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TORONTO, May 16, 2013 /CNW/ - First National Mortgage Investment Fund (TSX: FNM.UN) (the "Fund") today announced that as of the end of April, it had fully invested the $54.8 million net proceeds of its initial public offering in a diversified portfolio of mortgages secured by income-producing properties across Canada.
The Fund also reported that it has successfully closed a financing facility in the amount of $10.0 million that will be employed to fund additional mortgage assets and further enhance the Fund's yield, which was originally targeted at 6% based on the issue price of $10 per unit (pre-tax equivalent of 8.77%). The average interest rate on mortgages (excluding mortgage origination fees) is currently in excess of 8.0%; including mortgage origination fees, the yield is currently in excess of 9.0%.
Since inception on December 19, 2013, the Fund has paid regular monthly distributions at the prescribed rate of $0.05 per unit, which, at yesterday's closing price per unit of $8.85, represents a yield of 6.78%.
"After closing our IPO in December, we have moved strategically to obtain economic exposure to an attractive portfolio of mortgage assets originated in-house by First National Financial LP," said Jeremy Wedgbury, Managing Director, Commercial Mortgages, First National Financial Corporation. "Now that we are fully invested, we are well positioned to deliver our dual mandates of providing unitholders with tax-advantaged monthly cash distributions while preserving capital. Leverage from the financing facility will bolster the Fund's yield potential. We will aim to utilize excess yield to grow the Net Asset Value of the Fund."
The Fund now holds 25 loans with an average loan amount of $2.3 million and a conservative weighted average loan-to-value ratio of 70.1%. The Fund has chosen to allocate capital in favour of mortgage loans on multi-unit residential properties (55.4% of the portfolio), but also to gain exposure to industrial (25.1%) and retail (10.0%) properties as well as land (9.5%) for development.
In keeping with the Fund's mandate to limit second or lower-ranking mortgages to 40% or less, approximately 74.3% of the portfolio consists of 1st mortgages, 24.3% are 2nd mortgages and the remainder are 3rd.
About First National Mortgage Investment Fund
The Fund was created to obtain economic exposure to a diversified portfolio of mortgages originated by First National Financial LP, a wholly owned subsidiary of First National Financial Corporation. The Fund's daily net asset value can be found at http://www.stoneco.com/products/first-national/first-national-mortgage-investment-fund.
About Stone Asset Management Limited
Stone Asset Management Limited ("SAM") is the manager and portfolio manager of the Fund. SAM manages a family of open-ended mutual funds, a series of flow-through limited partnerships and a TSX-listed investment fund. SAM specializes in structuring and managing high quality investment products and currently has approximately $700 million in assets under management.
About First National Financial Corporation
First National Financial Corporation (TSX: FN) is the parent company of First National Financial LP, a Canadian-based originator, underwriter and servicer of predominantly prime residential (single-family and multi-unit) and commercial mortgages. With over $67 billion in mortgages under administration, First National is Canada's largest non-bank originator and underwriter of mortgages and is among the top three in market share in the mortgage broker distribution channel. For more information, please visit www.firstnational.ca.
SOURCE: First National Mortgage Investment Fund
For further information:
Chief Financial Officer
First National Financial Corporation
Tel: 905 648 9354