Romspen Mortgage Investment Fund Announces 2018 Results

Romspen Delivers Strong Absolute and Comparative Performance in 2018.

TORONTO, June 17, 2019 /CNW/ - Romspen Mortgage Investment Fund, a leading non-bank mortgage lender specializing in commercial and industrial real estate, today released its financial statements for the year ended December 31, 2018. For 2018, the Fund had a 7.5% net yield, reflecting both a strong absolute return and significant comparative outperformance against the major benchmarks. While slightly below last year, it was achieved in a year with significant trade and geopolitical events and negative returns across most asset classes.

2018 Highlights

• The net investment portfolio increased by 27% in 2018 to $2.6 billion.
• Net earnings for 2018 increased by 62% to $185 million.
• Distributions to investors totalled $0.73 per unit to yield a compounded net return of 7.5%.
• Net yield of 7.5% for Romspen significantly outperformed T-bills (1.4%), FTSE-TMX Short-Term Bond Index ("FTSE/TMX‑STBI") (1.9%) and S&P/TSX Composite Total Return Index ("S&P/TSX") (-8.9%).
• Romspen's past three, five, ten and twenty year performance has also outperformed T‑bills, FTSE/TMX‑STBI and S&P/TSX.
• US mortgages in the portfolio increased to 44% from 39% in 2017.
• The Fund's unitholder equity for all units outstanding grew to $2.4 billion at the end of 2018 compared to $2.1 billion for 2017.
• Romspen has delivered positive net investor returns each and every month for the past 20 consecutive years.

"Completing its 52^nd year in 2018, the firm has a strong history of growth, broad diversification across North America and a solid and consistent investment track record", says Mark Hilson, Managing General Partner of Romspen. "We have a long track record of delivering steady and predictable returns. Romspen has generated positive returns each and every month over the past 20 years and typically outperforms the major benchmarks across a broad spectrum of economic conditions and cycles".

2018 Results of Operations

Revenues for the year were $229 million, compared to $161 million for 2017. Current year revenues are higher mainly due to growth in size of the mortgage portfolio. For 2018, Romspen recorded net income of $185 million, or $0.81 per unit, compared to $115 million, or $0.61 per unit, in 2017. Investors held units totalling $2.4 billion, compared to $2.1 billion last year. Net debt (debt less cash) was $179 million, compared to last year's level of $10 million.

Comparative Performance

During 2018, Romspen's net compounded yield of 7.5% significantly outperformed T-bills (1.4%), FTSE/TMX‑STBI (1.9%) and S&P/TSX (-8.9%). The following table presents a comparative performance history reflecting Romspen's consistent outperformance against the benchmarks.

Comparative Cumulative Compounded Performance Yields
		1 year	3 years	5 years	10 years	20 years
	Romspen	7.5%	25%	46%	116%	466%
	S&P/TSX	-8.9%	20%	22%	114%	261%
	FTSE-TMX STBI	1.9%	3%	9%	28%	119%
	T-bills	1.4%	3%	4%	8%	54%
Note: Romspen returns are net, comparative returns are gross.
	Yield/return, as used herein, is calculated based on net compounded monthly cash distributions to unitholders, based on a $10.00/unit subscription price without any adjustment for unit gains/losses on sale/redemption.

Investment Portfolio

At December 31, 2018, the net investment portfolio was $2.6 billion, compared to $2.0 billion in 2017, representing an increase of 27%. The Fund realized losses of $5.0 million on mortgages that were previously reserved for, ensuring that there was no negative impact on net earnings from these losses. Total provisions for credit losses increased to $70.0 million, maintaining a comfortable margin of safety.

The Fund continues to focus on short-term mortgages, with 77% of mortgages maturing within one year and 95% maturing in less than two years. Geographic diversification continued, with 27% of mortgages invested in Ontario, 22% in Western Canada, 7% in other provinces, and 44% in the US. The weighted average interest rate of the mortgage portfolio remained at 10.6% in 2018, the same as a year ago.

2018 Distributions

Unitholder distributions for 2018 were $0.73 per unit, compared to $0.76 per unit in 2017. This equates to a compounded net yield to investors of 7.5% compared to 7.9% in 2017.

About the Fund

Romspen has a long-term track record of successful mortgage investing. With its origins in the mid-60's, Romspen is one of the largest non-bank commercial/industrial mortgage lenders in Canada with a portfolio in excess of $2.6 billion. Our investors are high net worth individuals, foundations, endowments and pension plans.

The Fund's investment mandate is focused on capital preservation, strong absolute returns and performance consistency. Romspen has had 20 consecutive years of positive net investor yields (ranging between 7.4% ‑ 10.6%) with positive returns each and every month.

The 2018 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 press release is for informational purposes only. It is not investment or financial product advice, and is not intended to be used as the basis for making an investment decision. This press release is not, and does not constitute, an offer to sell or the solicitation, invitation or recommendation to purchase any securities in any jurisdiction. An offering memorandum containing important information relating to the Fund has been prepared, and the Fund is available only to investors who are "accredited investors" or otherwise qualify under certain other exemptions from prospectus requirements under applicable securities laws. Copies of the offering memorandum may be obtained from Romspen.

SOURCE Romspen Investment Corporation

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

Related Links

www.romspen.com