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Timbercreek Financial Announces 2022 Second Quarter Results

·11-min read
Timbercreek Financial
Timbercreek Financial

TORONTO, Aug. 11, 2022 (GLOBE NEWSWIRE) -- Timbercreek Financial (TSX: TF) (the “Company”) announced today its financial results for the three months and six months ended June 30, 2022 (“Q2 2022”).

Q2 2022 Highlights1

  • Q2 2022 results reflect healthy funding volumes and lower repayments. The Company executed on net new mortgage fundings of $150.8 million, and advances on existing mortgages of $13.9 million, offset by net mortgage repayments of $98.2 million, syndications of $64.5 million and the exchange of two FVTPL loans of $30.0 million for a real estate investment. At the end of the period, net mortgage investments were $1,235.0 million (versus $1,159.6 at year-end 2021). The quarterly transaction volume resulted in a Q2 2022 turnover ratio of 8.1%.

  • Declared $14.5 million in dividends to shareholders, or $0.17 per share, and delivered distributable income and adjusted distributable income of $15.9 million, or $0.19 per share, representing a payout ratio of 91.3% on both distributable income and adjusted distributable income which is well within Management's target payout range.

  • Net income and comprehensive income of $14.7 million which includes $0.5 million of fair value losses on mortgages and investment properties measured at fair value through profit and loss. After adjusting for these losses, adjusted net income and comprehensive income was $15.2 million for the period, up from 13.6 million in the same period last year.

  • Basic and diluted earnings per share were $0.17, and basic and diluted adjusted earnings per share were $0.18, reflecting a payout ratio of 91.3% (Q2 2021 – 90.8%) on an adjusted distributable income basis.
    69.9% weighted average loan-to-value

    • 92.5% first mortgages in mortgage investment portfolio

    • 90.8% of mortgage investment portfolio is invested in cash-flowing properties

    • 7.2% quarterly weighted average interest rate on net mortgage investments
      Maintained conservative portfolio risk position focused on income-producing commercial real estate

  • In April, the Company completed the disposition of its interest in the Saskatchewan Portfolio as well as successfully aligned its interest in two FVTPL loans by exchanging them for an interest in the underlying assets of one loan, a portfolio of lands in Ontario, for which it intends to sell.

  • In July, subsequent to quarter end, the Company partially exercised the accordion feature on its credit facility, increasing the facility size to $600.0 million from $575.0 million.

"Against a backdrop of financial market volatility and economic uncertainty, it was another solid quarter for the company, highlighted by the continued resilience and performance of our underlying mortgage portfolio,” said Blair Tamblyn, CEO of Timbercreek Financial. “As we expected, we are seeing the benefit of recent interest rate hikes on our primarily floating rate portfolio, translating into higher interest income. Our long history in this space has shown us that periods of rapid rate increases, while they may impact short-term transaction volume, generally create opportunity for flexible alternative lenders, and we have the capital and team to take advantage of these conditions.”

  1. Refer to non-IFRS measures section below for net mortgages, enhanced return portfolio adjusted net income and comprehensive income and adjusted distributable income


Quarterly Comparison

$ millions

Q2 2022

 

 

Q2 2021

 

Q1 2022

 

 

 

 

 

 

 

Net Mortgage Investments1

$

1,235.0

 

 

 

$

1,159.2

 

 

$

1,263.3

 

Enhanced Return Portfolio Investments1

$

68.2

 

 

 

$

94.7

 

 

$

80.6

 

 

 

 

 

 

 

 

Net Investment Income

$

25.8

 

 

 

$

23.4

 

 

$

22.7

 

Income from Operations

$

21.7

 

 

 

$

18.8

 

 

$

18.7

 

Net Income and comprehensive Income

$

14.7

 

 

 

$

13.5

 

 

$

12.9

 

--Adjusted Net Income and comprehensive Income

$

15.2

 

 

 

$

13.6

 

 

$

13.8

 

Distributable Income

$

15.9

 

 

 

$

16.1

 

 

$

15.2

 

--Adjusted Distributable Income

$

15.9

 

 

 

$

15.4

 

 

$

15.2

 

Dividends declared to Shareholders

$

14.5

 

 

 

$

14.0

 

 

$

14.3

 

 

 

 

 

 

 

 

$ per share

Q2 2022

 

 

Q2 2021

 

Q1 2022

 

 

 

 

 

 

 

Dividends per share

$

0.17

 

 

 

$

0.17

 

 

$

0.17

 

Distributable Income per share

$

0.19

 

 

 

$

0.20

 

 

$

0.18

 

Adjusted distributable Income per share

$

0.19

 

 

 

$

0.19

 

 

$

0.18

 

Earnings per share

$

0.17

 

 

 

$

0.17

 

 

$

0.16

 

--Adjusted Earnings per share

$

0.18

 

 

 

$

0.17

 

 

$

0.17

 

 

 

 

 

 

 

 

Payout Ratio on Distributable Income1

 

91.3

%

 

 

 

86.8

%

 

 

93.9

%

--Payout ratio on Adjusted Distributable Income

 

91.3

%

 

 

 

90.8

%

 

 

93.9

%

Payout Ratio on Earnings per share

 

98.7

%

 

 

 

93.1

%

 

 

110.8

%

--Payout Ratio on Adjusted Earnings per share

 

95.6

%

 

 

 

102.7

%

 

 

103.2

%

 

 

 

 

 

 

 

Net Mortgage Investments

Q2 2022

 

 

Q2 2021

 

Q1 2022

 

 

 

 

 

 

 

Weighted Average Loan-to-Value

 

69.9

%

 

 

 

69.7

%

 

 

71.3

%

Weighted Average Remaining Term to Maturity

1.0 yr

 

 

0.9 yr

 

1.1 yr

First Mortgages

 

92.5

%

 

 

 

92.0

%

 

 

92.5

%

Cash-Flowing Properties

 

90.8

%

 

 

 

89.0

%

 

 

90.3

%

Multi-family residential

 

55.4

%

 

 

 

51.4

%

 

 

55.3

%

Floating Rate Loans with rate floors (at quarter end)

 

87.5

%

 

 

 

79.5

%

 

 

85.6

%

 

 

 

 

 

 

 

Weighted Average Interest Rate

 

 

 

 

 

 

For the quarter ended

 

7.2

%

 

 

 

7.2

%

 

 

6.6

%

Weighted Average Lender Fee

 

 

 

 

 

 

New and Renewed

 

1.0

%

 

 

 

0.8

%

 

 

1.2

%

New Net Mortgage Investment Only

 

1.2

%

 

 

 

1.3

%

 

 

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, August 11, 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/84465194435?pwd=VWI1N3Foc2o4dTFCRnBqcENuU2Y5QT09
      Webinar ID: 844 6519 4435
      Passcode: 1234
      Participant Dial-In Number: 1 647 374 4685

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

June 30, 2022

December 31, 2021

Mortgage investments, excluding mortgage syndications

$

1,235,567

 

$

1,159,210

 

Mortgage syndications

 

605,980

 

 

444,429

 

Mortgage investments, including mortgage syndications

 

1,841,547

 

 

1,603,639

 

Mortgage syndication liabilities

 

(605,980

)

 

(444,429

)

 

 

1,235,567

 

 

1,159,210

 

Interest receivable

 

(13,080

)

 

(10,824

)

Unamortized lender fees

 

8,530

 

 

8,278

 

Allowance for mortgage investments loss

 

4,001

 

 

2,970

 

Net mortgage investments

$

1,235,018

 

$

1,159,634

 


Enhanced return portfolio

As at

 

June 30, 2022

 

December 31, 2021

Collateralized loans, net of allowance for credit loss

 

$

55,489

 

$

58,000

 

Finance lease receivable, measured at amortized cost

 

 

6,020

 

 

6,020

 

Investment, measured at FVTPL

 

 

4,396

 

 

4,985

 

Indirect real estate development, measured using equity method:

 

 

 

 

Investment in Joint Venture

 

 

2,225

 

 

2,225

 

Total Other Investments

 

 

68,130

 

 

71,230

 

 

 

 

 

 

Investment properties

 

 

 

 

44,063

 

Credit facility (investment properties)

 

 

 

 

(30,690

)

Net equity in investment properties

 

 

 

 

13,373

 

 

 

 

 

 

Total Enhanced Return Portfolio

 

$

68,130

 

$

84,603

 


OPERATING RESULTS

 

 

Three months ended
June 30,

 

 

Six months ended
June 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

 

$

25,802

 

 

$

23,390

 

 

$

48,479

 

 

$

45,829

 

 

$

90,249

 

Total fair value (loss) gain and other income on financial assets measured at FVTPL

 

$

352

 

 

$

211

 

 

$

249

 

 

$

690

 

 

$

(10,291

)

Net rental income

 

$

36

 

 

$

376

 

 

$

418

 

 

$

724

 

 

$

1,499

 

Total fair value loss on real estate properties

 

$

(378

)

 

$

 

 

$

(378

)

 

$

 

 

$

(4,374

)

Expenses

 

$

4,150

 

 

$

5,177

 

 

$

8,391

 

 

$

9,072

 

 

$

16,237

 

Income from operations

 

$

21,662

 

 

$

18,800

 

 

$

40,377

 

 

$

38,171

 

 

$

60,846

 

 

 

 

 

 

 

 

 

 

 

 

Financing costs:

 

 

 

 

 

 

 

 

 

 

Financing cost on credit facilities

 

$

4,749

 

 

$

4,746

 

 

$

8,309

 

 

$

8,649

 

 

$

16,734

 

Financing cost on convertible debentures

 

$

2,233

 

 

$

1,543

 

 

$

4,506

 

 

$

2,997

 

 

$

6,745

 

Fair value (gain) loss on derivative contract

 

$

 

 

$

(974

)

 

$

 

 

$

(1,951

)

 

$

(3,940

)

Net income (loss) and comprehensive income

 

$

14,680

 

 

$

13,485

 

 

$

27,562

 

 

$

28,476

 

 

$

41,307

 

Payout ratio on earnings per share

 

 

98.7

%

 

 

103.7

%

 

 

104.3

%

 

 

98.1

%

 

 

135.9

%

 

 

 

 

 

 

 

 

 

 

 

ADJUSTED NET INCOME AND COMPREHENSIVE INCOME

 

 

 

 

 

 

Net income (loss) and comprehensive income

 

$

14,680

 

 

$

13,485

 

 

$

27,562

 

 

$

28,476

 

 

$

41,307

 

Add: fair value (gain) loss on derivative contract (interest rate swap)

 

$

 

 

$

(974

)

 

$

 

 

$

(1,951

)

 

$

(3,940

)

Add: net unrealized loss on financial assets measured at FVTPL

 

$

377

 

 

$

1,100

 

 

$

1,323

 

 

$

1,216

 

 

$

13,748

 

Add: Net unrealized loss on real estate properties

 

$

95

 

 

$

 

 

$

95

 

 

$

 

 

$

4,374

 

Adjusted net income and comprehensive income

 

$

15,152

 

 

$

13,611

 

 

$

28,980

 

 

$

27,741

 

 

$

55,489

 

Payout ratio on adjusted earnings per share

 

 

95.6

%

 

 

102.7

%

 

 

99.2

%

 

 

100.7

%

 

 

101.2

%

 

OPERATING RESULTS

 

 

Three months ended
June 30,

 

 

Six months ended
June 30,

 

 

Year ended
December 31,

 

DISTRIBUTABLE INCOME

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

 

 

2021

 

Adjusted net income and comprehensive income1

 

$

15,151

 

 

$

13,611

 

 

$

28,980

 

 

$

27,741

 

 

$

55,489

 

Less: amortization of lender fees

 

 

(2,263

)

 

 

(2,361

)

 

 

(4,553

)

 

 

(4,443

)

 

 

(9,275

)

Add: lender fees received and receivable

 

 

2,117

 

 

 

2,317

 

 

 

4,576

 

 

 

4,878

 

 

 

10,746

 

Add: amortization of financing costs, credit facility

 

 

254

 

 

 

501

 

 

 

469

 

 

 

655

 

 

 

1,022

 

Add: amortization of financing costs, debentures

 

 

251

 

 

 

252

 

 

 

503

 

 

 

433

 

 

 

1,060

 

Add: accretion expense, debentures

 

 

114

 

 

 

68

 

 

 

227

 

 

 

118

 

 

 

323

 

Add: unrealized fair value (gain) loss on DSU

 

 

(57

)

 

 

87

 

 

 

(90

)

 

 

106

 

 

 

104

 

Add: allowance for expected credit loss

 

 

301

 

 

 

1,638

 

 

 

950

 

 

 

1,938

 

 

 

1,660

 

Distributable income

 

$

15,869

 

 

$

16,113

 

 

$

31,062

 

 

$

31,426

 

 

$

61,129

 

Payout ratio on distributable income

 

 

91.3

%

 

 

86.8

%

 

 

92.6

%

 

 

88.9

%

 

 

91.8

%

 

 

 

 

 

 

 

 

 

 

 

ADJUSTED DISTRIBUTABLE INCOME

 

 

 

 

 

 

 

 

 

 

Distributable income

 

$

15,869

 

 

$

16,113

 

 

$

31,062

 

 

$

31,426

 

 

$

61,129

 

Less: One-time distribution income

 

 

 

 

 

(707

)

 

$

 

 

 

(707

)

 

 

(707

)

Adjusted Distributable income

 

$

15,869

 

 

$

15,406

 

 

$

31,062

 

 

$

30,719

 

 

$

60,422

 

Payout ratio on adjusted distributable income1

 

 

91.3

%

 

 

90.8

%

 

 

92.6

%

 

 

91.0

%

 

 

92.9

%


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