Timbercreek Financial (TSX: TF) (the “Company”) announced today its
financial results for the three and six months ended June 30, 2024
(“Q2 2024”).
Q2 2024 Highlights1
- The net mortgage investment portfolio increased by $25.8
million to $1,003.4 million at the end of Q2 2024 from
$977.5 million at the end of Q1 2024 (Q2 2023 –
$1,123.7 million).
- Net investment income of $26.4 million compared to $31.5
million in Q2 2023.
- Net income and comprehensive income of $15.4 million (Q2
2023 – $16.9 million) or basic earnings per share of $0.19 (Q2
2023 – $0.20).
- Distributable income of $16.3 million (Q2 2023 –
$17.8 million) or distributable income per share of $0.20 (Q2
2023 – $0.21 per share).
- Declared a total of $14.3 million in dividends to
shareholders, or $0.17 per share, reflecting a distributable income
payout ratio of 87.8% (Q2 2023 - 81.1%).
- The quarterly weighted average interest rate on net mortgage
investments was 9.8% in Q2 2024, compared to 9.9% in Q1 2024 (Q2
2023 – 9.8%). Interest rate exposure in the net mortgage investment
portfolio was well protected at the end of Q2 2024, floating rate
loans with rate floors representing 78.3% (Q2 2023 – 88.3%) of net
mortgage investment portfolio.
- Maintained conservative portfolio risk composition focused on
income-producing commercial real estate:
- 62.3% weighted average loan-to-value;
- 85.6% first mortgages in mortgage investment portfolio;
and
- 83.4% of mortgage investment portfolio is invested in
cash-flowing properties.
- The Company continues to focus on the resolution of its staged
loans, utilizing active asset management strategies and continues
to make significant progress. The Company's management team is very
experienced in navigating these situations and is well positioned
to strategically work through these loans to ensure the best
outcomes in light of the current economic environment.
“The overall portfolio performed solidly in the
second quarter, as we reported improved sequential results and
demonstrated our ability to generate consistent healthy cash flows
and dividends with a conservative payout ratio, despite a
transitioning commercial real estate backdrop,” said Blair Tamblyn,
CEO of Timbercreek Financial. “We continue to have success
redeploying capital into high-quality loans as we expand the
portfolio back to historical levels. The positive macro backdrop
from recent Bank of Canada rate cuts is further enhancing the deal
flow pipeline, and we expect to see increased financing
opportunities as transaction activity in most asset classes grows.
We believe these conditions are key factors to support a recovery
in commercial real estate fundamentals, and the company is well
positioned to deploy capital in this environment and grow the
portfolio through the balance of the year.”
Mr. Tamblyn added: “During the quarter, our team
also continued to focus on resolving the remaining staged loans
through highly active asset management efforts. We are making good
progress on these select situations and remain confident both in
the underlying value of the assets and our ability to navigate
these situations to ensure the best outcomes for our
shareholders.”
- 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 Comparison
| $
millions |
Q2 2024 |
|
|
Q2 2023 |
|
Q1 2024 |
| |
|
|
|
|
|
|
|
Net Mortgage Investments1 |
$ |
1,003.4 |
|
|
|
$ |
1,123.7 |
|
|
$ |
977.5 |
|
| Enhanced Return Portfolio
Investments1 |
$ |
62.0 |
|
|
|
$ |
58.7 |
|
|
$ |
63.4 |
|
| Real Estate land
Inventory |
$ |
30.6 |
|
|
|
$ |
30.3 |
|
|
$ |
30.6 |
|
| Real Estate held for sale, net
of collateral liability |
$ |
62.2 |
|
|
|
$ |
— |
|
|
$ |
62.2 |
|
| |
|
|
|
|
|
|
| Net Investment Income |
$ |
26.4 |
|
|
|
$ |
31.5 |
|
|
$ |
24.6 |
|
| Income from Operations |
$ |
23.5 |
|
|
|
$ |
26.3 |
|
|
$ |
20.9 |
|
| Net Income and comprehensive
Income |
$ |
15.4 |
|
|
|
$ |
16.9 |
|
|
$ |
14.4 |
|
| --Adjusted Net Income and
comprehensive Income |
$ |
15.7 |
|
|
|
$ |
17.0 |
|
|
$ |
14.2 |
|
| Distributable income1 |
$ |
16.3 |
|
|
|
$ |
17.8 |
|
|
$ |
15.8 |
|
| Dividends declared to
Shareholders2 |
$ |
14.3 |
|
|
|
$ |
14.4 |
|
|
$ |
14.3 |
|
| |
|
|
|
|
|
|
| $ per
share |
Q2 2024 |
|
|
Q2 2023 |
|
Q1 2024 |
| |
|
|
|
|
|
|
| Dividends per share |
$ |
0.17 |
|
|
|
$ |
0.17 |
|
|
$ |
0.17 |
|
| Distributable income per
share1 |
$ |
0.20 |
|
|
|
$ |
0.21 |
|
|
$ |
0.19 |
|
| Earnings per share |
$ |
0.19 |
|
|
|
$ |
0.20 |
|
|
$ |
0.17 |
|
| --Adjusted Earnings per
share |
$ |
0.19 |
|
|
|
$ |
0.20 |
|
|
$ |
0.17 |
|
| |
|
|
|
|
|
|
| Payout Ratio on Distributable
Income1 |
|
87.8 |
% |
|
|
|
81.1 |
% |
|
|
90.6 |
% |
| Payout Ratio on Earnings per
share |
|
93.2 |
% |
|
|
|
85.5 |
% |
|
|
99.7 |
% |
| --Payout Ratio on Adjusted
Earnings per share |
|
91.1 |
% |
|
|
|
85.1 |
% |
|
|
100.8 |
% |
| |
|
|
|
|
|
|
| Net Mortgage
Investments |
Q2 2024 |
|
|
Q2 2023 |
|
Q1 2024 |
| |
|
|
|
|
|
|
| Weighted Average
Loan-to-Value |
|
62.3 |
% |
|
|
|
68.3 |
% |
|
|
64.4 |
% |
| Weighted Average Remaining
Term to Maturity |
1.0 yr |
|
|
|
0.8 yr |
|
|
0.8 yr |
|
| First Mortgages |
|
85.6 |
% |
|
|
|
91.4 |
% |
|
|
85.7 |
% |
| Cash-Flowing Properties |
|
83.4 |
% |
|
|
|
87.7 |
% |
|
|
85.7 |
% |
| Multi-family residential |
|
51.2 |
% |
|
|
|
50.1 |
% |
|
|
54.6 |
% |
| Floating Rate Loans with rate
floors (at quarter end) |
|
78.3 |
% |
|
|
|
88.3 |
% |
|
|
88.6 |
% |
| |
|
|
|
|
|
|
| Weighted Average Interest
Rate |
|
|
|
|
|
|
|
For the quarter ended |
|
9.8 |
% |
|
|
|
9.8 |
% |
|
|
9.9 |
% |
| Weighted Average Lender
Fee |
|
|
|
|
|
|
|
New and Renewed |
|
0.9 |
% |
|
|
|
1.1 |
% |
|
|
0.8 |
% |
|
New Net Mortgage Investment Only |
|
1.0 |
% |
|
|
|
1.2 |
% |
|
|
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.
- Dividends declared exclude 2023 year-end special dividends paid
in March 2024.
Quarterly Conference Call
Interested parties are invited to participate in
a conference call with management on Thursday, August 1, 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/82594185755?pwd=M2NmRHYrMnJoK3A3blpSeTNreE9SUT09
Webinar ID: 825 9418
5755
Passcode: 1234
Or Telephone:Dial
(for higher quality, dial a number based on your current
location):Canada: +1 647 374 4685, +1 647 558 0588, +1 778
907 2071, +1 780 666 0144, +1 204 272 7920, +1 438 809 7799, +1 587
328 1099International numbers available:
https://us02web.zoom.us/u/kBj4jLpCU
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 months
endedJune 30, |
|
Six months endedJune 30, |
|
Year endedDecember 31, |
|
|
NET INCOME AND COMPREHENSIVE INCOME |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
2023 |
|
|
Net investment income on financial assets measured at amortized
cost |
$ |
26,441 |
|
$ |
31,471 |
|
$ |
51,031 |
|
$ |
64,180 |
|
$ |
124,205 |
|
|
Fair value gain and other income on financial assets measured at
FVTPL |
|
235 |
|
|
306 |
|
|
572 |
|
|
588 |
|
|
1,282 |
|
|
Net rental gain (loss) |
|
389 |
|
|
(293 |
) |
|
863 |
|
|
(652 |
) |
|
(595 |
) |
|
Fair value gain on real estate properties |
|
— |
|
|
— |
|
|
— |
|
|
63 |
|
|
63 |
|
|
Expenses |
|
(3,599 |
) |
|
(5,139 |
) |
|
(8,097 |
) |
|
(9,582 |
) |
|
(19,140 |
) |
| Income from operations |
$ |
23,466 |
|
$ |
26,345 |
|
$ |
44,369 |
|
$ |
54,597 |
|
$ |
105,815 |
|
| |
|
|
|
|
|
| Financing costs: |
|
|
|
|
|
|
Financing cost on credit facility |
|
(5,571 |
) |
|
(7,208 |
) |
|
(9,856 |
) |
|
(15,106 |
) |
|
(30,396 |
) |
|
Financing cost on convertible debentures |
|
(2,535 |
) |
|
(2,249 |
) |
|
(4,785 |
) |
|
(4,499 |
) |
|
(8,998 |
) |
| Net income and comprehensive income |
$ |
15,360 |
|
$ |
16,888 |
|
$ |
29,728 |
|
$ |
34,992 |
|
$ |
66,421 |
|
| Payout ratio on earnings per share |
|
93.2 |
% |
|
85.5 |
% |
|
96.3 |
% |
|
82.5 |
% |
|
86.7 |
% |
| |
|
|
|
|
|
| ADJUSTED
NET INCOME AND COMPREHENSIVE INCOME |
|
|
|
| Net income and comprehensive income |
|
15,360 |
|
|
16,888 |
|
|
29,728 |
|
|
34,992 |
|
|
66,421 |
|
|
Add: Net unrealized gain (loss) on financial assets measured at
FVTPL |
|
357 |
|
|
68 |
|
|
191 |
|
|
11 |
|
|
(342 |
) |
| Adjusted net
income and comprehensive income1 |
$ |
15,717 |
|
$ |
16,956 |
|
$ |
29,919 |
|
$ |
35,003 |
|
$ |
66,078 |
|
| Payout ratio on adjusted earnings per share1 |
|
91.1 |
% |
|
85.1 |
% |
|
95.7 |
% |
|
82.5 |
% |
|
87.2 |
% |
| |
|
|
|
|
|
|
DISTRIBUTABLE INCOME |
|
|
|
|
|
| Adjusted net income and comprehensive income1 |
$ |
15,717 |
|
$ |
16,956 |
|
$ |
29,919 |
|
$ |
35,003 |
|
$ |
66,078 |
|
|
Less: Amortization of lender fees |
|
(1,678 |
) |
|
(2,181 |
) |
|
(3,083 |
) |
|
(4,646 |
) |
|
(8,279 |
) |
|
Add: Lender fees received and receivable |
|
1,828 |
|
|
1,672 |
|
|
3,007 |
|
|
3,381 |
|
|
6,597 |
|
|
Add: Amortization of financing costs, credit facility |
|
200 |
|
|
172 |
|
|
616 |
|
|
425 |
|
|
953 |
|
|
Add: Amortization of financing costs, convertible debentures |
|
285 |
|
|
242 |
|
|
528 |
|
|
486 |
|
|
972 |
|
|
Add: Accretion expense, convertible debentures |
|
136 |
|
|
114 |
|
|
249 |
|
|
227 |
|
|
454 |
|
|
Add: Unrealized fair value (gain) loss on DSU |
|
(88 |
) |
|
(48 |
) |
|
65 |
|
|
27 |
|
|
(67 |
) |
|
Add: Expected credit (recovery) loss |
|
(97 |
) |
|
875 |
|
|
815 |
|
|
1,175 |
|
|
3,649 |
|
| Distributable income1 |
$ |
16,303 |
|
$ |
17,802 |
|
$ |
32,116 |
|
$ |
36,078 |
|
$ |
70,357 |
|
| Payout ratio on distributable income1 |
|
87.8 |
% |
|
81.1 |
% |
|
89.2 |
% |
|
80.1 |
% |
|
81.9 |
% |
| |
|
|
|
|
|
| PER SHARE
INFORMATION |
|
|
|
|
|
| Dividends declared to shareholders |
$ |
14,319 |
|
$ |
14,434 |
|
$ |
28,638 |
|
$ |
28,885 |
|
$ |
57,603 |
|
| Weighted average common shares (in thousands) |
|
83,010 |
|
|
83,737 |
|
|
83,010 |
|
|
83,760 |
|
|
83,509 |
|
| Dividends per share |
$ |
0.17 |
|
$ |
0.17 |
|
$ |
0.35 |
|
$ |
0.35 |
|
$ |
0.69 |
|
| Earnings per share (basic) |
$ |
0.19 |
|
$ |
0.20 |
|
$ |
0.36 |
|
$ |
0.42 |
|
$ |
0.80 |
|
| Earnings per share (diluted) |
$ |
0.18 |
|
$ |
0.20 |
|
$ |
0.36 |
|
$ |
0.41 |
|
$ |
0.78 |
|
| Adjusted earnings per share (basic)1 |
$ |
0.19 |
|
$ |
0.20 |
|
$ |
0.36 |
|
$ |
0.42 |
|
$ |
0.79 |
|
| Adjusted earnings per share (diluted)1 |
$ |
0.19 |
|
$ |
0.20 |
|
$ |
0.36 |
|
$ |
0.41 |
|
$ |
0.78 |
|
| Distributable income
per share1 |
$ |
0.20 |
|
$ |
0.21 |
|
$ |
0.39 |
|
$ |
0.43 |
|
$ |
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 |
June 30, 2024 |
|
|
December 31, 2023 |
|
|
Mortgage investments, excluding mortgage syndications |
$ |
996,025 |
|
|
$ |
943,488 |
|
|
Mortgage syndications |
|
480,277 |
|
|
|
601,624 |
|
| Mortgage investments,
including mortgage syndications |
|
1,476,302 |
|
|
|
1,545,112 |
|
|
Mortgage syndication liabilities |
|
(480,277 |
) |
|
|
(601,624 |
) |
| |
|
996,025 |
|
|
|
943,488 |
|
|
Interest receivable |
|
(11,106 |
) |
|
|
(14,585 |
) |
|
Unamortized lender fees |
|
5,408 |
|
|
|
5,226 |
|
|
Expected credit loss |
|
13,093 |
|
|
|
12,093 |
|
|
Net mortgage investments |
$ |
1,003,420 |
|
|
$ |
946,222 |
|
| |
|
|
|
|
|
|
|
Enhanced return portfolio
|
As at |
June 30, 2024 |
|
December 31, 2023 |
|
Other loan investments, net of expected credit loss |
$ |
48,422 |
|
$ |
47,033 |
| Finance lease receivable,
measured at amortized cost |
|
6,020 |
|
|
6,020 |
| Investment in participating
debentures, measured at FVTPL |
|
2,335 |
|
|
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 |
$ |
62,002 |
|
$ |
62,658 |
|
|
|
|
|
|
|
Real estate held for sale, net of collateral
liability
| As at |
June 30, 2024 |
|
|
December 31, 2023 |
|
|
Real estate held for sale |
|
130,987 |
|
|
|
130,987 |
|
| Real
estate held for sale collateral liability |
|
(68,787 |
) |
|
|
(69,008 |
) |
|
Total Real Estate held for sale, net of collateral
liability |
$ |
62,200 |
|
|
$ |
61,979 |
|
| |
|
|
|
|
|
|
|
SOURCE: Timbercreek Financial
For further information, please contact:
Timbercreek FinancialBlair
Tamblyn, CEOTracy Johnston, CFO
416-923-9967www.timbercreekfinancial.com
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