Tricon Completes Breakout Year with Strong Q4 2021 Financial Results and Operating Metrics
Tricon Residential reported impressive financial results for Q4 2021, with net income from continuing operations rising 67% to $127 million year-over-year. Diluted EPS increased 28% to $0.46. Core FFO grew 10% to $45.6 million, while same home NOI and occupancy rates increased by 10.3% and 0.3%, respectively. The company also expanded its single-family rental portfolio with the acquisition of 2,016 homes and anticipates similar growth in 2022. Furthermore, the Core FFO per share for 2022 is projected to be between $0.60 and $0.64.
- Net income from continuing operations increased by 67% year-over-year to $127 million in Q4 2021.
- Diluted earnings per share rose 28% to $0.46 compared to Q4 2020.
- Core FFO for the fourth quarter grew by 10% to $45.6 million.
- Same home NOI grew by 10.3% year-over-year.
- Acquisition of 2,016 homes in Q4 2021 with plans for 8,000+ acquisitions in 2022.
- Core FFO per share decreased by $0.02 due to increased diluted shares outstanding.
- Direct operating expenses rose to $40 million, reflecting higher costs tied to a larger portfolio and supply chain delays.
All financial information is presented in
The Company reported strong operational and financial results in the fourth quarter, including the following highlights:
-
Net income from continuing operations increased by
67% year-over-year to compared to$127.0 million in Q4 2020; diluted earnings per share from continuing operations increased by$75.8 million 28% year-over-year to compared to$0.46 per share in Q4 2020;$0.36
-
Core funds from operations ("Core FFO") increased by
10% year-over-year to driven by solid operating performance in the single-family rental portfolio and higher fees generated from new Investment Vehicles created during the year. Core FFO per share decreased by$45.6 million to$0.02 due to an increase in the diluted weighted average shares outstanding resulting primarily from the$0.15 U.S. public offering and private placement completed onOctober 12, 2021 ;1
-
Same home Net Operating Income ("NOI") for the single-family rental business grew by
10.3% year-over-year and same home NOI margin increased by0.8% to68.3% . Same home occupancy increased by0.3% year-over-year to97.6% , and blended rent growth was8.8% (comprised of new lease rent growth of19.1% and renewal rent growth of5.7% ). In addition, Tricon's continued focus on resident retention led to a record-low annualized same home turnover rate of16.3% ;1
-
The Company continued to grow its single-family rental portfolio through the organic acquisition of 2,016 homes during the quarter at an average price of
per home (including up-front renovations) for a total acquisition cost of$335,000 , of which Tricon's proportionate share was equal to$675 million ;$203 million
-
Positive trends continued into the new year, with same home rent growth of
8.3% inJanuary 2022 , including19.1% growth on new leases and6.3% growth on renewals, while the same home occupancy increased to97.9% . The steady pace of acquisitions is expected to continue into 2022, with management forecasting approximately 1,800 to 2,000 home acquisitions in Q1 2022; and
-
On
October 7, 2021 , the Company’s common shares were listed for trading on theNew York Stock Exchange . OnOctober 12, 2021 , the Company closed a public offering and concurrent private placement of common shares resulting in a total issuance of 46,248,746 common shares for aggregate gross proceeds of approximately .$570 million
In addition to strong quarterly operational and financial results, Tricon achieved several significant strategic milestones in 2021:
-
During the year, the Company entered into two strategic single-family rental joint venture partnerships with institutional investors: (i) SFR JV-HD, which was upsized in Q4 2021 from
to$300 million of total equity commitments, is expected to acquire up to 5,000 newly built single-family rental homes from national and regional homebuilders with approximately$450 million of purchasing potential (including associated leverage), and (ii) SFR JV-2, which is expected to acquire approximately 18,000 single-family homes through resale channels in its$1.5 billion U.S. Sun Belt target markets with approximately of purchasing potential (including associated leverage);$5.0 billion
-
In
March 2021 , the Company entered into a new joint venture withCanada Pension Plan Investment Board to invest up toC of equity capital in build-to-core multi-family rental projects in the$500 million Greater Toronto Area ;
-
In the same month, the Company sold an
80% interest in itsU.S. multi-family rental portfolio to two institutional investors. The transaction generated gross sales proceeds of approximately to Tricon, which strengthened the Company's balance sheet and reduced its leverage;$432 million
-
With these new joint ventures completed during 2021, the Company increased its third-party Assets Under Management ("AUM") by
or$4.0 billion 139% year-over-year to , and increased its total AUM by$6.8 billion or$4.9 billion 55% year-over-year to ;$13.7 billion
-
On
September 9, 2021 , the Company completed the redemption of its outstanding5.75% extendible convertible unsecured subordinated debentures dueMarch 31, 2022 and issued a total of 16,449,980 common shares in connection with the conversion and redemption of the aggregate principal amount of , further reducing its leverage; and$172.4 million
-
On an annual basis, Core FFO per share increased by
12% year-over-year from to$0.51 , meeting the Company's Core FFO per share target of$0.57 to$0.52 one year ahead of schedule.$0.57
“Tricon’s fourth quarter marked yet another period of exceptional growth and operational milestones, with our single-family rental portfolio growing by
Financial Highlights |
|||||||||||||||
For the periods ended |
Three months |
|
|
Twelve months |
|||||||||||
(in thousands of |
2021 |
|
2020 |
|
|
2021 |
|
2020 |
|||||||
|
|
|
|
|
|||||||||||
Financial highlights on a consolidated basis |
|
|
|
|
|||||||||||
Net income from continuing operations, including: |
$ |
126,977 |
$ |
75,808 |
$ |
517,089 |
|
$ |
112,637 |
|
|||||
Fair value gain on rental properties |
|
261,676 |
|
106,995 |
|
990,575 |
|
|
220,849 |
|
|||||
Income (loss) from investments in |
|
10,530 |
|
10,191 |
|
31,726 |
|
|
(61,776 |
) |
|||||
|
|
|
|
|
|||||||||||
Basic earnings per share attributable to shareholders of Tricon from continuing operations |
|
0.47 |
|
0.38 |
|
2.34 |
|
|
0.56 |
|
|||||
Diluted earnings per share attributable to shareholders of Tricon from continuing operations |
|
0.46 |
|
0.36 |
|
2.31 |
|
|
0.56 |
|
|||||
|
|
|
|
|
|||||||||||
Net income (loss) from discontinued operations |
|
— |
|
5,670 |
|
(67,562 |
) |
|
3,776 |
|
|||||
Basic earnings (loss) per share attributable to shareholders of Tricon from discontinued operations |
|
— |
|
0.03 |
|
(0.31 |
) |
|
0.02 |
|
|||||
Diluted earnings (loss) per share attributable to shareholders of Tricon from discontinued operations |
|
— |
|
0.03 |
|
(0.31 |
) |
|
0.02 |
|
|||||
|
|
|
|
|
|||||||||||
Dividends per share (1) |
$ |
0.058 |
$ |
0.055 |
$ |
0.225 |
|
$ |
0.207 |
|
|||||
|
|
|
|
|
|||||||||||
Weighted average shares outstanding - basic |
|
268,428,784 |
|
194,679,682 |
|
219,834,130 |
|
|
194,627,127 |
|
|||||
Weighted average shares outstanding - diluted |
|
270,953,420 |
|
212,445,547 |
|
222,118,737 |
|
|
195,795,473 |
|
|||||
|
|
|
|
|
|||||||||||
Non-IFRS(2) measures on a proportionate basis |
|
|
|
|
|||||||||||
Core funds from operations ("Core FFO") (3) |
$ |
45,630 |
$ |
41,430 |
$ |
152,021 |
|
$ |
113,217 |
|
|||||
Adjusted funds from operations ("AFFO") (3) |
|
36,548 |
|
33,985 |
|
121,594 |
|
|
85,342 |
|
|||||
|
|
|
|
|
|||||||||||
Core FFO per share (4) |
|
0.15 |
|
0.17 |
|
0.57 |
|
|
0.51 |
|
|||||
|
|
|
|
|
|||||||||||
AFFO per share (4) |
|
0.12 |
|
0.14 |
|
0.45 |
|
|
0.38 |
|
|||||
|
|
|
|
|
(1) Dividends are issued and paid in |
(2) 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” and Appendix A. For definitions of the Company’s Non-IFRS measures, refer to Section 6 of Tricon's MD&A. |
(3) Performance share unit (PSU) expense of |
(4) Core FFO per share and AFFO per share are calculated using the total number of weighted average potential dilutive shares outstanding, including the assumed conversion of convertible debentures and exchange of preferred units issued by |
Net income from continuing operations in the fourth quarter of 2021 was
-
Revenue from single-family rental properties of
compared to$123.4 million in the fourth quarter of 2020, driven by$94.4 million 28.0% growth in the number of rental homes to 29,149 and an8.7% increase in average effective monthly rent, partially offset by a2.4% decrease in occupancy driven by an accelerated pace of acquisition of vacant homes.
-
Direct operating expenses of
compared to$40.0 million in the fourth quarter of 2020, reflecting the growth in size of the single-family rental portfolio, higher property tax expenses associated with increasing property values, and incremental repairs and maintenance expenses as a result of a tighter labor market and supply chain delays.$30.7 million
-
Revenue from private funds and advisory services of
compared to$17.7 million in the fourth quarter of 2020 largely as a result of the syndication and internalization of property management functions of the$10.3 million U.S. multi-family portfolio, an increase in performance fees earned in the quarter, and higher development fees generated from Johnson communities.
-
Fair value gain on rental properties of
compared to$261.7 million in the fourth quarter of 2020 as a result of significantly higher home values for the single-family rental portfolio. The appreciation in home prices is attributable to a number of factors, including strong population and job growth in the$107.0 million U.S. Sun Belt markets, low mortgage interest rates, and a relatively low supply of new construction.
Net income from continuing operations for the year ended
-
Revenue from single-family rental properties of
and direct operating expenses of$441.7 million compared to$145.8 million and$367.0 million in the prior year, respectively, which translated to a net operating income ("NOI") increase of$121.2 million attributable to the organic expansion of the single-family rental portfolio as well as strong rent growth.$50.2 million
-
Income from investments in
U.S. residential developments of compared to a loss of$31.7 million in 2020; results in the current year reflect healthy project performance in the for-sale housing market and contrast with the comparative period when a major fair value adjustment was taken at the onset of the COVID-19 pandemic due to rapidly deteriorating business fundamentals.$61.8 million
-
Fair value gain on rental properties of
compared to$990.6 million in the prior year, for the reasons discussed above.$220.8 million
Core funds from operations ("Core FFO") for the fourth quarter of 2021 was
Core FFO increased by
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 |
2021 |
|
2020 |
|
2021 |
|
2020 |
|||||||||
|
|
|
|
|
|
|||||||||||
Total rental homes managed |
|
|
|
|
29,237 |
|
|
22,794 |
|
|||||||
Net operating income (NOI)(1) |
$ |
59,354 |
|
$ |
50,476 |
|
|
$ |
221,655 |
|
$ |
197,528 |
|
|||
Same home net operating income (NOI) margin(1) |
|
68.3 |
% |
|
67.5 |
% |
|
|
67.8 |
% |
|
66.9 |
% |
|||
Same home net operating income (NOI) growth |
|
10.3 |
% |
|
N/A |
|
|
|
7.2 |
% |
|
N/A |
|
|||
Same home occupancy |
|
97.6 |
% |
|
97.3 |
% |
|
|
97.6 |
% |
|
97.2 |
% |
|||
Same home annualized turnover |
|
16.3 |
% |
|
22.6 |
% |
|
|
19.7 |
% |
|
23.3 |
% |
|||
Same home average quarterly rent growth - renewal |
|
5.7 |
% |
|
3.0 |
% |
|
|
4.9 |
% |
|
3.4 |
% |
|||
Same home average quarterly rent growth - new move-in |
|
19.1 |
% |
|
11.2 |
% |
|
|
17.1 |
% |
|
9.6 |
% |
|||
Same home average quarterly rent growth - blended |
|
8.8 |
% |
|
5.5 |
% |
|
|
8.2 |
% |
|
5.2 |
% |
(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” 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 continued to grow its single-family rental portfolio through the acquisition of an additional 2,016 homes during the quarter, bringing its total managed portfolio to 29,149 rental homes. The homes were purchased at an average cost per home of
On
Adjacent Residential Businesses Highlights
Quarterly highlights of the Company's adjacent residential businesses include:
-
Tricon's share of
U.S. multi-family rental NOI was compared to$3.9 million for the same period in 2020, a$3.2 million or$0.7 million 20.6% increase on a same-property basis. The growth in NOI is mainly driven by a or$0.7 million 13.0% year-over-year increase in revenue buoyed by a3.0% year-over-year rise in occupancy to96.6% , a7.1% year-over-year improvement in average monthly rent and a decline in concessions associated with improved leasing demand. Total operating expenses remained stable at as higher property management costs incurred from a competitive labor market and rising material prices were fully offset by recoveries from property tax appeals during the quarter;$2.3 million
-
In the Canadian multi-family business, The Selby achieved occupancy of
97.8% (a10.8% year-over-year increase) owing to management's successful execution of targeted marketing and resident retention strategies, and the stabilization of overall market conditions in downtownToronto ;
-
Across Tricon's Canadian residential developments portfolio, construction continues to progress on schedule, with the majority of projects under construction being funded by construction loans. Of note, The
Taylor in downtownToronto is on track to secure its first occupancy in Q2 2022;
-
In addition, the Company successfully completed the sale of the 7 Labatt development project in downtown
Toronto , generating total distributions to Tricon of (including$15.1 million of performance fees) or a ~$0.3 million 15% internal rate of return; and
-
Tricon's investments in
U.S. residential developments generated of distributions to the Company in the fourth quarter of 2021, including$18.1 million in performance fees.$3.3 million
Change in Net Assets
Tricon's net assets were
Balance Sheet and Liquidity
Tricon's liquidity consists of a
As at
Full-Year 2022 Guidance
The following table highlights guidance for the Company's Core FFO per share and same home metrics for the upcoming fiscal year:
For the years ended |
2021 Actual |
2022 Guidance |
||||||||||
|
|
|
|
|
||||||||
Core FFO per share |
$ |
0.57 |
|
$ |
0.60 |
|
- |
$ |
0.64 |
|
||
|
|
|
|
|
||||||||
Same home revenue growth |
|
5.9 |
% |
|
7.0 |
% |
- |
|
9.0 |
% |
||
Same home expense growth |
|
3.2 |
% |
|
6.5 |
% |
- |
|
8.5 |
% |
||
Same home NOI growth |
|
7.2 |
% |
|
7.0 |
% |
- |
|
9.0 |
% |
||
Single-family rental home acquisitions |
|
6,574 |
|
|
|
|
|
|
8,000+ |
|||
|
|
|
|
|
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, anticipated home acquisitions, the single-family rental unit acquisition and development pipeline and the benefits to the Company of such factors. 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 2022 guidance for Core FFO per share and same home metrics, are considered to be financial outlook for purposes of applicable Canadian 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 press release 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 activities and improved management efficiencies accompanying portfolio growth; and the availability of single-family 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, 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 |
2021 |
|
2020 |
|
Variance |
|
|
2021 |
|
2020 |
|
Variance |
|||||||||||||
|
|
|
|
|
|
|
|
||||||||||||||||||
Net income from continuing operations attributable to Tricon's shareholders |
$ |
125,122 |
|
$ |
74,008 |
|
$ |
51,114 |
|
|
$ |
512,817 |
|
$ |
109,546 |
|
$ |
403,271 |
|
||||||
|
|
|
|
|
|
|
|
||||||||||||||||||
Fair value gain on rental properties |
|
(261,676 |
) |
|
(106,995 |
) |
|
(154,681 |
) |
|
|
(990,575 |
) |
|
(220,849 |
) |
|
(769,726 |
) |
||||||
Fair value gain on Canadian development properties |
|
(10,098 |
) |
|
— |
|
|
(10,098 |
) |
|
|
(10,098 |
) |
|
— |
|
|
(10,098 |
) |
||||||
Fair value loss on derivative financial instruments and other liabilities |
|
72,783 |
|
|
16,418 |
|
|
56,365 |
|
|
|
220,177 |
|
|
7,461 |
|
|
212,716 |
|
||||||
Loss from investments in |
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
79,579 |
|
|
(79,579 |
) |
||||||
Limited partners' share of FFO adjustments |
|
41,720 |
|
|
12,204 |
|
|
29,516 |
|
|
|
171,498 |
|
|
30,388 |
|
|
141,110 |
|
||||||
FFO attributable to Tricon's shareholders |
$ |
(32,149 |
) |
$ |
(4,365 |
) |
$ |
(27,784 |
) |
|
$ |
(96,181 |
) |
$ |
6,125 |
|
$ |
(102,306 |
) |
||||||
|
|
|
|
|
|
|
|
||||||||||||||||||
Core FFO from |
|
2,318 |
|
|
7,199 |
|
|
(4,881 |
) |
|
|
13,805 |
|
|
27,977 |
|
|
(14,172 |
) |
||||||
Income from equity-accounted investments in multi-family rental properties |
|
(33,961 |
) |
|
(427 |
) |
|
(33,534 |
) |
|
|
(75,333 |
) |
|
(746 |
) |
|
(74,587 |
) |
||||||
Income from equity-accounted investments in Canadian residential developments |
|
(10,085 |
) |
|
(8,293 |
) |
|
(1,792 |
) |
|
|
(8,200 |
) |
|
(13,378 |
) |
|
5,178 |
|
||||||
Deferred tax expense |
|
53,507 |
|
|
32,188 |
|
|
21,319 |
|
|
|
234,483 |
|
|
41,824 |
|
|
192,659 |
|
||||||
Current tax impact on sale of |
|
— |
|
|
— |
|
|
— |
|
|
|
(44,502 |
) |
|
— |
|
|
(44,502 |
) |
||||||
Interest on convertible debentures |
|
— |
|
|
2,506 |
|
|
(2,506 |
) |
|
|
6,732 |
|
|
9,927 |
|
|
(3,195 |
) |
||||||
Interest on Due to Affiliate |
|
4,312 |
|
|
4,312 |
|
|
— |
|
|
|
17,250 |
|
|
5,654 |
|
|
11,596 |
|
||||||
Amortization of deferred financing costs, discounts and lease obligations |
|
3,917 |
|
|
3,730 |
|
|
187 |
|
|
|
16,571 |
|
|
10,922 |
|
|
5,649 |
|
||||||
Equity-based, non-cash and non-recurring compensation (1),(2) |
|
56,050 |
|
|
2,222 |
|
|
53,828 |
|
|
|
66,262 |
|
|
8,719 |
|
|
57,543 |
|
||||||
Other adjustments |
|
1,721 |
|
|
2,358 |
|
|
(637 |
) |
|
|
21,134 |
|
|
16,193 |
|
|
4,941 |
|
||||||
Core FFO attributable to Tricon's shareholders |
$ |
45,630 |
|
$ |
41,430 |
|
$ |
4,200 |
|
|
$ |
152,021 |
|
$ |
113,217 |
|
$ |
38,804 |
|
||||||
|
|
|
|
|
|
|
|
||||||||||||||||||
Recurring capital expenditures (3) |
|
(9,082 |
) |
|
(7,445 |
) |
|
(1,637 |
) |
|
|
(30,427 |
) |
|
(27,875 |
) |
|
(2,552 |
) |
||||||
AFFO attributable to Tricon's shareholders |
$ |
36,548 |
|
$ |
33,985 |
|
$ |
2,563 |
|
|
$ |
121,594 |
|
$ |
85,342 |
|
$ |
36,252 |
|
(1) Includes performance fees expense, which is accrued based on changes in the unrealized carried interest of the underlying Investment Vehicles and hence is added back to Core FFO as a non-cash expense. Performance fees are paid and deducted in arriving at Core FFO only when the associated fee revenue has been realized. For the three and twelve months ended |
(2) Performance share unit (PSU) expense of |
(3) Recurring capital expenditures represent ongoing costs associated with maintaining and preserving the quality of a property after it has been renovated. Capital expenditures related to renovations or value-enhancement are excluded from recurring capital expenditure. |
RECONCILIATION OF SINGLE-FAMILY RENTAL NOI AND SAME HOME NOI |
|||||||||||||
For the periods ended |
Three months |
|
Twelve months |
||||||||||
(in thousands of |
2021 |
2020 |
|
2021 |
2020 |
||||||||
|
|
|
|
|
|
||||||||
Net operating income (NOI), proportionate same home portfolio |
$ |
50,602 |
$ |
45,881 |
|
$ |
194,292 |
$ |
181,176 |
||||
Net operating income (NOI), proportionate non-same home portfolio |
|
8,752 |
|
4,595 |
|
|
27,363 |
|
16,352 |
||||
Net operating income (NOI), proportionate total portfolio |
|
59,354 |
|
50,476 |
|
|
221,655 |
|
197,528 |
||||
Limited partners' share of NOI(1) |
|
24,001 |
|
13,243 |
|
|
74,320 |
|
48,212 |
||||
Net operating income from single-family rental properties per financial statements |
$ |
83,355 |
$ |
63,719 |
|
$ |
295,975 |
$ |
245,740 |
(1) Represents the limited partners' interest in the NOI from SFR JV-1, SFR JV-2 and SFR JV-HD. |
RECONCILIATION OF PROPORTIONATE SAME HOME GROWTH METRICS |
||||||||||||||
For the year ended |
|
|
||||||||||||
(in thousands of |
2021 |
|
2020 |
|
Variance |
|
% Variance |
|||||||
|
|
|
|
|
||||||||||
Total revenue from rental properties |
$ |
286,673 |
|
$ |
270,689 |
|
$ |
15,984 |
5.9 |
% |
||||
Total direct operating expenses |
|
92,381 |
|
|
89,513 |
|
|
2,868 |
3.2 |
% |
||||
|
|
|
|
|
||||||||||
Net operating income (NOI)(1) |
$ |
194,292 |
|
$ |
181,176 |
|
$ |
13,116 |
7.2 |
% |
||||
Net operating income (NOI) margin(1) |
|
67.8 |
% |
|
66.9 |
% |
|
|
(1) Non-IFRS measures; refer to Section 6 of the MD&A for definition. |
RECONCILIATION OF |
||||||||||||||||
For the periods ended |
Three months |
|
Twelve months |
|||||||||||||
(in thousands of |
2021 |
2020 |
|
2021 |
2020 |
|||||||||||
|
|
|
|
|
|
|||||||||||
Net operating income (NOI), proportionate portfolio |
$ |
3,916 |
|
$ |
— |
|
|
$ |
14,266 |
|
$ |
— |
|
|||
Less: net operating income (NOI) in discontinued operations |
|
— |
|
|
— |
|
|
|
(3,245 |
) |
|
— |
|
|||
Interest expense, proportionate portfolio |
|
(1,388 |
) |
|
— |
|
|
|
(4,150 |
) |
|
— |
|
|||
Other expenses, proportionate portfolio |
|
(426 |
) |
|
— |
|
|
|
(2,005 |
) |
|
— |
|
|||
Fair value gain on multi-family rental properties, proportionate portfolio |
|
29,782 |
|
|
— |
|
|
|
68,212 |
|
|
— |
|
|||
Income from equity-accounted investments in |
$ |
31,884 |
|
$ |
— |
|
|
$ |
73,078 |
|
$ |
— |
|
|||
|
|
|
|
|
|
|||||||||||
Net operating income (NOI), proportionate portfolio(2) |
$ |
— |
|
$ |
3,248 |
|
|
$ |
3,245 |
|
$ |
13,087 |
|
|||
Net operating income (NOI), IFRS reconciliation(2) |
|
— |
|
|
12,985 |
|
|
|
12,979 |
|
|
52,351 |
|
|||
Interest expense |
|
— |
|
|
(8,077 |
) |
|
|
(7,845 |
) |
|
(33,464 |
) |
|||
Other expenses |
|
— |
|
|
(1,546 |
) |
|
|
(1,176 |
) |
|
(7,067 |
) |
|||
Fair value loss on multi-family rental properties |
|
— |
|
|
— |
|
|
|
— |
|
|
(22,535 |
) |
|||
Loss on sale (1) |
|
— |
|
|
— |
|
|
|
(84,427 |
) |
|
— |
|
|||
Net income (loss) from discontinued operations before income taxes per financial statements(1) |
$ |
— |
|
$ |
6,610 |
|
|
$ |
(77,224 |
) |
$ |
2,372 |
|
(1) On |
(2) The total NOI from discontinued operations represents |
PROPORTIONATE BALANCE SHEET |
|||||||||||||||||||
(in thousands of |
Rental portfolio |
|
Development
|
|
Corporate
|
|
Tricon
|
|
IFRS
|
|
Consolidated
|
||||||||
A |
B |
C |
D = A+B+C |
E |
D+E |
||||||||||||||
|
|
|
|
|
|
|
|||||||||||||
Assets |
|
|
|
|
|
|
|||||||||||||
Rental properties |
$ |
5,404,540 |
$ |
— |
$ |
— |
|
$ |
5,404,540 |
$ |
2,573,856 |
$ |
7,978,396 |
||||||
Equity-accounted investments in multi-family rental properties |
|
199,285 |
|
— |
|
— |
|
|
199,285 |
|
— |
|
199,285 |
||||||
Equity-accounted investments in Canadian residential developments |
|
— |
|
98,675 |
|
— |
|
|
98,675 |
|
— |
|
98,675 |
||||||
Canadian development properties |
|
— |
|
133,250 |
|
— |
|
|
133,250 |
|
— |
|
133,250 |
||||||
Investments in |
|
— |
|
143,153 |
|
— |
|
|
143,153 |
|
— |
|
143,153 |
||||||
Restricted cash |
|
76,020 |
|
6,405 |
|
757 |
|
|
83,182 |
|
40,147 |
|
123,329 |
||||||
|
|
113 |
|
— |
|
123,799 |
|
|
123,912 |
|
250 |
|
124,162 |
||||||
Deferred income tax assets |
|
— |
|
— |
|
96,945 |
|
|
96,945 |
|
— |
|
96,945 |
||||||
Cash |
|
65,093 |
|
1,116 |
|
25,446 |
|
|
91,655 |
|
85,239 |
|
176,894 |
||||||
Other working capital items (1) |
|
12,043 |
|
1,736 |
|
44,484 |
|
|
58,263 |
|
16,265 |
|
74,528 |
||||||
Total assets |
$ |
5,757,094 |
$ |
384,335 |
$ |
291,431 |
|
$ |
6,432,860 |
$ |
2,715,757 |
$ |
9,148,617 |
||||||
|
|
|
|
|
|
|
|||||||||||||
Liabilities |
|
|
|
|
|
|
|||||||||||||
Debt |
|
2,142,433 |
|
34,199 |
|
13,962 |
|
|
2,190,594 |
|
1,726,839 |
|
3,917,433 |
||||||
Due to Affiliate |
|
— |
|
— |
|
256,362 |
|
|
256,362 |
|
— |
|
256,362 |
||||||
Other liabilities (2) |
|
120,075 |
|
2,854 |
|
340,217 |
|
|
463,146 |
|
988,918 |
|
1,452,064 |
||||||
Deferred income tax liabilities |
|
— |
|
— |
|
461,689 |
|
|
461,689 |
|
— |
|
461,689 |
||||||
Total liabilities |
$ |
2,262,508 |
$ |
37,053 |
$ |
1,072,230 |
|
$ |
3,371,791 |
$ |
2,715,757 |
$ |
6,087,548 |
||||||
|
|
|
|
|
|
|
|||||||||||||
Non-controlling interest |
|
— |
|
— |
|
7,275 |
|
|
7,275 |
|
— |
|
7,275 |
||||||
|
|
|
|
|
|
|
|||||||||||||
Net assets attributable to Tricon's shareholders |
$ |
3,494,586 |
$ |
347,282 |
$ |
(788,074 |
) |
$ |
3,053,794 |
$ |
— |
$ |
3,053,794 |
||||||
|
|
|
|
|
|
|
|||||||||||||
Net assets per share (3) |
$ |
12.84 |
$ |
1.28 |
$ |
(2.90 |
) |
$ |
11.22 |
|
|
||||||||
Net assets per share (CAD) (3) |
$ |
16.28 |
$ |
1.62 |
$ |
(3.68 |
) |
$ |
14.22 |
|
|
(1) Other working capital items include amounts receivable and prepaid expenses and deposits. |
(2) Other liabilities include long-term incentive plan, performance fees liability, derivative financial instruments, other liabilities, limited partners' interests, dividends payable, resident security deposits and amounts payable and accrued liabilities. |
(3) As at |
TOTAL AUM |
|||||||||||||
|
|
|
|
|
|||||||||
(in thousands of |
Balance |
|
% of total AUM |
|
|
Balance |
|
% of total AUM |
|||||
|
|
|
|
|
|||||||||
Third-party AUM |
$ |
6,816,668 |
49.6 |
% |
$ |
2,850,004 |
32.2 |
% |
|||||
Principal AUM |
|
6,919,664 |
50.4 |
% |
|
5,997,489 |
67.8 |
% |
|||||
Total AUM |
$ |
13,736,332 |
100.0 |
% |
$ |
8,847,493 |
100.0 |
% |
(1) The Company changed its definition of AUM in the current year in order to better align with the fair value of the assets comprising a portion of the AUM. The AUM in the comparative period has been updated to conform with the current period presentation. This change resulted in increases of |
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDAre |
||||||||||||
(in thousands of |
Total
|
|
IFRS
|
|
Consolidated
|
|||||||
|
|
|
||||||||||
For the three months ended |
|
|
||||||||||
Net income attributable to Tricon's shareholders from continuing operations |
$ |
125,122 |
|
$ |
— |
|
$ |
125,122 |
|
|||
Interest expense |
|
24,297 |
|
|
11,351 |
|
|
35,648 |
|
|||
Current income tax expense |
|
615 |
|
|
— |
|
|
615 |
|
|||
Deferred income tax expense |
|
53,507 |
|
|
— |
|
|
53,507 |
|
|||
Amortization and depreciation expense |
|
2,818 |
|
|
— |
|
|
2,818 |
|
|||
Fair value gain on rental properties |
|
(219,899 |
) |
|
(41,777 |
) |
|
(261,676 |
) |
|||
Fair value gain on Canadian development properties |
|
(10,098 |
) |
|
— |
|
|
(10,098 |
) |
|||
Fair value loss on derivative financial instruments and other liabilities |
|
72,726 |
|
|
57 |
|
|
72,783 |
|
|||
Look-through EBITDAre adjustments from non-consolidated affiliates |
|
(40,089 |
) |
|
— |
|
|
(40,089 |
) |
|||
EBITDAre, consolidated |
$ |
8,999 |
|
$ |
(30,369 |
) | $ |
(21,370 |
) |
|||
|
|
|
|
|||||||||
Equity-based, non-cash and non-recurring compensation |
|
56,050 |
|
|
— |
|
|
56,050 |
|
|||
Other adjustments (1) |
|
308 |
|
|
38 |
|
|
346 |
|
|||
Limited partners' share of EBITDAre adjustments |
|
— |
|
|
30,331 |
|
|
30,331 |
|
|||
Non-controlling interest's share of EBITDAre adjustments |
|
(219 |
) |
|
— |
|
|
(219 |
) |
|||
Adjusted EBITDAre |
$ |
65,138 |
|
$ |
— |
|
$ |
65,138 |
|
|||
|
|
|
||||||||||
Adjusted EBITDAre (annualized) |
|
$ |
260,552 |
|
||||||||
(1) Includes the following adjustments: |
|
|
||||||||||
(in thousands of |
Proportionate |
|
IFRS
|
|
Consolidated |
|||||||
|
|
|||||||||||
Transaction costs |
$ |
3,792 |
$ |
38 |
|
$ |
3,830 |
|||||
Realized and unrealized foreign exchange loss |
|
407 |
|
— |
|
|
407 |
|||||
Look-through other adjustments from non-consolidated affiliates |
|
211 |
|
— |
|
|
211 |
|||||
Lease payments on right-of-use assets |
|
(643 |
) |
|
— |
|
|
(643 |
) | |||
Other non-recurring adjustments |
|
(3,459 |
) |
|
— |
|
|
(3,459 |
) | |||
Total other adjustments |
$ |
308 |
$ |
38 |
|
$ |
346 |
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) |
$ |
6,134,900 |
|
|
|
|
|
343,499 |
Canadian multi-family rental properties |
|
40,629 |
Canadian residential developments |
|
207,772 |
Pro-rata assets of non-consolidated entities |
|
591,900 |
Pro-rata assets, total |
$ |
6,726,800 |
Pro-rata assets (net of cash), total (2),(3) |
$ |
6,542,032 |
(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. |
(2) Reflects proportionate cash and restricted cash of |
(3) Non-IFRS measure. Refer to the "Glossary and Defined Terms" section for definition. |
PRO-RATA NET DEBT TO ASSETS |
|||
(in thousands of |
|
||
|
|
||
Pro-rata debt of consolidated entities |
$ |
2,190,594 |
|
|
|
||
|
|
160,017 |
|
Canadian multi-family rental properties |
|
18,748 |
|
Canadian residential developments |
|
101,707 |
|
Pro-rata debt of non-consolidated entities |
|
280,472 |
|
|
|
||
Pro-rata debt, total |
$ |
2,471,066 |
|
Pro-rata net debt, total (1) ,(2) |
$ |
2,286,298 |
|
Pro-rata net debt to assets |
|
34.9 |
% |
(1) Reflects proportionate cash and restricted cash of |
|||
(2) Non-IFRS measure. Refer to the "Glossary and Defined Terms" section for definition. |
RECONCILIATION OF PRO-RATA DEBT AND ASSETS OF NON-CONSOLIDATED ENTITIES TO CONSOLIDATED BALANCE SHEET |
|||
(in thousands of |
|
||
|
|
||
Equity-accounted investments in |
|
||
Tricon's pro-rata share of assets |
$ |
343,499 |
|
Tricon's pro-rata share of debt |
|
(160,017 |
) |
Tricon's pro-rata share of working capital and other |
|
(5,084 |
) |
Equity-accounted investments in |
|
178,398 |
|
|
|
||
Equity-accounted investments in Canadian multi-family rental properties |
|
||
Tricon's pro-rata share of assets |
$ |
40,629 |
|
Tricon's pro-rata share of debt |
|
(18,748 |
) |
Tricon's pro-rata share of working capital and other |
|
(994 |
) |
Equity-accounted investments in Canadian multi-family rental properties |
|
20,887 |
|
|
|
||
Equity-accounted investments in multi-family rental properties |
$ |
199,285 |
|
|
|
||
Equity-accounted investments in Canadian residential developments |
|
||
Tricon's pro-rata share of assets |
$ |
207,772 |
|
Tricon's pro-rata share of debt |
|
(101,707 |
) |
Tricon's pro-rata share of working capital and other |
|
(7,390 |
) |
Equity-accounted investments in Canadian residential developments |
$ |
98,675 |
|
PRO-RATA NET DEBT TO ADJUSTED EBITDAre
(in thousands of |
|
|
|
|
|
Pro-rata debt of consolidated entities, excluding development and subscription facilities (1) |
$ |
2,020,692 |
|
|
|
|
|
160,017 |
Canadian multi-family rental properties debt |
|
18,748 |
Pro-rata debt of non-consolidated entities (stabilized properties) |
|
178,765 |
|
|
|
Pro-rata debt (stabilized properties), total |
$ |
2,199,457 |
Pro-rata net debt (stabilized properties), total (2) |
$ |
2,027,076 |
|
|
|
Adjusted EBITDAre (annualized) (3) |
$ |
260,552 |
Pro-rata net debt to Adjusted EBITDAre (annualized) |
7.8x |
|
(1) Excludes |
||
(2) Reflects proportionate cash and restricted cash (excluding cash held at development entities and excess cash held at single-family rental joint venture entities) of |
||
(3) Adjusted EBITDAre is a non-IFRS measure. Refer to the "Glossary and Defined Terms" section for definition and the Reconciliation of net income to adjusted EBITDAre table above. |
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 and 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 and subscription facilities related to acquisitions of vacant single-family homes, which do not currently contribute to Adjusted EBITDAre).
Cost to maintain is defined as the annualized repairs and maintenance expense, turnover expense 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 and subscription facilities related to acquisitions of vacant single-family homes, which do not currently 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” and Appendix A. For definitions of the Company’s Non-IFRS measures, refer to Section 6 of Tricon's MD&A.
2 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” and Appendix A. For definitions of the Company’s Non-IFRS measures, refer to Section 6 of Tricon's MD&A.
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” and Appendix A. For definitions of the Company’s Non-IFRS measures, refer to Section 6 of Tricon's MD&A.
View source version on businesswire.com: https://www.businesswire.com/news/home/20220302005927/en/
EVP & Chief Financial Officer
Tel: 416-323-2484
Email: wfrancis@triconresidential.com
Managing Director, Capital Markets
Tel: 416-925-2409
Email: wnowak@triconresidential.com
Source:
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