Timbercreek Financial (TSX: TF) (the “Company”) announced today its
financial results for the three months ended March 31, 2024 (“Q1
2024”).
Q1 2024
Highlights1
- 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.
“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.”
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 |
% |
- 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
2656Passcode: 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.
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.
OPERATING
RESULTS1
| |
Three monthsended 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 |
|
- 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 FinancialBlair
Tamblyn, CEOTracy Johnston,
CFO416-923-9967www.timbercreekfinancial.com
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