Romspen delivers strong performance in 2021

TORONTO, July 7, 2022 /CNW/ – Romspen Mortgage Investment Fund, one of Canada’s leading non-bank commercial mortgage lenders, has released its financial statements for the year ended Dec. 31, 2021. In a year that has seen many sectors of the l he economy recovering from the disruptions of the pandemic, the Unitholders of the Fund achieved a net return of 7.9%, which outperformed major fixed income benchmarks.

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2021 Highlights

  • Net profit for 2021 increased by 54%

  • Distributions to unitholders totaled $0.74 per unit, representing a net compound return of 7.9%, which outperformed the FTSE Canada Short Term Overall Bond Index (“FTSE Canada STBI”) (-0.9%)

  • Romspen’s performance over 3, 10 and 25 years outperformed the FTSE Canada STBI over the same periods

  • US mortgages in portfolio increased from 47% to 52% in 2020

  • The Fund’s net investment portfolio decreased slightly by 7% in 2021 to $2.7 billionreflecting an increase in loan repayments

  • Romspen has generated positive net returns for investors every month of the year for the 26th consecutive year

Getting into her 58e year, Romspen, the Fund’s mortgage manager, “enjoys a well-deserved reputation with borrowers and investors for its innovative approach to commercial mortgages,” said Wes Roitman, managing partner of Romspen. “We have a significant history of providing investors with stable and predictable returns, even in difficult economic times, and we have generated positive performance every month for the past 26 years. Our strategy of building a diversified pool of carefully underwritten first mortgages has generally outperformed major fixed income and equity indices across a wide range of conditions and economic cycles, including the Great Financial Crisis and the COVID-19 pandemic. »

2021 operating results

Revenues for the year were $225 millioncompared to $240 million in 2020. The Fund recorded net income of $204 millionWhere $0.66 per unit, compared to $133 millionWhere $0.42 per unit, in 2020. This net income reflects the Fund’s pivot from its defensive posture in 2020, as real estate activity normalized across many sectors and submarkets. Investors in the Fund held units totaling $2.8 billioncompared to $3.1 billion Last year. Net debt (debt less cash) was $131 million, compared to $43 million in 2020.

Comparative performance

For 2021, the Fund’s compounded net return of 7.9% outperformed the FTSE Canada STBI total return (-0.9%). The following chart compares Romspen’s performance history to the total return of the FTSE Canada STBI and the S&P/TSX Composite Index.

Performance/Comparative Cumulative Compound Returns

1 year

3 years

5 years

10 years

25 years

Romspen

7.9%

23%

43%

108%

744%

FTSE Canada-STBI

-0.9%

8%

ten %

22%

136%*

S&P/TSX Composite Index

25.1%

62%

61%

140%

563%

Romspen results prior to January 16, 2006 reflect pool of individually syndicated mortgages

Romspen’s return is calculated on a cash-on-cash basis, net of fees, and assumes monthly reinvestment of distributions. It does not take into account income taxes, changes in unit value, third party expenses or redemption fees.

Comparative returns are gross.

*FTSE Canada-STBI returns are based on 23 years of data due to data restrictions

Investment portfolio

To December 31, 2021the net investment portfolio decreased slightly by 7% for $2.7 billion compared to 2020. The Fund realized losses of $16.1 million on mortgages that were previously reserved, meaning there was no negative impact on net income. Total provisions for credit losses decreased by 14% for $117.9 millionwhich still represents a solid margin of safety given the economic uncertainties in 2022.

The Fund continues to focus on short-term lending, with 92% of mortgages maturing in less than one year and the remainder maturing in less than two years. The portfolio remains well diversified with 21% of mortgages invested in Ontario21% in Western Canada, 6% in the other provinces and 52% in the United States in 20 states. The weighted average interest rate of the mortgage portfolio was 9.8% compared to 10.2% in 2020.

Distribution 2021

Distributions to unitholders for 2021 have been $0.74 per unit, compared to $0.56 per unit in 2020. This equates to a compound net return to investors of 7.9%, compared to 5.8% in 2020.

About the Fund

The Fund has a long and successful track record of commercial mortgage investments and is one of the largest non-bank commercial mortgage lenders in Canada. Investors in the Fund include high net worth individuals, family offices, foundations, endowments and pension plans.

The Fund’s investment mandate emphasizes capital preservation, strong absolute returns and performance consistency. The Fund and its predecessor, the Syndicated Mortgage Pool, have delivered 26 consecutive years of positive net returns to investors (ranging from 5.8% to 10.6%), with positive returns every month.

The Fund’s 2021 Annual Report, including the Trustees’ Report, Management Report and Audited Financial Statements, is available at: www.romspen.com.

This press release is for informational purposes only. It is not investment advice or financial products and is not intended to be used as a basis for making an investment decision. This press release is not and does not constitute an offer to sell or a solicitation, invitation or recommendation to buy any securities in any jurisdiction. An offering memorandum containing important information about the Fund has been prepared and the Fund is only available to investors who qualify under certain other exemptions from prospectus requirements under applicable securities laws. Copies of the offering memorandum, which should be reviewed carefully before making a purchasing decision, can be obtained from Romspen. Past performance does not guarantee future results.

The FTSE Canada™ Global Short-Term Bond Index is a market capitalization-weighted index comprised of a diversified range of high-quality, fixed-rate, semi-annually paid Canadian government and corporate bonds with maturities ranging from 1 to 5 years. Although the constituent assets of this index have terms similar to those of the Fund’s mortgage investments, the Fund is not managed to track the FTSE Canada–STBI as a benchmark. Similarly, the Fund is not managed to track the performance of the S&P/TSX Composite Index™, which is a market capitalization-weighted index of approximately 250 of the largest publicly traded companies in the Canada and is the broadest measure of the performance of publicly traded Canadian stocks. These are unmanaged, broad-based indices and measures that reflect no management fees and assume reinvestment of earnings. They should not be viewed as “benchmarks” for the Fund as they do not track commercial mortgage investments, which is the Fund’s investment strategy. Whenever the Fund’s net return for a given period is compared to the performance of these indices over the same period, the purpose is to compare the Fund’s return to the performance of other major Canadian asset classes typically included in a investment portfolio.

This press release contains forward-looking statements or information under applicable securities laws. Because forward-looking statements and information relate to future events and conditions, they, by their very nature, involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of risks. The forward-looking statements and information contained in this press release speak as of the date of its publication, and Romspen undertakes no obligation to publicly update or revise the forward-looking statements or information included, whether as a result of new information , future or other events, except as required by applicable securities laws.

SOURCE Romspen Investment Corporation

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