Mr. Gary Berman reports

TRICON DELIVERS SOLID Q1 2023 RESULTS AND REITERATES FULL-YEAR GUIDANCE

Tricon Residential Inc. has released its consolidated financial results for the three months ended March 31, 2023.

All financial information is presented in U.S. dollars unless otherwise indicated.

The company reported strong operational and financial results in the first quarter, including the following highlights:

• Net income from continuing operations was $29.4-million in Q1 2023; basic and diluted earnings per share from continuing operations were 10 cents and eight cents, respectively.
• Core funds from operations (FFO) for the first quarter of 2023 was $42.2-million, compared with $43.0-million in the first quarter of 2022, and core FFO per share remained flat year over year at 14 cents. The change in core FFO was driven by strong net operating income (NOI) growth of 17.9 per cent for the single-family rental portfolio that was largely offset by an increase in borrowing costs to support the expansion of the SFR portfolio and a loss of core FFO contribution from the U.S. multifamily rental portfolio, which was sold in Q4 2022.
• Same-home NOI growth for the single-family rental portfolio in Q1 2023 was 6.2 per cent year over year and same-home NOI margin increased by 0.9 per cent to 69.5 per cent. Same-home operating metrics remained strong, including occupancy of 97.3 per cent, annualized turnover of 16.8 per cent and blended rent growth of 7.2 per cent (comprising new lease rent growth of 10.3 per cent and renewal rent growth of 6.5 per cent).
• The company acquired 409 homes during the quarter at an average price of $318,000 per home (including upfront renovations) for a total acquisition cost of $130-million, of which Tricon's proportionate share was $40-million.
• Positive trends continued into the second quarter, with same-home rent growth of 7.6 per cent in April, 2023, including an 11.9-per-cent growth on new leases and a 6.5-per-cent growth on renewals, while same-home occupancy was stable at 97.2 per cent and same-home turnover remained low at 17.8 per cent.
• On March 10, 2023, SFR JV-HD entered into two new term loan facilities, each with a total commitment of $150-million, a term to maturity of five years and a fixed interest rate of 5.96 per cent. These facilities are secured by pools of 707 and 696 single-family rental properties. The loan proceeds were primarily used to pay down existing short-term floating rate debt and to finance the acquisition of new rental homes within SFR JV-HD.

"Tricon's first quarter results represent a solid start to the year, underpinned by a continuation of supportive demand fundamentals. Housing in America has a math problem; demographics are driving demand for single-family homes from both buyers and renters; meanwhile the supply of new homes is not keeping pace," said Gary Berman, president and chief executive officer of Tricon. "Tricon fulfills a critical need in the market by providing working families with quality rental homes in good neighbourhoods at an accessible price point and it's clear from our results that there is a real need for what we offer. We see this firsthand in our high volume of leasing inquiries quarter after quarter, resulting in nearly full same-home occupancy of 97.3 per cent in Q1, consistently low annualized turnover of 16.8 per cent, and our ability to steadily and responsibly increase rents. As we look ahead, we are cautiously optimistic that financing and acquisition conditions will become more favorable for our SFR business, enabling us to double our acquisition pace in Q2 while continuing to buy homes at blended cap rates at or above our cost of long-term financing. Although it's still early days, we remain confident in our guidance for same home NOI growth, core FFO and acquisitions for the year."

Net income from continuing operations in the first quarter of 2023 was $29.4-million, compared with $150.1-million in the first quarter of 2022, and included:

• Revenue from single-family rental properties of $188.5-million, compared with $138.8-million in the first quarter of 2022, driven primarily by growth of 16.3 per cent in the single-family rental portfolio to 36,104 homes, an 8.7-per-cent year-over-year increase in average effective monthly rent (from $1,625 to $1,767) and a 1.1-per-cent increase in total portfolio occupancy to 94.9 per cent.
• Direct operating expenses of $62.1-million compared with $45.5-million in the first quarter of 2022, driven primarily by growth in the rental portfolio, and higher property tax expenses associated with increasing property value assessments, as well as general cost and labour market inflationary pressures.
• Revenue from strategic capital services (previously reported as revenue from private funds and advisory services) of $15.1-million, compared with $12.4-million in the first quarter of 2022, reflecting higher Johnson development fees and performance fees from legacy for-sale housing projects. This was partially offset by lower asset management fees and property management fees following the sale of Tricon's remaining interest in the U.S. multifamily rental portfolio in Q4 2022.
• Fair value gain on rental properties of $11.9-million, compared with $299.6-million in the first quarter of 2022, attributable to a moderation in home price appreciation within the single-family rental portfolio given the current climate of higher mortgage rates and rising economic uncertainty.

Core funds from operations for the first quarter of 2023 was $42.2-million, compared with $43.0-million in the first quarter of 2022. The change was driven by strong NOI growth in the SFR business that was largely offset by an increase in borrowing costs incurred to support the expansion of the SFR portfolio and a loss of NOI and fee income from the disposition of the U.S. multifamily rental portfolio; the sale of this portfolio in October, 2022, generated $319.3-million of gross proceeds used to pay down debt and strengthen Tricon's balance sheet for future growth.

Adjusted funds from operations (AFFO) for the first quarter of 2023 was $33.0-million, compared with $33.6-million in the same period in the prior year. This movement in AFFO was driven by the change in core FFO discussed above, partially offset by lower recurring capital expenditures following the sale of Tricon's remaining interest in the U.S. multifamily rental portfolio.

Single-family rental operating highlights

The measures presented in the attached table and throughout this news 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 (management's discussion and analysis).

Single-family rental NOI was $74.6-million for the first quarter of 2023, an increase of $11.3-million or 17.9 per cent compared with the same period in 2022. The higher NOI was mainly driven by a $16.2-million or 18.0-per-cent increase in rental revenues as a result of an 8.7-per-cent increase in the average monthly rent ($1,767 in Q1 2023, versus $1,625 in Q1 2022) and 5.6-per-cent portfolio growth (Tricon's proportionate share of rental homes was 21,380 in Q1 2023 compared with 20,253 in Q1 2022). This favourable change in rental revenue was partially offset by a $5.0-million or 16.0-per-cent increase in direct operating expenses, reflecting incremental costs associated with a larger portfolio of homes, higher property taxes attributable to increased assessed property values, and growth in property management costs reflecting the portfolio expansion and a tighter labour market.

Single-family rental same-home NOI growth was 6.2 per cent in the first quarter of 2023, primarily attributable to revenue growth of 4.9 per cent, driven by a 7.4-per-cent increase in average monthly rent ($1,706 in Q1 2023 compared with $1,589 in Q1 2022), partially offset by a 60-basis-point decrease in occupancy to 97.3 per cent. This favourable growth in rental revenue was partially offset by a reduction in other revenue and a 2.0-per-cent increase in operating expenses reflecting higher property taxes and Homeowners' Association (HOA) costs, offset primarily by lower turnover, repairs and maintenance expenses through effective cost containment efforts.

Single-family rental investment activity

The company expanded its single-family rental portfolio by acquiring 409 homes during the quarter, bringing its total managed portfolio to 36,525 homes. The homes were purchased at an average cost per home of $318,000, including upfront renovations, for a total acquisition cost of $130-million, of which Tricon's share was approximately $40-million.

Adjacent residential businesses highlights

Quarterly highlights of the company's adjacent residential businesses include:

• In the Canadian multifamily business, The Selby's occupancy remained stable at 97.4 per cent, supported by strong demand fundamentals. Annualized turnover rate improved to 22.4 per cent from 23.2 per cent year over year. Blended rent growth moderated to 6.6 per cent during the quarter, in part driven by a reduction in the number of leases being renewed that had low pandemic era rents or lease incentives in place. Overall leasing activity remained steady and new lease rent growth remained robust.
• In Tricon's Canadian residential development portfolio, The Taylor's occupancy continued to improve, with 64 per cent of the building leased at an average monthly rent of $4.55 (Canadian) per square foot. Construction at The Ivy and Maple House (West Don Lands -- block 8) continued to progress, with first occupancy anticipated in Q3 2023. Meanwhile, the Symington project commenced construction during the quarter. 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.
• Tricon's investments in U.S. residential developments generated $8.7-million of distributions to the company in Q1 2023.

Change in net assets

Tricon's net assets were $3.8-billion at March 31, 2023, increasing by $5-million when compared with $3.8-billion as at Dec. 31, 2022. Tricon's book value (net assets) per common share outstanding increased by a nominal 1 per cent to $13.96 ($18.89 (Canadian)) as at March 31, 2023, compared with $13.89 ($18.81 (Canadian)) as at Dec. 31, 2022.

Balance sheet and liquidity

Tricon's liquidity consists of a $500-million corporate credit facility with approximately $462-million of undrawn capacity as at March 31, 2023. The company also had approximately $142-million of unrestricted cash on hand, resulting in total liquidity of $604-million.

As at March 31, 2023, Tricon's pro rata net debt (excluding exchangeable instruments) was $2.7-billion, reflecting a pro rata net debt to assets ratio of 35.5 per cent. For the three months ended March 31, 2023, Tricon's pro rata net debt to adjusted EBITDA ratio was 8.2 times.

Quarterly dividend

On May 9, 2023, the board of directors of the company declared a dividend of 5.8 U.S. cents per common share, payable on or after July 15, 2023, to shareholders of record on June 30, 2023.

Tricon's dividends are designated as eligible dividends for Canadian tax purposes in accordance with Subsection 89(14) of the Income Tax Act (Canada), and any applicable corresponding provincial and territorial legislation. Tricon has a dividend reinvestment plan (DRIP), which allows eligible shareholders of the company to reinvest their cash dividends in additional common shares of the company. Common shares issued pursuant to the DRIP in connection with the announced dividend will be issued from treasury at a 1-per-cent discount from the market price, as defined in the DRIP. Participation in the DRIP is optional and shareholders who do not participate in the plan will continue to receive cash dividends. A complete copy of the DRIP is available in the investors section of Tricon's website.

Conference call and webcast

Management will host a conference call at 11 a.m. ET on Wednesday, May 10, 2023, to discuss the company's results. Please call 888-550-5422 or 646-960-0676 (conference ID No. 3699415). The conference call will also be accessible via webcast (investors -- news and events). A replay of the call will be available from 2 p.m. ET on May 10, 2023, until 12 a.m. ET on June 10, 2023. To access the replay, call 800-770-2030 or 647-362-9199, followed by conference ID No. 3699415.

This news release should be read in conjunction with the company's interim financial statements and management's discussion and analysis for the three months ended March 31, 2023, which are available on Tricon's website, and have been filed on SEDAR as well as with the U.S. Securities and Exchange Commission as part of the company's annual report filed on form 40-F. The financial information therein is presented in U.S. dollars. Shareholders have the ability to receive a hard copy of the complete audited financial statements free of charge upon request.

The company has also made available on its website supplemental information for the three months ended March 31, 2023.

About Tricon Residential Inc.

Tricon is an owner and operator of a growing portfolio of approximately 37,000 single-family rental homes in the U.S. Sun Belt and multifamily apartments in Canada. The company's commitment to enriching the lives of its employees, residents and local communities underpins Tricon's culture and business philosophy. Tricon provides high-quality rental housing options for families across the United States and Canada through its technology-enabled operating platform and dedicated on-the-ground operating teams. The company's development programs are also delivering thousands of new rental homes and apartments as part of its commitment to help solve the housing supply shortage. Tricon imagines a world where housing unlocks life's potential.

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