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TERRA FIRMA CAPITAL CORPORATION REPORTS FOURTH QUARTER & FULL YEAR 2019 FINANCIAL RESULTS

All amounts are stated in United States dollars unless otherwise indicated.

Full Year 2019 Financial Highlights:

  • Revenues increased by 23.9% to $16.7 million
  • Total Investments(1)  increased by 9.0% to $142.4 million
  • Loan and mortgage syndication increased by 16.3%
  • Adjusted net income and comprehensive income(2) increased by 56.4% to $3.0 million
  • Adjusted basic and diluted earnings per share(2) increased by 70.3% to $0.53
  • Book Value(3) increased by 9.1% to $7.12 (CAD $9.50) per share
  • CAD$0.10 per share paid in dividends             

Q4 2019 Financial Highlights:

  • Revenues increased by 23.3% to $4.6 million
  • Total Investments(1)  increased by 0.38% to $142.4 million
  • Loan and mortgage syndication increased by 6.4%
  • Adjusted net income and comprehensive income(2) increased by 77.9% to $966,000
  • Adjusted basic and diluted earnings per share(2) increased by 88.9% to $0.17
  • CAD$0.05 per share paid in dividends

TORONTO, April 02, 2020 (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 months and year ended December 31, 2019.

For the year-ended December 31, 2019, revenues increased 23.9% to $16.7 million, compared to $13.4 million for the prior year. The increase in revenues is primarily due to increase in interest and fees of $1.7 million primarily due to interest and fees of $1.7 million earned from loan and mortgage investments  funded after December 31, 2018 and an increase in interest and fees of $3.3 million, earned from loan and mortgage investments funded prior to December 31, 2018, the increase is partially offset by interest and fees of $3.1 million earned on investments repaid after December 31, 2018 and an increase in finance income of $1.3 million. Overall, interest and fee income increased by 14.2% to $15.0 million compared to $13.1 million in 2018. Finance income in 2019 was $1.5 million, compared to $153,000 in the prior year. Interest and financing expense in 2019 increased by 15.3% to $9.2 million, compared to $7.9 million in 2018, due to primarily due to the increase in loan and mortgage syndications from $75.9 million at December 31, 2018 to $88.2 million at December 31, 2019.

As a result of the foregoing, net income and comprehensive income attributable to common shareholders for the year ended December 31, 2019 was $3.0 million or $0.54 per basic and diluted share compared to $2.2 million or $0.36 per basic share and diluted share for the year ended December 31, 2018.

For the three-month period ended December 31, 2019, revenues increased 23.3% to $4.6 million, compared to $3.8 million during the same period in 2018, primarily due to interest and fees of $1.6 million, earned from new loan and mortgage investments made funded after December 31, 2018, which is partially offset by loss of interest fees income of $1,173,489 on investments repaid after December 31, 2018 and increase in finance income from finance leases of $496,000. Interest and fee income increased by 10.1% to $4.0 million compared to $3.7 million in 2018. Finance income in 2019 was $541,000, compared to $44,000 in the prior year. Interest and financing expense during the same period remained relatively unchanged at $2.4 million, compared to $2.3 million in 2018. During the quarter, the Company provided an allowance for loan and mortgage investments of $226,000 and $102,000, respectively, relating to certain loan and mortgage investments in arrears.

The net income and comprehensive income attributable to common shareholders for the three months ended December 31, 2019 was $884,000 or $0.16 per basic and diluted share compared to $1.9 million or $0.32 per basic and diluted share for the same period last year.

“Terra Firma made significant strides in all facets during 2019.  The Company increased its assets under management and funded its activities through additional syndicate capital and lower cost debt which ultimately resulted in a significant increase in net income.  In addition to our improved financial performance, the Company added to its goodwill by improving its sales channels and technology,” commented Glenn Watchorn, President and Chief Executive Officer.  “Terra Firma now has an investor portal where our syndicate investors can deal with almost all loan syndication transactions and reporting virtually.  While 2019 was a transformative year for the Company and positioned us for strong growth in 2020, the global landscape has changed dramatically with the COVID-19 pandemic.  As such, the Company has been working diligently to protect the interests of our shareholders and all other stakeholders while being sensitive to adhere to our civic duty in these difficult and unprecedented times.  Given the quality of our portfolio which is largely in first mortgages or wholly-owned assets and the strength and flexibility of our balance sheet with relatively low leverage, we believe that we are well-positioned to weather the storm.”

As at December 31, 2019, the Company’s Total Investments(1) increased by 8.9% to $142.4 million versus $130.7 million at the end of 2018. The weighted average effective interest rate of the loan and mortgage investments at December 31, 2019 was 13.2% compared to 13.7% at December 31, 2018.

The principal balance of the Company’s loan and mortgage syndications increased from $75.9 million at December 31, 2018 to $88.2 million at December 31, 2019, an increase of $12.3 million or 16.3%. The weighted average effective interest rate of the loan and mortgage syndications at December 31, 2019 was 9.6% compared to10.2% at December 31, 2018.

The Company’s Management’s Discussion & Analysis and Financial Statements as at and for the year ended December 31, 2019 have been filed and are available on SEDAR (www.sedar.com).

Subsequent Events

On January 14, 2020, the Company entered into a $40,000,000 secured line of credit (the “LOC”) with Texas Capital Bank. The LOC replaced the master facility agreement the Company had with Texas Capital for a $35,000,000 master facility. The LOC provides for an increase in the borrowing limit to $50,000,000 over time subject to approval by Texas Capital.

On March 11, 2020, the Board declared a quarterly dividend of CAD$0.05 per common share, payable on April 15, 2020, to shareholders of record as of the close of business on March 31, 2020.

Subsequent to year-end, the evolving pandemic of the novel coronavirus, or COVID-19 is causing significant financial market and social disruption. While the Company engages in emergency preparedness, including business continuity planning, to mitigate risks, and continues to monitor its investments and assess the impact of the pandemic on its business activities, the rapid development and fluidity of this situation limits the Company’s ability to predict the ultimate impact on the Company at this time.

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, including adjusted net income and comprehensive income and Total Investments and book value per share, each as described below, 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.

  1. Total Investments (excluding cash) consists of principal balance of loan and mortgage investments, investment in finance leases, portfolio investments, investments in associates, convertible note receivables and an investment property held in joint operations. 

  2. Adjusted net income and comprehensive income, (as well as adjusted net income and comprehensive income attributable to common shareholders, adjusted net diluted income and comprehensive income attributable to common shareholders which in the current periods are equal to adjusted net income and comprehensive income and adjusted earnings per share are calculated by adjusting the following (as applicable), irrespective of materiality: 

    • foreign exchange gains/losses related to the Company’s net U.S. dollar denominated net assets;
    • impairment losses/reversals;
    • net gains/losses on the disposal of equity accounted investments;
    • other unusual one one-time items; and
    • the income tax impact of the items listed above. investment property held in joint operations

     3. The Company defines book value per share as total shareholders’ equity divided by outstanding common shares.

More information on the non-IFRS measures used by the Company can be found in the Company’s MD&A.

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 expectations about the impact of the Coronavirus pandemic on the Company’s business. 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 and those risks discussed in the Company’s MD&A under the heading “Risks and Uncertainties” and elsewhere in the Company’s MD&A and other disclosure documents filed with the applicable Canadian securities regulatory authorities from time to time, including, without limitation, risks related to the Coronavirus. 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 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 and years ended December 31, 2019 and 2018
(Unaudited)

                 
      Three months ended   Years ended  
      December 31,
2019
December 31,
2018
  December 31,
2019
December 31,
2018
 
Revenue            
  Interest and fees $ 4,046,909   $ 3,671,489     $ 15,003,292   $ 13,139,718    
  Finance income   540,835     44,024       1,497,294     152,733    
  Rental   41,844     38,174       155,720     155,720    
        4,629,588     3,753,687       16,656,306     13,448,171    
Expenses            
  Interest and financing costs   2,422,611     2,329,722       9,161,259     7,947,282    
  General and administrative   1,129,828     950,701       3,375,989     2,775,430    
  Property operating costs   14,235     13,108       53,427     53,427    
  Share based compensation   120,594     (234,302 )     474,168     (15,828 )  
  Provision for loan and mortgage investment loss   226,108     102,039       74,208     2,403,182    
  Provision for uncollectible receivables   -     258,707       -     134,940    
  Realized and unrealized foreign exchange gain   (114,885 )   (2,238,783 )     (156,901 )   (3,034,987 )  
  Fair value adjustment - portfolio investments   (56,124 )   (57,413 )     (56,124 )   (57,413 )  
  Loss on redemption of portfolio investment   -     -       -     173,646    
  Share of income from investment in associates   (356,435 )   -       (356,435 )   -    
        3,385,932     1,123,779       12,569,591     10,379,679    
                 
Income from operations before income taxes   1,243,656     2,629,908       4,086,715     3,068,492    
                 
Income taxes   359,377     706,539       1,008,958     902,038    
                 
Net income and comprehensive income $ 884,279   $ 1,923,369     $ 3,077,757   $ 2,166,454    
                 
                 
Net income and comprehensive income attributable to:          
  Common shareholders   884,279     1,923,369       3,077,757     2,215,783    
  Non-controlling interest   -     -       -     (49,329 )  
      $ 884,279   $ 1,923,369     $ 3,077,757   $ 2,166,454    
                 
                 
Earnings per share            
  Basic $ 0.16   $ 0.32     $ 0.54   $ 0.36    
  Diluted   0.16     0.32       0.54     0.36    
                 


Terra Firma Capital Corporation
Consolidated Statements of Financial Position
As at December 31, 2019 and 2018

         
        December 31,
2019
    December 31,
2018
 
         
Assets    
         
  Cash and cash equivalents $ 1,931,451   $ 7,731,379  
  Funds held in trust   1,805,229     1,095,669  
  Amounts receivable and prepaid expenses   1,520,698     1,013,935  
  Loan and mortgage investments   116,212,642     121,675,979  
  Investment in finance leases   17,959,374     2,819,915  
  Portfolio investments   2,042,937     1,911,574  
  Investment in associates   3,097,947     2,146,984  
  Investment property held in joint operations   1,700,303     1,619,633  
  Convertible note receivable   912,436     -  
  Right-of-use asset   800,531     -  
  Income taxes recoverable   247,719     130,741  
         
Total assets $ 148,231,267   $ 140,145,809  
         
Liabilities    
         
  Accounts payable and accrued liabilities $ 5,344,792   $ 3,618,067  
  Lease obligations   913,129     -  
  Unearned income   692,264     1,303,162  
  Deferred income taxes payable   450,017     753,089  
  Unsecured note payable   3,000,000     -  
  Credit facilities   8,878,839     19,464,106  
  Loan and mortgage syndications   88,249,414     75,906,550  
  Mortgages payable   1,067,440     1,047,809  
Total liabilities   108,595,895     102,092,783  
         
Equity    
         
  Share capital $ 25,283,343   $ 26,533,950  
  Contributed surplus   3,440,695     3,264,388  
  Foreign currency translation reserve   (6,885,398 )   (6,885,398 )
  Retained earnings   17,796,732     15,140,086  
  Total equity   39,635,372     38,053,026  
         
Total liabilities and equity $ 148,231,267   $ 140,145,809