Terra Firma Capital Corporation Reports Results for the Second Quarter Ended June 30, 2016

TORONTO, ONTARIO--(Marketwired - Aug. 9, 2016) -

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 released its financial results for the three and six months ended June 30, 2016.

HIGHLIGHTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2016:

• Total assets increased by 61% to $146.7 million at June 30, 2016 from $91.3 million at June 30, 2015.
  
  

• Total loan and mortgage syndications increased by 91% to $54.8 million at June 30, 2016 from $28.6 million at June 30, 2015.
  
  

• Total revenue for the second quarter 2016 amounted to $3.6 million, a decrease of $427,000 or 11%, from the same period in the prior year. Total revenue for the six months ended June 30, 2016 amounted to $7.8 million, a decrease of $165,000 or 2%, from the same period in the prior year.
  
  

• Net income for the quarter ended June 30, 2016 of $395,000, ($0.01 on a basic and diluted per share basis) after recognizing a tax adjusted foreign exchange loss of $220,000, decreased by $922,000 compared to $1,317,000 ($0.03 on a basic and $0.02 on a diluted per share basis), including tax adjusted foreign exchange gain of $185,000 for the quarter ended June 30, 2015. Net income for the six months ended June 30, 2016 of $510,000, ($0.01 on a basic and diluted per share basis) after recognizing a tax adjusted foreign exchange loss of $1,124,000, decreased by $1,752,000 compared to $2,262,000, ($0.05 on a basic and $0.04 on a diluted per share basis) including tax adjusted foreign exchange gain of $185,000, in the same period ended June 30, 2015.
  
  

• Adjusted net income (a non-IFRS measurement) for the quarter ended June 30, 2016 of $616,000 ($0.01 on a basic and diluted per share basis) before recognizing a tax adjusted foreign exchange loss of $220,000, decreased by $516,000 compared to adjusted net income of $1,132,000 ($0.03 on a basic and $0.02 on a diluted per share basis) for the quarter ended June 30, 2015. Adjusted net income (a non-IFRS measurement) for the six months ended June 30, 2016 of $1,635,000 ($0.03 on a basic and diluted per share basis), before recognizing a tax adjusted foreign exchange loss of $1,124,000, decreased by $442,000 compared to adjusted net income of $2,077,000 ($0.05 on a basic and $0.04 on a diluted per share basis) in quarter ended June 30, 2015.
  
  

"We are very pleased with the increase in our assets, the increase in our loan syndications and the growing base of syndicated investors which bodes well for our ability to achieve higher yields and to continue to attract capital for future growth. As previously announced, our quarterly results have been impacted as we are no longer recording any income on those loans currently in default. The robustness of the Southern Ontario market has served to improve the overall performance of our portfolio and the value of the security for all of our loans. We are optimistic that the underlying collateral security of the defaulted loans will be successfully liquidated, and the interest income on these loans as well as income on other equity investments will be recorded in the coming quarters. We are also pleased with our decision to enter the US market as the economy, the creation of jobs and the overall real estate market continue to perform well. Our pipeline of opportunities continues to grow and we expect to convert these opportunities into successful transactions," commented Glenn Watchorn, Chief Executive Officer of Terra Firma Capital Corporation.

During the quarter, the Company originated $19 million of loans and mortgage investments.

Results of operations - three and six months ended June 30, 2016

Net income in the second quarter ended June 30, 2016 was $395,000 or $0.01 per basic and diluted share compared to $1,317,000, or $0.03 per share and $0.02 per diluted share, in the second quarter ended June 30, 2015. Net income for the six months ended June 30, 2016 was $510,000 or $0.01 per basic and diluted share compared to $2,262,000, or $0.05 per share and $0.04 per diluted share, for the six months ended June 30, 2015. The decrease in net income was primarily due to a decrease in interest income due to Company not accruing interest on loans that are currently in arrears and not recognizing revenue on a loan investment of $7 million converted into an investment in joint operations, and an increase in interest expense from the Company's revolving operating facility and loan and mortgage syndications.

Interest and fee income for the second quarter ended June 30, 2016 aggregated $3.5 million, a decrease of 11% from the $4.0 million in the same period in the previous year and a decrease of 16% over the $4.2 million in the first quarter ended March 31, 2016. Interest and fee income for the six months ended June 30, 2016 aggregated $7.8 million, a decrease of 2.1% from the $7.9 million in the same period in the previous year. The decrease in interest and fee revenue was primarily due to the Company not accruing interest on loans that are currently in arrears and not recognizing revenue on a loan investment of $7 million converted into an investment in joint operations. The average interest rate on the loan and mortgage investments at June 30, 2016 was 16.3%, compared to 15.8% at December 31, 2015 and 23.1% at June 30, 2015.

Interest and financing costs for the second quarter ended June 30, 2016 were $2.0 million, compared to $1.4 million for the comparative period last year. Interest and financing costs for the six months ended June 30, 2016 were $3.8 million, compared to $2.9 million for the comparative period last year. The increase in interest and financing costs was primarily due to an increase in loan syndications, short-term unsecured loans payable and the Company's revolving operating facility.

The Company's Management's Discussion & Analysis and Financial Statements as at and for the three and six months ended June 30, 2016 have been filed and are available under the Company's profile on SEDAR (www.sedar.com).

Non-IFRS Measures

This press release refers to certain financial measures, such as adjusted net income and adjusted net income 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 net income 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 plus tax adjusted foreign exchange losses, while adjusted net income per share and adjusted diluted net income per share are calculated as adjusted net income divided by the weighted average number of outstanding common shares of the Company and weighted average diluted number of outstanding common shares of the Company, respectively.

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.

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.

This Press Release contains forward‐looking statements with respect matters concerning the business, operations, strategy and financial performance of Terra Firma, the realization of future profits on one of Terra Firma's larger investments, and Terra Firma's ability to achieve higher yields in the future and 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", "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, including the matters covered by the non-binding letter of intent 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. Forward‐looking 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 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 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.

Terra Firma Capital Corporation
Consolidated Statements of Income and Comprehensive Income
For the three and six months ended June 30, 2016 and 2015
(Unaudited)
		Three months ended						Six months ended
		June 30, 2016			June 30, 2015			June 30, 2016			June 30, 2015
Revenue
	Interest and fees	$	3,527,298		$	3,956,736		$	7,748,454		$	7,917,148
	Rental		50,444			47,362			98,822			94,710
			3,577,742			4,004,098			7,847,276			8,011,858
Expenses
	Property operating costs		17,307			15,268			33,399			30,522
	General and administrative		608,484			568,831			1,266,629			1,366,855
	Share based compensation		58,818			724,689			269,204			1,115,728
	Interest and financing costs		2,008,734			1,436,038			3,835,975			2,939,070
	Provision for loan and investment loss		-			-			112,726			-
	Foreign exchange loss - realized		673,249			-			631,615			-
	Foreign exchange loss (gain) - unrealized		(373,569)			(251,710)			898,027			(251,710)
			2,993,023			2,493,116			7,047,575			5,200,465
Income from operations before income taxes			584,719			1,510,982			799,701			2,811,393
Income taxes			189,278			194,304			289,436			549,277
Net income and comprehensive income		$	395,441		$	1,316,678		$	510,265		$	2,262,116
Earnings per share
	Basic	$	0.01		$	0.03		$	0.01		$	0.05
	Diluted		0.01			0.02			0.01		$	0.04

Terra Firma Capital Corporation
Consolidated Statements of Financial Position
As at June 30, 2016 and December 31, 2015
		June 30, 2016			December 31, 2015
Assets
	Cash and cash equivalents	$	5,321,544		$	11,723,550
	Funds held in trust		769,845			2,061,207
	Deposits		-			11,747,370
	Amounts receivable and prepaid expenses		2,832,822			2,279,977
	Loan and mortgage investments		107,009,960			95,135,201
	Investment properties held in joint operations		25,090,678			2,143,794
	Portfolio investments		2,739,555			2,339,555
	Investment in associates		2,315,414			2,315,414
	Income taxes recoverable		466,227			-
	Deferred income tax asset		203,626			-
Total assets		$	146,749,671		$	129,746,068
Liabilities
	Accounts payable and accrued liabilities	$	5,720,901		$	5,980,560
	Unearned income		535,193			301,099
	Income taxes payable		-			322,046
	Deferred income tax liability		-			18,665
	Short-term unsecured notes payable		2,665,620			9,286,000
	Revolving operating facility		9,916,263			9,865,144
	Loan and mortgage syndications		54,782,718			45,691,948
	Due to joint operations partner		13,308,141			-
	Mortgages payable		1,524,826			1,120,314
	Convertible debentures		10,689,622			10,628,301
Total liabilities			99,143,284			83,214,077
Equity
	Share capital	$	31,778,294		$	31,257,404
	Equity component of convertible debentures		284,490			284,490
	Contributed surplus		2,403,816			2,360,575
	Retained earnings		12,885,146			12,374,881
	Shareholders' equity		47,351,746			46,277,350
	Non-controlling interest		254,641			254,641
Total equity			47,606,387			46,531,991
Total liabilities and Equity		$	146,749,671		$	129,746,068