Mcan Mortgage Corporation · TSX:MKP
Mcan Mortgage — Investor Presentation (March 2022)
29 slides from Mcan Mortgage's investor presentation, Mar 2, 2022
Slide 1: Investor Presentation
Investor Presentation March 2, 2022
Slide 2: Forward Looking Information; Non-GAAP and Other Financial Measures
Forward Looking Information This presentation may contain forward-looking information within the meaning of applicable Canadian securities laws, including statements regarding the business and anticipated financial performance of MCAN Mortgage Corporation d/b/a MCAN Financial Group and its subsidiar
Slide 3: Invested in Canadian Communities
Invested in Canadian Communities Our shareholders benefit from MCAN's investment in Canadian communities. MCAN offers exclusive access to a range of unique financing and investment opportunities for institutional and retail investors, originators and individuals across Canada that enables them to pa
Slide 4: Our embedded culture
Our vision is to be the preferred mortgage lender and investor within our chosen real estate markets in Canada. Our mission every day is to provide sustainable growth and returns for all our stakeholders • through relationship-driven mortgage lending and investing; • by delivering quality work throu
Slide 5: MCAN's Business Model
MCAN’s Business Model Uniquely structured as flow-through Mortgage Investment LONG TERM Corporation (“MIC1”) OBJECTIVES • not taxed at the corporate level • Distribute all taxable earnings annually • Sustained 10% • 67% of non-consolidated tax assets required to be held in annual growth of assets re
Slide 6: MCAN Financial Group Today
MCAN Financial Group Today MCAN funds its business through issuing term deposits through MCAN Wealth, securitization of insured mortgages through the NHA MBS and CMB programs, banking facilities, partner programs and equity raises, when needed. • Origination of insured and • Construction & commercia
Slide 7: MCAN at-a-glance: December 31, 2021
MCAN at-a-glance: December 31, 2021 $3.8B Total Assets (+ 40% YoY) $510M Market Capitalization (+ 31% YoY) $64M Net Income (+ 50% YoY) 2021 Return on Average 16.9% Shareholders’ Equity1 Two oversubscribed Rights $53M Offerings in 2021 1Considered to be a non-GAAP and other financial measure. For fur
Slide 8: MCAN Value Proposition
MCAN Value Proposition Lower risk profile than peer MICs with equal or higher returns driven by lower funding costs. Differentiated from OSFI-regulated peer lenders due to construction and other investment portfolio focus. • Almost $4 billion of total assets, including $1.8 billion corporate mortgag
Slide 9: MCAN Value Proposition
MCAN Value Proposition • ~14% ownership in MCAP, Canada’s largest independent mortgage finance company (majority owned by CDPQ) generates substantial income and represents a significant source of growth Investment Portfolio a Source of Nascent • Unique opportunity for investors to participate in top
Slide 10: Attractive Financial Profile
Attractive Financial Profile AVERAGE RETURN ON MORTGAGE ASSETS ($MM) NET INCOME ($MM) SHAREHOLDERS’ EQUITY1 (4%) 4% 27% 42% (9%) 33% (11%) 50% $3,390 $64.4 16.9% 15.1% $2,389 $48.3 13.8% 13.1% $42.9 11.9% $39.9 $1,880 $1,810 $1,874 $36.3 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 2017 2018 20
Slide 11: $3.8B Total Assets
Diversified Quality Mortgages and Other Investments Balance sheet optimization achieved through risk and reward strategy MCAP Other Single-Family Residential Non-Marketable Securities Insured Mortgages Marketable Securities Commercial loans $3.8B Single-Family Residential Uninsured Mortgages Total C
Slide 12: Portfolio Quality and Lending Criteria
Portfolio Quality and Lending Criteria Corporate Mortgage Portfolio Geographic Distribution Average corporate Average LTV at mortgage term to maturity Origination (months) 13 66% • Prudent risk management practices are the foundation of the quality and diversification of our lending activities • Con
Slide 13: Residential Single-Family Lending
Residential Single-Family Lending Single-Family Residential Insured Mortgages1 ($197M) PRODUCTS 5% • Purchases, refinances and renewals • Insured mortgages (typically 5-year term) Single-Family 22% Residential Uninsured ⚬ Strategy of securitizing the majority of insured mortgages 51% Mortgages1 (($8
Slide 14: Spotlight: Single-Family Residential Deal
Spotlight: Single-Family Residential Deal People-first mortgage solutions designed for real life We help young Canadians who are seeking alternative ways to enter the Canadian real estate market despite historical market obstacle. Intense competition, decreased supply and increasing property valuati
Slide 15: Securitization Portfolio
Securitization Portfolio PROGRAM • Securitize through CMHC National Housing Act (“NHA”) MBS 51% Program and Canada Housing Trust CMB Program • Predominantly Insured Single-Family Mortgages, some Insured Multi-Family Mortgages 42% BENEFITS • Source of low-cost funding • Growth allows for ongoing rela
Slide 16: Construction and Commercial Business
Construction and Commercial Business PRODUCTS Commercial • Investing in the construction of affordable housing in urban/suburban Loans ($93M) growth markets with a preference for proximity to transit in Ontario, BC, and 2% Alberta Construction • Select commercial term and inventory loans Loans ($684
Slide 17: Spotlight: Vancouver Real Estate Market
Spotlight: Vancouver Real Estate Market Leveraging our experience and strong strategic partnerships with originators MCAN’s investment in the Greater Vancouver Area is focused on affordable housing with family-oriented amenities and good transit access to Metro Vancouver (e.g., Langley, Surrey, Coqu
Slide 18: MCAP Overview
MCAP Overview • Strategic relationship with Canada’s largest independent mortgage finance company ($146 billion in MUA), BBB DBRS Rating • MCAN owns ~14% equity interest in MCAP (majority owned by CDPQ) • MCAP serves many institutional investors and over 400,000 homeowners • Over 1,400 professionals
Slide 19: Unique Portfolio of Real Estate Based Investments
Unique Portfolio of Real Estate Based Investments We are committed to increasing our investments in various funds that provide a current above-average yield or a projected longer term return greater than 15% over the life of the funds. All funds we invest in are secured by real estate in Canada and
Slide 20: Senior Leadership Team
Senior Leadership Team The Senior Executive Leadership team has 120 years in collective experience in financial services and real estate. On average, the team has 8 years of experience at MCAN. Karen Weaver Floriana Cipollone President and Chief Executive Officer SVP and Chief Financial Officer Kare
Slide 21: Board of Directors
Board of Directors The Board of Directors brings together deep experience in real estate transaction, residential lending, financial institutions, real estate lending and investing, investment management and mortgage origination and servicing. Glenn Doré Derek Sutherland Karen Weaver Brian W. Chu Mr
Slide 22: ESG Highlights
ESG Highlights Our values and culture are rooted in our people, and we are committed to responsible environmental, social and governance practices, with focus on: Providing capital and loans to real estate developers and investment funds who are committed to community E and climate-based responsible
Slide 23: ESG Highlights
ESG Highlights E >90% Percentage of total capital committed in our construction and commercial businesses that is focused on density development >90% Employee engagement score in our 2021 annual team member survey 87% Percentage of Board members who are independent $15 million Amount committed for i
Slide 24: Attractive Dividends and Total Shareholder Return
Attractive Dividends and Total Shareholder Return Paying dividends since 1992 Declared Q1 2022 $0.36/share cash dividend and $0.97/share special stock dividend • Regular cash dividend declared for Q1 2022 increased by nearly 6% 150 130.0 0.85 125 $0.85 0.33 0.03 100 0.97 1.43 1.36 1.36 CAGR1 Volatil
Slide 25: MCAN Value Proposition
MCAN Value Proposition Lower risk profile than peer MICs with equal or higher returns driven by lower funding costs. Differentiated from OSFI-regulated peer lenders due to construction and other investment portfolio focus. Seasoned Unique Business Investment Portfolio a Consistent and Attractive Fin
Slide 26: Karen Weaver and Floriana Cipollone contact details
Karen Weaver Floriana Cipollone President and Chief Executive Officer SVP and Chief Financial Officer (416) 203-5931 (416) 591-5204 MCAN Financial Group 600-200 King Street West, Toronto, ON M5H 3T4 (416) 572-4880 | mcanexecutive@mcanfinancial.com | mcanfinancial.com | TSX: MKP
Slide 27: Appendix
=> Appendix L
Slide 28: Balance Sheet Highlights
Balance Sheet Highlights Trend YoY FY 2021 FY 2020 Trend QoQ Q4 2021 Q4 2020 Uninsured Originations* $575 million $283 million $159 million $113 million Insured Originations $801 million $616 million $166 million $218 million Residential Construction Originations $681 million $474 million $150 milli
Slide 29: Earnings Highlights
Earnings Highlights The Board declared a Q1 2022 cash dividend of $0.36 per share and special stock dividend of $0.97 per share. Trend QoQ Q4 2021 Q4 2020 Trend YoY FY 2021 FY 2020 Spread of Corporate Mortgages over Term 2.70% 2.76% 2.80% 2.62% Deposit Interest and Expense1 Mortgage Interest - Corpo