Romspen Mortgage Investment Fund Announces 2010 Results

Romspen delivers strong net returns in context of historically low interest rate environment

TORONTO, May 5 /CNW/ - Romspen Mortgage Investment Fund, a leading non-bank mortgage lender specializing in commercial and industrial real estate, released its financial statements for the year ended December 31, 2010 today.  As economic headwinds continued to linger throughout 2010, Romspen again delivered solid results with compounded net investor returns of 8.7%.  This was achieved in a historically low interest rate environment where there has been downward pressure on rates everywhere and across the entire yield spectrum.

2010 Highlights

  • The net mortgage portfolio increased by 9% in 2010 to $518.9 million.
  • Net income for 2010 increased by 11% to $40.6 million.
  • Romspen's three year performance (2008-2010), which represented a challenging and volatile investment period for all investors, has significantly outperformed the stock market, long bonds and T-bills.
  • 2010 distributions to investors totalled $0.84 per unit to yield a compounded net return of 8.7%.
  • The Fund's unitholder equity for all units outstanding grew to $552.7 million at the end of 2010 compared to $483.1 million for 2009.
  • Romspen has shown positive investor returns each month during the last 10 years (120 months).

"Our focus on a simple strategy based on capital preservation, absolute returns and consistency drives our decision making", says Mark Hilson, Managing General Partner of Romspen. "Disciplined execution of this long-standing strategy has produced strong returns over virtually every time period and through various business cycles relative to other major investment benchmarks.  We are pleased with the Fund's performance over 2010, particularly in light of the tepid economic circumstances and record low interest rates across the globe."

2010 Results of Operations

Revenues for the year were $46.6 million in 2010 compared to $48.5 million for 2009 as the portfolio was smaller for most of 2010.  For 2010, Romspen recorded net income of $40.6 million or $0.80 per unit compared to $36.7 million or $0.80 per unit in 2009.  Investors held units totalling $552.7 million compared to $483.1 million last year.  Net debt (debt less cash) was reduced to nil with a positive cash balance of $15.7 million compared to last year's level of $9.7 million.

Comparative Performance

During 2010, Romspen's net compounded return of 8.7% return strongly outperformed T-bills while long bonds performed well as interest rates declined and the S&P/TSX showed strong performance as it continued to recover its past losses. Over the past three years, Romspen's accumulated net compounded return of 30% outperformed the stock market (S&P/TSX) at 6%; long bonds at 21%; and T-bills at 3%.  For a comparison of Romspen's short and long-term performance track record versus other investment classes, please see the Fund's website at:  www.romspen.com.

Mortgage Portfolio

At December 31, 2010, the net mortgage portfolio was $519.0 million compared to $476.0 million in 2009, representing an increase of 9%.  As expected, the Fund realized losses of $5.9 million on mortgages that were previously reserved for ensuring that there was no negative impact on net earnings from these losses.  The Fund currently has loss reserves of $3.8 million.

The Fund continues to focus on short-term cash flow mortgages with 73% of mortgages maturing within one year and 93% maturing in less than two years.  Geographic diversification continued as 42% of the mortgages were invested in Ontario, 51% in Western Canada, and 7% in other provinces.  The weighted average interest rate of the mortgage portfolio decreased throughout the year to 11.5% compared to 12.2% as at December 31, 2009 reflecting more open credit markets and downward rate pressure generally.

2010 Distributions

Unitholder distributions of $0.84 per unit for 2010 were equal to 2009.  This yielded a compounded net return to investors of 8.7% in both 2010 and 2009.

About the Fund

Romspen has a long-term track record of successful mortgage investing across Canada.  With its origins in the mid-60's, Romspen is one of the largest non-bank commercial/industrial mortgage lenders in Canada.  The Fund's investment mandate is focused on capital preservation, absolute returns of approximately 10% and performance consistency.  Our investors are high net-worth individuals, foundations, endowments and pension plans.  Through disciplined investing we have generated consistent returns of approximately 10% annually for our investors.

Over the past five years, Romspen has invested more than $1 billion in mortgages and has consistently earned average net annual compounded returns of approximately 10%.

The 2010 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 news release may contain forward-looking statements that are based on management's current expectations and are subject to known and unknown uncertainties and risks.  These uncertainties and risks may cause actual results to differ materially from those contemplated or implied and readers are cautioned not to place undue reliance on these forward-looking statements.  Romspen is under no obligation to update any forward-looking statements contained herein should material facts change due to new information, future events or otherwise.

SOURCE Romspen Investment Corporation

For further information:

Mark L. Hilson
Managing General Partner
markhilson@romspen.com
416-966-1100


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