/NOT FOR DISTRIBUTION TO
The Company finished off a transformative year with strong operational and financial results in Q4 2019, including:
- Net income of
$45.3 million and basic and diluted earnings per share of$0.23 and$0.22 , respectively; - Adjusted EBITDA of
$95.8 million and adjusted basic and diluted earnings per share of$0.24 and$0.23 , respectively; - Funds from operations ("FFO") increased by 35% year-over-year to
$34.4 million ; FFO per share remained unchanged at$0.16 (C$0.21 in Q4 2019 andC$0.22 in Q4 2018); - Assets under management ("AUM") increased by 41% year-over-year to
$8.0 billion (C$10.5 billion ); Tricon American Homes ("TAH")NOI grew by 28% year-over-year to$52.9 million and Core FFO increased by 57% year-over-year to$26.7 million , driven by the growing leased portfolio and improved operating performance including 95.9% stabilized occupancy, 5.1% blended rent growth and a 65.0% NOI margin;- TAH achieved strong same home metrics of 65.5% NOI margin, 6.5% NOI growth, 5.3% blended rent growth, and 96.7% leased occupancy, and purchased 1,162 homes during the quarter;
- Tricon Lifestyle Rentals' ("TLR")
U.S. Multi-Family Portfolio, acquired in Q2 2019, reported year-over-year total and same property NOI growth of 5.0% to$17.0 million , a 160 bps increase in occupancy to 94.4%, renewal rent growth of 4.6% and a 59.2% NOI margin; and - TLR Canada achieved 86% lease-up at The Selby, which was awarded the
Rental Development of the Year by theFederation of Rental-housing Providers of Ontario .
Tricon achieved many strategic milestones during the year, including the following:
- TAH purchased 3,787 homes in its TAH JV-1 portfolio and reached a major milestone by acquiring its 20,000th single-family rental home;
- The Company completed the acquisition of
Starlight U.S. Multi-Family (No.5) Core Fund (the "U.S. Multi-Family Portfolio") for total consideration of$1.3 billion including assumed debt; - TLR
U.S. completed the disposition of its development holdings by selling its 90% interest in The McKenzie and The Maxwell; Tricon Housing Partners ("THP") entered into a$450.0 million joint venture ("THPAS JV-1") with a leading institutional investor, targeting investments in the development of master-planned communities and single-family "build-to-rent" communities in theU.S. Sun Belt ; and- Subsequent to year end, Tricon completed the syndication of 50% of one of its direct THP investments to THPAS JV-1; the Company also internalized property management of its Canadian multi-family platform and asset management of its
U.S. multi-family portfolio.
"Tricon's fourth quarter results were highlighted by 35% growth in FFO which capped off an exciting year of operational achievements and meaningful progress in our transition to a rental housing company," said
Financial Highlights
For the periods ended | Three months | Twelve months | |||||||
(in thousands of | 2019 | 2018 | 2019 | 2018 | |||||
Investment income - | $ | 42,451 | $ | 38,159 | $ | 162,193 | $ | 218,932 | |
Investment income - Tricon Lifestyle Rentals ("TLR") | 16,812 | 10,653 | 34,980 | 15,406 | |||||
Investment income - | 2,964 | 1,943 | 9,646 | 11,449 | |||||
Investment income from discontinued operations and | — | — | — | 21,170 | |||||
Private Funds and Advisory revenue | 11,716 | 9,565 | 39,895 | 30,347 | |||||
Net income | 45,259 | 43,297 | 114,135 | 216,355 | |||||
Basic earnings per share | 0.23 | 0.30 | 0.65 | 1.57 | |||||
Diluted earnings per share | 0.22 | 0.23 | 0.63 | 1.28 | |||||
Dividends per share | C$ | 0.07 | C$ | 0.07 | C$ | 0.28 | C$ | 0.28 |
For the periods ended | Three months | Twelve months | |||||||
(in thousands of | 2019 | 2018 | 2019 | 2018 | |||||
Non-IFRS measures | |||||||||
Adjusted net income | 46,647 | 46,116 | 147,297 | 224,675 | |||||
Adjusted EBITDA | 95,785 | 79,671 | 314,200 | 363,996 | |||||
Tricon share of fair value gain included in | (24,493) | (24,790) | (96,556) | (180,496) | |||||
Adjusted EBITDA from discontinued operations - | — | — | — | (31,394) | |||||
Adjusted EBITDA excluding TAH fair value gain and | 71,292 | 54,881 | 217,644 | 152,106 | |||||
Adjusted basic earnings per share | 0.24 | 0.32 | 0.85 | 1.64 | |||||
Adjusted diluted earnings per share | 0.23 | 0.30 | 0.81 | 1.45 | |||||
Funds from operations (FFO) | 34,392 | 25,414 | 80,447 | 50,171 | |||||
Funds from operations (FFO) per share | 0.16 | 0.16 | 0.42 | 0.31 | |||||
Funds from operations (FFO) per share (CAD) | C$ | 0.21 | C$ | 0.22 | C$ | 0.55 | C$ | 0.42 | |
Assets under management (AUM) | $ | 8,047,446 | $ | 5,703,910 |
Net income for the fourth quarter of 2019 was
- Investment income from TAH of
$42.5 million compared to$38.2 million in Q4 2018 primarily as a result ofTAH NOI of$52.9 million compared to$41.4 million in Q4 2018; - Investment income from TLR of
$16.8 million compared to$10.7 million in Q4 2018, including$6.7 million investment income from theU.S. Multi-Family Portfolio acquired onJune 11, 2019 ; and - A fair value loss on embedded derivatives of
$1.3 million related to the Company's convertible debentures compared to an$8.6 million gain recognized in Q4 2018, resulting in a$9.9 million reduction in net income.
Net income for the year ended
- Investment income of
$162.2 million from TAH compared to$218.9 million in the prior year as a result of a lower fair value gain of$96.6 million in 2019 compared to$180.5 million in the prior year, partially offset by higher NOI from a larger leased portfolio and a higher NOI margin; - Transaction costs of
$32.6 million compared to$0.1 million in 2018 related primarily to the acquisition of theU.S. Multi-Family Portfolio; - A fair value gain on embedded derivatives of
$3.0 million related to the convertible debentures compared to a$27.7 million gain recognized in 2018; - Investment income from TLR of
$35.0 million compared to$15.4 million in 2018, including$13.5 million of investment income from theU.S. Multi-Family Portfolio; and - Revenue from Private Funds and Advisory of
$39.9 million compared to$30.3 million in 2018, primarily attributable to higher development fees from Johnson and higher performance fees generated from THP investments.
Funds from operations (FFO) for the fourth quarter of 2019 was
- Single-family rental Core FFO (net of third-party investor interests) of
$23.0 million in Q4 2019 compared to$16.6 million in Q4 2018 driven by growth in portfolio size and strong operating metrics partly offset by higher interest expense on incremental debt; - Multi-family rental Core FFO of
$7.0 million in Q4 2019 resulting from NOI of$17.0 million partially offset by interest expense of$9.3 million ; - Fee income from Private Funds and Advisory (net of non-controlling interests) of
$10.1 million in Q4 2019 compared to$9.0 million in Q4 2018, primarily as a result of higher performance fees generated from THP investments and higher development fees from Johnson; and - Corporate overhead remained largely unchanged at
$11.9 million compared to$11.5 million in Q4 2018.
Funds from operations (FFO) for the year ended
Fourth Quarter Highlights by Business Unit
NOI increased by
- Higher revenue from a growing portfolio of properties and strong average blended rent growth of 5.1% (6.0% on new leases and 4.7% on renewals); and
- Cost efficiencies realized for repairs and maintenance (R&M) and turns as TAH continues to use in-house personnel for its R&M function.
Core FFO increased by
On a same home basis, Q4 2019 NOI increased by 6.5% year-over-year and the NOI margin increased to 65.5% from 64.7% in Q4 2018 for reasons similar to those listed above as well as reduced turn costs attributable to a lower turnover rate of 25.7%. The same home portfolio generated strong operating metrics in Q4 2019, including 5.3% rent growth (6.3% on new leases and 4.8% on renewals) and occupancy of 96.7%.
TAH acquired 1,162 homes in Q4 2019, including a portfolio of 708 homes in
Unless otherwise noted, the TAH operating metrics discussed in this press release (including NOI and Core FFO) reflect the performance of the entire portfolio under management, which includes the performance of the TAH JV-1 portfolio managed by a TAH subsidiary.
Tricon Lifestyle Rentals
Tricon Lifestyle Rentals
NOI from the
Subsequent to year-end, the Company fully transitioned the asset management function for the
Many of the historical metrics and financial information referenced in the discussion above are measures that were reported by Starlight
Tricon Lifestyle Rentals Canada
TLR Canada continues to execute on its strategy of establishing itself as the leading developer, owner and operator of Class A rental apartments in the
At Blocks 8/20 of the West
Subsequent to quarter-end, TLR Canada achieved a major platform milestone with the internalization of property management. Tricon now has a fully integrated Canadian multi-family rental platform which includes in-house investment, development and construction, and building operations. The internalization of property management will allow TLR Canada to fully control the resident experience by focusing on customer service and community engagement, while also overseeing building operations.
Private Funds and Advisory
Revenue from Private Funds and Advisory (including contractual fees, general partner distributions and performance fees) was
Johnson is credited with having three MPCs ranked in the top 50 in 2019 (source:
Quarterly Dividend and Normal Course Issuer Bid
The Company announced a dividend of
Tricon's dividends are designated as eligible dividends for Canadian tax purposes in accordance with subsection 89(14) of the Income Tax Act (
On
Subsequent Event
In
As a result, effective
The Company continues to assess the impact on its consolidated financial statements of ceasing to be an investment entity and final conclusions have not yet been made. The anticipated changes are material and will be applied on a prospective basis. Refer to Note 26 to the annual consolidated financial statements for details.
Conference Call and Webcast
Management will host a conference call at
The Company's Financial Statements and Management's Discussion and Analysis for the year ended
About
Tricon is a residential real estate company primarily focused on rental housing in
This news release may contain forward-looking statements relating to expected future events and financial and operating results and projections of 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, investee business plans, and the Company's 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 are described in the Company's continuous disclosure materials from time to time, available on SEDAR at www.sedar.com. Accordingly, 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 disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by applicable law.
The Company has included herein certain supplemental measures of key performance, including, but not limited to, adjusted EBITDA, adjusted net income, adjusted earnings per share ("EPS"), funds from operations ("FFO") and funds from operations per share ("FFO per share"), as well as certain key indicators of the performance of its investees. The Company utilizes these measures in managing its business, including performance measurement and capital allocation, and believes that providing these performance measures on a supplemental basis is helpful to investors in assessing the overall performance of the Company's business. However, these measures are not recognized under IFRS. Because non-IFRS measures do not have standardized meanings prescribed by IFRS, Tricon's use of these measures may not be comparable to similar measures reported by other issuers and they should not be construed as alternatives to net income (loss) or cash flow from the Company's activities, determined in accordance with IFRS, in measuring the Company's performance. The definition, calculation and reconciliation of the non-IFRS measures used herein are provided in Sections 6 and 7 of the Company's MD&A for the year ended
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