Highlights of Q2 2008 compared to Q2 2007
- Originations grew by 17% to a quarterly record of $39 million;
- The mortgage portfolio grew by 17% to $767 million;
- Normalized income per unit decreased 8% to $0.299;
TORONTO, Aug. 5 /CNW/ - Home Equity Income Trust (TSX: HEQ.UN (HOMEQ or
the Trust)), which pays cash distributions earned from a portfolio of reverse
mortgages originated by Canadian Home Income Plan (CHIP), today announced
record quarterly originations.
Current results continue the Trust's recent trend of strong business
expansion. During the quarter, mortgage originations of $39 million achieved
an all time record high, 17% over Q2 2007, and trailing four quarter
originations grew to $136 million in comparison to $115 million during the
period ended Q2 2007. The aggregate of new mortgage originations and accrued
interest is significantly outpacing repayments, resulting in acceleration in
the rate of growth of the mortgage portfolio. During the trailing four
quarters ended June 30, 2008 the portfolio grew 17% or $112 million to
"We are experiencing increasing demand for our product from a growing
demographic group. Our product continues to gain acceptance and recognition
and the range of product options is expanding. For our customers, a CHIP Home
Income Plan is the best alternative for meeting their financial needs," said
Steven Ranson, President and CEO.
Mr. Ranson continued, "We continue to expand and develop our network of
referral partners which now encompass all the major Canadian banks, and also
includes foreign and regional banks, wealth management companies and mortgage
brokers." During the quarter the Trust entered into an agreement with
Multi-Prêts, Quebec's leading mortgage broker. The new partnership with
Multi-Prêts will further the Trust's reach to seniors in Quebec through the
mortgage broker's well established branch network. The expansion of the
Trust's referral network comes on the heels of the expansion of the Trust's
sales and relationship management team, as well as establishment of a new
regional office in Montreal.
As a result of conservative underwriting policies, the portfolio
currently has an average loan-to-value of 36%, and less than 5% of the
portfolio has a loan-to-value of over 70%, which would reduce the impact of a
drop in residential real estate, should that occur. The real estate securing
our mortgages is diversified by property type, location and province.
"While it is difficult to predict the duration and extent to which the
current capital market environment will persist, we believe we are well
positioned to continue our prior success. Our customer segment is growing, our
profit margins are attractive and robust, we have a strong and well secured
portfolio and our sales force is highly trained, equipped and motivated. Under
these circumstances, we will continue to pay attention to growing the business
while managing the business risks identified in the Trust's Management
Discussion and Analysis and Annual Information Form," Mr Ranson concluded.
Quarterly Financial Statements
The Trust also announced the release of its financial results for the
quarter ended June 30, 2008. The Q2 2008 interim financial statements are
available on the Trust's website at www.homeq.ca and www.sedar.com.
HOMEQ will hold a conference call to discuss these financial results on
August 6, 2008 at 10.00 am (Eastern).
Available on the call to answer questions will be Steven Ranson,
President and Chief Executive Officer, and Gary Krikler, Senior Vice President
and Chief Financial Officer.
To participate in the conference call, please dial 1-888-892-3255.
A live audio webcast (listen-only mode) of the conference call will be
available at www.homeq.ca.
An archived recording of the call will be available at 1-800-937-6305
(conference ID 859705).
The Trust uses a number of financial measures to assess its performance.
Some measures are calculated in accordance with GAAP, such as operating margin
and net income. Other measures such as distributable cash and net spread are
non-GAAP measures. These measures do not have standardized meanings under GAAP
and may not be comparable to similar measures used by other trusts and
Forward Looking Statements
Home Equity Income Trust from time to time makes written and verbal
forward-looking statements about business objectives, operations, performance,
and financial condition, including, in particular, the forecast of cash
distributions and the likelihood of HOMEQ's success in developing and
expanding its business. These may be included in the Annual Reports,
regulatory filings, reports to unitholders, press releases, Trust
presentations and other communications. These forward-looking statements are
based upon a number of assumptions and estimates that are inherently subject
to significant uncertainties and contingencies, many of which are beyond the
control of HOMEQ. Actual results may differ materially from those expressed or
implied by such forward-looking statements. HOMEQ does not undertake to update
any forward-looking statement, whether written or verbal, that may be made
from time to time.
About Home Equity Income Trust
Home Equity Income Trust provides unitholders with stable monthly cash
distributions from a portfolio of reverse mortgages originated by its wholly
owned subsidiary Canadian Home Income Plan Corporation. The Trust's units are
rated SR-2 by Standard and Poor's, which assigns this rating to funds that
have "a very high level of cash distribution stability relative to other rated
Canadian income funds." As of June 30, 2008, the portfolio generating cash
returns to the Trust comprised approximately 6,900 reverse mortgages with an
accrued value of $767 million, secured by residential properties across Canada
worth approximately of $2.1 billion. CHIP (www.chip.ca), has been the main
underwriter of reverse mortgages in Canada since pioneering the concept in
The Trust's units trade on the Toronto Stock Exchange under the symbol
HEQ.UN. Additional information on HOMEQ, including annual and quarterly
reports and the Trust's distribution reinvestment plan, can be viewed at
For further information:
For further information: Steven K. Ranson, President and Chief Executive
Officer, (416) 413-4663, firstname.lastname@example.org or Gary Krikler, Senior Vice
President and Chief Financial Officer, (416) 413-4679, email@example.com