Timbercreek Financial (TSX: TF) (the “Company”) announced today its
financial results for the three months and year ended December 31,
2023 (“Q4 2023”).
Full-Year 2023 Highlights1
- Record net investment income of
$124.2 million versus $109.8 million in 2022.
- Net income and comprehensive income
of $66.4 million, up from $55.9 million last year. Basic and
diluted earnings per share for 2023 were $0.80, and $0.78 (2022 –
$0.67 and $0.67).
- Distributable income of $70.4
million, or $0.84 per share (2022 – $66.2 million, $0.79 per share)
representing a payout ratio of 81.9% on distributable income.
- Shareholders' equity of $701.1
million at year end (book value per share of $8.45).
- Subsequent to quarter end:
- The Company is declaring a $0.0575
per share special dividend to shareholders on record on March 5,
2024, reflecting strong top line income performance in 2023. The
special dividend will be paid on March 11, 2024.
“We generated solid financial performance for
the year 2023, highlighted by record net investment income and
strong year-over-year increases in net income and distributable
income,” said Blair Tamblyn, CEO of Timbercreek Financial. “In
addition to continuing our long track record of monthly dividends,
our strong distributable income drove book value per share up to
$8.45 from $8.33 last year and enabled us to report a special
dividend for this year. We achieved these results while navigating
a more challenging period of the real estate cycle, which placed
strain on some of our borrowers. Our team has demonstrated the
ability to actively manage these situations to ensure the best
outcomes for our shareholders, and we made meaningful progress on
resolving and reducing Stage 2 and Stage 3 loans which was an
important focus in 2023.”
Mr. Tamblyn added: “We were intentionally
cautious on new lending given the uncertainty in 2023, adjusting
the pace of new investments while ensuring sufficient lending to
maintain a healthy payout ratio. As we look forward to 2024, our
team is optimistic about the current investment environment with
the expectation that a stable interest rate environment will
promote increased commercial real estate activity. With our renewed
credit facility, we are a strong liquidity position to capitalize
on attractive risk-adjusted opportunities and expand the portfolio
back to historical levels.”
Q4 2023 Highlights1
- Record net investment income of
$29.7 million versus $31.3 million in 2022.
- Net income and comprehensive income
of $15.0 million, up from $14.8 million in the same period last
year. Basic and diluted earnings per share for 2023 were $0.18
(2022 – $0.18).
- Distributable income of $17.5
million, or $0.21 per share (2022 – $18.4 million, $0.22 per share)
representing a payout ratio of 81.9% on distributable income.
- Declared $14.3 million, or $0.17
per share in regular dividends to shareholders, reflecting a payout
ratio of 95.8% (Q4 2022 – 97.7%) on earnings per share.
- Net new mortgage advances were
$61.2 million and advances on existing mortgages were $16.2
million, offset by net mortgage repayments of $176.2 million and
net syndications of $23.5 million. Portfolio turnover increased to
19.2%, compared with 6.0% in Q3 2023 demonstrating borrowers'
ability to execute on their exit plans (i.e. sale or refinancing
with term debt).
- At the end of the period, net
mortgage investments were $946.2 million (versus $1,195.8 million
at Q4 2022) bearing a weighted-average interest rate of 10.0%
(versus 9.7% at Q4 2022 and 9.9% at Q3 2023) and a weighted-average
LTV of 65.6% (versus 68.3% at Q4 2022 and 67.0% at Q3 2023). The
Company also had net real estate inventory of $92.5 million at Q4
2023, versus $30.2 million at Q4 2022.
- A portfolio of seven Stage 3 loans
totaling $146.1 million returned to Stage 1 in the quarter and
were subsequently sold to an institutional buyer in Q1 2024; the
Company recovered all its principal and accrued interest.
- The Company continues to closely
manage its other Stage 3 and Stage 2 loans. The investment team,
which is experienced in navigating these situations and utilizing
various approaches to achieve resolution, continues to anticipate
repayment of principal outstanding as the asset sale processes are
completed.
- Maintained conservative portfolio
risk composition focused on income-producing commercial real
estate:
- 65.6% weighted average
loan-to-value;
- 88.9% first mortgages in mortgage
investment portfolio; and
- 86.0% of mortgage investment
portfolio is invested in cash-flowing properties.
Quarterly Comparison
| $
millions |
Q4 2023 |
|
|
Q4 2022 |
|
Q3 2023 |
| |
|
|
|
|
|
|
| Net Mortgage Investments
1 |
$ |
946.2 |
|
|
|
$ |
1,195.8 |
|
|
$ |
1,068.6 |
|
| Enhanced Return Portfolio
Investments 1 |
$ |
62.7 |
|
|
|
$ |
72.9 |
|
|
$ |
59.3 |
|
| Real Estate Inventory, net of
collateral liability |
$ |
92.6 |
|
|
|
$ |
30.2 |
|
|
$ |
92.5 |
|
| |
|
|
|
|
|
|
| Net Investment Income |
$ |
29.7 |
|
|
|
$ |
31.3 |
|
|
$ |
30.3 |
|
| Income from Operations |
$ |
25.1 |
|
|
|
$ |
25.2 |
|
|
$ |
26.1 |
|
| Net Income and comprehensive
Income |
$ |
15.0 |
|
|
|
$ |
14.8 |
|
|
$ |
16.5 |
|
| --Adjusted Net Income and
comprehensive Income |
$ |
14.7 |
|
|
|
$ |
14.7 |
|
|
$ |
16.4 |
|
| Distributable and adjusted
distributable income 1, 2 |
$ |
17.5 |
|
|
|
$ |
18.4 |
|
|
$ |
16.8 |
|
| Dividends declared to
Shareholders |
$ |
14.3 |
|
|
|
$ |
14.5 |
|
|
$ |
14.4 |
|
| |
|
|
|
|
|
|
| $ per
share |
Q4 2023 |
|
|
Q4 2022 |
|
Q3 2023 |
| |
|
|
|
|
|
|
| Dividends per share |
$ |
0.17 |
|
|
|
$ |
0.17 |
|
|
$ |
0.17 |
|
| Distributable and adjusted
distributable income per share 1, 2 |
$ |
0.21 |
|
|
|
$ |
0.22 |
|
|
$ |
0.20 |
|
| Earnings per share |
$ |
0.18 |
|
|
|
$ |
0.18 |
|
|
$ |
0.20 |
|
| --Adjusted Earnings per
share |
$ |
0.18 |
|
|
|
$ |
0.17 |
|
|
$ |
0.20 |
|
| |
|
|
|
|
|
|
| Payout Ratio on Distributable
and adjusted distributable Income 1, 2 |
|
82.0 |
% |
|
|
|
78.7 |
% |
|
|
85.6 |
% |
| Payout Ratio on Earnings per
share |
|
95.8 |
% |
|
|
|
97.7 |
% |
|
|
87.4 |
% |
| --Payout Ratio on Adjusted
Earnings per share |
|
97.7 |
% |
|
|
|
98.6 |
% |
|
|
87.7 |
% |
| |
|
|
|
|
|
|
| Net Mortgage
Investments |
Q4 2023 |
|
|
Q4 2022 |
|
Q3 2023 |
| |
|
|
|
|
|
|
| Weighted Average
Loan-to-Value |
|
65.6 |
% |
|
|
|
68.3 |
% |
|
|
67.0 |
% |
| Weighted Average Remaining
Term to Maturity |
0.7 yr |
|
|
0.9 yr |
|
0.7 yr |
| First Mortgages |
|
88.9 |
% |
|
|
|
92.4 |
% |
|
|
92.2 |
% |
| Cash-Flowing Properties |
|
86.0 |
% |
|
|
|
87.4 |
% |
|
|
86.5 |
% |
| Multi-family residential |
|
56.5 |
% |
|
|
|
52.5 |
% |
|
|
58.2 |
% |
| Floating Rate Loans with rate
floors (at quarter end) |
|
86.1 |
% |
|
|
|
88.5 |
% |
|
|
87.5 |
% |
| |
|
|
|
|
|
|
| Weighted Average Interest
Rate |
|
|
|
|
|
|
| For the quarter ended |
|
10.0 |
% |
|
|
|
9.7 |
% |
|
|
9.9 |
% |
| Weighted Average Lender
Fee |
|
|
|
|
|
|
| New and Renewed |
|
1.0 |
% |
|
|
|
1.2 |
% |
|
|
0.7 |
% |
| New Net Mortgage Investment
Only |
|
1.2 |
% |
|
|
|
1.4 |
% |
|
|
1.0 |
% |
- 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.
- There are no adjustments for the
periods presented.
Quarterly Conference Call
Interested parties are invited to participate in
a conference call with management on Tuesday, February 27,
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/82280798392?pwd=WUZtdXFza0FZVnhPd2NzblBPbVdDdz09Webinar
ID: 822 8079 8392Passcode: 1234
Or Telephone:Dial (for higher quality, dial a
number based on your current location):Canada:
+1 778 907 2071, +1
780 666 0144, +1 204 272 7920, +1 438 809 7799, +1 587 328 1099, +1
647 374 4685, +1 647 558 0588 International numbers available:
https://us02web.zoom.us/u/kbtEE30QVY
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.
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 |
|
December 31, 2023 |
|
December 31, 2022 |
|
Mortgage investments, excluding mortgage syndications |
|
$ |
943,488 |
|
|
$ |
1,189,215 |
|
|
Mortgage syndications |
|
|
601,624 |
|
|
|
611,291 |
|
|
Mortgage investments, including mortgage syndications |
|
|
1,545,112 |
|
|
|
1,800,506 |
|
|
Mortgage syndication liabilities |
|
|
(601,624 |
) |
|
|
(611,291 |
) |
|
|
|
|
943,488 |
|
|
|
1,189,215 |
|
|
Interest receivable |
|
|
(14,585 |
) |
|
|
(10,812 |
) |
|
Unamortized lender fees |
|
|
5,226 |
|
|
|
6,801 |
|
|
Expected credit loss |
|
|
12,093 |
|
|
|
10,605 |
|
|
Net mortgage investments |
|
$ |
946,222 |
|
|
$ |
1,195,809 |
|
Enhanced return portfolio
|
As at |
|
December 31, 2023 |
|
December 31, 2022 |
|
|
Other loan investments, net of expected credit loss |
|
$ |
47,033 |
|
$ |
59,956 |
|
| Finance lease receivable,
measured at amortized cost |
|
|
6,020 |
|
|
6,020 |
|
| Investment in participating
debentures, measured at FVTPL |
|
|
4,380 |
|
|
4,744 |
|
| Joint venture investment in
indirect real estate development |
|
|
2,225 |
|
|
2,225 |
|
| Investment in equity
instrument |
|
|
3,000 |
|
|
— |
|
|
Total Enhanced Return Portfolio |
|
$ |
62,658 |
|
$ |
72,945 |
|
Real Estate Inventory, net of collateral
liability
|
As at |
|
December 31, 2023 |
|
December 31, 2022 |
|
Real Estate Inventory |
|
$ |
161,564 |
|
|
$ |
30,245 |
| Real Estate Inventory
Collateral Liability |
|
|
(69,025 |
) |
|
|
— |
|
Real Estate Inventory, net of collateral
liability |
|
$ |
92,539 |
|
|
$ |
30,245 |
| OPERATING
RESULTS1 |
|
|
|
|
|
| (In thousands of
Canadian dollars, except units, per unit amounts and where
otherwise noted) |
| |
|
|
|
|
|
| NET INCOME
AND COMPREHENSIVE INCOME |
Three months ended December 31, |
|
|
|
|
Year ended December 31, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
|
Net investment income on financial assets measured at amortized
cost |
$ |
29,722 |
|
$ |
31,342 |
|
$ |
124,205 |
|
$ |
109,803 |
|
$ |
90,249 |
|
|
Fair value gain and other income on financial assets measured at
FVTPL |
|
463 |
|
|
736 |
|
|
1,282 |
|
$ |
1,388 |
|
$ |
(10,291 |
) |
|
Net rental gain (loss) income |
|
327 |
|
|
(278 |
) |
|
(595 |
) |
|
(151 |
) |
|
1,499 |
|
|
Fair value gain (loss) on real estate properties |
|
— |
|
|
82 |
|
|
63 |
|
|
(296 |
) |
|
(4,374 |
) |
|
Expenses |
|
(5,443 |
) |
|
(6,671 |
) |
|
(19,140 |
) |
|
(22,592 |
) |
|
(16,237 |
) |
|
Income from operations |
$ |
25,069 |
|
$ |
25,211 |
|
$ |
105,815 |
|
$ |
88,152 |
|
$ |
60,846 |
|
| |
|
|
|
|
|
| Financing costs: |
|
|
|
|
|
|
Financing cost on credit facility |
|
(7,846 |
) |
|
(8,137 |
) |
|
(30,396 |
) |
|
(23,234 |
) |
|
(16,734 |
) |
|
Financing cost on convertible debentures |
|
(2,249 |
) |
|
(2,260 |
) |
|
(8,998 |
) |
|
(9,022 |
) |
|
(6,745 |
) |
|
Fair value gain on derivative contract |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
3,940 |
|
|
Net income and comprehensive income |
$ |
14,974 |
|
$ |
14,814 |
|
$ |
66,421 |
|
$ |
55,896 |
|
$ |
41,307 |
|
| Payout ratio on earnings per
share |
|
95.8 |
% |
|
97.7 |
% |
|
86.7 |
% |
|
103.3 |
% |
|
135.9 |
% |
| |
|
|
|
|
|
|
ADJUSTED NET INCOME AND COMPREHENSIVE INCOME |
|
|
|
| Net income and comprehensive
income |
$ |
14,973 |
|
$ |
14,814 |
|
$ |
66,421 |
|
$ |
55,896 |
|
$ |
41,307 |
|
|
Add: Fair value (gain) on derivative contract (interest rate
swap) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(3,940 |
) |
|
Add: Net unrealized (gain) loss on financial assets measured at
FVTPL |
|
(292 |
) |
|
(122 |
) |
|
(342 |
) |
|
1,546 |
|
|
13,748 |
|
|
Add: Net unrealized loss on real estate properties |
|
— |
|
|
— |
|
|
— |
|
|
95 |
|
|
4,374 |
|
|
Adjusted net income and comprehensive
income1 |
$ |
14,681 |
|
$ |
14,692 |
|
$ |
66,078 |
|
$ |
57,537 |
|
$ |
55,489 |
|
| Payout ratio on adjusted
earnings per share1 |
|
97.7 |
% |
|
98.6 |
% |
|
87.2 |
% |
|
100.3 |
% |
|
101.2 |
% |
| |
|
|
|
|
|
|
PER SHARE INFORMATION |
|
|
|
|
|
|
Dividends declared to shareholders |
$ |
14,340 |
|
$ |
14,480 |
|
$ |
57,603 |
|
$ |
57,721 |
|
$ |
56,142 |
|
| Weighted average common shares
(in thousands) |
|
83,176 |
|
|
83,970 |
|
|
83,509 |
|
|
83,622 |
|
|
81,325 |
|
| Dividends per share |
$ |
0.17 |
|
$ |
0.17 |
|
$ |
0.69 |
|
$ |
0.69 |
|
$ |
0.69 |
|
| Earnings per share
(basic) |
$ |
0.18 |
|
$ |
0.18 |
|
$ |
0.80 |
|
$ |
0.67 |
|
$ |
0.51 |
|
| Earnings per share
(diluted) |
$ |
0.18 |
|
$ |
0.18 |
|
$ |
0.78 |
|
$ |
0.67 |
|
$ |
0.51 |
|
| Adjusted earnings per share
(basic)1 |
$ |
0.18 |
|
$ |
0.17 |
|
$ |
0.79 |
|
$ |
0.69 |
|
$ |
0.68 |
|
|
Adjusted earnings per share (diluted)1 |
$ |
0.18 |
|
$ |
0.17 |
|
$ |
0.78 |
|
$ |
0.69 |
|
$ |
0.68 |
|
1 Refer to non-IFRS measures section.
| OPERATING
RESULTS1 |
|
|
|
|
| (In thousands of
Canadian dollars, except units, per unit amounts and where
otherwise noted) |
| |
Three months ended December 31, |
|
Year ended December 31, |
|
|
DISTRIBUTABLE INCOME |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
Adjusted net income and comprehensive income1 |
$ |
14,681 |
|
$ |
14,692 |
|
$ |
66,078 |
|
$ |
57,537 |
|
|
Less: Amortization of lender fees |
|
(1,886 |
) |
|
(1,748 |
) |
|
(8,279 |
) |
|
(8,726 |
) |
|
Add: Lender fees received and receivable |
|
2,163 |
|
|
2,056 |
|
|
6,597 |
|
|
7,708 |
|
|
Add: Amortization of financing costs, credit facility |
|
399 |
|
|
262 |
|
|
953 |
|
|
984 |
|
|
Add: Amortization of financing costs, convertible debentures |
|
243 |
|
|
253 |
|
|
972 |
|
|
1,006 |
|
|
Add: Accretion expense, convertible debentures |
|
114 |
|
|
114 |
|
|
454 |
|
|
454 |
|
|
Add: Unrealized fair value gain on DSU |
|
(8 |
) |
|
(33 |
) |
|
(67 |
) |
|
(201 |
) |
|
Add: Expected credit loss |
|
1,782 |
|
|
2,800 |
|
|
3,649 |
|
|
7,482 |
|
|
Distributable income and adjusted distributable
income1, 2 |
$ |
17,488 |
|
$ |
18,396 |
|
$ |
70,357 |
|
$ |
66,244 |
|
| Payout ratio on distributable
income1 |
|
82.0 |
% |
|
78.7 |
% |
|
81.9 |
% |
|
87.1 |
% |
| |
|
|
|
|
|
PER SHARE INFORMATION |
|
|
|
|
|
Dividends declared to shareholders |
$ |
14,340 |
|
$ |
14,480 |
|
$ |
57,603 |
|
$ |
57,721 |
|
| Weighted average common shares
(in thousands) |
|
83,176 |
|
|
83,970 |
|
|
83,509 |
|
|
83,622 |
|
| Dividends per share |
$ |
0.17 |
|
$ |
0.17 |
|
$ |
0.69 |
|
$ |
0.69 |
|
|
Distributable and adjusted distributable income per share 1 |
$ |
0.21 |
|
$ |
0.22 |
|
$ |
0.84 |
|
$ |
0.79 |
|
1. Refer to
non-IFRS measures section. 2. There are no
adjustments for the periods presented.
SOURCE: Timbercreek Financial
For further information, please contact:
Timbercreek FinancialBlair
Tamblyn, CEOTracy Johnston, CFO Karynna Ma, Vice President,
Investor Relations
416-923-9967www.timbercreekfinancial.com
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