C.A. Bancorp Canadian Realty Finance Corporation

March 24, 2011 17:38 ET

C.A. Bancorp Canadian Realty Finance Corporation Announces 2010 Financial Results

TORONTO, ONTARIO--(Marketwire - March 24, 2011) - C.A. Bancorp Canadian Realty Finance Corporation (the "Corporation") (TSX:RF.PR.A)(TSX:RF.A)(TSX:RF.WT), managed by C.A. Bancorp Ltd. (the "Manager"), announces the release of its financial statements and management report of fund performance ("MRFP") for the year ended December 31, 2010.

All capitalized terms used and not defined in this press release have the meaning given to them in the MRFP.

The Corporation reports the following operational and financial highlights.

Mortgage Portfolio Highlights

For the year ended December 31, 2010, the Corporation:

  • funded mortgages in the aggregate amount of $13.7 million;

  • committed to fund an additional $1.6 million of mortgages;

  • completed the sale of the underlying properties of two non-performing mortgages with 98% of the principal outstanding recovered;

  • restructured a third non-performing mortgage which resulted in the Corporation taking a majority-ownership position in the underlying property and operating business. In addition to the Corporation taking an equity position in the underlying property and operating business, a new mortgage was also registered; and

  • had mortgages repaid or partially repaid in the aggregate amount of $29.7 million.

As at December 31, 2010:

  • the principal outstanding (less unamortized fees) in the Corporation's Mortgage Portfolio was approximately $37.5 million compared to $55.0 million at year end 2009;

  • the effective yield of the Mortgage Portfolio was approximately 10.9% compared to 11.6% in 2009;

  • the Mortgage Portfolio did not have any Non-Performing Mortgages, however one mortgage was in arrears 31 days;

  • the fair value adjustment on the Mortgage Portfolio was $1.1 million; and

  • the fair value of the Mortgage Portfolio was $36.4 million.

Below is a breakdown of the Mortgage Portfolio by mortgage type, asset type and geographic location.

BY MORTGAGE TYPE # Weighting   BY ASSET TYPE # Weighting
  1st Mortgages 13 68.5%     Retail 6 31.8%
  2nd Mortgages 8 19.0%     Land 2 13.7%
  Other loans and mortgages 2 12.5%     Multi-Residential 3 13.0%
  23 100.0%     Recreational 3 15.5%
          Hotel 1 4.0%
          Industrial 1 5.3%
          Residential (Lots/Construction) 5 13.1%
BY GEOGRAPHY # Weighting     Residential Condominiums 2 3.6%
  Ontario 17 74.2%     23 100.0%
  East 2 15.5%        
  Alberta 3 9.4%        
  British Columbia 1 0.9%        
  23 100.0%        

Since December 31, 2010, an additional six mortgages totaling $7.2 million have been repaid and discharged.

Cash on Hand and Publicly Traded Securities

As at December 31, 2010, the Corporation

  • had cash and cash equivalents of $18.4 million available to fund new mortgage investment opportunities and fulfill outstanding commitments; and

  • held Publicly Traded Securities such as debentures and convertible debentures in real estate corporations and REITs which had a carrying value of approximately $6.4 million.

The Corporation's cash balance has subsequently increased as a result of additional mortgages being repaid since December 31, 2010. A large portion of the cash has been invested in banker's acceptances with three different Canadian chartered banks.

Net Asset Value

As at December 31, 2010, the Corporation's net assets were $27.6 million representing a net asset value per Class A Share of $9.01.

Distributions to Shareholders

In 2010, aggregate cash distributions declared per Preferred Share were $1.6875 and aggregate cash distributions declared per Class A Share were $0.76. Both distributions were in-line with the investment objectives of the Corporation.

As previously disclosed, if the Corporation continued to maintain a large balance of uninvested cash, it would result in an overall investment yield to the Corporation that would be insufficient to meet the Corporation's target quarterly distribution of $0.19 per Class A Share. On March 7, 2011, the Corporation's Board of Directors (the "Board") resolved to suspend the Corporation's target quarterly distribution of $0.19 per Class A Share for the quarter ended March 31, 2011 until such time as the Corporation has further visibility on the reinvestment of its excess cash balances into mortgages and loans. The Corporation's Board will continue to assess future distributions on a quarterly basis.

2010 Financial Results

Statement of Operations Highlights  
  Period ended December 31,  
In Canadian $ millions 2010     2009  
Revenue $ 6.0     $ 5.9  
Expenses   (4.7 )     (4.7 )
Net income before other items $ 1.3       1.2  
Other items   (0.2 )     2.1  
Net increase in net assets from operations1 $ 1.0     $ 3.2  
Distributions paid to Class A Shareholders   (2.4 )     (2.6 )
Net increase (decrease) for the year1 $ (1.4 )   $ 0.7  
1 Rounding              
Statement of Net Assets Highlights              
In Canadian $ millions except per share amounts   December 31, 2010       December 31, 2009  
Cash $ 18.4     $ 4.7  
Publicly Traded Securities   6.4       6.5  
Mortgage Portfolio (net of fair value adjustment)   36.4       53.6  
Investment in Private Entity   0.8       -  
Note Receivable from the Manager   1.5       1.8  
Preferred Shares, Series 1   (34.3 )     (34.2 )
Warrants   (0.1 )     (0.2 )
All Other, net1   (1.4 )     (1.6 )
Total Net Assets $ 27.6     $ 30.6  
Number of shares outstanding (millions)   3.06       3.27  
Net asset value per Class A Share $ 9.01     $ 9.35  
1 Includes the common share basket, the forward contract, non-controlling interest and other assets and liabilities. The Manager does not generally view the common share basket, the forward Contract and non-controlling interest as critical from an investor's perspective in understanding the economic risk of the Corporation. For further information on the structure please refer to the Corporation's prospectus filed on SEDAR.  

Update on the Manager

In December 2009, C.A. Bancorp Inc. (the "Parent"), the Parent of the Manager was the target of a hostile take-over bid. As a result of the hostile bid, the Parent engaged in a strategic review process and in August 2010, following the culmination of a series of failed take-over bid transactions, it announced that its interests would best be served through the realization of its assets and distribution of the proceeds to its shareholders. Since that announcement, the Parent had been pursuing opportunities to accelerate the realization dates for its assets, including its interests in the Corporation, which, if and when completed, would result in change in Manager or change in control of the Manager of the Corporation.

Subsequent to Year-end

On March 15, 2011, the Corporation announced that it had formed a special committee comprised of its independent director (the "Special Committee") after being advised by the Manager that the Parent has entered into an agreement to, among other things, sell all of the issued and outstanding shares of the Manager and all of the Class A Shares of the Corporation which the Parent holds directly and indirectly (representing approximately 32% of the outstanding Class A Shares) to Green Tree Capital Management Corp. ("Green Tree") (the "Proposed Transaction"). The Proposed Transaction also contemplates Green Tree assuming the Parent's obligations under the commitment agreement dated January 31, 2008 between the Parent and the Corporation and the note payable to the Corporation. 

The Special Committee is evaluating the Proposed Transaction from the perspective of the Corporation to determine whether the Corporation's interests would be better served through proceeding with the Proposed Transaction or the status quo and will report its determination to the Corporation's Board.     

The Proposed Transaction remains subject to certain conditions, including without limitation, receipt of consents and regulatory approvals, completion of certain transaction documents, the approval of both the Preferred Shareholders and Class A Shareholders of the Corporation voting separately as a class and other customary closing conditions for a transaction of this nature.        

Additional Information             

To assist with readability and in order to better reflect economic reality rather than legal ownership, we refer to the Mortgage Portfolio and the mortgages and loans contained within that portfolio as if they are directly held by the Corporation rather than by C.A.B. Realty Finance L.P., the partnership holding the Mortgage Portfolio to which the Corporation has exposure.

For additional information, please see the Corporation's audited financial statements and management report of fund performance for the period ended December 31, 2010 which will be available under the Corporation's profile on SEDAR at www.sedar.com.

The Corporation

The Corporation is a mutual fund corporation incorporated under the laws of the Province of Ontario. It was created to obtain exposure to the investment performance of an actively managed portfolio of mortgages and secured loans in the Canadian commercial real estate sector on a tax-efficient basis.

C.A. Bancorp Inc.

C.A. Bancorp Inc. (TSX:BKP) owns approximately 32% of the Class A Shares of the Corporation and manages the Corporation through its wholly-owned subsidiary C.A. Bancorp Ltd.

This news release contains forward-looking statements relating to anticipated future events, results, circumstances, performance or expectations that are not historical facts but instead represent the Corporation or the Manager's beliefs regarding future events. Often, but not always, forward-looking statements can be identified by the use of forward- looking words such as "will", "expect", "intend", or "believe" similar words or the negative thereof, that certain actions, events or anticipated outcomes "may", "would" or "might" be taken, occur or be achieved. There can be no assurance that the plans, intentions or expectations upon which these forward-looking statements are based will occur. The future business, operations and performance of the Corporation discussed herein could differ materially from those expressed or implied by such statements. Forward-looking statements are based on a number of assumptions which may prove to be incorrect. Additional, important factors could cause actual results to differ materially from expectations. The Corporation cautions that risk factors discussed in applicable continuous disclosure filings on SEDAR should also be considered carefully and that undue reliance not be placed on forward-looking statements as events and results could differ materially from those expressed or implied by forward-looking statements made by the Corporation. Unless otherwise stated, all forward-looking statements speak only as of the date of this press release. The Corporation does not undertake, and specifically disclaims, any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by applicable law.

C.A. Bancorp Canadian Realty Finance Corporation
401 Bay Street, Suite 1600
Toronto, Ontario M5H 2Y4
Telephone: (416) 214-5985
Fax: (416) 861-8166

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