Calgary, Alberta--(Newsfile Corp. - April 28, 2020) - Builders Capital Mortgage Corp. (TSXV: BCF) ("Builders Capital" or "the Company") today released financial results for the year ending December 31, 2019.
Highlights include:
- Consistent with our targeted distribution, dividends paid to Class A public shareholders in 2019 were $0.80 per share, representing an 8% annual return on the original $10.00 issue price.
- Annual mortgage revenue of $2.9 million represented 10.2% of gross share capital calculated on the weighted average shares outstanding, compared to $3.4 million, or 12.4% of gross share capital in 2018.
- At year-end, our debt-to-equity ratio was an extremely conservative 2.3%.
- Despite foreclosing on mortgages with values totaling $6.1 million in the year, properties were resold for total proceeds of $3.9 million and overall assets held for sale increased by only $1.6 million in the year.
Sandy Loutitt, President of Builders Capital, commented on these results as follows:
"It is well known that real estate markets in the regions in which we operate have suffered a sustained downturn in recent years, with substantial declines in home selling prices and sales volumes, as well as suffering increased marketing times. While our core markets had largely stabilized by the fourth quarter - albeit at lower prices and prior to the onset of the COVID-19 pandemic - the lengthy downturn did have an impact on our business and our results in 2019.
"Through this challenging market environment, our first priority has been to preserve the investment capital with which we have been entrusted. To that end, we have effectively focused on the creative and efficient management of problem loans and foreclosures to reduce our risk. We have introduced and more conservative standards for the underwriting of new loans and this in turn has led to a reduction of risk and improving strength of our portfolio. We have also successfully reduced our portfolio of foreclosed properties, having sold five properties for $3.9 million during the year.
The Canada Mortgage and Housing Corporation's (CMHC) most recent Housing Market Outlook (October 24, 2019) anticipates improvement in sales and prices over the next two years in Canada generally, supported by income and population growth. Nevertheless, the emergence of the COVID-19 pandemic has the potential to greatly alter outcomes. In its Monthly Housing Market Update (April 15, 2020), RBC Economics suggests that, "despite the rough patch ahead, we expect property values to generally hold up." We would concur with that conclusion.
"In the near term, our strategy will concentrate on shifting assets from Alberta to the BC market as we receive repayments. We will also consider entering new markets where we see positive economic fundamentals and opportunities for productive portfolio growth, and we will generally continue to apply our newly-adopted conservative standards in granting new loans."
Financial Overview
| Year ended December 31, 2019 $ | Year ended December 31, 2018 $ | Year ended December 31, 2017 $ | |
| Revenues | 2,921,678 | 3,429,265 | 3,364,860 |
| Total comprehensive income | 1,445,634 | 1,924,711 | 2,382,194 |
| Total assets | 27,152,829 | 28,918,136 | 31,418,419 |
| Shareholders' equity | 26,554,715 | 26,250,889 | 25,683,552 |
| Basic and diluted earnings per share | 0.50 | 0.70 | 0.94 |
| Cash dividends declared | 2,061,004 | 2,171,973 | 2,376,866 |
| Cash dividends declared per Class A share | 0.80 | 0.80 | 0.80 |
| Cash dividends declared per Class B share | 0.53 | 0.74 | 1.12 |
A more detailed discussion of the Company's financial results can be found in Builders Capital's Fiscal 2019 Management's Discussion and Analysis, which has been posted along with audited condensed financial statements for the year on the Company's website () and filed on SEDAR ().
About Builders Capital
Builders Capital is a mortgage lender providing short-term course-of-construction financing to builders of residential, wood-frame properties in Western Canada. The Company commenced active operations on December 12, 2013 on the closing of its initial public offering, whereupon it acquired a portfolio of mortgages from two predecessor companies.
Builders Capital's investment objective is to generate attractive returns, relative to risk, in order to provide stable and consistent distributions to shareholders while remaining focused on capital preservation and satisfying the criteria mandated for mortgage investment corporations ("MIC") as defined in the Income Tax Act.
As an MIC, Builders Capital is not subject to income tax provided that it distributes all of its taxable income as dividends to shareholders within 90 days of its December 31st year-end. Such dividends are generally treated by shareholders as interest income, so that each shareholder is in the same tax position as if their proportionate share of mortgage investments made by the company had been made directly by the shareholder.
Forward-Looking Information
This news release contains forward-looking statements within the meaning of applicable securities legislation, including statements with respect to management's beliefs, estimates and intentions, and similar statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "outlook", "objective", "may", "will", "expect", "intent", "estimate", "anticipate", "believe", "should", "plans" or "continue" or similar expressions suggesting future outcomes or events. Such forward-looking statements reflect management's current beliefs and are based on information currently available to management. These statements are not guarantees of future performance and are based on estimates and assumptions that are subject to risks and uncertainties which could cause actual results to differ materially from the forward-looking statements contained in this news release. These include, among other things, risks associated with mortgage lending, competition for mortgage lending, real estate values, interest rate fluctuations, environmental matters and the general economic environment. The company cautions that the foregoing list is not exhaustive, as other factors could adversely affect its results, performance or achievements. Readers are cautioned against undue reliance on any forward-looking statements. Although the forward-looking information contained in this news release is based upon what management believes are reasonable assumptions, there can be no assurance that actual results will be consistent with these forward-looking statements. Except as required by applicable law, Builders Capital undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
For more information, please contact:
John Strangway CPA, CA, Chief Financial Officer
Telephone: (403) 685-9888 Email:
Website:
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