May 16, 2021

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Builders Capital Mortgage Corp. Reports Annual Results for 2020

A cautious approach produces positive results in uncertain times

Calgary, Alberta – (Newsfile Corp. – April 28, 2021) – Builders Capital Mortgage Corp. (TSXV: BCF) (“Builders Capital” or “the Company”) announces that it has published its annual report and financial results for the year ended December 31, 2020.

The highlights include:

  • Consistent with the company’s stated distribution target, the dividends paid to Class A public shareholders in 2020 totaled $ 0.80 per share, representing an annual return of 8% versus the original issue price of $ 10.00

  • Builders Capital has met its 8% distribution target for the 7th consecutive year since foundation

  • The mortgage portfolio grew by 8.7%

  • The overall result increased by 47%

  • Assets held for sale were reduced by 41.4%

  • The geographic diversity of the portfolio was increased by doubling the proportion of the British Columbia mortgage portfolio

  • In accordance with the objectives, a weighted average loan-to-value ratio of around 75% was achieved in the mortgage portfolio

Commenting on these results, Sandy Loutitt, President of Builders Capital:

“Real estate markets in our operating regions have seen a sustained decline in recent years, with significant declines in home sales prices and volumes. Despite the COVID-19 pandemic, that trend appears to have reversed by the end of 2020. The company was able to do so Positioning to capitalize on these improving conditions, coupled with an aggressive realignment on geographic diversification, has created a much stronger portfolio and achieved a 47% increase in net income from 2019.

These more resilient market conditions have also made it easier to sell properties that have been held for sale for an extended period of time and have allowed us to essentially address all other problem loans. Properties in Richmond, BC and Saskatoon, Saskatchewan were sold during the year, cutting the value of our small holdings of foreclosed homes nearly in half. We look forward to selling the rest of these assets in the near future. As a result, Builders Capital has entered 2021 very positively and is well positioned to generate further profit growth and improved returns for our shareholders.

Looking ahead, we find that supply in the Canadian real estate market has recently been unable to meet demand for housing. Again, this bodes well for the construction industry in general and suggests that we will continue to see positive demand for our home builder finance brand. “

In the April 2021 monthly housing market update, RBC Economics stated: “Sellers responded to calls for more supply in March, but ended up leaving the Canadian housing market far behind.” Additionally, the Canadian Real Estate Association forecast in its quarterly projections March 15, 2021 that “Current trends and the outlook for real estate market fundamentals suggest that activity will remain strong through 2021, resulting in a record number of sales “. We look forward to doing our part to meet this demand.

Financial overview

The year ended
December 31,

2020
$

The year ended
December 31,

2019
$

The year ended
December 31,

2018
$

revenues

3,230,735

2,921,678

3,429,265

Overall result

2,124,919

1,445,634

1,924,711

Total assets

27,352,266

27,152,829

28,918,136

Equity

26,816,558

26,554,715

26,250,889

Basic and diluted earnings per share

0.72

0.50

0.70

Cash dividends explained

2,047,833

2,061,004

2,171,973

Cash dividends per Class A share

0.80

0.80

0.80

Cash dividends per class B share

0.48

0.53

0.74

A more detailed discussion of the company’s financial results can be found in the Builders Capital management discussion and analysis for FY2020, which was posted on the company’s website along with the audited condensed financial statements for the year (www.builderscapital.ca) and submitted to SEDAR (www.sedar.com).

About Builders Capital

Builders Capital is a mortgage lender providing short term home finance to home builders of timber framed residential buildings in western Canada. The company started its active business on December 12, 2013 with the completion of its IPO and subsequently acquired a mortgage portfolio from two predecessor companies.

Builders Capital’s investment objective is to provide attractive returns relative to risk in order to provide shareholders with stable and consistent dividends while focusing on capital preservation and meeting the criteria set out for Mortgage Investment Companies (“MIC”) Definition in the Income Tax Act.

As an MIC, Builders Capital is exempt from income tax provided it pays all of its taxable income to shareholders in dividends within 90 days of its December 31stst End of year. Such dividends are typically treated as interest income by shareholders so that each shareholder is in the same tax position as if his or her pro-rated portion of the company’s mortgage investments had been made directly by the shareholder.

Forward-looking information

This press release contains forward-looking statements within the meaning of applicable securities laws, including statements regarding management’s beliefs, estimates and intentions and similar statements about expected future events, results, circumstances, performance or expectations that are not historical facts. Forward-looking statements can generally be made through the use of forward-looking terms such as “outlook”, “target”, “may”, “will”, “expectation”, “intention”, “estimate”, “anticipate”, “believe”, “should” , “plan” or “continue” or similar expressions indicative of future results or events. Such forward-looking statements reflect management’s current beliefs and are based on information currently available to management. These statements are not guarantees of future performance and are based on estimates and assumptions that are subject to risks and uncertainties that could cause actual results to differ materially from the forward-looking statements contained in this press release. These include risks related to mortgage credit, competition for mortgage credit, real estate values, interest rate fluctuations, environmental issues and the general economic environment. The company cautions that the above list is not exhaustive as other factors could affect results, performance, or success. Readers are cautioned not to place undue reliance on forward-looking statements. Although the forward-looking information contained in this press release is based on reasonable assumptions made by management, there can be no guarantee that actual results will correspond to these forward-looking statements. Except as required by law, Builders Capital undertakes no obligation to publicly update or revise any forward-looking statements as a result of new information, future events, or for any other reason.

For more information, please contact:
John Strangway CPA, CA, Chief Financial Officer
Phone: (403) 685-9888
E-mail: [email protected]
Website: www.builderscapital.ca

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this press release.

The source version of this press release can be found at https://www.newsfilecorp.com/release/82181