Mr. Blair Tamblyn reports

TIMBERCREEK FINANCIAL ANNOUNCES 2023 THIRD QUARTER RESULTS

Timbercreek Financial Corp. has released its financial results for the three and nine months ended Sept. 30, 2023.

Third quarter 2023 highlights:

• Q3 2023 results were highlighted by continued strong interest income; quarterly net investment income was $30.3-million, up from $30.0-million Q3 2022;
• Net income and comprehensive income of $16.5-million, up from $13.5-million in the same period last year; basic and diluted earnings per share for Q3 2023 were 20 cents and 19 cents (Q3 2022: 16 cents and 16 cents);
• Delivered distributable income and adjusted distributable income of $16.8-million, or 20 cents per share (Q3 2022: $16.8-million or 20 cents per share), representing a payout ratio of 85.6 per cent on both distributable income and adjusted distributable income;
• Declared $14.4-million, or 17 cents per share in dividends to shareholders, reflecting a payout ratio of 87.4 per cent (Q3 2022: 107.2 per cent) on earnings per share;
• Net new mortgage advances were $58.2-million, and advances on existing mortgages were $17.5-million, offset by net mortgage repayments of $61.9-million and net syndications of $4.5-million; mortgage repayment activity was low in the quarter due to continued slowness in the overall commercial real estate market; portfolio turnover decreased to 6.0 per cent, compared with 11.6 per cent in Q2 2023;
• At the end of the period, net mortgage investments were $1,068.6-million (versus $1,255.4-million at Q3 2022) bearing a weighted-average interest rate of 9.9 per cent (versus 8.5 per cent at Q3 2022 and 9.8 per cent at second quarter 2023) and a weighted-average LTV of 67.0 per cent (versus 69.4 per cent at Q3 2022 and 68.3 per cent at Q2 2023); the company also had net real estate inventory of $92.5-million at Q3 2023, versus $30.1-million at Q3 2022;
• Shareholders equity of $702.7-million at quarter-end (book value per share of $8.43);
• The company made material progress on the resolution of Stage 3 assets:
  • A portfolio of seven Stage 3 loans totalling $146.1-million received an offer for purchase, set to close in fourth quarter 2023; the proceeds from the sale and ultimate takeout of the mortgages are anticipated to fully cover principal and interest;
  • The company and its syndicate partners credit bid three collateral assets for which the associated mortgage investment was in Stage 3; the company is in active management of the property and is currently negotiating with a potential third party purchaser;
• The company continues to closely manage its other Stage 3 and Stage 2 loans, and expects to make significant progress over the rest of the year; the investment team, which is experienced in navigating these situations and utilizing various approaches to achieve resolution, continues to anticipate repayment of principal outstanding as the asset sale processes are completed;
• Maintained conservative portfolio risk composition focused on income-producing commercial real estate:
  • 67.0-per-cent weighted-average loan to value;
  • 92.2-per-cent first mortgages in mortgage investment portfolio;
  • 86.5 per cent of mortgage investment portfolio is invested in cash-flowing properties.

"The portfolio continued to generate strong interest income in the third quarter, allowing us to report year-over-year earnings per-share growth, distributable income of 20 cents per share and declare dividends of 17 cents per share," said Blair Tamblyn, chief executive officer of Timbercreek. "At the same time, the team made excellent progress toward the repayment of several loans, where the borrowers experienced challenges from the rapid rise in interest rates and general economic weakness. This is a cyclical and occasional reality of our market segment, and one that our team has demonstrated for over 15 years that it has the expertise to actively manage to ensure the best outcomes for our shareholders. We anticipate repayment of our principal on the Stage 2 and 3 loans we have provided updates on today, with a sizable portion to be resolved in the near term. As the interest rate outlook stabilizes, we expect to see increased commercial real estate activity, driving higher transaction volume within our portfolio."

Quarterly conference call

Interested parties are invited to participate in a conference call with management on Thursday, Nov. 2, 2023, at 1 p.m. ET, which will be followed by a question-and-answer period with analysts.

To join the Zoom webinar

Webinar ID:  834 2508 4478

Passcode:  1234

By telephone

Dial (for higher quality, dial a number based on your current location) the following.

Canada:  1-438-809-7799 or 1-587-328-1099 or 1-647-374-4685 or 1-647-558-0588 or 1-778-907-2071

International numbers are available.

Speakers will receive a separate link to the webinar.

The playback of the conference call will also be available on the Timbercreek website following the call.

About Timbercreek Financial Corp.

Timbercreek is a leading non-bank commercial real estate lender, providing shorter-duration structured financing solutions to commercial real estate professionals. Its sophisticated, service-oriented approach allows it to meet the needs of borrowers, including faster execution and more flexible terms that are not typically provided by Canadian financial institutions. By employing thorough underwriting, active management and strong governance, it is able to meet these needs while generating strong risk-adjusted yields for investors.

We seek Safe Harbor.