TORONTO, August 13, 2018 – Trez Capital Mortgage Investment Corporation (TSX: TZZ) (the "Company") today released its financial results for the quarter ended June 30, 2018. The financial statements and MD&A can be found at www.sedar.com or www.trezcapitalmic.com.
Financial Highlights & Business Update
On June 16, 2016 the shareholders of the Company approved the orderly wind-up of the Company (“Orderly Wind-Up”). As such, the financial results reflect the ongoing reduction in the size of the portfolio as capital is returned to shareholders.
For the three and six months ended June 30th, 2018, principal repayments and proceeds from sales totaled $31.9 and $44.5 million ($28.9 and $34.9 million for the comparable period in 2017). On April 20th, the Company paid a special distribution representing a return of capital totaling $17.9 million, or $1.52 per Class A share. The total of all paid distributions was $20.6 million for the six months ended June 30, 2018 ($4.8 million for the comparable period in 2017).
For the three and six months ended June 30, 2018, income from operations decreased by $1.4 million and $0.6 million compared to the same periods in 2017. Basic and diluted income per share were $0.15 and $0.16 for the three and six months ended June 30, 2018. During the second quarter, as compared to the same periods in 2017, revenue decreased by $0.7 million and $1.8 million as a result of reduced interest income. The reductions in interest income resulted from a decrease in the average mortgage portfolio by $63.5 million for the six months ended June 30, 2018 compared to the same period in 2017.
At June 30, 2018 the Company had 2 mortgages remaining to be liquidated, down from 9 as at December 31, 2017. Of the 2 remaining mortgages expected to mature or be sold, 1 mortgage totaling $0.5 million is expected to do so prior to the end of August 2018 and 1 mortgage totaling $5.0 million prior to the end of the first quarter of 2019.
The Board anticipates making further special distributions as the mortgages in the portfolio mature or are sold and subject to reasonable expected operating expenditures.
The Company also announced today that its board of directors has declared a special distribution of $2.40 per Class A share of the Company (the "Special Distribution"). The Special Distribution, which constitutes a return of capital pursuant to the winding-up of the Company’s business as approved by Shareholders on June 16, 2016, will be paid on September 17, 2018 to holders of Class A shares of record at the close of business on August 31, 2018. As of August 13, 2018, there were 11,649,711 Class A shares outstanding.
The Special Distribution payment is not subject to any condition, will be made in cash and will be subject to the "Due Bill" trading requirements mandated by the Toronto Stock Exchange (the “TSX”).
Because the amount of the Special Distribution represents a distribution of greater than 25% of the market value of the Class A shares on the declaration date, the TSX has required that the Class A shares will trade on a "Due Bill" basis during the period (the "Due Bill Period") from and including August 30, 2018 until the close of trading on September 17, 2018 (the "Payment Date").
This means that buyers of Class A shares during the Due Bill Period will receive the Special Distribution payment, provided they continue to be holders of the applicable Class A shares on the Payment Date.
The Class A shares will commence trading on an ex-distribution basis (i.e., without an attached "Due Bill" entitlement to the Special Distribution) commencing the opening of trading on September 18, 2018 (i.e., the next trading day after the Payment Date). The Due Bill redemption date will be September 19, 2018. As a result of the Class A shares trading on a Due Bill basis during the Due Bill Period, those entitled to be paid the Special Distribution owing on the Due Bills should expect to receive that payment by the Due Bill redemption date of September 19, 2018.
Regular Monthly & Further Special Distributions
In the first quarter of 2018, the Board made a decision to suspend regular monthly distributions. This decision was premised on a review of the last remaining mortgages and cash requirements.
The Board anticipates making further special distributions as the mortgages in the portfolio mature or are sold, and subject to reasonable expected operating expenditures. As the wind-up of the Company progresses, it is expected that there will be some variance in the timing and quantum of special distributions.
Forward Looking Statements
Certain statements in this news release about Trez Capital Mortgage Investment Corporation (the “Company”), and its business, operations, investments and strategies, and financial performance and condition may constitute forward-looking information, future oriented financial information, or financial outlooks (collectively, “forward looking statements”). The forward-looking statements are stated as of the date of this news release and are based on estimates and assumptions made by Trez Capital Fund Management LP (“Trez”) in light of its experience and perception of historical trends, current conditions and expected future developments, as well as other factors that Trez believes are appropriate and reasonable in the circumstances. There can be no assurance that such forward-looking statements will prove to be accurate, as actual results, performance and future events could differ materially from those anticipated in such statements. Past performance is not an indication of future returns, and there can be no guarantee that targeted returns or yields can be achieved. Trez refers you to the Company’s public disclosure for information regarding these forward-looking statements, including the assumptions made in preparing forward-looking statements and management’s expectations, and the risk factors that could cause the Company’s actual results, yield, levels of activity, performance or achievements or future events or developments to differ materially from those expressed or implied by the forward-looking statements. Such public disclosure is available on SEDAR and at the request of Trez. This news release does not represent an offer or solicitation to sell securities of the Company.
About the Company
Trez Capital Fund Management Limited Partnership is the manager of and portfolio advisor to the Company. On June 16, 2016 the Shareholders of the Company approved the orderly wind-up of the Company. Under the orderly wind-up plan the Company will distribute the net proceeds through special distributions, the repurchase of shares pursuant to the normal course issuer bid, or otherwise.
For further information:
Chief Executive Officer & Chief Financial Officer
Tel: (604) 630-0775