C.A. Bancorp Inc.

C.A. Bancorp Inc.
C.A. Bancorp Canadian Realty Finance Corporation

June 25, 2009 12:22 ET

C.A. Bancorp Canadian Realty Finance Corporation (TSX: RF.A; RF.PR.A) Provides Update on NAV Per Class A Share and Mortgage Portfolio

TORONTO, ONTARIO--(Marketwire - June 25, 2009) - C.A. Bancorp Canadian Realty Finance Corporation ("CRFC" or the "Corporation") (TSX:RF.A) (TSX:RF.PR.A), is pleased to announce its net asset value ("NAV") per Class A share of $9.44 as at June 24, 2009. The Corporation had a NAV per Class A share of $9.51 as at December 31, 2008 and $9.48 as at March 31, 2009.

The Corporation is managed by C.A. Bancorp Ltd. (the "Manager"), a wholly-owned subsidiary of C.A. Bancorp Inc. ("C.A. Bancorp"), and has approximately $69 million of investable capital that it manages on behalf of investors by investing primarily in mortgages and other secured loans (the "Mortgage Portfolio") in the commercial real estate sector.

The Mortgage Portfolio

The Corporation's Mortgage Portfolio has principal outstanding of approximately $53.7 million (December 31, 2008 - $54.2 million) with another $2.7 million in committed and approved loans that have not yet been funded. Since December 31, 2008, $2.1 million in mortgages and loans have been repaid.

As at June 24, 2009, one mortgage was in arrears and the Manager is working with the borrower on a resolution. Another mortgage is presently on the Corporation's "watch list" and the Manager is reviewing the Corporation's options for restructuring of the mortgage or otherwise securing repayment. All other mortgages and loans remain current in their payments as at June 24, 2009.

The Mortgage Portfolio is carried at an approximate fair value of $52.0 million comprised of $53.7 million in principal less $0.3 million in unamortized loan fees and less $1.4 million in fair value adjustments taken on the Mortgage Portfolio as a whole. The Corporation has increased the amount of fair value adjustments taken from approximately $0.8 million at December 31, 2008 to approximately $1.4 million as at the date hereof largely on the basis that the economy has continued to perform poorly.


The credit markets for commercial real estate lending remain tightly constrained across Canada. Commercial real estate transactions continue to be extremely limited as the difference between the bid and ask prices of buyers and sellers remains significant.

The Corporation has seen a substantial drop in the percentage of mortgage and loan transactions that meet the risk parameters of the Manager resulting in a large number of loan and mortgage applications being declined by the Manager. The Manager believes that it is prudent for the Corporation to focus on preservation of capital given the absence of acceptable loan opportunities in the current market.

Consequently, the Corporation currently maintains a cash position of approximately $12 million. If the Corporation maintains this level of uninvested cash for a sustained period of time, it is expected that this would result in an overall investment yield to the Corporation that is insufficient to meet the Corporation's target quarterly distribution of $0.19 per Class A share. The Corporation has decided not to make any changes to this quarterly distribution at this point in time; however, the Corporation will continue to monitor its ability to maintain this distribution target going forward.

The distributions on the Series 1, Preferred Shares (TSX:RF.PR.A) are fixed at $0.4219 per quarter and remain unaffected.

In order to obtain a satisfactory risk-return profile within the Mortgage Portfolio, the Manager has concentrated its mortgage sourcing efforts primarily on income-producing properties in the multi-residential market which have been less impacted by the economic recession on both a property value and a liquidity basis due to the availability of Canadian Mortgage and Housing Corporation (CMHC) insured senior financing.

The Manager is aiming to have the majority of its available cash invested on behalf of the Corporation by late fall 2009, which should restore the Corporation's ability to earn sufficient operating profit to fully fund the targeted quarterly distribution on the Class A shares.

As mentioned in previous updates, the "credit crunch" has had the following positive effect on the Corporation: a number of our higher-quality loans, which normally would have been repaid have been renewed with the Corporation at higher spreads and have generated additional fees.

Special Meeting

The Corporation's Special Meeting is being held today at the Toronto Board of Trade at 2:00 p.m.

Special Note

Where this press release refers to the Corporation's investment in the Mortgage Portfolio, readers should note that the Corporation does not invest directly in the Mortgage Portfolio, rather it gains exposure to the Mortgage Portfolio through C.A.B. Realty Finance L.P., a limited partnership which is provided investment advisory services by the Manager. The Corporation gains exposure to the Mortgage Portfolio by virtue of a forward agreement and a common share basket, all as more particularly described in the Corporation's offering documents available on SEDAR at www.sedar.com. For ease of comprehension, this press release discusses the Corporation's exposure as an investment without reference to C.A.B. Realty Finance L.P.

The Corporation

The Corporation has been created to obtain exposure to the investment performance of an actively managed portfolio of secured loans and mortgages in the Canadian commercial real estate sector on a tax-efficient basis.

Holders of the Series 1 Preferred Shares are entitled to receive fixed cumulative preferential quarterly cash distributions, on a tax-efficient basis, in the amount of $0.4219 per Preferred Share, representing a yield of 6.75% per annum, on the issue price of the Preferred Shares of $25.00 and to return the original issue price of the Preferred Shares on March 31, 2018. The Preferred Shares closed at a price of $18.00 per Share on June 24, 2008 (December 31, 2008 - $16.60).

The Class A shares closed at a price of $8.00 per share (December 31, 2008 - $6.74) representing a 15% discount to the NAV per Share as at June 24, 2009 (December 31, 2008 - 29%).

Distributions on the Preferred Shares and Class A shares are expected to comprise primarily of returns of capital or capital gains dividends.

C.A. Bancorp

C.A. Bancorp is a publicly traded Canadian merchant bank and alternative asset manager that provides investors with access to a range of private equity and other alternative asset class investment opportunities. C.A. Bancorp is focused on investments in small- and middle-capitalization public and private companies, with emphasis on the industrials, real estate, infrastructure and financial services sectors.

This news release contains forward-looking statements with respect to matters concerning the business, operations, commitments and strategy of CRFC. These statements relate to anticipated future events, results, circumstances, performance or expectations that are not historical facts but instead represents CRFC'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," "should," "plan," "estimate," "anticipate," "believe" or "continue," similar words or the negative thereof, or variations of such words and phrases 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. CRFC cautions that risk factors discussed in CRFC's prospectus and applicable continuous disclosure filings required by law that CRFC has made and filed on SEDAR at www.sedar.com 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 CRFC due to factors including, but not limited to, the timing and completion of funding of committed loans, the time required and ability of CRFC to become fully invested, the ability of CRFC to continue to pay targeted distributions, the ability of CRFC to reach acceptable arrangements to restructure loans with borrowers, and the suitability of the Class A Shares, and the Preferred Shares for any given investor. The cautionary statements qualify all forward-looking statements attributable to CRFC and persons acting on its behalf. Readers are cautioned to assess both risk and return before making their investment decisions. Unless otherwise stated, all forward-looking statements speak only as of the date of this news release. CRFC 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 Inc.
The Exchange Tower
130 King Street West
Suite 2810, P.O. Box 104
Toronto, Ontario M5X 1A4
Telephone: (416) 214-5985
Fax: (416) 861-8166

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