TORONTO, Nov. 11, 2016 /CNW/ - Trez Capital Mortgage Investment Corporation (TSX: TZZ) (the "Company") today released its financial results for the quarter ended September 30, 2016.
On June 16, 2016 the shareholders of the Company approved the orderly wind-up of the Company. As such, the financial results will reflect the ongoing reduction in the size of the portfolio as capital is returned to shareholders.
For the three months ended September 30th
- Income from operations totaled $0.4 million, compared to income from operations of $3.0 million in Q3 of 2015
- Net income for the quarter totaled $0.4 million, compared to net income of $2.8 million in Q3 of 2015
- Basic and diluted earnings per share were $0.02 versus dividends declared of $0.175 per share
During the third quarter, income from operations and net income declined primarily as a result of lower interest revenue resulting from a reduction in the average size of the mortgage portfolio. There were no commitment fees in the period as the Company is no longer funding loans. In addition, there was an increase of $1.9 million to the fair value adjustments on investments in mortgages that was partially offset by a decrease of $0.3 million in incentive fee to the Manager, for a net increase in expenses of $1.6 million.
As of September 30, 2016 the book value per share was $8.73 versus $8.85 at June 30, 2016. The Company's operating income is less than the amount of distributions declared which has contributed to the decline in the book value per share. The Company expects this trend will continue throughout the orderly wind-up.
Investment Portfolio Highlights
- 76% of the portfolio was invested in first mortgages
- Weighted average loan-to-value of the mortgage portfolio was 77%
- Weighted average interest rate and term to maturity on mortgage investments was 6.5% and 19.5 months, respectively
- Geographically diversified portfolio across Canada: Ontario 44%, Alberta 22%, New Brunswick 16%, Nova Scotia 15% and 3% in Saskatchewan.
On September 20, 2016 the Company completed its substantial issuer bid (the "Offer"), purchasing for cancellation 2,000,000 Shares at a price of $8.50 resulting in a total return of capital of $17,000,000. The Offer was oversubscribed, and successfully tendering shareholders received 27.82% of their offer prorated. Odd lot tenders were not subject to proration. The Offer resulted in an accretion of $0.04 to the book value per share.
On September 28, 2016 the Company announced the resignation of Michael J.R. Nisker as President and Chief Executive Officer due to his decision to retire from Trez Capital Fund Management Limited Partnership (the "Manager"). Effective November 10, 2016, Sandy Manson, who is currently the MIC's Chief Financial Officer, assumed the role of President and Chief Executive Officer. Effective November 10, 2016, Greg Vorwaller was appointed to the Board replacing Mr. Nisker as one of the Manager's Board nominees. Greg Vorwaller is currently the President of the Manager.
On September 30, 2016 the Company announced the resumption of its normal course issuer bid (the "NCIB") as well as approval by the Toronto Stock Exchange to enter into an automatic share purchase plan. The Company anticipates using the automatic share purchase plan during the course of its NCIB to enable purchases of its Shares when the MIC ordinarily would not be active in the market due to trading blackout periods, insider trading rules or otherwise. Purchases will be made by the MIC's broker based upon the parameters prescribed by the TSX, applicable Canadian securities laws and the terms of the parties' written agreement. As of November 10, 2016, 786,236 shares have been purchased for cancellation under the NCIB.
The Board of Directors is currently reviewing options for the distribution of future returns of capital taking into consideration tax consequences to shareholders, expenses to be incurred, and compliance with regulations to maintain the Company's status as a Mortgage Investment Corporation under the Tax Act. The Company expects to announce the details relating to the next return of capital distribution in the near future.
Certain statements in this news release about Trez Capital Mortgage Investment Corporation (the "Company"), and its business, operations, investments and strategies, and financial performance and condition may constitute forward-looking information, future oriented financial information, or financial outlooks (collectively, "forward looking statements"). The forward-looking statements are stated as of the date of this news release and are based on estimates and assumptions made by Trez Capital Fund Management LP ("Trez") in light of its experience and perception of historical trends, current conditions and expected future developments, as well as other factors that Trez believes are appropriate and reasonable in the circumstances. There can be no assurance that such forward-looking statements will prove to be accurate, as actual results, performance and future events could differ materially from those anticipated in such statements. Past performance is not an indication of future returns, and there can be no guarantee that targeted returns or yields can be achieved. Trez refers you to the Company's public disclosure for information regarding these forward-looking statements, including the assumptions made in preparing forward-looking statements and management's expectations, and the risk factors that could cause the Company's actual results, yield, levels of activity, performance or achievements or future events or developments to differ materially from those expressed or implied by the forward-looking statements. Such public disclosure is available on SEDAR and at the request of Trez. This news release does not represent an offer or solicitation to sell securities of the Company.
About the Company
The Company holds a diversified portfolio of mortgages in Canada. Trez Capital Fund Management Limited Partnership is the manager of and portfolio advisor to the Company. On June 16, 2016 the Shareholders of the Company approved the orderly wind-up of the Company. Under the orderly wind-up plan the Company will distribute the net proceeds through special distributions, the repurchase of shares pursuant to the normal course issuer bid, or otherwise.
SOURCE Trez Capital Junior Mortgage Investment Corporation
For further information: Karyn Phuong, Vice President, Investor Relations, Trez Capital, Tel: (647) 788-1788, E-mail: [email protected]