TORONTO, May 17, 2021 /CNW/ - Trez Capital Senior Mortgage Investment Corporation (TSX: TZS) (the "Company") today released its financial results for the quarter ended March 31, 2021. The financial statements and MD&A can be found at www.sedar.com or www.trezcapitalseniormic.com.
Financial Highlights & Business Update
On June 16, 2016 the shareholders of the Company approved the orderly wind-up of the Company ("Orderly Wind-Up"). As such, the financial results reflect the ongoing reduction in the size of the portfolio as capital is returned to shareholders.
During the quarter ended March 31, 2020, the COVID-19 outbreak was declared a pandemic by the World Health Organization. During the following two quarters, the situation has continued to be dynamic and the duration and magnitude of the impact on the economy and our business are not fully known at this time. These impacts could include further decreases in the fair value of our mortgage investments or potential future decreases in revenue or profitability of our ongoing operations. It is not possible to reliably estimate the length and severity of these developments and the impact on the financial results and condition of the Company as it relates to its ability to complete the Orderly Wind-Up Plan.
Income from operations for the three months ended March 31, 2021 was lower than same quarter last year due to lower revenue from a reduced mortgage portfolio as the mortgage monetization strategy continues, and higher expenses driven by higher legal costs due to the transition of the management of operations from the former Manager to senior management as well as stock-based compensation expense. For the three months ended March 31, 2021 there was a decrease of $0.46 million in income from operations compared to the same period in 2020 due to a favorable adjustment of incentive fee and higher average mortgage portfolio in Q1 of 2020.
Basic income per share from the three months ended March 31, 2021 was $0.01 compared to $(0.11) in the same period in 2020 primarily due to a fair value loss adjustment on investment in mortgages in Q1 of 2020 of $1.3 million. At March 31, 2021, the Company had two mortgages outstanding. Of the two mortgages remaining, the more significant one is set to mature in December 2022. During the second quarter of 2020, the borrower requested a three month deferral of mortgage payments, due to the inability of tenants to pay rent as a result of the Covid-19 economic and health crisis. The deferral was granted. Regular payments resumed during the third quarter of 2020, and the Company made certain amendments to this mortgage in December 2020, including extending the term of this mortgage through December 2022 in consideration of certain lump-sum repayments which commenced in December 2020. As of March 31, 2021, the Company did not make any fair market value adjustments based on the management's assessment of the fair market value of its investment in both mortgages.
Regular Monthly & Special Distributions
In the third quarter of 2017, the Board made a decision to suspend regular monthly distributions until further notice. This decision was premised on a review of the last remaining mortgages and anticipated cash requirements at that time, as well as the fact that one of the two remaining mortgages is shared with an external senior loan-sharing partner.
There were no regular distributions made for the three months ended March 31, 2021 (March 31, 2020 - nil). The Company made a special distribution of $0.478 per Class A share of the Company totaling, $3,510,819 on March 29, 2021.
The Board anticipates from time to time making further special distributions as the two remaining mortgages in the portfolio mature or are sold, subject to reasonable expected operating expenditures and repayment of the senior loan participant.
Forward Looking Statements
Statements in this press release contain forward-looking information. Such forward-looking information may be identified by words such as "anticipates", "plans", "proposes", "estimates", "intends", "expects", "believes", "may" and "will". The forward-looking statements are founded on the basis of expectations and assumptions made by the Company. Details of the risk factors relating to the Company and its business are discussed under the heading "Business Risks and Uncertainties" in the Company's annual Management's Discussion & Analysis for the year ended December 31, 2020 and under the heading "Risk Factors" in the Company's Annual Information Form dated March 31, 2021, copies of which are available on the Company's SEDAR profile at www.sedar.com. Most of these factors are outside the control of the Company. Investors are cautioned not to put undue reliance on forward-looking information. These statements speak only as of the date of this press release. Except as otherwise required by applicable securities statutes or regulation, the Company expressly disclaims any intent or obligation to update publicly forward-looking information, whether as a result of new information, future events or otherwise.
About the Company
The Company holds a portfolio of mortgages in Canada. At the Company's annual and special meeting held on May 6, 2021, the Company sought and received shareholder approval to change its name to Standard Mercantile Acquisition Corp. The Company is focused on monetizing its remaining mortgage assets and is considering options to enable its shareholders to participate in the potential future value of the Company through transactions that could capitalize on the Company's public listing. The Company's Board of Directors have experience in sourcing, evaluating and executing transactions of this nature.
SOURCE Trez Capital Senior Mortgage Investment Corporation
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