Terra Firma earns $3.07-million (U.S.) in 2019
2020-04-02 08:45 ET - News Release
Mr. Y. Dov Meyer reports
TERRA FIRMA CAPITAL CORPORATION REPORTSA FOURTH QUARTER & FULL YEAR 2019 FINANCIAL RESULTS
Terra Firma Capital Corp. has provided its financial results for the three months and year ended Dec. 31, 2019. All amounts are stated in United States dollars unless otherwise indicated.
Full-year 2019 financial highlights
- Revenues increased by 23.9 per cent to $16.7-million.
- Total investments increased by 9.0 per cent to $142.4-million.
- Loan and mortgage syndication increased by 16.3 per cent.
- Adjusted net income and comprehensive income increased by 56.4 per cent to $3.0-million.
- Adjusted basic and diluted earnings per share increased by 70.3 per cent to 53 cents.
- Book value increased by 9.1 per cent to $7.12 ($9.50 (Canadian)) per share.
- Ten Canadian cents per share paid in dividends.
Q4 2019 financial highlights
- Revenues increased by 23.3 per cent to $4.6-million.
- Total investments increased by 0.38 per cent to $142.4-million.
- Loan and mortgage syndication increased by 6.4 per cent.
- Adjusted net income and comprehensive income increased by 77.9 per cent to $966,000.
- Adjusted basic and diluted earnings per share increased by 88.9 per cent to 17 cents.
- Five Canadian cents per share paid in dividends.
For the year ended Dec. 31, 2019, revenues increased 23.9 per cent to $16.7-million, compared with $13.4-million for the prior year. The increase in revenues is primarily due to an increase in interest and fees of $1.7-million earned from loan and mortgage investments financed after Dec. 31, 2018, and an increase in interest and fees of $3.3-million, earned from loan and mortgage investments financed prior to Dec. 31, 2018. The increase is partially offset by interest and fees of $3.1-million earned on investments repaid after Dec. 31, 2018, and an increase in finance income of $1.3-million. Over all, interest and fee income increased by 14.2 per cent to $15.0-million compared with $13.1-million in 2018. Finance income in 2019 was $1.5-million, compared with $153,000 in the prior year. Interest and financing expense in 2019 increased by 15.3 per cent to $9.2-million, compared with $7.9-million in 2018, due to primarily due to the increase in loan and mortgage syndications from $75.9-million at Dec. 31, 2018, to $88.2-million at Dec. 31, 2019.
As a result of the foregoing, net income and comprehensive income attributable to common shareholders for the year ended Dec. 31, 2019, was $3.0-million or 54 cents per basic and diluted share compared with $2.2-million or 36 cents per basic share and diluted share for the year ended Dec. 31, 2018.
For the three-month period ended Dec. 31, 2019, revenues increased 23.3 per cent to $4.6-million, compared with $3.8-million during the same period in 2018, primarily due to interest and fees of $1.6-million, earned from new loan and mortgage investments made financed after Dec. 31, 2018, which are partially offset by loss of interest fees income of $1,173,489 on investments repaid after Dec. 31, 2018, and an increase in finance income from finance leases of $496,000. Interest and fee income increased by 10.1 per cent to $4.0-million compared with $3.7-million in 2018. Finance income in 2019 was $541,000, compared with $44,000 in the prior year. Interest and financing expense during the same period remained relatively unchanged at $2.4-million, compared with $2.3-million in 2018. During the quarter, the company provided an allowance for loan and mortgage investments of $226,000 and $102,000, respectively, relating to certain loan and mortgage investments in arrears.
The net income and comprehensive income attributable to common shareholders for the three months ended Dec. 31, 2019, were $884,000 or 16 cents per basic and diluted share compared with $1.9-million or 32 cents per basic and diluted share for the same period last year.
"Terra Firma made significant strides in all facets during 2019. The company increased its assets under management and funded its activities through additional syndicate capital and lower cost debt which ultimately resulted in a significant increase in net income. In addition to our improved financial performance, the company added to its goodwill by improving its sales channels and technology," commented Glenn Watchorn, president and chief executive officer. "Terra Firma now has an investor portal where our syndicate investors can deal with almost all loan syndication transactions and reporting virtually. While 2019 was a transformative year for the company and positioned us for strong growth in 2020, the global landscape has changed dramatically with the COVID-19 pandemic. As such, the company has been working diligently to protect the interests of our shareholders and all other stakeholders while being sensitive to adhere to our civic duty in these difficult and unprecedented times. Given the quality of our portfolio which is largely in first mortgages or wholly owned assets and the strength and flexibility of our balance sheet with relatively low leverage, we believe that we are well positioned to weather the storm."
As at Dec. 31, 2019, the company's total investments increased by 8.9 per cent to $142.4-million versus $130.7-million at the end of 2018. The weighted average effective interest rate of the loan and mortgage investments at Dec. 31, 2019, was 13.2 per cent compared with 13.7 per cent at Dec. 31, 2018.
The principal balance of the company's loan and mortgage syndications increased from $75.9-million at Dec. 31, 2018, to $88.2-million at Dec. 31, 2019, an increase of $12.3-million or 16.3 per cent. The weighted average effective interest rate of the loan and mortgage syndications at Dec. 31, 2019, was 9.6 per cent compared with 10.2 per cent at Dec. 31, 2018.
The company's management's discussion and analysis and financial statements as at and for the year ended Dec. 31, 2019, have been filed and are available on SEDAR.
Subsequent events
On Jan. 14, 2020, the company entered into a $40-million secured line of credit (the LOC) with Texas Capital Bank. The LOC replaced the master facility agreement the company had with Texas Capital for a $35-million master facility. The LOC provides for an increase in the borrowing limit to $50-million over time subject to approval by Texas Capital.
On March 11, 2020, the board declared a quarterly dividend of five Canadian cents per common share, payable on April 15, 2020, to shareholders of record as of the close of business on March 31, 2020.
Subsequent to year-end, the evolving pandemic of the novel coronavirus, or COVID-19, is causing significant financial market and social disruption. While the company engages in emergency preparedness, including business continuity planning, to mitigate risks, and continues to monitor its investments and assess the impact of the pandemic on its business activities, the rapid development and fluidity of this situation limits the company's ability to predict the ultimate impact on the company at this time.
About Terra Firma Capital Corp.
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.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME For the three months and years ended Dec. 31, 2019, and 2018 (Unaudited) Three months ended Years ended Dec. 31, Dec. 31, 2019 2018 2019 2018 Revenue Interest and fees $ 4,046,909 $ 3,671,489 $ 15,003,292 $ 13,139,718 Finance income 540,835 44,024 1,497,294 152,733 Rental 41,844 38,174 155,720 155,720 4,629,588 3,753,687 16,656,306 13,448,171 Expenses Interest and financing costs 2,422,611 2,329,722 9,161,259 7,947,282 General and administrative 1,129,828 950,701 3,375,989 2,775,430 Property operating costs 14,235 13,108 53,427 53,427 Share based compensation 120,594 (234,302) 474,168 (15,828) Provision for loan and mortgage investment loss 226,108 102,039 74,208 2,403,182 Provision for uncollectible receivables - 258,707 - 134,940 Realized and unrealized foreign exchange gain (114,885) (2,238,783) (156,901) (3,034,987) Fair value adjustment -- portfolio investments (56,124) (57,413) (56,124) (57,413) Loss on redemption of portfolio investment - - - 173,646 Share of income from investment in associates (356,435) - (356,435) - 3,385,932 1,123,779 12,569,591 10,379,679 Income from operations before income taxes 1,243,656 2,629,908 4,086,715 3,068,492 Income taxes 359,377 706,539 1,008,958 902,038 Net income and comprehensive income $ 884,279 $ 1,923,369 $ 3,077,757 $ 2,166,454 Net income and comprehensive income attributable to Common shareholders 884,279 1,923,369 3,077,757 2,215,783 Non-controlling interest - - - (49,329) $ 884,279 $ 1,923,369 $ 3,077,757 $ 2,166,454 Earnings per share Basic $ 0.16 $ 0.32 $ 0.54 $ 0.36 Diluted 0.16 0.32 0.54 0.36
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