Terra Firma Capital Corporation
TSX VENTURE : TII

Terra Firma Capital Corporation

November 27, 2012 16:57 ET

Terra Firma Capital Corporation Reports Q3 2012 Results

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

TORONTO, ONTARIO--(Marketwire - Nov. 27, 2012) -

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 that income from continuing operations for the nine months ended September 30, 2012 increased by 334% to $755,605, or $0.02 per basic and diluted share, from $174,019, or $0.01 per basic and diluted share in the comparative period in 2011. Interest income grew 441% to $3,258,720 year to date in 2012 from $602,241 in the year earlier period.

Income from continuing operations for the three months ended September 30, 2012 grew by 181% to $290,154, or $0.01 per basic and diluted share, from $103,160, or $0.01 per basic and diluted share in the comparative period in 2011. Interest income grew 399% to $1,234,250 for the last quarter in 2012 from $247,125 in the year earlier period.

The substantial growth in Terra Firma's revenues and income from continuing operations for the three and nine months ended September 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 $32.1 million (with a weighted average effective interest rate of 20.2%) as at September 30, 2012 versus $16.7 million and $14.2 million as at December 31, 2011 and September 30, 2011, respectively.

Interest expense was higher for the three and nine months ended September 30, 2012 as compared to the year earlier periods, as a result of the issuance of $10.1 million of 3-year, 7% convertible debentures in September of 2011 and an increase in the syndicated portion of the Company's loan portfolio to $14.0 million as at September 30, 2012 from $4.8 million and $0.85 million as at December 31 2011 and September 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 third quarter and year to date 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 growth in revenue and earnings in the final quarter of 2012 and beyond," said Mr. Meyer.

2012 Third Quarter Operational Highlights:

  • During the three months ended September 30, 2012 Terra Firma completed two new loan investments totaling $5.7 million on projects in Toronto and Ottawa. These investments were funded through the repayment of loans at maturity providing net proceeds of $1.7, from the Company's syndication in the quarter providing cash proceeds of $2.1 and cash on hand.

  • On September 20, 2012 the Company's Manager exercised its right and notified the Company of its intention to terminate its Management Agreement effective the close of business on December 31, 2012.

The Company's Management's Discussion & Analysis and Financial Statements as at and for the three and nine months ended September 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 September 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 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 nine months ended September 30, 2012 and 2011
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
2012 2011 2012 2011
$ $ $ $
Revenue
Interest 1,234,250 247,125 3,258,720 602,241
Earnings from joint ventures 19,567 18,746 58,500 199,410
1,253,817 265,871 3,317,221 801,651
Expense
General and administrative expense 143,338 52,870 404,187 151,498
Stock based compensation 41,803 - 201,471 252,390
Interest expense 669,461 52,841 1,643,083 136,744
854,602 105,711 2,248,741 540,632
Income before income taxes 399,215 160,160 1,068,480 261,019
Income tax provision 109,061 57,000 312,875 87,000
Income from continuing operations 290,154 103,160 755,605 174,019
Loss from discontinued operations - (194,299 ) - (194,770 )
Net income (loss) and comprehensive income (loss) 290,154 (91,139 ) 755,605 (20,751 )
Basic and diluted earnings (loss) per share:
Continuing operations 0.01 0.01 0.02 0.01
Discontinued operations 0.00 (0.01 ) 0.00 (0.01 )
0.01 0.00 0.02 0.00
Weighted average number of common shares outstanding - basic and diluted 30,495,000 18,795,000 30,495,000 18,716,319
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 September 30, 2012 and December 31, 2011
(Unaudited)
September 30, December 31,
2012 2011
$ $
Assets
Cash and cash equivalents 322,153 8,662,505
Interest and sundry receivables 815,268 752,402
Prepaid expenses and deposits 13,960 7,365
Loan and mortgage investments 32,096,902 16,724,774
Interests in joint ventures 3,812,721 1,073,319
Portfolio investment 950,000 -
38,011,004 27,220,365
Liabilities
Accounts payable and accrued liabilities 1,082,556 682,186
Provision for discontinued operations 161,184 251,864
Unearned revenue 115,359 52,624
Income taxes payable 309,513 82,169
Deferred income taxes 13,627 10,260
Loans and mortgages payable 14,039,362 4,832,267
Debentures payable 10,085,201 10,061,869
25,806,802 15,973,239
Shareholders' equity 12,204,202 11,247,126
38,011,004 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.

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