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Terra Firma Capital Corporation Reports First Quarter 2019 Financial Results

NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR DISSEMINATION IN THE UNITED STATES

39% GROWTH IN QUARTERLY REVENUE YEAR-OVER-YEAR

24% GROWTH IN LOAN AND MORTGAGE INVESTMENTS YEAR-OVER-YEAR

49% GROWTH IN LOAN AND MORTGAGE SYNDICATIONS YEAR-OVER-YEAR

All amounts are stated in United States dollars

TORONTO, May 15, 2019 (GLOBE NEWSWIRE) -- Terra Firma Capital Corporation (TII.V) ("Terra Firma" or the “Company”), a real estate finance company, today announced its financial results for the three month period ended March 31, 2019.

Effective January 1, 2019, the Company changed its presentation currency from the Canadian dollar to the United States dollar, as significant percentage of the Company’s investments, revenues, expenses and cash flows are denominated in the United States dollars. The change in presentation currency reduces the impact of fluctuations in exchange rates on reported results and provides shareholders with a more accurate reflection of the Company’s underlying performance. As such, unless otherwise noted, all dollar amounts are stated in United States dollars.

FIRST QUARTER 2019 HIGHLIGHTS:

  • Revenues for the three months ended March 31, 2019 were $3,906,439, an increase of $1,102,203, or 39%, compared to $2,804,236 for the same period in 2018.

  • Loan and mortgage investments at March 31, 2019 amounted to $121.3 million, representing an increase of $23.5 million or 23.9% when compared to March 31, 2018.

  • Loan and mortgage syndications at March 31, 2019 totaled $79.0 million, representing an increase of $24.8 million or 48.5% when compared to March 31, 2018.

  • Net income and comprehensive income attributable to common shareholders for the three months ended March 31, 2019 was $297,166 ($0.01 on a basic and diluted per share basis), an increase of $95,401, compared to $201,765 ($0.00 on a basic and diluted per share basis) for the same period last year.

“Terra Firma made substantial strides over the 12 months ended March 31, 2019 as well as more recently. Our revenue has increased significantly, our originations have accelerated since the beginning of the year and Urbancorp is now firmly in our rear view mirror. With the recent expansion of a lower cost credit facility, we are now well positioned to not only fund our growing pipeline but also lower our related costs and increase earnings,” commented Glenn Watchorn, President and Chief Executive Officer of Terra Firma Capital Corporation. “The Company remains focused on its expansion into the United States and now has 90% of its portfolio invested in ten U.S. markets.  Terra Firma has firmly established its track record of success in the U.S. and continues to build on its large network of developers and intermediaries to grow future originations,” added Mr. Watchorn.

Results of operations – three months ended March 31, 2019

Net income and comprehensive income for the three months ended March 31, 2019 was $297,166 or $0.01 per basic and diluted share, compared to $201,765 or $0.00 per basic and diluted share, in the same period last year.

Interest and fee income for the three months ended March 31, 2019 totaled $3,868,489, compared to $2,764,354 in the same period in 2018, representing an increase of $1,104,135 on a year-over-year basis. The weighted average interest rate of loan and mortgage investments at March 31, 2019 and December 31, 2018 was 13.7%, compared to 14.1% at March 31, 2018. The Company’s principal balance of loan and mortgage investments was $121.3 million as at March 31, 2019, compared to $122.2 million at December 31, 2018 and $98.2 million at March 31, 2018.

Interest and financing expense for the first quarter ended March 31, 2019 was $2,306,753, compared to $1,615,007 for the same period in 2018. The principal balance of the Company’s loan and mortgage syndications increased from $75.9 million at December 31, 2018 to $79.0 million at March 31, 2019. The weighted average interest rate in the loan and mortgage syndications at March 31, 2019 and December 31, 2018 was 10.2%, compared to 10.5% at March 31, 2018.

General and administrative expenses for the three months ended March 31, 2019 was $781,238 compared to $565,668 for the same period last year. General and administrative expenses for the three months ended March 31, 2018 includes $180,000 of legal fees relating to loans in arrears.

The Company’s Management’s Discussion & Analysis and Financial Statements as at and for the three month period ended March 31, 2019 (the “MD&A”) have been filed and are available under the Company’s profile on SEDAR (www.sedar.com).

About Terra Firma

Terra Firma is a full service, publicly traded real estate finance company that provides real estate financings secured by investment properties and real estate developments in Canada and throughout the United States. The Company focuses on arranging and providing financing with flexible terms to real estate developers and owners who require shorter-term loans to bridge a transitional period of one to five years where they require capital at various stages of development or redevelopment of a property. These loans are typically repaid with lower cost, longer-term debt obtained from other Canadian financial institutions once the applicable transitional period is over or the redevelopment is complete, or from proceeds generated from the sale of the real estate assets. Terra Firma offers a full spectrum of real estate financing under the guidance of strict corporate governance, clarity and transparency. For further information please visit Terra Firma’s website at www.tfcc.ca.

Non-IFRS Financial Measures

This press release refers to certain financial measures, such as adjusted net income and comprehensive income and adjusted earnings per share, which are not measures defined under International Financial Reporting Standards (“IFRS”) as prescribed by the International Accounting Standards Board, do not have standardized meanings prescribed by IFRS and should not be construed as alternatives to profit/loss or other measures of financial performance calculated in accordance with IFRS. These measures may differ from those made by other companies and accordingly may not be comparable to such measures as reported by other companies.

Adjusted net income

Adjusted net income is calculated as net income excluding net foreign exchange gain or loss, net of tax. Adjusted earnings per share, basic or diluted, is calculated as adjusted net income divided by the weighted average number of common shares, basic or diluted. The Company uses adjusted net income and adjusted earnings per share to measure its performance from one period to the next, without the variation caused by the impact net foreign exchange gain or loss. The Company excludes this item because it affects the comparability of its financial results and could potentially distort the analysis of trends in its business performance. Excluding this item does not imply it is necessarily non-recurring.

In calculating adjusted net income and comprehensive income, the following items are adjusted (as applicable), irrespective of materiality:

  1. foreign exchange gains/losses related to the Company’s net U.S. dollar denominated net assets;
  2. impairment losses/reversals;
  3. net gains/losses on the disposal of equity accounted investments;
  4. other unusual one one-time items; and
  5. the income tax impact of the items listed above.

These items are excluded from adjusted net income and comprehensive income because the Company believes that inclusion of such items affects the comparability of the Company’s financial results, period-over-period, and could potentially distort the analysis of trends in the operational and financial performance of the Company.

For a reconciliation of adjusted net income and comprehensive income to net income and comprehensive income, see “Financial Performance” in the Company’s Management Discussion & Analysis.

Adjusted earnings per share for the period is a non-IFRS financial measure used by the Company to describe adjusted net income and comprehensive income, divided by the basic and fully diluted number of shares outstanding

The TSX-V has neither approved nor disapproved the contents of this press release. The TSX-V does not accept responsibility for the adequacy or accuracy of this press release.

Forward-Looking Information

This Press Release contains forwardlooking statements with respect matters concerning the business, operations, strategy and financial performance of Terra Firma, and Terra Firma’s ability to continue to attract capital for future growth. These statements generally can be identified by use of forward looking word such as “may”, “will”, “expects”, “estimates”, “indicates” “anticipates”, “intends”, “believe” or “could” or the negative thereof or similar variations. The future business, operations and performance of Terra Firma could differ materially from those expressed or implied by such statements. Such forwardlooking statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations, including the matters covered by any non-binding letters of intent that are not completed, as well as risks relating to market factors, competition, and dependence on tenants’ financial conditions, environmental and tax related matters, and reliance on key personnel. Forwardlooking statements are based on a number of assumptions which may prove to be incorrect, including that the general economy, local real estate conditions and interest rates are stable, the absence of significant changes in government regulation, and the continued availability of equity and debt financing. There can be no assurances that forwardlooking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forwardlooking statements. The cautionary statements qualify all forwardlooking statements attributable to Terra Firma and persons acting on its behalf. Unless otherwise stated, all forward looking statements speak only as of the date of this Press Release and Terra Firma does not assume any obligation to update such statements, whether as a result of new information, future events or otherwise, except as required by applicable Canadian securities laws..

For further information, please contact:

Terra Firma Capital Corporation
Glenn Watchorn
Chief Executive Officer
Phone: 416.792.4702
gwatchorn@tfcc.ca

or
Terra Firma Capital Corporation
Y. Dov Meyer
Executive Vice Chairman
Phone: 416.792.4709
ydmeyer@tfcc.ca

or

Ali Mahdavi
Managing Director
Spinnaker Capital Markets Inc.
Phone: 416.962.3300
am@spinnakercmi.com

 
Terra Firma Capital Corporation
Consolidated Statements of Income and Comprehensive Income
For the three months period ended March 31, 2019 and 2018
(Unaudited)
 
    Three months ended
  March 31,
2019
March 31,
2018
Revenue  
Interest and fees $ 3,868,489 $ 2,764,354
Rental   37,950   39,882
    3,906,439   2,804,236
Expenses  
Property operating costs   13,053   13,651
General and administrative   781,238   565,668
Share based compensation   327,832   21,329
Interest and financing costs   2,306,753   1,615,007
Realized and unrealized foreign exchange gain   56,534   248,481
    3,485,410   2,464,136
 
Income from operations before income taxes   421,029   340,100
 
Income taxes   123,863   138,335
 
Net income and comprehensive income $ 297,166 $ 201,765
 
Earnings per share  
Basic $ 0.01 $   0.00
Diluted   0.01   0.00
 

 

 
Terra Firma Capital Corporation
Consolidated Statements of Financial Position
As at March 31, 2019 and December 31, 2018
(Unaudited)
 
  March 31,
2019
December 31,
2018
 
Assets  
 
Cash and cash equivalents $ 10,079,078   $ 7,731,379  
Funds held in trust   1,261,205     1,095,669  
Amounts receivable and prepaid expenses   1,148,326     1,013,935  
Loan and mortgage investments   120,796,089     121,675,979  
Investment in finance lease   3,293,665     2,819,915  
Right-of-use asset   295,142     -  
Investment property held in joint operations   1,654,576     1,619,633  
Portfolio investments   1,935,042     1,911,574  
Investment in associates   2,193,304     2,146,984  
Convertible note receivable   749,120     -  
Income taxes recoverable   236,936     195,225  
Deferred income tax assets   60,960     -  
 
Total assets $ 143,703,443   $ 140,210,293  
 
Liabilities  
 
Accounts payable and accrued liabilities $ 4,163,035   $ 3,618,067  
Lease obligations   295,436       -  
Unearned income   985,870     1,303,162  
Deferred income tax liabilities     -     33,376  
Credit facilities   19,320,653     19,464,106  
Loan and mortgage syndications   78,979,830     75,906,550  
Mortgages payable   1,062,057     1,047,809  
Total liabilities   104,806,881     101,373,070  
 
Equity  
 
Share capital $ 26,238,648   $ 26,533,950  
Contributed surplus   3,321,863     3,264,388  
Cumulative translation adjustment   (3,663,314 )   (3,663,314 )
Retained earnings   12,999,365     12,702,199  
Total equity   38,896,562     38,837,223  
 
Total liabilities and equity $ 143,703,443   $ 140,210,293