Annual Report 2013
Timbercreek
Mortgage
Investment
Corporation
2013 Financial Highlights
$317.2 million of net mortgage and loan investments
$198.7 million in new mortgage investments funded
69 new mortgage investments funded
50 mortgage investments fully repaid
$283.1 million in full repayments and partial paydowns
$39.7 million in net interest income
$3.6 million in non-refundable lender fees (cash)
$0.65 EPS / $0.79 adjusted EPS
2013 Portfolio Highlights
96 mortgage and loan investments
Average mortgage and loan investment size of $3.3 million
9.8% weighted average interest rate
1.8% weighted average lender fee
Company Highlights
Timbercreek MIC’s
objective is to preserve
capital while generating
attractive, inflation-
protected income for
shareholders.
Established in 2008, Timbercreek Mortgage Investment
Corporation (Timbercreek MIC) provides investors
with the opportunity to invest indirectly in a diversified
portfolio of short duration, customized mortgage and
loan investments. The investments are primarily secured
by income-producing real estate principally located
in and around urban markets. Timbercreek MIC’s
portfolio currently consists of over 95 mortgage and loan
investments with a net aggregate value of approximate
$317.2 million.
Timbercreek Mortgage Investment CorporationTimbercreek Mortgage Investment Corporation Strong, Steady,
Inflation-Protected
Income
8.3%
annualized yield*
Weighted average loan term
to maturity of 2.2 years
$3.6 million of lender fees
received and paid to investors
Short-duration mortgage and loan investments and
early prepayment privileges drive high portfolio
turnover. As such, Timbercreek MIC is able to charge
higher interest rates in a rising rate environment as new
mortgage and loan investments are placed, resulting in
higher yields for investors.
Additional income is generated from lender fees, which
are collected each time a new loan is issued – 100% of
which is paid to Timbercreek MIC, for the benefit of
shareholders. Short-term mortgage and loan investments
and high portfolio turnover allow shareholders to enjoy
enhanced revenue from lender fees.
Inflationary periods, which can be tied to rising interest
rates, also typically encourage increased real estate
activity, driving increased demand for short-duration,
customized loans.
Healthy Portfolio Turnover
Stable Growth in Income
(in millions)
100.9%
80.1% 79.8%
48.1%
24.6%
10.2%
2008
2009
2010
2011
2012
2013
$38.7
14%
86%
$39.7
12%
88%
$24.6
14%
86%
$11.5
89%
11%
$5.8
6%
94%
6%
2009
2010
2011
2012
2013
$2.0
94%
2008
Fee Income
Interest Income
* Actual dividend yield equals the total per share dividend for the year ended December 31, 2013 for Class A shares and common
shares, divided by the trading close price on December 31, 2013.
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Timbercreek Mortgage Investment Corporation
3
Timbercreek Mortgage Investment CorporationTimbercreek Mortgage Investment Corporation Timbercreek MIC invests in a diversified portfolio of
mortgages and loan investments. The asset allocation
model ensures diversification by geography, economic
sector, term, borrower and loan-to value ratio.
96
mortgage and loan
investments secured
by 173 properties
Mitigating Risk with
Well-Diversified
Portfolio of
Income-Producing
Properties
Timbercreek MIC focuses on mortgage and loan investments that are primarily secured by income-producing,
investment real estate, such as multi-residential, retirement, office, retail and industrial properties, rather than land,
construction or single-family residential properties. Focusing on lending against income-producing real estate ensures
that there is income from the property to service the mortgage investment, which reduces the likelihood of defaults. In
addition, due to the increased liquidity of income-producing properties in and around urban markets, the properties
provide less volatile values for the underlying security relative to land or construction where a slowed or stalled
development cycle can substantially change the value.
Asset Allocation
Regional Mix
Asset Type
2.5%
1.1%
0.9%
3.3%
12.6%
13.7%
51.4%
1.8%
1.2%
0.9%
0.7%
0.3%
4.1%
12.5%
13.2%
51.7%
14.5%
Ontario
British Columbia
Quebec
Alberta
Saskatchewan
Manitoba
Other
Nova Scotia
13.6%
Multi-residential
Office
Retail
Retirement
Unimproved land
Industrial
Hotels
Other − residential
Self-storage
Single-family residential
4
Timbercreek Mortgage Investment Corporation
5
Timbercreek Mortgage Investment CorporationTimbercreek Mortgage Investment Corporation Disciplined
Approach
Thorough underwriting, active management and strong
governance are only three ways that Timbercreek MIC
manages risk from origination to mortgage and loan
repayment. Our disciplined approach to mortgage and loan
investing ensures that shareholders’ capital is preserved.
Timbercreek MIC leverages a strong real estate and
mortgage and loan investment management infrastructure,
including a comprehensive team of mortgage specialists
that are dedicated to origination, underwriting, funding and
servicing of all mortgage and loan investments.
over
195 years
of combined
investment experience
Mortgage Specialist Team
Five-year
track record with no principal impairments
Ugo Bizzarri
Paul Jones
Founding Managing
Director, Portfolio
Management and
Investments
Executive Director,
Debt Portfolio
Management
Alexandra
Mulkewytch
Analyst
Rob Kansun
Talia Zon
Analyst
Analyst
Luca Pasquali
David Smith
Research Valuations
Associate
Senior Associate
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Andrew Jones
Julie Neault
Karen Leeson
Charles Lingren
Managing Director
of Debt Investments,
Timbercreek Asset
Management
Director,
Debt Origination
Director,
Debt Origination
Director,
Debt Origination -
Western Canada
Region
Patrick Smith
Senior Associate,
Debt Origination
Laura Wheller
Mortgage
Administrator
Kim Casey
Mortgage
Administrator
Denel Black
Assistant Mortgage
Administrator
7
Timbercreek Mortgage Investment CorporationTimbercreek Mortgage Investment Corporation
Timbercreek MIC
vs.
Canadian Financial Institution
Conventional Mortgages
Loan size
$1MM - $25MM
Approval to funding period
Less than 1 month
3 months – 3 years
Term
Loan type
Loan-to-value ratio
Cost (fees plus interest)
Primarily interest-only
Principal repayment plus interest
Up to 85%
Premium
Up to 60%
Moderate
50MM+
2-3 months
> 5 years
Customized Loan Solutions for
the Non-Bank Mortgage Sector
Real estate investors often require short-term loans to bridge a period of one to five years where they
require temporary capital for property repairs, redevelopment or purchase of another investment. This
segment of the Canadian borrower market is typically under-serviced by Canadian financial institutions
that are reluctant to dedicate resources to these smaller, shorter-term mortgage investments and cannot
typically provide the customization required to meet the borrower’s needs.
Timbercreek MIC is a market leader in the non-bank mortgage sector in Canada, providing shorter-
duration, customized financing solutions for professional real estate investors. With a sophisticated
and service-oriented approach, focused on meeting the needs of borrowers, Timbercreek MIC is able
to provide quick execution of mortgage and loan investments and more flexible terms than typically
offered by Canadian financial institutions. Servicing this niche market, allows Timbercreek MIC to
generate strong risk-adjusted returns for investors..
8
Timbercreek Mortgage Investment Corporation
Timbercreek Mortgage Investment Corporation
9
Timbercreek Mortgage Investment CorporationTimbercreek Mortgage Investment Corporation Case
Studies
Office
Oakville, Ontario
Oakville is a dynamic community of over 180,000
residents. With a focus on growing clusters in
knowledge-based industries and one of the lowest
non-residential property tax rates in the Greater
Toronto Area, Oakville is becoming an increasingly
attractive location for businesses.
This beautiful brand new office building enjoys a
suburban location with excellent access to a major
cross-region highway and is directly adjacent to a
commuter transit station, making it a prime location
for companies to locate. The building has also been
awarded a Class-A, LEED Gold certification.
Meeting Rigorous Investment Criteria to Balance
Risk & Return for Investors
Criteria
Asset Type
Loan size ($1MM - $25MM)
Term (3 months - 3 years)
Interest
Fees
Investment
Office
$7,000,000
30 months
11.01%
2.10%
Multi-Residential
Edmonton, Alberta
The Conference Board of Canada estimates that
Edmonton will remain one of Canada’s fastest
growing economies for years to come. This multi-
residential building is located in central Edmonton
with outstanding views of the North Saskatchewan
River. The buildings securing the mortgage
investment include six-and 12-unit apartment
complexes situated on a 15,000 square foot infill
development site.
Meeting Rigorous Investment Criteria to Balance
Risk & Return for Investors
Criteria
Asset Type
Loan size ($1MM - $25MM)
Term (3 months - 3 years)
Interest
Fees
Investment
Multi-Residential
$1,500,000
24 months
12.00%
1.00%
Special Situation: Leveraging Hands-On Property Management Expertise to Reduce Investor Risk
In October 2008, Timbercreek granted a mortgage to the owner of this Edmonton complex. However, in October 2010, the
borrower began to have financial difficulty related to other owned assets and was unable to continue making payments
on the loan. With its extensive real estate experience, Timbercreek was able to immediately assume management of the
property. Timbercreek collected rents from the tenants, leased up a number of vacant units and, over a three-month period,
was able to foreclose on the property conveying title to itself. Timbercreek invested rental income to make some minor
improvements to the property, while also covering scheduled payments for the mortgage. After approximately seven months
of improving and stabilizing the property, it was listed for sale and sold at a profit four months later for $1.9 million enabling
the mortgage and all accrued interest to be repaid.
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Timbercreek Mortgage Investment Corporation
Timbercreek Mortgage Investment Corporation
11
Timbercreek Mortgage Investment CorporationTimbercreek Mortgage Investment Corporation Letter to
Shareholders
Andrew Jones
Timbercreek Mortgage Investment Corporation
(Timbercreek MIC) enjoyed another strong year in
2013. Our success is built on a strategy of providing
shorter-duration, customized financing solutions for
professional real estate investors, which generated net
interest income of $39.7 million. Because of these results,
our Board of Directors approved a 6% increase to our
dividend, increasing the monthly dividend to $0.067 per
common share. As always, we are proud to be able to
reward our dedicated shareholders with dividends. We have
been providing them with dividends monthly since our
inception in 2008.
This was a watershed year for Timbercreek MIC, as our
Board made the proactive decision to undertake a major
reorganization following a proposed regulatory change
released by the Canadian Securities Administrators. On
September 12, 2013, our shareholders approved a resolution
to transition Timbercreek MIC from an investment
fund to a corporate reporting issuer (a full description is
available in the Management’s Discussion & Analysis). The
transition benefits our shareholders by:
i.
increasing stability with the elimination of the
redemption feature,
ii. improving governance and transparency with more
frequent financial reporting,
iii. providing shareholders with full voting rights,
iv. eliminating trailer fees, and
v. opening up new opportunities for growth.
We believe it is important to be a leader in our sector,
which is why we acted on the proposed regulatory
reforms before they were enacted into law. If we had
waited, our ability to manage the transition would have
been more limited. We were pleased that our investors
overwhelmingly voted in favour of the resolution.
Importantly, the successful underlying business model of
Timbercreek MIC was unchanged.
As a market leader in the Canadian non-bank
mortgage sector, our goal is to preserve capital while
providing shareholders with strong, inflation-protected
income. We achieve that by employing a sophisticated
and service-oriented approach for borrowers that provides
faster execution and more flexible terms than traditional
financial institutions. The strength of our strategy is
evident not only in the fact that we have exceeded our
target yield every month since inception, but also that
we have completed another year without any principal
impairments.
In 2013, Canadian investment-grade real estate
fundamentals remained stable and sustainable, leading to
an attractive lending environment. On the investment
front, pension funds and private investors continued
to seek out properties with strong cash-flow, in most
cases requiring some form of mortgage financing. The
continued lack of activity in the commercial mortgage-
backed securities markets and tightening of bank
regulations continues to constrain mortgage capital.
When taken together, these facts demonstrate the fact
that deal-flow remains healthy and those with capital are
able to invest in high-quality loans with less competitive
pressure. Furthermore, medium-term Canadian bond
yields continued to rise, narrowing the gap between
institutional lenders’ and non-bank lenders’ costs of capital,
making the latter more competitive.
As a result of our portfolio strategy and positive market
fundamentals, our financial performance in 2013 was
strong despite market sensitivities around rising interest
rates. Our total assets grew by 14.3% to $467.4 million.
In addition, we advanced 69 new investments totaling
$198.7 million in 2013, and had additional advances on
existing mortgage and loan investments of $42.6 million.
We received full repayments and partial pay-downs on
mortgage and loan investments totaling $283.1 million
with 50 mortgage investments fully repaid in 2013. This
reflected the quality of our mortgage and loan investments.
The redeployment of this principal continued to generate
significant fee income, which contributed to our dividends.
So as we look ahead to 2014 with interest rates
expected to remain low, we are encouraged by the growth
we are seeing in our portfolio and continued strength in
Canadian real estate fundamentals. We are confident that
our disciplined approach to investing will continue to
provide our shareholders with preservation of capital.
Furthermore, with a greater than 75% turnover rate in the
portfolio annually, shareholders will continue to benefit
from full participation in lender fees on new mortgage and
loan investments, providing a strong, stable, inflation-
protected income.
Subsequent to year-end, we announced the
completion of a bought deal offering of $34.5 million
aggregate principal amount of 6.35% convertible unsecured
subordinated debentures due March 31, 2019. These funds
will help us grow the portfolio in an accretive manner and
take advantage of the low interest rate environment to
secure low-cost, fixed-term debt.
I will conclude by thanking everyone who has been
critical to our success this year. For their guidance
and insight, I would like to thank our Board of Directors
and Mortgage Advisory Committee. I would also like to
recognize the dedication and hard work of our entire
investment team from origination to funding – their
expertise and experience are invaluable. Finally, to our
shareholders, thank you for your continued confidence
and support. Our entire team is committed to working
on your behalf and we look forward to another year of
success.
Andrew Jones
Chief Executive Officer
Timbercreek Mortgage Investment Corporation
March 2014
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Timbercreek Mortgage Investment Corporation
13
Timbercreek Mortgage Investment CorporationTimbercreek Mortgage Investment Corporation
Management’s Discussion
and Analysis
For the year ended December 31, 2013
FORWARD-LOOKING STATEMENTS
Forward-looking statement advisory
The terms, the “Company”, “we”, “us” and “our” in the following Management Discussion &
Analysis (“MD&A”) refer to Timbercreek Mortgage Investment Corporation (the “Company”). This
MD&A may contain forward-looking statements relating to anticipated future events, results,
circumstances, performance or expectations that are not historical facts but instead represent
our beliefs regarding future events. These statements are typically identified by expressions like
“believe”, “expects”, “anticipates”, “would”, “will”, “intends”, “projected”, “in our opinion” and other
similar expressions. By their nature, forward-looking statements require us to make assumptions
which include, among other things, that (i) the Company will have sufficient capital under
management to effect its investment strategies and pay its targeted dividends to shareholders, (ii)
the investment strategies will produce the results intended by the Manager, (iii) the markets will
react and perform in a manner consistent with the investment strategies and (iv) the Company
is able to invest in mortgages of a quality that will generate returns that meet and/or exceed the
Company’s targeted investment returns.
Forward-looking statements are subject to inherent risks and uncertainties. There is significant
risk that predictions and other forward-looking statements will prove not to be accurate. We
caution readers of this MD&A not to place undue reliance on our forward-looking statements
as a number of factors could cause actual future results, conditions, actions or events to differ
materially from the targets, expectations, estimates or intentions expressed or implied in the
forward-looking statements. Actual results may differ materially from management expectations
as projected in such forward-looking statements for a variety of reasons, including but not limited
to, general market conditions, interest rates, regulatory and statutory developments, the effects of
competition in areas that the Company may invest in and the risks detailed from time to time in
the Company’s public disclosures.
We caution that the foregoing list of factors is not exhaustive and that when relying on forward-
looking statements to make decisions with respect to investing in the Company, investors and
others should carefully consider these factors, as well as other uncertainties and potential events
and the inherent uncertainty of forward-looking statements. Due to the potential impact of these
factors, the Company and Timbercreek Asset Management Inc. (the “Manager”) do not undertake,
and specifically disclaim any intention or obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise, unless required by
applicable law.
This MD&A is dated March 5, 2014. Disclosure contained in this MD&A is current to that date,
unless otherwise noted. Additional information on the Company, its dividend reinvestment plan
and its mortgage investments is available on the Manager’s website at www.timbercreek.com.
Additional information about the Company, including its Annual Information Form (“AIF”), can be
found on the SEDAR website at www.sedar.com.
2013
Management’s Discussion and Analysis and
Financial Statements
16
15
Timbercreek Mortgage Investment CorporationTimbercreek Mortgage Investment Corporation BUSINESS OVERVIEW
Timbercreek Mortgage Investment Corporation (the “Company”) is incorporated under the laws of
the Province of Ontario by Articles of Incorporation dated April 30, 2008. On September 13, 2013,
in connection with the Transition as explained below, the Company filed articles of amendment
effective as of September 13, 2013 (the “Effective Date”), to amend, among other things, certain
provisions of the articles of the Company related to the rights attached to the existing Class A, Class
B and voting shares, and provide for the creation of a new class of common shares for which all
existing classes of redeemable shares will be exchanged. On November 29, 2013 (the “Exchange
Date”), all issued and outstanding Class A and Class B shares were exchanged into common shares.
The Company invests in mortgage and loan investments selected and determined to be high
quality by the Manager. The Company intends to qualify as a mortgage investment corporation
(“MIC”) as defined under Section 130.1(6) of the Income Tax Act (Canada).
The fundamental investment objectives of the Company are to:
•
•
Preserve shareholder capital of the Company; and
Provide shareholders with a stable stream of monthly dividends.
The Company intends on meeting its investment objectives by investing in a diversified portfolio
of mortgage and loan investments, consisting primarily of conventional mortgage and loan
investments secured directly by multi-residential, retirement homes, office, retail and industrial
real property across Canada, primarily located in urban markets and surrounding areas.
TRANSITION TO PUBLIC COMPANY REGIME
On September 12, 2013, the Company received shareholder approval for the Company’s transition
(the “Transition”) from the Canadian securities regulatory regime for investment funds to the
regulatory regime for non-investment fund reporting issuers (the “Public Company Regime”).
Beginning on the Effective Date, the Company is subject to, and files all continuous disclosure
materials in compliance with the Public Company Regime requirements, which includes
preparation of its financial statements in accordance with IFRS, along with a Management’s
Discussion and Analysis.
As part of the Transition, the Company provided a one-time special redemption right of up to
15% of the issued and outstanding shares of each class (the “Special Redemption”). The Company
redeemed requests from holders of 1,674,568 Class A shares and 259,771 Class B shares for the
Special Redemption. The total redemptions payable of $18,027 were paid on November 27, 2013.
On the Exchange Date, the Company exchanged all of the 32,829,013 outstanding Class A shares
and 3,887,053 outstanding Class B shares into a newly created class of common shares. The
common shares commenced trading on the Toronto Stock Exchange (“TSX”) on November 29,
2013, continuing under the symbol ‘TMC’, and the Class A shares ceased to trade after the close of
market on November 28, 2013.
Effective September 13, 2013, the Company entered into a new management agreement with
the Manager and terminated its management agreement with Timbercreek Asset Management
Ltd., a wholly owned subsidiary of the Manager. The Manager is responsible for the day-to-day
operations and providing all general management, mortgage servicing and administrative services
for the Company’s mortgage and loan investments.
Additionally, Messrs. Ugo Bizzarri and Andrew Jones have been elected as additional directors of
the Company.
In connection with the Transition, the Company has incurred total costs of $3.8 million, which
includes soliciting dealer fees, soliciting broker fees, audit fees, legal fees and other related costs.
The Manager elected to assume responsibility for $0.3 million of costs relating to the Transition.
BASIS OF PRESENTATION
This MD&A has been prepared to provide information about the financial results of the Company
for the year ended December 31, 2013 (the “Year”). This MD&A should be read in conjunction with
the consolidated financial statements for the years ended December 31, 2013 and 2012, which
are prepared in accordance with IFRS as issued by the International Accounting Standards Board
(“IASB”).
The functional and reporting currency of the Company is Canadian dollars and unless otherwise
specified, all amounts in this MD&A are in thousands of Canadian dollars, except per share and
other non-financial data.
Copies of these documents have been filed electronically with securities regulators in Canada
through the System for Electronic Document Analysis and Retrieval (“SEDAR”) and may be
accessed through the SEDAR website at www.sedar.com.
NON-IFRS MEASURES
The Company prepares and releases consolidated financial statements in accordance with IFRS. In
this MD&A, as a complement to results provided in accordance with IFRS, the Company discloses
certain financial measures not recognized under IFRS and that do not have standard meanings
prescribed by IFRS (collectively the “non-IFRS measures”). These non-IFRS measures are further
described below. The Company has presented such non-IFRS measures because the Manager
believes they are relevant measures of the ability of the Company to earn and distribute cash
dividends to shareholders and to evaluate the Company’s performance. These non-IFRS measures
should not be construed as alternatives to net income (loss) and comprehensive income (loss) or
cash flows from operating activities as determined in accordance with IFRS as indicators of the
Company’s performance.
•
•
Expense ratio – represents total expenses (excluding financing costs, transition-related costs
and net operating loss on foreclosed properties held for sale) for the stated period expressed as
an annualized percentage of the average net mortgage and loan investment portfolio;
Fixed expense ratio – represents total expenses (excluding performance fees, financing costs,
transition-related costs, impairment provision and net operating loss on foreclosed properties
held for sale) for the stated period expressed as an annualized percentage of the average net
mortgage and loan investment portfolio;
• Net mortgage investments – represent total mortgage and loan investments net of mortgage
syndication liabilities and before adjustments for interest receivable and unamortized lender
fees as at the reporting date;
• Average net mortgage and loan investment – represents the total net mortgage and loan
investments divided by the total number of mortgage and loan investments at the reporting
date;
• Average net mortgage and loan investment portfolio – represents the monthly average of the
net mortgage and loan investment portfolio over the stated period;
• Weighted average interest rate – represents the weighted average interest rate on the net
mortgage and loan investments at period end;
• Average lender fees – represents the cash lender fees received as a percentage of new net
mortgage and loan investments funded during the stated period;
•
•
Turnover ratio – represents total mortgage and loan repayments during the stated period
expressed as a percentage of the average net mortgage and loan investment portfolio for the
stated period; and
Payout ratio – represents total dividends paid to the holders of redeemable shares and
common shares divided by distributable income.
RECENT DEVELOPMENTS AND OUTLOOK
During the year ended December 31, 2013 (the “Year”), the Manager continued to view Canadian
investment-grade real estate fundamentals as being stable and sustainable, contributing to an
attractive lending environment.
Although REIT valuations in the public markets were more volatile, the demand for cash-flowing
properties remained strong, with little change to healthy underlying market fundamentals. There
were minimal adjustments to average prices (based on capitalization rates) in most asset classes,
with some asset classes, such as rental apartments and class A commercial properties, remaining
generally flat.
There was a diminishing supply of mortgage capital in the second half of the Year as a result of
institutional lenders meeting their annual allocations, and the continued lack of activity in the
Commercial Mortgage Backed Securities market. In addition, there was less competition from
non-bank lenders, as a result of substantially less new capital being raised in the public markets
in comparison to 2012. In addition, certain publically traded non-bank lenders actually saw their
availability of capital shrink as they were required to meet redemption requests from shareholders,
further limiting the supply of non-bank mortgage financing. At the same time, deal flow
16
17
Timbercreek Mortgage Investment CorporationTimbercreek Mortgage Investment Corporation
remained healthy, allowing those with capital available to invest in high quality mortgage and loan
investments with less pressure from competitors.
In the second half of the year, medium-term Canadian bond yields continued to rise, further
narrowing the gap between institutional lenders’ and non-bank lenders’ cost of capital, making the
non-bank lenders more competitive.
Given these factors and the resulting environment, the Manager is very comfortable that it can
continue to meet the investment objectives of the Company, particularly as the Company is
able to take advantage of its strategic relationship with Timbercreek Senior Mortgage Investment
Corporation (“TSMIC”) to offer flexible lending solutions to qualified borrowers.
Given the current availability of high quality mortgage and loan investments and general
market trends observed by the Manager, there has been no need to modify the Company’s Asset
Allocation Model (“AAM”) during the Year. The Manager and the Mortgage Advisory Committee
(“MAC”) continue to place emphasis on mortgage and loan investments secured by cash-flowing
real estate assets, a geographically diversified portfolio and larger, individual mortgage and loan
investments secured by institutional quality real estate assets. This strategy is expected to continue
TIMBERCREEK MORTGAGE INVESTMENT CORPORATION
throughout 2014 and beyond.
In summary, the Company has been competitive and successful in establishing itself as a market
Management’s Discussion and Analysis
leader in the non-bank mortgage sector in Canada. The Manager believes this success is a result
of being conservative and selective in making mortgage and loan investments that meet the
For the year ended December 31, 2013
Company’s investment objectives, while at the same time focusing on providing responsive,
flexible and unique lending solutions to qualified borrowers.
FIN AN CIAL HIG HLIGHTS
The financial highlights of the Company are as follows:
FINANCIAL HIGHLIGHTS
The financial highlights of the Company are as follows:
Three months ended
Year ended
December 31,
2013
December 31,
2012
December 31,
2013
December 31,
2012
STATEMENT OF FINANCIAL POSITION HIGHLIGHTS (as at)
Mortgage and loan investments, including
mortgage syndications
Total assets
Credit facility
Net assets attributable to Class A and B
shareholders
Shareholders’ equity
$
$
$
$
$
442,166
467,406
–
–
336,568
$
$
$
$
$
FINANCIAL INFORMATION (for the period ended)
Dirstibutable income
Distributable
Targeted dividend yield
1
Actual dividend yield
2
Closing trading price
Payout ratio
Net income per share (basic and diluted)
Adjusted net income per share (basic and
diluted)
Dividends per share:
Class A
Class B
Common
$
7,536
$
6.61%
8.51%
9.17
$
$
$
$
$
$
$
97.76%
0.17
0.20
0.063
0.067
0.134
$
$
$
$
$
3
3
MORTGAGE AND LOAN INVESTMENTS INFORMATION
Net mortgage and loan investments
Average net mortgage and loan investment
$
$
317,154
3,304
Weighted average interest rate
Average lender fee
Turnover ratio
9.81%
1.38%
24.22%
407,140
408,895
8,706
355,528
–
6,451
6.59%
7.40%
10.16
112.82%
–
–
0.189
0.201
–
368,253
4,783
10.14%
1.67%
13.48%
$
$
$
$
$
$
$
$
$
$
$
$
$
$
442,166
467,406
–
–
336,568
$
$
$
$
$
407,140
408,895
8,706
355,528
–
30,204
$
29,505
6.61%
8.33%
9.17
$
96.92%
0.65
0.79
0.630
0.670
0.134
317,154
3,304
9.81%
1.83%
79.76%
$
$
$
$
$
6.61%
7.68%
10.16
98.97%
–
–
0.780
0.828
–
368,253
4,783
10.14%
1.71%
80.07%
Targeted dividend yield equals the average 2-Year Government of Canada Bond Yield plus 550 basis points.
1
1 Targeted dividend yield equals the average 2-Year Government of Canada Bond Yield plus 550
basis points.
Actual dividend yield equals the total per share dividend for the stated perod for Class A shares and common shares
2
2 Actual dividend yield equals the total per share dividend for the stated perod for Class A shares
divided by the trading close price for the stated period (annualized).
and common shares divided by the trading close price for the stated period (annualized).
3
3 Refer to Non-IFRS Measures section, where applicable.
Refer to Non-IFRS Measures section, where applicable.
18
TIMBERCREEK MORTAGE INVESTMENT CORPORATION 6
For the three months ended December 31, 2013 (“Q4 2013”) and December 31, 2012 (“Q4
2012”)
•
The Company advanced 18 new mortgage investments (Q4 2012 – 13) totaling $51.8 million
(Q4 2012 – $83.1 million), had additional advances on existing mortgage investments totaling
$2.1 million (Q4 2012 – $4.5 million) and received full repayments on 11 mortgage investments
(Q4 2012 – 10) and partial pay downs totaling $85.8 million (Q4 2012 – $47.6 million), resulting
in net mortgage and loan investments of $317.2 million as at December 31, 2013 (December 31,
2012 – $368.3 million).
• Net interest income earned by the Company in Q4 2013 was $9.9 million (Q4 2012 – $9.8
million), an increase of $0.1 million, or 0.97%, over the same period last year.
•
•
•
•
•
The Company received non-refundable lender fees of $0.7 million (Q4 2012 – $1.4 million) or
1.38% (Q4 2012 – 1.67%) of new mortgage and loan investments funded in Q4 2013.
The Company generated income from operations of $6.8 million (Q4 2012 – $6.4 million), an
increase of $0.5 million, or 7.8%, over the same period last year. The increase over the same
period last year is a result of an increase in the average net mortgage and loan investment
portfolio over the same period last year.
Prior to the Transition, the Company paid dividends of $0.063 per Class A share for a total of
$2.2 million (Q4 2012 – $0.189; $6.5 million) and $0.067 per Class B share for a total of $0.2
million (Q4 2012 – $0.201; $0.8 million).
Subsequent to the Transition, the Company declared dividends of $0.13 per common share
for a total $5.0 million (Q4 2012 – Nil).
The Company redeemed requests from holders of 1,674,568 Class A shares and 259,771 Class
B shares for the Special Redemption. The total redemption payable of $18.1 million was paid
on November 27, 2013.
• On the Exchange Date, the Company exchanged all of the 32,829,013 outstanding Class A
shares and 3,887,053 outstanding Class B shares into 36,964,028 common shares.
•
In November 2013, the Company amended the terms of its revolving credit facility (the “Credit
Facility”) with its bank. Under the amended terms, the Company was provided a temporary
bulge of $18.1 million to fund the Special Redemption. The bulge was repaid in full prior to
December 31, 2013.
For the years ended December 31, 2013 (the “Year”) and December 31, 2012 (“2012”)
•
•
The Company completed a non-brokered private placement of 508,647 Class B shares for
gross proceeds of $5.0 million (2012 – 3,400,573; $34.0 million).
The Company redeemed requests from holders of 1,674,568 Class A shares and 259,771 Class
B shares for the Special Redemption. The total redemptions payable of $18.1 million were paid
on November 27, 2013.
• On the Exchange Date, the Company exchanged all of the 32,829,013 outstanding Class A
shares and 3,887,053 outstanding Class B shares into 36,964,028 common shares.
• During the Year, the Company advanced 69 new mortgage investments (2012 – 51) totaling
$198.7 million (2012 – $295.4 million), had additional advances on existing mortgage
investments of $42.6 million (2012 – $32.4 million) and received full repayments on 50
mortgage investments (2012 – 40) and partial pay downs totaling $283.1 million (2012 – $262.9
million), resulting in net mortgage and loan investments of $317.2 million (December 31, 2012
– $368.3 million) as at December 31, 2013.
• Net interest income earned by the Company for the Year was $39.7 million (2012 – $38.7
million), an increase of $1.1 million, or 2.8%, over the same period last year. The increase
over the same period last year is a result of an increase in the average net mortgage and loan
investment portfolio over the Year.
•
•
The Company received non-refundable lender fees of $3.6 million (2012 – $5.1 million) or
1.83% (2012 – 1.71%) of new mortgage and loan investments funded in the Year.
The Company generated income from operations of $25.5 million (2012 – $29.2 million), a
decrease of $3.7 million, or 12.67%, from the same period last year. The decrease from the last
19
Timbercreek Mortgage Investment CorporationTimbercreek Mortgage Investment Corporation
year is mostly a result of incurring the one time transition related costs of $3.5 million and
provision for mortgage and loan investments of $2.1 million.
Prior to the Transition, the Company paid dividends of $0.630 per Class A share for a total
of $21.9 million (2012 – $0.780; $25.8 million) and $0.670 per Class B share for a total of $2.4
million (2012 – $0.828; $3.4 million).
Subsequent to the Transition, the Company declared dividends of $0.13 per Common Share for
a total $5.0 million (Q4 2012 – Nil).
The Company’s actual dividend yield of 8.33% (2012 – 7.68%) exceeded its targeted dividend
yield of the 2-Year Government of Canada Bond Yield (“2-Yr GOC Yield”) plus 550 basis points
of 6.61% for the year ended December 31, 2013 (December 31, 2012 – 6.61%).
•
•
•
• On February 24, 2014 the Company closed on an unsecured convertible debenture offering
for gross proceeds of $30.0 million. The unsecured convertible debentures mature on March
31, 2019 and pay interest semi-annually on March 31 and September 30 of each year at rate
of 6.35%. On February 27, 2014, the underwriters exercised the over-allotment option for an
additional $4.5 million.
TIMBERCREEK MORTGAGE INVESTMENT CORPORATION
Management’s Discussion and Analysis
• On January 20, 2014 the Board of Directors appointed Andrew Jones as Chief Executive
For the year ended December 31, 2013
Officer of the Company, effective immediately, to replace Blair Tamblyn. Blair Tamblyn will
remain as Chairman of the Board of Directors.
AN ALYSIS O F FINANCIA L INFORM ATION FOR TH E YEAR
ANALYSIS OF FINANCIAL INFORMATION FOR THE YEAR
Distributable incom e
Year ended
December 31,
2013
Year ended
December 31,
2012
Net income (loss) and comprehensive income (loss)
$
507
$
Less: amortization of lender fees
Add: one-time Transition related costs
Add: lender fees received during the year
Add: amortization of financing costs
Add: issuance cost of redeemable shares
Add: net operating loss from foreclosed properties held for sale
Add: provision for mortgage and loan investments loss
Add: dividends to shareholders
Distributable income
Less: Dividends to holders of redeemable shares
Less: Dividends to common shareholders
(4,266)
3,530
3,633
144
3
182
2,150
24,321
30,204
(24,321)
(4,953)
(Over) / under distributions
$
930
$
Payout ratio
Turnover ratio
96.92%
79.76%
(402)
(4,525)
–
5,055
149
27
–
–
29,201
29,505
(29,201)
–
304
98.97%
80.07%
The distributable income reconciliation above provides a link between the Company’s IFRS reporting
The distributable income reconciliation above provides a link between the Company’s IFRS
reporting requirements, and its ability to generate recurring profit for dividends.
requirements, and its ability to generate recurring profit for dividends.
TIMBERCREEK MORTGAGE INVESTMENT CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2013
Statem ents of incom e (loss) and com prehensive incom e (loss)
Statements of income (loss) and comprehensive income (loss)
Three months ended
December 31,
Year ended
December 31,
2013
2012
%
Change
2013
2012
%
Change
Net interest income
$
9,926
$
9,831
1.0%
$
39,731
$
38,655
2.8%
Expenses
Income from
operations
Net operating loss
from foreclosed
properties held for
sale
Financing costs:
Interest on credit
facility
Issuance costs of
redeemable shares
Dividends to holders
of redeemable
shares
Net income (loss)
and
comprehensive
income (loss)
(3,082)
(3,481)
(27.3%)
(14,244)
(9,477)
50.3%
6,844
6,350
16.4%
25,487
29,178
(12.6%)
(182)
–
–
(182)
–
–
(195)
(91)
(114.4%)
(475)
(352)
(34.9%)
(3)
(10)
(73.2%)
(3)
(27)
(90.0%)
(2,414)
(7,278)
(66.8%)
(24,321)
(29,201)
(16.7%)
$
4,050
$
(1,029)
547.4%
$
506
$
(402)
225.8%
Net interest income1
Net interest incom e 1
The Company earned net interest income for the three months and year ended December 31,
The Company earned net interest income for the three months and year ended December 31, 2013 of $9.9
2013 of $9.9 million (Q4 2012 – $9.8 million) and $39.7 million (2012 – $38.7 million), respectively.
Net interest income is made up of the following:
million (Q4 2012 – $9.8 million) and $39.7 million (2012 – $38.7 million), respectively. Net interest income is
made up of the following:
(a) Interest income
(a) Interest income
For the three months and year ended December 31, 2013, the Company earned $8.7 million and
For the three months and year ended December 31, 2013, the Company earned $8.7 million and $34.9 million
$34.9 million (Q4 2012 – $8.6 million; 2012 – $33.2 million) in interest income on the net mortgage
and loan investments, respectively. The weighted average interest rate on the net mortgage and
(Q4 2012 – $8.6 million; 2012 – $33.2 million) in interest income on the net mortgage and loan investments,
loan investments decreased slightly over the Year, to 9.81% at December 31, 2013 from 10.14% at
respectively. The weighted average interest rate on the net mortgage and loan investments decreased slightly
December 31, 2012. While the average net mortgage and loan investment decreased over the Year,
over the Year, to 9.81% at December 31, 2013 from 10.14% at December 31, 2012. While the average net mortgage
it is still within the Company’s targeted range.
and loan investment decreased over the Year, it is still within the Company’s targeted range.
(b) Lender fee income
During the three months and year ended December 31, 2013, the Company received non-
refundable lender fees of $0.7 million and $3.6 million (Q4 2012 – $1.4 million; 2012 – $5.1 million),
or 1.38% and 1.83% (Q4 2012 – 1.67%; 2012 – 1.71%) of new net mortgage and loan investments
funded in the respective periods. These lender fees are amortized using the effective interest
1 For analysis purposes, net interest income and its component parts are discussed net of payments made on account of
rate method over the expected life of the mortgage investments to lender fee income. For the
three months and year ended December 31, 2013, $1.0 million and $4.3 million (Q4 2012 – $1.2
million; 2012 – $4.5 million) of non-refundable lender fees were amortized to lender fee income.
The lender fees generated by the Company continue to be a significant component of income
resulting from mortgage turnover, unlike other competing mortgage investment corporations,
ensuring management interests are aligned with the Company.
TIMBERCREEK MORTAGE INVESTMENT CORPORATION 10
(c) Other income
For the three months and year ended December 31, 2013, the Company earned $0.3 million
and $0.5 million (Q4 2012 – $0.03 million; 2012 – $0.9 million) in other income. Other income
includes fees earned on net mortgage and loan investment fundings, prepayment penalties and
exit fees earned on mortgage and loan investment repayments and other miscellaneous fees. The
Manager does not retain any portion of fees, thus maximizing the income of the Company.
Expenses
For the three months and year ended December 31, 2013, the Company’s expense ratio2 was
2.2% and 2.4% (Q4 2012 – 3.9%; 2012 – 2.9%), including a fixed expense ratio2 of 1.8% and 1.9%
(Q4 2012 – 2.1%; 2012 – 2.1%), respectively. As the Company continues to grow its mortgage and
loan investments portfolio, its expense ratio will decrease as several of the operating costs of the
Company do not increase in proportion to the size of the Company.
1 For analysis purposes, net interest income and its component parts are discussed net of payments made
on account of mortgage syndications to provide the reader with a more representative reflection of the
Company’s performance.
2 Defined in Non-IFRS Measures section.
20
TIMBERCREEK MORTAGE INVESTMENT CORPORATION 9
21
Timbercreek Mortgage Investment CorporationTimbercreek Mortgage Investment Corporation
Management fees
(a) Management fees
As part of the Transition, the Company has entered into a new management agreement with
Timbercreek Asset Management Inc. (the “Manager”) and terminated its management agreement
with Timbercreek Asset Management Ltd., a wholly owned subsidiary of the Manager. Under
the new management agreement, the Company pays the Manager an annual management fee
of 1.20% per annum of the gross assets of the Company, calculated and paid monthly in arrears,
plus applicable taxes. The gross assets are calculated as the total assets of the Company before
deducting any liabilities, less any amounts that are reflected as mortgage syndication liabilities
related to syndicated mortgage investments.
For the three months and year ended December 31, 2013, the Company incurred management fees
of $1.2 million and $5.0 million (Q4 2012 – $1.2 million; 2012 – $4.8 million). The management fee
has increased due to an increase in the average net mortgage and loan investment portfolio over
the Year.
(b) Performance fees
Under the new management agreement, the Manager continues to be entitled to a performance
fee. In any calendar year where the Company has net earnings available for distribution to
shareholders in excess of the hurdle rate (the “Hurdle Rate”), which is defined as the average two-
year Government of Canada Bond Yield for the 12-month period then ended plus 450 basis points,
the Manager is entitled to receive from the Company a performance fee equal to 20% of the net
earnings of the Company available to distribute over the Hurdle Rate. The net earnings of the
Company shall mean the net income before performance fees of the Company in accordance with
applicable accounting principles and adjusted for certain other non-cash adjustments as defined
in the management agreement. The performance fee is payable to the Manager within 15 days of
the issuance of the Company’s audited financial statements for that calendar year.
During the Year, the Manager accrued a Performance Fee of $2.0 million (2012 – $2.5 million). The
annualized Hurdle Rate for the Year was 5.61% (2012 – 5.61%).
Trailer fees
In conjunction with the shareholder approval for the Transition, the Company is no longer
required to pay trailer fees to the brokers effective for the quarter ended September 30, 2013. Prior
to Q3 2013, the Company paid each registered dealer a trailer fee equal to 0.50% annually of the
net redemption value per Class A share held by clients of the registered dealer, calculated and paid
at the end of each calendar quarter. For the Year, the Company incurred trailer fees of $0.7 million
(2012 – $1.4 million) for Class A shares.
Transition-related costs
In connection with the Transition, the Company incurred a one-time expense of $3.8 million,
which includes soliciting dealer fees of $2.5 million, soliciting broker fees of $0.7 million and audit,
legal and other related fees of $0.6 million. The Manager elected to assume responsibility for $0.3
million of costs relating to the Transition.
General and administrative
For the three months and year ended December 31, 2013, the Company incurred general and
administrative expenses of $0.4 million and $0.9 million (Q4 2012 – $0.3 million; 2012 – $0.8
million). General and administrative expenses consist mainly of audit fees, professional fees,
director fees and other operating costs associated with operating the Company and administration
of the mortgage and loan investement portfolio. The operating expenses ratio equates to 0.3% of
the average net mortgage and loan investments portfolio for the Year (2012 – 0.2%). The increase is
mainly due to costs associated with additional reporting requirements.
Interest on credit facility
Financing costs include interest paid on amounts drawn on the Credit Facility, stand-by fees
charged on unutilized Credit Facility amounts and amortization of financing costs which were
incurred on closing of the Credit Facility. Financing costs for the three months and year ended
December 31, 2013 were $0.2 million and $0.5 million (Q4 2012 - $0.09 million and 2012 – $0.4
million).
Issuance costs of redeemable shares
As the Class A and B shares were classified as liabilities under IFRS, the issuance costs associated
with periodic equity offerings were recorded as financing costs and were recognized in profit and
loss. For the Year, the Company incurred issuance costs of $3 (2012 – $27) relating to the issuance
TIMBERCREEK MORTGAGE INVESTMENT CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2013
Issuance costs of redeem able shares
As the Class A and B shares were classified as liabilities under IFRS, the issuance costs associated with periodic
equity offerings were recorded as financing costs and were recognized in profit and loss. For the Year, the
Company incurred issuance costs of $3 (2012 – $27) relating to the issuance of Class B shares on total gross
of Class B shares on total gross proceeds of $5.0 million (2012 – $34.0 million). The issuance costs
proceeds of $5.0 million (2012 – $34.0 million). The issuance costs include legal, professional and other costs
include legal, professional and other costs relating to the offering.
relating to the offering.
Dividends to holders of redeemable shares and common shares
Dividends to holders of redeem able shares and com m on shares
The Company intends to pay dividends to shareholders on a monthly basis within 15 days
The Company intends to pay dividends to shareholders on a monthly basis within 15 days following the end of
following the end of each month. Below is a summary of the dividends to holders of redeemable
each month. Below is a summary of the dividends to holders of redeemable shares and to common
shares and to common shareholders for the three months and year ended December 31, 2013 and
shareholders for the three months and year ended December 31, 2013 and 2012.
2012.
Class A
Class B
Common
Class A
Class B
Three months ended
December 31, 2013
Year ended
December 31, 2013
Dividends
per share
$ 0.063
$
0.067
0.134
Total
2,170
244
4,953
Dividends
per share
Total
$ 0.630
$
21,876
0.670
0.134
2,445
4,953
Three months ended
December 31, 2012
Year ended
December 31, 2012
Dividends
per share
Total
Dividends
per share
Total
$ 0.189
$
6,523
$ 0.780
$
25,793
0.201
755
0.828
3,408
–
Common
–
TIMBERCREEK MORTGAGE INVESTMENT CORPORATION
–
–
The current dividend yield of 8.33% on combined Class A and common shares, (based on the closing market
Management’s Discussion and Analysis
The current dividend yield of 8.33% on combined Class A and common shares, (based on the
price of common shares at the reporting date) is in excess of the Company’s targeted dividend yield of 6.61% (2-
closing market price of common shares at the reporting date) is in excess of the Company’s
Yr GOC Yield plus 550 basis points).
For the year ended December 31, 2013
targeted dividend yield of 6.61% (2-Yr GOC Yield plus 550 basis points).
STATEM ENT OF FIN AN CIAL PO SITIO N
STATEMENT OF FINANCIAL POSITION
M ortgage and loan investm ents
Mortgage and loan investments
The balance of net mortgage and loan investments is as follows:
The balance of net mortgage and loan investments is as follows:
Net mortgage and loan investments
$
317,154
$
368,253
$
(51,099)
Interest receivable
4,691
4,620
71
December 31,
2013
December 31,
2012
Change
(51,028)
TIMBERCREEK MORTAGE INVESTMENT CORPORATION 13
372,873
321,845
Unamortized lender fees
Provision for mortgage and loan investments
(3,508)
(550)
(4,141)
–
633
(550)
$
317,787
$
368,732
$
(50,945)
During the Year, the Company advanced 69 new mortgage investments (2012 – 51) totaling $198.7 million (2012
During the Year, the Company advanced 69 new mortgage investments (2012 – 51) totaling $198.7
million (2012 – $295.4 million), had additional advances on existing mortgage investments of
– $295.4 million), had additional advances on existing mortgage investments of $42.6 million (2012 – 32.4
$42.6 million (2012 – 32.4 million) and received full repayments on 50 mortgage investments
million) and received full repayments on 50 mortgage investments (2012 – 40) and partial pay downs totaling
(2012 – 40) and partial pay downs totaling $283.1 million (2012 – $262.9 million, resulting in
$283.1 million (2012 – $262.9 million, resulting in net mortgage and loan investments of $317.2 million
net mortgage and loan investments of $317.2 million (December 31, 2012 – $368.3 million) as at
(December 31, 2012 – $368.3 million) as at December 31, 2013, or a portfolio turnover rate of 79.8% (2012 – 80.1%).
December 31, 2013, or a portfolio turnover rate of 79.8% (2012 – 80.1%). As at December 31, 2013,
As at December 31, 2013, the average net mortgage and loan investment was approximately $3.3 million
the average net mortgage and loan investment was approximately $3.3 million (December 31,
(December 31, 2012 – $4.8 million), a reduction over the Year as the Company continues to share mortgage
2012 – $4.8 million), a reduction over the Year as the Company continues to share mortgage
investments with TSMIC and other third party lenders, which results in a lower exposure to individual mortgage
investments with TSMIC and other third party lenders, which results in a lower exposure to
investments. Further, the new net mortgage and loan investments for the Year equate to approximately 62.7% of
individual mortgage investments. Further, the new net mortgage and loan investments for the
the Company’s net mortgage and loan investments at year end (December 31, 2012 – 80.2%).
Year equate to approximately 62.7% of the Company’s net mortgage and loan investments at year
end (December 31, 2012 – 80.2%).
The Company enters into certain mortgage participation agreements with mainly third party lenders, using
senior and subordinated participation, whereby the third party lenders take the senior position and the
The Company enters into certain mortgage participation agreements with mainly third party
Company retains the subordinated position. These agreements generally provide an option to the Company to
lenders, using senior and subordinated participation, whereby the third party lenders take the
senior position and the Company retains the subordinated position. These agreements generally
repurchase the senior position, but not the obligation, at a purchase price equal to the outstanding principal
provide an option to the Company to repurchase the senior position, but not the obligation, at
amount of the lenders’ proportionate share together with all accrued interest. During the Year, the non-recourse
a purchase price equal to the outstanding principal amount of the lenders’ proportionate share
mortgage syndications have increased to $124.4 million (December 31, 2012 – $38.4 million), as the Company is
expanding its relationships with various lenders. These syndications provide the Company with flexibility
through the ability to buy-back the existing investments at a future date if desired.
22
23
TIMBERCREEK MORTAGE INVESTMENT CORPORATION 14
Timbercreek Mortgage Investment CorporationTimbercreek Mortgage Investment Corporation
TIMBERCREEK MORTGAGE INVESTMENT CORPORATION
TIMBERCREEK MORTGAGE INVESTMENT CORPORATION
together with all accrued interest. During the Year, the non-recourse mortgage syndications have
Management’s Discussion and Analysis
increased to $124.4 million (December 31, 2012 – $38.4 million), as the Company is expanding
Management’s Discussion and Analysis
its relationships with various lenders. These syndications provide the Company with flexibility
For the year ended December 31, 2013
through the ability to buy-back the existing investments at a future date if desired.
For the year ended December 31, 2013
Net mortgage and loan investment portfolio allocation
Net m ortgage and loan investm ent portfolio allocation
As at December 31, 2013, the Company’s mortgage and loan investments portfolio is comprised
Net m ortgage and loan investm ent portfolio allocation
of 96 mortgage investments (December 31, 2012 – 77), which were allocated across the following
As at December 31, 2013, the Company’s mortgage and loan investments portfolio is comprised of 96 mortgage
categories:
investments (December 31, 2012 – 77) which were allocated across the following categories:
As at December 31, 2013, the Company’s mortgage and loan investments portfolio is comprised of 96 mortgage
investments (December 31, 2012 – 77) which were allocated across the following categories:
(a) Security Position
(a) Security Position
(a) Security Position
First mortgages
First mortgages
Non-first mortgages
Non-first mortgages
December 31, 2013
December 31, 2013
% of Net Mortgage
and Loan
% of Net Mortgage
Investments
and Loan
Investments
61.1%
61.1%
38.9%
# of
Loans
# of
Loans
72
72
24
December 31, 2012
December 31, 2012
% of Net Mortgage
and Loan
% of Net Mortgage
Investments
and Loan
Investments
48.5%
48.5%
51.5%
# of
Loans
# of
Loans
49
49
28
24
96
96
38.9%
100.0%
100.0%
28
77
77
51.5%
100.0%
100.0%
The Company’s allocation of first vs. non-first mortgages has changed moderately from December 31, 2012 to
The Company’s allocation of first vs. non-first mortgages has changed moderately from December 31, 2012 to
December 31, 2013 with a 12.6% change in the portfolio allocation between these two positions at Year end. For
The Company’s allocation of first vs. non-first mortgages has changed moderately from December
31, 2012 to December 31, 2013 with a 12.6% change in the portfolio allocation between these two
December 31, 2013 with a 12.6% change in the portfolio allocation between these two positions at Year end. For
the Year, the Company co-invested in several mortgage investments with TSMIC and holds subordinate
positions at Year end. For the Year, the Company co-invested in several mortgage investments with
the Year, the Company co-invested in several mortgage investments with TSMIC and holds subordinate
mortgage positions in these co-investments in relation to TSMIC.
TSMIC and holds subordinate mortgage positions in these co-investments in relation to TSMIC.
mortgage positions in these co-investments in relation to TSMIC.
(b) Region
(b) Region
(b) Region
ON
ON
AB
AB
QC
QC
BC
BC
SK
SK
MB
MB
OT
OT
NS
NS
December 31, 2013
December 31, 2013
% of Net Mortgage
and Loan
% of Net Mortgage
Investments
and Loan
Investments
51.4%
51.4%
12.6%
12.6%
13.7%
13.7%
14.5%
14.5%
3.3%
3.3%
2.5%
2.5%
1.1%
1.1%
0.9%
0.9%
100.0%
100.0%
# of
Loans
# of
Loans
47
47
15
15
14
14
9
9
5
5
3
3
2
2
1
1
96
96
December 31, 2012
December 31, 2012
% of Net Mortgage
and Loan
% of Net Mortgage
Investments
and Loan
Investments
43.4%
43.4%
13.7%
13.7%
19.2%
19.2%
7.0%
7.0%
3.1%
3.1%
9.1%
9.1%
4.5%
4.5%
0.0%
0.0%
100.0%
100.0%
# of
Loans
# of
Loans
37
37
7
7
13
13
9
9
6
6
4
4
1
1
0
0
77
77
The Company continues to maintain a diversified portfolio of net mortgage and loan investments primarily
The Company continues to maintain a diversified portfolio of net mortgage and loan investments primarily
across Canada, with its greatest concentration in Canada’s largest provinces. As at December 31, 2013 92.2%
The Company continues to maintain a diversified portfolio of net mortgage and loan investments
across Canada, with its greatest concentration in Canada’s largest provinces. As at December 31, 2013 92.2%
(December 31, 2012 – 83.3%) of the net mortgage and loan investments were allocated across Ontario, Quebec,
primarily across Canada, with its greatest concentration in Canada’s largest provinces. As at
(December 31, 2012 – 83.3%) of the net mortgage and loan investments were allocated across Ontario, Quebec,
British Columbia and Alberta. The Company has continued to maintain significant exposure to Ontario as it has
December 31, 2013, 92.2% (December 31, 2012 – 83.3%) of the net mortgage and loan investments
British Columbia and Alberta. The Company has continued to maintain significant exposure to Ontario as it has
were allocated across Ontario, Quebec, British Columbia and Alberta. The Company has
benefited from sourcing mortgages secured by high-quality, cash flowing multi-family residential, retirement
benefited from sourcing mortgages secured by high-quality, cash flowing multi-family residential, retirement
continued to maintain significant exposure to Ontario as it has benefited from sourcing mortgages
and office assets in good markets, with multiple repeat borrowers with proven track records.
secured by high-quality, cash-flowing multi-family residential, retirement and office assets in
and office assets in good markets, with multiple repeat borrowers with proven track records.
good markets, with multiple repeat borrowers with proven track records.
TIMBERCREEK MORTAGE INVESTMENT CORPORATION 15
TIMBERCREEK MORTAGE INVESTMENT CORPORATION 15
24
TIMBERCREEK MORTGAGE INVESTMENT CORPORATION
TIMBERCREEK MORTGAGE INVESTMENT CORPORATION
Management’s Discussion and Analysis
Management’s Discussion and Analysis
For the year ended December 31, 2013
For the year ended December 31, 2013
(c) Maturity
(c) Maturity
(c) Maturity
Maturing 2013
Maturing 2013
Maturing 2014
Maturing 2014
Maturing 2015
Maturing 2015
Maturing 2016
Maturing 2016
Maturing 2017
Maturing 2017
December 31, 2013
December 31, 2013
% of Net Mortgage
% of Net Mortgage
and Loan
and Loan
Investments
Investments
–
–
32.0%
32.0%
51.3%
51.3%
15.1%
15.1%
1.6%
1.6%
December 31, 2012
December 31, 2012
% of Net Mortgage
% of Net Mortgage
and Loan
and Loan
Investments
Investments
32.2%
32.2%
33.2%
33.2%
27.0%
27.0%
7.6%
7.6%
0.0%
0.0%
# of
# of
Loans
Loans
38
38
24
24
13
13
2
2
–
–
100.0%
100.0%
77
77
100.0%
100.0%
# of
# of
Loans
Loans
–
–
38
38
41
41
16
16
1
1
96
96
The Company’s portfolio turnover rate for the Year was strong at 79.76% (December 31, 2012 – 80.07%). The
The Company’s portfolio turnover rate for the Year was strong at 79.76% (December 31, 2012 – 80.07%). The
The Company’s portfolio turnover rate for the Year was strong at 79.76% (December 31, 2012 –
Company’s strong portfolio turnover helps generate fee income, all of which goes to the Company, and helps
Company’s strong portfolio turnover helps generate fee income, all of which goes to the Company, and helps
80.07%). The Company’s strong portfolio turnover helps generate fee income, all of which goes
ensure the Company is able to respond quickly to a changing interest rate environment. The weighted average
to the Company, and helps ensure the Company is able to respond quickly to a changing interest
ensure the Company is able to respond quickly to a changing interest rate environment. The weighted average
term to maturity as at December 31, 2013 is 2.2 years (December 31, 2012 – 2.9 years), in-line with the portfolio’s
rate environment. The weighted average term to maturity as at December 31, 2013 is 2.2 years
term to maturity as at December 31, 2013 is 2.2 years (December 31, 2012 – 2.9 years), in-line with the portfolio’s
target maturity of 1.5 – 3.0 years.
(December 31, 2012 – 2.9 years), in-line with the portfolio’s target maturity of 1.5 – 3.0 years.
target maturity of 1.5 – 3.0 years.
(d) Asset Type
(d) Asset Type
(d) Asset Type
Multi-residential
Multi-residential
Office
Office
Retail
Retail
Retirement
Retirement
Industrial
Industrial
Unimproved land
Unimproved land
Other-residential
Other-residential
Hotels
Hotels
Self-storage
Self-storage
Single-family residential
Single-family residential
December 31, 2013
December 31, 2013
% of Net Mortgage
% of Net Mortgage
and Loan
and Loan
Investments
Investments
51.7%
51.7%
13.6%
13.6%
13.2%
13.2%
12.5%
12.5%
1.8%
1.8%
4.1%
4.1%
0.9%
0.9%
1.2%
1.2%
0.7%
0.7%
0.3%
0.3%
100.0%
100.0%
# of
# of
Loans
Loans
36
36
15
15
14
14
8
8
7
7
6
6
4
4
2
2
2
2
2
2
96
96
# of
# of
Loans
Loans
27
27
8
8
15
15
9
9
6
6
5
5
5
5
0
0
0
0
2
2
77
77
December 31, 2012
December 31, 2012
% of Net Mortgage
% of Net Mortgage
and Loan
and Loan
Investments
Investments
37.0%
37.0%
7.6%
7.6%
21.8%
21.8%
15.9%
15.9%
5.5%
5.5%
4.2%
4.2%
7.9%
7.9%
0.0%
0.0%
0.0%
0.0%
0.1%
0.1%
100.0%
100.0%
The Company has developed a lending niche predominantly targeting short-term mortgages, secured by cash-
TIMBERCREEK MORTGAGE INVESTMENT CORPORATION
The Company has developed a lending niche predominantly targeting short-term mortgages, secured by cash-
flowing assets, while specializing in multi-residential real estate assets. Historically, the Company has had very
The Company has developed a lending niche predominantly targeting short-term mortgages,
flowing assets, while specializing in multi-residential real estate assets. Historically, the Company has had very
secured by cash-flowing assets, while specializing in multi-residential real estate assets.
little exposure to land development, single-family residential, construction mortgages and construction loans,
little exposure to land development, single-family residential, construction mortgages and construction loans,
Management’s Discussion and Analysis
Historically, the Company has had very little exposure to land development, single-family
where demand is largely impacted by the strength or weakness of the Canadian housing market.
where demand is largely impacted by the strength or weakness of the Canadian housing market.
residential, construction mortgages and construction loans, where demand is largely impacted by
For the year ended December 31, 2013
the strength or weakness of the Canadian housing market.
TIMBERCREEK MORTAGE INVESTMENT CORPORATION 16
TIMBERCREEK MORTAGE INVESTMENT CORPORATION 16
(e) Interest Rate
(e) Interest Rate
9.99% or lower
10.00%–10.99%
11.00%–11.99%
12.00%–12.99%
13.00%–13.99%
14.00% or greater
December 31, 2013
December 31, 2012
# of
Loans
% of Net Mortgage
and Loan
Investments
# of
Loans
% of Net Mortgage
and Loan
Investments
47
23
17
4
3
2
96
59.3%
22.7%
12.3%
2.8%
0.3%
2.6%
100.0%
24
25
16
6
4
2
77
43.2%
38.1%
13.5%
3.9%
0.9%
0.4%
100.0%
The weighted average interest rate, excluding lender fee income, on the mortgage investments at December 31,
The weighted average interest rate, excluding lender fee income, on the mortgage investments
2013 was 9.81% (December 31, 2012 – 10.14%). Although the weighted average interest rate has slightly decreased
at December 31, 2013 was 9.81% (December 31, 2012 – 10.14%). Although the weighted average
over the Year, it is still significantly greater than the Company’s target dividend return for the Year of 6.61%
interest rate has slightly decreased over the Year, it is still significantly greater than the Company’s
(December 31, 2012 – 6.61%), equal to the 2-Yr GOC Yield plus 550 basis points, while providing sufficient margin
for operating expenses of the Company.
(f) Loan-to-value
25
December 31, 2013
December 31, 2012
% of Net Mortgage
% of Net Mortgage
# of
Loans
and Loan
Investments
# of
Loans
and Loan
Investments
55% or less
56%–60%
61%–65%
66%–70%
71%–75%
76%–80%
81%–85%
26
6
9
11
10
13
21
96
15.1%
3.0%
5.1%
9.8%
13.1%
19.1%
34.8%
12
3
6
13
11
15
17
77
9.4%
2.5%
4.3%
10.3%
27.3%
20.9%
25.3%
The loan-to-value on the mortgage and loan investment portfolio at December 31, 2013 was 61.7% (December 31,
2012 – 69.5%), well below the AAM’s ceiling of 85%.
100.0%
100.0%
TIMBERCREEK MORTAGE INVESTMENT CORPORATION 17
Timbercreek Mortgage Investment CorporationTimbercreek Mortgage Investment Corporation
TIMBERCREEK MORTGAGE INVESTMENT CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2013
(e) Interest Rate
9.99% or lower
10.00%–10.99%
11.00%–11.99%
12.00%–12.99%
13.00%–13.99%
14.00% or greater
December 31, 2013
December 31, 2012
% of Net Mortgage
% of Net Mortgage
# of
Loans
and Loan
Investments
# of
Loans
and Loan
Investments
47
23
17
4
3
2
96
59.3%
22.7%
12.3%
2.8%
0.3%
2.6%
100.0%
24
25
16
6
4
2
77
43.2%
38.1%
13.5%
3.9%
0.9%
0.4%
100.0%
The weighted average interest rate, excluding lender fee income, on the mortgage investments at December 31,
2013 was 9.81% (December 31, 2012 – 10.14%). Although the weighted average interest rate has slightly decreased
over the Year, it is still significantly greater than the Company’s target dividend return for the Year of 6.61%
target dividend return for the Year of 6.61% (December 31, 2012 – 6.61%), equal to the 2-Yr GOC Yield
(December 31, 2012 – 6.61%), equal to the 2-Yr GOC Yield plus 550 basis points, while providing sufficient margin
plus 550 basis points, while providing sufficient margin for operating expenses of the Company.
for operating expenses of the Company.
(f) Loan-to-value
(f) Loan-to-value
55% or less
56%–60%
61%–65%
66%–70%
71%–75%
76%–80%
81%–85%
December 31, 2013
December 31, 2012
# of
Loans
% of Net Mortgage
and Loan
Investments
# of
Loans
% of Net Mortgage
and Loan
Investments
26
6
9
11
10
13
21
96
15.1%
3.0%
5.1%
9.8%
13.1%
19.1%
34.8%
100.0%
12
3
6
13
11
15
17
77
9.4%
2.5%
4.3%
10.3%
27.3%
20.9%
25.3%
100.0%
The loan-to-value on the mortgage and loan investment portfolio at December 31, 2013 was 61.7% (December 31,
The loan-to-value on the mortgage and loan investment portfolio at December 31, 2013 was 61.7%
2012 – 69.5%), well below the AAM’s ceiling of 85%.
(December 31, 2012 – 69.5%), well below the AAM’s ceiling of 85%.
Foreclosed properties held for sale
Duing the Year, the Company foreclosed on two properties and reclassified the carrying amount of
the outstanding principal, interest receivable and related impairment provision on the underlying
security, as of the dates of foreclosure, to foreclosed properties held for sale. The fair value of the
foreclosed properties held for sale as at December 31, 2013 is $11.4 million (December 31, 2012 –
nil), which is based on valuations by independent external appraisers accredited by professional
TIMBERCREEK MORTAGE INVESTMENT CORPORATION 17
institutes with recent experience in the location of the properties being valued. The Company has
engaged a third party manager to operate the properties while they are held for sale.
Provision for mortgage and loan investments loss
For the three months and year ended December 31, 2013 the Company has recognized an
impairment provision of $950,000 and $2,150,000 (Q4 2012 – Nil, 2012 – Nil) relating to impaired
mortgage investments, which represents the total amount of the Manager’s estimate of the
shortfall between the principal balances and accrued interest and the estimated recoverable
amount of the underlying security of the mortgage investment. Overall, this provision exquates to
approximately 0.68% of the net mortgage and loan investments and foreclosed properties held for
sale of the Company. During the Year, the Company foreclosed two properties and $1.6 million was
reclassified from impairment provision to foreclosed closed properties held for sale.
Net working capital
The net working capital increased by $11.9 million to $12.0 million at December 31, 2013 from $0.1
million at December 31, 2012, mainly due to the cash on hand from the repayment of the loan
investment in December 2013. The Company has available its Credit Facility to manage its working
capital while ensuring idle cash is minimized.
Credit facility
In November 2013, the Company amended the terms of its Credit Facility with its bank. Under the
amended terms, the Company was provided a temporary bulge of $18.1 million to fund the Special
Redemption. The bulge was repaid in full prior to December 31, 2013. Following repayment of the
bulge the Credit Facility limit was $25.0 million (December 31, 2012 – $25.0 million). The Credit
Facility is primarily used to bridge timing differences between new mortgage and loan advances
and repayments or follow-on equity offerings. The Credit Facility expires in October 2014 and
is subject to an interest rate equal to the bank’s prime rate of interest plus 1.50% (December 31,
2012 – bank’s prime rate of interest plus 1.50%). The Credit Facility is secured by a general security
agreement over the Company’s assets. As at December 31, 2013, no amount was outstanding on
the Credit Facility (December 31, 2012 – $8.8 million).
Interest paid related to the Credit Facility is amortized to financing costs using the effective interest
rate method. For the year ended December 31, 2013, interest on the Credit Facility of $0.5 million
(December 31, 2012 –$0.4 million), was amortized to financing costs.
As at December 31, 2013, there were $0.1 million (December 31, 2012 – $0.1 million) in unamortized
financing costs related to the Credit Facility. For the year ended December 31, 2013, the Company
has amortized financing costs of $0.1 million (2012 – $0.1 million) respectively, to interest expense
using the effective interest rate method.
26
Net assets attributable to holders of redeemable shares
Under IFRS, IAS 32 requires that shares of an entity, which include a contractual obligation for
the issuer to repurchase or redeem the shares for cash or another financial asset, to be classified
as a financial liability. Prior to the Transition, the Company’s Class A and Class B shares did not
meet the criteria in IAS 32 for classification as equity and therefore, were classified as financial
liabilities. In addition, the dividends and issuance costs related to these shares were also presented
as financing costs in the statement of net income (loss) and comprehensive income (loss).
Subsequent to the Transition, as described in the ‘Transition to Public Company Regime’ section
of this MD&A, Class A and Class B shares were exchanged into common shares and are classified
as shareholders’ equity.
During the Year, the Company completed a non-brokered private placement of 508,647 Class B
shares, for gross proceeds of $5.0 million (2012 – 3,400,573; $34.0 million).
Dividend reinvestment plan
As part of the Transition, the Company has amended and restated its dividend reinvestment plan
(“DRIP”) effective as of November 20, 2013. The amended and restated DRIP (the “Amended DRIP”)
replaces in its entirety the original DRIP (the “Original DRIP”) established by the Company on May
19, 2010.
The Amended DRIP provides eligible beneficial and registered holders of common shares of the
Company with a means to reinvest dividends declared and payable on such common shares in
additional common shares.
Under the Amended DRIP, shareholders may enroll to have their cash dividends reinvested to
purchase additional common shares. The common shares are issued from treasury at a price of
95% of the average of the daily volume weighted average closing price on the TSX for the 5 trading
days preceding payment, the price of which will not be less than the book value per commons.
During the Year, 393,522 (2012 – 388,288) Class A shares were issued under the Original DRIP
using reinvested dividends of $3.7 million (2012 – $3.9 million) and 35,250 (2012 – nil) common
shares were issued under the Amended DRIP using reinvested dividends of $0.3 million. Of these,
194,948 Class A shares and 35,250 common shares were acquired from the market under the DRIP.
Normal course issuer bid
On June 6, 2013, the Company received the approval of the TSX to commence a normal course
issuer bid (the “NCIB”) to purchase for cancellation up to 3,476,193 Class A shares; representing
approximately 10% of the Class A shares float on June 4, 2013. The purchases were limited, during
any 30-day period during the term of the NCIB to 695,458 Class A shares in the aggregate. The
NCIB commenced on June 18, 2013, and provides the Company with the flexibility to repurchase
TIMBERCREEK MORTGAGE INVESTMENT CORPORATION
Class A shares for cancellation, with an expiry date of June 9, 2014, or such earlier date as the
NCIB is complete. From June 18, 2013 to November 29, 2013, the date of the exchange of the
Management’s Discussion and Analysis
Company’s Class A shares to common shares, the Company purchased for cancellation 362,800
Class A shares at a cost of $3,352. Following the exchange of the Class A Shares, further purchases
For the year ended December 31, 2013
pursuant to a NCIB will require the re-filing of certain documentation with the TSX in respect of
the common shares.
Com m on shares
Common shares
The Company is authorized to issue an unlimited number of common shares. The holders of
The Company is authorized to issue an unlimited number of common shares. The holders of common shares
common shares are entitled to receive notice of and to attend and vote at all meetings of the
are entitled to receive notice of and to attend and vote at all meetings of the shareholders of the Company. The
shareholders of the Company. The holders of the common shares shall be entitled to receive
holders of the common shares shall be entitled to receive dividends as and when declared by the board of
dividends as and when declared by the board of directors.
directors.
The common shares are classified as equity in the statements of financial position. Any
The common shares are classified as equity in the statements of financial position. Any incremental costs
incremental costs directly attributable to the issuance of common shares are recognized as a
directly attributable to the issuance of common shares are recognized as a deduction from equity.
deduction from equity.
The changes in the number of common shares are as follows:
The changes in the number of common shares are as follows:
Year ended December 31, 2013
Common shares issued as a result of exchange
Repurchased
Issuance of common shares under Amended DRIP
Common shares outstanding, end of year
December 31,
2013
36,964,028
(35,250)
35,250
36,964,028
QUARTERLY FINANCIAL INFORM ATION
The following is a quarterly summary of the Company’s results for the eight most recently completed quarters:
Q4
Q3
Q2
2013
2013
2013
Q1
2013
Q4
2012 Q3 2012
Q2
2012
Q1
2012
27
Net interest income
$ 9,926
$ 9,889
$ 9,397 $ 10,520
$ 9,831
$ 10,200
$ 9,677
$ 8,947
Expenses
(3,082)
(5,622)
(2,690)
(2,851)
(3,481)
(2,173)
(2,023)
(1,800)
Income from operations
6,844
4,267
6,707
7,669
6,350
8,027
7,654
7,147
Net operating loss from FPHFS
(182)
Financing costs:
Issuance costs of
redeemable shares
Dividends to holders of redeemable
Interest on credit facility
(195)
(98)
(91)
(90)
(91)
(87)
(82)
(93)
(3)
-
-
-
(10)
59
(69)
(7)
shares
(2,414)
(7,299)
(7,311)
(7,297)
(7,278)
(7,263) (7,701) (6,959)
(2,612)
(7,397)
(7,402)
(7,387)
(7,379)
(7,291) (7,852) (7,059)
Net income (loss) and
comprehensive income (loss)
$ 4,050
$(3,130) $ (695) $ 282 $(1,029) $
736
$
(198) $
88
The variations in net income (loss) by quarter are attributed to the following:
(i) Since Q1 2012, the Company has raised gross proceeds of approximately $39.0 million and the related
issuance costs incurred were expensed in profit and loss in the period raised. Further, the proceeds from
TIMBERCREEK MORTAGE INVESTMENT CORPORATION 20
Timbercreek Mortgage Investment CorporationTimbercreek Mortgage Investment Corporation
TIMBERCREEK MORTGAGE INVESTMENT CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2013
Com m on shares
directors.
The Company is authorized to issue an unlimited number of common shares. The holders of common shares
are entitled to receive notice of and to attend and vote at all meetings of the shareholders of the Company. The
holders of the common shares shall be entitled to receive dividends as and when declared by the board of
The common shares are classified as equity in the statements of financial position. Any incremental costs
directly attributable to the issuance of common shares are recognized as a deduction from equity.
The changes in the number of common shares are as follows:
Year ended December 31, 2013
Common shares issued as a result of exchange
Repurchased
Issuance of common shares under Amended DRIP
Common shares outstanding, end of year
December 31,
2013
36,964,028
(35,250)
35,250
36,964,028
QUARTERLY FINANCIAL INFORM ATION
QUARTERLY FINANCIAL INFORMATION
The following is a quarterly summary of the Company’s results for the eight most recently
completed quarters:
The following is a quarterly summary of the Company’s results for the eight most recently completed quarters:
Q4
Q3
Q2
2013
2013
2013
Q1
2013
Q4
2012
Q3
2012
Q2
2012
Q1
2012
Net interest income
$ 9,926
$ 9,889
$ 9,397 $ 10,520
$ 9,831
$ 10,200
$ 9,677
$ 8,947
Expenses
(3,082)
(5,622)
(2,690)
(2,851)
(3,481)
(2,173)
(2,023)
(1,800)
Income from operations
6,844
4,267
6,707
7,669
6,350
8,027
7,654
7,147
Net operating loss from FPHFS
(182)
Financing costs:
Interest on credit facility
(195)
(98)
(91)
(90)
(91)
(87)
(82)
(93)
Issuance costs of
redeemable shares
Dividends to holders of redeemable
(3)
-
-
-
(10)
59
(69)
(7)
shares
(2,414)
(7,299)
(7,311)
(7,297)
(7,278)
(7,263) (7,701) (6,959)
(2,612)
(7,397)
(7,402)
(7,387)
(7,379)
(7,291) (7,852) (7,059)
Net income (loss) and
comprehensive income (loss)
$ 4,050
$(3,130) $ (695) $ 282 $(1,029) $
736
$
(198) $
88
The variations in net income (loss) by quarter are attributed to the following:
The variations in net income (loss) by quarter are attributed to the following:
(i) Since Q1 2012, the Company has raised gross proceeds of approximately $39.0 million and the related
(i) Since Q1 2012, the Company has raised gross proceeds of approximately $39.0 million
issuance costs incurred were expensed in profit and loss in the period raised. Further, the proceeds from
and the related issuance costs incurred were expensed in profit and loss in the period
raised. Further, the proceeds from these offerings have been used to fund net mortgage
and loan investments, the timing of which typically occur around periodic offerings and
existing investment maturities, which vary throughout the years;
TIMBERCREEK MORTAGE INVESTMENT CORPORATION 20
(ii) The dividends to holders of redeemable shares were presented in the statement of income
(loss) and comprehensive income (loss) through October 2013, with the dividends
to common shareholders now presented in the statement of changes in equity from the
Exchange Date to December 31, 2013.
RELATED PARTY TRANSACTIONS
As at December 31, 2013, due to Manager includes management and performance fees payable of
$2,347 (December 31, 2012 – $2,461) and $3 (December 31, 2012 - $9) related to costs incurred by
the Manager on behalf of the Company.
As at December 31, 2013, the Company, Timbercreek Global Real Estate Fund (“TGREF”) and
Timbercreek Four Quadrant Global Real Estate Partners (“T4Q”), related parties by virtue of
common management, have co invested in three (December 31, 2012 – two) mortgage
investments amounting to $21,210 (December 31, 2012 – $29,850). On December 24, 2013, the
loan investment, which was co-invested in by these related parties was repaid in full, leaving a
balance of nil (December 31, 2012 – $16,521) as at December 31, 2013. As at December 31, 2013, no
amount (December 31, 2012 – $213) is receivable from T4Q and no amount (December 31, 2012
– $44) is payable to TGREF in relation to these investments. Timbercreek Asset Management Ltd.,
a wholly owned subsidiary of the Manger, has been retained by TGREF and T4Q to provide fund
management and portfolio advisory services.
As at December 31, 2013, the Company and Timbercreek Senior Mortgage Investment Corporation
(“TSMIC”), a related party by virtue of common management, have co-invested in several mortgage
investments, totaling $681,961 (December 31, 2012 – $392,870), which are secured primarily by
multi-residential, office, retail, retirement and other commercial properties. The Company holds
subordinated positions in these co-investments in relation to TSMIC. The Company’s net share
in these investments is $215,999 (December 31, 2012 – $86,202), and included in this amount is a
mortgage investment of $1,044 to a limited partnership, which is co-owned by T4Q. In addition,
$281 (December 31, 2012 – $4) is receivable by the Company from TSMIC relating to amounts paid
on behalf of the Company.
As at December 31, 2013, the Company, T4Q and Timbercreek Canadian Direct LP, related parties
by virtue of common management, have co-invested in a mortgage investment secured by a retail
property. The Company’s share in this mortgage investment is $667 (December 31, 2012 – $4,000).
As at December 31, 2013, included in other assets is $1,040 (December 31, 2012 – nil) of cash held
in trust for the Company by Timbercreek Mortgage Servicing Inc., a related party by virtue of
common management. The balance relates to mortgage funding holdbacks and prepaid interest
received from the borrowers.
The Manager has borne total costs of $250 relating to the Transition and are not included in the
Transition related costs in the statement of income (loss) and comprehensive income (loss).
COMMITMENTS AND CONTINGENCIES
In the ordinary course of business activities, the Company may be contingently liable for litigation
and claims arising from investing in mortgages and loans. Where required, management records
adequate provisions in the accounts.
Although it is not possible to accurately estimate the extent of potential costs and losses, if any,
management believes that the ultimate resolution of such contingencies would not have a
material adverse effect on the Company’s financial position.
CRITICAL ACCOUNTING ESTIMATES
The preparation of consolidated financial statements requires the use of certain critical
accounting estimates. It also requires management to exercise judgment in applying the
Company’s accounting policies. The critical accounting estimates and judgments have been
set out in detail in note 2 of the Company’s consolidated financial statements for the year ended
December 31, 2013.
FUTURE CHANGES IN ACCOUNTING POLICIES
A number of new standards, amendments to standards and interpretations are effective for
annual periods beginning on or after January 1, 2014 and have not been applied in preparing the
consolidated financial statements of the Company. Those which may be relevant to the Company
are set out below. The Company does not plan to adopt these standards early.
(i) IFRS 9, Financial instruments, (“IFRS 9”):
In November 2009 the IASB issued IFRS 9, Financial Instruments (IFRS 9 (2009)), and in
October 2010 published amendments to IFRS 9 (IFRS 9 (2010)). IFRS 9 (2009) introduces
new requirements for the classification and measurement of financial assets. Under IFRS
9 (2009), financial assets are classified and measured based on the business model in
which they are held and the characteristics of their contractual cash flows. IFRS 9 (2010)
introduces additional changes relating to financial liabilities. The mandatory effective date
is not yet determined. The extent of the impact of adoption of these amendments has not
yet been determined.
(ii) IAS 32, Financial Instruments: Presentation (“IAS 32”):
In December 2011, the IASB published Offsetting Financial Assets and Financial Liabilities
and issued new disclosure requirements in IFRS 7. The effective date for the amendments
to IAS 32 is annual periods beginning on or after January 1, 2014. These amendments are
to be applied retrospectively. The Company intends to adopt the amendments to IAS 32
in its consolidated financial statements for the annual period beginning January 1, 2014.
The Company does not expect the implementation of this standard to have a significant
impact on the consolidated financial statements.
(iii) Levies
In 2013, the International Accounting Standards Board (IASB) issued IFRIC 21, “Levies”
(“IFRIC 21”). The IFRIC addresses accounting for a liability to pay a levy within the scope
of IAS 37, “Provisions, contingent liabilities and contingent assets” (“IAS 37”). A levy is an
outflow of resources embodying economic benefits that is imposed by governments
on entities in accordance with legislation, other than income taxes within the scope of
annual periods beginning on or after January 1, 2014, and is to be applied retrospectively.
The Company is currently assessing the impact of the new interpretation on its
consolidated financial statements.
OUTSTANDING SHARE DATA
As at March 5, 2013, the Company’s authorized capital consists of an unlimited number of
common shares, of which 36,964,028 are issued and outstanding.
CAPITAL STRUCTURE AND LIQUIDITY
Capital structure
The Company manages its capital structure in order to support ongoing operations while
focusing on its primary objectives of preserving shareholder capital and generating a stable
monthly cash dividend to shareholders. The Company defines its capital structure to include
common shares and the Credit Facility.
28
29
Timbercreek Mortgage Investment CorporationTimbercreek Mortgage Investment Corporation
The Company reviews its capital structure on an ongoing basis and adjusts its capital structure in
response to mortgage and loan investment opportunities, the availability of capital and anticipated
changes in general economic conditions.
Liquidity
Access to liquidity is an important element of the Company as it allows the Company to
implement its investment strategy. The Company intends to qualify as a MIC as defined under
Section 130.1(6) of the Income Tax Act (Canada) and as a result is required to distribute not less
than 100% of the taxable income of the Company to its shareholders. The Company manages its
liquidity position through various sources of cash flows including cash generated from operations,
equity offerings and the Credit Facility. The Company routinely forecasts cash flow sources and
requirements to ensure cash is efficiently utilized. In addition, the Company has the borrowing
TIMBERCREEK MORTGAGE INVESTMENT CORPORATION
ability of $25.0 million through its Credit Facility and seeks manage the fluctuations in cash flows
TIMBERCREEK MORTGAGE INVESTMENT CORPORATION
as a result of the timing of mortgage and loan investment fundings and repayments and other
TIMBERCREEK MORTGAGE INVESTMENT CORPORATION
working capital needs. Of note, the Credit Facility was utilized by the Company to assist with
Management’s Discussion and Analysis
funding the Special Redemption.
Management’s Discussion and Analysis
Management’s Discussion and Analysis
For the year ended December 31, 2013
The following are the contractual maturities of financial liabilities as at December 31, 2013,
For the year ended December 31, 2013
including expected interest payments:
For the year ended December 31, 2013
holdbacks
Due to Manager
Mortgages funding
Mortgages funding
Mortgages funding
holdbacks
holdbacks
Dividends payable
Dividends payable
Dividends payable
Due to Manager
Due to Manager
Prepaid mortgage and
Prepaid mortgage and
loan interest
Prepaid mortgage and
loan interest
Accounts payable and
Accounts payable and
accrued expenses
Accounts payable and
accrued expenses
Unadvanced mortgage
Unadvanced mortgage
Unadvanced mortgage
accrued expenses
loan interest
and loan commitments
and loan commitments
and loan commitments
Carrying
Contractual
Values
Carrying
Carrying
Values
Values
cash flows
Contractual
Contractual
cash flows
cash flows
Within
Within
a year
Within
a year
a year
g
Followin
Following
year
g
year
year
3–5 years
3–5 years
3–5 years
Over 5
Over 5
years
Over 5
years
years
Followin
$
$
$
$
29
29 $
29
$
2,477
29
$
29
29
2,477
$
$
29
$
29
29
2,477
$
$
2,477
2,477
2,350
2,350
2,350
1,012
1,012
1,012
592
592
592
–
2,477
2,477
2,350
2,350
2,350
1,012
1,012
1,012
592
592
592
2,477
2,477
2,350
2,350
2,350
1,012
1,012
1,012
592
592
592
61,564
61,564
61,564
68,024
$
61,564
61,564
61,564
68,024
$
68,024
68,024
$
$
68,024
68,024
$
$
$
$
$
–
–
6,460
6,460 $
$
6,460
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
$
$
$
$
$
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
$
$
$
–
–
–
–
–
–
$
$
$
As at December 31, 2013, the Company‘s cash position was $12.3 million (December 31, 2012 – $0.9 million)
As at December 31, 2013, the Company‘s cash position was $12.3 million (December 31, 2012 – $0.9 million)
As at December 31, 2013, the Company‘s cash position was $12.3 million (December 31, 2012 – $0.9 million)
As at December 31, 2013, the Company‘s cash position was $12.3 million (December 31, 2012 –
including an undrawn Credit Facility of $25.0 million (December 31, 2012 – $16.2 million). The Company is
including an undrawn Credit Facility of $25.0 million (December 31, 2012 – $16.2 million). The Company is
$0.9 million) including an undrawn Credit Facility of $25.0 million (December 31, 2012 – $16.2
including an undrawn Credit Facility of $25.0 million (December 31, 2012 – $16.2 million). The Company is
confident that it will be able to finance its operations using the cash flow generated from operations, the Credit
million). The Company is confident that it will be able to finance its operations using the cash flow
confident that it will be able to finance its operations using the cash flow generated from operations, the Credit
confident that it will be able to finance its operations using the cash flow generated from operations, the Credit
Facility and the proceeds raised in subsequent offerings.
generated from operations, the Credit Facility and the proceeds raised in subsequent offerings.
Facility and the proceeds raised in subsequent offerings.
Facility and the proceeds raised in subsequent offerings.
FIN AN CIAL IN STRUM EN TS
FIN AN CIAL IN STRUM EN TS
FIN AN CIAL IN STRUM EN TS
FINANCIAL INSTRUMENTS
The Company has designated its financial instruments as follows:
The Company has designated its financial instruments as follows:
The Company has designated its financial instruments as follows:
The Company has designated its financial instruments as follows:
Classification
Measurement
Classification Measurement
Measurement
Classification
Financial assets
Financial assets
Financial assets
Mortgage and loan investments, including mortgage
Mortgage and loan investments, including mortgage
Mortgage and loan investments, including mortgage
Other assets
Credit facility
Amortized cost
Amortized cost
Amortized cost
Amortized cost
Amortized cost
Amortized cost
Amortized cost
Amortized cost
Amortized cost
Amortized cost
Loans and receivables
Loans and receivables
Loans and receivables
Loans and receivables
Loans and receivables
Loans and receivables
Loans and receivables
Loans and receivables
Loans and receivables
Loans and receivables
Loans and receivables
Loans and receivables
Financial liabilities
syndications
syndications
syndications
Restricted cash
Restricted cash
Restricted cash
Other assets
Other assets
Cash and cash equivalents
Cash and cash equivalents
Cash and cash equivalents
Financial liabilities
Financial liabilities
Credit facility
Credit facility
Non-recourse mortgage syndication liabilities
Non-recourse mortgage syndication liabilities
Non-recourse mortgage syndication liabilities
Prepaid mortgage and loan interest
Prepaid mortgage and loan interest
Mortgage funding holdbacks
Mortgage funding holdbacks
Due to Manager
Due to Manager
Dividends payable
Dividends payable
Accounts payable and accrued expenses
Amortized cost
Accounts payable and accrued expenses
Accounts payable and accrued expenses
The fair values of restricted cash, other assets, credit facility, accounts payable and accrued expenses, mortgage
The fair values of restricted cash, other assets, credit facility, accounts payable and accrued expenses, mortgage
The fair values of restricted cash, other assets, credit facility, accounts payable and accrued expenses, mortgage
funding holdbacks, dividends payable and due to Manager approximate their carrying amounts due to their
The fair values of restricted cash, other assets, credit facility, accounts payable and accrued
funding holdbacks, dividends payable and due to Manager approximate their carrying amounts due to their
funding holdbacks, dividends payable and due to Manager approximate their carrying amounts due to their
short-term nature.
expenses, mortgage funding holdbacks, dividends payable and due to Manager approximate their
short-term nature.
short-term nature.
carrying amounts due to their short-term nature.
Prepaid mortgage and loan interest
Mortgage funding holdbacks
Other financial liabilities
Other financial liabilities
Other financial liabilities
Other financial liabilities
Other financial liabilities
Other financial liabilities
Other financial liabilities
Other financial liabilities
Other financial liabilities
Other financial liabilities
Other financial liabilities
Other financial liabilities
Other financial liabilities
Other financial liabilities
Other financial liabilities
Other financial liabilities
Other financial liabilities
Other financial liabilities
Other financial liabilities
Other financial liabilities
Other financial liabilities
Dividends payable
Due to Manager
Amortized cost
Amortized cost
Amortized cost
Amortized cost
Amortized cost
Amortized cost
Amortized cost
Amortized cost
Amortized cost
Amortized cost
Amortized cost
Amortized cost
Amortized cost
Amortized cost
Amortized cost
Amortized cost
Amortized cost
Amortized cost
Amortized cost
Amortized cost
Amortized cost
Amortized cost
TIMBERCREEK MORTAGE INVESTMENT CORPORATION 24
TIMBERCREEK MORTAGE INVESTMENT CORPORATION 24
The fair value of mortgage and loan investments and mortgage syndication liabilities approximate
TIMBERCREEK MORTAGE INVESTMENT CORPORATION 24
to their carrying values given the mortgage investments consist of short-term loans that are
repayable at the option of the borrower without yield maintenance or penalties.
The Company’s use of financial instruments exposes the Company to various related risks, which
are outlined in note 17 of the consolidated financial statements of the Company.
RISKS AND UNCERTAINTIES
The Company is subject to certain risks and uncertainties that may affect the Company’s future
performance and its ability to execute on its investment objectives. We have processes and
procedures in place in an attempt to control or mitigate certain risks, while other risks 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
and loan investments at rates consistent with rates historically achieved, not having adequate
mortgage and loan investment opportunities presented to us, and not having adequate sources of
bank financing available.
For a full discussion of the risks and uncertainties, please also refer to the “Risk Factors” section of
our Annual Information Form for the year ended December 31, 2013.
DISCLOSURE CONTROLS AND PROCEDURES & INTERNAL CONTROL OVER FINANCIAL
REPORTING
Disclosure controls and procedures are designed to provide reasonable assurance that all relevant
information is gathered and reported to senior management, including the CEO and CFO on a
timely basis so appropriate decisions can be made regarding public disclosures.
The preparation of this information is supported by a set of disclosure controls and procedures
(“DC&P”) implemented by management. In fiscal 2013, these controls and procedures were
reviewed and the effectiveness of their design and operation was evaluated. This evaluation
confirmed the effectiveness of the design and operation of disclosure controls and procedures
as at December 31, 2013. The evaluation was performed in accordance with the Committee of
Sponsoring Organizations of the Treadway Commission (“COSO”) control framework adopted
by the Company and the requirements of National Instrument 52-109 of the Canadian Securities
Administrators titled, Certification of Disclosure in Issuers’ Annual and Interim Filings.
The Company continues to review the design of disclosure controls and procedures to
provide reasonable assurance that material information relating to the Company is properly
communicated to certifying officers responsible for establishing and maintaining disclosure
controls and procedures, as those terms are defined in National Instrument 52-109 certification
of disclosure in issuers’ annual and interim filings as at December 31, 2013. The Company
confirmed the effectiveness of the design of Internal Controls over Financial Reporting (“ICFR”)
to provide reasonable assurance regarding the reliability of financial statements and information
the Company may, from time to time, make changes aimed at enhancing their effectiveness and
ensuring that our systems evolve with our business.
There were no changes made in the Company’s internal controls over financial reporting during
the year ended December 31, 2013, that have materially affected, or are reasonably likely to
materially affect, the Company’s internal controls over financial reporting.
ADDITIONAL INFORMATION
Phone
Calling the Company at 1-866-898-8868, Carrie Morris, Managing Director Capital Markets &
Corporate Communications
Shareholders who wish to enroll in the DRIP or who would like further information about the plan
should contact Corporate Communications at (416) 306-9967 ext. 7266 (collect if long distance).
Internet
Visiting SEDAR at www.sedar.com; or
Mail
Writing to the Company at:
Timbercreek Mortgage Investment Corporation
Attention: Corporate Communications
1000 Yonge Street, Suite 500
Toronto, Ontario M4W 2K2
30
31
Timbercreek Mortgage Investment CorporationTimbercreek Mortgage Investment Corporation
Independent Auditors’ Report
To the Shareholders of Timbercreek Mortgage Investment Corporation
We have audited the accompanying consolidated financial statements of Timbercreek Mortgage
Investment Corporation (the “Company”), which comprise the consolidated statements of financial
position as at December 31, 2013 and December 31, 2012, the consolidated statements of net
income (loss) and comprehensive income (loss), changes in shareholders’ equity and net assets
attributable to holders of redeemable shares and cash flows for the years then ended, and notes,
comprising a summary of significant accounting policies and other explanatory information.
Management’s Responsibility 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 the consolidated
financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on the consolidated financial statements based on
our audits. We conducted our audits in accordance with Canadian generally accepted auditing
standards. Those standards require that we comply with ethical requirements and plan and
perform the audit to obtain reasonable assurance about whether the consolidated financial
statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the consolidated financial statements. The procedures selected depend on our
judgment, including the assessment of the risks of material misstatement of the consolidated
financial statements, whether due to fraud or error. In making those risk assessments, we consider
internal control relevant to the entity’s preparation and fair presentation of the consolidated
financial statements 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 entity’s internal
control. An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by management, as well as evaluating the overall
presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to
provide a basis for our audit opinion.
Opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the
consolidated financial position of the Company as at December 31, 2013 and December 31, 2012,
and its consolidated financial performance and its consolidated cash flows for the years then
ended, in accordance with International Financial Reporting Standards.
Chartered Professional Accountants, Licensed Public Accountants
March 5, 2014
Toronto, Canada
32
Consolidated Statements of
TIMBERCREEK MORTGAGE INVESTMENT CORPORATION
Financial Position
December 31, 2013 and 2012
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
December 31, 2013 and 2012
ASSETS
Cash and cash equivalents
Other assets (note 14(e))
Restricted cash (note 6)
Mortgage and loan investments, including mortgage
syndications (note 4)
Foreclosed properties held for sale (note 5)
Total assets
LIABILITIES AND EQUITY
Accounts payable and accrued expenses
Dividends payable (notes 10(a) and 11(b))
Due to Manager (note 14(a))
Credit facility (note 7)
Mortgage funding holdbacks
Prepaid mortgage and loan interest
Mortgage syndication liabilities (note 4)
December 31,
2013
December 31,
2012
$
12,348,449
$
992,671
1,540,102
–
366,634
395,088
442,165,777
407,140,364
11,351,435
–
467,405,763
408,894,757
592,421
2,476,592
2,349,736
–
28,809
1,011,565
868,300
2,428,105
2,469,511
8,706,383
129,262
357,235
124,378,929
38,407,891
Total liabilities (excluding net assets attributable
to holders of redeemable shares)
130,838,052
53,366,687
Net assets attributable to holders of redeemable shares
–
355,527,970
Shareholders’ equity
336,567,711
100
Total liabilities and equity
$ 467,405,763
$ 408,894,757
Commitments and contingencies (notes 4 and 19)
Subsequent event (note 21)
See accompanying notes to the consolidated financial statements.
TIMBERCREEK MORTGAGE INVESTMENT CORPORATION 2
33
Timbercreek Mortgage Investment CorporationTimbercreek Mortgage Investment Corporation
Consolidated Statements of Net Income
TIMBERCREEK MORTGAGE INVESTMENT CORPORATION
(Loss) and Comprehensive Income (Loss)
CONSOLIDATED STATEMENTS OF NET INCOME (LOSS)
Years ended December 31, 2013 and 2012
AND COMPREHENSIVE INCOME (LOSS)
Years ended December 31, 2013 and 2012
Interest income:
Interest, including mortgage syndications
$
39,024,302
$
35,479,082
2013
2012
Fees, including mortgage syndications
Interest and fees expense on mortgage syndications
Net interest income
Expenses:
Management fees (note 12(a))
Performance fees (note 12(a))
Trailer fees (note 12(b))
Transition related costs (note 1)
Provision for mortgage and loan investments loss (note 4(d))
Net unrealized foreign exchange (gain) loss
General and administrative
Income from operations
5,083,354
5,436,148
44,107,656
40,915,230
(4,376,377)
(2,260,275)
39,731,279
38,654,955
4,974,029
1,940,688
737,199
3,530,417
2,150,000
5,436
906,208
14,243,977
25,487,302
4,812,148
2,460,947
1,432,823
–
–
–
771,254
9,477,172
29,177,783
Net operating loss from foreclosed properties held for sale
181,845
–
Financing costs:
Interest on credit facility (note 7)
Issuance costs of redeemable shares
Dividends to holders of redeemable shares (note 10(b))
474,778
2,680
24,321,067
24,798,525
351,882
26,851
29,201,015
29,579,748
Net income (loss) and comprehensive income (loss)
$
506,932
$
(401,965)
Net income per share (note 13)
Basic and diluted
$
0.65
–
See accompanying notes to the consolidated financial statements.
TIMBERCREEK MORTGAGE INVESTMENT CORPORATION
Consolidated Statements of Changes
in Shareholders’ Equity and Net Assets
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’
Attributable to Holders of Redeemable Shares
EQUITY AND NET ASSETS ATTRIBUTABLE TO HOLDERS OF
REDEEMABLE SHARES
Years ended December 31, 2013 and 2012
Years ended December 31, 2013 and 2012
Redemption of redeemable shares
(15,511,769)
(2,553,549)
Repurchase of redeemable shares
(5,154,943)
–
Exchange of redeemable shares
1,037,375
(1,037,375)
2013
Net assets attributable to holders of
redeemable shares, beginning of
year
Gross proceeds from issuance
of redeemable shares
Issuance of redeemable shares under
dividend reinvestment plan
Exchange of redeemable shares to
common shares
Dividends to shareholders
Issuance of common shares under
dividend reinvestment plan
Repurchase of common shares
Net income and comprehensive
income for the year
Shareholders’ equity, end of
Class A
Shares
Class B
Shares
Common
Shares
Total
$ 319,585,511
$
35,942,459
$
– $
355,527,970
–
5,000,000
3,706,252
–
–
–
–
–
–
5,000,000
3,706,252
(18,065,318)
(5,154,943)
–
–
(303,662,426)
(37,351,535)
341,013,961
–
–
–
–
–
–
–
–
(4,953,182)
(4,953,182)
319,073
319,073
(319,073)
(319,073)
506,932
506,932
year
$
–
$
–
$ 336,567,711 $ 336,567,711
2012
Net assets attributable to holders of
redeemable shares, beginning of
year
Gross proceeds from issuance
of redeemable shares
Class A
Shares
Class B
Shares
Common
Shares
Total
$ 282,536,697
$ 35,674,222
$
–
$ 318,210,919
–
34,005,730
Issuance of redeemable shares under
dividend reinvestment plan
3,859,179
Redemption of redeemable shares
(145,893)
–
–
Exchange of redeemable shares
33,823,230
(33,823,230)
Net income (loss) and comprehensive
income (loss) for the year
(487,702)
85,737
–
–
–
–
–
34,005,730
3,859,179
(145,893)
–
(401,965)
TIMBERCREEK MORTGAGE INVESTMENT CORPORATION
Net assets attributable to
holders of redeemable shares,
end of year
$319,585,511
$35,942,459
$
–
$355,527,970
TIMBERCREEK MORTGAGE INVESTMENT CORPORATION 3
See accompanying notes to the consolidated financial statements.
TIMBERCREEK MORTGAGE INVESTMENT CORPORATION 4
34
35
TIMBERCREEK MORTGAGE INVESTMENT CORPORATION 5
Timbercreek Mortgage Investment CorporationTimbercreek Mortgage Investment Corporation
Consolidated Statements of Cash Flow
TIMBERCREEK MORTGAGE INVESTMENT CORPORATION
Years ended December 31, 2013 and 2012
CONSOLIDATED STATEMENTS OF CASH FLOW
Years ended December 31, 2013 and 2012
OPERATING ACTIVITIES
Net income (loss) and comprehensive income (loss)
$
506,932
$
(401,965)
2013
2012
Amortization of lender fees
Financing costs
Net unrealized foreign exchange gain
Impairment provision on mortgage and loan investments
Change in non-cash operating items:
Restricted cash
Interest receivable
Other assets
Accounts payable and accrued expenses
Due to Manager
Prepaid mortgage and loan interest
Mortgage funding holdbacks
Lender fees
FINANCING ACTIVITIES
Redemption of Class A redeemable shares
Proceeds from issuance of Class B redeemable shares
Redemption of Class B redeemable shares
Advances from (repayment of) credit facility
Interest paid
Repurchase of redeemable shares for cancellation
Issuance costs of redeemable shares
Dividends to holders of redeemable shares
Dividends to holders of common shares
INVESTING ACTIVITIES
(4,266,467)
24,798,525
(33,456)
2,150,000
395,088
(2,392,721)
(1,065,865)
(347,575)
(119,775)
654,330
(100,453)
3,633,287
(4,524,819)
29,579,748
–
–
5,512,859
1,849,643
(170,807)
394,999
1,329,040
(5,543,180)
(528,911)
5,054,523
23,811,850
32,551,130
(15,511,769)
5,000,000
(2,553,549)
(8,836,425)
(452,440)
(5,154,943)
(2,680)
(145,893)
34,005,730
–
8,836,425
(237,347)
–
–
(23,042,920)
(25,263,969)
(2,476,590)
–
(53,031,316)
17,194,946
Capital improvements to foreclosed properties held for sale
(1,251,462)
–
Funding of mortgage and loan investments, net of mortgage
syndications
(241,306,257)
(327,810,084)
Discharge of mortgage and loan investments, net of mortgage
syndications
Increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginning of year
283,132,963
262,913,692
40,575,244
(64,896,392)
11,355,778
992,671
(15,150,316)
16,142,987
Cash and cash equivalents, end of year
$ 12,348,449
$
992,671
See accompanying notes to consolidated financial statements.
TIMBERCREEK MORTGAGE INVESTMENT CORPORATION 6
Notes to the Consolidated
Financial Statements
Years ended December 31, 2013 and 2012
Timbercreek Mortgage Investment Corporation (the “Company”) is a mortgage investment
corporation domiciled in Canada. The registered office of the Company is 1000 Yonge Street, Suite
500, Toronto, Ontario M4W 2K2.
The Company is incorporated under the laws of the Province of Ontario by Articles of
Incorporation dated April 30, 2008. Effective September 13, 2013 (the “Effective Date”), the
Company filed articles of amendment with the Ministry of Government Services of Ontario
in connection with the Transition, as defined in note 1 below, to amend, among other things,
certain provisions of the articles of the Company related to the rights attached to the existing
redeemable Class A, Class B and voting classes of shares, and provide for the creation of a new
class of common shares for which all existing classes of redeemable shares will be exchanged on
November 29, 2013.
The investment objective of the Company is, with a primary focus on capital preservation, to
acquire and maintain a diversified portfolio of mortgage and loan investments that generate
income allowing the Company to pay monthly dividends to shareholders.
1. TRANSITION TO PUBLIC COMPANY REGIME
On September 12, 2013, the Company received shareholder approval for the Company’s transition
(the “Transition”) from the Canadian securities regulatory regime for investment funds to the
regulatory regime for non-investment fund reporting issuers (the “Public Company Regime”).
Beginning on the Effective Date, the Company is subject to and files all continuous disclosure
materials in compliance with the Public Company Regime requirements, which includes
preparation of its financial statements in accordance with International Financial Reporting
Standards (“IFRS”), along with a Management’s Discussion and Analysis.
As part of the Transition, the Company provided a one-time special redemption right of up to
15% of the issued and outstanding shares of each class (the “Special Redemption”). The Company
redeemed requests from holders of 1,674,568 Class A shares and 259,771 Class B shares for the
Special Redemption. The total redemption payable of $18,026,557 was paid on November 27,
2013. On November 29, 2013 (the “Exchange Date”), the Company exchanged all of the 32,829,013
outstanding Class A shares and 3,887,053 outstanding Class B Shares into a newly created class of
common shares. The common shares commenced trading on the Toronto Stock Exchange (“TSX”)
on November 29, 2013, continuing under the symbol ‘TMC’ and the Class A shares ceased to trade
after the close of market on November 28, 2013.
Also effective September 13, 2013, the Company entered into a new management agreement with
Timbercreek Asset Management Inc. (the “Manager”) and terminated its management agreement
with Timbercreek Asset Management Ltd., a wholly owned subsidiary of the Manager. The
Manager is responsible for the day-to-day operations and providing all general management,
mortgage servicing and administrative services for the Company’s mortgage and loan
investments.
Additionally, Messrs. Ugo Bizzarri and Andrew Jones have been elected as additional directors of
the Company.
In connection with the Transition, the Company has incurred total costs of $3,780,417, which
includes soliciting dealer fees, soliciting broker fees, audit fees, legal fees and other related
costs. Timbercreek Asset Management Inc., in its capacity as the Manager, elected to assume
responsibility for $250,000 of costs relating to the Transition.
36
37
Timbercreek Mortgage Investment CorporationTimbercreek Mortgage Investment Corporation
2. BASIS OF PREPARATION
(a) Statement of compliance:
These consolidated financial statements have been prepared in accordance with IFRS as issued
by the International Accounting Standards Board (“IASB”) and were approved by the Board of
Directors on March 5, 2014.
(b) Functional and presentation currency:
These consolidated financial statements are presented in Canadian dollars, which is the functional
currency of the Company.
(c) Basis of measurement:
The consolidated financial statements have been prepared on the historical cost basis except
for foreclosed properties held for sale and foreign exchange forward contract and which are
measured at fair value on each reporting date.
(d) Principles of consolidation:
These consolidated financial statements include the accounts of the Company and its wholly
owned subsidiaries including Timbercreek Mortgage Investment Fund. All intercompany
transactions and balances are eliminated upon consolidation.
(e) Use of estimates and judgments:
In the preparation of these consolidated financial statements, the Manager has made judgments,
estimates and assumptions that affect the application of the Company’s accounting policies and
the reported amounts of assets, liabilities, income and expenses. Actual results may differ from
these estimates.
In making estimates, the Manager relies on external information and observable conditions
where possible, supplemented by internal analysis as required. Those estimates and judgments
have been applied in a manner consistent with the prior period and there are no known trends,
commitments, events or uncertainties that we believe will materially affect the methodology or
assumptions utilized in making those estimates and judgments in these consolidated financial
statements. The significant estimates and judgments used in determining the recorded amount
for assets and liabilities in the consolidated financial statements are as follows:
Mortgage and loan investments:
The Company is required to make an assessment of the impairment of mortgage and loan
investments. Mortgage and loan investments are considered to be impaired only if objective
evidence indicates that one or more events (“loss events”) have occurred after its initial
recognition, that have a negative effect on the estimated future cash flows of that asset. The
estimation of future cash flows includes assumptions about local real estate market conditions,
market interest rates, availability and terms of financing, underlying value of the security and
various other factors. These assumptions are limited by the availability of reliable comparable
market data, economic uncertainty and the uncertainty of future events. Accordingly, by their
nature, estimates of impairment are subjective and may not necessarily be comparable to the
actual outcome. Should the underlying assumptions change, the estimated future cash flows
could vary.
Measurement of fair values:
The Company’s accounting policies and disclosures require the measurement of fair values for
both financial and non-financial assets and liabilities.
When measuring the fair value of an asset or liability, the Company uses market observable data
where possible. Fair values are categorized into different levels in a fair value hierarchy based on
the inputs used in the valuation techniques as follows:
•
•
•
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Inputs other than quoted prices included within level 1 that are observable for the
asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices).
Level 3: Inputs for the asset or liability that are not based on observable market data (that
is, unobservable inputs).
The Manager reviews significant unobservable inputs and valuation adjustments. If third party
information, such as broker quotes or appraisals are used to measure fair values, the Manager will
assess the evidence obtained from the third parties to support the conclusion that such valuations
meet the requirements of IFRS, including the level in the fair value hierarchy in which such
valuations should be classified.
The information about the assumptions made in measuring fair value is included in the following
notes:
Note 5 - Foreclosed properties held for sale; and
Note 18 - Fair value measurements.
3. SIGNIFICANT ACCOUNTING POLICIES
(a) Cash and cash equivalents:
The Company considers highly liquid investments with an original maturity of three months
or less that are readily convertible to known amounts of cash and which are subject to an
insignificant risk of changes in value to be cash equivalents. Cash and cash equivalents are
classified as loans and receivables and carried at amortized cost.
(b) Mortgage and loan investments:
The mortgage and loan investments are recognized initially at fair value plus any directly
attributable transaction costs. Subsequent to initial recognition, the mortgage and loan investments
are measured at amortized cost using the effective interest method, less any impairment losses.
The mortgage and loan investments are assessed on each reporting date to determine whether
there is objective evidence of impairment. A financial asset is considered to be impaired only if
objective evidence indicates that one or more loss events have occurred after its initial recognition,
that have a negative effect on the estimated future cash flows of that asset.
The Company considers evidence of impairment for mortgage and loan investments at both a
specific asset and collective level. All individually significant mortgage and loan investments are
assessed for specific impairment. Those found not to be specifically impaired are then collectively
assessed for any impairment that has been incurred but not yet identifiable at an individual
mortgage level. Mortgage and loan investments that are not individually significant are collectively
assessed for impairment by grouping together mortgage and loan investments with similar risk
characteristics.
In assessing collective impairment, the Company reviews historical trends of the probability of
default, the timing of recoveries and the amount of loss incurred, adjusted for management’s
judgments as to whether current economic and credit conditions are such that the actual losses
are likely to be greater or less than suggested by historical trends.
An impairment loss in respect of specific mortgage and loan investments is calculated as the
difference between its carrying amount including accrued interest and the present value of the
estimated future cash flows discounted at the investment’s original effective interest rate. Losses
are recognized in profit and loss and reflected in an allowance account against the mortgage and
loan investments. When a subsequent event causes the amount of an impairment loss to decrease,
the decrease in impairment loss is reversed through profit or loss.
(c) Foreclosed properties held for sale:
When the Company obtains legal title of the underlying security of an impaired mortgage
investment, the carrying value of the mortgage investment, which comprises of principal, costs
incurred, accrued interest and a provision for mortgage investment loss, if any, is reclassified from
mortgage and loan investments to foreclosed properties held for sale (“FPHFS”). At each reporting
date, FPHFS are measured at fair value, with changes in fair value recorded in profit or loss in
the period they arise. The Company uses management’s best estimate to determine fair value
of the properties, which may involve frequent inspections, engaging realtors to assess market
conditions based on previous property transactions or, retaining professional appraisers to provide
independent valuations.
Contractual interest on the mortgage or loan investment is discontinued from the date of transfer
from mortgage and loan investments to FPHFS. Net income or loss generated from FPHFS
(including fair value adjustments), if any, is recorded as net operating income or loss from FPHFS.
(d) Foreign exchange forward contract:
The Company holds a derivative financial instrument to hedge its foreign currency risk exposure.
Derivatives are recognized initially at fair value, with transaction costs recognized in profit or loss
as incurred. Subsequent to initial recognition, derivatives are measured at fair value at the end of
each reporting period. Any resulting gain or loss is recognized in profit or loss unless the derivative
is designated and effective as a hedging instrument under IFRS. The Company has elected to not
account for its derivative instrument as a hedge.
38
39
Timbercreek Mortgage Investment CorporationTimbercreek Mortgage Investment Corporation (e) Dividends:
Dividends payable to holders of common shares are recognized in the consolidated statement
of changes in shareholders’ equity and net assets attributable to holders of redeemable shares.
Prior to the Transition, dividends payable to holders of redeemable shares were recognized in the
consolidated statements of net income (loss) and comprehensive income (loss) as financing costs.
(f) Income taxes:
It is the intention of the Company to qualify as a mortgage investment corporation (“MIC”) for
Canadian income tax purposes. As such, the Company is able to deduct, in computing its income
for a taxation year, dividends paid to its shareholders during the year or within 90 days of the
end of the year. The Company intends to maintain its status as a MIC and pay dividends to its
shareholders in the year and in future years to ensure that it will not be subject to income taxes.
Accordingly, for financial statement reporting purposes, the tax deductibility of the Company’s
dividends results in the Company being effectively exempt from taxation and no provision for
current or deferred taxes is required for the Company and its subsidiaries.
(g) Financial instruments:
Financial instruments are classified as one of the following: (i) fair value through profit and
loss (“FVTPL”), (ii) loans and receivables, (iii) held-to-maturity, (iv) available-for-sale, or (v) other
liabilities. Financial instruments are recognized initially at fair value, plus in the case of financial
instruments not FVTPL any incremental direct transaction costs. Financial assets and liabilities
classified as FVTPL are subsequently measured at fair value with gains and losses recognized in
profit and loss. Financial instruments classified as held-to-maturity, loans and receivables or other
liabilities are subsequently measured at amortized cost. Available-for-sale financial instruments
are subsequently measured at fair value and any unrealized gains and losses are recognized
through other comprehensive income. The classifications of the Company’s financial instruments
are outlined in note 18.
Prior to the Transition, net assets attributable to holders of redeemable shares were carried on the
consolidated statements of financial position at net asset value. The presentation of net assets
attributable to holders of redeemable shares reflected, in total, that the interests of the holders were
limited to the net assets of the Company. After the Transition, redeemable shares were exchanged
to common shares and are classified as shareholders’ equity in the statement of financial position
as at December 31, 2013, as outlined in note 1.
(h) Derecognition of financial assets and liabilities:
Financial assets:
The Company derecognizes a financial asset when the contractual rights to the cash flows
from the financial asset expire; or it transfers the rights to receive the contractual cash flows in
a transaction in which substantially all the risks and rewards of ownership of the financial asset
are transferred, or in which the Company neither transfers nor retains substantially all the risks
and rewards of ownership and it does not retain control of the financial asset. Any interest in
such transferred financial assets that qualify for derecognition that is created or retained by the
Company is recognized as a separate asset or liability. On derecognition of a financial asset, the
difference between the carrying amount of the asset (or the carrying amount allocated to the
portion of the asset transferred), and the sum of (i) the consideration received (including any new
asset obtained less any new liability assumed) and (ii) any cumulative gain or loss that had been
recognized in other comprehensive income is recognized in profit or loss.
The Company enters into transactions whereby it transfers mortgage investments recognized on
its statement of financial position, but retains either all, substantially all, or a portion of the risks
and rewards of the transferred mortgage investments. If all or substantially all risks and rewards are
retained, then the transferred mortgage or loan investments are not derecognized.
In transactions in which the Company neither retains nor transfers substantially all the risks
and rewards of ownership of a financial asset and it retains control over the asset, the Company
continues to recognize the asset to the extent of its continuing involvement, determined by the
extent to which it is exposed to changes in the value of the transferred asset.
Financial liabilities:
The Company derecognizes a financial liability when the obligation under the liability is
discharged, cancelled or expires.
(i) Interest and fee income:
Interest income is accounted for using the effective interest method. Lender fees received are an
integral part of the yield on the mortgage or loan investments and are amortized to profit and loss
over the expected life of the specific mortgage or loan investment using the effective interest rate
method. Forfeited lender fees are taken to profit and loss at the time a borrower has not fulfilled the
terms and conditions of a lending commitment and payment has been received.
(j) Changes in accounting policies:
Except for the changes below, the Company has consistently applied the accounting policies
set out to all periods presented in these consolidated financial statements. The Company has
adopted the following new standards and amendments to standards, including any consequential
amendments to other standards, with a date of initial application of January 1, 2013.
a) IFRS 10 Consolidated Financial Statements (2011)
b) IFRS 11 Joint Arrangements
c) IFRS 12 Disclosure of Interests in Other Entities
d) IFRS 13 Fair Value Measurement
e) Presentation of Items of Other Comprehensive Income (Amendments to IAS 1)
f) IAS 19 Employee Benefits (2011)
With the exception of IFRS 13, Fair Value Measurements, there were no material effects upon
adoption of these new standards and amendments to standards.
IFRS 13 establishes a single framework for measuring fair value and making disclosures about fair
value measurements when such measurements are required or permitted by other IFRSs. It unifies
the definition of fair value as the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the measurement date. It replaces
and expands the disclosure requirements about fair value measurements in other IFRSs, including
IFRS 7. As a result, the Company has included additional disclosures in this regard (see notes 2(e), 5
and 18).
(k) Future changes in accounting policies:
A number of new standards, amendments to standards and interpretations are effective for annual
periods beginning on or after January 1, 2014 and have not been applied in preparing these
consolidated financial statements. Those which may be relevant to the Company are set out below.
The Company does not plan to adopt these standards early.
(i) IFRS 9, Financial instruments, (“IFRS 9”):
In November 2009 the IASB issued IFRS 9, Financial Instruments (IFRS 9 (2009)), and in
October 2010 published amendments to IFRS 9 (IFRS 9 (2010)). IFRS 9 (2009) introduces new
requirements for the classification and measurement of financial assets. Under IFRS 9 (2009),
financial assets are classified and measured based on the business model in which they are
held and the characteristics of their contractual cash flows. IFRS 9 (2010) introduces additional
changes relating to financial liabilities. The mandatory effective date is not yet determined.
The extent of the impact of adoption of these amendments has not yet been determined.
(ii) IAS 32, Financial Instruments: Presentation (“IAS 32”):
In December 2011, the IASB published Offsetting Financial Assets and Financial Liabilities and
issued new disclosure requirements in IFRS 7. The effective date for the amendments to IAS 32
is annual periods beginning on or after January 1, 2014. These amendments are to be applied
retrospectively. The Company intends to adopt the amendments to IAS 32 in its consolidated
financial statements for the annual period beginning January 1, 2014. The Company does not
expect the implementation of these standards to have a significant impact on the consolidated
financial statements.
(iii) Levies
In 2013, the International Accounting Standards Board (IASB) issued IFRIC 21, “Levies” (“IFRIC
21”). The IFRIC addresses accounting for a liability to pay a levy within the scope of IAS 37,
“Provisions, contingent liabilities and contingent assets” (“IAS 37”). A levy is an outflow of
resources embodying economic benefits that is imposed by governments on entities in
accordance with legislation, other than income taxes within the scope of annual periods
beginning on or after January 1, 2014, and is to be applied retrospectively. The Company
is currently assessing the impact of the new interpretation on its consolidated financial
statements.
40
41
Timbercreek Mortgage Investment CorporationTimbercreek Mortgage Investment Corporation
TIMBERCREEK MORTGAGE INVESTMENT CORPORATION
Notes to the Consolidated Financial Statements
Years ended December 31, 2013 and 2012
4. M ORTGAGE AN D LOAN INVESTM EN TS, IN CLU DING M ORTGAGE
4. MORTGAGE AND LOAN INVESTMENTS, INCLUDING MORTGAGE SYNDICATIONS
SYN DICATION S
December 31, 2013
Mortgage investments, including
Gross mortgage
investments
Mortgage
syndication
liabilities
Net
mortgage syndications (a) and (c)
$ 441,136,647
$ (123,982,494)
$
317,154,153
Interest receivable
5,384,798
(694,227)
Unamortized lender fees
(3,805,668)
297,792
446,521,445
(124,676,721)
4,690,571
321,844,724
(3,507,876)
Provision for mortgage and loan
investments loss (d)
December 31, 2012
Mortgage investments, including
(550,000)
–
(550,000)
$ 442,165,777
$ (124,378,929)
$ 317,786,848
Gross mortgage
and loan
investments
Mortgage
syndication
liabilities
Net
mortgage syndications (a) and (c)
$
390,216,024
$
(38,483,813)
$
351,732,211
Loan investments (b)
Interest receivable
16,520,826
4,721,310
–
(100,819)
16,520,826
4,620,491
411,458,160
(38,584,632)
372,873,528
Unamortized lender fees
(4,317,796)
176,741
(4,141,055)
$ 407,140,364
$ (38,407,891)
$368,732,473
(a) Mortgage investments:
(a) M ortgage investm ents:
Interest in first mortgages
Interest in non-first mortgages
December 31,
2013
$
193,574,221
123,579,932
%
61
39
December 31,
2012
$
159,136,575
192,595,636
%
45
55
100
$ 317,154,153
100
$ 351,732,211
The mortgage investments are secured by real property, bear interest at a weighted average interest rate of 9.81%
The mortgage investments are secured by real property, bear interest at a weighted average
(December 31, 2012 – 10.14%) and mature between 2014 and 2017 (December 31, 2012 – 2013 and 2016).
interest rate of 9.81% (December 31, 2012 – 10.14%) and mature between 2014 and 2017 (December
31, 2012 – 2013 and 2016).
A majority of the mortgage investments contain a prepayment option, whereby the borrower may repay the
TIMBERCREEK MORTGAGE INVESTMENT CORPORATION
principal at any time prior to maturity without penalty or yield maintenance.
A majority of the mortgage investments contain a prepayment option, whereby the borrower may
Notes to the Consolidated Financial Statements
repay the principal at any time prior to maturity without penalty or yield maintenance.
For the year ended December 31, 2013, the Company received total lender fees, net of fees relating to mortgage
syndication liabilities of $3,633,287 (2012 – $5,054,523), respectively, which are amortized to interest income
Years ended December 31, 2013 and 2012
For the year ended December 31, 2013, the Company received total lender fees, net of fees
over the term of the related mortgage investments using the effective interest rate method.
relating to mortgage syndication liabilities of $3,633,287 (2012 – $5,054,523), respectively, which
For the year ended December 31, 2013, the Company received total lender fees, net of fees relating to mortgage
are amortized to interest income over the term of the related mortgage investments using the
effective interest rate method.
syndication liabilities of $3,633,287 (2012 – $5,054,523), respectively, which are amortized to interest income
over the term of the related mortgage investments using the effective interest rate method.
The unadvanced mortgage commitments under the existing mortgage investments amounted
to $61,563,733 as at December 31, 2013 (December 31, 2012 – $39,177,491). Subsequent to the year
The unadvanced mortgage commitments under the existing mortgage investments amounted to $61,563,733 as
end, $1,863,751 of the commitments have expired.
at December 31, 2013 (December 31, 2012 – $39,177,491). Subsequent to the year end, $1,863,751 of the
TIMBERCREEK MORTGAGE INVESTMENT CORPORATION 15
commitments have expired.
Principal repayments, net of mortgage syndications, based on contractual maturity dates are as
follows:
Principal repayments, net of mortgage syndications, based on contractual maturity dates are as follows:
2014
2015
2016
2017
Total
$ 100,999,210
163,473,066
47,581,877
5,100,000
$ 317,154,153
(b) Loan investm ent:
(b) Loan investment:
As at December 31, 2012, the loan investment was secured by a note portfolio secured against individually
As at December 31, 2012, the loan investment was secured by a note portfolio secured against
individually manufactured housing communities, an inventory of manufactured homes in the
manufactured housing communities, an inventory of manufactured homes in the United States and first
United States and first charges on two manufactured housing communities. The interest rate
charges on two manufactured housing communities. The interest rate on the loan investment was 10.00%. On
on the loan investment was 10.00%. On December 24, 2013, the loan investment’s principal and
December 24, 2013, the loan investment’s principal and interest outstanding was repaid in full.
interest outstanding was repaid in full.
(c) Non-recourse m ortgage syndication liabilities:
The Company has entered into certain mortgage participation agreements with mainly third party lenders,
42
using senior and subordinated participation, whereby the third party lenders take the senior position and the
Company retains the subordinated position. The Company generally retains an option to repurchase the senior
position, but not the obligation, at a purchase price equal to the outstanding principal amount of the lenders’
proportionate share together with all accrued interest. Under certain participation agreements, the Company
has retained a residual portion of the credit and/or default risk as it is holding the residual interest in the
mortgage investment and therefore has not met the de-recognition criteria. As a result, the lender’s portion of
the mortgage is recorded as a mortgage investment with the transferred position recorded as a non-recourse
mortgage syndication liability. The interest and fees earned on the transferred participation interests and the
related interest expense is recognized in profit and loss. In addition, the Company may sell pari-pasu interests in
certain mortgage investments which meet the criteria for de-recognition under IFRS. The difference between
the carrying value of such interest sold and the proceeds on sale are recognized as gain or loss in profit and loss.
For those investments which have not met the derecognition criteria, the participation transactions have
resulted in the Company recognizing the participating mortgages and corresponding non-recourse mortgage
syndication liabilities on its statements of financial position. As at December 31, 2013 the carrying value of the
transferred assets and corresponding non-recourse liabilities is $124,378,929 (December 31, 2012 – $38,407,891).
The Company has also recognized interest and fee income and a corresponding interest and fee expense of
$4,376,377 (December 31, 2012- $2,260,275) in the statements of net income (loss) and comprehensive income
TIMBERCREEK MORTGAGE INVESTMENT CORPORATION 16
(c) Non-recourse mortgage syndication liabilities:
The Company has entered into certain mortgage participation agreements with mainly third
party lenders, using senior and subordinated participation, whereby the third party lenders take
the senior position and the Company retains the subordinated position. The Company generally
retains an option to repurchase the senior position, but not the obligation, at a purchase price
equal to the outstanding principal amount of the lenders’ proportionate share together with all
accrued interest. Under certain participation agreements, the Company has retained a residual
portion of the credit and/or default risk as it is holding the residual interest in the mortgage
investment and therefore has not met the de-recognition criteria. As a result, the lender’s portion
of the mortgage is recorded as a mortgage investment with the transferred position recorded as
a non-recourse mortgage syndication liability. The interest and fees earned on the transferred
participation interests and the related interest expense is recognized in profit and loss. In addition,
the Company may sell pari-pasu interests in certain mortgage investments which meet the criteria
for de-recognition under IFRS. The difference between the carrying value of such interest sold and
the proceeds on sale are recognized as gain or loss in profit and loss.
For those investments which have not met the derecognition criteria, the participation transactions
have resulted in the Company recognizing the participating mortgages and corresponding non-
TIMBERCREEK MORTGAGE INVESTMENT CORPORATION
recourse mortgage syndication liabilities on its statements of financial position. As at December
31, 2013 the carrying value of the transferred assets and corresponding non-recourse liabilities
is $124,378,929 (December 31, 2012 – $38,407,891). The Company has also recognized interest
Notes to the Consolidated Financial Statements
and fee income and a corresponding interest and fee expense of $4,376,377 (December 31, 2012-
Years ended December 31, 2013 and 2012
$2,260,275) in the statements of net income (loss) and comprehensive income (loss). The fair
value of the transferred assets and non-recourse mortgage syndicated liabilities approximate their
carrying values (see note 18).
(loss). The fair value of the transferred assets and non-recourse mortgage syndicated liabilities approximate
their carrying values (see note 18).
(d) Provision for mortgage and loan investments loss:
The mortgage and loan investments are assessed at each reporting date to determine whether
(d) Provision for m ortgage and loan investm ents loss:
there is objective evidence of impairment. A mortgage or loan investment is impaired if objective
The mortgage and loan investments are assessed at each reporting date to determine whether there is objective
evidence indicates that a loss event has occurred after the initial recognition of an asset, and that
the loss event had a negative effect on the estimated future cash flows of that asset that can be
evidence of impairment. A mortgage or loan investment is impaired if objective evidence indicates that a loss
estimated reliably.
event has occurred after the initial recognition of an asset, and that the loss event had a negative effect on the
estimated future cash flows of that asset that can be estimated reliably.
For the year ended December 31, 2013 the Company has recognized an impairment provision of
$2,150,000 (December 31, 2012 – nil) relating to impaired mortgage investments, which represents
For the year ended December 31, 2013 the Company has recognized an impairment provision of $2,150,000
the total amount of the Manager’s estimate of the shortfall between the principal balances, costs
(December 31, 2012 – nil) relating to impaired mortgage investments, which represents the total amount of the
incurred and accrued interest and the estimated recoverable amount of the underlying security
Manager’s estimate of the shortfall between the principal balances, costs incurred and accrued interest and the
of the mortgage investment. During the Year, the Company foreclosed on the underlying security
estimated recoverable amount of the underlying security of the mortgage investment. During the Year, the
relating to two impaired mortgage investments and $1,600,000 was reclassified from impairment
Company foreclosed on the underlying security relating to two impaired mortgage investments and $1,600,000
provision to FPHFS.
was reclassified from impairment provision to FPHFS.
The changes in the provision for mortgage and loan investments loss during the year was as
The changes in the provision for mortgage and loan investments loss during the year was as follows:
follows:
2013
TIMBERCREEK MORTGAGE INVESTMENT CORPORATION
–
Balance, beginning of year
$
$
Impairment provision recognized
Notes to the Consolidated Financial Statements
Provision reclassified to FPHFS
2,150,000
(1,600,000)
Years ended December 31, 2013 and 2012
Provision for mortgage and loan investments, end of year
$
550,000
$
2012
–
–
–
–
5. FO RECLO SED PROPERTIES H ELD FO R SALE
5. FORECLOSED PROPERTIES HELD FOR SALE
As at December 31, 2013, there are two properties (December 31, 2012 – nil) which are FPHFS and are recorded at
As at December 31, 2013, there are two properties (December 31, 2012 – nil) which are FPHFS and
are recorded at their fair value of $11,351,435 (December 31, 2012 – nil). The following table shows a
reconciliation from the opening balances to the closing balances for Level 3 fair values.
their fair value of $11,351,435 (December 31, 2012 – nil). The following table shows a reconciliation from the
opening balances to the closing balances for Level 3 fair values.
Year ended December 31,
2013
2012
Balance, beginning of year
$
–
$
Foreclosed properties reclassified from Mortgage and loan investments
10,099,973
Capital expenditures
Balance, end of year
1,251,462
$
11,351,435
$
–
–
–
–
The fair value is based on valuations by independent external appraisers accredited by professional institutes
with recent experience in the location of the property being valued. The fair value measurements have been
categorized as a level 3 fair value based on inputs to the valuation techniques used. The key valuation
techniques used in measuring the fair values of the foreclosed properties are set out in the following table:
Inter-relationship
between key
unobservable inputs
TIMBERCREEK MORTGAGE INVESTMENT CORPORATION 17
and fair value
measurement
43
Significant unobservable inputs
Valuation Technique
valuation method is based on
stabilized net operating income
(‘NOI’) divided by an overall
capitalization rate.
Direct sales comparison
Direct Capitalization Method. The
¥
Stabilized NOI is based on the
The estimated fair value
location, type and quality of the
property and supported current
market rents for similar
properties, adjusted for
estimated vacancy rates and
expected operating costs.
¥
Capitalization rate is based on
location, size and quality of the
property and taking into
account market data at the
valuation date.
The fair value is based on
comparison to recent sales of
properties of similar types, locations
and quality.
would increase
(decrease) if:
¥ Stabilized NOI was
higher (lower)
¥ Overall capitalization
rates were lower
(higher)
The significant
unobservable input is
adjustments due to
characteristics specific to
each property that could
cause the fair value to differ
from the property to which
it is being compared.
TIMBERCREEK MORTGAGE INVESTMENT CORPORATION 18
Timbercreek Mortgage Investment CorporationTimbercreek Mortgage Investment Corporation
TIMBERCREEK MORTGAGE INVESTMENT CORPORATION
Notes to the Consolidated Financial Statements
Years ended December 31, 2013 and 2012
5. FO RECLO SED PROPERTIES H ELD FO R SALE
As at December 31, 2013, there are two properties (December 31, 2012 – nil) which are FPHFS and are recorded at
their fair value of $11,351,435 (December 31, 2012 – nil). The following table shows a reconciliation from the
opening balances to the closing balances for Level 3 fair values.
Balance, beginning of year
$
–
$
Foreclosed properties reclassified from Mortgage and loan investments
10,099,973
Capital expenditures
Balance, end of year
Year ended December 31,
2013
2012
1,251,462
$
11,351,435
$
–
–
–
–
with recent experience in the location of the property being valued. The fair value measurements have been
The fair value is based on valuations by independent external appraisers accredited by professional institutes
The fair value is based on valuations by independent external appraisers accredited by professional
institutes with recent experience in the location of the property being valued. The fair value
measurements have been categorized as a level 3 fair value based on inputs to the valuation
techniques used. The key valuation techniques used in measuring the fair values of the foreclosed
properties are set out in the following table:
techniques used in measuring the fair values of the foreclosed properties are set out in the following table:
categorized as a level 3 fair value based on inputs to the valuation techniques used. The key valuation
Valuation Technique
Significant unobservable inputs
Direct Capitalization Method. The
valuation method is based on
stabilized net operating income
(‘NOI’) divided by an overall
capitalization rate.
Direct sales comparison
¥
¥
Stabilized NOI is based on the
location, type and quality of the
property and supported current
market rents for similar
properties, adjusted for
estimated vacancy rates and
expected operating costs.
Capitalization rate is based on
location, size and quality of the
property and taking into
account market data at the
valuation date.
The fair value is based on
comparison to recent sales of
properties of similar types, locations
and quality.
Inter-relationship
between key
unobservable inputs
and fair value
measurement
The estimated fair value
would increase
(decrease) if:
¥ Stabilized NOI was
higher (lower)
¥ Overall capitalization
rates were lower
(higher)
The significant
unobservable input is
adjustments due to
characteristics specific to
each property that could
cause the fair value to differ
from the property to which
it is being compared.
6. RESTRICTED CASH
Restricted cash consists of cash received from borrowers in connection with interest reserves on
certain mortgage and loan investments.
TIMBERCREEK MORTGAGE INVESTMENT CORPORATION 18
7. CREDIT FACILITY
In November 2013, the Company amended the terms of its revolving credit facility (the “Credit
Facility”) with its bank. Under the amended terms, the Company was provided a temporary bulge
of $18,026,557 to fund the Special Redemption. The bulge was repaid in full prior to expiry on
December 31, 2013. Following repayment of the bulge the Credit Facility limit was $25,000,000
(December 31, 2012 – $25,000,000). The Credit Facility is primarily used to bridge timing
differences between new mortgage advances and repayments or follow-on equity offerings. The
Credit Facility expires in October 2014 and is subject to an interest rate equal to the bank’s prime
rate of interest plus 1.50% (December 31, 2012 – bank’s prime rate of interest plus 1.50%). The Credit
Facility is secured by a general security agreement over the Company’s assets. As at December 31,
2013, no amount was outstanding on the Credit Facility (December 31, 2012 – $8,836,425).
Interest costs related to the Credit Facility are recorded in financing costs using the effective
interest rate method. For the year ended December 31, 2013, interest on the Credit Facility of
$474,778 (December 31, 2012 –$351,882), is included in financing costs.
As at December 31, 2013, there were $107,603 (December 31, 2012 – $130,042) in unamortized
financing costs related to the placement of the Credit Facility. For the year ended December 31,
2013, the Company has amortized financing costs of $143,859 (2012 – $149,120), to interest expense
using the effective interest rate method.
8. FOREIGN EXCHANGE FORWARD CONTRACT
The Company entered into a foreign exchange forward contract with its bank to lock in the
Company’s rate to exchange U.S. dollars into Canadian dollars. At December 31, 2013, the fair value
of the foreign currency contract was a liability of $71,696 (December 31, 2012 – nil).
9. VOTING SHARES
As part of the Transition outlined in note 1, on the Exchange Date, all voting shares were re-
purchased for a nominal amount and cancelled.
TIMBERCREEK MORTGAGE INVESTMENT CORPORATION
Prior to the Transition, the Company was authorized to issue an unlimited amount of voting
Notes to the Consolidated Financial Statements
shares. As at December 31, 2012, the Company had $100 of issued and fully paid voting shares. The
voting shares were held by certain shareholders of Timbercreek Asset Management Inc.
Years ended December 31, 2013 and 2012
10. REDEEM ABLE SH ARES
10. REDEEMABLE SHARES
As part of the Transition outlined in note 1, on the Exchange Date all classes of redeemable shares
including Class A and Class B shares were exchanged into common shares at the ratios specified
in note 11.
As part of the Transition outlined in note 1, on the Exchange Date all classes of redeemable shares including
Class A and Class B shares were exchanged into common shares at the ratios specified in note 11.
Prior to the Transition, Class A shares were publicly listed on the TSX under the symbol ‘TMC’.
Prior to the Transition, Class A shares were publicly listed on the TSX under the symbol ‘TMC’. Class B shares
Class B shares were privately held and there was no market through which these shares could be
were privately held and there was no market through which these shares could be sold. The Company was
sold. The Company was authorized to issue these classes of shares, which were redeemable at
authorized to issue these classes of shares, which were redeemable at the holder's option and were subject to
the holder’s option and were subject to different fee structures. The Company classifies financial
different fee structures. The Company classifies financial instruments issued as either financial liabilities or
instruments issued as either financial liabilities or equity instruments in accordance with the
equity instruments in accordance with the substance of the contractual terms of the instrument. The
substance of the contractual terms of the instrument. The redeemable shares were classified as
redeemable shares were classified as financial liabilities and presented as ‘net assets attributable to holders of
financial liabilities and presented as ‘net assets attributable to holders of redeemable shares’ in the
statements of financial position.
redeemable shares’ in the statements of financial position.
The changes in the number of Class A and Class B shares were as follows:
The changes in the number of Class A and Class B shares were as follows:
Year ended December 31, 2013
Redeemable shares outstanding, beginning of year
Issued
Issuance of redeemable shares under dividend reinvestment plan
Exchanged
Redeemed
Repurchased
Class A
34,561,122
–
393,522
110,685
(1,678,568)
(557,748)
Class B
3,742,597
508,647
–
(104,420)
(259,771)
–
Exchanged to common shares
(32,829,013)
(3,887,053)
Redeemable shares outstanding, end of year
–
–
Year ended December 31, 2012
Redeemable shares outstanding, beginning of year
Issued
Issuance of redeemable shares under dividend reinvestment plan
Exchanged
Redeemed
Class A
30,618,903
–
388,288
3,569,453
(15,522)
Class B
3,724,347
3,400,573
–
(3,382,323)
–
Redeemable shares outstanding, end of year
34,561,122
3,742,597
2013:
2013:
During the year ended December 31, 2013, the Company completed a non-brokered private
placement of 508,647 Class B shares for gross proceeds of $5,000,000. In connection with the
During the year ended December 31, 2013, the Company completed a non-brokered private placement of
above-noted share offering, the Company incurred $2,680 in issuance costs. Under IFRS, Class A
508,647 Class B shares for gross proceeds of $5,000,000. In connection with the above-noted share offering, the
and Class B shares were considered debt instruments prior to the Transition, and accordingly, the
Company has recorded these issuance costs through profit and loss.
Company incurred $2,680 in issuance costs. Under IFRS, Class A and Class B shares were considered debt
instruments prior to the Transition, and accordingly, the Company has recorded these issuance costs through
profit and loss.
2012:
During the year ended December 31, 2012, the Company completed a non-brokered private
placement of 3,400,573 Class B shares for gross proceeds of $34,005,730. In connection with the
above-noted share offering, the Company incurred $26,851 in issuance costs.
TIMBERCREEK MORTGAGE INVESTMENT CORPORATION 20
44
45
Timbercreek Mortgage Investment CorporationTimbercreek Mortgage Investment Corporation
TIMBERCREEK MORTGAGE INVESTMENT CORPORATION
Notes to the Consolidated Financial Statements
Years ended December 31, 2013 and 2012
2012:
During the year ended December 31, 2012, the Company completed a non-brokered private placement of
3,400,573 Class B shares for gross proceeds of $34,005,730. In connection with the above-noted share offering,
the Company incurred $26,851 in issuance costs.
(a) Dividends to holders of redeem able shares:
(a) Dividends to holders of redeemable shares:
Prior the Transition, the Company paid the following dividends to holders of redeemable shares:
Prior the Transition, the Company paid the following dividends to holders of redeemable shares:
Year ended December 31,
2013
Class A shares
Class B shares
Total
Year ended December 31,
2012
Class A shares
Class B shares
Total
Dividends
per share
$
0.630
0.670
Dividends
per share
$
0.780
0.828
Total
$
21,876,011
2,445,056
$
24,321,067
Total
$
25,793,050
3,407,965
$
29,201,015
As at December 31, 2013, no amount (December 31, 2012 – $2,428,105) was payable to the holders of redeemable
shares.
(b) Norm al course issuer bid :
(b) Normal course issuer bid:
On June 6, 2013, the Company received the approval of the TSX to commence a normal course
On June 6, 2013, the Company received the approval of the TSX to commence a normal course issuer bid (the
issuer bid (the “NCIB”) to purchase for cancellation up to 3,476,193 Class A shares, representing
“NCIB”) to purchase for cancellation up to 3,476,193 Class A shares; representing approximately 10% of the Class
approximately 10% of the Class A shares float on June 4, 2013. The purchases were limited, during
A shares float on June 4, 2013. The purchases were limited, during any 30-day period during the term of the
any 30-day period during the term of the NCIB, to 695,458 Class A shares in the aggregate. The
NCIB, to 695,458 Class A shares in the aggregate. The NCIB commenced on June 18, 2013, and provided the
NCIB commenced on June 18, 2013, and provided the Company with the flexibility to repurchase
Company with the flexibility to repurchase Class A shares for cancellation, with an expiry date of June 9, 2014,
Class A shares for cancellation, with an expiry date of June 9, 2014, or such earlier date as the NCIB
TIMBERCREEK MORTGAGE INVESTMENT CORPORATION
or such earlier date as the NCIB is complete. From June 18, 2013 to November 29, 2013, the date of the exchange
is complete. From June 18, 2013 to November 29, 2013, the date of the exchange of the Company’s
of the Company’s Class A shares to common shares, the Company acquired for cancellation 362,800 Class A
Class A shares to common shares, the Company acquired for cancellation 362,800 Class A shares
Notes to the Consolidated Financial Statements
shares at a cost of $3,351,744. Following the exchange of the Class A shares, further purchases pursuant to a
at a cost of $3,351,744. Following the exchange of the Class A shares, further purchases pursuant to
NCIB will require the re-filing of certain documentation with the TSX in respect of the common shares.
a NCIB will require the re-filing of certain documentation with the TSX in respect of the common
Years ended December 31, 2013 and 2012
shares.
11. COM M ON SHARES
approved was 1 to 1 for each Class A share and an exchange ratio for each of the Class B Shares equal to the
of all outstanding Class A shares and Class B shares into a new class of common shares. The exchange ratio
As outlined in note 1, on the Effective Date, the shareholders of the Company approved the automatic exchange
11. COMMON SHARES
As outlined in note 1, on the Effective Date, the shareholders of the Company approved the
automatic exchange of all outstanding Class A shares and Class B shares into a new class of
common shares. The exchange ratio approved was 1 to 1 for each Class A share and an exchange
quotient obtained by dividing the net redemption value per Class B share by the net redemption value per Class
ratio for each of the Class B Shares equal to the quotient obtained by dividing the net redemption
A share on the last business day of the month immediately preceding such exchange date. On the Exchange
value per Class B share by the net redemption value per Class A share on the last business day of
Date, 32,829,013 Class A shares and 3,887,053 Class B Shares were exchanged into 36,964,028 common shares.
the month immediately preceding such exchange date. On the Exchange Date, 32,829,013 Class A
shares and 3,887,053 Class B Shares were exchanged into 36,964,028 common shares.
On the Exchange Date, upon the completion of the exchange in accordance with the Company’s articles, the
common shares commenced trading on the TSX, continuing under the symbol ‘TMC’.
TIMBERCREEK MORTGAGE INVESTMENT CORPORATION 21
On the Exchange Date, upon the completion of the exchange in accordance with the Company’s
articles, the common shares commenced trading on the TSX, continuing under the symbol ‘TMC’.
The Company is authorized to issue an unlimited number of common shares. The holders of common shares
are entitled to receive notice of and to attend and vote at all meetings of shareholders of the Company. The
The Company is authorized to issue an unlimited number of common shares. The holders
of common shares are entitled to receive notice of and to attend and vote at all meetings of
holders of the common shares shall be entitled to receive dividends as and when declared by the board of
shareholders of the Company. The holders of the common shares shall be entitled to receive
dividends as and when declared by the board of directors.
directors.
The common shares are classified as shareholders’ equity in the statements of financial position. Any
The common shares are classified as shareholders’ equity in the statements of financial position.
incremental costs directly attributable to the issuance of common shares are recognized as a deduction from
Any incremental costs directly attributable to the issuance of common shares are recognized as a
deduction from shareholders’ equity.
shareholders’ equity.
The changes in the number of common shares are as follows:
The changes in the number of common shares are as follows:
Year ended December 31, 2013
Common shares issued as a result of exchange
Repurchased
Issuance of common shares under dividend reinvestment plan
Common shares outstanding, end of year
December 31,
2013
36,964,028
(35,250)
35,250
36,964,028
(a) Dividend reinvestm ent plan:
(a) Dividend reinvestment plan:
The Company has amended and restated its dividend reinvestment plan effective as of November
The Company has amended and restated its dividend reinvestment plan effective as of November 20, 2013. The
20, 2013. The amended and restated dividend reinvestment plan (the “Amended DRIP”) replaces in
amended and restated dividend reinvestment plan (the “Amended DRIP”) replaces in its entirety the original
its entirety the original DRIP (the “Original DRIP”) established by the Company on May 19, 2010.
DRIP (the “Original DRIP”) established by the Company on May 19, 2010.
The Amended DRIP provides eligible beneficial and registered holders of common shares of the Company with
a means to reinvest dividends declared and payable on such common shares in additional common shares. For
46
purposes of the Amended DRIP, common shares includes any Class A shares of the Company prior to their
exchange into common shares on the Exchange Date, pursuant to the amendment to the articles of the
Company that came into effect on September 13, 2013.
TIMBERCREEK MORTGAGE INVESTMENT CORPORATION 22
The Amended DRIP provides eligible beneficial and registered holders of common shares of the
Company with a means to reinvest dividends declared and payable on such common shares in
additional common shares. For purposes of the Amended DRIP, common shares includes any
Class A shares of the Company prior to their exchange into common shares on the Exchange
Date, pursuant to the amendment to the articles of the Company that came into effect on
September 13, 2013.
Under the Amended DRIP, shareholders may enroll to have their cash dividends reinvested to
purchase additional common shares. The common shares are issued from treasury at a price of
95% of the average of the daily volume weighted average closing price on the TSX for the 5 trading
days preceding payment, the price of which will not be less than the book value per common
share. For the year ended December 31, 2013, 393,522 (2012 – 388,288) Class A shares were issued
under the Original DRIP and 35,250 (2012 – nil) common shares were issued under the Amended
DRIP.
(b) Dividends to holders of common shares:
The Company intends to pay dividends on a monthly basis within 15 days following the end of
each month.
Subsequent to the Exchange Date, the Company has declared $4,953,183 ($0.134 per share) to
holders of common shares. As at December 31, 2013 $2,476,592 (2012 – Nil) was payable to the
holders of common shares. Subsequent to the Year end, the Company declared dividends of
$0.134 per common share.
12. EXPENSES
(a) Management and performance fees:
The Manager is responsible for the day-to-day operations of the Company, including
administration of the Company’s mortgage and loan investments. As a part of the Transition
detailed in note 1, the Company has entered into a new management agreement with the
Manager effective from September 13, 2013. Under the new management agreement, the
Company shall pay to the Manager, a management fee equal to 1.20% per annum of the gross
assets of the Company, calculated and paid monthly in arrears, plus applicable taxes. Gross Assets
is defined as the total assets of the Company before deducting any liabilities, less any amounts
that are reflected as mortgage syndicated liabilities related to syndicated mortgage investments
that are held by third parties. The initial term of the new management agreement is 10 years from
the Effective Date and is automatically renewed for successive five year terms at the expiration of
the initial term. For the year ended December 31, 2013, the Company incurred management fees
of $4,974,029 (2012 – $4,812,148).
Under the new management agreement, the Manager continues to be entitled to a performance
fee. In any calendar year where the Company has net earnings available for distribution to
shareholders in excess of the hurdle rate (the “Hurdle Rate”), which is defined as the average
two-year Government of Canada Bond Yield for the 12-month period then ended plus 450 basis
points, the Manager is entitled to receive from the Company a performance fee equal to 20% of
the net earnings of the Company available to distribute over the Hurdle Rate. The net earnings of
the Company shall mean the net income before performance fees of the Company in accordance
with applicable accounting principles and adjusted for certain other non-cash adjustments as
defined in the management agreement. The performance fee is payable to the Manager within 15
days of the issuance of the Company’s audited annual consolidated financial statements for that
calendar year.
The performance fees accrued for the year ended December 31, 2013 is $1,940,688 (December 31,
2012 - $2,460,947).
(b) Trailer fees:
Prior to September 13, 2013, the Company paid each registered dealer a trailer fee equal to 0.50%
annually of the net redemption value per Class A share for each Class A share held by clients
of the registered dealer, calculated and paid at the end of each calendar quarter. The Company
paid $737,199 in Class A service fee for the year ended December 31, 2013 (2012 – $1,432,823). In
conjunction with the Transition, effective September 13, 2013 the Company no longer pays trailer
fees on Class A shares to registered dealers.
13. NET INCOME PER SHARE
Net income per share has been calculated as if the Transition occurred on January 1, 2013 and as a
result, dividends to holders of redeemable shares and issuance costs of redeemable shares for the
year ended December 31, 2013 have been added back to the net loss of the Company.
47
Timbercreek Mortgage Investment CorporationTimbercreek Mortgage Investment Corporation
TIMBERCREEK MORTGAGE INVESTMENT CORPORATION
Notes to the Consolidated Financial Statements
Years ended December 31, 2013 and 2012
(b) Trailer fees:
Prior to September 13, 2013, the Company paid each registered dealer a trailer fee equal to 0.50% annually of the
net redemption value per Class A share for each Class A share held by clients of the registered dealer, calculated
and paid at the end of each calendar quarter. The Company paid $737,199 in Class A service fee for the year
ended December 31, 2013 (2012 – $1,432,823). In conjunction with the Transition, effective September 13, 2013
the Company no longer pays trailer fees on Class A shares to registered dealers.
13. N ET IN COM E PER SH ARE
Net income per share has been calculated as if the Transition occurred on January 1, 2013 and as a result,
dividends to holders of redeemable shares and issuance costs of redeemable shares for the year ended
December 31, 2013 have been added back to the net loss of the Company.
The Company has not disclosed net loss per share for the year ended December 31, 2012 as the Company did
not have equity instruments, as defined in IAS 33, Earnings per Share, as the redeemable shares were classified
The Company has not disclosed net loss per share for the year ended December 31, 2012 as
the Company did not have equity instruments, as defined in IAS 33, Earnings per Share, as the
redeemable shares were classified as a financial liability in the statements of financial position.
as a financial liability in the statements of financial position.
(a) Basic and diluted earnings per share:
Basic and diluted earnings per share are calculated by dividing net income attributable to common shares by
(a) Basic and diluted earnings per share:
Basic and diluted earnings per share are calculated by dividing net income attributable to common
shares by the sum of the weighted average number of common shares during the year.
the sum of the weighted average number of common shares during the year.
Numerator for net income per share:
Net income of the Company
Issuance costs of redeemable shares
TIMBERCREEK MORTGAGE INVESTMENT CORPORATION
Dividends to holders of redeemable shares
Net income of the Company attributable to common shares
Notes to the Consolidated Financial Statements
Denominator for net income per share:
Years ended December 31, 2013 and 2012
Net income per share – basic and diluted
Weighted average of common shares (basic and diluted)
(b) Adjusted basic and diluted earnings per share:
2013
$
506,932
2,680
24,321,067
24,830,679
38,444,103
$
0.65
The adjusted basic and diluted net income per share attributable to common shares for the year ended
December 31, 2013 is presented to provide an indication of the performance of the Company, excluding non-
(b) Adjusted basic and diluted earnings per share:
The adjusted basic and diluted net income per share attributable to common shares for the
recurring expenditures. In addition to the adjustments made to the net income of the Company in the
year ended December 31, 2013 is presented to provide an indication of the performance of the
calculation of basic and diluted net income per share in note 13(a) above, the Company has added back one-
Company, excluding non-recurring expenditures. In addition to the adjustments made to the net
income of the Company in the calculation of basic and diluted net income per share in note 13(a)
time Transition related costs and a non-cash provision for mortgage and loan investments loss. The weighted
above, the Company has added back one-time Transition related costs and a non-cash provision
average number of common shares is the same as in the calculation of basic and diluted net income per share
for mortgage and loan investments loss. The weighted average number of common shares is the
same as in the calculation of basic and diluted net income per share in note 13(a) above.
in note 13(a) above.
Numerator for net income per share:
Net income of the Company
Transition related costs
Provision for mortgage and loan investments loss
Issuance costs of redeemable shares
Dividends to holders of redeemable shares
Adjusted net income of the Company attributable to common shares
Denominator for net income per share:
Weighted average of common shares (basic and diluted)
Adjusted net income per share – basic and diluted
2013
$
506,932
3,530,417
2,150,000
TIMBERCREEK MORTGAGE INVESTMENT CORPORATION 24
2,680
24,321,067
30,511,096
38,444,103
$
0.79
14. RELATED PARTY TRANSACTIONS
14. RELATED PARTY TRANSACTIONS
(a) As at December 31, 2013, due to Manager includes management fees payable of $2,346,745
(a) As at December 31, 2013, due to Manager includes management fees payable of $2,346,745 (December 31,
(December 31, 2012 – $2,460,947) and $2,991 (December 31, 2012 - $8,564) related to costs
2012 – $2,460,947) and $2,991 (December 31, 2012 - $8,564) related to costs incurred by the Manager on
incurred by the Manager on behalf of the Company.
behalf of the Company.
Four Quadrant Global Real Estate Partners (“T4Q”), related parties by virtue of common management, have
co-invested in three (December 31, 2012 – two) mortgage investments amounting to $21,210,032 (December
(b) As at December 31, 2013, the Company, Timbercreek Global Real Estate Fund (“TGREF”) and
(b) As at December 31, 2013, the Company, Timbercreek Global Real Estate Fund (“TGREF”) and Timbercreek
Timbercreek Four Quadrant Global Real Estate Partners (“T4Q”), related parties by virtue
of common management, have co invested in three (December 31, 2012 – two) mortgage
investments amounting to $21,210,032 (December 31, 2012 – $29,850,000). On December
31, 2012 – $29,850,000). On December 24, 2013, a loan investment which was co-invested in by these related
24, 2013, a loan investment which was co-invested in by these related parties was repaid in full,
leaving a balance of nil (December 31, 2012 – $16,520,826) as at December 31, 2013. As at
December 31, 2013, no amount (December 31, 2012 – $213,254) is receivable from T4Q and
(December 31, 2012 – $43,640) is payable to TGREF in relation to these investments. Timbercreek Asset
no amount (December 31, 2012 – $43,640) is payable to TGREF in relation to these investments.
Timbercreek Asset Management Ltd., a wholly owned subsidiary of the Manger, has been
retained by TGREF and T4Q to provide fund management and portfolio advisory services.
parties was repaid in full, leaving a balance of nil (December 31, 2012 – $16,520,826) as at December 31, 2013.
As at December 31, 2013, no amount (December 31, 2012 – $213,254) is receivable from T4Q and no amount
Management Ltd., a wholly owned subsidiary of the Manger, has been retained by TGREF and T4Q to
provide fund management and portfolio advisory services.
(c) As at December 31, 2013, the Company and Timbercreek Senior Mortgage Investment
Corporation (“TSMIC”), a related party by virtue of common management, have co-invested in
several mortgage investments, including mortgage syndications, totaling $681,960,996
(December 31, 2012 – $392,869,519), which are secured primarily by multi residential, office,
retail, retirement and other commercial properties. The Company holds subordinated
mortgage positions in these co-investments in relation to TSMIC. The Company’s net share in
these investments is $215,999,878 (December 31, 2012 – $86,202,042), and included in this
amount is a mortgage investment of $1,044,252 (December 31, 2012 - $886,186) to a limited
TIMBERCREEK MORTGAGE INVESTMENT CORPORATION 25
partnership, which is co-owned by T4Q. In addition, $281,126 (December 31, 2012 – $4,462) is
receivable by the Company from TSMIC relating to amounts paid on behalf of the Company.
(d) As at December 31, 2013, the Company, T4Q and Timbercreek Canadian Direct LP, related
parties by virtue of common management, have co-invested in a mortgage investment
secured by a retail property. The Company’s share in this mortgage investment is $666,667
(December 31, 2012 – $4,000,000).
(e) As at December 31, 2013, included in other assets is $1,040,374 (December 31, 2012 – nil) of
cash held in trust for the Company by Timbercreek Mortgage Servicing Inc., a related party by
virtue of common management. The balance relates to mortgage funding deposits and
prepaid interest received from the borrowers.
(f) The Manager has borne total costs of $250,000 relating to the Transition, which are not
included in the Transition related costs in the statements of income (loss) and comprehensive
income (loss).
15. INCOME TAXES
As of December 31, 2013, the Company has non-capital losses carried forward for income tax
purposes of $14,672,000 (December 31, 2012 – $12,064,216), which will expire between 2029 and
2032 if not used. The Company also has future deductible temporary differences resulting from
share issuances, prepaid mortgage and loan interest, unearned income and financing costs for
income tax purposes of $12,040,000 (December 31, 2012 – $12,340,075).
16. CAPITAL RISK MANAGEMENT
The Company manages its capital structure in order to support ongoing operations while
focusing on its primary objectives of preserving shareholder capital and generating a stable
monthly cash dividend to shareholders. The Company defines its capital structure to include
common shares and the Credit Facility.
The Company reviews its capital structure on an ongoing basis and adjusts its capital structure in
response to mortgage and loan investment opportunities, the availability of capital and anticipated
changes in general economic conditions.
17. RISK MANAGEMENT
The Company is exposed to the symptoms and effects of global economic conditions and other
factors that could adversely affect its business, financial condition and operating results. Many of
these risk factors are beyond the Company’s direct control. The Manager and Board of Directors
play an active role in monitoring the Company’s key risks and in determining the policies that are
best suited to manage these risks. There has been no change in the process since the previous
year.
The Company’s business activities, including its use of financial instruments, exposes the
Company to various risks, the most significant of which are interest rate risk, credit risk, and
liquidity risk.
(a) Interest rate risk:
Interest rate risk is the risk that the fair value or future cash flows of financial assets or financial
liabilities will fluctuate because of changes in market interest rates. As of December 31, 2013,
$25,258,477 of mortgage and loan investments (December 31, 2012 – nil) bear interest at variable
rates; however out of these, $22,858,477 of mortgage investments include a “floor rate” to protect
its negative exposure and one mortgage investment of $2,400,000 bears interest at a variable
rate without a floor rate. If there were a decrease of 0.50% in interest rates, with all other variables
constant, the impact from variable rate mortgage investments would be a decrease in net income
of $12,000. However, if there were a 0.50% increase in interest rates, with all other variables
constant, it would result in an increase in net income of $126,292. The Company manages its
sensitivity to interest rate fluctuations by generally entering into fixed rate mortgage and loan
investments or adding a “floor-rate” to protect its negative exposure.
In addition, the Company is exposed to interest rate risk on the Credit Facility, which has a balance
of nil as at December 31, 2013 (December 31, 2012 - $8,836,425). Based on the outstanding balance
of the Credit Facility as at December 31, 2013, a 0.50% decrease in interest rates, with all other
variables constant, will increase net income by nil (December 31, 2012 – $44,182) annually, arising
mainly as a result of lower interest expense payable on the Credit Facility. A 0.50% increase in
interest rates would have an equal but opposite effect on the net income of the Company.
The Company’s interest receivable, other assets, accounts payable and accrued expenses, prepaid
mortgage and loan interest, mortgage funding holdbacks, dividends payable and due to Manager
have no exposure to interest rate risk due to their short-term nature. Cash and cash equivalents
and restricted cash carry a variable rate of interest and are subject to minimal interest rate risk.
48
49
Timbercreek Mortgage Investment CorporationTimbercreek Mortgage Investment Corporation
TIMBERCREEK MORTGAGE INVESTMENT CORPORATION
Notes to the Consolidated Financial Statements
Years ended December 31, 2013 and 2012
The Company's interest receivable, other assets, accounts payable and accrued expenses, prepaid mortgage and
loan interest, mortgage funding holdbacks, dividends payable and due to Manager have no exposure to interest
rate risk due to their short-term nature. Cash and cash equivalents and restricted cash carry a variable rate of
interest and are subject to minimal interest rate risk.
(b) Credit risk:
(b) Credit risk:
Credit risk is the possibility that a borrower may be unable to honour its debt commitments as a
result of a negative change in market conditions that could result in a loss to the Company. The
Credit risk is the possibility that a borrower may be unable to honour its debt commitments as a result of a
Company mitigates this risk by the following:
negative change in market conditions that could result in a loss to the Company. The Company mitigates this
risk by the following:
(i) adhering to the investment restrictions and operating policies included in the asset
allocation model (subject to certain duly approved exceptions);
(i)
adhering to the investment restrictions and operating policies included in the asset allocation
model (subject to certain duly approved exceptions);
(ii) all mortgage and loan investments are approved by the independent mortgage
advisory committee before funding; and
all mortgage and loan investments are approved by the independent mortgage advisory
(ii)
committee before funding; and
(iii) actively monitoring the mortgage and loan investments and initiating recovery
procedures, in a timely manner, where required.
a timely manner, where required.
actively monitoring the mortgage and loan investments and initiating recovery procedures, in
(iii)
The maximum exposure to credit risk at December 31, 2013 is the carrying values of its mortgage and loan
The maximum exposure to credit risk at December 31, 2013 is the carrying values of its mortgage
and loan investments, including interest receivable, which total $321,844,724 (December 31, 2012 –
investments, including interest receivable, which total $321,844,724 (December 31, 2012 – $372,873,528). The
$372,873,528). The Company has recourse under these investments in the event of default by the
Company has recourse under these investments in the event of default by the borrower; in which case, the
borrower; in which case, the Company would have a claim against the underlying collateral.
Company would have a claim against the underlying collateral.
(c) Liquidity risk:
(c) Liquidity risk:
Liquidity risk is the risk that the Company will encounter difficulty in meeting its financial
obligations as they become due. This risk arises in normal operations from fluctuations in cash
Liquidity risk is the risk that the Company will encounter difficulty in meeting its financial obligations as they
flow as a result of the timing of mortgage and loan investment advances and repayments and
become due. This risk arises in normal operations from fluctuations in cash flow as a result of the timing of
the need for working capital. Management routinely forecasts future cash flow sources and
requirements to ensure cash is efficiently utilized.
mortgage and loan investment advances and repayments and the need for working capital. Management
routinely forecasts future cash flow sources and requirements to ensure cash is efficiently utilized.
The following are the contractual maturities of financial liabilities as at December 31, 2013,
including expected interest payments:
The following are the contractual maturities of financial liabilities as at December 31, 2013, including expected
interest payments:
December 31, 2013
Mortgage funding holdbacks
Dividends payable
Carrying
Contractual
Within a
Values
cash flows
year
$
28,809
$
28,809
$
28,809
2,476,592
2,476,592
2,476,592
Due to Manager
TIMBERCREEK MORTGAGE INVESTMENT CORPORATION
Prepaid mortgage and loan interest
592,421
Accounts payable and accrued expenses
Notes to the Consolidated Financial Statements
–
Unadvanced mortgage and loan commitments
6,459,123
1,011,565
2,349,736
Years ended December 31, 2013 and 2012
$
2,349,736
1,011,565
592,421
$ 68,022,856
61,563,733
2,349,736
1,011,565
592,421
61,563,733
$ 68,022,856
18. FAIR VALUE M EASUREM ENTS
18. FAIR VALUE MEASUREMENTS
The following table shows the carrying amounts and fair values of assets and liabilities:
The following table shows the carrying amounts and fair values of assets and liabilities:
TIMBERCREEK MORTGAGE INVESTMENT CORPORATION 28
TIMBERCREEK MORTGAGE INVESTMENT CORPORATION
Notes to the Consolidated Financial Statements
Years ended December 31, 2013 and 2012
December 31, 2012
Assets not measured at fair value
Mortgage and loan investments, including
mortgage syndications
Restricted cash
Other assets
Cash and cash equivalents
Financial liabilities not measured at fair value
Credit facility
Non-recourse mortgage syndication liabilities
Mortgage funding holdbacks
Dividends payable
Due to Manager
Prepaid mortgage and loan interest
Accounts payable and accrued expenses
Carrying Value
Loans and
Other financial
receivable
FVTPL
liabilities
Fair Value
$ 407,140,364
$
395,088
366,634
992,671
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
$
–
–
–
–
$ 407,140,364
395,088
366,634
992,671
8,706,383
8,706,383
38,407,891
38,407,891
129,262
129,262
2,428,105
2,428,105
2,469,511
2,469,511
375,235
375,235
868,300
868,300
The valuation techniques and the inputs used for the Company’s financial instruments are as follows:
The valuation techniques and the inputs used for the Company’s financial instruments are as
follows:
(a) M ortgage and loan investm ents and m ortgage syndication liabilities:
There is no quoted price in an active market for the mortgage and loan investments or mortgage syndication
(a) Mortgage and loan investments and non-recourse mortgage syndication liabilities:
liabilities. The Manager makes its determination of fair value based on its assessment of the current lending
There is no quoted price in an active market for the mortgage and loan investments or mortgage
market for mortgage and loan investments of same or similar terms. Typically, the fair value of these mortgage
syndication liabilities. The Manager makes its determination of fair value based on its assessment
and loan investments and mortgage syndication liabilities approximate their carrying values given the amounts
of the current lending market for mortgage and loan investments of same or similar terms.
Typically, the fair value of these mortgage and loan investments and mortgage syndication
consist of short-term loans that are repayable at the option of the borrower without yield maintenance or
liabilities approximate their carrying values given the amounts consist of short-term loans that are
repayable at the option of the borrower without yield maintenance or penalties. As a result, the fair
value of mortgage and loan investments is based on level 3 inputs.
penalties. As a result, the fair value of mortgage and loan investments is based on level 3 inputs.
(b) Other financial assets and liabilities:
The fair values of restricted cash, cash and cash equivalents, other assets, credit facility, mortgage funding
holdbacks, dividends payable, due to Manager, prepaid mortgage interest and accounts payable and accrued
expenses approximate their carrying amounts due to their short-term maturities.
(b) Other financial assets and liabilities:
The fair values of restricted cash, cash and cash equivalents, other assets, credit facility, mortgage
funding holdbacks, dividends payable, due to Manager, prepaid mortgage interest and accounts
payable and accrued expenses approximate their carrying amounts due to their short-term
maturities.
(c) Foreign exchange forward contracts:
Foreign exchange forward contracts are measured at fair value using market comparison technique. The fair
values are based on broker quotes from Bloomberg. Similar contracts are traded in an active market and the
(c) Foreign exchange forward contracts:
quotes reflect the actual transactions in similar instruments. As a result, the fair value of foreign exchange
Foreign exchange forward contracts are measured at fair value using market comparison
technique. The fair values are based on broker quotes from Bloomberg. Similar contracts are
traded in an active market and the quotes reflect the actual transactions in similar instruments. As
a result, the fair value of foreign exchange forward contracts is based on level 2 inputs.
forward contracts is based on level 2 inputs.
December 31, 2013
Assets not measured at fair value
Mortgage and loan investments, including
Carrying Value
Loans and
receivable
Other
financial
Fair Value
FVTPL
liabilities
mortgage syndications
$ 442,165,777
$
Foreclosed properties held for sale (note 5)
Other assets
Cash and cash equivalents
11,351,435
1,540,102
12,348,449
Financial liabilities measured at FVTPL
Foreign exchange forward contract
Financial liabilities not measured at fair value
Non-recourse mortgage syndication liabilities
Mortgage funding holdbacks
Dividends payable
Due to Manager
Prepaid mortgage and loan interest
Accounts payable and accrued expenses
50
–
–
–
–
–
–
–
–
–
–
–
71,696
–
–
–
–
–
–
$
–
–
–
–
–
$ 442,165,777
11,351,435
1,540,102
12,348,449
71,696
124,378,929
124,378,929
28,809
28,809
2,476,592
2,476,592
2,349,736
2,349,736
1,011,565
1,011,565
520,725
520,725
(d) Net assets attributable to holders of redeemable shares:
As at December 31, 2012, the fair value of the net assets attributable to holders of redeemable
shares was $360,267,352 which represents net redemption value. The carrying value was adjusted
for unearned lender fees, deferred financing charges and costs associated with establishment,
TIMBERCREEK MORTGAGE INVESTMENT CORPORATION 30
structuring and offering of redeemable shares to arrive at net redemption value. As outlined
in note 1, all the outstanding redeemable shares were exchanged to common shares on the
Exchange Date.
There were no transfers between level 1, level 2 and level 3 during the years ended December 31,
2013 and 2012.
19. COMMITMENTS AND CONTINGENCIES
In the ordinary course of business activities, the Company may be contingently liable for litigation
and claims arising from investing in mortgages and loans. Where required, management records
adequate provisions in the accounts.
Although it is not possible to accurately estimate the extent of potential costs and losses, if any,
management believes that the ultimate resolution of such contingencies would not have a
material adverse effect on the Company’s financial position.
51
TIMBERCREEK MORTGAGE INVESTMENT CORPORATION 29
Timbercreek Mortgage Investment CorporationTimbercreek Mortgage Investment Corporation
20. KEY MANAGEMENT PERSONNEL COMPENSATION
The Company paid $136,750 (December 31, 2012 - $140,560) to the members of the Board and
Independent Review Committee for their services to the Company. The compensation to the
senior management of the Manager is paid through the management fees paid to the Manager
(note 12(a)).
21. SUBSEQUENT EVENT
On February 25, 2014, the Company closed on an unsecured convertible debenture offering for
gross proceeds of $30.0 million. The unsecured convertible debentures mature on March 31, 2019
and pay interest semi-annually on March 31 and September 30 of each year at rate of 6.35%. On
February 27, 2014, the underwriters exercised the over-allotment option for an additional $4.5
million.
Board of Directors
The directors of Timbercreek Mortgage Investment Corporation have deep experience, established reputa-
tions and extensive contacts in the commercial real estate and mortgage lending community, as well as in
the capital markets and asset management sectors in Canada.
Zelick L. Altman
Ugo Bizzarri
Craig A. Geier
Andrew Jones
Independent Director, Timbercreek MIC
Director and CFO, Timbercreek MIC
Managing Director, LaSalle Investment
Management (Canada)
Director, Founding Managing
Director of Portfolio Management
and Investments, Timbercreek Asset
Management
Independent Director and Audit
Committee Chair, Timbercreek MIC
Director and CEO,
Timbercreek MIC
Chairman and CEO, Microbonds Inc.
Managing Director of Debt
Investments, Timbercreek
Asset Management
W. Glenn Shyba
Blair Tamblyn
Derek J. Watchorn, LL.B.
Independent Director,
Timbercreek MIC
Principal, Origin Merchant
Partners
Chairman, Timbercreek MIC
Independent Director, Timbercreek MIC
Director, CEO and Founding
Managing Director, Timbercreek
Asset Management
Consultant
Independent Mortgage Advisory Committee
Chris Humeniuk
Ken Lipson
Pamela Spackman
Managing Partner, Canadian
Mortgage Strategies & Investments
President & CEO, Community Trust
Company
CFO, TMDL Asset Management Inc.
Committee Chair
Consultant
Head Office
1000 Yonge Street, Suite 500
Toronto, Ontario M4W 2K2
(t) 416-306-9967
(e) inquiries@timbercreek.com
Website: www.timbercreek.com
Stock Exchange Listing
TSX: TMC
Auditors
KPMG LLP
Transfer Agent & Registrar
CST Trust Company
320 Bay Street
Toronto, Ontario M5H 4A6
Legal Counsel
McCarthy Tétrault LLP
52
Timbercreek Mortgage Investment CorporationTimbercreek Mortgage Investment Corporation TIMBERCREEK.COM