TORONTO, Feb. 24, 2022 (GLOBE NEWSWIRE) — Timbercreek Financial (TSX: TF) (the “Company”) announced today its financial results for the three months and year ended December 31, 2021 (“Q4 2021”).
Q4 2021 Highlights1
- Q4 2021 results reflect high funding volumes from a strong pipeline of opportunities. The Company funded $335.6 million on new and existing mortgages, versus repayments of $263.8 million, ending the period with net mortgage investments of $1,159.6 million. The robust transaction volume resulted in a Q4 2021 turnover ratio of 23.3%.
- Declared $14.2 million in dividends to shareholders, or $0.17 per share, and delivered distributable income and adjusted distributable income of $16.2 million, or $0.20 per share, representing a payout ratio of 87.6% on both distributable income and adjusted distributable income. The 2021 adjusted distributable income payout ratio of 92.9% was within management’s target payout range of low to mid-90s for the year and compares with 97.3% for 2020.
- Net income and comprehensive income of $2.4 million which includes $12.7 million of fair value losses on mortgages and investment properties measured at fair value through profit and loss. In the quarter the Company changed its realization strategy for these assets to an exit strategy versus development and redevelopment plans contemplated previously. After adjusting for these losses, adjusted net income and comprehensive income was $14.0 million for the period.
- Basic and diluted earnings per share were $0.03, and basic and diluted adjusted earnings per share were $0.17, reflecting a payout ratio of 100.8% on diluted adjusted earnings per share.
- Maintained conservative portfolio risk position focused on income-producing commercial real estate
- 70.1% weighted average loan-to-value
- 93.2% first mortgages in mortgage investment portfolio
- 88.3% of mortgage investment portfolio is invested in cash-flowing properties
- 6.9% quarterly weighted average interest rate on net mortgage investments
- Expanded credit facility by $40 million subsequent to year end which, when combined with other financing activities during 2021, provides expanded capital base to achieve steady growth of the total portfolio.
“The fourth-quarter results reflect a highly active period on the funding front and healthy transaction volume. This activity contributed to strong distributable income per share in the fourth quarter and improved performance on this important metric for the full year,” said Blair Tamblyn, CEO of Timbercreek Financial. “During a more challenging operating environment in commercial real estate, our team has remained very focused on asset and risk management and that has served us well. Over the past year, we have also accelerated plans to exit the small number of legacy, non-core, and non-income-producing loans. We expect further progress in 2022, which will allow us to reinvest this capital in mortgages that will be accretive to distributable income.”
Mr. Tamblyn added: “Heading into 2022, the operating environment is likely to be noticeably improved and the pipeline remains strong. Commercial real estate transaction activity is increasing, and we expect reduced COVID-19 restrictions will continue to positively impact transaction activity. With an expanded capital base and broader origination capabilities, we are well positioned to achieve steady growth of the portfolio. Moreover, potential interest rate increases are expected to have a positive effect on distributable income as the vast majority of our new and existing loans are floating rate investments.”
- Refer to non-IFRS measures section below for net mortgages, enhanced return portfolio adjusted net income and comprehensive income and adjusted distributable income
Quarterly Comparison
| $ millions | Q4 2021 | Q4 2020 | Q3 2021 | |||||||||
| Net Mortgage Investments1 | $1,159.6 | $1,143.1 | $1,096.0 | |||||||||
| Enhanced Return Portfolio Investments1 | $84.6 | $91.6 | $97.6 | |||||||||
| Net Investment Income | $22.4 | $24.0 | $22.0 | |||||||||
| Income from Operations | $7.2 | $3.9 | $15.4 | |||||||||
| Net Income and comprehensive Income | $2.4 | $(1.6) | $10.4 | |||||||||
| –Adjusted Net Income and comprehensive Income | $14.0 | $13.0 | $13.7 | |||||||||
| Distributable Income | $16.2 | $14.6 | $13.5 | |||||||||
| –Adjusted Distributable Income | $16.2 | $14.6 | $13.5 | |||||||||
| Dividends declared to Shareholders | $14.2 | $14.0 | $14.0 | |||||||||
| $ per share | Q4 2021 | Q4 2020 | Q3 2021 | |||||||||
| Dividends per share | $0.17 | $0.17 | $0.17 | |||||||||
| Distributable Income per share | $0.20 | $0.18 | $0.17 | |||||||||
| Adjusted distributable Income per share | $0.20 | $0.18 | $0.17 | |||||||||
| Earnings (loss) per share | $0.03 | $(0.02) | $0.13 | |||||||||
| –Adjusted Earnings per share | $0.17 | $0.16 | $0.17 | |||||||||
| Payout Ratio on Distributable Income1 | 87.6% | 95.4% | 103.7% | |||||||||
| –Payout ratio on Adjusted Distributable Income | 87.6% | 95.4% | 103.7% | |||||||||
| Payout Ratio on Earnings per share | 587.6% | n/a | 134.7% | |||||||||
| –Payout Ratio on Adjusted Earnings per share | 100.9% | 107.2% | 102.3% | |||||||||
| Net Mortgage Investments | Q4 2021 | Q4 2020 | Q3 2021 | |||||||||
| Weighted Average Loan-to-Value | 70.1% | 68.5% | 69.6% | |||||||||
| Weighted Average Remaining Term to Maturity | 1.0yr | 1.0yr | 0.9yr | |||||||||
| First Mortgages | 93.2% | 90.3% | 90.2% | |||||||||
| Cash-Flowing Properties | 88.3% | 84.9% | 87.1% | |||||||||
| Rental Apartments | 48.0% | 52.3% | 49.4% | |||||||||
| Floating Rate Loans with rate floors (at quarter end) | 84.6% | 78.1% | 82.7% | |||||||||
| Weighted Average Interest Rate | ||||||||||||
| For the quarter ended | 6.9% | 7.2% | 7.1% | |||||||||
| Weighted Average Lender Fee | ||||||||||||
| New and Renewed | 0.9% | 0.7% | 0.6% | |||||||||
| New Net Mortgage Investment Only | 1.3% | 1.5% | 0.9% | |||||||||
- 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, February 24, 2022 at 1:00 p.m. (ET) which will be followed by a question and answer period with analysts. To join the call:
https://timbercreekfinancial.adobeconnect.com/tfq42021/
Participant Toll Free Dial-In Number: (866) 211-4953
Participant International Dial-In Number: (873) 415-0258
Provide the Operator with the Conference ID Number: 1564706
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 | December 31, 2021 | December 31, 2020 | ||||
| Mortgage investments, excluding mortgage syndications | $1,159,210 | $1,142,662 | ||||
| Mortgage syndications | 444,429 | 429,915 | ||||
| Mortgage investments, including mortgage syndications | 1,603,639 | 1,572,577 | ||||
| Mortgage syndication liabilities | (444,429) | (429,915) | ||||
| 1,159,210 | 1,142,662 | |||||
| Interest receivable | (10,824) | (10,209) | ||||
| Unamortized lender fees | 8,278 | 6,958 | ||||
| Allowance for mortgage investments loss | 2,970 | 3,710 | ||||
| Net mortgage investments | $1,159,634 | $1,143,121 |
Enhanced return portfolio
| As at | December 31, 2021 | December 31, 2020 | |||||
| Collateralized loans, net of allowance for credit loss | $58,000 | $60,370 | |||||
| Finance lease receivable, measured at amortized cost | 6,020 | 6,020 | |||||
| Investment, measured at FVTPL | 4,985 | 5,819 | |||||
| Indirect real estate development, measured using equity method: | |||||||
| Investment in Joint Venture | 2,225 | 2,225 | |||||
| Total Other Investments | 71,230 | 74,434 | |||||
| Investment properties | 44,063 | 47,862 | |||||
| Credit facility (investment properties) | (30,690) | (30,656) | |||||
| Net equity in investment properties | 13,373 | 17,206 | |||||
| Total Enhanced Return Portfolio | $84,603 | $91,640 | |||||
| OPERATING RESULTS | |||||||||||||||||
| Three months ended December 31, |
Year ended December 31, |
||||||||||||||||
| NET INCOME AND COMPREHENSIVE INCOME | 2021 | 2020 | 2021 | 2020 | 2019 | ||||||||||||
| Net Investment Income on financial assets measured at amortized cost | $ | 22,378 | $ | 23,958 | $ | 90,249 | $95,940 | $98,514 | |||||||||
| Total fair value (loss) gain and other income on financial assets measured at FVTPL | $ | (7,404) | $ | (14,918) | $ | (10,291) | $(16,778) | $923 | |||||||||
| Net rental income | $ | 389 | $ | 373 | $ | 1,499 | $1,453 | $1,440 | |||||||||
| Total fair value loss on investment properties | $ | (4,374) | $ | – | $ | (4,374) | – | $- | |||||||||
| Expenses | $ | 3,761 | $ | 5,560 | $ | 16,237 | $18,024 | $15,863 | |||||||||
| Income from operations | $ | 7,228 | $ | 3,853 | $ | 60,846 | $62,591 | $85,014 | |||||||||
| Financing costs: | |||||||||||||||||
| Financing cost on credit facilities | $ | 4,045 | $ | 4,397 | $ | 16,734 | $18,025 | $21,886 | |||||||||
| Financing cost on convertible debentures | $ | 1,767 | $ | 1,919 | $ | 6,745 | $8,624 | $8,801 | |||||||||
| Fair value (gain) loss on derivative contract | $ | (994) | $ | (850) | $ | (3,940) | $3,940 | $- | |||||||||
| Net income (loss) and comprehensive income | $ | 2,410 | $ | (1,613) | $ | 41,307 | $32,002 | $54,740 | |||||||||
| Payout ratio on earnings per share | 587.6% | n/a | 135.9% | 176.4% | 104.3% | ||||||||||||
| ADJUSTED NET INCOME AND COMPREHENSIVE INCOME | |||||||||||||||||
| Net income (loss) and comprehensive income | $ | 2,410 | $ | (1,613) | $ | 41,307 | $ | 32,002 | $54,740 | ||||||||
| Add: fair value (gain) loss on derivative contract (interest rate swap) | $ | (994) | $ | (850) | $ | (3,940) | $ | 3,940 | $ | – | |||||||
| Add: net unrealized loss on financial assets measured at FVTPL | $ | 8,237 | $ | 15,477 | $ | 13,748 | $ | 18,949 | $ | 188 | |||||||
| Add: Net unrealized loss on investment properties | $ | 4,374 | $ | – | $ | 4,374 | $ | – | $ | – | |||||||
| Adjusted net income and comprehensive income | $ | 14,027 | $ | 13,014 | $ | 55,489 | $54,891 | $54,928 | |||||||||
| Payout ratio on adjusted earnings per share | 100.9% | 107.2% | 101.2% | 102.8% | 104.3% | ||||||||||||
| OPERATING RESULTS | ||||||||||||||
| Three months ended December 31, |
Year ended December 31, |
|||||||||||||
| DISTRIBUTABLE INCOME | 2021 | 2020 | 2021 | 2020 | ||||||||||
| Adjusted net income and comprehensive income | $ | 14,027 | $ | 13,014 | $ | 55,489 | $54,891 | |||||||
| Less: amortization of lender fees | (2,135) | (2,929) | (9,275) | (10,110) | ||||||||||
| Add: lender fees received and receivable | 3,720 | 1,813 | 10,746 | 7,660 | ||||||||||
| Add: amortization of financing costs, credit facility | 189 | 249 | 1,022 | 953 | ||||||||||
| Add: amortization of financing costs, debentures | 199 | 470 | 1,060 | 1,458 | ||||||||||
| Add: accretion expense, debentures | 77 | 79 | 323 | 271 | ||||||||||
| Add: unrealized fair value (gain) loss on DSU | (17) | (99) | 104 | (99) | ||||||||||
| Add: allowance for expected credit loss | 103 | 2,024 | 1,660 | 2,994 | ||||||||||
| Distributable income | $ | 16,163 | $ | 14,621 | $ | 61,129 | $58,018 | |||||||
| Payout ratio on distributable income | 87.6% | 95.4% | 91.8% | 97.3% | ||||||||||
| ADJUSTED DISTRIBUTABLE INCOME | ||||||||||||||
| Distributable income | $ | 16,163 | $ | 14,621 | $ | 61,129 | $58,018 | |||||||
| Less: One-time distribution income | – | – | (707) | – | ||||||||||
| Adjusted Distributable income | $ | 16,163 | $ | 14,621 | $ | 60,422 | $58,018 | |||||||
| Payout ratio on adjusted distributable income | 87.6% | 95.4% | 92.9% | 97.3% | ||||||||||
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
