Tricon Completes a Year of Record Growth and Delivers Strong Operational Results in Q4 2022
Tricon Residential Inc. (NYSE: TCN, TSX: TCN) reported strong Q4 2022 results, with a net income of $55.9 million and Core FFO surging 112.2% to $96.8 million. Basic earnings per share were $0.19, driven by a 9.7% increase in same home NOI and solid rent growth of 7.4%. The company acquired 815 homes at an average price of $331,000, expanding their portfolio to 35,908 homes. Tricon's liquidity remains robust with $704 million available. Looking ahead, the company anticipates a slower acquisition pace in 2023, expecting to acquire 2,000-4,000 homes, with Core FFO per share guidance set at $0.54-$0.59.
- Core FFO increased by 112.2% year-over-year to $96.8 million in Q4 2022.
- Same home NOI growth of 10.4% for the full year 2022.
- Acquired a record 7,227 homes in 2022, expanding the portfolio by 23.2%.
- Same home occupancy rate stable at 98.0% with a record-low turnover rate of 12.2%.
- Strong liquidity with $704 million available.
- Net income decreased from $110.4 million in Q4 2021 to $55.9 million in Q4 2022.
- Direct operating expenses rose by 42.5% year-over-year, impacting profitability.
- Fair value gain on rental properties fell significantly to $56.4 million from $261.7 million year-over-year.
All financial information is presented in
The Company reported strong operational and financial results in the fourth quarter and for the full year, including the following highlights:
-
Net income from continuing operations was
in Q4 2022; basic and diluted earnings per share from continuing operations were$55.9 million and$0.19 , respectively;$0.11 -
Core funds from operations ("Core FFO") for Q4 2022 increased by
112.2% year-over-year to and Core FFO per share grew by$96.8 million 106.7% year-over-year to , driven by net operating income ("NOI") growth in the single-family rental home business, solid operating performance, and the inclusion of performance fees related to the sale of the$0.31 U.S. multi-family rental portfolio;1 -
Same home NOI for the single-family rental portfolio in Q4 2022 grew by
9.7% year-over-year and same home NOI margin increased by1.8% to a record69.8% . Same home occupancy increased in Q4 by0.2% year-over-year to98.0% and blended rent growth was7.4% (comprised of new lease rent growth of11.5% and renewal rent growth of6.8% ). In addition, Tricon's continued focus on resident retention led to a record-low annualized same home turnover rate of12.2% in Q4. For the full year, same home NOI grew by10.4% and same home NOI margin increased by1.2% to68.6% ;1 -
The Company acquired 815 homes during the quarter at an average price of
per home (including up-front renovations) for a total acquisition cost of$331,000 , of which Tricon's proportionate share was$270 million . For the full year, Tricon acquired a record 7,227 homes, expanding its portfolio by$84 million 23.2% ; -
Positive trends continued into early 2023, with same home rent growth of
7.3% inJanuary 2023 , including13.9% growth on new leases and6.6% growth on renewals, while same home occupancy was stable at97.4% and same home turnover remained low at16.6% ; -
On
October 18, 2022 , the Company completed the sale of its remaining20% equity interest in itsU.S. multi-family rental portfolio, generating proceeds of , including$319.3 million of performance fees (half of which are payable to participants in LTIP and management co-investment plans); and$99.9 million -
On
October 13, 2022 , the Company announced that theToronto Stock Exchange ("TSX") had approved its notice of intention to make a normal course issuer bid (“NCIB”) to repurchase up to 2,500,000 of its common shares trading on the TSX, theNew York Stock Exchange ("NYSE") and/or alternative Canadian trading systems during the twelve-month period ending onOctober 17, 2023 . During Q4, the Company repurchased 338,100 of its common shares on the TSX and 339,566 common shares on the NYSE under the NCIB for a total of .$5.4 million
In addition to strong operational and financial results, Tricon achieved several significant strategic milestones in the fourth quarter:
-
On
October 20, 2022 , the Company announced an industry-leading Bill of Rights for single-family residents, the first of its kind among single-family rental housing providers inthe United States . This measure underscores Tricon’s resident-first approach and highlights the Company’s mission to support the well-being of its residents. The Tricon Resident Bill of Rights outlines the Company’s commitment to providing quality, move-in-ready homes with caring and reliable service; and -
In December, Tricon amended its
corporate credit facility to incorporate Environmental, Social and Governance ("ESG") targets and convert it to a Sustainability-linked Loan ("SLL"). This credit facility, which was undrawn as of$500 million December 31, 2022 , provides Tricon with liquidity to pursue the growth of its single-family rental business. The SLL structure links the borrowing cost directly to the Company's performance in three priority areas of its ESG strategy: (i) increasing the percentage of homes with energy efficiency upgrades in Tricon's single-family home rental portfolio, (ii) increasing the number of multi-family residential buildings with LEED Gold certification, and (iii) increasing participation in Tricon Vantage, a market-leading program aimed at providing ourU.S. residents with tools and resources to set financial goals and enhance their long-term economic stability.
“Amidst a period of economic uncertainty, Tricon concluded 2022 with a record year of growth and another strong quarter of operating results. Our key accomplishments included record acquisition volume of more than 7,200 single-family rental homes, growth in proportionate net operating income (NOI) of approximately
Financial Highlights
For the periods ended |
Three months |
|
Twelve months |
||||||||||
(in thousands of |
2022 |
2021 |
|
2022 |
2021 |
||||||||
|
|
|
|
|
|
||||||||
Financial highlights on a consolidated basis |
|
|
|
|
|
||||||||
Net income from continuing operations, including: |
$ |
55,883 |
|
$ |
110,439 |
|
|
$ |
779,374 |
|
$ |
459,357 |
|
Fair value gain on rental properties |
|
56,414 |
|
|
261,676 |
|
|
|
858,987 |
|
|
990,575 |
|
|
|
|
|
|
|
||||||||
Basic earnings per share attributable to shareholders of Tricon from continuing operations |
|
0.19 |
|
|
0.41 |
|
|
|
2.82 |
|
|
2.07 |
|
Diluted earnings per share attributable to shareholders of Tricon from continuing operations |
|
0.11 |
|
|
0.40 |
|
|
|
1.98 |
|
|
2.05 |
|
|
|
|
|
|
|
||||||||
Net income (loss) from discontinued operations |
|
1,829 |
|
|
16,538 |
|
|
|
35,106 |
|
|
(9,830 |
) |
Basic earnings (loss) per share attributable to shareholders of Tricon from discontinued operations |
|
0.01 |
|
|
0.06 |
|
|
|
0.13 |
|
|
(0.04 |
) |
Diluted earnings (loss) per share attributable to shareholders of Tricon from discontinued operations |
|
0.01 |
|
|
0.06 |
|
|
|
0.11 |
|
|
(0.05 |
) |
|
|
|
|
|
|
||||||||
Dividends per share(1) |
$ |
0.058 |
|
$ |
0.058 |
|
|
$ |
0.232 |
|
$ |
0.225 |
|
|
|
|
|
|
|
||||||||
Weighted average shares outstanding - basic |
|
274,684,779 |
|
|
268,428,784 |
|
|
|
274,483,264 |
|
|
219,834,130 |
|
Weighted average shares outstanding - diluted |
|
311,222,080 |
|
|
270,953,420 |
|
|
|
311,100,493 |
|
|
222,118,737 |
|
|
|
|
|
|
|
||||||||
Non-IFRS(2) measures on a proportionate basis |
|
|
|
|
|
||||||||
Core funds from operations ("Core FFO") |
$ |
96,841 |
|
$ |
45,630 |
|
|
$ |
237,288 |
|
$ |
152,021 |
|
Adjusted funds from operations ("AFFO") |
|
88,694 |
|
|
36,548 |
|
|
|
198,264 |
|
|
121,594 |
|
|
|
|
|
|
|
||||||||
Core FFO per share(3) |
|
0.31 |
|
|
0.15 |
|
|
|
0.76 |
|
|
0.57 |
|
AFFO per share(3) |
|
0.28 |
|
|
0.12 |
|
|
|
0.64 |
|
|
0.45 |
|
|
|
|
|
|
|
||||||||
(1) Dividends are issued and paid in |
Net income from continuing operations in the fourth quarter of 2022 was
-
Revenue from single-family rental properties of
compared to$180.9 million in the fourth quarter of 2021, driven primarily by growth of$124.4 million 23.2% in the single-family rental portfolio to 35,908 homes and a9.4% year-over-year increase in average effective monthly rent (from to$1,591 ).$1,741 -
Direct operating expenses of
compared to$58.4 million in the fourth quarter of 2021, reflecting a larger rental portfolio, higher property tax expenses associated with increasing property value assessments, as well as general cost and labor market inflationary pressures.$41.0 million -
Revenue from private funds and advisory services of
, compared to$14.8 million in the fourth quarter of 2021, driven by no performance fees being recognized in the quarter as well as a decrease in property management fees following the sale of Tricon's remaining interest in the$17.7 million U.S. multi-family rental portfolio during the quarter.2 -
Fair value gain on rental properties of
compared to$56.4 million in the fourth quarter of 2021, attributable to a moderation in home price appreciation within the single-family rental portfolio given the current climate of rising mortgage rates and greater economic uncertainty.$261.7 million
Net income from continuing operations for the year ended
-
Revenue from single-family rental properties of
and direct operating expenses of$645.6 million compared to$209.1 million and$445.9 million in the prior year, respectively, which translated to a net operating income ("NOI") increase of$149.9 million , attributable to the continued growth of the single-family rental portfolio and strong rent growth.$140.5 million -
Revenue from private funds and advisory services of
compared to$160.1 million in the prior year, driven primarily by$50.7 million of performance fees earned from Tricon's investors in respect of the sale of the$100 million U.S. multi-family rental portfolio. -
Fair value gain on rental properties of
compared to$859.0 million in the prior year as a result of a moderation of home price appreciation experienced in the latter half of the year.$990.6 million
Core FFO for the fourth quarter of 2022 was
Adjusted funds from operations ("AFFO") for the three and twelve months ended
Single-Family Rental Operating Highlights
The measures presented in the table below and throughout this press release are on a proportionate basis, reflecting only the portion attributable to Tricon's shareholders based on the Company's ownership percentage of the underlying entities and excludes the percentage associated with non-controlling and limited partners' interests, unless otherwise stated. A list of these measures, together with a description of the information each measure reflects and the reasons why management believes the measure to be useful or relevant in evaluating the underlying performance of the Company’s businesses, is set out in Section 6 of Tricon's MD&A.
For the periods ended |
Three months |
|
Twelve months |
||||||||||
(in thousands of |
2022 |
2021 |
|
2022 |
2021 |
||||||||
|
|
|
|
|
|
||||||||
Total rental homes managed |
|
|
|
|
36,259 |
|
|
29,237 |
|
||||
Total proportionate net operating income (NOI)(1) |
$ |
73,744 |
|
$ |
59,354 |
|
|
$ |
275,543 |
|
$ |
221,655 |
|
Total proportionate net operating income (NOI) growth(1) |
|
24.2 |
% |
|
17.6 |
% |
|
|
24.3 |
% |
|
12.2 |
% |
Same home net operating income (NOI) margin(1) |
|
69.8 |
% |
|
68.0 |
% |
|
|
68.6 |
% |
|
67.4 |
% |
Same home net operating income (NOI) growth(1) |
|
9.7 |
% |
|
N/A |
|
|
|
10.4 |
% |
|
N/A |
|
Same home occupancy |
|
98.0 |
% |
|
97.8 |
% |
|
|
98.1 |
% |
|
97.6 |
% |
Same home annualized turnover |
|
12.2 |
% |
|
15.3 |
% |
|
|
15.0 |
% |
|
20.6 |
% |
Same home average quarterly rent growth - renewal |
|
6.8 |
% |
|
5.7 |
% |
|
|
6.5 |
% |
|
4.9 |
% |
Same home average quarterly rent growth - new move-in |
|
11.5 |
% |
|
18.6 |
% |
|
|
16.8 |
% |
|
17.0 |
% |
Same home average quarterly rent growth - blended |
|
7.4 |
% |
|
8.9 |
% |
|
|
8.2 |
% |
|
8.3 |
% |
(1) Non-IFRS measures are presented to illustrate alternative relevant measures to assess the Company's performance. For the basis of presentation of the Company’s Non-IFRS measures and reconciliations, refer to the “Non-IFRS Measures” section and Appendix A. For definitions of the Company’s Non-IFRS measures, refer to Section 6 of Tricon's MD&A. |
Single-family rental NOI was
Single-family rental same home NOI growth was
Single-Family Rental Investment Activity
The Company expanded its single-family rental portfolio by acquiring 815 homes during the quarter, bringing its total managed portfolio to 35,908 rental homes. The homes were purchased at an average cost per home of
Adjacent Residential Businesses Highlights
Quarterly highlights of the Company's adjacent residential businesses include:
-
In the Canadian multi-family business, The Selby's occupancy remained strong at
98.0% , supported by an improved annualized turnover rate of24.0% and blended rent growth of11.4% (reflecting a combination of higher market rents and the removal of substantial leasing concessions prevalent during the COVID-19 pandemic). These factors resulted in a year-over-year NOI growth of35.0% ; -
In Tricon's Canadian residential development portfolio, The Taylor's occupancy rates are tracking ahead of plan, with
41% of the building leased up at average monthly rents ofC per square foot. Construction at The Ivy and$4.42 Canary Landing (WestDon Lands ) - Block 8 continue to progress, with first occupancy anticipated by mid-2023. Meanwhile, the Symington project is on track to commence construction in early 2023. Although the portfolio experienced pressures on construction timelines and costs associated with the current inflationary environment, the Company leveraged its strong trade relationships to minimize construction delays and reduce the impact of cost increases; and -
Tricon's investments in
U.S. residential developments generated of distributions to the Company in Q4 2022.$5.4 million
Change in Net Assets
Tricon's net assets were
Balance Sheet and Liquidity
Tricon's liquidity consists of a
As at
Full Year 2023 Guidance
The following table highlights guidance for the Company's Core FFO per share, same home metrics and acquisitions for the upcoming fiscal year. Given the ongoing dislocation in the capital markets, whereby the high cost of financing has negatively impacted investment returns on most acquisitions, Tricon has elected to reduce its pace of acquisitions in 2023 and expects to acquire approximately 400 homes in the first quarter of 2023, and to moderate external growth for the remainder of 2023.
For the years ended |
|
|
|
|
|
|
|
|||||||||
(in billions of |
2022 Recent guidance |
2022 Actual |
2023 Guidance |
|||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Core FFO per share |
$ |
0.75 |
|
- |
0.77 |
|
$ |
0.76 |
|
$ |
0.54 |
|
- |
$ |
0.59 |
|
|
|
|
|
|
|
|
|
|||||||||
Same home revenue growth |
|
8.0 |
% |
- |
9.0 |
% |
|
8.3 |
% |
|
6.0 |
% |
- |
|
7.5 |
% |
Same home expense growth |
|
4.5 |
% |
- |
5.5 |
% |
|
4.1 |
% |
|
6.0 |
% |
- |
|
7.5 |
% |
Same home NOI growth |
|
10.0 |
% |
- |
11.0 |
% |
|
10.4 |
% |
|
6.0 |
% |
- |
|
7.5 |
% |
Single-family rental acquisitions (homes)(1) |
7,300+ |
|
7,227 |
|
|
2,000 |
|
- |
|
4,000 |
|
|||||
Single-family rental acquisitions ($ in billions)(1) |
|
|
N/A |
|
$ |
2.6 |
|
$ |
0.7 |
|
- |
$ |
1.4 |
|
||
|
|
|
|
|
|
|
|
|||||||||
(1) Single-family rental acquisition costs include initial purchase price, closing costs and up-front renovation costs. These acquisition home counts and costs are presented on a consolidated basis and Tricon's share represents approximately |
Reconciliation of Core FFO per share - 2022 results to 2023 Guidance mid-point
For the years ended |
|
||
|
|
||
2022 Core FFO per share |
$ |
0.76 |
|
|
|
(0.20 |
) |
2022 Core FFO per share excluding |
|
0.56 |
|
|
|
||
Change attributed to: |
|
||
Same home NOI growth |
|
0.05 |
|
Non-same home NOI growth |
|
0.08 |
|
Corporate overhead efficiencies |
|
0.03 |
|
Interest expense |
|
(0.12 |
) |
Income tax expenses and other |
|
(0.03 |
) |
Total change |
$ |
0.01 |
|
|
|
||
2023 Core FFO per share guidance midpoint |
$ |
0.57 |
|
|
|
||
(1) Includes impact to Core FFO from fees, Core FFO from |
Note: Non-IFRS measures are presented to illustrate alternative relevant measures to assess the Company's performance. Refer to the “Non-IFRS Measures” and Section 6 of the Company's MD&A for definitions. See also the “Forward-Looking Information” section, as the figures presented above are considered to be “financial outlook” for purposes of applicable Canadian securities laws and may not be appropriate for purposes other than to understand management’s current expectations relating to the future of the Company. The reader is cautioned that this information is forward-looking and actual results may vary materially from those reported. Although the Company believes that its anticipated future results, performance or achievements expressed or implied by the forward-looking statements and information are based upon reasonable assumptions and expectations, the reader should not place undue reliance on forward-looking statements and information. The Company reviews its key assumptions regularly and may change its outlook on a going-forward basis if necessary.
Quarterly Dividend
On
Tricon’s dividends are designated as eligible dividends for Canadian tax purposes in accordance with subsection 89(14) of the Income Tax Act (
Conference Call and Webcast
Management will host a conference call at
This press release should be read in conjunction with the Company’s Financial Statements and Management’s Discussion and Analysis (the "MD&A") for the year ended
The Company has also made available on its website supplemental information for the three and twelve months ended
About
Forward-Looking Information
This news release contains forward-looking statements pertaining to expected future events, financial and operating results, and projections of the Company, including statements related to targeted financial performance and leverage; the Company's growth plans; the pace, availability and pricing of anticipated home acquisitions; anticipated rent growth, fee income and other revenue; development plans, costs and timelines; and the impact of such factors on the Company. Such forward-looking information and statements involve risks and uncertainties and are based on management’s current expectations, intentions and assumptions in light of its understanding of relevant current market conditions, its business plans, and its prospects. If unknown risks arise, or if any of the assumptions underlying the forward-looking statements prove incorrect, actual results may differ materially from management expectations as projected in such forward-looking statements. Examples of such risks include, but are not limited to, the Company's inability to execute its growth strategies; the impact of changing economic and market conditions, increasing competition and the effect of fluctuations and cycles in the Canadian and
Certain statements included in this press release, including with respect to 2023 guidance for Core FFO per share and same home metrics, are considered to be financial outlook for purposes of applicable securities laws, and as such, the financial outlook may not be appropriate for purposes other than to understand management’s current expectations relating to the future of the Company, as disclosed in this press release. These forward-looking statements have been approved by management to be made as at the date of this press release. Although the forward-looking statements contained in this presentation are based upon what management currently believes to be reasonable assumptions (including in particular the revenue growth, expense growth and portfolio growth assumptions set out herein (which themselves are based on, respectively: assumed ancillary revenue growth and continuing favorable market rent growth increased internalization of maintenance activity and increased management efficiencies accompanying portfolio growth; and the availability of SFR homes meeting the Company’s acquisition objectives), there can be no assurance that actual results, performance or achievements will be consistent with these forward-looking statements. The forward-looking statements contained in this document are expressly qualified in their entirety by this cautionary statement.
Non-IFRS Measures
The Company has included herein certain non-IFRS financial measures and non-IFRS ratios, including, but not limited to: "proportionate" metrics, net operating income ("NOI"), NOI margin, funds from operations ("FFO"), core funds from operations ("Core FFO"), adjusted funds from operations ("AFFO"), Core FFO per share, AFFO per share, Adjusted EBITDAre as well as certain key indicators of the performance of our businesses which are supplementary financial measures. These measures are commonly used by entities in the real estate industry as useful metrics for measuring performance. We utilize these measures in managing our business, including performance measurement and capital allocation. In addition, certain of these measures are used in measuring compliance with our debt covenants. We believe that providing these performance measures on a supplemental basis is helpful to investors and shareholders in assessing the overall performance of the Company’s business. However, these measures are not recognized under and do not have any standardized meaning prescribed by IFRS as issued by the IASB, and are not necessarily comparable to similar measures presented by other publicly traded entities. These measures should be considered as supplemental in nature and not as a substitute for related financial information prepared in accordance with IFRS. Because non-IFRS financial measures, non-IFRS ratios and supplementary financial measures do not have standardized meanings prescribed under IFRS, securities regulations require that such measures be clearly defined, identified, and reconciled to their nearest IFRS measure. The calculation and reconciliation of the non-IFRS financial measures and the requisite disclosure for non-IFRS ratios used herein are provided in Appendix A below. The definitions of the Company’s Non-IFRS measures are provided in the "Glossary and Defined Terms" section as well as Section 6 of Tricon's MD&A.
The non-IFRS financial measures, non-IFRS ratios and supplementary financial measures presented herein should not be construed as alternatives to net income (loss) or cash flow from the Company’s activities, determined in accordance with IFRS, as indicators of Tricon’s financial performance. Tricon’s method of calculating these measures may differ from other issuers’ methods and, accordingly, these measures may not be comparable to similar measures presented by other publicly-traded entities.
Appendix A - Reconciliations
RECONCILIATION OF NET INCOME TO FFO, CORE FFO AND AFFO
For the periods ended |
Three months |
|
Twelve months |
||||||||||||||||
(in thousands of |
2022 |
2021 |
Variance |
|
2022 |
2021 |
Variance |
||||||||||||
|
|
|
|
|
|
|
|
||||||||||||
Net income from continuing operations attributable to Tricon's shareholders |
$ |
53,339 |
|
$ |
93,238 |
|
$ |
(39,899 |
) |
|
$ |
773,835 |
|
$ |
439,739 |
|
$ |
334,096 |
|
|
|
|
|
|
|
|
|
||||||||||||
Fair value gain on rental properties |
|
(56,414 |
) |
|
(261,676 |
) |
|
205,262 |
|
|
|
(858,987 |
) |
|
(990,575 |
) |
|
131,588 |
|
Fair value (gain) loss on Canadian development properties |
|
— |
|
|
(10,098 |
) |
|
10,098 |
|
|
|
440 |
|
|
(10,098 |
) |
|
10,538 |
|
Fair value (gain) loss on derivative financial instruments and other liabilities |
|
(25,818 |
) |
|
72,783 |
|
|
(98,601 |
) |
|
|
(184,809 |
) |
|
220,177 |
|
|
(404,986 |
) |
Limited partners' share of FFO adjustments |
|
49,834 |
|
|
41,720 |
|
|
8,114 |
|
|
|
283,338 |
|
|
171,498 |
|
|
111,840 |
|
FFO attributable to Tricon's shareholders |
$ |
20,941 |
|
$ |
(64,033 |
) |
$ |
84,974 |
|
|
$ |
13,817 |
|
$ |
(169,259 |
) |
$ |
183,076 |
|
|
|
|
|
|
|
|
|
||||||||||||
Core FFO from |
|
868 |
|
|
2,318 |
|
|
(1,450 |
) |
|
|
8,173 |
|
|
13,805 |
|
|
(5,632 |
) |
Income from equity-accounted investments in multi-family rental properties |
|
(1,051 |
) |
|
(2,077 |
) |
|
1,026 |
|
|
|
(1,550 |
) |
|
(2,255 |
) |
|
705 |
|
Income from equity-accounted investments in Canadian residential developments |
|
(7,690 |
) |
|
(10,085 |
) |
|
2,395 |
|
|
|
(11,198 |
) |
|
(8,200 |
) |
|
(2,998 |
) |
Performance fees revenue from the sale of |
|
99,866 |
|
|
— |
|
|
99,866 |
|
|
|
— |
|
|
— |
|
|
— |
|
Performance fees payments associated with |
|
(49,577 |
) |
|
— |
|
|
(49,577 |
) |
|
|
(49,577 |
) |
|
— |
|
|
(49,577 |
) |
Deferred income tax expense |
|
5,601 |
|
|
53,507 |
|
|
(47,906 |
) |
|
|
189,179 |
|
|
234,483 |
|
|
(45,304 |
) |
Current tax impact on sale of |
|
— |
|
|
— |
|
|
— |
|
|
|
(29,835 |
) |
|
(44,502 |
) |
|
14,667 |
|
Interest on convertible debentures |
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
6,732 |
|
|
(6,732 |
) |
Interest on Due to Affiliate |
|
4,245 |
|
|
4,312 |
|
|
(67 |
) |
|
|
17,022 |
|
|
17,250 |
|
|
(228 |
) |
Amortization of deferred financing costs, discounts and lease obligations |
|
5,581 |
|
|
3,917 |
|
|
1,664 |
|
|
|
19,284 |
|
|
16,571 |
|
|
2,713 |
|
Equity-based, non-cash and non-recurring compensation(2) |
|
8,383 |
|
|
56,050 |
|
|
(47,667 |
) |
|
|
54,716 |
|
|
66,262 |
|
|
(11,546 |
) |
Other adjustments |
|
9,674 |
|
|
1,721 |
|
|
7,953 |
|
|
|
27,257 |
|
|
21,134 |
|
|
6,123 |
|
Core FFO attributable to Tricon's shareholders |
$ |
96,841 |
|
$ |
45,630 |
|
$ |
51,211 |
|
|
$ |
237,288 |
|
$ |
152,021 |
|
$ |
85,267 |
|
|
|
|
|
|
|
|
|
||||||||||||
Recurring capital expenditures(3) |
|
(8,147 |
) |
|
(9,082 |
) |
|
935 |
|
|
|
(39,024 |
) |
|
(30,427 |
) |
|
(8,597 |
) |
AFFO attributable to Tricon's shareholders |
$ |
88,694 |
|
$ |
36,548 |
|
$ |
52,146 |
|
|
$ |
198,264 |
|
$ |
121,594 |
|
$ |
76,670 |
|
(1) Performance fees of |
RECONCILIATION OF SINGLE-FAMILY RENTAL TOTAL AND SAME HOME NOI
For the periods ended |
Three months |
|
Twelve months |
||||||||||
(in thousands of |
2022 |
2021 |
|
2022 |
2021 |
||||||||
|
|
|
|
|
|
||||||||
Net operating income (NOI), proportionate same home portfolio |
$ |
54,816 |
|
$ |
49,948 |
|
|
$ |
211,183 |
|
$ |
191,313 |
|
Net operating income (NOI), proportionate non-same home |
|
18,928 |
|
|
9,406 |
|
|
|
64,360 |
|
|
30,342 |
|
Net operating income (NOI), proportionate total portfolio |
|
73,744 |
|
|
59,354 |
|
|
|
275,543 |
|
|
221,655 |
|
Limited partners' share of NOI(1) |
|
48,778 |
|
|
24,001 |
|
|
|
160,953 |
|
|
74,320 |
|
Net operating income from single-family rental properties per financial statements |
$ |
122,522 |
|
$ |
83,355 |
|
|
$ |
436,496 |
|
$ |
295,975 |
|
(1) Represents the limited partners' interest in the NOI from SFR JV-1, SFR JV-2 and SFR JV-HD. |
RECONCILIATION OF PROPORTIONATE TOTAL PORTFOLIO GROWTH METRICS
For the three months ended |
|
|
|
|
|||||||
(in thousands of |
2022 |
2021 |
Variance |
% Variance |
|||||||
|
|
|
|
|
|||||||
Total revenue from rental properties |
$ |
107,778 |
|
$ |
89,111 |
|
$ |
18,667 |
20.9 |
% |
|
Total direct operating expenses |
|
34,034 |
|
|
29,757 |
|
|
4,277 |
|
14.4 |
% |
|
|
|
|
|
|||||||
Net operating income (NOI)(1) |
$ |
73,744 |
|
$ |
59,354 |
|
$ |
14,390 |
|
24.2 |
% |
Net operating income (NOI) margin(1) |
|
68.4 |
% |
|
66.6 |
% |
|
|
|||
(1) Non-IFRS measures; refer to Section 6 of the MD&A for definitions. |
For the twelve months ended |
|
|
|
|
|||||||
(in thousands of |
2022 |
2021 |
Variance |
% Variance |
|||||||
|
|
|
|
|
|||||||
Total revenue from rental properties |
$ |
407,227 |
|
$ |
334,905 |
|
$ |
72,322 |
21.6 |
% |
|
Total direct operating expenses |
|
131,684 |
|
|
113,250 |
|
|
18,434 |
|
16.3 |
% |
|
|
|
|
|
|||||||
Net operating income (NOI)(1) |
$ |
275,543 |
|
$ |
221,655 |
|
$ |
53,888 |
|
24.3 |
% |
Net operating income (NOI) margin(1) |
|
67.7 |
% |
|
66.2 |
% |
|
|
|||
(1) Non-IFRS measures; refer to Section 6 of the MD&A for definitions. |
RECONCILIATION OF PROPORTIONATE SAME HOME GROWTH METRICS
For the three months ended |
|
|
|
|
|||||||
(in thousands of |
2022 |
2021 |
Variance |
% Variance |
|||||||
|
|
|
|
|
|||||||
Total revenue from rental properties |
$ |
78,511 |
|
$ |
73,447 |
|
$ |
5,064 |
6.9 |
% |
|
Total direct operating expenses |
|
23,695 |
|
|
23,499 |
|
|
196 |
|
0.8 |
% |
|
|
|
|
|
|||||||
Net operating income (NOI)(1) |
$ |
54,816 |
|
$ |
49,948 |
|
$ |
4,868 |
|
9.7 |
% |
Net operating income (NOI) margin(1) |
|
69.8 |
% |
|
68.0 |
% |
|
|
|||
(1) Non-IFRS measures; refer to Section 6 of the MD&A for definitions. |
For the twelve months ended |
|
|
|
|
|||||||
(in thousands of |
2022 |
2021 |
Variance |
% Variance |
|||||||
|
|
|
|
|
|||||||
Total revenue from rental properties |
$ |
307,646 |
|
$ |
283,995 |
|
$ |
23,651 |
8.3 |
% |
|
Total direct operating expenses |
|
96,463 |
|
|
92,682 |
|
|
3,781 |
|
4.1 |
% |
|
|
|
|
|
|||||||
Net operating income (NOI)(1) |
$ |
211,183 |
|
$ |
191,313 |
|
$ |
19,870 |
|
10.4 |
% |
Net operating income (NOI) margin(1) |
|
68.6 |
% |
|
67.4 |
% |
|
|
|||
(1) Non-IFRS measures; refer to Section 6 of the MD&A for definitions. |
PROPORTIONATE BALANCE SHEET
(in thousands of |
Rental portfolio |
Development portfolio |
Corporate assets and liabilities |
Tricon proportionate results |
IFRS reconciliation |
Consolidated results/Total |
||||||||||||
A |
B |
C |
D = A+B+C |
E |
D+E |
|||||||||||||
|
|
|
|
|
|
|
||||||||||||
Assets |
|
|
|
|
|
|
||||||||||||
Rental properties |
$ |
6,797,730 |
$ |
— |
$ |
— |
$ |
6,797,730 |
$ |
4,647,929 |
$ |
11,445,659 |
||||||
Equity-accounted investments in multi-family rental properties |
|
20,769 |
|
|
— |
|
|
— |
|
|
20,769 |
|
|
— |
|
|
20,769 |
|
Equity-accounted investments in Canadian residential developments |
|
— |
|
|
106,538 |
|
|
— |
|
|
106,538 |
|
|
— |
|
|
106,538 |
|
Canadian development properties |
|
— |
|
|
136,413 |
|
|
— |
|
|
136,413 |
|
|
— |
|
|
136,413 |
|
Investments in |
|
— |
|
|
138,369 |
|
|
— |
|
|
138,369 |
|
|
— |
|
|
138,369 |
|
Restricted cash |
|
55,748 |
|
|
243 |
|
|
1,231 |
|
|
57,222 |
|
|
60,078 |
|
|
117,300 |
|
|
|
3,687 |
|
|
— |
|
|
133,671 |
|
|
137,358 |
|
|
6,671 |
|
|
144,029 |
|
Deferred income tax assets |
|
— |
|
|
— |
|
|
75,062 |
|
|
75,062 |
|
|
— |
|
|
75,062 |
|
Cash |
|
68,187 |
|
|
1,181 |
|
|
62,847 |
|
|
132,215 |
|
|
72,088 |
|
|
204,303 |
|
Other working capital items(1) |
|
11,445 |
|
|
1,506 |
|
|
35,687 |
|
|
48,638 |
|
|
13,866 |
|
|
62,504 |
|
Assets held for sale |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Total assets |
$ |
6,957,566 |
|
$ |
384,250 |
|
$ |
308,498 |
|
$ |
7,650,314 |
|
$ |
4,800,632 |
|
$ |
12,450,946 |
|
|
|
|
|
|
|
|
||||||||||||
Liabilities |
|
|
|
|
|
|
||||||||||||
Debt |
|
2,674,173 |
|
|
21,095 |
|
|
11,715 |
|
|
2,706,983 |
|
|
3,021,201 |
|
|
5,728,184 |
|
Due to Affiliate |
|
— |
|
|
— |
|
|
256,824 |
|
|
256,824 |
|
|
— |
|
|
256,824 |
|
Other liabilities(2) |
|
131,712 |
|
|
3,626 |
|
|
162,431 |
|
|
297,769 |
|
|
1,779,431 |
|
|
2,077,200 |
|
Deferred income tax liabilities |
|
— |
|
|
— |
|
|
591,713 |
|
|
591,713 |
|
|
— |
|
|
591,713 |
|
Total liabilities |
$ |
2,805,885 |
|
$ |
24,721 |
|
$ |
1,022,683 |
|
$ |
3,853,289 |
|
$ |
4,800,632 |
|
$ |
8,653,921 |
|
|
|
|
|
|
|
|
||||||||||||
Non-controlling interest |
|
— |
|
|
— |
|
|
6,776 |
|
|
6,776 |
|
|
— |
|
|
6,776 |
|
|
|
|
|
|
|
|
||||||||||||
Net assets attributable to Tricon's shareholders |
$ |
4,151,681 |
|
$ |
359,529 |
|
$ |
(720,961 |
) |
$ |
3,790,249 |
|
$ |
— |
|
$ |
3,790,249 |
|
|
|
|
|
|
|
|
||||||||||||
Net assets per share(3) |
$ |
15.22 |
|
$ |
1.32 |
|
$ |
(2.64 |
) |
$ |
13.89 |
|
|
|
||||
Net assets per share (CAD)(3) |
$ |
20.61 |
|
$ |
1.79 |
|
$ |
(3.58 |
) |
$ |
18.81 |
|
|
|
||||
(1) Other working capital items include amounts receivable and prepaid expenses and deposits.
|
TOTAL AUM
|
|
|
|
||
(in thousands of |
Balance |
% of total AUM |
|
Balance |
% of total AUM |
|
|
|
|
|
|
Third-party AUM |
|
|
|
|
|
Principal AUM |
7,882,908 |
|
|
6,919,664 |
|
Total AUM |
|
|
|
|
|
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDAre
(in thousands of |
Total proportionate results |
IFRS reconciliation |
Consolidated results/Total |
||||||
|
|
|
|
||||||
For the three months ended |
|
|
|
||||||
Net income attributable to Tricon's shareholders from continuing operations |
$ |
53,339 |
|
$ |
— |
|
$ |
53,339 |
|
Interest expense |
|
32,810 |
|
|
38,310 |
|
|
71,120 |
|
Current income tax recovery |
|
(5,665 |
) |
|
— |
|
|
(5,665 |
) |
Deferred income tax expense |
|
5,601 |
|
|
— |
|
|
5,601 |
|
Amortization and depreciation expense |
|
4,764 |
|
|
— |
|
|
4,764 |
|
Fair value gain on rental properties |
|
(5,914 |
) |
|
(50,500 |
) |
|
(56,414 |
) |
Fair value gain on Canadian development properties |
|
— |
|
|
— |
|
|
— |
|
Fair value gain on derivative financial instruments and other liabilities |
|
(26,484 |
) |
|
666 |
|
|
(25,818 |
) |
Look-through EBITDAre adjustments from non-consolidated affiliates |
|
(7,141 |
) |
|
— |
|
|
(7,141 |
) |
EBITDAre, consolidated |
$ |
51,310 |
|
$ |
(11,524 |
) |
$ |
39,786 |
|
|
|
|
|
||||||
Equity-based, non-cash and non-recurring compensation |
|
8,383 |
|
|
— |
|
|
8,383 |
|
Other adjustments(1) |
|
64,124 |
|
|
(826 |
) |
|
63,298 |
|
Limited partners' share of EBITDAre adjustments |
|
— |
|
|
12,350 |
|
|
12,350 |
|
Non-controlling interest's share of EBITDAre adjustments |
|
(197 |
) |
|
— |
|
|
(197 |
) |
Adjusted EBITDAre(2) |
$ |
123,620 |
|
$ |
— |
|
$ |
123,620 |
|
|
|
|
|
||||||
Adjusted EBITDAre (annualized)(2) |
|
|
|
494,480 |
|
||||
(1) Includes the following adjustments: |
(in thousands of |
Proportionate |
IFRS reconciliation |
Consolidated |
||||||
|
|
|
|
||||||
Transaction costs |
$ |
8,004 |
|
$ |
(826 |
) |
$ |
7,178 |
|
Realized and unrealized foreign exchange loss |
|
164 |
|
|
— |
|
|
164 |
|
Loss on debt extinguishment |
|
6,816 |
|
|
— |
|
|
6,816 |
|
Look-through other adjustments from non-consolidated affiliates |
|
(19 |
) |
|
— |
|
|
(19 |
) |
Lease payments on right-of-use assets |
|
(1,130 |
) |
|
— |
|
|
(1,130 |
) |
Performance fees earned on the sale of the |
|
99,866 |
|
|
|
99,866 |
|
||
Performance fees payments associated with |
|
(49,577 |
) |
|
— |
|
|
(49,577 |
) |
Total other adjustments |
$ |
64,124 |
|
$ |
(826 |
) |
$ |
63,298 |
|
(2) Q4 Adjusted EBITDAre includes the net performance fee income of |
PRO-RATA ASSETS
Tricon's pro-rata assets include its share of total assets of non-consolidated entities on a look-through basis, which are shown as equity-accounted investments on its proportionate balance sheet.
(in thousands of |
|
||
|
|
||
Pro-rata assets of consolidated entities(1) |
$ |
7,523,007 |
|
|
|
||
Canadian multi-family rental properties |
|
38,979 |
|
Canadian residential developments(2) |
|
247,854 |
|
Pro-rata assets of non-consolidated entities |
|
286,833 |
|
|
|
||
Pro-rata assets, total |
$ |
7,809,840 |
|
Pro-rata assets (net of cash), total(3) |
$ |
7,616,248 |
|
(1) Includes proportionate total assets presented in the proportionate balance sheet table above excluding equity-accounted investments in multi-family rental properties and equity-accounted investments in Canadian residential developments.
|
PRO-RATA NET DEBT TO ASSETS
(in thousands of |
|
||
|
|
||
Pro-rata debt of consolidated entities |
$ |
2,706,983 |
|
|
|
||
Canadian multi-family rental properties |
|
17,308 |
|
Canadian residential developments(2) |
|
127,690 |
|
Pro-rata debt of non-consolidated entities |
|
144,998 |
|
|
|
||
Pro-rata debt, total |
$ |
2,851,981 |
|
Pro-rata net debt, total(1) |
$ |
2,658,389 |
|
|
|
||
Pro-rata net debt to assets |
|
34.9 |
% |
(1) Reflects proportionate cash and restricted cash of |
RECONCILIATION OF PRO-RATA DEBT AND ASSETS OF NON-CONSOLIDATED ENTITIES TO CONSOLIDATED BALANCE SHEET
(in thousands of |
|
||
|
|
||
Equity-accounted investments in Canadian multi-family rental properties |
|
||
Tricon's pro-rata share of assets |
$ |
38,979 |
|
Tricon's pro-rata share of debt |
|
(17,308 |
) |
Tricon's pro-rata share of working capital and other |
|
(902 |
) |
Equity-accounted investments in Canadian multi-family rental properties |
|
20,769 |
|
|
|
||
Equity-accounted investments in multi-family rental properties |
$ |
20,769 |
|
|
|
||
Equity-accounted investments in Canadian residential developments |
|
||
Tricon's pro-rata share of assets(1) |
$ |
247,854 |
|
Tricon's pro-rata share of debt(1) |
|
(127,690 |
) |
Tricon's pro-rata share of working capital and other |
|
(13,626 |
) |
Equity-accounted investments in Canadian residential developments |
$ |
106,538 |
|
(1) Excludes right-of-use assets and lease obligations under ground leases of |
PRO-RATA NET DEBT TO ADJUSTED EBITDAre
(in thousands of |
|
||
|
|
||
Pro-rata debt of consolidated entities, excluding facilities related to non-income generating assets(1) |
$ |
2,244,851 |
|
|
|
||
Canadian multi-family rental properties debt |
|
17,308 |
|
Pro-rata debt of non-consolidated entities (stabilized properties) |
|
17,308 |
|
|
|
||
Pro-rata debt (stabilized properties), total |
$ |
2,262,159 |
|
Pro-rata net debt (stabilized properties), total(2) |
$ |
2,113,312 |
|
|
|
||
Adjusted EBITDAre (annualized)(3)(4) |
$ |
494,480 |
|
Pro-rata net debt to Adjusted EBITDAre (annualized)(4) |
4.3x |
||
(1) Excludes |
Glossary and Defined Terms
The non-IFRS financial measures, non-IFRS ratios, and KPI supplementary financial measures discussed throughout this press release for each of the Company’s business segments are calculated based on Tricon's proportionate share of each portfolio or business and are defined and discussed below and in Section 6 of the MD&A, which definitions and discussion are incorporated herein by reference. These measures are commonly used by entities in the real estate industry as useful metrics for measuring performance; however, they do not have any standardized meaning prescribed by IFRS and are not necessarily comparable to similar measures presented by other publicly-traded entities. These measures should be considered as supplemental in nature and not as a substitute for the related financial information prepared in accordance with IFRS. See Appendix A for a reconciliation to IFRS financial measures where applicable.
Adjusted EBITDAre is a metric that management believes to be helpful in evaluating the Company’s operating performance across and within the real estate industry. Further, management considers it to be a more accurate reflection of the Company’s leverage ratio, especially as it adjusts for and negates non-recurring and non-cash items. The Company’s definition of EBITDAre reflects all adjustments that are specified by the
EBITDAre represents net income from continuing operations, excluding the impact of interest expense, income tax expense, amortization and depreciation expense, fair value changes on rental properties, fair value changes on derivative financial instruments and adjustments to reflect the entity’s share of EBITDAre of unconsolidated entities. Adjusted EBITDAre is a normalized figure and is defined as EBITDAre before stock-based compensation, unrealized and realized foreign exchange gains and losses, transaction costs and other non-recurring items, and reflects only Tricon’s share of results from consolidated entities (by removing non-controlling interests’ and limited partners’ share of reconciling items).
The Company also discloses its Net Debt to Adjusted EBITDAre ratio to assist investors in accounting for the Company’s unconsolidated joint ventures and equity-accounted investments, in both debt and Adjusted EBITDAre, by calculating pro-rata leverage on a look-through basis (excluding debt directly related to the Canadian development portfolio as well as warehouse and subscription facilities related to acquisitions of vacant single-family homes, which do not fully contribute to Adjusted EBITDAre).
Cost to maintain is defined as the annualized repairs and maintenance expense, turnover expense net of applicable resident recoveries and recurring capital expenditures per home in service. The metric provides insight into the costs needed to maintain a property's current condition and is indicative of a portfolio's operational efficiency.
Pro-rata net assets represents the Company's proportionate share of total consolidated assets as well as assets of non-consolidated entities on a look-through basis (which are shown as equity-accounted investments on its proportionate balance sheet), less its cash and restricted cash.
Pro-rata net debt represents the Company's total current and long-term debt per its consolidated financial statements, less its cash and restricted cash (excluding debt directly related to the Canadian development portfolio as well as warehouse and subscription facilities related to acquisitions of vacant single-family homes, which do not fully contribute to Adjusted EBITDAre).
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1 Non-IFRS measures are presented to illustrate alternative relevant measures to assess the Company's performance. For the basis of presentation of the Company’s Non-IFRS measures and reconciliations, refer to the “Non-IFRS Measures” section and Appendix A. For definitions of the Company’s Non-IFRS measures, refer to Section 6 of Tricon's MD&A.
2 Performance fees of
3 Non-IFRS measures are presented to illustrate alternative relevant measures to assess the Company's performance. For the basis of presentation of the Company’s Non-IFRS measures and reconciliations, refer to the “Non-IFRS Measures” section and Appendix A. For definitions of the Company’s Non-IFRS measures, refer to Section 6 of Tricon's MD&A.
4 Q4 Adjusted EBITDAre includes the net performance fee income of
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For further information:
EVP & Chief Financial Officer
Managing Director, Capital Markets
Email: investorsupport@triconresidential.com
Source:
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