Publicly-Traded Mortgage Investment Corporations (MICs)

February 15, 2011


I’ve looked briefly at Mortgage Investment Corporations (MICs) [MICs are essentially mortgage funds] before but the accredited investor requirement or high minimum investments deterred me from investigating them any further. The High Net Worth section in today’s Globe and Mail included a column on MICs that pointed out that the existence of publicly-traded MICs. Publicly-traded MICs have several advantages: (1) No minimum investment or accredited investor requirements (2) Better liquidity and (3) Better disclosure by virtue of being a listed company. All the MICs listed here are qualified investments in a RRSP, RRIF, RDSP, TFSA and RESP. Since, MIC distributions are mostly classified as income, it is best to hold these investments in a tax-deferred account.

Timbercreek Mortgage Investment Corporation (TSX: TMC)

Primarily residential and retail mortgages in Ontario, Alberta and Quebec.
Current yield of 7.79%. Distributions paid monthly.
No leverage.
Fees: Management Fee of 1.2% per annum.
Performance fee of 20% over hurdle rate (2-year Government of Canada Bond Yield plus 450 basis points).

Firm Capital Mortgage Investment Corporation (TSX: FC)

Mostly conventional first mortgages in Ontario.
Current yield of 7.64%. Monthly distributions.
Fees: 75 bps manager fee. 10 bps mortgage banker fee. Performance fees charged on mezzanine and equity investments.

MCAN Mortgage Corporation (TSX: MKP)

Current yield 6.86%. Quarterly distributions.
Unable to locate prospectus.

I don’t own any of these names personally and I have tended to avoid alternative asset classes. I’ve started looking into MICs as many investors are interested in the relatively high income that these investments produce. If you own any of these names or other MICs, I’d be interested in your take in the comments section.

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