Tricon Reports Solid Q2 2022 Results Driven by Strong SFR Fundamentals and Fee Income

Tricon Residential Inc. (NYSE: TCN, TSX: TCN) ("Tricon" or the "Company"), an owner and operator of single-family rental homes and multi-family rental apartments in the United States and Canada, announced today its consolidated financial results for the three and six months ended June 30, 2022.

All financial information is presented in U.S. dollars unless otherwise indicated.

The Company reported strong operational and financial results in the second quarter, including the following highlights:

• Net income from continuing operations increased by 185% year-over-year to $416.9 million compared to $146.3 million in Q2 2021; diluted earnings per share from continuing operations increased by 18% year-over-year to $0.85 compared to $0.72 per share in Q2 2021;

• Core FFO of $51.0 million increased by 42.8% year-over-year and Core FFO per share of $0.16 increased by 14.3% driven by single-family rental home acquisitions, solid operational results and higher fee income, partially offset by a 24% increase in weighted average diluted shares outstanding stemming largely from Tricon's U.S. public offering in October 2021;¹

• Same home Net Operating Income ("NOI") for the single-family rental portfolio in Q2 grew by 10.5% year-over-year and same home NOI margin increased by 1.3% to 68.2%. Same home occupancy increased by 0.8% year-over-year to a record of 98.3%, same home turnover remained low at 16.5% and blended rent growth was 8.4% (comprised of new lease rent growth of 19.6% and renewal rent growth of 6.4%);

• The single-family rental portfolio expanded by 7.7% during the quarter (34% year-over-year) through the organic acquisition of 2,489 homes at an average price of $364,000 per home (including closing and up-front renovations costs) for a total acquisition cost of $906 million, of which Tricon's proportionate share was $274 million;

• Positive trends continued into the third quarter, with same home rent growth of 9.3% in July 2022, including 23.5% growth on new leases and 6.5% growth on renewals, while same home occupancy was 97.8% and same home turnover remained seasonally low at 18.2%. The steady pace of acquisitions is expected to continue and management is on track to reach its target of 8,000 home acquisitions in 2022; and

• The Company closed a successor single-family rental build-to-rent Investment Vehicle with the Arizona State Retirement System ("ASRS") with a total equity commitment of $500 million.

"As we enter a period of economic uncertainty, our conviction in the defensive nature of our business and positive outlook for the future remains resolute,” said Gary Berman, President and CEO of Tricon. “If investors or market observers were expecting softer operational results or signs of consumer weakness in Tricon’s Q2 2022 financial results, then they would be disappointed to find the very opposite. In fact, operational performance across all our rental businesses is as good as we have ever seen with NOI margin, occupancy, blended rent growth and turnover at record or near record levels (and continuing into July). In an environment of relatively tight housing supply, full employment, higher mortgage rates and declining homeownership affordability, the demand for rental housing is robust with single-family rental being a particularly strong beneficiary. As such, we intend to stay calm and carry on, and use our substantial access to capital in our private investment vehicles to deliver on our growth plans.”

Financial Highlights

Net income from continuing operations in the second quarter of 2022 was $416.9 million compared to $146.3 million in the second quarter of 2021, and included:

• Revenue from single-family rental properties of $155.1 million compared to $107.0 million in the second quarter of 2021, driven primarily by 33.9% growth in the single-family rental portfolio to 33,423 homes and a 10.4% year-over-year increase in average effective monthly rent (from $1,513 to $1,670).

• Direct operating expenses of $50.7 million compared to $36.3 million in the second quarter of 2021, largely as a result of the growth of the rental portfolio, higher property tax expenses associated with increasing property values, as well as general cost and labor market inflationary pressures.

• Revenue from private funds and advisory services of $20.4 million compared to $13.1 million in the second quarter of 2021, primarily attributable to performance fees earned from the U.S. residential development portfolio, along with property management fees earned from the U.S. multi-family portfolio following the internalization of its property management functions.

• Fair value gain on rental properties of $395.8 million compared to $254.3 million in the second quarter of 2021 driven by the appreciation of home values within the single-family rental portfolio. The higher home prices are attributable to a number of factors, including strong population and job growth in the U.S. Sun Belt markets, but are predominantly reflective of perennially low supply of existing and new homes for sale throughout the United States and in particular in the Company's target markets.

Net income from continuing operations for the six months ended June 30, 2022 was $580.3 million compared to $188.2 million for the period ended June 30, 2021, and included:

• Revenue from single-family rental properties of $293.9 million and direct operating expenses of $96.3 million compared to $206.4 million and $69.5 million in the prior year, respectively, which translated to a net operating income ("NOI") increase of $60.8 million attributable to the expansion of the single-family rental portfolio as well as strong rent growth.

• Fair value gain on rental properties of $695.4 million compared to $366.6 million in the prior year, for the reasons discussed above.

Core funds from operations ("Core FFO") for the second quarter of 2022 was $51.0 million, an increase of $15.3 million or 43% compared to $35.7 million in the second quarter of 2021. This increase in Core FFO was primarily driven by significant NOI growth from the single-family rental business as discussed above and higher fees earned by the Company's Private Funds and Advisory business from new Investment Vehicles. Notably, the Company earned $8.3 million of performance fees during the quarter, compared to $3.9 million in the prior period. For these same reasons, Core FFO increased by $25.8 million or 38% to $94.0 million for the six months ended June 30, 2022 compared to $68.2 million in the prior period.

Adjusted funds from operations ("AFFO") for the three and six months ended June 30, 2022 was $40.7 million and $74.4 million, respectively, an increase of $12.5 million (44%) and $20.3 million (38%) from the same periods in the prior year. This growth in AFFO was driven by the increase in Core FFO discussed above, partially offset by higher recurring capital expenditures associated with a larger single-family rental portfolio and inflationary cost pressures for both materials and labor.

Single-Family Rental Operating Highlights

The measures presented in the table below and throughout this press release are on a proportionate basis, reflecting only the portion attributable to Tricon's shareholders based on the Company's ownership percentage of the underlying entities and excludes the percentage associated with non-controlling and limited partners' interests, unless otherwise stated. A list of these measures, together with a description of the information each measure reflects and the reasons why management believes the measure to be useful or relevant in evaluating the underlying performance of the Company’s businesses, is set out in Section 6 of Tricon's MD&A.

Single-family rental NOI was $67.2 million for the three months ended June 30, 2022, an increase of $13.1 million or 24.3% compared to the same period in 2021. The increase in NOI was primarily driven by a $16.1 million or 20.6% increase in rental revenues attributable to a 10.4% increase in the average monthly rent ($1,670 in Q2 2022 vs. $1,513 in Q2 2021) and portfolio growth (Tricon's proportionate share of rental homes was 20,910 in Q2 2022 compared to 18,662 in Q2 2021, an increase of 12.0%). Other revenue also increased by $1.8 million or 48.1% as a result of incremental ancillary revenues earned on services provided to residents such as smart-home technology and renters insurance. This favorable change in revenue was partially offset by a $4.8 million or 17.2% increase in direct operating expenses due to incremental costs associated with a larger portfolio of homes, higher property taxes attributable to home price appreciation and increased property management costs reflecting a tighter labor market.

Single-family rental same home NOI growth was 10.5% in the second quarter of 2022, primarily driven by revenue growth of 8.2%, reflecting a 7.6% increase in average monthly rent ($1,623 in Q2 2022 compared to $1,509 in Q2 2021) coupled with an 80 basis point improvement in occupancy to a record 98.3% as well as ancillary revenue growth of 11.2%. This favorable growth in revenue was partially offset by a 3.7% increase in operating expenses reflecting higher property taxes and property management expenses, offset primarily by lower turnover, repairs and maintenance expenses.

Single-Family Rental Investment Activity

The Company expanded its single-family rental portfolio by acquiring 2,489 homes during the quarter, bringing its total managed portfolio to 33,423 rental homes. The homes were purchased at an average cost per home of $364,000, including up-front renovations, for a total acquisition cost of $906 million, of which Tricon's share was approximately $274 million. Tricon continued to acquire homes at attractive capitalization rates, and notwithstanding higher financing costs, expects returns to remain favorable over the long term given strong underlying rent growth. The Company remains on track to acquire approximately 8,000 homes in 2022.

Adjacent Residential Businesses Highlights

Quarterly highlights of the Company's adjacent residential businesses include:

• Tricon's share of U.S. multi-family rental NOI was $4.0 million compared to $3.5 million for the same period in 2021, a $0.6 million or 16.4% increase on a same-property basis. The favorable NOI growth is largely driven by a $0.8 million or 13.6% year-over-year increase in revenue attributable to a 13.5% year-over-year improvement in average monthly rent. Total operating expenses increased marginally by $0.2 million to $2.6 million reflecting increased usage and rising prices of third-party contract services and higher property management costs owing to a competitive labor market;

• In the Canadian multi-family business, The Selby reported strong leasing activity, with the property achieving record occupancy of 98.0% and blended rent growth of 15.1%, resulting in year-over-year NOI growth of 47.1%;

• Tricon's investments in U.S. residential developments generated $23.0 million of distributions to the Company in Q2 2022, including $8.3 million in performance fees. On June 13, 2022, the Company closed on a second joint venture arrangement ("THPAS Development JV-2") with ASRS, which will continue to advance the development of single-family build-to-rent communities. The total equity committed to this venture is $500 million, including a $100 million co-investment from Tricon and $400 million from ASRS, which is expected to be deployed over an investment period of three years;

• Across Tricon's Canadian residential development portfolio, construction continues to progress on schedule, with the majority of projects under construction being funded by construction loans. Of note, Queen & Ontario began construction during the quarter and the Symington project is on schedule to begin construction in Q1 2023. Construction at the Taylor and Canary Landing (West Don Lands) - Block 8 continues to progress, with first occupancy anticipated by the end of 2022 and early 2023, respectively; and

• Subsequent to quarter-end, the Company and its partner, the Canada Pension Plan Investment Board ("CPPIB"), approved the amendment of the CPPIB joint venture to provide for, among other matters, an increase of the venture’s maximum equity capitalization from C$500 million at inception to C$1.5 billion and the funding of all projects (including Queen & Ontario and Symington) with equity only. This amendment results in a reduction of Tricon’s maximum equity co-investment from C$150 million to C$115.7 million. In preparation for this amendment, the Company reduced its Queen & Ontario equity ownership from 30% to 10% by selling the equity to CPPIB in the second quarter of 2022 for net proceeds of $10.4 million.

Change in Net Assets

As at June 30, 2022, Tricon's net assets grew by $394.3 million to $3.6 billion compared to $3.2 billion as at March 31, 2022. The increase was primarily driven by reported net income of $415.8 million for the quarter (including fair value gains of $395.8 million on the single-family rental properties or $287.4 million on a proportionate basis). As a result, Tricon's book value (net assets) per common share outstanding increased by 12% sequentially or 38% year-over-year to $13.21 (C$17.02) as at June 30, 2022.

Balance Sheet and Liquidity

Tricon's liquidity consists of a $500 million corporate credit facility with approximately $371 million of undrawn capacity as at June 30, 2022. The Company also had approximately $146 million of unrestricted cash on hand, resulting in total liquidity of $517 million.

As at June 30, 2022, Tricon’s pro-rata net debt (excluding exchangeable instruments) was $2.7 billion, reflecting a pro-rata net debt to assets ratio of 36.0%. For the three months ended June 30, 2022, Tricon's pro-rata net debt to Adjusted EBITDAre ratio was 7.8x.²

On July 7, 2022, SFR JV-2 closed a new securitization transaction involving the issuance and sale of five classes of fixed-rate pass-through certificates with a face amount of approximately $350 million, a weighted average fixed-rate coupon of 5.47% (including servicing fees) and a term to maturity of six years, secured indirectly by a pool of 1,684 single-family rental homes. The transaction proceeds were primarily used to pay down existing short-term SFR JV-2 debt.

2022 Guidance Update

As a result of the strong operating performance during the second quarter, the Company updated its guidance for the Core FFO per share and same home metrics for the current fiscal year as follows:

Quarterly Dividend

On August 9, 2022, the Board of Directors of the Company declared a dividend of $0.058 per common share in U.S. dollars payable on or after October 15, 2022 to shareholders of record on September 30, 2022.

Tricon’s dividends are designated as eligible dividends for Canadian tax purposes in accordance with subsection 89(14) of the Income Tax Act (Canada), and any applicable corresponding provincial and territorial legislation. Tricon has a Dividend Reinvestment Plan (“DRIP”) which allows eligible shareholders of the Company to reinvest their cash dividends in additional common shares of the Company. Common shares issued pursuant to the DRIP in connection with the announced dividend will be issued from treasury at a 1% discount from the market price, as defined in the DRIP. Participation in the DRIP is optional and shareholders who do not participate in the plan will continue to receive cash dividends. A complete copy of the DRIP is available in the Investors section of Tricon’s website at www.triconresidential.com.

Conference Call and Webcast

Management will host a conference call at 10 a.m. ET on Thursday, August 11, 2022 to discuss the Company’s results. Please call (888) 550-5422 or (646) 960-0676 (Conference ID #3699415). The conference call will also be accessible via webcast at www.triconresidential.com (Investors - News & Events). A replay of the call will be available from 2 pm ET on August 11, 2022 until midnight ET on September 10, 2022. To access the replay, call (800) 770-2030 or (647) 362-9199, followed by Conference ID #3699415.

This press release should be read in conjunction with the Company’s Interim Financial Statements and Management’s Discussion and Analysis (the "MD&A") for the three and six months ended June 30, 2022, which are available on Tricon’s website at www.triconresidential.com and have been filed on SEDAR (www.sedar.com) as well as with the SEC as part of the Company’s filed Form 6-K. The financial information therein is presented in U.S. dollars.

The Company has also made available on its website supplemental information for the three and six months ended June 30, 2022. For more information, visit www.triconresidential.com.

About Tricon Residential Inc.

Tricon Residential Inc. is an owner and operator of a growing portfolio of approximately 41,000 single-family rental homes and multi-family rental apartments in the United States and Canada with a primary focus on the U.S. Sun Belt. Our commitment to enriching the lives of our residents and local communities underpins Tricon’s culture and business philosophy. We strive to continuously improve the resident experience through our technology-enabled operating platform and innovative approach to rental housing. At Tricon Residential, we imagine a world where housing unlocks life’s potential. For more information, visit www.triconresidential.com.

Forward-Looking Information

This news release contains forward-looking statements pertaining to expected future events, financial and operating results, and projections of the Company, including statements related to targeted financial performance and leverage, anticipated home acquisitions, the single-family rental unit acquisition and development pipeline and the benefits to the Company of such factors. Such forward-looking information and statements involve risks and uncertainties and are based on management’s current expectations, intentions and assumptions in light of its understanding of relevant current market conditions, its business plans, and its prospects. If unknown risks arise, or if any of the assumptions underlying the forward-looking statements prove incorrect, actual results may differ materially from management expectations as projected in such forward-looking statements. Examples of such risks include, but are not limited to, the Company's inability to execute its growth strategies; the impact of changing economic and market conditions, increasing competition and the effect of fluctuations and cycles in the Canadian and U.S. real estate markets; changes in the attitudes, financial condition and demand of the Company's demographic markets; fluctuation in interest rates and volatility in financial markets; the potential impact of reduced supply of labor and materials on expected costs and timelines; developments and changes in applicable laws and regulations; and the impact of COVID-19 on the operations, business and financial results of the Company. Accordingly, although the Company believes that its anticipated future results, performance or achievements expressed or implied by the forward-looking statements and information are based upon reasonable assumptions and expectations, the reader should not place undue reliance on forward-looking statements and information. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by applicable law.

Certain statements included in this press release, including with respect to 2022 guidance for Core FFO per share and same home metrics, are considered to be financial outlook for purposes of applicable securities laws, and as such, the financial outlook may not be appropriate for purposes other than to understand management’s current expectations relating to the future of the Company, as disclosed in this press release. These forward-looking statements have been approved by management to be made as at the date of this press release. Although the forward-looking statements contained in this press release are based upon what management currently believes to be reasonable assumptions (including in particular the revenue growth, expense growth and portfolio growth assumptions set out herein which themselves are based on, respectively: assumed ancillary revenue growth and continuing favorable market rent growth; increased internalization of maintenance activities and improved management efficiencies accompanying portfolio growth; and the availability of homes meeting the Company’s single-family rental acquisition objectives), there can be no assurance that actual results, performance or achievements will be consistent with these forward-looking statements. The forward-looking statements contained in this document are expressly qualified in their entirety by this cautionary statement.

Non-IFRS Measures

The Company has included herein certain non-IFRS financial measures and non-IFRS ratios, including, but not limited to: proportionate metrics, net operating income ("NOI"), NOI margin, funds from operations ("FFO"), core funds from operations ("Core FFO"), adjusted funds from operations ("AFFO"), Core FFO per share, AFFO per share, Adjusted EBITDAre as well as certain key indicators of the performance of our businesses which are supplementary financial measures. These measures are commonly used by entities in the real estate industry as useful metrics for measuring performance. We utilize these measures in managing our business, including performance measurement and capital allocation. In addition, certain of these measures are used in measuring compliance with our debt covenants. We believe that providing these performance measures on a supplemental basis is helpful to investors and shareholders in assessing the overall performance of the Company’s business. However, these measures are not recognized under and do not have any standardized meaning prescribed by IFRS as issued by the IASB, and are not necessarily comparable to similar measures presented by other publicly traded entities. These measures should be considered as supplemental in nature and not as a substitute for related financial information prepared in accordance with IFRS. Because non-IFRS financial measures, non-IFRS ratios and supplementary financial measures do not have standardized meanings prescribed under IFRS, securities regulations require that such measures be clearly defined, identified, and reconciled to their nearest IFRS measure. The calculation and reconciliation of the non-IFRS financial measures and the requisite disclosure for non-IFRS ratios used herein are provided in Appendix A below. The definitions of the Company’s Non-IFRS measures are provided in the "Glossary and Defined Terms" section as well as Section 6 of Tricon's MD&A.

The non-IFRS financial measures, non-IFRS ratios and supplementary financial measures presented herein should not be construed as alternatives to net income (loss) or cash flow from the Company’s activities, determined in accordance with IFRS, as indicators of Tricon’s financial performance. Tricon’s method of calculating these measures may differ from other issuers’ methods and, accordingly, these measures may not be comparable to similar measures presented by other publicly-traded entities.

Appendix A - Reconciliations

RECONCILIATION OF NET INCOME TO FFO, CORE FFO AND AFFO

RECONCILIATION OF SINGLE-FAMILY RENTAL TOTAL AND SAME HOME NOI

RECONCILIATION OF PROPORTIONATE TOTAL PORTFOLIO GROWTH METRICS

RECONCILIATION OF PROPORTIONATE SAME HOME GROWTH METRICS

RECONCILIATION OF U.S. MULTI-FAMILY RENTAL NOI

PROPORTIONATE BALANCE SHEET

TOTAL AUM

RECONCILIATION OF NET INCOME TO ADJUSTED EBITDAre

PRO-RATA ASSETS

Tricon's pro-rata assets include its share of total assets of non-consolidated entities on a look-through basis, which are shown as equity-accounted investments on its proportionate balance sheet.

PRO-RATA NET DEBT TO ASSETS

RECONCILIATION OF PRO-RATA DEBT AND ASSETS OF NON-CONSOLIDATED ENTITIES TO CONSOLIDATED BALANCE SHEET

PRO-RATA NET DEBT TO ADJUSTED EBITDAre

Glossary and Defined Terms

The non-IFRS financial measures, non-IFRS ratios, and KPI supplementary financial measures discussed throughout this press release for each of the Company’s business segments are calculated based on Tricon's proportionate share of each portfolio or business and are defined and discussed below and in Section 6 of the MD&A, which definitions and discussion are incorporated herein by reference. These measures are commonly used by entities in the real estate industry as useful metrics for measuring performance; however, they do not have any standardized meaning prescribed by IFRS and are not necessarily comparable to similar measures presented by other publicly-traded entities. These measures should be considered as supplemental in nature and not as a substitute for the related financial information prepared in accordance with IFRS. See Appendix A for a reconciliation to IFRS financial measures where applicable.

Adjusted EBITDAre is a metric that management believes to be helpful in evaluating the Company’s operating performance across and within the real estate industry. Further, management considers it to be a more accurate reflection of the Company’s leverage ratio, especially as it adjusts for and negates non-recurring and non-cash items. The Company’s definition of EBITDAre reflects all adjustments that are specified by the National Association of Real Estate Investment Trusts (“NAREIT”). In addition to the adjustments prescribed by NAREIT, Tricon excludes fair value gains that arise as a result of reporting under IFRS.

EBITDAre represents net income from continuing operations, excluding the impact of interest expense, income tax expense, amortization and depreciation expense, fair value changes on rental properties, fair value changes on derivative financial instruments and adjustments to reflect the entity’s share of EBITDAre of unconsolidated entities. Adjusted EBITDAre is a normalized figure and is defined as EBITDAre before stock-based compensation, unrealized and realized foreign exchange gains and losses, transaction costs and other non-recurring items, and reflects only Tricon’s share of results from consolidated entities (by removing non-controlling interests’ and limited partners’ share of reconciling items).

The Company also discloses its Net Debt to Adjusted EBITDAre ratio to assist investors in accounting for the Company’s unconsolidated joint ventures and equity-accounted investments, in both debt and Adjusted EBITDAre, by calculating pro-rata leverage on a look-through basis (excluding debt directly related to the Canadian development portfolio as well as warehouse and subscription facilities related to acquisitions of vacant single-family homes, which do not fully contribute to Adjusted EBITDAre).

Cost to maintain is defined as the annualized repairs and maintenance expense, turnover expense net of applicable resident recoveries and recurring capital expenditures per home in service. The metric provides insight into the costs needed to maintain a property's current condition and is indicative of a portfolio's operational efficiency.

Pro-rata net assets represents the Company's proportionate share of total consolidated assets as well as assets of non-consolidated entities on a look-through basis (which are shown as equity-accounted investments on its proportionate balance sheet), less its cash and restricted cash.

Pro-rata net debt represents the Company's total current and long-term debt per its consolidated financial statements, less its cash and restricted cash (excluding debt directly related to the Canadian development portfolio as well as warehouse and subscription facilities related to acquisitions of vacant single-family homes, which do not fully contribute to Adjusted EBITDAre).

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¹ Non-IFRS measures are presented to illustrate alternative relevant measures to assess the Company's performance. For the basis of presentation of the Company’s Non-IFRS measures and reconciliations, refer to the “Non-IFRS Measures” section and Appendix A. For definitions of the Company’s Non-IFRS measures, refer to Section 6 of Tricon's MD&A.

² Non-IFRS measures are presented to illustrate alternative relevant measures to assess the Company's performance. For the basis of presentation of the Company’s Non-IFRS measures and reconciliations, refer to the “Non-IFRS Measures” section and Appendix A. For definitions of the Company’s Non-IFRS measures, refer to Section 6 of Tricon's MD&A.

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