Terra Firma Capital Corporation
TSX VENTURE : TII

Terra Firma Capital Corporation

May 11, 2016 08:00 ET

Terra Firma Capital Corporation Reports Results for the Three Months Ended March 31, 2016

- Increased Total Assets by 66% Year Over Year

- Grew Revenue 7% Year Over Year

TORONTO, ONTARIO--(Marketwired - May 11, 2016) -

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 month period ended March 31, 2016.

FIRST QUARTER 2016 HIGHLIGHTS:

  • Terra Firma increased total assets by 66% to $133.5 million at March 31, 2016 from $80.6 million at March 31, 2015.
  • Total revenue in the first quarter amounted to $4.3 million, an increase of $262,000 or 7%, from the same period in the prior year.
  • Net income of $115,000, ($0.00 on a basic diluted per share basis) after recognizing a tax adjusted foreign exchange loss of $904,000, a decrease of $830,000 from $945,000 ($0.02 on a basic diluted per share basis) in Q1 2015.
  • Adjusted net income (non-IFRS measurement) for the quarter of $1,019,000 ($0.02 on a basic and diluted per share basis), before recognizing a tax adjusted foreign exchange loss of $904,000, increased by $74,000, compared to $945,000 ($0.02 on a basic diluted per share basis) in Q1 2015.

"We believe that the strategic decision to expand into the U.S. will provide diversification and greater opportunities to create enhanced shareholder value," said Dov Meyer, Chief Executive Officer. "However in the short term, as witnessed in Q1, results may be distorted by volatility in the foreign exchange market. In Q1, the Company was successful in originating and deploying new loans, which will have a positive impact on earnings in the coming quarters," he concluded.

"Our penetration into the U.S. real estate debt market is growing steadily," said Glenn Watchorn, President and Chief Operating Officer. "The Company has demonstrated that it can offer attractive and competitive debt products both to our existing clients and new prospective borrowers. As expected, we had strong loan originations and we are pleased that our syndicated investors are showing interest in our growing portfolio of loans. Our pipeline should steadily increase for the remainder of 2016," he further said.

Results of operations - three months ended March 31, 2016

Interest and fee income for the first quarter ended March 31, 2016 aggregated $4.2 million, an increase of 7% over the $4.0 million in the same period in the previous year and a decrease of 17% from the $5.1 million in the fourth quarter ended December 31, 2015. Interest and fees in the fourth quarter ended December 31, 2015 included fees recognized due to early repayments of $896,000. The average interest rate in the loan and mortgage investments at March 31, 2016 was 15.6%, compared to 15.8% at December 31, 2015.

The Company's loan and mortgage investments increased from $64.9 million at March 31, 2015 to $117.6 million at March 31, 2016, an increase of 81%.

Interest expense for the first quarter ended March 31, 2016 was $1.8 million, compared to $1.5 million for the comparative period last year and $1.6 million for the fourth quarter ended December 31, 2015. The average interest rate in the loan and mortgage syndications at March 31, 2016 was 10.3%, compared to 10.5% at December 31, 2015.

Net income and comprehensive income for the three months ended March 31, 2016 was $115,000 or $0.00 per basic and diluted share, compared to $945,000 or $0.02 per basic and diluted share, in the same period last year. General and administrative expenses for the three months ended March 31, 2016 decreased to $658,000 from $798,000 for the same period last year. The general and administrative expenses for the three months ended March 31, 2015 was higher due to the recording of performance bonus.

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

Subsequent Event

On April 25, 2016, one of the Company's borrowers filed a Notice of Intention to Make a Proposal ("NOI") under the Bankruptcy and Insolvency Act (Canada). This process provides the borrower an opportunity to present a plan to restructure their financial affairs. The Company's total loan exposure to this borrower is approximately $13.9 million and is secured. The Company has already commenced enforcing its security on these loans, but the process has been temporarily stayed by the filing of the NOI. Based on the current information available, the Company expects to recover the amounts outstanding. However, the final outcome and timing of recovery will depend on the NOI process and other factors in the market. In the short term, we anticipate that there may be a negative impact on our ability to earn income on the outstanding amounts.

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.

Non-IFRS Measures:

This press release refers to certain financial measures, such as adjusted net income and adjusted earnings per share, which are not measures defined under International Financial Reporting Standards ("IFRS") as prescribed by the International Accounting Standards Board, do not have standardized meanings prescribed by IFRS and should not be construed as alternatives to profit/loss or other measures of financial performance calculated in accordance with IFRS. These measures may differ from those made by other companies and accordingly may not be comparable to such measures as reported by other companies. These measures have been derived from the Company's financial statements and disclosed herein because the Company believes they are of assistance in the understanding of the operational and financial performance of the Company. Adjusted net income is calculated as net income ($115,000) plus tax adjusted foreign exchange losses ($904,000), while adjusted basic earnings per share and adjusted diluted earnings per share are calculated as adjusted net income ($1,019,000) divided by the weighted average number of outstanding common shares of the Company (60,260,083) and weighted average diluted number of outstanding common shares of the Company (76,386,025), respectively.

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.

This Press Release contains forwardlooking 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 and include statements regarding final timing of recovery in the NOI process, the expected impact of new loans on earnings in coming quarters and our expectations regarding the increase in our pipeline for the remainder of 2016. 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. Forwardlooking 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 those factors discussed in the MD&A as well as 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 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 has no obligation to update such statements except as required by law.

Terra Firma Capital Corporation
Consolidated Statements of Income and Comprehensive Income
For the three months ended March 31, 2016 and 2015
(Unaudited)
Three months ended
March 31,
2016
March 31,
2015
Revenue
Interest and fees $ 4,221,156 $ 3,960,412
Rental 48,378 47,348
4,269,534 4,007,760
Expenses
Property operating costs 16,092 15,254
General and administrative 658,145 798,024
Share based compensation 210,386 391,039
Interest and financing costs 1,827,241 1,503,032
Provision for loan and investment loss 112,726 -
Foreign exchange gain - realized (41,634 ) -
Foreign exchange loss - unrealized 1,271,596 -
4,054,552 2,707,349
Income from operations before income taxes 214,982 1,300,411
Income taxes 100,158 354,973
Net income and comprehensive income $ 114,824 $ 945,438
Earnings per share
Basic $ 0.00 $ 0.02
Diluted $ 0.00 $ 0.02
Terra Firma Capital Corporation
Reconciliation of Non-IFRS Measures
Three months ended
March 31,
2016
March 31,
2015
Net income and comprehensive income $ 114,824 $ 945,438
Foreign exchange loss (tax adjusted) 904,022 -
Adjusted net income and comprehensive income $ 1,018,846 $ 945,438
Terra Firma Capital Corporation
Consolidated Statements of Financial Position
As at March 31, 2016 and December 31, 2015
(Unaudited)
March 31,
2016
December 31,
2015
Assets
Cash and cash equivalents $ 4,009,958 $ 11,723,550
Funds held in trust 896,434 2,061,207
Deposits - 11,747,370
Amounts receivable and prepaid expenses 3,389,160 2,279,977
Loan and mortgage investments 117,567,642 95,135,201
Investment properties held in joint operations 2,143,794 2,143,794
Portfolio investments 2,339,555 2,339,555
Investment in associates 2,315,414 2,315,414
Income taxes recoverable 529,108 -
Deferred income tax asset 330,023 -
Total assets $ 133,521,088 $ 129,746,068
Liabilities
Accounts payable and accrued liabilities $ 4,553,389 $ 5,980,560
Unearned income 400,932 301,099
Income taxes payable - 322,046
Deferred income tax liability - 18,665
Short-term unsecured notes payable 7,786,010 9,286,000
Revolving operating facility 9,890,678 9,865,144
Loan and mortgage syndications 52,037,018 45,691,948
Mortgages payable 1,112,392 1,120,314
Convertible debentures 10,658,689 10,628,301
Total liabilities 86,439,108 83,214,077
Equity
Share capital $ 31,778,294 $ 31,257,404
Equity component of convertible debentures 284,490 284,490
Contributed surplus 2,274,850 2,360,575
Retained earnings 12,489,705 12,374,881
Shareholders' equity 46,827,339 46,277,350
Non-controlling interest 254,641 254,641
Total equity 47,081,980 46,531,991
Total liabilities and Equity $ 133,521,088 $ 129,746,068

Contact Information

  • Terra Firma Capital Corporation
    Y. Dov Meyer
    President and Chief Executive Officer
    416.792.4709
    ydmeyer@tfcc.ca

    Spinnaker Capital Markets Inc.
    Ali Mahdavi
    Managing Director
    416.962.3300
    am@spinnakercmi.com