Investor Presentation - Tricon Residential
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Investor Presentation October 2020
Disclaimer
General
You are advised to read this disclaimer carefully before reading, accessing or making any alternative to IFRS financial measures, such as net income. As non-IFRS financial
other use of the information included herewith. These materials are not an offer or the measures do not have standardized definitions prescribed by IFRS, they are less likely to
solicitation of an offer to purchase any securities or make any investment. This be comparable with other issuers or peer companies. A description of the non-IFRS
presentation includes information about Tricon Residential Inc. and its subsidiaries and measures used by the Company in measuring its performance is included in its
investees (together, the “Company”) as of June 30, 2020, unless otherwise stated. These Management Discussion and Analysis available on the Company’s website at
materials should be reviewed in conjunction with the Company’s Financial Statements and www.triconcapital.com and on SEDAR at www.sedar.com.
Management Discussion and Analysis for the periods ending June 30, 2020 and are
subject to the detailed information and disclaimers contained therein. All dollar amounts This presentation may contain information and statistics regarding the markets in which
are expressed in U.S. Dollars unless otherwise stated. the Company and its investees operate. Some of this information has been obtained from
market research, publicly available information and industry publications. This information
The Company measures the success of its business in part by employing several key has been obtained from sources believed to be reliable, but the accuracy or completeness
performance indicators that are not recognized under IFRS including net operating income of such information has not been independently verified by the Company and cannot be
(“NOI”), funds from operations (“FFO”), core funds from operations (“core FFO”), and guaranteed. Disclosure of past performance is not indicative of future results.
adjusted funds from operations (“AFFO”). These indicators should not be considered an
Forward-Looking Statements
This presentation may contain forward-looking statements and information relating to anticipated impact and therefore no assurance that actual performance will align with the
expected future events and the Company’s financial and operating results and projections, Company’s targets. These statements are based on management’s current expectations,
including statements regarding the Company’s growth and performance goals and intentions and assumptions which management believes to be reasonable having regard
expectations, including, in particular, targeted returns, expected future performance, and to its understanding of prevailing market conditions and the current terms on which
growth projections, that involve risks and uncertainties. Such forward-looking information is investment opportunities may be available.
typically indicated by the use of words such as “will”, “may”, “expects” or “intends”. The
forward-looking statements and information contained in this presentation include Projected returns and financial performance are based in part on projected cash flows for
statements regarding the Company’s strategic priorities; expected or targeted financial and incomplete projects as well as future company plans. Numerous factors, many of which
operating performance including project timing, projected cash flow; projected NOI and are not in the Company’s control, and including known and unknown risks, general and
other projected performance metrics; the ability of the Company to extend debt maturities local market conditions and general economic conditions (such as prevailing interest rates
and refinanced debt; the ability to attract third-party investment; FFO growth and the and rates of inflation) may cause actual performance and income to differ from current
potential drivers of that growth; expectations for the growth in the business; the availability projections. Accordingly, although we believe that our anticipated future results,
and quantum of debt reduction opportunities and the Company’s ability to avail itself of performance or achievements expressed or implied by the forward-looking statements and
them; operational improvements in the single-family rental and U.S. multi-family portfolios, information are based upon reasonable assumptions and expectations, the reader should
including integration/internalization plans, and any associated impact on revenues or not place undue reliance on forward-looking statements and information. If known or
costs; and improvements to the Company’s financial reporting. unknown risks materialize, or if any of the assumptions underlying the forward-looking
statements prove incorrect, actual results may differ materially from management
In regards to the targets presented on pages 22 and 23: the 2022 Targets are based on expectations as projected in such forward-looking statements. Examples of such risks are
the assumed impact of the growth drivers, proposed transactions, and sources of cash described in the Company’s continuous disclosure materials from time-to-time, as
flow described throughout those pages and on the assumption that other drivers of available on SEDAR at www.sedar.com. The Company disclaims any intention or
performance will not deteriorate over the relevant period. There can be no assurance that obligation to update or revise any forward-looking statements, whether as a result of new
such growth drivers, transactions or cash flow will occur, be realized, or have their information, future events or otherwise, unless required by applicable law.
Jacksonville, FL
1
Founded in 1988, Tricon is a rental housing company focused on the middle
market demographic. Tricon owns and operates approximately 30,000
single-family rental homes and multi-family rental units in 21 markets across
the United States and Canada, managed with an integrated technology-
enabled operating platform
Coolray Field,
Atlanta, GA Houston, TX Atlanta, GA
The Reserve at Alafaya,
Charlotte, NC Jacksonville, FL Orlando, FL The Selby, Toronto, ON
Note: The above photos may not be representative of all Tricon investment properties.
2
Our mission is to provide quality housing for families TSX: TCN
across North America and to generate strong risk-adjusted
returns for our public and private investors
1988 Founded 21,582 Single-Family
Rental (“SFR”)
C$2.1B Market
Capitalization
Homes
Dividend Yield
2010 Listed (TSX) 7,789 Stabilized
Multi-Family 2.5% (C$0.07/Quarter)
Rental Apartments
1
Multi-Family
32
Years of Investing
In Communities 3,695 Rental Apartments 18% Annualized Growth
In Book Value Per
Under Development Share Since Entering
SFR In 2012
All data presented as at June 30th, 2020. Share price is as of September 30th, 2020. All figures in U.S. dollars unless otherwise indicated.
1. Annualized growth in book value per share is calculated based on CAD book value since Tricon entered the Single Family Rental sector in Q1 2012.
3
Our Evolution as a Rental Housing Company
1988 2010 2012 2015 2017 2018 2019 2020
Founded by Initial Public Entered U.S. Internalized Acquisition of Formed $2B $450M JV Internalized
David Berman Offering, Single-family SFR Property Silver Bay Trust SFR joint formed with U.S. multi-family
and listed on rental business management for $1.4B venture to ASRS to asset management &
Geoff Matus The TSX --- acquire ~10,000 pursue B2R Canadian multi- family
homes communities property management
Formed
Canadian --- ---
multi-family Acquisition Closed a $553 million
development of $1.3B U.S. securitization in
platform multi-family SFR-JV-1 at weighted
portfolio average coupon of
2.34%
---
$300M Preferred Equity
investment led by
Blackstone Real Estate
Investment Trust
4
Our Strategic Vision
Tricon generates predictable cash flow from rental assets and enhances its investment returns with
contractual fees earned from managing third-party capital
Predictable Access to Centralized
Rental Income Strategic Capital Operating Platform
Generate recurring rental Raise third-party capital to enhance Leverage operating synergies
income from single-family scale and improve operational and innovation across single-
and multi-family rental efficiency, reduce balance sheet family and multi-family
properties. exposure to development activities, portfolios.
and drive return on equity with
incremental fee income.
5
Our New Purpose Statement and Guiding Principles
Our Purpose Statement
Imagine a world where housing unlocks life’s potential
Our Guiding Principles
• Go above and beyond to enrich the lives of
our residents
• Commit to and inspire excellence in
everything we do
• Ask questions, embrace problems, thrive on
the process of innovation
• Do what is right, not what is easy
• Elevate each other so together we leave an
enduring legacy
6
ESG Update
In Q2, Tricon embarked on several initiatives in support of our commitment to our people and our residents
Living Wage West Don Lands Block 10 – Indigenous Hub
During the quarter, Tricon and its joint venture partners
• Tricon is establishing a minimum annual base salary agreed to expand their multi-family portfolio to include
of $36,400 for full time employees in the U.S. and Block 10 of the West Don Lands. The highlight of the
C$46,000 for full-time employees in Canada project is the partnership with Anishnawbe Health
• By paying a living wage, we can provide financial Toronto in creating Toronto’s first purpose-built
security for our employees and their families and Indigenous hub. The hub will include an indigenous
allow them to live with dignity health center and community gardens as well as an
indigenous employment, education, and training center
Our Response to Racism
Tricon is committed to demonstrable and positive action
to acknowledge and counter systemic anti-Black and
anti-minority racism
• On June 19th, Tricon observed the Juneteenth
holiday which marks the day in 1865 when anti-
slavery laws were enforced by the government of
Texas. We invited our employees company-wide to
learn about Black history and the challenges
minorities face
• Donated to Black Girls Code and Black Boys Code
• Signed the BlackNorth CEO Pledge, committing to
ensure that 3.5% of Tricon executive and board
roles are held by Black leaders by 2025
Jacksonville, FL
7
Tricon’s Asset Composition
96% Rental Housing Tricon’s Balance Sheet Asset Mix
• Recurring rental income Residential
CA MF Development
• Differentiated middle market focus Rental 4%
Q2 2020 Core FFO per Share Growth
175%
Year-over-Year Growth
(+$0.07)
< $0.01
$0.03
Lower corporate
$0.04 overhead due to
property management
cost efficiencies
Acquisition of U.S.
portfolio at the end $0.11
of Q2 2019
Driven by 15%
increase in NOI on
$0.04 larger portfolio and
rent growth
Q2 2019 Core FFO per Single-family rental growth U.S. multi-family portfolio Other Q2 2020 Core FFO per
Share acquisition share
Jacksonville, FL
9Consolidated Balance Sheet and Liquidity
Q2 Corporate Liquidity
Debt Maturity Schedule
Corporate Credit Facility $ 500
(including Tricon’s extension options)
Less Amounts Drawn (330)
In millions of U.S. dollars 33
Plus Unrestricted Cash
Corporate Liquidity 203
2017-1 $461M Liquidity enhanced
$1,400 subsequently with $300M
MS Term Loan $471M
Preferred Equity Offering
$1,200
2016-1 $354M2
$1,000
Refinanced
$800 $932
JV debt SFR JV-1
subsequent 2020
to quarter Securitization
$600 end Corporate Credit $404
In discussions Facility
to extend $236 $886
$400
US MF Credit
$200 Facility $383 $364
$330 $313
$113 $156
$0
2020 2021 2022 2023 2024 2025 2026+
Corporate SFR MF Development
1. On July 21, 2020, SFR JV-1 closed a $553 million securitization at a weighted average coupon of 2.34% and term to maturity of six years. The proceeds were used to refinance the existing short-term
SFR JV-1 debt
2. Expected to be refinanced in Q4 2020
Jacksonville, FL
10The U.S. Sun Belt – A Vast Rental Housing Opportunity
The U.S. Sun Belt is home to about ~40% of all U.S. households, and is expected to see
~60% of the growth in U.S. households over the next decade
Projected population
growth in the next 10 years
TORONTOTricon’s Middle Market Focus
Tricon’s U.S. rental strategy is focused on serving the middle market, an addressable market of almost 9
million households with strong long-term rentership fundamentals
HOUSEHOLD 7.1M RENTERS
INCOME 39M $1,800+ Monthly Rent
HOUSEHOLDS Temporary renters
>$100K Higher turnover
Higher ownership rate
$100K
8.8M RENTERS
28M $1,000 − $1,800 Monthly Rent
HOUSEHOLDS Long-term renters
$60K − $100K Lower turnover
Stable cash flow
$60K
28.2M RENTERS
61M < $1,000 Monthly Rent
HOUSEHOLDS Higher eviction ratesOur People
A dynamic, high-performing team of industry leaders and housing experts leading a team
of ~700 dedicated employees
Toronto / San Francisco
32
Investment Team &
Tricon Development Group
Gary Berman Wissam Francis David Berman Geoff Matus Jonathan Ellenzweig Kevin Baldrige
61
Finance, Accounting,
President & CEO EVP & Chief Financial Officer Executive Chairman
& Co-Founder
Co-Founder Chief Investment Officer Chief Operating Officer
Tax and Legal Team
Houston
105 Sherrie Suski David Veneziano Andy Carmody Andrew Joyner Wojtek Nowak Evelyne Dubé
Johnson Development Corp. Chief People Officer Chief Legal Officer Managing Director Managing Director Managing Director, Managing Director,
Capital Markets Private Funds
Orange County /
Local Field Offices
512
Tricon American Homes Andrew Gray Larry Johnson Douglas Quesnel Sandra Pereira David Mark Gina McMullan
Head of Development, President, Chief Accounting Officer SVP, Head of Tax Services Managing Director, Finance SVP, Corporate Reporting
Canada The Johnson Companies LP
13Our Single-Family Rental Portfolio
Tricon operates one of the largest portfolios of single-family rental homes in the U.S. Sun Belt
21,582 1,627 SF $1,432 $0.88 1993 $210,000
Total Homes Avg. Home Size Avg. Monthly Rent Avg. Monthly Rent / SF Avg. Vintage Avg. Home Value
Charlotte, NC
Atlanta, GA Houston, TX Charlotte, NC
Atlanta, GA
Jacksonville, FL Columbia, SC Atlanta, GA
Jacksonville, FL
Note: Homes depicted may not represent all homes in the portfolio.
14Single-Family Rental: Key Performance Metrics
Acquisitions Blended Rental Growth Same Home NOI Growth
7.5% on new leases
1,162 3.2% on renewals 11.6%
977 10.0%
918
6.2% 6.1% 5.9% 6.5%
5.1% 5.5%
538 4.5% 5.1%
68
Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020
Acquisition program was on pause Benefitting from continued strong Strong revenue growth and savings
and resumed in mid-July due to demand for institutional SFR from from R&M internalization offsetting
COVID-19 middle market households higher property tax expenses
Occupancy Annualized Turnover
97.1% 29.7% 30.0%
95.1% 94.4% 94.5% 95.5%
25.4%
23.5%
21.4%
Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020
Targeting ~95% by balancing rent Focused on driving lower turnover by
growth and time on market for vacant continually improving the resident
homes experience
15Industry Leading Technology Platform
Innovative technology is at the core of Tricon’s single-family rental operations – from acquisition of homes to
leasing and customer service
Cloud
Cellular Broadband
Computing
Mobility Networking
and Analytics
Proprietary TriAD platform filters over
Home 1 million MLS listing/yr based on 90 point Revenue Balancing rent vs. occupancy and
Acquisitions criteria with ability to issue a purchase Optimization time on market
agreement in under five minutes
Coded lock boxes allow for secure and 3D imaging captures and
Self Home
efficient showings at times that are Documenting
documents key components of
Showings
convenient for the potential resident the home
TriOPS platform enables real-time data
sharing by field staff and head office
Automated lease application, Repair &
Leasing resident underwriting and Maintenance Mobile inventory management for
rental payment options maintenance techs
Roof diagnosis using drones
16Our U.S. Multi-Family Rental Portfolio
Tricon owns a portfolio of high quality affordably priced suburban garden-style apartments
in the U.S. Sun Belt
23 7,289 966 SF $1,240 $1.28 2012
Properties Total Units Avg. Unit Size Avg. Monthly Rent Avg. Monthly Rent / SF Avg. Vintage
Falls at Eagle Creek, Houston, TX The Allure, Austin, TX The Reserves at Alafaya, Orlando, FL
The Callie, Dallas, TX Carrick Bend, Denver, CO Altis at Sand Lake, Orlando, FL
Note: Representative images are of select units and may not represent all properties.
17U.S. Multi-Family Rental: Key Performance Metrics
Blended Rental Growth Same Property NOI Growth Occupancy
-5.5% on new leases
6.8% 94.7% 95.2% 94.9%
0% on renewals 94.4%
5.6% 93.5%
1.6% 5.0%
1.4%
1.1% 1.1%
Consistent
with prior
(2.2%) year (4.9%)
Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2019 Q3 2019 Q4 2019 Q1 2020
Q2 2020 Q2 2020
Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020
Focused on driving occupancy since acquiring the portfolio in Q2/2019 and maintaining occupancy throughout current economic climate
Annualized Turnover Value-add Program
53.5%
52.9%
51.3%
Plan to renovate the portfolio over
47.5% time at a cost of ~$2,500-$6,000 per
46.5%
unit and projected average rent
increase of $50-$100/month
Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020
Targeting turnover below 50% by continually
improving the resident experience
18Our Canadian Multi-Family Rental Portfolio
In Canada, Tricon is developing a premier portfolio of build-to-core rental apartments
500 3,695 C$3.83 $1.2B ~45%
Suites in Lease-up Suites Under Avg. Monthly Rent / SF Cost to Complete1 Tricon
Development Ownership
The Selby, Toronto, ON The Taylor, Toronto, ON The James, Toronto, ON
West Don Lands, Toronto, ON The Ivy, Toronto, ON Labatt, Toronto, ON
Note: Images are renderings.
1. Based on current project plans and Tricon’s underwriting assumptions. Total projected construction cost of $1.46 billion with remaining $1.2 billion mostly funded by construction loans.
19Value Creation - Canadian Multi-Family Rental
The Canadian Multi-Family Development portfolio is projected to be a significant source of value creation for
Tricon’s shareholders upon stabilization
Development Status & Projected NOI1 Illustrative Value Creation upon Stabilization1
2 - 3x
Return on
$1,460M $69M Investment
17% Cost to date
$242M
TCN
~$31M 45%
Cost to complete C$1.64
83% $1,218M
(mostly funded by
construction loans)
Third-Party C$0.86
55%
~$38M
C$0.64
Funding Status Projected Annual NOI Upon Current IFRS NAV NAV per Share @ NAV per Share @
Stabilization per Share 4.00% cap rate 3.50% cap rate
1. Calculated on a total portfolio basis excluding The Selby, and based on target development yield of 4.75% on cost, with assumed financing of 65% loan-to-cost, and cap rates of 3.50-4.00% representing illustrative cap rates for the downtown Toronto
Class A multi-family market. Tricon’s equity stake in the portfolio is approximately 30%. There can be no assurance that actual performance will align with these projections.
20Private Funds and Advisory
Through its private funds and advisory business, Tricon earns fees from managing third-party capital
co-invested in its real estate assets
Fee Revenue by Segment (Q2/2020) PF&A AUM Growth
30% YOY
$2.4B
Asset
Management $1.8B
31%
Development
Management
$7.3M Q2 64%
Fee Revenue
Performance
Fees
3%
Property
Management
2% Q2 2019 Q2 2020
21Our Key Priorities1
• Provide stable, predictable income for shareholders by focusing on defensive
Grow FFO per rental housing
Share • Target 10%+ compounded annual growth rate in FFO per Share over three years
• Raise third-party capital in all our businesses to enhance scale, improve
Increase Third-Party operational efficiency, and drive return on equity with incremental fee income
AUM
• Add new third-party equity capital commitments of ~$1B over three years
Grow Book Value • Build shareholder value by deploying our free cash flow into accretive growth
per Share opportunities focused on rental housing
• Minimize corporate-level debt while maintaining prudent and largely non-recourse
Reduce Leverage leverage at the business segment or asset level
• Pursue consolidated leverage target of 50-55% net debt to assets
• Adopt financial disclosure practices that reduce complexity and improve
Improve Reporting comparability of results with real estate peers
1. Refer to the Forward-Looking Statements on page 1.
22Performance Dashboard1
Grow FFO per Share2 Increase Third-Party AUM Grow Book Value per Share
Target 10%+ compounded Target raising ~$1.0B in fee-bearing 18% annualized growth since entering
annual growth capital over the next 3 years SFR in 2012
C$11.37
$0.52 to
$0.57
~$3.3B
$0.42 $2.4B
C$3.01
$0.31
2018 2019 2022 2019 2022 2012 2013 2014 2015 2016 2017 2018 2019 Q2'20
Target Target Book Value per Share does not fully capture the value
from embedded growth in underlying investments
Reduce Leverage3 Improve Reporting
Current Consolidated Targeted Consolidated
Leverage Leverage of 50-55% ✓
□ Adopt consolidated accounting
□ Adopt more conventional company-
✓
Working towards wide real estate performance metrics,
39% 45-50% syndication of the such as FFO / AFFO per share
U.S. Multi-Family ✓
□ Enhance financial disclosure practices
Rental portfolio □ Adopt comprehensive ESG plan
61% 50-55% ✓
Equity Debt
Refer to “General” and “Forward-Looking Statements” on Page 1
1. USD/CAD exchange rates used are 1.36 at June 30, 2020 and going-forward;1.31 at June 30, 2019
2. All debt figures are presented net of cash and exclude Tricon’s outstanding 5.75% convertible debentures
Jacksonville, FL
23Gary Berman Wissam Francis Wojtek Nowak
President and Executive Vice President Managing Director,
Chief Executive Officer and Chief Financial Officer Capital Markets
triconresidential.com wfrancis@triconcapital.com wnowak@triconcapital.comYou can also read
