• Portfolio focus: Due to sluggish sector activity, especially in development and construction, management remains focused on increasing exposure to lower-risk property types, such as single-family residential and income-producing commercial properties.
  • Sector trends: We are seeing a notable increase in M&A activity among private MICs. Discussions with managers indicate several are pursuing acquisitions to scale platforms, drive synergies, and achieve cost savings in administration, operations, and staffing. Although Atrium has not indicated any plans to pursue acquisitions, we believe such moves could potentially support higher investor yields, and attract additional capital.
  • Market positioning: Historically, declining rates have boosted MICs and financial stocks. In the current falling-rate environment, MICs have lagged financials (+9% YoY vs. +29% YoY), and are tracking REITs (+8% YoY), given both their exposure to residential real estate, which, as mentioned above, is undergoing a slow phase with negative sentiment. We believe a gradual rebound in residential real estate in 2026 will support MIC stocks this year.
  • 2026 Outlook: We project a dividend of $1.02/share (previously $0.99/share), reflecting an 8.74% yield.

Price and Volume (1-year)

  YTD 12M
AI 1% 9%
TSX 6% 35%
XFN (Financial) -1% 29%
XRE (REIT) 4% 8%

* Atrium Mortgage Investment Corporation has paid FRC a fee for research coverage and distribution of reports. See last page for other important disclosures, rating, and risk definitions. All figures in C$ unless otherwise stated. 

Loan advances rose 2% YoY, while repayments were down 3% YoY, resulting in net mortgages outstanding increasing 3% YoY to $892M vs our forecast of $900M

Portfolio Update

First mortgages and LTV declined slightly

Duration rose due to turnover

Lending rates eased following BoC rate cuts; since peaking in 2023, lending rates are down 2.40 pp vs a 2.75 pp decline in the benchmark rate, indicating MIC lending rates are less elastic 

Mortgages by Property Type

Source: Company Data / FRC

Increased exposure to revenue generating commercial properties, and already built single-family units, while scaling back on residential development projects, implying a lower risk profile

Mortgages by Region

No changes in provincial exposure
Stage two mortgages (high credit risk, not impaired) plus stage three (impaired) declined 12% QoQ 
However, stage three mortgages rose 53% QoQ to 9.4% of total mortgages, driven by a single $31M loan that moved into impairment;  management noted on the earnings call that this loan was fully repaid after year-end, which should reduce stage three levels 

Source: FRC / Company

*Red (green) indicates an increase (decrease) in risk level.

Source: FRC

This explains why loan loss allowances remained largely flat QoQ

Overall, we believe the portfolio’s risk profile has edged higher, with four negative indicators versus three positive 

Financials

Revenue fell 13% YoY, amid lower lending rates, but beat our estimate by 0.3%
EPS declined 3% YoY, less sharply than revenue, beating our estimate by 3%, supported by lower loan loss provisions
Dividends were down 3% to $1.03/share, 4% above our estimate, reflecting an 8.84% yield

*The calculations in the above table are approximate as we used the average of beginning and end of period mortgage s outstanding.

Annual regular dividends held steady at $0.93/share, reflecting an 8.00% yield
Debt-to-capital increased slightly to 40%, but stayed under the 10-year average of 42%

  • Our calculations are slightly different from the company’s calculations.

Source: Company / FRC

Notably, AI’s lending syndicate increased its credit facility by $40 million to $380 million, which we view as a strong vote of confidence in the company’s portfolio

FRC Forecasts & Valuation

Source: FRC

As Q4 loan loss provisions came in below expectations, we are raising our 2026 EPS and dividend forecasts

Source: FRC

Our estimate for the 2026 dividend varies between $0.88 and $1.02/share, as loan loss provisions and lending rates vary

Source: S&P Capital IQ / FRC

Sector multiples are up 3% YoY, and 1% since our November 2025 report

On average, MICs and banks are expected to report 6% revenue growth this year vs 3% in 2025, potentially driven by higher lending volumes

Our fair value estimate increased from $13.00 to $13.12/share, driven by higher sector multiples, and our upward revision to earnings and dividend forecasts 

We are reiterating our BUY rating , and adjusting our fair value estimate from $13.00 to $13.1 2 /share, implying a potential return of 22% (including dividends) in the next 12 months. Despite a 13% YoY revenue decline, results exceeded our expectations, driven by lower loan loss provisions, and solid mortgage growth. With a growing focus on lower-risk properties, and an attractive 8-9% dividend yield, we believe AI is well-positioned to benefit from a gradual rebound in residential real estate.

Risks

We believe the company is exposed to the following risks:

  • Diversification – over 90% of Atrium's mortgages are secured by properties in ON
  • Credit
  • A downturn in the real estate sector may impact the company’s deal flow 
  • Timely deployment of capital is critical
  • Investments in mortgages are typically affected by macroeconomic conditions, and local real estate markets 
  • Highly competitive sector
  • Like most MICs, the company uses leverage to fund mortgages 
  • Default rates can rise during recession
  • Geopolitical risks and the potential for a tariff-induced recession

Maintaining our risk rating of 3 (Average)

APPENDIX