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Timbercreek Financial Announces 2022 Third Quarter Results

Timbercreek Financial
Timbercreek Financial

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

$ millions

Q3 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 share

Q3 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 Investments

Q3 2022

 

 

Q3 2021

 

Q2 2022

 

 

 

 

 

 

 

Weighted Average Loan-to-Value

 

69.4

%

 

 

 

69.6

%

 

 

69.9

%

Weighted Average Remaining Term to Maturity

0.9 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