Q4 2025 Timbercreek Financial Corp Earnings Call

February 26, 2026

First quarter earnings call at this time, all participants are in a listen only mode. Following the presentation, we will conduct a question and answer session.

Analyst.

Analysts are asked to raise their hand to register for a question. As a reminder, today's call is being recorded I would now like to turn the meeting over to Scott Roland. Please go ahead.

Good afternoon, everyone. Thanks for joining us to discuss the fourth quarter and full year 2025 results.

Fortunately Liberty Hamlin is delayed on a plane and is not currently available for the call.

So joining me today is Tracy Johnson, CFO, and Jeff Mctague head of our Canadian originations and global syndication.

I will begin today's call by reading Blair his prepared remarks.

Q4 marked a strong finish to the year from an investment activity standpoint, as we anticipated on our last earnings call.

We closed the year with strong fourth quarter originations of more than $330 million driving portfolio growth of 18% over Q3.

Net investment income was solid at $25 7 million supported by portfolio growth and offset by the lower interest rate environment.

Importantly, lower policy rates are now working in our favor reducing funding costs and supporting net interest margins as origination activity accelerates.

Distributable income was <unk> 18 per share in the quarter with a payout ratio of 95%.

And we continue to advance the remaining stage loans as we look to return this balance to historical levels in the near term.

Yeah.

As we move toward resolution on these stage loans, we've seen valuation adjustments in several cases, leading to a reported loss in book value contraction. This period. However, importantly, our distributable income has remained healthy as the underlying portfolio continues to generate strong recurring income to support our consistent monthly.

And.

Our disciplined cycle tested approach remains firmly intact, and we are well positioned to benefit from an improving market environment and the resulting uptick in transaction activity. Moreover, as these legacy assets are positioned for sale and Cabos redeployed. This will further align the portfolio with our growth strategy and add to earnings.

This concludes players opening remarks.

At this point I'll quickly cover the portfolio metrics and provide a brief update on key developments with the stage loans and Jeff will comment on the originations activity and lending environment.

Looking at the portfolio Kpis, most consistent with recent periods and historical performance at.

At quarter end, 84% of our investments were in cash flowing properties.

Multi residential real estate assets continued to comprise the largest portion of the portfolio a roughly 62%.

First mortgages represented 95% of the portfolio.

The weighted average loan to value for Q4 was 67, 4%, which is slightly below Q3.

We continue to be very comfortable in this range in this economic environment.

The weighted average interest rate was eight 1% in Q4 versus eight 3% in Q3 and eight 9% in Q4 last year.

The decrease reflects the bank of Canada's policy rate cuts, bringing the we're closer to our long term average of roughly 8%.

The portfolio, whereas also protected by the high percentage of floating rate loans with rate floors.

9% of portfolio at year end.

Roughly 97%, 97% of the loans with floors are currently at their floor rates.

I will highlight that we have begun to expand our margins as rates continue to trend downward in this phase of our business cycle or interest rates tend to decrease with reductions in prime. However, this is offset by opportunities to capture incremental credit spreads.

A reduction in the cost of our bank financing facility and higher fees driven by increased transaction volumes.

This dynamic is familiar to our team over 18 years in this market. We've consistently managed through both rising and falling rate environments ensure that the dividend remains well supported by distributable income.

In terms of the asset allocation by region, 96% of the capital is concentrated in Ontario, British Columbia, Quebec in Alberta, and focused on urban markets.

We continue to be active from an asset management perspective resolve $6 $5 million of stage III loans in December 2025, and over the past year. Most remaining files have made notable progress with zoning and other milestones close to completion.

Achievements will position the assets for sale and substantial progress as anticipated throughout 2026 overall.

Overall, we are focused on reducing stage loan balances to traditional levels by year end, and then redeploying that capital into new accretive loan investments.

At this point I'll ask Jeff to comment on the transaction activity in the portfolio.

Thanks Scott.

Clear that the real estate industry has navigated another year of transition, albeit marked by several encouraging developments.

Broader environment of monetary easing and supported a healthy volume of commercial real estate transactions.

With approximately 47 billion changing hands across Canada last year.

This momentum coupled with growing optimism for ongoing sector improvement sets the stage for a strong 2026.

The transaction volume is projected to reach nearly $56 billion by year end.

Against this backdrop as was previously highlighted.

New investments in the fourth quarter was strong.

We advanced nearly $334 million in 'twenty through 'twenty, three new net mortgage investments and advances.

Dominic targeting low LTV multifamily assets.

These were offset by total mortgage portfolio repayments of $135 million.

<unk> and a turnover ratio of 12%.

And our portfolio balance of $1 4 billion up $185 million from Q3 levels.

As another measure of the level of activity gross originations in Q4 were $425 million.

Looking ahead. The Q4 momentum has carried into 2026, resulting in healthy new business pipeline.

For timber Creek, the current interest rate environment aligns us well with our typical two year bridge financing offerings and.

And is helping drive borrower demand, while supporting requisite credit spreads.

In terms of asset types.

We are seeing particular strength in multi residential assets continue.

Continued improvement in retail the tightening conditions emerging in industrial markets.

Although the office market still faces hurdles returned to office mandates are changing the outlook.

The premium well situated properties poised to outperform their peers.

I will now pass the call over to Tracy to review the financial highlights Tracy. Thanks.

Thanks, Jeff and good afternoon, everyone. As you look at the main drivers of eight times. The average portfolio size has grown year over year offset by the way are returning to a more typical range. Following the bank of Canada rate cut.

For net investment income on financial assets measured at amortized cost was $25 7 million consistent with Q3 of 2025.

We reported distributable income is $15 million or <unk> 18 per share compared with $14 1 million or <unk> 17 per share in Q3.

The payout ratio on <unk> for the fourth quarter and full year within our targeted range.

And as Scott noted distributable income continues to provide solid coverage of our monthly dividend.

We reported a net loss of $1 1 million in Q4, driven by three specific items are related to the continued resolution of legacy loans and <unk>.

We recorded EPS of $8 $3 million in the quarter driven by updated market appraisals on a small number of remaining space alone.

As we have discussed previously these provisions reflect valuation adjustments and we continue to make progress on enhancing these toward resolution.

Second we recorded a net fair value loss of $4 5 million on net mortgage investments measured at fair value through profit and loss.

This reflects the lower than anticipated sales price on underlying collateral assets.

Third we completed the disposition of our land inventory asset, which included an operating Marina.

This resulted in a loss of $2 1 million relative to carrying value importantly, the associated operating losses incurred in this arena will not recur going forward.

Looking at quarterly EPS over the past three years with and without ECL, you'll see it's been quite stable as has EI.

Sure sure.

Over the medium term quarterly <unk> per share has been between 17 and 21, averaging 19 per share over this time period.

Looking quickly at the balance sheet.

The value of the net mortgage portfolio, excluding syndications with just under 124 billion at the end of the quarter, an increase of $150 million year over year.

We continue to have capacity to deploy capital against the strong pipeline as we move into 2026.

I will now turn the call back to Scott for closing comments.

Thanks Tracy.

As we look ahead to 2026, our outlook is increasingly constructive in Canadian commercial real estate market has begun to regain momentum supported by monetary easing and improving transaction volumes while.

While 2026 is not without its macro risks our team believes the conditions for a continued recovery in the real estate industry, our deeply rooted.

We are seeing this translate directly into a stronger opportunity set for timber Creek, our origination volumes remained strong and we expect this momentum to support continued portfolio growth as the year progresses.

Addition, we expect to substantially reduce the stage one balances to traditional levels by year end.

That in turn creates the opportunity to redeploy the capital into new accretive loan investments to drive distributable income.

Taken together, we believe the company is well positioned for the next phase of the real estate cycle, while continuing to deliver stable monthly income and attractive risk adjusted returns for shareholders.

That completes our prepared remarks and with that we will open the call to questions.

We will now be taking any analyst questions. If you have a question. Please click the <unk> button on the bottom of the screen.

First question comes from Zach back your line is open. Please go ahead.

Hey, good afternoon.

Is that correct.

Thanks for taking the questions short handed today.

There was strong growth in the mortgage portfolio in Q4.

You highlighted that the momentum is continuing into 2026. When you look at funding. These loans is there a specific ceiling for leverage that you're targeting on the overall portfolio.

Just want to ask when you say leverage being like the loan to value of the loans.

Okay.

Good morning, Tim live data as a percentage of the loan.

Okay.

So to make sure I hopefully I answered your question correctly.

Please feel free to ask again, if I don't.

Typically right, we're leveraged at around 50% for the 45% debt to equity right. So we're going to use sort of 45 ish.

Leverage.

Across the book.

So that would sort of continue on that in that manner. Zack so for US right as we look at the 226, we basically use a combination of our of our debt facility right or repayments.

To generate capacity for new loans.

And then the other thing we do is as our as our as our credit line near towards optimal capacity is that what we also do is we increased the level of syndications of loans.

So we will go out and use more of an AB structure. So.

So we will lay off sort of an a note and hold it tends to be accretive to the overall book.

The analogy I would use is kind of like a hotel right you want to increase the occupancy of your hotel as much as you can I know you want to drive drive rates.

So for US it's a question of making sure we have the book Nice in fall, which we were able to accomplish at year end <unk> seen a lot I'll, let Jeff comment as well, but we're seeing a lot of transaction activity, which is great which should help keep the book fall and then we use syndications that are leveraged strategy to help increase our equity return within the book to drive to drive our margin.

Does that answer your question Zach or we're trying to get at something else.

No that answers that I appreciate that.

And my last question here is regarding the impaired loans.

There are assets listed for sale or slated to be marketed in the near term can you comment on the bidding activity and specifically your willingness to accept the current market pricing.

Versus potentially holding assets longer.

Okay.

Yes.

Specific bidding activity is.

There are markets or assets that are in the market with.

Bids to come so I wouldn't necessarily comment on on activity, yet I think it's a little premature.

When it comes to the price.

<unk>.

We're hopeful obviously that we could trade up at the current price.

I think it makes sense to do that obviously, we will evaluate any bid that we got we felt it was.

If it doesn't make sense, where we thought would also be dilutive, we're not forced to make some of these decisions.

That said, we feel pretty good about where we think market pricing is going to be and what we are really kind of attracted to is our ability to see those resolutions of these files.

And then redeploy that capital into a more accretive situation right. So basically the stage one of the issues with the stage loans.

Is that they tend to be.

Lower where today.

Don't churn book, So we don't we don't get that men in those new loans. So we're not generating fees from those assets.

These are the things that kind of hamper us and our distributable income model.

For US right when we look at it when we look at an asset although the price may not be.

Pathic today's market.

That ability to take out as I take that capital and then redeploy it into a new loan and likely a higher we're earning a new fee. Those are those those are the reasons why we're excited about resolving these issues and taking that transfer price, while a negative potential.

Essentially upfront is accretive.

So the portfolio down the road.

And Thats one of these where folks are certainly a key part of that calculus that we evaluate when we're looking at bids.

Yes, I mean, I think it is very much asset asset specific decision.

As we look at.

Again dependent on the specific asset in some cases you have a.

Our current market value.

And again, whether it's perfectly optimal or not.

Part of the analysis, we consider as circumstances, where.

In addition to the fact that it's not urgent generating a yield for our investors. It may also be an asset that obligates additional capital investment beyond the existing exposure.

To carry further two to maintain to potentially drive incremental future value.

And it's a and there is no definitive confirmation that that incremental exposure will drive future positive or.

Accretive outcome such that.

A decision is Scott.

Made on that basis as well right.

Again, it depends on the asset specifically, how the decision is made but it is there is a fundamental detailed analysis we consider.

For this specific asset in question.

No.

Understood. Thanks, I'll turn it back.

Thanks Chuck.

Our next call comes from Graham Graham Your line is open. Please go ahead.

Great can you hear me.

Yes, good afternoon Graham great.

Our first question just on.

Loan growth just sort of understand it was a good quarter for activity strong loan growths.

Is your messaging that.

That could persist into Q1 should we see.

Further loan growth or just further turnover of the portfolio.

It's a bit of both so we are the pipeline is strong which we're very happy about.

We also have some decent repayment activity.

It's important for us the fuel to be able to do those loans and generate those fees.

We expect to be at sort of a near optimal level.

In Q1 and going into Q2.

Okay great.

I appreciate the disclosure you provided on page 21 of the MD&A just around the individual key loans within stage, two and stage III.

The retail Vancouver property, it seems to be the most sizable at $158 million.

And it's been in stage two for <unk>.

Almost two years now.

Two questions just why would the asset not be sitting in stage three because its been.

In stage two for so long and then how much of your current ACL as provision against that asset or how are you feeling about your loss exposure there.

Yes, I can I can jump in.

This one is obviously on our watch list its not technically a parcel of a couple of loans.

It's not technically and in default and we are monitoring it is currently continuing to perform but obviously.

A significant watch list diamonds for item track, that's why it's not in stage III versus the other stage loans, CRE loans, which are technically and up.

And in terms of overall provisioning.

On the asset I mean this year we took.

About.

$5 million.

<unk> position, which is really bringing us too.

I'm, just adding things up here slightly.

So we're at about $6 4 million there as a provision on the overall portfolio.

And a little more color I can provide to Graham is.

This is multiple projects actually and they are.

They are very well located Vancouver redevelopment sites.

A major component of it.

So we've been basically.

Part of explaining the two years like that which is obviously a long time to be in staged part of that has been ongoing efforts by the borrower with rezoning applications just to get the projects ready for sale.

But I think about.

$150 million.

The largest component of it is the primary site downtown Ah represents about 45% of that exposure.

Asset is actually going to go up for sale in Q1 this year.

So that's about half of that exposure. So we would expect and are very hopeful for resolution of that in later Q2 Q3.

There's a couple of other projects that are also produced similar timeline.

A little bit.

Later, it longer than that let's say about two other projects about call it 15% each without exposure.

We are ideally getting resolution out before the end of Q4 of 2026.

So it is sort of going to be a multi stage approach, but it's been sort of the length of time has been sort of the length of steady.

Rezoning processes, which do take a great deal of time.

But it's a key a key component to unlocking the value.

And then putting it for sale at an optimal position. So that's what we've been working through and Thats why that in there as long as it has been but we're feeling very optimistic that half of it is coming to market and we're working with the borrower.

To get other assets ready for sale this year as well.

Okay, Great I appreciate it.

The thorough.

Response to that my last one if I could just a weighted average interest rate.

Looking at 2025 overall, it's down 100 basis points year over year.

I guess, given the spreads that you're sort of seeing with your recent activity.

And either your outlook or the consensus outlook for for rates in 2026, what would you <unk>.

For further.

Weighted average interest rate compression.

Yes.

Question.

Answered a couple of different ways. So we're right as it is right now, but lets just assume a stable rate environment for a moment.

Because it's obviously part of that part of that math is a floating rate portfolio right. So if there was future rate cuts you would expect to see that we're starting to fall a bit.

So the other the other component for us as we have current floating rate loans that are on floors. So as those roll over.

And they get replaced with new loans.

You'll start to see a little pressure on where as well. So you might see a 10 20.

<unk> 30 basis point compression in where.

One of the big things that happens, though and this is a key component of this.

As.

And our business in the bridge business has a certain coupon rate that the borrower pays the borrower can afford in the coupon is that combination of the prime interest rate and then the credit spread that we put on the loan which is ultimately what drives our distributable income.

So one of things that we see as interest rates have been coming down we're starting to expand our margin and our credit spread of those loans.

As Prime comes down 2500 <unk>.

80 basis points, we're able to recapture 25 basis points plus an incremental margin.

Interest rates are really high it's hard to do that and actually credit spreads get tighter because the asset is going to support so.

So much of a coupon but.

But as interest rates have fallen we're sort of in that.

Goldilocks, but it is a nice rate of interest where.

Or is are happy to pay the coupon it makes sense for their business models. When we are more in that 7% to 8%.

9% range.

And as interest rates if they were to continue to fall, we are able to capture expanding margins and I can tell you sort of over the last six months or the last couple of rate cuts.

<unk> been expanding our margin across all of our all of our property and asset classes. So Jeff if you want to add anything to that.

Yes, yes for sure I think over the.

Over the last year that we've definitely seen in the 50% to 75% rate range.

Credit spread expansion.

Which is again to Scott's point I mean, our.

Our leverage underlying is also coming down in cost us as prime has fallen but.

We are able to capture incremental margin through this period of time, while still maintaining sort of.

The coupons <unk> sticky.

And it still allows us to compete.

Very favorably in the market and when transactions.

And then we'll see we'll see where interest rates go through the balance of this year.

But certainly there is an ability to recapture.

At least a portion of any future cuts.

Through credit spread expansion than you would have seen that in that sort of.

Covid period, when interest rates were so low.

Aware, obviously went down quite a bit, but we were still able to hit that sort of mid nineties payout target ratio.

And that's a combination as Jeff mentioned, the lower credit line cost for us, but also an expanded margin. So that we are able to maintain that equity yield that's necessary to do to protect the dividend.

It's a big part of the calculus and the model that we run.

As we as we look forward and look at the rates the rate environment that we're in.

Perfect. Thank you.

Thanks.

As a reminder, if you have any questions. Please use the rains and button at the button on the screen.

The next question comes from Steven Steven Your line is open. Please go ahead.

Yes.

Steven Your line should be open. Please go ahead.

Sorry can you hear me now.

Yes, David Good afternoon, good morning.

Most of it.

So just on the unimproved land and the improved land.

We are hearing through.

The banks and things of of projects being delayed so I can imagine that these are non income generating property sold you're relying on the developer.

To continue to pay the mortgage so I'm just wondering has there been more.

Easy question to what what's the protection.

Yes.

You get a comfort.

The developer has the cash to keep paying a mortgage if there is delays in the projects.

So assuming there is delays.

Okay.

I mean in general where and when we contemplate.

Land land loans, which is again, it's a very small.

<unk> of our overall portfolio I mean, they are fundamentally.

Much lower leverage positions.

Start right. So you are.

Given the non income producing reality of those assets, you're you're prepared to advance less dollars relative to the value of the.

Of the collateral security.

Facilities and again in general it's a typical analysis for us at any a loan we're looking at.

And certainly with.

With increased focus over the last few years relative to underlying sponsor strength.

Excess to liquidity.

And cash flow et cetera from other from other assets they own towards ensuring that they can support the interest positions on our loan but we also include structures interest reserves set capital aside.

You identify those.

Exposure amount you're comfortable with and then you reduce that amount by whatever you.

Set aside for specific interest obligations so.

Those are general structural elements that we would look to look at and consider when it comes to land positions.

Sure if that answers your question, yes, I think so I just.

Obviously, when youre not income generating.

Is it.

Has it been obviously youre doing your diligence hold time, but does not portfolio.

Extra diligence.

These these developers are solvent or continue to be solid.

Well I think listen and again, that's why it is a smaller component of our portfolio.

100% I think when we have land projects Youre looking at what is the strategy is are they being delayed is there is there.

<unk> got construction takeout.

That happening or not.

So in our business in the bridge business, right, where we have sort of a.

Sort of a constant relationship with our borrowers you know what I mean, like a sort of ongoing communication.

And to Jeff's point, we typically structure along with interest reserves. So as you get towards what would be the normal maturity event.

And let's say the borrower needs a renewal and extension.

Youre negotiating.

Replenishment is an interest reserve rate to take that period going forward.

And to your point, though like listen this is happening in land projects. If a <unk> doesn't have that liquidity right because I don't have the income they.

They didn't have the balance sheet to support it I mean, that's when you.

Yes.

When you.

Unfortunately, that's what you can get yourself into a workout loan and you have to you have to enforce or a couple of our plan with that borrower.

Fortunately for US again, it's not a huge part of our of our.

Of our reality.

And we've been dealing with as everyone knows we have a we have a fair amount of stage loans in our portfolio.

It hasn't really been growing right and for US most of it has been.

On resolutions.

I think that just speaks to the quality of things where we can.

Before that interest rate environment.

Went up in 2023 when these loans. These days loans are from that period before that when interest rates when when everyone's on the borrowers balance sheets were super strong interest rates are very low.

Those are some of the borrowers that got caught in the shock of the hiring straight environment. Those are unfortunately for us the other stage once we have.

Now, we're working through diligently with our borrowers or through enforcement.

Many of those positions.

We've made a lot of progress on that and that is what we're focused on and we feel good about our ability to resolve those in 'twenty six.

But I do think I think about.

Land right I mean.

There is no question. There is there is land loans out there today, especially in the trial and Vancouver market that I think are under pressure for sure and those headlines you've seen in other firms just in the real estate and use which is very factual.

And Thats a challenge in those markets, but for us we.

We haven't done a lot of historically, if youre doing land today.

Because it's not a reset valuation.

And you can evaluate again, you've been ongoing evaluate those borrowers balance sheets.

Yes, I mean, it's a great. It really is a good question it doesn't sort of get to the fundamental tenet of timber REIT financial.

Largely income producing oriented focus of our platform right.

Certainly as I think of it relative to some of our peers in the market would be less income producing and much more Atlantic construction focused.

For all.

But very questions you've raised that I mean I think.

While we have always historically been opportunistic and limited in scope in terms of where we step into the into that part of the market and it can provide.

Good augmentation enhancement of the portfolio and diversity et cetera, and to Scott's point.

And at this point in the current.

The current land reality.

It's not about a point in time to be looking at.

Good.

Unities with strong sponsors.

Very attractive risk adjusted return basis, but for US we are.

We're very happy that we arent.

Largely exposed to this.

On our legacy historical basis, and it remains so again, a smaller part of the overall strategy in general.

Okay.

Dr <unk>.

Maybe I want to follow on <unk> question in terms of growth.

Not from a loan perspective, but an income perspective.

So you've got $600 million of loans maturing this year.

And you've got these properties that are non income generating right now that are for sale and hopefully.

You come out with the cash and you can turn those into loans that are income generating.

Okay.

That's one portion of the growth, but I guess with the loans rolling off.

Is the goal to if a $10 million loan gets paid off now you.

Redeploy it maybe into a bigger loan using the credit line like is that how we should think about you are generating income growth and not just.

Loan growth I guess, but there is a portion of to maintain our growth right now.

You're going to have to continue to use a credit line.

That number I guess.

Yes.

Our use of the credit line, I'd say, it's consistent and and repaint.

Repayments create policy. Okay. So it is kind of a closed loop system.

We want repayments repayments.

Repayments for us generates an ability.

Go out and do a new loan.

<unk> put a new fee for us as well right.

So you want for us historically I'm going to say an easy number for us is about 50%.

Our loan book should churn every year.

We use the word churn.

Just sort of describe that repayment and then redeployment churn as a key part of our business. It allows that redeployment current risk level at current market rate.

And we are in a new fee. So it's an attractive thing to do how we structurally leverage that like using our bank line are using a syndication.

Those are both tools and they're both effective tools. We're very focused on what is what is our equity returning rate because that is ultimately what pays the pays the dividend.

So I think so.

Sort of getting to your question I think so if I got $10 million back.

I'm looking at I'm looking at my margin on that loan. So if I had a margin that was a little less absolutely no Geoff Mackay and his team and myself, we evaluate what's out there in the market and where do we think we can get our best risk adjusted returns and we might sit there and say something that I got a 250 credit spread.

And opportunistic part of the market in today's market cap.

Capture 300 over that's the way I can have an accretion right.

You are talking about to the D R.

The other thing for US is these days loans, which are absolutely sort of in a sort of a sub standard current income position as that money comes back we can absolutely deploy that at a higher yield than we're making today right. So it was a big part of it is opportunistic for us to get repayments. It allows us to redeploy but we typically thing.

<unk> is the best risk return at the time and try to drive incremental margin with those decisions.

It is a key part of what we do that's why we really want to get these days loans back because they don't those don't churn right, it's sort of like managing the portfolio with an arm tied behind your back so for US we are excited too.

Turning the page on the stage loans, and then be able to pivot these discussions towards growth.

And calls like today, when we have to take.

Impairments to sort of write off positions.

Which hurts book value of these arent phone calls for us.

We know it's not fun for our investors either.

Unfortunately, it was a part of that.

Environment by Covid environment, and the rapid rate increase, but we very much look forward to working very hard to resolve these issues and then move to a more of a growth narrative.

Alright, Thats really helpful. I appreciate that thanks.

No worries thank you.

There are no other questions at this time.

During the call back over to Scott for closing remarks.

Okay well. Thank you. Thank you everyone for joining us today, we look forward to speaking again, when we release, our Q1 2026 results as always please reach out to the team with any <unk>.

Questions.

From now disconnected.

Scott: resulting in a turnover ratio of 12% and a portfolio balance of CAD 1.24 billion, up CAD 185 million from Q3 levels. As another measure of the level of activity, gross originations in Q4 were CAD 425 million. Looking ahead, the Q4 momentum has carried into 2026, resulting in a healthy new business pipeline. For Timbercreek, the current interest rate environment aligns well with our typical two-year bridge financing offerings and is helping drive borrower demand while supporting requisite credit spreads. In terms of asset types, we are seeing particular strength in multi-residential assets, continued improvement in retail, and tightening conditions emerging in industrial markets. Although the office market still faces hurdles, return-to-office mandates are changing the outlook, with premium, well-situated properties poised to outperform their peers. I will now pass the call over to Tracy to review the financial highlights.

Geoff McTait: resulting in a turnover ratio of 12% and a portfolio balance of CAD 1.24 billion, up CAD 185 million from Q3 levels. As another measure of the level of activity, gross originations in Q4 were CAD 425 million. Looking ahead, the Q4 momentum has carried into 2026, resulting in a healthy new business pipeline. For Timbercreek, the current interest rate environment aligns well with our typical two-year bridge financing offerings and is helping drive borrower demand while supporting requisite credit spreads. In terms of asset types, we are seeing particular strength in multi-residential assets, continued improvement in retail, and tightening conditions emerging in industrial markets.

Geoff McTait: Although the office market still faces hurdles, return-to-office mandates are changing the outlook, with premium, well-situated properties poised to outperform their peers. I will now pass the call over to Tracy to review the financial highlights. Tracy?

Scott: Tracy?

Tracy: 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 WAIR returning to a more typical range following the Bank of Canada rate cut. Q4 net investment income on financial assets measured at amortized cost was CAD 25.7 million, consistent with Q3 of 2025. We reported distributable income of CAD 15 million or CAD 0.18 per share, compared with CAD 14.1 million or CAD 0.17 per share in Q3. The payout ratio on DI, both for Q4 and full year, fell within our targeted range. As Scott noted, distributable income continues to provide solid coverage of our monthly dividend. We reported a net loss of CAD 1.1 million in Q4, driven by three specific items, all related to the continued resolution of legacy loans and assets.

Tracy Johnston: 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 WAIR returning to a more typical range following the Bank of Canada rate cut. Q4 net investment income on financial assets measured at amortized cost was CAD 25.7 million, consistent with Q3 of 2025. We reported distributable income of CAD 15 million or CAD 0.18 per share, compared with CAD 14.1 million or CAD 0.17 per share in Q3. The payout ratio on DI, both for Q4 and full year, fell within our targeted range.

Tracy Johnston: As Scott noted, distributable income continues to provide solid coverage of our monthly dividend. We reported a net loss of CAD 1.1 million in Q4, driven by three specific items, all related to the continued resolution of legacy loans and assets. We recorded ECL of CAD 8.3 million in the quarter, driven by updated market appraisals on a small number of remaining staged loans. As we have discussed previously, these provisions reflect valuation adjustments, and we continue to make progress on advancing these toward resolution. Second, we recorded a net fair value loss of CAD 4.5 million on net mortgage investments measured at fair value through profit or loss.

Tracy: We recorded ECL of CAD 8.3 million in the quarter, driven by updated market appraisals on a small number of remaining staged loans. As we have discussed previously, these provisions reflect valuation adjustments, and we continue to make progress on advancing these toward resolution. Second, we recorded a net fair value loss of CAD 4.5 million on net mortgage investments measured at fair value through profit or loss. This reflects a lower-than-anticipated sales price on underlying collateral assets. Third, we completed the disposition of a land inventory asset, which included an operating marina. This resulted in a loss of CAD 2.1 million relative to carrying value. Importantly, the associated operating losses incurred in this marina will not recur going forward. Looking at quarterly EPS over the past 3 years with and without ECL, you will see it's been quite stable, as has DI per share.

Tracy Johnston: This reflects a lower-than-anticipated sales price on underlying collateral assets. Third, we completed the disposition of a land inventory asset, which included an operating marina. This resulted in a loss of CAD 2.1 million relative to carrying value. Importantly, the associated operating losses incurred in this marina will not recur going forward. Looking at quarterly EPS over the past 3 years with and without ECL, you will see it's been quite stable, as has DI per share.

Tracy: Over the medium term, quarterly DI per share has been between CAD 0.17 and CAD 0.21, averaging CAD 0.19 per share over this time period. Looking quickly at the balance sheet. The value of the net mortgage portfolio, excluding syndications, was just under CAD 1.24 billion at the end of the quarter, an increase of CAD 150 million year-over-year. We continue to have capacity to deploy capital against a strong pipeline as we move into 2026. I will now turn the call back to Scott for closing comments.

Tracy Johnston: Over the medium term, quarterly DI per share has been between CAD 0.17 and CAD 0.21, averaging CAD 0.19 per share over this time period. Looking quickly at the balance sheet. The value of the net mortgage portfolio, excluding syndications, was just under CAD 1.24 billion at the end of the quarter, an increase of CAD 150 million year-over-year. We continue to have capacity to deploy capital against a strong pipeline as we move into 2026. I will now turn the call back to Scott for closing comments.

Scott: Thanks, Tracy. As we look ahead to 2026, our outlook is increasingly constructive. The Canadian commercial real estate market has begun to regain momentum, supported by monetary easing and improving transaction volumes. While 2026 is not without its macro risks, our team believes the conditions for a continued recovery in the real estate industry are deeply rooted. We are seeing this translate directly into a stronger opportunity set for Timbercreek. Our origination volumes remain strong, we expect this momentum to support continued portfolio growth as the year progresses. In addition, we expect to substantially reduce the staged loan balances to traditional levels by year-end. That, in turn, creates the opportunity to redeploy the capital into new accretive loan investments to drive distributable income.

Scott Rowland: Thanks, Tracy. As we look ahead to 2026, our outlook is increasingly constructive. The Canadian commercial real estate market has begun to regain momentum, supported by monetary easing and improving transaction volumes. While 2026 is not without its macro risks, our team believes the conditions for a continued recovery in the real estate industry are deeply rooted. We are seeing this translate directly into a stronger opportunity set for Timbercreek. Our origination volumes remain strong, we expect this momentum to support continued portfolio growth as the year progresses. In addition, we expect to substantially reduce the staged loan balances to traditional levels by year-end. That, in turn, creates the opportunity to redeploy the capital into new accretive loan investments to drive distributable income.

Scott: Taken together, we believe the company is well-positioned for the next phase of the real estate cycle, while continuing to deliver stable monthly income and attractive risk-adjusted returns for shareholders. That completes our prepared remarks, and with that, we will open the call to questions.

Scott Rowland: Taken together, we believe the company is well-positioned for the next phase of the real estate cycle, while continuing to deliver stable monthly income and attractive risk-adjusted returns for shareholders. That completes our prepared remarks, and with that, we will open the call to questions.

Operator: We'll now be taking any analyst questions. If you have a question, please click the Raise Hand button on the bottom of the screen. Our first question comes from Zach. Zach, your line is open. Please go ahead.

Zachary Weisbrod: Hey, good afternoon.

Scott: Hey, Zach.

Scott Rowland: Hey, Zach.

Zachary Weisbrod: Thanks for taking the question short-handed today. There's strong growth in the mortgage portfolio in Q4, and you highlighted that the momentum is continuing into 2026. When you look at funding these loans, is there a specific ceiling for leverage that you're targeting on the overall portfolio?

Thanks for, uh, taking the question shorthanded. Today, um, there is strong growth in the mortgage portfolio in Q4, and you highlighted that the momentum is continuing into 2026. Uh, when you look at funding these loans, is there a specific ceiling for leverage, um, that you're targeting on the overall portfolio?

Scott: Do you have to answer? When you say leverage, you mean like the loan-to-value of the loans? Or do you mean like-

Scott Rowland: Do you have to answer? When you say leverage, you mean like the loan-to-value of the loans? Or do you mean like-

You have to answer, and when you say leverage, you mean like the loan-to-value of the loan?

Zachary Weisbrod: In terms of, debt as a percentage of the loan.

Or in terms of data as a percentage of the loan.

Scott: Just to make sure I hopefully, I'm gonna answer your question correctly. Please feel free to ask again if I don't. Typically, we are leveraged at around 50%, 40% to 45% debt-to-equity. We're going to use sort of CAD 0.45-ish of leverage across the book. That would sort of continue in that manner, Zach. For us, as we look into 2026, we basically use a combination of our debt facility, repayments to generate capacity for new loans. The other thing we do is as our sort of credit line gets nearer to its optimal capacity, what we also do is we increase the level of syndications of loans.

Scott Rowland: Just to make sure I hopefully, I'm gonna answer your question correctly. Please feel free to ask again if I don't. Typically, we are leveraged at around 50%, 40% to 45% debt-to-equity. We're going to use sort of CAD 0.45-ish of leverage across the book. That would sort of continue in that manner, Zach. For us, as we look into 2026, we basically use a combination of our debt facility, repayments to generate capacity for new loans. The other thing we do is as our sort of credit line gets nearer to its optimal capacity, what we also do is we increase the level of syndications of loans.

Um,

so just to make sure I hopefully I don't answer your question correctly. Um, please feel free to ask again if I don't, um,

Typically, right, we we are leveraged at around 50% 40 to 45% that's Equity, right? So we're going to use sort of 45 cents ish of of Leverage um, across the book. Um, so that was sort of continue in that in that manner, Zack. So for us, right, as we look at the 2026, we basically use a combination of our of our debt facility, right? Or repayments to to generate capacity for for new loans.

Scott: We will go out and use more of an A/B structure. We'll lay off sort of an A note and hold a B note that tends to be accretive to the overall book. The analogy I would use is kind of like a hotel, right? Like you want to increase the occupancy of your hotel as much as you can, and then you want to drive rate, right? For us, it's a question of making sure we have the book nice and full, which we were able to accomplish at year-end. Deficit and a lot of that's common as well. We're seeing a lot of transaction activity, which is great, which should help keep the book full.

Scott Rowland: We will go out and use more of an A/B structure. We'll lay off sort of an A note and hold a B note that tends to be accretive to the overall book. The analogy I would use is kind of like a hotel, right? Like you want to increase the occupancy of your hotel as much as you can, and then you want to drive rate, right? For us, it's a question of making sure we have the book nice and full, which we were able to accomplish at year-end. Deficit and a lot of that's common as well. We're seeing a lot of transaction activity, which is great, which should help keep the book full.

And then the other thing we do is our as our, as our as our sort of credit line gets nearer to its optimal capacity, is that what we also do is we we increase the level of syndications of loans.

So, we will go out and use more of an AB structure. And so, we’ll lay off sort of an A note and hold a B note. That tends to be accretive to the overall book.

The analogy I would use is kind of like a hotel, right? Like, you want to increase the occupancy of your hotel as much as you can, and then you want to drive rate, right? So for us, it's a question of making sure we have the book nice and full, which we were able to accomplish at year-end.

Scott: Then we use syndications in our, in our leverage strategy to help increase that equity return within the book to drive, to drive our margins. Does that answer your question, Zach? Were you trying to get at something else?

Scott Rowland: Then we use syndications in our, in our leverage strategy to help increase that equity return within the book to drive, to drive our margins. Does that answer your question, Zach? Were you trying to get at something else?

Depositing a lot all that stuff, comment as well, but we're we're seeing a lot of transaction activity, which is great, which will help keep the book full. And then we use syndications, and our, and our leverage strategy to help increase that Equity return within the book to drive to drive our margins.

Zachary Weisbrod: No, that answers it. Appreciate that. My last question here is regarding the impaired loans. There are assets listed for sale or slated to be marketed in the near term. Can you comment on the bidding activity and specifically your willingness to accept the current market pricing versus potentially holding the assets for longer?

Does that answer your question? Zach, are you trying to get at something else?

No, that answers that. Appreciate that.

And, uh, my last question here is regarding the impaired loans.

Um, their assets listed for sale or slated to be marketed in the near term. Can you comment on the bidding activity and specifically your willingness to accept the current market pricing, uh, versus potentially holding the assets for longer?

Scott: Yeah, when specific bidding activity is, like, there are assets that are in the market with, you know, bids to come, I wouldn't necessarily comment on activity yet. I think it's a little premature. When it comes to the price, you know, we're hopeful, obviously, that we can trade at the current price. I think it makes sense to do that. Like, obviously, we will evaluate any bid that we get. We felt it was, you know, if it doesn't make sense or we felt it was ultimately dilutive, we're not forced to make some of these decisions.

Scott Rowland: Yeah, when specific bidding activity is, like, there are assets that are in the market with, you know, bids to come, I wouldn't necessarily comment on activity yet. I think it's a little premature. When it comes to the price, you know, we're hopeful, obviously, that we can trade at the current price. I think it makes sense to do that. Like, obviously, we will evaluate any bid that we get. We felt it was, you know, if it doesn't make sense or we felt it was ultimately dilutive, we're not forced to make some of these decisions.

Yeah, it wouldn't specific fitting activity is like, there are Mark, there are assets that are in the market with, you know, bids to come. So I wouldn't necessarily comment on on activity yet. I think it's a little premature.

When it comes to the price. Um,

You know, we're hopeful that we could trade at the at the current price. Um, I think it makes sense to do that like we obviously we will evaluate any bid that we get, we felt it was, you know um

Scott: That said, we feel pretty good about where we think market pricing is going to be, and what we are really kind of attracted to is that ability to see those resolutions of these files, and then redeploy that capital into a more accretive situation, right? Basically, one of the issues with the staged loans is that they tend to be at a lower WAIR today. They don't turn books. We don't get and those new loans, so we're not generating fees from those assets. These are the things that kind of hamper us in our distributable income model.

Scott Rowland: That said, we feel pretty good about where we think market pricing is going to be, and what we are really kind of attracted to is that ability to see those resolutions of these files, and then redeploy that capital into a more accretive situation, right? Basically, one of the issues with the staged loans is that they tend to be at a lower WAIR today. They don't turn books. We don't get and those new loans, so we're not generating fees from those assets. These are the things that kind of hamper us in our distributable income model.

If it doesn't make sense where we sell those all to be diluted, we were not forced to make some of these decisions.

That said, we feel pretty good about where we think market pricing is going to be, and what we are really kind of attracted to is that ability to see those resolutions of these files.

Um, and then redeploy that Capital into a more creative situation, right? So basically the the the stage that 1 of the issues with the stage loans,

Is that they tend to be at a lower where today.

Scott: For us, right, when we look at an asset, although the price may not be, you know, fantastic in today's market, that ability to take that asset, take that capital, and then redeploy it into a new loan at likely a higher WAIR, earning a new fee. Those are the reasons why we're excited about, you know, resolving these issues and taking that transfer price, while, you know, a negative potentially upfront, is accretive to the portfolio down the road. That, and that's one of the things we're focused on, and certainly a key part of that calculus that we evaluate when we're looking at bids.

Scott Rowland: For us, right, when we look at an asset, although the price may not be, you know, fantastic in today's market, that ability to take that asset, take that capital, and then redeploy it into a new loan at likely a higher WAIR, earning a new fee. Those are the reasons why we're excited about, you know, resolving these issues and taking that transfer price, while, you know, a negative potentially upfront, is accretive to the portfolio down the road. That, and that's one of the things we're focused on, and certainly a key part of that calculus that we evaluate when we're looking at bids.

They don't turn their books, so we don't get that comment and those new loans. So we're not generating fees from those assets, and these are the things that kind of hamper us in our distributable income model.

Geoff McTait: Yeah, I mean, I think it is very much asset-specific decisioning. As we look at, you know, again, dependent on the specific asset, in some cases, you have a current market value. Again, if whether it's perfectly optimal or not, part of the analysis we consider is circumstances where, you know, in addition to the fact that it's not earning, generating a yield for our investors, it may also be an asset that obligates additional capital investment beyond the existing exposure, to carry further, to maintain, to potentially drive incremental future value. There's no definitive confirmation that incremental exposure will derive a future positive or accretive outcome, such that, you know, decisions get made on that basis as well, right?

So for us, right? When we look at when we look at an asset, although the price may not be, you know, and passed it, today's market that ability to take that asset, take that capital, and then redeploy it into a new loan, and likely a higher wear, earning a new fee. Those are those, those are the reasons why we're excited about, you know, resolving these issues and and taking that transfer price. While, you know, a negative potentially upfront is a creative, uh, to the portfolio down the road. Um, and that and that's 1 of the things we're focused and certainly a key part of that calculus that we, we evaluate when we're looking at bids.

Yeah, I mean, I think it is very much asset-specific decisioning. Um, and as we look at, uh,

You know, again, dependent on the specific asset, in some cases, you have a—

Part of the analysis we consider is circumstances where you know, in addition to the fact that it's not generating a yield for our investors, it may also be an asset that obligates additional capital investment beyond the existing exposure to carry further, to maintain, to potentially drive incremental future value.

Geoff McTait: It's, again, it depends on the asset, specifically, how the decisioning is made, but there's a fundamental detailed analysis we consider for the specific asset in question.

Scott: Yeah.

Scott Rowland: Yeah.

And, and it's a, uh, and there's no, no, no definitive confirmation that that incremental exposure will drive a future positive or, uh, creative outcome. Such that, um, you know, decisions get, uh, get, get made on that basis as well, right? It's, uh, again, it depends on the asset, specifically, how the decisioning is made, but it is, there's a fundamental detailed analysis we consider, um, for the specific asset in question.

Yeah.

Zachary Weisbrod: Understood. Thanks. I'll turn it back.

Scott: Thanks, Zach.

Scott Rowland: Thanks, Zach.

Understood, thanks. So I'll turn it back.

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

Exactly.

Great. Our next call comes from Graham. Graham. Your line is open. Please go ahead.

[Analyst] (Unknown): Great. Can you hear me?

[Analyst]: Great. Can you hear me?

Scott: Yeah. Good afternoon, Graham.

Scott Rowland: Yeah. Good afternoon, Graham.

Great, can you hear me?

[Analyst] (Unknown): Great. First question, just on loan growth. Just to sort of understand, it was a good quarter for activity, strong loan growth. Is your messaging that that could persist into Q1? Should we see further loan growth or just further turnover of the portfolio?

[Analyst]: Great. First question, just on loan growth. Just to sort of understand, it was a good quarter for activity, strong loan growth. Is your messaging that that could persist into Q1? Should we see further loan growth or just further turnover of the portfolio?

Yeah, good afternoon, Graham, great. Um, first question just on

Uh, loan growth. Just, sort of, understand it was a good quarter for activity—strong loan growth.

Is your messaging that, um, that could persist into Q1? Should we see?

Further loan growth, or just further turnover of the portfolio.

Scott: It's a bit of both. We are. Listen, the pipeline is strong, which we're very happy about. We also have some decent repayment activity, which, you know, is important for us, you know, fuel to be able to do those. We expect to be at sort of a near optimal level in Q1 and going into Q2.

Scott Rowland: It's a bit of both. We are. Listen, the pipeline is strong, which we're very happy about. We also have some decent repayment activity, which, you know, is important for us, you know, fuel to be able to do those. We expect to be at sort of a near optimal level in Q1 and going into Q2.

It's a bit of both, so we are listening. The pipeline is strong, which we're very happy about. Um, we also have some decent repayment activity,

Um, which, which, you know, it's important for us that, you know, fuel to be able to, to do the, um,

We expect to be at sort of a near-optimal level, um, in Q1 and going into Q2.

[Analyst] (Unknown): Okay, great. Appreciate the disclosure you provided on page 21 of the MD&A, around the individual or the key loans within Stage 2 and Stage 3. The retail Vancouver property, it seems to be the most sizable at CAD 158 million, and it's been in Stage 2 for almost 2 years now. Two questions. Why would the asset not be sitting in Stage 3, because it's been in Stage 2 for so long? Then how much of your current ACL is provisioned against that asset, or how are you feeling about your loss exposure there?

[Analyst]: Okay, great. Appreciate the disclosure you provided on page 21 of the MD&A, around the individual or the key loans within Stage 2 and Stage 3. The retail Vancouver property, it seems to be the most sizable at CAD 158 million, and it's been in Stage 2 for almost 2 years now. Two questions. Why would the asset not be sitting in Stage 3, because it's been in Stage 2 for so long? Then how much of your current ACL is provisioned against that asset, or how are you feeling about your loss exposure there?

Okay, great.

Um, appreciate the disclosure you provided on page 21 of the MD&A, just around the, the individual or the key loans within Stage 2 and Stage 3.

Um, the retail Vancouver property—it seems to be the most sizable at $158 million.

um, and it's been in stage 2 for

Almost two years now. I have two questions. Just, why would the asset not be sitting in Stage 3 because it's been—

In stage 2 for so long. And then, how much of your current ACL is provisioned against that asset, or how are you feeling about your loss exposure there?

Tracy: Yeah, I can jump in. You know, this loan is obviously on our watch list. It's not technically sorry, it's a parcel of a couple of loans, but it's not technically in default, we are monitoring it. It is currently continuing to perform, but obviously, a significant watch list item for us. That's why it's not in Stage 3 versus the other staged loans, Stage 3 loans, which are technically in default. In terms of overall provisioning on the asset, I mean, this year we took about CAD 5 million on that position, which is really bringing us to... I'm just adding things up here slightly. We're at about CAD 6.4 million there as a provision on the overall portfolio.

Tracy Johnston: Yeah, I can jump in. You know, this loan is obviously on our watch list. It's not technically sorry, it's a parcel of a couple of loans, but it's not technically in default, we are monitoring it. It is currently continuing to perform, but obviously, a significant watch list item for us. That's why it's not in Stage 3 versus the other staged loans, Stage 3 loans, which are technically in default. In terms of overall provisioning on the asset, I mean, this year we took about CAD 5 million on that position, which is really bringing us to... I'm just adding things up here slightly. We're at about CAD 6.4 million there as a provision on the overall portfolio.

Yeah, I can— I can jump in, um,

You know, this this loan is obviously on our our watch list, it's not technically, sorry. It's a, it's a parcel of a couple of loans but it's not technically in in default. So we are monitoring it. It is currently continuing to to perform, but obviously, um, a significant watch list items for item press. So that's why it's not in stage 3 versus the other stage loans, stage 3 loans, which are technically in in default.

Um, in terms of, of overall provisioning, um, on, on the asset.

I mean, this year we took about, um, $5 million on that position, which is really bringing us to, um,

Scott: Yeah. A little more color I can provide too, Graham, is, this is multiple projects actually, and they're very well-located Vancouver redevelopment sites. A major component of it. We've been basically, and why sorry to explain the 2 years, like, which is obviously a long time to be in stage. Part of that has been ongoing efforts by the borrower with rezoning applications, you know, just to get the projects ready for sale. If I think about that, you know, CAD 150 million, the largest component of it is a primary site downtown that represents about 45% of that exposure. That asset is actually going to go up for sale in Q1 this year. That's about half of that exposure.

Scott Rowland: Yeah. A little more color I can provide too, Graham, is, this is multiple projects actually, and they're very well-located Vancouver redevelopment sites. A major component of it. We've been basically, and why sorry to explain the 2 years, like, which is obviously a long time to be in stage. Part of that has been ongoing efforts by the borrower with rezoning applications, you know, just to get the projects ready for sale. If I think about that, you know, CAD 150 million, the largest component of it is a primary site downtown that represents about 45% of that exposure. That asset is actually going to go up for sale in Q1 this year. That's about half of that exposure.

I'm just adding things up here slightly. Um, so we're at about $6.4 million there as a provision on the overall portfolio.

And a little more color. I can provide 2 grams, um,

This is multiple projects, actually, and they are.

They're very well-located Vancouver redevelopment sites.

So, a major component of it—um, so we've been, basically... And why? So, we started explaining the two years, like, which is a long time to be in staged. Part of that has been ongoing efforts by the borrower with rezoning applications, you know, just to get the projects ready for sale.

Um, but I think about that, you know, 150 million the the the largest component of it is a is a is a primary site downtown that represents about 45% of that exposure.

Scott: We would expect and are very hopeful for resolution of that, you know, in later Q2, Q3. There's a couple other projects that are also, you know, working through similar timelines, a little bit longer than that. I'd say about, there's about two other projects, about probably 15% each of that exposure. You know, we're ideally getting resolution at before the end of Q4 of 2026. It is, it's sort of going to be a multi-stage approach, but it's been sort of the length of time, it's been sort of the length of city rezoning processes, which do take a great deal of time. It's a key component to unlocking the value and then putting it for sale in an optimal position.

Scott Rowland: We would expect and are very hopeful for resolution of that, you know, in later Q2, Q3. There's a couple other projects that are also, you know, working through similar timelines, a little bit longer than that. I'd say about, there's about two other projects, about probably 15% each of that exposure. You know, we're ideally getting resolution at before the end of Q4 of 2026. It is, it's sort of going to be a multi-stage approach, but it's been sort of the length of time, it's been sort of the length of city rezoning processes, which do take a great deal of time. It's a key component to unlocking the value and then putting it for sale in an optimal position.

That asset is actually going to go up for sale in Q1, uh, this year. Um, so that's about, that's about half of that exposure. So we would expect and are very hopeful for resolution of that, you know, in later Q2, Q3.

Um, there are a couple of other projects that are also, you know, working through similar timelines—a little bit later, longer than that. And I'd say about this, about two other projects are about, call it, 15% each without exposure. Uh, you know, we're ideally getting resolution on that before the end of Q4 of 2026.

Scott: That's what we've been working through, and that's why that's been there as long as it has been. We're feeling very optimistic that, you know, half of it is coming to market, and we're working with the borrower to get other assets ready for sale this year as well.

Scott Rowland: That's what we've been working through, and that's why that's been there as long as it has been. We're feeling very optimistic that, you know, half of it is coming to market, and we're working with the borrower to get other assets ready for sale this year as well.

[Analyst] (Unknown): Okay, great. Appreciate the thorough response to that. My last one, if I could, just the weighted average interest rate. Looking at 2025 overall, it's down 100 basis points year-over-year. I guess, given the spreads that you're sort of seeing with your recent activity, and either your outlook or the consensus outlook for rates in 2026, what would you expect for further weighted average interest rate compression?

[Analyst]: Okay, great. Appreciate the thorough response to that. My last one, if I could, just the weighted average interest rate. Looking at 2025 overall, it's down 100 basis points year-over-year. I guess, given the spreads that you're sort of seeing with your recent activity, and either your outlook or the consensus outlook for rates in 2026, what would you expect for further weighted average interest rate compression?

Uh but it's a key, a key component uh to unlocking the value and and then putting it for sale at an optimal position. So that that's what we've been working through and that's why that's been there as long as it has been. But we are we're feeling very optimistic that, you know, half of it is coming to Market. And we're we're working with the borrower um to get other assets ready for sale this year as well.

Okay, great. Appreciate the, uh,

The thorough, uh, uh, response to that, uh, my last one—if I could just—the weighted average interest rate, um, looking at 2025 overall, it's down 100 basis points year-over-year.

In the spreads that you're sort of seeing with your recent activity, and either your outlook or the consensus outlook for rates in 2026, what would you expect for further, um,

uh,

Scott: Yeah. Yeah, good question. I'll answer it a couple of different ways. The where, right, as it is right now, let's just assume a stable rate environment for a moment, because that's obviously part of that math. Like, it's a floating rate portfolio, right? If there was future rate cuts, you would expect to see that where start to fall a bit. That said, the other component for us is we have current floating rate loans that are on floors. As those roll over and they get replaced with new loans, you start to see a little pressure on where as well. You know, you might see a 10, 20, 30 basis point compression in where.

Scott Rowland: Yeah. Yeah, good question. I'll answer it a couple of different ways. The where, right, as it is right now, let's just assume a stable rate environment for a moment, because that's obviously part of that math. Like, it's a floating rate portfolio, right? If there was future rate cuts, you would expect to see that where start to fall a bit. That said, the other component for us is we have current floating rate loans that are on floors. As those roll over and they get replaced with new loans, you start to see a little pressure on where as well. You know, you might see a 10, 20, 30 basis point compression in where.

Weighted average interest rate compression? Yeah.

Yeah, good question. Um,

I'll answer it a couple different ways so the the where right as it is right now let's just let's just assume a stable rate environment for a moment um because that's obviously part of that part of that math. Like what is a floating rate portfolio? Right. So, if there was future rate Cuts, you would expect to see uh that where I start to follow a bit.

Scott: One of the big things that happens, though, and this is a key component of this, is in our business, in the bridge business, there's a certain coupon, right, that the borrower pays, that the borrower can afford. The coupon is that combination of the prime interest rate and then the credit spread that we put on the loan, right? Which is ultimately actually what drives our distributable income. One of the things that we see as interest rates have been coming down, we're starting to expand our margin and our credit spread of those loans. If, you know, as prime comes down 25, 50 basis points, we're able to recapture 25 basis points plus an incremental margin.

Scott Rowland: One of the big things that happens, though, and this is a key component of this, is in our business, in the bridge business, there's a certain coupon, right, that the borrower pays, that the borrower can afford. The coupon is that combination of the prime interest rate and then the credit spread that we put on the loan, right? Which is ultimately actually what drives our distributable income. One of the things that we see as interest rates have been coming down, we're starting to expand our margin and our credit spread of those loans. If, you know, as prime comes down 25, 50 basis points, we're able to recapture 25 basis points plus an incremental margin.

Um, I said the other the other component for us is we have current floating rate loans that are on floors. So as those roll over, uh and they get replaced with new loans, um you start to see, uh, a little pressure on where as well. So, you know, you might see a 10, 20, 30 basis point compression and where

One of the big things that happens, though—and this is a key component of this.

Is.

In our business in this in the bridge business as a certain coupon, right? That the forward pays of the that the borrower can afford and the coupon is that combination of the of the prime interest rate and then the credit spread that we put on the loan, right? Which is ultimately actually what drives our distributable income.

So, one of the things that we see as interest rates have been coming down, is that we're starting to expand our margin on our credit spread of those loans.

Scott: When interest rates are really high, it's hard to do that, and actually, credit spreads get tighter because the assets can only support, you know, so much of a coupon. As interest rates have fallen, we're sort of in that, I won't call it Goldilocks, but it is, it is a, it is a, it's a nice rate of interest where borrowers are happy to pay the coupon. It makes sense for their business models when we're more in that 7%, 8%, 9% range. As interest rates, if they were to continue to fall, we're able to capture expanding margins. I can tell you, sort of over the last six months or those last couple rate cuts, we have been expanding our margin across all of our all of our property and asset classes.

Scott Rowland: When interest rates are really high, it's hard to do that, and actually, credit spreads get tighter because the assets can only support, you know, so much of a coupon. As interest rates have fallen, we're sort of in that, I won't call it Goldilocks, but it is, it is a, it is a, it's a nice rate of interest where borrowers are happy to pay the coupon. It makes sense for their business models when we're more in that 7%, 8%, 9% range. As interest rates, if they were to continue to fall, we're able to capture expanding margins. I can tell you, sort of over the last six months or those last couple rate cuts, we have been expanding our margin across all of our all of our property and asset classes.

So, if you know, as Prime comes down 2,550 basis points, we're able to recapture 25 basis points plus in incremental margin.

When interest rates are really high, it's hard to do that. And actually, credit spreads get tighter because the assets can only support, you know, so much of a coupon.

But as interest rates have fallen, we're sort of in that.

Scott: Jeff, if you want to add anything to that?

Scott Rowland: Jeff, if you want to add anything to that?

Geoff McTait: Yeah. Like, yeah, for sure. I think, over the last year, we've definitely seen in the 50 to 75 bit range of credit spread expansion. Which is, you know, again, to Scott's point, I mean, and our leverage underlying is also coming down in cost as prime has fallen. We are able to capture incremental margin through this period of time while still maintaining sort of that, the coupon's a little sticky. And it still allows us to compete very favorably in the market and win transactions. Again, we'll see where interest rates go through to the balance of this year.

We'll call it Goldilocks. But it is. It is a, it is a it is a nice rate of interest where, um, borrowers are happy to pay the coupon. It makes sense for their business models. When we're more in that 7 8% 9% range. Um and as interest rates, if they were to continue to fall, we're able to capture expanding margins. And I can tell you sort of over the last 6 months over those last couple rate Cuts, we have been expanding our margin across all of our, uh, all of our property, an asset classes with Jeff if you want to add anything to that.

Yeah, like I, yeah, for sure. I think, uh, over the over the last year that we've definitely seen in the 50 to 75 bit rate, range of of uh, credit spread expansion.

Um which is you know again to Scott's point I mean again our our our, our leverage underlying is also coming down in cost as as Prime has fallen. But we are able to capture incremental margin uh through this period of time while still maintaining you know sort of that the coupons little sticky.

Geoff McTait: Certainly there is an ability to recapture, you know, at least a portion of any future cuts through credit spread expansion.

Scott: You would have seen that in that sort of, you know, that COVID period when interest rates were so low. Our WAIR obviously went down quite a bit, but we were still able to hit that sort of mid-90s payout target ratio. That's a combination, as Jeff mentioned, of the lower credit line cost for us, but also an expanded margin so that we were able to maintain that equity yield that's necessary to protect the dividend. It is a big part of the calculus and the model that we run as we look forward and look at the rates, the rate environment that we're in.

Scott Rowland: You would have seen that in that sort of, you know, that COVID period when interest rates were so low. Our WAIR obviously went down quite a bit, but we were still able to hit that sort of mid-90s payout target ratio. That's a combination, as Jeff mentioned, of the lower credit line cost for us, but also an expanded margin so that we were able to maintain that equity yield that's necessary to protect the dividend. It is a big part of the calculus and the model that we run as we look forward and look at the rates, the rate environment that we're in.

Uh, and then, and it's still allows us to compete. Uh, very favorably in the market and, and, and when transactions, and again, we'll see, we'll see where interest rates go through to the balance of this year. Um, but certainly, there is an ability to to recapture, uh, you know, at least a portion of, uh, any future cuts through through credit through credit expansion. And you would have seen that in that sort of, uh, you know, that Co period when just rates were so low. Um, are aware obviously went down quite a bit.

We were still able to hit that sort of mid-90s payout target ratio.

And that's a that combination is Jeff mentioned that the lower credit line cost for us. But also, an expanded margin so that we were able to maintain that Equity yield that's necessary to, to, uh, protected them. And it's a big part of the calculus and the model that we run. Um, as we as we look forward and look at the rates the rate environment that we're in,

Zachary Weisbrod: Perfect. Thank you.

Perfect, thank you.

Geoff McTait: Thanks.

Operator: As a reminder, if you have any questions, please use the Raise Hand button at the bottom of the screen. The next question comes from Stephen. Stephen, your line should be open. Please go ahead.

Thanks.

Is there a reminder? If you have any questions, please use the 'raise hand' button at the bottom of the screen. The next question comes from Steven. Steven, your line is open, please go ahead.

Even your line should be open. Please go ahead.

Stephen Boland: Sorry, can you hear me now?

Scott: Yeah. Hey, Stephen. Afternoon.

Scott Rowland: Yeah. Hey, Stephen. Afternoon.

Sorry, can you hear me now?

Stephen Boland: What is up? Sorry about most of it. Just on the unimproved land and the improved land, you know, we're hearing through, you know, the banks and things about projects being delayed. I can imagine that these are not income-generating properties, you're relying on the developer to continue to pay the mortgage. I'm just wondering, I guess the easy question, what's the protection, you know, that you get comfort that, you know, the developer has the cash to keep paying the mortgage, if there is delays in the projects? That's assuming there is delays.

Yeah. Hey, Stephen. Good afternoon, sorry about that.

Um, so just on the unimproved land and the improved land, uh, you know, we're hearing through, you know, the banks and and things of our projects being delayed. So I can imagine that these are not income generating property, so you're relying on the developer, um, to to continue to pay them more mortgage. So, I'm just wondering, is there been more? Like, what I guess the easy question. What, what's the protection? Um, you know, that you get comfort that, you know, the developer has the cash to keep paying the mortgage if there is delays in the projects if and that's assuming there is delays.

Geoff McTait: I mean, in general, when we contemplate land loans, which is, you know, again, it's a very small component of our overall portfolio. I mean, they are fundamentally, you know, much lower leverage positions to start, right? You're given the non-income producing reality of those assets, you're prepared to advance, you know, less dollars relative to the value of the collateral security.

I mean, it's in— in general, where and when we contemplate,

Uh, land land loans, which is, you know—again, it's a very small.

Component of our overall portfolio. I mean, they, they are fundamentally.

Geoff McTait: Facilities, and again, in general, a typical analysis for us in any loan we're looking at. Certainly, you know, with increased focus over the last few years relative to, you know, underlying sponsor strength, access to liquidity, and cash flow, et cetera, from other assets they own towards ensuring that, you know, they can support the interest positions on our loan. We also include structures, interest reserves, and set capital aside. You identify an exposure amount you're comfortable with, and then you know, you reduce that amount by whatever you set aside for specific interest obligations. You know, those are general structural elements that we would look at and consider when it comes to land positions, right? I'm sure if that answers your question.

You know, much lower leverage positions to start, right? So you're uh, given the 9 income producing reality of those assets. You're, you're you're prepared to advance, you know, less dollars, relative to the value of the of the, of the collateral security.

Uh, facilities. And again, in general, a typical analysis for us in any loan, we're looking at—um, and certainly, you know, with increased focus over the last few years relative to, you know, underlying sponsor strength.

Access to liquidity. Uh,

Um, and and cash flow Etc, from other, from other assets, they own towards ensuring that, you know, they can support the interests that positions on our loan. We also include uh, structures interest reserves set Capital aside and you you you identify a an exposure amount, your comfortable with and then you, you know, you reduce that amount by whatever you um set aside for specific interest obligations. So you know that those are General structural uh elements that we would look to look at and consider when it comes to land positions, right? Um,

Stephen Boland: Yeah, I think so. I just, I mean, obviously, you know, when you're not income, you know, generating, I mean, obviously, you're doing your diligence all the time, but is that portfolio getting extra diligence that, you know, these developers are solvent or continue to be solvent?

Sure if that answers your question. Yeah, I think so. I just, I mean, obviously, you know, when you're you're not income, you know, generating,

Scott: Well, I think, listen, again, I mean, to Jeff's point, it is a smaller component of our portfolio, but 100% it's. I think when we have land projects, you're looking at, you know, what is the strategy? Are they being delayed? You know, is there that to sort of take that construction take out, is that happening or not? In our business, in the bridge business, right, we have sort of a constant relationship with our borrowers, you know what I mean? Like, this sort of ongoing communication. To Jeff's point, we typically structure a land loan with interest reserves.

Scott Rowland: Well, I think, listen, again, I mean, to Jeff's point, it is a smaller component of our portfolio, but 100% it's. I think when we have land projects, you're looking at, you know, what is the strategy? Are they being delayed? You know, is there that to sort of take that construction take out, is that happening or not? In our business, in the bridge business, right, we have sort of a constant relationship with our borrowers, you know what I mean? Like, this sort of ongoing communication. To Jeff's point, we typically structure a land loan with interest reserves.

I mean is it has there been obviously you're doing your diligence all the time but is that portfolio get getting extra diligence that you know these these developers are solvent or continue to be solvent.

Well I think listen. I and again I mean the death point is a smaller component of our portfolio but 100% it's it's I think when we have land projects, you're looking at, you know, what is the strategy is? Are they being delayed? You know, is there is there is that to sort of take, that construction, take out, um, is that happening or not? Um, so in, in our business in the bridge business, right? We're we have sort of a

Sort of a constant relationship with our borrowers, you know what I mean? Like, there's sort of ongoing communication.

Scott: As you get towards what would be the normal maturity event, and let's say the borrower needs a renewal, like an extension, you're negotiating like a replenishment of that interest reserve, right. To take that period going forward. And to your point, though, like, and listen, this is happening in land projects, you know, if a borrower doesn't have that liquidity, right. Because they don't have the income, they didn't have the balance sheet to support it. I mean, that's when you, yeah, that's when you unfortunately, that's when you can get yourself into a workout loan and you have to enforce or come up with a plan with that borrower. Fortunately for us, again, it's not a huge part of our reality.

Scott Rowland: As you get towards what would be the normal maturity event, and let's say the borrower needs a renewal, like an extension, you're negotiating like a replenishment of that interest reserve, right. To take that period going forward. And to your point, though, like, and listen, this is happening in land projects, you know, if a borrower doesn't have that liquidity, right. Because they don't have the income, they didn't have the balance sheet to support it. I mean, that's when you, yeah, that's when you unfortunately, that's when you can get yourself into a workout loan and you have to enforce or come up with a plan with that borrower. Fortunately for us, again, it's not a huge part of our reality.

And to suggest a point, we typically structure a land loan with interest reserves.

So as you get towards what would be the normal maturity event?

Um, and let's say if a borrower needs a renewal, like an extension,

Scott: You know, we've been dealing with, you know, as everyone knows, we have a fair amount of staged loans in our portfolio, but it hasn't really been growing, right? For us, most of it has been we're focused on resolutions. I think that just speaks to the quality of things. We, you know, before that interest rate environment, you know, went up in 2023, when these loans, these staged loans are from that period before that, right? When interest rates went when everyone's on the forward, balance sheets were super strong, interest rates are very low.... Those are some of the borrowers that got caught in the shock of the higher interest rate environment.

Scott Rowland: You know, we've been dealing with, you know, as everyone knows, we have a fair amount of staged loans in our portfolio, but it hasn't really been growing, right? For us, most of it has been we're focused on resolutions. I think that just speaks to the quality of things. We, you know, before that interest rate environment, you know, went up in 2023, when these loans, these staged loans are from that period before that, right? When interest rates went when everyone's on the forward, balance sheets were super strong, interest rates are very low.... Those are some of the borrowers that got caught in the shock of the higher interest rate environment.

Your your negotiating. And on like a a replenishment is that interest Reserve right to take that period going forward. Um, and, and to your point though, like, and listen, this is, this is happening in land projects, you know, if a borrower doesn't have that liquidity, right? Because they don't have the income, they didn't have the balance sheet to support it. I mean, that's when you, um, gather that's when you, unfortunately, that's what you can get yourself into a workout loan and you have to, you have to enforce or come up with a plan with that borrower. Um, unfortunately, for us again, it's not a huge part of our of, our of our reality. Um, and, you know, we've been dealing with, you know, as everyone knows. We we have a, we have a fair amount of stage loans in our portfolio. But um, it hasn't really been growing, right? Like, for us, most of it has been, we're focused on resolutions.

Scott: Those are, unfortunately for us, are the staged loans we have, that we're working through diligently with our borrowers or through enforcement to get rid of those positions. We've made a lot of progress on that, and that is what we're focused on. We feel good about our ability to resolve those in 2026. I do think, you know, I think about land, right? I mean, there's no question there's land loans out there today, especially in the Toronto and Vancouver market, that I think are under pressure, for sure. Those headlines you've seen in other firms and just in the real estate news, which I think is very factual. That's a challenge in those markets.

Scott Rowland: Those are, unfortunately for us, are the staged loans we have, that we're working through diligently with our borrowers or through enforcement to get rid of those positions. We've made a lot of progress on that, and that is what we're focused on. We feel good about our ability to resolve those in 2026. I do think, you know, I think about land, right? I mean, there's no question there's land loans out there today, especially in the Toronto and Vancouver market, that I think are under pressure, for sure. Those headlines you've seen in other firms and just in the real estate news, which I think is very factual. That's a challenge in those markets.

Um, I had just got to speak to the the quality of things, but we, you know, before that interest rate environment, you know, went up in 2023 when these loans, these days loans are from that period before that. Right? When interest rates when when, when everyone's on the forward balance sheets were super strong and the rates are very low. Um, those are some of the borrowers that got caught in the shock of the higher interest rate environment. Those are unfortunately for us or the other stage ones we have, um, that we are we're working through diligently with our borrowers or through enforcement to, to get rid of those positions. Um, we've made a lot of progress on that, and that is what we're focused on. We feel good about our ability to resolve those in 26.

Um, but I do think, you know, I think about—

Land loans out there today, especially in the trial in the Vancouver market, I think are under pressure for sure. And those headlines you've seen in other firms, and just in the real estate news, which I think is very factual.

Scott: For us, you know, we haven't done a lot of that historically. If you're doing land today, it's not bad because it's at a reset valuation. You can evaluate, again, you can ongoing evaluate those borrowers' balance sheets.

Scott Rowland: For us, you know, we haven't done a lot of that historically. If you're doing land today, it's not bad because it's at a reset valuation. You can evaluate, again, you can ongoing evaluate those borrowers' balance sheets.

Um, and that's a challenge in those markets. Um, but for us, you know, we—we haven't done a lot of that historically. If you're doing land today, it's not bad because it's at a reset valuation.

Geoff McTait: Yeah, I mean, it really is a good question. It does sort of get to the fundamental tenet of Timbercreek Financial and the, you know, the largely income-producing oriented focus of our platform, right? I mean, certainly, as I think of it, relative to some of our peers in the market, wouldn't be less income-producing and much more land and construction-focused. I think for all, you know, the very questions you've raised, I mean, I think it's why we've always historically been, you know, opportunistic and limited in scope in terms of where we step into that part of the market. It can provide, you know, good augmentation and enhancement to the portfolio and diversity, et cetera.

Um, and you can evaluate again, you can ongoingly evaluate those borrowers' balance sheets.

Geoff McTait: To Scott's point, you know, at this point, in the current, the current land reality, it's not a bad point in time to be looking at and seeing, you know, good opportunities with strong sponsors on a, you know, on a very attractive risk-adjusted return basis. For us, we are very happy that we aren't largely exposed to this on a legacy historical basis, and it remains, again, a smaller part of the overall strategy in general.

Yeah, I mean, it's a great. It really is a good question. It does sort of get to the fundamental tenet of, of Timber Creek Financial. And the, you know, the largely income producing oriented focus of our platform, right? I mean, certainly as I think of it relative to some of our peers in the market, would be less than can producing and much more land and construction focused. Uh, I think for all, you know, the very questions you've raised. I mean, I think it's, it's, it's why we've always historically been, you know, opportunistic and and limited in scope in terms of where we step into into that part of the market and it can provide, uh, you know, good augmentation and enhancement to the portfolio and diversity Etc in the Scott's point, you know, and at this point in the current, so current land reality, um, it's not about point in time to to be looking at and see seeing you know, good opportunities with strong sponsors on a, you know, on on very attractive risk adjusted return basis. But for us, we are, uh, we're very happy that we aren't.

Stephen Boland: Okay. Sorry to beat that to death. Maybe I wanna follow on Graham's question in terms of growth, but not from a loan perspective, but an income perspective. You've got $600 million of loans maturing this year, and you've got these properties that are non-income generating right now that are for sale, and hopefully, you know, you come out with the cash and you can turn those into loans that are income-generating. To, you know, that's one portion of the growth. I guess with the loans rolling off, is the goal to, if a $10 million loan gets paid off, that you redeploy it maybe into a bigger loan using the credit line? Like, is that how we should think about you generating income growth and not just, you know, loan growth, I guess?

Largely exposed to this, uh, on a legacy, uh, historical basis. And it remains—we got a smaller part of the overall strategy in general.

Okay, sorry to beat that to death. Um,

Maybe I want to follow on Graham's question in terms of growth, but not from a loan perspective, but an income perspective. Um, so you've got $600 million of loans maturing this year, and um, and you've got these properties that are non-income generating right now that are for sale, and hopefully, you know, you come out with the cash and, and you can turn those into loans that are income generating. Um, but to...

You know, that's one portion of the growth, but I guess with the loans that are rolling off, is the goal to—if a $10 million loan gets paid off, that you...

Stephen Boland: There is a portion of, to maintain that growth right now, you're gonna have to continue to use, you know, the credit line and bring that number up, I guess.

Redeploy it maybe into a bigger loan using the credit line like is that how we should think about you generating income growth and not just you know loan growth, I guess. But there is a portion of to to maintain that growth right now. Um you're going to have to continue to use, you know, the credit line and and and bring that number up, I guess.

Scott: Yeah, like, our use of the credit line, I'm gonna say is consistent. You know, repayments create capacity. Okay, it is kind of a closed-loop system that, you know, we want repayments, right? Repayments for us generates an ability to then go out and do a new loan. One of the key component of that is a new fee for us as well, right? For us, historically, I'm gonna say an easy number for us is about 50% of our loan book should churn every year. We use the word churn to sort of describe that repayment and then redeployment. Churn is a key part of our business. It allows that redeployment at a current risk level, at a current market rate, and we earn a new fee.

Scott Rowland: Yeah, like, our use of the credit line, I'm gonna say is consistent. You know, repayments create capacity. Okay, it is kind of a closed-loop system that, you know, we want repayments, right? Repayments for us generates an ability to then go out and do a new loan. One of the key component of that is a new fee for us as well, right? For us, historically, I'm gonna say an easy number for us is about 50% of our loan book should churn every year. We use the word churn to sort of describe that repayment and then redeployment. Churn is a key part of our business. It allows that redeployment at a current risk level, at a current market rate, and we earn a new fee.

yeah, like

Are you see the credit line? I, I'm going to say it's consistent and and, and, you know, repayments create capacity, okay? So it is kind of a closed loop system that, you know, we want. Repayments right repayments for us generates an ability to, then go out and do a new loan and 1 of the, the key component of that is a new fee for us as well, right?

So you want, for us, historically, I’m going to say an easy number for us is about 50% of our loan book should turn every year.

Scott: It's an attractive thing to do. How we structurally leverage that, like using our bank line or using a syndication. Those are both tools, and they're both effective tools. We're very focused on what is our equity returning, right. Because that is ultimately what pays the dividend. I think it, when, sort of getting to your question, I think if I get CAD 10 million back, I'm looking at my margin on that loan. If I had a margin that was a little less, absolutely, you know, Geoff McTait and his team and myself, we evaluate what's out there in the market and where do we think we can get our best risk-adjusted returns.

Scott Rowland: It's an attractive thing to do. How we structurally leverage that, like using our bank line or using a syndication. Those are both tools, and they're both effective tools. We're very focused on what is our equity returning, right. Because that is ultimately what pays the dividend. I think it, when, sort of getting to your question, I think if I get CAD 10 million back, I'm looking at my margin on that loan. If I had a margin that was a little less, absolutely, you know, Geoff McTait and his team and myself, we evaluate what's out there in the market and where do we think we can get our best risk-adjusted returns.

We we use the word churn, um, to sort of describe that repayment. And then redeployment churn is a, is a, is a key part of our business. It allows that redeployment a, a current risk level at a current market rate, um, and we earned a new fee. So it's an attractive thing to do. How we structurally leverage that like using our bank line or using a syndication. Um, those are both tools and they're both effective tools. We're very focused on what is, what is our Equity returning, right? Because that, that is ultimately, what pays? The pays the dividend. Um, so I think it when it started getting into your question, I think. So if I get 10 million dollars back,

Scott: We might sit there and say, you know, something I got a 250 credit spread. If I see an opportunistic part of the market in today's market, where I could capture 300 over, that's a way I can have an accretion, right, to the, what you're talking about, to the DI. The other thing for us is these staged loans, which are absolutely sort of in a substandard current income position. As that money comes back, we can absolutely deploy that at a higher yield than we're making today, right? It's opportunistic for us to get repayments. It allows us to redeploy what we typically think is the best risk return at the time and try to drive incremental margin with those decisions.

Scott Rowland: We might sit there and say, you know, something I got a 250 credit spread. If I see an opportunistic part of the market in today's market, where I could capture 300 over, that's a way I can have an accretion, right, to the, what you're talking about, to the DI. The other thing for us is these staged loans, which are absolutely sort of in a substandard current income position. As that money comes back, we can absolutely deploy that at a higher yield than we're making today, right? It's opportunistic for us to get repayments. It allows us to redeploy what we typically think is the best risk return at the time and try to drive incremental margin with those decisions.

I'm looking to I'm looking at my margin on that loan. So if I had a margin that was a little less absolutely you know, Jeff mate and his team and myself, we evaluate what's out there in the market and where do we think we can get our best risk adjusted returns? And we might sit there and say, you know, something that I got a 250 credit spread. I see an opportunistic part of the market in today's market where I could capture 300 over. That's the way I can have an accretion right? To to the what you're talking about to the DI

Scott: It is a key part of what we do, which is why we really want to get these staged loans back because they don't churn, right? It's sort of like managing the portfolio with an arm tied behind your back. For us, we are excited to turn the page on the staged loans and then be able to pivot these discussions towards growth. Calls like today, when we have to take, you know, impairments to sort of write off positions, which hurts book value. These aren't fun calls for us, and we know it's not fun for our investors either. It's unfortunately, you know, it was a part of that environment, that COVID environment and the rapid rate increase.

Scott Rowland: It is a key part of what we do, which is why we really want to get these staged loans back because they don't churn, right? It's sort of like managing the portfolio with an arm tied behind your back. For us, we are excited to turn the page on the staged loans and then be able to pivot these discussions towards growth. Calls like today, when we have to take, you know, impairments to sort of write off positions, which hurts book value. These aren't fun calls for us, and we know it's not fun for our investors either. It's unfortunately, you know, it was a part of that environment, that COVID environment and the rapid rate increase.

The other thing for us is the stage loans which are absolutely sort of in a sort of a substandard current income position as that money comes back, we can absolutely deploy that at a higher yield than we're making today. Right? So there's a big part of its it's an opportunistic for us to get repayments. It allows us to redeploy but we typically think is the best risk Return of the time and try to drive incremental margin with with those decisions.

Really want to get these stage loans back because they don't churn, right? It's sort of like managing the portfolio with an arm tied behind your back. So for us, we are excited to

Turn the page on the stage loans and then be able to pivot these discussions towards growth. Um,

The call is like today when we have to take, uh, you know, impairments to sort of write off positions.

Which hurts Brooke value. These aren't fun calls for us.

And we know it's not fun for our investors either. Um, it's unfortunately, you know, it was a part of that.

Scott: We very much look forward to, and we've been working very hard to resolve these issues and then move to more of a, of a growth narrative.

Scott Rowland: We very much look forward to, and we've been working very hard to resolve these issues and then move to more of a, of a growth narrative.

Stephen Boland: Okay. That's really helpful. I appreciate that. Thanks.

Environment that Co environment and the rapid rate increase, but we very much look forward to, we've been working very hard to resolve these issues and then and then move to more of a of a growth narrative.

Scott: No worries. Thank you.

Scott Rowland: No worries. Thank you.

Okay, that's really helpful. I appreciate that. Thanks.

No worries. Thank you.

Operator: There are no other questions at this time. I'll now turn the call back over to Scott for closing remarks.

There are no other questions at this time. I'll now turn the call back over to Scott for closing remarks.

Scott: Okay. Well, thank you everyone for joining us today. We look forward to speaking again when we release our Q1 2026 results. As always, please reach out to the team with any questions.

Scott Rowland: Okay. Well, thank you everyone for joining us today. We look forward to speaking again when we release our Q1 2026 results. As always, please reach out to the team with any questions.

Okay, well, thank you. Thank you, everyone, for joining us today. We look forward to speaking again when we release our Q1 2026 results, and, as always, please reach out to the team with any questions.

Operator: You may now be disconnected.

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Q4 2025 Timbercreek Financial Corp Earnings Call

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