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TORONTO, Sept. 25, 2017 /CNW/ – Tricon Capital Group Inc. (“Tricon” or the “Company”, TSX:TCN), a principal investor and asset manager focused on the residential real estate industry, provided an update today on its Tricon American Homes (“TAH”) single-family rental investment vertical.
Inquiry into Broker Price Opinions (BPOs)
Tricon American Homes has received a letter from the staff of the Securities and Exchange Commission (“SEC”) with the subject “In the Matter of Certain Single Family Rental Securitizations.” The letter includes a subpoena that requests the production of certain documents and communications related to TAH’s securitization transactions, including materials related to BPOs provided on properties included in those transactions. A number of TAH’s peers that have undertaken securitization transactions, as well as one BPO service provider, have publicly disclosed that they have also received requests from the SEC in this matter.
The SEC’s letter indicates that its investigation is a fact-finding inquiry and does not mean that the SEC has a negative opinion of any person or security. TAH and Tricon plan to cooperate fully with the SEC.
Impact of Recent Hurricanes
TAH has completed its assessment of the impact of Hurricane Harvey, and is nearing the end of assessing the impact of Hurricane Irma, on its single-family rental portfolio in Houston and the Southeast U.S. (in particular Florida and Atlanta). Based on the assessments completed to date, fewer than 100 homes (out of TAH’s total of approximately 8,200 homes) in Houston, Florida and Atlanta have experienced meaningful damage as a result of the storms. In addition, based on the assessments completed to date, approximately 800 other homes in Houston, Florida and Atlanta (or less than 5% of TAH’s overall portfolio) experienced minor damage, in many cases related to fallen branches and other impacts to exterior landscaping. Beginning with the initial pre-storm warnings, the TAH team implemented its disaster preparedness and recovery protocols and has been actively working with all affected residents to ensure their safety and security, and assisting with relocation efforts where necessary.
TAH’s homes are insured under property and casualty insurance policies, which cover wind and flood damage as well as business interruption costs, subject to certain deductibles and limits. Based on the assessments completed to date, management estimates total property damage, before taking into account any available insurance proceeds, of $5 million to $6 million across all affected markets, which is approximately 0.2% of the aggregate fair market value of TAH’s portfolio. Although management believes that all homes with significant damage have already been identified, TAH continues to assess its portfolio and may, as necessary, revise its damage estimates as the assessment is completed and repair work continues.
Silver Bay Update
TAH’s integration of the portfolio of homes acquired in its merger with Silver Bay Realty Trust Corp. on May 9, 2017 continues to progress well and is generally ahead of schedule. All local field offices in overlapping markets have been fully integrated and the property-level synergies realized to date have exceeded management’s initial expectations. In addition, management remains confident in achieving its underwritten G&A synergies of approximately $10 million per annum by centralizing management, streamlining back-office functions and eliminating redundant public company costs. Roughly half of these synergies have been realized, with some continuing offset for temporary consulting engagements with certain former Silver Bay employees, and they are expected to be fully realized by mid-2018.
TAH also continues to progress well in refinancing its remaining debt outstanding under the credit facility used to partially finance the Silver Bay acquisition, with the aim of reducing TAH’s cost of capital over the long term, extending the term structure of TAH’s debt, and diversifying its sources of financing.
About Tricon Capital Group Inc.
Tricon is a principal investor and asset manager focused on the residential real estate industry in North America with approximately $4.6 billion (C$5.9 billion) of assets under management. Tricon owns, or manages on behalf of third-party investors, a portfolio of investments in land and homebuilding assets, single-family rental homes, manufactured housing communities and purpose-built rental apartments. Our business objective is to invest for investment income and capital appreciation through our Principal Investment business and to earn fee income through our Private Funds and Advisory business. Since its inception in 1988, Tricon has invested in real estate and development projects valued at approximately $19 billion. More information about Tricon is available at www.triconcapital.com.
About Tricon American Homes
Tricon American Homes is a leading owner and operator of single-family rental homes in the United States with approximately 16,700 homes in 18 markets across ten states, predominantly located in the Sun Belt. TAH’s portfolio is concentrated in neighborhoods with good school districts, strong resident demographics and proximity to major employment centers, providing families with a viable alternative to homeownership. Headquartered in Orange County, California, TAH has a team of approximately 375 employees nationwide who are focused on driving customer retention through a high-quality product offering and a focus on customer service. More information about TAH is available at www.triconamericanhomes.com.
Certain statements contained in this news release are forward-looking statements and are provided for the purpose of presenting information about management’s current expectations and plans relating to the future. Readers are cautioned that such statements may not be appropriate for other purposes. These forward-looking statements include the anticipated impact, economic or otherwise (including as it relates to the availability of insurance coverage), of the recent weather events and the Company’s intended recovery efforts; the quantum and timing of expected synergies arising from the acquisition of Silver Bay, TAH’s ability to refinance its outstanding debt in accordance with management’s current plans and the effects of any such refinancing. Such statements are subject to significant known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those expressed or implied by such statements and, accordingly, should not be read as guarantees of future performance or results and will not necessarily be accurate indications of whether or not such results will be achieved. Although management believes that it has a reasonable basis for the expectations reflected in these forward-looking statements, actual results may differ from those suggested by the forward-looking statements for various reasons. These forward-looking statements reflect current expectations of the Company as at the date of this news release and speak only as at the date of this news release. The Company does not undertake any obligation to publicly update or revise any forward-looking statements except as may be required by applicable law.
SOURCE Tricon Capital Group Inc.
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