TF Timbercreek Financial Corp

Timbercreek Financial (TSX: TF) (the “Company”) announced today its financial results for the three and nine months ended September 30, 2024 (“Q3 2024”).

Q3 2024 Highlights1

• The net mortgage investment portfolio increased by $14.1 million to $1,017.6 million at the end of Q3 2024 from $1,003.4 million at the end of Q2 2024 (Q3 2023 – $1,068.6 million).
• Net investment income of $25.4 million compared to $30.3 million in Q3 2023.
• Net income and comprehensive income of $14.1 million (Q3 2023 – $16.5 million) or basic earnings per share of $0.17 (Q3 2023 – $0.20).
• Distributable income of $15.0 million (Q3 2023 – $16.8 million) or distributable income per share of $0.18 (Q3 2023 – $0.20 per share).
• Declared a total of $14.3 million in dividends to shareholders, or $0.17 per share, reflecting a distributable income payout ratio of 95.3% (Q2 2023 – 85.6%).
• The quarterly weighted average interest rate on net mortgage investments was 9.3% in Q3 2024, compared to 9.8% in Q2 2024 (Q3 2023 – 9.9%). Interest rate exposure in the net mortgage investment portfolio was well protected at the end of Q3 2024, with floating rate loans with rate floors representing 77.9% (Q3 2023 – 87.5%) of the net mortgage investment portfolio.
• Maintained conservative portfolio risk composition focused on income-producing commercial real estate:
  • 63.8% weighted average loan-to-value ("LTV"); and        
  • 87.1% first mortgages in mortgage investment portfolio.
• The Company's management team continues to focus on growing the portfolio and redeploying capital into loans at today's values in our core asset types, generating attractive returns relative to the portfolio today.

“The portfolio increased modestly in the quarter and we delivered solid financial results generating stable cash flows and dividends, even during a period of reduced transaction volume due to volatility in the commercial real estate markets," said Blair Tamblyn, CEO of Timbercreek Financial. “The commercial real estate environment is stabilizing and showing signs of steady improvement and we remain optimistic that additional rate cuts will strengthen market conditions and drive increased financing opportunities for Timbercreek. We are well positioned to deploy capital in this environment and expand the portfolio back to – or above – historical levels. At the same time, our team is effectively managing the remaining exposure to staged loans. The improved environment will add a tailwind as we work to resolve these situations and redeploy this capital into productive loans in our core asset types, such as multi-residential and industrial, where we see positive long-term market drivers.”

Mr. Tamblyn added: “In a decreasing rate environment, our monthly dividend provides shareholders with an increasing spread versus instruments such as high interest savings accounts and GICs."

Quarterly Comparison

$ millions	Q3 2024					Q3 2023				Q2 2024
Net Mortgage Investments1	$	1,017.6				$	1,068.6			$	1,003.4
Enhanced Return Portfolio Investments1	$	50.7				$	59.3			$	62.0
Real Estate Inventory	$	34.4				$	30.5			$	30.6
Real Estate held for sale, net of collateral liability	$	62.2				$	62.0			$	62.2
Net Investment Income	$	25.4				$	30.3			$	26.4
Income from Operations	$	22.5				$	26.1			$	23.5
Net Income and comprehensive Income	$	14.1				$	16.5			$	15.4
--Adjusted Net Income and comprehensive Income	$	14.2				$	16.4			$	15.7
Distributable income1	$	15.0				$	16.8			$	16.3
Dividends declared to Shareholders2	$	14.3				$	14.4			$	14.3
$ per share	Q3 2024					Q3 2023				Q2 2024
Dividends per share	$	0.17				$	0.17			$	0.17
Distributable income per share1	$	0.18				$	0.20			$	0.20
Earnings per share	$	0.17				$	0.20			$	0.19
--Adjusted Earnings per share	$	0.17				$	0.20			$	0.19
Payout Ratio on Distributable Income1		95.3	%				85.6	%			87.8	%
Payout Ratio on Earnings per share		101.9	%				87.4	%			93.2	%
--Payout Ratio on Adjusted Earnings per share		101.1	%				87.7	%			91.1	%
Net Mortgage Investments	Q3 2024					Q3 2023				Q2 2024
Weighted Average Loan-to-Value		63.8	%				67.0	%			62.3	%
Weighted Average Remaining Term to Maturity		0.9 yr					0.7 yr				1.0 yr
First Mortgages		87.1	%				92.2	%			85.6	%
Cash-Flowing Properties		83.2	%				86.5	%			83.4	%
Multi-family residential		59.8	%				58.2	%			51.2	%
Floating Rate Loans with rate floors (at quarter end)		77.9	%				87.5	%			78.3	%
Weighted Average Interest Rate
For the quarter ended		9.3	%				9.9	%			9.8	%
Weighted Average Lender Fee
New and Renewed		0.7	%				0.7	%			0.9	%
New Net Mortgage Investment Only		1.1	%				1.0	%			1.0	%

1. Refer to non-IFRS measures section below for net mortgages, enhanced return portfolio investments, adjusted net income and comprehensive income, distributable income and adjusted distributable income.
2. Dividends declared exclude 2023 year-end special dividends paid in March 2024.

Quarterly Conference Call

Interested parties are invited to participate in a conference call with management on Thursday, October 31, 2024 at 1:00 p.m. (ET) which will be followed by a question and answer period with analysts.

To join the Zoom Webinar:

If you are a Guest, please click the link below to join:

https://us02web.zoom.us/j/86473939910?pwd=Y0kzK1MwZFAwUGIxd2JQOE1xZEdqZz09

Webinar ID: 864 7393 9910

Passcode: 1234

Or Telephone:Dial (for higher quality, dial a number based on your current location):Canada: +1 780 666 0144, +1 204 272 7920, +1 438 809 7799, +1 587 328 1099, +1 647 374 4685, +1 647 558 0588, +1 778 907 2071International numbers available: https://us02web.zoom.us/u/kbE03DvhIf

Speakers will receive a separate link to the Webinar.

The playback of the conference call will also be available on www.timbercreekfinancial.com following the call.

About the Company

Timbercreek Financial is a leading non-bank, commercial real estate lender providing shorter-duration, structured financing solutions to commercial real estate professionals. Our sophisticated, service-oriented approach allows us to meet the needs of borrowers, including faster execution and more flexible terms that are not typically provided by Canadian financial institutions. By employing thorough underwriting, active management and strong governance, we are able to meet these needs while generating strong risk-adjusted yields for investors. Further information is available on our website, www.timbercreekfinancial.com.

Non-IFRS Measures

The Company prepares and releases financial statements in accordance with IFRS. 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 in Management's Discussion and Analysis ("MD&A") available on SEDAR+. Certain non-IFRS measures relating to net mortgages, adjusted net income and comprehensive income and adjusted distributable income have been shown below. The Company has presented such non-IFRS measures because the Manager believes they are relevant measures of the Company’s ability to earn and distribute cash dividends to shareholders and to evaluate its performance. The following non-IFRS financial measures should not be construed as alternatives to total net income and comprehensive income or cash flows from operating activities as determined in accordance with IFRS as indicators of the Company’s performance.

Certain statements contained in this news release may contain projections and "forward looking statements" within the meaning of that phrase under Canadian securities laws. When used in this news release, the words "may", "would", "should", "could", "will", "intend", "plan", "anticipate", "believe", "estimate", "expect", "objective" and similar expressions may be used to identify forward looking statements. By their nature, forward looking statements reflect the Company's current views, beliefs, assumptions and intentions and are subject to certain risks and uncertainties, known and unknown, including, without limitation, those risks disclosed in the Company's public filings. Many factors could cause actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by these forward looking statements. The Company does not intend to nor assumes any obligation to update these forward looking statements whether as a result of new information, plans, events or otherwise, unless required by law.

OPERATING RESULTS1

	Three months ended September 30,						Nine months ended September 30,						Year ended December 31,
NET INCOME AND COMPREHENSIVE INCOME		2024			2023			2024			2023			2023
Net investment income on financial assets measured at amortized cost	$	25,411		$	30,303		$	76,442		$	94,483		$	124,205
Fair value gain and other income on financial assets measured at FVTPL		291			231			863			819			1,282
Net rental income (loss)		459			(270	)		1,322			(922	)		(595	)
Fair value gain on real estate properties		—			—			—			63			63
Expenses		(3,629	)		(4,115	)		(11,726	)		(13,697	)		(19,140	)
Income from operations	$	22,532		$	26,149		$	66,901		$	80,746		$	105,815
Financing costs:
Financing cost on credit facility		(5,865	)		(7,444	)		(15,721	)		(22,550	)		(30,396	)
Financing cost on convertible debentures		(2,611	)		(2,250	)		(7,396	)		(6,749	)		(8,998	)
Net income and comprehensive income	$	14,056		$	16,455		$	43,784		$	51,447		$	66,421
Payout ratio on earnings per share		101.9	%		87.4	%		98.1	%		84.1	%		86.7	%
ADJUSTED NET INCOME AND COMPREHENSIVE INCOME
Net income and comprehensive income		14,056			16,455			43,784			51,447			66,421
Add: Net unrealized loss (gain) on financial assets measured at FVTPL		114			(61	)		305			(50	)		(342	)
Adjusted net income and comprehensive income1	$	14,170		$	16,394		$	44,089		$	51,397		$	66,078
Payout ratio on adjusted earnings per share1		101.1	%		87.7	%		97.4	%		84.2	%		87.2	%
DISTRIBUTABLE INCOME
Adjusted net income and comprehensive income1	$	14,170		$	16,394		$	44,089		$	51,397		$	66,078
Less: Amortization of lender fees		(1,342	)		(1,747	)		(4,425	)		(6,393	)		(8,279	)
Add: Lender fees received and receivable		1,139			1,053			4,146			4,434			6,597
Add: Amortization of financing costs, credit facility		205			129			821			554			953
Add: Amortization of financing costs, convertible debentures		291			243			819			729			972
Add: Accretion expense, convertible debentures		160			113			409			340			454
Add: Unrealized fair value loss (gain) on DSU		146			(86	)		211			(59	)		(67	)
Add: Expected credit loss		252			692			1,067			1,867			3,649
Distributable income1	$	15,021		$	16,791		$	47,137		$	52,869		$	70,357
Payout ratio on distributable income1		95.3	%		85.6	%		91.1	%		81.8	%		81.9	%
PER SHARE INFORMATION
Dividends declared to shareholders	$	14,319		$	14,378		$	42,957		$	43,263		$	57,603
Weighted average common shares (in thousands)		83,010			83,347			83,010			83,621			83,509
Dividends per share	$	0.17		$	0.17		$	0.52		$	0.52		$	0.69
Earnings per share (basic)	$	0.17		$	0.20		$	0.53		$	0.62		$	0.80
Earnings per share (diluted)	$	0.17		$	0.19		$	0.53		$	0.60		$	0.78
Adjusted earnings per share (basic)1	$	0.17		$	0.20		$	0.53		$	0.61		$	0.79
Adjusted earnings per share (diluted)1	$	0.17		$	0.19		$	0.53		$	0.60		$	0.78
Distributable income per share1	$	0.18		$	0.20		$	0.57		$	0.63		$	0.84

1. Refer to non-IFRS measures section.

Net mortgage investments(In thousands of Canadian dollars, except units, per unit amounts and where otherwise noted)

The Company’s exposure to the financial returns is related to the net mortgage investments as mortgage syndication liabilities are non-recourse mortgages with periodic variance having no impact on Company's financial performance. Reconciliation of gross and net mortgage investments balance is as follows:

Net Mortgage Investments		September 30, 2024				December 31, 2023
Mortgage investments, excluding mortgage syndications		$	1,015,337			$	943,488
Mortgage syndications			394,144				601,624
Mortgage investments, including mortgage syndications			1,409,481				1,545,112
Mortgage syndication liabilities			(394,144	)			(601,624	)
			1,015,337				943,488
Interest receivable			(12,002	)			(14,585	)
Unamortized lender fees			4,955				5,226
Expected credit loss			9,326				12,093
Net mortgage investments		$	1,017,616			$	946,222

Enhanced return portfolio

As at		September 30, 2024			December 31, 2023
Other loan investments, net of expected credit loss		$	38,644		$	47,033
Finance lease receivable, measured at amortized cost			6,020			6,020
Investment in participating debentures, measured at FVTPL			806			4,380
Joint venture investment in indirect real estate development			2,225			2,225
Investment in equity instrument			3,000			3,000
Total enhanced return portfolio		$	50,695		$	62,658

Real estate held for sale, net of collateral liability

As at		September 30, 2024				December 31, 2023
Real estate held for sale			130,987				130,987
Real estate held for sale collateral liability			(68,812	)			(69,008	)
Total real estate held for sale, net of collateral liability		$	62,175			$	61,979

SOURCE: Timbercreek Financial

For further information, please contact:

Timbercreek FinancialBlair Tamblyn, CEOTracy Johnston, CFO

416-923-9967www.timbercreekfinancial.com