Capital Direct 1 Income Trust
Powers Through 2025: Record Revenue and Earnings
Published: May 21, 2026
Author: FRC Analysts
Disclosure: Capital Direct 1 Income Trust has paid FRC a fee for research coverage and distribution of reports. See last page for other important disclosures, rating, and risk definitions.
Company Details
Sector – Research Report
Industry – Finance
Trading Information
Trading information – Trading information not available
Report Highlights
- Maintains Status as a Leading Canadian MIE: CDIT remains one of the larger Mortgage Investment Entities (MIEs) in Canada, focused on first and second mortgages secured by single-family residential properties in B.C., Ontario, and Atlantic Canada.
- Record High Mortgage Receivables: In 2025, mortgage receivables increased 30% YoY to $616M, exceeding our forecast by 15%. In Q1-2026, receivables rose a further 7% QoQ to $659M, the highest level in CDIT’s history.
- Earnings Beat on Strong Lending Yield: 2025 delivered record revenue and net income. Net income increased 27% to $43M, beating our estimate by 12%, driven by higher lending rates, and growth in mortgage receivables. The weighted average yield, across all unit classes, rose 0.10 pp YoY to 9.63% vs our forecast of 9.29%.
- Macroeconomic backdrop: Following nine rate cuts totaling 275 bps since June 2024 (bringing the policy rate to 2.25%), the Bank of Canada has held rates steady over the past four meetings. We expect rates to remain unchanged through 2026, as unemployment levels have eased since peaking in September 2025, and inflation remains moderate. Supported by lower rates, we believe the sector entered 2026 with lower default risk, and improving mortgage origination momentum.
- Sector trends: We are seeing a notable increase in M&A activity among private MICs; several managers are pursuing acquisitions to scale platforms, and realize cost synergies in administration, operations, and staffing. While CDIT has not indicated any acquisition plans, we would not be surprised to see either a strategic transaction, or a potential bid from a larger player.
- 2026 Outlook: We are projecting a yield of 8.31% in 2026 vs 9.63% in 2025. We believe CDIT stands out for delivering yields above sector averages, along with risk diversification driven by geographic diversification, smaller mortgage sizes, and lower loan-to-value (LTV) ratios.
* Capital Direct I Income Trust has paid FRC a fee for research coverage and distribution of reports. See last page for other important disclosures, rating, and risk definitions. All figures in C$ unless otherwise specified.
Portfolio Summary
The table below compares CD IT ’s portfolio with other MICs (AUM $100M+) focused on already-built single-family residential units.
We believe CDIT operates a low-to-mid risk MIE
Lower first-mortgage exposure implies higher risk, partly offset by smaller loan sizes and lower LTVs
Source: FRC / Various
Leverage is higher, reflected in a higher debt-to-capital ratio
The yield is slightly higher despite management charging both management and performance fees, unlike most comparable MIEs, which typically do not have performance-based compensation
The sector has seen two material transactions recently (listed below). Discussions with MIC managers indicate several are actively pursuing M&A to scale their platforms, drive synergies, and achieve cost savings across administration, operations, and staffing. We believe t hese efficiencies can support higher yields, and attract additional capital. While CD IT has not indicated any acquisition plans, we would not be surprised to see either a strategic transaction, or a potential bid from a larger player.
September 2025: Alta West Mortgage Capital Corporation acquired Premiere Home Mortgage for an undisclosed amount.
October 2025: Neighbourhood Holdings acquired Fisgard Asset Management for an undisclosed amount, creating one of Canada’s largest alternative mortgage lenders with over $750M in AUM across 1,550 mortgages .
Portfolio Update
In 2025, mortgage receivables were up 30% to $616M, 15% above our forecast
In Q1-2026, receivables increased 7% QoQ to a record $659M
Source: Company / FRC
At the end of Q1-2026, debt-to-capital was 29%, in line with comparables (20%–40%)
The interest coverage ratio is on the higher end of comparables (3x–5x), implying stronger debt servicing capacity
At the end of Q1-2026, exposure to first mortgages increased 9 pp since year-end 2024 to 68%, implying a lower risk profile
LTV increased slightly, but remains below the sector average of 59%, implying lower relative risk
Source: Company / FRC
Increased B.C. and Alberta exposure, with a corresponding decrease in Ontario
The average mortgage size increased 25% since the end of 2024 to $254k
Source: Company / FRC
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