Terra Firma Capital Corporation
TSX VENTURE : TII

Terra Firma Capital Corporation

August 23, 2012 19:14 ET

Terra Firma Capital Corporation Reports Q2 2012 Results

Revenue and Net Income Continue to Grow at a Significant Pace as Loan Origination Increases

TORONTO, ONTARIO--(Marketwire - Aug. 23, 2012) - Terra Firma Capital Corporation (TSX VENTURE:TII) ("Terra Firma" or the "Company"), a real estate finance company, today announced that net income for the three months ended June 30, 2012 more than doubled to $212,000, or $0.01 per basic and diluted share, from $94,000, or $0.01 per basic and diluted share in the comparative period in 2011. Interest income grew 498% to $1,058,000 in the second quarter of 2012 from $177,000 in the second quarter of 2011. All amounts are stated in Canadian dollars.

Net income for the six months ended June 30, 2012 grew by 561% to $465,000, or $0.02 per basic and diluted share, from $70,000, or $0.00 per basic and diluted share in the comparative period in 2011. Interest income grew 470% to $2,024,000 in the first half of 2012 from $355,000 in the first half of 2011.

The substantial growth in Terra Firma's revenues and net income for the three and six months ended June 30, 2012 as compared to the year earlier periods was driven primarily by a substantial increase in mortgage and loan investments originated and funded over the past twelve months. The Company's loan portfolio increased to $28.8 million (with a weighted average effective interest rate of 19.3%) as at June 30, 2012 versus $16.7 million and $3.3 million as at December 31, 2011 and June 30, 2011, respectively.

Interest expense was higher for the three and six months ended June 30, 2012 as compared to the year earlier period, as a result of the issuance of $10.1 million of 3-year, 7% convertible debentures and an increase in the syndicated portion of the Company's loan portfolio to $12.7 million as at June 30, 2012 from $4.8 million and $0.85 million as at December 31 2011 and June 30, 2011, respectively. These funding sources were used to leverage the Company's shareholders' equity to fuel the growth of its loan portfolio and increase the return on its net investment, while limiting its overall portfolio risk profile.

"We are very pleased with our 2012 second quarter and first half results," commented Mr. Y. Dov Meyer, Terra Firma's CEO and President. "We continue to forge new and strengthen existing relationships with experienced real estate owners and complementary co-lenders - the drivers of growth, sustainability and quality of our loan portfolio."

"We are well positioned to continue the origination of quality real estate lending transactions and to grow our revenue and earnings throughout the balance of 2012 and beyond" concluded Mr. Meyer.

2012 Second Quarter Operational Highlights:

  • During the three months ended June 30, 2012 Terra Firma completed two new loan investments totaling $3.4 million on projects in Toronto. These investments were funded from the Company's syndication of a prior funded loan, which realized cash proceeds of $3.8 million.

The Company's Management's Discussion & Analysis and Financial Statements as at and for the three and six months ended June 30, 2012 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 customized equity and debt solutions to the real estate industry. Our focus is to arrange and provide financing with flexible terms to property owners looking to improve or add to their existing real estate assets but who may be limited by conventional bank financing, as well as to invest in quality commercial and residential developments by proven real estate developers. Terra Firma offers a full spectrum of real estate financing under the guidance of strict corporate governance, clarity and transparency. Terra Firma is managed by Counsel Asset Management, L.P., a wholly owned subsidiary of Counsel Corporation (TSX:CXS). Counsel Corporation owned approximately 20.2% of the outstanding common shares of Terra Firma as at June 30, 2012. For further information please visit Terra Firma's website at www.terrafirmacapital.ca.

About Counsel Corporation

Counsel Corporation (TSX:CXS) is a financial services company that operates through its individually branded businesses in residential mortgage lending, distressed and surplus capital asset transactions, real estate finance and private equity investment. For further information, please visit Counsel's website at www.counselcorp.com.

This Press Release contains forward‐looking statements with respect matters concerning the business, operations, strategy and financial performance of Terra Firma. These statements generally can be identified by use of forward looking word such as "may", "will", "expects", "estimates", "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 forward‐looking statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations. Forward‐looking statements are based on a number of assumptions which may prove to be incorrect. Additional, important factors that could cause actual results to differ materially from expectations include, among other things, general economic and market factors, local real estate conditions, competition, changes in government regulation, dependence on tenants' financial conditions, interest rates, the availability of equity and debt financing, environmental and tax related matters, and reliance on key personnel. There can be no assurances that forward‐looking 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 forward‐looking statements. The cautionary statements qualify all forward‐looking 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 has no obligation to update such statements except as required by law.

Terra Firma Capital Corporation
Condensed Statements of Operations
For the three and six months ended June 30, 2012 and 2011
(Unaudited)
Three months ended
June 30,
Six months ended
June 30,
2012 2011 2012 2011
$ $ $ $
Revenue
Interest 1,058,182 176,915 2,024,470 355,116
Earnings from joint ventures 19,482 22,174 38,933 180,664
1,077,664 199,089 2,063,403 535,780
Expense
General and administrative expense 133,131 51,421 260,849 98,628
Stock based compensation 129,311 - 159,668 252,390
Interest expense 490,527 42,855 973,622 83,903
752,969 94,276 1,394,139 434,921
Income before income taxes 324,695 104,813 669,264 100,859
Income tax provision 112,462 10,586 203,814 30,000
Income from continuing operations 212,233 94,227 465,450 70,859
Loss from discontinued operations - (153 ) - (471 )
Net income and comprehensive income 212,233 94,074 465,450 70,388
Basic and diluted earnings (loss) per share
Continuing operations 0.01 0.01 0.02 0.00
Discontinued operations 0.00 (0.00 ) 0.00 (0.00 )
0.01 0.01 0.02 0.00
Weighted average number of common shares outstanding -basic and diluted 30,495,000 18,795,000 30,495,000 18,676,326

The notes contained in the Company's interim financial statements are an integral part of these condensed statements.

Terra Firma Capital Corporation
Condensed Statements of Financial Position
As at June 30, 2012 and December 31, 2011
(Unaudited)
June 30, December 31,
2012 2011
$ $
Assets
Cash and cash equivalents 1,468,519 8,662,505
Interest and sundry receivables 1,466,051 752,402
Prepaid expenses and deposits 19,643 7,365
Loan and mortgage investments 28,787,195 16,724,774
Interests in joint ventures 3,807,173 1,073,319
Portfolio investment 950,000 -
36,498,581 27,220,365
Liabilities
Accounts payable and accrued liabilities 1,380,243 682,186
Provision for discontinued operations 191,411 251,864
Unearned revenue 81,755 52,624
Income taxes payable 201,221 82,169
Deferred income taxes 12,436 10,260
Loans and mortgages payable 12,682,046 4,832,267
Debentures payable 10,077,225 10,061,869
24,626,337 15,973,239
Shareholders' equity 11,872,244 11,247,126
36,498,581 27,220,365

The notes contained in the Company's interim financial statements are an integral part of these condensed statements.

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

Contact Information