Tricon Residential Inc T.TCN

RBC Notes

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Portfolio Value – TCN

We estimate that TCN trades at a 33% discount to its portfolio value, and more with upside from ancillary/fee businesses

•  We estimate a value of $7.2 billion for TCN’s single-family portfolio, and $8.0 billion including cash/JVs/land/CIP/multi-family

•  This implies that TCN’s enterprise value is currently trading at a 33% discount to the value of the portfolio

•  TCN currently has roughly $600 million in book value allocated to multi-family assets and development, and we expect that these values could be conservative

•  The company has discussed $500+ million in additional potential upside versus IFRS values, which would move the discount to 37%

•  While we expect the market does not give full credit for ancillary upside, we also think that the fee business is increasingly being

  capitalized, and that the true discount is likely in the mid 30% range
  
  Regional Appreciation – TCN

  We estimate that TCN’s overall portfolio value was up 1.5% in May

   For the first time in recent memory, several of TCN’s markets did not see double-digit annualized appreciation
   The strongest markets were geographically mixed
   Among TCN’s focus markets, appreciation was led by Southeast Florida (+3.3%), Raleigh (+2.2%) and Orlando (+2.1%)  The weakest appreciation was seen in Reno (-1.1%), Southern California (0.5%) and San Antonio (+0.9%)
  
  Underlying Assumptions Are Conservative

  We think the underlying home value should be the floor value for SFH businesses

  Assumptions

  •  Paid market price for portfolio

  •  Appreciation in line with the market average

  •  No value for scale

  •  No value for operating platform

  •  No value for ancillary services

  •  No value for AMH/TCN development expertise