Emmanuel OchayiIn a press release issued today, the Firm Capital Mortgage Investment Corporation (TSX: FC, FC.DB.G, FC.DB.H, FC.DB.I, FC.DB.J, FC.DB.K, FC.DB.L) has provided shareholders with a comprehensive update on its Investment Portfolio, corporate balance sheet position, and trading metrics.
Investment Portfolio Highlights
Firm Capital Mortgage Investment Corporation specializes in offering bridge mortgage financing and maintains a dynamic Investment Portfolio that adapts to new valuations. Key highlights include:
- The current Portfolio stands at approximately $587 million, distributed across 237 separate investments.
- 95% of the Portfolio features variable interest rates, designed to be the greater of Bank Prime plus a spread or a fixed rate, ensuring flexibility in various economic conditions.
- The average face interest rate on the Portfolio has increased to 11.16% per annum.
- The Portfolio has seen a reduction from its peak of approximately $681 million in June 2022, down to $587 million, primarily through net repayments of approximately $94 million.
- Approximately 85% of the Portfolio matures by December 31, 2024, allowing for reinvestment of cash into new opportunities.
- Over the past year, the Corporation engaged in $291 million of new transactions, with an additional $110 million of existing investments being re-underwritten.
- About 87% of the current Portfolio was either re-underwritten or newly funded in 2022 and 2023, mitigating valuation risks associated with older investments.
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Corporate Balance Sheet Position / Liquidity
According to GlobeNewswire, the Corporation is well-prepared to seize new lending opportunities in a market where credit from major financial institutions and other alternative lenders has receded. Key points include:
- Approximately $15.5 million of cash is on deposit.
- An undrawn credit facility of $180 million is available.
- Debt as a percentage of the Portfolio is at a conservative 34%.
- The Corporation intends to redeem $22.5 million of convertible unsecured debentures (TSX: FC.FB.G) expiring on December 31, 2023, using cash from its balance sheet.
- A prudent impairment allowance of $16.5 million, representing approximately 2.8% of the current Portfolio, ensures stability of dividends to shareholders in the event of issues with loans.
Shares Trading at 11% Discount to Net Asset Value
The Corporation reports an adjusted Net Asset Value (NAV) of $11.33 per share, indicating an 11% discount to the current trading price of $10.00 per share. Common shares are trading at 0.9x NAV.
9.5% Dividend Yield
At the present trading price, the Corporation offers a 9.5% dividend yield, consistently providing monthly cash dividends and a year-end Special Dividend since its inception in 1999.
The Corporation intends to continue providing regular reporting to shareholders.
About the Corporation
Firm Capital Mortgage Investment Corporation, operating through its mortgage banker, Firm Capital Corporation, serves as a non-bank lender offering residential and commercial short-term bridge and conventional real estate financing, including construction, mezzanine, and equity investments.
The Corporation’s mission is to preserve shareholders’ equity while delivering stable monthly dividends. It achieves these objectives by investing in underserved niche markets. The Corporation is classified as a Mortgage Investment Corporation (MIC) under the Income Tax Act (Canada).
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