Timbercreek Financial Announces 2023 Second Quarter Results

TORONTO, Aug. 02, 2023 (GLOBE NEWSWIRE) -- Timbercreek Financial (TSX: TF) (the “Company”) announced today its financial results for the three and six months ended June 30, 2023 (“Q2 2023”).

Q2 2023 Highlights¹

• Quarterly net investment income of $31.5 million (up 22% from Q2 2022).
  
• Net income and comprehensive income of $16.9 million, up from $14.7 million in the same period last year. Basic and diluted earnings per share for Q2 2023 were $0.20 (Q2 2022 – $0.17).
  
• Delivered distributable income and adjusted distributable income of $17.8 million, or $0.21 per share (Q2 2022 – $15.9 million, $0.19 per share) representing a payout ratio of 81.1% on both distributable income and adjusted distributable income.
  
• Declared $14.4 million in dividends to shareholders, or $0.17 per share, reflecting an earnings per share payout ratio of 85.5% (Q2 2022 – 98.7%) on net income and comprehensive income.
  
• Q2 2023 results were highlighted by strong interest income and a healthy mortgage portfolio. Net new mortgage advances were $64.7 million and advances on existing mortgages were $43.3 million, offset by net mortgage repayments of $128.1 million and net syndications of $5.3 million. Mortgage repayment activity was higher in the second quarter after a slower Q1 2023 and as a result, portfolio turnover increased to 11.6% compared with 8.4% in Q1 2023.
  
• At the end of the period, net mortgage investments were $1,123.7 million (versus $1,235.0 million at Q2 2022) bearing a weighted-average interest rate of 9.8% (versus 7.2% at Q2 2022 and 9.7% at Q1 2023) and a weighted-average LTV of 68.3% (versus 69.9% at Q2 2022 and 68.5% at Q1 2023).
  
• The Company continues to closely manage its Stage III and Stage II loans and expects to make material progress over the remainder of the year. 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:
  
  • 68.3% weighted average loan-to-value;
  • 91.4% first mortgages in mortgage investment portfolio; and
  • 87.7% of mortgage investment portfolio is invested in cash-flowing properties.

“The second quarter results showed significant year-over-year growth in our key financial measures, including a 22% increase in net investment income, 18% increase in earnings per share, and strong growth in distributable income, to $0.21 per share at a conservative payout ratio,” said Blair Tamblyn, CEO of Timbercreek Financial. “These results reflect the overall solid performance and underlying durability of our portfolio focused on high-quality, income-producing assets. New funding activity increased sequentially, and we are seeing good borrower demand supported by an improving commercial real estate market. We continue to diligently manage select situations where borrowers are experiencing challenges in the current macroeconomic environment. Our team is highly experienced in navigating these scenarios to achieve a resolution and the best outcomes for our shareholders.”

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 Comparison

$ millions	Q2 2023					Q2 2022				Q1 2023
Net Mortgage Investments1	$	1,123.7				$	1,235.0			$	1,149.1
Enhanced Return Portfolio Investments1	$	58.7				$	68.2			$	59.4
Land Inventory	$	30.3				$	30.0			$	30.3
Net Investment Income	$	31.5				$	25.8			$	32.7
Income from Operations	$	26.3				$	21.7			$	28.3
Net Income and comprehensive Income	$	16.9				$	14.7			$	18.1
--Adjusted Net Income and comprehensive Income	$	17.0				$	15.2			$	18.0
Distributable and adjusted distributable income1, 2	$	17.8				$	15.9			$	18.3
Dividends declared to Shareholders	$	14.4				$	14.5			$	14.5
$ per share	Q2 2023					Q2 2022				Q1 2023
Dividends per share	$	0.17				$	0.17			$	0.17
Distributable and adjusted distributable income per share1, 2	$	0.21				$	0.19			$	0.22
Earnings per share	$	0.20				$	0.17			$	0.22
--Adjusted Earnings per share	$	0.20				$	0.18			$	0.21
Payout Ratio on Distributable and adjusted distributable Income1, 2		81.1	%				91.3	%			79.1	%
Payout Ratio on Earnings per share		85.5	%				98.7	%			79.8	%
--Payout Ratio on Adjusted Earnings per share		85.1	%				95.6	%			80.1	%
Net Mortgage Investments	Q2 2023					Q2 2022				Q1 2023
Weighted Average Loan-to-Value		68.3	%				69.9	%			68.5	%
Weighted Average Remaining Term to Maturity	0.8 yr					1.0 yr				0.8 yr
First Mortgages		91.4	%				92.5	%			92.0	%
Cash-Flowing Properties		87.7	%				90.8	%			89.0	%
Multi-family residential		50.1	%				55.4	%			50.8	%
Floating Rate Loans with rate floors (at quarter end)		88.3	%				87.5	%			88.2	%
Weighted Average Interest Rate
For the quarter ended		9.8	%				7.2	%			9.7	%
Weighted Average Lender Fee
New and Renewed		1.1	%				1.0	%			1.1	%
New Net Mortgage Investment Only		1.2	%				1.2	%			1.5	%

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.
2. There are no adjustments for the periods presented.

Quarterly Conference Call

Interested parties are invited to participate in a conference call with management on Thursday, August 3, 2023 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/83425084478?pwd=bVRqSFFmV1VQYVRSZEM1SjVSTlBq ...
Webinar ID: 834 2508 4478
Passcode: 1234
Or Telephone:
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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	June 30, 2023				December 31, 2022
Mortgage investments, excluding mortgage syndications	$	1,119,729			$	1,189,215
Mortgage syndications		574,014				611,291
Mortgage investments, including mortgage syndications		1,693,743				1,800,506
Mortgage syndication liabilities		(574,014	)			(611,291	)
		1,119,729				1,189,215
Interest receivable		(13,540	)			(10,812	)
Unamortized lender fees		5,510				6,801
Allowance for mortgage investments loss		12,029				10,605
Net mortgage investments	$	1,123,728			$	1,195,809

Enhanced return portfolio

As at	June 30, 2023			December 31, 2022
Other loan investments, net of allowance for credit loss	$	46,425		$	59,956
Finance lease receivable, measured at amortized cost		6,020			6,020
Investment, measured at FVTPL		4,026			4,744
Joint venture investment in indirect real estate development		2,225			2,225
Total Enhanced Return Portfolio	$	58,696		$	72,945

OPERATING RESULTS1
(In thousands of Canadian dollars, except units, per unit amounts and where otherwise noted)
	Three months ended June 30,						Six months ended June 30,						Year ended December 31,
NET INCOME AND COMPREHENSIVE INCOME	2023			2022			2023			2022			2022
Net investment income on financial assets measured at amortized cost	$	31,471		$	25,802		$	64,180		$	48,479		$	109,803
Fair value gain and other income on financial assets measured at FVTPL		306			352			588			249			1,388
Net rental (loss) income		(293	)		36			(652	)		418			(151	)
Fair value (loss) gain on real estate properties		—			(378	)		63			(378	)		(296	)
Expenses		(5,139	)		(4,150	)		(9,582	)		(8,391	)		(22,592	)
Income from operations	$	26,345		$	21,662		$	54,597		$	40,377		$	88,152
Financing costs:
Financing cost on credit facilities		(7,208	)		(4,749	)		(15,106	)		(8,309	)		(23,234	)
Financing cost on convertible debentures		(2,249	)		(2,233	)		(4,499	)		(4,506	)		(9,022	)
Net income and comprehensive income	$	16,888		$	14,680		$	34,992		$	27,562		$	55,896
Payout ratio on earnings per share		85.5	%		98.7	%		82.5	%		104.3	%		103.3	%
ADJUSTED NET INCOME AND COMPREHENSIVE INCOME
Net income and comprehensive income	$	16,888		$	14,680		$	34,992		$	27,562		$	55,896
Add: Net unrealized loss on financial assets measured at FVTPL		68			377			11			1,323			1,546
Add: Net unrealized loss on real estate properties		—			95			—			95			95
Adjusted net income and comprehensive income1	$	16,956		$	15,152		$	35,003		$	28,980		$	57,537
Payout ratio on adjusted earnings per share1		85.1	%		95.6	%		82.5	%		99.2	%		100.3	%
PER SHARE INFORMATION
Dividends declared to shareholders	$	14,434		$	14,482		$	28,885		$	28,750		$	57,721
Weighted average common shares (in thousands)		83,737			83,912			83,760			83,251			83,622
Dividends per share	$	0.17		$	0.17		$	0.35		$	0.35		$	0.69
Earnings per share (basic)	$	0.20		$	0.17		$	0.42		$	0.33		$	0.67
Earnings per share (diluted)	$	0.20		$	0.17		$	0.41		$	0.33		$	0.67
Adjusted earnings per share (basic)1	$	0.20		$	0.18		$	0.42		$	0.35		$	0.69
Adjusted earnings per share (diluted)1	$	0.20		$	0.18		$	0.41		$	0.35		$	0.69

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 June 30,						Six months ended June 30,						Year ended December 31,
DISTRIBUTABLE INCOME	2023			2022			2023			2022			2022
Adjusted net income and comprehensive income1	$	16,956		$	15,152		$	35,003		$	28,980		$	57,537
Less: Amortization of lender fees		(2,181	)		(2,263	)		(4,646	)		(4,553	)		(8,726	)
Add: Lender fees received and receivable		1,672			2,117			3,381			4,576			7,708
Add: Amortization of financing costs, credit facility		172			254			425			469			984
Add: Amortization of financing costs, convertible debentures		242			251			486			503			1,006
Add: Accretion expense, convertible debentures		114			114			227			227			454
Add: Unrealized fair value (gain) loss on DSU		(48	)		(57	)		27			(90	)		(201	)
Add: Allowance for expected credit loss		875			301			1,175			950			7,482
Distributable income and adjusted distributable income1, 2	$	17,802		$	15,869		$	36,078		$	31,062		$	66,244
Payout ratio on distributable income and adjusted distributable income1, 2		81.1	%		91.3	%		80.1	%		92.6	%		87.1	%
PER SHARE INFORMATION
Dividends declared to shareholders	$	14,434		$	14,482		$	28,885		$	28,750		$	57,721
Weighted average common shares (in thousands)		83,737			83,912			83,760			83,251			83,622
Dividends per share	$	0.17		$	0.17		$	0.35		$	0.35		$	0.69
Distributable and adjusted distributable income per share1	$	0.21		$	0.19		$	0.43		$	0.37		$	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