investor presentation · president of optus capital corporation and founding partner and past ceo...
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INVESTOR PRESENTATIONAugust 2019
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FORWARD-LOOKING STATEMENTS
This presentation contains certain statements that may be forward-looking statements. Allstatements in this document, other than statements of historical fact, that address events ordevelopments that Atrium Mortgage Investment Corporation expects to occur, are forwardlooking statements. Forward looking statements are statements that are not historical factsand 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 arebased upon reasonable assumptions, such statements are not guarantees of futureperformance and actual results may differ materially from those in the forward- lookingstatements. Factors that could cause the actual results to differ materially from those inforward looking statements include: failure to successfully negotiate or subsequently closetransactions, adverse results from mortgage investments and general economic, market orbusiness conditions. Investors are cautioned that any such statements are not guarantees offuture performance and actual results may differ materially from those projected in theforward-looking statements. Forward looking statements are based on the beliefs, estimatesand opinions of Atrium’s management on the date the statements are made. Atriumundertakes no obligation to update these forward-looking statements in the event thatmanagement’s beliefs, estimates or opinions, or other factors, change.
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CANADA’S PREMIER NON-BANK LENDER
ATRIUM MORTGAGE INVESTMENT CORPORATION
Non-bank lender, founded in 2001Assets - $751 millionMarket capitalization - $539 millionAverage mortgage yield - 8.81%Diversified, high quality mortgagesFocus on shareholder value: Safe portfolio Steady returns Minimize expenses Maximize distributions to shareholders
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FINANCIAL STRENGTH AND STABILITY
$ millions June 30, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Mortgages receivable $734 $683 $627 $531
Foreclosed properties 17 17 1 1
Total assets $751 $700 $628 $532
Bank debt and BAs $162 $148 $144 $ 145
Convertibledebenture $156 $157 126 101
Other liabilities 8 8 9 7
Total liabilities $326 $313 279 253
Shareholders’ equity 425 387 349 279
Total liabilities andequity $751 $700 $628 $532
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June 30, 2019 June 30,2018 Year 2018 Year 2017
6 months 6 months 12 months 12 months
Millions millions millions millions
Mortgage interest and fees $32.5 $28.0 $58.3 $50.4
Financing costs 8.7 7.1 15.3 12.7
Mortgage servicing and management fees 3.4 3.1 6.3 5.5
General and administrative 0.7 0.6 1.1 1.2
Loss provision 0.8 0.7 1.8 1.9
Expenses 13.6 11.5 24.5 21.3
Net income $18.9 $16.5 $33.8 $29.1
Earnings per common share – basic $0.49 $0.48 $0.95 $0.95
EXCELLENT OPERATING RESULTS
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$0.70
$0.75
$0.80
$0.85
$0.90
$0.95
$1.00
2013 2014 2015 2016 2017 2018 2019
FINANCIAL OVERVIEW
Objective: preserve capital and focus on steady, safe return to shareholders.
Monthly dividends + special annually• 2013: $0.80 rate + $0.05 = $0.85
• 2014: $0.82 rate + $0.07 = $0.89
• 2015: $0.84 rate + $0.09 = $0.93• 2016: $0.86 rate + $0.10 = $0.96
• 2017: $0.88 rate + $0.04 = $0.92
• 2018: $0.90 rate + $0.04 = $0.94• 2019: $0.90 rate, plus special
DRIP at 2% discount.RRSP, TFSA, etc. eligible.
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Monthly dividends and annual special
To b
e de
term
ined
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STRONG AND CONSISTENT RETURNS
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0%
2%
4%
6%
8%
10%
12%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Q2 2019
Rate
Atrium Mortgage Investment Corporation - Return on Equity
5-year Government of Canada bond
1-year Government of Canada treasury bill - 1.7%
Q2 2019 - 9.3%
Q2 2019 – 1.45%
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MOVEMENT IN AVERAGE MORTGAGE RATE
Inte
rest
Rat
e %
0
1
2
3
4
5
6
7
8
9
10
Q22014
Q32014
Q42014
Q12015
Q22015
Q32015
Q42015
Q12016
Q22016
Q32016
Q42016
Q12017
Q22017
Q32017
Q42017
Q12018
Q22018
Q32018
Q42018
Q12019
Q22019
Atrium MIC 5 year Canada bond yields Difference
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PRIME BASED LOANSPERCENTAGE OF PORTFOLIO
Q4 2017 – Q2 2019
9
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
80.00%
8.20%
8.30%
8.40%
8.50%
8.60%
8.70%
8.80%
8.90%
9.00%
Q4 2017 Q1 2018 Q2 2108 Q3 2018 Q4 2018 Q1 2019 Q2 2019
% p
rime
base
d m
ortg
ages
Wei
ghte
d av
erag
e m
ortg
age
inte
rest
rate
% prime based mortgages Weighted average mortgage interest rate
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MAINTAIN LOW RISK PORTFOLIO PORTFOLIO LOAN TO VALUE
MICs are lenders, not owners
66.6%
64.1% 64.3% 64.7%
62.7%61.5% 61.1%
60.3%
50%
55%
60%
65%
70%
75%
2012 2013 2014 2015 2016 2017 2018 Q2 2019
Since going public in 2012
Loa
n-to
-Val
ue
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ATRIUM MIC
Management fee0.85%
on mortgages(not on idle cash)
Performance fee None
Total expenses 1.10%of assets
LOW RUNNING COSTS
Lowest management fee: 0.85% plus HST
Other costs under 0.20% No performance fee
Underwriters in two offices knowledgeable about local markets
Lowest management fee amongst our peers
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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 Director of George Weston Limited and Choice Properties REIT.
Maurice (Maish) Kagan
Director of Pure Multi-Family REIT, Kew Media Group and Cliffside Capital Ltd. Former CFO of GreenwinProperties and ResREIT.
EXPERTISE OF INDEPENDENT DIRECTORS
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LENDING TEAMEXPERIENCE + GEOGRAPHIC DIVERSIFICATION
5 originators, many with up to 25 years of lending experience
Originator has 25 years of lending experience
Geographic diversification reduces risk13
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GEOGRAPHIC PORTFOLIO DIVERSIFICATION
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June 30, 2019
GTA66.8%
Non-GTA Ontario3.4%
Alberta 2.0%
British Columbia27.8%
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ONTARIO PORTFOLIO
Commercial17.6%
Single Family10.3%
Condo Corps.0.6%
Low Rise34.5%
Mid Rise 16.9%
High Rise20.3%
Ontario Portfolio : $516,738,859
PROPERTY TYPEQ2 2019
LOCATIONQ2 2019
GTA96.3%
Hamilton2.2%
Ottawa1.1%
Other0.4%
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MAINTAIN LOW RISK PORTFOLIO ONTARIO PROFILE
June 30, 2019
82%
18%
First mortgages Other ranks <75% >75%
86%
14%
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Mortgage rank Loan-to-value: 64.6%
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COMMERCIAL REAL ESTATEGreater Toronto Area- Vacancy Rates
Rat
e
7.6%
2.7%
1.6%1.1%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
11%
12%
13%
14%
15%
Office - Overall Office - Downtown Industrial Apartment
2014 2015 2016 2017 2018
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MONTHLY NEW HOME SALES:GTA
20182016 2017
Low Rise: 19,574
High Rise: 21,991 High Rise: 29,132
TOTAL: 41,565
Low Rise: 18,365
TOTAL: 47,497
High Rise: 21,330
Low Rise: 3,831
TOTAL: 25,161
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RESIDENTIAL REAL ESTATE Greater Toronto Area- Home Prices
Source: Altus Group
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UNSOLD INVENTORY Greater Toronto Area
Source: Altus Group
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Loan Example #1
DescriptionAcquisition financing of an historic bank
building for re-leasing and possibly re-positioning Property
A single storey commercial building totaling 8,250 square feet. 4 parking stalls at rear of siteLoan
$4.9 million subordinate tranche of a $8.3 million 1st mortgageInterest rate
9.50% per annumTerm
24 monthsLoan-to-value
64.5% of appraised value
GuaranteeCorporate and Personal guarantees for 100%
of the loan
COMMERCIAL LEASE UP AND REPOSITIONING
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Loan Example #2
DescriptionAcquisition financing for an assembly of 10
detached homes on Lawrence Avenue WestProperty
Two blocks of townhouses with a combined GFA of 70,000 square feetLoan
$9.9 million first mortgage
Interest rate8.00% per annum
Term24 months
Loan-to-value66.0% on an ‘as is’ appraised basis
GuaranteePersonal guarantees for 25% of the loan
MULTI-RESIDENTIAL ACQUISITION
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B.C. PORTFOLIO
B.C. Portfolio : $204,239,514
PROPERTY TYPEQ2 2019
LOCATIONQ2 2019
Mixed Use and Commercial16.3%
Low Rise 15.0%
Mid Rise 26.1%
High Rise38.6%
House & Apt. 3.9%
Greater Vancouver
100%
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METRO VANCOUVER COMMERCIAL MARKET
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RESIDENTIAL REAL ESTATE NEW HOME MARKET - SALES
Source: Urban Analytics
14,035
20,280
17,54117,58515,317
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RESIDENTIAL REAL ESTATE NEW HOME MARKET - INVENTORY
Source: Urban Analytics
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B.C. Loan Example
DescriptionAcquisition financing of two adjacent
industrial properties for redevelopment Property
Two single storey industrial buildings totalling 32,247 sq. ft. leasable area on a 38,594 sq. ft. site. Loan
$13.5 million
Interest rateGreater of 8% or Prime + 4.05% per annum
Term12 months
Loan-to-Purchase Price67.5%
Loan-to-value45.0%
GuaranteeCorporate and Personal guarantees for 100%
of the loan
INDUSTRIAL REPOSITIONING
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0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
RBC TD Scotiabank BMO CIBC CWB Equitable Bank Atrium MIC
BETA OF ATRIUM MIC VS. BANKS
Beta is a measure of the volatility of a security in comparison to the stock market as a whole.
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5-year average
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ATRIUM VERSUS THE TSX COMPOSITETOTAL RETURN SINCE ATRIUM LISTED
100
120
140
160
180
200
220
September 4,2012
December 31,2012
December 31,2013
December 31,2014
December 31,2015
December 31,2016
December 31,2017
December 31,2018
June 30, 2019
Common Shares ($)
S&P/TSX Composite Total Return Index ($)
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ATRIUM VERSUS THE TSX COMPOSITECUMULATIVE TOTAL RETURN
30
0
50
100
150
200
250
300
350
400
450
500
550
600
650
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Q22019
Atrium
TSX
Steady growth and superior returns
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