Romspen demonstrates another year of solid absolute returns
TORONTO, May 13, 2014 /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, 2013 today. While at the low end of our historical range, it was achieved in a year marked by slowly improving, but still challenging, economic conditions and a backdrop of historically low interest rates.
- The net mortgage portfolio increased by 16% in 2013 to $1.15 billion.
- Net income for 2013 increased by 23% to $77 million.
- 2013 distributions to investors totalled $0.72 per unit to yield a compounded net return of 7.4%.
- Net returns of 7.4% for Romspen outperformed T-bills (1.0%), the DEX Short-Term Bond Index ("DEX‑STBI") (1.7%), but were behind the resurgent S&P/TSX (13.0%).
- Romspen's three year performance (2011-2013), which represented a challenging and volatile investment period for all investors, has significantly outperformed T‑bills, the DEX‑STBI and the S&P/TSX.
- US mortgages in the portfolio increased to 14%.
- The Fund's unitholder equity for all units outstanding grew to $1.1 billion at the end of 2013 compared to $997 million for 2012.
- Romspen has shown only a single negative month of performance during the past 20 years (240 months).
"Our mandate has remained unchanged; focused on capital preservation, absolute returns and consistency", says Mark Hilson, Managing General Partner of Romspen. "Our objective is to make money for our investors on a constant basis, regardless of prevailing market conditions".
2013 Results of Operations
Revenues for the year were $97 million in 2013 compared to $77 million for 2012 as the mortgage portfolio grew significantly in 2013 to $1.15 billion. For 2013, Romspen recorded net income of $77 million or $0.73 per unit compared to $63 million or $0.71 per unit in 2012. Investors held units totalling $1.1 billion compared to $997 million last year. Net debt (debt less cash) was $71 million compared to last year's level of $39 million.
During 2013, Romspen's net compounded return of 7.4% outperformed T-bills at 1.0% and the DEX-STBI at 1.7%, but trailed a resurgent S&P/TSX at 13.0%. A comparative performance history shows that over the past three years, Romspen's accumulated net compounded return of 25% outperformed T-bills at 3%; the DEX‑STBI at 9%; and the S&P/TSX at 11%. Over the past ten years, Romspen still outperformed other benchmarks with an accumulated net compounded return of 139% versus T-bills at 21%; the DEX-STBI at 49%; and the S&P/TSX at 115%. For a comparison of Romspen's short and long-term performance track records versus other investment classes, please see the Fund's website at: www.romspen.com.
At December 31, 2013, the net mortgage portfolio was $1.15 billion compared to $995 million in 2012, representing an increase of 16%. The Fund realized losses of only $1.3 million on mortgages that were previously reserved for ensuring that there was no negative impact on net earnings from these losses. Furthermore, the Fund increased its loss reserves to $16 million to create a comfortable margin of safety for such occurrences.
The Fund continues to be focused on short-term mortgages with 72% of mortgages maturing within one year and 98% maturing in less than two years. Geographic diversification continued with 46% of the mortgages invested in Ontario, 31% in Western Canada, 9% in other provinces, and 14% in the US. The weighted average interest rate of the mortgage portfolio decreased slightly during the year to 10.5% compared to 10.6% last year reflecting the continued impact of the low interest rate environment.
Unitholder distributions for 2013 were $0.72 per unit compared to $0.74 per unit in 2012. This yielded a compounded net return to investors of 7.4% in 2013 compared to 7.7% in 2012.
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. The Fund's investment mandate is focused on capital preservation, strong absolute returns and performance consistency. Our investors are high net‑worth individuals, foundations, endowments and pension plans.
Over the past ten years, Romspen has invested more than $2.5 billion in mortgages and has earned average net annual compounded returns of over 9%.
The 2013 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, email@example.com, 416-966-1100