Timbercreek Financial Announces 2024 First Quarter Results


TORONTO, May 06, 2024 (GLOBE NEWSWIRE) -- 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

$ millionsQ1 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 shareQ1 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 InvestmentsQ1 2024  Q1 2023 Q4 2023
       
Weighted Average Loan-to-Value 64.4%   68.5%  65.6%
Weighted Average Remaining Term to Maturity 0.8yr   0.8yr  0.7yr
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%
  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.
  2. 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 2656
Passcode: 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 months
ended 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 
  1. 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 Financial
Blair Tamblyn, CEO
Tracy Johnston, CFO
416-923-9967
www.timbercreekfinancial.com