Earnings call transcript: Timbercreek Financial misses Q3 2025 forecasts

Timbercreek Financial reported its Q3 2025 earnings, revealing a notable miss on both earnings per share (EPS) and revenue forecasts. The company posted an EPS of $0.10, falling short of the anticipated $0.1725, resulting in a negative surprise of 42.03%. Revenue also disappointed, coming in at $25.4 million, below the forecasted $27.75 million, a shortfall of 8.47%. Following the earnings announcement, Timbercreek Financial’s stock declined by 5.06%, closing at $6.76, down from its prior close of $7.12.

Key Takeaways

• Timbercreek Financial’s Q3 EPS and revenue both fell short of expectations.
• The company’s stock dropped over 5% in response to the earnings miss.
• Despite challenges, Timbercreek maintains a strong focus on multifamily assets and expects robust investment activity in Q4.

Company Performance

In Q3 2025, Timbercreek Financial continued to focus on its core strategy of investing in low loan-to-value (LTV) multifamily assets. The company reported a net investment income of $25.4 million, consistent with the previous quarter and the same period last year. Distributable income stood at $14.1 million, or $0.17 per share, with a payout ratio elevated due to market conditions. Timbercreek’s net income was reported at $8.5 million.

Financial Highlights

• Revenue: $25.4 million, consistent with Q2 and Q3 last year
• Earnings per share: $0.10, below the forecast of $0.1725
• Net income: $8.5 million
• Payout ratio: Elevated this quarter

Earnings vs. Forecast

Timbercreek Financial’s Q3 2025 results missed analysts’ expectations, with an EPS of $0.10 compared to the forecast of $0.1725, marking a negative surprise of 42.03%. Revenue also fell short, with actual figures at $25.4 million against a forecast of $27.75 million, an 8.47% miss. This performance contrasts with previous quarters where the company had met or exceeded forecasts.

Market Reaction

Following the earnings release, Timbercreek Financial’s stock experienced a sharp decline of 5.06%, closing at $6.76. This drop reflects investor disappointment with the earnings miss. The stock is trading closer to its 52-week low of $5.91, indicating bearish sentiment, especially when compared to broader market trends.

Outlook & Guidance

Looking ahead, Timbercreek Financial expects its portfolio to grow to between $1.2 billion and $1.3 billion, with robust investment activity anticipated in Q4. The company continues to resolve staged loans and maintains a stable monthly dividend yielding over 9.5%. The management remains optimistic about expanding credit spreads as interest rates decrease.

Executive Commentary

Blair Tamblyn, Executive, emphasized the company’s commitment to delivering a stable monthly dividend, currently yielding over 9.5%. Scott Rowland, CIO, highlighted the benefit of expanding credit spreads as interest rates decline. Geoff McTait, Head of Originations, noted the opportunities arising from refinancing and maturing mortgages.

Risks and Challenges

• Elevated payout ratio due to market conditions
• Potential impacts of recalibrating commercial real estate valuations
• Challenges in resolving stage two loans
• Market volatility affecting investor sentiment
• Interest rate fluctuations impacting credit spreads

Q&A

During the earnings call, analysts probed the potential sale and resolution of properties in Calgary and Vancouver. Discussions also covered growth strategies, balance sheet capacity, and the dynamics of interest rates and credit spreads. Management expressed confidence in maintaining a mid-90% payout ratio despite current challenges.

Full transcript - Timbercreek Financial Corp (TF) Q3 2025:

Operator: As a reminder, today’s call is being recorded. I would now like to turn the meeting over to Blair Tamblyn. Please go ahead.

Blair Tamblyn, Executive (likely CEO), Timbercreek Financial: Thank you, Operator. Good afternoon, everyone. Thanks for joining us to discuss the third quarter financial results today. I’m joined, as usual, by Scott Rowland, CIO, Tracy Johnston, CFO, and Geoff McTait, Head of Canadian Originations and Global Syndications. With respect to portfolio growth, which we’ve been communicating on regularly, we’re up by approximately $50 million year-to-date, with an expectation that will increase by year-end. Looking at Q3 specifically, transaction activity, while solid, was mildly behind our expected pace as the residual effects of the macro uncertainty we discussed in recent quarters continue to play out. As Geoff will elaborate on, we’re pleased with the pipeline in general, although a few material commitments expected to fund in Q3 did push into Q4. Combined with a large unexpected repayment, this brought the overall portfolio down modestly from Q2.

The Q3 spillover volume, in conjunction with strong Q4 commitments and additional pipeline volume, should still generate the portfolio growth we anticipated for the full year and result in higher revenue. To put a finer point on this, we’ve had more than $200 million of funded and committed deals so far in Q4. Our overall optimism continues to reflect improved market conditions as recalibrated commercial real estate valuations and a reduced interest rate environment have set the foundation for a new real estate cycle. In short, the conditions are favorable for a period of sustained strong transaction activity. We upsized the credit facility with this outlook in mind. Given these factors, the third quarter financial performance was mixed. Net investment income was steady at $25.4 million. DI was modestly below last quarter at $0.17 per share, partly reflecting the constraints on new investment activity in the quarter, as mentioned.

This drove a higher payout ratio in this quarter. As we’ve said before, the payout ratio will move around during the year and then settle in our targeted range for the full year. We expect to deliver full-year results in this range based on higher activity levels in Q4. Lastly, we continue to demonstrate progress with the remaining staged loans as we return this balance back to historical levels. From the remaining staged loans, the revaluation of two investments drove a higher ECL in this quarter, which lowered our reporting earnings in the period. Scott will expand on this in his remarks. In summary, I would reiterate our confidence in the continued ability to deliver stable monthly income through a conservative strategy grounded in income-producing assets.

Our core objective is to deliver strong, risk-adjusted returns primarily comprised of distributions for our investors, a goal we’ve consistently met over the long term. One key indicator of this performance is our 10-year IRR, which today stands around 7.8%. This track record reflects our disciplined approach and ability to navigate evolving market dynamics. I will now ask Scott to cover the portfolio review. Scott?

Scott Rowland, CIO, Timbercreek Financial: Thanks, Blair, and good afternoon. I’ll quickly cover the portfolio metrics and provide a brief update on key developments with the staged loans, and Geoff will comment on the originations activity and lending environment. Looking at portfolio KPIs, most were consistent with recent periods and historical performance. At quarter end, 82% of our investments were in cash-flowing properties. Multi-residential real estate assets continue to comprise the largest portion of the portfolio at roughly 57%. First mortgages represented 94% of the portfolio. The weighted average LTV for Q3 was 67.9%, which is up a bit from recent quarters. We’ve previously communicated that we expect LTV to tick higher in 2025 as we lean into the market with reset asset valuations, and we are seeing that. We continue to be very comfortable in this range in this economic environment.

The portfolio’s weighted average interest rate was 8.3% in Q3 versus 8.6% in Q2 and 9.3% in Q3 last year. The decrease reflects the Bank of Canada’s policy rate cuts, bringing the WIR closer to a long-term average of roughly 8%. With rates coming down, we’re seeing a corresponding decrease in interest expense on the credit facility, supporting a healthy net interest margin. The portfolio WIR is also protected by the high percentage of floating-rate loans with rate floors, above 85% of the portfolio at quarter end. Roughly 93% of the loans with floors are currently at those rate floors. In terms of asset allocation by region, there were no major shifts to highlight, with approximately 92% of the capital invested in Ontario, BC, Quebec, and Alberta, and focused on urban markets.

From an asset management perspective, we resolved close to $19 million in stage two loans since our last earnings call. More recently, we provided an update on the Stephen Avenue Place office asset in Calgary. As we disclosed, we applied for the court appointment of a receiver on behalf of the Syndicate of Secured Creditors, following the termination of a forbearance period with the borrower. This is the next step on the path to realization and to protect the interests of all stakeholders in the property. As a reminder, Timbercreek Financial holds approximately 11% interest in this loan on a pari-passu basis with other lenders. The revaluation of this asset was the largest contributor to an ECL increase of $5.9 million in the quarter, with $3 million related to this exposure and $2.1 million related to the Vancouver retail portfolio slated for redevelopment into multifamily.

Both revaluations were driven by current market appraisals and reflect the overall challenges in their respective markets. We are actively working toward the resolution and monetization of the outstanding staged loans and continue to advance the remaining files. While few challenges remain, we expect to see further progress over the coming quarters, with the expectation of ultimately returning this portion of the portfolio to historical norms. Ultimately, the redeployment of this capital into more profitable loans will be a significant tailwind for revenue growth. I’ll now ask Geoff to comment on the transaction activity in the portfolio. Thanks, Scott. As Blair highlighted, new investments in the quarter were solid, although transaction delays pushed some meaningful Q3 committed volume into Q4. During the quarter, we advanced over $131 million in 11 new net mortgage investments and advances, all targeting low LTV multifamily assets.

These were offset by total mortgage portfolio repayments of $191 million, including a large $83 million repayment in September, as also outlined in our press release, resulting in a turnover ratio of 18.2% and a portfolio balance of a bit over $1.05 billion, down $60 million from Q2 levels. These short-term variations aside, we are seeing continued opportunity in the conventional multifamily bridge and construction space, in addition to the multi-tenant industrial lending space. The market also continues to respond well to Timbercreek Financial’s CMHC-approved lender status, which is leading to more opportunities with existing clients and interest from new prospects. Looking forward, our Q4 transaction pipeline is strong, including approximately $200 million already funded or committed at this point in the quarter, with continued momentum anticipated through year-end.

Our position in the market and strong client relationships continue to support our ability to deploy capital into high-quality loans and return to growth mode. I will now pass the call over to Tracy to review the financial highlights. Tracy.

Tracy Johnston, CFO, Timbercreek Financial: Thanks, Geoff, and good afternoon, everyone. As we look at the main drivers of income, the average portfolio size has grown year-over-year, offset by the WIR returning to a more typical range following Bank of Canada rate cuts. Q3 net investment income on financial assets measured at amortized cost was $25.4 million, consistent with Q2 of this year and Q3 of last year. We reported distributable income of $14.1 million, or $0.17 per share, versus $15 million and $0.18 per share in Q3 last year. The payout ratio on DI was elevated this quarter as a result of market conditions that have been discussed. We recorded a reserve of $5.9 million this quarter, as Scott highlighted, driven primarily by the revaluation of two loans. Net income was $8.5 million this quarter, and net income before ECL was $14.3 million, the same level as Q3 2024.

Looking at quarterly earnings per share over the past three years, with and without ECLs, you will see it’s been quite stable, as has DI per share. Over the medium term, quarterly DI per share has been between $0.17 and $0.21 per share, averaging just over $0.19 over this time period. Looking quickly at the balance sheet, the value of the net mortgage portfolio, excluding syndications, was just over $1.05 billion at the end of the quarter, an increase of about $37 million year-over-year. The balance on the credit facility was $283 million at the end of Q3, down from $345 million at the end of Q2. The credit utilization rate at the end of the quarter was 75%. We expect to utilize the facility more significantly in Q4, given the volume Geoff highlighted.

As Blair highlighted, with the upsizing of the credit facility and repayments, we have ample capacity to deploy new capital against the pipeline Geoff and team are building. I will now turn the call back to Scott for closing comments.

Scott Rowland, CIO, Timbercreek Financial: Thanks, Tracy. We’re encouraged by the overall outlook. Despite some short-term transaction delays given current macro conditions, we believe that the combination of interest rate cuts and strengthening fundamentals will lead to the next upswing in the real estate cycle. This bodes well for future transaction activity at an attractive risk-return basis. Q4 investment activity is expected to be robust, allowing us to grow the portfolio in 2025. We are delivering a stable monthly dividend, currently yielding over 9.5%. We continue to make progress on resolving the majority of the staged loans, and we look forward to freeing up this capital for new investments. That completes our prepared remarks. With that, we will open the call to questions.

Operator: Now take any analyst questions. If you have a question, please click the raise hand button on the bottom right screen. The first question will come from Michael McCue. Michael, please go ahead.

Hi, guys. Just wanted to check that you can hear me first.

Scott Rowland, CIO, Timbercreek Financial: Good morning, Michael.

Hey, guys. Good to talk to you again. Just wanted to start on the Calgary and Vancouver properties against which the ECLs were taken. Just wondering about the outlook and an exit strategy for the Calgary property, and then maybe just a little bit of color on progress with Vancouver. It looked like that was the first specific update since it was initially placed into Q3. Maybe just update on strategy and potentially a timeline for both of those if you have any visibility.

Yeah, that’s a good question. Let’s start with the Calgary office. That is a specific asset, right? It was a loan that we originated in 2018, actually, so it was a pre-COVID loan, which has been part of the challenge. At this point, the lending syndicate, we have decided to sort of take control of the asset, and we are looking to likely test the market for sale. That will take a bit of time, but I would say we will likely be launching a process in early Q1 to test the market. That’s not to say we’re necessarily going to sell, but I think we’re at the point we’d like to have that visibility into the market. As part of that process, we did an updated valuation, which is what drove the ECL. If we look at Calgary office, while there’s a couple of green shoots, it remains challenging.

That revaluation was just reflective of what we think is the current market conditions. When it comes to Vancouver, the second part of your question, we do have a—it’s kind of a similar story. If I look at Vancouver and Toronto, both of those markets, on the development basis, remain challenged. It’s just part of the supply and demand in those markets right now. From time to time, we do continue to do asset valuations. This is basically reflecting an updated view of what we think is the current market for those assets. As far as timeline goes, these are going through approval processes with the city. We are definitely in the final innings of those. The borrower is in the final innings of getting those approvals. I would say somewhere between Q4 and Q1, we expect that to be complete.

Going to market, the borrower, like us getting off those loans, there’s obviously a few different ways that can happen. We sort of expect to see resolution to those sometime in the middle quarters of 2026. That’d be my sort of assessment today.

Okay. Great. Thanks. That’s very helpful. Just as a follow-up again, relating to both of those loans, potential for further ECLs in the coming quarters, obviously depending on these timelines, just sort of an outlook on the provisioning front for both of those.

Yeah. Look, the view of the current market value of these things, and I would sit there and say for development, these markets are pretty much near the bottom. If you want to look at historical timelines, it’s been a pretty aggressive markdown of what you would say sort of land values are in sort of the Vancouver, Toronto markets, and certainly office values in Calgary. It is fairly low, pretty much of a trough. I’d say where these valuations are fairly reflective. I can’t predict what’s going to happen to the market in the future, but certainly the current outlook of values is nowhere near a high point.

Okay, great. Thanks. That’s helpful. I will re-queue and raise my hand again.

Thanks, Michael.

Operator: The next call comes from Stephen Boland. Stephen, please go ahead.

Stephen Boland, Analyst: Hi, can you hear me okay?

Scott Rowland, CIO, Timbercreek Financial: Yep, I see you.

Stephen Boland, Analyst: Great. Maybe a general question. I’m just wondering about—you talked about growth at the end of the presentation. I’m trying to see if your outlook has changed for 2026 in terms of what you can grow, what rate. Is the balance sheet a little bit constrained at this point? You mentioned your additional debt capacity. How are you navigating that? What can you do here besides sell if you’re getting robust kind of growth and commitments? Are you going to have to syndicate more? I’m just trying to get an idea for 2026, what your outlook is.

Scott Rowland, CIO, Timbercreek Financial: Yeah. That’s a great question. I think I’m going back to the comments we made the last call. I’d say it’s just very consistent. A key driver for growth for us, right, is capacity. As we mentioned in the MD&A, we’re able to upsize our primary credit facility up to $600 million. That gives us a fair amount of powder to continue to grow the book. If we look at Q4, sort of the commitments that we have, and with the line where it is, I think it is sort of consistent. I don’t know exactly what we said from last quarter. I’m just thinking back, but growth year over year. I mean. Yeah.

Stephen Boland, Analyst: For 2026, are you comfortable? In terms of—I know you’ve got the extension or the increase on the line. Do you feel the balance sheet is constrained at all? I’m just trying to get an idea.

Scott Rowland, CIO, Timbercreek Financial: Listen, I think that existing capacity gets us to—I’m sort of looking at Tracy here too, but I think it gets us to sort of the $1.2, $1.3 billion level. We feel very confident we can hit those numbers. Growth beyond that, right, then we’re looking at are you raising equity and debt together to continue to grow? I think as we resolve the staged loans, the book has that much more flexibility, right, to continue to grow. With interest rate cuts, resolving the staged loans, I think that sets the stage for positive action on the stock, which I think then, obviously, that would allow you to go in and raise equity and then match that with debt to continue to grow.

If I look at us in stages and we are where we are today, I think the existing debt capacity gets us to that billion two, billion three. Future growth from that, right, that’s debt and equity matching with, I think, with an improved stock price, right? That’s a story we’ll tell through 2026. In my head, I’m flaring. Yeah. I agree. Hey, Steven, flare. The only thing I’d add sort of as a parallel swim lane to growth of the balance sheet is obviously the growth of revenue. As we’ve talked about a few times, I mean, as the portfolio turns over and the pace of transaction picks up, which is a result of commercial real estate fundamentals stabilizing, we’ll generate more revenue, right? That ties in with a loan that’s—you pick Calgary office.

I mean, a loan that is in forbearance, obviously, is generating less interest income than a loan that is freshly originated, generating, call it, roughly an 11. Drive revenue as sort of both are important, of course, but we expect revenue to grow in addition to what you would correlate with the balance sheet, if that makes sense.

Stephen Boland, Analyst: Okay. That’s great. The second question is the stage two and three, I believe, increased quarter over quarter. Should we start to see that number sequentially come down quarter after quarter? I know it can be lumpy, but is there going to be improvement in those, starting even in Q4?

Scott Rowland, CIO, Timbercreek Financial: It’s hard to pick the exact quarter, Steve, to spell it out, but I got to be honest, we’ve had ongoing improvement and reductions over time. Yeah, it is lumpy. The loans we’ve been talking about on this call today are the majority of what’s left, dollar value for sure, dollar-wise. It is unusual. These aren’t popping up as new stage two or stage three loans. These are pretty much the ones that have been around for a while that have longer timelines to resolve. We do plan to get rid of them and sort of go back to historic norms. Steven, if you think about it going back, I don’t have the number at hand, but we’ve worked through quite a few of them, and I think arguably one every quarter. We announced the one that was resolved in this quarter earlier.

To answer your question directly, we do expect there to be resolutions in Q4. It’s super active, right, as we’ve talked about. They’re negotiated, and to the extent you try to force things, it generally reduces the validity or isn’t helpful to the outcome.

Stephen Boland, Analyst: Okay. I’ll sneak one more in. Just in terms of the credit facility, I know you got the increase of size. Was there any other changes, rate, covenants, anything like that you can mention, or you just got more money?

Geoff McTait, Head of Canadian Originations and Global Syndications, Timbercreek Financial: Yeah. We got more money, increased two new banks into the syndicate, which was great. More importantly, improved economics. Our spread has come in back to kind of where we were historically, which is great. No changes on covenants.

Stephen Boland, Analyst: Okay. Can you mention the spread? Maybe it’s in the disclosure. I apologize if it is.

Scott Rowland, CIO, Timbercreek Financial: I don’t think it is. Why don’t we say that it’s come in by 0.25 basis points.

Stephen Boland, Analyst: Okay, I appreciate that. Thank you.

Scott Rowland, CIO, Timbercreek Financial: Thanks.

Operator: The next call comes from James. James, your line is open. Please go ahead.

Curious on the $200 million funded or committed. How does that look from a geographic and asset class perspective?

Scott Rowland, CIO, Timbercreek Financial: Hey, James, I think we missed the first part of your question, but I think you were asking just what is sort of the makeup of the Q4 outlook.

You got it. Yeah, thank you.

Geoff McTait, Head of Canadian Originations and Global Syndications, Timbercreek Financial: Yeah. I mean, I would say it’s Geoff here. Pretty consistent with the portfolio overall. It’s a combination of, I’d say, primarily Ontario and Quebec. The vast majority is residential income with the balance being industrial.

Would these be some new customers, new borrowers, or existing former clients? I’m just curious on how that portfolio shaped in Q4.

Yeah, I.

Going forward.

Yeah. Listen, I mean, I think there’s some very strong repeat business within that new volume in addition to some new prospects, but it’s predominantly repeat business with existing clients that we’ve seen good churn with, right? We’re focused on and managing total exposure with individual groups, but are seeing good churn. They’re executing on their plan, refinancing our existing exposures and then taking on new opportunities. That existing relationship is enabling us to facilitate execution on good timelines and win good deals, even with some incremental spread.

Yeah. Understood. Just in terms of the yield, new loans came in at, I believe, 7.3% weighted average interest rate. Loans going out the door was 8.3%. That was much lower than I think it was in the mid-9% in Q2 going out the door. I’m just curious, I guess, what is the range of rates right now in the portfolio? Are there still loans that are well above 9% that are still there that are expected to roll off at some point soon? Just trying to really kind of understand, I guess, the stability of the weighted average interest rate and yields in general here over the next several quarters.

Scott Rowland, CIO, Timbercreek Financial: Yeah. I mean, it’s always a bit of a mix, right? We do have some of those loans that exist that have some pretty high floors that, over time, to your point, will roll off. Generally speaking, if I think of new originations, if I look at it over prime—and this is maybe helpful context, like a credit spread over prime—we typically are in that kind of 2.75% to 3.25% range. What happens with credit spreads, right? It’s an interesting thing. As interest rates go up, credit spreads compress because there’s only so much whole loan coupon that necessarily a book can absorb, like a borrower can absorb. When we saw rates go high, it is good for income, but your credit spread is compressing. As rates come down, the inverse is true. If prime was to continue to fall, we start to be able to expand credit spreads.

The credit spread is ultimately what we are interested in because our cost of funds is also floating. As long as you maintain that difference, it allows us to achieve the equity yield we’re looking to achieve. It’s an interesting model. As rates go down, our credit spread expands. You also tend to get more velocity of churn in the book, which generates more fees. The headline weighted average interest rate may fall, but more fees through more velocity and higher credit spread through expansion in a lower rate environment. We’ve seen this happen through—we’ve now operated through a few interest rate cycles, and it seems to be a consistent case. In a higher interest rate environment, you have less velocity, less fees, but higher weighted average interest rate. In a lower interest rate environment, you have more fees and reduced weighted average interest rate.

What helps us right now in the short to medium term is the floors, to your point. That does provide some positive impact into the book. As those roll off, it’s true, but then we continue to grow the book in that lower rate environment where you’re getting more fees, and we have a bigger book, right? It is an ever-changing model that we do manage quite closely, ensuring that we end up in that kind of mid-90% payout ratio that we’re targeting.

Stephen Boland, Analyst: Yeah. Okay.

Scott Rowland, CIO, Timbercreek Financial: Go ahead. The only thing to add there, perhaps, is we all hear a lot about the cost of debt generally. Generally speaking, when we’re reading that in the media, it’s by and large talking about term debt, right? Five and 10-year money, which can get super cheap. As you, of course, know, our business is to provide flexible sort of debt with features that are valuable. That is another way of explaining what Scott was saying. A borrower is willing to—there’s sort of a floor that is willing to be paid to be able to be flexible and creative as they go and execute on their value-add opportunities where they’re generating equity returns that are obviously well in excess of what they’re paying us, if that’s helpful at all.

Yeah. The follow-up on that is, obviously, we’re going into an environment where you should see expanding profitability given the interest rate setup. Still, in the near term, those higher floor loans rolling off will have a bit of a negative impact. I guess I’m just trying to see if you had any visibility on potentially when that inflection point happens. Is it still several quarters away, or is it something that’s much more visible as those higher rate floor loans are no longer in the portfolio?

Yeah. No, listen, we can’t predict necessarily when those loans will roll off. They roll off at different times, right? We have a fairly consistent rollover of the portfolio, right? Somewhere in that 40% to 50% per year, and it tends to be pretty evenly distributed through the book. It could be some higher yielding loans, it could be some lower yield. Again, to Blair’s point before, these shorter-term bridge loans are not necessarily driven by just the high rate. It’s more around the strategy of the asset. If the borrower is looking to reposition themselves, regardless of their underlying rates, they probably stay till they’ve executed their plan. That does change the impact of when loans will roll off.

When we look at the book, again, as it rolls off, we’re originating at a yield based for the current market environment and the current interest rate to make sure that we’re in a decent position.

Okay, thank you.

Don’t underestimate the income, right? It’s meaningful when the portfolio is turning over regularly.

Yeah, no, understood.

Operator: Our next call comes from Zach. Zach, your line is open. Please go ahead.

Hey, good afternoon. Can you guys hear me?

Scott Rowland, CIO, Timbercreek Financial: Yeah. Hey, Zach.

It appears you guys have high confidence that the payout ratio will stabilize in the mid-90%. What are some of the factors driving that?

Just overall, if I look at year to date, that’s where we’re at. Again, Q3 was just a little high, given, again, as Geoff was describing, just the timing of some transactions. It’s just really managing the pipeline and where we’re seeing investment activity. When you’re just running through the yield math, it sort of generates that sort of mid-90s type math. Just running the business normally, Zach.

Okay.

If the pipeline was not where it is, we wouldn’t have the confidence that we do.

Understood.

It really comes down to the floor, I guess, at the end of the day.

Geoff McTait, Head of Canadian Originations and Global Syndications, Timbercreek Financial: Yeah. The pipeline, just for Blair’s point, we look at the pipeline. It obviously was looked at in stages, right? There’s early stage deal identified. We’re working through it. We don’t really have a good view as to do we want to bid, where it’s going to land, are we going to win it? Obviously, as you go down the path, deals that we’ve been working through, deals we’ve issued term sheets, deals we’ve issued commitment letters, acquisitions with firm timelines, any combination of these things gives us sort of increased probability of execution within that pipeline view. Aligned with a timeline that, in our view, again, goes back into our forecasts and expectations. Along with year to date, gets us to a point where we’re comfortable in that range.

Okay. Understood. Appreciate that. With softer fundamentals for most property types right now, we’re seeing higher vacancy, lower rental rates. Are you seeing that translate into slower origination activity at all? I know that you mentioned in your prepared remarks that there were some transaction delays.

Yeah. The transaction delays we’re talking about are sort of more normal course. There’s a real deal, it’s signed up, and it’s targeted to fund on a certain date. As they’re going through their due diligence process and/or negotiating final conditions to waive, they need an extra week, they need an extra couple of weeks, any combination of things. This is more specific to real transactions than necessarily an indication of the broader environment, right? I think, to your point, certainly the fundamentals have softened across, and again, varies depending on asset class. For us in general, we are still seeing strong fundamentals underlying the multifamily business and the industrial business, which has been the core of what we’re doing. We are still seeing transaction activity continue.

We benefit from refinancing opportunities as well as mortgages continuing to mature and need to be refinanced, even if there is no actual trade occurring. As you get into other asset classes, office is one that’s been really inactive for the last number of years, given the unknowns in that space. You’re starting to see tenancy demand increase. You’re starting to see the fundamentals underlying that reality improve. That’s something that we’re not looking at a ton of. We’ve seen opportunities, we haven’t found a ton that are overly compelling. At the same time, the fundamentals in that space, which has been very uncertain for a period, are starting to increase or improve, and that should drive increased activity.

Scott Rowland, CIO, Timbercreek Financial: Look, I’ll just add to that. I think it is true, though, right? I think we said the softening fundamentals, if I go back to you go back to 2023. As you got sort of heavily into that rate uptick cycle, like we started in 2022. For sure, those weakening fundamentals and the higher cost of debt, that caused price mismatches in the market, right, between buyer and seller. That is what’s really been driving this more challenging transaction activity, right? The sellers are trying to hang on, and they’re trying to believe their 2021 pricing, their 2021 valuations. As vendors, sellers get more realistic in their price targets. What happens is all of a sudden, prices come down a bit, and then you have that market transaction can occur, right? The buyer and seller have a meeting of the mind, and the transaction occurs.

That’s what we’re talking about when we talk about on the face of these weakening fundamentals that you mentioned. Now you put in the rate cut environment, and you have a little more realistic view from the sellers, that’s what drives those transaction activities. For us, on the lending side, what we like about it is you have a little bit more realistic view of value. Values are kind of lower than what we would have been lending into 2020, 2021. If you look at today’s environment, you feel pretty good that this is a reset value. More transactions are happening, and we feel pretty good at where we’re lending and where our advance rates are.

Okay. Thanks. Appreciate the color. I’ll turn it back.

Operator: There are no other calls at this time, so I’ll turn the meeting back to Blair for closing remarks.

Scott Rowland, CIO, Timbercreek Financial: Thanks, everyone, for your time. Obviously, if you have any further questions, feel free to reach out. We’re happy to chat. Have a good afternoon.

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