Timbercreek Financial Announces 2017 Fourth Quarter Results and Year-End 2017 Results

TORONTO, ON—(Marketwired – March 06, 2018) – Timbercreek Financial (TSX: TF) (the “Company”) announced today its financial results for the three months and year ended December 31, 2017 (“Q4 2017″ and “2017”, respectively).

“The fourth quarter closed off an eventful and successful 2017 for the company and solidified our position as the leading non–bank lender providing customized short–term mid–ticket transitional lending secured by commercial real estate,” said Cameron Goodnough, CEO of Timbercreek Financial. “We delivered on our objective to generate attractive returns from a high–quality, conservatively positioned mortgage portfolio focused on first mortgages on income–producing properties. With the new capital raised in 2017 and early 2018, we have expanded and diversified our capital base to take advantage of a strong pipeline of investment opportunities.”

Fourth Quarter Highlights (versus Q4 2016)

  • Net investment income earned was $23.2 million, up from $20.6 million (Q3 2017 – $23.5 million), Net income and comprehensive income was $12.9 million, compared to $13.1 million (Q3 2017 – $13.2 million)
  • Basic and diluted earnings per share of $0.17 compared to $0.18 (Q3 2017 – $0.18)
  • Weighted average interest rate on net mortgage investments was 6.9% compared to 7.4% (Q3 2017 – 7.0%), which reflects turnover in the portfolio into lower–risk and more liquid mortgages
  • Weighted average lender fees on all investments were 1.0%, compared to 0.8% (Q3 2017 – 1.6%)
  • Distributable income per share at $0.18, compared to $0.19 (Q3 2017 – $0.19)
  • Payout ratio on distributable income increased to 93.3% compared to 90.8% (Q3 2017 – 89.8%)
  • During Q4 2017, monthly dividend increased from $0.057 to $0.0575

Year ended December 31, 2017 (versus 2016)

  • Net investment income was $88.9 million, up from $61.4 million
  • Net income and comprehensive income was $52.2 million, up from $46.0 million. Adjusted net income and comprehensive income was $52.2 million, up from $39.9 million
  • Basic and diluted earnings per share were $0.70, compared to $0.80. Adjusted earnings per share were $0.70 in both years
  • Weighted average interest rate was 7.0% compared to 7.9%, which reflects the continuous repositioning of the portfolio
  • Weighted average lender fees were 1.0% compared to 1.1%
  • Distributable income per share increased to $0.75 compared to $0.74
  • The Company completed two issuances of unsecured convertible debentures, raising $91.0 million in gross proceeds

December 31, 2017 – Investment Portfolio Highlights

  • Net mortgage investments increased by 10.4% to $1,103.6 million (December 31, 2016 – $1,000.0 million*) primarily due to $532.9 million in advances offset by $428.8 million in repayments received
  • Other investments within the enhanced return portfolio were $57.9 million (December 31,2016 – $9.8 million), a net increase of $48.1 million in 2017 (2016 – $9.8 million)
  • The Company completed a joint acquisition resulting in a 20.46% interest in a $201.7 million portfolio that is comprised of 14 properties totaling 1,079 units located in Saskatoon and Regina, Saskatchewan for total consideration of $41.3 million
  • Net mortgage investments secured by cash–flowing properties represented 86.7% of the portfolio (September 30, 2017 – 85.9%), a key hallmark of our defensive investment strategy and highlighted by 50.1% secured by rental apartments
  • First mortgages, which are lower risk, represented 93.0% of the portfolio (September 30, 2017 – 92.7%)
  • Weighted average loan–to–value decreased to 66.0% (September 30, 2017 – 65.6%)
  • Weighted average remaining term to maturity decreased to 1.1 years (September 30, 2017 – 1.2 years)
  • The portfolio continues to be well diversified across Canada's largest provinces: Ontario (55.0%), Quebec (13.5%), British Columbia (12.2%), and Alberta (12.1%)

Operating Results Highlights

    Three months ended
December 31,
    Year ended December 31,  
    2017     2016       2017     2016     2015  
Net investment income $ 23,178   $ 20,583     $ 88,937   $ 61,422   $ 43,003  
Net rental income $ 99   $     $ 193   $   $  
Income from operations $ 19,644   $ 17,940     $ 75,374   $ 51,231   $ 32,750  
Total net income and comprehensive income $ 12,876   $ 13,078     $ 52,204   $ 45,999   $ 28,021  
Earnings per share (basic) $ 0.17   $ 0.18     $ 0.70   $ 0.80   $ 0.69  
Earnings per share (diluted) $ 0.17   $ 0.18     $ 0.70   $ 0.80   $ 0.69  
Adjusted total net income and comprehensive income $ 12,876   $ 13,162     $ 52,204   $ 39,940   $ 28,021  
Adjusted earnings per share (basic and diluted) $ 0.17   $ 0.18     $ 0.70   $ 0.70   $ 0.69  
                                 
Dividends to shareholders $ 12,769   $ 12,630     $ 50,736   $ 39,895   $ 29,253  
Dividends per common share $ 0.172   $ 0.171     $ 0.685   $ 0.702   $ 0.720  
Payout ratio on earnings per share   99.2 %   96.6 %     97.2 %   86.7 %   104.4 %
Distributable income $ 13,681   $ 13,905     $ 55,262   $ 42,636   $ 29,484  
Distributable income per share $ 0.18   $ 0.19     $ 0.75   $ 0.74   $ 0.73  
Payout ratio on distributable income   93.3 %   90.8 %     91.8 %   93.5 %   99.2 %

Quarterly Conference Call

Interested parties are invited to participate in a conference call with management on Wednesday, March 7, 2018 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: 5583929

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.

*Amended to reflect reclassification of an investment from other investments to net mortgage investments. Previously reported amounts for net mortgage investments and net other investments were $1,010.0 million