Trez Capital Mortgage Investment Reports Loss in Q2 Results

Trez Capital Mortgage Investment Corporation (TZZ) posted EPS loss of $0.10 in second quarter due to lower commitment fees, interest revenue resulting from a reduction in the average size of the mortgage portfolio and an increase in expenses primarily related to the orderly wind up plan. The loss from operations summed up $3.8 million, compared to income from operations of $3 million in same quarter previous year. In last quarter of 2015, TZZ reported EPS of $0.14, slightly below consensus estimate of $0.15 and marginally above compared to last year of $0.13 in fourth quarter.

In Q2, 72% of the portfolio was invested in first mortgages, while weighted average loan-to-value of the mortgage portfolio remained 75%.  Geographically diversified portfolio across Canada was Ontario (45%), Alberta (27%), New Brunswick (14%), Nova Scotia (12%) and Saskatchewan (2%). Weighted average interest rate and term to maturity on mortgage investments remained 7.3% and 20.5 months, respectively.

Strategic review continues still results remains uncertain. Earlier this year, the Special Committee had committed to a monetization transaction but it remains uncertain whether an attractive bid will materialize. Over next 90 days, speculation getting about $7.6 million in refinancing of existing mortgages by private funds. As shareholders agreed wind-up plan, TZZ has got repayment of about $10.2 million principal amount of mortgages.

Street maintains “Sector Perform” rating with target price lowered to $8.60 per share.