Tricon acquires portfolio of U.S. rental homes

Tuesday, March 31, 2015

Tricon Capital Group Inc., an asset manager and principal investor focused on the residential real estate industry, announced that its Tricon American Homes (TAH) subsidiary, has agreed to extend the closing date of its US$150 million proposed acquisition of a portfolio of 1,386 single-family rental homes. The acquisition is expected to be completed before the end of April.

“We remain focused on growing our Tricon American Homes platform through a disciplined acquisition strategy,” said Gary Berman, Tricon’s President and Chief Executive Officer. “This Portfolio is an excellent strategic fit which allows us to obtain incremental scale in three existing markets while entering two new ones. In addition, the homes we are acquiring have been renovated to a similar standard as our assets and the seller used similar underwriting criteria to TAH when leasing them. This acquisition, coupled with our existing portfolio, is expected to drive greater operating efficiency for our business over the long term.”

Key highlights
• Accelerates Tricon American Homes’ growth strategy by acquiring homes in target markets at attractive yields
• Increases Tricon’s portfolio of US single-family rental homes by nearly 30 per cent
• Purchase price is approximately US$108,000 per door or US$74 per square foot with average existing rents of approximately US$1,070 per month
• Increases scale in growth markets by acquiring a complementary stabilized portfolio (93 per cent in-place portfolio occupancy)
• Ability to capture market-level operational efficiencies and leverage Tricon American Homes’ internalized property management and asset management functions.

Description of the properties
The significant geographic overlap with Tricon American Homes’ existing portfolio in Houston, San Antonio and Charlotte, allows TAH to build scale in its existing Texas markets and further strengthen its position in Charlotte. TAH would also enter two new markets through this acquisition in Dallas-Fort Worth, Texas and Columbia, South Carolina.

TAH has been actively looking to expand into Dallas-Fort Worth, which it believes to be one of the strongest economic markets in the US, and the acquisition would not only accelerate that plan, but also allow the company to obtain meaningful scale immediately. In addition, Columbia is among the fastest-growing regions in the Carolinas, which makes the acquisition consistent with TAH’s investment strategy of focusing on growing markets.