Mortgage Portfolio Strengthens and Continues to Build
Calgary, Alberta--(Newsfile Corp. - August 28, 2019) - Builders Capital Mortgage Corp. (TSXV: BCF) ("Builders Capital" or "the Company") today released second quarter financial results for the period ending June 30, 2019.
- Consistent with our targeted distribution goals, and with the prior 21 consecutive fiscal quarters, dividends paid to Class A public shareholders in the quarter were $0.1995 per share, representing an 8% annual return on the original $10.00 issue price.
- At quarter-end, our debt-to-equity ratio was a very conservative 1.9%.
- Earnings exceeded the amount required to pay committed Class A Non-Voting Share dividends by 1.2 times.
Sandy Loutitt, President of Builders Capital, commented, "In response to the ongoing weakness experienced in some of the housing markets in which we operate, we have, in recent years, pursued a program in which we have been very conservative in our lending practices. Despite the ongoing weakness in those markets, the effect of this program has been the recovery of our loan-to- value ratios to sustainable and positive levels. We are now witnessing an improvement in those markets and look forward to redeploying our capital into more profitable loans. Of course, we are very pleased that our share structure has operated as intended in consistently providing 8% per year dividends to our public shareholders through some difficult times."
Real estate markets in the regions in which we operate have suffered a sustained downturn in recent years, with substantial declines in home selling prices and sales volumes and increased marketing times. These trends have impacted the short‐term construction lending market in which we specialize. Through this challenging market environment, our first priority has been to preserve the investment capital with which we have been entrusted. We have focused on effectively managing problem loans and foreclosures to reduce our risk. We have also underwritten new loans more conservatively than we would in healthier markets and this in turn has helped to reduce risk and improve the strength of our portfolio.
While an oversupply of housing inventory is expected to continue to weigh on Western Canada's real estate markets in the near term, there are signs that a recovery is underway. In our primary market of Calgary, Alberta, improvements in full‐time employment rates, more affordable home prices and relatively stable lending rates have contributed to a recent increase in home sales. In BC, the prediction is that economic growth will be boosted substantially as construction begins on the liquified natural gas project in Northwestern BC. While housing affordability is still a significant concern in the large urban markets of BC's Lower Mainland, we believe that employment growth will drive housing demand in other areas of the province. Accordingly, we anticipate that opportunities to source quality projects with good builders in our core Alberta and BC markets will improve.
Q1 2019 FINANCIAL OVERVIEW
|Three months |
ended June 30,
|Three months |
ended June 30,
|Total comprehensive income||472,190||492,823|
|Basic and diluted earnings per share||0.16||0.18|
|Cash dividends declared||588,715||542,343|
|Cash dividends declared per Class A share||0.1995||0.1995|
|Cash dividends declared per Class B share||0.2096||0.1763|
A more detailed discussion of the Company's financial results can be found in Builders Capital's Second Quarter 2019 Management's Discussion and Analysis, which has been posted along with unaudited interim condensed financial statements for the quarter on the Company's website (www.builderscapital.ca) and filed on SEDAR (www.sedar.com).
About Builders Capital
Builders Capital is a mortgage lender providing short-term course-of-construction financing to builders of residential, wood-frame properties in Western Canada. The Company commenced active operations on December 12, 2013 on the closing of its initial public offering, whereupon it acquired a portfolio of mortgages from two predecessor companies.
Builders Capital's investment objective is to generate attractive returns, relative to risk, in order to provide stable and consistent distributions to shareholders while remaining focused on capital preservation and satisfying the criteria mandated for mortgage investment corporations ("MIC") as defined in the Income Tax Act.
As an MIC, Builders Capital is not subject to income tax provided that it distributes all of its taxable income as dividends to shareholders within 90 days of its December 31st year-end. Such dividends are generally treated by shareholders as interest income, so that each shareholder is in the same tax position as if their proportionate share of mortgage investments made by the company had been made directly by the shareholder.
This news release contains forward-looking statements within the meaning of applicable securities legislation, including statements with respect to management's beliefs, estimates and intentions, and similar statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "outlook", "objective", "may", "will", "expect", "intent", "estimate", "anticipate", "believe", "should", "plans" or "continue" or similar expressions suggesting future outcomes or events. Such forward-looking statements reflect management's current beliefs and are based on information currently available to management. These statements are not guarantees of future performance and are based on estimates and assumptions that are subject to risks and uncertainties which could cause actual results to differ materially from the forward-looking statements contained in this news release. These include, among other things, risks associated with mortgage lending, competition for mortgage lending, real estate values, interest rate fluctuations, environmental matters and the general economic environment. The company cautions that the foregoing list is not exhaustive, as other factors could adversely affect its results, performance or achievements. Readers are cautioned against undue reliance on any forward-looking statements. Although the forward-looking information contained in this news release is based upon what management believes are reasonable assumptions, there can be no assurance that actual results will be consistent with these forward-looking statements. Except as required by applicable law, Builders Capital undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
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