TF Timbercreek Financial Corp

Timbercreek Financial (TSX: TF) (the “Company”) announced today its financial results for the three months ended March 31, 2022 (“Q1 2022”).

Q1 2022 Highlights1

• Q1 2022 results reflect high funding volumes from a strong pipeline of opportunities. The Company executed on net new mortgage fundings of $210.5 million, and advances on existing mortgages of $16.1 million, offset by net mortgage repayments of $122.2 million. At the end of the period, net mortgage investments were $1,263.3 million (versus $1,159.6 at year-end 2021). The robust transaction volume resulted in a Q1 2022 turnover ratio of 11.4%.
• Declared $14.3 million in dividends to shareholders, or $0.17 per share, and delivered distributable income and adjusted distributable income of $15.2 million, or $0.18 per share, representing a payout ratio of 93.9% on both distributable income and adjusted distributable income. The Q1 2022 adjusted distributable income payout ratio of 93.9% was within management's target payout range of low to mid-90s for the quarter and compares with 91.2% for Q1 2021.
• Net income and comprehensive income of $12.9 million which includes $0.9 million of fair value losses on mortgages and investment properties measured at fair value through profit and loss. After adjusting for these losses, adjusted net income and comprehensive income was $13.8 million for the period.
• 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 93.9% (Q1 2021 – 91.2%) on an adjusted distributable income basis.
• Maintained conservative portfolio risk position focused on income-producing commercial real estate
  • 71.3% weighted average loan-to-value
  • 92.5% first mortgages in mortgage investment portfolio
  • 90.3% of mortgage investment portfolio is invested in cash-flowing properties
  • 6.6% quarterly weighted average interest rate on net mortgage investments
• Expanded the credit facility by $59 million in February, which provided greater ability to fund more loans accretively, resulting in an increased credit facility utilization rate of 92.0% as at Q1 2022 (Q1 2021 - 87.2%).
• Subsequent to quarter-end, the Company completed the disposition of the Saskatchewan Portfolio for proceeds approximating carrying value as well as successfully aligned its interest in two FVTPL loans to an equity position in one of the assets that can now be positioned for sale

“Overall, it was a good start to 2022 as our team managed a particularly busy period on the funding front, reflecting improved market activity, our expanded capital base, and Timbercreek’s strong standing and reputation in the market nationally,” said Blair Tamblyn, CEO of Timbercreek Financial. “At the same time, we made meaningful progress to exit the remaining non-core assets, which will free up additional capital to put to work in core mortgages that will be accretive to distributable income. Looking ahead, our expectation is that interest rate increases will also have a positive impact on our distributable income as the majority of our loans are structured with floating rates. Given the short duration of our loans, we have considerable flexibility to react to changing real estate fundamentals in a rising rate environment.”

1. 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	Q1 2022					Q1 2021				Q4 2021
Net Mortgage Investments1	$	1,263.3				$	1,147.6			$	1,159.6
Enhanced Return Portfolio Investments1	$	80.6				$	87.4			$	84.6
Net Investment Income	$	22.7				$	22.4			$	22.4
Income from Operations	$	18.7				$	19.4			$	7.2
Net Income and comprehensive Income	$	12.9				$	15.0			$	2.4
--Adjusted Net Income and comprehensive Income	$	13.8				$	14.1			$	14.0
Distributable Income	$	15.2				$	15.3			$	16.2
--Adjusted Distributable Income	$	15.2				$	15.3			$	16.2
Dividends declared to Shareholders	$	14.3				$	14.0			$	14.2
$ per share	Q1 2022					Q1 2021				Q4 2021
Dividends per share	$	0.17				$	0.17			$	0.17
Distributable Income per share	$	0.18				$	0.19			$	0.20
Adjusted distributable Income per share	$	0.18				$	0.19			$	0.20
Earnings (loss) per share	$	0.16				$	0.19			$	0.03
--Adjusted Earnings per share	$	0.17				$	0.17			$	0.17
Payout Ratio on Distributable Income1		93.9	%				91.2	%			87.6	%
--Payout ratio on Adjusted Distributable Income		93.9	%				91.2	%			87.6	%
Payout Ratio on Earnings per share		110.8	%				93.1	%			587.6	%
--Payout Ratio on Adjusted Earnings per share		103.2	%				98.8	%			100.9	%
Net Mortgage Investments	Q1 2022					Q1 2021				Q4 2021
Weighted Average Loan-to-Value		71.3	%				68.8	%			70.1	%
Weighted Average Remaining Term to Maturity	1.1 yr					1.0 yr				1.0 yr
First Mortgages		92.5	%				90.3	%			93.2	%
Cash-Flowing Properties		90.3	%				86.7	%			88.3	%
Rental Apartments		55.3	%				51.2	%			48.0	%
Floating Rate Loans with rate floors (at quarter end)		85.6	%				76.3	%			84.6	%
Weighted Average Interest Rate
For the quarter ended		6.6	%				7.3	%			6.9	%
Weighted Average Lender Fee
New and Renewed		1.2	%				0.9	%			0.9	%
New Net Mortgage Investment Only		1.2	%				1.0	%			1.3	%

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 Tuesday, May 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/85277413702?pwd=UmhiUCs2aVF5ZHp1RFFwZ1B2YXFNQT09Webinar ID: 852 7741 3702, Passcode: 1234Participant Dial-In Number: +1 587 328 1099

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	March 31, 2022			December 31, 2021
Mortgage investments, excluding mortgage syndications	$	1,263,848			$	1,159,210
Mortgage syndications		475,502				444,429
Mortgage investments, including mortgage syndications		1,739,350				1,603,639
Mortgage syndication liabilities		(475,502	)			(444,429	)
		1,263,848				1,159,210
Interest receivable		(12,545	)			(10,824	)
Unamortized lender fees		8,497				8,278
Allowance for mortgage investments loss		3,541				2,970
Net mortgage investments	$	1,263,341			$	1,159,634

Enhanced return portfolio

As at	March 31, 2022				December 31, 2021
Collateralized loans, net of allowance for credit loss	$	54,240			$	58,000
Finance lease receivable, measured at amortized cost		6,020				6,020
Investment, measured at FVTPL		4,608				4,985
Indirect real estate development, measured using equity method:
Investment in Joint Venture		2,225				2,225
Total Other Investments		67,093				71,230
Investment properties		44,168				44,063
Credit facility (investment properties)		(30,683	)			(30,690	)
Net equity in investment properties		13,485				13,373
Total Enhanced Return Portfolio	$	80,578			$	84,603

OPERATING RESULTS
	Three months endedMarch 31,							Year endedDecember 31,
NET INCOME AND COMPREHENSIVE INCOME		2022				2021				2021
Net Investment Income on financial assets measured at amortized cost	$	22,677			$	22,439			$	90,249
Total fair value (loss) gain and other income on financial assets measured at FVTPL	$	(103	)		$	479			$	(10,291	)
Net rental income	$	382			$	348			$	1,499
Total fair value loss on investment properties					$	—			$	(4,374	)
Expenses	$	4,241			$	3,895			$	16,237
Income from operations	$	18,715			$	19,371			$	60,846
Financing costs:
Financing cost on credit facilities	$	3,560			$	3,903			$	16,734
Financing cost on convertible debentures	$	2,273			$	1,454			$	6,745
Fair value (gain) loss on derivative contract	$	—			$	(977	)		$	(3,940	)
Net income (loss) and comprehensive income	$	12,882			$	14,991			$	41,307
Payout ratio on earnings per share		110.8	%			93.1	%			135.9	%
ADJUSTED NET INCOME AND COMPREHENSIVE INCOME
Net income (loss) and comprehensive income	$	12,882			$	14,991			$	41,307
Add: fair value (gain) loss on derivative contract (interest rate swap)	$	—			$	(977	)		$	(3,940	)
Add: net unrealized loss on financial assets measured at FVTPL	$	946			$	116			$	13,748
Add: Net unrealized loss on investment properties	$	—			$	—			$	4,374
Adjusted net income and comprehensive income	$	13,828			$	14,130			$	55,489
Payout ratio on adjusted earnings per share		103.2	%			98.8	%			101.2	%

        

OPERATING RESULTS
	Three months endedMarch 31,							Year endedDecember 31,
DISTRIBUTABLE INCOME	2022				2021				2021
Adjusted net income and comprehensive income1	$	13,828			$	14,130			$	55,489
Less: amortization of lender fees		(2,290	)			(2,082	)			(9,275	)
Add: lender fees received and receivable		2,459				2,561				10,746
Add: amortization of financing costs, credit facility		215				154				1,022
Add: amortization of financing costs, debentures		252				181				1,060
Add: accretion expense, debentures		113				50				323
Add: unrealized fair value (gain) loss on DSU		(33	)			19				104
Add: allowance for expected credit loss		649				300				1,660
Distributable income	$	15,193			$	15,313			$	61,129
Payout ratio on distributable income		93.9	%			91.2	%			91.8	%
ADJUSTED DISTRIBUTABLE INCOME
Distributable income	$	15,193			$	15,313			$	61,129
Less: One-time distribution income		—			$	—				(707	)
Adjusted Distributable income	$	15,193			$	15,313			$	60,422
Payout ratio on adjusted distributable income1		93.9	%			91.2	%			92.9	%

SOURCE: Timbercreek Financial

For further information, please contact: Timbercreek FinancialBlair Tamblyn, CEOTracy Johnston, CFO Karynna Ma, Vice President, Investor Relations

1-844-304-9967www.timbercreekfinancial.com