Timbercreek Financial Announces 2016 Fourth Quarter and Year-End 2016 Results

TORONTO, ON--(Marketwired - February 28, 2017) - Timbercreek Financial (TSX: TF) (the "Company") announced today its financial results for the three months and year ended December 31, 2016 ("Q4 2016" and "2016", respectively).

"We generated strong financial and operational results in the fourth quarter, concluding an exciting and eventful year, the highlight of which was the merger of Timbercreek MIC and Timbercreek Senior MIC to create Timbercreek Financial," said Andrew Jones, CEO of Timbercreek Financial. "Timbercreek Financial has established itself as one of the leading non-bank lenders capable of meeting the growing demand for shorter-duration, structured financing solutions from commercial real estate investors. Since the merger, we have increased our visibility in the investment community, cut our expense ratio in half, achieved our earnings and distribution targets and enhanced our portfolio diversification. We are very excited about the potential of the platform we have created, which has been built to capitalize on the demand from our borrowers while generating attractive risk-adjusted yield for our shareholders."

Fourth Quarter Highlights (versus Q4 2015)

For financial reporting purposes, the amalgamation contemplates Timbercreek Mortgage Investment Corporation ("TMC") as the acquirer of Timbercreek Senior Mortgage Investment Corporation ("MTG") on June 30, 2016, and as a result, the financials reflect a full quarter of TF's results for Q4 2016 in comparison to a full quarter of TMC's results for Q4 2015.

  • Net interest income was $20.6 million, up from $10.8 million (Q3 2016 - $19.1 million)
  • Net income and comprehensive income was $13.1 million, up from $6.9 million (Q3 2016 - $12.4 million)
  • Basic and diluted earnings per share were $0.18, up from $0.17 (Q3 2016 - $0.17)
  • Weighted average interest rate was 7.4% compared to 8.9% (Q3 2016 - 7.5%), which reflects management's repositioning of the portfolio into lower-risk and more liquid mortgages
  • Weighted average lender fees were 0.8%, compared to 1.4% (Q3 2016 - 1.0%)
  • Distributable income per share was $0.19, up from $0.18 (Q3 2016 - $0.19)
  • On February 7, 2017, the Company closed on an unsecured convertible debenture offering for gross proceeds of $40.0 million plus additional $6.0 million from the over-allotment option, for net proceeds of $43.5 million. The unsecured convertible debentures will mature on March 31, 2022 and pay interest semi-annually on March 31 and September 30 at a rate of 5.45% per annum.

Year ended December 31, 2016 (versus 2015)

  • Net interest income was $61.4 million, up from $43.0 million
  • Net income and comprehensive income was $46.0 million, up from $28.0 million. Adjusted net income and comprehensive income was $39.9 million, up from $28.0 million
  • Basic and diluted earnings per share were $0.80, up from $0.69. Adjusted earnings per share was $0.70 compared to $0.69
  • Weighted average interest rate was 7.9% compared to 9.1%, which reflects the repositioning of the portfolio
  • Weighted average lender fees were 1.1% compared to 1.2%
  • Distributable income per share was $0.74 compared to $0.73
  • Since June 30, 2016, the Company has completed two issuances of unsecured convertible debentures, raising a total of $91.8 million in gross proceeds, which provides additional diversification of capital funding sources as well as significant incremental capital to support the growth of our mortgage portfolio.

December 31, 2016 - Investment Portfolio Highlights

  • Net mortgage investments increased by 129.8% to $1,010.0 million (December 31, 2015 - $439.5 million) due to $440.6 million in advances offset by $339.6 million in repayments received as well as $469.5 million from the amalgamation of Timbercreek Senior Mortgage Investment Corporation
  • Net mortgage investments secured by cash-flowing properties represented 85.8% of the portfolio (September 30, 2016 - 85.7%), a key hallmark of our defensive investment strategy and highlighted by 48.8% secured by rental apartments
  • First mortgages, which are lower risk, represented 83.3% of the portfolio (September 30, 2016 - 82.3%)
  • Weighted average loan-to-value decreased to 65.7% (September 30, 2016 - 66.4%)
  • Weighted average remaining term to maturity of 1.3 years (September 30, 2016 - 1.2 years)
  • The portfolio continues to be well diversified across Canada's largest provinces: Ontario (53.4%), Quebec (12.7%), British Columbia (12.2%), and Alberta (8.2%)

Operating Results Highlights

   Three months ended
December 31,
Year ended December 31,
   2016  2015   2016  2015  2014
 Net interest income  $20,583  $10,814   $61,422  $43,003  $36,710
 Income from operations  $17,940  $8,427   $51,231  $32,750  $28,272
 Total net income and comprehensive income (basic and diluted)  $13,078  $6,905   $45,999  $28,021  $24,917
 Earnings per share (basic and diluted)  $0.18  $0.17   $0.80  $0.69  $0.63
 Adjusted total net income and comprehensive income (basic and diluted)  $13,162  $6,905   $39,940  $28,021  $24,917
 Adjusted earnings per share (basic and diluted)  $0.18  $0.17   $0.70  $0.69  $0.63
 Dividends to shareholders  $12,630  $7,296   $39,895  $29,253  $30,263
 Dividends per common share  $0.171  $0.180   $0.702  $0.720  $0.762
 Payout ratio on earnings per share   96.6%   105.7%    86.7%   104.4%   121.5%
 Distributable income  $13,911  $7,256   $42,681  $29,484  $27,899
 Distributable income per share  $0.19  $0.18   $0.74  $0.73  $0.71
 Payout ratio on distributable income   90.8%   100.6%    93.5%   99.2%   108.5%

Quarterly Conference Call

Interested parties are invited to participate in a conference call with management on Wednesday, March 1, 2017 at 11:00 a.m. (EST) which will be followed by a question and answer period with analysts. Instructions on how to participate on this call are provided below:

Dial-in-number(s): 1-(855) 223-7310
Event Conference ID: 54317821

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. 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.

Contact Information:

For further information:

Timbercreek Financial
Carrie Morris
Investor Relations