Tricon Residential Inc
TSX:TCN
| US |
|
Johnson & Johnson
NYSE:JNJ
|
Pharmaceuticals
|
| US |
|
Estee Lauder Companies Inc
NYSE:EL
|
Consumer products
|
| US |
|
Exxon Mobil Corp
NYSE:XOM
|
Energy
|
| US |
|
Church & Dwight Co Inc
NYSE:CHD
|
Consumer products
|
| US |
|
Pfizer Inc
NYSE:PFE
|
Pharmaceuticals
|
| US |
|
American Express Co
NYSE:AXP
|
Financial Services
|
| US |
|
Nike Inc
NYSE:NKE
|
Textiles, Apparel & Luxury Goods
|
| US |
|
Visa Inc
NYSE:V
|
Technology
|
| CN |
|
Alibaba Group Holding Ltd
NYSE:BABA
|
Retail
|
| US |
|
3M Co
NYSE:MMM
|
Industrial Conglomerates
|
| US |
|
JPMorgan Chase & Co
NYSE:JPM
|
Banking
|
| US |
|
Coca-Cola Co
NYSE:KO
|
Beverages
|
| US |
|
Target Corp
NYSE:TGT
|
Retail
|
| US |
|
Walt Disney Co
NYSE:DIS
|
Media
|
| US |
|
Mueller Industries Inc
NYSE:MLI
|
Machinery
|
| US |
|
PayPal Holdings Inc
NASDAQ:PYPL
|
Technology
|
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
10.4148
15.46
|
| Price Target |
|
We'll email you a reminder when the closing price reaches CAD.
Choose the stock you wish to monitor with a price alert.
|
|
Johnson & Johnson
NYSE:JNJ
|
US |
|
|
Estee Lauder Companies Inc
NYSE:EL
|
US |
|
|
Exxon Mobil Corp
NYSE:XOM
|
US |
|
|
Church & Dwight Co Inc
NYSE:CHD
|
US |
|
|
Pfizer Inc
NYSE:PFE
|
US |
|
|
American Express Co
NYSE:AXP
|
US |
|
|
Nike Inc
NYSE:NKE
|
US |
|
|
Visa Inc
NYSE:V
|
US |
|
|
Alibaba Group Holding Ltd
NYSE:BABA
|
CN |
|
|
3M Co
NYSE:MMM
|
US |
|
|
JPMorgan Chase & Co
NYSE:JPM
|
US |
|
|
Coca-Cola Co
NYSE:KO
|
US |
|
|
Target Corp
NYSE:TGT
|
US |
|
|
Walt Disney Co
NYSE:DIS
|
US |
|
|
Mueller Industries Inc
NYSE:MLI
|
US |
|
|
PayPal Holdings Inc
NASDAQ:PYPL
|
US |
This alert will be permanently deleted.
Tricon Residential Inc
You don't have any saved screeners yet
Good morning, ladies and gentlemen. My name is Abbey and
I
will
be
your
conference
operator
today.
At
this
time,
I
would
like
to
welcome
everyone
to
the
Tricon
Residential's
Fourth
Quarter
and
Full-Year
2021
Analyst
Conference
Call.
All
lines
have
been
placed
on
mute
to
prevent
any
background
noise.
After
the
speakers'
remarks,
there
will
be
a
question-and-answer
session.
[Operator Instructions]
I'd
now like
to
hand the
conference
over
to
your
speaker
today,
Wojtek
Nowak,
Managing
Director
of
Capital
Markets.
Thank
you
and
please
go
ahead.
Thank
you,
Abbey.
Good
morning,
everyone.
Thank
you
for
joining
us to
discuss
Tricon's
results
for
the
3 and
12
months
ended
December
31, 2021,
which
we
shared
in
the
news
release
distributed
yesterday.
I'd
like
to
remind
you
that
our
remarks
and
answers
to your
questions
may
contain
forward-looking
statements
and
information.
This
information
is
subject
to
risks
and
uncertainties
that
may
cause
actual
events
or
results
to
differ
materially.
For
more
information,
please
refer
to
our
most
recent
Management
Discussion
and
Analysis
and
Annual
Information
Form,
which
are
available
on
SEDAR,
EDGAR
and
our
company
website.
Our
remarks
also
include
references
to
non-IFRS
financial
measures,
which
are
explained
and
reconciled
in
our
MD&A.
I
would
also
like
to
remind
everyone
that
all
figures
are
being
quoted
in
US
dollars,
unless
otherwise
stated.
Please
note
that
this
call is
available
by
webcast
on
our
website,
and
a
replay
will
be
accessible
there
following
the
call.
Lastly,
please
note
that
during
this
call,
we
will
be
referring
to
a
supplementary
presentation
that
you
can
follow
by
joining
our
webcast,
or
you
can
access
directly
through
our
website.
You
can
find
both
the
webcast
registration
and
the
presentation
in
the
Investors
section
of
triconresidential.com
under
News
&
Events.
With
that,
I will
turn
the
call
over
to Gary
Berman,
President
and
CEO
of
Tricon.
Thank
you,
Wojtek,
and
good
morning,
everyone.
By
all
accounts,
2021
was
a
breakout
year
for
Tricon
Residential
as
we
harnessed
powerful
demand
trends
to deliver
on
our
business
plan
and
implement
bold
strategic
initiatives.
None
of
this
would have
been
possible
without
our
world-class
team
and
their
commitment
to
excellence,
integrity
and
teamwork
in
serving
our
residents
and
communities.
I
cannot
be
prouder
of
the
many
talented
people
who
make
our
company
such
a
great
place
to
work.
Let
me
share
with
you
some
of
these
achievements
on
slide
2.
First,
we
achieved
our
three-year
core
FFO
per
share
target
one
year
ahead
of
schedule
with
a
compounded
annual
growth
rate
of
40%
over
two
years
compared
to
the
10%
target
we
initially
set
out.
We
did
this
while
reducing
our
balance
sheet
leverage
by
nearly
half
over
the
course
of
two
years
and
during
a
pandemic
and
related
recession.
We
also
achieved
records
in
same home
turnover,
occupancy,
rent
growth
and
NOI
margin
in
our
single-family
rental
or
SFR
business.
Our
growth
plan
was
supported
by
over
$2
billion
of
new
third
party
equity
capital
commitments,
making
2021
the
most
prolific
year
of
fundraising
in
Tricon's
history.
From
there,
we
completed
one
of
the largest
US
real
estate
IPOs
and
Canadian
follow-on
offerings
in
history,
raising
$570
million
in
gross
proceeds.
All
of this
activity
culminated
in
a
monster
year
for
our
stock,
with
TCN
delivering
a
72%
total
return
to
common
shareholders.
Even
more
impressive
is
our
history
of
delivering
shareholder
value
over
the long-term
with
a
10-year
compounded
annual
return
of
20%.
And
finally,
above
all else,
as
we
did
this
while
staying
true to
who
we
are
at
the
core,
a
people-first
company.
We
prioritize
the
well-being
of
our
residents
by
continuing to
self-govern
our
renewal
rent
increases
and
by
launching
Tricon
Vantage,
a
market-leading
program
to
help
our
residents
achieve
their
financial
goals
and
facilitate
access
to
homeownership.
Now,
let's
turn to
slide
3
for
a
summary
of
our
Q4 2021
results.
Our
net
income
from
continuing
operations
was
$127
million,
that's
up
67%
year-over-year,
and
earnings
per
diluted
share
was
$0.46,
up
28%
year-over-year.
Our
core
FFO
increased
by
10%
while
core
FFO
per
share
was
$0.15
or
12%
lower
than
the
prior
year.
A
big
driver of
the
variance
was
our
deleveraging
process,
which
resulted
in
a
diluted
share
count
that's
24%
higher
than
last
year.
Last
year's
number
also
benefited
from
a
$7
million
tax
recovery,
and
without
this
item,
FFO
per
share
would
have been
up
7.5%
even
with
the
higher
share
count.
On
a
full-year
basis,
our
core
FFO
per
share
and
AFFO
per
share
were up
12%
and
18%,
respectively,
in
2021,
again,
notwithstanding
significant
deleveraging
over
the
course of
the
year.
We
remain
hyper
focused
on
growth,
acquiring
over
2,000
single-family
rental
homes
in
what
is
typically
a
softer
quarter
of
home
sales.
Tricon's
proportionate
share
of
total
NOI
increased
by
18%
and
same home
NOI
grew
by
10.3%
compared
to
last
year.
We
achieved
a
record
high
same home
NOI
margin of
68.3%,
driven
by
consistently
high
occupancy,
record
low
turnover of
16%
and
strong
rent
growth
of
8.8%
on
a
blended
basis.
We
also
had stellar
results
in
private
funds
and
advisories,
new
joint
ventures,
record Johnson
development
fees
and performance
fees
from
legacy
for-sale
housing
funds
all
contributed
to
significant
year-over-year
growth
in
core
FFO
from
fees. And
with
the
benefit
of
our
US
IPO,
we
reduced
leverage
to
35%
net
debt
to
assets
and
7.8
times
net
debt
to
adjusted
EBITDA
compared
to
43%
and
9.8
times
in
Q3.
Moving
to
slide
4,
in
our
adjacent
residential
businesses,
US
multi-family
rental
continues
to
perform
very
well,
with
same property
NOI
up
nearly
21%
year-over-year
and
now
solidly
above
pre-pandemic
levels.
For-sale
housing
had
another
outstanding
quarter,
distributing
over $18
million
of
cash
to
Tricon.
And
Canadian
multi-family
is
progressing
on
its
development
pipeline,
with
over
1,000 apartment
units
on
track
to
be
delivered
in
2022.
Lastly,
The
Selby,
located
in
downtown
Toronto,
achieved
stabilization
in
Q4
with
98%
occupancy
rate.
We're
also pleased
to
introduce full-year
guidance
for
the
first
time.
Our
SFR
same home
NOI
growth
for
2022
is
expected
to
be
7%
to
9%
compared
to
7.2%
for
2021,
and
to
be
driven
by
same home
revenue
growth
of
7%
to
9%
and
same-home
expense
growth
of
6.5%
to
8.5%.
Our
guidance
assumes
a
combination
of strong
rent
growth
trends
with
new
lease
growth
in
the
mid-teens
and
renewals
around
5%
to
6%,
occupancy
in
the
97%
to
98%
range,
turnover
near
20%,
and
ancillary
revenue
growing
by
10%
to
15%.
In
our
guidance,
we
assume
relatively
elevated
bad
debt
of
1.5%
to
2%,
gradually
trending
down
over
the
course of
the
year.
Our
operating
cost
guidance
assumes
property
tax
growth
in
the
high-single
digits,
as
our
homes
have
appreciated
in
value
considerably,
and
mid-single
digit
inflation
and other
expense
items,
as
we
continue
to
navigate
an
inflationary
environment.
Second,
we
expect
to
acquire
over
8,000 homes
during
the
year,
as
we remain
focused
on
growth
and
squarely
on
track
to
reach
50,000 homes
by
2024.
If
we
assume
an
average
acquisition
price
of
$340,000,
slightly
above
Q4
of
$335,000,
and
65%
financing in
our
SFR
joint
venture
vehicles,
Tricon's
equity
requirement
at
a
one-third
share
is
approximately $300
million.
Finally,
we
expect
core
FFO
per
share
to
be
$0.60
to
$0.64,
representing
nearly
9%
growth
year-over-year
at
the
midpoint.
I
would
note
that
our
diluted
share
count
is
currently
14%
higher
than
the
weighted
average
in
2021.
And
so,
the
implied
growth
in
our
total
core
FFO
is
about
20%
to
30%.
This
is
driven
by
the
aforementioned
growth
in
our
total
SFR portfolio
and
same home
NOI,
relatively
stable
fee
revenue
and
overhead
costs
compared
to
Q4
levels,
albeit
with
lower
projected
performance
fees
and
higher
interest
expenses
commensurate
with
the
growth
of
the
overall
portfolio.
We're
very
excited
about
the
year
ahead,
not
only
because
of the
operating
trends
we
are
seeing,
but
also
because
of
the
tremendous
opportunity
to
positively
impact
the
lives
of our
residents.
Turning
to
slide
5,
I'd
like
to
share
with
you
some
details of
our
recently
announced
Tricon
Vantage
program.
This
is
a
suite
of
programs
and
resources
available
to
our
US
residents
to
help
them
achieve
their
financial
goals,
including
the
goal
of
homeownership
if
they
so
choose.
At
the
core
of this
program
is
our
long-standing
practice
of
self-governing
on
renewal
rent
increases,
with
annual
rent
increases
for
existing
residents
typically
set
at
rates
below
market.
In
addition,
Tricon
Advantage (sic) [Vantage] (00:08:37)
includes
educational
tools
to
help
residents
plan
and
achieve
their
financial
goals,
a
credit
builder
tool
that
helps
residents
improve
their
credit
scores.
We
are
pleased
to
report
that
over
1,200
residents
have
enrolled
in
this
program
so
far.
A
resident
home
purchase
program
that
gives
qualifying
residents
the
first
opportunity
to purchase
the
home
they're
renting
if
Tricon
elects
to
sell
it.
A
resident
emergency
assistance
fund,
which
has
awarded
over
$350,000
to
over 100
families
since
inception.
And
finally,
our
soon-to-be
launched
resident
down
payment
assistance
program,
which
will
provide
qualifying
long-term
residents
with
a
portion
of their
down payment
should
they
remain
in
good
standing
and
wish
to
buy
a
home.
Tricon's
ESG
strategy
is
heavily
focused
on
the
social
component,
with
our
residents
and
our
people
being
top
priorities.
When
families
have
the
stability
necessary
to
achieve
financial
freedom,
entire
communities
can
prosper.
We
believe
that
this
compassionate
approach
to
serving
our
residents
is
not
only
the
right
thing
to
do,
but
also
the
primary
reason
for
our
high
occupancy,
low
turnover
rate
and
leading
resident
satisfaction
scores.
Let's
now
turn to
slide
6
to
delve
deeper
into
our
Q4
portfolio
growth.
Throughout
the
course
of
this
year,
we
accelerated
our
acquisition
program
from
nearly 800
homes
in
Q1
to
over
2,000
homes
in
the
past
two
quarters,
bringing
total
acquisitions
to
6,574
for
2021.
At the
current
pace,
we
are
well-positioned
to
acquire
over 8,000
homes
in
2022
through our
resale
and
new
home
channels,
including
deliveries
from
our
build-to-rent
program.
To
give
you
some
insight
as
to
where
these
homes
are
coming
from,
our
largest
acquisition
channel
is
buying
existing
homes
through
the
MLS.
In
Q4,
we
also
acquired
resale
homes
through
non-MLS
channels
such
as
iBuyers.
You'll
note
that our
average
acquisition
price
has
trended
higher
over
time.
This
is
a
function
of
significant
home
price
appreciation
in
all
our
markets
and
expanded
buy
box
in
our
SFR
JV-2,
which
includes
traditionally
pricier
markets
such
as
Austin,
Nashville,
Las
Vegas,
and
Phoenix. And
an
acquisition
program
tilted
towards
generally
new or
vintage
homes,
especially
with
the
inclusion
of
our
HomeBuilder
Direct
JV.
Given
market
rents
have
also
been
increasing,
our
acquisition
cap
rates
remain
healthy
and
are
in
line
with our
JV
underwriting.
And
finally,
we're
excited
about
our
active
build-to-rent
pipeline,
which
now
has
expanded
to
include
over
3,000
rental
units
in
23
new
home
communities
across
the
US
Sun
Belt.
What
we
really
like
about
both
of
our
new
home
channels
through
our HomeBuilder
Direct
and
THPAS
JV-1
is
that
they
provide
our
residents
with
the
ability
to live
in
a
brand-new
home
at an
accessible
price
point
while
giving
us
a
maintenance
holiday
and
lower
upfront
renovation
costs.
I
would
now
like
to
pass
the
presentation
over
to
Wissam
to discuss
our
financial
results.
Thank you,
Gary,
and
good
morning,
everyone.
Our
performance
in
the
fourth
quarter
exceeded
our
expectations
as
we
capped
off
what
truly
was
a
historical
year.
We
grew
our
portfolio
significantly
while
focusing
on
cost
containment
and
deleveraging.
What
makes
these
results
even
more
remarkable
is
that
our
dedicated
team
delivered
day
in
and
day
out
despite
the
challenging
backdrop
of
labor
shortages,
inflation,
supply
chain
constraints
and
a
global
pandemic.
On
slide
7, we
summarize
our
key
metrics
for
the
quarter.
Net
income
from continued
operation
grew
by
67%
year-over-year
to
$127
million.
Our
core
FFO
grew
by
10%
year-over-year
to
$46
million.
Core FFO
per
share
was
$0.15
for
the
quarter.
AFFO
per
share
was $0.12
for
the
quarter,
which
provides
us with
ample
cushion
to
support
our
quarterly
dividend
and
an AFFO
payout
ratio
of
43%.
Let's
move to
slide 8
and
talk
about the
drivers
of
core
FFO
per
share.
On
the
whole, core
FFO
grew
by
10%
year-over-year.
But
on
a
per
share
basis,
there
was
a
year-over-year
decrease
of
$0.02.
First
off,
last
year's
FFO
per
share
included
$0.03
stocks
recovery
so
our
starting
point
was
relatively
high.
Second,
our
single-family
rental
portfolio,
which
makes
up
over
90%
of
our
real
estate
assets,
delivered
18%
growth
in
Tricon's
proportionate
NOI,
adding
$0.04
to
core
FFO.
This
was
driven
by
a
17%
increase
in
revenues
as
the
number
of
proportionately
owned
homes
grew
by
11%,
while our
average
monthly
rent
increased
by
9%
over
last
year
and
ancillary
revenues
ramped
up.
Our
operating
expenses, on
the
other
hand,
also
grew
by a
similar
17%
due
to
portfolio
growth
and
overall
cost
inflation.
Our
FFO contribution
from
fees
increased
by
132%
compared
to
last
year,
adding
another
$0.06
FFO
per
share.
This was
driven
by
new
investment
vehicles,
record
development
fees
from
a
Johnson
subsidiary
and
strong
performance
fees
from
legacy
investments.
In
our
adjacent residential
businesses,
US
multifamily
rental
FFO
reflected
the
80%
syndication
of the
portfolio
earlier
in
2021.
And
as
Gary
mentioned,
the
portfolio
is
performing
extremely
well.
This
was
coupled
with
strong
results
in
our
for-sale
housing
business.
On
the
corporate side,
we
had
lower
interest
expense
offset
by
higher
corporate
overhead
expenses.
Some
of
this
relates
to
the
incremental
cost
associated
with
our
US
listing,
as
well
as
staffing
up
for
our
growth.
As
we
mentioned earlier,
our
diluted
share
count
this
quarter
was
24%
higher
as
a
result
of
last
year's
equity
offering
to
fund
growth
and
reduce
our
leverage.
Let's
turn
to
slide
9
to
discuss
our
operating
efficiency.
Our
strategy
of
managing
third-party
capital
allows
us
to
scale
faster
and
improve
operational
efficiency.
And
all
fees
we
earned
would
allow
us
to
offset
a
large
portion
of
our
corporate
overhead
expenses.
Our
recurring
fee
stream
totaled
$22
million
in
the
quarter
and
included
asset
management
fees,
property
management
fees
and
development
fees,
but
excludes
performance
fees
as
they
tend
to
be
episodic.
Together,
these
recurrent
fees
covered
71%
of
our
total
recurring
overhead
costs
this
quarter
compared
to
42%
coverage
in
the
prior
period.
Ultimately,
we
expect
our
fee
revenue
to
cover
the
majority
of
our
overhead
expenses
and
allow
our
shareholders
to
benefit
from
strong
NOI
growth
contributing
directly
to the
bottom line.
Let's
discuss
our balance
sheet
on
slide
10.
We
have
continued
to
prioritize
deleveraging
while
driving
significant
growth,
all
while
navigating
challenging
economic
conditions.
We
have
successfully cut
our
leverage
significantly
since
the
start
of
2000 with
net
debt
to
adjusted
EBITDA
down
to
7.8
times
in
the
current
quarter
and
net debt
to assets to
35%.
Much
of
this was
achieved
with
our
US
IPO,
our
prior
common
equity
offering,
and
our
preferred
equity
financing.
I
do
want
to thank
our
shareholders
for
their
support
as
we
were
able
to
accomplish
this
equity
financings
at
increasing
share
prices
along
the
way.
Turning
to
slide
11,
to
discuss
our
debt
profile,
would
remain
focused
on
addressing
near-term
debt
maturities.
We
have
$225
million (sic) [$255 million] (00:15:45)
in
maturities
in
2022,
most
of
which
is
an
SFR
term
loan,
which
we
expect
to
refinance
later
on
this
year.
Our
liquidity
position's
also
very
strong
with
$677
million
in
available
cash
and
credit
facilities
to
fund
our
growth.
Slide 12
highlights
our
performance
dashboard
that
we've
updated
for
you
every
quarter
since
we
introduced
in
2019.
I'm
thrilled
to
report
that
we
have
not
only
achieved
all
these
targets;
we've
exceeded
the
well
ahead
of
schedule.
Our
team
has
worked
tirelessly
to
achieve
this
important
milestone,
and
I'm very
proud
of
all
their
efforts.
And
you didn't
think
I'll
stop
there,
did
you?
On
slide
13,
I
am
pleased
to
introduce
our
updated
performance
dashboard.
Our
team
once
again
is
raising
the
bar
and
setting
ambitious
targets
to
drive
our
incremental
shareholder
value
for
2024.
First,
we
plan
to
continue
growing
our
core
FFO
per
share
with
a
target
of
15%
compounded
annual
growth
through
2024.
As
Gary
mentioned
earlier
in
2022,
there's
some
dilution
from
our
US
IPO,
but
we
expect
higher
growth
in
the
outer
years.
Second,
as
we
have
mentioned
many,
many,
many
times
already,
we
plan
to
expand
our
SFR
portfolio
to
50,000 homes.
And
we
have
the
people,
the
operations
and
the
capital
all
in
place
to
do
so.
Next,
as
we
embark
on
a
period
of hyper-growth
over
the
next
three
years,
we
plan
to stay
disciplined
and
maintain
our
leverage
within
the
range
of
8
to
9
times
EBITDA.
And
finally,
we've
continued
to improve
our
overhead
efficiency
with
a
target
of
90%
of
our
current
overhead
costs
to
be
covered
by
fee
revenue,
excluding
performance
fees.
As
we
set
our
sights
on
the
future,
we
are
– we
have
tremendous
opportunities
ahead.
And
we
are
very
excited
for
2022
and
beyond.
One
of the
most
excited
people
is
certainly
Kevin.
So,
let me
pass
the
call
over
to
him
to
discuss
the
operational
highlights.
Thank
you,
Wissam.
Appreciate
that.
Good
morning,
everyone.
When
I
take
a
moment
to
reflect
on
this
past
year,
I
get
an
overwhelming
sense
of
pride
for
what
has
been
accomplished.
For
me
personally,
these
results
speak
to
the
strength
and
dedication
of
our
team,
who
continue
to
put
our
residents
first
while
navigating
our
rapid
pace
of
growth.
Things
just
keep
getting
better
and
better,
and
I
could
not
be
more
excited
for
what's
ahead.
Let's
talk
about
the
components
of
our
same-home
NOI
growth
of
10.3%
this
quarter,
starting
on
slide
14.
Our
same-home
total
revenue
growth
of
8.9%
was
driven
by
rental
revenue,
increasing
7.9%.
This
was
made
up
of
a
6.7%
increase
in
average
rent,
a
30-basis-point
uptick
in
occupancy,
as
well
as
an
80-basis-point
decrease
in
bad
debt
from
2.7%
of
revenue
to
1.9%.
Even
at
1.9%,
it
is
more
elevated
than
we'd
like
and
is
a
result
of
our
resident-friendly
approach
throughout
the pandemic.
Our
rent
growth
profile
remained
strong
with
blended
rents
increasing
8.8%
during
the
quarter,
supported
by
an
impressive
19.1%
increase
on
new
move-ins
and
5.7%
increase
on
renewals.
Since
we've
been
self-governing
on
renewals
for
the
past
few
years,
we
estimate
that
we
have
accumulated
at
least
15%
to
20%
loss
to
lease
in
our
portfolio,
creating
a
runway
for
significant
rent
growth
ahead.
Our
other
revenue
line,
which
includes
ancillary
fees,
also
grew
meaningfully,
up
42%
from
last
year
as
we
resumed
collection
of
late
fees
and
rolled
out
smart
home
and
renters
insurance
programs.
We
see
a
path
to
increasing
this
number
by
over
30%
per
home
compared
to
current
levels
as
we
continue
to
roll
out
these
and
other
ancillary
services
over
the
next
few
years.
Let's
turn
to slide
15
to
discuss
the
key
same-home
expense
variances.
Property
taxes,
which
account
for
almost
50%
of
operating
expenses,
continue
to
trend
higher,
tracking
a
significant
home
price
appreciation
we
are
witnessing
in
our
markets.
With
the
benefit
of
successful
appeals,
we
have
managed
to
keep
property
tax
growth
to
5.6%
this
quarter
and
4.6%
for
the
full
year.
Repairs
and
maintenance
expenses
were
also
elevated
this
quarter
as
we
returned
to
a
higher
level
of
maintenance
calls
post-COVID.
Our
work
order
volume
was
up
5%
while
labor
and
materials
inflation
added
about
8%
of
the
cost
of each
work
order
even
with
the
benefit
of
bulk
purpose
discounts.
On the
other
hand,
turnover
expense
was
flat
as
our
turnover
rate
decreased
by
630
basis
points
from
last
year,
largely
offsetting
the
underlying
inflation
pressures
in
this
line
item. On
the
property
management
side,
we're
seeing
the
benefits
of
scale
as
we
are
managing
28%
more
homes
compared
to
last
year
using
our
centralized
and
tech-enabled
operating
platform,
which
results
in
a
lower
cost
per
home.
Property
insurance
costs
have
also
increased,
driven
by
rising
premiums
across
the
industry
which
we
hope
to
mitigate
over
time with
greater
scale and
diversification. And
marketing
and
leasing
is
down
meaningfully
due
to
strong
demand,
higher
physical
occupancy
and
lower
resident turnover.
As
we
look
ahead,
we
expect
inflationary
pressures
to
continue
in
our
business,
and
we
remain
focused
on
what
we
can
control:
harvesting
operating
efficiencies
through
technology
and
process
improvements,
providing
superior
resident
service
and
driving
economies
of
scale.
Let's
now
turn
to
slide
16
for an
update
on
more
recent
leasing
trends.
I
continue
to
be
amazed
by
the
strong
demand
for
our
product,
where
the
level
of
interest
from
prospective
residents
continues
to
vastly
exceed
the
number of
homes
we
have
available
for
rent.
The
substantial
demand,
coupled
with
our
loss-to-lease,
allowed
us
to
continue
pushing
rents
on
new
move-ins
by
over
19%
in
January.
Meanwhile,
rent
growth
on
renewals
is
inching
up
over
6%,
and
our
overall
blended
rent
growth
has
remained
at
a
healthy
8.3%
in
January.
At
the
same
time,
occupancy
remains
at
a
record
high
of
97.9%.
On
the
whole,
the
robust
trends
that
have carried
us
through
the
past
year
remain
in
place
and
set
us
up
well
for
great
results
in
2022.
Now,
I'll
turn
the
call
back
over
to
Gary
for
closing
remarks.
Thank
you,
Kevin.
Let's
conclude
on
slide
17.
If
there's
one
thing
you
should
take
away
from
our
story
today
is
that
the
factors
that
have driven
our
performance
and
value
creation
over
the
past
year
continue
to
be
in
place.
First
and
foremost
is
our
focus
on
growth.
By
partnering with
leading
global
real
estate
investors,
Tricon
has
a
clear
path
increasing
its
SFR
portfolio
to
50,000
homes
by
the
end
of
2024,
with
the
balance
sheet,
operating
platform
and
third-party
capital
in
place
to
achieve
this
target
with
confidence.
And
we
believe
that
favorable
tailwinds
in
our
industry
should
drive
strong
operating
performance
for
years
to
come.
Our
growing
portfolio,
coupled
with
strong
same-home
results,
should
also
translate
into
meaningful
NAV
appreciation
for
shareholders.
And
second,
let's
not
forget
about
our
adjacent
businesses,
which
account
for
about
6%
of
our
balance
sheet
but
represent
a
meaningful
source
of
upside
and
potential
cash
flow
to
supercharge
our
SFR
growth.
These
include
our
Canadian
multifamily
built-to-core
business,
a
20%
interest
in
a
high-quality
multifamily
portfolio
located
in
the
Sun
Belt,
and
legacy
for
sale
housing
assets.
These
businesses
are
all
benefiting
from
a
robust
housing
market,
and
we
believe
they
can
ultimately
be
worth
2
times
our
IFRS
carry
value
and
represent
$1.1
billion
of
value
for
our
shareholders.
Should
we
monetize
these
assets
over
time,
we
would
use
the
proceeds
to
pay
down
debt
or
grow
our
SFR portfolio
and, in
the
process,
simplify
our
business.
That
concludes
our
prepared
remarks.
I
would
like to
express
our
gratitude
to
our
employees,
our
many
longstanding
shareholders,
private
investors
and
capital
market
partners
for
their
ongoing
support
throughout
our
journey.
We
believe
we're
in
a
golden
decade
for
housing
and
for
SFR
in
particular. And
as
we
look
ahead
to
the
future,
we
plan
to
use
this
tremendous
opportunity to
create
significant
value
for
our investors,
make
our
business
a
platform
to
do
good,
elevate
the
lives
of our
employees
and
residents,
and
inspire
the
broader
industry
to
do
the
same.
I
will
now
pass
the
call
back
to
Abbey
to
take
questions
with
Sam,
Kevin and
I
will
also
be
joined
by
Jon
Ellenzweig
and
Andrew
Joyner
to
answer
questions.
Thank
you.
[Operator Instructions]
We
will
take
our
first question
from
Chandni Luthra
with
Goldman
Sachs. Your
line
is
open.
Hi.
Good
morning, everyone.
Good morning,
Chandni.
Thank
you
for
taking
my
question
and
congratulations
on
the
strong
finish
to
the
year.
So...
Thank
you.
...given
the
level of
home
price
appreciation
you
obviously
talked
about,
your
own
acquisition
price
was
up
7%
sequentially
and
keeping
your
parameters
of
sort of
staying
within
the
middle
market
and
a
certain
box
size
in
mind,
are
you
finding
it
harder
to
acquire
homes?
And
what's
been
the
cap
rate
that
you
acquired
homes
in
fourth
quarter?
Did
it
change
much
from
3Q?
If
you
could
perhaps
give
us
some
context
around
that?
Sure.
Well,
I
would
say,
there's
been
a
very
slight
degradation in
cap
rates,
let's
say,
over
a
year.
And
the
way
I
would
describe
that
to
you
is
if
you
assume
home
price
appreciation
of
20%
and
rent
growth,
let's
say
of
10%,
your
cap
rate
will
come
down
by
about
20 basis
points.
So,
for
example,
we've
seen
acquisitions,
let's
say
in
Atlanta,
where
in
the
past,
maybe
a
year
or
two
ago
we
would have
acquired
those
homes
at
a
5.5%
cap
rate,
maybe
today
we're
acquiring
them
at
5.3%
cap
rate.
But
even
with having
said
that,
we
have
no
shortage
of
opportunity.
We've
had
no
issue
hitting –
in
fact,
we
had
a
better
quarter
than
we
expected.
We
had
no
issue
hitting,
getting
to
2,000 homes
in
what's
normally
a
weaker
quarter,
weaker
period
because
obviously less
people
are
listing
their
homes
after
Thanksgiving
or
Christmas.
And
we
continue
to
hit
the
cap
rates
that are
outlined
in
our
JV
underwriting.
So
let's wait
for
that
call
to
go.
And
just
to
spell
that
out
for
you,
the
cap
rates
in
JV-2,
nominal
cap
rates
are
between
5%
and
5.5%.
Homebuilder
Direct
JV
are
closer
to 5%.
The
economic
cap
rates
for
both
joint
ventures
are
actually
very
similar
in
the
high-4%
range,
high-4%
range.
So
we've
continued
to
hit
high-4%
since
launching
JV-2
and
Homebuilder
Direct
now
for
several
quarters.
And
we
don't
expect
that
to
change
going
forward.
If
anything,
there
may
be
now
a
slight
tick up
in
rent vis-à-vis
home
prices
as
we
look
forward
to
2022 and
maybe
into
2023.
And
if
that
happens,
we
might
actually
see
higher
cap
rates.
That's
great
color.
Thank
you
for
that.
And
just
switching
gears
to
your
PFA
segment
a
little
bit.
So
performance
fee
was
almost
$4
million
in
the
quarter.
Besides
for
sale
housing,
were
there
any
other
drivers
and
then
how
should
we
think
about
that
going
forward?
And
then
as
an
extension,
what
drove
higher
development
fee
and
how
should
we
think
about
that
in
2022?
Yeah.
So,
performance
fees
are
obviously
episodic.
They
will
ebb
and
flow
from
period to
period.
All
the performance
fees
in
Q4
came
from
our
legacy-for-sale
housing
funds
including
Cross
Creek
Ranch,
which
is
getting
towards
the
end
of
its
life.
And
so,
you
should
continue
to expect
the
performance
fees
in
the
next
couple
of years
are
largely
going
to come
from
our
for-sale
housing
funds,
right?
And
where
I
would
guide
you, I
mean,
this
is
just
a
guide,
but
based
on
what
we've
shown
in
our
MD&A,
we're
looking at
about
$5
million
in
performance
fees
this
year
and
next
year,
okay,
[ph]
and 20 (28:14)
$5
million
in
2022; and
$5
million
in
2023. We
might
be
able
to
do better
than that,
but
that's
where
we're
kind
of
loosely
guiding.
Your
next question
– sorry,
Chandni,
what was
your
next
question?
Development
fee.
Development
fees?
Yes,
so
development fees
on
Johnson,
I
think
partly
explain
the
beat, and
we're
probably
$2.5
million
higher
than
they
normally
are.
And
so,
I
would
not
use,
Q4
development
fees
as
a
run
rate,
probably
$2.5
million
higher
than
where
they
typically
are.
Johnson
had, I mean,
an
outstanding
year.
It's
too
bad
Larry
Johnson
didn't
get
to
see
it,
but
the
best
quarter
on record.
And
lot
sales,
I
mean,
this
business,
as
you
know,
is
booming.
Lot
sales
are
incredibly
robust,
particularly
in
Texas.
And
lot
sales
– lot
sale
pricing
was
up
about
20%
year-over-year.
So
that
–
all of
those
things
together,
I
think,
explain
why
fees
were
so
much
higher
than
the
previous
year
over
year
comparison.
But
we
would
not
expect
that
going
forward,
although
we
haven't
seen
any
real
change
in
conditions.
They
continue
to
be
very,
very
strong.
Very
helpful.
Thank
you
and
congrats
once
again.
Thank
you.
Your
next
question
comes
from
Nick
Joseph
with
Citigroup.
Your
line
is
open.
Thank
you.
How
are
you
thinking
about
pushing
renewals
in
2022?
Obviously,
you've
self-governed
and
continue
to
do
so.
But just
given
the
higher
inflationary
environment,
where
could
those
move
to?
I
think
we
move
them
up
to
where
we
want
them
to
be, Nick.
You've
seen
them
move
from
Q4
to
Q1
as
we
talked
about
in
January.
So
they're
right
now
in
a
6%
range.
They
might
move
a
touch
higher,
but
I
think
we'll
probably
be
about
6%
for
the
year.
So,
again,
that
would
be
kind of
on
the
upper
end
of
where
we've
been
guiding
in
our
formal
guidance.
But
I
think
we
can
assume
roughly
6%,
maybe
a
touch
higher
in
2022.
And
we
get
there
by
really
trying
to
look
at
where's
wage
growth.
We're
broadly
seeing
wage
growth
of
4%
to
8%.
And
so
we
think
6%
is
fair.
Again,
this
is
part
of
our
ESG
program
to
self-govern,
to
make
sure
that
our
rents
are
typically
below
market
to
keep
our
residents
in
our
homes
as
long
as
possible,
and
we
think
we're
striking
the
balance
at
6%.
Thanks.
And
then
I
think
on
slide
17, you
talked
about
the
adjacent
residential
businesses.
Are
there
any
plans
to
monetize
any
of
them
in
2022?
Well,
the
legacy for
sale
housing
business
just
obviously
gradually
monetizes
over
time,
so
that
– we'll
see
some
more
monetization
this
year
and
obviously
over
the
next
several
years.
That
business
naturally
liquidates
as
we
sell
lots
or
homes.
Canadian
build
to
core
multifamily,
no,
we're
not
looking
at
any
monetization
until
that
portfolio
is
stabilized
and
delivered.
So
– And
that's
going to
take
roughly
a
few
years.
But
we
are
having
conversations.
We
are
starting
to explore
with
our
institutional
partners
in
the
US
multifamily
portfolio
to
discuss
a
recap.
So
we
are
exploring
that.
I
can't
really
tell
you anything
more
than
that.
If
something
were
to
happen,
it's
possible
that
it
could
be
a
later
half
2022 event.
But
again,
we're
only
exploring
it.
And would
a recap be
more
likely
or
an
outright
sale
of
the
remaining
JV
interest?
I
can't
really
say
at
this
point,
but
I
think
I
probably
lean
more
towards
a
recap.
Thanks.
Your
next
question
comes
from
Rich
Hill
with
Morgan
Stanley.
Your
line
is
open.
Hey.
Good
morning,
guys.
I
want
to
maybe
follow
up
on
that
question
on
pushing
renewals.
If
I'm
thinking
about
your
business
right,
you
have
very
low
turnover,
which
is
a
great
thing.
But
how
long
do you
think
it's
going to
take
you
to
capture
that
healthy
loss to
lease
in
your
portfolio?
Is
it
really
like
a
four-
to
five-year
period
of time
to
capture
it
given
you're
not
pushing
renewals;
new
leases
are
high,
but
your
turnover
is
low?
Yeah.
Rich,
that's
the
way
we're
thinking
about
it.
I
mean,
the
turnover –
I
mean,
we
never
thought
we'd
ever
see
turnover
below
25%,
let
alone
16%
where
it's
been
in
December
and
January,
did
push
up
a
little
bit
higher
in
February
to
about 18%.
And
as
we
talked
about,
were
guiding
to
about
20%.
So
if
you
assume
20%
for
2022,
then
we
think
it's
going to
take
the
better
part
of
four
or
five
years
to
capture
that
loss
to
lease.
And
I
think
the
loss
to
lease
again,
I
think
we're
being
somewhat
conservative
there
at
15%
to
20%.
It's
probably at
the
upper
end
of
that
range,
if
not
higher.
Okay.
Got
it,
guys.
And
the
reason
I
was
focused
on
that
is
if
I'm
looking
at
your
2024
FFO
per
share
target,
which
I
appreciate,
so
thank
you
for
that,
that's
a
pretty
healthy
20%
growth
off
of
our
published
[ph]
2023
e-FFO (00:33:15)
estimates.
So,
I
guess,
what
I'm
getting
at
here,
is
there
a
scenario
where
you
have
really,
really
strong
FFO
growth
for
much
longer
than
maybe
the
market's
anticipating
because
you
do
have
all
this
embedded
growth?
So,
yeah,
it's
not
like
you can
capture
all
of it
in
2022,
but
does
it –
is
there
a
scenario
where
growth
is
sustained
and
very
strong
for
three,
four
or
five
years?
Absolutely.
And
the thing
I'd tell
you
is
there's
a
lot of
focus,
obviously,
on
the
same
home –
on
the
same
home
guidance.
But
the
thing
you
have
to
remember
is
that
our
same
home
portfolio
is
only
about
60%
of
our
total
portfolio,
right?
And
that
may
compare
to our
peers
who
are,
let's
say,
85%
or
90%.
So
what's
really
driving
the
growth
is –
what's
really
driving
the growth
in
FFO
per
share
is
the
acquisition
volume,
right?
That's
where
you're
really
going
to see
a
decrease
in
total
NOI.
So
again,
I
mean,
we're
guiding
the
7%
to
9%
NOI
growth,
let's
say
8%
the
midpoint.
But
if
you
saw
in
Q4,
our
actual
total
proportion
NOI
was
up
18%,
right.
So that's
really
the
number,
I
think
to
focus
on.
And
I
think
because
of
the
growth
in
the
acquisitions,
which
again,
8,000
this
year
and
maybe
over
time
that
– it grows
from
there,
you're
going
to see
some
pretty
significant
growth
in
FFO
per
share
overall,
plus
significant
growth
in
the
fees
in
the
private
function
advisory
business
that accompanies
that
growth
in
acquisitions.
Got
it. That's
helpful,
Gary.
And
just
one
more
question
if
I
may,
you have
a
differentiated
product
type
compared
to
your
peers
in
terms
of
what
type
of
consumer
that
you
target.
There's
been
a
lot
of
dialogue
about,
lower
income
consumers
struggling
a
little
bit
here
because
of
inflationary
pressures.
But
I
also
note
your
rent
to
disposable
income
is
very
low.
So
can
you
maybe
just
walk
us
through
how
you
balance
pushing
rents
with
rent
to disposable
income?
I
know
I'm
asking
a
complicated
question,
ultimately
asking,
how
affordable
are
your
homes?
I
think
they're
affordable. But
has
that
changed
with
inflationary
pressures?
Well,
and
I'll
start
and
maybe
Kevin,
you're
welcome
to
kind
of
chime
in.
But
no,
I
mean,
we
haven't
really
seen
a
big
change
in
the
underwriting.
I
mean,
if
you
look
at
the
rent-to-income
right
now,
it's
about
22%,
23%.
So
we
think
there's
significant
cushion
or
margin
there
for
–
and
so
we
feel
we're
in
a
really
good
place
with
the
underwriting.
Our
residents
on
the
whole
are
in
a
good
place.
And
so
we're
not
worried
about
that
at
all.
I
mean,
our
bad
debt
is
a
little
bit
elevated,
and
I
think
Kevin
can
talk
to
this.
But
that's
largely
because
I
think
we've
taken
a
very
empathetic
approach
to
dealing
with
our
residents
during
the
pandemic.
Right?
So
– but we're
not
seeing
– for
the
most
part,
we're
not
really
seeing
any
pressure.
Our
average
household
income
is
about
$85,000.
I
think
we're
in
a
sweet
spot,
Rich,
I
really
do,
with
this
kind of
middle-market
resident.
They
definitely
have
the
ability
to
afford
our
product
and
over
time,
if
they're
earning
more
income
to
pay
higher
rent.
So
we're
not
really
seeing
any
real
pressure.
Kevin, do
you
want
to
add
any
more
color
on
the
bad
debt?
Yeah.
On
the
bad
debt,
we
have
–
as
Gary was
saying,
we're
taking
a
very
resident-friendly
approach
and
we've
even
after
the
moratoriums
had
expired,
we
offered
rent
forgiveness
programs,
relocation
programs
for
a
cohort
of
people
and
really
trying
to
keep
people
in
their
homes.
And
we've
found
that
some
people
were
unresponsive.
And
so,
we're
going
to
be
taking
a
more
conventional
approach
to
collections
coming
forward,
and
so
we'll
see
bad
debt
going
down.
And
that's
really
one of
the
reasons
why
it's
higher
in
California,
especially
California
is
very
resident-friendly.
You
still
can't
charge
late
fees
here
in
California.
It takes
–
if
we
want to
file
any
kind
of
notices,
it
takes a
lot
longer.
So
we're
going
to be
working
through
that
in
the
coming
quarters, and
I
think
we're
going
to
see
bad
debt
come
down.
But
as
far
as
underwriting,
we
still
–
we
turn
down
maybe
49%
to
50%
of
applicants
that
apply
with
us.
So
we
are
scrutinizing
the
people
that
are
coming
in.
We've
seen
the
FICO
scores
stay
even,
the
rent
to
income
stay
even.
So,
we
feel
very
good
about
the
resident
profile
that
we
have.
And
we
think
we'll
get
back
down
to
the
same
kind
of bad
debt
levels
pre-COVID
in
the
next
three
quarters.
Great.
Thanks.
Thanks,
Gary
and Kevin.
That's
really
helpful.
Thanks,
Rich.
Your
next
question
comes
from
Mario
Saric
with
Scotiabank.
Your
line
is
open.
Hey.
Good
morning.
Hi, Mario.
You
guys
have
introduced
guidance
for
the
first
time,
and here
we
are talking
about
2024.
On
that
front,
can
you
talk
about
like
the
17%
CAGR
and
your
FFO
per
share
reflected
in
your
2024
guidance
is
pretty
strong,
can
you
talk
about
whether
that's
kind
of
evenly
split
between 2023
and
2024,
or
do
you
expect
the
per share
growth
to
accelerate
upon
development
completions,
for
example, in
Canada?
It's
lower
in
2022
because
we
have
the
overhang
of
the
US
IPO.
And
then
we
assume
relatively
consistent
FFO
per
share
growth
in
2023
and
2024.
So
the
growth
to
get
to
that
kind
of
17%
or
15%
to
17%
CAGR
is
a
little
bit
more
back-ended
between
2023 and
2024, but
it's
consistent
between
those
two
years.
Got
it.
Okay.
And
then what
type of
same-store NOI
growth
are
you
looking
at
in
2023
and 2024
that
underpins
[indiscernible]
(00:39:07)?
Yeah.
Our
–
again,
I
mean,
we're
not
providing
any
formal
guidance
here,
Mario.
So
I
just
want
to
preface
that.
But
I
think,
in
our
internal
model,
to
get
to
those
numbers,
we're
actually
assuming
lower
same
home
NOI
growth,
probably
in
the
kind
of 6%,
maybe
5.5%
to
6%
range,
which
is
what
it's
been
over
the
longer
term
for
us
and
our
business.
So
we're
not
assuming,
10%
as
we
did
in
Q4,
7%
and
9%
formal
guidance
for
this
year.
To
get
that
level of
growth,
we
only
need
same
home
NOI
growth
probably
of
5%
to
6%.
Makes
sense.
And
then,
as
you
mentioned,
acquisitions
are
a
big
driver
of
the
growth,
given
50%
to
60%
of the
portfolio
is
same
property.
What
kind
of acquisition
spread
do
you
think
you
can
continue
to
achieve
given
[indiscernible]
(00:39:57) here
a
little
bit,
cap
rates
will
come
down
a
little
bit.
So
when
you
look
over
the
next
two
years,
what's
a
reasonable
acquisition
cap
rate
spread
in
your
model?
We think
it's
going
to be –
well,
I
mean,
I
think
the
acquisitions,
as
we
talked
about
before,
we
think
is
an
evergreen
opportunity.
So
the
biggest
challenge
for
us
is
not
the
market,
it's
actually
the operations.
It's
staffing
up
in
order
to manage
those
acquisitions.
So
we're
very
confident
that
we're
going to
hit
the
8,000
acquisitions
this
year
at
the
cap
rates
I
was
talking
about
which
are
kind
of
low
to
mid
5s
on
an
economic
basis,
high
4s,
very
high
4s.
We
think
we
can
hold
that
all
the
way
through.
To
the
extent
that
higher
mortgage
rates
ultimately
impact
the
for
sale
housing
market,
it
is
possible
the
cap
rates
might
move
up
a
little
bit,
but
we're
not
assuming
that.
We're
assuming
that
they
continue
to
be
where
they
are
and
we'll
buy
8,000 homes
this
year.
And
maybe
10,000 homes, 8,000
to
10,000
homes
in
the
next
couple
of years
to
get
to
the
50,000.
Got it, got it. Okay.
And
then
in
terms
of
2022,
your
floating
rate
guide on
a proportionate
basis, about
25%
of the
total
debt,
primarily
on
the
credit
facilities.
But – internally,
how many
rate hikes
are
you
guys
projecting
in 2022,
and kind
of
where
you see
that
floating
rate
debt exposure in
going
over
the
course
of
2022?
Hey, Mario,
it's
Wissam.
So,
I'll
tell
you
a
couple
of things,
we
are
actively
in
the
market
to
do
a
securitization
deal
as
we
speak.
That
will
actually
take
out
some
of
that
floating
rate
debt
that
you're
talking
about
that
you're
seeing
in
there. Most
of
that
floating
rate
debt
that
you
have
is
in
the
warehouse
facility,
a
subscription
facility,
and
we're
going to
take
that
out
this
year.
We're
expecting
to
close
that
in
first
or
second
week
of
April.
The
rates
that
we're
seeing
on
that
specific
deal
is
around,
let's
say,
3.5%,
3.6%.
Put
that
in perspective,
the
last
securitization
deal
that
we
did
was
2.57%
and
the
one
before
that
was
at
1.94%.
So,
we're
obviously
seeing
a
jump
in
rates.
Having
said
that,
we've
always
said
we're
going to
maintain,
we're
really
focused
on
overall
leverage
targets
of
8
to
9 times
EBITDA,
as
well
as
making
sure
that
we
are
focused
on
fixing
for
a
longer-term
or for
as
long
as
we
can.
So,
we
expect
to
have
some
impact,
but
that's
already
been
factored
in
in
our
2022
FFO
targets.
Okay.
Okay. My
last
question – and
Gary,
you
mentioned
an
equity
requirement to
SFR JV-2 under
the $300
million
range
for
the
year.
What –
can
you
just
remind
us
of
what
your
total
expected
equity
requirement
to
fund
co-investments
and
all of
your
[indiscernible]
(00:42:37), including
an
incremental
equity
required
to
complete
developments
in
Canada,
which
I
think
is
pretty
minimal?
Yeah,
so.
And,
Wissam,
feel
free
to
chime
in.
Yeah,
so
for
–
based
on
the
8,000 homes
we
discussed
at
$340,000
a
door,
we're
looking about
$300
million.
Now,
some
of
that
could
be
funded
by
a
subline,
so
that
I
would
say
is
kind of
a
maximum
number.
So,
it's
about
$300
million.
We
think
we
need
about
another
$50
million
for
the
other
adjacent
businesses,
including
Canadian
multifamily
development.
So,
that
leaves
us
about
$350
million
gross.
And
then,
we're
generating
AFFO
of
roughly
$150
million
less
$75
million
of
dividends.
So,
if
you
kind
of
net
off
the
AFFO
after
dividends,
it
leaves
us
requiring
about
$275
million
of
capital
for
the
year.
And
obviously
that
can
easily
be
funded
through
our liquidity.
Like
our
liquidity
right
now
is
more
than
double
that.
So,
we're
in
a very
– obviously
very
comfortable
position
to
fund
that
growth. As
I was
saying
in
an
earlier
comments,
to
the
extent
that
we
have
some
monetization
from
our
adjacent
businesses,
that
could also
be
used
to
fund
the
growth.
But
we
feel
we're
in
a
really
good
place
and
certainly
don't
need
to
top
the
market
today.
And
on
that
adjacent
business
in
the
US,
on
the
multifamily
side,
the
consideration
of
the
sale or
a recap, are
there
any
structural
agreements
in
place
with
the
investors
[ph]
at profit
previous (00:44:09)
80%
in
terms
of purchase
price
and then
cap
rates and so
on and
so
forth
or
that's
based
on
market?
No,
I
mean,
listen,
we
need
their
buy-in
to
be
able to
do
anything,
right?
We've
entered
into
a
long-term
partnership
with
them.
So,
really
to
entertain
any
change
of
structure
including
a
recap,
we
do
need
their
buy-in,
so
we
are
exploring
that
with
them.
And
if
that
made
sense,
then
it's
something
we
could
pursue.
I
will
say
that
the
portfolio
is appreciated
massively
since
we
bought
it
and
syndicated
it.
So
we
do
have,
I
think,
a
lot
of goodwill
with
our
investors
and
I
think they'd
be
more
likely
than
not
to
work
with
us
or
accommodate
us
on
some
sort
of
recap.
But
it
would
be
based
on
market,
and
there's
no
specific
parameters,
I
would
say,
in
the
contract
or
limited
partnership
agreement
that
would
prevent
us
apart
from
their
permission.
Perfect.
Okay.
Thanks,
guys.
Great.
Thank
you.
Your
next
question
comes
from
Brad
Heffern
with
RBC
Capital
Markets.
Your
line
is
open.
Hey.
Good
morning, everyone.
Thanks
for
taking
the
questions.
On
expense
growth,
I
was
curious.
The
guidance
for
2022 came
in
a
little
bit
higher
than
your
peers.
But
you
said in
the
prepared
comments
that
you're
assuming
property
tax
increases
in
the
high-single
digits,
which
I
think
is
higher
than
what
others
have
assumed.
How
much
visibility
do
you
have
into
that?
And
ultimately,
do
you
think
that
the
expense
guide
is
potentially
conservative?
Yeah.
I
think they're
– I
think
all of
our
guidance
[indiscernible]
(00:45:49)
an
element of
conservatism,
right?
I
mean,
this
is
the
first
time
we
put
guidance
out.
You
can
never
be
too
sure
certainly
in
the
new
world
that
we're
in
with
the
economic
uncertainty.
So,
we
like
to
under
promise
and
over
deliver.
I
would
just
say
that's
just
kind
of a
general
rule,
Brad.
But
the
insight
we
have
really
comes
from
our
property
tax
consultant
who's guided
us
to
high-single
digits.
And
the
reason
for
that
is
obviously
we've
seen
20%-plus
home
price
appreciation
in
our
portfolio.
You
can't
suck
and
blow.
I
mean,
at
some
point,
you
have
to
pay
some
of
that
back
in
higher
property
taxes.
I
think
the
other
big
thing
that
has
to
get
taken
into
account
is
the
market
mix,
right?
There's
a
big
geographic
difference
in
certain
cases
between
us
and our
peers.
And
if
you
look
at
us,
65%
of
our
homes
are
in
markets
that
do
not
have
statutory
caps
and
that
might
compare
to
Invitation
at
35%,
right?
So
it's
a
big
difference,
right?
Whether
you have
homes
in
California,
Florida,
Arizona,
Nevada,
Invitation's got
a
much
bigger
concentration
in
those
markets
and
therefore
should
probably
see
lower
property
taxes.
That's
really
the
difference.
But
look,
as
I
said,
I
think
there
is
some
conservatism
in
there.
I
hope
at
the
end
of the year –
we'll
know
later
in
the
year.
Obviously,
once
we
start
seeing
the assessments,
hopefully,
we
can
do
a
little bit
better.
And
it
doesn't
factor
in
any
appeal
of
those
assessments.
And
so,
if
we're
able
to
successfully
appeal
them,
we'll
do
a
little
better
there
as
well.
Thanks,
Gary, if
I
could
add
just
quickly,
is
that we
do,
I
mean,
we're
actively
managing
that.
We
have
[indiscernible]
(00:47:26)
roughly
5,000
homes
a
year,
so
we're
working
with
our
consultants
to
do
that.
And
then
we
typically
have
a
50%
to
60%
success
rate.
So, it's
something
that
we're
actively
working
on.
Okay.
Got
it.
Thanks
for
that.
And
then
you
all
obviously
saw
the
Invitation
investment
in
Pathway
Homes.
I'm
curious
if
you
have
any
interest
in
pursuing
a
similar
rent-to-own
strategy
at
some
point?
It
seems like
it
might
correspond
well
with
your
resident-friendly
ethos.
No,
we
don't.
I
mean,
we're
very
focused
on
our
model,
which
is,
we
buy
homes
and
we
want
to
hold
them.
This
is
a
business
that
is
extremely
intensive,
a scattered
site
property
management, it's
difficult
to
run.
And
at
the
end
of
the
day,
we
want
to hold
as
many
properties
as
we
can.
So, we
don't
have
any
plans
to
pursue
that
particular
business
model,
but
we
think
we
can
accomplish
it
and
really
help
our
residents
in
different
ways.
And
that's
really
the
point
at
Tricon
Vantage.
The
biggest
thing
that
we
do
is
just
governing
on
renewals,
right?
And
that
really
gives
our
residents
stability that
allows
them
to plan
for
the
future.
It's
probably the
most
important
thing
we're
doing
in
our
ESG
program,
but
to
the
extent
– and
we
also have
a
program
if
we
ever
do
sell
homes
and
we
do
sell
roughly
100
homes
a
year,
we
do
give
a
first
opportunity
to
our
residents.
And
we
will
be
unveiling
a
down
payment
assistance
program,
hopefully
in
the
second
half
of the
year.
So
you
should
see
information
on that coming
soon,
which
will
help
longer-tenured
residents,
if
they
do
choose
to
buy
a
home,
we'll
help
them
there.
So
we
– but we probably
prefer
to
do
it
that
way.
If
they
do
want
to buy
a
home,
we
can
prepare
them
for
that
through a
financial
literacy
training,
credit
building,
down
payment
assistance,
but
we
probably prefer
them
to
go
and
buy
another
home
rather
than
cannibalize
their
own
portfolio
and
sell
their
own
homes
en
masse.
Got
it.
Thank
you.
Yeah.
Your
next
question
comes
from
Jade
Rahmani
with
KBW.
Your
line
is
open.
Thank you
very
much.
You
talked
about
providing
down
payment
assistance
and
your
tenant-friendly
approach.
I
was
wondering
if
you
might
take
it
a
step
further
considering
the
company's
expertise
in
capital
markets
and
securitization
and
perhaps
create
a
vehicle
to
provide
mortgage
finance
to
any
customers
that
might
be
interested
in
purchasing
homes.
Is
that
an
interesting
concept
or
is
there
not
enough
of
an
install
base
that
might
access
such
a product?
I
think
it's an
interesting
idea.
And,
look,
we're
always
welcome
–
we
always
welcome
great
ideas.
We're
all
about
continuous
improvement
and
learning.
But
I
don't
think
there's
a
big
enough
opportunity
to
make
that
work
for
us.
Again,
I'm
not
going
to
reveal
too
much
about
the
program
yet.
But
what
I
will
tell
you
is
on
the
modeling
that
we
did,
we
thought
we
could
help
500 to
700
families
over
about
three
years.
So,
if
you
kind of
think
about
that,
it's
not
a
huge
opportunity
in
terms
of
mortgage
financing.
You
probably
couldn't
make
a
business
work
with
that
type
of
volume.
So,
I
think
you'd
have
to
be
much
bigger.
And
again,
we
only
want
to provide
the
down
payment
assistance
to
long-tenured
residents,
right?
They
have
to
be
in
good
standing.
It's
not
for
anybody.
They
have
to
be
with
us
for
a
certain
period of
time
and
we'll
unveil
more
of those
details
later.
Thank
you
very
much.
In
terms of
the
supply
chain
environment
and
with
the
aggressive
acquisition
targets
hitting
those
growth
[indiscernible]
(00:51:08)
clearly
an
important
part
of
the
story,
we're
seeing
homebuilders
push
out
deliveries
significantly.
We're
seeing
cycle
times
expand
probably
25%.
So,
can
you
talk
to
what
the
supply
chain
are
that
you're
seeing
and
how
it's
impacting
the
business?
Is
it
[ph]
impacting (00:51:29)
time
to
renovate
homes
and
therefore,
time
to
lease?
Is
it
causing
any
curtailment
in
the
build-to-rent
delivery
strategy?
So,
Kevin,
why
don't you
talk
about
the
general
impact
on
our
business,
and
then maybe
I'll
discuss
build-to-rent.
Okay.
Sure
thing.
So
yeah,
we
did
experience
some
pressures
early
on
when
it
first
started.
And
we
quickly
really
went
to and
expanded
our
vendor
base
and
our
supplier
base.
We
also
started
ordering
materials
a
lot
sooner,
and
we
began
bulk
ordering
on
kind of
the
heavily
used
materials
like
paint
and appliances.
And
we're
actually
right
now
taking
a
step
further.
We're
working
with some
of
our
partners
to
warehouse
inventory
so
that
we
can
bulk
buy
and
have
it
in
warehouses
where
–
that
are
run
by
our
partners.
So,
we're
not
having
to
rent
space.
We're
not
having
to
add
more
people.
It's
something
that we're
working
with
our
partners.
And in
terms
of
supplies, look,
all
of
our
carpet,
vinyl
flooring,
smart
home
controllers,
those
are
all
in
full
supply.
Where
we
continue
to
feel
a
little
bit
of
pressure
is
like
in
our
GE
appliances.
And
that
continues
to
be
a
challenge,
but
we've
found
ultimate
supply
sources
we're
working. We've
got
a
really
good
relationship
with
Home
Depot
and
Lowe's
that
we're
able
to
go
to,
to
get
those
appliances.
So,
we've
really
kind
of
extended
the
web,
if
you
will,
and
have
been
able
to
really
keep
that
under
control.
We
– to
take
it
a
step
further,
we
did
feel
pressure,
supply
pressure
on
pricing.
And
– but because
of these
national
relationships
that
we
have,
we've
been
able
to
keep
the
cost
increases
to
5%,
6%
on
rentals
and
churns
and
6%
to
8%
on
repairs
and
maintenance
where
they
could
have
been
retail
pricing
on
like
flooring
and
HVAC
paint
have
gone
up
like
25%.
So,
we've
been
able
to
mitigate
most
of
those
cost
increases.
And
I
think
also
we've
been
able
to
lower
the
increased
pressure
through
lower
turnover
rates.
Our
work
orders
done
in-house
are
now
up
to
70%
and
we've
centralized
our
scoping
and
renovation,
scoping
for
renos
and R&M.
And
we're
also
starting
to
buy
slightly
newer
homes,
which
we
think
is
going
to lower
our
costs
and
maintenance
going
forward.
Yeah,
so
just,
I
would
just
add
to
that.
I
think
on
build-to-rent,
I
mean,
yeah,
there's
no
question
the
home building
industry
is
being
dramatically
affected
by
supply
chain
issues
and
longer
building
cycle
times.
We
saw
increases
in
costs
of
about
20%
last
year.
We've
heard
from
some
of
our
bigger
private
builder
partners
that
they
saw
cost
increases
of
up
to
6%
to
7%
a
month
in
January
and
February.
And
that
–
those
inflation
levels,
I
would
say,
are
scary
and
will
ultimately
put
downward
pressure
on
development
yields.
So,
that's
something
we
need
to
watch
very
closely.
At
this
point
in time,
and
we're
really
happy
with
our
build-to-rent
portfolio,
the
development
yields
are
in
that
kind
of
5%
to
5.5%
range
on
an
un-trended
basis.
So,
we
think
we're
getting
paid
for
the
risk.
But
if we
continue
to
see
this
type
of
inflation
on
costs
and
direct
costs,
I
don't think
rents
will
be
able
to
catch
up.
And
so,
we
will
see
some
degradation
in
yields.
And
so,
that's something
we
have
to
watch.
We
believe
a
lot
in
the
build-to-rent
program.
We
want
to be
part
of
the solution.
We
want to
be
able to
add
more
housing
to
the
market,
but
we
won't
do
it
in
any
cost,
right?
So,
if
the
yields
get
too
thin,
then
we
might
need
to
take
a
pause,
but
we'll
see
how
that
plays
out
later
in
the
year.
And
what
are you
seeing
on
the
policy
and
regulatory
side?
Are
you
detecting
pressure
building
from
a
rent
regulation
standpoint
and
taking
some
of these
actions,
down
payment
assistance,
etcetera,
proactively?
What
are
you
seeing
there?
Well,
I
mean, we're
not
subject
to
any
inquiries.
So,
I
mean,
we
haven't
seen
anything
directly,
we're
obviously
aware
of
what's
kind
of
more
broadly
happening in
the
industry.
And
we're
also
sensitive
to the
fact
that
there
is
a
lot
of negative
press
on
the
industry.
And
so
we
want
to,
hopefully
with
our
peers,
start
to
change
the
narrative
to
talk
about
all
the
positive
things
this
industry is
doing
for
residents,
right?
It's
not
only
about
homeownership,
it's
also
about
providing
more
opportunities
for
people
for
different
reasons
that
need
to
rent
homes
and
to
talk
about
the
product
that
we
provide
for
residents.
And
then
also,
I
think,
to
try
to
help
our
residents,
right?
This
should
not
be
about
extracting
value,
it
should
be
about
creating
value
for
residents.
So,
these
are
the
type
of
programs
we're
rolling
out.
We're
incredibly
excited
about
Tricon
Vantage
and
we
hope
that
these
initiatives
help
inspire
the
broader
industry
to do
the
same.
Thank
you very
much.
Thanks,
Jade.
Your
next
question
comes
from
Tal
Woolley
with
National
Bank
Financial.
Your
line
is
open.
Hi,
good
morning,
everybody.
Hi,
Tal.
Thank
you
for
providing
a 2024
sort
of
bridge
there.
I'm
just
wondering
what
sort
of
targets
for
capital
raising
from
third
parties
are
you
looking
at
to
drive
that
growth?
Jon,
you
want
to
– do you
want
to
talk
about
those?
Yeah.
Sure,
Tal.
So,
if
you
look,
last
year,
obviously
2021
was
a
record
year
for
Tricon
for
third-party
capital
raising
across
all
of
our
businesses,
but
in
particular SFR.
If
you
think
about
JV-2
which
we
raised, we
raised
$1.5
billion
of
capital,
over
$5
billion
of
equity – for
over
$5
billion
dollars
of
total
capital
which
gives
us
firepower
for
[ph]
15,000 to
16,000
(00:57:15)
homes.
So,
clearly,
that doesn't
get
us
quite
to
the 50,000.
So,
there
could
be
– or
does
to
the
edge.
So,
there
could
be
another
vehicle
in
the
cards
between
now
and
the
end
of
2024.
Obviously,
thinking
about
Gary's
guidance
on
where
home
price
is,
maybe
call
it,
$340,000
to
$350,000
a
home
all-in
cost,
you
could
see
us
raising
a
bigger
successor
vehicle
perhaps
both
in
terms
of
equity
and
total
capital,
but
we're
not
providing
a
specific
guidance
at
this
time.
I
would
say
though,
we
continue
to
get
significant
inbound
demand
from
both
our
existing
investor
as
well
as
new
investors
for
single-family
rental
private
investment
vehicles.
So,
if
we
were
in the
market
today,
there'd
be
no
shortage
of
capital
available
to
help
us
meet
our
growth
guidelines.
Yeah.
And
the
only
thing
I
would
add
to
that
is
on
our
build-to-rent
program,
[ph]
Keep As One (00:58:04),
that
is
now
substantially
committed.
So,
we
are
working
on
a
successor
vehicle.
So,
that's
something
that
could
happen
that
we
could
announce
in
the
second
half
of
the
year
to
continue
our
build-to-rent
initiative.
Okay.
And
then, just
my
next
question
is
just
around
the
Toronto
apartment
platform.
You
sold
your
interest
in
7
Labatt.
I'm
just
wondering
if
you can
give
a –
what
prompted
the
sale
there?
And
then,
I'm
just
also
wondering,
too,
when
you
look
at
some
of
your
longer-dated
projects
like
Queen
&
Ontario,
Block
20
at
West
Don
Lands,
how
are
you
feeling
about
budgets
pro
forma
returns
on
some
of
those
later
projects?
Yeah.
So
on the
Labatt
project,
we
just
had
a
difference
of
opinion
with
our
partner
on
the
business
plan.
We
want
to go
rental
wherever
we
can.
This
is
a
kind
of long-term
hold
strategy
for
us
to
develop
more market
rate,
and
in
some
cases,
affordable
housing,
to
Toronto,
and
our
partner
was
more
interested
in
doing
condo.
And
so,
that
was
really
the
issue.
It
is
often
more
profitable
in
the
short
term
to
do
a
condo,
but
we
are
taking
a
longer-term
approach,
and
wherever
we
can,
try
to
do
rental.
So,
I
think
that's
what
happens
on
7 Labatt.
We
still
did
very
well
on
the
exit.
So,
we're
happy
with
where
that
ended
up
and
got
some
money
back.
On
the
other
projects,
I
think
what's
really
important
is
we
try
to
enter
into
opportunities
that
are
basically
shovel-ready,
which
means
we
can
lock
in
costs
as
soon
as
possible.
And
so,
we've
seen
a
little
bit
of
creep.
I
mean, there's
significant hard
cost
inflation
in
the
market
and
we've
seen
a
little
bit
of
creep
in
our
business
plans,
and
certainly,
a
little
bit,
in
the
case
of
The
Taylor,
for
example, we're
probably
three
months
behind
on
delivering
that
building.
But
on
the
whole,
we've
been
able
to hold
the
costs,
again,
because
we've
largely
been
able to
lock
them
in
right
away.
And
so,
that's
been
a
real
advantage.
And
then,
the
other
thing
I
would
say
is
on
the
rent
side,
I
mean,
it's
been
tough
in
Toronto,
as
you know,
Tal. It's
probably,
along
with
San
Francisco,
it's probably
been
the
worst
major
performing
market
coming
out
of
the
pandemic.
But
now,
I
would
say
rents
are
probably
back
to
pre-pandemic
levels.
And
so,
if
we're
able
to
lock
in
our
costs,
which
we
generally
have
been
able
to
do,
and
now
rents
are
back
to
pre-pandemic,
we're
essentially
back
to
our
[ph]
on-trended (01:00:30)
development
yield
underwriting.
And
so
now,
it's
just
a
question
of
how
much
do
rents
rise
from
here
and
where
will
the
trended
yields
end
up.
And
I've
got
to believe
that
with
the
massive
immigration
targets,
$1
million,
$2
million over
three
years,
where
are
people
going
to live,
I
expect
we're
going to
see
significant
rent
growth
in
Toronto
over
the
next
few
years.
And
so,
I
think
this
business
is
going
to
do
remarkably
well,
even
on
The
Taylor,
which
we're
going to
be
delivering
by
mid-year,
we
expect
trended
development
yields
probably
be
in
the
high-5% range.
Just
to
give
you
a little
bit
of
insight,
market's
probably
trading
at
3.5%
or
below.
So
it's
going
to
be
another,
I
think,
very
profitable
investment
for
us.
Okay.
That's helpful.
Thanks very
much.
Thank
you.
And
your next
question
comes
from
Dean
Wilkinson
with
CIBC.
Your
line
is
open.
Thanks.
Good
morning, everybody.
Hi,
Dean.
This
is
probably
a
question
for
Wissam,
who
always
raises
the
bar.
When
you
look
at
the
active
growth
vehicles, I
think
you
disclosed
there's
about
$455
million
of
unfunded
equity.
So,
I
just
want
to
circle
that
back
against
the
$275
million that
Gary
was
talking
about,
and
then
just
how
you're
looking
at
funding
that
from
the
credit
facility.
What
kind of
home
price
appreciation
would
you
need
in
order
for
that
drawdown
to
be
leverage
neutral?
Good
morning. I
was
actually
waiting
for
you. I
haven't
seen
you
in
a
while.
So
talk
about
our
commitment
first,
Gary
talked
about
$300
million
in SFR
and
probably
another $50
million
from
adjacent
businesses.
That's
really
for
2022.
What
you're
talking
about
is
MD&A
and
financials
are
really
is
looking
at
unfunded
commitment
over
a
period
of
time.
So,
you're
looking
at
stretching
that
out.
Look, Dean,
at
the
end
of
the
day,
even
if
I
look
on
a
three-year
basis,
as
opposed to
a
one-year
basis,
we're still
going
to
need
about $500
million
total
equity
for
SFR,
$300
million
this
year,
plus
a
couple
hundred
million
dollars next
year
simply
because
of
financing
and
making
sure
our
leverage
stays
between
8
and
9
times,
and
you'd
also
assume
that
you're
growing
AFFO.
So,
Gary
mentioned
AFFO of
$150 million.
Less
dividends,
you're
at
$75 million.
And
then,
you're
also
going
to be
buying
more
homes
throughout
the
year.
So
if
you
model
it
out,
and
I
could
help
you
with
the
modeling
if
you
need,
we
could
probably
get
a
lot
of
the
cash
in.
So,
our
total
equity
requirement
might
be
as
high
as
maybe
$400
million.
And
we
have,
as
mentioned
earlier,
$677
million
available
cash.
So, we're
actually
fine
the
next
couple of
years.
Now,
having
said
all
that,
we
are
opportunistic.
If
we
think
that
stock
price
is
where
it
is
and
we
want to
issue
equity
at
an
opportunistic
way,
we
will.
But
we're
really
managing
the
growth
and
leverage
at
the
exact
same
time. We
want
to
maintain
the
leverage
of
8
to
9
times.
Okay.
I
guess
the
point
was
that
you
don't
need
a
20%
increase
again
in
HPA in
order
to
keep
your
rent
where
it
is.
No.
[indiscernible]
(01:03:37).
No,
we
don't.
And
again,
like
I
mean,
the
home
price
appreciation
is
really,
in
many
ways,
is
kind
of
an
IFRS
concept
in
terms
of
kind
of working
out
our
NAV.
But from
an
acquisition
perspective,
it's
really
about
the
interplay
between
home
prices
or
home
price
appreciation
and
rent
growth,
like
how
does
that
move
over
time.
And
what
we
do
find,
Dean,
is
that
there –
maybe
not
in
a
year
and
a period,
but
over
time,
over
a
couple
of years,
several
years, there's
an
extremely
high
correlation
between
home
price
appreciation
and
rent
growth.
So
as
a
result,
we
think
the
cap
rates
will
stay
fairly
constant
looking
forward
over the
next
few
years.
So
look,
we
can't
predict
home
price
appreciation.
I
would
tell
you,
it's
got
to
stabilize
at
some
point.
It's
still
running
hot
into
January
and
February.
But
we
got to
believe
that
with
mortgage
rates
up
now
at
4%
and
significant
inflation
in
delivering
new
homes
on
the
home
building
cost
side,
at
some
point,
the
market's
going
to
–
the
price
appreciation
is
going to
slow.
So,
that
would
be
our
prediction
over
time
that
you're
not going
to
have
20%
home
price
appreciation
forever.
That
is
not
sustainable.
And
it
will
slow
down
probably
in
the
back
half
of
this
year
and
into
2023,
but that
won't
– in
some
ways,
that
might
help
us
because
there'll
be
an opportunity
for
rents
to
catch
up.
Right.
But
I
guess
we've
had
kind of
been
having
this
conversation
for
a
couple
of years,
and
at
some
point,
[indiscernible]
(01:05:10). Just
going
into
scale,
do
you
have
the
internal
infrastructure
now
in
place
to
go
from
30,000 to
50,000 homes? Can
that
ramp
up
quickly
or
would
you
need
to
do
some
sort
of
larger
expansion
in
order
to
kind of
get
to
your
ultimate
goal?
We
scaled up.
I
mean,
as
being
a big –
I
mean,
if
you
look
at
this,
the
company has
grown
dramatically
over the
last
year
or
two
and
also
in
head
count
in
order
to
prepare
for
the
growth
where
we're
going
– we're
incurring
right
now.
So
we
are
at
a
point
right
now
where
we
can
easily
accommodate
at
least
2,000 homes
a
quarter,
right?
So
we're
already
there,
right?
We
did
2,000
homes
in
Q3
and
Q4.
We got in
to 1,800
to
2,000
homes
in
Q1.
We've
got
the
team
in
place
to
accommodate
that.
If
we
were
to
go
faster
than
that
and
let's
say
we
wanted
to
go
to
3,000 homes, we'd
obviously
have
to
increase
the
hiring
again,
right?
Because
when
–
[ph]
a
tech (01:06:18),
for
example,
can
only
do
three
or
four
homes
a
day,
right?
So
if
you
had
5,000 or 10,000
homes,
you
do
need
to
add
more
bodies
over
time.
So
the
operation is
in
place
right
now
to
handle
the
acquisitions,
but
I
would
say
that
over
time,
we
do
need
to increase
the
hiring
in
order
to
handle
the
higher
volume.
And
so,
what
I
would
guide
to
is
we're
probably
going
to increase
our
head
count
by
about
25%
this
year,
right,
again,
in
order
to
accommodate
the 8,000
homes.
And
that's
why
we
are
guiding, I
think
in
our
formal
comments,
too,
if
you
look
at
the
overhead
in
the
FFO
schedule, we
are
guiding
to
about
$30
million
a
quarter
throughout
this
year,
which
is
a
big
jump
from
Q3,
but
that
is
to
accommodate
the
higher
head
count
for
this
growth.
Got
it.
Okay.
That's
it
for
me. Thanks,
guys.
I'll
hand it
back.
Thanks,
Dean.
Your
next
question
comes
from
Jonathan
Kelcher
with
TD
Securities.
Your
line
is
open.
Thanks.
Good
morning.
Just
on
the
–
if
I
look
at
your
Q4
acquisitions,
the
average
rents
for
those
houses
were
about
$2,000.
Has
there been
any
change
in
your
target
tenant
profile?
Not
really.
I
think the –
I
mean,
the
rents
you're
seeing –
first
of
all,
remember,
we've
got
significant
loss
to
lease
in
our
portfolio,
right?
We've
been
talking
about
that
being
15%
and
20%,
but
that's
probably
conservative.
So
that's
why
when
you
see
our
in-place
rents
compared
to
the
new
acquisitions,
you
see
that
big
difference.
That
is
the
loss
to lease.
The
other
factors
that
in our
new
acquisition
program
under
JV2
and
Homebuilder
Direct,
we
are
we
are
buying
homes
in
pricier
markets
that
have
higher
rents,
right?
So
if we're
buying
homes
in
Austin
or
Las
Vegas
or
Phoenix,
those
markets
do
have
higher
home
prices
and
commensurate
with
that
higher
rents. So,
that's
typically
what
you're
seeing.
Okay.
So,
those
markets
would
also
have
higher
median
family
incomes?
Is
that the
way
to think
about
it?
Yeah.
They
typically
would,
right?
Because
across
the
board,
we
are
underwriting
rent
to
income
in
that
kind
of 22%,
23%
range.
And
so,
that's
really
consistent
across
our
markets.
It
might
be
a
little
bit
different in
California,
where
it is
much
more
expensive,
but
typically,
that's
pretty
steady
across
the
markets.
Okay.
And
then,
just
on the
maintenance
CapEx,
that
did
jump
on
an
annualized
basis
pretty
good
in
Q4.
Was
there
anything
onetime
in
there
or
what
do
you think
– what's
a
good
run
rate
for
that
going
forward?
Yeah.
Kevin,
do you
want
to start
with
that
and
maybe
I'll
continue?
Yeah.
On
our –
on the
CapEx,
one
of
the
things
that
happened
in
Q4
is
we
took
a
proactive
stance
on
replacing
a
bunch
of
HVAC
units
that
were
aging
out.
We
thought
it'd
be
better
to
do
it
on
our
own
time
versus
some of
these
units
breaking
in
the middle
of
summer
in
Phoenix,
right,
where
it
costs
more.
So,
we
replaced
60
units
for
the
same
home
portfolio
in
Q4.
It's
like
[ph]
$265,000 (01:09:32).
So,
that
affected it
about
$100 a
unit
for
the
quarter.
And
then,
on
top
of
that,
we
did
see
about
a
38%
increase
in
the
number
of
homes
requiring
some
form
of
CapEx.
And
a
lot
of
that
is
due
to
still
coming
out,
we're
comparing
against
a
period
where
we
were
still
slower
due
to the
pandemic.
And
so,
now,
we're
back
to
full
tilt.
And
so,
the
numbers
of –
the
number
of
work
orders
happening,
whether
it's
R&M
or
CapEx,
has
increased.
So,
that
was
the
bigger
driver.
And
then,
there
was
a
7%
to
8%
just
inflation
factor
that
went
into
that.
And
so,
those
are
really
the
biggest
drivers.
And
then,
I'd
just
add
to
that,
Jon,
I
would
say
that
as
we
look
ahead
to
2022 with
the
new
same
home
portfolio,
which
will
be
recomposed,
it
will
include
homes
from
JV-1,
which
are
newer
homes.
And
so,
as
a
result
of
that,
we
do
expect
that
the
cost
to
maintain
on
the
same
home
portfolio
will
come
down
over
the
course
of
2022
because
of
the
introduction
of
newer
homes,
and
that's
the
hope.
And
probably
say –
we'll
probably
be
in
the
high-2,000s
rather
than
the
low-3,000s
[indiscernible]
(01:10:49).
And
that's –
but
obviously,
between
R&M
and...
Yeah.
That's
R&M
and
recurring
CapEx
cost to
maintain.
Okay.
Thanks.
I'll
turn
it
back.
Thank
you.
Your
next
question
comes
from
Chris
Koutsikaloudis
with
Canaccord.
Your
line
is
open.
Thanks.
Morning,
everyone.
Hi,
Chris.
Just a
quick
question
here
on
the
fair
value
of
your
SFR
portfolio.
It
equates
to
a
value
of
about
$274,000
per
home.
I'm just
wondering
if
you
think
that's
fairly
reflective
of
current
home
prices
or
if
that
might
be
a
little
bit
conservative.
Yeah.
Sure,
Chris,
and
great
to
speak
with
you.
Yeah.
I
would
say
we
think
it's
more
on
the
conservative
side.
Again,
a
couple of
things.
As
Gary
and
Wissam
talked
about
earlier,
you
saw
a
meaningful
ramp-up
in
home
price
appreciation
over
the
course
of
2021
that
we've
seen
continue
in
many
markets
in
2022.
And
our
valuation
models
lag
a
little
bit
because
of
the
nature
of
BPOs,
which
are
backward-looking
in
a
transaction.
So,
you
see
that
as
well.
And
then, secondarily,
we're
using
a
kind
of
home-by-home
or
HPA
BPO
methodology.
You
can
also
look
at
the
fair
market
value
on
a
cap
rate
basis,
which
we
don't do
for
IFRS
purposes.
But
given
where
you're
seeing
single-family
rental
portfolios
trading,
that
would
support
a
higher
– the
higher
fair
market
value
as
well.
So,
I
think
our
preference
is
to
be
on
the
conservative
side
for
that
metric.
Yeah.
And
just
to
give
you
more
context
on
that,
Chris,
the
implied
cap
rate
right
now
in
the
portfolio
is
about
4.7%,
right?
So,
we
would
see
that's
actually
very
conservative
compared
to
where
we've
seen
private
market
portfolios
trade,
in
many
cases,
in
the
low-3s,
never
mind
in
the
4s,
but
in
the
low-3s,
and
the
reason
for
that
is
that
when
people
are
looking
at
portfolios,
there
tends
to
be
a
significant
amount
of
loss
to
lease. So, they're factoring
that
in
in
valuing
the
portfolio.
And
so,
at
4.7%,
that's
extremely
conservative,
especially
factoring
the
loss
to
lease,
which,
as
we
said,
is
minimum
15%
to
20%,
right?
So, there's
pretty big
delta
there
between
what
we're
seeing
in
the
private
markets
and
the
public
markets.
Okay.
Great.
Much
appreciated.
Thanks.
Thank
you.
And
your
next
question
comes
from
Mario
Saric
with
Scotiabank.
Your
line
is
open.
Sorry, guys,
just
one more
quick
one
for
me,
coming
back
to
the
Canadian
multi-rent
development.
Can
you
just
remind
us
of
what
the
cumulative
fair
value
gain
you've
taken
on
that
portfolio
to date?
Do
you
remember
that,
Wissam?
Mario,
I
can get
back
to
you.
I don't
have
the
number
off the
top of
my
head.
But
we
haven't
taken
that
many
gains.
Most
of
the
gains
have
been
– as
the
property
goes
through
development,
we
take
– we
keep
it
at
book
cost,
which
is
what
we've
done.
And
as
the
property
mature
and
the
–
they
pass
the
75%
mark,
we
get
external
appraisals
done.
The
Selby,
we've
done
an
appraisal
this
year,
so
some of
the
gains
there,
but
the
cumulative
gain
since
the
beginning,
I
don't
have.
We
did
$20 million
this
year.
Yeah,
we're
talking
[ph]
about cumulative from the beginning (01:14:01).
We
did
$20 million
this
year.
So
Mario, I'll let
Wissam
get
back
to you,
but
I'm
going to
guess
it's
around $40
million, $40
million,
$50
million.
I
don't
think
it's
a
huge
number.
Got
it. And Wissam, is
75%
of
that
construction
completion
or
leasing?
Yeah.
We usually
do
it
at
construction
completion.
We switch the
methodology
from
cost
plus
to
fully
externally
appraised
on
a
completion
list
[indiscernible]
(01:14:26).
Okay. Thanks
a
lot.
And
there
are no
further
questions
at
this
time.
I'll
turn
the
call
back
over
to
Gary
Berman,
President
and
CEO
of
Tricon
Residential,
for
closing
remarks.
Thank
you,
Abbey.
I
would
like to
thank
all
of
you
on
this
call for
your
participation.
We
look
forward
to speaking
with
you
again
in
May
to
discuss
our
Q1
results.
And
ladies
and
gentlemen,
this
concludes
today's
conference
call.
We
thank
you
for
your
participation
and
you
may
now
disconnect.