Friday 17 January, 2020

IPO expenses reduce income for Equityline Mortgage Corp

Equityline Mortgage Investments Corporation President and Director of ELMIC, Sergiy Shchavyelyev.

Equityline Mortgage Investments Corporation President and Director of ELMIC, Sergiy Shchavyelyev.

Equityline Mortgage Corporation Limited, a Canadian mortgage company listed on the Jamaica Stock Exchange, ended its third quarter of 2019 with a net income of CAD$27,078.

Net income for the nine-months ended September income stood at $50,094.

Directors note, however, “that the number alone is not reflective of the company’s result of operation for it includes various one-time expenses such as the initial listing fees, advertising fees and other administrative and general fees that relate to satisfying the strong demands for the company’s public offering.”

Equityline raised US$5.3 million from this initial public offer in Jamaica in 2018.

The company has indicated its intention to cross-list on the Toronto Stock Exchange (TSX).

In the report for the nine-month period ended September 2019 management noted that without the one-time expenses related to the Jamaica listing, the company would be operating at a year-to-date profit of Canadian $166,851.

During the third quarter of 2019, the company funded 22 new mortgages investments totalling CAD$5,505,000.

Regulatory changes, including the B20 guidelines in Canada, have resulted in most residential–focused lenders tightening up on income qualification, forcing borrowers to private loans as a result of difficulty qualifying for institutional loans.

This has shown a large increase in demand for more private mortgage products in Canada.

The Equityline portfolio is heavily weighted towards Canada’s largest provinces, with 100 per cent of the portfolio invested in Ontario urban markets that generally experience better real estate liquidity in periods of uncertainty and thus offer a better risk profile, management outlined.

During Q3 2019, the company earned CAD$217,095 (YTD 2019: $513,766) of interest income on net mortgage investments while the weighted average interest rate on net mortgage investments for the nine months ended September 30, 2019, was 11.41 per cent.

Management said that funds raised in Jamaica were put towards a high-quality mortgage portfolio, which up to September had an average loan-to-value of 70.63 per cent.

Equityline’s directors indicate that the company aims to provide financing to borrowers that are not well serviced by the commercial banks for a short term.

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