Timbercreek Financial Q1 2026 Earnings Report

Timbercreek Financial EPS Results

• Actual EPS: C$0.17
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Timbercreek Financial Revenue Results

• Actual Revenue: $44.06 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Timbercreek Financial Announcement Details

• Quarter: Q1 2026
• Date: 5/5/2026
• Time: After Market Closes
• Conference Call Date: Wednesday, May 6, 2026
• Conference Call Time: 1:00PM ET

Timbercreek Financial (TSE:TF) Corp is a Canada-based non-banking commercial real estate lender. The company provides shorter-duration, customized financing solutions to professional real estate investors. It invests directly in a diversified portfolio of structured mortgage loans primarily secured by stabilized, income-producing commercial real estates, such as multi-residential, office and retail buildings located in urban markets across Canada. The company's strategy is to preserve investor capital by lending mainly against income producing real estate, mitigate concentration risk by diversifying geographically by asset type and borrower and ensure loan to value ratios.

Timbercreek Financial Q1 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Management deployed CAD 224 million in Q1 across 13 investments, growing the portfolio ~15% YoY to ~CAD 1.24 billion and citing a strong pipeline that supports continued origination.
• Neutral Sentiment: Distributable income was CAD 0.18 per share with a payout ratio of 98.5% and net investment income of CAD 25.1 million, signaling stable cash generation but a thin cushion given the near‑100% payout.
• Positive Sentiment: Management says it is making steady progress resolving legacy Stage 2/3 loans—two Stage 3 Calgary assets sold post‑quarter—and expects a material reduction in staged exposure with capital recycled into higher‑yielding loans.
• Neutral Sentiment: The weighted average interest rate fell to 7.7% (from 8.1% in Q4) with ~88% of loans floating at contractual floors; management expects lower funding costs and higher fee income to offset WAIR declines, but benchmark moves could still pressure near‑term net interest income.
• Positive Sentiment: Balance sheet flexibility remains, with leverage around 50%, the ability to syndicate to institutional partners, and management’s view that improving commercial real estate transaction activity supports disciplined portfolio growth.

Presentation

[Operator]

First quarter earnings call. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question and answer session for analysts. Analysts are asked to raise their hand to register for a question. As a reminder, today's call is being recorded. I would now like to turn the meeting over to Blair Tamblyn. Please go ahead.

[Blair Tamblyn, CEO at Timbercreek Financial]

Thank you. Good afternoon, everyone, and thank you for joining us. With me on the call today are Scott Rowland, our Chief Investment Officer, Tracy Johnston, our Chief Financial Officer, and Geoff McTait, who leads Canadian Originations and Global Syndications. Q1 marked a good start to 2026, with strong origination activity and continued progress in repositioning the portfolio. During the quarter, we deployed CAD 224 million, and the portfolio has grown nearly 15% year-over-year to approximately CAD 1.24 billion, reflecting the sustained level of lending activity we've seen over the past 12 months. Net investment income for the quarter was solid at CAD 25.1 million, and distributable income was CAD 0.18 per share, resulting in a payout ratio of 98.5%.

[Blair Tamblyn, CEO at Timbercreek Financial]

Importantly, we continue to make steady progress resolving the legacy Stage loans and redeploying that capital into high-quality income-producing investments, which we expect will continue to strengthen the earnings power of the portfolio as we move through 2026. The underlying cash-generating strength of the portfolio remains intact, and our core lending platform continues to perform as expected. With improving transaction activity in commercial real estate and a strong pipeline of opportunities, we're well-positioned to deliver the portfolio growth through the balance of the year. With that, I'll turn the call over to Scott to walk through the portfolio in more detail. Scott?

[Scott Rowland, Chief Investment Officer at Timbercreek Financial]

Thanks, Blair, and good afternoon, everyone. I'll spend a few minutes reviewing portfolio composition and performance, touch on asset management activity related to stage loans, and then hand things over to Geoff to discuss origination trends. At a high level, the portfolio remains well-aligned with our long-standing risk framework. At quarter end, just over 81% of the portfolio was invested in cash-flowing properties, and multi-residential assets continue to represent the largest single asset class at approximately 60%. First mortgages accounted for roughly 95% of the portfolio at the end of Q1. The weighted average loan-to-value was 66.5%. The weighted average interest rate for the quarter was 7.7% compared to 8.1% in Q4 and 8.7% a year ago. This reflects the impact of the Bank of Canada rate reductions over the past year.

[Scott Rowland, Chief Investment Officer at Timbercreek Financial]

Importantly, 88.4% of the portfolio is floating rate with contractual rate floors, and the vast majority of those loans are currently operating at their rate floor levels. As rates have come down, we are also seeing opportunities to capture incremental margin through a combination of a lower cost of bank financing and higher fee contribution as transaction volumes increase. This dynamic is consistent with our experience managing the portfolio through previous rate cycles. In terms of the asset allocation by region, 92% of the capital is concentrated in Ontario, British Columbia, Quebec, and Alberta, and focused on urban markets. As Blair highlighted, we continue to make steady progress on our remaining Stage 2 and Stage 3 loans. Over the past year, most of these files have advanced meaningfully, whether through zoning approvals, leasing improvements, preparation for sale.

[Scott Rowland, Chief Investment Officer at Timbercreek Financial]

As these milestones are achieved, assets are increasingly positioned for resolution. For example, two Stage 3 Calgary assets, downtown office tower and adjacent retail building, were sold subsequent to quarter end. Capital recovered through these processes is being redeployed into new income-producing loans, and we expect this capital recycling to continue throughout 2026 and for the percentage of staged loans to decrease materially. At this point, I'll turn things over to Geoff to discuss origination activity and the lending environment.

[Geoff McTait, Managing Director, Origination – Canada, Head of Global Syndication at Timbercreek Financial]

Thanks, Scott, and good afternoon, everyone. While the commercial real estate market continues to show signs of stabilization, supported by improving transaction activity across the country, broader geopolitical volatility has tempered the pace of recovery and contributed to some increased interest rate uncertainty. Against this backdrop, however, Timbercreek successfully deployed CAD 224 million during the first quarter across 13 new investments in incremental advances, primarily focused on lower LTV multi-residential opportunities. This deployment was largely offset by repayments totaling CAD 223 million, reflecting both the short-duration nature of our model and successful outcomes on prior originations. While this level of repayment moderated sequential portfolio growth, turnover represents a healthy source of capital recycling, creating ongoing opportunities to redeploy capital and generate fee income to support distributable income as origination activity remains elevated.

[Geoff McTait, Managing Director, Origination – Canada, Head of Global Syndication at Timbercreek Financial]

The higher cost of long-term debt appears to be driving increased appetite for our interim floating rate product, as long-term debt decisions are being delayed in hopes of a near-term resolution of the Iran conflict and a resulting softening of the yield curve. As such, momentum from Q4, Q1 has carried into the second quarter, with an active current pipeline and conditions that are supportive of continued robust origination activity through the balance of the year. Our ability to syndicate select transactions with institutional partners provides additional capacity and supports earnings in DI while maintaining discipline on the balance sheet. I'll now turn the call over to Tracy to review the financial results in more detail.

[Tracy Johnston, CFO at Timbercreek Financial]

Thanks, Geoff, good afternoon, everyone. Starting with the income statement, net investment income on financial assets measured at amortized costs was CAD 25.1 million in Q1. Consistent with the prior quarter as portfolio growth and lower financing costs offset the impact of lower benchmark rates. Distributable income for the quarter was CAD 14.5 million or CAD 0.18 per share compared to CAD 15 million in Q4 2025. The payout ratio on distributable income was within our targeted range at 98.5%. Net income for the quarter was CAD 10.4 million. Included in that result were expected credit losses of CAD 3.7 million, reflecting firm sales prices for two Stage 3 assets now sold in Q2 2026.

[Tracy Johnston, CFO at Timbercreek Financial]

Looking at earnings and distributable income over the past several years, you can see that distributable income per share has remained relatively stable even as IFRS earnings have reflected the timing of credit provisions and valuation adjustments. Over the medium term, quarterly distributable income per share has generally ranged between CAD 0.17 and CAD 0.21 per share with an average of approximately CAD 0.19. This profile reflects the recurring income characteristics of the portfolio supplemented by fee income as capital is recycled. Looking quickly at the balance sheet. Net mortgage investments excluding syndications totaled just over CAD 1.24 billion at quarter end, an increase of approximately CAD 161 million year-over-year. Credit utilization increased at quarter end, reflecting strong origination activity during the quarter. Alongside repayments, asset resolutions, and syndication activity, we maintain flexibility to fund new opportunities.

[Tracy Johnston, CFO at Timbercreek Financial]

Overall, we continue to see ample opportunity to deploy capital prudently against a strong origination pipeline as we move through 2026. With that, I'll turn the call back to Scott for closing remarks.

[Scott Rowland, Chief Investment Officer at Timbercreek Financial]

Thanks, Tracy. Looking ahead, we are increasingly constructive on the outlook for Canadian commercial real estate. Transaction activity is improving, financing conditions are becoming more supportive, and asset pricing appears to be recalibrating in a way that encourages buyer participation. For Timbercreek, this environment supports both origination activity and capital recycling. We expect to continue advancing staged assets towards resolution, redeploying capital into new investments, and growing the portfolio in a disciplined manner as the year progresses. Taken together, we believe the company is well-positioned for the next phase of the cycle, with a portfolio focused on generating stable income, managing risk conservatively, and delivering attractive risk-adjusted returns for our shareholders. That concludes our prepared remarks. We will now open the call to questions.

[Operator]

We will now take any analyst questions. The first question comes from Graham Ryding. Graham, your line is open. Please go ahead.

[Graham Ryding, Senior Equity Research Analyst at TD Cowen]

Can you hear me okay?

[Scott Rowland, Chief Investment Officer at Timbercreek Financial]

Hey, Graham. Yep. Yeah.

[Graham Ryding, Senior Equity Research Analyst at TD Cowen]

Yeah. Great. Thanks. Originations look pretty healthy in the quarter and also repayments so turnover picked up. Is your message that this is a reasonable sort of run rate and something that you sort of a level of activity that you could expect to persist through the rest of the year?

[Geoff McTait, Managing Director, Origination – Canada, Head of Global Syndication at Timbercreek Financial]

Hey, Graham, it's Geoff. Yeah, no, absolutely. I mean, I think we've seen consistent pipeline activity like, you know, from call it early sort of deal identified, LOI issued, commitments issued, and signed commitments consistently kind of through the last couple of quarters. We continue to see that activity today, which, you know, it's fulsome across all these categories and we're feeling confident that this is reflective of, you know, what we're expecting going forward.

[Graham Ryding, Senior Equity Research Analyst at TD Cowen]

Okay. Great. It looked like there's some progress post-quarter on the Stage loans. I think you called out couple Calgary office loans. Anything else that you would sort of call out where you're seeing progress in the Stage loans?

[Scott Rowland, Chief Investment Officer at Timbercreek Financial]

Yeah. I think the major project that I can say we're following, Graham, is, we have a significant project in Vancouver that is currently in the market for sale. I'm gonna say about 50% of this exposure that I'm thinking about. It's a longer process. It's probably gonna take a quarter or two. It's a fully zoned project. It's actively being marketed and so that's a resolution we expect this year. That'll be meaningful for sure.

[Graham Ryding, Senior Equity Research Analyst at TD Cowen]

Okay. Great. My last question, just, your weighted average rate, interest rate did trend down a bit quarter-over-quarter. It, you know, it is gonna have an impact on your net interest income. Sort of big picture, what would be the sort of main pieces in your business that need to surface in the second half of this year or looking into 2027 in order to get EPS back to a level that, you know, meets the dividend and book value per share, doesn't experience any further attrition?

[Scott Rowland, Chief Investment Officer at Timbercreek Financial]

Yeah. No, it's a good question. I think we look at it two different ways. First of all, even in the position that we find ourselves in today, right, I think we do cover on a DI basis. I think two different things are happening within the book RAM. We've operated, right? We've operated even in a lower WAIR environment than this. Two Things are starting to happen. As WAIR comes down, you know, our financing costs are also lower, which obviously offsets a portion of that. The other thing that we're starting to see is margin expansion. Even though the headline WAIR comes down a bit, we're getting more credit spread above our cost of funds.

[Scott Rowland, Chief Investment Officer at Timbercreek Financial]

We're starting to see. This is just sort of reflective, you know, borrowers, projects can sort of handle certain coupon. As interest rates are coming down, we're able to increase that credit spread, which although the WAIR may be lower, our return on equity, right, can be stabilized. Then the other thing that's happening is, to Geoff's point a minute ago, as we start to see more acceleration of deal flow, we'll churn more fees through the book, and that will also materially help with the payout ratio. I look at all those sort of things as sort of the, you know, the organic part of the model that works. Then the other thing for us, of course, is the Stage loans are a bit of a speed break for us, right?

[Scott Rowland, Chief Investment Officer at Timbercreek Financial]

It's a bit of a headwind for us, of course, because we're not churning that portion of the book. We don't get as effective financing leverage on that portion of the book. It's earning a lower WAIR. As we resolve those loans, instead of making, you know, 5%, 6%-ish on those loans, we redeploy that money. I'm thinking equity. This is an equity return, but that's more like a 10 or 11 for us. That'll be, you know, again, a tailwind for us as we roll through 2026. Blair, do you want to add?

[Blair Tamblyn, CEO at Timbercreek Financial]

Yeah. No. Hey, Graham. It's Blair. We talked to Mike about this a bit last night. We're gonna share with, you know, with you guys and probably put in a presentation as well, a graph that kind of speaks to what Scott said a minute ago. I mean, there was a number of years where prime was lower, WAIR was lower, and our payout ratio was also lower. You know, it's information that you could find if, you know, if you wanted to go back seven, eight, nine, 10 years. You know, we're happy to share it to make it easier. I certainly wouldn't assume that, you know, that lower WAIR equals higher payout ratio. Like, we can show you that that's not the case.

[Graham Ryding, Senior Equity Research Analyst at TD Cowen]

No, that's helpful. That I think, what you were sort of referring to there was just the stage loans. Like, what's a normalized--? I think it's 7% of the portfolios in Stage 3 now.

[Blair Tamblyn, CEO at Timbercreek Financial]

Yeah.

[Graham Ryding, Senior Equity Research Analyst at TD Cowen]

Does it need to get down to, like, a 2%-3%? Is that a normal level where it's less of a drag on earnings?

[Scott Rowland, Chief Investment Officer at Timbercreek Financial]

Well, I mean, look, every percent is a drag on earnings, right? We're around 20% on a historical. You know, we think we get back down to, you know, two to five or wherever that number's gonna be. All of that is beneficial for us.

[Blair Tamblyn, CEO at Timbercreek Financial]

Yeah, I don't think the average would be two. I think the average would be five-seven if we went back and looked at it. Again, we'll do that because I think it's a reasonable question. Tracy's telling me it's seven, I'm gonna believe her.

[Blair Tamblyn, CEO at Timbercreek Financial]

That 13 points, we expect that going from 20 to seven, the vast majority of that should happen this year. Just as a soundbite, that comes back, it's going to free up at a normal leverage rate another CAD 100 million to invest at our equity yield, which is sort of 11%-12%, which it probably drops about, all else being equal, about CAD 5 million to net income. I know that's a lot of sort of stats right there, but we can go through with you if you want. It definitely makes a difference, and you should expect it to happen.

[Graham Ryding, Senior Equity Research Analyst at TD Cowen]

No, that was perfect. sort of high level how you're thinking about the business. That's exactly what I was asking. Thank you.

[Blair Tamblyn, CEO at Timbercreek Financial]

Okay. Thanks, Graham.

[Scott Rowland, Chief Investment Officer at Timbercreek Financial]

Thanks, Graham.

[Operator]

The next call comes from Jaeme Gloyn. Jaeme, your line is open. Please go ahead.

[Jaeme Jaeme Gloyn, Analyst at National Bank Financial]

I wanted to get an updated view of leverage, and where should we expect leverage to trend to? It's kind of right around the 50% mark. Is that something you can take higher, or is this where you're comfortable?

[Tracy Johnston, CFO at Timbercreek Financial]

Hey, Jaeme Gloyn. It's Tracy Johnston. I mean, we're generally comfortable with where our leverage is. It can tick up a little bit higher, but generally, we keep it at about the same point it is right now. I mean highlighting that a lot of the Stage 2, Stage 3 loans are under-levered. There will be some ability to kind of grow that on redeployment. Overall, keeping leverage in general kind of where we are.

[Jaeme Jaeme Gloyn, Analyst at National Bank Financial]

I guess the takeaway is that absent a resolution on Stage 2, Stage 3, we're kind of right around the level of where the portfolio is gonna, the portfolio size will sit here for a few quarters until resolution flows through. I guess that's the fair conclusion.

[Tracy Johnston, CFO at Timbercreek Financial]

Yeah. Yeah. I mean, there's always ways to continue the churn with our, with our syndications as well, right? You are able to kind of grow that on the asset side without taking on the actual structural leverage. There's ability there to continue the churn and earn fees on those.

[Jaeme Jaeme Gloyn, Analyst at National Bank Financial]

Yeah.

[Scott Rowland, Chief Investment Officer at Timbercreek Financial]

Yeah.

[Jaeme Jaeme Gloyn, Analyst at National Bank Financial]

The growth AUM, you're right, is about static.

[Tracy Johnston, CFO at Timbercreek Financial]

Yeah.

[Jaeme Jaeme Gloyn, Analyst at National Bank Financial]

Yeah. Yeah. Okay. You know, with respect to the resolutions, you know, specifically to the Vancouver property, is that something that would be sold on a, I'm gonna say, like, a whole basis? You know, I've seen, I think you guys a couple of times have had, you know, I'll say vendor take back loans or mortgages on some of these restructuring and resolutions. You know, what's the likelihood that we see something along those lines for, you know, for the Vancouver loan specifically, but I guess for other loans outstanding.

[Scott Rowland, Chief Investment Officer at Timbercreek Financial]

Yeah. You know what?

[Jaeme Jaeme Gloyn, Analyst at National Bank Financial]

as well.

[Scott Rowland, Chief Investment Officer at Timbercreek Financial]

That's a great question, and it really is case by case. I look at this project, so this is like, you know, a zoned development project, a significant one in Vancouver. I could very much see a scenario where, you know, my expectation would be this is probably a clean takeout. That said, you know, you put a strong borrower in that with a good business plan, and there's an opportunity for VTB financing. You know, is it a current Stage loan 1, and it makes sense for us? We look at it, you know, if it helps facilitate things. That's hard to predict. I think it's part of that asset management process where, we like clean recycling that, you know, that works well.

[Scott Rowland, Chief Investment Officer at Timbercreek Financial]

You know, if there's a loan opportunity helps facilitate a deal, not that we view that as accretive to the resolution of the stage loan. You know, there's enough cash in equity, a market rate that works for us. We would look at that as well. I think we essentially take that on a case-by-case basis.

[Jaeme Jaeme Gloyn, Analyst at National Bank Financial]

Yeah. Okay. Understood. With the two resolutions this quarter, or I guess, like, based on firm sale prices that closed in Q2, I guess, like, the concern or the thought that I'm thinking through is, we have these other loans in Stage 2 or Stage 3 that are valued at X. Was this kind of like a scenario where, look, there was a price that was close enough and you take it and you eat a little bit more of a loss than what you were anticipating just to get that recycling done. Like obviously case by case, I get that.

[Jaeme Jaeme Gloyn, Analyst at National Bank Financial]

You know, that's kind of something I'm thinking through in terms of, you know, is there further potential for, you know, book value erosion as these loans resolve over the course of this year, next year?

[Scott Rowland, Chief Investment Officer at Timbercreek Financial]

It's a very good question. I can say this, right? We do our quarterly evaluations, you know, every quarter. We, we try to be, you know, as on top of market as we can. I would sit there and say, though, it's a fair question to ask, right? Like, if the right deal, these are market price transactions, right? In a challenging market in some cases. You know, Calgary office was a good example of a challenged environment. We sit there and say, you know, when we have a loan that is not being levered through our financing facility, that is earning a subpar where you sit there and say as a portfolio manager, right?

[Scott Rowland, Chief Investment Officer at Timbercreek Financial]

Like, you had to take a bit of a mark to move that asset and then be able to reinvest it. What's that payback period in book value, right? If it's X number of months, it may be a very logical and a smart move for us to do that. What I can say to you, obviously, as you know, and as you framed it yourself in your question, right? Like, it's a very tough thing for us to comment on. It's tough for us to predict. It is case by case. I think that is part of that calculus that we evaluate, right?

[Scott Rowland, Chief Investment Officer at Timbercreek Financial]

Like, is that ability If it meant taking a mark, we felt it was a good price and we feel good about our ability to redeploy that capital and have that be accretive in months, not years. You know, I think I would be an advocate for that in certain circumstances.

[Jaeme Jaeme Gloyn, Analyst at National Bank Financial]

Yeah. Okay. Thanks very much.

[Scott Rowland, Chief Investment Officer at Timbercreek Financial]

Thank you.

[Tracy Johnston, CFO at Timbercreek Financial]

That's all the questions we have at this time. I'll turn the call back to Blair Tamblyn for closing remarks.

[Blair Tamblyn, CEO at Timbercreek Financial]

Thanks, everyone. Appreciate your time as usual. We will continue to work away on the program as discussed and remain optimistic that the quarters ahead will be productive ones. We'll look forward to talking to you in 90 days. Have a good afternoon.

Participants

Executives

• Blair Tamblyn, CEO
• Geoff McTait, Managing Director, Origination – Canada, Head of Global Syndication
• Scott Rowland, Chief Investment Officer
• Tracy Johnston, CFO

Analysts

• Graham Ryding, Senior Equity Research Analyst at TD Cowen
• Jaeme Jaeme Gloyn, Analyst at National Bank Financial