Annual Report
2018
Year Ended(cid:1)
December 31, 2018
CANADA’S PREMIER NON-BANK LENDER™
Table
of Contents
1
5
(cid:446)(cid:417)
(cid:447)(cid:214)
Earnings Press Release
Management’s Discussion and Analysis
Interim Consolidated Financial Statements
Corporate Directory
About Atrium Mortgage Investment Corporation
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Year
Regular dividend
Bonus dividend
Total dividends paid
Earnings per share (basic)
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(cid:446)(cid:416)(cid:417)(cid:447)
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(cid:446)(cid:416)(cid:417)(cid:420)
(cid:446)(cid:416)(cid:417)(cid:214)
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(cid:144)(cid:416)(cid:234)(cid:420)(cid:447)
(cid:144)(cid:416)(cid:234)(cid:420)(cid:213)
(cid:144)(cid:416)(cid:234)(cid:420)(cid:420)
(cid:144)(cid:416)(cid:234)(cid:214)(cid:416)
(cid:144)(cid:416)(cid:234)(cid:214)(cid:416)
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(cid:144)(cid:416)(cid:234)(cid:417)(cid:416)
(cid:144)(cid:416)(cid:234)(cid:416)(cid:447)
(cid:144)(cid:416)(cid:234)(cid:416)(cid:447)
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(cid:144)(cid:416)(cid:234)(cid:420)(cid:448)
(cid:144)(cid:416)(cid:234)(cid:420)(cid:214)
(cid:144)(cid:416)(cid:234)(cid:214)(cid:418)
(cid:144)(cid:416)(cid:234)(cid:214)(cid:213)
(cid:144)(cid:416)(cid:234)(cid:214)(cid:446)
(cid:144)(cid:416)(cid:234)(cid:214)(cid:447)
(cid:144)(cid:416)(cid:234)(cid:420)(cid:448)
(cid:144)(cid:416)(cid:234)(cid:214)(cid:417)
(cid:144)(cid:416)(cid:234)(cid:214)(cid:447)
(cid:144)(cid:416)(cid:234)(cid:214)(cid:419)
(cid:144)(cid:416)(cid:234)(cid:214)(cid:448)
(cid:144)(cid:416)(cid:234)(cid:214)(cid:448)
FOR IMMEDIATE RELEASE
ATRIUM MORTGAGE INVESTMENT CORPORATION
ACHIEVES RECORD REVENUES
AND NET INCOME IN 2018
TORONTO: February 13, 2019 – Atrium Mortgage Investment Corporation (TSX: AI, AI.DB, AI.DB.A,
AI.DB.B, AI.DB.C, AI.DB.D) today released its financial results for the year ended December 31, 2018.
Highlights
Record revenues of $58.3 million, up 15.8% from prior year
Record net income of $33.8 million, up 16.2% from prior year
$0.95 basic and $0.94 diluted earnings per share for the year ended December 31, 2018
$0.04 per share special dividend to shareholders of record December 31, 2018
$0.94 total dividends per share paid to shareholders in 2018
Mortgage portfolio increased to $684.4 million, 8.2% increase from prior year
High quality mortgage portfolio
o 84.1% of portfolio in first mortgages
o 88.6% of portfolio is less than 75% loan to value
o average loan-to-value is 61.1%
“2018 was another good year for Atrium and represented a sixth consecutive year of portfolio growth and
record income. We ended the year with a mortgage portfolio balance of $684.4 million, up 8.2% from the
beginning of the year and up 3.3% from Q3 2018. We had annual revenue of $58.3 million and net income
of $33.8 million. We increased our weighted average interest rate from 8.44% in 2017 to 8.85% at the end
of this year. Notwithstanding those impressive results, we continued our practice of lending conservatively,
with an average portfolio loan to value of 61.1%. We would like to thank our new and existing shareholders
for the strong demand on the recent public offering of our common shares completed on February 8, 2019.
We will continue to work hard to earn your continued support,” said Rob Goodall, CEO of Atrium.
“We are proud to state that Atrium continues to be regarded as Canada’s premier non-bank lender™.”
Interested parties are invited to participate in a conference call with management on Thursday, February
14, 2019 at 4:00 p.m. ET to discuss the results. To participate or listen to the conference call live, please
call 1 (888) 241-0551 or (647) 427-3415. For a replay of the conference call (available until February 27,
2019) please call 1 (855) 859-2056, Conference ID 4959418.
Results of operations
Atrium ended the year with assets of $699.8 million, and revenues grew to a record $58.3 million, an
increase of 15.8% from the prior year. Net income for 2018 was $33.8 million, an increase of 16.2% from
the prior year.
1
Basic and diluted earnings per common share were $0.95 and $0.94, respectively, for the year ended
December 31, 2018, compared with $0.95 basic and $0.94 diluted earnings per common share in the prior
year.
The company had $682.7 million of mortgages receivable as at December 31, 2018, an increase of 8.9%
from December 31, 2017. During the year, $306.0 million of mortgages were advanced, and $240.4 million
of mortgages were repaid.
The weighted average interest rate on the mortgage portfolio increased to 8.85% at December 31, 2018,
compared with 8.44% at December 31, 2017.
Financial summary
Condensed Statements of Earnings and Comprehensive Income
Revenue
Mortgage servicing and management fees
Other expenses
Provision for mortgage losses
Income before financing costs
Financing costs
Earnings and total comprehensive income
Basic earnings per share
Diluted earnings per share
Dividends declared
Mortgages receivable, end of year
Total assets, end of year
Shareholder’ equity, end of year
Analysis of mortgage portfolio
(dollars in 000s)
$
Year Year Year
ended
ended
ended
December 31
December 31
December 31
2016
2017
2018
44,042
50,359
58,316
(4,661)
(5,470)
(6,279)
(1,221)
(1,251)
(1,142)
(1,519)
(1,850)
(1,800)
36,641
41,788
49,095
(10,521)
(12,729)
(15,326)
26,120
29,059
33,769
$
$
$
$
$
$
$
0.95
0.94
$
$
0.95
0.94
$
$
0.97
0.95
$
33,658
$
28,545
$
25,918
$ 682,721
$ 699,750
$ 387,306
$ 626,756
$ 627,859
$ 349,064
$ 530,590
$ 531,856
$ 278,540
Property type
Low-rise residential
High-rise residential
Mid-rise residential
House and apartment
Condominium corporation
Residential portfolio
Commercial
Mortgage portfolio
December 31, 2018
Outstanding % of
December 31, 2017
Outstanding % of
Number
38
15
20
101
14
188
20
208
amount
$ 232,713
146,027
139,708
64,230
2,533
585,211
99,193
684,404
Portfolio Number
39
10
6
120
14
189
27
216
34.0%
21.3%
20.4%
9.4%
0.4%
85.5%
14.5%
100.0%
amount
$ 256,581
81,939
37,071
86,287
2,887
464,765
167,622
632,387
Portfolio
40.6%
13.0%
5.9%
13.6%
0.4%
73.5%
26.5%
100.0%
2
Location of underlying property
(outstanding amounts in 000s)
Greater Toronto Area
Non-GTA Ontario
Alberta
British Columbia
Location of underlying property
(outstanding amounts in 000s)
Greater Toronto Area
Non-GTA Ontario
Saskatchewan
Alberta
British Columbia
December 31, 2018
Number of
mortgages
Outstanding
amount
Percentage
outstanding
Weighted
average
loan to value
Weighted
average
interest rate
162
26
3
17
208
$ 431,334
29,160
15,698
208,212
$ 684,404
63.0%
4.3%
2.3%
30.4%
100.0%
65.5%
57.9%
52.5%
53.1%
61.1%
8.94%
8.28%
8.83%
8.76%
8.85%
December 31, 2017
Number of
mortgages
Outstanding
amount
Percentage
outstanding
Weighted
average
loan to value
Weighted
average
interest rate
159
35
2
5
15
216
$ 397,293
26,383
17,107
22,518
169,086
$ 632,387
62.8%
4.2%
2.7%
3.6%
26.7%
100.0%
62.5%
65.9%
100.0%
59.4%
54.7%
61.5%
8.51%
8.54%
8.06%
8.87%
8.24%
8.44%
For further information on the financial results, and further analysis of the company’s mortgage portfolio,
please refer to Atrium’s consolidated financial statements and its management’s discussion and analysis for
the year ended December 31, 2018, available on SEDAR at www.sedar.com, and on the company’s website
at www.atriummic.com.
Conference call
Interested parties are invited to participate in a conference call with management on Thursday, February
14, 2019 at 4:00 p.m. ET to discuss the results. To participate or listen to the conference call live, please
call 1 (888) 241-0551 or (647) 427-3415. For a replay of the conference call (available until February 27,
2019) please call 1 (855) 859-2056, Conference ID 4959418.
About Atrium
Canada’s Premier Non-Bank Lender™
Atrium is a non-bank provider of residential and commercial mortgages that lends in major urban centres
in Canada where the stability and liquidity of real estate are high. Atrium’s objectives are to provide its
shareholders with stable and secure dividends and preserve shareholders’ equity by lending within
conservative risk parameters. Atrium is a Mortgage Investment Corporation (MIC) as defined in the Canada
Income Tax Act, so is not taxed on income provided that its taxable income is paid to its shareholders in the
form of dividends within 90 days after December 31 each year. Such dividends are generally treated by
shareholders as interest income, so that each shareholder is in the same position as if the mortgage
investments made by the company had been made directly by the shareholder. For further information about
Atrium, please refer to regulatory filings available at www.sedar.com or investor information on Atrium’s
website at www.atriummic.com.
For additional information, please contact
Robert G. Goodall
President and Chief Executive Officer
(416) 867-1053
info@atriummic.com
www.atriummic.com
Jennifer Scoffield
Chief Financial Officer
3
MD&A
Management’s Discussion
And Analysis
Year Ended(cid:1)
December 31, 2018
CANADA’S PREMIER NON-BANK LENDER™
MANAGEMENT’S DISCUSSION AND ANALYSIS • 2018 • ATRIUM MORTGAGE INVESTMENT CORPORATION • 7
Management’s Discussion and Analysis
December 31, 2018
Our business
Atrium is a mortgage lender filling the lending gap that results from the limited number of
financial institutions operating in Canada. We lend in major urban centres and where the
stability and liquidity of real estate are high. Our loan portfolio is high quality but we are able
to charge higher rates than the banks because we offer flexibility, creativity and excellent
service. Our mortgages are secured by all types of residential, multi-residential and
commercial real estate located in Canada, and must all be in strict compliance with our
investment policies. Atrium has an 18-year track record of success and consistency in
achieving our strategic objectives: to grow in a controlled manner by focusing on real estate
sectors with the lowest risk profiles.
Our objective is to invest in a diverse portfolio of predominantly first mortgages that are
relatively short-term, to provide our shareholders with stable and secure dividends while
preserving shareholders’ equity, all within the parameters mandated for a Mortgage
Investment Corporation (MIC). Working within conservative risk parameters, we endeavour
to maximize income and dividends through careful underwriting and efficient management of
our mortgage investments.
Information herein is current as of February 13, 2019.
Highlights
Atrium continues to demonstrate strength and stability. For the year ended December 31,
2018, we had record revenues of $58.3 million, up 15.8% from the prior year. Net income was
a record $33.8 million compared with $29.1 million for the prior year. Basic and diluted
earnings per share were $0.95 and $0.94 respectively, compared with $0.95 and $0.94 basic
and diluted earnings per share in the prior year.
During 2018, we issued common shares for gross proceeds of $34.5 million, including full
exercise of the overallotment option. In addition, during 2018, we issued a new series of
5.50% convertible debentures maturing December 31, 2025 for gross proceeds of $34.5
million, including full exercise of the overallotment option.
We declared a regular dividend of $0.075 per share for each month in the year, a total of
$0.90 for the year to date compared to $0.88 for the prior year. In addition, we declared a
special dividend of $0.04, for a total dividend of $0.94 for 2018, compared to $0.92 for the
previous year. For 2019, our board of directors has set the regular dividend rate at $0.90 per
annum.
Our regular and special dividends since listing on the Toronto Stock Exchange in 2012 are
as follows:
Year
2013
2014
2015
2016
2017
2018
2019
Regular
dividend
$0.80
$0.82
$0.84
$0.86
$0.88
$0.90
$0.90
Special
dividend
$0.05
$0.07
$0.09
$0.10
$0.04
$0.04
to be determined
Total dividends
paid
$0.85
$0.89
$0.93
$0.96
$0.92
$0.94
Earnings per
share (basic)
$0.85
$0.91
$0.94
$0.97
$0.95
$0.95
We had $682.7 million of mortgages receivable as at December 31, 2018, an increase of 8.9%
from December 31, 2017. During the year, $306.0 million of mortgages were advanced and
$240.4 million of mortgages were repaid. The portfolio has a weighted average remaining
term of 11.3 months.
Our focus continues to be lending in the major metropolitan areas of Ontario and British
Columbia.
Revenues $58.3
million
increased 15.8%
from prior year
Earnings per share
$0.95 basic
Strong, high quality
mortgage portfolio
84.1%
first mortgages
88.6%
less than 75%
loan‐to‐value
Mortgages
receivable $682.7
million, up 8.9%
from prior year
We focus on
first mortgages
with high liquidity
and low
loan‐to‐value
ratios
8 • ATRIUM MORTGAGE INVESTMENT CORPORATION • 2018 • MANAGEMENT’S DISCUSSION AND ANALYSIS
Investment portfolio
Our mortgage portfolio consisted of 208 mortgage loans and aggregated $684.4 million at December 31, 2018, an
increase of 8.2% from December 31, 2017.
Property Type
(outstanding amounts in 000s)
Low-rise residential1
High-rise residential1
Mid-rise residential1
House and apartment2
Condominium corporation3
Residential portfolio
Commercial 4
Mortgage portfolio
Accrued interest receivable
Mortgage discount
Unamortized origination fees
Provision for mortgage losses
Mortgages receivable
December 31, 2018
Outstanding % of
December 31, 20175
Outstanding % of
Number
amount
Portfolio Number
amount
Portfolio
34.0%
21.3%
20.4%
9.4%
0.4%
85.5%
14.5%
100.0%
39
10
6
120
14
189
27
216
38
15
20
101
14
188
20
208
$ 232,713
146,027
139,708
64,230
2,533
585,211
99,193
684,404
3,122
(221)
(684)
(3,900)
$ 682,721
40.6%
13.0%
5.9%
13.6%
0.4%
73.5%
26.5%
100.0%
$ 256,581
81,939
37,071
86,287
2,887
464,765
167,622
632,387
2,537
(262)
(706)
(7,200)6
$ 626,756
1) Mortgage loans on properties where the near-term business plan, as vetted by the lender, is to intensify the property into low-rise
residential (detached, semi-detached, townhomes and/or multi-unit residential buildings up to 4 storeys), mid-rise residential (multi-
unit residential buildings from 5-14 storeys and stacked townhomes) or high-rise residential (multi-unit residential buildings over 14
storeys).
2) Mortgage loans on existing single-family or multi-family residential homes and apartment buildings.
3) Mortgage loans to residential condominium corporations for guest suites, superintendent suites and green loans.
4) Mortgage loans on properties where the existing real estate is currently, or the proposed development project after rezoning will be,
mixed use, commercial or industrial.
5) Comparative figures have been reclassified to conform with the current year presentation (See Note 15 to the December 31, 2018
consolidated financial statements)
6) Measured under IAS 39
A summary of our mortgages by loan type is presented below.
Loan type
(outstanding amounts in 000s)
Term loans
Construction loans
December 31, 2018
Outstanding % of
December 31, 2017
Outstanding % of
Number
amount
Portfolio Number
amount
Portfolio
199
9
208
$ 609,099
75,305
$ 684,404
89.0%
11.0%
100.0%
207
9
216
$ 549,818
82,569
$ 632,387
86.9%
13.1%
100.0%
A summary of our mortgages by size is presented below.
Mortgage amount
(outstanding amounts in 000s)
$0 - $2,500,000
$2,500,001 - $5,000,000
$5,000,001 - $7,500,000
$7,500,001 - $10,000,000
$10,000,001 +
December 31, 2018
Outstanding % of
December 31, 2017
Outstanding % of
Number
amount
Portfolio Number
amount
Portfolio
145
26
8
7
22
208
$ 103,128
98,176
48,118
61,394
373,588
$ 684,404
15.1%
14.3%
7.0%
9.0%
54.6%
100.0%
161
19
10
5
21
216
$ 105,386
69,755
60,555
42,920
353,771
$ 632,387
16.7%
11.0%
9.6%
6.8%
55.9%
100.0%
MANAGEMENT’S DISCUSSION AND ANALYSIS • 2018 • ATRIUM MORTGAGE INVESTMENT CORPORATION • 9
As of December 31, 2018, the average outstanding mortgage balance was $3.3 million (December 31, 2017 – $2.9
million), and the median outstanding mortgage balance was $0.8 million (December 31, 2017 – $0.8 million).
The tables below show our mortgage portfolio by location of the underlying property and type of mortgage. The
weighted average interest rates shown exclude the lender fees paid by the borrower, which reflect the yield to Atrium
including any mortgage discount or premium. Almost all new loans funded in Q3 and Q4 2018 were at floating rates.
As at December 31, 2018, 61.9% of our portfolio was priced at floating rates, up from 15% at December 31, 2017.
We are continuing to reduce our exposure in Alberta; 100% of the remaining Alberta loans are first mortgages. In
that market our exposure is further mitigated by not lending to office, high-rise condominiums or to hotels.
Location of underlying property
(outstanding amounts in 000s)
Greater Toronto Area
Non-GTA Ontario
Alberta
British Columbia
Location of underlying property
(outstanding amounts in 000s)
Greater Toronto Area
Non-GTA Ontario
Saskatchewan
Alberta
British Columbia
December 31, 2018
Number of
mortgages
Outstanding
amount
Percentage
outstanding
Weighted Weighted
average
average
interest rate
loan to value
162
26
3
17
208
$ 431,334
29,160
15,698
208,212
$ 684,404
63.0%
4.3%
2.3%
30.4%
100.0%
65.5%
57.9%
52.5%
53.1%
61.1%
8.94%
8.28%
8.83%
8.76%
8.85%
December 31, 2017
Number of
mortgages
Outstanding Percentage
outstanding
amount
Weighted
average
loan to value
Weighted
average
interest rate
159
35
2
5
15
216
$ 397,293
26,383
17,107
22,518
169,086
$ 632,387
62.8%
4.2%
2.7%
3.6%
26.7%
100.0%
62.5%
65.9%
100.0%
59.4%
54.7%
61.5%
8.51%
8.54%
8.06%
8.87%
8.24%
8.44%
We have an exceptionally high proportion of our portfolio invested in first mortgages (84.1%), which is one of our
core strategies.
At December 31, 2018, the weighted average loan-to-value ratio in our mortgage portfolio was 61.1%, with 88.6%
of the portfolio below 75% loan-to-value. (At December 31, 2017, the weighted average loan-to-value ratio in our
mortgage portfolio was 61.5%, with 85.9% of the portfolio below 75% loan-to-value.)
Type of mortgage
(dollars in 000s)
First mortgages
Conventional
Non-Conventional
Other
Second and third mortgages
Conventional
Non-conventional
December 31, 2018
Number of Outstanding
amount
mortgages
Weighted
Percentage average
outstanding interest rate
150
3
14
167
33
8
41
208
$ 549,039
24,047
2,533
575,619
54,460
54,325
108,785
$ 684,404
80.2%
3.5%
0.4%
84.1%
8.59%
7.67%
7.46%
8.55%
8.0%
7.9%
15.9%
100.0%
10.03%
10.85%
10.44%
8.85%
10 • ATRIUM MORTGAGE INVESTMENT CORPORATION • 2018 • MANAGEMENT’S DISCUSSION AND ANALYSIS
Type of mortgage
(dollars in 000s)
First mortgages
Conventional
Non-Conventional
Other
Second and third mortgages
Conventional
Non-conventional
December 31, 2017
Number of
mortgages
Outstanding
amount
Weighted
Percentage average
outstanding interest rate
144
8
14
166
44
6
50
216
$ 467,583
46,672
2,887
517,142
72,609
42,636
115,245
$ 632,387
73.9%
7.4%
0.5%
81.8%
8.07%
8.00%
7.49%
8.06%
11.5%
6.7%
18.2%
100.0%
9.78%
10.76%
10.14%
8.44%
Conventional mortgages are those with a loan-to-value of less than or equal to 75%, which is the industry standard for
determining that a mortgage is conventional. Non-conventional mortgages are those with a loan-to-value in excess of
75%.
The weighted average term remaining for our mortgage portfolio at December 31, 2018 is 11.3 months (December
31, 2017 – 12.4 months).
Our business
In Canada there is a lending gap due to the limited number of financial institutions operating. Our business is to help
fill that gap by focusing on loans that cannot be placed with larger financial institutions but represent an acceptable
underwriting risk. Our borrowers benefit from our efficient, thorough and fast underwriting process. We lend in major
urban centres where the stability and liquidity of real estate are at the highest levels.
Our policy is that the weighted average loan-to-value ratio of our mortgage portfolio, as a whole, at the time of
underwriting each loan in our portfolio, will not exceed 75%. At December 31, 2018, the weighted average loan-to-
value ratio of the mortgage portfolio was considerably lower than that, at 61.1%, compared to 61.5% at December 31,
2017.
A typical loan in our portfolio has an interest rate of 7.75% to 10% per annum, a one or two-year term and monthly
interest-only mortgage payments.
Our lending parameters are as follows:
Mortgages on residential and commercial properties up to a maximum of 75% of appraised value.
Loans on single family residences up to 75% of appraised value.
Mortgages on income-producing real estate up to a maximum of 85% of appraised value.
Construction loans up to a maximum of 90% of cost.
Loans to condominium corporations.
Mortgage loan amounts are generally $300,000 to $30 million. The largest single mortgage in our mortgage portfolio
as at December 31, 2018 was $41.1 million (December 31, 2017 – $32.3 million). For loan amounts in excess of $30
million, we generally co-lend with a financial institution or private lender.
Our investment policies, which may be changed by our board of directors (“board”), are as follows:
We may invest only in residential mortgages, commercial mortgages, commercial mortgage backed
securities and certain related investments.
All investments must be mortgages on the security of real property situated within Canada, loans to
condominium corporations, or certain permitted interim investments.
Commercial mortgages may not constitute more than 50% of our total assets at any time.
The term of the mortgage may generally be no greater than ten years.
Mortgages are subject to the following geographic limits at the time of funding: Ontario – maximum 80%
of total mortgages; Alberta – maximum 15% of total mortgages; British Columbia – maximum of 35% of
total mortgages.
No single borrower may account for more than 15% of our total assets.
All mortgages are supported by external appraisals by a qualified appraiser. All mortgages, except
mortgages secured by one to six residential units, are also supported by environmental audits.
The maximum initial loan-to-value ratio of an individual mortgage is 85% including any prior ranking
encumbrances, and the weighted average loan-to-value ratio of our mortgage portfolio at the time of
underwriting each loan may not exceed 75%.
MANAGEMENT’S DISCUSSION AND ANALYSIS • 2018 • ATRIUM MORTGAGE INVESTMENT CORPORATION • 11
Our ratio of debt to equity must be less than 1:1.
We do not invest directly in real property, although real property may be acquired by foreclosing on a
mortgage.
A mortgage investment of: (i) $2,000,000 or more requires approval of the board; (ii) between $1,000,000
and $2,000,000 requires approval of three members of the board, including at least two independent
directors; and (iii) $1,000,000 or less requires approval of any one member of the board. For loans
previously approved, the approval of one member of the board is required for changes to the loan that do
not exceed the approved amount by more than $200,000 and/or for minor technical amendments that do
not change other underwriting considerations, provided the loan-to-value ratio increases by less than 5%
and the ratio is 75% or less. We may invest in interim investments that are guaranteed by the Government
of Canada or of a province or territory of Canada or deposits or certificates of deposits, acceptances and
other similar instruments issued, endorsed or guaranteed by a Schedule I Bank in any amount without prior
board approval.
We may not make unsecured loans to, nor invest in securities issued by, our manager or its affiliates, nor
make unsecured loans to the directors or officers of the manager.
We may not make any investment, or incur any indebtedness, that would result in our not qualifying as a
MIC.
Our objective is to invest in a diverse portfolio of predominantly first mortgages that are relatively short-term,
to provide our shareholders with stable and secure dividends while preserving shareholders’ equity, all within
the parameters mandated for a MIC. Working within conservative risk parameters, we endeavour to maximize
income and dividends through the sourcing and efficient management of our mortgage investments.
We are a non-bank lender and invest in mortgages secured by all types of residential, multi-residential and commercial
real property located in Canada, subject to compliance with our investment policies. The types of properties that we
finance include residential houses, small multi-family residential properties comprised of six or fewer units, residential
apartment buildings, commercial properties and store-front retail properties, commercial properties and residential
and commercial land development sites. We also finance construction projects and provide short-term bridge financing
for real estate developers. Our strategy is to grow in a controlled manner by diversifying geographically, and focusing
on real estate sectors with the lowest risk profiles.
We qualify as a MIC and are restricted from any activity that would result in us failing to qualify as a MIC. In
order to qualify as a MIC, we must satisfy the requirements in subsection 130.1(6) of the Income Tax Act (Canada)
(“ITA”) throughout the taxation year. Among the requirements are:
We can only invest or manage funds and cannot manage or develop real property.
We cannot own debts secured on real property situated outside Canada, debts owing by non-residents
unless such debts were secured on real property situated in Canada, shares of the capital stock of
corporations not resident in Canada, or real property situated outside of Canada or any leasehold interest
in such property.
No shareholder (together with related persons, as defined in the ITA) may at any time own, directly or
indirectly, more than 25% of our common shares.
The cost for tax purposes of cash on hand, debts secured on specified residential properties, and funds on
deposit with a Canada Deposit Insurance Fund or Régie de l’assurance-dépôts du Québec-insured
institution or credit union must constitute at least 50% of the cost of all of our property.
The cost for tax purposes of any interests in real property (including leaseholds but excepting real or
immovable property acquired by foreclosure after default by the mortgagor) may not exceed 25% of the
cost of all of our property.
There are certain restrictions as to our maximum debt-to-equity ratio.
We are managed by Canadian Mortgage Capital Corporation (the “manager” or “CMCC”), which is our exclusive
manager and arranges and services our mortgage loans and otherwise directs our affairs and manages our business.
For explanations as to some of the terms used herein, please refer to our Annual Information Form for the year ended
December 31, 2018, which is available at www.sedar.com.
12 • ATRIUM MORTGAGE INVESTMENT CORPORATION • 2018 • MANAGEMENT’S DISCUSSION AND ANALYSIS
Results of Operations
(In this section, dollars are in thousands of Canadian dollars, except per share amounts)
Financial summary
Revenue
Mortgage servicing and management fees
Other expenses
Provision for mortgage losses
Income before financing costs
Financing costs
Earnings and total comprehensive income
Basic earnings per share
Diluted earnings per share
Dividends declared
Mortgages receivable, end of year
Total assets, end of year
Shareholders’ equity, end of year
Summary of quarterly results (unaudited)
$
Year Year Year
ended
ended
ended
December 31
December 31
December 31
2016
2017
2018
44,042
50,359
58,316
(4,661)
(5,470)
(6,279)
(1,221)
(1,251)
(1,142)
(1,519)
(1,850)
(1,800)
36,641
41,788
49,095
(10,521)
(12,729)
(15,326)
26,120
29,059
33,769
$
$
$
$
$
$
$
0.95
0.94
$
$
0.95
0.94
$
$
0.97
0.95
$
33,658
$
28,545
$
25,918
$ 682,721
$ 699,750
$ 387,306
$ 626,756
$ 627,859
$ 349,064
$ 530,590
$ 531,856
$ 278,540
Revenue
Mortgage servicing and management fees
Other expenses
Provision for mortgage losses
Income before financing costs
Financing costs
Net income and comprehensive income
Basic earnings per share
Diluted earnings per share
Dividends declared
(1,661)
(279)
(563)
12,973
(4,273)
Q4 2018 Q3 2018 Q2 2018 Q1 2018 Q4 2017 Q3 2017 Q2 2017 Q1 2017
$ 14,850 $ 15,476 $ 14,616 $ 13,374 $ 13,656 $ 12,668 $ 12,069 $ 11,966
(1,292)
(1,554)
(285)
(294)
(400) (745) (303)
(537)
10,609
9,729 10,086
12,465
(3,928)
(3,397) (2,927) (2,928)
$ 8,537 $ 8,700 $ 8,605 $ 7,927 $ 7,887 $ 7,212 $ 6,802 $ 7,158
$ 0.23 $ 0.24 $ 0.24 $ 0.24 $ 0.24 $ 0.24 $ 0.23 $ 0.25
$ 0.23 $ 0.24 $ 0.24 $ 0.24 $ 0.23 $ 0.23 $ 0.23 $ 0.24
$ 9,677 $ 8,164 $ 8,140 $ 7,677 $ 8,640 $ 6,866 $ 6,635 $ 6,404
(1,454)
(252)
(300)
11,368
(3,441)
(1,610)
(317)
(400)
12,289
(3,684)
(1,501)
(389)
(402)
11,364
(3,477)
(1,292)
(303)
(1,385)
(274)
Results of operations – three months ended December 31, 2018
For the three months ended December 31, 2018, mortgage interest and fees revenues aggregated $14,850, compared
to $13,656 in the comparative period, an increase of 8.7%. Virtually all our revenues are mortgage interest, therefore,
the increase is due to the growth of our mortgage portfolio and an increase in the weighted average interest rate. A
variety of factors affect the changes in the weighted average interest rate of our mortgage portfolio from quarter to
quarter. No single factor is determinative or material for the mortgage portfolio as a whole, however, such factors
include, but are not limited to, changes in prime rate of interest, the dollar amount of mortgages advanced and/or
repaid in the period, the types of properties on which mortgage loans are advanced and/or repaid in the period, the
location of the underlying properties on which mortgage loans are advanced and/or repaid, the types of mortgage loans
advanced and/or repaid during the period and whether the mortgage loans advanced and/or repaid during the period
are conventional or non-conventional mortgages. The weighted average interest rate on our mortgage portfolio was
8.85% at December 31, 2018, compared with 8.44% at the previous year end, December 31, 2017.
Operating expenses, excluding the provision for mortgage losses, for the three months ended December 31, 2018
were $1,848, compared to $1,890 in the comparative period, a decrease of 2.2%. This decrease is due to a decrease in
share based payments and investor relation expenses which were partially offset by an increase in mortgage servicing
and management fees. Share based payments were higher in the fourth quarter of 2017 as a result of a one-time charge
to account for vesting of deferred share units for an officer who left the company. Investor relations expenses were
lower in the current quarter as we used fewer consultants during the period. Mortgage servicing and other fees paid to
the manager (that is, the management fee plus HST) aggregated $1,554 for the three months ended December 31,
2018, compared with $1,501 in the prior year period. This increase was due to the increase in the size of the mortgage
portfolio, as mortgage servicing fees are calculated and paid monthly based on the mortgage portfolio balance
outstanding during the month. The provision for mortgage losses was $537 in the quarter to bring the total provision
MANAGEMENT’S DISCUSSION AND ANALYSIS • 2018 • ATRIUM MORTGAGE INVESTMENT CORPORATION • 13
to $3,900 compared to $402 in the prior year period to bring the total provision to $7,200.
Financing costs for the three months ended December 31, 2018 were $3,928, compared to $3,477 in the same
period of 2017, an increase of 13.0%. Interest on convertible debentures was $2,600 for the three months ended
December 31, 2018 compared to $2,104 for the comparative period. This increase was a result of the new convertible
debenture issuance completed in July 2018 which was not outstanding during the comparative period. Interest and
other bank charges for the three months ended December 31, 2018 were $1,328, down from $1,373 in the same period
of 2017. This decrease is due to a decrease in the average credit facility balance between the quarters due to the
variation in the timing of repayments and advances during the periods. This decrease was partially offset by the
increase in interest rates from December 31, 2017 to December 31, 2018, as well as the amortization of fees incurred
to increase our credit facility to $210,000 in the fourth quarter of 2017.
Net income and comprehensive income for the three months ended December 31, 2018 was $8,537, an increase of
8.2% from net income and comprehensive income of $7,887 for the same period in the prior year. Basic and diluted
earnings per common share were $0.23, for the three months ended December 31, 2018, compared with $0.24 basic
and $0.23 diluted for the comparable period in the previous year. The small decrease in basic earnings per share from
the comparative period is due to the increase in earnings for the quarter being offset by a greater number of shares
outstanding as a result of the public offering issuances of shares completed in March 2018 as well as conversions of
convertible debentures into shares during the quarter.
During the three months ended December 31, 2018, we funded mortgages aggregating $114,155. Of those
advances, $99,663 were first mortgages, representing 87.3% of the total loans funded. British Columbia advances
were $21,502, advances of $86 were on properties in Alberta, $9,425 were non-GTA Ontario, $991 were on properties
in Saskatchewan and the remaining $82,151 were for mortgages on properties located in the Greater Toronto Area.
There were $70,110 of repayments during the period.
Results of operations – Year ended December 31, 2018
For the year ended December 31, 2018, mortgage interest and fees revenues aggregated a record $58,316, compared
to $50,359 in the comparative period, an increase of 15.8%. Virtually all our revenues are mortgage interest, therefore,
the increase is due to the growth of our mortgage portfolio and an increase in the weighted average interest rate. A
variety of factors affect the changes in the weighted average interest rate of our mortgage portfolio from year to year.
No single factor is determinative or material for the mortgage portfolio as a whole, however, such factors include, but
are not limited to, changes in prime rate of interest, the dollar amount of mortgages advanced and/or repaid in the
period, the types of properties on which mortgage loans are advanced and/or repaid in the period, the location of the
underlying properties on which mortgage loans are advanced and/or repaid, the types of mortgage loans advanced
and/or repaid during the period and whether the mortgage loans advanced and/or repaid during the period are
conventional or non-conventional mortgages. The weighted average interest rate on our mortgage portfolio was 8.85%
at December 31, 2018, compared with 8.44% at the previous year end, December 31, 2017.
Operating expenses, excluding the provision for mortgage losses, for the year ended December 31, 2018 were
$7,421, compared to $6,721 in the comparative period, an increase of 10.4%. This increase is primarily due to an
increase in mortgage servicing and management fees and professional fees, which were partially offset by decreases
in share based payments and administration and general expense. Mortgage servicing and other fees paid to the
manager (that is, the management fee plus HST) aggregated $6,279 for the year ended December 31, 2018, compared
with $5,470 in the prior year period. This increase was due to the increase in the size of the mortgage portfolio during
the period, as mortgage servicing fees are calculated and paid monthly based on the mortgage portfolio balance
outstanding during the month. Professional fees were higher during 2018 due to an increase in audit and legal fees.
Share based payments were lower for the year ended December 31, 2018 as a result of a one-time charge to account
for vesting of deferred share units for an officer who left the company in 2017. Administration and general expenses
decreased as a result of reduced overhead in our Alberta office. The provision for mortgage losses was $1,800 in the
year to bring the total provision to $3,900 compared to $1,850 in the previous period to bring the total provision to
$7,200.
Financing costs for the year ended December 31, 2018 were $15,326, compared to $12,729 in the same period of
2017, an increase of 20.4%. Interest on convertible debenture was $9,373 for the year ended December 31, 2018
compared to $7,734 for the comparative period. This increase was a result of the new convertible debenture issuance
completed in July 2018 which was not outstanding during the comparative period as well as the convertible debenture
offering completed in June 2017 that was outstanding for the full year ended December 31, 2018 and only a portion
of the comparative period. Interest and other bank charges for the year ended December 31, 2018 were $5,953, up
from $4,995 in the same period of 2017. This increase is due to the increased utilization of our bank line of credit
compared to the comparable period, an increase in interest rates, as well as the amortization of fees charged to increase
our operating line to $210,000 in the fourth quarter of 2017.
Net income and comprehensive income for the year ended December 31, 2018 was a record $33,769, an increase
of 16.2% from net income and comprehensive income of $29,059 for the same period in the prior year. Basic and
14 • ATRIUM MORTGAGE INVESTMENT CORPORATION • 2018 • MANAGEMENT’S DISCUSSION AND ANALYSIS
diluted earnings per common share were $0.95 and $0.94, respectively, for the year ended December 31, 2018,
compared with $0.95 basic and $0.94 diluted, for the comparable period in the previous year. Earnings per share was
consistent with the comparative period due to the increase in earnings for the year being offset by a higher number of
shares outstanding as a result of the two public offering issuances of shares completed in September 2017 and March
2018 as well as conversions of convertible debentures into shares during the year.
During the year ended December 31, 2018, we funded mortgages aggregating $329,453. Of those advances,
$270,682 were first mortgages, representing 82.2% of the total loans funded. British Columbia advances were
$104,561, advances of $372 were on properties in Alberta, $14,247 were non-GTA Ontario, $4,838 were on properties
in Saskatchewan and the remaining $205,435 were for mortgages on properties located in the Greater Toronto Area.
There were $255,128 of repayments during the period.
Liquidity and capital resources
At December 31, 2018, we had borrowings under credit facility (excluding unamortized finance costs) of $148,330.
The credit facility, currently authorized for up to $210,000 (December 31, 2017 – $210,000), is provided by a syndicate
of four major chartered banks, drawn through a combination of bankers’ acceptances and bank loans to minimize our
borrowing costs. At any time during the term of the credit facility, we have the one-time right to increase the credit
facility by up to $30,000 (such that the total maximum availability would be up to $240,000). We were in compliance
with the covenants in the credit facility as at December 31, 2018, and we expect to remain in compliance with such
covenants going forward.
At December 31, 2018, we had five series of convertible debentures outstanding, with a total book value of
$157,289, and a face value (and maturity value) of $161,821. (For additional information on the operating credit
facility and the debentures, please refer to notes 7 and 9, respectively, of our accompanying consolidated 2018
financial statements.)
During the year ended December 31, 2018, we completed a bought deal public offering and issued 2,400,000
common shares for gross proceeds of $30,000. The full amount of the overallotment option was exercised, resulting
in the issuance of an additional 360,000 common shares for gross proceeds of $4,500.
The growth in our mortgage portfolio has been financed by the issuance of common shares, issuance of convertible
debt, and through the operating credit facility. We expect to be able to generate sufficient funds for future growth in
net mortgage loan investments by utilizing those three sources of funds. As at December 31, 2018, total debt
(consisting of borrowings under operating credit facility and convertible debentures) was 44.0% of total assets
(December 31, 2017 – 43.7%). Our policy and our banking arrangements both require that total debt not exceed 50%
of total assets.
Changes in financial position
During the year ended December 31, 2018, we completed one public offering of common shares, issuing a total of
2,760,000 common shares for gross proceeds of $34,500, including the full amount of the overallotment option.
Additionally, in July 2018, we completed a public offering of 5.50% convertible debentures maturing December 31,
2025 for gross proceeds of $34,500, which included the full amount of the overallotment option. The net proceeds of
these two public offerings were used to repay our indebtedness under our credit facility and fund current mortgage
loans. Cash used in financing activities also included net advances of the operating facility of $3,176, dividends paid
of $29,268 and interest paid of $15,386, resulting in net cash provided by financing activities of $24,437.
Cash used in investing activities during the year ended December 31, 2018 consisted primarily of advances on
mortgage loan investments of $306,025, less repayments received of $240,404, for net cash invested in mortgage loan
investments of $65,621 to support the growth in our mortgage portfolio.
Borrowings under our operating credit facility increased to $148,330 at December 31, 2018, from $145,154 at
December 31, 2017, due to the growth in our portfolio which was offset somewhat by proceeds received from the
issuances of shares and convertible debentures during the period, as described above.
Accounts payable and accrued liabilities, including accrued convertible debenture interest, were $3,104 at
December 31, 2018 compared to $4,596 at December 31, 2017. This decrease is due to timing differences in the
convertible debenture interest payment dates. Dividends payable were $4,205 at December 31, 2018 up from $3,769
at December 31, 2017. The increase is due to an increased number of shares outstanding at December 31, 2018 and a
higher regular monthly dividend for December 2018 compared to December 2017.
Share capital increased to $385,261 at December 31, 2018 from $345,325 at December 31, 2017 due to issuances
of our common shares completed during 2018.
MANAGEMENT’S DISCUSSION AND ANALYSIS • 2018 • ATRIUM MORTGAGE INVESTMENT CORPORATION • 15
Contractual obligations
Contractual obligations due at December 31, 2018 were as follows:
December 31, 2018
Borrowings under credit facility
Accounts payable and accrued
liabilities
Accrued convertible debenture
interest
Dividends payable
Convertible debentures
Total contractual obligations
Total
obligation
$148,330
Within 1
year
$ –
1 to 3
years
$148,330
3 to 5
years
$ –
More than
5 years
$ –
2,093
2,093
–
–
–
1,011
4,205
161,821
$317,460
1,011
4,205
29,271
$ 36,580
–
–
72,750
$221,080
–
–
–
$ –
–
–
59,800
$ 59,800
We have commitments to advance additional funds under existing mortgages of $75,601 and for new mortgages of
$33,450 at December 31, 2018 (December 31, 2017 – $65,005, $9,489). Generally, outstanding commitments are
expected to be funded within the next 24 months. However, our experience has been that a portion of the unfunded
amounts on existing mortgages will never be drawn.
Off-balance sheet arrangements
As at December 31, 2018, we had $7,908 (December 31, 2017 – $3,640) of letters of credit (LCs) outstanding which
were issued under our operating credit facility. The maximum available by way of LCs under our operating credit
facility at December 31, 2018 was $10,000. This maximum was increased to $20,000 as part of an amendment to the
credit facility completed on January 2, 2019. LCs represent irrevocable assurances that our banks will make payments
in the event that a customer cannot meet its obligations to third parties. LCs carry the same credit risk, recourse and
collateral security requirements as mortgages extended to customers.
Transactions with related parties
Transactions with related parties are in the normal course of business and are recorded at the exchange amount, which
is the amount of consideration established and agreed to by the related parties, and are measured at fair value.
The manager is responsible for our day-to-day activities. We incurred management and mortgage servicing fees from
a subsidiary of the manager of $6,279 for the year ended December 31, 2018 (year ended December 31, 2017 –
$5,470). Mr. Robert G. Goodall is a director and part of the key management personnel of the manager, received
compensation from the manager, and is also a director of Atrium. The management agreement between us and the
manager contains provisions for the payment of termination fees to the manager in the event that the management
agreement is terminated in certain circumstances. The manager also acts as broker for our mortgages. The manager
receives origination fees from the borrowers of up to 1% of the amount being funded; origination fees in excess of 1%
are split between the manager and Atrium.
Certain of our mortgages are shared with other investors. As at December 31, 2018, companies owned by a director
and officer of the company (Robert G. Goodall) had co-invested in one syndicated secured mortgage. The total amount
of the mortgage is $50,484 (December 31, 2017 – one syndicated mortgage of $45,360) of which the company’s share
is $25,242 (December 31, 2017 – $22,680).
As at December 31, 2018, the company had two mortgages receivable from borrowers over which a director and
officer of the company (Robert G. Goodall) has joint control. (December 31, 2017 – two).
A secured mortgage loan with a total gross commitment of $3,490 (December 31, 2017 – $3,490), of which
$3,394 (December 31, 2017 – $3,071) had been funded at December 31, 2018. During the year ended
December 31, 2018, the company recognized net mortgage interest and fees of $288 (year ended December
31, 2017 – $19) from this mortgage receivable.
A secured mortgage loan with a total gross commitment of $8,738 (December 31, 2017 – $8,738). The
company’s share of the commitment is $2,330 (December 31, 2017 – $2,330), of which $2,330 had been
funded at December 31, 2018 (December 31, 2017 – $2,330). During the year ended December 31, 2018, the
company recognized net mortgage interest and fees of $228 (year ended December 31, 2017 – $105) from
this mortgage receivable.
16 • ATRIUM MORTGAGE INVESTMENT CORPORATION • 2018 • MANAGEMENT’S DISCUSSION AND ANALYSIS
Critical accounting estimates and policies
Our consolidated annual financial statements for the year ended December 31, 2018 are prepared in accordance with
Canadian generally accepted accounting principles and IFRS, as set out in Part I of the CPA Canada Handbook. The
preparation of consolidated financial statements in accordance with IFRS requires management to make estimates,
assumptions and judgements that affect the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the reporting date and the reported amounts of revenue and expenses during the reporting
period.
The most subjective of these estimates relate to:
(a) determining whether the cash flows from the mortgages receivable represent solely payments of principal
and interest (SPPI);
(b) the measurement of impairment losses for mortgages receivable, in particular: measurement of credit risk to
determine whether there has been a significant increase in credit risk since initial recognition; the assessment
of when mortgages receivable become impaired and the incorporation of forward-looking information to
determine expected credit losses; and
(c) the measurement of the liability and equity components of the convertible debentures which depend upon the
estimated market interest rates for a comparable debenture without the convertibility feature.
We believe that management’s estimates are appropriate; however, actual results could differ from the amounts
estimated. Estimates and underlying assumptions are reviewed each quarter. Revisions to accounting estimates are
recognized in the period in which the estimate is revised and in any future periods affected.
Mortgages receivable
Mortgages receivable are a financial asset and are recognized initially at fair value and are subsequently carried at
amortized cost using the effective interest method. All our mortgages receivable are held in a single business model.
We have concluded that our business model is to hold mortgages receivable to collect contractual cash flows that
represent solely payments of principal and interest.
Mortgages receivable and commitments are assessed for impairment at the end of each reporting period using an
expected credit loss (ECL) model. The ECL model uses a three-stage impairment approach based on changes in the
credit risk of the commitment or mortgage receivable since initial recognition. Credit quality is assessed at each
reporting period and results in commitments and mortgages receivable being moved between stages, as necessary.
Significant credit judgement is required when assessing evidence of credit impairment and estimating expected credit
losses. For commitments and mortgages receivable, the company considers a number of past events, current conditions
and forward-looking information when assessing if there has been a significant increase or subsequent decrease in
credit risk. The company considers a commitment or mortgage receivable to be impaired when there is objective
evidence that one or more events have occurred that have an unfavourable impact on estimated future cash flows such
that there is no longer reasonable assurance as to the timely collection of the full amount of principal and interest.
An ECL represents the difference between the present value of all contractual cash flows that are due under the
original terms of the contract and the present value of all cash flows expected to be received. The company’s
application of the concept uses three inputs to measure ECLs for commitments and mortgages receivable classified as
Stage 1: probability of default (PD), loss given default (LGD) and exposure at default (EAD). These inputs are
determined at each reporting period using historical data and current conditions. Adjustments may be made to the
probability of default if the effects of, for example, forecasts of housing prices, employment and interest rates, are
expected to be significant over the term of the mortgage. The inputs for Stage 1 mortgages receivable are calculated
separately for (i) mortgages receivable on single-family residences and (ii) mortgages receivable on all other properties
on the basis of differences in the credit risk of each. The ECL is assessed individually for each commitment and
mortgage receivable classified as either Stage 2 or Stage 3. For mortgages receivable in these stages, forecast future
information specific to the loan (for example, forecasts of real estate prices) is incorporated when assessing the cash
flows expected to be received.
Mortgages receivable are presented on the consolidated statements of financial position net of the provision for
mortgage losses. A loss on a mortgage is written off against the related provision for mortgage losses when there is
no reasonable expectation of further recovery, which is the point at which the underlying real property has been
liquidated and claims against guarantors, if any, are unlikely to recover any further losses. For any mortgages
receivable that have been written off but where guarantors are still being pursued for collection, no recovery is
recognized until it is virtually certain of collection. For further information see Note 3 (a) and (c) of our 2018
consolidated annual financial statements.
MANAGEMENT’S DISCUSSION AND ANALYSIS • 2018 • ATRIUM MORTGAGE INVESTMENT CORPORATION • 17
Revenue recognition
Mortgage interest and fees revenues are recognized in the statement of income and comprehensive income using the
effective interest method. Mortgage interest and fees revenues include our share of any fees received, as well as the
effect of any discount or premium on the mortgage. Interest revenue is calculated on the gross carrying amount for
mortgages receivable in Stages 1 and 2 and on the net carrying amount for mortgages receivable in Stage 3.
The effective interest method derives the interest rate that discounts the estimated future cash receipts during the
expected life of the mortgage receivable (or, where appropriate, a shorter period) to its carrying amount. When
calculating the effective interest rate, future cash flows are estimated considering all contractual terms of the financial
instrument, but not future credit losses. The calculation of the effective interest rate includes all fees and transaction
costs paid or received. Fees and transaction costs include incremental revenues and costs that are directly attributable
to the acquisition or issuance of the mortgage.
Convertible debentures
The convertible debentures can be converted into our common shares at the option of the investor. They are compound
financial instruments with two components: a financial liability, and a call option which is an equity instrument. The
fair value of the liability component is measured as of the date that the debentures were issued, and the equity
instrument is valued on that date based upon the difference between the fair value of the debenture and the fair value
of the liability component.
The measurement of the fair value of the liability component is based upon market rates of interest on similar debt
instruments without the conversion feature. Expenses of issue are allocated between the two components on a pro-
rata basis. The book value of the debt is accreted up to its face value over the life of the financial liability using the
effective interest method, which provides for the application of a constant interest rate over the term of the debt. The
value of the equity component is not re-measured subsequent to its initial measurement date.
Income taxes
We are, and intend to maintain our status as, a MIC, and as such are not taxed on income provided that it flows through
to our shareholders as dividends during the year or within 90 days after December 31 each year. It is our policy to pay
such dividends to our shareholders to remain non-taxable. Accordingly, no provision for current or future income
taxes is required.
Future changes in accounting policies
Various pronouncements have been issued by the International Accounting Standards Board (IASB) or IFRS
Interpretations Committee (IFRIC) that will be effective for future accounting periods. The company closely monitors
new accounting standards as well as amendments to existing standards and assesses what impact, if any, they will
have on the consolidated financial statements.
Controls and procedures
Our Chief Executive Officer (CEO) and Chief Financial Officer (CFO) are responsible for establishing and
maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those
terms are defined in National Instrument (NI) 52-109 – Certification of Disclosure in Issuers’ Annual and Interim
Filings.
We designed the DC&P and ICFR, the latter of which was using the framework in Internal Control – Integrated
Framework (published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and as
revised in 2013) to provide reasonable assurance that material information relating to us is made known to our CEO
and CFO during the reporting period; and information required to be disclosed by us in our filings under securities
legislation is recorded, processed, summarized and reported within the required time periods; and provide reasonable
assurance regarding the reliability of financial reporting and preparation of consolidated financial statements for
external purposes in accordance with Canadian generally accepted accounting principles (GAAP).
Our CEO and CFO evaluated the design effectiveness of the DC&P and ICFR, as defined by NI 52-109, as of
December 31, 2018. Based on this evaluation, they concluded that the designs of the DC&P and ICFR were effective
as of that date. NI 52-109 also requires Canadian public companies to disclose in their MD&A any change in ICFR
during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, ICFR. No
such change to ICFR has occurred during the most recently completed quarter.
It should be noted that a control system, no matter how well conceived and operated, can provide only reasonable,
not absolute, assurance that its objectives are met. Because of the inherent limitations in any control system, no
evaluation of control can provide absolute assurance that all control weaknesses including, for example, any instances
of fraud, have been detected. Inherent limitations include: (i) that management’s assumptions and judgements could
ultimately prove to be incorrect as conditions and circumstances vary; (ii) the impact of any undetected errors; and
18 • ATRIUM MORTGAGE INVESTMENT CORPORATION • 2018 • MANAGEMENT’S DISCUSSION AND ANALYSIS
(iii) controls may be circumvented through the unauthorized acts of individuals, by collusion of two or more people,
or by management override. The design of any system of control is also based upon assumptions as to the likelihood
of future events and there is no assurance that any design will succeed in achieving its goals under future conditions.
Outstanding share data
Our authorized capital consists of an unlimited number of common shares, of which 36,561,198 were issued and
outstanding at December 31, 2018, and 39,281,177 were issued and outstanding as at the date hereof. In addition, as
at the date hereof, 2,407,408, 2,200,827, 2,747,440, 1,693,440 and 2,211,540 common shares are issuable upon
conversion or redemption or in respect of repayment at maturity of the outstanding 5.25%, 6.25%, 5.50% (September
2021), 5.30% and the 5.50% (December 2025) convertible debentures, using the conversion price of $13.50, $13.30,
$14.65, $14.94 and $15.60 respectively, for each common share.
We also have an employee share purchase plan, a deferred share incentive plan and a dividend reinvestment plan
pursuant to which common shares are issued from time to time.
Subsequent to December 31, 2018, we announced we had entered into an underwriting agreement with a syndicate
of underwriters to purchase 2,300,000 common shares of Atrium at a price of $13.05 per share for gross proceeds of
$30,015. We also granted to the underwriters an over-allotment option to purchase up to an additional 345,000
common shares at the issue price. We received gross proceeds of $34,517 on February 8, 2019 which included exercise
of the overallotment option in full.
Risks and uncertainties
We are subject to many risks and uncertainties that may limit our ability to execute our strategies and achieve our
objectives. We have processes and procedures in place in an attempt to control or mitigate certain risks, while others
cannot be or are not mitigated. Material risks that cannot be mitigated include a significant decline in the general real
estate market, interest rates changing markedly, being unable to make mortgage loans at rates consistent with rates
historically achieved, not having adequate mortgage loan opportunities presented to us, and not having adequate
sources of bank finance available.
Under various federal, provincial and municipal laws, an owner or operator of real property could become liable
for the cost of removal or remediation of certain hazardous or toxic substances released on or in its properties or
disposed of at other locations. In rare circumstances where a mortgage is in default, we may take possession of real
property and may become liable for environmental issues as a mortgagee in possession. As part of the due diligence
performed in respect of our mortgage loan investments, we obtain a Phase I environmental audit on the underlying
real property provided as security for a mortgage, unless the manager has determined that a Phase I environmental
audit is not necessary.
Please also refer to “Forward-looking information,” below, and the “Risk Factors” section of our Annual
Information Form for the year ended December 31, 2018 which is incorporated herein by reference and is available at
www.sedar.com and at www.atriummic.com.
Forward-looking information
From time to time in our public communications we provide forward-looking statements. Such statements are
disclosures regarding possible events, conditions, results of operations or changes in financial position that are based
upon assumptions and expectations. These are not based upon historical facts but are with respect to management’s
beliefs, estimates, and intentions. Forward-looking statements generally can be identified by the use of forward-
looking terminology such as “outlook”, “objective”, “may”, “will”, “expect”, “intent”, “estimate”, “anticipate”,
“believe”, “should”, “plans” or “continue” or similar expressions suggesting future outcomes or events. Forward-
looking statements regarding earnings, possible mortgage losses, and mortgage portfolio growth are based upon
assumptions regarding performance of the economy in general and real estate markets in particular. Forward-looking
statements generally assume that our revenues and expenses continue to follow current trends, and that current trends
in our mortgage portfolio growth continue.
All forward-looking statements reflect management’s current beliefs and are based on information currently
available to management. These statements are not guarantees of future performance and are based on our estimates
and assumptions that are subject to risks and uncertainties which could cause our actual results to differ materially
from the forward-looking statements contained in this MD&A or elsewhere. Those risks and uncertainties include
risks associated with mortgage lending, competition for mortgage lending, real estate values, interest rate fluctuations,
environmental matters and the general economic environment. For other risks and uncertainties, please refer to “Risks
and uncertainties” above, and the “Risk Factors” section of our Annual Information Form for the year ended December
31, 2018 which is available at www.sedar.com and at www.atriummic.com. That list is not exhaustive, as other factors
MANAGEMENT’S DISCUSSION AND ANALYSIS • 2018 • ATRIUM MORTGAGE INVESTMENT CORPORATION • 19
could adversely affect our results, performance or achievements. The reader is cautioned against undue reliance on
any forward-looking statements.
Although the forward-looking information contained in this MD&A is based upon what management believes are
reasonable assumptions, there can be no assurance that actual results will be consistent with these forward-looking
statements. We will not publicly update or revise any forward-looking statement, whether as a result of new
information, future events or otherwise, unless required to do so by law.
Responsibility of management and the board of directors
Management is responsible for the information disclosed in this MD&A, and has in place the appropriate information
systems, procedures and controls to ensure that the information used internally by management and disclosed
externally is materially complete and reliable. In addition, our audit committee and board of directors provide an
oversight role with respect to our public financial disclosures, and have reviewed and approved this MD&A and the
unaudited interim consolidated financial statements as at December 31, 2018.
Dividend Reinvestment Plan
A Dividend Reinvestment Plan (DRIP) is available to holders of our common shares. The DRIP allows participants
to have their monthly cash dividends reinvested in additional common shares, at a discount of 2% from the market
price. Shareholders who wish to enroll or who would like further information about the DRIP should contact their
broker or our agent for the DRIP, Computershare Trust Company of Canada, at 1 (800) 564-6253 or
www.computershare.com.
Additional information
Additional information about Atrium, including our Annual Information Form for the year ended December 31, 2018,
is available on SEDAR at www.sedar.com. You may also obtain further information about us from our website at
www.atriummic.com, by telephone at (416) 607-4200, or by email at info@atriummic.com.
Consolidated
Financial Statements
Year Ended(cid:1)
December 31, 2018
CANADA’S PREMIER NON-BANK LENDER™
MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL REPORTING
To the shareholders of
Atrium Mortgage Investment Corporation:
The management of Atrium Mortgage Investment Corporation (Atrium) is responsible for the preparation,
presentation and integrity of these consolidated financial statements, and the accompanying Management’s
Discussion and Analysis. This responsibility includes the selection and consistent application of appropriate
accounting principles and methods in addition to making the judgements and estimates necessary to prepare
the consolidated financial statements in accordance with International Financial Reporting Standards as
issued by the International Accounting Standards Board.
Management of Atrium is responsible to provide reasonable assurance that assets are safeguarded and
that relevant and reliable financial information is produced. We are required to design a system of internal
controls and certify as to the design and operating effectiveness of internal controls over financial reporting.
We have implemented a system of internal controls that we believe provides reasonable assurance in all
material respects that transactions are authorized, assets are safeguarded and financial records are reliable
for producing consolidated financial statements. Crowe Soberman LLP was appointed as the independent
auditor by a vote of Atrium’s shareholders to audit the consolidated financial statements; their report
appears on the next page.
The board of directors, through the Audit Committee comprised solely of independent directors, is
responsible for determining that management fulfills its responsibilities in the preparation of these
consolidated financial statements and the financial control of operations. The Audit Committee
recommends the independent auditors for appointment by the shareholders, and it meets regularly with
senior and financial management to discuss internal controls and financial reporting matters. The
independent auditors have unrestricted access to the Audit Committee.
These consolidated financial statements and accompanying Management’s Discussion and Analysis
have been approved by the board of directors based upon the review and recommendation of the Audit
Committee.
Toronto, Canada
February 13, 2019
“Robert G. Goodall”
Robert G. Goodall
President and Chief Executive Officer
“Jennifer Scoffield”
Jennifer Scoffield
Chief Financial Officer
INDEPENDENT AUDITORS' REPORT
To the Shareholders of Atrium Mortgage Investment Corporation
Opinion
We have audited the consolidated financial statements of Atrium Mortgage Investment Corporation and
its subsidiaries (the Group), which comprise the consolidated statements of financial position as at
December 31, 2018 and December 31, 2017, and the consolidated statements of income and
comprehensive income, consolidated statements of changes in shareholders' equity and consolidated
statements of cash flows for the years then ended, and notes to the consolidated financial statements,
including a summary of significant accounting policies.
In our opinion, the accompanying consolidated financial statements present fairly, in all material
respects, the consolidated financial position of the Group as at December 31, 2018 and December 31,
2017, and its consolidated financial performance and its consolidated cash flows for the years then
ended in accordance with International Financial Reporting Standards.
Basis for Opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards. Our
responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit
of the Consolidated Financial Statements section of our report. We are independent of the Group in
accordance with the ethical requirements that are relevant to our audit of the consolidated financial
statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these
requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Other Information
Management is responsible for the other information. The other information comprises:
Management's Discussion and Analysis
The information, other than the consolidated financial statements and our auditors' report
thereon, in the Annual Report
Our opinion on the consolidated financial statements does not cover the other information and we do not
express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the
other information and, in doing so, consider whether the other information is materially inconsistent with
the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be
materially misstated. If, based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact. We have nothing to report in
this regard.
Responsibilities of Management and Those Charged with Governance for the Consolidated Financial
Statements
Management is responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with International Financial Reporting Standards, and for such internal control
as management determines is necessary to enable the preparation of consolidated financial statements
that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group's
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless management either intends to liquidate the Group or
to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Group's financial reporting process.
Auditors' Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as
a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors'
report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with Canadian generally accepted auditing standards will always
detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The
risk of not detecting a material misstatement resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or
the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group's internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the Group's ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in
our auditors' report to the related disclosures in the consolidated financial statements or, if such
disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditors' report. However, future events or conditions
may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements,
including the disclosures, and whether the consolidated financial statements represent the
underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and performance of the group audit.
We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope
and timing of the audit and significant audit findings, including any significant deficiencies in internal
control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
The engagement partner on the audit resulting in this independent auditors' report is Chandor Gauthier.
Crowe Soberman LLP
Chartered Professional Accountants
Licensed Public Accountants
Toronto, Canada
February 13, 2019
CONSOLIDATED FINANCIAL STATEMENTS • 2018 • ATRIUM MORTGAGE INVESTMENT CORPORATION •27
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(in thousands of Canadian dollars)
Notes
2018
2017
December 31
Assets
Mortgages receivable
Foreclosed properties
Prepaid expenses
Total assets
Liabilities
Borrowings under credit facility
Accounts payable and accrued liabilities
Accrued convertible debenture interest
Dividends payable
Convertible debentures
Total liabilities
Shareholders’ equity
Share capital
Deferred share incentive plan units
Equity component of convertible debentures
Contributed surplus
Retained earnings (deficit)
Total shareholders’ equity
Total liabilities and shareholders’ equity
5
6
7
8
9
$ 682,721
17,007
22
$ 699,750
$ 147,846
2,093
1,011
4,205
157,289
312,444
385,261
644
1,675
645
(919)
387,306
$ 699,750
$ 626,756
1,064
39
$ 627,859
$ 144,454
1,960
2,636
3,769
125,976
278,795
345,325
802
1,322
645
970
349,064
$ 627,859
Commitments
7, 13(d)
The accompanying notes are an integral part of these consolidated financial statements.
Approved on behalf of the board of directors:
“Robert Goodall”
Robert Goodall, Director
“Mark Silver”
Mark Silver, Director
28 • ATRIUM MORTGAGE INVESTMENT CORPORATION • 2018 • CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(in thousands of Canadian dollars, except for number of common shares)
Notes
Balance, December 31, 2016
Shares issued by prospectus
Shares issued under dividend reinvestment plan
Shares issued under employee share purchase plan
Shares issued under deferred share incentive plan
Issue costs
Share-based payments
Equity component of convertible debentures issued
Issue costs attributable to equity component of
convertible debentures issued
Net income and comprehensive income
Dividends declared
Balance, December 31, 2017
Impact of adoption of IFRS 9
Balance, restated at January 1, 2018
Shares issued by prospectus
Shares issued under dividend reinvestment plan
Shares issued under employee share purchase plan
Shares issued under deferred share incentive plan
Shares issued on debenture conversion
Issue costs
Share-based payments
Equity component of convertible debentures issued
Issue costs attributable to equity component of
convertible debentures issued
Net income and comprehensive income
Dividends declared
Balance, December 31, 2018
10
10
11
11
9
9
2(b)
10
10
11
9
11
9
9
Share capital
Number
27,105,703
5,827,050
293,622
11,620
14,144
–
–
–
Amount
$ 275,785
69,051
3,481
142
161
(3,295)
–
–
Deferred
share
incentive
plan units
592
$
–
–
–
(161)
–
371
–
$
Equity
component
of convertible
debentures
1,062
–
–
–
–
–
–
274
–
–
–
33,252,139
–
33,252,139
2,760,000
311,339
12,109
38,020
187,591
–
–
–
–
–
–
345,325
–
345,325
34,500
3,954
155
450
2,491
(1,614)
–
–
–
–
–
36,561,198
–
–
–
$ 385,261
$
–
–
–
802
–
802
–
–
–
(450)
–
–
292
–
–
–
–
644
(14)
–
–
1,322
–
1,322
–
–
–
–
(12)
–
–
383
(18)
–
–
1,675
$
Contributed
surplus
Retained
earnings
(deficit)
$
$
645
–
–
–
–
–
–
–
–
–
–
645
–
645
–
–
–
–
–
–
–
–
–
–
–
645
$
$
456
–
–
–
–
–
–
–
–
29,059
(28,545)
970
(2,000)
(1,030)
–
–
–
–
–
–
–
–
–
33,769
(33,658)
(919)
Total
$ 278,540
69,051
3,481
142
–
(3,295)
371
274
(14)
29,059
(28,545)
349,064
(2,000)
347,064
34,500
3,954
155
–
2,479
(1,614)
292
383
(18)
33,769
(33,658)
$ 387,306
Dividends amounted to $0.94 per share for the year ended December 31, 2018 (year ended December 31, 2017 – $0.92).
The accompanying notes are an integral part of these consolidated financial statements.
CONSOLIDATED FINANCIAL STATEMENTS • 2018 • ATRIUM MORTGAGE INVESTMENT CORPORATION • 29
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(in thousands of Canadian dollars, except for per share amounts)
Revenues
Mortgage interest and fees
Years ended December 31
Notes
2018
2017
$
58,316
$ 50,359
Operating expenses
Mortgage servicing and management fees
Transfer agent, regulatory fees and investor relations
Share-based payments
Professional fees
Directors’ expense
Administration and general
Loss from sale of foreclosed property
Provision for mortgage losses
Total operating expenses
8
8, 11
8
6
5(b)
6,279
326
292
172
202
150
–
1,800
9,221
5,470
322
371
128
195
216
19
1,850
8,571
Income before financing costs
49,095
41,788
Financing costs
Interest on convertible debentures
Interest and other bank charges
Total financing costs
9,373
5,953
15,326
7,734
4,995
12,729
Net income and comprehensive income for the year
$
33,769
$ 29,059
Earnings per common share
Basic
Diluted
12
12
$
$
0.95
0.94
$
$
0.95
0.94
The accompanying notes are an integral part of these consolidated financial statements.
30 • ATRIUM MORTGAGE INVESTMENT CORPORATION • 2018 • CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of Canadian dollars)
Cash provided by (used in):
Operating activities
Net income and comprehensive income for the year
Adjustments to determine net cash flows provided by (used in)
operating activities
Share-based payments
Mortgage interest and fees earned
Mortgage interest and fees received
Interest on convertible debentures expensed
Interest and other bank charges expensed
Provision for mortgage losses
Loss on disposition of foreclosed property
Changes in operating assets and liabilities
Prepaid expenses
Accounts payable and accrued liabilities
Additions to unamortized origination fees
Cash provided by operating activities
Investing activities
Cash advances of mortgages receivable
Cash repayments of mortgages receivable
Improvements and expenditures on foreclosed properties
Proceeds from disposition of foreclosed assets
Cash used in investing activities
Financing activities
Advances under credit facility
Repayments under credit facility
Interest on convertible debentures paid
Interest and other bank charges paid
Issuance of common shares
Share capital issue costs
Issuance of convertible debentures
Convertible debenture issue costs
Cash dividends paid
Cash provided by financing activities
Increase (decrease) in cash
Cash, beginning of year
Cash, end of year
Years ended December 31
2018
2017
$
33,769
$
29,059
292
(58,316)
48,217
9,373
5,953
1,800
–
17
(370)
746
41,481
(306,025)
240,404
(297)
–
(65,918)
540,628
(537,452)
(9,715)
(5,671)
34,655
(1,614)
34,500
(1,626)
(29,268)
24,437
–
–
–
$
371
(50,359)
41,977
7,734
4,995
1,850
19
4
816
873
37,339
(353,730)
263,223
(399)
539
(90,367)
557,729
(558,300)
(5,073)
(5,341)
69,193
(3,295)
25,300
(1,237)
(25,948)
53,028
–
–
–
$
The accompanying notes are an integral part of these consolidated financial statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS • 2018 • ATRIUM MORTGAGE INVESTMENT CORPORATION • 31
NOTE 1 – NATURE OF OPERATIONS
Atrium Mortgage Investment Corporation (the “company”) is a corporation domiciled in Canada,
incorporated under the Ontario Business Corporations Act. The address of the company’s registered head
office and principal place of business is Suite 900, 20 Adelaide Street East, Toronto, Ontario M5C 2T6.
The company is a Mortgage Investment Corporation (MIC) as defined in Section 130.1(6) of the Canada
Income Tax Act (ITA). Accordingly, the company is not taxed on income provided that its taxable income is
paid to its shareholders in the form of dividends within 90 days after December 31 each year. Such dividends
are generally treated by shareholders as interest income, so that each shareholder is in the same position as if
the mortgage investments made by the company had been made directly by the shareholder.
The company’s common shares are listed on the Toronto Stock Exchange (TSX) under the symbol AI
and its convertible debentures are listed under the symbols AI.DB, AI.DB.A, AI.DB.B, AI.DB.C and
AI.DB.D.
NOTE 2 – BASIS OF PRESENTATION
(a) Statement of compliance
These consolidated financial statements have been prepared in accordance with International Financial
Reporting Standards (IFRS), as set out in Part I of the CPA Canada Handbook – Accounting. Except as
described in Note 2(b), significant accounting policies have been consistently applied in the preparation of
these consolidated financial statements, which were authorized for issuance by the board of directors on
February 13, 2019.
(b) New and amended standards and interpretations
Effective January 1, 2018, the company adopted IFRS 9 Financial Instruments (IFRS 9), which replaced IAS
39 Financial Instruments: Recognition and Measurement (IAS 39). IFRS 9 was adopted retrospectively
without restatement, as allowed under the standard’s transitional provisions. IFRS 9 addresses the
measurement of financial assets and financial liabilities, including the impairment of financial assets and
other commitments.
As a result of the application of IFRS 9, the company changed its accounting policies for financial assets
and mortgages receivable effective January 1, 2018, as described in Notes 3(a), (b), (c) and (d). The IAS 39
accounting policies for financial instruments that were applied prior to January 1, 2018 are included in Note
3(f).
Adoption of IFRS 9 had no effect on the measurement of the company’s financial assets and financial
liabilities, which continue to be measured at amortized cost subsequent to their initial recognition.
The effect on the allowance for credit losses on January 1, 2018 has been recognized as an adjustment
to opening retained earnings in the consolidated statements of changes in shareholders’ equity.
(c) Basis of measurement
These consolidated financial statements are prepared on the historical cost basis.
(d) Functional and presentation currency
These consolidated financial statements are presented in Canadian dollars, which is also the company’s
functional currency. Dollars are expressed in thousands except for per share amounts or where the context
requires otherwise.
(e) Principles of consolidation
These consolidated financial statements include the accounts of the company and CMCC Sisyphus LP, which
is considered to be a subsidiary for financial reporting purposes. Consolidation commenced the date the
company obtained control and continues until control ceases. Atrium has consolidated the subsidiary from
August 5, 2016, the date of its formation. All transactions and balances between the company and the
subsidiary have been eliminated, including unrealized gains and losses, if any.
32 • ATRIUM MORTGAGE INVESTMENT CORPORATION • 2018 • NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 – BASIS OF PRESENTATION (continued)
(f) Use of estimates and judgements
The preparation of consolidated financial statements in accordance with IFRS requires management to make
estimates, assumptions and judgements that affect the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the reporting date and the reported amounts of revenue and expenses
during the reporting period.
The most subjective of these estimates relate to:
(a) determining whether the cash flows from the mortgages receivable represent solely payments
of principal and interest (SPPI);
(b) the measurement of impairment losses for mortgages receivable, in particular: measurement of
credit risk to determine whether there has been a significant increase in credit risk since initial
recognition; the assessment of when mortgages receivable become impaired and the
incorporation of forward-looking information to determine expected credit losses; and
(c) the measurement of the liability and equity components of the convertible debentures which
depend upon the estimated market interest rates for a comparable debenture without the
convertibility feature.
Management believes that its estimates are appropriate; however, actual results could differ from the
amounts estimated. Estimates and underlying assumptions are reviewed each quarter. Revisions to
accounting estimates are recognized in the period in which the estimate is revised and in any future periods
affected.
NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES
(a) Financial instrument assets – initial recognition and measurement
Financial instrument assets are initially recognized when the company becomes a party to a contract. On
initial recognition, the measurement category is determined, based on: (i) the business model under which
the asset is held, and (ii) the contractual cash flow characteristics of the instrument.
Upon initial recognition, financial assets are measured as either:
Fair value through profit and loss (FVTPL) – which is the required measurement classification for
instruments that are held for trading and derivative assets;
Amortized cost – if the instrument is held within a business model whose objective is to collect
contractual cash flows and the cash flows represent SPPI;
Fair value through other comprehensive income (FVOCI) – which is required for debt instruments
held in a dual-purpose business model, to collect contractual cash flows and to sell the instruments
and can be irrevocably elected at initial recognition provided they have not been designated as
FVTPL and are not held for trading; or
Designated as FVTPL – available on initial recognition provided certain criteria are met.
All of the company’s mortgages receivable are held in a single business model. The company has
concluded that its business model is to hold mortgages receivable to collect contractual cash flows for the
following reasons:
The performance of the mortgage portfolio is assessed on the basis of effective yield, and not on a
fair value basis, whether realized or unrealized.
Neither key management compensation nor remuneration paid to the company’s manager is based
on the fair values of mortgages.
Historically the company has not sold, and in future has no expectations to sell, any of its
mortgages receivable. While the company may decrease its interest in a syndicated mortgage
receivable by transferring its interest, at its amortized cost carrying amount, to another lender in
the syndicate, such transfers are consistent with the business model of holding mortgages
receivable to collect contractual cash flows.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS • 2018 • ATRIUM MORTGAGE INVESTMENT CORPORATION • 33
NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES (continued)
(a) Financial instrument assets – initial recognition and measurement (continued)
The returns earned by the company on its mortgages receivable are interest rates that are set at levels to
provide an acceptable profit margin based on the time value of money and credit risk, although other basic
lending risks (for example, the location and quality of the underlying collateral) may also be built-in. There
are no factors that give rise to variation in the return on the company’s mortgages other than the time value
of money, credit risk and other basic lending risks. Interest rates, or the credit spread for variable rate
mortgages, are set for the full term of the loan, which is considered SPPI because the rate is still based on
the time value of money and credit risk. The majority of the mortgages receivable can be prepaid after an
initial closed period with no penalty, subject to the borrower providing advance written notice according to
the terms of their mortgage so the return therefore represents SPPI.
Mortgages receivable are initially recognized at fair value and are subsequently carried at amortized cost
using the effective interest method. See Note 3 (d) Financial instruments – revenue recognition.
(b) Financial instrument liabilities – initial recognition and measurement
Financial liabilities are measured as either:
FVTPL – which is required for any financial instrument liabilities that are held for trading and for
derivative liabilities;
Designated as FVTPL – available on initial recognition if either: the instrument includes one or
more embedded derivatives and the host contract is not a financial asset; or if the designation meets
certain criteria;
Designated as at fair value – if the instrument does not meet the criteria and is designated as at
FVTPL and is not otherwise required to be measured as FVTPL, it can still be irrevocably
designated at initial recognition as at fair value, meaning that changes in fair value related to
changes in own credit risk are presented in other comprehensive income and other changes in fair
value are presented in net income; or
Amortized cost – which is the default category and is also used for any host contract that is a
financial instrument liability.
The company’s borrowings under credit facility, accounts payable and accrued liabilities, dividends
payable, accrued convertible debenture interest and the liability component of convertible debentures are
measured at amortized cost. These financial instrument liabilities are initially recognized at fair value and are
subsequently measured at amortized cost using the effective interest method.
(c) Financial instruments – impairment of assets
Loan commitments and letters of credit (collectively commitments) and mortgages receivable are assessed
for impairment at the end of each reporting period using an expected credit loss (ECL) model. The ECL
model uses a three-stage impairment approach based on changes in the credit risk of the commitment or
mortgage receivable since initial recognition. The three stages are as follows:
Credit Stage and financial assets included
Stage 1 – commitments and mortgages receivable
on initial recognition and existing assets that have
not shown a significant increase in credit risk since
initial recognition
Stage 2 – commitments and mortgages receivable
that have experienced a significant increase in
credit risk since initial recognition and up to the
date of approval of the financial statements
Stage 3 – impaired commitments and mortgages
receivable for which there is objective evidence of
impairment at the date of approval of the financial
statements
Impairment loss recognized
12-month ECL – portion of lifetime ECLs that
represent the ECL from possible default events
within the next 12 months
Lifetime ECL – expected losses from possible
default events over the expected life of the
instrument, weighted by the likelihood of loss
Lifetime ECL – expected losses from possible
default events over the expected life of the
instrument, weighted by the likelihood of loss
34 • ATRIUM MORTGAGE INVESTMENT CORPORATION • 2018 • NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES (continued)
(c) Financial instruments – impairment of assets (continued)
Credit quality is assessed at each reporting period and results in commitments and mortgages receivable
being moved between stages, as necessary. Significant judgement is required when assessing evidence of
credit impairment and estimating expected credit losses.
For commitments and mortgages receivable, the company considers a number of past events, current
conditions and forward-looking information when assessing if there has been a significant increase or
subsequent decrease in credit risk. There is a presumption in IFRS 9 that credit risk has increased significantly
once payments are 30 days past due. However, for single-family residential mortgages, the company’s
historical experience is that mortgages can become 30 days past due, but be brought up to date by the
borrower, therefore another additional risk factor also needs to be identified for the mortgage to move to
Stage 2. For single-family mortgages that are not 30 days past due, a significant increase in credit risk may
still be evidenced by the presence of one or more additional risk factors. For all other mortgages receivable,
a significant increase in credit risk is considered to have occurred if payments are 30 days past due or if one
or more additional risk factors is present.
The additional risk factors used in assessing credit risk include:
changes in the financial condition of the borrower;
responsiveness of the borrower;
other borrower specific information that may be available, without consideration of collateral;
current economic conditions: interest rates, housing prices, real estate market statistics and
employment statistics; and
supportable forward-looking information: macro-economic factors, such as forecast real estate
values and interest rate forecasts.
Determining whether there has been a significant increase in credit risk since initial recognition, or a
subsequent reduction in credit risk back to the level at initial recognition, requires the exercise of significant
judgement.
The company considers a commitment or mortgage receivable to be impaired when there is objective
evidence that one or more events have occurred that have an unfavourable impact on estimated future cash
flows such that there is no longer reasonable assurance as to the timely collection of the full amount of
principal and interest.
The company considers a commitment or mortgage receivable to be in default if payments are greater than
90 days past due for single-family residential mortgages or 30 days past due for all other mortgages, or if an
event of default has occurred under the terms of the mortgage commitment, including: non-payment of
property taxes, a material adverse change in the financial position of the borrower and/or guarantors or a
material adverse change in the property given as security. These definitions are consistent with industry
practice.
An ECL represents the difference between the present value of all contractual cash flows that are due
under the original terms of the contract and the present value of all cash flows expected to be received. The
company’s application of the concept uses three inputs to measure ECLs for commitments and mortgages
receivable classified as Stage 1: probability of default (PD), loss given default (LGD) and exposure at default
(EAD). These inputs are determined at each reporting period using historical data and current conditions.
Adjustments may be made to the probability of default if the effects of, for example, forecasts of housing
prices, employment and interest rates, are expected to be significantly different over the term of the mortgage.
The inputs for Stage 1 mortgages receivable are calculated separately for (i) mortgages receivable on single-
family residences and (ii) mortgages receivable on all other properties on the basis of differences in the credit
risk of each. The ECL is assessed individually for each commitment and mortgage receivable classified as
either Stage 2 or Stage 3. For mortgages receivable in these stages, forecast future information specific to the
loan (for example, forecasts of real estate prices) is incorporated when assessing the cash flows expected to
be received.
Mortgages receivable are presented on the statements of financial position net of the provision for
mortgage losses. A loss on a mortgage is written off against the related provision for mortgage losses when
there is no reasonable expectation of further recovery, which is the point at which the underlying real property
has been liquidated and claims against guarantors, if any, are unlikely to recover any further losses. For any
mortgages receivable that have been written off but where guarantors are still being pursued for collection,
no recovery is recognized until virtually certain of collection.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS • 2018 • ATRIUM MORTGAGE INVESTMENT CORPORATION • 35
NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES (continued)
(d) Financial instruments - revenue recognition
Mortgage interest and fees revenues are recognized in the statements of income and comprehensive income
using the effective interest method. Mortgage interest and fees revenues include the company’s share of any
fees received, as well as the effect of any discount or premium on the mortgage. Interest revenue is calculated
on the gross carrying amount for mortgages receivable in Stages 1 and 2 and on the net carrying amount for
mortgages receivable in Stage 3 (see Note 3(c)).
The effective interest method derives the interest rate that discounts the estimated future cash receipts
during the expected life of the mortgage receivable (which is the contractual life, if a shorter period is not
expected) to its carrying amount. When calculating the effective interest rate, future cash flows are estimated
considering all contractual terms of the financial instrument, but not future credit losses (see Note 3(c)). The
calculation of the effective interest rate includes all fees and transaction costs paid or received. Fees and
transaction costs include incremental revenues and costs that are directly attributable to the acquisition or
issuance of the mortgage.
(e) Financial instruments – derecognition
Financial assets are derecognized when the contractual rights to receive cash flows from the asset expire.
When the company exercises its security and takes title to the underlying real estate, a mortgage receivable
is derecognized on the date of foreclosure.
Financial liabilities are derecognized when the obligation under the liability is discharged, cancelled, or
expires.
(f) Financial instruments – IAS 39 accounting policy, applied prior to January 1, 2018
Financial assets – classification, initial recognition and measurement (IAS 39)
Classification of financial assets depends upon the purpose for which the financial assets were acquired.
Management determines the classification of financial assets at initial recognition. Mortgages receivable are
classified as loans and receivables. Loans and receivables are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market.
Loans and receivables are initially recognized at fair value plus transaction costs and subsequently
carried at amortized cost using the effective interest method.
All financial assets are reviewed for impairment quarterly, and written down when there is evidence of
impairment.
Financial instruments – derecognition of financial assets and liabilities (IAS 39)
Financial assets are derecognized when the contractual rights to receive cash flows from the asset expire.
When the company exercises its security and takes title to the underlying real estate, a mortgage receivable
is derecognized on the date of foreclosure. Financial liabilities are derecognized when the obligation under
the liability is discharged, cancelled, or expires.
36 • ATRIUM MORTGAGE INVESTMENT CORPORATION • 2018 • NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES (continued)
(f) Financial instruments – IAS 39 accounting policy, applied prior to January 1, 2018 (continued)
Mortgages receivable (IAS 39)
A mortgage receivable, carried at amortized cost, is considered impaired when there is objective evidence at
the end of the reporting period that there has been a deterioration of credit quality subsequent to its initial
recognition to the extent that the company no longer has reasonable assurance as to the timely collection of
the full amount of principal and interest. The company assesses mortgages receivable for objective evidence
of impairment at each reporting period. The provision for mortgage losses is determined by taking into
account the following factors:
•
•
•
•
Delays in the collection of interest and principal;
The point at which management considers a loan to be in default (which is defined as 90 days
for single family residential mortgages and 30 days for all other mortgages);
Other known factors specific to the property, the borrower or the guarantor;
Economic and other real estate market conditions in the geographic area in which a borrower’s
project is located;
• Management’s judgement as to whether current economic and credit conditions are such that
the inchoate or potential losses at the reporting date are likely to be higher or lower than the
amounts suggested by historic experience; and
Any other factors that apply to a particular mortgage or group of mortgages.
•
Several of these factors involve estimates and judgements on the part of management in determining
provisions for mortgage losses. The other key estimates used for quantifying the provision for mortgage
losses are:
•
•
•
•
The period of time expected to elapse between the contractual maturity or interest and principal
repayment dates and the date at which recovery is estimated;
The amount expected to be ultimately recovered on impaired loans, taking into account the
likelihood of different outcomes;
The value of underlying security, and whether the company expects to take possession of the
property; and
The amount of any legal and other third party costs estimated to be incurred.
An impairment loss is calculated as the difference between the carrying amount of the mortgage receivable
and the present value of the estimated future cash flows discounted at the original effective interest rate.
Losses are charged to the statements of income and comprehensive income and are reflected in the provision
for mortgage losses.
If there is no objective evidence of impairment for a specific mortgage receivable, it is included in a
group of mortgages with similar credit risk characteristics and collectively assessed for impairment for losses
incurred but not identified. For the purpose of determining groups of mortgages with similar credit risk
characteristics, mortgages are grouped by the location of the underlying property and by other risk
characteristics.
Other financial liabilities (IAS 39)
Other financial liabilities are non-derivative liabilities recognized initially at fair value, net of transaction
costs, and are subsequently stated at amortized cost using the effective interest method. The company has
classified borrowings under credit facility, accounts payable and accrued liabilities, dividends payable,
accrued convertible debenture interest and the liability component of convertible debentures as other financial
liabilities.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS • 2018 • ATRIUM MORTGAGE INVESTMENT CORPORATION • 37
NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES (continued)
(g) Foreclosed properties
Foreclosed properties are properties over which the company has taken title through exercise of its security
interest. Such properties are accounted for under IAS 40 Investment Property. A foreclosed property is
recognized on the date of foreclosure and is measured initially at cost, which is the book value of the
respective mortgage net of any related provision for mortgage loss, plus any directly attributable expenditures
and transaction costs. Any costs subsequently incurred to complete the construction or development of a
foreclosed property are capitalized. After initial recognition, foreclosed properties are measured using the
cost model. Depreciation commences from the date the property is substantially complete and is recognized
when the property’s carrying amount exceeds its residual value. If the higher of the fair value and the value
in use of a foreclosed property (its recoverable amount) is less than its carrying amount, then an impairment
loss is recognized for the excess. Any impairment loss, or gain or loss realized on disposal is recognized in
the statements of income and comprehensive income.
(h) Convertible debentures
Convertible debentures can be converted into common shares of the company at the option of the investor.
They are compound financial instruments with two components: a financial liability, and a call option which
is an equity instrument. The fair value of the liability component is measured as of the date that the convertible
debentures were issued, and the equity instrument is valued on that date based upon the difference between
the fair value of the convertible debenture and the fair value of the liability component. The measurement of
the fair value of the liability component is based upon market rates of interest on similar debt instruments
without the conversion feature. Expenses of issue are allocated between the two components on a pro-rata
basis. The book value of the debt is accreted up to its face value over the life of the financial liability using
the effective interest method, which applies a constant interest rate over the term of the debt. The value of
the equity component is not remeasured subsequent to its initial measurement date.
(i) Income taxes
The company qualifies as a MIC under the ITA, and as such is not taxed on income provided that its taxable
income is distributed to its shareholders in the form of dividends within 90 days after December 31 each year.
It is the company’s policy to pay such dividends to remain non-taxable. Accordingly, no provision for current
or deferred income taxes is required.
(j) Earnings per common share
Basic earnings per common share is calculated by dividing earnings during the year by the weighted average
number of common shares outstanding during the year. Diluted earnings per share is calculated by adjusting
the income and comprehensive income attributable to common shareholders and the weighted average
number of common shares outstanding for the effects of all dilutive items such as convertible debentures and
deferred share incentive plans.
(k) Share-based payments
The company has an equity-settled share-based compensation plan for grants to eligible directors, officers,
and senior management under its deferred share incentive plan. Grants are measured based upon the fair
value of the awards granted, using the volume-weighted average trading share price for the five trading days
prior to the date of the grant.
38 • ATRIUM MORTGAGE INVESTMENT CORPORATION • 2018 • NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 – RECENT ACCOUNTING PRONOUNCEMENTS
Various pronouncements have been issued by the International Accounting Standards Board (IASB) or IFRS
Interpretations Committee (IFRIC) that will be effective for future accounting periods. The company closely
monitors new accounting standards as well as amendments to existing standards and assesses what impact,
if any, they will have on the consolidated financial statements. None of the standards issued to date are
expected to have a material effect on the consolidated financial statements.
NOTE 5 – MORTGAGES RECEIVABLE
(a) Mortgage portfolio
December 31, 2018
Outstanding % of
December 31, 20171
Outstanding % of
$
amount
Portfolio Number
Number
38
15
20
101
14
188
20
208
Property type
Low-rise residential
High-rise residential
Mid-rise residential
House and apartment
Condominium corporation
Residential portfolio
Commercial
Mortgage portfolio
Accrued interest receivable
Mortgage discount
Unamortized origination fees
Provision for mortgage losses
Mortgages receivable
1Comparative figures have been reclassified to conform with the current year presentation (Note 15)
2Measured under IAS 39
232,713
146,027
139,708
64,230
2,533
585,211
99,193
684,404
3,122
(221)
(684)
(3,900)
682,721
34.0%
21.3%
20.4%
9.4%
0.4%
85.5%
14.5%
100.0%
39 $
10
6
120
14
189
27
216
$
$
Portfolio
40.6%
13.0%
5.9%
13.6%
0.4%
73.5%
26.5%
100.0%
amount
256,581
81,939
37,071
86,287
2,887
464,765
167,622
632,387
2,537
(262)
(706)
(7,200)2
626,756
The mortgage portfolio has maturity dates between 2019 and 2030 with a weighted average remaining term
of 11.3 months at December 31, 2018 (December 31, 2017 – 12.4 months). The portfolio has a weighted
average interest rate (which excludes lender fees earned by the company) of 8.85% as at December 31, 2018
(8.44% as at December 31, 2017).
Within the mortgage portfolio, at December 31, 2018 there were 21 loans aggregating $74,399 (10.9% of the
mortgage portfolio) in which the company has a subordinate position in a syndicated mortgage (December
31, 2017 – 13 mortgages aggregating $40,550, 6.4% of the portfolio). Additional analysis of the mortgage
portfolio, including by location of underlying property and type of mortgage, is set out in the “Investment
Portfolio” section of the Management’s Discussion and Analysis for the year ended December 31, 2018.
A majority of the mortgages receivable have an initial closed period, after which the borrower may repay the
principal at any time prior to maturity, without penalty, subject to providing advance written notice according
to the terms of their mortgage.
Principal repayments based on contractual maturity dates are as follows:
Years ended December 31, 2019
2020
2021
2022
2023
Thereafter
$ 372,958
238,837
65,894
271
4,468
1,976
$ 684,404
54.5%
34.9%
9.6%
0.1%
0.7%
0.2%
100.0%
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS • 2018 • ATRIUM MORTGAGE INVESTMENT CORPORATION • 39
NOTE 5 – MORTGAGES RECEIVABLE (continued)
(b) Provision for mortgage losses
The gross carrying amounts of mortgages receivable and expected credit loss by property type are as follows:
Gross carrying amount
Property type
Low-rise residential
High-rise residential
Mid-rise residential
House and apartment
Condominium corporation
Commercial
Mortgage portfolio
Provision for mortgage losses
Property type
Low-rise residential
High-rise residential
Mid-rise residential
House and apartment
Condominium corporation
Commercial
Mortgage portfolio
Stage 1
$ 232,713
146,026
139,708
61,007
2,533
95,245
$ 677,232
Stage 1
1,395
$
875
837
207
15
571
3,900
$
As at December 31, 2018
Stage 2 Stage 3
– $
$
–
–
3,223
–
3,949
7,172 $
Total
– $ 232,713
146,026
–
139,708
–
64,230
–
2,533
–
–
99,194
− $ 684,404
$
As at December 31, 2018
Stage 2 Stage 3
– $
– $
$
–
–
–
–
–
–
–
–
–
–
− $
− $
$
Total
1,395
875
837
207
15
571
3,900
The provision for mortgage losses at December 31, 2018 is $3,900. This provision represents management’s
estimate of the ECLs on mortgages in the company’s portfolio that have not experienced a significant increase
in credit risk since initial recognition (Stage 1). The ECL was assessed individually for each mortgage
receivable and commitment classified as Stage 2 and management estimated the ECL as $nil, primarily due
to the mortgage collateral held.
The changes in the provision for mortgage losses are shown in the following table.
IFRS 9
Year ended December 31, 2018
Stage 1
Stage 2
Stage 3
Total
$ 3,300
$ 7,200
2,000
$ 9,200
IAS 39 balance, December 31, 2017
Transition adjustment (Note 2(b))
IFRS 9 opening balance, January 1, 2018
Provision for mortgage losses
Transfers to (from) Stage 1 (1)
Transfers to (from) Stage 2 (1)
Transfers to (from) Stage 3 (1)
Net remeasurement (2)
Mortgage advances
Mortgage repayments
Write-offs (3)
Balance, December 31, 2018
(1) Transfers between stages which are presumed to occur before any corresponding remeasurement of the provision.
(2) Net remeasurement represents the change in the allowance related to changes in model inputs or assumptions, including changes
(16)
–
–
115
1,752
(1,251)
–
$ 3,900
–
16
–
(16)
–
–
–
– $
(16)
16
–
1,248
1,752
(1,251)
(7,049)
3,900
–
–
–
1,149
–
–
(7,049)
− $
5,900 $
9,200
– $
$
$
in macroeconomic conditions, and changes in measurement following a transfer between stages.
(3) Represents write-offs against prior period provision for mortgage losses. Actual loss incurred was $7,100.
During the year ended December 31, 2018, the provision for mortgage losses for mortgages classified as
Stage 1 increased as a result of the overall increase in the mortgage portfolio. The decrease in the provision
for mortgage losses for mortgages classified as Stage 3 was a result of the acquisition through a credit bid of
a property on which the company had a mortgage that was classified as Stage 3 as at January 1, 2018 (See
Note 6 – Foreclosed properties). At January 1, 2018, upon adoption of IFRS 9, the gross carrying amounts
of the mortgage portfolio were classified as follows: Stage 1– $605,089, Stage 2– $10,191 and Stage 3–
$17,107.
40 • ATRIUM MORTGAGE INVESTMENT CORPORATION • 2018 • NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5 – MORTGAGES RECEIVABLE (continued)
(b) Provision for mortgage losses (continued)
IAS 39
Balance, beginning of year
Mortgages settled during the year
Provision for mortgage losses
Balance, end of year
NOTE 6 – FORECLOSED PROPERTIES
Year ended
December 31
2017
$
$
5,800
(450)
1,850
7,200
On September 1, 2018, the company submitted a conditional offer through a credit bid to purchase a property
on which the company held a mortgage, with the option that it be transferred to a nominee on closing. The
offer was accepted by the receiver and on October 12, 2018 was approved by the court. The transaction
closed on November 9, 2018.
During the year ended December 31, 2017 the company disposed of one foreclosed property with a book
value of $558 resulting in a net loss of $19. The book value at December 31, 2018 and December 31, 2017
approximates fair value.
Balance, beginning of year
Property acquired through a credit bid during the year
Capital improvements and expenditures
Disposition of foreclosed property
Balance, end of year
NOTE 7 – CREDIT FACILITY
Years ended December 31
2018
1,064
15,208
735
–
17,007
$
$
2017
1,223
–
399
(558)
1,064
$
$
At December 31, 2018, the company had a credit facility from a syndicate of four Canadian financial
institutions of $210,000 (December 31, 2017 – $210,000) at a formula rate that varies with bank prime and
the market bankers’ acceptance rate. At any time during the term of the credit facility, we have the one-time
right to increase the credit facility by up to $30,000 (such that the total maximum availability would be up to
$240,000). The weighted average rate for the year ended December 31, 2018 was 3.81% (3.12% for the year
ended December 31, 2017). Drawings under the credit facility may be by way of a bank loan (including an
overdraft facility of up to $500), bankers’ acceptances or letters of credit (LCs). LCs represent irrevocable
assurances that the company’s banks will make payments in the event that a customer cannot meet its
obligations to third parties. LCs carry the same credit risk, recourse and collateral security requirements as
mortgages extended to customers. The committed credit facility was effective November 28, 2017, has a
term to January 11, 2020, and is subject to certain conditions of drawdown and other covenants (See Note 16
– Subsequent events).
The credit facility is secured by a lien over all of the company’s assets by means of a general security
agreement. The amount that may be drawn down under the credit facility is determined by the aggregate
value of mortgages that are acceptable to the lender. Under the terms of the credit facility, covenants must be
met in respect of shareholders’ equity, debt to total assets and interest coverage. At December 31, 2018 and
December 31, 2017, the company was in compliance with these covenants.
Credit facility
Bankers’ acceptances
Bank loan
Overdraft facility
Unamortized finance costs
Borrowings under credit facility
Letters of credit
Total credit facility utilization
December 31
2018
$ 136,000
12,490
(160)
(484)
147,846
7,908
$ 155,754
2017
$ 125,000
19,900
254
(700)
144,454
3,640
$ 148,094
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS • 2018 • ATRIUM MORTGAGE INVESTMENT CORPORATION • 41
NOTE 8 – RELATED PARTY TRANSACTIONS
The company pays management and mortgage servicing fees to Canadian Mortgage Capital Corporation
(CMCC), which is the manager of the company, and responsible for its day-to-day management. The majority
beneficial owner and Chief Executive Officer (CEO) of the manager is also CEO of the company. The
company incurred management and mortgage servicing fees of $6,279 for the year ended December 31, 2018
(year ended December 31, 2017 – $5,470). The management agreement between the company and CMCC
contains provisions for the payment of termination fees to the manager in the event that the management
agreement is terminated in certain circumstances. Amounts due to related party of $529 (December 31, 2017
– $1,021) are included in accounts payable and accrued liabilities and are due to CMCC, are in the normal
course of business, are non-interest bearing, due on demand and are paid within 30 days of each period end.
Under an employee share purchase plan (ESPP) for the company’s common shares, participants,
including employees of CMCC, may contribute up to an annual maximum to the ESPP and CMCC matches
50% of the participant’s contribution. The total amount matched by CMCC for the year ended December 31,
2018 was $52 (year ended December 31, 2017 – $47).
Certain of the company’s mortgages receivable are shared with other investors. As at December 31, 2018,
companies owned by a director and officer of the company had co-invested in one syndicated secured
mortgage. The total amount of the mortgage is $50,484 (December 31, 2017 – one syndicated mortgage of
$45,360) of which the company’s share is $25,242 (December 31, 2017 – $22,680).
As at December 31, 2018, the company had two mortgages receivable from borrowers over which a
director and officer of the company has joint control (December 31, 2017 – two).
A secured mortgage loan with a total gross commitment of $3,490 (December 31, 2017 – $3,490),
of which $3,394 (December 31, 2017 – $3,071) had been funded at December 31, 2018. During
the year ended December 31, 2018, the company recognized net mortgage interest and fees of $288
(year ended December 31, 2017 – $19) from this mortgage receivable.
A secured mortgage loan with a total gross commitment of $8,738 (December 31, 2017 – $8,738).
The company’s share of the commitment is $2,330 (December 31, 2017 – $2,330), of which $2,330
had been funded at December 31, 2018 (December 31, 2017 – $2,330). During the year ended
December 31, 2018, the company recognized net mortgage interest and fees of $228 (year ended
December 31, 2017 – $105) from this mortgage receivable.
Key management includes directors and officers of the company. Compensation expenses for key
management personnel include:
Directors’ fees
Share-based payments to directors (Note 11)
Share-based payments to officers (Note 11)
Years ended December 31
2018
179
137
61
377
$
$
2017
179
136
106
421
$
$
Related party transactions are in the normal course of business and are recorded at the amount of
consideration established and agreed to by the related parties.
42 • ATRIUM MORTGAGE INVESTMENT CORPORATION • 2018 • NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 9 – CONVERTIBLE DEBENTURES
5.50%
AI.DB.D
5.30%
AI.DB.C
Convertible debenture
6.25%
5.50%
AI.DB.A
AI.DB.B
5.25%
AI.DB
Total
Year ended December 31, 2018
Issued and outstanding
face value
$ 34,500
$ 25,300
$ 40,250
$ 29,271
$ 32,500
$ 161,821
Book value –
Convertible debentures,
beginning of year
Conversion to shares
Issued
Equity component
Issue costs
Issue costs attributed to
equity component
Accretion for the year
Convertible debentures,
$
–
–
34,500
(383)
(1,626)
$ 23,916
–
–
–
–
$ 38,961
–
–
–
–
$ 31,340
(2,479)
–
–
–
$ 31,759
–
–
–
–
$ 125,976
(2,479)
34,500
(383)
(1,626)
18
118
–
208
–
338
–
325
–
294
18
1,283
end of year
$ 32,627
$ 24,124
$ 39,299
$ 29,186
$ 32,053
$ 157,289
5.50%
AI.DB.D
5.30%
AI.DB.C
Convertible debenture
6.25%
5.50%
AI.DB.A
AI.DB.B
5.25%
AI.DB
Total
Year ended December 31, 2017
Issued and outstanding
$
$
face value
Book value –
Convertible debentures,
beginning of year
Issued
Equity component
Issue costs
Issue costs attributed to
equity component
Accretion for the year
Convertible debentures,
end of year
$
–
$ 25,300
$ 40,250
$ 31,766
$ 32,500
$ 129,816
–
–
–
–
–
–
–
$
–
25,300
(274)
(1,237)
$ 38,627
–
–
–
$ 31,003
–
–
–
$ 31,468
–
–
–
$ 101,098
25,300
(274)
(1,237)
14
113
–
334
–
337
–
291
14
1,075
$ 23,916
$ 38,961
$ 31,340
$ 31,759
$ 125,976
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS • 2018 • ATRIUM MORTGAGE INVESTMENT CORPORATION • 43
NOTE 9 – CONVERTIBLE DEBENTURES (continued)
Convertible debenture
Maturity date
Initial term
Conversion at option of
shareholder at:
Interest payment dates
5.50%
AI.DB.D
Dec. 31, 2025
7 years
5.25%
5.30%
AI.DB.C
AI.DB
June 30, 2024 Sept. 30, 2021 March 31, 2019 June 30, 2020
6.25%
AI.DB.A
5.50%
AI.DB.B
7 years
7 years
5 years
7 years
$15.60/share
$14.94/share $14.65/share
$13.30/share
$13.50/share
June 30,
Dec. 31
June 30,
Dec. 31
March 31, March 31,
Sept. 30
Sept. 30
June 30,
Dec. 31
Redeemable at the company’s
option at par plus accrued interest,
provided the weighted average
trading price of common shares is
not less than 125% of the conversion
price from
to
Dec. 31, 2021 June 30, 2020
Dec. 31, 2023 June 30, 2022
Sept. 30, 2017 March 31, 2017 June 30, 2016
Sept. 30, 2019 March 31, 2018 June 30, 2018
Redeemable at the company’s
option at par plus accrued interest
and unpaid interest after
NOTE 10 – SHARE CAPITAL
Dec. 31, 2023 June 30, 2022 Sept. 30, 2019 March 31, 2018 June 30, 2018
The company is authorized to issue an unlimited number of common shares without par value. Common
shares rank equally with each other and have no preference, conversion, exchange or redemption rights.
Common shares participate pro rata with respect to any dividends paid, including distributions upon
termination and dissolution.
The company has an optional dividend reinvestment plan (DRIP) for shareholders, whereby participants
may reinvest cash dividends in additional common shares of the company at the volume weighted average
price for five days prior to distribution, less a 2% discount. During the year ended December 31, 2018,
311,339 common shares were issued under the Company’s DRIP (December 31, 2017 – 293,622), using
reinvested dividends of $3,954 (December 31, 2018 – $3,481). Shares issued under the DRIP are issued by
the company from treasury (See Note 16 – Subsequent events).
Under the employee share purchase plan (ESPP), each participant may contribute up to an annual
maximum to the ESPP, and CMCC matches 50% of the participant’s contribution. Thus, the company does
not bear any of the cost of the ESPP, as it is reimbursed by CMCC and the participants.
NOTE 11 – SHARE-BASED PAYMENTS
December 31, 2018
Year ended
Balance, beginning of year
Units granted
Units cancelled
Units earned
Common shares issued
Balance, end of year
Deferred
share
units
81,667
22,000
(3,000)
–
(32,000)
68,667
Income
deferred
share
units
11,502
–
(331)
3,905
(6,020)
9,056
Total
93,169
22,000
(3,331)
3,905
(38,020)
77,723
December 31, 2017
Income
deferred
share
units
8,448
–
–
5,948
(2,894)
11,502
Total
77,365
24,000
–
5,948
(14,144)
93,169
Deferred
share
units
68,917
24,000
–
–
(11,250)
81,667
44 • ATRIUM MORTGAGE INVESTMENT CORPORATION • 2018 • NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 11 – SHARE-BASED PAYMENTS (continued)
Share-based payments expense:
September 1, 2018 grant
September 1, 2017 grant
September 1, 2016 grant
September 1, 2015 grant
September 1, 2014 grant
August 30, 2013 grant
August 29, 2012 grant
Years ended December 31
2018
2017
$
$
61
132
59
24
12
4
–
292
$
$
–
79
171
82
31
7
1
371
Grants are provided to directors and certain employees of the manager under the company’s deferred share
incentive plan (“DSIP”). The deferred share units vest annually over three years. Common shares are issued
to participants on the vesting date of each tranche of deferred share units, unless a participant elects to defer
the issuance. In addition, income deferred share units (“IDSU”) are credited to holders of deferred share units
granted before 2018 based upon dividends paid on common shares. The fair value of share-based
compensation was based upon the volume weighted average market price of the common shares five days
prior to the grant date of September 1, 2018 ($13.71) and September 1, 2017 ($12.26).
NOTE 12 – EARNINGS PER SHARE
Basic earnings per share –
Numerator
Net income and comprehensive income for the year
Denominator
Weighted average common shares outstanding
Basic earnings per share
Diluted earnings per share –
Numerator
Net income and comprehensive income for the year
Interest on convertible debentures
Net income and comprehensive
income for diluted earnings per share
Denominator
Weighted average common shares outstanding
Convertible debentures
Deferred share incentive plan
Income deferred share units
Weighted average common shares outstanding – diluted basis
Diluted earnings per share
Years ended December 31
2018
2017
$
33,769
$
29,059
35,571,414
0.95
$
30,633,314
0.95
$
$
33,769
9,373
43,142
35,571,414
10,203,163
64,648
8,093
45,847,318
0.94
$
$
29,059
7,734
36,793
30,633,314
8,475,621
73,815
8,150
39,190,900
0.94
$
NOTE 13 – FINANCIAL INSTRUMENTS
(a) Classification of financial instruments
Financial assets comprise mortgages receivable and are classified and measured at amortized cost. Financial
liabilities comprise borrowings under credit facility, accounts payable and accrued liabilities, dividends
payable, accrued convertible debenture interest and the liability component of convertible debentures. All
financial liabilities are measured as other financial liabilities at amortized cost.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS • 2018 • ATRIUM MORTGAGE INVESTMENT CORPORATION • 45
NOTE 13 – FINANCIAL INSTRUMENTS (continued)
(b) Fair value
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between arm’s length market participants at the measurement date. The fair value hierarchy
establishes three levels to classify the inputs to valuation techniques used to measure fair value:
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 inputs are quoted prices in markets that are not active, quoted prices for similar assets or
liabilities in active markets, inputs other than quoted prices that are observable for the asset or
liability, or inputs that are derived principally from or corroborated by observable market data or
other means.
Level 3 inputs are unobservable (supported by little or no market activity).
The fair value hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3
inputs. All financial assets are classified and measured at amortized cost. Their carrying values approximate
their fair value due to their relatively short-term maturities and because market interest rates have not
fluctuated significantly since the date at which the loans were entered into. The fair value of borrowings
under credit facility approximates book value since it bears interest at floating rates. The accounts payable
and accrued liabilities, dividends payable and accrued convertible debenture interest carrying values
approximates their fair values due to the short term nature of the items.
The fair value of convertible debentures at the time of issue is established using Level 2 inputs. The fair
value of convertible debentures has been determined based on the closing prices of the convertible debentures
on the TSX on the respective dates.
Convertible debentures
Fair value
Less book value of equity component
December 31
2018
$ 158,036
(1,675)
$ 156,361
2017
$ 131,134
(1,322)
$ 129,812
Book value of financial liability component
$ 157,289
$ 125,976
(c) Credit risk
Mortgages receivable and issued letters of credit are exposed to credit risk. Credit risk is the risk that a
counterparty to a financial instrument will fail to discharge its obligation or commitment, resulting in a
financial loss to the company. The maximum exposure to credit risk related to mortgages receivable,
including letters of credit outstanding, at December 31, 2018 is $691,534 (2017 - $631,364).
The company mitigates the credit risk by maintaining strict credit policies including due diligence
processes, credit limits, documentation requirements, review and approval of new and renewed mortgages
by the board of directors or a subgroup thereof, quarterly review of the entire portfolio by the board of
directors, and other credit policies approved by the board of directors. Credit risk is approved by the board
of directors. These credit policies and processes have been consistently applied throughout the two year
period ended December 31, 2018.
All mortgages receivable are secured by the underlying real estate, plus other credit enhancements, which
may include guarantees from the borrowers, personal guarantees from the borrower’s shareholders and/or
cross guarantees from related entities. The quality of the mortgage collateral is primarily driven by the
location and type of underlying property and type of mortgage. For further information, refer to Note 5(a)
and to the “Investment Portfolio” section of the Management’s Discussion and Analysis for the year ended
December 31, 2018. The company foreclosed on one property during the year (2017 – none) (See Note 6 –
Foreclosed properties). Management continuously monitors real estate values and considers there to have
been no significant changes in the quality of the collateral underlying the remaining mortgage portfolio.
At December 31, 2018, the largest borrower group accounted for 11.7% of mortgages receivable
(December 31, 2017 – 9.0%). See Note 5(a) and Note 5(b) for a breakdown of mortgages and provision by
property type.
46 • ATRIUM MORTGAGE INVESTMENT CORPORATION • 2018 • NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 13 – FINANCIAL INSTRUMENTS (continued)
(d) Liquidity risk
Liquidity risk is the risk that the company will not be able to meet its obligations when due. The primary
sources of liquidity risk are the requirements to fund commitments for new mortgages, advances on existing
mortgages, as well as obligations under the company’s credit facility. The company’s liquidity risk is
managed on an ongoing basis in accordance with the policies and procedures in place that reduce the risk to
an acceptable level. Policies and procedures include continuous monitoring of expected cash flows,
reviewing credit requirements with the company’s bankers, issuing convertible debentures or common shares
in the public markets from time to time as required, and staggering the maturities of convertible debentures
when they are issued. From time to time the company has arranged temporary increases in its credit facility
with its banks in order to manage liquidity requirements, and expects to be able to continue to do so in the
future if required. The company’s significant financial liabilities include borrowings under credit facility,
accounts payable and accrued liabilities, dividends payable, accrued convertible debenture interest and the
liability component of convertible debentures. The borrowings under credit facility are drawn upon as
required to discharge accounts payable and accrued liabilities as well as to pay out dividends on a monthly
basis. The company’s agreement with the lender is that the operating line will not be called provided that all
covenants are met and that any significant excess cash is used to pay down the borrowings under credit
facility.
December 31, 2018
Borrowings under credit
facility1
Accounts payable and
accrued liabilities
Accrued convertible
debenture interest
Dividends payable
Convertible debentures2
Total
Unadvanced mortgage
commitments3
Total contractual
liabilities
Notes:
Carrying
value
$148,330
Contractual
cash flow
$154,390
Within 1
year
1 to 3
years
$ 5,898 $148,492
3 to 5
years
$ –
2,093
2,093
2,093
–
–
1,011
4,205
157,289
312,928
1,011
4,205
177,662
339,361
1,011
4,205
106,920
120,127
–
–
6,477
154,969
–
–
64,265
64,265
–
109,051
109,051
–
–
More
than 5
years
$ –
–
–
–
–
–
–
$312,928
$448,412
$229,178
$154,969
$ 64,265
$ –
(1) Includes interest assuming the outstanding balance is not repaid until maturity on January 11, 2020 (See Note 16 – Subsequent
events).
(2) The 5.25% debentures are assumed to be repaid January 1, 2019; 6.25% debentures are assumed to be repaid January 1, 2019;
5.50% debentures are assumed to be repaid September 30, 2019, 5.30% debentures are assumed to be repaid June 30, 2022 and
5.50% debentures are assumed to be repaid December 31, 2023.
(3) Unadvanced mortgage commitments include additional funds on existing mortgage and new mortgage commitments. The
experience of the company has been that a portion of the unadvanced amounts on existing mortgages will never be drawn.
As at December 31, 2018, management considers that it has adequate procedures in place to manage
liquidity risk.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS • 2018 • ATRIUM MORTGAGE INVESTMENT CORPORATION • 47
NOTE 13 – FINANCIAL INSTRUMENTS (continued)
(e) Interest rate risk
The company is exposed to interest rate risk in that an increase in interest rates will result in increased interest
expense due to its borrowings under credit facility being set at a variable rate and mortgages are set at a
combination of fixed and variable rates. The financial structure of the company results in relatively moderate
interest rate risk because a majority of the company’s financing is through common shares and convertible
debentures, with a moderate amount of borrowings under the credit facility that bear floating interest rates.
If interest rates on debt had been one percentage point higher (lower) during the year ended December
31, 2018, income and comprehensive income would have been reduced (increased) by approximately $1,435
during the year, assuming that no changes had been made to the interest rates at which new mortgage loans
were entered into. However, if new mortgage loans had been entered into at higher (lower) interest rates, the
resulting reduction of income and comprehensive income would have been less than (greater than) $1,435.
(f) Currency risk
Currency risk is the risk that the value of financial assets and liabilities will fluctuate due to changes in foreign
exchange rates. The company is not exposed to currency risk as all assets and liabilities are denominated in
Canadian funds.
NOTE 14 – CAPITAL MANAGEMENT
The company defines capital as total debt plus shareholders’ equity, as shown below:
Borrowings under credit facility
Convertible debentures
Total debt
Shareholders’ equity
Capital employed
December 31
2018
$ 147,846
157,289
305,135
387,306
$ 692,441
2017
$ 144,454
125,976
270,430
349,064
$ 619,494
The company’s objectives for managing capital are to preserve shareholders’ equity, provide shareholders
with stable dividends, and to use leverage in a conservative manner to improve return to shareholders. The
company finances growth of its portfolio by issuing common shares and debt. In addition, a small amount of
equity is raised every month through a dividend reinvestment plan for shareholders and the employee share
purchase plan.
As bank borrowings increase, the company could expect to raise further funds through public offerings
of convertible debentures or common shares, and through private placements of debt. The borrowings under
credit facility are subject to external covenants as set out in Note 7. There has been no change in the
company’s capital management objectives since the prior year.
48 • ATRIUM MORTGAGE INVESTMENT CORPORATION • 2018 • NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 15 – COMPARATIVE RECLASSIFICATION
The presentation of the table in Note 5(a) as at December 31, 2017 has been reclassified in order to improve
the usefulness of the information presented. Comparative figures have been reclassified to conform to the
new presentation. Previously, the table was titled “Mortgage category” and included a category named
“Construction”. In the new “Property type” table, mortgages previously categorized as Construction have
been reallocated to the applicable property types.
The effect of the change on the comparative figures is as follows:
Property type
Low-rise residential
Construction
High-rise residential
Mid-rise residential
December 31, 2017
As originally reported
Outstanding % of
As reclassified
Outstanding % of
Number
36
8
7
4
amount
Portfolio Number
amount
$
234,343
64,828
44,949
31,471
37.1%
10.3%
7.1%
5.0%
39 $
–
10
6
256,581
–
81,939
37,071
Portfolio
40.6%
–%
13.0%
5.9%
NOTE 16 – SUBSEQUENT EVENTS
On January 2, 2019 the company amended its credit facility with a syndicate of four Canadian financial
institutions extending the term from January 11, 2020 to January 11, 2021.
On January 11, 2019, the company issued 26,163 common shares ($333) to shareholders under its dividend
reinvestment plan.
On February 12, 2019, the company issued 26,260 common shares ($335) to shareholders under its dividend
reinvestment plan.
On January 30, 2019, the company announced it had entered into an underwriting agreement with a syndicate
of underwriters to purchase 2,300,000 common shares of Atrium at a price of $13.05 per share for gross
proceeds of $30,015. The company also granted to the underwriters an over-allotment option to purchase up
to an additional 345,000 common shares at the issue price, exercisable in whole or in part at any time for a
period of up to 30 days following the closing of the offering. Gross proceeds of $34,517 were received by
the company on February 8, 2019 which included exercise of the overallotment option in full.
Corporate Directory
Board of Directors
Management
Auditors
Crowe Soberman LLP
1100 – 2 St. Clair Ave. E.
Toronto, ON M4T 2T5
T. (416) 964-7633
Share Listing
Common shares,
(cid:106)(cid:100)(cid:127)(cid:235)(cid:1)(cid:16)(cid:57)
Convertible debentures 5.25%,
(cid:106)(cid:100)(cid:127)(cid:235)(cid:1)(cid:16)(cid:57)(cid:234)(cid:35)(cid:28)
Convertible debentures 6.25%,
(cid:106)(cid:100)(cid:127)(cid:235)(cid:1)(cid:16)(cid:57)(cid:234)(cid:35)(cid:28)(cid:234)(cid:16)
Convertible debentures 5.5%,
(cid:106)(cid:100)(cid:127)(cid:235)(cid:1)(cid:16)(cid:57)(cid:234)(cid:35)(cid:28)(cid:234)(cid:28)
(cid:29)(cid:148)(cid:149)(cid:402)(cid:390)(cid:399)(cid:400)(cid:392)(cid:388)(cid:395)(cid:390)(cid:1)(cid:407)(cid:390)(cid:388)(cid:390)(cid:149)(cid:400)(cid:401)(cid:399)(cid:390)(cid:141)(cid:1)(cid:448)(cid:234)(cid:418)(cid:252)(cid:232)(cid:1)
(cid:106)(cid:100)(cid:127)(cid:235)(cid:1)(cid:16)(cid:57)(cid:234)(cid:35)(cid:28)(cid:234)(cid:29)
Convertible debentures 5.5%,
(cid:106)(cid:100)(cid:127)(cid:235)(cid:1)(cid:16)(cid:57)(cid:234)(cid:35)(cid:28)(cid:234)(cid:35)
Mark L. Silver
Chair of the Board,
Atrium Mortgage
Investment Corporation
President, Optus Capital Corporation
Robert G. Goodall
CEO and President,
Atrium Mortgage
Investment Corporation
Peter P. Cohos (cid:417),4
President,
Copez Properties Ltd.
Robert H. DeGasperis
President,
Metrus Properties Inc.
Andrew Grant 4
President,
PCI Group
(cid:97)(cid:72)(cid:13)(cid:22)(cid:12)(cid:3)(cid:45)(cid:72)(cid:11)(cid:72)(cid:76)(cid:3)(cid:32)
(cid:94)(cid:399)(cid:390)(cid:141)(cid:392)(cid:407)(cid:390)(cid:149)(cid:400)(cid:232)
(cid:29)(cid:147)(cid:149)(cid:147)(cid:395)(cid:1)(cid:49)(cid:399)(cid:148)(cid:401)(cid:397)
Nancy H. O. Lockhart 2,3
(cid:29)(cid:140)(cid:147)(cid:392)(cid:399)(cid:1)(cid:148)(cid:391)(cid:1)(cid:400)(cid:140)(cid:390)(cid:1)(cid:28)(cid:148)(cid:147)(cid:399)(cid:407)(cid:1)(cid:148)(cid:391)(cid:1)Director(cid:141),
Gluskin Sheff + Associates
Director,
Loblaw Companies Ltd.
1. Chair of Audit Committee
2. Member of Audit Committee
3. (cid:1)Chair of (cid:29)(cid:148)(cid:396)(cid:397)(cid:390)(cid:149)(cid:141)(cid:147)(cid:400)(cid:392)(cid:148)(cid:149)(cid:232)(cid:1)
Nominating and Governance Committee
4. Member of(cid:1)(cid:29)(cid:148)(cid:396)(cid:397)(cid:390)(cid:149)(cid:141)(cid:147)(cid:400)(cid:392)(cid:148)(cid:149)(cid:232)(cid:1)
Nominating and Governance Committee
Robert G. Goodall
CEO and President
(cid:67)(cid:390)(cid:149)(cid:149)(cid:392)(cid:391)(cid:390)(cid:399)(cid:1)(cid:100)(cid:389)(cid:148)(cid:391)(cid:391)(cid:392)(cid:390)(cid:395)(cid:407) CPA, CA
CFO and Secretary
Bram Rothman
Managing Director – Ontario
Richard Munroe
Managing Director – Ontario
Phil Fiuza
Managing Director –
Ontario, Residential
Marianne Dobslaw
Managing Director –
British Columbia
Transfer Agent
Computershare Trust Co.
of Canada
100 University Ave.
9th Floor, North Tower
Toronto, ON M5J 2Y1
T. (800) 564-6253
(cid:48)(cid:148)(cid:397)(cid:1)(cid:446)(cid:234)(cid:416)(cid:252)(cid:1)(cid:230)(cid:16)(cid:57)(cid:234)(cid:35)(cid:28)(cid:234)(cid:29)(cid:231)(cid:1)(cid:147)(cid:149)(cid:405)(cid:1)(cid:446)(cid:234)(cid:446)(cid:252)
(cid:230)(cid:16)(cid:57)(cid:234)(cid:35)(cid:28)(cid:234)(cid:35)(cid:231)(cid:1)(cid:29)(cid:148)(cid:149)(cid:400)(cid:388)(cid:397)(cid:398)(cid:390)(cid:386)(cid:393)(cid:388)(cid:1)(cid:35)(cid:388)(cid:386)(cid:388)(cid:149)(cid:398)(cid:399)(cid:397)(cid:388)(cid:141)(cid:1)
(cid:16)(cid:100)(cid:106)(cid:1)(cid:106)(cid:399)(cid:401)(cid:141)(cid:400)(cid:1)(cid:29)(cid:148)(cid:396)(cid:397)(cid:147)(cid:149)(cid:405)
(cid:417)(cid:1)(cid:106)(cid:148)(cid:399)(cid:148)(cid:149)(cid:400)(cid:148)(cid:1)(cid:100)(cid:400)(cid:234)(cid:232)(cid:1)(cid:100)(cid:401)(cid:392)(cid:400)(cid:390)(cid:1)(cid:417)(cid:446)(cid:416)(cid:416)(cid:1)
(cid:106)(cid:148)(cid:399)(cid:148)(cid:149)(cid:400)(cid:148)(cid:232)(cid:1)(cid:82)(cid:77)(cid:1)(cid:76)(cid:448)(cid:29)(cid:1)(cid:446)(cid:121)(cid:213)
(cid:106)(cid:234)(cid:1)(cid:230)(cid:420)(cid:416)(cid:416)(cid:231)(cid:1)(cid:418)(cid:420)(cid:419)(cid:233)(cid:416)(cid:420)(cid:446)(cid:448)
Atrium® offers a dividend reinvestment plan (DRIP) so that shareholders may automatically reinvest their dividends in
new shares of Atrium at a 2% discount from market price and with no commissions. This provides an easy way to realize
the benefits of compound growth of their investment in Atrium. Shareholders can enroll in the DRIP program
by contacting their investment advisor or Computershare
20 Adelaide Street East - Suite 900
Toronto, Ontario M5C 2T6
T. 416 867 1053
F. 416 867 1303
W. (cid:403)(cid:403)(cid:403)(cid:234)(cid:147)(cid:400)(cid:399)(cid:392)(cid:401)(cid:396)(cid:396)(cid:392)(cid:389)(cid:234)(cid:389)(cid:148)(cid:396)