Romspen demonstrates solid absolute returns and outperformance relative to major benchmarks
TORONTO, May 7, 2013 /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, 2012 today. In a year marked by slowly improving, but still difficult and unresolved economic conditions, Romspen delivered solid 2012 results with compounded net investor returns of 7.7%. These results outperformed the major benchmarks and were achieved against a backdrop of generationally low interest rates.
- The net mortgage portfolio increased by 33% in 2012 to $995.1 million.
- Net income for 2012 increased by 24% to $63.1 million.
- 2012 distributions to investors totalled $0.74 per unit to yield a compounded net return of 7.7%.
- Net returns of 7.7% for Romspen outperformed T-bills (1.0%), the DEX Short Term Bond Index ("DEX-STBI") (2.0%), and the S&P/TSX (7.2%).
- Romspen's five year performance (2008-2012), 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 12%.
- The Fund's unitholder equity for all units outstanding grew to $997.2 million at the end of 2012 compared to $751.9 million for 2011.
- Romspen has shown positive investor returns every month during the last 15 years (180 months).
"Since inception, our mandate has remained unchanged; focused on capital preservation, absolute returns and consistency", says Mark Hilson, Managing General Partner of Romspen. "We are proud of our long established track record of consistently delivering steady and predictable returns particularly during the past five years which have been particularly difficult for investors".
2012 Results of Operations
Revenues for the year were $76.8 million in 2012 compared to $64.3 million for 2011 as the mortgage portfolio grew significantly in 2012 to $995.1 million. For 2012, Romspen recorded net income of $63.1 million or $0.71 per unit compared to $51.0 million or $0.75 per unit in 2011. Investors held units totalling $997.2 million compared to $751.9 million last year. Net debt (debt less cash) was $39.1 million compared to last year's level of $15.7 million.
During 2012, Romspen's net compounded return of 7.7% outperformed T-bills at 1.0%, the DEX-STBI at 2.0%, and the S&P/TSX at 7.2%. A comparative performance history shows that over the past five years, Romspen's accumulated net compounded return of 51% outperformed T-bills at 5%; the DEX-STBI at 25%; and the S&P/TSX at 4%. Over the past ten years, Romspen still outperformed other benchmarks with an accumulated net compounded return of 144% versus T-bills at 24%; the DEX-STBI at 54%; and the S&P/TSX at 142%. 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, 2012, the net mortgage portfolio was $995.1 million compared to $749.1 million in 2011, representing an increase of 33%. The Fund realized losses of only $1.1 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 $12.0 million to create a greater margin of safety.
The Fund continues to be focused on short-term mortgages with 74% of mortgages maturing within one year and 97% maturing in less than two years. Geographic diversification continued with 44% of the mortgages invested in Ontario, 39% in Western Canada, 5% in other provinces, and 12% in the US. The weighted average interest rate of the mortgage portfolio decreased slightly during the year to 10.6% compared to 10.7% as at December 31, 2011 reflecting more open credit markets and pervasive downward rate pressure on Canadian loans.
Unitholder distributions for 2012 were $0.74 per unit compared to $0.79 per unit in 2011. This yielded a compounded net return to investors of 7.7% in 2012 compared to 8.2% in 2011.
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, absolute returns of approximately 10% 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 billion in mortgages and has earned average net annual compounded returns of over 9%.
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
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