TORONTO, ONTARIO–(Marketwired – March 29, 2017) –
NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR DISSEMINATION IN THE UNITED STATES
All amounts are stated in Canadian dollars
Terra Firma Capital Corporation (TSX VENTURE:TII) (“Terra Firma” or the “Company“), a real estate finance company, today announced its financial results for the three and twelve month periods ended December 31, 2016.
“Although we have experienced growth in total assets, the impact of our new loans has not yet been reflected in the bottom line as our results were negatively impacted by foreign exchange movements and from not recognizing income on approximately 30% of the Company’s book equity. Such book equity is invested in loans that are currently in default and certain equity investments. We expect to recognize the income on these investments in future periods including the amounts that otherwise would have been recognized in 2016. While we funded close to $50 million of loans in 2016, we had reserved cash to fund several large loans amounting to over $70 million which did not transact. We are very confident in our prospects for 2017. During the first quarter of 2017, our loan originations of $40 million have almost reached all of our 2016 loan originations, and we have much higher goals for the coming year and beyond,” commented Glenn Watchorn, President and Chief Executive Officer of Terra Firma Capita Corporation.
“We believe our origination pipeline and the syndication network is very deep. We continue to attract top quality clients for their financing needs and our syndicate of investors is eager to participate in these loans. Over the last few quarters, our transactions have been oversubscribed, and our syndication network is expanding. In summary, 2017 has started off very strong and we are very optimistic that these very positive developments will define themselves on our bottom line over the remainder of the year and beyond,” he further said.
Results of operations
Revenue for the three months ended December 31, 2016 totaled $3.4 million, compared to revenue for the three months ended December 31, 2015 of $5.2 million, representing a decrease of $1.8 million or 34.6% on a year-over-year basis. Revenue for the year ended December 31, 2016 totaled $14.9 million, compared to revenue for the year ended December 31, 2015 of $17.4 million, representing a decrease of $2.5 million or 14.4% on a year-over-year basis.
Interest and fee income for the three months ended December 31, 2016 aggregated $3.4 million, a decrease of 33.3% over the $5.1 million in the same period in the previous year. Interest and fee income for the year ended December 31, 2016 aggregated $14.7 million, compared to interest and fee income for the year ended December 31, 2015 of $17.2 million, representing a decrease of $2.5 million or 14.5% over last year.
Interest and financing expense for the three months ended December 31, 2016 and 2015 were $2.0 million and $1.6 million, respectively. Interest expense for the year ended December 31, 2016 was $7.8 million, compared to $5.9 million for the year ended December 31, 2015.
Net income and comprehensive income attributable to common shareholders for the three months ended December 31, 2016 was $252,143 or $0.00 per basic and diluted share, compared to $1.9 million or $0.03 per basic and diluted share, for the same period last year.
Net income and comprehensive income attributable to common shareholders for the year ended December 31, 2016 was $1.4 million or $0.02 per basic and diluted share, compared to $6.1 million or $0.11 per basic share and $0.10 diluted share, for the year ended December 31, 2015. General and administrative expenses for the year ended December 31, 2016 decreased $198,821 year-over-year, to $3.0 million, compared to $3.2 million for the year ended December 31, 2016.
The principal balance of the Company’s loan and mortgage investments decrease from $95.6 million at December 31, 2015 to $93.4 million at December 31, 2016, a decrease of 1.4%, primarily due to several large loans amounting to over $70 million which did not transact during the year and the conversion of a loan investment into an equity investment in April 2016. The weighted average effective interest rate in the mortgage investment portfolio at December 31, 2016 was 15.3% compared to 15.8% at December 31, 2015.
The principal balance of the Company’s loan and mortgage syndications increased from $45.7 million at December 31, 2015 to $56.2 million at December 31, 2016, an increase of $10.5 million or 23.0%. The weighted average effective interest rate in the mortgage investment portfolio at December 31, 2016 was 10.81% compared to 10.54% at December 31, 2015.
The Company’s Management’s Discussion & Analysis and Financial Statements as at and for the three and twelve month periods ended December 31, 2016 have been filed and are available 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 throughout Canada and 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.
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.
This Press Release contains forward‐looking statements with respect matters concerning the business, operations, strategy and financial performance of Terra Firma, the realization of future profits on one of Terra Firma’s larger investments, and Terra Firma’s ability to achieve higher yields in the future and 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 forward‐looking 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. Forward‐looking 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 forward‐looking 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 forward‐looking statements. The cautionary statements qualify all forward‐looking 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.
| Terra Firma Capital Corporation | |||||||||||||
| Consolidated Statements of Income and Comprehensive Income | |||||||||||||
| For the three months and years ended December 31, 2016 and 2015 | |||||||||||||
| (Unaudited) | |||||||||||||
| Three months ended | Years ended | ||||||||||||
| December 31, 2016 |
December 31, 2015 |
December 31, 2016 |
December 31, 2015 |
||||||||||
| Revenue | |||||||||||||
| Interest and fees | $ | 3,384,576 | $ | 5,104,378 | $ | 14,701,947 | $ | 17,162,141 | |||||
| Rental | 50,445 | 47,362 | 199,711 | 189,434 | |||||||||
| 3,435,021 | 5,151,740 | 14,901,658 | 17,351,575 | ||||||||||
| Expenses | |||||||||||||
| Property operating costs | 17,307 | 15,269 | 71,892 | 61,059 | |||||||||
| General and administrative | 854,683 | 1,303,935 | 3,027,678 | 3,226,499 | |||||||||
| Share based compensation | 430,360 | 321,389 | 819,714 | 1,782,722 | |||||||||
| Interest and financing costs | 1,957,033 | 1,613,844 | 7,774,172 | 5,928,475 | |||||||||
| Provision for loan and mortgage investment loss | 310,493 | 478,066 | 423,219 | 478,066 | |||||||||
| Realized and unrealized foreign exchange loss (gain) | (357,375 | ) | (1,090,208 | ) | 858,660 | (2,078,788 | ) | ||||||
| Gain on conversion of interest in joint operation | (61,950 | ) | (82,500 | ) | (61,950 | ) | (82,500 | ) | |||||
| Fair value adjustment – portfolio investments | (72,529 | ) | (394,170 | ) | (72,529 | ) | (394,170 | ) | |||||
| Share of income from investment in associates | – | (91,949 | ) | – | (91,949 | ) | |||||||
| 3,078,022 | 2,073,676 | 12,840,856 | 8,829,414 | ||||||||||
| Income from operations before income taxes | 356,999 | 3,078,064 | 2,060,802 | 8,522,161 | |||||||||
| Income taxes | 104,856 | 1,138,177 | 653,907 | 2,456,251 | |||||||||
| Net income and comprehensive income | $ | 252,143 | $ | 1,939,887 | $ | 1,406,895 | $ | 6,065,910 | |||||
| Terra Firma Capital Corporation | |||||
| Consolidated Statements of Financial Position | |||||
| As at December 31, 2016 and 2015 | |||||
| December 31, 2016 |
December 31, 2015 |
||||
| Assets | |||||
| Cash and cash equivalents | $ | 12,315,242 | $ | 11,723,550 | |
| Funds held in trust | 982,353 | 2,061,207 | |||
| Deposits | 3,256,074 | 11,747,370 | |||
| Amounts receivable and prepaid expenses | 4,865,280 | 2,279,977 | |||
| Loan and mortgage investments | 93,408,444 | 95,135,201 | |||
| Investment property held in joint operations | 2,208,694 | 2,143,794 | |||
| Land under development held in joint operations | 23,808,574 | – | |||
| Portfolio investments | 3,212,084 | 2,339,555 | |||
| Investment in associates | 2,315,414 | 2,315,414 | |||
| Deferred income tax asset | 328,324 | – | |||
| Total assets | $ | 146,700,483 | $ | 129,746,068 | |
| Liabilities | |||||
| Accounts payable and accrued liabilities | $ | 10,647,966 | $ | 5,980,560 | |
| Unearned income | 329,340 | 301,099 | |||
| Income taxes payable | 22,942 | 322,046 | |||
| Deferred income tax liability | – | 18,665 | |||
| Short-term unsecured notes payable | – | 9,286,000 | |||
| Revolving operating facility | 7,467,586 | 9,865,144 | |||
| Loan and mortgage syndications | 56,180,448 | 45,691,948 | |||
| Due to joint operations partner | 11,163,640 | – | |||
| Mortgages payable | 1,509,503 | 1,120,314 | |||
| Convertible debentures | 10,754,259 | 10,628,301 | |||
| Total liabilities | 98,075,684 | 83,214,077 | |||
| Equity | |||||
| Share capital | $ | 31,789,819 | $ | 31,257,404 | |
| Equity component of convertible debentures | 284,490 | 284,490 | |||
| Contributed surplus | 2,514,073 | 2,360,575 | |||
| Retained earnings | 13,781,776 | 12,374,881 | |||
| Shareholders’ equity | 48,370,158 | 46,277,350 | |||
| Non-controlling interest | 254,641 | 254,641 | |||
| Total equity | 48,624,799 | 46,531,991 | |||
| Total liabilities and equity | $ | 146,700,483 | $ | 129,746,068 | |
Glenn Watchorn
Chief Executive Officer
416.792.4702
gwatchorn@tfcc.ca
Terra Firma Capital Corporation
Y. Dov Meyer
Executive Vice Chairman
416.792.4709
ydmeyer@tfcc.ca
www.tfcc.ca
Ali Mahdavi
Managing Director
Spinnaker Capital Markets Inc.
416.962.3300
am@spinnakercmi.com