For Immediate Release
Toronto, Ontario, May 16, 2013 – First National Mortgage Investment Fund (TSX: FNM.UN) (the “Fund”) today announced that as of the end of April, it had fully invested the $54.8 million net proceeds of its initial public offering in a diversified portfolio of mortgages secured by income-producing properties across Canada.
The Fund also reported that it has successfully closed a financing facility in the amount of $10.0 million that will be employed to fund additional mortgage assets and further enhance the Fund’s yield, which was originally targeted at 6% based on the issue price of $10 per unit (pre-tax equivalent of 8.77%). The average interest rate on mortgages (excluding mortgage origination fees) is currently in excess of 8.0%; including mortgage origination fees, the yield is currently in excess of 9.0%.
Since inception on December 19, 2013, the Fund has paid regular monthly distributions at the prescribed rate of $0.05 per unit, which, at yesterday’s closing price per unit of $8.85, represents a yield of 6.78%.
“After closing our IPO in December, we have moved strategically to obtain economic exposure to an attractive portfolio of mortgage assets originated in-house by First National Financial LP,” said Jeremy Wedgbury, Managing Director, Commercial Mortgages, First National Financial Corporation. “Now that we are fully invested, we are well positioned to deliver our dual mandates of providing unitholders with tax-advantaged monthly cash distributions while preserving capital. Leverage from the financing facility will bolster the Fund’s yield potential. We will aim to utilize excess yield to grow the Net Asset Value of the Fund.”
The Fund now holds 25 loans with an average loan amount of $2.3 million and a conservative weighted average loan-to-value ratio of 70.1%. The Fund has chosen to allocate capital in favour of mortgage loans on multi-unit residential properties (55.4% of the portfolio), but also to gain exposure to industrial (25.1%) and retail (10.0%) properties as well as land (9.5%) for development. 2 In keeping with the Fund’s mandate to limit second or lower-ranking mortgages to 40% or less, approximately 74.3% of the portfolio consists of 1st mortgages, 24.3% are 2nd mortgages and the remainder are 3rd.
About First National Mortgage Investment Fund
The Fund provides unitholders with tax-advantaged monthly distributions by investing in Canadian mortgage loans originated by First National Financial LP. Today, the Fund is fully invested in a diversified portfolio of mortgages on multi-unit residential, industrial, and retail properties as well as land. To deliver an attractive yield, the Fund invests primarily in short-term bridge mortgages, which typically bear higher rates of interest than traditional debt financing, and the Fund’s manager applies leverage. To achieve its objective of preserving capital, the portfolio’s weighted average loan-to-value ratio will not exceed 75%. For more information, visit the Fund’s website at
About Stone Asset Management Limited
Stone Asset Management Limited (“SAM”) manages the Fund. Established in 1999, SAM is an independent, Canadian-owned asset management company that specializes in structuring and managing high quality investment products. Its professionals are well regarded in the Canadian investment community for their disciplined investment process. The Fund’s daily unit price can be found at http://www.stoneco.com/products/first-national/first-national-mortgage-investment-fund
About First National Financial Corporation
First National Financial Corporation (TSX: FN) is the parent company of First National Financial LP, a Canadian-based originator, underwriter and servicer of predominantly prime residential (single-family and multi-unit) and commercial mortgages. With over $67 billion in mortgages under administration, First National is Canada’s largest non-bank originator and underwriter of mortgages and is among the top three in market share in the mortgage broker distribution channel. For more information, please visit www.firstnational.ca.
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