TORONTO, Feb. 17, 2021 /CNW/ - Trez Capital Senior Mortgage Investment Corporation (TSX: TZS) (the "Company") today released its financial results for the three months and year ended December 31, 2020. The audited financial statements and annual MD&A of the Company can be found at www.sedar.com or www.trezcapitalseniormic.com. The Company also announces a change to the composition of its board of directors (the "Board").
Financial Highlights & Business Update
For the three months and year ended December 31, 2020, income from operations decreased by $250 thousand and $53 thousand for the three months and year ended December 31, 2020, respectively, compared to the same periods in 2019. The decrease was primarily the result of an increase in management fees related to a $200 thousand fee paid by the Company pursuant to the terms of the Separation and Mutual Release Agreement entered into between the Company and Trez Capital Fund Management LP dated November 23, 2020, as described in the news release of the Company dated the same day. Remaining expenses were largely consistent with the same periods in 2019. Additionally, the fair value adjustment on investments of the Company in mortgages was reduced by $2.78 million during the fourth quarter of 2020. This was the result of management's analysis of a single mortgage for which there has been a fair value adjustment based on a number of factors including the expected future cash flows on the mortgage outstanding, the estimated loan to value and recent payment history regarding this mortgage.
During the three months and year ended December 31, 2020, no mortgages were funded or fully repaid, although the Company did receive a substantial repayment on one of its remaining mortgages for which there was a fair value adjustment. The Company's investment in existing mortgages decreased by $129 thousand, which was primarily the result of capitalized interest and a principle repayment of $3.9 million on one of the two remaining mortgages. Basic and diluted income per share was $0.61 and $0.55 for the three months and year ended December 31, 2020 respectively, compared to $(0.16) and $(0.07) in the same periods in 2019.
Changes to Board Composition
Effective February 16, 2021, Jordan Kupinsky has stepped down from the Board and Brad Nathan has been appointed as a new independent director of the Company. Mr. Kupinsky stepped down from the Board to ensue that there are a sufficient number of independent directors of the Company for the Company to comply with its audit committee member composition requirements under applicable securities laws. Mr. Kupinsky will continue to act as the Chief Executive Officer of the Company and is expected to be nominated by management to once again serve on the Board at the Company's next annual and special meeting of shareholders (the "2021 Meeting"). The Company expects to put a resolution to shareholders at the 2021 Meeting to approve an amendment to the articles of the Company that would allow the Board to increase its size by up to one-third in between meetings of shareholders in order to provide the Company with greater flexibility with respect to the future composition of its Board.
Mr. Nathan is President of Lynx Equity Limited, a Toronto-based private equity & investment firm focused on acquiring small and medium-sized businesses, where he works with the Lynx management team to define strategy and goals. His responsibilities at Lynx include overseeing transactions, operations, capital sourcing and deal origination. After receiving his Chartered Accounting degree, Mr. Nathan practiced accounting at Price Waterhouse, and then at Grant Thornton in Toronto. He later served as Vice-President of merchant banking at Rothschild Canada Limited. Prior to forming Lynx, Mr. Nathan founded Succession Capital Corporation, a private equity firm that grew to $40 million in annual revenue. He also served on the Board of Directors of the Toronto Wildlife Centre for many years and continues to support wildlife related organizations.
Mr. Kupinsky, Chief Executive Officer of the Company, commented: "we are pleased to welcome Brad to the Board and know that his considerable experience and capabilities will be a welcome addition to the Board."
About 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.
Statements in this press release contain forward-looking information. Such forward-looking information may be identified by words such as "anticipates", "plans", "proposes", "estimates", "intends", "expects", "believes", "may" and "will". The forward-looking statements are founded on the basis of expectations and assumptions made by the Company. Details of the risk factors relating to the Company and its business are discussed under the heading "Business Risks and Uncertainties" in the Company's annual Management's Discussion & Analysis for the year ended December 31, 2020 and under the heading "Risk Factors" in the Company's Annual Information Form dated March 31, 2020, copies of which are available on the Company's SEDAR profile at www.sedar.com. Most of these factors are outside the control of the Company. Investors are cautioned not to put undue reliance on forward-looking information. These statements speak only as of the date of this press release. Except as otherwise required by applicable securities statutes or regulation, the Company expressly disclaims any intent or obligation to update publicly forward-looking information, whether as a result of new information, future events or otherwise.
SOURCE Trez Capital Senior Mortgage Investment Corporation
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