Release Date: May 06, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Timbercreek Financial Corp (TBCRF, Financial) reported a solid first quarter with net investment income of $28.6 million, up from $27.9 million in Q4.
- The company generated a distributable income of $0.19 per share with a payout ratio of 93%, indicating strong dividend coverage.
- First mortgages represented 88.3% of the portfolio, with a trend towards increasing this percentage to 90%, enhancing portfolio security.
- The company successfully closed the sale of three senior living facilities, freeing up capital for higher-yielding mortgage investments.
- Timbercreek Financial Corp (TBCRF) is well-positioned to deploy capital into high-quality loans, with a portfolio balance of nearly $1.1 billion.
Negative Points
- Market volatility from tariff disputes has caused delays in some transactions, although these are expected to be temporary.
- The weighted average interest rate decreased to 8.7% in Q1 from 8.9% in Q4, reflecting Bank of Canada's rate cuts, which could impact income.
- The company recorded a reserve on net mortgage investments and other loans of $1.6 million due to changes in stage 2 and stage 3 loans.
- There is pressure in the condo market, particularly in Toronto, which could indirectly affect multi-family space valuations and demand.
- Timbercreek Financial Corp (TBCRF) faces competition from other lenders, some of whom may offer irrational bids, affecting market share.
Q & A Highlights
Q: Can you elaborate on your confidence regarding the improvement of stage 2 and 3 loans? Is this based on specific situations or a general confidence in navigating workout situations?
A: Blair Tamblin, CEO: We have clear visibility on $80 million of resolutions this quarter. For the remaining $220 million, we continue to work towards resolutions that benefit our shareholders, and we remain confident in our approach.
Q: With the current pressure in the condo market, is there any impact on the multi-family space in terms of valuations, vacancy, or investor demand?
A: Scott Roland, CIO: The condo market varies by city, with Toronto experiencing some price weakness. However, Timbercreek Financial is not exposed to owner-occupied single units. Our focus on traditional multi-family assets, which are typically older and less expensive, remains stable and well-occupied.
Q: Are there any new opportunities in the market that weren't present 3 to 6 months ago, particularly within multi-family or other verticals?
A: Scott Roland, CIO: We maintain a balanced approach with a focus on multi-family and diversified commercial assets. Retail, especially grocery-anchored, is becoming more favored. We are also monitoring industrial and development land markets for potential opportunities.
Q: How is Timbercreek Financial adjusting to the uncertainty caused by tariff issues, and has this affected your competitive position?
A: Jeff McTape, Head of Canadian Originations and Global Syndications: We remain nimble and can adjust quickly. While some competitors may not have adapted as swiftly, we continue to compete favorably and maintain our market share. Our cost of capital and portfolio stability position us well against competitors.
Q: What is the outlook for land inventory, and how confident are you in its realizable value?
A: Scott Roland, CIO: We aim to dispose of most of our land inventory this year. We are close to finalizing some deals and expect to provide an update in the next call. We feel confident about our basis and the ability to realize value from these assets in 2025.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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