1 | % | 7.2 | % | ||||||
| Weighted Average Lender Fee | ||||||||||||
| New and Renewed | 0.7 | % | 0.6 | % | 1.0 | % | ||||||
| New Net Mortgage Investment Only | 1.2 | % | 0.9 | % | 1.2 | % | ||||||
1. 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.
Quarterly Conference Call
Interested parties are invited to participate in a conference call with management on Thursday, November 10, 2022 at 1:00 p.m. (ET) which will be followed by a question and answer period with analysts. To join the call:
https://us02web.zoom.us/j/82579568746?pwd=L2lHSGxxTDVyeDAvL1VDWk1UbjhXUT09
Webinar ID: 825 7956 8746
Passcode: 1234
Participant Dial-In Number: 1 647 558 0588
The playback of the conference call will also be available on www.timbercreekfinancial.com following the call.
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.
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.
Net Mortgage Investments
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 | September 30, 2022 | December 31, 2021 | ||||||
| Mortgage investments, excluding mortgage syndications | $ | 1,256,363 | $ | 1,159,210 | ||||
| Mortgage syndications | 700,896 | 444,429 | ||||||
| Mortgage investments, including mortgage syndications | 1,957,259 | 1,603,639 | ||||||
| Mortgage syndication liabilities | (700,896 | ) | (444,429 | ) | ||||
| 1,256,363 | 1,159,210 | |||||||
| Interest receivable | (15,691 | ) | (10,824 | ) | ||||
| Unamortized lender fees | 6,890 | 8,278 | ||||||
| Allowance for mortgage investments loss | 7,805 | 2,970 | ||||||
| Net mortgage investments | $ | 1,255,367 | $ | 1,159,634 | ||||
Enhanced return portfolio
| As at | September 30, 2022 | December 31, 2021 | |||||
| Collateralized loans, net of allowance for credit loss | $ | 58,660 | $ | 58,000 | |||
| Finance lease receivable, measured at amortized cost | 6,020 | 6,020 | |||||
| Investment, measured at FVTPL | 4,336 | 4,985 | |||||
| Investment in indirect real estate development | 2,225 | 2,225 | |||||
| Total Other Investments | 71,241 | 71,230 | |||||
| Investment properties | — | 44,063 | |||||
| Credit facility (investment properties) | — | (30,690 | ) | ||||
| Net equity in investment properties | — | 13,373 | |||||
| Total Enhanced Return Portfolio | $ | 71,241 | $ | 84,603 | |||
| OPERATING RESULTS1 | ||||||||||||||||
| Three months ended September 30, |
Nine months ended September 30, |
Year ended December 31, |
||||||||||||||
| NET INCOME AND COMPREHENSIVE INCOME | 2022 | 2021 | 2022 | 2021 | 2021 | |||||||||||
| Net Investment Income on financial assets measured at amortized cost | $ | 29,982 | $ | 22,042 | $ | 78,461 | $ | 67,871 | $ | 90,249 | ||||||
| Total fair value (loss) gain and other income on financial assets measured at FVTPL | $ | 403 | $ | (3,577 | ) | $ | 652 | $ | (2,887 | ) | $ | (10,291 | ) | |||
| Net rental (loss) income | $ | (291 | ) | $ | 386 | $ | 127 | $ | 1,110 | $ | 1,499 | |||||
| Total fair value loss on real estate properties | $ | — | $ | — | $ | (378 | ) | $ | — | $ | (4,374 | ) | ||||
| Expenses | $ | 7,530 | $ | 3,404 | $ | 15,921 | $ | 12,476 | $ | 16,237 | ||||||
| Income from operations | $ | 22,564 | $ | 15,447 | $ | 62,941 | $ | 53,618 | $ | 60,846 | ||||||
| Financing costs: | ||||||||||||||||
| Financing cost on credit facilities | $ | 6,788 | $ | 4,040 | $ | 15,097 | $ | 12,689 | $ | 16,734 | ||||||
| Financing cost on convertible debentures | $ | 2,256 | $ | 1,981 | $ | 6,762 | $ | 4,978 | $ | 6,745 | ||||||
| Fair value gain on derivative contract | $ | — | $ | (995 | ) | $ | — | $ | (2,946 | ) | $ | (3,940 | ) | |||
| Net income and comprehensive income | $ | 13,520 | $ | 10,421 | $ | 41,082 | $ | 38,897 | $ | 41,307 | ||||||
| Payout ratio on earnings per share | 107.2 | % | 134.7 | % | 105.3 | % | 107.9 | % | 135.9 | % | ||||||
| ADJUSTED NET INCOME AND COMPREHENSIVE INCOME | ||||||||||||||||
| Net income and comprehensive income | $ | 13,520 | $ | 10,421 | $ | 41,082 | $ | 38,897 | $ | 41,307 | ||||||
| Less: fair value gain on derivative contract (interest rate swap) | $ | — | $ | (995 | ) | $ | — | $ | (2,946 | ) | $ | (3,940 | ) | |||
| Add: net unrealized loss on financial assets measured at FVTPL | $ | 369 | $ | 4,295 | $ | 1,691 | $ | 5,511 | $ | 13,748 | ||||||
| Add: Net unrealized loss on real estate properties | $ | — | $ | — | $ | 95 | $ | — | $ | 4,374 | ||||||
| Adjusted net income and comprehensive income1 | $ | 13,889 | $ | 13,721 | $ | 42,868 | $ | 41,462 | $ | 55,489 | ||||||
| Payout ratio on adjusted earnings per share1 | 104.3 | % | 102.3 | % | 100.9 | % | 101.3 | % | 101.2 | % | ||||||
| PER SHARE INFORMATION | ||||||||||||||||
| Dividends declared to shareholders | $ | 14,491 | $ | 14,037 | $ | 43,241 | $ | 41,982 | $ | 56,142 | ||||||
| Weighted average common shares (in thousands) | 84,005 | 81,311 | 83,505 | 81,093 | 81,325 | |||||||||||
| Dividends per share | $ | 0.17 | $ | 0.17 | $ | 0.52 | $ | 0.52 | $ | 0.69 | ||||||
| Earnings per share (basic) | $ | 0.16 | $ | 0.13 | $ | 0.49 | $ | 0.48 | $ | 0.51 | ||||||
| Earnings per share (diluted) | $ | 0.16 | $ | 0.13 | $ | 0.49 | $ | 0.48 | $ | 0.51 | ||||||
| Adjusted earnings per share (basic)1 | $ | 0.17 | $ | 0.17 | $ | 0.51 | $ | 0.51 | $ | 0.68 | ||||||
| Adjusted earnings per share (diluted)1 | $ | 0.17 | $ | 0.17 | $ | 0.51 | $ | 0.51 | $ | 0.68 | ||||||
1. Refer to non-IFRS measures section.
| OPERATING RESULTS1 | ||||||||||||||||
| Three months ended September 30, |
Nine months ended September 30 |
Year ended December 31, |
||||||||||||||
| DISTRIBUTABLE INCOME | 2022 | 2021 | 2022 | 2021 | 2021 | |||||||||||
| Adjusted net income and comprehensive income1 | $ | 13,889 | $ | 13,721 | $ | 42,868 | $ | 41,462 | $ | 55,489 | ||||||
| Less: amortization of lender fees | (2,425 | ) | (2,697 | ) | (6,978 | ) | (7,140 | ) | $ | (9,275 | ) | |||||
| Add: lender fees received and receivable | 1,076 | 2,148 | 5,652 | 7,026 | $ | 10,746 | ||||||||||
| Add: amortization of financing costs, credit facility | 253 | 178 | 722 | 833 | $ | 1,022 | ||||||||||
| Add: amortization of financing costs, debentures | 250 | 428 | 753 | 861 | $ | 1,060 | ||||||||||
| Add: accretion expense, debentures | 113 | 128 | 340 | 246 | $ | 323 | ||||||||||
| Add: unrealized fair value (gain) loss on DSU | (78 | ) | 15 | (168 | ) | 121 | 104 | |||||||||
| Add: allowance for (recovery of) expected credit loss | 3,732 | (381 | ) | 4,682 | 1,557 | 1,660 | ||||||||||
| Distributable income1 | $ | 16,810 | $ | 13,540 | $ | 47,871 | $ | 44,966 | $ | 61,129 | ||||||
| Payout ratio on distributable income1 | 86.2 | % | 103.7 | % | 90.3 | % | 93.4 | % | 91.8 | % | ||||||
| ADJUSTED DISTRIBUTABLE INCOME | ||||||||||||||||
| Distributable income | $ | 16,810 | $ | 13,540 | $ | 47,871 | $ | 44,966 | $ | 61,129 | ||||||
| Less: One-time distribution income | — | — | — | (707 | ) | (707 | ) | |||||||||
| Adjusted Distributable income1 | $ | 16,810 | $ | 13,540 | $ | 47,871 | $ | 44,259 | $ | 60,422 | ||||||
| Payout ratio on adjusted distributable income1 | 86.2 | % | 103.7 | % | 90.3 | % | 94.9 | % | 92.9 | % | ||||||
| PER SHARE INFORMATION | ||||||||||||||||
| Dividends declared to shareholders | $ | 14,491 | $ | 14,037 | $ | 43,241 | $ | 41,982 | $ | 56,142 | ||||||
| Weighted average common shares (in thousands) | 84,005 | 81,311 | 83,505 | 81,093 | 81,325 | |||||||||||
| Dividends per share | $ | 0.17 | $ | 0.17 | $ | 0.52 | $ | 0.52 | $ | 0.69 | ||||||
| Distributable income per share1 | $ | 0.20 | $ | 0.17 | $ | 0.57 | $ | 0.55 | $ | 0.75 | ||||||
| Adjusted distributable income per share1 | $ | 0.20 | $ | 0.17 | $ | 0.57 | $ | 0.55 | $ | 0.74 | ||||||
1. Refer to non-IFRS measures section.
SOURCE: Timbercreek Financial
For further information, please contact:
Timbercreek Financial
Blair Tamblyn, CEO
Tracy Johnston, CFO
Karynna Ma, Vice President, Investor Relations
1-844-304-9967
www.timbercreekfinancial.com
