Mortgage investment corporation continues shedding assets and weighing next steps
Firm Capital Apartment Real Estate Investment Trust has released its financial results for the fourth quarter and full year ending December 31, 2024, alongside updates on its ongoing strategic review.
The Canadian mortgage investment corporation (MIC), listed on the TSX Venture Exchange, continues to actively dispose of wholly owned assets and explore uses for the Trust, including potential distributions, reinvestments, or unit buybacks.
Firm Capital, structured as a MIC under Canada’s Income Tax Act, is exempt from tax on income provided it distributes taxable earnings to shareholders as dividends within 90 days of year-end.
For the quarter ending Dec. 31, 2024, net income (excluding non-cash fair value adjustments) was approximately $0.1 million, matching results from the prior quarter and improving from the $0.3 million net loss reported in Q4 2023. On a full-year basis, the trust posted a net loss of approximately $0.15 million, compared to a $0.8 million net loss in 2023.
Adjusted funds from operations (AFFO) for Q4 2024 came in at approximately $0.16 million, flat from the previous quarter, while full-year AFFO reflected a net loss of approximately $0.08 million, versus a $0.7 million net loss in 2023.
The trust reported a net asset value (NAV) of $6.57 per trust unit (CAD $9.36), including disposition costs for assets currently held for sale.
As part of its ongoing asset disposition strategy, Firm Capital has sold four of its six wholly owned assets, generating gross proceeds of approximately $71.6 million. After repaying associated mortgage debt and closing costs, about $28 million in net proceeds were used to redeem or reduce debt, including:
- $13.7 million (CAD $18.8 million) in 6.25% convertible unsecured subordinated debentures due June 2026
- $5.1 million (CAD $6.9 million) bridge loan
- $1.0 million credit facility with a Canadian chartered bank
- $3.0 million partial repayment on a Houston, Texas mortgage, which reduced the interest rate from 9% to 8.25% and extended the term to February 202
Additionally, Firm Capital provided $4.0 million in seller financing as part of the sale of its only Florida property, generating a minimum 9% return for unitholders.
The trust continues to actively market its two remaining wholly owned assets in Houston, Texas, comprising 485 apartment units.
Read next: Firm Capital files preliminary base shelf prospectus
Firm Capital’s board and senior management continue to review strategic options for the Trust. Ongoing discussions with third parties focus on determining the best path forward, including evaluating whether to: distribute excess income or asset sale proceeds, reinvest proceeds into new investments, return capital or issue special distributions, or repurchase trust units in the marketplace.
The Trust emphasized that it does not plan to disclose further developments on the strategic review unless required under applicable securities laws or deemed necessary.
Make sure to get all the latest news to your inbox on Canada’s mortgage and housing markets by signing up for our free daily newsletter here.
