Romspen Delivers Strong Performance in 2019.
TORONTO, June 8, 2020 /CNW/ - Romspen Mortgage Investment Fund, a leading non-bank mortgage lender specializing in commercial and industrial real estate, today released its financial statements for the year ended December 31, 2019. For 2019, the Fund achieved a 7.5% net yield, reflecting both a strong absolute return and significant comparative outperformance against the major fixed income benchmarks.
2019 Highlights
- The net investment portfolio increased by 15% in 2019 to $3.0 billion.
- Net earnings for 2019 increased by 1% to $187 million.
- Distributions to investors totalled $0.73 per unit to yield a compounded net return of 7.5%.
- Net yield of 7.5% for Romspen significantly outperformed T-bills (1.7%) and the FTSE-TMX Short-Term Bond Index ("FTSE/TMX–STBI") (3.1%). S&P/TSX Composite Total Return Index ("S&P/TSX") (22.9%).
- Romspen's past three, five, ten and twenty year performance has outperformed T–bills, FTSE/TMX–STBI and S&P/TSX.
- US mortgages in the portfolio increased to 45% from 44% in 2018.
- The Fund's unitholder equity for all units outstanding grew to $3.0 billion at the end of 2019 compared to $2.4 billion for 2018.
- Romspen has delivered positive net investor returns each and every month for the past 20 consecutive years.
"Completing its 53rd year in 2019, the firm has a strong history of growth, broad diversification across North America and a solid and consistent investment track record", says Mark Hilson, Managing General Partner of Romspen. "We have a long track record of delivering steady and predictable returns. Romspen has generated positive returns each and every month over the past 20 years and has typically outperformed the major benchmarks across a broad spectrum of economic conditions and cycles".
2019 Results of Operations
Revenues for the year were $232 million, compared to $229 million for 2018. Current year revenues are higher reflecting the growth in size of the mortgage portfolio offset by modestly lower interest rates on the potfolio. For 2019, Romspen recorded net income of $187 million, or $0.68 per unit, compared to $185 million, or $0.81 per unit, in 2018. Investors held units totalling $3.0 billion, compared to $2.4 billion last year. Net debt (debt less cash) was $106 million, compared to last year's level of $179 million.
Comparative Performance
During 2019, Romspen's net compounded yield of 7.5% significantly outperformed T-bills (1.7%) and the FTSE/TMX–STBI (3.1%). S&P/TSX (22.9%). The following table presents a comparative performance history reflecting Romspen's consistent outperformance against the benchmarks.
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Comparative Cumulative Compounded Performance Yields
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1 year
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3 years
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5 years
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10 years
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20 years
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Romspen
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7.5%
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25%
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46%
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114%
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453%
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S&P/TSX
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22.9%
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22%
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36%
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95%
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261%
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FTSE-TMX STBI
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3.1%
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5%
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9%
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26%
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119%
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T-bills
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1.7%
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4%
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5%
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9%
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54%
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Note:
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Romspen returns are net, comparative returns are gross.
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Yield/return, as used herein, is calculated based on net compounded monthly cash distributions to unitholders, based on a $10.00/unit subscription price without any adjustment for unit gains/losses on sale/redemption.
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Investment Portfolio
At December 31, 2019, the net investment portfolio was $3.0 billion, compared to $2.6 billion in 2018, representing an increase of 15%. The Fund realized losses of $7.2 million on mortgages that were previously reserved for, ensuring that there was no negative impact on net earnings from these losses. Total provisions for credit losses increased to $74.7 million, maintaining a comfortable margin of safety.
The Fund continues to focus on short-term mortgages, with 82% of mortgages maturing within one year and 93% maturing in less than two years. The portfolio remains well diversified with 21% of mortgages invested in Ontario, 26% in Western Canada, 8% in other provinces, and 45% in the US across 17 states. The weighted average interest rate of the mortgage portfolio was 10.4% compared to 10.6% in 2018.
2019 Distributions
Unitholder distributions for 2019 were $0.73 per unit, consistent with $0.73 per unit in 2018. This equates to a compounded net yield to investors of 7.5% consistent with 7.5% in 2018.
About the Fund
Romspen has a long-term track record of successful mortgage investing. With its origins in the mid-60's, Romspen is one of the largest non-bank commercial/industrial mortgage lenders in Canada with a portfolio in excess of $3.0 billion. Our investors are high net worth individuals, foundations, endowments and pension plans.
The Fund's investment mandate is focused on capital preservation, strong absolute returns and performance consistency. Romspen has had 20 consecutive years of positive net investor yields (ranging between 7.4% – 10.6%) with positive returns each and every month.
The 2019 Romspen Mortgage Investment Fund Annual Report including the Trustees' Report, Management's Discussion & Analysis and the audited Financial Statements, are available at: www.romspen.com.
This press release is for informational purposes only. It is not investment or financial product advice, and is not intended to be used as the basis for making an investment decision. This press release is not, and does not constitute, an offer to sell or the solicitation, invitation or recommendation to purchase any securities in any jurisdiction. An offering memorandum containing important information relating to the Fund has been prepared, and the Fund is available only to investors who are "accredited investors" or otherwise qualify under certain other exemptions from prospectus requirements under applicable securities laws. Copies of the offering memorandum may be obtained from Romspen.
SOURCE Romspen Investment Corporation
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Mark L. Hilson, Managing General Partner, markhilson@romspen.com, 416-966-1100Copyright CNW Group 2020