Terra Firma Capital Corporation
TSX VENTURE : TII

Terra Firma Capital Corporation

March 29, 2017 07:00 ET

Terra Firma Capital Corporation Reports Fourth Quarter & Full Year 2016 Financial Results

13% Increase in Total Assets Year Over Year

23% Increase in Loan and Mortgage Syndications Year Over Year

TORONTO, ONTARIO--(Marketwired - March 29, 2017) -

NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR DISSEMINATION IN THE UNITED STATES

All amounts are stated in Canadian dollars

Terra Firma Capital Corporation (TSX VENTURE:TII) ("Terra Firma" or the "Company"), a real estate finance company, today announced its financial results for the three and twelve month periods ended December 31, 2016.

"Although we have experienced growth in total assets, the impact of our new loans has not yet been reflected in the bottom line as our results were negatively impacted by foreign exchange movements and from not recognizing income on approximately 30% of the Company's book equity. Such book equity is invested in loans that are currently in default and certain equity investments. We expect to recognize the income on these investments in future periods including the amounts that otherwise would have been recognized in 2016. While we funded close to $50 million of loans in 2016, we had reserved cash to fund several large loans amounting to over $70 million which did not transact. We are very confident in our prospects for 2017. During the first quarter of 2017, our loan originations of $40 million have almost reached all of our 2016 loan originations, and we have much higher goals for the coming year and beyond," commented Glenn Watchorn, President and Chief Executive Officer of Terra Firma Capita Corporation.

"We believe our origination pipeline and the syndication network is very deep. We continue to attract top quality clients for their financing needs and our syndicate of investors is eager to participate in these loans. Over the last few quarters, our transactions have been oversubscribed, and our syndication network is expanding. In summary, 2017 has started off very strong and we are very optimistic that these very positive developments will define themselves on our bottom line over the remainder of the year and beyond," he further said.

Results of operations

Revenue for the three months ended December 31, 2016 totaled $3.4 million, compared to revenue for the three months ended December 31, 2015 of $5.2 million, representing a decrease of $1.8 million or 34.6% on a year-over-year basis. Revenue for the year ended December 31, 2016 totaled $14.9 million, compared to revenue for the year ended December 31, 2015 of $17.4 million, representing a decrease of $2.5 million or 14.4% on a year-over-year basis.

Interest and fee income for the three months ended December 31, 2016 aggregated $3.4 million, a decrease of 33.3% over the $5.1 million in the same period in the previous year. Interest and fee income for the year ended December 31, 2016 aggregated $14.7 million, compared to interest and fee income for the year ended December 31, 2015 of $17.2 million, representing a decrease of $2.5 million or 14.5% over last year.

Interest and financing expense for the three months ended December 31, 2016 and 2015 were $2.0 million and $1.6 million, respectively. Interest expense for the year ended December 31, 2016 was $7.8 million, compared to $5.9 million for the year ended December 31, 2015.

Net income and comprehensive income attributable to common shareholders for the three months ended December 31, 2016 was $252,143 or $0.00 per basic and diluted share, compared to $1.9 million or $0.03 per basic and diluted share, for the same period last year.

Net income and comprehensive income attributable to common shareholders for the year ended December 31, 2016 was $1.4 million or $0.02 per basic and diluted share, compared to $6.1 million or $0.11 per basic share and $0.10 diluted share, for the year ended December 31, 2015. General and administrative expenses for the year ended December 31, 2016 decreased $198,821 year-over-year, to $3.0 million, compared to $3.2 million for the year ended December 31, 2016.

The principal balance of the Company's loan and mortgage investments decrease from $95.6 million at December 31, 2015 to $93.4 million at December 31, 2016, a decrease of 1.4%, primarily due to several large loans amounting to over $70 million which did not transact during the year and the conversion of a loan investment into an equity investment in April 2016. The weighted average effective interest rate in the mortgage investment portfolio at December 31, 2016 was 15.3% compared to 15.8% at December 31, 2015.

The principal balance of the Company's loan and mortgage syndications increased from $45.7 million at December 31, 2015 to $56.2 million at December 31, 2016, an increase of $10.5 million or 23.0%. The weighted average effective interest rate in the mortgage investment portfolio at December 31, 2016 was 10.81% compared to 10.54% at December 31, 2015.

The Company's Management's Discussion & Analysis and Financial Statements as at and for the three and twelve month periods ended December 31, 2016 have been filed and are available on SEDAR (www.sedar.com).

About Terra Firma

Terra Firma is a full service, publicly traded real estate finance company that provides real estate financings secured by investment properties and real estate developments throughout Canada and the United States. The Company focuses on arranging and providing financing with flexible terms to real estate developers and owners who require shorter-term loans to bridge a transitional period of one to five years where they require capital at various stages of development or redevelopment of a property. These loans are typically repaid with lower cost, longer-term debt obtained from other Canadian financial institutions once the applicable transitional period is over or the redevelopment is complete, or from proceeds generated from the sale of the real estate assets. Terra Firma offers a full spectrum of real estate financing under the guidance of strict corporate governance, clarity and transparency. For further information please visit Terra Firma's website at www.tfcc.ca.

The TSX-V has neither approved nor disapproved the contents of this press release. The TSX-V does not accept responsibility for the adequacy or accuracy of this press release.

This Press Release contains forwardlooking statements with respect matters concerning the business, operations, strategy and financial performance of Terra Firma, the realization of future profits on one of Terra Firma's larger investments, and Terra Firma's ability to achieve higher yields in the future and to continue to attract capital for future growth. These statements generally can be identified by use of forward looking word such as "may", "will", "expects", "estimates", "indicates" "anticipates", "intends", "believe" or "could" or the negative thereof or similar variations. The future business, operations and performance of Terra Firma could differ materially from those expressed or implied by such statements. Such forwardlooking statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations, including the matters covered by any non-binding letters of intent that are not completed, as well as risks relating to market factors, competition, and dependence on tenants' financial conditions, environmental and tax related matters, and reliance on key personnel. Forwardlooking statements are based on a number of assumptions which may prove to be incorrect, including that the general economy, local real estate conditions and interest rates are stable, the absence of significant changes in government regulation, and the continued availability of equity and debt financing. There can be no assurances that forwardlooking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forwardlooking statements. The cautionary statements qualify all forwardlooking statements attributable to Terra Firma and persons acting on its behalf. Unless otherwise stated, all forward looking statements speak only as of the date of this Press Release and Terra Firma does not assume any obligation to update such statements, whether as a result of new information, future events or otherwise, except as required by applicable Canadian securities laws.

Terra Firma Capital Corporation
Consolidated Statements of Income and Comprehensive Income
For the three months and years ended December 31, 2016 and 2015
(Unaudited)
Three months ended Years ended
December 31,
2016
December 31,
2015
December 31,
2016
December 31,
2015
Revenue
Interest and fees $ 3,384,576 $ 5,104,378 $ 14,701,947 $ 17,162,141
Rental 50,445 47,362 199,711 189,434
3,435,021 5,151,740 14,901,658 17,351,575
Expenses
Property operating costs 17,307 15,269 71,892 61,059
General and administrative 854,683 1,303,935 3,027,678 3,226,499
Share based compensation 430,360 321,389 819,714 1,782,722
Interest and financing costs 1,957,033 1,613,844 7,774,172 5,928,475
Provision for loan and mortgage investment loss 310,493 478,066 423,219 478,066
Realized and unrealized foreign exchange loss (gain) (357,375 ) (1,090,208 ) 858,660 (2,078,788 )
Gain on conversion of interest in joint operation (61,950 ) (82,500 ) (61,950 ) (82,500 )
Fair value adjustment - portfolio investments (72,529 ) (394,170 ) (72,529 ) (394,170 )
Share of income from investment in associates - (91,949 ) - (91,949 )
3,078,022 2,073,676 12,840,856 8,829,414
Income from operations before income taxes 356,999 3,078,064 2,060,802 8,522,161
Income taxes 104,856 1,138,177 653,907 2,456,251
Net income and comprehensive income $ 252,143 $ 1,939,887 $ 1,406,895 $ 6,065,910
Terra Firma Capital Corporation
Consolidated Statements of Financial Position
As at December 31, 2016 and 2015
December 31,
2016
December 31,
2015
Assets
Cash and cash equivalents $ 12,315,242 $ 11,723,550
Funds held in trust 982,353 2,061,207
Deposits 3,256,074 11,747,370
Amounts receivable and prepaid expenses 4,865,280 2,279,977
Loan and mortgage investments 93,408,444 95,135,201
Investment property held in joint operations 2,208,694 2,143,794
Land under development held in joint operations 23,808,574 -
Portfolio investments 3,212,084 2,339,555
Investment in associates 2,315,414 2,315,414
Deferred income tax asset 328,324 -
Total assets $ 146,700,483 $ 129,746,068
Liabilities
Accounts payable and accrued liabilities $ 10,647,966 $ 5,980,560
Unearned income 329,340 301,099
Income taxes payable 22,942 322,046
Deferred income tax liability - 18,665
Short-term unsecured notes payable - 9,286,000
Revolving operating facility 7,467,586 9,865,144
Loan and mortgage syndications 56,180,448 45,691,948
Due to joint operations partner 11,163,640 -
Mortgages payable 1,509,503 1,120,314
Convertible debentures 10,754,259 10,628,301
Total liabilities 98,075,684 83,214,077
Equity
Share capital $ 31,789,819 $ 31,257,404
Equity component of convertible debentures 284,490 284,490
Contributed surplus 2,514,073 2,360,575
Retained earnings 13,781,776 12,374,881
Shareholders' equity 48,370,158 46,277,350
Non-controlling interest 254,641 254,641
Total equity 48,624,799 46,531,991
Total liabilities and equity $ 146,700,483 $ 129,746,068

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