Disclosure: Bullpen receives compensation from Timbercreek Financial for research coverage. Timbercreek is also an IR client of LodeRock Advisors, an affiliate of Bullpen.
Timbercreek (TF) reported a solid Q2, which came in a touch under our estimates for net investment income…
… driven by a slightly lower WAIR, which now sits relatively in line with the long-term average and is moderated by lower financing costs.
While headline EPS missed on higher ECLs of $6.7M, distributable income held steady at $0.18 per share - representing a payout ratio of ~98%…
… and reinforcing the core earnings power of the portfolio, with dividends declared for the rest of the year - squashing investor concerns over sustainability. Syndication has been a key part of that DI stability, given it’s accretive to TF’s equity yield…
… and enables the company to keep originating when the line is near capacity.
Speaking of origination activity, management is constructive on the back half of 2026 - pointing to $100M of net deployment in July alone and a healthy pipeline…
… which creates a good environment for recycling capital from staged loans (down 10% Q/Q) as resolutions are reached throughout the year.
We expect those resolutions will be positive for more than just the business, with TF’s current 0.78x book value multiple representing a $137M discount…
… and implying a near-zero recovery on excess staged loans, a scenario we believe is extremely unlikely and break down in the full report below:
