TORONTO, May 3, 2013 /CNW/ - Timbercreek Senior Mortgage Investment Corporation (the "Company") (TSX: MTG) is pleased to announce its shareholders have approved amendments that will enhance the Company's corporate governance practices for the benefit of shareholders. The amendments were put forward by the Company voluntarily and include:
- moving the Company's current asset allocation model into the Company's Investment Restrictions to further enforce the Company's commitment to diversification
- removing any ability for the Fund to issue dilutive shares;
The Company's asset allocation model is used to manage the overall risk profile of the Company's portfolio of mortgage investments by ensuring it is diversified by, among other things, geography, economic sector, asset class, and borrower, and has been strictly adhered to since inception. Moving the asset allocation model criteria to the investment restrictions is intended to remove any uncertainty that this strategy could be changed in the future.
"These amendments formalize our existing practice while reinforcing our commitment to strong governance of our Company," explained Blair Tamblyn, the Company's Director and Chief Executive Officer.
The Company currently has other measures in place to protect shareholders, including:
- employing a fully independent credit committee to review and approve all mortgage and loan investments; and,
- mandating that the Company's Manager, Timbercreek Asset Management Ltd., cannot retain any fees that it earns for originating mortgages in which the Company invests. All of these fees are passed through to the Company to augment the interest earned from its mortgage investments, and this cash flow is then distributed to shareholders.
"The reason our Manager is not permitted to retain any fees is to ensure a conflict of interest doesn't exist between the Manager and the Company's shareholders," explained Mr. Tamblyn. "There isn't a financial incentive for the Manager to structure the loans in favour of more fee income and less interest income."
Timbercreek Senior Mortgage Investment Corporation invests in a diversified portfolio of first mortgage loans in Canada, which are secured primarily by income-producing real estate, as opposed to raw land or projects under development. The Company's investment objective is to preserve capital while generating attractive, stable returns through the interest and fees it generates from its mortgage investments to allow it to pay monthly distributions to its shareholders. As of the close of business on May 3, 2013, the Class A Shares of the Company were yielding 6.3%.
SOURCE: Timbercreek Senior Mortgage Investment Corporation
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