TORONTO, Feb. 26, 2024 (GLOBE NEWSWIRE) -- Timbercreek Financial (TSX: TF) (the "Company") announced today its financial results for the three months and year ended December 31, 2023 ("Q4 2023").
Full-Year 2023 Highlights1
- Record net investment income of $124.2 million versus $109.8 million in 2022.
- Net income and comprehensive income of $66.4 million, up from $55.9 million last year. Basic and diluted earnings per share for 2023 were $0.80, and $0.78 (2022 - $0.67 and $0.67).
- Distributable income of $70.4 million, or $0.84 per share (2022 - $66.2 million, $0.79 per share) representing a payout ratio of 81.9% on distributable income.
- Shareholders' equity of $701.1 million at year end (book value per share of $8.45).
- Subsequent to quarter end:
- The Company is declaring a $0.0575 per share special dividend to shareholders on record on March 5, 2024, reflecting strong top line income performance in 2023. The special dividend will be paid on March 11, 2024.
"We generated solid financial performance for the year 2023, highlighted by record net investment income and strong year-over-year increases in net income and distributable income," said Blair Tamblyn, CEO of Timbercreek Financial. "In addition to continuing our long track record of monthly dividends, our strong distributable income drove book value per share up to $8.45 from $8.33 last year and enabled us to report a special dividend for this year. We achieved these results while navigating a more challenging period of the real estate cycle, which placed strain on some of our borrowers. Our team has demonstrated the ability to actively manage these situations to ensure the best outcomes for our shareholders, and we made meaningful progress on resolving and reducing Stage 2 and Stage 3 loans which was an important focus in 2023."
Mr. Tamblyn added: "We were intentionally cautious on new lending given the uncertainty in 2023, adjusting the pace of new investments while ensuring sufficient lending to maintain a healthy payout ratio. As we look forward to 2024, our team is optimistic about the current investment environment with the expectation that a stable interest rate environment will promote increased commercial real estate activity. With our renewed credit facility, we are a strong liquidity position to capitalize on attractive risk-adjusted opportunities and expand the portfolio back to historical levels."
Q4 2023 Highlights1
- Record net investment income of $29.7 million versus $31.3 million in 2022.
- Net income and comprehensive income of $15.0 million, up from $14.8 million in the same period last year. Basic and diluted earnings per share for 2023 were $0.18 (2022 - $0.18).
- Distributable income of $17.5 million, or $0.21 per share (2022 - $18.4 million, $0.22 per share) representing a payout ratio of 81.9% on distributable income.
- Declared $14.3 million, or $0.17 per share in regular dividends to shareholders, reflecting a payout ratio of 95.8% (Q4 2022 - 97.7%) on earnings per share.
- Net new mortgage advances were $61.2 million and advances on existing mortgages were $16.2 million, offset by net mortgage repayments of $176.2 million and net syndications of $23.5 million. Portfolio turnover increased to 19.2%, compared with 6.0% in Q3 2023 demonstrating borrowers' ability to execute on their exit plans (i.e. sale or refinancing with term debt).
- At the end of the period, net mortgage investments were $946.2 million (versus $1,195.8 million at Q4 2022) bearing a weighted-average interest rate of 10.0% (versus 9.7% at Q4 2022 and 9.9% at Q3 2023) and a weighted-average LTV of 65.6% (versus 68.3% at Q4 2022 and 67.0% at Q3 2023). The Company also had net real estate inventory of $92.5 million at Q4 2023, versus $30.2 million at Q4 2022.
- A portfolio of seven Stage 3 loans totaling $146.1 million returned to Stage 1 in the quarter and were subsequently sold to an institutional buyer in Q1 2024; the Company recovered all its principal and accrued interest.
- The Company continues to closely manage its other Stage 3 and Stage 2 loans. The investment team, which is experienced in navigating these situations and utilizing various approaches to achieve resolution, continues to anticipate repayment of principal outstanding as the asset sale processes are completed.
- Maintained conservative portfolio risk composition focused on income-producing commercial real estate:
- 65.6% weighted average loan-to-value;
- 88.9% first mortgages in mortgage investment portfolio; and
- 86.0% of mortgage investment portfolio is invested in cash-flowing properties.
Quarterly Comparison
| $ millions | Q4 2023 | Q4 2022 | Q3 2023 | |||||||||
| Net Mortgage Investments 1 | $ | 946.2 | $ | 1,195.8 | $ | 1,068.6 | ||||||
| Enhanced Return Portfolio Investments 1 | $ | 62.7 | $ | 72.9 | $ | 59.3 | ||||||
| Real Estate Inventory, net of collateral liability | $ | 92.6 | $ | 30.2 | $ | 92.5 | ||||||
| Net Investment Income | $ | 29.7 | $ | 31.3 | $ | 30.3 | ||||||
| Income from Operations | $ | 25.1 | $ | 25.2 | $ | 26.1 | ||||||
| Net Income and comprehensive Income | $ | 15.0 | $ | 14.8 | $ | 16.5 | ||||||
| --Adjusted Net Income and comprehensive Income | $ | 14.7 | $ | 14.7 | $ | 16.4 | ||||||
| Distributable and adjusted distributable income 1, 2 | $ | 17.5 | $ | 18.4 | $ | 16.8 | ||||||
| Dividends declared to Shareholders | $ | 14.3 | $ | 14.5 | $ | 14.4 | ||||||
| $ per share | Q4 2023 | Q4 2022 | Q3 2023 | |||||||||
| Dividends per share | $ | 0.17 | $ | 0.17 | $ | 0.17 | ||||||
| Distributable and adjusted distributable income per share 1, 2 | $ | 0.21 | $ | 0.22 | $ | 0.20 | ||||||
| Earnings per share | $ | 0.18 | $ | 0.18 | $ | 0.20 | ||||||
| --Adjusted Earnings per share | $ | 0.18 | $ | 0.17 | $ | 0.20 | ||||||
| Payout Ratio on Distributable and adjusted distributable Income 1, 2 | 82.0 | % | 78.7 | % | 85.6 | % | ||||||
| Payout Ratio on Earnings per share | 95.8 | % | 97.7 | % | 87.4 | % | ||||||
| --Payout Ratio on Adjusted Earnings per share | 97.7 | % | 98.6 | % | 87.7 | % | ||||||
| Net Mortgage Investments | Q4 2023 | Q4 2022 | Q3 2023 | |||||||||
| Weighted Average Loan-to-Value | 65.6 | % | 68.3 | % | 67.0 | % | ||||||
| Weighted Average Remaining Term to Maturity | 0.7 yr | 0.9 yr | 0.7 yr | |||||||||
| First Mortgages | 88.9 | % | 92.4 | % | 92.2 | % | ||||||
| Cash-Flowing Properties | 86.0 | % | 87.4 | % | 86.5 | % | ||||||
| Multi-family residential | 56.5 | % | 52.5 | % | 58.2 | % | ||||||
| Floating Rate Loans with rate floors (at quarter end) | 86.1 | % | 88.5 | % | 87.5 | % | ||||||
| Weighted Average Interest Rate | ||||||||||||
| For the quarter ended | 10.0 | % | 9.7 | % | 9.9 | % | ||||||
| Weighted Average Lender Fee | ||||||||||||
| New and Renewed | 1.0 | % | 1.2 | % | 0.7 | % | ||||||
| New Net Mortgage Investment Only | 1.2 | % | 1.4 | % | 1.0 | % | ||||||
- 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.
- There are no adjustments for the periods presented.
Quarterly Conference Call
Interested parties are invited to participate in a conference call with management on Tuesday, February 27, 2024 at 1:00 p.m. (ET) which will be followed by a question and answer period with analysts.
To join the Zoom Webinar:
If you are a Guest please click the link below to join:
https://us02web.zoom.us/j/82280798392?pwd=WUZtdXFza0FZVnhPd2NzblBPbVdDdz09
Webinar ID: 822 8079 8392
Passcode: 1234
Or Telephone:
Dial (for higher quality, dial a number based on your current location):
Canada: +1 778 907 2071, +1 780 666 0144, +1 204 272 7920, +1 438 809 7799,
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International numbers available: https://us02web.zoom.us/u/kbtEE30QVY
Speakers will receive a separate link to the Webinar
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
(In thousands of Canadian dollars, except units, per unit amounts and where otherwise noted)
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 | December 31, 2023 | December 31, 2022 | ||||||
| Mortgage investments, excluding mortgage syndications | $ | 943,488 | $ | 1,189,215 | ||||
| Mortgage syndications | 601,624 | 611,291 | ||||||
| Mortgage investments, including mortgage syndications | 1,545,112 | 1,800,506 | ||||||
| Mortgage syndication liabilities | (601,624 | ) | (611,291 | ) | ||||
| 943,488 | 1,189,215 | |||||||
| Interest receivable | (14,585 | ) | (10,812 | ) | ||||
| Unamortized lender fees | 5,226 | 6,801 | ||||||
| Expected credit loss | 12,093 | 10,605 | ||||||
| Net mortgage investments | $ | 946,222 | $ | 1,195,809 | ||||
Enhanced return portfolio
| As at | December 31, 2023 | December 31, 2022 | |||||
| Other loan investments, net of expected credit loss | $ | 47,033 | $ | 59,956 | |||
| Finance lease receivable, measured at amortized cost | 6,020 | 6,020 | |||||
| Investment in participating debentures, measured at FVTPL | 4,380 | 4,744 | |||||
| Joint venture investment in indirect real estate development | 2,225 | 2,225 | |||||
| Investment in equity instrument | 3,000 | - | |||||
| Total Enhanced Return Portfolio | $ | 62,658 | $ | 72,945 | |||
Real Estate Inventory, net of collateral liability
| As at | December 31, 2023 | December 31, 2022 | |||||
| Real Estate Inventory | $ | 161,564 | $ | 30,245 | |||
| Real Estate Inventory Collateral Liability | (69,025 | ) | - | ||||
| Real Estate Inventory, net of collateral liability | $ | 92,539 | $ | 30,245 | |||
| OPERATING RESULTS1 | ||||||||||||||||||||||||||||||
| (In thousands of Canadian dollars, except units, per unit amounts and where otherwise noted) | ||||||||||||||||||||||||||||||
| NET INCOME AND COMPREHENSIVE INCOME | Three months ended December 31, | Year ended December 31, | ||||||||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | 2021 | ||||||||||||||||||||||||||
| Net investment income on financial assets measured at amortized cost | $ | 29,722 | $ | 31,342 | $ | 124,205 | $ | 109,803 | $ | 90,249 | ||||||||||||||||||||
| Fair value gain and other income on financial assets measured at FVTPL | 463 | 736 | 1,282 | $ | 1,388 | $ | (10,291 | ) | ||||||||||||||||||||||
| Net rental gain (loss) income | 327 | (278 | ) | (595 | ) | (151 | ) | 1,499 | ||||||||||||||||||||||
| Fair value gain (loss) on real estate properties | - | 82 | 63 | (296 | ) | (4,374 | ) | |||||||||||||||||||||||
| Expenses | (5,443 | ) | (6,671 | ) | (19,140 | ) | (22,592 | ) | (16,237 | ) | ||||||||||||||||||||
| Income from operations | $ | 25,069 | $ | 25,211 | $ | 105,815 | $ | 88,152 | $ | 60,846 | ||||||||||||||||||||
| Financing costs: | ||||||||||||||||||||||||||||||
| Financing cost on credit facility | (7,846 | ) | (8,137 | ) | (30,396 | ) | (23,234 | ) | (16,734 | ) | ||||||||||||||||||||
| Financing cost on convertible debentures | (2,249 | ) | (2,260 | ) | (8,998 | ) | (9,022 | ) | (6,745 | ) | ||||||||||||||||||||
| Fair value gain on derivative contract | - | - | - | - | 3,940 | |||||||||||||||||||||||||
| Net income and comprehensive income | $ | 14,974 | $ | 14,814 | $ | 66,421 | $ | 55,896 | $ | 41,307 | ||||||||||||||||||||
| Payout ratio on earnings per share | 95.8 | % | 97.7 | % | 86.7 | % | 103.3 | % | 135.9 | % | ||||||||||||||||||||
| ADJUSTED NET INCOME AND COMPREHENSIVE INCOME | ||||||||||||||||||||||||||||||
| Net income and comprehensive income | $ | 14,973 | $ | 14,814 | $ | 66,421 | $ | 55,896 | $ | 41,307 | ||||||||||||||||||||
| Add: Fair value (gain) on derivative contract (interest rate swap) | - | - | - | - | (3,940 | ) | ||||||||||||||||||||||||
| Add: Net unrealized (gain) loss on financial assets measured at FVTPL | (292 | ) | (122 | ) | (342 | ) | 1,546 | 13,748 | ||||||||||||||||||||||
| Add: Net unrealized loss on real estate properties | - | - | - | 95 | 4,374 | |||||||||||||||||||||||||
| Adjusted net income and comprehensive income1 | $ | 14,681 | $ | 14,692 | $ | 66,078 | $ | 57,537 | $ | 55,489 | ||||||||||||||||||||
| Payout ratio on adjusted earnings per share1 | 97.7 | % | 98.6 | % | 87.2 | % | 100.3 | % | 101.2 | % | ||||||||||||||||||||
| PER SHARE INFORMATION | ||||||||||||||||||||||||||||||
| Dividends declared to shareholders | $ | 14,340 | $ | 14,480 | $ | 57,603 | $ | 57,721 | $ | 56,142 | ||||||||||||||||||||
| Weighted average common shares (in thousands) | 83,176 | 83,970 | 83,509 | 83,622 | 81,325 | |||||||||||||||||||||||||
| Dividends per share | $ | 0.17 | $ | 0.17 | $ | 0.69 | $ | 0.69 | $ | 0.69 | ||||||||||||||||||||
| Earnings per share (basic) | $ | 0.18 | $ | 0.18 | $ | 0.80 | $ | 0.67 | $ | 0.51 | ||||||||||||||||||||
| Earnings per share (diluted) | $ | 0.18 | $ | 0.18 | $ | 0.78 | $ | 0.67 | $ | 0.51 | ||||||||||||||||||||
| Adjusted earnings per share (basic)1 | $ | 0.18 | $ | 0.17 | $ | 0.79 | $ | 0.69 | $ | 0.68 | ||||||||||||||||||||
| Adjusted earnings per share (diluted)1 | $ | 0.18 | $ | 0.17 | $ | 0.78 | $ | 0.69 | $ | 0.68 | ||||||||||||||||||||
1 Refer to non-IFRS measures section.
| OPERATING RESULTS1 | ||||||||||||
| (In thousands of Canadian dollars, except units, per unit amounts and where otherwise noted) | ||||||||||||
| Three months ended December 31, | Year ended December 31, | |||||||||||
| DISTRIBUTABLE INCOME | 2023 | 2022 | 2023 | 2022 | ||||||||
| Adjusted net income and comprehensive income1 | $ | 14,681 | $ | 14,692 | $ | 66,078 | $ | 57,537 | ||||
| Less: Amortization of lender fees | (1,886 | ) | (1,748 | ) | (8,279 | ) | (8,726 | ) | ||||
| Add: Lender fees received and receivable | 2,163 | 2,056 | 6,597 | 7,708 | ||||||||
| Add: Amortization of financing costs, credit facility | 399 | 262 | 953 | 984 | ||||||||
| Add: Amortization of financing costs, convertible debentures | 243 | 253 | 972 | 1,006 | ||||||||
| Add: Accretion expense, convertible debentures | 114 | 114 | 454 | 454 | ||||||||
| Add: Unrealized fair value gain on DSU | (8 | ) | (33 | ) | (67 | ) | (201 | ) | ||||
| Add: Expected credit loss | 1,782 | 2,800 | 3,649 | 7,482 | ||||||||
| Distributable income and adjusted distributable income1, 2 | $ | 17,488 | $ | 18,396 | $ | 70,357 | $ | 66,244 | ||||
| Payout ratio on distributable income1 | 82.0 | % | 78.7 | % | 81.9 | % | 87.1 | % | ||||
| PER SHARE INFORMATION | ||||||||||||
| Dividends declared to shareholders | $ | 14,340 | $ | 14,480 | $ | 57,603 | $ | 57,721 | ||||
| Weighted average common shares (in thousands) | 83,176 | 83,970 | 83,509 | 83,622 | ||||||||
| Dividends per share | $ | 0.17 | $ | 0.17 | $ | 0.69 | $ | 0.69 | ||||
| Distributable and adjusted distributable income per share 1 | $ | 0.21 | $ | 0.22 | $ | 0.84 | $ | 0.79 | ||||
1. Refer to non-IFRS measures section.
2. There are no adjustments for the periods presented.
SOURCE: Timbercreek Financial
For further information, please contact:
Timbercreek Financial
Blair Tamblyn, CEO
Tracy Johnston, CFO
Karynna Ma, Vice President, Investor Relations
416-923-9967
www.timbercreekfinancial.com
