Romspen Investment Corporation
U.S. Focused Alternative Lending – Initiating Coverage
Published: Aug 15, 2025
Author: FRC Analysts
*Romspen Investment Corporation has paid FRC a fee for research coverage and distribution of reports. See last page for other important disclosures, rating, and risk definitions.
Sector: Mortgage | Industry: Mortgage
Report Highlights
- Formed in 2018, and based out of Toronto, Romspen US Mortgage Investment Fund is a Mortgage Investment Entity (MIE) and alternative lender, focused on commercial and industrial first mortgages across the U.S. The fund is managed by Romspen Investment Corporation, which also manages Romspen Mortgage Investment Fund, one of Canada’s largest non-bank commercial and industrial lenders.
- Target properties include multi-purpose, office, industrial, retail, and multi-family residential properties. The fund provides construction loans, pre-development financing, and mortgages on revenue-generating properties.
- At the end of 2024, the fund managed $553M in mortgages, with 38% concentrated in Florida, 11% in Texas, and the remainder distributed across various other states.
- At the end of 2024, the fund had $211M (39% of the portfolio) in impaired mortgages and foreclosed assets, significantly above the sector average of 6%, indicating elevated risk. However, management has allocated just $6M (1% of mortgages and foreclosed assets) for loan loss allowances, suggesting they anticipate limited losses. We remain cautious and will closely monitor how management works to resolve and recover impaired mortgages in the coming quarters.
- While Trump’s tariff threats have heightened uncertainty amid trade tensions and geopolitical risks, recent deals with the U.K. and China have partially restored investor confidence. We expect Trump to reverse or soften most new measures due to their potential negative impact on U.S. consumers and businesses. We maintain a stable outlook on U.S. real estate, supported by healthy economic metrics.
- We find high-yielding funds, like Romspen, increasingly attractive in the current declining rate environment. This is because MIE 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.
- We are projecting a yield of 5.8% in 2025 vs 7.6% in 2024. In comparison, publicly traded U.S. REITs currently offer a dividend yield of 3% – 4%.
Risks
- Highly competitive sector
- A downturn in the real estate sector may impact the company’s deal flow
- Principal is not guaranteed; no guaranteed distributions
- Default rates can rise during recession
- Construction/development properties tend to carry higher risks than already-built operating properties
Business Overview
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 ranging from $10,000 to $20,000 have been paid by Romspen Investment Corporation to FRC to issue this report. This fee creates a potential conflict of interest which readers should consider. 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.
To subscribe for real-time access to research, visitwww.researchfrc.com/plansfor subscription options
This report contains “forward looking” statements. Forward-looking statements regarding the Company and/or stock’s performance inherently involve risks and uncertainties that could cause actual results to differ from such forward-looking statements. Factors that would cause or contribute to such differences include, but are not limited to, continued acceptance of the Company’s products/technologies in the marketplace; acceptance in the marketplace of the Company’s new product lines/services; competitive factors; new product/service introductions by others; technological changes; dependence on suppliers; systematic market risks which discuss discussed in the Company’s periodic SEC filings, including interim reports, annual reports, and annual information forms filed with the various securities regulators. By making these forward-looking statements, Fundamental Research Corp. and the analyst/author of this report undertakes no obligation to update these statements for revisions or changes after the date of this report. A report initiating coverage will most often be updated quarterly while a report reconfirming a rating may have future results. A report initiating coverage will most often be updated quarterly while a report issuing a rating may have no further or less frequent updates because the subject company is likely to be in earlier stages where nothing material may occur quarter to quarter.
Fundamental Research Corp DOES NOT MAKE ANY WARRANTY TO EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED FROM USING THIS INFORMATION AND MAKES NO EXPRESS OR IMPLIED WARRANTIES OF FITNESS FOR A PARTICULAR USE. ANYONE USING THIS REPORT ASSUMES FULL RESPONSIBILITY FOR WHATEVER RESULTS THEY OBTAIN FROM WHATEVER USE THE INFORMATION WAS PUT TO. ALTERNATIVELY, TO COVER FINANCIAL ADVISOR BEFORE YOU INVEST. WHETHER A STOCK SHOULD BE INCLUDED IN A PORTFOLIO DEPENDS ON ONE’S RISK TOLERANCE AND OTHER FACTORS, FULL DESCRIPTION OF THE ASSETS, ETC. ONLY YOUR INVESTMENT ADVISOR WHO KNOWS YOU UNIQUE CIRCUMSTANCES CAN MAKE A PROPER RECOMMENDATION AS TO THE MERIT OF ANY PARTICULAR SECURITY FOR INCLUSION IN YOUR PORTFOLIO. THIS REPORT IS SOLELY FOR INFORMATIVE PURPOSES AND IS NOT A SOLICITATION OF AN OFFER TO BUY OR SELL ANY SECURITY. IT IS NOT INTENDED AS INVESTMENT ADVICE OR OPINION FOR INDIVIDUAL INVESTOR OR INVESTMENT PURPOSES. It is not a solicitation for offers to buy or sell any securities. All statements in this report were independently prepared unless otherwise stated and HAVE NOT BEEN ENDORSED BY THE MANAGEMENT OF THE COMPANY WHICH IS THE SUBJECT OF THIS REPORT. Additional information is available upon request. THIS REPORT IS COPYRIGHT. YOU MAY NOT REDISTRIBUTE THIS REPORT WITHOUT OUR PERMISSION. Please give proper credit, including citing Fundamental Research Corp and/or the analyst, when quoting information from this report.
The information contained in this report is intended to be viewed only in jurisdictions where it may be legally viewed and is not intended for use by any person or entity in any jurisdiction where such use would be contrary to local regulations or which would require any registration requirement within such jurisdiction.
