Capital Direct I Income Trust
Record Receivables and Earnings with Reduced Risk Profile
Published: May 8, 2025
Author: FRC Analysts
View Complete Report*This report and research coverage is paid for and commissioned by Capital Direct I Income Trust – See the bottom of this report for other important disclosures rating, and risk definitions. All figures in C$ unless otherwise specified.
Sector: Mortgage | Industry: Mortgage
Ticker Symbols:
Report Highlights
- In 2024, mortgage receivables increased 21% YoY to $476M, exceeding our forecast by 10%. In Q1-2025, receivables increased 10% YTD to $521M – the highest in Capital Direct I Income Trust’s (CDIT) history.
- CDIT is one of the larger Mortgage Investment Entities (MIEs) in Canada. The MIE remains focused on first/second mortgages for single family residential units in B.C. and ON.
- In 2024, the fund achieved record revenue and net income. Net income was up 27% to $34M, beating our estimate by 14%, driven by higher lending rates, and mortgage receivables. The yield on class F units increased 1.1 pp to 9.8% in 2024 (our forecast was 9.4%), and to 10.1% in Q1-2025.
- Since May 2024, the BoC has cut rates seven times (225 bp), with the potential for one or two more cuts this year, driven by high unemployment, escalating geopolitical/trade risks, and concerns over potential weakness in GDP growth.
- We find high-yielding funds, like CDIT, increasingly attractive in the current declining rate environment. This is because MIC lending rates are less elastic, meaning their yields tend to decline less in a falling rate environment, and rise more slowly in a rising rate environment.
- At the end of 2024, CDIT had $20M (4% of the portfolio vs the sector average of 6%) in stage three (impaired) mortgages, down from $29M (7% of the portfolio) at the end of 2023, a notable contrast to the broader MIC sector, which saw a rise in impairments.
- We are projecting a yield of 9.3% in 2025 vs 9.8% in 2024, while raising our overall rating from 2- to 2.
Fundamental Research Corp. Equity Rating Scale:
- Rating – Excellent Return to Risk Ratio
- Rating – Very Good Return to Risk Ratio
- Rating – Good Return to Risk Ratio
- Rating – Average Return to Risk Ratio
- Rating – Weak Return to Risk Ratio
- Rating – Very Weak Return to Risk Ratio
- Rating – Poor Return to Risk Ratio
Fundamental Research Corp. Risk Rating Scale:
- (Low Risk)
- (Below Average Risk)
- (Average Risk)
- (Speculative)
- (Highly Speculative)
FRC Distribution of Ratings
| Rating | Percentage | Risk | Percentage |
| Rating – 1 | 0% | Risk – 1 | 0% |
| Rating – 2 | 33% | Risk – 2 | 10% |
| Rating – 3 | 45% | Risk – 3 | 41% |
| Rating – 4 | 4% | Risk – 4 | 32% |
| Rating – 5 | 8% | Risk – 5 | 8% |
| Rating – 6 | 1% | Suspended | 10% |
| Rating – 7 | 0% | ||
| Suspended | 9% |
Disclaimers and Disclosure
The opinions expressed in this report are the true opinions of the analyst about this company and industry. Any “forward looking statements” are our best estimates and opinions based upon information that is publicly available and that we believe to be correct, but we have not independently verified with respect to truth or correctness. There is no guarantee that our forecasts will materialize. Actual results will likely vary.
Fundamental Research Corp. “FRC” owns shares of the subject company: No. The analyst owns shares of the subject company: No , and does not make a market or offer shares for sale of the subject company, and does not have any investment banking business with the subject company.
Fees were paid by the issuer to FRC Yes. The purpose of the fee is to subsidize the high costs of research and monitoring. FRC takes steps to ensure independence including setting fees in advance and utilizing analysts who must abide by CFA Institute Code of Ethics and Standards of Professional Conduct. Additionally, analysts may not trade in any security under coverage. Our full editorial control of all research, timing of release of the reports, and release of liability for negative reports are protected contractually. Distribution procedure: our reports are distributed first to our web-based subscribers on the date shown on this report then made available to delayed access users through various other channels for a limited time.
