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Timbercreek Mortgage Investment Corporation announces 2014 third quarter results - Timbercreek Mortgage Investment Corporation

Toronto Stock Exchange: TMC

TORONTO, Nov. 6, 2014 /CNW/ - Timbercreek Mortgage Investment Corporation (TSX: TMC) (the "Company") today announced its financial results for the three and nine months ended September 30, 2014.

"While the Company has not fully recovered from the impacts of the cash drag experienced earlier in the year, we are pleased with the strong investment activity in the third quarter that continues to be focused on quality mortgages, primarily secured by income-producing assets," states Andrew Jones, Chief Executive Officer of the Company. "This momentum has continued into the fourth quarter where we have already deployed an additional $63 million in capital at higher rates bringing our weighted average interest rate back in line with previous quarters."

"It is important to note, that the underperformance in earnings year-to-date is a result of carrying excess cash on the balance sheet and is in no way related to the performance of the underlying investments," explained Mr. Jones. "By year end, we expect to have the portfolio fully deployed and operating as what we believe to be one of the highest-quality portfolios in the market today."

Key Financial Highlights

  • Net interest income earned by the Company was $8.7 million (Q3 2013 - $9.9 million), a decrease of 12.4%, from the three months ended September 30, 2013 ("Q3 2013"). Net interest income for the nine months ended September 30, 2014 (the "Period") decreased to $26.9 million, or 9.6%, compared to $29.8 million for the nine months ended September 30, 2013 ("YTD 2013"). The decrease is primarily due to historically high repayments in 2014, coupled with downward pressure on lending rates.
  • Income from operations for Q3 2014 increased to $6.6 million, or 55.1%, compared to $4.3 million for Q3 2013. The increase is mainly attributed to the decrease in expenses from Q3 2013 relating to costs incurred on transition to a corporate issuer. Income from operations for the Period increased to $20.8 million, or 11.8%, compared to $18.6 million for YTD 2013. Although YTD 2014 has generated lower net interest income relative to YTD 2013, it has been offset by the reduction in expenses resulting from the transition costs and trailer fees and a higher mortgage loss provision experienced in YTD 2013.
  • Net mortgage investments increased by 9.1% to $346.1 million from $317.2 million as at December 31, 2013.
  • Earnings per share for Q3 2014 and the Period were $0.15 and $0.49 per common share.

Investment Portfolio Highlights

  • During Q3 2014, the Company funded 21 new net mortgage investments (Q3 2013 - 17) totaling $64.2 million (Q3 2013 - $42.1 million), had additional advances on existing net mortgage investments totaling $62.2 million (Q3 2013 - $6.5 million) and received full repayments on nine net mortgage investments (Q3 2013 - 14) and partial pay downs totaling $75.6 million (Q3 2013 - $44.3 million), resulting in net mortgage investments of $346.1 million as at September 30, 2014 (June 30, 2014 - $327.5 million).
  • As at September 30, 2014, the average loan-to-value was 64.9% (December 31, 2013 - 61.1%) whereas the weighted average loan-to-value on the mortgage investment portfolio was 70.1% (December 31, 2013 - 70.8%), well below the 85% loan-to-value limit in the Company's asset allocation model.
  • Weighted average interest rate on net mortgage investments decreased to 9.17% at September 30, 2014 from 9.81% at December 31, 2013 relating to increased competition in the market.
  • Weighted average lender fees received were 2.33% and 1.66% for Q3 2014 and the Period compared with 1.52% and 1.61% for the same comparable periods in 2013. The Company had significant advances in the Period coupled with larger fees on a couple investments.
  • Weighted average term to maturity was 2.2 years at September 30, 2014 (December 31, 2013 - 2.2 years), well within range of its 1.5 - 3.0 year target.
  • The portfolio continues to be well-diversified across Canada's largest provinces: Ontario (52.5%), Quebec (19.5%), Alberta (11.1%) and B.C. (8.3%).

Financial Highlights

  Three months ended Nine months ended Year ended
30, 2014
30, 2013
30, 2014
30, 2013
31, 2013
FINANCIAL INFORMATION (for the period ended)          
Distributable income       $ 6,559       $ 7,586       $ 20,034       $ 22,667       $ 30,204
Targeted dividend yield       6.61%       6.69%       6.56%       6.61% 6.61%
Actual dividend yield             7.84%             8.20%             8.54%             8.29% 8.33%
Closing trading price       $ 9.11       $ 9.14       $ 9.11       $ 9.14       $ 9.17
Payout ratio             111.70%             96.21%             114.49%             96.65%             96.92%
Dividends per share:          
    Class A       $ -       $ 0.189       $ -       $ 0.567       $ 0.630
    Class B       $ -       $ 0.201       $ -       $ 0.603       $ 0.670
    Common       $ 0.180       $ -       $ 0.582       $ -       $ 0.134
Net mortgage investments       $ 346,054       $ 354,962       $ 346,054       $ 354,962       $ 317,154
Total number of net mortgage investments 100 92 100 92 96
Average net mortgage investment       $ 3,461       $ 3,858       $ 3,461       $ 3,858       $ 3,304
Weighted average interest rate 9.17% 9.68% 9.17% 9.68% 9.81%
Weighted average lender fees 2.33% 1.52% 1.66% 1.61% 1.69%
Turnover ratio 23.34% 12.38% 74.54% 55.55% 79.76%

Quarterly Conference Call

Interested parties are invited to participate in a conference call with management on Friday, November 7, 2014 at 2:00 p.m. (EST). Instructions on how to participate on this call are provided below:

Dial-in-number(s):  1-(855) 223-7310

Event Conference ID:  6854417

The playback of the conference call will also be available on www.timbercreekmic.com following the call.

About the Company

The Company provides investors with an opportunity to invest in a diversified portfolio of mortgage investments originated and underwritten by its manager, Timbercreek Asset Management Inc. (the "Manager").  The Company focuses on capital preservation and the generation of attractive, stable returns, allowing for the payment of monthly dividends to shareholders.

*Non-GAAP 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. The Company has presented such non-IFRS measures because the Manager believes they are relevant measures of the ability of the Company to earn and distribute cash dividends to investors and to evaluate the Company's performance. These non-IFRS measures should not be construed as alternatives to net income (loss) and comprehensive income (loss) or cash flows from operating activities 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 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.

SOURCE Timbercreek Mortgage Investment Corporation

Timbercreek Asset Management Inc.
Carrie Morris
Investor Relations