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Terra Firma Capital Corporation Reports first Quarter 2018 Financial Results

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

TORONTO, May 10, 2018 (GLOBE NEWSWIRE) -- Terra Firma Capital Corporation (TII.V) ("Terra Firma" or the “Company”), a real estate finance company, today announced its financial results for the three month period ended March 31, 2018.

FIRST QUARTER 2018 HIGHLIGHTS:

  • Principal balance of loan and mortgage investments at March 31, 2018 was $126.5 million, an increase of $7.5 million or 6% from December 31, 2017.

  • Net income and comprehensive income attributable to common shareholders for the three months ended March 31, 2018 was $1,257,000 ($0.02 on a basic and diluted per share basis), an increase of $772,000, compared to $485,000 ($0.01 on a basic and diluted per share basis) for the same period last year.

  • Revenues for the three months ended March 31, 2018 were $3,548,000, a decrease of $469,000, compared to $4,017,000 for the same period in 2017.

  • Adjusted net income (a non-IFRS financial measure, see “Non-IFRS Financial Measures” below) for the three months ended March 31, 2018 amounted to $525,000 ($0.01 on a basic and diluted per share basis) before recognizing a foreign exchange gain, an increase of $185,000, compared to adjusted net income of $340,000 ($0.00 on a basic and diluted per share basis) for same period last year.

“Terra Firma continues to demonstrate growth in both assets and net income.  We expect this growth to accelerate in the coming quarters as a result of the deployment of available funds and additional funds from our syndicate investors.  As well, the redeployment of capital received from monetizing a large equity position in combination with proceeds expected from repayments on defaulted loan positions will also add to earnings in the short term”, commented Glenn Watchorn, President and Chief Executive Officer of Terra Firma Capital Corporation.  “The Company remains focused on its expansion into the United States especially given the volatility in the Canadian market and the significantly higher yields available in the United States for quality land and development financing”, added Mr. Watchorn.

Results of operations – three months ended March 31, 2018

Net income and comprehensive income for the three months ended March 31, 2018 was $1,257,000 or $0.02 per basic and diluted share, compared to $485,000 or $0.01 per basic and diluted share, in the same period last year.

Interest and fee income for the three months ended March 31, 2018 totaled $3,497,000, compared to $3,966,000 in the same period in 2017, representing a decrease of $469,000 on a year-over-year basis. The weighted average interest rate of loan and mortgage investments at both March 31, 2018 and December 31, 2017 was 14.1%, compared to 14.9% at March 31, 2017. The Company’s principal balance of loan and mortgage investments was $126.5 million as at March 31, 2018, compared to $117.4 million at March 31, 2017 and $119.0 million at December 31, 2017.

Interest and financing expense for the first quarter ended March 31, 2018 was $2,043,000, compared to $2,327,000 for the same period in 2017. The principal balance of the Company’s loan and mortgage syndications increased from $63.3 million at December 31, 2017 to $65.9 million at March 31, 2018, an increase of $2.6 million or 4.1%. The weighted average interest rate in the loan and mortgage syndications at March 31, 2018 was 10.5%, compared to 10.2% at December 31, 2017 and 10.9% at March 31, 2017.

General and administrative expenses for the three months ended March 31, 2018 was $718,000 compared to $897,000 for the same period last year. General and administrative expenses for the three months ended March 31, 2017 includes onetime expenses relating to due diligence work on loan and mortgage investments not funded.

The Company’s Management’s Discussion & Analysis and Financial Statements as at and for the three month period ended March 31, 2018 (the “MD&A”) have been filed and are available under the Company’s profile 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 in Canada and throughout 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 Financial 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

Adjusted net income is calculated as net income excluding net foreign exchange gain or loss, net of tax. Adjusted earnings per share, basic or diluted, is calculated as adjusted net income divided by the weighted average number of common shares, basic or diluted. The Company uses adjusted net income and adjusted earnings per share to measure its performance from one period to the next, without the variation caused by the impact net foreign exchange gain or loss. The Company excludes this item because it affects the comparability of its financial results and could potentially distort the analysis of trends in its business performance. Excluding this item does not imply it is necessarily non-recurring.

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.

Forward-Looking Information

This Press Release contains forwardlooking statements with respect matters concerning the business, operations, strategy and financial performance of Terra Firma, and Terra Firma’s ability 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..

For further information, please contact:

Terra Firma Capital Corporation
Glenn Watchorn
Chief Executive Officer
Phone: 416.792.4702
gwatchorn@tfcc.ca

or
Terra Firma Capital Corporation
Y. Dov Meyer
Executive Vice Chairman
Phone: 416.792.4709
ydmeyer@tfcc.ca

or

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


Terra Firma Capital Corporation
Consolidated Statements of Income and Comprehensive Income
For the three months period ended March 31, 2018 and 2017
(Unaudited)

               
          Three months ended
            March 31,
2018
March 31,
2017
Revenue          
  Interest and fees       $   3,497,072   $   3,966,244  
  Rental           50,444       50,444  
                3,547,516       4,016,688  
Expenses          
  Property operating costs           17,266       17,331  
  General and administrative           717,937       896,736  
  Share based compensation           26,976       280,721  
  Interest and financing costs           2,042,587       2,327,061  
  Realized and unrealized foreign exchange gain           (996,047 )     (197,291 )
                1,808,719       3,324,558  
               
Income from operations before income taxes           1,738,797       692,130  
               
Income taxes           481,406       207,318  
               
Net income and comprehensive income       $   1,257,391   $   484,812  
               
               
Earnings per share          
  Basic       $   0.02   $   0.01  
  Diluted           0.02       0.01  
               

 

Terra Firma Capital Corporation
Consolidated Statements of Financial Position
As at March 31, 2018 and December 31, 2017
(Unaudited)

               
            March 31,
2018
December 31,
2017
               
Assets          
               
  Cash and cash equivalents       $   4,443,458   $   2,691,049  
  Funds held in trust           4,113,704       3,014,606  
  Amounts receivable and prepaid expenses           1,351,346       1,463,310  
  Loan and mortgage investments           124,711,501       117,166,221  
  Investment property held in joint operations           2,208,694       2,208,694  
  Portfolio investments           7,575,623       13,575,623  
  Investment in associates           2,927,842       2,927,842  
  Income taxes recoverable           328,171       300,667  
  Deferred income tax asset           -       126,283  
Total assets       $   147,660,339   $   143,474,295  
               
Liabilities          
               
  Accounts payable and accrued liabilities       $   7,325,042   $   6,236,233  
  Unearned income           1,347,181       1,505,576  
  Deferred income taxes payable           156,627       -  
  Revolving operating facility           18,916,639       18,965,205  
  Loan and mortgage syndications           65,866,899       63,299,522  
  Mortgages payable           1,459,720       1,469,844  
Total liabilities           95,072,108       91,476,380  
               
Equity          
               
  Share capital       $   32,119,914   $   32,864,287  
  Contributed surplus           3,650,704       3,573,406  
  Retained earnings           16,562,972       15,305,581  
  Shareholders' equity           52,333,590       51,743,274  
               
  Non-controlling interest           254,641       254,641  
Total equity           52,588,231       51,997,915  
               
Total liabilities and equity       $   147,660,339   $   143,474,295