INVESTOR PRESENTATION. November 2018

Transcription

1 INVESTOR PRESENTATION November 2018

2 FORWARD-LOOKING STATEMENTS This presentation contains certain statements that may be forward-looking statements. All statements in this document, other than statements of historical fact, that address events or developments that Atrium Mortgage Investment Corporation expects to occur, are forward looking statements. Forward looking statements are statements that are not historical facts and may be identified by the words expects, plans, anticipates, believes, intends, estimates, projects, potential and similar expressions, or that events or conditions will, would, may, could or should occur. Although Atrium believes the expectations expressed in such forward-looking statements are based upon reasonable assumptions, such statements are not guarantees of future performance and actual results may differ materially from those in the forward- looking statements. Factors that could cause the actual results to differ materially from those in forward looking statements include: failure to successfully negotiate or subsequently close transactions, adverse results from mortgage investments and general economic, market or business conditions. Investors are cautioned that any such statements are not guarantees of future performance and actual results may differ materially from those projected in the forward-looking statements. Forward looking statements are based on the beliefs, estimates and opinions of Atrium s management on the date the statements are made. Atrium undertakes no obligation to update these forward-looking statements in the event that management s beliefs, estimates or opinions,or other factors, change. 2

3 CANADA S PREMIER NON-BANK LENDER ATRIUM MORTGAGE INVESTMENT CORPORATION Non-bank lender, founded in 2001 Assets - $656 million Market capitalization - $483 million Average mortgage yield % Diversified, high quality mortgages Focus on shareholder value: Safe portfolio Steady returns Minimize expenses Maximize distributions to shareholders 3

4 ACQUISITION FINANCING COMMERCIAL REDEVELOPMENT Description Acquisition financing of a site to be redeveloped into two mixed-use towers of 15 and 12-storeys in height with a proposed density of 5.5x FSR Property 1 acre site in North Vancouver, improved with two multi-tenanted, medical office buildings of 4 and 9-storeys in height with rentable areas of 26,779 and 25,302 square feet, respectively Loan $46 million blanket first mortgage (shared 50/50 with another lender partner) Interest Rate Greater of 8.25% or Prime +4.55% per annum Term 24 months Loan-to-value 72.8% on an as is appraised basis Guarantee Corporate and Personal guarantees 4

5 ACQUISITION FINANCING COMMERCIAL REPOSITIONING Description Acquisition financing for a downtown property to be repositioned by exterior recladding & interior renovation to achieve market level rents Property A acre site with a 3-storey building comprised of 28,300 square feet in downtown Toronto, currently utilized as retail space and restaurants Loan $6.725 million first mortgage Interest rate 7.75% per annum Term 24 months Loan-to-value 74.4% on an as is appraised basis Guarantee Corporate and Personal guarantees 100% of the loan 5

6 SINGLE FAMILY RESIDENCE LOAN OWNER OCCUPIED HOUSE LOAN Description Purchase of a 1,614 sq. ft. single-family home. Property Detached two storey residential home in Ajax, Ontario Loan First mortgage of $575,000 Interest rate Prime % per annum Term 1 year Loan-to-value 75.0% Guarantee Fully guaranteed by owner 6

7 FINANCIAL OVERVIEW Monthly dividends and annual special Objective: preserve capital and focus on steady, safe return to shareholders. Monthly dividends + special annually 2013: $0.80 rate + $0.05 = $ : $0.82 rate + $0.07 = $ : $0.84 rate + $0.09 = $ : $0.86 rate + $0.10 = $ : $0.88 rate + $0.04 = $ : $0.90 rate, plus special $1.00 $0.95 $0.90 $0.85 $0.80 To be determined $0.75 DRIP at 2% discount. RRSP, TFSA, etc. eligible. $ Monthly Dividend Annual Special 7

8 CONSISTENT DIVIDENDS Equity-type return on a fixed-income-type investment 12.0% Atrium listed on the TSX September 2012 Atrium MIC TSX 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% Atrium yield based upon book value 8

9 STEADY GROWTH MORTGAGE PORTFOLIO $800 $700 $600 $500 Millions $400 $300 $200 $100 $0 QUARTERLY REVENUES Millions $18 $16 $14 $12 $10 $8 $6 $4 $2 $0 9

10 STRONG AND CONSISTENT RETURNS Atrium Mortgage Investment Corporation - Return on Equity 12% 10% 8% Q % Rate 6% 4% 2% 0% 1-year Government of Canada treasury bill - 1.7% 5-year Government of Canada bond Q % Q

11 FINANCIAL STRENGTH AND STABILITY $ millions Sept 30, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Mortgages receivable Foreclosed properties $654 $627 $531 $ Total assets $655 $628 $532 $448 Bank debt and BAs $104 $144 $ Convertible debenture Other liabilities Total liabilities Shareholders equity Total liabilities and equity $655 $628 $532 $448 11

12 EXCELLENT OPERATING RESULTS Sept 30, 2018 Sept 30, 2017 Year 2017 Year 2016 Year months 9 months 12 months 12 months 12 months millions millions millions millions millions Mortgage interest and fees $43.5 $36.7 $50.4 $44.0 $40.2 Financing costs Mortgage servicing and management fees General and administrative Loss provision Expenses Net income $25.2 $21.2 $29.1 $26.1 $

13 LOW RUNNING COSTS Management fee Performance fee Total expenses ATRIUM MIC 0.85% on mortgages (not on idle cash) None 1.10% of assets Lowest management fee amongst our peers Lowest management fee: 0.85% plus HST (MICs typically are 1% - 2%) Other costs under 0.15% No performance fee Underwriters in two offices knowledgeable about local markets 13

14 MOVEMENT IN AVERAGE MORTGAGE RATE Interest Rate % Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Atrium MIC 5 year Canada bond yields Difference 14

15 MAINTAIN LOW RISK PORTFOLIO PORTFOLIO LOAN TO VALUE Atrium MIC average loan-to-value 75% 70% Loan-to-Value 65% 60% 55% 50% Q MICs are lenders, not owners 15

16 MORTGAGE PORTFOLIO TURNOVER 100% Repayments/Average of Mortgages Receivable 80% 60% 40% 20% 47.3% 42.8% 35.3% 57.2% 42.2% 44.8% 0%

17 MAINTAIN LOW RISK PORTFOLIO HIGH 1ST MORTGAGES & LOW RISK UNDERWRITING Atrium September 30, 2018 Loan-t0-value under 75% 79% First mortgages 85% 21% Other ranks <75% >75% 15% 17

18 GEOGRAPHIC PORTFOLIO DIVERSIFICATION Greater Toronto Area 69.0% Greater Toronto Area 61.0% Non-GTA Ontario 2.9% Saskatchewan 0.9% Non-GTA Ontario 3.0% Saskatchewan 3.2% British Columbia 7.7% Alberta 19.5% British Columbia 30.4% Alberta 2.4% March 31, 2015 Alberta exposure reduced to 2.4% September 30,

19 LENDING TEAM EXPERIENCE + GEOGRAPHIC DIVERSIFICATION Originator has 25 years of lending experience 4 originators, many with up to 25 years of lending experience Geographic diversification reduces risk 19

20 EXPERTISE OF INDEPENDENT DIRECTORS Mark L. Silver, Chair President of Optus Capital Corporation and founding partner and past CEO of Universal Energy. Robert H. DeGasperis President of Metrus Properties and DG Group, family owned and operated real estate companies. Peter P. Cohos President and founder of Copez Properties Ltd., a Calgary-based real estate investment company. Andrew Grant President of PCI Group, a major developer in British Columbia. Nancy H.O. Lockhart Loblaw Companies Limited; as well as a Chair of the Board of Directors of Gluskin Sheff + Associates, Inc. Maurice (Maish) Kagan Director of Pure Multi-Family REIT, Kew Media Group and Cliffside Capital Ltd. Former CFO of Greenwin Properties and ResREIT. 20

21 COMMERCIAL REAL ESTATE Greater Toronto Area- vacancy rates % 14% 13% 12% 11% 10% 9% Rate 8% 7% 6% 5% 4% 3% 2% 1% 0% Office - Overall Office - Downtown Industrial Apartment 21

22 COMMERCIAL MARKET METRO VANCOUVER OFFICE MARKET 22

23 COMMERCIAL MARKET METRO VANCOUVER INDUSTRIAL MARKET 23

24 RESIDENTIAL REAL ESTATE Resale Home Market Benchmark Price Change (YoY) GTA Toronto 20% 15% 10% 5% 0% Composite Condominium Townhouse Semi-Detached Single Family -5% -10% $768,400 $838,900 $501,400 $530,200 $569,300 $634,600 $719,800 $882,400 $923,800 $1,112,800 24

25 RESIDENTIAL REAL ESTATE Greater Vancouver Resale Home Market $1,800,000 October 2017 October 2018 change: - 5.1% $1,600,000 $1,524,000 $1,400,000 $1,200,000 $1,000,000 $800,000 change: + 5.8% $683,500 change: + 4.4% $829,200 $600,000 $400,000 $200,000 $0 Condominium Townhouse Single Family 25

26 PRICE VOLATILITY OF ATRIUM VS. MAJOR REITS 26

27 BETA OF ATRIUM MIC VS. BANKS RBC TD Scotiabank BMO CIBC CWB Equitable Bank Atrium MIC Beta is a measure of the volatility of a security in comparison to the stock market as a whole. 27

28 ATRIUM VERSUS THE TSX COMPOSITE TOTAL RETURN SINCE ATRIUM LISTED Common Shares ($) S&P/TSX Composite Total Return Index ($) September 4, 2012 December 31, 2012 December 31, 2013 December 31, 2014 December 31, 2015 December 31, 2016 December 31, 2017 September 30,

29 ATRIUM VERSUS THE TSX COMPOSITE CUMULATIVE TOTAL RETURN Steady growth and superior returns Atrium TSX Q

30 SUMMARY: COMPELLING VALUE PROPOSITION Experienced management team Local presence in two provinces Strong mortgage portfolio focused on liquid markets Great track record since 2001 Lowest management fees 5% board ownership 6 of 7 independent directors Dividend stable and high 30