TSX Symbol FC.UN
TORONTO, July 30 /CNW/ - Firm Capital Mortgage Investment Trust (the "Trust") (TSX FC.UN) announced today that Firm Capital Corporation, the Trust's Mortgage Banker, has entered into a purchase letter for the acquisition of a $12.5 million principal amount portfolio of 30 performing first mortgages in Ontario.
The mortgage portfolio purchase is priced at a 27% discount to the principal balance of the mortgages with the purchase yielding an estimated cash on cash return of approximately 14% per annum plus the profit to be made on the discount. The average loan to value on the purchased portfolio, based on purchase price, is 47%. In conjunction with the acquisition, Firm Capital Corporation has issued a commitment letter for a loan secured by another portfolio of mortgages held by the vendor.
Subject to the Trust's availability of capital, the Trust expects to acquire an interest in the portfolio acquisition. The Trust's objective for its ownership interest in each of the loan and purchased mortgages is in the range of 25% to 50%, subject to investment committee approval. The transactions are expected to close within 30 days. The transactions are subject to normal underwriting due diligence. The Trust cannot be certain that one or both of these transactions will close, and if they do close, the Trust cannot be certain that its percentage ownership will be within the indicated range.
About Firm Capital Mortgage Investment Trust
The Trust, through its Mortgage Banker, Firm Capital Corporation, is a non-bank lender providing residential and commercial short-term bridge and conventional real estate finance, including construction, mezzanine and equity investments. The Trust's investment objective is the preservation of Unitholders' equity, while providing Unitholders with a stable stream of monthly distributions from investments. The Trust achieves its investment objectives by pursuing a strategy of growth through investments in selected niche markets that are under-serviced by large lending institutions. Lending activities to date continue to develop a diversified mortgage portfolio, producing a stable return to Unitholders.
Additional information about the Trust is available on the SEDAR website at www.sedar.com.
Certain information in this news release may contain forward-looking statements with the meaning of applicable securities laws including, among others, statements relating to the Trust's objectives, strategies to achieve those objectives, the Trust's beliefs, plans, estimates, objectives and intentions, and similar statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. Forward-looking statements generally can be identified by words such as "outlook", "objective", "may", "will", "expect", "intend", "estimate", "anticipate", "believe", "should", "plans", or "continue" or similar expressions suggesting future outcomes or events. Such forward-looking statements reflect the Trust's current beliefs and are based on information currently available to management. Forward-looking statements are provided for the purpose of presenting information about management's current expectations and plans relating to the future and readers are cautioned that such statements may not be appropriate for other purposes. These statements are not guarantees of future performance and are based on the Trust's estimates and assumptions that are subject to risks and uncertainties, including those described under "Risk Factors" in the Trust's annual information form and those discussed in the Trust's materials filed with the Canadian securities regulatory authorities from time to time, which could cause actual results and performance of the Trust to differ materially from the forward-looking statements contained in this news release. Those risks and uncertainties include, among other things, risks related to: the tax position and consequence unique to each unitholder; Unit prices, availability of cash for distributions; credit risk; interest rate and other debt related risks; tax risk; ability to access capital markets; dilution; government regulation; investment eligibility; unitholder liability; dependence on key personnel; composition of and competition for mortgages; mortgage renewals; dependence on the Trust's Mortgage Banker and Trust Manager; and potential conflicts of interest. Material factors or assumptions that were applied in drawing a conclusion or making an estimate set out in the forward-looking statements include the completion of the transactions and availability of funds to enable the Trust to acquire an interest in the loan and mortgage portfolio; quality of the mortgages underlying the loan and mortgages being purchased; the general economy remains stable; interest rates are relatively stable; and equity and debt markets continue to provide access to capital. The Trust cautions that this list of factors is not exhaustive. Although the forward-looking statements contained in this news release are based upon what the Trust believes are reasonable assumptions, there can be no assurance that actual results will be consistent with these forward-looking statements. All forward-looking statements in this news release are qualified by these cautionary statements. The forward-looking statements are made only as of the date that such statements are made and the Trust, except as required by applicable law, assumes no obligation to update or revise them to reflect new information or the occurrence of future events or circumstances.