Romspen Mortgage Investment Fund Announces 2015 Results

Romspen demonstrates solid absolute returns in an extremely low yield environment

TORONTO, May 6, 2016 /CNW/ - Romspen Mortgage Investment Fund, a leading non-bank mortgage lender specializing in commercial and industrial real estate, today released its financial statements for the year ended December 31, 2015.  For 2015, the Fund had an 8.2% net return, reflecting both a strong absolute return and significant comparative outperformance against all major benchmarks.  These results are ahead of last year's, and were achieved despite an increasingly competitive lending environment and persistent record-low interest rates.

2015 Highlights

• The net investment portfolio increased by 15% in 2015 to $1.5 billion.
• Net earnings for 2015 increased by 31% to $120 million.
• Distributions to investors totalled $0.79 per unit to yield a compounded net return of 8.2%.
• Net returns of 8.2% for Romspen significantly outperformed T-bills (0.5%), the FTSE-TMX Short-Term Bond Index ("FTSE/TMX‑STBI") (2.6%) and the S&P/TSX Composite Total Return Index (-8.3%).
• Romspen's past three, five, ten and twenty year performance has outperformed T‑bills, the FTSE/TMX‑STBI and the S&P/TSX.
• US mortgages in the portfolio increased to 36%.
• The Fund's unitholder equity for all units outstanding grew to $1.4 billion at the end of 2015 compared to $1.2 billion for 2014.
• Romspen has delivered positive net investor returns each and every month for the past 20 consecutive years.

"Capital preservation, absolute returns and performance consistency continue to be our mandate", says Mark Hilson, Managing General Partner of Romspen. "We are proud of our long established track record of delivering steady and predictable returns. We have generated positive returns each and every month over the past 20 years along with consistently outperforming the major benchmarks during all matter of economic conditions".

2015 Results of Operations

Revenues for the year were $155 million, compared to $125 million for 2014, due to the appreciation of the US dollar and the growth of the mortgage portfolio during the year to $1.5 billion.  For 2015, Romspen recorded net income of $120 million, or $0.93 per unit, compared to $92 million, or $0.78 per unit, in 2014.  Investors held units totalling $1.4 billion, compared to $1.2 billion last year.  Net debt (debt less cash) was $155 million, compared to last year's level of $153 million.

Comparative Performance

During 2015, Romspen's net compounded return of 8.2% significantly outperformed T-bills (0.5%), the FTSE/TMX-STBI (2.6%) and the poor performing S&P/TSX (-8.3%).  The following table presents a comparative performance history reflecting Romspen's consistent outperformance against the benchmarks.

Comparative Performance History

					Comparative performance returns
					1 year	3 years	5 years	10 years	20 years
Romspen					8.2%	25%	46%	131%	507%
S&P/TSX					-8.3%	15%	12%	54%	335%
FTSE-TMX STBI^1					2.6%	8%	15%	46%	113%
T-bills					0.5%	2%	4%	17%	67%
			Note: Romspen returns are net, comparative returns are gross
			^1FTSE-TMX STBI return is based on the 17 year cumulative return due to data restrictions.

Investment Portfolio

At December 31, 2015, the net investment portfolio was $1.5 billion, compared to $1.3 billion in 2014, representing an increase of 15%.  The Fund realized losses of only $3 million on mortgages that were previously reserved for, ensuring that there was no negative impact on net earnings from these losses.  Total provisions for credit losses increased to $37 million, as the Fund seeks to maintain a comfortable margin of safety. 

The Fund continues to focus on short-term mortgages, with 82% of mortgages maturing within one year, and 99% maturing in less than two years.  Geographic diversification continued, with 34% of mortgages invested in Ontario, 23% in Western Canada, 7% in other provinces, and 36% in the US.  The weighted average interest rate of the mortgage portfolio was 10.6% in 2015, compared to 10.5% to last year. 

2015 Distributions

Unitholder distributions for 2015 were $0.79 per unit, compared to $0.75 per unit in 2014.  This equates to a compounded net return to investors of 8.2%, compared to 7.8% in 2014.

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 with a portfolio in excess of $1.5 billion.  Our investors are high net worth individuals, foundations, endowments and pension plans. 

The Fund's investment mandate is focused on capital preservation, strong absolute returns and performance consistency.  Romspen has had 20 consecutive years of positive net investor returns (ranging between 7.4% ‑ 10.8%) with positive returns each and every month.

The 2015 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 press release is for informational purposes only.  It is not investment or financial product advice, and is not intended to be used as the basis for making an investment decision. This press release is not, and does not constitute, an offer to sell or the solicitation, invitation or recommendation to purchase any securities in any jurisdiction. An offering memorandum containing important information relating to the Fund has been prepared, and the Fund is available only to investors who are "accredited investors" or otherwise qualify under certain other exemptions from prospectus requirements under applicable securities laws. Copies of the offering memorandum may be obtained from Romspen.

SOURCE Romspen Investment Corporation

Mark L. Hilson, Managing General Partner, [email protected], 416-966-1100