Timbercreek Financial Announces 2022 Third Quarter Results


TORONTO, Nov. 10, 2022 (GLOBE NEWSWIRE) -- Timbercreek Financial (TSX: TF) (the “Company”) announced today its financial results for the three months and nine months ended September 30, 2022 (“Q3 2022”).

Q3 2022 Highlights1

  • Q3 2022 results reflect a healthy and stable portfolio with lower turnover. Net new mortgage fundings were $54.2 million and advances on existing mortgages were $34.6 million, offset by net mortgage repayments of $41.2 million and syndications of $26.9 million. As noted last quarter, Management anticipated lower origination volumes in Q3 2022, however, the increase in interest income more than replaced the historical level of lender fees.
  • At the end of the period, net mortgage investments were $1,255.4 million (versus $1,159.6 million at year-end 2021). The quarterly transaction volume resulted in a Q3 2022 turnover ratio of 3.3%.
  • Declared $14.5 million in dividends to shareholders, or $0.17 per share, and delivered distributable income and adjusted distributable income of $16.8 million, or $0.20 per share, representing a payout ratio of 86.2% on both distributable income and adjusted distributable income which is well within Management’s target payout range.
  • Net income and comprehensive income of $13.5 million. After adjusting for $0.4 million of fair value losses on mortgages and real estate properties measured at fair value through profit and loss, adjusted net income and comprehensive income was $13.9 million for the period, up from $13.7 million in the same period last year.
  • Basic and diluted earnings per share were $0.16, and basic and diluted adjusted earnings per share were  $0.17, reflecting  a payout ratio of 104.3% (Q3 2021 – 102.3%) on an adjusted distributable income basis.
  • There were no new additions to either Stage II or Stage III loans in Q3 2022, however, allowance for credit losses increased to $3.73 million due to increased provisions on an existing Stage III loan comprised of condominium units in Edmonton that are currently for sale.
  • Maintained conservative portfolio risk position focused on income-producing commercial real estate
    • 69.4% weighted average loan-to-value     `          
    • 90.9% first mortgages in  mortgage investment portfolio
    • 89.3% of mortgage investment portfolio is invested in cash-flowing properties
    • 8.5% quarterly weighted average interest rate on net mortgage investments
  • In July, the Company partially exercised the accordion feature on its credit facility, increasing the facility size to $600.0 million (from $575.0 million).

“Our mortgage portfolio continued to perform well in the third quarter, demonstrating the durability through market cycles that has become a hallmark of our income-focused investment philosophy,” said Blair Tamblyn, CEO of Timbercreek Financial. “We generated strong distributable income in the quarter as our largely variable rate portfolio benefited from the rising rate environment, offsetting an anticipated reduction in repayments and origination volume. We anticipate a return to more typical transaction levels in the coming quarters, and we continue to be well positioned to act on these opportunities.”

Quarterly Comparison

$ millionsQ3 2022  Q3 2021 Q2 2022
       
Net Mortgage Investments1$1,255.4   $1,096.0  $1,235.0 
Enhanced Return Portfolio Investments1$71.2   $97.6  $68.2 
       
Net Investment Income$30.0   $22.0  $25.8 
Income from Operations$22.6   $15.4  $21.7 
Net Income and comprehensive Income$13.5   $10.4  $14.7 
--Adjusted Net Income and comprehensive Income$13.9   $13.7  $15.2 
Distributable Income$16.8   $13.5  $15.9 
Dividends declared  to Shareholders$14.5   $14.0  $14.5 
       
$ per shareQ3 2022  Q3 2021 Q2 2022
       
Dividends per share$0.17   $0.17  $0.17 
Distributable Income per share$0.20   $0.17  $0.19 
Adjusted distributable Income per share$0.20   $0.17  $0.19 
Earnings per share$0.16   $0.13  $0.17 
--Adjusted Earnings per share$0.17   $0.17  $0.18 
       
Payout Ratio on Distributable Income1 86.2%   103.7%  91.3%
Payout Ratio on Earnings per share 107.2%   134.7%  98.7%
--Payout Ratio on Adjusted Earnings per share 104.3%   102.3%  95.6%
       
Net Mortgage InvestmentsQ3 2022  Q3 2021 Q2 2022
       
Weighted Average Loan-to-Value 69.4%   69.6%  69.9%
Weighted Average Remaining Term to Maturity0.9 yr  0.9 yr 1.0 yr
First Mortgages 90.9%   90.2%  92.5%
Cash-Flowing Properties 89.3%   87.1%  90.8%
Multi-family residential 55.4%   49.4%  55.4%
Floating Rate Loans with rate floors (at quarter end) 87.3%   82.7%  87.5%
       
Weighted Average Interest Rate      
For the quarter ended 8.5%   7.1%  7.2%
Weighted Average Lender Fee      
New and Renewed 0.7%   0.6%  1.0%
New Net Mortgage Investment Only 1.2%   0.9%  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.

Quarterly Conference Call

Interested parties are invited to participate in a conference call with management on Thursday, November 10, 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/82579568746?pwd=L2lHSGxxTDVyeDAvL1VDWk1UbjhXUT09
Webinar ID: 825 7956 8746
Passcode: 1234
Participant Dial-In Number: 1 647 558 0588

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  September 30, 2022   December 31, 2021 
Mortgage investments, excluding mortgage syndications $                   1,256,363   $1,159,210 
Mortgage syndications                           700,896    444,429 
Mortgage investments, including mortgage syndications                        1,957,259    1,603,639 
Mortgage syndication liabilities                         (700,896)  (444,429)
                         1,256,363    1,159,210 
Interest receivable                            (15,691)  (10,824)
Unamortized lender fees                                6,890    8,278 
Allowance for mortgage investments loss                                7,805    2,970 
Net mortgage investments $                   1,255,367   $1,159,634 
         


Enhanced return portfolio

As at  September 30, 2022  December 31, 2021 
Collateralized loans, net of allowance for credit loss $                         58,660  $58,000 
Finance lease receivable, measured at amortized cost                                6,020   6,020 
Investment, measured at FVTPL                                4,336   4,985 
Investment in indirect real estate development                                2,225   2,225 
Total Other Investments                             71,241   71,230 
     
Investment properties                                      —   44,063 
Credit facility (investment properties)                                      —   (30,690)
Net equity in investment properties                                      —   13,373 
     
Total Enhanced Return Portfolio $                         71,241  $84,603 
        


OPERATING RESULTS1      
 Three months ended
September 30, 

 Nine months ended
September 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$29,982 $22,042  $78,461 $67,871 $90,249 
Total fair value (loss) gain and other income on financial assets measured at FVTPL$403 $(3,577) $652 $(2,887)$(10,291)
Net rental (loss) income$(291)$386  $127 $1,110 $1,499 
Total fair value loss on real estate properties$ $  $(378)$ $(4,374)
Expenses$7,530 $3,404  $15,921 $12,476 $16,237 
Income from operations$22,564 $15,447  $62,941 $53,618 $60,846 
       
       
Financing costs:      
Financing cost on credit facilities$6,788 $4,040  $15,097 $12,689 $16,734 
Financing cost on convertible debentures$2,256 $1,981  $6,762 $4,978 $6,745 
Fair value gain on derivative contract$ $(995) $ $(2,946)$(3,940)
Net income and comprehensive income$13,520 $10,421  $41,082 $38,897 $41,307 
Payout ratio on earnings per share 107.2% 134.7%  105.3% 107.9% 135.9%
       
ADJUSTED NET INCOME AND COMPREHENSIVE INCOME    
Net income and comprehensive income$13,520 $10,421  $41,082 $38,897 $41,307 
Less: fair value gain on derivative contract (interest rate swap)$ $(995) $ $(2,946)$(3,940)
Add: net unrealized loss on financial assets measured at FVTPL$369 $4,295  $1,691 $5,511 $13,748 
Add: Net unrealized loss on real estate properties$ $  $95 $ $4,374 
Adjusted net income and comprehensive income1$13,889 $13,721  $42,868 $41,462 $55,489 
Payout ratio on adjusted earnings per share1 104.3% 102.3%  100.9% 101.3% 101.2%
       
PER SHARE INFORMATION      
Dividends declared to shareholders$14,491 $14,037  $43,241 $41,982 $56,142 
Weighted average common shares (in thousands) 84,005  81,311   83,505  81,093  81,325 
Dividends per share$0.17 $0.17  $0.52 $0.52 $0.69 
Earnings per share (basic)$0.16 $0.13  $0.49 $0.48 $0.51 
Earnings per share (diluted)$0.16 $0.13  $0.49 $0.48 $0.51 
Adjusted earnings per share (basic)1$0.17 $0.17  $0.51 $0.51 $0.68 
Adjusted earnings per share (diluted)1$0.17 $0.17  $0.51 $0.51 $0.68 

1.     Refer to non-IFRS measures section.


OPERATING RESULTS1      
 Three months ended
September 30,

  Nine months ended
September 30
 Year ended
December 31,

 
DISTRIBUTABLE INCOME 2022  2021   2022  2021  2021 
Adjusted net income and comprehensive income1$13,889 $13,721  $42,868 $41,462 $55,489 
Less: amortization of lender fees (2,425) (2,697)  (6,978) (7,140)$(9,275)
Add: lender fees received and receivable 1,076  2,148   5,652  7,026 $10,746 
Add: amortization of financing costs, credit facility 253  178   722  833 $1,022 
Add: amortization of financing costs, debentures 250  428   753  861 $1,060 
Add: accretion expense, debentures 113  128   340  246 $323 
Add: unrealized fair value (gain) loss on DSU (78) 15   (168) 121  104 
Add: allowance for (recovery of) expected credit loss 3,732  (381)  4,682  1,557  1,660 
Distributable income1$16,810 $13,540  $47,871 $44,966 $61,129 
Payout ratio on distributable income1 86.2% 103.7%  90.3% 93.4% 91.8%
       
ADJUSTED DISTRIBUTABLE INCOME      
Distributable income$16,810 $13,540  $47,871 $44,966 $61,129 
Less: One-time distribution income        (707) (707)
Adjusted Distributable income1$16,810 $13,540  $47,871 $44,259 $60,422 
Payout ratio on adjusted distributable income1 86.2% 103.7%  90.3% 94.9% 92.9%
       
PER SHARE INFORMATION      
Dividends declared to shareholders$14,491 $14,037  $43,241 $41,982 $56,142 
Weighted average common shares (in thousands) 84,005  81,311   83,505  81,093  81,325 
Dividends per share$0.17 $0.17  $0.52 $0.52 $0.69 
Distributable income per share1$0.20 $0.17  $0.57 $0.55 $0.75 
Adjusted distributable income per share1$0.20 $0.17  $0.57 $0.55 $0.74 

1.     Refer to non-IFRS measures section.


SOURCE: Timbercreek Financial

For further information, please contact:
Timbercreek Financial
Blair Tamblyn, CEO
Tracy Johnston, CFO
Karynna Ma, Vice President, Investor Relations

1-844-304-9967
www.timbercreekfinancial.com