Trez Capital Mortgage Investment Corporation Second Quarter Update

Financial & Business Update

On June 16, 2016 the shareholders of the Company approved the orderly wind-up of the Company (“Orderly WindUp”). The Company is currently in the final wind-down period. Its remaining activities involve solely the oversight of ongoing litigation and the maintenance of the corporation pending release and discharge of its liabilities. As previously announced effective at the close of markets on July 31, 2019 the Company delisted and no longer trades on the TSX. Upon delisting the Company filed an application for an order that it cease to be a reporting issuer. The order, was granted on October 4, 2019 and permits the Company to reduce financial and regulatory reporting requirements. The Company is updating investors by posting a quarterly press release and annual audited financial statements onto www.trezcapitaljuniormic.com. In the first quarter the COVID-19 outbreak was declared a pandemic by the World Health Organization. Currently the situation is dynamic and the ultimate duration and magnitude of the impact on the economy and our business are not fully known at this time. However given that we have divested from all our mortgage investments and there are limited assets remaining the effect on the Company is expected to be minimal. Below is a summary of the return of capital per book value since inception of the Orderly Wind Up plan:

Below is a summary of the return of capital per book value since inception of the Orderly Wind Up plan:

 

Summary of Return of Capital since Inception of the Orderly Wind Up Plan

 

 

 

Book Value Per Share 
Opening Book Value at inception of Orderly Wind Up June 30, 2016 $8.85

 

Total Regular and Special Distributions to Investors since inception of Plan (1)

(9.02)

 

Increase/decrease from Operations in net assets (including SIB)1

0.31 

Ending Book Value at June 30, 2020

$0.14

(1) Includes upcoming Special Distribution of $0.11 per class A share which is to be paid on April 20, 2020.

 

On March 27, 2020, the Board of Directors declared a special distribution of $1.3 million ($0.11 per Class A share) (the “Special Distribution”). The Special Distribution, which constituted a return of capital pursuant to the winding-up of the Company's business as approved by Shareholders on June 16, 2016, was paid on April 20, 2020 to holders of Class A shares of record at the close of business on April 13, 2020.

In the prior year, the Manager settled two lawsuits in relation to mortgages that were previously in default. Under the terms of the first settlement, which related to a lawsuit against an advisor on a loan that was sold at a loss $1.9 million in 2017, the Company received $1.1 million in cash compensation. The second settlement, stemming from a loan that Summary of Return of Capital since Inception of the Orderly Wind Up Plan Book Value per Share Opening Book Value at inception of Orderly Wind Up June 30, 2016 $ 8.85 Total Regular and Special Distributions to Investors since inception of Plan1 (9.02) Increase/decrease from Operations in net assets (including SIB) 0.31 Ending Book Value at June 30, 2020 $ 0.14 1. Includes upcoming Special Distribution of $0.11 per class A share which is to be paid on April 20, 2020. was sold at a loss of $1.9 million in 2018, related to a lawsuit against a borrower for misrepresentation. The Company settled the case prior to December 31, 2019 for $0.3 million which was received in the first quarter of 2020.

During the first quarter of 2020, the Company settled the one remaining litigation to recover losses from loans where realized proceeds were less than the outstanding principal amounts and interest. In Q2 the Company was able to recover the default administration fee and some legal fee expenses in the amount of $0.2 million.

The Company has approximately $1.4 million in cash, as a reserve against ongoing expenses and contingent liabilities. Upon release and satisfaction of all liabilities, the Company intends to make a final distribution of all remaining funds to the holders of its Class A shares (the “Final Distribution”). If and to the extent there are proceeds to do so, one or more interim distributions may be made to the holders of Class A shares prior to the Final Distribution. However, there can be no assurance that any such interim distributions will occur. The formal dissolution of the Company will follow the Final Distribution. The expected time frame to obtain the release and discharge of all liabilities, distribute its remaining assets to shareholders and to dissolve is expected to be approximately twelve to eighteen months.

Forward Looking Statements

Certain statements in this news release about Trez Capital Senior 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 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: 
Alexander Manson 
Chief Executive Officer 
Trez Capital 
Tel: (604) 630-0775 
E-mail: sandym@trezcapital.com