Romspen Mortgage Investment Fund Announces 2011 Results

Romspen demonstrates strong absolute returns as well as substantial outperformance compared to major benchmarks

TORONTO, May 2, 2012 /CNW/ - Romspen Mortgage Investment Fund, a leading non-bank mortgage lender specializing in commercial and industrial real estate, released its financial statements for the year ended December 31, 2011 today.  In a year marked by crisis conditions in Europe and global and economic upheaval, Romspen again delivered solid results in 2011 with compounded net investor returns of 8.2%.  This was achieved in an economic environment where there has been unprecedented downward pressure on rates everywhere and across the entire yield spectrum.

2011 Highlights

• The net mortgage portfolio increased by 44% in 2011 to $749.1 million.
• Net income for 2011 increased by 26% to $51.0 million.
• Romspen's five year performance (2007-2011), which represented a challenging and volatile investment period for all investors, has significantly outperformed T-bills, the DEX Short Term Bond Index ("DEX-STBI") and the S&P/TSX.
• 2011 distributions to investors totalled $0.79 per unit to yield a compounded net return of 8.2%.
• The Fund's unitholder equity for all units outstanding grew to $751.9 million at the end of 2011 compared to $552.7 million for 2010.
• Romspen has shown positive investor returns each month during the last 15 years (180 months).

"Our business is based on a simple strategy focused on capital preservation, absolute returns and consistency", says Mark Hilson, Managing General Partner of Romspen. "Disciplined execution of this long-standing strategy has produced strong returns over virtually every time period and through various business cycles relative to other major investment benchmarks.  We are pleased that Romspen has consistently delivered steady and predictable returns during a period of high market volatility, economic uncertainty, and generally poor returns elsewhere in the capital markets".

2011 Results of Operations

Revenues for the year were $64.3 million in 2011 compared to $46.6 million for 2010 as the mortgage portfolio grew significantly in 2011 to $749.1 million.  For 2011, Romspen recorded net income of $51.0 million or $0.75 per unit compared to $46.6 million or $0.80 per unit in 2009.  Investors held units totalling $751.9 million compared to $552.7 million last year.  Net debt (debt less cash) was $15.7 million compared to last year's level of $15.7 million positive cash.

Comparative Performance

During 2011, Romspen's net compounded return of 8.2% strongly outperformed T-bills at 0.9%, the DEX-STBI at 4.7%, and the S&P/TSX at -8.7%. Over the past five years, Romspen's accumulated net compounded return of 55% outperformed T-bills at 9%; the DEX-STBI at 28%; and the S&P/TSX at 7%.  For a comparison of Romspen's short and long-term performance track record versus other investment classes, please see the Fund's website at:  www.romspen.com.

Mortgage Portfolio

At December 31, 2011, the net mortgage portfolio was $749.1 million compared to $519.0 million in 2010, representing an increase of 44%.  The Fund realized losses of only $0.3 million on mortgages that were previously reserved for ensuring that there was no negative impact on net earnings from these losses.  Furthermore, the Fund increased its safety by increasing its loss reserves to $9.5 million.

The Fund continues to be focused on short-term mortgages with 59% of mortgages maturing within one year and 95% maturing in less than two years.  Geographic diversification continued as 41% of the mortgages were invested in Ontario, 50% in Western Canada, and 9% in other areas.  The weighted average interest rate of the mortgage portfolio decreased throughout the year to 10.7% compared to 11.5% as at December 31, 2010 reflecting more open credit markets and pervasive downward rate pressure on a global basis.

2011 Distributions

Unitholder distributions for 2011 were $0.79 per unit compared to $0.84 per unit in 2010.  This yielded a compounded net return to investors of 8.2% in 2011 compared to 8.7% in 2010.

About the Fund

Romspen has a long-term track record of successful mortgage investing across Canada.  With its origins in the mid-60's, Romspen is one of the largest non-bank commercial/industrial mortgage lenders in Canada.  The Fund's investment mandate is focused on capital preservation, absolute returns of approximately 10% and performance consistency.  Our investors are high net-worth individuals, foundations, endowments and pension plans.  Through disciplined investing we have generated consistent long-term returns of approximately 10% annually for our investors.

Over the past ten years, Romspen has invested more than $2 billion in mortgages and has earned average net annual compounded returns of approximately 10%.

The 2011 Romspen Mortgage Investment Fund Annual Report including the Trustees' Report, Management's Discussion & Analysis and the audited Financial Statements are available at: www.romspen.com.

This news release may contain forward-looking statements that are based on management's current expectations and are subject to known and unknown uncertainties and risks.  These uncertainties and risks may cause actual results to differ materially from those contemplated or implied and readers are cautioned not to place undue reliance on these forward-looking statements.  Romspen is under no obligation to update any forward-looking statements contained herein should material facts change due to new information, future events or otherwise.

Mark L. Hilson
Managing General Partner
[email protected]
416-966-1100