CIBC EQUITY RESEARCH
February 28, 2024 Flash Research
TRICON RESIDENTIAL INC. Q4/23 First (And Possibly Final) Take
TCN reported an in-line quarter, with operations that continue to point
towards the attractiveness of the U.S. SFR market. FFO/share came in at
$0.15, with SP-NOI growing 6.2% Y/Y on 97.4% occupancy. Blended rent
growth was 6%, with NOI margins of 69.3%, further highlighting the benefits
of the company’s integrated platform.
Given the largely unchanged fundamentals coupled with the material
termination fees bound to both Blackstone and TCN, we are given no cause
to believe that Blackstone will not proceed with the planned acquisition of
TCN at $11.25/share. Management has also indicated that the company
received Canadian Competition Act approval for the sale, with the
shareholder meeting to be held on March 28, 2024, and closing to remain in
Q2/24. Units are trading at ~1% discount to the proposed take-out price,
which we suspect will continue to narrow as the closing date approaches,
and is a signal that the market largely shares the same sentiment on the
probability of the deal closing.
The company will not be hosting a Q4/23 conference call.