Timbercreek Financial Announces 2022 Second Quarter Results
August 11 2022 - 06:00AM
Timbercreek Financial (TSX: TF) (the “Company”) announced today its
financial results for the three months and six months ended June
30, 2022 (“Q2 2022”).
Q2 2022 Highlights1
- Q2 2022 results reflect healthy
funding volumes and lower repayments. The Company executed on net
new mortgage fundings of $150.8 million, and advances on existing
mortgages of $13.9 million, offset by net mortgage repayments of
$98.2 million, syndications of $64.5 million and the exchange of
two FVTPL loans of $30.0 million for a real estate investment. At
the end of the period, net mortgage investments were $1,235.0
million (versus $1,159.6 at year-end 2021). The quarterly
transaction volume resulted in a Q2 2022 turnover ratio of
8.1%.
- Declared $14.5 million in dividends
to shareholders, or $0.17 per share, and delivered distributable
income and adjusted distributable income of $15.9 million, or $0.19
per share, representing a payout ratio of 91.3% on both
distributable income and adjusted distributable income which is
well within Management's target payout range.
- Net income and comprehensive income
of $14.7 million which includes $0.5 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 $15.2 million for the
period, up from 13.6 million in the same period last year.
- Basic and diluted earnings per
share were $0.17, and basic and diluted adjusted earnings per share
were $0.18, reflecting a payout ratio of 91.3% (Q2 2021 – 90.8%) on
an adjusted distributable income basis.69.9% weighted average
loan-to-value
-
- 92.5% first mortgages in mortgage
investment portfolio
- 90.8% of mortgage investment
portfolio is invested in cash-flowing properties
- 7.2% quarterly weighted average
interest rate on net mortgage investmentsMaintained conservative
portfolio risk position focused on income-producing commercial real
estate
- In April, the Company completed the
disposition of its interest in the Saskatchewan Portfolio as well
as successfully aligned its interest in two FVTPL loans by
exchanging them for an interest in the underlying assets of one
loan, a portfolio of lands in Ontario, for which it intends to
sell.
- In July, subsequent to quarter end,
the Company partially exercised the accordion feature on its credit
facility, increasing the facility size to $600.0 million from
$575.0 million.
"Against a backdrop of financial market
volatility and economic uncertainty, it was another solid quarter
for the company, highlighted by the continued resilience and
performance of our underlying mortgage portfolio,” said Blair
Tamblyn, CEO of Timbercreek Financial. “As we expected, we are
seeing the benefit of recent interest rate hikes on our primarily
floating rate portfolio, translating into higher interest income.
Our long history in this space has shown us that periods of rapid
rate increases, while they may impact short-term transaction
volume, generally create opportunity for flexible alternative
lenders, and we have the capital and team to take advantage of
these conditions.”
- 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 |
Q2 2022 |
|
|
Q2 2021 |
|
Q1 2022 |
|
|
|
|
|
|
|
Net Mortgage Investments1 |
$ |
1,235.0 |
|
|
|
$ |
1,159.2 |
|
|
$ |
1,263.3 |
|
Enhanced Return Portfolio
Investments1 |
$ |
68.2 |
|
|
|
$ |
94.7 |
|
|
$ |
80.6 |
|
|
|
|
|
|
|
|
Net Investment Income |
$ |
25.8 |
|
|
|
$ |
23.4 |
|
|
$ |
22.7 |
|
Income from Operations |
$ |
21.7 |
|
|
|
$ |
18.8 |
|
|
$ |
18.7 |
|
Net Income and comprehensive
Income |
$ |
14.7 |
|
|
|
$ |
13.5 |
|
|
$ |
12.9 |
|
--Adjusted Net Income and
comprehensive Income |
$ |
15.2 |
|
|
|
$ |
13.6 |
|
|
$ |
13.8 |
|
Distributable Income |
$ |
15.9 |
|
|
|
$ |
16.1 |
|
|
$ |
15.2 |
|
--Adjusted Distributable
Income |
$ |
15.9 |
|
|
|
$ |
15.4 |
|
|
$ |
15.2 |
|
Dividends declared to
Shareholders |
$ |
14.5 |
|
|
|
$ |
14.0 |
|
|
$ |
14.3 |
|
|
|
|
|
|
|
|
$ per
share |
Q2 2022 |
|
|
Q2 2021 |
|
Q1 2022 |
|
|
|
|
|
|
|
Dividends per share |
$ |
0.17 |
|
|
|
$ |
0.17 |
|
|
$ |
0.17 |
|
Distributable Income per
share |
$ |
0.19 |
|
|
|
$ |
0.20 |
|
|
$ |
0.18 |
|
Adjusted distributable Income
per share |
$ |
0.19 |
|
|
|
$ |
0.19 |
|
|
$ |
0.18 |
|
Earnings per share |
$ |
0.17 |
|
|
|
$ |
0.17 |
|
|
$ |
0.16 |
|
--Adjusted Earnings per
share |
$ |
0.18 |
|
|
|
$ |
0.17 |
|
|
$ |
0.17 |
|
|
|
|
|
|
|
|
Payout Ratio on Distributable
Income1 |
|
91.3 |
% |
|
|
|
86.8 |
% |
|
|
93.9 |
% |
--Payout ratio on Adjusted
Distributable Income |
|
91.3 |
% |
|
|
|
90.8 |
% |
|
|
93.9 |
% |
Payout Ratio on Earnings per
share |
|
98.7 |
% |
|
|
|
93.1 |
% |
|
|
110.8 |
% |
--Payout Ratio on Adjusted
Earnings per share |
|
95.6 |
% |
|
|
|
102.7 |
% |
|
|
103.2 |
% |
|
|
|
|
|
|
|
Net Mortgage
Investments |
Q2 2022 |
|
|
Q2 2021 |
|
Q1 2022 |
|
|
|
|
|
|
|
Weighted Average
Loan-to-Value |
|
69.9 |
% |
|
|
|
69.7 |
% |
|
|
71.3 |
% |
Weighted Average Remaining
Term to Maturity |
1.0 yr |
|
|
0.9 yr |
|
1.1 yr |
First Mortgages |
|
92.5 |
% |
|
|
|
92.0 |
% |
|
|
92.5 |
% |
Cash-Flowing Properties |
|
90.8 |
% |
|
|
|
89.0 |
% |
|
|
90.3 |
% |
Multi-family residential |
|
55.4 |
% |
|
|
|
51.4 |
% |
|
|
55.3 |
% |
Floating Rate Loans with rate
floors (at quarter end) |
|
87.5 |
% |
|
|
|
79.5 |
% |
|
|
85.6 |
% |
|
|
|
|
|
|
|
Weighted Average Interest
Rate |
|
|
|
|
|
|
For the quarter ended |
|
7.2 |
% |
|
|
|
7.2 |
% |
|
|
6.6 |
% |
Weighted Average Lender
Fee |
|
|
|
|
|
|
New and Renewed |
|
1.0 |
% |
|
|
|
0.8 |
% |
|
|
1.2 |
% |
New Net Mortgage Investment
Only |
|
1.2 |
% |
|
|
|
1.3 |
% |
|
|
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.
Quarterly Conference Call
Interested parties are invited to participate in
a conference call with management on Thursday, August 11, 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/84465194435?pwd=VWI1N3Foc2o4dTFCRnBqcENuU2Y5QT09
Webinar ID: 844 6519 4435
Passcode: 1234 Participant
Dial-In Number: 1 647 374 4685
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 |
June 30, 2022 |
December 31, 2021 |
Mortgage investments, excluding mortgage syndications |
$ |
1,235,567 |
|
$ |
1,159,210 |
|
Mortgage syndications |
|
605,980 |
|
|
444,429 |
|
Mortgage investments, including mortgage syndications |
|
1,841,547 |
|
|
1,603,639 |
|
Mortgage syndication liabilities |
|
(605,980 |
) |
|
(444,429 |
) |
|
|
1,235,567 |
|
|
1,159,210 |
|
Interest receivable |
|
(13,080 |
) |
|
(10,824 |
) |
Unamortized lender fees |
|
8,530 |
|
|
8,278 |
|
Allowance for mortgage investments loss |
|
4,001 |
|
|
2,970 |
|
Net mortgage investments |
$ |
1,235,018 |
|
$ |
1,159,634 |
|
Enhanced return portfolio
As at |
|
June 30, 2022 |
|
December 31, 2021 |
Collateralized loans, net of allowance for credit loss |
|
$ |
55,489 |
|
$ |
58,000 |
|
Finance lease receivable,
measured at amortized cost |
|
|
6,020 |
|
|
6,020 |
|
Investment, measured at
FVTPL |
|
|
4,396 |
|
|
4,985 |
|
Indirect real estate
development, measured using equity method: |
|
|
|
|
Investment in Joint
Venture |
|
|
2,225 |
|
|
2,225 |
|
Total Other Investments |
|
|
68,130 |
|
|
71,230 |
|
|
|
|
|
|
Investment properties |
|
|
— |
|
|
44,063 |
|
Credit
facility (investment properties) |
|
|
— |
|
|
(30,690 |
) |
Net equity in investment properties |
|
|
— |
|
|
13,373 |
|
|
|
|
|
|
Total Enhanced Return Portfolio |
|
$ |
68,130 |
|
$ |
84,603 |
|
OPERATING RESULTS
|
|
Three months ended June 30, |
|
|
Six months ended June 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 |
|
$ |
25,802 |
|
|
$ |
23,390 |
|
|
$ |
48,479 |
|
|
$ |
45,829 |
|
|
$ |
90,249 |
|
Total fair value (loss) gain and other income on financial assets
measured at FVTPL |
|
$ |
352 |
|
|
$ |
211 |
|
|
$ |
249 |
|
|
$ |
690 |
|
|
$ |
(10,291 |
) |
Net rental income |
|
$ |
36 |
|
|
$ |
376 |
|
|
$ |
418 |
|
|
$ |
724 |
|
|
$ |
1,499 |
|
Total fair value loss on real estate properties |
|
$ |
(378 |
) |
|
$ |
— |
|
|
$ |
(378 |
) |
|
$ |
— |
|
|
$ |
(4,374 |
) |
Expenses |
|
$ |
4,150 |
|
|
$ |
5,177 |
|
|
$ |
8,391 |
|
|
$ |
9,072 |
|
|
$ |
16,237 |
|
Income from operations |
|
$ |
21,662 |
|
|
$ |
18,800 |
|
|
$ |
40,377 |
|
|
$ |
38,171 |
|
|
$ |
60,846 |
|
|
|
|
|
|
|
|
|
|
|
|
Financing costs: |
|
|
|
|
|
|
|
|
|
|
Financing cost on credit facilities |
|
$ |
4,749 |
|
|
$ |
4,746 |
|
|
$ |
8,309 |
|
|
$ |
8,649 |
|
|
$ |
16,734 |
|
Financing cost on convertible debentures |
|
$ |
2,233 |
|
|
$ |
1,543 |
|
|
$ |
4,506 |
|
|
$ |
2,997 |
|
|
$ |
6,745 |
|
Fair value (gain) loss on derivative contract |
|
$ |
— |
|
|
$ |
(974 |
) |
|
$ |
— |
|
|
$ |
(1,951 |
) |
|
$ |
(3,940 |
) |
Net income (loss) and comprehensive income |
|
$ |
14,680 |
|
|
$ |
13,485 |
|
|
$ |
27,562 |
|
|
$ |
28,476 |
|
|
$ |
41,307 |
|
Payout ratio on earnings per
share |
|
|
98.7 |
% |
|
|
103.7 |
% |
|
|
104.3 |
% |
|
|
98.1 |
% |
|
|
135.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
ADJUSTED NET INCOME AND COMPREHENSIVE INCOME |
|
|
|
|
|
|
Net income (loss) and
comprehensive income |
|
$ |
14,680 |
|
|
$ |
13,485 |
|
|
$ |
27,562 |
|
|
$ |
28,476 |
|
|
$ |
41,307 |
|
Add: fair value (gain) loss on derivative contract (interest rate
swap) |
|
$ |
— |
|
|
$ |
(974 |
) |
|
$ |
— |
|
|
$ |
(1,951 |
) |
|
$ |
(3,940 |
) |
Add: net unrealized loss on financial assets measured at FVTPL |
|
$ |
377 |
|
|
$ |
1,100 |
|
|
$ |
1,323 |
|
|
$ |
1,216 |
|
|
$ |
13,748 |
|
Add: Net unrealized loss on real estate properties |
|
$ |
95 |
|
|
$ |
— |
|
|
$ |
95 |
|
|
$ |
— |
|
|
$ |
4,374 |
|
Adjusted net income
and comprehensive income |
|
$ |
15,152 |
|
|
$ |
13,611 |
|
|
$ |
28,980 |
|
|
$ |
27,741 |
|
|
$ |
55,489 |
|
Payout ratio on adjusted
earnings per share |
|
|
95.6 |
% |
|
|
102.7 |
% |
|
|
99.2 |
% |
|
|
100.7 |
% |
|
|
101.2 |
% |
OPERATING
RESULTS
|
|
Three months ended June 30, |
|
|
Six months ended June 30, |
|
|
Year endedDecember 31, |
|
DISTRIBUTABLE INCOME |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2021 |
|
Adjusted net income and comprehensive income1 |
|
$ |
15,151 |
|
|
$ |
13,611 |
|
|
$ |
28,980 |
|
|
$ |
27,741 |
|
|
$ |
55,489 |
|
Less: amortization of lender fees |
|
|
(2,263 |
) |
|
|
(2,361 |
) |
|
|
(4,553 |
) |
|
|
(4,443 |
) |
|
|
(9,275 |
) |
Add: lender fees received and receivable |
|
|
2,117 |
|
|
|
2,317 |
|
|
|
4,576 |
|
|
|
4,878 |
|
|
|
10,746 |
|
Add: amortization of financing costs, credit facility |
|
|
254 |
|
|
|
501 |
|
|
|
469 |
|
|
|
655 |
|
|
|
1,022 |
|
Add: amortization of financing costs, debentures |
|
|
251 |
|
|
|
252 |
|
|
|
503 |
|
|
|
433 |
|
|
|
1,060 |
|
Add: accretion expense, debentures |
|
|
114 |
|
|
|
68 |
|
|
|
227 |
|
|
|
118 |
|
|
|
323 |
|
Add: unrealized fair value (gain) loss on DSU |
|
|
(57 |
) |
|
|
87 |
|
|
|
(90 |
) |
|
|
106 |
|
|
|
104 |
|
Add: allowance for expected credit loss |
|
|
301 |
|
|
|
1,638 |
|
|
|
950 |
|
|
|
1,938 |
|
|
|
1,660 |
|
Distributable income |
|
$ |
15,869 |
|
|
$ |
16,113 |
|
|
$ |
31,062 |
|
|
$ |
31,426 |
|
|
$ |
61,129 |
|
Payout ratio on distributable
income |
|
|
91.3 |
% |
|
|
86.8 |
% |
|
|
92.6 |
% |
|
|
88.9 |
% |
|
|
91.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
ADJUSTED DISTRIBUTABLE INCOME |
|
|
|
|
|
|
|
|
|
|
Distributable income |
|
$ |
15,869 |
|
|
$ |
16,113 |
|
|
$ |
31,062 |
|
|
$ |
31,426 |
|
|
$ |
61,129 |
|
Less: One-time distribution income |
|
|
— |
|
|
|
(707 |
) |
|
$ |
— |
|
|
|
(707 |
) |
|
|
(707 |
) |
Adjusted Distributable income |
|
$ |
15,869 |
|
|
$ |
15,406 |
|
|
$ |
31,062 |
|
|
$ |
30,719 |
|
|
$ |
60,422 |
|
Payout ratio on adjusted
distributable income1 |
|
|
91.3 |
% |
|
|
90.8 |
% |
|
|
92.6 |
% |
|
|
91.0 |
% |
|
|
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
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