Key Highlights

  • At the end of Q3-2019, Timbercreek Financial Corp. (“TF”, “company”, “MIC”) had $1.18 billion in mortgage receivables (net), down 3.3% QoQ, and 3.4% YTD. Originations continued to drop on a YoY basis due to a sustained competitive environment for mortgages on cash flowing commercial real estate. However, in the Q3 conference call, mangement indicated that the company entered Q4 with a strong deal pipeline.
  • In Q3-2019, TF generated $25 million in revenues (up 1% YoY), and $14 million in net income / EPS: $0.19 (up 2% YoY).
  • We estimate that the dividend yield (dividends as a percentage of invested capital) remained unchanged YoY at 7.89% p.a. in Q3-2019.
  • We are maintaining our 2019 dividend estimate at $0.69 per share, and our 2020 estimate at $0.70 per share.
  • Most key portfolio parameters remained unchanged QoQ. However, we believe an increase in exposure to income producing properties (from 86.1% to 87.4%) has further lowered the portfolio’s risk profile.
  • We continue to believe that TF’s high percentage of first mortgages on income producing properties makes its portfolio of significantly lower risk relative to other MICs.

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