Author Topic: TII.V - Terra Firma Capital Corp  (Read 8841 times)

SafetyinNumbers

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Re: TII.V - Terra Firma Capital Corp
« Reply #20 on: November 14, 2019, 09:58:23 PM »
So they lend money for 13-18% interest rates to real estate developers. What could go wrong?
I know it’s a snarky response, but this seems to ave written very high risk all over it.

Lots can go wrong but that’s why it’s valued where it is. The opportunity only exists because banks in the US won’t lend against land after what happened in the GFC. The markets TII invests in are generally considered cheap by traditional measures of housing affordability. Meanwhile, it trades at a big discount to book while not being significantly financially levered.

People are very good against protecting themselves against the last crisis. Maybe it will happen again exactly the same way but it just doesn’t seem probable, in my view. With the XHB and XLF much closer to 52 week highs than lows the market is certainly not indicating near term danger but anything can happen.


ColdandRich

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Re: TII.V - Terra Firma Capital Corp
« Reply #21 on: November 15, 2019, 06:42:36 AM »
Terra Firma put up a great quarter, in my view, at least. The stock didn’t budge.

TII earned C$0.24 in Q3 and book value increased to C$9.24 vs the stock price at $5.30.

So still 0.6x book and closer to 5x annualized Q3 EPS. The ROE crested 10% in the quarter. We should continue to see operating leverage as the loan book grows and financial leverage as they utilize the low cost credit facility that was added this year.

Should I keep posting on this name or is there zero interest?

There is interest from me, especially after the post you made about talking to the CEO. I have not bought shares yet, but if I sell anything this will probably be the next stock I buy.

SafetyinNumbers

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Re: TII.V - Terra Firma Capital Corp
« Reply #22 on: November 15, 2019, 10:26:42 AM »
Terra Firma put up a great quarter, in my view, at least. The stock didn’t budge.

TII earned C$0.24 in Q3 and book value increased to C$9.24 vs the stock price at $5.30.

So still 0.6x book and closer to 5x annualized Q3 EPS. The ROE crested 10% in the quarter. We should continue to see operating leverage as the loan book grows and financial leverage as they utilize the low cost credit facility that was added this year.

Should I keep posting on this name or is there zero interest?

There is interest from me, especially after the post you made about talking to the CEO. I have not bought shares yet, but if I sell anything this will probably be the next stock I buy.

That’s encouraging, thanks!

matts

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Re: TII.V - Terra Firma Capital Corp
« Reply #23 on: November 17, 2019, 10:40:30 AM »
Yes, I'm also paying attention. Please keep sharing your thoughts.

SafetyinNumbers

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Re: TII.V - Terra Firma Capital Corp
« Reply #24 on: January 08, 2020, 08:01:53 AM »
New Insider at Terra Firma picked up 75k shares yesterday and owns close to 2% of the company after recently coming on board as an MD from Tricon (TCN.TO). Interesting pair trade for him given TCN has a lower ROE and higher P/B.

https://m.canadianinsider.com/company?ticker=TII

Philbert77

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Re: TII.V - Terra Firma Capital Corp
« Reply #25 on: June 17, 2020, 01:52:56 PM »
giving this one a bump. Seems pretty cheap here. Q2 will not be good. But its trading at a huge discount to BVPS. Any thoughts?

Philbert77

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Re: TII.V - Terra Firma Capital Corp
« Reply #26 on: July 03, 2020, 07:33:47 PM »

sculpin

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Re: TII.V - Terra Firma Capital Corp
« Reply #27 on: July 05, 2020, 09:07:30 AM »
Terra Firma Capital Corp

Rating: Buy
unchanged
12-Month Target: C$10.00
RESEARCH NOTE | May 15, 2020


Short-term Pain, Long-term Gain

Investment Thesis. The North American housing market relies on access to development capital
to fund its growth. The U.S. market remains underfunded following the housing crisis and with the
onset of COVID-19, provides a huge opportunity for Terra Firma to leverage its experience
operating in distressed markets. The experience of senior management on both sides of the
border is a competitive advantage. The business model is highly scalable and offers considerable
operating leverage. In our view, TII’s risk/reward profile makes it a unique and attractive
investment opportunity.

Event

Terra Firma reported Q1/20 results which showed the first indication of the COVID-19
slowdown. Demand for residential development financing remains robust, although the
company is pausing its lending activities until the outlook is more certain.

Highlights

 Q1 Overview | Despite starting the quarter on a “strong footing”, COVID-19 hit
late in the quarter which impacted global debt and equity markets, dampened
consumer sentiment, and ultimately caused the company to elect not to close on
$38M of the $48M in possible transactions in its pipeline. Even with the impact, TII
still managed to grow revenue and earnings marginally y/y, but both came in
slightly below our estimates. Additionally, the loan book and average realized
interest rate both decreased by a marginal amount sequentially.

 COVID-19 Impact on TII & U.S. Housing | Prior to the outbreak, the U.S. housing
market was off to a roaring start in 2020; however, the COVID-19 outbreak caused
a complete reversal in sentiment. TII has fared quite well so far as its U.S.
positions are all in “good standing”, having received close to all promised interest
payments. Looking longer term, the virus will likely continue to be disruptive and
could potentially lead to a material slowdown in land development over the next
few quarters, which will slow growth of Terra Firma’s pipeline (but shouldn’t last
too long). We believe the near-term turmoil presents a significant opportunity for
Terra Firma because of its exposure to leading residential housing sub-markets in
the U.S. at a time when now, more than ever, banks will likely curtail lending
activities. The company continues to have a good relationship and be in close
contact with Texas Capital Bank; this, along with its book equity of ~$40M, should
allow it to continue to grow AUM without the need for additional capital.

Valuation & Conclusion

TII is a profitable, growing lender that offers investors upside, a solid yield (~5%),
strong inside ownership and remains inexpensive, trading at ~0.4x book and ~5x run
rate P/E. Short-term COVID-19 impact aside, we continue to believe the company’s
compelling fundamentals and strong track record (having raised +C$350M from
investors with a zero loss rate) are not accurately reflected in the current share price,
trading at $4.00, well below its long-term average 1.0x book value multiple. Exiting
COVID-19, we expect deal flow to be robust, as home builders and land developers
look to restart their businesses while faced with a lack of traditional funding sources.
Early indicators are pointing to increased security and higher deposit and interest
rates, which combine to mean that Terra Firma may be able to loan money with more
security and a higher interest rate. We are rolling forward our valuation to 2021, given
that we expect it to be a more normalized year. Using our 12x P/E multiple we maintain
our C$10.00 target, which is supported by the company’s C$9.94/sh book value. We
reiterate our Buy rating.

Corey Hammill, Senior Analyst | 416.361.0754 | chammill@paradigmcap.com

Philbert77

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Re: TII.V - Terra Firma Capital Corp
« Reply #28 on: August 17, 2020, 09:28:00 AM »
"Terra Firma has taken all the necessary steps to safeguard its employees and its capital in order to weather the storm. While this has meant no new originations during the quarter, the Company’s Adjusted Net Income remained healthy,” said Glenn Watchorn, CEO of Terra Firma Capital Corporation. “It seems somewhat counterintuitive, but the housing market in the U.S. has been very strong during the crisis with many of our borrowers reporting record sales over the months of May, June and July. We believe that this is largely due to record-low mortgage rates, low supply, pent-up demand and the overall health of the housing market prior to the crisis. Consequently, Terra Firma is now actively pursuing new originations. We are also currently working on several transactions that had previously been postponed, which are expected to close by the end of Q3."

https://www.tfcc.ca/wp-content/uploads/2020/08/Aug-12-2020-Press-Release-Terra-Firma-Capital-Corporation-Reports-Second-Quarter-2020-Financial-Results.pdf