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.
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.
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.
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.
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
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