EX-4.3





 Exhibit 4.3 
  





 
 Management’s Discussion & Analysis

FOR THE YEAR ENDED DECEMBER 31, 2020 












 TABLE OF CONTENTS 
  

							
		 	 Non-IFRS measures and forward-looking statements
	  	 	1	 
			
	1.	 	 INTRODUCTION
	  	 	4	 
		 	 1.1  Vision and guiding principles
	  	 	4	 
		 	 1.2  Business objectives and strategy
	  	 	6	 
		 	 1.3  Environmental, Social and Governance
	  	 	12	 
		 	 1.4  COVID-19 developments
	  	 	15	 
			
	2.	 	 HIGHLIGHTS
	  	 	17	 
			
	3.	 	 CONSOLIDATED FINANCIAL RESULTS
	  	 	20	 
		 	 3.1  Review of income statements
	  	 	20	 
		 	 3.2  Review of selected balance sheet items
	  	 	30	 
		 	 3.3  Subsequent events
	  	 	36	 
			
	4.	 	 OPERATING RESULTS OF BUSINESSES
	  	 	38	 
		 	 4.1  Single-Family Rental
	  	 	40	 
		 	 4.2  Multi-Family Rental
	  	 	49	 
		 	 4.3  Residential Development
	  	 	58	 
		 	 4.4  Private Funds and Advisory
	  	 	64	 
			
	5.	 	 SUMMARY OF NON-IFRS SEGMENT INFORMATION
	  	 	69	 
			
	6.	 	 LIQUIDITY AND CAPITAL RESOURCES
	  	 	80	 
		 	 6.1  Financing strategy
	  	 	80	 
		 	 6.2  Liquidity
	  	 	80	 
		 	 6.3  Capital resources
	  	 	80	 
			
	7.	 	 OPERATIONAL KEY PERFORMANCE INDICATORS
	  	 	81	 
		 	 7.1  Key performance indicators
	  	 	81	 
		 	 7.2  Assets under management
	  	 	82	 
			
	8.	 	 ACCOUNTING ESTIMATES AND POLICIES, CONTROLS AND PROCEDURES, AND RISK ANALYSIS
	  	 	83	 
		 	 8.1  Revenue and income recognition
	  	 	83	 
		 	 8.2  Accounting estimates and policies
	  	 	84	 
		 	 8.3  Controls and procedures
	  	 	87	 
		 	 8.4  Transactions with related parties
	  	 	87	 
		 	 8.5  Dividends
	  	 	88	 
		 	 8.6  Compensation incentive plans
	  	 	88	 
		 	 8.7  Risk definition and management
	  	 	88	 
			
	9.	 	 HISTORICAL FINANCIAL INFORMATION
	  	 	98	 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 
  

 NON-IFRS MEASURES AND FORWARD-LOOKING STATEMENTS 

The Company has included herein certain supplemental measures of key performance, including, but not limited to, net operating income (“NOI”),
funds from operations (“FFO”), core funds from operations (“Core FFO”), adjusted funds from operations (“AFFO”), Core FFO per share, AFFO per share, Core FFO payout ratio and AFFO payout ratio, as well as certain key
indicators of the performance of our businesses. 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
International Financial Reporting Standards (“IFRS”). Because non-IFRS 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 definition, calculation and reconciliation of the non-IFRS measures used in this MD&A are provided in Sections 4 and 5 and the key performance indicators presented are discussed in detail in
Section 7. 
 The supplemental 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. 
 Certain statements in this MD&A may be considered
“forward-looking information” as defined under applicable securities laws (“forward-looking statements”). Statements other than statements of historical fact contained in this document may be forward-looking statements. Wherever
possible, words such as “may”, “would”, “could”, “will”, “anticipate”, “believe”, “plan”, “expect”, “intend”, “estimate”, “aim”,
“endeavour”, “project”, “continue” and similar expressions have been used to identify these forward-looking statements. These statements reflect management’s expectations, intentions and beliefs concerning
anticipated future events, results, circumstances, economic performance or expectations with respect to Tricon and its investments and are based on information currently available to management and on assumptions that management believes to be
reasonable. 
 This MD&A includes forward-looking statements pertaining to: anticipated operational and financial performance; the Company’s
strategic and operating plans and growth prospects; expected demographic and economic trends impacting the Company’s key markets; project plans, timelines and sales/rental expectations; projected development costs, timelines, plans and
development yields; estimated stabilized NOI from development and rental properties; expected performance fees; future cash flows; transaction timelines; anticipated demand for homebuilding and lots; the anticipated growth of the Company’s
rental businesses; the acquisition of build-to-rent projects; the intentions to attract third-party capital to the Company’s businesses, including the syndication of its current investments; the Company’s key priorities over the next three
years and the manner in which they might be achieved; the intended internalization of property management of the Company’s U.S. multi-family rental portfolio and any resulting synergies; expected future acquisitions, occupancy and turnover
rates, and capital expenditure programs for single-family rental homes and U.S. multi-family rental apartments; and the ongoing impact of the current COVID-19 pandemic. The assumptions underlying these forward-looking statements and a list of
factors that may cause actual business performance to differ from current projections are discussed in this MD&A and in the Company’s Annual Information Form dated March 2, 2021 (the “AIF”) which is available on SEDAR at
www.sedar.com. The continuing impact of COVID-19 on the operations, business and financial results of the Company may cause actual results to differ, possibly materially, from the results discussed in the forward-looking statements. 

Forward-looking statements involve significant known and unknown risks, uncertainties and assumptions. Should one or more of these risks or uncertainties
materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results, performance or achievements could vary materially from those expressed or implied by the forward-looking statements contained in this
MD&A. See the AIF and the continuous disclosure documents referenced in Section 8.7 for a more complete list of risks relating to an investment in the Company and an indication of the impact the materialization of such risks could
have on the Company, and therefore cause actual results to deviate from the forward-looking statements. 
 Certain statements included in this
MD&A may be considered a “financial outlook” for purposes of applicable Canadian securities laws, and as such, the financial outlook may not be appropriate for purposes other than this document. Although the forward-looking statements
contained in this MD&A are based upon what management currently believes to be reasonable assumptions, 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. 
 When relying on our
forward-looking statements to make decisions with respect to the Company, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. The forward-looking statements in this MD&A are made as
of the date of this document and the Company does not intend to, or assume any obligation to, update or revise these forward-looking statements or information to reflect new information, events, results or circumstances or otherwise after the date
on which such statements are made to reflect the occurrence of unanticipated events, except as required by law, including securities laws. 

  
 TRICON RESIDENTIAL
2020 ANNUAL REPORT 1 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 
  

 Market and industry data 

This MD&A includes certain market and industry data and forecasts obtained from third-party sources, industry publications and publicly available
information as well as industry data prepared by management on the basis of its knowledge of the industry in which the Company operates (including management’s estimates and assumptions relating to the industry based on that knowledge).
Management’s knowledge of the North American residential real estate industry has been developed through its experience and participation in the industry. Management believes that its industry data is accurate and that its estimates and
assumptions are reasonable, but there can be no assurance as to the accuracy or completeness of this data. Third-party sources generally state that the information contained therein has been obtained from sources believed to be reliable, but there
can be no assurance as to the accuracy or completeness of included information. Although management believes it to be reliable, the Company has not independently verified any of the data from management or third-party sources referred to in this
MD&A, or analyzed or verified the underlying studies or surveys relied upon or referred to by such sources, or ascertained the underlying economic assumptions relied upon by such sources. 

Other 
 Select photos in this document are
presented for illustrative purposes only, may be artists’ renditions, and may not be representative of all properties in the Company’s portfolio. 

  
 2 2020 ANNUAL REPORT
TRICON RESIDENTIAL 













 



 

	1	 


 INTRODUCTION 













 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 
  

 1. INTRODUCTION 

This Management’s Discussion and Analysis (“MD&A”) is dated as of March 2, 2021, the date it was approved by the Board of Directors of
Tricon Residential Inc. (“Tricon”, “us”, “we” or the “Company”), formerly Tricon Capital Group Inc., and reflects all material events up to that date. 

In January 2020, the Company completed its transition to an owner and operator of diversified rental housing, resulting in the Company determining that it no
longer meets the criteria for being an investment entity under International Financial Reporting Standards 10, Consolidated Financial Statements (“IFRS 10”). As a result, the Company began consolidating the financial results of controlled
subsidiaries including those holding its investments in single-family rental homes and U.S. multi-family rental properties, resulting in the inclusion of these subsidiaries’ assets, liabilities and non-controlling interests in the balance sheet
of the Company on a prospective basis in accordance with the relevant guidance of IFRS 10. 
 The requirement to consolidate the financial results of the
Company’s single-family rental and U.S. multi-family rental businesses is not applied on a retrospective basis in accordance with IFRS 10. Therefore, comparative balances on the balance sheet and income statement continue to present the
financial results of these businesses as investments in, and investment income from, Tricon American Homes (“TAH”) and Tricon Lifestyle Rentals (“TLR”). For the purpose of comparability, where applicable in this MD&A, the
comparative balances have been recast to show the financial results as if the consolidation of Tricon’s single-family rental and multi-family rental businesses had been in effect in prior periods. 

This MD&A should be read in conjunction with the Company’s audited consolidated financial statements and related notes for the year ended
December 31, 2020, which were prepared using International Financial Reporting Standards (“IFRS”) accounting policies. 
 Additional
information about the Company, including its Annual Information Form, is available on the Company’s website at www.triconresidential.com, and on the Canadian Securities Administrators’ website at www.sedar.com. 

All dollar amounts in this MD&A are expressed in U.S. dollars unless otherwise indicated. 

1.1 Vision and guiding principles 
 Tricon was founded in
1988 as a fund manager for private clients and institutional investors focused on for-sale residential real estate development. The pursuit of continuous improvement as well as a desire to diversify and facilitate succession planning drove the
Company’s decision to become publicly traded in 2010. While the U.S. for-sale housing industry was decimated in the Great Recession of 2007–2009, Tricon’s strong foundation and its leaders’ resilience helped it endure the
downturn and learn valuable lessons that informed the Company’s decision to ultimately focus on rental housing. 
 In the decade that followed, Tricon
embarked on a deliberate transformation away from for-sale housing, which is inherently cyclical, to a rental housing company that addresses the needs of a new generation facing reduced home affordability and a desire for meaningful human
connections, convenience and a sense of community. Today, Tricon provides high-quality, essential shelter to residents. It’s a defensive business that is designed to outperform in good times and perform relatively well in more challenging times
like today. 
 Tricon was among the first to enter into and institutionalize the U.S. single-family rental industry. Our success has been built on a culture
of innovation and our willingness to adopt new technologies to drive efficiencies and improve our residents’ lives. We believe that our ability to bring together capital, ideas, people and technology under one roof is unique in real estate and
allows us to improve the resident experience, safeguard our stakeholders’ investments, and drive superior returns. 
 We were also first to recognize
the benefits of combining single-family and multi-family rental operations to create a pure play on “middle-market” rental housing. By focusing on the similarities of collecting monthly rent from residents and the complementary nature of
property management, we believe that Tricon can deliver a superior experience at all stages of the resident lifecycle. Our properties and residents may be diverse but our commitment to enrich the lives of our residents through caring service and a
simplified, connected lifestyle is consistent. 
 Tricon strives to be North America’s pre-eminent rental housing company focused on the middle-market
demographic by owning quality properties in attractive markets, focusing on operational excellence, and delivering exceptional customer service. Tricon is driven by its purpose statement –Imagine a world where housing unlocks life’s
potential – and expects its employees to conduct themselves according to the following guiding principles: 
  

	 	•	 	 Go above and beyond to enrich the lives of our residents 



 

	 	•	 	 Commit to and inspire excellence in everything we do 



 

	 	•	 	 Ask questions, embrace problems, thrive on the process of innovation 



 

	 	•	 	 Do what is right, not what is easy 



 

	 	•	 	 Elevate each other so together we leave an enduring legacy 



  
 4 2020 ANNUAL REPORT
TRICON RESIDENTIAL 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 
  

 Tricon’s guiding principles underpin our business strategy and culture of taking care of our employees
first so they in turn are empowered and inspired to provide residents with superior service and to positively impact local communities. When our residents are satisfied, they rent with us longer, they are more likely to treat our properties as their
own, and they are more willing to refer new customers. We have realized that the best way to drive returns for our investors and shareholders is to ensure our team and residents are fulfilled. 

At Tricon, we have always sought to improve the lives of our employees, our residents, and those in our broader communities. We strive to make the world a
better place through our guiding principles, which inspire us to go above and beyond and commit to excellence in everything we do. 
 Living our corporate
purpose every day starts with our own employees. And at a time when the world seems so full of uncertainty, it is more important than ever that our employees feel comfortable that they can pay their bills, and save for retirement and unforeseen
expenses. We recognize that our employees and their families can live with dignity when their lives are financially secure. Tricon’s newly introduced “Living wage” program embodies these guiding principles (see
Section 1.3). 
 We also know that true diversity improves corporate performance, drives growth, and enhances employee engagement. Accordingly,
Tricon is also dedicated to the continuation of learning about our society’s historic and current systemic prejudices. Recognizing important dates such as June 19th, which is Freedom Day in the U.S., and June 21st, which is National
Indigenous People’s Day in Canada, was the impetus for declaring June 19th as a paid holiday for all our employees to take the opportunity to learn more about these important issues (see Section 1.3). Only through education can
we achieve a greater understanding of, and appreciation for, races, genders, and all groups that find themselves disadvantaged. 
 As another important,
concrete step toward building more truly diverse and inclusive workplaces, Tricon has committed to promoting the BlackNorth Initiative in order to help eliminate persistent inequities across Canada that have resulted from anti-Black systemic racism
(see Section 1.3). 
 Tricon’s activities are also guided by Environmental, Social and Governance (“ESG”) factors, as outlined in
our inaugural ESG roadmap, published in January 2020. This roadmap will guide the Company’s ESG initiatives over the next three years and will provide a framework for robust data collection and reporting on Tricon’s ongoing progress and
performance (see Section 1.3). 
 In addition, to guide its efforts of building shareholder value over the near term, Tricon has defined the
following key priorities for the next three years. Progress toward these goals remains subject to potential ongoing economic instability and uncertainty related to the novel coronavirus global pandemic (“COVID-19”) and other risks and
uncertainties (see “Non-IFRS measures and forward-looking statements” on page 1 and Section 8.7). 
  

	 	•	 	 Growing core funds from operations – (“Core FFO”, a key performance indicator
(“KPI”); refer to Section 7.1) – Tricon is focused on growing Core FFO per share by increasing the net operating income of its rental properties, increasing its Private Funds and Advisory fee streams, and acquiring
additional rental properties;  


  

	 	•	 	 Increasing third-party assets under management (“AUM”) – Tricon aims to raise third-party
capital in all of its businesses to enhance scale and improve operational efficiency, reduce its balance sheet exposure to development activities, and drive its return on equity with incremental fee income;  



 

	 	•	 	 Growing book value per share – Over time, Tricon plans to redeploy the majority of its free cash flow
into accretive growth opportunities focused primarily on rental housing; and  


  

	 	•	 	 Reducing leverage – Tricon plans to reduce corporate-level debt by maintaining prudent and largely
non-recourse leverage at the subsidiary level, with a mid-term leverage target of 50–55% net debt to assets. 



  
 TRICON RESIDENTIAL
2020 ANNUAL REPORT 5 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 
  

 1.2 Business objectives and strategy 

Tricon is a residential real estate company primarily focused on owning and operating rental housing in the United States and Canada. Since the Company’s
initial public offering in 2010, Tricon has evolved from an asset manager focused on investing in “for-sale” housing development to a growth-oriented rental housing company with a comprehensive technology-enabled operating platform. Tricon
currently owns and operates approximately 31,000 single-family rental homes and multi-family rental units in 21 markets across the United States and Canada. As at December 31, 2020, about 95% of the Company’s real estate assets are
stabilized rental housing assets, and the remaining 5% or less are invested in residential development projects. 
 ASSET MIX 

(in millions of U.S. dollars) 
  
 



 
 (Based on the fair value of single-family homes, multi-family properties, investments in Canadian multi-family
developments, Canadian development properties (net of debt) and investments in for-sale housing.) 
 Through its fully integrated operating platform, the
Company earns rental income and ancillary revenue from single-family and multi-family rental properties as well as fees from managing third-party capital co-invested in its real estate assets. 

  
 6 2020 ANNUAL REPORT
TRICON RESIDENTIAL 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 
  


			
	 RENTAL PORTFOLIO
	  	
		
	 




	  	 SOURCES OF REVENUE
  

1.  Revenue from Rental Properties

 
 Single-Family Rental

 
 Multi-Family Rental

 
 +

 
 2.  Revenue from
Private Funds and Advisory
  
 Asset Management &
Performance Fees
  
 Development Fees

 
 Property Management Fees


  

	*	 Excludes 28 single-family rental homes held for sale. 



	**	 Includes estimated Canadian multi-family rental units under development based on development plans as of
December 31, 2020. See Section 4.3 for details. 


 Rental housing strategy 

Tricon’s U.S. rental strategy, in both single-family and multi-family rental, is focused on select geographic markets in the U.S. Sun Belt and targets the
“middle-market” resident demographic. The U.S. Sun Belt has experienced significant population and job growth over time, driven by a friendly business environment, lower tax rates, enhanced affordability and a warm climate. It is home to
about 40% of all U.S. households, and is expected to see 60% of the growth in U.S. households over the next decade (source: John Burns Real Estate Consulting, 2019). In many ways, the COVID-19 pandemic has accelerated these demographic trends and is
expected to help drive even stronger relative population growth over the next five years in Tricon’s core markets as Americans de-urbanize and seek out the safety of suburban living in less dense markets. Furthermore, the Company believes that
growing work-from-home trends will likely strengthen in-migration to the Sun Belt states as employers permit more flexible work arrangements and employees gravitate towards more affordable housing markets. 

Within its targeted geographic markets, Tricon is focused on serving the middle-market resident demographic which consists of nearly nine million
working-class U.S. renter households (source: U.S. Census Bureau). The Company defines the middle-market cohort as those households earning between $60,000 and $100,000 per year and with monthly rental payments of $1,200 to $1,800. These rent levels
typically represent approximately 20–25% of household income, which provides each household with meaningful cushion to continue paying rent in times of economic hardship and when experiencing a decline in income. Conversely, Tricon has the
flexibility to increase rents and defray higher operating costs in a stronger economic environment without significantly impacting its residents’ financial well-being. Focusing on qualified middle-market families who are likely to be long-term
residents is expected to result in lower turnover rates, thereby reducing turn costs and providing stable cash flows for the Company. 
 Tricon’s
Canadian “build-to-core” rental strategy targets markets that are underpinned by strong economic fundamentals, including robust job and population growth over an extended period, and attractive supply and demand fundamentals. The Company
is currently developing all of its Canadian multi-family properties in downtown Toronto, and believes that the confluence of Canadian urbanization trends, strong population growth, a robust and diversified economy, and major for-sale housing
affordability issues will support attractive, long-term rental fundamentals. In addition, Tricon’s high-quality, service-oriented rental offerings are well-positioned to cater towards an urban workforce seeking condo-quality, highly amenitized
apartments but with professional property management. 

  
 TRICON RESIDENTIAL
2020 ANNUAL REPORT 7 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 
  

 



 
 A description of each of the Company’s businesses is provided below. 

Single-Family Rental 
 Tricon owns and operates one of the
largest portfolios of single-family rental homes in the U.S. Sun Belt, with 22,766 homes (excluding 28 homes held for sale) in 18 markets across ten states as of December 31, 2020. Tricon offers middle-market families the convenience of renting
a high-quality, renovated home without costly overhead expenses such as maintenance and property taxes, and with a focus on superior customer service. 

Since entering the single-family rental business in 2012, Tricon has built a technology-enabled platform to support its growth and manage its properties
efficiently. The Company’s proprietary technology automates home acquisitions, leasing activities (such as virtual tours and/or self-showings), resident underwriting, revenue management, call centre services, repairs and maintenance and
workflow management, among other activities. Management believes the Company has a significant competitive advantage arising from its technology-enabled property management platform that is difficult to replicate yet highly scalable, and it intends
to apply these capabilities across both its single-family and multi-family rental portfolios. 
  
 



 

  
 8 2020 ANNUAL REPORT
TRICON RESIDENTIAL 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 
  

 Multi-Family Rental 

In the U.S., Tricon owns a portfolio of high-quality, affordably priced garden-style apartments primarily in the U.S. Sun Belt, comprised of 23 properties
totalling 7,289 suites in 13 major markets. The current portfolio consists of new vintage garden-style complexes featuring resort-style amenities, including swimming pools and well-appointed fitness and common areas, located in desirable suburban
sub-markets that have experienced strong employment and population growth over an extended period of time. These assets are currently property managed by leading third-party firms, overseen by Tricon’s internal asset management team. However,
the Company intends to internalize property management to produce additional synergies by leveraging existing technology, infrastructure and centralized management functions. Tricon’s long-term strategy is to continue to grow this business and
drive operating synergies through incremental scale. 
 In Canada, Tricon operates one 500-unit Class A rental property, The Selby, located in Toronto.
The Selby is currently managed through Tricon’s vertically integrated platform, including local property management employees. 
  





 
 Residential Development 

In its Residential Development business, Tricon develops new residential real estate properties, predominantly rental housing intended for long-term ownership.
Such developments include (i) Class A multi-family rental apartments in Canada, (ii) its recently launched strategy to develop single-family rental communities in the U.S., and (iii) (legacy) land development and homebuilding
projects predominantly in the U.S. 
 (i) Canadian Class A multi-family rental apartments: 

Tricon is one of the most active multi-family rental developers in downtown Toronto with eight projects under development, totalling approximately 3,720 units
(including select condominium units). Tricon is focused on developing, owning and operating the leading portfolio of Class A rental apartments in the Greater Toronto Area, Canada’s economic engine and one of its fastest-growing
metropolitan areas. The Company’s “build-to-core” strategy targets institutional-quality development of well-located rental properties near major employment nodes and/or public transit that will ultimately be held over the long term
as part of an income-producing portfolio. Through its vertically integrated operations, including land acquisition/entitlement, development, oversight of vertical construction, and property management, we believe that Tricon has a major competitive
advantage and is able to develop properties designed specifically to serve rental residents in a Toronto market saturated with investor-driven condominium projects. Tricon holds these assets in partnerships with pension plans and strategic partners
who have an investment bias towards long-term ownership and stable recurring cash flows. These institutional investors or strategic partners pay Tricon development management fees, asset management fees and possibly performance fees, enabling the
Company to enhance its return on investment. 

  
 TRICON RESIDENTIAL
2020 ANNUAL REPORT 9 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 
  

 (ii) U.S. single-family rental communities: 

The Company’s innovative build-to-rent strategy, which is focused on developing a portfolio of well-designed, dedicated single-family home rental
communities, commenced in the third quarter of 2019, following the establishment of a joint venture arrangement with an institutional investor. Such developments, which typically include a cluster of rental homes with shared amenities, combine the
privacy and convenience of single-family rental living with the community experience of the multi-family rental model. This strategy leverages the Company’s complementary expertise in land development, homebuilding, and single-family rental and
multi-family rental property management. The Company closed on its first investment under this strategy in 2020 and expects to commit to approximately ten development communities per year in 2021 and 2022. 

(iii) U.S. land development and homebuilding: 
 The
Company’s legacy business provides equity or equity-type financing to experienced local or regional developers and builders of for-sale housing primarily in the U.S. These investments are typically made through Investment Vehicles that hold an
interest in land development and homebuilding projects, including master-planned communities (“MPCs”). Tricon also serves as the developer of certain of its MPCs through its Houston-based subsidiary, The Johnson Companies LP
(“Johnson”), an integrated development platform with expertise in land entitlement, infrastructure, municipal bond finance and placemaking, and deep relationships with public and regional homebuilders and commercial developers. 

Johnson’s reputation for developing high-quality MPCs is further evidenced by Johnson having four MPCs ranked in the top 50 based on homebuilder sales in
2020 according to RCLCO Real Estate Advisors and John Burns Real Estate Consulting. 
  
 



 
 (Residential development investments of $293.0 million represent 5% of Tricon’s real estate asset value. The
investment balance includes Tricon’s investments in Canadian multi-family developments, investments in Canadian development properties (net of debt) and investments in for-sale housing as at December 31, 2020. Refer to Section 4.3.)


  
 10 2020 ANNUAL REPORT
TRICON RESIDENTIAL 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 
  

 Private Funds and Advisory 

Through its Private Funds and Advisory (“PF&A”) business, Tricon earns fees from managing third-party capital co-invested in its real estate
assets through commingled funds, separate accounts and joint ventures (“Investment Vehicles”). Activities of this business include: 
  

	(i)	 Asset management of third-party capital: Tricon manages capital on behalf of American, Canadian and
international institutional investors, including pension funds, sovereign wealth funds, insurance companies, endowments and foundations, as well as family offices and high net-worth accredited investors who seek exposure to the residential real
estate industry. 


 Tricon currently manages $2.6 billion of third-party capital (of total AUM of $8.5 billion) across its
single-family rental, multi-family rental and residential development business segments. 
 Tricon manages third-party capital for ten of the
top 100 largest institutional real estate investors in the world (source: PERE 2020 Top 100 Global Investor report, October 2020). Tricon ranked 65th globally and second in Canada (compared to 68th and third, respectively, in 2019) among global real
estate investment managers based on the amount of private real estate direct investment capital raised since 2015 (source: PERE 100 report, June 2020). In aggregate, the Company has approximately 17 institutional investors in its active Investment
Vehicles. 
 For its services, Tricon earns asset management fees and performance fees, provided targeted investment returns are achieved.
Tricon believes it is prudent to use a combination of balance sheet and third-party capital across its businesses. In particular, third-party capital allows the Company to generate scale and drive operational synergies, diversify its investor base,
capitalize on opportunities that would otherwise be too large for the Company, reduce its balance sheet exposure to development activities, and enhance Tricon’s return on equity by earning asset management and other fees. 

When co-investing with institutional partners, Tricon prefers to invest a higher relative portion of its commitment in income-producing rental
strategies and a lower portion in development. This approach allows Tricon’s balance sheet investments to immediately generate regular income streams and help grow FFO, while minimizing exposure to longer-term development assets, which do not
generate immediate cash flow. 
  

	(ii)	 Development management and related advisory services: Tricon earns development management fees from its
rental development projects in Toronto, which leverage its fully integrated development team. In addition, Tricon earns contractual development fees and sales commissions from the development and sale of single-family lots, residential land parcels,
and commercial land within the MPCs managed by its Johnson subsidiary. 


  

	(iii)	 Property management of rental properties: Tricon provides integrated property management services to its
entire single-family rental portfolio (including homes owned through joint ventures with third-party capital partners) and Canadian multi-family assets and is planning the internalization of property management for its U.S. multi-family rental
portfolio. The property management business is headquartered in Orange County, California, and provides resident-facing services including marketing, leasing, and repairs and maintenance delivered through a dedicated call centre and local field
offices. For its services, Tricon earns property management fees, typically calculated as a set percentage of the gross revenues of each property, as well as leasing, construction and acquisition fees. 



FEE REVENUE BY SOURCE FOR THE YEAR ENDED DECEMBER 31, 2020* 
  





 
 *Property management fees paid by the single-family rental business segment and certain development management fees paid by
Canadian development properties are eliminated upon consolidation and are excluded from revenue from private funds and advisory services. Refer to Section 4.4 for a summary of revenue from private funds and advisory services for the three and
twelve months ended December 31, 2020. 

  
 TRICON RESIDENTIAL
2020 ANNUAL REPORT 11 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 
  

 1.3 Environmental, Social and Governance 

Environmental, Social and Governance (“ESG”) principles have guided Tricon’s decision-making and strategy for the past 32 years. In
January 2020, the Company published its ESG roadmap, formalizing our approach to ESG and highlighting our commitment to five strategic priorities: Our People, Our Residents, Our Innovation, Our Impact and Our Governance. The ESG roadmap will guide
the Company’s ESG initiatives through 2022 and will provide a framework for data collection and reporting on the Company’s ongoing progress and performance. 

Over the course of this year, we have established the ESG programs and related performance measures intended to fulfill our commitments. The design of these
programs is substantially complete and will form our three-year ESG implementation plan. We aim to share our key initiatives and discuss our ESG performance in our inaugural ESG annual report in the coming months. 

Our People 
 The Company is committed to engaging,
supporting and enriching the lives of its employees so they can thrive. Tricon recognizes that creating a strong and healthy culture is an ongoing journey that must be firmly rooted in the concept of continuous improvement. Examples of
accomplishments to date include: 
  

	 	•	 	 A continued focus on talent management and a succession planning framework to build leadership capacity and
strengthen retention. 


  

	 	•	 	 The implementation of a number of recognition programs to promote workplace culture and values. These programs
include the “Good Gotcha” program, which celebrates individual examples of day-to-day employee excellence, and the “Pay It Forward” program, whereby every employee receives $100 annually to give to the charity of their choice or
a person in need. We are proud to have donated over $100,000 as a group to a broad range of organizations and individuals in need during the past holiday season. Just over half of our donations went to organizations that have missions ranging from
poverty reduction, animal welfare and health causes, benefiting our local communities in diverse ways. We may be “social distancing” today but the human connections we value and the communities we live in remain firmly intact.



  

	 	•	 	 Health, safety and well-being initiatives including programs such as web-based medical services, fitness
benefits, employee assistance programs, Best Doctors medical counselling and life balance naturopathic services. 


  

	 	•	 	 A corporate office designed with employee health and well-being as a primary consideration, including a spacious
open-concept floor plan that increases employees’ access to natural sunlight, ergonomic solutions for all employees (including sit-stand desks), and the promotion of face-to-face interactions and walking meetings when possible.



  

	 	•	 	 We continuously monitor employee engagement and satisfaction, using the results to drive our actions. Our annual
employee engagement survey was completed through Great Places to Work in the past quarter. The survey focuses on instilling a culture where employees both trust and feel trusted by their managers and co-workers. Our Tricon Residential teams in the
U.S. and now in Canada have been Great Place to Work-certified. 


 At Tricon, living our corporate purpose every day starts with our own
employees. In 2020, the Company embarked on several initiatives focused on equality, diversity and inclusion: • Living wage – we established a minimum base salary threshold of $36,400 in the U.S. and C$46,000 in Canada per year,
providing financial security for our employees and their families. 
  

	 	•	 	 BlackNorth Initiative’s CEO Pledge – we participated in the BlackNorth Initiative and have
joined several of Canada’s largest businesses in signing a “CEO pledge” committing Tricon to take demonstrable and positive action to acknowledge and counter systemic anti-Black racism. 



 

	 	•	 	 Juneteenth holiday – on June 19, we observed the Juneteenth holiday which marks the day in 1865
when anti-slavery laws were enforced in Texas. We invited our employees company-wide to learn about Black history and the challenges that racialized communities face. 



 

	 	•	 	 Black Girls Code – we donated to Black Girls Code, a charity focused on helping young Black girls
gain exposure to computer science and technology and encouraging careers in Science, Technology, Engineering and Mathematics. 


  

	 	•	 	 Founders’ Day  



Each year, we celebrate Tricon’s founders by devoting one day towards making a positive difference in our communities. 

This year, Tricon celebrated Founders’ Day on September 23 with nearly 700 employees across North America participating virtually.
The main theme of 2020 was anti-Black systemic racism, featuring discussions with the heads of the Canadian Council of Business Leaders Against Anti-Black Systemic Racism as well as Black Girls Code. 

  
 12 2020 ANNUAL REPORT
TRICON RESIDENTIAL 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 
  

 In addition, during Founders’ Day, we featured Red Door Family Shelter as Tricon’s
charity of choice in Canada. Red Door Family Shelter is one of the largest family shelters in Toronto, providing emergency shelter and support for women and children affected by domestic abuse, families experiencing a housing crisis, and refugee
claimants. The COVID-19 pandemic has put even more pressure on families at risk and so Tricon partnered with Red Door Family Shelter in 2020 to respond to the growing need for homeless shelters in the City of Toronto. 

This year, we also focused on Tricon’s guiding principles and, as part of the Founders’ Day celebration, employees across the U.S.
and Canada submitted short videos of themselves in which they explained what Tricon’s new purpose statement and guiding principles mean to them and why they are important in their work at Tricon. Select content from these inspirational videos
is posted on Tricon’s website at www.triconresidential.com. 
 Our Residents 

Tricon’s goal is to build meaningful communities where people can connect, grow and prosper. In light of the widespread economic uncertainty related to
COVID-19, we have focused our efforts this year on assisting residents in need through several initiatives: 
  

	 	•	 	 Comprehensive suite of resident surveys – we implemented a comprehensive suite of resident surveys in
our single-family rental business that are used throughout the resident lifecycle, including after a property tour, move-in, maintenance technician visit, seven-month checkpoint, renewal and post move-out communications. We believe this program
helps drive significantly higher resident retention, higher revenues and a lower turnover rate. 


  

	 	•	 	 Resident Emergency Assistance Fund – in response to the COVID-19 pandemic, we expanded our Resident
Emergency Assistance Fund to $200,000 per year which provides emergency assistance and financial relief to residents experiencing unexpected hardship. The fund helps residents and their families meet their rent obligations and stay in their homes.



  

	 	•	 	 Tricon Residential Giving Back Fund – in the third quarter of 2020, we established the Tricon
Residential Giving Back Fund. The Fund gives Tricon employees the opportunity to automatically deduct a portion of their pay to make a tax-deductible donation to a selection of non-profit organizations, including our partner charities Black Girls
Code and Red Door Family Shelter. 


  

	 	•	 	 Self-governing rent growth on renewals – recognizing that many of our residents may be facing
financial pressures during the COVID-19 pandemic, in the second and third quarters of 2020 we offered to renew many expiring leases at nominal increases, or forego rent increases altogether, and plan to continue our practice of
“self-governing” on rent increases related to renewals. 


  

	 	•	 	 Late fees and deferral plans – among our various initiatives intended to alleviate financial pressure
for our residents, we waived late fees and offered flexible rent deferral plans for those in need. We also temporarily halted all evictions and currently observe eviction moratoriums according to federal and municipal mandates. Moreover, we have
waived early termination fees throughout the pandemic to select residents who encountered COVID-19 hardships. 


  

	 	•	 	 Affordable Housing Lands Program – we partnered with investors and the Ontario government under the
Affordable Housing Lands Program to deliver an innovative solution to housing affordability in Toronto. Our West Don Lands project is one of the largest affordable housing projects in Canada and will include 30% affordable units delivered at the
same quality and standard as the market rate units. Block 10 of the West Don Lands will feature Toronto’s first purpose-built Indigenous Hub which will include an Indigenous Health Centre and community gardens as well as an Indigenous
Employment, Education and Training Centre. 


 Our Innovation 

Tricon is strongly committed to leveraging innovative technologies and housing solutions in order to drive convenience, connectivity and affordability. Core
service offerings are guided by two key desired outcomes: (i) delivering superior service that creates exceptional resident experiences and (ii) developing offerings that enhance the lives of residents while addressing their housing needs.
Examples include: 
  

	 	•	 	 Intelligent Virtual Agent technology deployed at our call centre to automate the leasing process. This technology
improves the customer communication experience, enabling residents to contact us 24 hours a day, seven days a week, with inquiries related to home statistics, tour scheduling and account information. 



 

	 	•	 	 Proprietary self-showing and virtual move-in process that allows potential residents to: (i) find a Tricon
home online and perform a 360-degree walkthrough from the comfort of their smart phone or computer; (ii) schedule and conduct a self-showing of a Tricon home at their preferred time and without a leasing agent; (iii) complete the leasing
documentation process seamlessly and 100% electronically; and (iv) move in to a Tricon home using a virtual concierge who can conduct a home walkthrough via videoconference. 



 

	 	•	 	 Customized Smart Home system which provides: convenient and controlled access to our homes through smart locks
and door sensors, remote thermostat access which enhances comfort and generates energy savings, and moisture sensors that identify and allow us to fix hard-to-detect water leaks before they cause damage. 



  
 TRICON RESIDENTIAL
2020 ANNUAL REPORT 13 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 
  


	 	•	 	 Investment in new fleet tracking technology that enhances capacity and demand planning to ensure much higher
on-time service delivery to our residents. This technology also helps decrease emissions through reduced vehicle idling times. 


  

	 	•	 	 Augmented reality is used to provide field training to our maintenance technicians virtually. This program helps
us standardize training across all 21 markets and identify suitable candidates through a virtual interview process. 


  

	 	•	 	 Partnerships with organizations such as Toronto Life magazine, Eye Buy Art, Roy Thomson Hall, Massey Hall and the
Evergreen Brick Works to provide our Toronto multi-family residents access to cultural activities and events. We also have partnerships with companies such as Last Box Moving, Casper Mattress and Wayfair, aimed at providing discounted access to
services needed for elevated apartment living. Our full-sized commercial-grade gyms, designed in partnership with Biosteel Fitness, offer a combination of weight training, cardiovascular and group fitness options through our Fitness on Demand app.



  

	 	•	 	 Predictive Index, an analytical measurement tool, is used to assist with recruiting and retaining high-performing
employees. A behavioural assessment is completed for every position we fill, and by every candidate who applies for that specific position. 



The Predictive Index assesses a candidate on four dimensions – dominance, extroversion, patience and formality – and compares the
results to the job profile to identify areas of mismatch during the interview process so that we can identify the candidate best suited for the position and address misalignment that may lead to turnover. 

Our Impact 
 The Company is committed to making a material
sustainability impact across all of its business activities over the long term. This effort will involve embracing smarter ways to reduce the environmental impact of our buildings by minimizing both our resource consumption and carbon footprint.
Tricon is dedicated to ensuring its developments are built to LEED standards and that wildlife and biodiversity are protected by creating parks, green spaces and natural ecosystems. Examples of accomplishments to date include: 

 

	 	•	 	 The Viridian master-planned community is a Certified Gold Signature Sanctuary. This certification is only awarded
to new developments that are designed, constructed and maintained according to Audubon International’s standards for planning and environmental stewardship. 



 

	 	•	 	 In the fourth quarter of 2020, Tricon’s first purpose-built residential development, The Selby, received
LEED gold certification. Several sustainable design strategies were deployed to improve the building’s performance, taking into consideration its energy consumption, water efficiency, carbon emissions and indoor environmental quality. The
building also features a green roof with drought-tolerant plants as well as bike storage and electric vehicle charging stations, providing additional opportunities for residents to reduce their carbon footprint. 



 

	 	•	 	 The West Don Lands mixed-use development is being built to achieve LEED Gold status, with a strong emphasis on
sustainability, energy efficiency and walkability. Key sustainability and energy efficiency features have been incorporated into the design and development, including efficient chillers, temperature-moderating façade systems, in-suite heat
recovery, low-flow hot water fixtures, LED fixtures in communal areas, locally sourced materials, bike parking, storm water retention, solar wall technology, a self-shading façade, green roofs, native plant species, urban farming and a city
tram connection. 


  

	 	•	 	 We are using smart home technology in our single-family rental homes across the United States to reduce our
carbon footprint. Sensors under sinks and near hot water heaters reduce needless water consumption by providing early leak detection, while smart thermostats allow temperature management when homes are vacant. 



  
 14 2020 ANNUAL REPORT
TRICON RESIDENTIAL 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 
  

 Our Governance 

Tricon is firmly committed to acting in an ethical manner across all of its business dealings, and to working transparently with stakeholders and investors to
enhance trust and reduce risks. We have established a governance framework to hold our organization, leadership and staff accountable. The governance framework includes four key elements: 

 

	 	•	 	 Code of Business Conduct and Ethics and Compliance Manual – outline the Company’s business
practices and procedures to ensure compliance with all securities laws, legal requirements and our own standards. 


  

	 	•	 	 Whistleblower policy – sets out expectations for the reporting of any illegal or unethical behaviour,
in addition to a confidential complaint procedure through which people can report concerns about accounting or auditing matters or potential violations of the Company’s policies without the threat of retaliation. 



 

	 	•	 	 Diversity of leadership – exemplifying the Company’s commitment to diversity throughout its
business across a range of factors, including expertise and experience, gender, geography, age, race and ethnicity. It also confirms our commitment to meeting or exceeding the expectations of the 30% Club Canada, a campaign to increase gender
diversity at board and senior management levels, and our pledge made as part of the BlackNorth Initiative. 


  

	 	•	 	 Risk management – including the use of prudent and disciplined investment practices, diversifying
capital across product types and market locations, diligently structuring transactions, conducting comprehensive due diligence and market research, and taking an active role in the ongoing management of our investments. 



For further details, please refer to the Company’s ESG roadmap, which was published on January 28, 2020. The ESG roadmap is available on our website
at www.triconresidential.com/investors and on SEDAR at www.sedar.com. 
 1.4 COVID-19 developments 

During 2020, the outbreak of COVID-19 and its rapid spread around the globe caused unprecedented disruption to the world’s economies and capital markets.
The ultimate consequences of the COVID-19 pandemic are still unknown; however, management believes that the Company’s strong leadership team, its diverse sources of recurring cash flow and its flexible liquidity profile will help mitigate the
impact that COVID-19 may have on Tricon’s near-term business performance (see also Section 8.7). Tricon’s response to COVID-19 has been as follows: 

Supporting Tricon’s employees 
 Tricon is committed
to the health and safety of over 750 employees across our U.S. and Canadian operations (including approximately 100 employees at Johnson). The Company’s employees began working from home as early as March 16, 2020, leveraging Tricon’s
investments in technology to conduct operations without interruption. Tricon’s call centre staff are fully equipped to work from home, and leasing activities are largely conducted using virtual tours and self-showings. In-person contact is
being minimized for local market staff, and personal protective equipment is being used where necessary to continue providing essential maintenance activities. 

Supporting Tricon’s residents 
 Tricon is focused on
providing its residents with a safe living environment and helping to mitigate the financial impact of COVID-19. The Company has moved to a strong occupancy bias in its rental businesses, and temporarily halted evictions, waived late fees, and
offered flexible payment plans for residents whose financial well-being has been directly impacted by the pandemic. 
 The pandemic is a highly dynamic and
evolving situation. Tricon will continue to monitor and act according to the direction of relevant federal, state, provincial and municipal governments. The Company remains steadfast and is committed to implementing the necessary actions to protect
its employees and residents during this unprecedented time (see Section 3.3). 

  
 TRICON RESIDENTIAL
2020 ANNUAL REPORT 15 













 



 
 2 HIGHLIGHTS 













 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 
  

 2. HIGHLIGHTS 

The following section presents highlights for the quarter on a consolidated and proportionate basis. Throughout this section, comparative balances have been
recast to conform with the current period presentation. 
 In response to the COVID-19 pandemic, a business update for the period subsequent to year-end has
been presented in Section 3.3. 
 Core funds from operations (“Core FFO”), Core FFO per share, Adjusted funds from operations
(“AFFO”) and AFFO per share are KPIs as defined in Section 7.1. The Company uses guidance specified by the National Association of Real Estate Investment Trusts (“NAREIT”). 

 

																	
	For the periods ended December 31	  	Three months	 	  	Twelve months	 
	(in thousands of U.S. dollars, except per share amounts
which are in U.S. dollars, unless otherwise indicated)	  	2020	 	  	2019(1)	 	  	2020	 	 	2019(1)	 
	 Financial highlights on a consolidated basis
	  				  				  				 			
	 Net income, including:
	  	$	81,478	 	  	$	43,557	 	  	$	116,413	 	 	$	110,335	 
	 Fair value gain on rental properties
	  	 	106,995	 	  	 	32,025	 	  	 	198,314	 	 	 	116,548	 
	 Income (loss) from investments in for-sale housing
	  	 	10,191	 	  	 	2,964	 	  	 	(61,776	) 	 	 	9,646	 
	 Basic earnings per share
	  	 	0.41	 	  	 	0.22	 	  	 	0.58	 	 	 	0.62	 
	 Diluted earnings per share
	  	 	0.39	 	  	 	0.21	 	  	 	0.58	 	 	 	0.61	 
	 Dividends per share
	  	$	0.07	 	  	$	0.07	 	  	$	0.28	 	 	$	0.28	 
	 Weighted average shares outstanding – basic
	  	 	194,679,682	 	  	 	195,269,680	 	  	 	194,627,127	 	 	 	172,735,776	 
	 Weighted average shares outstanding – diluted
	  	 	212,445,547	 	  	 	213,682,237	 	  	 	195,795,473	 	 	 	191,081,128	 
	 Non-IFRS(2) measures on a proportionate
basis
	  				  				  				 			
	 Core funds from operations (“Core FFO”)
	  	$	39,910	 	  	$	21,748	 	  	$	109,584	 	 	$	55,011	 
	 Adjusted funds from operations (“AFFO”)
	  	 	32,465	 	  	 	15,923	 	  	 	81,709	 	 	 	28,388	 
	 Core FFO per share(3)
	  	 	0.16	 	  	 	0.10	 	  	 	0.49	 	 	 	0.29	 
	 Core FFO per share (CAD)(3),(4)
	  	 	0.21	 	  	 	0.13	 	  	 	0.66	 	 	 	0.38	 
	 AFFO per share(3)
	  	 	0.13	 	  	 	0.07	 	  	 	0.36	 	 	 	0.15	 
	 AFFO per share (CAD)(3),(4)
	  	 	0.17	 	  	 	0.09	 	  	 	0.48	 	 	 	0.20	 
					
	Select balance sheet items reported on a consolidated basis	  	 	 	  	 	 	  	December 31, 2020	 	 	December 31, 2019(1)	 
	 Total assets
	  				  				  	$	7,174,834	 	 	$	6,486,396	 
	 Total liabilities
	  				  				  	 	5,431,596	 	 	 	4,825,214	 
	 Net assets attributable to shareholders of Tricon
	  				  				  	 	1,735,096	 	 	 	1,653,138	 
	 Rental properties
	  				  				  	 	6,321,918	 	 	 	5,682,525	 
	 Debt
	  				  				  	 	4,137,506	 	 	 	3,955,261	 
		  				  				  	  
	  
	 	 	  
	  
	 

  

	(1)	 The comparative period results have been recast to present the consolidated results in conformity with the
current period presentation. The reconciliation of the prior period figures under investment entity accounting to consolidated accounting can be found in Sections 3.1 and 3.2. 



	(2)	 Non-IFRS measures are presented to illustrate alternative relevant measures to assess the Company’s
performance and ability to generate cash. Refer to Section 5. 



	(3)	 Core FFO per share and AFFO per share are calculated using the total number of weighted average potential
dilutive shares outstanding, including the assumed conversion of convertible debentures and exchange of preferred units issued by Tricon PIPE LLC, which were 248,247,018 and 224,015,498 for the three and twelve months ended December 31, 2020,
respectively, and 213,682,237 and 191,081,128 for the three and twelve months ended December 31, 2019, respectively. 



	(4)	 USD/CAD exchange rates used are 1.3030 and 1.3415 for the three and twelve months ended December 31, 2020,
respectively, and 1.3200 and 1.3269 for the three and twelve months ended December 31, 2019, respectively. 



  
 TRICON RESIDENTIAL
2020 ANNUAL REPORT 17 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 
  

 IFRS measures on a consolidated basis 

Net income for the fourth quarter of 2020 was $81.5 million compared to $43.6 million in the fourth quarter of 2019, and included: 

 

	 	•	 	 Revenue from rental properties of $122.0 million compared to $109.9 million in the fourth quarter of 2019 driven
primarily by the single-family rental business, reflecting 8.3% growth in the number of rental homes to 22,766, combined with a 4.2% increase in average effective monthly rent and a 1.9% increase in occupancy. 



 

	 	•	 	 Direct operating expenses of $42.7 million compared to $40.1 million in the fourth quarter of 2019, mainly
representing incremental costs to manage the larger single-family rental home portfolio and a 5.0% increase in property taxes, partially offset by a decrease in repairs, maintenance and turnover expenses driven by improved cost containment
discipline as well as lower resident turnover. 


  

	 	•	 	 Income from investments in for-sale housing of $10.2 million compared to $3.0 million in the fourth quarter of
2019 driven by higher valuations at certain projects, as historically low mortgage rates and de-urbanization trends are increasing demand for new single-family housing. 



 

	 	•	 	 Fair value gain on rental properties of $107.0 million compared to $32.0 million in the fourth quarter of 2019,
owing to significant home price appreciation in Tricon’s core markets for its single-family rental homes. The increase in home prices is underpinned by population growth in Tricon’s Sun Belt markets driven by in-migration, de-densification
and de-urbanization trends, all of which have fuelled demand for spacious suburban homes. 


 Net income for the twelve months ended
December 31, 2020 was $116.4 million compared to net income of $110.3 million for the twelve months ended December 31, 2019, and included: 
  

	 	•	 	 Revenue from rental properties of $478.2 million and direct operating expenses of $169.5 million compared to
$361.8 million and $130.5 million in the prior year, respectively, as a result of the continued growth in the single-family rental business as discussed above and the addition of the U.S. multi-family rental portfolio in the second quarter of 2019.



  

	 	•	 	 Income from investments in Canadian multi-family developments of $14.1 million compared to $7.7 million in the
prior year, attributable to fair value gains recognized across multiple projects upon achieving key development milestones. 


  

	 	•	 	 Fair value gain on rental properties of $198.3 million compared to $116.5 million in the prior year driven by
home price appreciation in the single-family rental portfolio, partially offset by a fair value loss of $22.5 million recognized on the U.S. multi-family rental portfolio in the second quarter of 2020, as COVID-19-related impacts to the
Company’s U.S. multi-family business contributed to a downward adjustment in NOI assumptions. 


  

	 	•	 	 Loss from investments in for-sale housing of $61.8 million compared to income of $9.6 million in 2019, as a
significant write-down was recognized in the first quarter of 2020 in the context of a precipitous drop in sales and uncertainty over the timing of future cash flows brought on by the pandemic. 



Non-IFRS measures on a proportionate basis 
 Core funds
from operations (“Core FFO”) for the fourth quarter of 2020 was $39.9 million, an increase of $18.2 million or 84% compared to $21.7 million in the fourth quarter of 2019. The increase was attributable to solid operating results from
Tricon’s growing single-family rental business, reflecting strong rent growth and higher occupancy, coupled with the improved performance of the Company’s investments in for-sale housing and a decrease in corporate interest expense. For
the twelve months ended December 31, 2020, Core FFO was $109.6 million, an increase of $54.6 million or 99% compared to $55.0 million in the prior year. This increase was mainly attributable to the items noted above, along with the inclusion of
a full year of results from the U.S. multi-family rental portfolio compared to a seven-month inclusion in 2019. 
 Adjusted funds from operations
(“AFFO”) for the three and twelve months ended December 31, 2020 was $32.5 million and $81.7 million, respectively, an increase of $16.5 million and $53.3 million from the same periods in the prior year. These variances reflect
the increase in Core FFO discussed above, along with higher recurring capital expenditures attributable to the full-year inclusion of the U.S. multi-family rental portfolio results. While Tricon’s single-family rental portfolio has expanded in
2020, the Company was able to lower recurring capital expenditures as a result of a targeted reduction in elective capital projects during the COVID-19 pandemic. 

Change in net assets 
 As at December 31, 2020,
Tricon’s net assets totalled $1,735 million compared to $1,653 million as at December 31, 2019. The $82.0 million increase includes $113.3 million of net income attributable to Tricon’s shareholders reported for the twelve months
ended December 31, 2020 (including a $198.3 million fair value gain on rental properties and a $61.8 million loss from investments in for-sale housing), offset by dividends of $35.8 million, among other items. 

Tricon’s net asset value for its for-sale housing investments decreased by $135.8 million from $300.7 million as at December 31, 2019 to $164.8
million as at December 31, 2020, attributable to (i) distributions of $77.4 million largely from the proceeds of syndicating a balance sheet investment in the first quarter, and (ii) the above-noted fair value loss of $61.8 million
driven by the pandemic-related write-down in the first quarter. As a result, Tricon’s for-sale housing assets now represent approximately 2.3% of the total assets of the Company. 

  
 18 2020 ANNUAL REPORT
TRICON RESIDENTIAL 













 



 

	3	 CONSOLIDATED FINANCIAL RESULTS 















 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 
  

 3. CONSOLIDATED FINANCIAL RESULTS 

The following section should be read in conjunction with the Company’s consolidated financial statements and related notes for the year ended
December 31, 2020. 
 3.1 Review of income statements 

Consolidated statements of income 
 The comparative figures
in the Company’s consolidated statements of comprehensive income in the table below have been recast as if the current reporting framework under IFRS 10, Consolidated Financial Statements (“IFRS 10”), first applied by the
Company effective January 1, 2020 on a prospective basis, had been in effect for the three and twelve months ended December 31, 2019. 
  

																									
	 For the periods ended December 31

(in thousands of U.S. dollars, except per share amounts
which are in U.S. dollars)
	 	Three months	 	 	Twelve months	 
	 	2020	 	 	2019	 	 	Variance	 	 	2020	 	 	2019	 	 	Variance	 
		 				 	 
 
	Recast
 (Schedule A)
	 
  
	 				 				 	 
 
	Recast
 (Schedule A)
	 
  
	 			
	 Revenue from rental properties
	 	$
	121,983
	 
	 	$
	109,915
	 
	 	$
	12,068
	 
	 	$	478,187 	 	 	$
	361,766
	 
	 	$	116,421 	 
	 Direct operating expenses
	 	 	(42,660)	 	 	 	(40,093)	 	 	 	(2,567)	 	 	 	(169,538)	 	 	 	(130,468)	 	 	 	(39,070)	 
		 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Net operating income from rental properties
	 	 	79,323	 	 	 	69,822	 	 	 	9,501	 	 	 	308,649	 	 	 	231,298	 	 	 	77,351	 
	 Revenue from private funds and advisory services
	 	 	10,339	 	 	 	12,138	 	 	 	(1,799	) 	 	 	34,090	 	 	 	41,060	 	 	 	(6,970	) 
	 Income from investments in Canadian multi-family developments(1)
	 	 	8,720	 	 	 	7,416	 	 	 	1,304	 	 	 	14,124	 	 	 	7,714	 	 	 	6,410	 
	 Other income from Canadian development
properties(2)
	 	 	309	 	 	 	91	 	 	 	218	 	 	 	791	 	 	 	725	 	 	 	66	 
	 Income (loss) from investments in for-sale
housing(3)
	 	 	10,191	 	 	 	2,964	 	 	 	7,227	 	 	 	(61,776	) 	 	 	9,646	 	 	 	(71,422	) 
	 Other income(4)
	 	 	1,774	 	 	 	—  	 	 	 	1,774	 	 	 	1,774	 	 	 	—  	 	 	 	1,774	 
	 Property management overhead
	 	 	(5,872	) 	 	 	(5,675	) 	 	 	(197	) 	 	 	(22,654	) 	 	 	(25,875	) 	 	 	3,221	 
	 Compensation expense
	 	 	(14,940	) 	 	 	(9,744	) 	 	 	(5,196	) 	 	 	(40,100	) 	 	 	(37,681	) 	 	 	(2,419	) 
	 General and administration expense
	 	 	(5,748	) 	 	 	(5,925	) 	 	 	177	 	 	 	(23,569	) 	 	 	(20,846	) 	 	 	(2,723	) 
	 Other expense
	 	 	(791	) 	 	 	(1,004	) 	 	 	213	 	 	 	(3,173	) 	 	 	(3,991	) 	 	 	818	 
	 Interest expense
	 	 	(44,421	) 	 	 	(43,651	) 	 	 	(770	) 	 	 	(170,610	) 	 	 	(152,309	) 	 	 	(18,301	) 
	 Fair value gain on rental properties
	 	 	106,995	 	 	 	32,025	 	 	 	74,970	 	 	 	198,314	 	 	 	116,548	 	 	 	81,766	 
	 Gain on sale of U.S. multi-family developments
	 	 	—  	 	 	 	1,113	 	 	 	(1,113	) 	 	 	—  	 	 	 	9,718	 	 	 	(9,718	) 
	 Fair value (loss) gain on derivative financial instruments and other liabilities
	 	 	(16,418	) 	 	 	(1,462	) 	 	 	(14,956	) 	 	 	(7,461	) 	 	 	2,357	 	 	 	(9,818	) 
	 Transaction costs
	 	 	(2,491	) 	 	 	(6,532	) 	 	 	4,041	 	 	 	(14,016	) 	 	 	(36,415	) 	 	 	22,399	 
	 Amortization and depreciation expense
	 	 	(2,614	) 	 	 	(2,733	) 	 	 	119	 	 	 	(10,848	) 	 	 	(10,543	) 	 	 	(305	) 
	 Realized and unrealized foreign exchange gain (loss)
	 	 	948	 	 	 	178	 	 	 	770	 	 	 	(166	) 	 	 	42	 	 	 	(208	) 
	 Net change in fair value of limited partners’ interests in rental business
	 	 	(17,780	) 	 	 	(4,210	) 	 	 	(13,570	) 	 	 	(50,581	) 	 	 	(3,784	) 	 	 	(46,797	) 
		 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
		 	 	17,862	 	 	 	(37,149	) 	 	 	55,011	 	 	 	(189,951	) 	 	 	(144,694	) 	 	 	(45,257	) 
		 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Income before income taxes
	 	$	107,524	 	 	$	44,811	 	 	$	62,713	 	 	$	152,788	 	 	$	127,664	 	 	$	25,124	 
	 Income tax recovery (expense) – current
	 	 	7,087	 	 	 	1,974	 	 	 	5,113	 	 	 	4,050	 	 	 	(5,395	) 	 	 	9,445	 
	 Income tax expense – deferred
	 	 	(33,133	) 	 	 	(3,228	) 	 	 	(29,905	) 	 	 	(40,425	) 	 	 	(11,934	) 	 	 	(28,491	) 
		 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Net income
	 	$	81,478	 	 	$	43,557	 	 	$	37,921	 	 	$	116,413	 	 	$	110,335	 	 	$	6,078	 
		 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Attributable to:
	 				 				 				 				 				 			
	 Shareholders of Tricon
	 	$	79,678	 	 	$	42,354	 	 	$	37,324	 	 	$	113,322	 	 	$	107,762	 	 	$	5,560	 
	 Non-controlling interest
	 	 	1,800	 	 	 	1,203	 	 	 	597	 	 	 	3,091	 	 	 	2,573	 	 	 	518	 
		 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Net income
	 	$	81,478	 	 	$	43,557	 	 	$	37,921	 	 	$	116,413	 	 	$	110,335	 	 	$	6,078	 
		 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Other comprehensive income
	 				 				 				 				 				 			
	 Items that will be reclassified subsequently to net income
	 				 				 				 				 				 			
	 Cumulative translation reserve
	 	 	5,256	 	 	 	1,669	 	 	 	3,587	 	 	 	3,999	 	 	 	3,671	 	 	 	328	 
		 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Comprehensive income for the period
	 	$	86,734	 	 	$	45,226	 	 	$	41,508	 	 	$	120,412	 	 	$	114,006	 	 	$	6,406	 
		 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Attributable to:
	 				 				 				 				 				 			
	 Shareholders of Tricon
	 	$	84,934	 	 	$	44,023	 	 	$	40,911	 	 	$	117,321	 	 	$	111,433	 	 	$	5,888	 
	 Non-controlling interest
	 	 	1,800	 	 	 	1,203	 	 	 	597	 	 	 	3,091	 	 	 	2,573	 	 	 	518	 
		 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Comprehensive income for the period
	 	$	86,734	 	 	$	45,226	 	 	$	41,508	 	 	$	120,412	 	 	$	114,006	 	 	$	6,406	 
		 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Basic EPS attributable to shareholders of Tricon
	 	$	0.41	 	 	$	0.22	 	 	$	0.19	 	 	$	0.58	 	 	$	0.62	 	 	$	(0.04	) 
	 Diluted EPS attributable to shareholders of Tricon
	 	$	0.39	 	 	$	0.21	 	 	$	0.18	 	 	$	0.58	 	 	$	0.61	 	 	$	(0.03	) 
	 Weighted average shares outstanding – basic
	 	 	194,679,682	 	 	 	195,269,680	 	 	 	(589,998	) 	 	 	194,627,127	 	 	 	172,735,776	 	 	 	21,891,351	 
	 Weighted average shares outstanding –
diluted(5)
	 	 	212,445,547	 	 	 	213,682,237	 	 	 	(1,236,690	) 	 	 	195,795,473	 	 	 	191,081,128	 	 	 	4,714,345	 

  

	(1)	 Includes income from The Selby (Section 4.2.2) and income from The Taylor, West Don Lands, The Ivy and 7
Labatt (Section 4.3.1). 



	(2)	 Includes other income from Canadian development properties, The James (Scrivener Square) and The Shops of
Summerhill (Section 4.3.1). 



	(3)	 Reflects the net change in the fair values of the underlying investments in the legacy THP business (Section
4.3.2). 



	(4)	 Includes government assistance received by Johnson. 



	(5)	 For the three months ended December 31, 2020, the Company’s 2022 convertible debentures were dilutive
and the exchangeable preferred units of Tricon PIPE LLC were anti-dilutive, whereas for the twelve months ended December 31, 2020, both were anti-dilutive. For the three and twelve months ended December 31, 2019, the 2022 convertible
debentures were dilutive. Refer to Note 29 to the consolidated financial statements. 



  
 20 2020 ANNUAL REPORT
TRICON RESIDENTIAL 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 
  

 Schedule A 

The table below provides a reconciliation of the consolidated statements of comprehensive income for the three and twelve months ended December 31, 2019
from figures previously reported under investment entity accounting in accordance with IFRS 10 to the recast figures shown in the table above. 
  

																									
	 	 	Three months	 	 	Twelve months	 
	 For the periods ended December 31, 2019

(in thousands of U.S. dollars)
	 	Previously
reported	 	 	Adjustments	 	 	Recast	 	 	Previously
reported	 	 	Adjustments	 	 	Recast	 
	 Revenue from rental properties
	 	$	—  	 	 	$	109,915	 	 	$	109,915	 	 	$	—  	 	 	$	361,766	 	 	$	361,766	 
	 Direct operating expenses
	 	 	—  	 	 	 	(40,093	) 	 	 	(40,093	) 	 	 	—  	 	 	 	(130,468	) 	 	 	(130,468	) 
		 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Net operating income from rental properties
	 	 	—  	 	 	 	69,822	 	 	 	69,822	 	 	 	—  	 	 	 	231,298	 	 	 	231,298	 
	 Revenue from private funds and advisory services
	 	 	11,716	 	 	 	422	 	 	 	12,138	 	 	 	39,895	 	 	 	1,165	 	 	 	41,060	 
	 Income from investments in Canadian multi-family developments
	 	 	—  	 	 	 	7,416	 	 	 	7,416	 	 	 	—  	 	 	 	7,714	 	 	 	7,714	 
	 Investment income – Tricon American Homes
	 	 	42,451	 	 	 	(42,451	) 	 	 	—  	 	 	 	162,193	 	 	 	(162,193	) 	 	 	—  	 
	 Investment income – Tricon Lifestyle Rentals
	 	 	16,812	 	 	 	(16,812	) 	 	 	—  	 	 	 	34,980	 	 	 	(34,980	) 	 	 	—  	 
	 Other income from Canadian development properties
	 	 	—  	 	 	 	91	 	 	 	91	 	 	 	—  	 	 	 	725	 	 	 	725	 
	 Income from investments in for-sale housing
	 	 	2,964	 	 	 	—  	 	 	 	2,964	 	 	 	9,646	 	 	 	—  	 	 	 	9,646	 
	 Property management overhead
	 	 	—  	 	 	 	(5,675	) 	 	 	(5,675	) 	 	 	—  	 	 	 	(25,875	) 	 	 	(25,875	) 
	 Compensation expense
	 	 	(9,744	) 	 	 	—  	 	 	 	(9,744	) 	 	 	(37,681	) 	 	 	—  	 	 	 	(37,681	) 
	 General and administration expense
	 	 	(2,876	) 	 	 	(3,049	) 	 	 	(5,925	) 	 	 	(11,683	) 	 	 	(9,163	) 	 	 	(20,846	) 
	 Other expense
	 	 	—  	 	 	 	(1,004	) 	 	 	(1,004	) 	 	 	—  	 	 	 	(3,991	) 	 	 	(3,991	) 
	 Interest expense
	 	 	(8,908	) 	 	 	(34,743	) 	 	 	(43,651	) 	 	 	(32,439	) 	 	 	(119,870	) 	 	 	(152,309	) 
	 Fair value gain on rental properties
	 	 	—  	 	 	 	32,025	 	 	 	32,025	 	 	 	—  	 	 	 	116,548	 	 	 	116,548	 
	 Gain on sale of U.S. multi-family developments
	 	 	—  	 	 	 	1,113	 	 	 	1,113	 	 	 	—  	 	 	 	9,718	 	 	 	9,718	 
	 Fair value (loss) gain on derivative financial instruments and other liabilities
	 	 	(1,348	) 	 	 	(114	) 	 	 	(1,462	) 	 	 	2,961	 	 	 	(604	) 	 	 	2,357	 
	 Transaction costs
	 	 	(3,713	) 	 	 	(2,819	) 	 	 	(6,532	) 	 	 	(32,626	) 	 	 	(3,789	) 	 	 	(36,415	) 
	 Amortization and depreciation expense
	 	 	(1,589	) 	 	 	(1,144	) 	 	 	(2,733	) 	 	 	(6,274	) 	 	 	(4,269	) 	 	 	(10,543	) 
	 Realized and unrealized foreign exchange gain
	 	 	178	 	 	 	—  	 	 	 	178	 	 	 	42	 	 	 	—  	 	 	 	42	 
	 Net change in fair value of limited partners’ interests in rental business
	 	 	—  	 	 	 	(4,210	) 	 	 	(4,210	) 	 	 	—  	 	 	 	(3,784	) 	 	 	(3,784	) 
		 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
		 	 	34,227	 	 	 	(71,376	) 	 	 	(37,149	) 	 	 	89,119	 	 	 	(233,813	) 	 	 	(144,694	) 
		 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Income before income taxes
	 	$	45,943	 	 	$	(1,132	) 	 	$	44,811	 	 	$	129,014	 	 	$	(1,350	) 	 	$	127,664	 
	 Income tax recovery (expense) – current
	 	 	1,974	 	 	 	—  	 	 	 	1,974	 	 	 	(5,410	) 	 	 	15	 	 	 	(5,395	) 
	 Income tax expense – deferred
	 	 	(2,658	) 	 	 	(570	) 	 	 	(3,228	) 	 	 	(9,469	) 	 	 	(2,465	) 	 	 	(11,934	) 
		 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Net income(1)
	 	$	45,259	 	 	$	(1,702	) 	 	$	43,557	 	 	$	114,135	 	 	$	(3,800	) 	 	$	110,335	 
		 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Attributable to:
	 				 				 				 				 				 			
	 Shareholders of Tricon
	 	$	44,056	 	 	$	(1,702	) 	 	$	42,354	 	 	$	111,562	 	 	$	(3,800	) 	 	$	107,762	 
	 Non-controlling interest
	 	 	1,203	 	 	 	—  	 	 	 	1,203	 	 	 	2,573	 	 	 	—  	 	 	 	2,573	 
		 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Net income(1)
	 	$	45,259	 	 	$	(1,702	) 	 	$	43,557	 	 	$	114,135	 	 	$	(3,800	) 	 	$	110,335	 
		 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Other comprehensive income
	 				 				 				 				 				 			
	 Items that will be reclassified subsequently to net income
	 				 				 				 				 				 			
	 Cumulative translation reserve(1)
	 	 	(33	) 	 	 	1,702	 	 	 	1,669	 	 	 	(129	) 	 	 	3,800	 	 	 	3,671	 
		 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Comprehensive income for the period
	 	$	45,226	 	 	$	—  	 	 	$	45,226	 	 	$	114,006	 	 	$	—  	 	 	$	114,006	 
		 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Attributable to:
	 				 				 				 				 				 			
	 Shareholders of Tricon
	 	$	44,023	 	 	$	—  	 	 	$	44,023	 	 	$	111,433	 	 	$	—  	 	 	$	111,433	 
	 Non-controlling interest
	 	 	1,203	 	 	 	—  	 	 	 	1,203	 	 	 	2,573	 	 	 	—  	 	 	 	2,573	 
		 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Comprehensive income for the period
	 	$	45,226	 	 	$	—  	 	 	$	45,226	 	 	$	114,006	 	 	$	—  	 	 	$	114,006	 
		 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Basic EPS attributable to shareholders of
Tricon(1)
	 	$	0.23	 	 	$	(0.01	) 	 	$	0.22	 	 	$	0.65	 	 	$	(0.03	) 	 	$	0.62	 
	 Diluted EPS attributable to shareholders of
Tricon(1)
	 	$	0.22	 	 	$	(0.01	) 	 	$	0.21	 	 	$	0.63	 	 	$	(0.02	) 	 	$	0.61	 
	 Weighted average shares outstanding – basic
	 	 	195,269,680	 	 	 	—  	 	 	 	195,269,680	 	 	 	172,735,776	 	 	 	—  	 	 	 	172,735,776	 
	 Weighted average shares outstanding – diluted
	 	 	213,682,237	 	 	 	—  	 	 	 	213,682,237	 	 	 	191,081,128	 	 	 	—  	 	 	 	191,081,128	 

  

	(1)	 The effects of changes in foreign exchange rates for Canadian multi-family developments were accounted for as
investment income under investment entity accounting. Such exchange differences are recognized in other comprehensive income for the Company upon adoption of consolidation accounting framework. As a result, basic and diluted EPS as recast have
decreased compared to the amounts under investment entity accounting, as other comprehensive income is not included in net income. 



  
 TRICON RESIDENTIAL
2020 ANNUAL REPORT 21 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 
  

 Revenue from rental properties 

The following table provides further details regarding revenue from rental properties for the three and twelve months ended December 31, 2020. 

 

																									
	 For the periods ended December 31

(in thousands of U.S. dollars)
	  	Three months	 	 	Twelve months	 
	  	2020	 	  	2019	 	  	Variance	 	 	2020	 	  	2019	 	  	Variance	 
	 Single-family rental
	  	$	94,400	 	  	$	81,348	 	  	$	13,052	 	 	$	366,982	 	  	$	297,956	 	  	$	69,026	 
	 Multi-family rental – U.S.
	  	 	27,583	 	  	 	28,567	 	  	 	(984	) 	 	 	111,205	 	  	 	63,810	 	  	 	47,395	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Revenue from rental properties
	  	$	121,983	 	  	$	109,915	 	  	$	12,068	 	 	$	478,187	 	  	$	361,766	 	  	$	116,421	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	  	  
	  
	 	  	  
	  
	 

 Revenue from rental properties for the three months ended December 31, 2020 totalled $122.0 million, an increase of $12.1
million compared to $109.9 million for the same period in the prior year. The increase is attributable to: 
  

	 	•	 	 An increase of $13.1 million in rental revenue from single-family rental properties reflecting (i) an 8.3%
portfolio expansion (22,766 rental homes compared to 21,014), (ii) 4.2% growth in average effective rent per home ($1,464 compared to $1,405), and (iii) a 1.9% increase in occupancy (96.4% compared to 94.5%). 



 

	 	•	 	 A partially offsetting decrease of $1.0 million in rental revenue from the U.S. multi-family rental portfolio,
driven by (i) a 1.3% decline in occupancy (93.6% compared to 94.9%), (ii) a $0.5 million (or 130%) increase in bad debt expense ($0.8 million compared to $0.3 million) as a result of higher resident delinquency, and (iii) a $0.4
million (or 169%) increase in leasing concessions ($0.6 million compared to $0.2 million) from an effort to drive occupancy. 


 Revenue
from rental properties for the twelve months ended December 31, 2020 totalled $478.2 million, an increase of $116.4 million from the prior year as a result of (i) the expansion of the single-family rental portfolio as well as improvements
in occupancy and average monthly rent as discussed above, and (ii) the inclusion of twelve months of revenue from the U.S. multi-family portfolio in 2020 compared to a seven-month inclusion in the comparative period, as the portfolio was
acquired in the second quarter of 2019. 
 Direct operating expenses 

The following table provides further details regarding direct operating expenses for the three and twelve months ended December 31, 2020. 

 

																									
	 For the periods ended December 31

(in thousands of U.S. dollars)
	  	Three months	 	 	Twelve months	 
	  	2020	 	  	2019	 	  	Variance	 	 	2020	 	  	2019	 	  	Variance	 
	 Single-family rental
	  	$	30,681	 	  	$	28,490	 	  	$	(2,191	) 	 	$	121,242	 	  	$	104,605	 	  	$	(16,637	) 
	 Multi-family rental – U.S.
	  	 	11,979	 	  	 	11,603	 	  	 	(376	) 	 	 	48,296	 	  	 	25,863	 	  	 	(22,433	) 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Direct operating expenses
	  	$	42,660	 	  	$	40,093	 	  	$	(2,567	) 	 	$	169,538	 	  	$	130,468	 	  	$	(39,070	) 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	  	  
	  
	 	  	  
	  
	 

 Direct operating expenses for the three months ended December 31, 2020 were $42.7 million, an increase of $2.6 million
compared to the same period in the prior year. The variance is attributable to: 
  

	 	•	 	 An increase of $2.2 million from the single-family rental portfolio, driven by (i) an 8.3% growth in the
size of the portfolio (1,752 more rental homes in service in Q4 2020 compared to Q4 2019), (ii) a 5.0% increase in property taxes, and (iii) a partially offsetting decrease in repairs, maintenance and turnover expenses owing to a 3.1%
decrease in turnover as well as improved cost discipline and controlled scoping of maintenance work. 


  

	 	•	 	 An increase of $0.4 million from the U.S. multi-family rental portfolio, reflecting a 27.9% increase in property
insurance premiums due to industry-wide price escalation and normal-course salary increases for on-site property management personnel. 



Direct operating expenses for the twelve months ended December 31, 2020 were $169.5 million, an increase of $39.1 million compared to the prior year.
This variance is primarily attributable to (i) the acquisition of the U.S. multi-family rental portfolio in the second quarter of 2019, resulting in the inclusion of twelve months of operating expenses in 2020 compared to seven months in 2019,
and (ii) the expansion of the single-family rental portfolio year-over-year along with the property tax increases discussed above. 

  
 22 2020 ANNUAL REPORT
TRICON RESIDENTIAL 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 
  

 Revenue from private funds and advisory services 

The following table provides further details regarding revenue from private funds and advisory services for the three and twelve months ended December 31,
2020, net of inter-segment revenues eliminated upon consolidation. Under certain arrangements, asset-based fees that are earned from third-party investors in Tricon’s subsidiary entities are billed directly to those investors and are therefore
not recognized in the accounts of the applicable subsidiary. These amounts are included in the asset management fees revenue recognized in the statements of comprehensive income. 

 

																									
	 For the periods ended December 31

(in thousands of U.S. dollars)
	  	Three months	 	 	Twelve months	 
	  	2020	 	  	2019	 	  	Variance	 	 	2020	 	  	2019	 	  	Variance	 
	 Asset management fees
	  	$	2,815	 	  	$	3,355	 	  	$	(540	) 	 	$	12,061	 	  	$	15,099	 	  	$	(3,038	) 
	 Performance fees
	  	 	1,691	 	  	 	2,565	 	  	 	(874	) 	 	 	2,836	 	  	 	7,448	 	  	 	(4,612	) 
	 Development fees(1)
	  	 	5,653	 	  	 	5,876	 	  	 	(223	) 	 	 	18,298	 	  	 	17,736	 	  	 	562	 
	 Property management fees
	  	 	180	 	  	 	342	 	  	 	(162	) 	 	 	895	 	  	 	777	 	  	 	118	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Revenue from private funds and advisory services
	  	$	10,339	 	  	$	12,138	 	  	$	(1,799	) 	 	$	34,090	 	  	$	41,060	 	  	$	(6,970	) 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	  	  
	  
	 	  	  
	  
	 

  

	(1)	 Development fees are comprised of fees earned by: 



 

																									
	 For the periods ended December 31

(in thousands of U.S. dollars)
	  	Three months	 	 	Twelve months	 
	  	2020	 	  	2019	 	  	Variance	 	 	2020	 	  	2019	 	  	Variance	 
	 The Johnson Companies (“Johnson”)
	  	$	4,833	 	  	$	5,509	 	  	$	(676	) 	 	$	14,586	 	  	$	15,726	 	  	$	(1,140	) 
	 Tricon Development Group (“TDG”)
	  	 	820	 	  	 	367	 	  	 	453	 	 	 	3,712	 	  	 	2,010	 	  	 	1,702	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Development fees
	  	$	  5,653	 	  	$	  5,876	 	  	$	(223	) 	 	$	18,298	 	  	$	17,736	 	  	$	      562	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	  	  
	  
	 	  	  
	  
	 

 Revenue from private funds and advisory services for the three months ended December 31, 2020 totalled $10.3 million, a
decrease of $1.8 million from the same period in the prior year. The variance is primarily attributable to: 
  

	 	•	 	 A decrease of $0.9 million in performance fees generated from the Company’s for-sale housing investments
portfolio, owing to higher performance fees paid in the fourth quarter of 2019 from commingled funds and separate accounts compared to the current period. Performance fees are paid when realized returns from an Investment Vehicle exceed third-party
investor return thresholds, and are therefore episodic in nature and can vary substantially from period to period. 


  

	 	•	 	 A decrease of $0.5 million in asset management fees, as significant distributions were made from investments in
for-sale housing to third-party investors over the past twelve months, thereby reducing the outstanding invested capital upon which asset management fees are based. 



 

	 	•	 	 A decrease of $0.2 million in development fees driven by (i) a $0.7 million reduction from Johnson
attributable to fewer lot sales in the fourth quarter of 2020 compared to the comparative period (see below), and (ii) a partially offsetting increase of $0.5 million in development fees earned from Canadian multi-family developments at Blocks
3/4/7 of the West Don Lands project. 


 Johnson’s development fees are generated based on the number of lots sold to homebuilders.
While Johnson does not generate revenues from third-party homes sales, the number of homes sold is indicative of Johnson’s expected future performance as homebuilders must replenish inventories to accommodate future demand. In spite of the
COVID-19 pandemic, the for-sale housing market has fared well, underpinned by ultra-low mortgage rates, de-densification and de-urbanization trends and extended work-from-home orders, which have all led to higher demand for detached houses.
Third-party home sales at Johnson communities increased by 24% year-over-year (2020 – 4,876 vs. 2019 – 3,920), which is expected to drive homebuilders’ demand for lot inventory in the coming periods. 

Revenue from private funds and advisory services for the twelve months ended December 31, 2020 totalled $34.1 million, a decrease of $7.0 million from
the prior year largely for the reasons discussed above. 

  
 TRICON RESIDENTIAL
2020 ANNUAL REPORT 23 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 
  

 Income from investments in Canadian multi-family developments 

Investments in Canadian multi-family developments include joint ventures and equity holdings in development projects, which are equity-accounted for in
accordance with IAS 28 (as defined in Section 8), namely The Taylor, West Don Lands, The Ivy and 7 Labatt. The Selby, a Canadian multi-family rental property, is also accounted for under the equity method while its operational results
are discussed within the Canadian multi-family rental segment in Section 4.2 as the property is now substantially stabilized. The James (Scrivener Square) and The Shops of Summerhill are accounted for as Canadian development properties.
The income earned from The Shops of Summerhill is grouped with Other income (expenses) given its immaterial nature. 
 The following table provides further
details regarding income from investments in Canadian multi-family developments for the three and twelve months ended December 31, 2020. 
  

																									
	 For the periods ended December 31

(in thousands of U.S. dollars)
	  	Three months	 	 	Twelve months	 
	  	2020	 	  	2019	 	  	Variance	 	 	2020	 	  	2019	 	 	Variance	 
	 Multi-family rental – Canada (The
Selby)(1)
	  	$	427	 	  	$	535	 	  	$	(108	) 	 	$	746	 	  	$	(564	) 	 	$	1,310	 
	 Multi-family rental – Canada (under development)
	  	 	8,293	 	  	 	6,881	 	  	 	1,412	 	 	 	13,378	 	  	 	8,278	 	 	 	5,100	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	  	  
	  
	 	 	  
	  
	 
	 Income from investments in Canadian multi-family developments
	  	$	8,720	 	  	$	7,416	 	  	$	1,304	 	 	$	14,124	 	  	$	7,714	 	 	$	6,410	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	  	  
	  
	 	 	  
	  
	 

 (1) See Section 4.2.2, “Canadian multi-family rental – The Selby”, for details of the operational
performance of The Selby. 
 Income from investments in Canadian multi-family developments for the three months ended December 31, 2020 was $8.7
million, an increase of $1.3 million from the same period in the prior year. This variance was driven by: 
  

	 	•	 	 An increase of $1.4 million in income from the Company’s development projects, primarily attributable to
fair value gains recognized on Blocks 3/4/7 of the West Don Lands project, which achieved development milestones in the current period. In comparison, the fair value gains in the comparative period were driven by land value increases across multiple
projects, which moderated in 2020. 


  

	 	•	 	 A partially offsetting decrease of $0.1 million in income from The Selby, as higher fair value gains were
recognized in the fourth quarter of 2019 while no fair value gains were recorded in the same period in 2020. 


 Income from investments in
Canadian multi-family developments for the twelve months ended December 31, 2020 was $14.1 million, an increase of $6.4 million from the prior year. The variance is attributable to: 

 

	 	•	 	 An increase of $5.1 million in income from the Company’s development projects, reflecting fair value gains
on multiple blocks of the West Don Lands project, including Block 8 which commenced construction in 2020. 


  

	 	•	 	 An additional increase of $1.3 million in income from The Selby. The Selby generated positive net operating
income (“NOI”) in 2020 following its substantial stabilization, compared to a loss during the lease-up period in 2019. Tricon’s share of NOI was $0.9 million, reflecting occupancy of 87.0% and average monthly rent of $2,663 (in
Canadian dollars) for the year (see Section 4.2.2). 


 Income (loss) from investments in for-sale housing 

The following table presents the income (loss) from investments in for-sale housing for the three and twelve months ended December 31, 2020. 

 

																									
	 For the periods ended December 31

(in thousands of U.S. dollars)
	  	Three months	 	  	Twelve months	 
	  	2020	 	  	2019	 	  	Variance	 	  	2020	 	 	2019	 	  	Variance	 
	 Income (loss) from investments in for-sale housing
	  	$	10,191	 	  	$	2,964	 	  	$	7,227	 	  	$	(61,776	) 	 	$	9,646	 	  	$	(71,422	) 

 Income from investments in for-sale housing for the three months ended December 31, 2020 was $10.2 million, an increase
of $7.2 million from the same period in the prior year. This increase was driven largely by higher valuations at certain projects which are experiencing improved performance, reflecting stronger housing demand buoyed by historically low mortgage
rates, de-urbanization trends and extended work-from-home mandates. 
 Loss from investments in for-sale housing for the twelve months ended
December 31, 2020 was $61.8 million, a decrease of $71.4 million compared to income of $9.6 million for 2019. The variance was driven by a fair value loss of $79.6 million recorded in the first quarter of 2020, which was partially recovered in
the latter part of the year through improvements in project performance as discussed above. While the for-sale housing market outlook for 2021 appears favourable, management is also mindful of rising labour and material costs which could partially
offset rising home prices and high absorption rates. 

  
 24 2020 ANNUAL REPORT
TRICON RESIDENTIAL 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 
  

 Property management overhead 

Property management overhead costs are corporate-level costs (including salaries of employees engaged in leasing, acquisition, disposition and other direct
property management-related activities) and are not direct property-level costs included in NOI. 
 The following table provides further details regarding
property management overhead for the three and twelve months ended December 31, 2020. 
  

																									
	 For the periods ended December 31

(in thousands of U.S. dollars)
	  	Three months	 	 	Twelve months	 
	  	2020	 	  	2019	 	  	Variance	 	 	2020	 	  	2019	 	  	Variance	 
	 Property management salaries and benefits
	  	$	3,384	 	  	$	3,432	 	  	$	48	 	 	$	12,903	 	  	$	15,873	 	  	$	2,970	 
	 Other property management
overhead(1)
	  	 	2,488	 	  	 	2,243	 	  	 	(245	) 	 	 	9,751	 	  	 	10,002	 	  	 	251	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Property management overhead
	  	$	5,872	 	  	$	5,675	 	  	$	(197	) 	 	$	22,654	 	  	$	25,875	 	  	$	3,221	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	  	  
	  
	 	  	  
	  
	 

  

	(1)	 Includes general and administration expenses, marketing and other expenses attributable to the property
management platform. 


 Property management overhead for the three months ended December 31, 2020 was $5.9 million, an increase of
$0.2 million compared to the same period in the prior year. The increase was primarily attributable to incremental IT subscription costs in scaling the operating platform and online marketing initiatives to drive virtual leasing activities. 

Property management overhead for the twelve months ended December 31, 2020 was $22.7 million, a decrease of $3.2 million compared to the prior year. The
favourable variance is primarily driven by increased allocation of property management salaries to direct operating costs, as the rental portfolio under management continued to expand. The amount of property management overhead allocated to direct
operating costs correlates with the amount of revenue earned from rental properties during the period. In addition, lower travel costs and contained overhead expenses due to constrained property management activities during the COVID-19 pandemic
drove savings in overhead expenses. 
 Compensation expense 

The following table provides further details regarding compensation expense, excluding the compensation expense for direct property management employees noted
above, for the three and twelve months ended December 31, 2020. 
  

																													
	 For the periods ended December 31

(in thousands of U.S. dollars)
	  	 	 	  	Three months	 	 	Twelve months	 
	  	 	 	  	2020	 	  	2019	 	  	Variance	 	 	2020	 	 	2019	 	  	Variance	 
	 Salaries and benefits
	  	 	



	 	  	$	6,319	 	  	$	5,139	 	  	$	(1,180	) 	 	$	21,451	 	 	$	19,198	 	  	$	(2,253	) 
	 Cash-settled(1)
	  				  	 	6,370	 	  	 	2,584	 	  	 	(3,786	) 	 	 	15,721	 	 	 	11,661	 	  	 	(4,060	) 
	 Equity-settled(2)
	  				  	 	198	 	  	 	290	 	  	 	92	 	 	 	2,066	 	 	 	2,194	 	  	 	128	 
		  				  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	  	  
	  
	 
	 Annual incentive plan (“AIP”)
	  	 	



	 	  	 	6,568	 	  	 	2,874	 	  	 	(3,694	) 	 	 	17,787	 	 	 	13,855	 	  	 	(3,932	) 
	 Cash-settled(1)
	  				  	 	1,549	 	  	 	1,317	 	  	 	(232	) 	 	 	(2,051	) 	 	 	2,843	 	  	 	4,894	 
	 Equity-settled(2)
	  				  	 	504	 	  	 	414	 	  	 	(90	) 	 	 	2,913	 	 	 	1,785	 	  	 	(1,128	) 
		  				  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	  	  
	  
	 
	 Long-term incentive plan (“LTIP”)
	  	 	



	 	  	 	2,053	 	  	 	1,731	 	  	 	(322	) 	 	 	862	 	 	 	4,628	 	  	 	3,766	 
		  				  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	  	  
	  
	 
	 Total compensation expense
	  	 	



 + 



 + 



	 	  	$	14,940	 	  	$	9,744	 	  	$	(5,196	) 	 	$	40,100	 	 	$	37,681	 	  	$	(2,419	) 
		  				  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	  	  
	  
	 

  

	(1)	 Includes cash component and performance share units. 



	(2)	 Includes deferred share units, stock options and restricted shares. 



  
 TRICON RESIDENTIAL
2020 ANNUAL REPORT 25 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 
  

 Compensation expense for the three months ended December 31, 2020 was $14.9 million, an increase of $5.2
million compared to the same period in the prior year. The variance is attributable to: 
  

	 	•	 	 An increase of $3.7 million in AIP expense, which represents: (i) an expanded base salary pool on which the
AIP is measured; (ii) an increase to previously accrued expenses throughout the year, as the year-end AIP payable was finalized based on actual performance; and (iii) an increase in cash-settled PSUs, which incorporates existing and new
entitlements as well as an increase from revaluation owing to the Company’s share price increase. As at December 31, 2020, the Company’s share price was $8.98 (C$11.43), a 26% increase compared to $7.10 (C$9.69) as at the end of 2018,
the year in which the PSU plan was first implemented. 


  

	 	•	 	 An increase of $1.2 million in payroll costs related to additional staffing to support Tricon’s continued
growth as well as normal course salary adjustments. 


 Compensation expense for the twelve months ended December 31, 2020 was $40.1
million, an increase of $2.4 million compared to the prior year. The variance is driven by: 
  

	 	•	 	 An increase of $3.9 million and $2.3 million in AIP expense and salaries and benefits, respectively, for the
reasons discussed above. 


  

	 	•	 	 A partially offsetting decrease of $3.8 million in LTIP expense, which corresponds to the significant write-down
of Tricon’s investments in for-sale housing, resulting in lower estimated future performance fees to be paid to management under the LTIP. 



General and administration expense 
 The following table
presents general and administration expense for the three and twelve months ended December 31, 2020. 
  

																									
	 For the periods ended December 31

(in thousands of U.S. dollars)
	  	Three months	 	  	Twelve months	 
	  	2020	 	  	2019	 	  	Variance	 	  	2020	 	  	2019	 	  	Variance	 
	 General and administration expense
	  	$	5,748	 	  	$	5,925	 	  	$	177	 	  	$	23,569	 	  	$	20,846	 	  	$	(2,723	) 

 General and administration expense for the three months ended December 31, 2020 was $5.7 million, a decrease of $0.2
million compared to the same period in the prior year. This favourable variance is driven by lower professional fees incurred in the fourth quarter of 2020 compared to the comparative period, which included additional expenses related to the
implementation of the Company’s ESG roadmap, among other items. 
 General and administration expense for the twelve months ended December 31,
2020 increased by $2.7 million compared to the prior year, driven by higher consulting costs for various improvement initiatives and increased franchise tax in certain states, both of which corresponded with the Company’s growing business
activities. Notably, the comparative period includes only seven months of additional overhead costs from Tricon’s expansion into the U.S. multi-family rental business in June 2019, compared to a full year of cost inclusion in 2020. 

Interest expense 
 The following table provides details
regarding interest expense for the three and twelve months ended December 31, 2020 by borrowing type. 
  

																									
	 For the periods ended December 31

(in thousands of U.S. dollars)
	  	Three months	 	 	Twelve months	 
	  	2020	 	  	2019	 	  	Variance	 	 	2020	 	 	2019	 	 	Variance	 
	 Corporate borrowings
	  	$	1,018	 	  	$	5,297	 	  	$	4,279	 	 	$	13,032	 	 	$	18,173	 	 	$	5,141	 
	 Property-level borrowings
	  	 	34,209	 	  	 	34,677	 	  	 	468	 	 	 	135,562	 	 	 	119,661	 	 	 	(15,901	) 
	 Convertible debentures
	  	 	3,687	 	  	 	3,595	 	  	 	(92	) 	 	 	14,572	 	 	 	14,201	 	 	 	(371	) 
	 Due to Affiliate
	  	 	5,429	 	  	 	—  	 	  	 	(5,429	) 	 	 	7,116	 	 	 	—  	 	 	 	(7,116	) 
	 Lease obligations
	  	 	78	 	  	 	82	 	  	 	4	 	 	 	328	 	 	 	274	 	 	 	(54	) 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Total interest expense
	  	$	44,421	 	  	$	43,651	 	  	$	(770	) 	 	$	170,610	 	 	$	152,309	 	 	$	(18,301	) 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Weighted average interest rate
	  				  				  				 	 	3.12	% 	 	 	3.95	% 	 	 	0.83	% 


  
 26 2020 ANNUAL REPORT
TRICON RESIDENTIAL 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 
  

 The following table provides further details regarding interest expense by its nature (cash interest and
non-cash interest expense, such as amortization). 
  

																									
	 For the periods ended December 31

(in thousands of U.S. dollars)
	  	Three months	 	 	Twelve months	 
	  	2020	 	  	2019	 	  	Variance	 	 	2020	 	  	2019	 	  	Variance	 
	 Corporate and property-level borrowings
	  	$	33,873	 	  	$	39,104	 	  	$	5,231	 	 	$	144,107	 	  	$	135,326	 	  	$	(8,781	) 
	 Convertible debentures
	  	 	2,506	 	  	 	2,492	 	  	 	(14	) 	 	 	9,927	 	  	 	9,902	 	  	 	(25	) 
	 Due to Affiliate
	  	 	4,312	 	  	 	—  	 	  	 	(4,312	) 	 	 	5,654	 	  	 	—  	 	  	 	(5,654	) 
	 Amortization of deferred financing costs, discounts and lease obligations
	  	 	3,730	 	  	 	2,055	 	  	 	(1,675	) 	 	 	10,922	 	  	 	7,081	 	  	 	(3,841	) 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Total interest expense
	  	$	44,421	 	  	$	43,651	 	  	$	(770	) 	 	$	170,610	 	  	$	152,309	 	  	$	(18,301	) 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	  	  
	  
	 	  	  
	  
	 

 Interest expense was $44.4 million for the three months ended December 31, 2020, an increase of $0.8 million compared to
$43.7 million for the same period last year. The variance is primarily attributable to: 
  

	 	•	 	 A $5.2 million decrease in interest expense on corporate and property-level borrowings, despite higher borrowings
compared to the same period in the prior year. The $5.2 million decrease is mainly driven by the following: 


  

	 	(i)	 Corporate credit facility interest expense decreased by $4.3 million as a result of a $271.0 million reduction
in the carrying balance of this facility in the past year, from $297.0 million to $26.0 million as at December 31, 2020. In addition, the average effective interest rate on this facility decreased by 0.8% (from 3.82% in Q4 2019 to 3.06% in Q4
2020). 


  

	 	(ii)	 Interest expense on property-level debt decreased by $0.5 million as a result of a 1.0% decrease in the average
effective interest rates, which outweighed a $0.2 billion increase in the average debt balance. The reduction in the effective interest rate was driven by advantageous refinancing of properties at lower fixed-rate terms (see Section 3.2)
along with a 1.6% decrease in LIBOR (from 1.79% in Q4 2019 to 0.15% in Q4 2020). These savings underscore management’s efforts to refinance existing debt at lower prevailing interest rates as well to stagger Tricon’s debt maturities.



  

	•	 	 An offsetting $4.3 million increase in interest expense on the balance Due to Affiliate in connection with the
preferred share issuance in September 2020 (see Section 3.2). These interest payments are to fund dividend payments by PIPE LLC. 



Interest expense was $170.6 million for the twelve months ended December 31, 2020, an increase of $18.3 million compared to $152.3 million for the prior
year. The variance is attributable to: 
  

	 	•	 	 An $8.8 million increase in interest expense on corporate and property-level borrowings, driven primarily by
(i) additional debt assumed in relation to the Company’s acquisition of the U.S multi-family rental portfolio in the second quarter of 2019, and (ii) additional debt incurred to finance the Company’s growing portfolio of
single-family rental homes. 


  

	 	•	 	 A $5.6 million increase in interest expense on the balance Due to Affiliate as discussed above.



  

	 	•	 	 A $3.8 million increase in the amortization of deferred financing costs and discounts, attributable to costs
incurred for the aforementioned Due to Affiliate and incremental debt for the acquisition of single-family rental homes. 


 Fair value
gain on rental properties 
 The following table presents the fair value gain on rental properties held by the Company for the three and twelve months
ended December 31, 2020. 
  

																									
	 For the periods ended December 31

(in thousands of U.S. dollars)
	  	Three months	 	  	Twelve months	 
	  	2020	 	  	2019	 	  	Variance	 	  	2020	 	  	2019	 	  	Variance	 
	 Fair value gain on rental properties
	  	$	106,995	 	  	$	32,025	 	  	$	74,970	 	  	$	198,314	 	  	$	116,548	 	  	$	81,766	 

 Fair value gain on rental properties was $107.0 million for the three months ended December 31, 2020, an increase of
$75.0 million compared to $32.0 million for the same period last year, which is attributable to the single-family rental portfolio. The fair value of single-family rental homes is typically determined by using a combination of Broker Price Opinion
(“BPO”) and the Home Price Index (“HPI”) methodologies. 
 Higher home pricing is attributable to population growth in Sun Belt markets
owing to in-migration, de-densification and de-urbanization trends, all of which have strengthened demand for suburban homes. This increased demand coupled with limited supply drove HPI growth during the three months ended December 31, 2020,
which was 1.5% (6.0% annualized), net of capital expenditures, compared to 0.7% (2.8% annualized) in the same period in the prior year. The HPI and BPO methodologies were also applied to a larger portfolio of homes in the three months ended
December 31, 2020 than in the comparative period, driving even higher fair value gains. 

  
 TRICON RESIDENTIAL
2020 ANNUAL REPORT 27 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 
  

 Fair value gain on rental properties for the twelve months ended December 31, 2020 totalled $198.3
million, an increase of $81.8 million from the prior year. The increase was primarily attributable to a $220.8 million fair value gain on the single-family rental portfolio driven by home price appreciation influenced by the factors discussed above.
The variance was partially offset by a fair value loss of $22.5 million on the U.S. multi-family rental portfolio as reduced demand for multi-family living contributed to a downward adjustment in stabilized NOI assumptions in the second quarter of
2020. 
 Fair value (loss) gain on derivative financial instruments and other liabilities 

The following table presents the fair value (loss) gain on derivative financial instruments and other liabilities for the three and twelve months ended
December 31, 2020. 
  

																									
	 For the periods ended December 31

(in thousands of U.S. dollars)
	  	Three months	 	 	Twelve months	 
	  	2020	 	 	2019	 	 	Variance	 	 	2020	 	 	2019	 	  	Variance	 
	 Fair value (loss) gain on derivative financial instruments and other liabilities
	  	$	(16,418	) 	 	$	(1,462	) 	 	$	(14,956	) 	 	$	(7,461	) 	 	$	2,357	 	  	$	(9,818	) 

 For the three months ended December 31, 2020, the fair value loss on derivative financial instruments and other
liabilities increased by $15.0 million to $16.4 million compared to $1.5 million in the same period in the prior year. This unfavourable variance is attributable to a new derivative liability added in the third quarter in connection with the
exchangeable preferred units issued by Tricon PIPE LLC (see Section 3.2). 
 The fair value loss on the derivative financial instruments was
driven by an increase in Tricon’s share price, on a USD converted basis, which served to increase the probability of exchange of the exchangeable preferred units into Tricon’s common shares. This increased conversion probability drove the
increase in the derivative liability of the Company. 
 For the twelve months ended December 31, 2020, the fair value loss on derivative financial
instruments and other liabilities increased by $9.8 million to $7.5 million compared to a $2.4 million gain in the prior year. The variance is primarily driven by: 
  

	 	•	 	 A $7.9 million increase in the derivative liability in connection with the aforementioned exchangeable preferred
units issued by Tricon PIPE LLC in the third quarter of 2020. 


  

	 	•	 	 A $1.0 million loss on a previously-outstanding put liability, compared to a $0.3 million loss in 2019, which was
redeemed on March 4, 2020 in connection with the Company’s acquisition and cancellation of 1,867,675 outstanding common shares (see Section 3.2). 



 

	 	•	 	 A partially offsetting $1.5 million gain on the embedded derivative on the 2022 convertible debentures,
reflecting an increase in the value of Tricon’s redemption option relative to the holders’ conversion option. In the comparative period, the fair value gain of $3.3 million related primarily to the conversion option, driven by a reduction
in the time remaining until option expiration, among other factors. 


 Transaction costs 

The following table presents the transaction costs for the three and twelve months ended December 31, 2020. 

 

																									
	 For the periods ended December 31

(in thousands of U.S. dollars)
	  	Three months	 	  	Twelve months	 
	  	2020	 	  	2019	 	  	Variance	 	  	2020	 	  	2019	 	  	Variance	 
	 Transaction costs
	  	$	2,491	 	  	$	6,532	 	  	$	4,041	 	  	$	14,016	 	  	$	36,415	 	  	$	22,399	 

 For the three months ended December 31, 2020, transaction costs were $2.5 million, a decrease of $4.0 million compared to
the same period in the prior year. The decrease was primarily driven by costs incurred for the acquisition of the U.S. multi-family rental portfolio in the comparative period. 

For the twelve months ended December 31, 2020, transaction costs were $14.0 million, a decrease of $22.4 million compared to the prior year, driven
primarily by $28.0 million of transaction costs incurred for the acquisition of the U.S. multi-family rental portfolio in 2019. This decrease was partially offset by transaction costs incurred in connection with the issuance of the exchangeable
preferred units by Tricon PIPE LLC. The Company incurred $15.2 million of transaction costs in connection with the Transaction, of which $12.2 million was capitalized and $3.0 million was expensed as transaction costs (see Section 3.2).


  
 28 2020 ANNUAL REPORT
TRICON RESIDENTIAL 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 
  

 Net change in fair value of limited partners’ interests in rental business 

Ownership interests in the single-family rental joint venture (“SFR JV-1”) are in the form of non-controlling limited partnership interests which are
classified as liabilities under the provisions of IFRS. The following table presents the net change in fair value of limited partners’ interests in rental business for the three and twelve months ended December 31, 2020. 

 

																									
	 For the periods ended December 31

(in thousands of U.S. dollars)
	  	Three months	 	 	Twelve months	 
	  	2020	 	 	2019	 	 	Variance	 	 	2020	 	 	2019	 	 	Variance	 
	 Net change in fair value of limited partners’’ interests in rental business
	  	$	(17,780	) 	 	$	(4,210	) 	 	$	(13,570	) 	 	$	(50,581	) 	 	$	(3,784	) 	 	$	(46,797	) 

 For the three months ended December 31, 2020, the change in fair value of limited partners’ interests in rental
business was $17.8 million compared to $4.2 million for the same period in the prior year, representing an increase in non-controlling limited partners interests of $13.6 million. This increase in non-controlling limited partners’ interests
mainly reflects additional income earned from SFR JV-1 during the year that is attributable to the Company’s joint venture partners. The increase in income was driven largely by NOI growth associated with a larger portfolio and a higher fair
value gain on rental properties in which SFR JV-1 invests. 
 For the twelve months ended December 31, 2020, the fair value of limited partners’
interests in rental business increased by $50.6 million compared to an increase of $3.8 million for the prior year, for the same reasons noted above. 

Income tax expense 
  

																									
	 For the periods ended December 31

(in thousands of U.S. dollars)
	  	Three months	 	 	Twelve months	 
	  	2020	 	 	2019	 	 	Variance	 	 	2020	 	 	2019	 	  	Variance	 
	 Income tax (recovery) expense – current
	  	$	(7,087	) 	 	$	(1,974	) 	 	$	5,113	 	 	$	(4,050	) 	 	$	5,395	 	  	$	9,445	 
	 Income tax expense – deferred
	  	 	33,133	 	 	 	3,228	 	 	 	(29,905	) 	 	 	40,425	 	 	 	11,934	 	  	 	(28,491	) 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	  	  
	  
	 
	 Income tax expense – total
	  	$	26,046	 	 	$	1,254	 	 	$	(24,792	) 	 	$	36,375	 	 	$	17,329	 	  	$	(19,046	) 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	  	  
	  
	 

 For the three months ended December 31, 2020, income tax expense was $26.0 million, an increase of $24.8 million compared
to the same period in the prior year driven primarily by a higher deferred tax expense of $29.9 million related to the fair value gain on rental properties. This variance was partially offset by an increase in the current tax recovery of $5.1
million that arose from the utilization of a loss carryback provision which enabled the Company to apply current year tax losses from certain corporate entities against taxes paid in previous periods. 

For the twelve months ended December 31, 2020, income tax expense was $36.4 million, an increase of $19.0 million compared to the prior year for the
reasons discussed above. In addition, the comparative period included the current tax impact of the gain on the sale of U.S. multi-family developments. 

  
 TRICON RESIDENTIAL
2020 ANNUAL REPORT 29 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 
  

 3.2 Review of selected balance sheet items 

The comparative figures in the Company’s consolidated balance sheets in the table below have been recast as if the current reporting framework under IFRS
10, which was first applied by the Company effective January 1, 2020 on a prospective basis, had been in effect as at December 31, 2019. 
  

									
	 As at

(in thousands of U.S. dollars)
	  	December 31,
2020	 	  	December 31,
2019	 
	 	  	 	 	  	Recast	 
	 	  	 	 	  	(Schedule B)	 
	 ASSETS
	  				  			
	 Non-current assets
	  				  			
	 Rental properties
	  	$	6,321,918	 	  	$	5,682,525	 
	 Investments in Canadian multi-family developments
	  	 	94,868	 	  	 	75,141	 
	 Canadian development properties
	  	 	110,018	 	  	 	35,625	 
	 Investments in for-sale housing
	  	 	164,842	 	  	 	300,653	 
	 Restricted cash
	  	 	116,302	 	  	 	84,082	 
	 Goodwill
	  	 	108,838	 	  	 	108,838	 
	 Intangible assets
	  	 	12,363	 	  	 	16,396	 
	 Other assets
	  	 	47,990	 	  	 	42,071	 
	 Deferred income tax assets
	  	 	102,444	 	  	 	84,749	 
	 Derivative financial instruments
	  	 	841	 	  	 	—  	 
		  	  
	  
	 	  	  
	  
	 
	 Total non-current assets
	  	 	7,080,424	 	  	 	6,430,080	 
		  	  
	  
	 	  	  
	  
	 
	 Current assets
	  				  			
	 Cash
	  	 	55,158	 	  	 	31,107	 
	 Amounts receivable
	  	 	25,593	 	  	 	13,851	 
	 Prepaid expenses and deposits
	  	 	13,659	 	  	 	11,358	 
		  	  
	  
	 	  	  
	  
	 
	 Total current assets
	  	 	94,410	 	  	 	56,316	 
		  	  
	  
	 	  	  
	  
	 
	 Total assets
	  	$	7,174,834	 	  	$	6,486,396	 
		  	  
	  
	 	  	  
	  
	 
	 LIABILITIES
	  				  			
	 Non-current liabilities
	  				  			
	 Long-term debt
	  	$	3,863,316	 	  	$	3,954,977	 
	 Convertible debentures
	  	 	165,956	 	  	 	161,311	 
	 Due to Affiliate
	  	 	251,647	 	  	 	—  	 
	 Derivative financial instruments
	  	 	45,494	 	  	 	629	 
	 Limited partners’ interests in rental business
	  	 	356,305	 	  	 	285,774	 
	 Long-term incentive plan
	  	 	17,930	 	  	 	21,409	 
	 Other liabilities
	  	 	4,599	 	  	 	19,764	 
	 Deferred income tax liabilities
	  	 	298,071	 	  	 	240,723	 
		  	  
	  
	 	  	  
	  
	 
	 Total non-current liabilities
	  	 	5,003,318	 	  	 	4,684,587	 
		  	  
	  
	 	  	  
	  
	 
	 Current liabilities
	  				  			
	 Amounts payable and accrued liabilities
	  	 	98,290	 	  	 	97,744	 
	 Resident security deposits
	  	 	45,157	 	  	 	32,125	 
	 Dividends payable
	  	 	10,641	 	  	 	10,474	 
	 Current portion of long-term debt
	  	 	274,190	 	  	 	284	 
		  	  
	  
	 	  	  
	  
	 
	 Total current liabilities
	  	 	428,278	 	  	 	140,627	 
		  	  
	  
	 	  	  
	  
	 
	 Total liabilities
	  	 	5,431,596	 	  	 	4,825,214	 
		  	  
	  
	 	  	  
	  
	 
	 Equity
	  				  			
	 Share capital
	  	 	1,192,963	 	  	 	1,201,061	 
	 Share capital reserve
	  	 	—  	 	  	 	(13,057	) 
	 Contributed surplus
	  	 	19,738	 	  	 	20,223	 
	 Cumulative translation adjustment
	  	 	23,395	 	  	 	19,396	 
	 Retained earnings
	  	 	499,000	 	  	 	425,515	 
		  	  
	  
	 	  	  
	  
	 
	 Total shareholders’ equity
	  	 	1,735,096	 	  	 	1,653,138	 
	 Non-controlling interest
	  	 	8,142	 	  	 	8,044	 
		  	  
	  
	 	  	  
	  
	 
	 Total equity
	  	 	1,743,238	 	  	 	1,661,182	 
		  	  
	  
	 	  	  
	  
	 
	 Total liabilities and equity
	  	$	7,174,834	 	  	$	6,486,396	 
		  	  
	  
	 	  	  
	  
	 


  
 30 2020 ANNUAL REPORT
TRICON RESIDENTIAL 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 
  

 Schedule B 

The table below provides a reconciliation of balance sheet results as at December 31, 2019 from figures previously disclosed under investment entity
accounting in accordance with IFRS 10 to the recast figures shown above. 
  

													
	 (in thousands of U.S. dollars)
	  	Previously
reported	 	 	Adjustments	 	 	Recast	 
	 ASSETS
	  				 				 			
	 Non-current assets
	  				 				 			
	 Rental properties
	  	$	—  	 	 	$	5,682,525	 	 	$	5,682,525	 
	 Investments – Tricon American Homes
	  	 	1,365,007	 	 	 	(1,365,007	) 	 	 	—  	 
	 Investments – Tricon Lifestyle Rentals
	  	 	525,932	 	 	 	(525,932	) 	 	 	—  	 
	 Investments in Canadian multi-family developments
	  	 	—  	 	 	 	75,141	 	 	 	75,141	 
	 Investments in for-sale housing
	  	 	300,653	 	 	 	—  	 	 	 	300,653	 
	 Canadian development properties
	  	 	—  	 	 	 	35,625	 	 	 	35,625	 
	 Restricted cash
	  	 	—  	 	 	 	84,082	 	 	 	84,082	 
	 Goodwill
	  	 	219	 	 	 	108,619	 	 	 	108,838	 
	 Intangible assets
	  	 	16,396	 	 	 	—  	 	 	 	16,396	 
	 Other assets
	  	 	30,677	 	 	 	11,394	 	 	 	42,071	 
	 Deferred income tax assets
	  	 	44,749	 	 	 	40,000	 	 	 	84,749	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Total non-current assets
	  	 	2,283,633	 	 	 	4,146,447	 	 	 	6,430,080	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Current assets
	  				 				 			
	 Cash
	  	 	8,908	 	 	 	22,199	 	 	 	31,107	 
	 Amounts receivable
	  	 	8,952	 	 	 	4,899	 	 	 	13,851	 
	 Prepaid expenses and deposits
	  	 	796	 	 	 	10,562	 	 	 	11,358	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Total current assets
	  	 	18,656	 	 	 	37,660	 	 	 	56,316	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Total assets
	  	$	2,302,289	 	 	$	4,184,107	 	 	$	6,486,396	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 LIABILITIES
	  				 				 			
	 Non-current liabilities
	  				 				 			
	 Long-term debt
	  	$	307,869	 	 	$	3,647,108	 	 	$	3,954,977	 
	 Convertible debentures
	  	 	161,311	 	 	 	—  	 	 	 	161,311	 
	 Derivative financial instruments
	  	 	657	 	 	 	(28	) 	 	 	629	 
	 Limited partners’ interests in rental business
	  	 	—  	 	 	 	285,774	 	 	 	285,774	 
	 Long-term incentive plan
	  	 	21,409	 	 	 	—  	 	 	 	21,409	 
	 Other liabilities
	  	 	14,329	 	 	 	5,435	 	 	 	19,764	 
	 Deferred income tax liabilities
	  	 	98,584	 	 	 	142,139	 	 	 	240,723	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Total non-current liabilities
	  	 	604,159	 	 	 	4,080,428	 	 	 	4,684,587	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Current liabilities
	  				 				 			
	 Amounts payable and accrued liabilities
	  	 	26,190	 	 	 	71,554	 	 	 	97,744	 
	 Resident security deposits
	  	 	—  	 	 	 	32,125	 	 	 	32,125	 
	 Dividends payable
	  	 	10,474	 	 	 	—  	 	 	 	10,474	 
	 Current portion of long-term debt
	  	 	284	 	 	 	—  	 	 	 	284	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Total current liabilities
	  	 	36,948	 	 	 	103,679	 	 	 	140,627	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Total liabilities
	  	 	641,107	 	 	 	4,184,107	 	 	 	4,825,214	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Equity
	  				 				 			
	 Share capital
	  	 	1,201,061	 	 	 	—  	 	 	 	1,201,061	 
	 Share capital reserve
	  	 	(13,057	) 	 	 	—  	 	 	 	(13,057	) 
	 Contributed surplus
	  	 	20,223	 	 	 	—  	 	 	 	20,223	 
	 Cumulative translation adjustment
	  	 	19,396	 	 	 	—  	 	 	 	19,396	 
	 Retained earnings
	  	 	425,515	 	 	 	—  	 	 	 	425,515	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Total shareholders’ equity
	  	 	1,653,138	 	 	 	—  	 	 	 	1,653,138	 
	 Non-controlling interest
	  	 	8,044	 	 	 	—  	 	 	 	8,044	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Total equity
	  	 	1,661,182	 	 	 	—  	 	 	 	1,661,182	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Total liabilities and equity
	  	$	2,302,289	 	 	$	4,184,107	 	 	$	6,486,396	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 


  
 TRICON RESIDENTIAL
2020 ANNUAL REPORT 31 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 
  

 Rental properties 

The table below presents the changes in the fair value of rental properties by business segment for the years ended December 31, 2020 and
December 31, 2019. The comparative figures in the table below have been recast as if the current reporting framework under IFRS 10, which was first applied by the Company effective January 1, 2020 on a prospective basis, had been in effect
for the year ended December 31, 2019. 
  

																									
	 	  	December 31, 2020	 	 	December 31, 2019	 
	 (in thousands of U.S. dollars)
	  	Single-Family
Rental	 	 	Multi-Family
Rental	 	 	Total	 	 	Single-Family
Rental	 	 	Multi-Family
Rental	 	  	Total	 
	 Balance, beginning of year
	  	$	4,337,681	 	 	$	1,344,844	 	 	$	5,682,525	 	 	$	3,357,967	 	 	$	—  	 	  	$	3,357,967	 
	 Initial recognition for business combinations
	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	1,338,683	 	  	 	1,338,683	 
	 Acquisitions
	  	 	356,514	 	 	 	—  	 	 	 	356,514	 	 	 	733,370	 	 	 	—  	 	  	 	733,370	 
	 Capital expenditures
	  	 	93,568	 	 	 	9,067	 	 	 	102,635	 	 	 	115,238	 	 	 	6,161	 	  	 	121,399	 
	 Dispositions
	  	 	(18,070	) 	 	 	—  	 	 	 	(18,070	) 	 	 	(18,809	) 	 	 	—  	 	  	 	(18,809	) 
	 Fair value adjustments
	  	 	220,849	 	 	 	(22,535	) 	 	 	198,314	 	 	 	149,915	 	 	 	—  	 	  	 	149,915	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	  	  
	  
	 
	 Balance, end of year
	  	$	4,990,542	 	 	$	1,331,376	 	 	$	6,321,918	 	 	$	4,337,681	 	 	$	1,344,844	 	  	$	5,682,525	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	  	  
	  
	 

 Rental properties increased by $639.4 million to $6.3 billion as at December 31, 2020, from $5.7 billion as at
December 31, 2019. The increase was driven by: 
  

	 	•	 	 Acquisitions of 1,836 single-family rental homes for $356.5 million, partially offset by the disposition of 119
properties with an aggregate carrying value of $18.1 million. 


  

	 	•	 	 Capital expenditures of $102.6 million of which $93.6 million was attributable to the renovation of
newly-acquired single-family homes as well as the maintenance and improvement of homes across the single-family rental portfolio. In addition, $9.1 million was invested in U.S. multi-family properties to enhance common area amenities and restore
units. 


  

	 	•	 	 Fair value gain of $220.8 million on the single-family rental portfolio driven by higher demand for single-family
homes, as previously discussed, combined with relatively limited supply in the Company’s Sun Belt markets that contributed to significant home price appreciation. This significant fair value gain was partially offset by a $22.5 million fair
value loss on the multi-family portfolio recognized in the second quarter of 2020, reflecting the negative impact of COVID-19 on NOI assumptions. 



Investments in Canadian multi-family developments 
 The
table below presents the change in investments in Canadian multi-family developments for the twelve months ended December 31, 2020. 
  

																									
	 (in thousands of U.S. dollars)
	  	As at
December 31, 2019	 	  	Advances	 	  	Distributions	 	 	Income	 	  	Translation
adjustment	 	  	As at
December 31, 2020	 
	 Multi-family rental – Canada (The
Selby)(1)
	  	$	19,733	 	  	$	—  	 	  	$	(935	) 	 	$	746	 	  	$	369	 	  	$	19,913	 
	 Multi-family rental – Canada (under
development)(2)
	  	 	55,408	 	  	 	4,294	 	  	 	—  	 	 	 	13,378	 	  	 	1,875	 	  	 	74,955	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Investments in Canadianmulti-family developments
	  	$	75,141	 	  	$	4,294	 	  	$	(935	) 	 	$	14,124	 	  	$	2,244	 	  	$	94,868	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	  	  
	  
	 	  	  
	  
	 

  

	(1)	 See Section 4.2.2, “Canadian multi-family rental – The Selby”, for details of the
operational performance of The Selby. 



	(2)	 See Section 4.3.1, “Canadian Class A multi-family developments”, for details of
Canadian multi-family projects under development. 


 Investments in Canadian multi-family developments increased by $19.7 million to $94.9
million as at December 31, 2020 compared to $75.1 million as at December 31, 2019. The increase was primarily attributable to (i) income of $14.1 million, mainly related to fair value gains from the West Don Lands projects, which
achieved significant development and construction milestones during the year, (ii) advances to development projects of $4.3 million, and (iii) a favourable foreign exchange translation adjustment of $2.2 million driven by a stronger
Canadian dollar, partially offset by (iv) distributions of $0.9 million from The Selby. 

  
 32 2020 ANNUAL REPORT
TRICON RESIDENTIAL 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 
  

 Canadian development properties 

The table below presents the change in investments in Canadian development properties, which are comprised of The James (Scrivener Square) and The Shops of
Summerhill, for the twelve months ended December 31, 2020. 
  

																					
	 (in thousands of U.S. dollars)
	  	As at
December 31, 2019	 	  	Acquisitions	 	  	Development
expenditures	 	  	Translation
adjustment	 	  	As at
December 31, 2020	 
	 Canadian development properties
	  	$	35,625	 	  	$	65,861	 	  	$	2,998	 	  	$	5,534	 	  	$	110,018	 

 The Company’s Canadian development properties increased by $74.4 million to $110.0 million as at December 31, 2020
compared to $35.6 million as at December 31, 2019. The increase was attributable to (i) the acquisition of third-party ownership interests in The James and The Shops of Summerhill for $65.9 million during the second quarter of 2020,
(ii) a favourable foreign exchange translation adjustment of $5.5 million driven by a stronger Canadian dollar, and (iii) development expenditures of $3.0 million at The James. 

Investments in for-sale housing 
 The table below presents
the change in investments in for-sale housing for the twelve months ended December 31, 2020. 
  

																					
	 (in thousands of U.S. dollars)
	  	As at
December 31, 2019	 	  	Advances	 	  	Loss from
investments in
for-sale housing	 	 	Distributions	 	 	As at
December 31, 2020	 
	 Investments in for-sale housing
	  	$	300,653	 	  	$	3,408	 	  	$	(61,776	) 	 	$	(77,443	) 	 	$	164,842	 

 Investments in for-sale housing decreased by $135.8 million to $164.8 million as at December 31, 2020 compared to $300.7
million as at December 31, 2019. The decrease was attributable to (i) distributions of $77.4 million primarily from the syndication of a balance sheet investment in the first quarter, (ii) a cumulative fair value loss of $61.8 million
driven by the write-down recognized in the first quarter of 2020 as a result of negative revisions in expected project performance and uncertainty of cash flows caused by the onset of COVID-19, partially offset by (iii) advances to projects of
$3.4 million. 
 Debt 
 The following table
summarizes the consolidated net debt position of the Company. 
  

													
	 As at

(in thousands of U.S. dollars)
	  	December 31, 2020	 	 	December 31, 2019	 	 	Variance	 
	 Single-family rental properties borrowings
	  	$	3,156,601	 	 	$	2,728,717	 	 	$	(427,884	) 
	 Multi-family rental properties borrowings
	  	 	910,340	 	 	 	916,340	 	 	 	6,000	 
	 Canadian development properties borrowings
	  	 	60,037	 	 	 	13,935	 	 	 	(46,102	) 
	 Corporate borrowings
	  	 	37,089	 	 	 	308,153	 	 	 	271,064	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 
		  	 	4,164,067	 	 	 	3,967,145	 	 	 	(196,922	) 
	 Transaction costs (net of amortization)
	  	 	(25,019	) 	 	 	(9,896	) 	 	 	15,123	 
	 Debt discount (net of amortization)
	  	 	(1,542	) 	 	 	(1,988	) 	 	 	(446	) 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Total debt per balance
sheet(1)
	  	$	4,137,506	 	 	$	3,955,261	 	 	$	(182,245	) 
	 Cash and restricted cash
	  	 	(171,460	) 	 	 	(115,189	) 	 	 	56,271	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Net debt
	  	$	3,966,046	 	 	$	3,840,072	 	 	$	(125,974	) 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Total assets
	  	$	7,174,834	 	 	$	6,486,396	 	 	$	688,438	 
	 Net debt to assets(2)
	  	 	56.6	% 	 	 	60.3	% 	 			

  

	(1)	 Excludes the 2022 convertible debentures and Due to Affiliate. 



	(2)	 Calculated by dividing net debt by total assets (net of cash and restricted cash). 



Net debt increased by $126.0 million to $4.0 billion as at December 31, 2020, from $3.8 billion as at December 31, 2019. The variance was primarily
attributable to: 
  

	 	•	 	 An increase of $427.9 million in single-family rental properties borrowings driven by two new securitization
transactions completed during the year with a total face value of $993.9 million. Of the net proceeds, $352.5 million was used to pay down a higher-coupon securitization facility and a portion was used to reduce short-term debt.



  

	 	•	 	 An increase of $46.1 million in Canadian development properties borrowings, attributable to assumed debt and
vendor take-back loans as part of the Company’s purchase of its partners’ 50% and 75% respective interests in The James and The Shops of Summerhill during the second quarter of 2020 (see Section 4.3.1). 



  
 TRICON RESIDENTIAL
2020 ANNUAL REPORT 33 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 
  


	 	•	 	 A reduction in corporate borrowings of $271.1 million. The Company used the $287.8 million net proceeds of Tricon
PIPE LLC’s issuance of exchangeable preferred units to repay the majority of the balance outstanding on the Company’s revolving credit facility. 


  

	 	•	 	 An increase of $56.3 million in cash and restricted cash mainly attributable to cash reserved to pay for upcoming
property tax bills and capital renovation projects on a larger portfolio of single-family rental homes, as well as a higher cash balance at SFR JV-1 to finance the acquisition of single-family rental homes after year-end. 



The weighted average interest rate applicable to debt owed by the Company as at December 31, 2020 was 3.12%. The following table summarizes the debt
structure and leverage position as at December 31, 2020: 
  

																	
	 (in thousands of U.S. dollars) Debt structure
	  	Balance	 	  	% of total	 	 	Weighted average
interest rate	 	 	Weighted average
time to maturity
(years)	 
	 Fixed (including floating swapped to fixed)
	  	$	3,152,455	 	  	 	75.7	% 	 	 	3.24	% 	 	 	4.4	 
	 Floating
	  	 	1,011,612	 	  	 	24.3	% 	 	 	2.76	% 	 	 	1.5	 
		  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Total/Weighted average
	  	$	4,164,067	 	  	 	100.0	% 	 	 	3.12	% 	 	 	3.7	 
		  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 

 During the quarter, Tricon negotiated additional extension options of its two single-family warehouse credit facilities,
extending their maturities into the fourth quarter of 2022. As at December 31, 2020, Tricon’s near-term debt maturities include a land loan and a vendor take-back loan totalling $47.6 million in connection with Tricon’s Canadian
multi-family developments, the U.S. multi-family credit facility of $109.9 million and the SFR JV-1 subscription facility of $116.0 million. The SFR JV-1 subscription facility will be repaid jointly with the limited partners as per the joint venture
agreement and the U.S. multi-family credit facility will be repaid upon syndication of the Company’s interest in the portfolio (see Section 4.4). 

As a result of the transactions during the fourth quarter described above, Tricon extended the weighted average time to maturity of its debt to 3.7 years as
at December 31, 2020, representing an increase of 0.3 years from the previous quarter. In addition, Tricon reduced its weighted average interest rate by 0.25% to 3.12% compared to 3.37% in the previous quarter, due in large part to favourable
rate financing transactions entered into during the quarter, along with a decrease in LIBOR. 
 Tricon’s debt maturities as at December 31, 2020
are presented below, assuming the exercise of all extension options. 
 DEBT MATURITY ANALYSIS* 

(in millions of U.S. dollars) 
 



 
  

	*	 Assumes the exercise of all extension options. 



	**	 Single-family rental borrowings maturing in 2026 include securitized debt totalling $887 million.




  
 34 2020 ANNUAL REPORT
TRICON RESIDENTIAL 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 
  

 Goodwill 

Goodwill was $108.8 million as at December 31, 2020, comprised primarily of the goodwill recognized upon the deemed acquisitions of the single-family
rental and multi-family rental businesses on January 1, 2020 as a result of converting to consolidated accounting. The Company tested its goodwill and concluded that there was no impairment of goodwill as at December 31, 2020. The goodwill
testing model is sensitive to underlying assumptions, such as changes in the discount rate and long-term growth rate. Refer to Note 12 to the consolidated financial statements. 

Other liabilities 
 Other liabilities decreased by $15.2
million to $4.6 million as at December 31, 2020, from $19.8 million as at December 31, 2019, primarily attributable to the settlement of the $13.4 million put liability in relation to common shares issued by Tricon in connection with its
acquisition of the Starlight U.S. Multi-Family (No. 5) Core Fund on June 11, 2019. These put rights were exercised by their holders during the first quarter of 2020 (see Section 6.3). 

Limited partners’ interests in rental business 
 The
following table provides details regarding the change in limited partners’ interests in rental business for the twelve months ended December 31, 2020. 
  

																					
	 (in thousands of U.S. dollars)
	  	As at
December 31, 2019	 	  	Contributions	 	  	Distributions	 	 	Net change
in fair value	 	  	As at
December 31, 2020	 
	 Limited partners’ interests in rental business
	  	$	285,774	 	  	$	66,112	 	  	$	(46,162	) 	 	$	50,581	 	  	$	356,305	 

 Limited partners’ interests in rental business were $356.3 million as at December 31, 2020, an increase of $70.5
million from December 31, 2019. Limited partners’ interests in the SFR JV-1 single-family rental joint venture are classified as liabilities under the provisions of IAS 32. 

Due to Affiliate 
 On August 26, 2020, Tricon and its
affiliate, Tricon PIPE LLC (the “Affiliate” or “LLC”) entered into subscription agreements with each investor in a syndicate of investors (the “Investors”), pursuant to which the Investors subscribed for exchangeable
preferred units of the Affiliate (the “Preferred Units”) for an aggregate subscription price of $300 million (the “Transaction”). The Transaction was completed on September 3, 2020, on which date the Company and the
Affiliate entered into various agreements with the Investors in connection with the Transaction (together with the subscription agreements, the “Transaction Documents”). The material terms of the Transaction Documents are summarized in the
Company’s material change report which, together with the material Transaction Documents, is available on SEDAR at www.sedar.com. 
 In connection with
the Transaction, the Company borrowed the subscription proceeds of $300 million from the Affiliate. This indebtedness, which is evidenced by a promissory note (the “Promissory Note” or “Due to Affiliate”), has a maturity of
September 3, 2032 (permitting prepayment at any time pursuant to its terms) and bears interest at a rate of 5.75% per annum, calculated and payable quarterly for the first seven years following Closing with increases thereafter matching
the applicable increases of the dividend rate applicable to the Preferred Units, described below. The Company incurred $15.2 million of transaction costs in connection with the Transaction, of which $12.2 million was capitalized, which reduced the
initial fair value of the Promissory Note, and the remaining portion was expensed as it was attributed to the derivative component of the Promissory Note. 

On September 3, 2020, the fair value of the Promissory Note was $262.4 million, and $37.6 million of the subscription price was allocated to the fair
value of the derivative (see Derivative financial instruments in connection with the Transaction). As at December 31, 2020, the carrying value of the Due to Affiliate was $251.6 million, net of unamortized discount and transaction costs.


  
 TRICON RESIDENTIAL
2020 ANNUAL REPORT 35 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 
  

 Derivative financial instruments in connection with the Transaction 

Pursuant to the Transaction Documents, the holders of the Preferred Units have the right to exchange the Preferred Units into common shares of the Company at
any time at the option of the holder (the “Exchange Right”) at an initial exchange price of $8.50 per common share, as may be adjusted from time to time in accordance with the terms of the Transaction Documents (the “Exchange
Price”), subject to shareholder approval, where applicable. Holders of Preferred Units are also entitled to receive a cash dividend equal to 5.75% of the Liquidation Preference of the Preferred Units (as defined in the Transaction Documents),
per annum, calculated and payable quarterly for the first seven years following closing of the Transaction (“Closing”), with a prescribed annual increase to the dividend rate of 1% per year thereafter, up to a maximum rate of
9.75% per year. 
 The Affiliate has the right to force the exchange (the “Forced Exchange Right”) of the outstanding Preferred Units
beginning after the fourth anniversary of Closing, provided the 20-day volume-weighted average price of Tricon’s shares exceeds 135% of the Exchange Price (reducing to 115% following the fifth anniversary of Closing). The Affiliate also has the
right to redeem the Preferred Units (“Redemption Right”) at any time following the fifth anniversary of Closing for cash equal to 105% of the Liquidation Preference of the Preferred Units (as defined in the Transaction Documents). 

The Promissory Note contains mandatory prepayment provisions (“Mandatory Prepayment”) applicable in connection with certain provisions of the
Transaction Documents requiring the redemption of all or a portion of the outstanding Preferred Units. This Mandatory Prepayment is a derivative, which incorporates assumptions in respect of the Exchange Right, Forced Exchange Right and Redemption
Right, and is measured separately from the Promissory Note, with a fair value at inception of $37.6 million. From September 3, 2020 to December 31, 2020, there was a fair value loss on the derivative on the Due to Affiliate of $7.9
million, increasing the balance to $45.5 million, primarily driven by an increase in Tricon’s common share price, on a USD converted basis, from September 3rd to December 31st, which served to increase the probability of exchange of
the preferred units into Tricon’s common shares (see Section 3.1). 
 3.3 Subsequent events 

COVID-19 related business update 
 In light of the ongoing
COVID-19 pandemic, the Company is providing a more current update on its rental operations. 
 Single-family rental 

In the single-family rental business, same home occupancy for January remained stable at 97.3%. As of February 28, 2021, the Company had collected 97% of
January rents and fewer than 1% of Tricon’s single-family rental residents had requested a rent deferral plan because of economic hardship in 2021. Average blended rent growth for the same home portfolio in January increased to 6.0%, driven by
10.6% growth on new move-ins and 4.0% growth on renewals. 
 U.S. multi-family rental 

In the U.S. multi-family rental business, same property occupancy for January improved to 94.6%. As of February 28, 2021, the Company had collected 96% of
January rents and none of Tricon’s multi-family rental residents had requested a rent deferral plan because of economic hardship in 2021. Average blended rent growth for the same property portfolio has also increased in January to 1.1%,
registering the first month of positive blended rent growth since February of 2020, driven by 2.8% growth on new move-ins and (0.4%) growth on renewals. 

Texas storm update 
 In February of 2021, a severe winter
storm hit Texas that devastated the state’s power grid and natural gas production, leaving thousands of people without power across the state and millions experiencing water disruptions. Based on assessments completed to date, approximately 570
of Tricon’s single-family rental homes and 200 multi-family units in Texas were affected. The Company is expecting no material financial impact as a result of this storm as Tricon’s rental properties are insured under property and casualty
insurance policies, subject to certain deductibles and limits. The Company is managing the restoration processes, while remaining focused on our employees’ and residents’ well-being. 

U.S. multi-family rental portfolio syndication 
 On
February 25, 2021, the Company announced that it had reached an agreement in principle to enter into a joint venture arrangement with two institutional investors. Under the joint venture, the investors will acquire a combined 80% ownership
interest in Tricon’s existing portfolio of 23 U.S. multi-family apartments and Tricon will retain a 20% ownership interest. The transaction reflects a total portfolio value of $1.331 billion including in-place debt, and is expected to generate
gross proceeds of approximately $425 million to Tricon, which will be used to repay outstanding debt and for general corporate purposes. The transaction is expected to close in March of 2021, subject to finalizing definitive documentation and
customary closing conditions including obtaining the necessary lender consents. 
 Quarterly dividend 

On March 2, 2021, the Board of Directors of the Company declared a dividend of seven cents per common share in Canadian dollars payable on or after
April 15, 2021 to shareholders of record on March 31, 2021. 

  
 36 2020 ANNUAL REPORT
TRICON RESIDENTIAL 













 



 
  

	4	 


 OPERATING RESULTS 
OF BUSINESSES 













 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 
  

 4. OPERATING RESULTS OF BUSINESSES 

Management believes that information concerning the underlying activities within each of the Company’s operating businesses is useful for investors in
understanding the Company’s overall performance, and this section presents key operating highlights for the quarter on a segment-by-segment basis. Although the Company’s performance is primarily measured by Core FFO per share, as set out
in Section 1.1, management also monitors the underlying activities within those businesses using KPIs to provide a better understanding of the performance of the Company. A list of these KPIs, 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 7.1. The supplemental
measures presented herein are not recognized under IFRS and should not be construed as alternatives to net income 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. 

The financial results and performance metrics in Section 4 and throughout this document reflect Tricon’s proportionate share of
results, unless otherwise stated. 

  
 38 2020 ANNUAL REPORT
TRICON RESIDENTIAL 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 
  

 Operational highlights by segment 

The following table summarizes Tricon’s proportionate share of operating results and key performance metrics for each business segment. In previous years,
operating highlights by segment were disclosed on a consolidated or portfolio-wide basis, and have been recast to conform with the current period presentation. Refer to Section 5 for a reconciliation of Tricon’s proportionate
financial results from each segment to consolidated figures under IFRS. 
  

																	
	For the periods ended December 31	  	Three months	 	 	Twelve months	 
	 (in thousands of U.S. dollars, except percentages and units)
	  	2020	 	 	2019	 	 	2020	 	 	2019	 
	 SINGLE-FAMILY RENTAL (Refer to Section 4.1)
	  				 				 				 			
					
	 Total rental homes managed
	  	 	22,766	 	 	 	21,014	 	 				 			
	 Net operating income (NOI)(1)
	  	$	50,476	 	 	$	45,493	 	 	$	197,528	 	 	$	173,865	 
	 Same home net operating income (NOI)
margin(1)
	  	 	66.8	% 	 	 	65.3	% 	 	 	66.3	% 	 	 	65.5	% 
	 Same home net operating income (NOI)
growth(1)
	  	 	5.1	% 	 	 	N/A	 	 	 	5.6	% 	 	 	N/A	 
	 Same home occupancy(1)
	  	 	97.3	% 	 	 	95.9	% 	 				 			
	 Same home annualized turnover(1)
	  	 	22.2	% 	 	 	25.7	% 	 				 			
	 Same home average quarterly rent growth – blended(1)
	  	 	5.6	% 	 	 	5.3	% 	 				 			
					
	 MULTI-FAMILY RENTAL (Refer to Section 4.2)
	  				 				 				 			
					
	 U.S. multi-family
rental(2),(3) – See Section 4.2.1
	  				 				 				 			
	 Total suites managed
	  	 	7,289	 	 	 	7,289	 	 				 			
	 Net operating income (NOI)
	  	$	15,604	 	 	$	16,964	 	 	$	62,909	 	 	$	67,170	 
	 Net operating income (NOI) margin
	  	 	56.6	% 	 	 	59.4	% 	 	 	56.6	% 	 	 	59.0	% 
	 Occupancy
	  	 	93.6	% 	 	 	94.9	% 	 				 			
	 Annualized turnover
	  	 	46.5	% 	 	 	51.3	% 	 				 			
	 Average quarterly rent growth – blended
	  	 	(1.8	%) 	 	 	1.1	% 	 				 			
					
	 Canadian multi-family
rental(4) – See Section 4.2.2
	  				 				 				 			
	 Total suites managed
	  	 	500	 	 	 	—  	 	 				 			
	 Net operating income (NOI)(5)
	  	$	220	 	 	$	—  	 	 	$	927	 	 	$	—  	 
	 Net operating income (NOI) margin(5)
	  	 	55.6	% 	 	 	—  	 	 	 	58.6	% 	 	 	—  	 
	 Occupancy(5)
	  	 	87.0	% 	 	 	—  	 	 				 			
	 Annualized turnover(5)
	  	 	41.6	% 	 	 	—  	 	 				 			
	 Average quarterly rent growth –
blended(5)
	  	 	(5.1	%) 	 	 	—  	 	 				 			
					
	 RESIDENTIAL DEVELOPMENT (Refer to Section 4.3)
	  				 				 				 			
					
	 Investments in residential
developments(6)
	  	$	292,958	 	 	$	397,815	 	 				 			
	 Core funds from operations (Core FFO)
	  	 	11,532	 	 	 	3,076	 	 	$	18,913	 	 	$	8,240	 
	 Cash distributions from investments to Tricon
	  	 	12,720	 	 	 	24,284	 	 	 	77,443	 	 	 	51,946	 
					
	 PRIVATE FUNDS AND ADVISORY (Refer to Section 4.4)
	  				 				 				 			
					
	 Revenue from private funds and advisory services
	  	$	10,339	 	 	$	12,138	 	 	$	34,090	 	 	$	41,060	 
	 Third-party AUM(7)
	  	 	2,553,358	 	 	 	2,434,610	 	 				 			

  

	(1)	 Operating metrics are stated at Tricon’s proportionate share of the managed portfolio and exclude
limited partners’ interests in the SFR JV-1 portfolio. 



	(2)	 The financial information presented in the table includes prior-year results for comparability although
Tricon’s U.S. multi-family rental portfolio was acquired on June 11, 2019. 



	(3)	 For the three and twelve months ended December 31, 2020, the total property results equate to same
property results for the U.S. multi-family rental portfolio. 



	(4)	 Presented within investments in Canadian multi-family developments and income from Canadian multi-family
developments, respectively, on the Company’s balance sheet and income statement. Tricon’s proportionate share of the operating results and key performance metrics is presented to provide more insight into underlying property operations.




	(5)	 Operating metrics are stated at Tricon’s proportionate share of the managed portfolio and exclude limited
partner’s interest in The Selby. 



	(6)	 Represents Tricon’s investments in Canadian multi-family developments, investments in Canadian development
properties (net of debt) and investments in for-sale housing. 



	(7)	 KPI measure; see Section 7.2. 



  
 TRICON RESIDENTIAL
2020 ANNUAL REPORT 39 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 

			
	4.1 Single-Family Rental	  	





  

 4.1 Single-Family Rental 

The discussion and presentation of the single-family rental operating metrics and results throughout this section reflect Tricon’s
proportionate share of the business, including its proportionate share of the Company’s single-family rental joint venture (“SFR JV-1”), unless otherwise stated. Prior period metrics have also been recast to reflect Tricon’s
proportionate share. 
 Operating results 

The Company’s single-family rental business continued to benefit from secular tailwinds which drove higher occupancy, rent growth and retention in the
quarter. De-urbanization, de-densification and work-from-home trends have accelerated over the course of the COVID-19 pandemic, making Tricon’s Sun Belt markets and suburban rental homes an increasingly attractive option for many families.
Tighter supply, stringent mortgage underwriting and affordability pressures in the for-sale market have also contributed to growing demand for rental housing. 

Above all, Tricon’s Sun Belt middle-market strategy has proven to be resilient throughout this economic down cycle. Tricon’s relatively low average
rent-to-income ratio of 23% and stable resident base with average household incomes of $85,000 (based on the prior six months of new move-ins) have allowed the single-family rental business to weather a large portion of the negative economic effects
caused by the COVID-19 pandemic thus far. 
 Tricon’s single-family rental business finished the year on a strong note, reporting a record-high NOI
margin of 67.1% in the fourth quarter. Both occupancy and blended rent growth remained healthy at 96.4% and 5.4%, respectively. Blended rent growth was comprised of 10.7% growth on new leases, attributable to strong demand and a scarcity of homes
available for rent, as well as 2.9% growth on renewals, reflecting the Company’s policy of moderating rent increases for current residents. Management expects that a favourable supply-demand imbalance coupled with inherent portfolio
loss-to-lease, estimated conservatively to be 7% to 9% of current rents, will continue to drive rent growth in 2021 and beyond (see “Non-IFRS measures and forward-looking statements” on page 1). 

The annualized turnover rate was 22.3% during the quarter, a 3.1% decrease from 25.4% recorded during the same period in 2019. On a full-year basis, resident
turnover was 23.4% compared to 26.9% in the prior year, reflecting Tricon’s focus on superior customer service and effective renewal management, as well as a strong occupancy bias throughout the pandemic, which has provided residents with
housing security during these challenging times. 
 The Company acquired 842 homes (at an average cost per home of $226,000 including upfront renovations)
during the fourth quarter as acquisition volumes returned to pre-COVID-19 levels. Management continues to see strong opportunities for home-buying and expects to acquire approximately 800 homes in the first quarter of 2021. 

The table below presents key operational metrics that drive revenue and NOI for the single-family rental segment (KPI measure; refer to
Section 7.1). The operating metrics below reflect Tricon’s proportionate share of the single-family rental portfolio, with the exception of the total number of rental homes comprising the portfolio. 

 

																																	
	 Proportionate operating metrics
	 	Q4 2020	 	 	Q3 2020	 	 	Q2 2020	 	 	Q1 2020	 	 	Q4 2019(1)	 	 	Q3 2019(1)	 	 	Q2 2019(1)	 	 	Q1 2019(1)	 
	 Rental homes
	 	 	22,766	 	 	 	21,948	 	 	 	21,582	 	 	 	21,535	 	 	 	21,014	 	 	 	19,886	 	 	 	19,016	 	 	 	18,094	 
	 Occupancy(2)
	 	 	96.4	% 	 	 	97.3	% 	 	 	97.1	% 	 	 	95.5	% 	 	 	94.5	% 	 	 	94.4	% 	 	 	95.1	% 	 	 	94.5	% 
	 Annualized turnover rate
	 	 	22.3	% 	 	 	26.3	% 	 	 	23.5	% 	 	 	21.4	% 	 	 	25.4	% 	 	 	30.0	% 	 	 	29.7	% 	 	 	22.3	% 
	 Average monthly rent(3)
	 	$	1,464	 	 	$	1,450	 	 	$	1,432	 	 	$	1,420	 	 	$	1,405	 	 	$	1,389	 	 	$	1,371	 	 	$	1,348	 
	 Average quarterly rent growth
–renewal(4)
	 	 	2.9	% 	 	 	2.4	% 	 	 	3.2	% 	 	 	5.3	% 	 	 	5.3	% 	 	 	5.1	% 	 	 	5.2	% 	 	 	5.3	% 
	 Average quarterly rent growth –new
move-in(4)
	 	 	10.7	% 	 	 	11.6	% 	 	 	7.5	% 	 	 	7.5	% 	 	 	5.5	% 	 	 	8.4	% 	 	 	9.1	% 	 	 	8.8	% 
	 Average quarterly rent growth
–blended(4)
	 	 	5.4	% 	 	 	5.1	% 	 	 	4.5	% 	 	 	5.9	% 	 	 	5.3	% 	 	 	6.1	% 	 	 	6.5	% 	 	 	6.3	% 

  

	(1)	 Prior period metrics have been recast to reflect Tricon’s proportionate share of the single-family rental
segment. 



	(2)	 The decrease in occupancy from Q3 2020 to Q4 2020 was primarily driven by the resumption of acquisition
activity to pre-COVID-19 levels. 



	(3)	 Average monthly rent represents average monthly rental income per unit for occupied units and reflects the
impact of rent concessions amortized over the life of the related leases. 



	(4)	 Average rent growth during the period represents the percentage difference between the monthly rent from an
expiring lease and the monthly rent from the next lease and reflects the impact of rent concessions amortized over the life of the related lease. 



  
 40 2020 ANNUAL REPORT
TRICON RESIDENTIAL 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 

			
	4.1 Single-Family Rental	  	





  

 The table below presents a breakdown of Tricon’s NOI (KPI measure; refer to Section 7.1) for
the single-family rental business. 
  

																																									
	 	 	Three months	 	 	Twelve months	 
	 For the periods ended December 31

(in thousands of U.S. dollars)
	 	2020	 	 	% of
revenue	 	 	2019(1)	 	 	% of
revenue	 	 	Variance	 	 	2020	 	 	% of
revenue	 	 	2019(1)	 	 	% of
revenue	 	 	Variance	 
	 Rental revenue
	 	$	74,906	 	 				 	$	67,982	 	 				 	$	6,924	 	 	$	292,112	 	 				 	$	260,719	 	 				 	$	31,393	 
	 Concessions and abatements
	 	 	(326	) 	 				 	 	(473	) 	 				 	 	147	 	 	 	(1,231	) 	 				 	 	(1,621	) 	 				 	 	390	 
	 Fees and other revenue
	 	 	2,754	 	 				 	 	2,907	 	 				 	 	(153	) 	 	 	10,804	 	 				 	 	10,028	 	 				 	 	776	 
	 Bad debt expense
	 	 	(2,080	) 	 				 	 	(560	) 	 				 	 	(1,520	) 	 	 	(4,745	) 	 				 	 	(2,145	) 	 				 	 	(2,600	) 
		 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Total revenue from rental properties
	 	 	75,254	 	 	 	100	% 	 	 	69,856	 	 	 	100	% 	 	 	5,398	 	 	 	296,940	 	 	 	100	% 	 	 	266,981	 	 	 	100	% 	 	 	29,959	 
	 Property taxes
	 	 	11,415	 	 	 	15	% 	 	 	10,873	 	 	 	16	% 	 	 	(542	) 	 	 	45,768	 	 	 	15	% 	 	 	42,307	 	 	 	16	% 	 	 	(3,461	) 
	 Repairs, maintenance and turnover
	 	 	5,044	 	 	 	7	% 	 	 	5,547	 	 	 	8	% 	 	 	503	 	 	 	20,555	 	 	 	7	% 	 	 	20,408	 	 	 	8	% 	 	 	(147	) 
	 Property management expenses
	 	 	5,249	 	 	 	7	% 	 	 	4,935	 	 	 	7	% 	 	 	(314	) 	 	 	20,646	 	 	 	7	% 	 	 	18,870	 	 	 	7	% 	 	 	(1,776	) 
	 Property insurance
	 	 	1,168	 	 	 	2	% 	 	 	1,095	 	 	 	2	% 	 	 	(73	) 	 	 	4,606	 	 	 	2	% 	 	 	4,230	 	 	 	2	% 	 	 	(376	) 
	 Homeowners’ association (HOA) costs
	 	 	976	 	 	 	1	% 	 	 	894	 	 	 	1	% 	 	 	(82	) 	 	 	3,858	 	 	 	1	% 	 	 	3,259	 	 	 	1	% 	 	 	(599	) 
	 Other direct expenses
	 	 	926	 	 	 	1	% 	 	 	1,019	 	 	 	1	% 	 	 	93	 	 	 	3,979	 	 	 	1	% 	 	 	4,042	 	 	 	2	% 	 	 	63	 
		 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Total direct operating expenses
	 	 	24,778	 	 				 	 	24,363	 	 				 	 	(415	) 	 	 	99,412	 	 				 	 	93,116	 	 				 	 	(6,296	) 
	 Net operating income (NOI)(2)
	 	$	50,476	 	 				 	$	45,493	 	 				 	$	4,983	 	 	$	197,528	 	 				 	$	173,865	 	 				 	$	23,663	 
	 Net operating income (NOI)
margin(2)
	 	 	67.1	% 	 				 	 	65.1	% 	 				 				 	 	66.5	% 	 				 	 	65.1	% 	 				 			

  

	(1)	 The comparative period has been reclassified to conform with the current period presentation.




	(2)	 KPI measures; see Section 7.1. 



NOI was $50.5 million for the three months ended December 31, 2020, an increase of $5.0 million or 11.0% compared to the same period in 2019. The
variance in NOI is attributable to an increase of $6.9 million or 10.2% in rental revenue, mainly explained by (i) a larger rental portfolio (Tricon’s proportionate share of rental homes was 17,698 in Q4 2020 compared to 17,054 in Q4
2019), (ii) higher average monthly rent ($1,464 in Q4 2020 compared to $1,405 in Q4 2019), and (iii) a 1.9% increase in occupancy. The higher rental revenue was partially offset by a $1.5 million increase in bad debt expense, as a result
of higher resident delinquency from ongoing unemployment related to COVID-19 and the wind-down of various government stimulus programs. The Company has taken a conservative approach and has reserved 100% of residents’ accounts receivable
balances aged more than 30 days. The bad debt expense in the fourth quarter represented 2.7% of revenue, compared to historical bad debt levels (pre-COVID-19) of approximately 0.8%. 

Direct operating expenses in the quarter increased by $0.4 million or 1.7% driven by higher costs incurred on a larger portfolio of homes, which were
partially offset by savings on repairs, maintenance and turnover as well as other direct expenses. The savings were attributable to a lower turnover rate as well as improved cost discipline and controlled scoping of maintenance work. 

Managed portfolio 
 The following tables provide a summary
of the single-family rental home portfolio, reflecting information for all homes managed by Tricon, including all homes owned by SFR JV-1 and homes wholly-owned by Tricon. 
  

																																	
	 	  	Q4 2020	 	 	Q3 2020	 	 	Q2 2020	 	 	Q1 2020	 	 	Q4 2019	 	 	Q3 2019	 	 	Q2 2019	 	 	Q1 2019	 
	 Tricon wholly-owned homes
	  	 	15,355	 	 	 	15,384	 	 	 	15,410	 	 	 	15,429	 	 	 	15,453	 	 	 	15,500	 	 	 	15,535	 	 	 	15,563	 
	 SFR JV-1 homes (34% TCN/66% JV Partners)
	  	 	7,439	 	 	 	6,597	 	 	 	6,212	 	 	 	6,154	 	 	 	5,624	 	 	 	4,462	 	 	 	3,545	 	 	 	2,568	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Total homes managed
	  	 	22,794	 	 	 	21,981	 	 	 	21,622	 	 	 	21,583	 	 	 	21,077	 	 	 	19,962	 	 	 	19,080	 	 	 	18,131	 
	 Less homes held for sale
	  	 	28	 	 	 	33	 	 	 	40	 	 	 	48	 	 	 	63	 	 	 	76	 	 	 	64	 	 	 	37	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Rental homes
	  	 	22,766	 	 	 	21,948	 	 	 	21,582	 	 	 	21,535	 	 	 	21,014	 	 	 	19,886	 	 	 	19,016	 	 	 	18,094	 
	 Homes acquired
	  	 	842	 	 	 	388	 	 	 	68	 	 	 	538	 	 	 	1,162	 	 	 	918	 	 	 	977	 	 	 	730	 
	 Less homes disposed
	  	 	(29	) 	 	 	(29	) 	 	 	(29	) 	 	 	(32	) 	 	 	(47	) 	 	 	(36	) 	 	 	(28	) 	 	 	(41	) 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Net homes acquired during the
quarter(1)
	  	 	813	 	 	 	359	 	 	 	39	 	 	 	506	 	 	 	1,115	 	 	 	882	 	 	 	949	 	 	 	689	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 

  

	(1)	 Of the net homes acquired during the quarter, 842 were acquired by SFR JV-1 and 29 wholly-owned homes were
disposed. 


 Tricon acquired 842 homes (or 813 net of dispositions) during the quarter. As of December 31, 2020, Tricon managed
22,794 homes (22,766 rental homes and 28 homes held for sale) of which 15,355 were wholly-owned by Tricon and 7,439 were owned by SFR JV-1, where Tricon has a one-third equity interest. 

  
 TRICON RESIDENTIAL
2020 ANNUAL REPORT 41 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 

			
	4.1 Single-Family Rental	  	





  

 As at December 31, 2020, Tricon’s single-family rental portfolio is diversified across 18 markets.
Market-level details for all homes managed by Tricon are presented below. 
  

																					
	 Geography
	  	Rental homes	 	  	Average vintage	 	  	Average total
cost per home
(in U.S. dollars)	 	  	Average size
(sq. feet)	 	  	Tricon %
ownership	 
	 Atlanta
	  	 	5,253	 	  	 	1997	 	  	$	158,000	 	  	 	1,762	 	  	 	79.3	% 
	 Charlotte
	  	 	2,630	 	  	 	1999	 	  	 	171,000	 	  	 	1,590	 	  	 	69.0	% 
	 Nashville
	  	 	1,031	 	  	 	2009	 	  	 	286,000	 	  	 	1,945	 	  	 	33.7	% 
	 Columbia
	  	 	922	 	  	 	1996	 	  	 	137,000	 	  	 	1,505	 	  	 	65.2	% 
	 Raleigh
	  	 	280	 	  	 	2006	 	  	 	212,000	 	  	 	1,507	 	  	 	33.7	% 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Southeast United States
	  	 	10,116	 	  	 	1999	 	  	$	174,000	 	  	 	1,705	 	  	 	69.4	% 
	 Phoenix
	  	 	2,040	 	  	 	1995	 	  	$	184,000	 	  	 	1,689	 	  	 	100.0	% 
	 Northern California
	  	 	999	 	  	 	1970	 	  	 	224,000	 	  	 	1,304	 	  	 	100.0	% 
	 Las Vegas
	  	 	601	 	  	 	1996	 	  	 	182,000	 	  	 	1,649	 	  	 	100.0	% 
	 Southern California
	  	 	269	 	  	 	1962	 	  	 	191,000	 	  	 	1,307	 	  	 	100.0	% 
	 Reno
	  	 	248	 	  	 	1981	 	  	 	181,000	 	  	 	1,549	 	  	 	100.0	% 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Western United States
	  	 	4,157	 	  	 	1986	 	  	$	194,000	 	  	 	1,557	 	  	 	100.0	% 
	 Dallas
	  	 	1,760	 	  	 	1991	 	  	$	169,000	 	  	 	1,580	 	  	 	76.7	% 
	 Houston
	  	 	1,510	 	  	 	1993	 	  	 	161,000	 	  	 	1,610	 	  	 	72.1	% 
	 San Antonio
	  	 	549	 	  	 	1998	 	  	 	165,000	 	  	 	1,616	 	  	 	64.1	% 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Texas
	  	 	3,819	 	  	 	1993	 	  	$	165,000	 	  	 	1,597	 	  	 	73.1	% 
	 Tampa
	  	 	1,797	 	  	 	1987	 	  	$	180,000	 	  	 	1,555	 	  	 	87.0	% 
	 Jacksonville
	  	 	731	 	  	 	1995	 	  	 	166,000	 	  	 	1,515	 	  	 	73.9	% 
	 Southeast Florida
	  	 	695	 	  	 	1969	 	  	 	173,000	 	  	 	1,417	 	  	 	100.0	% 
	 Orlando
	  	 	477	 	  	 	1988	 	  	 	185,000	 	  	 	1,484	 	  	 	93.0	% 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Florida
	  	 	3,700	 	  	 	1985	 	  	$	177,000	 	  	 	1,512	 	  	 	87.6	% 
	 Indianapolis
	  	 	974	 	  	 	2002	 	  	$	156,000	 	  	 	1,638	 	  	 	63.3	% 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Midwest United States
	  	 	974	 	  	 	2002	 	  	$	156,000	 	  	 	1,638	 	  	 	63.3	% 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Total/Weighted average
	  	 	22,766	 	  	 	1993	 	  	$	176,000	 	  	 	1,626	 	  	 	78.3	% 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 


  
 42 2020 ANNUAL REPORT
TRICON RESIDENTIAL 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 

			
	4.1 Single-Family Rental	  	





  

 Operating results – Same home portfolio 

“Same home” or “same home portfolio” includes homes that were stabilized 90 days prior to the first day of the prior-year comparative
period as per the guidelines of the National Rental Home Council. It excludes homes that have been sold and homes that have been designated for sale. This same home portfolio is defined on January 1 of each reporting year. Based on this
definition, any home included in the same home portfolio will have satisfied the conditions described above prior to September 30, 2018, and those homes are held in operations throughout the full periods presented in both 2019 and 2020. 

The operating metrics below reflect Tricon’s proportionate share of the same home portfolio, with the exception of the total number of homes
comprising the same home portfolio. 
  

																									
	For the periods ended December 31	  	Three months	 	 	Twelve months	 
	 (in U.S. dollars)
	  	2020	 	 	2019	 	 	Variance	 	 	2020	 	 	2019	 	 	Variance	 
	 Operating metrics – same home
	  				 				 				 				 				 			
	 Tricon wholly-owned rental homes
	  	 	14,804	 	 	 	14,804	 	 	 	—  	 	 	 	14,804	 	 	 	14,804	 	 	 	—  	 
	 SFR JV-1 homes (34% TCN/66% JV Partners)
	  	 	530	 	 	 	530	 	 	 	—  	 	 	 	530	 	 	 	530	 	 	 	—  	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Rental homes
	  	 	15,334	 	 	 	15,334	 	 	 	—  	 	 	 	15,334	 	 	 	15,334	 	 	 	—  	 
	 Occupancy
	  	 	97.3	% 	 	 	95.9	% 	 	 	1.4	% 	 	 	97.2	% 	 	 	96.1	% 	 	 	1.1	% 
	 Annualized turnover rate
	  	 	22.2	% 	 	 	25.7	% 	 	 	3.5	% 	 	 	22.8	% 	 	 	27.4	% 	 	 	4.6	% 
	 Average monthly rent(1)
	  	$	1,464	 	 	$	1,407	 	 	$	57	 	 	$	1,440	 	 	$	1,383	 	 	$	57	 
	 Average rent growth –
renewal(2)
	  	 	3.0	% 	 	 	5.1	% 	 	 	(2.1	%) 	 	 	3.4	% 	 	 	5.1	% 	 	 	(1.7	%) 
	 Average rent growth – new
move-in(2)
	  	 	11.3	% 	 	 	5.5	% 	 	 	5.8	% 	 	 	9.9	% 	 	 	8.1	% 	 	 	1.8	% 
	 Average rent growth –
blended(2)
	  	 	5.6	% 	 	 	5.3	% 	 	 	0.3	% 	 	 	5.3	% 	 	 	6.1	% 	 	 	(0.8	%) 

  

	(1)	 Average monthly rent represents average monthly rental income per unit for occupied units and reflects the
impact of rent concessions amortized over the life of the related leases. 



	(2)	 Average rent growth during the period represents the percentage difference between the monthly rent from an
expiring lease and the monthly rent from the next lease and reflects the impact of rent concessions amortized over the life of the related lease. 



For the same home portfolio, blended rent growth for the quarter was 5.6% (including 11.3% on new leases and 3.0% on renewals), accompanied by a 1.4% increase
in occupancy to 97.3% from 95.9% recorded in the same period in 2019. Robust demand for single-family rental homes in suburban markets, combined with limited supply of rental homes and embedded loss-to-lease in the portfolio, drove stronger
new-lease rent growth. In addition, the Company’s continued focus on resident retention and its inherent occupancy bias helped it achieve an annualized turnover rate of 22.2%, a 3.5% decrease compared to the same period in the prior year. 

The following table provides details of the same home portfolio results for the three and twelve months ended December 31, 2020 and December 31,
2019. 
  

																																									
	 	 	Three months	 	 	Twelve months 	 
	 For the periods ended December 31 (in thousands of
U.S.
dollars)
	 	2020	 	 	% of
revenue	 	 	2019	 	 	% of
revenue	 	 	Variance	 	 	2020	 	 	% of
revenue	 	 	2019	 	 	% of
revenue	 	 	Variance	 
	 Rental revenue
	 	$	63,959	 	 				 	$	60,593	 	 				 	$	3,366	 	 	$	251,405	 	 				 	$	238,989	 	 				 	$	12,416	 
	 Concessions and abatements
	 	 	(263	) 	 				 	 	(250	) 	 				 	 	(13	) 	 	 	(819	) 	 				 	 	(1,088	) 	 				 	 	269	 
	 Fees and other revenue
	 	 	2,261	 	 				 	 	2,520	 	 				 	 	(259	) 	 	 	8,863	 	 				 	 	8,852	 	 				 	 	11	 
	 Bad debt expense
	 	 	(1,846	) 	 				 	 	(502	) 	 				 	 	(1,344	) 	 	 	(4,144	) 	 				 	 	(1,971	) 	 				 	 	(2,173	) 
		 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Total revenue from rental properties
	 	 	64,111	 	 	 	100	% 	 	 	62,361	 	 	 	100	% 	 	 	1,750	 	 	 	255,305	 	 	 	100	% 	 	 	244,782	 	 	 	100	% 	 	 	10,523	 
	 Property taxes
	 	 	9,972	 	 	 	16	% 	 	 	9,769	 	 	 	16	% 	 	 	(203	) 	 	 	40,119	 	 	 	16	% 	 	 	38,451	 	 	 	16	% 	 	 	(1,668	) 
	 Repairs, maintenance and turnover
	 	 	4,355	 	 	 	7	% 	 	 	4,881	 	 	 	8	% 	 	 	526	 	 	 	18,200	 	 	 	7	% 	 	 	18,898	 	 	 	8	% 	 	 	698	 
	 Property management expenses
	 	 	4,455	 	 	 	7	% 	 	 	4,396	 	 	 	7	% 	 	 	(59	) 	 	 	17,660	 	 	 	7	% 	 	 	17,230	 	 	 	7	% 	 	 	(430	) 
	 Property insurance
	 	 	1,053	 	 	 	2	% 	 	 	1,003	 	 	 	2	% 	 	 	(50	) 	 	 	4,167	 	 	 	2	% 	 	 	3,929	 	 	 	2	% 	 	 	(238	) 
	 Homeowners’ association (HOA) costs
	 	 	737	 	 	 	1	% 	 	 	725	 	 	 	1	% 	 	 	(12	) 	 	 	2,944	 	 	 	1	% 	 	 	2,759	 	 	 	1	% 	 	 	(185	) 
	 Other direct expenses
	 	 	710	 	 	 	1	% 	 	 	846	 	 	 	1	% 	 	 	136	 	 	 	3,036	 	 	 	1	% 	 	 	3,301	 	 	 	1	% 	 	 	265	 
		 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Total direct operating expenses
	 	 	21,282	 	 				 	 	21,620	 	 				 	 	338	 	 	 	86,126	 	 				 	 	84,568	 	 				 	 	(1,558	) 
	 Net operating income (NOI)
	 	$	42,829	 	 				 	$	40,741	 	 				 	$	2,088	 	 	$	169,179	 	 				 	$	160,214	 	 				 	$	8,965	 
	 Net operating income (NOI) growth
	 				 				 				 				 	 	5.1	% 	 				 				 				 				 	 	5.6	% 
	 Net operating income (NOI) margin
	 	 	66.8	% 	 				 	 	65.3	% 	 				 				 	 	66.3	% 	 				 	 	65.5	% 	 				 			


  
 TRICON RESIDENTIAL
2020 ANNUAL REPORT 43 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 

			
	4.1 Single-Family Rental	  	





  

 Total revenue for the same home portfolio increased by $1.8 million or 2.8% to $64.1 million in the fourth
quarter of 2020 compared to $62.4 million for the same period in the prior year. This favourable change was primarily attributable to a $3.4 million or 5.6% increase in rental revenue as a result of higher average monthly rent ($1,464 in Q4 2020
compared to $1,407 in Q4 2019) and a 1.4% increase in occupancy as discussed above. 
 These positive variances were partially offset by a $1.3 million
increase in bad debt expense as the Company has reserved higher bad debt amounts for the reasons discussed previously. The bad debt expense represented 2.8% of revenue in the fourth quarter of 2020 compared to 0.8% in the same period in the prior
year. In addition, fees and other revenue declined by $0.3 million as the Company has decided to forego early termination and late fees in the quarter. Late fees and early termination fees are typically enforced in accordance with lease agreements
but were not charged to many residents in light of the pandemic. 
 Same home operating expenses decreased by $0.3 million or 1.6% to $21.3 million in the
fourth quarter of 2020 from $21.6 million during the same period in 2019. This variance is largely attributable to the following: 
  

	 	•	 	 Property taxes – Property tax expense increased nominally by $0.2 million or 2.1% to $10.0 million as
the 2019 comparative period expense included an unfavourable one-time local market reassessment. On a full-year basis, property taxes increased by $1.7 million or 4.4%, reflecting higher assessments primarily as a result of home price appreciation.



  

	 	•	 	 Repairs, maintenance and turnover – These costs decreased by $0.5 million or 10.8% to $4.4 million
during the quarter, attributable to a $1.0 million reduction in turnover costs driven by a lower turnover rate and a heightened attention to scope and expense management. The Company has focused on expense management by refining and managing work
scopes on turns and increasing purchasing efficiencies through its centralized procurement group. The turnover savings were partially offset by a $0.5 million increase in repairs and maintenance costs owing to damage from severe weather in the
Atlanta and Southeast Florida markets.  


  

	 	•	 	 Property insurance – The increase in property insurance expense of $0.1 million or 5.0% to $1.1
million was attributable to higher insurance premium rates across the industry. Based on the Company’s recently negotiated 2021 renewals, 2021 insurance pricing is expected to increase by approximately 10% compared to 2020, which is in line
with the broader single-family rental market. 


 With strong revenue growth and controlled expenses, same home NOI increased by 5.1%
year-over-year to $42.8 million in the fourth quarter of 2020 compared to $40.7 million in the fourth quarter of 2019. Same home NOI margin increased to a record- high 66.8% in the fourth quarter of 2020 from 65.3% in the same period in the prior
year. 
 As at December 31, 2020, the same home portfolio is diversified across 16 target markets. Same home market-level details are presented below.

 Year-over-year comparison 
  

																													
	 	  	 	 	  	NOI(1)	 	 	NOI margin(1)	 
	 Geography
	  	Homes	 	  	Q4 2020	 	  	Q4 2019	 	  	Change	 	 	Q4 2020	 	 	Q4 2019	 	 	Change	 
	 Atlanta
	  	 	3,695	 	  	$	9,782	 	  	$	9,123	 	  	 	7.2	% 	 	 	68.4	% 	 	 	66.9	% 	 	 	1.5	% 
	 Charlotte
	  	 	1,514	 	  	 	3,904	 	  	 	3,737	 	  	 	4.5	% 	 	 	70.9	% 	 	 	70.4	% 	 	 	0.5	% 
	 Columbia
	  	 	462	 	  	 	869	 	  	 	791	 	  	 	9.9	% 	 	 	57.8	% 	 	 	53.4	% 	 	 	4.4	% 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Southeast United States
	  	 	5,671	 	  	$	14,555	 	  	$	13,651	 	  	 	6.6	% 	 	 	68.3	% 	 	 	66.8	% 	 	 	1.5	% 
	 Phoenix
	  	 	1,766	 	  	$	5,439	 	  	$	5,255	 	  	 	3.5	% 	 	 	74.4	% 	 	 	75.3	% 	 	 	(0.9	%) 
	 Northern California
	  	 	991	 	  	 	4,262	 	  	 	4,033	 	  	 	5.7	% 	 	 	77.1	% 	 	 	74.0	% 	 	 	3.1	% 
	 Las Vegas
	  	 	585	 	  	 	1,865	 	  	 	1,823	 	  	 	2.3	% 	 	 	74.7	% 	 	 	74.9	% 	 	 	(0.2	%) 
	 Reno
	  	 	247	 	  	 	987	 	  	 	958	 	  	 	3.0	% 	 	 	78.4	% 	 	 	78.7	% 	 	 	(0.3	%) 
	 Southern California
	  	 	237	 	  	 	935	 	  	 	820	 	  	 	14.0	% 	 	 	71.2	% 	 	 	64.6	% 	 	 	6.6	% 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Western United States
	  	 	3,826	 	  	$	13,488	 	  	$	12,889	 	  	 	4.6	% 	 	 	75.3	% 	 	 	74.3	% 	 	 	1.0	% 
	 Tampa
	  	 	1,479	 	  	$	4,152	 	  	$	4,023	 	  	 	3.2	% 	 	 	61.6	% 	 	 	61.4	% 	 	 	0.2	% 
	 Southeast Florida
	  	 	671	 	  	 	1,908	 	  	 	1,730	 	  	 	10.3	% 	 	 	55.2	% 	 	 	49.6	% 	 	 	5.6	% 
	 Jacksonville
	  	 	465	 	  	 	1,153	 	  	 	1,132	 	  	 	1.9	% 	 	 	64.6	% 	 	 	63.3	% 	 	 	1.3	% 
	 Orlando
	  	 	432	 	  	 	1,207	 	  	 	1,217	 	  	 	(0.8	%) 	 	 	65.0	% 	 	 	65.1	% 	 	 	(0.1	%) 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Florida
	  	 	3,047	 	  	$	8,420	 	  	 	8,102	 	  	 	3.9	% 	 	 	60.8	% 	 	 	59.2	% 	 	 	1.6	% 
	 Dallas
	  	 	1,198	 	  	$	2,855	 	  	$	2,798	 	  	 	2.0	% 	 	 	56.7	% 	 	 	56.9	% 	 	 	(0.2	%) 
	 Houston
	  	 	888	 	  	 	1,960	 	  	 	1,829	 	  	 	7.2	% 	 	 	56.8	% 	 	 	53.0	% 	 	 	3.8	% 
	 San Antonio
	  	 	236	 	  	 	550	 	  	 	502	 	  	 	9.6	% 	 	 	61.5	% 	 	 	56.3	% 	 	 	5.2	% 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Texas
	  	 	2,322	 	  	$	5,365	 	  	$	5,129	 	  	 	4.6	% 	 	 	57.2	% 	 	 	55.4	% 	 	 	1.8	% 
	 Indianapolis
	  	 	468	 	  	$	1,001	 	  	$	970	 	  	 	3.2	% 	 	 	60.1	% 	 	 	59.6	% 	 	 	0.5	% 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Midwest United States
	  	 	468	 	  	$	1,001	 	  	$	970	 	  	 	3.2	% 	 	 	60.1	% 	 	 	59.6	% 	 	 	0.5	% 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Total/Weighted average
	  	 	15,334	 	  	$	42,829	 	  	$	40,741	 	  	 	5.1	% 	 	 	66.8	% 	 	 	65.3	% 	 	 	1.5	% 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 

  

	(1)	 Represents Tricon’s proportionate share of NOI and NOI margin of the same home portfolio.




  
 44 2020 ANNUAL REPORT
TRICON RESIDENTIAL 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 

			
	4.1 Single-Family Rental	  	





  


																													
	 	  	Rental
homes	 	  	Average monthly rent(1),(2)	 	 	Occupancy(1)	 
	 Geography
	  	Q4 2020	 	  	Q4 2019	 	  	Change (%)	 	 	Q4 2020	 	 	Q4 2019	 	 	Change (%)	 
	 Atlanta
	  	 	3,695	 	  	$	1,355	 	  	$	1,297	 	  	 	4.5	% 	 	 	97.3	% 	 	 	95.3	% 	 	 	2.0	% 
	 Charlotte
	  	 	1,514	 	  	 	1,315	 	  	 	1,270	 	  	 	3.5	% 	 	 	97.6	% 	 	 	95.1	% 	 	 	2.5	% 
	 Columbia
	  	 	462	 	  	 	1,204	 	  	 	1,161	 	  	 	3.7	% 	 	 	96.8	% 	 	 	95.0	% 	 	 	1.8	% 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Southeast United States
	  	 	5,671	 	  	$	1,332	 	  	$	1,278	 	  	 	4.2	% 	 	 	97.4	% 	 	 	95.2	% 	 	 	2.2	% 
	 Phoenix
	  	 	1,766	 	  	$	1,402	 	  	$	1,311	 	  	 	6.9	% 	 	 	98.2	% 	 	 	97.4	% 	 	 	0.8	% 
	 Northern California
	  	 	991	 	  	 	1,912	 	  	 	1,833	 	  	 	4.3	% 	 	 	98.9	% 	 	 	98.5	% 	 	 	0.4	% 
	 Las Vegas
	  	 	585	 	  	 	1,459	 	  	 	1,388	 	  	 	5.1	% 	 	 	98.0	% 	 	 	97.6	% 	 	 	0.4	% 
	 Reno
	  	 	247	 	  	 	1,731	 	  	 	1,655	 	  	 	4.6	% 	 	 	98.3	% 	 	 	97.0	% 	 	 	1.3	% 
	 Southern California
	  	 	237	 	  	 	1,894	 	  	 	1,801	 	  	 	5.2	% 	 	 	99.4	% 	 	 	96.5	% 	 	 	2.9	% 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Western United States
	  	 	3,826	 	  	$	1,595	 	  	$	1,511	 	  	 	5.6	% 	 	 	98.4	% 	 	 	97.6	% 	 	 	0.8	% 
	 Tampa
	  	 	1,479	 	  	$	1,577	 	  	$	1,534	 	  	 	2.8	% 	 	 	97.4	% 	 	 	95.4	% 	 	 	2.0	% 
	 Southeast Florida
	  	 	671	 	  	 	1,799	 	  	 	1,755	 	  	 	2.5	% 	 	 	96.1	% 	 	 	95.2	% 	 	 	0.9	% 
	 Jacksonville
	  	 	465	 	  	 	1,366	 	  	 	1,303	 	  	 	4.8	% 	 	 	96.8	% 	 	 	97.0	% 	 	 	(0.2	%) 
	 Orlando
	  	 	432	 	  	 	1,501	 	  	 	1,428	 	  	 	5.1	% 	 	 	96.4	% 	 	 	97.7	% 	 	 	(1.3	%) 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Florida
	  	 	3,047	 	  	$	1,583	 	  	 	1,533	 	  	 	3.3	% 	 	 	96.9	% 	 	 	95.9	% 	 	 	1.0	% 
	 Dallas
	  	 	1,198	 	  	$	1,498	 	  	$	1,446	 	  	 	3.6	% 	 	 	96.0	% 	 	 	95.6	% 	 	 	0.4	% 
	 Houston
	  	 	888	 	  	 	1,371	 	  	 	1,359	 	  	 	0.9	% 	 	 	96.6	% 	 	 	93.0	% 	 	 	3.6	% 
	 San Antonio
	  	 	236	 	  	 	1,342	 	  	 	1,321	 	  	 	1.6	% 	 	 	95.5	% 	 	 	94.9	% 	 	 	0.6	% 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Texas
	  	 	2,322	 	  	$	1,434	 	  	$	1,400	 	  	 	2.4	% 	 	 	96.2	% 	 	 	94.5	% 	 	 	1.7	% 
	 Indianapolis
	  	 	468	 	  	$	1,264	 	  	$	1,223	 	  	 	3.4	% 	 	 	97.1	% 	 	 	96.4	% 	 	 	0.7	% 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Midwest United States
	  	 	468	 	  	$	1,264	 	  	$	1,223	 	  	 	3.4	% 	 	 	97.1	% 	 	 	96.4	% 	 	 	0.7	% 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Total/Weighted average
	  	 	15,334	 	  	$	1,464	 	  	$	1,407	 	  	 	4.1	% 	 	 	97.3	% 	 	 	95.9	% 	 	 	1.4	% 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 

  

	(1)	 Represents Tricon’s proportionate share of average monthly rent and occupancy of the same home portfolio.




	(2)	 Average monthly rent represents average monthly rental income per unit for occupied units and reflects the
impact of rent concessions amortized over the life of the related leases. The year-over-year change in average monthly rent does not equal the average quarterly rent growth, which is calculated as the percentage difference between the monthly rent
from an expiring lease and the monthly rent from the next lease. 



  
 TRICON RESIDENTIAL
2020 ANNUAL REPORT 45 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 

			
	4.1 Single-Family Rental	  	





  

 Quarter-over-quarter comparison 

 

																													
	 	  	Rental
homes	 	  	Average monthly rent(1),(2)	 	 	Occupancy(1)	 
	 Geography
	  	Q4 2020	 	  	Q3 2020	 	  	Change (%)	 	 	Q4 2020	 	 	Q3 2020	 	 	Change (%)	 
	 Atlanta
	  	 	3,695	 	  	$	1,355	 	  	$	1,334	 	  	 	1.6	% 	 	 	97.3	% 	 	 	97.7	% 	 	 	(0.4	%) 
	 Charlotte
	  	 	1,514	 	  	 	1,315	 	  	 	1,297	 	  	 	1.4	% 	 	 	97.6	% 	 	 	97.6	% 	 	 	–	 
	 Columbia
	  	 	462	 	  	 	1,204	 	  	 	1,189	 	  	 	1.3	% 	 	 	96.8	% 	 	 	97.5	% 	 	 	(0.7	%) 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Southeast United States
	  	 	5,671	 	  	$	1,332	 	  	$	1,312	 	  	 	1.5	% 	 	 	97.4	% 	 	 	97.6	% 	 	 	(0.2	%) 
	 Phoenix
	  	 	1,766	 	  	$	1,402	 	  	$	1,375	 	  	 	2.0	% 	 	 	98.2	% 	 	 	98.5	% 	 	 	(0.3	%) 
	 Northern California
	  	 	991	 	  	 	1,912	 	  	 	1,885	 	  	 	1.4	% 	 	 	98.9	% 	 	 	98.5	% 	 	 	0.4	% 
	 Las Vegas
	  	 	585	 	  	 	1,459	 	  	 	1,439	 	  	 	1.4	% 	 	 	98.0	% 	 	 	98.0	% 	 	 	–	 
	 Reno
	  	 	247	 	  	 	1,731	 	  	 	1,718	 	  	 	0.8	% 	 	 	98.3	% 	 	 	98.5	% 	 	 	(0.2	%) 
	 Southern California
	  	 	237	 	  	 	1,894	 	  	 	1,873	 	  	 	1.1	% 	 	 	99.4	% 	 	 	99.9	% 	 	 	(0.5	%) 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Western United States
	  	 	3,826	 	  	$	1,595	 	  	$	1,570	 	  	 	1.6	% 	 	 	98.4	% 	 	 	98.5	% 	 	 	(0.1	%) 
	 Tampa
	  	 	1,479	 	  	$	1,577	 	  	$	1,562	 	  	 	1.0	% 	 	 	97.4	% 	 	 	97.3	% 	 	 	0.1	% 
	 Southeast Florida
	  	 	671	 	  	 	1,799	 	  	 	1,787	 	  	 	0.7	% 	 	 	96.1	% 	 	 	96.6	% 	 	 	(0.5	%) 
	 Jacksonville
	  	 	465	 	  	 	1,366	 	  	 	1,350	 	  	 	1.2	% 	 	 	96.8	% 	 	 	98.0	% 	 	 	(1.2	%) 
	 Orlando
	  	 	432	 	  	 	1,501	 	  	 	1,481	 	  	 	1.4	% 	 	 	96.4	% 	 	 	98.1	% 	 	 	(1.7	%) 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Florida
	  	 	3,047	 	  	$	1,583	 	  	 	1,568	 	  	 	1.0	% 	 	 	96.9	% 	 	 	97.4	% 	 	 	(0.5	%) 
	 Dallas
	  	 	1,198	 	  	$	1,498	 	  	$	1,482	 	  	 	1.1	% 	 	 	96.0	% 	 	 	96.0	% 	 	 	–	 
	 Houston
	  	 	888	 	  	 	1,371	 	  	 	1,366	 	  	 	0.4	% 	 	 	96.6	% 	 	 	95.0	% 	 	 	1.6	% 
	 San Antonio
	  	 	236	 	  	 	1,342	 	  	 	1,343	 	  	 	(0.1	%) 	 	 	95.5	% 	 	 	94.5	% 	 	 	1.0	% 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Texas
	  	 	2,322	 	  	$	1,434	 	  	$	1,423	 	  	 	0.8	% 	 	 	96.2	% 	 	 	95.5	% 	 	 	0.7	% 
	 Indianapolis
	  	 	468	 	  	$	1,264	 	  	$	1,248	 	  	 	1.3	% 	 	 	97.1	% 	 	 	97.6	% 	 	 	(0.5	%) 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Midwest United States
	  	 	468	 	  	$	1,264	 	  	$	1,248	 	  	 	1.3	% 	 	 	97.1	% 	 	 	97.6	% 	 	 	(0.5	%) 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Total/Weighted average
	  	 	15,334	 	  	$	1,464	 	  	$	1,445	 	  	 	1.3	% 	 	 	97.3	% 	 	 	97.5	% 	 	 	(0.2	%) 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 

  

	(1)	 Represents Tricon’s proportionate share of average monthly rent and occupancy of the same home portfolio.




	(2)	 Average monthly rent represents average monthly rental income per unit for occupied units and reflects the
impact of rent concessions amortized over the life of the related leases. The year-over-year change in average monthly rent does not equal the average quarterly rent growth, which is calculated as the percentage difference between the monthly rent
from an expiring lease and the monthly rent from the next lease. 



  
 46 2020 ANNUAL REPORT
TRICON RESIDENTIAL 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 

			
	4.1 Single-Family Rental	  	





  


													
	 	  	Rent growth(1)	 
	 Geography
	  	Renewal	 	 	New move-in	 	 	Blended	 
	 Atlanta
	  	 	2.9	% 	 	 	17.1	% 	 	 	6.6	% 
	 Charlotte
	  	 	3.3	% 	 	 	14.6	% 	 	 	7.0	% 
	 Columbia
	  	 	2.7	% 	 	 	8.4	% 	 	 	5.4	% 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Southeast United States
	  	 	3.0	% 	 	 	15.4	% 	 	 	6.6	% 
	 Phoenix
	  	 	4.5	% 	 	 	21.4	% 	 	 	9.5	% 
	 Northern California
	  	 	4.7	% 	 	 	8.4	% 	 	 	5.4	% 
	 Las Vegas
	  	 	3.7	% 	 	 	11.7	% 	 	 	5.9	% 
	 Reno
	  	 	3.2	% 	 	 	17.0	% 	 	 	5.4	% 
	 Southern California
	  	 	4.5	% 	 	 	9.0	% 	 	 	5.0	% 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Western United States
	  	 	4.4	% 	 	 	16.5	% 	 	 	7.3	% 
	 Tampa
	  	 	2.1	% 	 	 	9.6	% 	 	 	4.8	% 
	 Southeast Florida
	  	 	1.3	% 	 	 	3.3	% 	 	 	1.9	% 
	 Jacksonville
	  	 	2.3	% 	 	 	7.6	% 	 	 	4.2	% 
	 Orlando
	  	 	2.4	% 	 	 	9.3	% 	 	 	4.6	% 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Florida
	  	 	2.0	% 	 	 	7.8	% 	 	 	4.0	% 
	 Dallas
	  	 	2.2	% 	 	 	6.3	% 	 	 	3.9	% 
	 Houston
	  	 	1.1	% 	 	 	2.4	% 	 	 	1.6	% 
	 San Antonio
	  	 	0.2	% 	 	 	1.3	% 	 	 	0.5	% 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Texas
	  	 	1.5	% 	 	 	4.5	% 	 	 	2.7	% 
	 Indianapolis
	  	 	2.6	% 	 	 	8.9	% 	 	 	7.0	% 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Midwest United States
	  	 	2.6	% 	 	 	8.9	% 	 	 	7.0	% 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Total/Weighted average
	  	 	3.0	% 	 	 	11.3	% 	 	 	5.6	% 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 

  

	(1)	 Represents quarterly rent growth on Tricon’s proportionate share of the same home portfolio, calculated as
the percentage difference between the monthly rent from an expiring lease and the monthly rent from the next lease and reflecting the impact of rent concessions amortized over the life of the related lease. 



Rental properties 
 The table below presents the change in
Tricon’s proportionate share of the fair value of rental properties for the twelve months ended December 31, 2020 and December 31, 2019. 
  

									
	 For the years ended December 31

(in thousands of U.S. dollars)
	  	2020	 	  	2019	 
	 Cost basis of rental properties, beginning of period
	  	$	2,913,716	 	  	$	2,563,505	 
	 Acquisition of rental properties
	  	 	124,907	 	  	 	281,229	 
	 Disposition of rental properties
	  	 	(16,714	) 	  	 	(18,924	) 
	 Renovation capital expenditures
	  	 	34,354	 	  	 	53,538	 
	 Recurring capital expenditures
	  	 	22,462	 	  	 	23,165	 
	 Value-enhancing capital expenditures
	  	 	10,053	 	  	 	11,203	 
		  	  
	  
	 	  	  
	  
	 
	 Total cost basis of rental properties
	  	 	3,088,778	 	  	 	2,913,716	 
	 Cumulative fair value adjustment
	  	 	852,307	 	  	 	634,897	 
		  	  
	  
	 	  	  
	  
	 
	 Fair value of rental properties
	  	$	3,941,085	 	  	$	3,548,613	 
		  	  
	  
	 	  	  
	  
	 

 For the twelve months ended December 31, 2020, Tricon acquired 1,836 homes compared to 3,787 for the same period in the
prior year. This variance is attributable to the acquisition program being paused for approximately six months in 2020 in light of the COVID-19 pandemic and Tricon’s decision to focus on its existing residents and the safety of its operating
team. Of the homes acquired during the year, 1,816 were acquired in SFR JV-1 compared to 3,622 in the prior year. As a result of the lower acquisition volume, renovation capital expenditures declined by $19.2 million or 36% year-over-year. Lower
resident turnover during the year also led to a reduction in recurring capital expenditures of $0.7 million or 3% compared to the prior year. 

  
 TRICON RESIDENTIAL
2020 ANNUAL REPORT 47 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 

			
	4.1 Single-Family Rental	  	





  

 The following table presents details regarding Tricon’s proportionate share of cost to maintain for the
single-family rental portfolio. 
  

																																	
	 (in thousands of U.S. dollars, except cost to maintain per home and
cost
to maintain per square foot)
	 	Q4 2020	 	 	Q3 2020	 	 	Q2 2020	 	 	Q1 2020	 	 	Q4 2019	 	 	Q3 2019	 	 	Q2 2019	 	 	Q1 2019	 
	 Recurring operating expense
	 				 				 				 				 				 				 				 			
	 Repairs and maintenance operating expense
	 	$	4,057	 	 	$	4,023	 	 	$	3,680	 	 	$	3,655	 	 	$	3,673	 	 	$	3,550	 	 	$	3,459	 	 	$	3,108	 
	 Turnover operating expense
	 	 	986	 	 	 	1,368	 	 	 	1,504	 	 	 	1,337	 	 	 	1,877	 	 	 	1,731	 	 	 	1,458	 	 	 	1,555	 
		 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Total recurring operating expense
	 	 	5,043	 	 	 	5,391	 	 	 	5,184	 	 	 	4,992	 	 	 	5,550	 	 	 	5,281	 	 	 	4,917	 	 	 	4,663	 
	 Recurring capital expenditures
	 				 				 				 				 				 				 				 			
	 Repairs and maintenance capital expense
	 	$	5,129	 	 	$	5,666	 	 	$	4,330	 	 	$	4,136	 	 	$	2,818	 	 	$	4,848	 	 	$	5,020	 	 	$	4,104	 
	 Turnover capital expense
	 	 	421	 	 	 	726	 	 	 	628	 	 	 	1,426	 	 	 	1,299	 	 	 	1,587	 	 	 	2,063	 	 	 	1,426	 
		 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Total recurring capital expenditures
	 	 	5,550	 	 	 	6,392	 	 	 	4,958	 	 	 	5,562	 	 	 	4,117	 	 	 	6,435	 	 	 	7,083	 	 	 	5,530	 
	 Total cost to maintain
	 	 	10,593	 	 	 	11,783	 	 	 	10,142	 	 	 	10,554	 	 	 	9,667	 	 	 	11,716	 	 	 	12,000	 	 	 	10,193	 
	 Annualized recurring operating expense per home
	 	 	1,152	 	 	 	1,238	 	 	 	1,193	 	 	 	1,160	 	 	 	1,317	 	 	 	1,277	 	 	 	1,204	 	 	 	1,381	 
	 Annualized recurring capital expense per home
	 	 	1,267	 	 	 	1,468	 	 	 	1,141	 	 	 	1,293	 	 	 	977	 	 	 	1,555	 	 	 	1,734	 	 	 	1,164	 
		 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Total annualized cost to maintain per home
	 	$	2,419	 	 	$	2,706	 	 	$	2,334	 	 	$	2,453	 	 	$	2,294	 	 	$	2,832	 	 	$	2,938	 	 	$	2,545	 
		 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Total annualized cost to maintain per square foot
	 	$	1.50	 	 	$	1.68	 	 	$	1.45	 	 	$	1.52	 	 	$	1.42	 	 	$	1.76	 	 	$	1.83	 	 	$	1.59	 

 Total cost to maintain was $10.6 million for the three months ended December 31, 2020, an increase of $0.9 million
compared to the same period in the prior year, driven by higher repairs and maintenance expense on a larger portfolio of homes and an increase in repair activities from severe weather conditions in the Atlanta and Southeast Florida markets. This
higher repair expense was partially offset by lower turnover expense as fewer residents moved out during the quarter, as well as improved cost discipline and controlled scoping of work when turning homes. 

The following table provides details regarding Tricon’s proportionate share of total capital expenditures incurred for the single-family rental
portfolio. 
  

																																	
	 (in thousands of U.S. dollars)
	  	Q4 2020	 	  	Q3 2020	 	  	Q2 2020	 	  	Q1 2020	 	  	Q4 2019	 	  	Q3 2019	 	  	Q2 2019	 	  	Q1 2019	 
	 Renovation capital expenditures(1)
	  	$	13,376	 	  	$	6,020	 	  	$	5,952	 	  	$	9,006	 	  	$	11,745	 	  	$	17,952	 	  	$	12,561	 	  	$	11,282	 
	 Recurring capital expenditures(2)
	  	 	5,550	 	  	 	6,392	 	  	 	4,958	 	  	 	5,562	 	  	 	4,117	 	  	 	6,435	 	  	 	7,083	 	  	 	5,530	 
	 Value-enhancing capital
expenditures(3)
	  	 	2,141	 	  	 	2,525	 	  	 	2,728	 	  	 	2,659	 	  	 	3,014	 	  	 	2,983	 	  	 	2,549	 	  	 	2,656	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Total capital expenditures
	  	$	21,067	 	  	$	14,937	 	  	$	13,638	 	  	$	17,227	 	  	$	18,876	 	  	$	27,370	 	  	$	22,193	 	  	$	19,468	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 

  

	(1)	 Renovation capital expenditures are incurred in order to prepare the property for rental use in accordance with
Tricon’s standards. These expenditures are either incurred shortly after acquisition on vacant homes or deferred until the resident moves out if homes are occupied when acquired. 



	(2)	 Recurring capital expenditures represent ongoing costs associated with maintaining and preserving the quality
of a property after the home has been renovated. 



	(3)	 Value-enhancing capital expenditures are defined as capital expenditures that go above and beyond maintaining
the quality of a property and are incurred for the purpose of increasing expected future returns. 


 Total capital expenditures were $21.1
million for the three months ended December 31, 2020, an increase of $2.2 million compared to the same period in the prior year. The variance was primarily attributable to an increase in renovation capital expenditures as a higher number of
homes were acquired through organic channels during the quarter and required upfront renovations (708 of the home acquisitions in the comparative period were part of a stabilized portfolio transaction). 

  
 48 2020 ANNUAL REPORT
TRICON RESIDENTIAL 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 

			
	4.2 Multi-Family Rental	  	





  

 4.2 Multi-Family Rental 

Tricon’s multi-family rental business segment consists of 24 assets, including 23 predominantly garden-style apartments in the U.S. Sun Belt and one
Class A high-rise property in downtown Toronto (note that eight other properties in downtown Toronto are currently under development and are discussed in Section 4.3). 

4.2.1 U.S. multi-family rental 
 Several metrics in the
tables and disclosure throughout this subsection relating to periods prior to the Company’s ownership of the U.S. multi-family rental portfolio are KPI measures that were reported historically (refer to Starlight U.S. Multi-Family (No. 5) Core
Fund profile on SEDAR at www.sedar.com) while some are Tricon KPIs (as defined in Section 7.1) not previously reported. Any differences are described in the notes to the relevant tables below. Management believes this historical
information is useful in understanding the performance of the acquired portfolio. 
 Operating results 

The Company’s U.S. multi-family rental business continued to experience softness in demand and pricing amid the negative economic and employment impact
caused by the COVID-19 pandemic. Growing preference for detached single-family rental homes as opposed to higher density apartments weakened multi-family rental market fundamentals. While Tricon’s U.S. multi-family rental business has faced
near-term challenges in maintaining occupancy levels and driving rent growth throughout the pandemic, the fourth quarter performance improved sequentially compared to the third quarter of 2020. 

The U.S. multi-family rental business reported a 56.6% NOI margin (a 140-bps improvement from 55.2% in Q3 2020), 93.6% occupancy rate and collections equal to
98% of rent billed during the quarter. The Company continued to adopt an occupancy-biased rental strategy by offering lower rents and/or higher concessions, which led to a 0.8% increase in occupancy compared to the preceding quarter but a decline in
new lease rents of 5.6% (inclusive of concessions). Renewal rent growth, however, improved meaningfully to 2.3%, and reflects a preference of existing residents to remain in place, even at higher rents, which bodes well for 2021 performance. This
positive trend has continued into 2021, and average blended rent growth increased to 1.1% in January 2021, registering the first month of positive blended rent growth since February of 2020. 

Annualized turnover decreased by 15.3% to 46.5% in the fourth quarter compared to 61.8% in the third quarter. This favourable change was driven by
Tricon’s efforts to provide a higher level of customer service to residents and a reduced desire to move during the pandemic. On a full-year basis, resident turnover was 50.8% compared to 52.6% in the prior year. 

The Company’s U.S. multi-family rental business continued to experience performance challenges in the Houston and Orlando markets, which make up 32% of
the total suites in the portfolio. These markets have been among the hardest hit by the COVID-19 pandemic, with local employment being further impacted by weak oil prices and diminished tourism, respectively. Operating performance was also impeded
by higher bad debt ascribable to slower collections, which remain volatile quarter-over-quarter. Management has made active efforts to connect residents with local rent relief programs and has also created incentive plans for residents who are
habitually delinquent to get current on their rent payments. 
 Despite lower NOI in the fourth quarter compared to the same period in the prior year, the
U.S. multi-family rental Core FFO has remained flat as the decrease in NOI was fully offset by savings in interest expense on the portfolio’s floating-rate loan facilities (see Section 5). 

A weak labour market and muted wage growth weighed on multi-family rental demand in 2020; however, the broader industry is expected to rebound in 2021 and
2022 as the population is vaccinated, the economy recovers, and demand increases for high-quality multi-family housing that offers a strong sense of community and first-class amenities. Meanwhile, management continues to execute an occupancy-biased
rental strategy and aims to achieve a positive blended rent growth while maintaining occupancy. 

  
 TRICON RESIDENTIAL
2020 ANNUAL REPORT 49 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 

			
	4.2 Multi-Family Rental	  	





  

 The table below provides a summary of certain operating metrics for the U.S. multi-family rental segment that
management uses to evaluate performance over time. The metrics are key drivers of revenue for the multi-family rental business and ultimately its NOI (KPI measure; refer to Section 7.1). 

 

																																	
	 	  	Q4 2020	 	 	Q3 2020	 	 	Q2 2020	 	 	Q1 2020	 	 	Q4 2019	 	 	Q3 2019	 	 	Q2 2019	 	 	Q1 2019	 
	 Number of suites
	  	 	7,289	 	 	 	7,289	 	 	 	7,289	 	 	 	7,289	 	 	 	7,289	 	 	 	7,289	 	 	 	7,289	 	 	 	7,289	 
	 Occupancy(1)
	  	 	93.6	% 	 	 	92.8	% 	 	 	93.5	% 	 	 	94.4	% 	 	 	94.9	% 	 	 	95.2	% 	 	 	94.7	% 	 	 	93.1	% 
	 Annualized turnover rate
	  	 	46.5	% 	 	 	61.8	% 	 	 	46.5	% 	 	 	47.5	% 	 	 	51.3	% 	 	 	52.9	% 	 	 	53.5	% 	 	 	N/A	 
	 Average monthly rent(2),(3)
	  	$	1,217	 	 	$	1,228	 	 	$	1,240	 	 	$	1,244	 	 	$	1,233	 	 	$	1,234	 	 	$	1,236	 	 	$	1,232	 
	 Average quarterly rent growth –
renewals(2),(4)
	  	 	2.3	% 	 	 	1.2	% 	 	 	—  	 	 	 	3.4	% 	 	 	4.6	% 	 	 	4.5	% 	 	 	4.4	% 	 	 	N/A	 
	 Average quarterly rent growth – new
move-in(2),(4)
	  	 	(5.6	%) 	 	 	(4.5	%) 	 	 	(5.5	%) 	 	 	(1.7	%) 	 	 	(1.7	%) 	 	 	—  	 	 	 	(0.3	%) 	 	 	N/A	 
	 Average quarterly rent growth –
blended(2),(4)
	  	 	(1.8	%) 	 	 	(2.0	%) 	 	 	(2.2	%) 	 	 	1.1	% 	 	 	1.1	% 	 	 	2.1	% 	 	 	1.9	% 	 	 	N/A	 

  

	(1)	 The occupancy rate from Q2 2019 to Q4 2020 represents average physical occupancy (refer to
Section 7.1 for Tricon’s definition of this KPI), while the occupancy rate for Q1 2019 represents economic occupancy as previously reported by the U.S. multi-family rental portfolio under prior ownership. 



	(2)	 These metrics are Tricon’s KPIs and they were not previously disclosed by the U.S. multi-family rental
portfolio under prior ownership. 



	(3)	 Average monthly rent represents average monthly rental income per suite for occupied suites and reflects the
impact of rent concessions amortized over the life of the related leases. 



	(4)	 Average rent growth during the period represents the percentage difference between the monthly rent from an
expiring lease and the monthly rent from the next lease and reflects the impact of rent concessions amortized over the life of the related lease. Excluding the impact of concessions, the Q4 2020 rent growth was 2.2% for renewals, (4.8%) for new
move-ins, and (1.4%) blended. 


 The table below presents a breakdown of Tricon’s NOI (KPI measure; refer to
Section 7.1) for the U.S. multi-family rental business. The financial information presented in the table includes prior-year results reported for comparability, although Tricon did not own the portfolio prior to June 11, 2019.
Management believes this information is useful in understanding the performance of the acquired portfolio. 
  

																																									
	 	 	Three months	 	 	Twelve months	 
	 For the periods ended December 31 (in thousands
of U.S.
dollars)
	 	2020	 	 	% of
revenue	 	 	2019	 	 	% of
revenue	 	 	Variance	 	 	2020	 	 	% of
revenue	 	 	2019	 	 	% of
revenue	 	 	Variance	 
	 Rental revenue
	 	$	25,159	 	 				 	$	25,605	 	 				 	$	(446	) 	 	$	100,938	 	 				 	$	101,781	 	 				 	$	(843	) 
	 Concessions and abatements
	 	 	(565	) 	 				 	 	(210	) 	 				 	 	(355	) 	 	 	(1,903	) 	 				 	 	(869	) 	 				 	 	(1,034	) 
	 Fees and other revenue(1)
	 	 	3,829	 	 				 	 	3,491	 	 				 	 	338	 	 	 	14,700	 	 				 	 	13,926	 	 				 	 	774	 
	 Bad debt expense
	 	 	(840	) 	 				 	 	(319	) 	 				 	 	(521	) 	 	 	(2,530	) 	 				 	 	(1,079	) 	 				 	 	(1,451	) 
		 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Total revenue from rental properties
	 	$	27,583	 	 	 	100	% 	 	$	28,567	 	 	 	100	% 	 	$	(984	) 	 	$	111,205	 	 	 	100	% 	 	$	113,759	 	 	 	100	% 	 	$	(2,554	) 
	 Property taxes
	 	 	4,418	 	 	 	16	% 	 	 	4,377	 	 	 	15	% 	 	 	(41	) 	 	 	18,623	 	 	 	17	% 	 	 	18,354	 	 	 	16	% 	 	 	(269	) 
	 Repairs, maintenance and turnover
	 	 	1,214	 	 	 	4	% 	 	 	1,119	 	 	 	4	% 	 	 	(95	) 	 	 	4,411	 	 	 	4	% 	 	 	4,108	 	 	 	4	% 	 	 	(303	) 
	 Property management expenses
	 	 	3,092	 	 	 	11	% 	 	 	2,936	 	 	 	10	% 	 	 	(156	) 	 	 	12,097	 	 	 	11	% 	 	 	11,995	 	 	 	11	% 	 	 	(102	) 
	 Utilities and other direct costs(2)
	 	 	1,840	 	 	 	7	% 	 	 	1,773	 	 	 	6	% 	 	 	(67	) 	 	 	7,514	 	 	 	7	% 	 	 	6,709	 	 	 	6	% 	 	 	(805	) 
	 Property insurance
	 	 	632	 	 	 	2	% 	 	 	494	 	 	 	2	% 	 	 	(138	) 	 	 	2,472	 	 	 	2	% 	 	 	1,915	 	 	 	2	% 	 	 	(557	) 
	 Marketing and leasing
	 	 	426	 	 	 	2	% 	 	 	384	 	 	 	1	% 	 	 	(42	) 	 	 	1,413	 	 	 	1	% 	 	 	1,582	 	 	 	1	% 	 	 	169	 
	 Other property operating expenses
	 	 	357	 	 	 	1	% 	 	 	520	 	 	 	2	% 	 	 	163	 	 	 	1,766	 	 	 	2	% 	 	 	1,926	 	 	 	2	% 	 	 	160	 
		 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Total direct operating expenses
	 	 	11,979	 	 				 	 	11,603	 	 				 	 	(376	) 	 	 	48,296	 	 				 	 	46,589	 	 				 	 	(1,707	) 
	 Net operating income (NOI)(3)
	 	$	15,604	 	 				 	$	16,964	 	 				 	$	(1,360	) 	 	$	62,909	 	 				 	$	67,170	 	 				 	$	(4,261	) 
	 Net operating income (NOI)
margin(3)
	 	 	56.6	% 	 				 	 	59.4	% 	 				 				 	 	56.6	% 	 				 	 	59.0	% 	 				 			

 Note: Given that the suite count did not change from 2019 to 2020, this should also be considered the “Same
Property” portfolio. 

	(1)	 The comparative period has been reclassified to conform with the current period presentation. One-time
insurance recoveries of $270 for the twelve months ended December 31, 2019 have been reclassified out of NOI since they do not meet Tricon’s definition of operating activities. The amount was previously included in revenue by the U.S.
multi-family rental portfolio under prior ownership. No insurance recoveries were recorded in the three months ended December 31, 2019. 



	(2)	 Utilities and other direct costs include water and sewer expense, valet waste expense, electricity and gas and
cable contract costs. 



	(3)	 KPI measures; see Section 7.1. 



  
 50 2020 ANNUAL REPORT
TRICON RESIDENTIAL 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 

			
	4.2 Multi-Family Rental	  	





  

 For the three months ended December 31, 2020, revenue decreased by $1.0 million or 3.4% to $27.6 million
compared to $28.6 million for the same period in 2019. The variance is primarily a result of (i) a decrease of 1.3% in occupancy attributable to weaker leasing demand during the COVID-19 pandemic, (ii) an increase of $0.4 million in
leasing concessions to attract or retain residents (equivalent to 0.6 weeks of average rent per lease signed in Q4 2020, comprised of 1 week for new leases and 0.2 weeks for renewals leases), and (iii) incremental bad debt expense of $0.5
million as a larger percentage of accounts receivable is expected to become uncollectible as a result of the pandemic. 
 Tricon reserved 100% of
residents’ accounts receivable balances aged more than 30 days, incorporating management’s conservative measurement when estimating the collectability of outstanding amounts. The decrease in revenue was partially offset by $0.3 million in
additional income from ancillary service offerings such as bundled media packages (largely cable and internet) and onsite or offsite parcel storage, resulting in total fees and other revenue of $3.8 million in the quarter. 

Total operating expenses increased by $0.4 million or 3.2% to $12.0 million. Notable operating expense variances for the quarter include:  

 

	 	•	 	 Property taxes – Fourth quarter property tax expense remained flat year-over-year at $4.4 million, as
successful appeal efforts in the fourth quarter of 2020 resulted in tax recoveries that offset normal course increases. On a full-year basis, property tax expense growth of $0.3 million or 1.5% was relatively muted and reflected strong efforts in
contesting property tax assessments. 


  

	 	•	 	 Property management expenses – Property management expenses increased by $0.2 million to $3.1 million
driven by the Company’s use of additional employee incentive programs in the current quarter to encourage higher occupancy targets, higher rent growth, and lower turnover in the challenging pandemic leasing environment. 



 

	 	•	 	 Repairs, maintenance and turnover – Expenses increased by $0.1 million to $1.2 million driven by
increased security costs during the pandemic. 


  

	 	•	 	 Property insurance – Property insurance costs increased by $0.1 million year-over-year to $0.6
million, reflecting significantly higher insurance premiums across the industry and comparable to similarly-sized portfolios in Tricon’s markets. In the new year, insurance premiums are expected to increase by approximately 10% compared to 2020
based on the Company’s recently negotiated insurance pricing. 


  

	 	•	 	 Other property operating expenses – Other property operating expenses decreased by $0.2 million to
$0.4 million as a result of cost containment efforts to reduce property-level general and administration expenses. 


 As a result of these
drivers, the portfolio NOI decreased by $1.4 million or 8.0% to $15.6 million in the fourth quarter of 2020 compared to $17.0 million in the fourth quarter of 2019. NOI margin decreased to 56.6% in the fourth quarter of 2020 from 59.4% for the same
period in the prior year. Of note, the Company expensed all rent concessions instead of amortizing them over the expected life of the lease term. NOI in the fourth quarter of 2020 would have been $15.8 million, a $1.2 million or 7.1% decrease
year-over-year, if leasing concessions were reflected on an amortized basis. 

  
 TRICON RESIDENTIAL
2020 ANNUAL REPORT 51 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 

			
	4.2 Multi-Family Rental	  	





  

 Market-level results 

The U.S. multi-family rental business is diversified across 13 markets. Market-level details on all the properties owned by the Company are presented below.

  

																					
	 Geography
	  	Properties	 	  	Average vintage	 	  	Average cost
per property	 	  	Suites	 	  	Average suite
size (sq. feet)	 
	 Austin
	  	 	4	 	  	 	2010	 	  	$	61,884	 	  	 	1,454	 	  	 	941	 
	 Houston
	  	 	3	 	  	 	2009	 	  	 	55,260	 	  	 	1,098	 	  	 	942	 
	 Dallas
	  	 	2	 	  	 	2012	 	  	 	52,335	 	  	 	640	 	  	 	922	 
	 San Antonio
	  	 	1	 	  	 	2013	 	  	 	39,575	 	  	 	276	 	  	 	874	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Texas
	  	 	10	 	  	 	2010	 	  	$	55,756	 	  	 	3,468	 	  	 	932	 
	 Orlando
	  	 	4	 	  	 	2012	 	  	$	69,534	 	  	 	1,215	 	  	 	1,059	 
	 Tampa
	  	 	1	 	  	 	2014	 	  	 	64,967	 	  	 	304	 	  	 	998	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Florida
	  	 	5	 	  	 	2012	 	  	$	68,620	 	  	 	1,519	 	  	 	1,047	 
	 Atlanta
	  	 	2	 	  	 	2012	 	  	$	61,169	 	  	 	607	 	  	 	860	 
	 Charlotte
	  	 	1	 	  	 	2015	 	  	 	59,014	 	  	 	320	 	  	 	973	 
	 Nashville
	  	 	1	 	  	 	2015	 	  	 	47,625	 	  	 	288	 	  	 	1,085	 
	 Raleigh
	  	 	1	 	  	 	2014	 	  	 	51,280	 	  	 	265	 	  	 	996	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Southeast United States
	  	 	5	 	  	 	2014	 	  	$	56,051	 	  	 	1,480	 	  	 	953	 
	 Las Vegas
	  	 	1	 	  	 	2012	 	  	$	62,169	 	  	 	320	 	  	 	1,042	 
	 Phoenix
	  	 	1	 	  	 	2012	 	  	 	54,398	 	  	 	274	 	  	 	966	 
	 Denver
	  	 	1	 	  	 	2014	 	  	 	56,423	 	  	 	228	 	  	 	930	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Western United States
	  	 	3	 	  	 	2013	 	  	$	57,664	 	  	 	822	 	  	 	986	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Total/Weighted average
	  	 	23	 	  	 	2012	 	  	$	58,866	 	  	 	7,289	 	  	 	966	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 

 Year-over-year comparison 
  

																													
	 	  	 	 	  	NOI	 	 	NOI margin	 
	 Geography
	  	Suites	 	  	Q4 2020	 	  	Q4 2019	 	  	Change (%)	 	 	Q4 2020	 	 	Q4 2019	 	 	Change (%)	 
	 Austin
	  	 	1,454	 	  	$	3,064	 	  	$	3,296	 	  	 	(7.0	%) 	 	 	54.5	% 	 	 	59.7	% 	 	 	(5.2	%) 
	 Houston
	  	 	1,098	 	  	 	1,798	 	  	 	2,176	 	  	 	(17.4	%) 	 	 	50.4	% 	 	 	54.8	% 	 	 	(4.4	%) 
	 Dallas
	  	 	640	 	  	 	989	 	  	 	1,017	 	  	 	(2.8	%) 	 	 	46.2	% 	 	 	45.7	% 	 	 	0.5	% 
	 San Antonio
	  	 	276	 	  	 	456	 	  	 	514	 	  	 	(11.3	%) 	 	 	48.5	% 	 	 	52.0	% 	 	 	(3.5	%) 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Texas
	  	 	3,468	 	  	$	6,307	 	  	$	7,003	 	  	 	(9.9	%) 	 	 	51.4	% 	 	 	55.1	% 	 	 	(3.7	%) 
	 Orlando
	  	 	1,215	 	  	$	3,031	 	  	$	3,364	 	  	 	(9.9	%) 	 	 	60.6	% 	 	 	62.3	% 	 	 	(1.7	%) 
	 Tampa
	  	 	304	 	  	 	871	 	  	 	828	 	  	 	5.2	% 	 	 	68.2	% 	 	 	65.5	% 	 	 	2.7	% 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Florida
	  	 	1,519	 	  	$	3,902	 	  	$	4,192	 	  	 	(6.9	%) 	 	 	62.1	% 	 	 	62.9	% 	 	 	(0.8	%) 
	 Atlanta
	  	 	607	 	  	$	973	 	  	$	1,337	 	  	 	(27.2	%) 	 	 	43.2	% 	 	 	55.2	% 	 	 	(12.0	%) 
	 Charlotte
	  	 	320	 	  	 	782	 	  	 	768	 	  	 	1.8	% 	 	 	64.7	% 	 	 	62.8	% 	 	 	1.9	% 
	 Nashville
	  	 	288	 	  	 	743	 	  	 	732	 	  	 	1.5	% 	 	 	65.7	% 	 	 	65.5	% 	 	 	0.2	% 
	 Raleigh
	  	 	265	 	  	 	607	 	  	 	644	 	  	 	(5.7	%) 	 	 	59.2	% 	 	 	60.0	% 	 	 	(0.8	%) 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Southeast United States
	  	 	1,480	 	  	$	3,105	 	  	$	3,481	 	  	 	(10.8	%) 	 	 	55.3	% 	 	 	59.7	% 	 	 	(4.4	%) 
	 Las Vegas
	  	 	320	 	  	$	858	 	  	$	819	 	  	 	4.8	% 	 	 	70.3	% 	 	 	68.7	% 	 	 	1.6	% 
	 Phoenix
	  	 	274	 	  	 	726	 	  	 	715	 	  	 	1.5	% 	 	 	64.9	% 	 	 	66.2	% 	 	 	(1.3	%) 
	 Denver
	  	 	228	 	  	 	706	 	  	 	754	 	  	 	(6.4	%) 	 	 	65.8	% 	 	 	69.4	% 	 	 	(3.6	%) 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Western United States
	  	 	822	 	  	$	2,290	 	  	$	2,288	 	  	 	0.1	% 	 	 	67.1	% 	 	 	68.1	% 	 	 	(1.0	%) 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Total/Weighted average
	  	 	7,289	 	  	$	15,604	 	  	$	16,964	 	  	 	(8.0	%) 	 	 	56.6	% 	 	 	59.4	% 	 	 	(2.8	%) 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 

 The Houston and Orlando markets are among the economies hardest hit by COVID-19, driven by elevated unemployment in the oil
and hospitality-related industries, respectively. While the NOI and NOI margin for the Company’s portfolio have decreased year-over-year, they have improved from the third quarter of 2020, as shown in the table below. Management expects NOI
will continue to improve into 2021 (see “Non-IFRS measures and forward-looking statements” on page 1). 

  
 52 2020 ANNUAL REPORT
TRICON RESIDENTIAL 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 

			
	4.2 Multi-Family Rental	  	





  

 Quarter-over-quarter comparison 

 

																													
	 	  	 	 	  	NOI	 	 	NOI margin	 
	 Geography
	  	Suites	 	  	Q4 2020	 	  	Q3 2020	 	  	Change (%)	 	 	Q4 2020	 	 	Q3 2020	 	 	Change (%)	 
	 Austin
	  	 	1,454	 	  	$	3,064	 	  	$	3,046	 	  	 	0.6	% 	 	 	54.5	% 	 	 	54.1	% 	 	 	0.4	% 
	 Houston
	  	 	1,098	 	  	 	1,798	 	  	 	1,782	 	  	 	0.9	% 	 	 	50.4	% 	 	 	48.7	% 	 	 	1.7	% 
	 Dallas
	  	 	640	 	  	 	989	 	  	 	903	 	  	 	9.5	% 	 	 	46.2	% 	 	 	42.0	% 	 	 	4.2	% 
	 San Antonio
	  	 	276	 	  	 	456	 	  	 	418	 	  	 	9.1	% 	 	 	48.5	% 	 	 	46.7	% 	 	 	1.8	% 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Texas
	  	 	3,468	 	  	$	6,307	 	  	$	6,149	 	  	 	2.6	% 	 	 	51.4	% 	 	 	49.8	% 	 	 	1.6	% 
	 Orlando
	  	 	1,215	 	  	$	3,031	 	  	$	2,828	 	  	 	7.2	% 	 	 	60.6	% 	 	 	57.1	% 	 	 	3.5	% 
	 Tampa
	  	 	304	 	  	 	871	 	  	 	798	 	  	 	9.1	% 	 	 	68.2	% 	 	 	63.4	% 	 	 	4.8	% 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Florida
	  	 	1,519	 	  	$	3,902	 	  	$	3,626	 	  	 	7.6	% 	 	 	62.1	% 	 	 	58.3	% 	 	 	3.8	% 
	 Atlanta
	  	 	607	 	  	$	973	 	  	$	1,131	 	  	 	(14.0	%) 	 	 	43.2	% 	 	 	50.2	% 	 	 	(7.0	%) 
	 Charlotte
	  	 	320	 	  	 	782	 	  	 	763	 	  	 	2.5	% 	 	 	64.7	% 	 	 	64.1	% 	 	 	0.6	% 
	 Nashville
	  	 	288	 	  	 	743	 	  	 	687	 	  	 	8.2	% 	 	 	65.7	% 	 	 	64.1	% 	 	 	1.6	% 
	 Raleigh
	  	 	265	 	  	 	607	 	  	 	599	 	  	 	1.3	% 	 	 	59.2	% 	 	 	59.2	% 	 	 	—  	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Southeast United States
	  	 	1,480	 	  	$	3,105	 	  	$	3,180	 	  	 	(2.4	%) 	 	 	55.3	% 	 	 	57.6	% 	 	 	(2.3	%) 
	 Las Vegas
	  	 	320	 	  	$	858	 	  	$	766	 	  	 	12.0	% 	 	 	70.3	% 	 	 	67.2	% 	 	 	3.1	% 
	 Phoenix
	  	 	274	 	  	 	726	 	  	 	676	 	  	 	7.4	% 	 	 	64.9	% 	 	 	62.0	% 	 	 	2.9	% 
	 Denver
	  	 	228	 	  	 	706	 	  	 	717	 	  	 	(1.5	%) 	 	 	65.8	% 	 	 	66.3	% 	 	 	(0.5	%) 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Western United States
	  	 	822	 	  	$	2,290	 	  	$	2,159	 	  	 	6.1	% 	 	 	67.1	% 	 	 	65.2	% 	 	 	1.9	% 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Total/Weighted average
	  	 	7,289	 	  	$	15,604	 	  	$	15,114	 	  	 	3.2	% 	 	 	56.6	% 	 	 	55.2	% 	 	 	1.4	% 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 

 Market-level details for average monthly rent and physical occupancy for the fourth quarter of 2020 and applicable comparative
periods are shown below. 
 Year-over-year comparison 
  

																													
	 	  	 	 	  	Average monthly rent(1)	 	 	Occupancy	 
	 Geography
	  	Suites	 	  	Q4 2020	 	  	Q4 2019	 	  	Change (%)	 	 	Q4 2020	 	 	Q4 2019	 	 	Change (%)	 
	 Austin
	  	 	1,454	 	  	$	1,176	 	  	$	1,170	 	  	 	0.5	% 	 	 	93.4	% 	 	 	95.5	% 	 	 	(2.1	%) 
	 Houston
	  	 	1,098	 	  	 	1,112	 	  	 	1,143	 	  	 	(2.7	%) 	 	 	93.1	% 	 	 	95.9	% 	 	 	(2.8	%) 
	 Dallas
	  	 	640	 	  	 	1,103	 	  	 	1,127	 	  	 	(2.1	%) 	 	 	93.5	% 	 	 	92.4	% 	 	 	1.1	% 
	 San Antonio
	  	 	276	 	  	 	1,076	 	  	 	1,124	 	  	 	(4.3	%) 	 	 	93.8	% 	 	 	95.6	% 	 	 	(1.8	%) 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Texas
	  	 	3,468	 	  	$	1,134	 	  	$	1,150	 	  	 	(1.4	%) 	 	 	93.4	% 	 	 	95.1	% 	 	 	(1.7	%) 
	 Orlando
	  	 	1,215	 	  	$	1,342	 	  	$	1,414	 	  	 	(5.1	%) 	 	 	92.6	% 	 	 	94.2	% 	 	 	(1.6	%) 
	 Tampa
	  	 	304	 	  	 	1,338	 	  	 	1,321	 	  	 	1.3	% 	 	 	95.3	% 	 	 	96.2	% 	 	 	(0.9	%) 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Florida
	  	 	1,519	 	  	$	1,341	 	  	$	1,395	 	  	 	(3.9	%) 	 	 	93.2	% 	 	 	94.6	% 	 	 	(1.4	%) 
	 Atlanta
	  	 	607	 	  	$	1,303	 	  	$	1,301	 	  	 	0.2	% 	 	 	93.5	% 	 	 	93.5	% 	 	 	—  	 
	 Charlotte
	  	 	320	 	  	 	1,183	 	  	 	1,171	 	  	 	1.0	% 	 	 	92.9	% 	 	 	95.6	% 	 	 	(2.7	%) 
	 Nashville
	  	 	288	 	  	 	1,204	 	  	 	1,207	 	  	 	(0.2	%) 	 	 	95.1	% 	 	 	95.4	% 	 	 	(0.3	%) 
	 Raleigh
	  	 	265	 	  	 	1,180	 	  	 	1,188	 	  	 	(0.7	%) 	 	 	93.8	% 	 	 	95.5	% 	 	 	(1.7	%) 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Southeast United States
	  	 	1,480	 	  	$	1,236	 	  	$	1,234	 	  	 	0.2	% 	 	 	93.8	% 	 	 	94.7	% 	 	 	(0.9	%) 
	 Las Vegas
	  	 	320	 	  	$	1,223	 	  	$	1,209	 	  	 	1.2	% 	 	 	95.8	% 	 	 	94.5	% 	 	 	1.3	% 
	 Phoenix
	  	 	274	 	  	 	1,247	 	  	 	1,227	 	  	 	1.6	% 	 	 	95.3	% 	 	 	94.4	% 	 	 	0.9	% 
	 Denver
	  	 	228	 	  	 	1,475	 	  	 	1,470	 	  	 	0.3	% 	 	 	94.4	% 	 	 	96.0	% 	 	 	(1.6	%) 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Western United States
	  	 	822	 	  	$	1,301	 	  	$	1,287	 	  	 	1.1	% 	 	 	95.3	% 	 	 	94.9	% 	 	 	0.4	% 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Total/Weighted average
	  	 	7,289	 	  	$	1,217	 	  	$	1,233	 	  	 	(1.3	%) 	 	 	93.6	% 	 	 	94.9	% 	 	 	(1.3	%) 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 

  

	(1)	 Average monthly rent represents average monthly rental income per suite for occupied suites and reflects the
impact of rent concessions amortized over the life of the related leases. The year-over-year change in average monthly rent does not equal the average quarterly rent growth, which is calculated as the percentage difference between the monthly rent
from an expiring lease and the monthly rent from the next lease. 



  
 TRICON RESIDENTIAL
2020 ANNUAL REPORT 53 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 

			
	4.2 Multi-Family Rental	  	





  

 Quarter-over-quarter comparison 

 

																													
	 	  	 	 	  	Average monthly rent(1)	 	 	Occupancy	 
	 Geography
	  	Suites	 	  	Q4 2020	 	  	Q3 2020	 	  	Change (%)	 	 	Q4 2020	 	 	Q3 2020	 	 	Change (%)	 
	 Austin
	  	 	1,454	 	  	$	1,176	 	  	$	1,178	 	  	 	(0.2	%) 	 	 	93.4	% 	 	 	93.9	% 	 	 	(0.5	%) 
	 Houston
	  	 	1,098	 	  	 	1,112	 	  	 	1,135	 	  	 	(2.0	%) 	 	 	93.1	% 	 	 	92.2	% 	 	 	0.9	% 
	 Dallas
	  	 	640	 	  	 	1,103	 	  	 	1,128	 	  	 	(2.2	%) 	 	 	93.5	% 	 	 	91.6	% 	 	 	1.9	% 
	 San Antonio
	  	 	276	 	  	 	1,076	 	  	 	1,090	 	  	 	(1.3	%) 	 	 	93.8	% 	 	 	93.3	% 	 	 	0.5	% 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Texas
	  	 	3,468	 	  	$	1,134	 	  	$	1,148	 	  	 	(1.2	%) 	 	 	93.4	% 	 	 	92.9	% 	 	 	0.5	% 
	 Orlando
	  	 	1,215	 	  	$	1,342	 	  	$	1,381	 	  	 	(2.8	%) 	 	 	92.6	% 	 	 	90.0	% 	 	 	2.6	% 
	 Tampa
	  	 	304	 	  	 	1,338	 	  	 	1,332	 	  	 	0.5	% 	 	 	95.3	% 	 	 	95.2	% 	 	 	0.1	% 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Florida
	  	 	1,519	 	  	$	1,341	 	  	$	1,371	 	  	 	(2.2	%) 	 	 	93.2	% 	 	 	91.0	% 	 	 	2.2	% 
	 Atlanta
	  	 	607	 	  	$	1,303	 	  	$	1,313	 	  	 	(0.8	%) 	 	 	93.5	% 	 	 	92.4	% 	 	 	1.1	% 
	 Charlotte
	  	 	320	 	  	 	1,183	 	  	 	1,174	 	  	 	0.8	% 	 	 	92.9	% 	 	 	93.7	% 	 	 	(0.8	%) 
	 Nashville
	  	 	288	 	  	 	1,204	 	  	 	1,191	 	  	 	1.1	% 	 	 	95.1	% 	 	 	94.0	% 	 	 	1.1	% 
	 Raleigh
	  	 	265	 	  	 	1,180	 	  	 	1,194	 	  	 	(1.2	%) 	 	 	93.8	% 	 	 	94.0	% 	 	 	(0.2	%) 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Southeast United States
	  	 	1,480	 	  	$	1,236	 	  	$	1,238	 	  	 	(0.2	%) 	 	 	93.8	% 	 	 	93.3	% 	 	 	0.5	% 
	 Las Vegas
	  	 	320	 	  	$	1,223	 	  	$	1,207	 	  	 	1.3	% 	 	 	95.8	% 	 	 	95.0	% 	 	 	0.8	% 
	 Phoenix
	  	 	274	 	  	 	1,247	 	  	 	1,233	 	  	 	1.1	% 	 	 	95.3	% 	 	 	95.4	% 	 	 	(0.1	%) 
	 Denver
	  	 	228	 	  	 	1,475	 	  	 	1,473	 	  	 	0.1	% 	 	 	94.4	% 	 	 	94.0	% 	 	 	0.4	% 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Western United States
	  	 	822	 	  	$	1,301	 	  	$	1,289	 	  	 	0.9	% 	 	 	95.3	% 	 	 	94.8	% 	 	 	0.5	% 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Total/Weighted average
	  	 	7,289	 	  	$	1,217	 	  	$	1,228	 	  	 	(0.9	%) 	 	 	93.6	% 	 	 	92.8	% 	 	 	0.8	% 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 

  

	(1)	 Average monthly rent represents average monthly rental income per suite for occupied suites and reflects the
impact of rent concessions amortized over the life of the related leases. The quarter-over-quarter change in average monthly rent does not equal the average quarterly rent growth, which is calculated as the percentage difference between the monthly
rent from an expiring lease and the monthly rent from the next lease. 


 Rent growth by market for the U.S. multi-family rental portfolio
for the fourth quarter of 2020 is presented below. 
  

													
	 	  	Rent growth(1)	 
	 Geography
	  	Renewal	 	 	New move-in	 	 	Blended	 
	 Austin
	  	 	3.3	% 	 	 	(5.0	%) 	 	 	(2.0	%) 
	 Houston
	  	 	0.1	% 	 	 	(8.2	%) 	 	 	(4.2	%) 
	 Dallas
	  	 	2.1	% 	 	 	(5.2	%) 	 	 	(2.4	%) 
	 San Antonio
	  	 	1.5	% 	 	 	(11.1	%) 	 	 	(5.7	%) 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Texas
	  	 	1.9	% 	 	 	(6.5	%) 	 	 	(3.1	%) 
	 Orlando
	  	 	1.6	% 	 	 	(9.4	%) 	 	 	(5.4	%) 
	 Tampa
	  	 	4.4	% 	 	 	4.0	% 	 	 	4.2	% 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Florida
	  	 	2.1	% 	 	 	(6.7	%) 	 	 	(3.5	%) 
	 Atlanta
	  	 	2.5	% 	 	 	(2.9	%) 	 	 	(0.7	%) 
	 Charlotte
	  	 	2.8	% 	 	 	(0.3	%) 	 	 	1.6	% 
	 Nashville
	  	 	1.4	% 	 	 	3.4	% 	 	 	2.0	% 
	 Raleigh
	  	 	2.8	% 	 	 	(4.8	%) 	 	 	0.1	% 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Southeast United States
	  	 	2.4	% 	 	 	(1.4	%) 	 	 	0.5	% 
	 Las Vegas
	  	 	3.8	% 	 	 	6.0	% 	 	 	4.7	% 
	 Phoenix
	  	 	4.5	% 	 	 	7.6	% 	 	 	5.9	% 
	 Denver
	  	 	1.8	% 	 	 	(8.2	%) 	 	 	(4.4	%) 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Western United States
	  	 	3.5	% 	 	 	2.6	% 	 	 	2.5	% 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Total/Weighted average
	  	 	2.3	% 	 	 	(5.6	%) 	 	 	(1.8	%) 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 

  

	(1)	 Average rent growth during the quarter represents the percentage difference between the monthly rent from an
expiring lease and the monthly rent from the next lease and reflects the impact of rent concessions amortized over the life of the related lease. 



  
 54 2020 ANNUAL REPORT
TRICON RESIDENTIAL 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 

			
	4.2 Multi-Family Rental	  	





  

 Rental properties 

The table below presents the change in the fair value of rental properties for the twelve months ended December 31, 2020. 

 

					
	 For the year ended December 31

(in thousands of U.S. dollars)
	  	2020	 
	 Cost basis of rental properties, beginning of year
	  	$	1,344,844	 
	 Recurring capital expenditures
	  	 	5,373	 
	 In-suite value-enhancing capital expenditures
	  	 	1,399	 
	 Common area value-enhancing capital expenditures
	  	 	2,295	 
		  	  
	  
	 
	 Total cost basis of rental properties
	  	$	1,353,911	 
	 Cumulative fair value adjustment(1)
	  	 	(22,535	) 
		  	  
	  
	 
	 Fair value of rental properties
	  	$	1,331,376	 
		  	  
	  
	 

  

	(1)	 The Company determined the fair value of each investment property using the direct income capitalization
approach. 


 For the twelve months ended December 31, 2020, recurring capital expenditures of $5.4 million were incurred
predominately for exterior remodelling and turnover activities such as in-suite appliance replacements and full carpet replacements. 
 In-suite
value-enhancing capital expenditures for the year totalled $1.4 million related to flooring and kitchen upgrades, installation of smart home technology and upgraded stainless steel washer and dryer units. 

In addition, $2.3 million was invested to improve common area amenities as several large capital projects resumed in the fourth quarter of 2020 after a
temporary suspension during the COVID-19 pandemic. Projects included clubhouse renovations, pet facility improvements, balcony resurfacing and water-efficient irrigation upgrades. Management believes these projects will provide a more enjoyable
resident experience, improve the properties’ curb appeal and reduce future utility expenses. 
 The following table provides details regarding costs to
maintain for the three months ended December 31, 2020 and applicable comparative periods. The financial information presented in the two tables below includes prior-year results reported for comparability, although Tricon did not own the
portfolio prior to June 11, 2019. Management believes this information is useful in understanding the performance of the acquired portfolio. 
  

																																	
	 (in thousands of U.S. dollars, except cost to maintain per suite
and
cost to maintain per square foot)
	  	Q4 2020	 	  	Q3 2020	 	  	Q2 2020	 	  	Q1 2020	 	  	Q4 2019	 	  	Q3 2019	 	  	Q2 2019	 	  	Q1 2019	 
	 Recurring operating expense
	  				  				  				  				  				  				  				  			
	 Repairs and maintenance operating expense
	  	$	1,017	 	  	$	1,051	 	  	$	874	 	  	$	935	 	  	$	976	 	  	$	981	 	  	$	880	 	  	$	834	 
	 Turnover operating expense
	  	 	197	 	  	 	112	 	  	 	70	 	  	 	155	 	  	 	143	 	  	 	150	 	  	 	92	 	  	 	52	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Total recurring operating expense
	  	 	1,214	 	  	 	1,163	 	  	 	944	 	  	 	1,090	 	  	 	1,119	 	  	 	1,131	 	  	 	972	 	  	 	886	 
	 Recurring capital expenditures
	  				  				  				  				  				  				  				  			
	 Repairs and maintenance capital expense
	  	 	941	 	  	 	538	 	  	 	464	 	  	 	445	 	  	 	745	 	  	 	479	 	  	 	508	 	  	 	287	 
	 Turnover capital expense
	  	 	934	 	  	 	961	 	  	 	462	 	  	 	628	 	  	 	962	 	  	 	946	 	  	 	758	 	  	 	771	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Total recurring capital expenditures
	  	 	1,875	 	  	 	1,499	 	  	 	926	 	  	 	1,073	 	  	 	1,707	 	  	 	1,425	 	  	 	1,266	 	  	 	1,058	 
	 Total cost to maintain
	  	$	3,089	 	  	$	2,662	 	  	$	1,870	 	  	$	2,163	 	  	$	2,826	 	  	$	2,556	 	  	$	2,238	 	  	$	2,324	 
	 Annualized recurring operating expense per suite
	  	 	666	 	  	 	823	 	  	 	518	 	  	 	598	 	  	 	614	 	  	 	621	 	  	 	533	 	  	 	486	 
	 Annualized recurring capital expense per suite
	  	 	1,029	 	  	 	638	 	  	 	508	 	  	 	589	 	  	 	937	 	  	 	782	 	  	 	695	 	  	 	581	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Total annualized cost to maintain per suite
	  	$	1,695	 	  	$	1,461	 	  	$	1,026	 	  	$	1,187	 	  	$	1,551	 	  	$	1,403	 	  	$	1,228	 	  	$	1,067	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Total annualized cost to maintain per square foot
	  	$	1.75	 	  	$	1.51	 	  	$	1.06	 	  	$	1.23	 	  	$	1.61	 	  	$	1.45	 	  	$	1.27	 	  	$	1.10	 

 Total cost to maintain increased by $0.3 million to $3.1 million for the three months ended December 31, 2020 compared to
the same period in the prior year. Additional work was performed at the properties for repairs and maintenance to replace in-suite appliances and restore common areas in order to attract and retain residents. 

  
 TRICON RESIDENTIAL
2020 ANNUAL REPORT 55 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 

			
	4.2 Multi-Family Rental	  	





  

 The following table provides details regarding recurring and non-recurring capital expenditures for the U.S.
multi-family rental portfolio. 
  

																																	
	 (in thousands of U.S. dollars)
	  	Q4 2020	 	  	Q3 2020	 	  	Q2 2020	 	  	Q1 2020	 	  	Q4 2019	 	  	Q3 2019	 	  	Q2 2019	 	  	Q1 2019	 
	 Recurring capital expenditures(1)
	  	$	1,875	 	  	$	1,499	 	  	$	926	 	  	$	1,073	 	  	$	1,707	 	  	$	1,425	 	  	$	1,266	 	  	$	1,058	 
	 In-suite value-enhancing capital
expenditures(2)
	  	 	333	 	  	 	189	 	  	 	393	 	  	 	484	 	  	 	709	 	  	 	585	 	  	 	502	 	  	 	592	 
	 Common area value-enhancing capital
expenditures(2)
	  	 	1,336	 	  	 	250	 	  	 	256	 	  	 	453	 	  	 	870	 	  	 	594	 	  	 	578	 	  	 	679	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Total capital expenditures
	  	$	3,544	 	  	$	1,938	 	  	$	1,575	 	  	$	2,010	 	  	$	3,286	 	  	$	2,604	 	  	$	2,346	 	  	$	2,329	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 

  

	(1)	 Recurring capital expenditures represent ongoing costs associated with maintaining and preserving the quality
of a property including significant work performed during the turnover of a suite. 



	(2)	 Value-enhancing capital expenditures are defined as capital expenditures that go above and beyond maintaining
the quality of a property and are incurred for the purpose of increasing expected future returns. These costs for the multi-family portfolio are split between work performed in-suite and that performed on common area spaces and amenities.



 Total capital expenditures were $3.5 million for the three months ended December 31, 2020, an increase of $0.3 million compared to
the same period in the prior year attributable to the delay of several large-scale common area projects planned which resumed construction in the fourth quarter of 2020. 

4.2.2 Canadian multi-family rental – The Selby 
 As
at December 31, 2020, Tricon’s Canadian multi-family rental portfolio included its first operating building, The Selby, located in downtown Toronto. The Selby was substantially completed and nearly stabilized and was therefore reclassified
from the Residential Development segment (Section 4.3) to the Multi-Family Rental segment for internal and external reporting purposes during the first quarter of 2020. 

Operating results 
 Similar to Tricon’s U.S.
multi-family rental business, the Company’s Canadian multi-family rental business continued to experience softening demand fundamentals during the quarter as a result of the challenges presented by the COVID-19 pandemic. The confluence of
border restrictions, curtailed immigration, elevated unemployment, work-from-home orders, and temporary migration to suburban regions for more space continued to place downward pressure on occupancy and rents in downtown Toronto. This impact was
further exacerbated by increased supply, attributable to increased rental listings of vacant condominium units (recently completed buildings and units withdrawn from the short-term rental market) and new purpose-built rental buildings coming online.
The slowdown in demand and additional supply increased competition among rental housing providers resulting in lower rental rates and heightened concessions across the rental market. Despite these challenges, purpose-built rental properties have
performed better than condominium rental properties in terms of average rent, occupancy and renewal rates as residents pursue a flight to quality and the benefits of professionally managed buildings, which are now available at a lower price point.

 During the fourth quarter, the Canadian multi-family rental business reported an NOI margin of 55.6%, representing a 1.6% increase over the prior
quarter. The Company continued with several of its marketing initiatives from the previous quarter to attract and retain residents, such as online resident engagement programs, targeted digital advertising campaigns and customer service training for
on-site staff. Tricon proactively transitioned to an occupancy bias in the fourth quarter by offering pricing adjustments for suites on lower floors of The Selby. The strategic use of incentives and flexible leasing options to secure and retain
residents helped maintain occupancy at 87.0% and reduced turnover to 41.6% but negatively impacted blended rent growth which decreased to (5.1%). 
 While
these metrics remain well below long-term expectations, the Company firmly believes that the downtown Toronto rental market will bounce back as the COVID-19 vaccination program is accelerated, businesses re-open and higher education students return
to in-person learning (see “Non-IFRS measures and forward-looking statements” on page 1). 

  
 56 2020 ANNUAL REPORT
TRICON RESIDENTIAL 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 

			
	4.2 Multi-Family Rental	  	





  

 The tables in this section provide a summary of certain operating metrics for the Canadian multi-family
rental portfolio that management uses to evaluate the performance of this business segment over time and relative to industry peers. Many of the metrics referenced in these tables are KPI measures that are defined in Section 7.1 and are
key drivers of revenue and ultimately NOI (KPI measure; refer to Section 7.1). 
 All dollar amounts in this subsection are
expressed in Canadian dollars and represent Tricon’s share of the operating results unless otherwise indicated. Tricon currently owns a 15% equity interest in The Selby. 

 

																	
	 	  	Q4 2020	 	 	Q3 2020	 	 	Q2 2020	 	 	Q1 2020	 
	 Number of suites
	  	 	500	 	 	 	500	 	 	 	500	 	 	 	500	 
	 Occupancy
	  	 	87.0	% 	 	 	87.1	% 	 	 	88.2	% 	 	 	85.8	% 
	 Annualized turnover rate
	  	 	41.6	% 	 	 	52.8	% 	 	 	27.2	% 	 	 	10.4	% 
	 Average monthly rent(1)
	  	$	2,648	 	 	$	2,664	 	 	$	2,675	 	 	$	2,666	 
	 Average quarterly rent growth –
renewals(2)
	  	 	1.3	% 	 	 	(0.7	%) 	 	 	0.8	% 	 	 	2.2	% 
	 Average quarterly rent growth – new
move-in(2)
	  	 	(11.3	%) 	 	 	(3.8	%) 	 	 	—  	 	 	 	4.2	% 
	 Average quarterly rent growth –
blended(2)
	  	 	(5.1	%) 	 	 	(2.0	%) 	 	 	0.7	% 	 	 	2.4	% 

  

	(1)	 Average monthly rent represents average monthly rental income per suite for occupied suites and reflects the
impact of rent concessions amortized over the life of the related leases. 



	(2)	 Average rent growth during the period represents the percentage difference between the monthly rent from an
expiring lease and the monthly rent from the next lease and reflects the impact of rent concessions amortized over the life of the related lease. Excluding the impact of concessions, the Q4 2020 rent growth was (0.4%) for renewals, (5.2%) for
new move-ins and (2.8%) blended. 


 The table below presents a breakdown of Tricon’s NOI (KPI measure; refer to
Section 7.1) for the Canadian multi-family rental business. Comparative period results are not shown as The Selby was in the initial lease-up phase during 2019. 
  

																	
	 (in thousands of Canadian dollars, unless otherwise indicated)
	  	For the three months
ended December 31, 2020	 	 	% of
revenue	 	 	For the twelve months
ended December 31, 2020	 	 	% of
revenue	 
	 Rental revenue
	  	    $	530	 	 				 	      $	2,121	 	 			
	 Concessions and abatements
	  	 	(39	) 	 				 	 	(94	) 	 			
	 Fees and other revenue(1)
	  	 	30	 	 				 	 	124	 	 			
	 Bad debt expense
	  	 	(5	) 	 				 	 	(33	) 	 			
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Total revenue from rental properties
	  	    $	516	 	 	 	100	% 	 	    $	2,118	 	 	 	100	% 
	 Property taxes
	  	 	50	 	 	 	10	% 	 	 	203	 	 	 	10	% 
	 Repairs, maintenance and turnover
	  	 	33	 	 	 	6	% 	 	 	116	 	 	 	5	% 
	 Property management expenses
	  	 	52	 	 	 	10	% 	 	 	233	 	 	 	11	% 
	 Utilities
	  	 	33	 	 	 	6	% 	 	 	121	 	 	 	6	% 
	 Property insurance
	  	 	19	 	 	 	4	% 	 	 	73	 	 	 	3	% 
	 Marketing and leasing
	  	 	22	 	 	 	4	% 	 	 	78	 	 	 	4	% 
	 Other property operating expense
	  	 	20	 	 	 	4	% 	 	 	52	 	 	 	2	% 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Total direct operating expenses
	  	 	229	 	 				 	 	876	 	 			
	 Net operating income (NOI)
	  	    $	287	 	 				 	    $	1,242	 	 			
	 Net operating income (NOI) margin
	  	 	55.6	% 	 				 	 	58.6	% 	 			
	 Net operating income (NOI)(2)
	  	US$	220	 	 				 	US$	927	 	 			

  

	(1)	 Fees and other revenue include commercial rental revenue, ancillary income earned on usage of facilities,
parking services and storage usage fees as well as utility recovery from residents. 



	(2)	 The weighted average USD/CAD exchange rate used to present the multi-family rental portfolio NOI was 1.3030 and
1.3398 for the three and twelve months ended December 31, 2020, respectively. 


 NOI for the three months ended December 31,
2020 was C$0.3 million, remaining relatively in line with the third quarter of 2020 and reflecting an NOI margin of 55.6% . Tricon’s share of revenue generated by The Selby was C$0.5 million, attributable to average monthly rent of C$2,648 per
suite and occupancy of 87.0%, while operating expenses were C$0.2 million. 

  
 TRICON RESIDENTIAL
2020 ANNUAL REPORT 57 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 

			
	4.3 Residential Development	  	





  

 4.3 Residential Development 

Tricon’s Residential Development business segment currently includes (i) new Class A multi-family rental apartments in Canada that are in the
development and construction stages, and which Tricon intends to own long term following completion, and (ii) legacy investments in for-sale housing development projects predominantly in the U.S. Once construction is complete and lease-up
stabilization occurs, newly built Canadian multi-family rental apartments will transition from the Residential Development segment to Tricon’s multi-family rental business segment. 

The table below presents the components of Tricon’s net assets in residential developments, including Canadian multi-family developments which are
classified as either investments or consolidated development properties according to their legal and ownership structure. 
  

									
	 As at

(in thousands of U.S. dollars)
	  	December 31, 2020	 	  	December 31, 2019	 
	 Investments in Canadian multi-family
developments(1) – See Section 4.3.1
	  	$	74,955	 	  	$	75,141	 
	 Canadian development properties, net of debt(2)
– See Section 4.3.1
	  	 	53,161	 	  	 	22,021	 
	 Investments in for-sale housing – See Section 4.3.2
	  	 	164,842	 	  	 	300,653	 
		  	  
	  
	 	  	  
	  
	 
	 Net investments in residential developments
	  	 	292,958	 	  	 	397,815	 
	 Other net assets(3)
	  	 	10,002	 	  	 	3,471	 
		  	  
	  
	 	  	  
	  
	 
	 Net assets attributable to Tricon – see Section 5
	  	$	302,960	 	  	$	401,286	 
		  	  
	  
	 	  	  
	  
	 

  

	(1)	 Includes Tricon’s investment in The Taylor, The Ivy, West Don Lands and 7 Labatt, where Tricon is a
co-investor in each project alongside institutional partners. The comparative balance also includes The Selby. 



	(2)	 Refers to the net assets of The James (Scrivener Square) and The Shops of Summerhill, which are wholly-owned by
Tricon as of June 23, 2020. As of December 31, 2020, the net assets of $53,161 include development properties of $110,018 less debt of $60,018 and other net assets of $3,161. 



	(3)	 Other net assets include deferred income tax assets and other working capital items. 



  
 58 2020 ANNUAL REPORT
TRICON RESIDENTIAL 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 

			
	4.3 Residential Development	  	





  

 4.3.1 Canadian Class A multi-family developments 

Tricon is focused on developing, owning and operating the leading portfolio of Class A rental apartments in the Greater Toronto Area. The Company is one
of the most active rental developers in downtown Toronto with eight projects totalling 3,720 units (including select condominium units) under construction or in pre-construction as at December 31, 2020, in addition to 500 units at The Selby,
which is now essentially stabilized. The Company’s portfolio also includes an existing commercial property, The Shops of Summerhill, adjacent to one of its multi-family development properties. 

As at December 31, 2020, the carrying value of Tricon’s net assets in its Canadian multi-family development portfolio was $128.1 million. The
following table summarizes the net assets by project. 
  

																																			
	 	 	 	  	December 31, 2020	 	  	December 31, 2019	 
	 (in thousands of U.S. dollars)
	  	Tricon’s share
of property
value	 	  	Tricon’s
share of debt
and lease
obligations(1)	 	 	Tricon’s share
of net working
capital and
other items	 	 	Tricon’s
net assets(2)	 	  	Tricon’s share
of property
value	 	  	Tricon’s
share of debt
and lease
obligations(1)	 	 	Tricon’s share
of net working
capital and
other items	 	  	Tricon’s
net assets(2)	 
	 Projects in pre-construction
	 		  				  				 				 				  				  				 				  			
	 The James (Scrivener Square)
	 	 




	  	$	73,299	 	  	$	(47,555	) 	 	$	1,514	 	 	$	27,258	 	  	$	25,170	 	  	$	(10,779	) 	 	$	289	 	  	$	14,680	 
	 7 Labatt
	 	 




	  	 	24,941	 	  	 	(8,814	) 	 	 	53	 	 	 	16,180	 	  	 	23,593	 	  	 	(8,640	) 	 	 	66	 	  	 	15,019	 
	 West Don Lands – Blocks 3/4/7
	 	 




	  	 	23,639	 	  	 	(11,818	) 	 	 	(2,246	) 	 	 	9,575	 	  	 	6,121	 	  	 	(5,075	) 	 	 	201	 	  	 	1,247	 
	 West Don Lands – Block 20
	 	 




	  	 	15,232	 	  	 	(14,551	) 	 	 	256	 	 	 	937	 	  	 	3,117	 	  	 	(2,963	) 	 	 	129	 	  	 	283	 
	 West Don Lands – Block 10(3)
	 	 




	  	 	850	 	  	 	—  	 	 	 	2,144	 	 	 	2,994	 	  	 	—  	 	  	 	—  	 	 	 	1,689	 	  	 	1,689	 
		 		  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	  	  
	  
	 
	 Subtotal – Projects in pre-construction
	 		  	$	137,961	 	  	$	(82,738	) 	 	$	1,721	 	 	$	56,944	 	  	$	58,001	 	  	$	(27,457	) 	 	$	2,374	 	  	$	32,918	 
	 Projects under construction
	 		  				  				 				 				  				  				 				  			
	 The Taylor (57 Spadina)
	 	 




	  	$	33,972	 	  	$	(11,920	) 	 	$	(664	) 	 	$	21,388	 	  	$	27,088	 	  	$	(7,297	) 	 	$	18	 	  	$	19,809	 
	 West Don Lands – Block 8
	 	 




	  	 	37,496	 	  	 	(29,545	) 	 	 	(468	) 	 	 	7,483	 	  	 	13,047	 	  	 	(16,954	) 	 	 	5,784	 	  	 	1,877	 
	 The Ivy (8 Gloucester)
	 	 




	  	 	19,175	 	  	 	(3,138	) 	 	 	361	 	 	 	16,398	 	  	 	15,046	 	  	 	—  	 	 	 	438	 	  	 	15,484	 
		 		  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	  	  
	  
	 
	 Subtotal – Projects under construction
	 		  	$	90,643	 	  	$	(44,603	) 	 	$	(771	) 	 	$	45,269	 	  	$	55,181	 	  	$	(24,251	) 	 	$	6,240	 	  	$	37,170	 
	 Projects in lease-up
	 		  				  				 				 				  				  				 				  			
	 The Selby (592 Sherbourne)(4)
	 	 




	  	$	—  	 	  	$	—  	 	 	$	—  	 	 	$	—  	 	  	$	37,167	 	  	$	(17,645	) 	 	$	211	 	  	$	19,733	 
		 		  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	  	  
	  
	 
	 Subtotal – Projects in lease-up
	 		  	$	—  	 	  	$	—  	 	 	$	—  	 	 	$	—  	 	  	$	37,167	 	  	$	(17,645	) 	 	$	211	 	  	$	19,733	 
	 Stabilized projects
	 		  				  				 				 				  				  				 				  			
	 The Shops of Summerhill
	 	 




	  	$	36,719	 	  	$	(12,463	) 	 	$	1,647	 	 	$	25,903	 	  	$	10,455	 	  	$	(3,149	) 	 	$	35	 	  	$	7,341	 
		 		  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	  	  
	  
	 
	 Subtotal – Stabilized projects
	 		  	$	36,719	 	  	$	(12,463	) 	 	$	1,647	 	 	$	25,903	 	  	$	10,455	 	  	$	(3,149	) 	 	$	35	 	  	$	7,341	 
		 		  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	  	  
	  
	 
	 Total
	 		  	$	265,323	 	  	$	(139,804	) 	 	$	2,597	 	 	$	128,116	 	  	$	160,804	 	  	$	(72,502	) 	 	$	8,860	 	  	$	97,162	 
		 		  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	  	  
	  
	 
	 Investments in Canadian multi-family developments
	 	 




	  	$	155,305	 	  	$	(79,786	) 	 	$	(564	) 	 	$	74,955	 	  	$	125,179	 	  	$	(58,574	) 	 	$	8,536	 	  	$	75,141	 
	 Canadian development properties, net of
debt(5)
	 	 




	  	 	110,018	 	  	 	(60,018	) 	 	 	3,161	 	 	 	53,161	 	  	 	35,625	 	  	 	(13,928	) 	 	 	324	 	  	 	22,021	 
	 Total
	 		  	$	265,323	 	  	$	(139,804	) 	 	$	2,597	 	 	$	128,116	 	  	$	160,804	 	  	$	(72,502	) 	 	$	8,860	 	  	$	97,162	 

  

	(1)	 Tricon’s share of debt and lease obligations includes land and construction loans (net of deferred
financing fees), vendor take-back loans and lease obligations under ground leases. 



	(2)	 Represents Tricon’s share of development properties and other working capital items, net of debt and lease
obligations. 



	(3)	 Tricon’s share of net assets of DKT B10 LP includes the purchase price paid to third-party partners for a
one-third ownership interest in the partnership. 



	(4)	 The Selby was reclassified from property under development to income-producing property during the first
quarter of 2020, and therefore removed from the Residential Development segment disclosure. 



	(5)	 On June 23, 2020, Tricon acquired the remaining 50% and 75% of The James and The Shops of Summerhill,
respectively, for cash of $7,643 and recognized an additional $65,861 of property value, $53,340 of debt and net working deficit of $4,878. 



  
 TRICON RESIDENTIAL
2020 ANNUAL REPORT 59 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 

			
	4.3 Residential Development	  	





  

 Project details and projections 

The tables in this subsection provide a summary of certain details and projections for Canadian Class A multi-family development projects that management
uses to evaluate the ongoing performance of these projects over time and relative to industry peers. The Canadian multi-family development segment targets a development yield spread (net operating income/project cost) of approximately 100 basis
points over the yield available on core assets, and is expected to deliver a 4.75% yield at the stabilization of the portfolio. Projected units, rentable area, costs and timelines are estimated based on current project plans which are subject to
change. Refer to page 1, “Non-IFRS measures and forward-looking statements”. 
 As at December 31, 2020, the Canadian multi-family
development portfolio consisted of 3,720 projected rental and condominium units. The current status of these units is presented below: 
  

									
	 	  	Projected rental and condominium units	 
	 As at
	  	December 31, 2020	 	  	December 31, 2019	 
	 Pre-construction
	  	 	2,433	 	  	 	2,541	 
	 Construction
	  	 	1,287	 	  	 	286	 
	 Lease-up
	  	 	—  	 	  	 	500	 
		  	  
	  
	 	  	  
	  
	 
	 Total
	  	 	3,720	 	  	 	3,327	 
		  	  
	  
	 	  	  
	  
	 

  

																	
	 	  	 Neighbourhood/

Major intersections in
Toronto
	  	 Fee simple interest/
ground lease
	  	Tricon’s
percentage
interest	 	 	Projected
units(1)	 	  	Estimated
commercial
area (sq. feet)	 
	 Projects in pre-construction
	  		  		  				 				  			
	 The James (Scrivener Square)
	  	 Rosedale
	  	 Fee simple interest
	  	 	100	% 	 	 	120	 	  	 	31,000	 
	 7 Labatt
	  	 Downtown East – Corktown
	  	 Fee simple interest
	  	 	30	% 	 	 	558	 	  	 	51,000	 
	 West Don Lands – Blocks 3/4/7
	  	 Downtown East – Distillery District
	  	 Ground lease
	  	 	33	% 	 	 	855	 	  	 	39,000	 
	 West Don Lands – Block 20
	  	 Downtown East – Distillery District
	  	 Ground lease
	  	 	33	% 	 	 	661	 	  	 	250,000	 
	 West Don Lands – Block 10
	  	 Downtown East – Distillery District
	  	 Ground lease(2)
	  	 	33	% 	 	 	239	 	  	 	TBD	 
		  		  		  				 	  
	  
	 	  	  
	  
	 
	 Subtotal – Projects in pre-construction
	  		  		  				 	 	2,433	 	  	 	371,000	 
	 Projects under construction
	  		  		  				 				  			
	 The Taylor (57 Spadina)
	  	 Entertainment District
	  	 Fee simple interest
	  	 	30	% 	 	 	286	 	  	 	44,000	 
	 West Don Lands – Block 8
	  	 Downtown East – Distillery District
	  	 Ground lease
	  	 	33	% 	 	 	770	 	  	 	4,000	 
	 The Ivy (8 Gloucester)
	  	 Yonge & Bloor
	  	 Fee simple interest
	  	 	47	% 	 	 	231	 	  	 	1,600	 
		  		  		  				 	  
	  
	 	  	  
	  
	 
	 Subtotal – Projects under construction
	  		  		  				 	 	1,287	 	  	 	49,600	 
		  		  		  				 	  
	  
	 	  	  
	  
	 
	 Total
	  		  		  				 	 	3,720	 	  	 	420,600	 
		  		  		  				 	  
	  
	 	  	  
	  
	 

  

	(1)	 Includes 3,419 projected rental units and 301 projected condominium units. 



	(2)	 The ground lease for West Don Lands – Block 10 is under contract and will be in force upon the severance
of the leased premises from a broader land parcel. 



  
 60 2020 ANNUAL REPORT
TRICON RESIDENTIAL 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 

			
	4.3 Residential Development	  	





  


																					
	 (in thousands of U.S. dollars)
	  	Cost to date	 	  	Projected
remaining costs	 	  	Projected
total cost	 	  	Percentage
completed(1)	 	 	Tricon’s
unfunded equity
commitment	 
	 Projects in pre-construction
	  				  				  				  				 			
	 The James (Scrivener Square)(2)
	  	$	70,000	 	  	$	195,000	 	  	$	265,000	 	  	 	8	% 	 	$	31,653	 
	 7 Labatt
	  	 	63,000	 	  	 	223,000	 	  	 	286,000	 	  	 	3	% 	 	 	8,088	 
	 West Don Lands – Blocks 3/4/7
	  	 	6,000	 	  	 	395,000	 	  	 	401,000	 	  	 	1	% 	 	 	13,275	 
	 West Don Lands – Block 20
	  	 	2,000	 	  	 	371,000	 	  	 	373,000	 	  	 	—  	 	 	 	704	 
	 West Don Lands – Block 10
	  	 	3,000	 	  	 	91,000	 	  	 	94,000	 	  	 	3	% 	 	 	7,058	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  				 	  
	  
	 
	 Subtotal – Projects in pre-construction
	  	 	144,000	 	  	 	1,275,000	 	  	 	1,419,000	 	  				 	 	60,778	 
	 Projects under construction
	  				  				  				  				 			
	 The Taylor (57 Spadina)
	  	 	73,000	 	  	 	55,000	 	  	 	128,000	 	  	 	46	% 	 	 	—  	 
	 West Don Lands – Block 8(3)
	  	 	64,000	 	  	 	217,000	 	  	 	281,000	 	  	 	22	% 	 	 	—  	 
	 The Ivy (8 Gloucester)
	  	 	34,000	 	  	 	79,000	 	  	 	113,000	 	  	 	10	% 	 	 	—  	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  				 	  
	  
	 
	 Subtotal – Projects under construction
	  	 	171,000	 	  	 	351,000	 	  	 	522,000	 	  				 	 	—  	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  				 	  
	  
	 
	 Total
	  	$	315,000	 	  	$	1,626,000	 	  	$	1,941,000	 	  				 	$	60,778	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  				 	  
	  
	 

  

	(1)	 Percentage completed is calculated by taking cost to date as a percentage of projected total cost,
excluding the cost of land. 



	(2)	 Tricon’s unfunded equity commitment for The James excludes $25,564 of committed capital set aside to repay
the vendor take-back (VTB) loan due in 2021. 



	(3)	 West Don Lands – Block 8 has a construction loan facility of $280,000 and therefore Tricon does not expect
to fund its remaining equity commitment of $16,873. 


 The projected timelines for construction and lease-up of Tricon’s Canadian
multi-family development projects are presented below (see “Non-IFRS measures and forward-looking statements” on page 1). 
  





 
 Performance overview – projects in pre-construction 

At The James, the project received the final form zoning by-law and demolition permits and erected site hoarding during the quarter. Subsequent to
year-end, Tricon commenced demolition of the existing office building, and shoring and excavation are expected to start in the second quarter of 2021. 

The West Don Lands master-plan consists of four projects – Block 8 (currently under construction), Blocks 3/4/7, Block 20, and Block 10. During
the quarter, Blocks 3/4/7 received a Ministerial Zoning Order to accelerate entitlements. Tricon and its joint venture partners have received a commitment for a construction loan backed by the Canada Mortgage and Housing Corporation, and the
partnership expects to satisfy all outstanding funding conditions and start drawing on the construction loan in mid-2021. Block 20 also received a Ministerial Zoning Order to accelerate entitlements, and is in preparation for site plan
submission. At Block 10, formal registration of the distinct rental development land parcel is expected in the first quarter of 2021. The project is fully zoned and will include a multi-family rental building with 239 rental units, along with
Toronto’s first purpose-built Indigenous hub. Once part lot control is completed, the joint venture partners together will control over eleven acres of prime land within the West Don Lands, one of the largest and most significant rental
communities in Canada that involves all three levels of government. 
 At 7 Labatt, the project continues to progress with the site plan approval
process, which includes refinement of the architectural design. Given the current COVID-19 environment and restrictions in place, the scheduled condominium sales launch has been pushed back, which in turn has delayed the scheduled construction
commencement to the second half of 2021. 

  
 TRICON RESIDENTIAL
2020 ANNUAL REPORT 61 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 

			
	4.3 Residential Development	  	





  

 Performance overview – projects under construction 

As a result of the Province of Ontario deeming residential construction an essential service, the COVID-19 pandemic has only had a nominal impact on the
development timelines of Tricon’s projects that are already under construction. 
 At The Taylor, forming has progressed to the 15th floor,
installation of the building’s precast masonry façade progressed through the 9th floor, and window installation commenced during the quarter. The project is expected to “top off” in the coming months, with first resident
move-ins slated for early 2022 and construction completion in mid-2022. 
 At Block 8 of the West Don Lands, forming of the below-grade structure is
now complete and forming of the above-grade structure projected to be completed in early 2022. Installation of the precast brick façade is expected to commence in mid-2021. 

At The Ivy, construction progressed as planned during the quarter. Subsequent to year-end, a crane was erected following the completion of excavation.
The project is expected to close on a construction loan in the first quarter of 2021. 
 4.3.2 Investments in for-sale housing 

The Company’s legacy for-sale housing business provides equity or equity-type financing to local and regional developers and homebuilders for housing
development, primarily in the U.S. The investments are typically made through Investment Vehicles which hold an interest in for-sale residential land, homebuilding and condominium development projects. 

INVESTMENTS IN FOR-SALE HOUSING BY LOCATION 
  





 
 Investment performance of for-sale housing 

As part of its strategic shift towards becoming a rental housing company, Tricon intends to decrease its balance sheet investments in its for-sale housing
business over time through natural liquidation, and where possible, the strategic disposition of assets. Tricon’s for-sale housing investments are carried at $164.8 million, representing 2.3% of Tricon’s total balance sheet assets as at
December 31, 2020. 
 While the Company has decreased its balance sheet exposure, investments in for-sale housing continue to be a significant source
of cash generation for the Company and distributed $14.4 million to Tricon during the quarter, including $1.7 million in performance fees (see Sections 3.2 and 4.4). 

In the first quarter of 2020, Tricon recognized a significant write-down of its investments in the for-sale housing business under the context of a
precipitous drop in sales in late March and uncertainty over the timing of future cash flows brought on by the pandemic. This resulted in a loss to Tricon of $61.8 million for the year ended December 31, 2020. However, since the onset of the
pandemic, sales in several projects have recovered to pre-COVID-19 levels, as historically low mortgage rates, coupled with strong de-urbanization trends and work-from-home mandates, have encouraged home buying in the suburbs. As a result of this
acceleration in housing demand, the Company was able to recover some of its previously recognized losses in the fourth quarter. While the for-sale housing market outlook for 2021 appears favourable, management is also mindful of rising labour and
material costs, which could partially offset rising home prices and high absorption rates. 

  
 62 2020 ANNUAL REPORT
TRICON RESIDENTIAL 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 

			
	4.3 Residential Development	  	





  

 Project details and projections 

The table below presents Tricon’s share of key financial metrics and projections in its for-sale housing investments. 

 

																	
	 (in thousands of U.S. dollars)
	  	Advances
to date	 	  	Distributions
to date(1)	 	  	Tricon’s fair value
of investment	 	  	Projected
distributions net
of advances
remaining(2)	 
	 For-sale housing investments
	  	$	520,066	 	  	$	451,986	 	  	$	164,842	 	  	$	322,580	 

  

	(1)	 Distributions include repayments of preferred return and capital. 



	(2)	 Projected distributions are based on current project plans which are subject to change. Refer to page 1,
“Non-IFRS measures and forward-looking statements”. 


 For-sale housing investments are structured as self-liquidating
investments generally with cash flows generated as land, lots or homes are sold to third-party buyers (typically large homebuilders or commercial developers in the case of land and end consumers for homebuilding). For-sale housing investments now
represent 2.3% of total assets but are still expected to generate approximately $322.6 million of net cash flow to Tricon over the next ten years. 
 The
scheduled time frame for Tricon to receive the projected net distributions remaining is as follows: 
  

																	
	 (in thousands of U.S. dollars)
	  	1 to 2
years	 	  	3 to 5 years	 	  	More than
5 years	 	  	Total	 
	 Projected distributions net of advances remaining
	  	$	83,080	 	  	$	120,587	 	  	$	118,913	 	  	$	322,580	 


  
 TRICON RESIDENTIAL
2020 ANNUAL REPORT 63 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 

			
	4.4 Private Funds and Advisory	  	





  

 4.4 Private Funds and Advisory 

Through its private funds and advisory (“PF&A”) business, Tricon earns fees from managing third-party capital co-invested in its real estate
assets. Activities of this segment include providing asset management, property management and development management services. In aggregate, Tricon manages $2.6 billion of third-party capital across its business segments and intends to continue
raising and managing third-party capital to generate scale and drive operational synergies, diversify its investor base, capitalize on opportunities that would otherwise be too large for the Company, reduce its balance sheet exposure to development
activities, and enhance Tricon’s return on equity by earning asset management and other fees. 
 During the quarter, the Company made significant
progress in negotiations with institutional investors to syndicate an 80% interest in its U.S. multi-family rental portfolio to a new Investment Vehicle. Subsequent to year-end, the Company announced that this syndication is expected to close in
March of 2021 (see Section 3.3). The creation of this new Investment Vehicle will act as a catalyst to further enhance the Company’s private funds and advisory revenue and will provide greater flexibility over capital reallocation.
The Company intends to use the net syndication proceeds to reduce debt as part of its deleveraging plan. 
 Looking forward, the Company intends to launch
several new Investment Vehicles in 2021. They include but are not limited to: (i) forming a separate growth-oriented joint venture to acquire additional multi-family properties in the U.S. Sun Belt; (ii) creating a second single-family
rental joint venture (“SFR JV-2”), a successor joint venture to SFR JV-1, which is on track to be fully invested by mid-2021; (iii) organizing an additional Investment Vehicle to purchase single-family rental homes directly from
homebuilders; and (iv) establishing a joint venture focused on developing and owning Class A rental apartments in the Greater Toronto Area. With third-party equity capital commitments of over $1.2 billion estimated to close in 2021, Tricon
is projected to earn an incremental $10 million of annualized asset management fees from these Investment Vehicles in the future. 
 Performance overview

 The following table provides details of revenue from private funds and advisory services for the three and twelve months ended December 31, 2020.

  

																									
	For the periods ended December 31	  	Three months	 	 	Twelve months	 
	 (in thousands of U.S. dollars)
	  	2020	 	  	2019	 	  	Variance	 	 	2020	 	  	2019	 	  	Variance	 
	 Asset management fees(1)
	  	$	2,815	 	  	$	3,355	 	  	$	(540	) 	 	$	12,061	 	  	$	15,099	 	  	$	(3,038	) 
	 Performance fees(2)
	  	 	1,691	 	  	 	2,565	 	  	 	(874	) 	 	 	2,836	 	  	 	7,448	 	  	 	(4,612	) 
	 Development fees(3)
	  	 	5,653	 	  	 	5,876	 	  	 	(223	) 	 	 	18,298	 	  	 	17,736	 	  	 	562	 
	 Property management fees(4)
	  	 	180	 	  	 	342	 	  	 	(162	) 	 	 	895	 	  	 	777	 	  	 	118	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Revenue from private funds and advisory services
	  	$	10,339	 	  	$	12,138	 	  	$	(1,799	) 	 	$	34,090	 	  	$	41,060	 	  	$	(6,970	) 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	  	  
	  
	 	  	  
	  
	 

  

	(1)	 Ranges typically from 1–2% of committed or invested capital throughout the lives of the Investment
Vehicles under management. 



	(2)	 Calculated as approximately 20% (in most cases) of net cash flow after investors’ capital has been
returned, together with a pre-tax preferred return on capital of, typically, between 8% and 10%. 



	(3)	 Calculated as 2–5% of the sales price of single-family lots, residential land parcels and commercial land
within master-planned communities, and 4–5% of overall development costs of Canadian multi-family rental apartments. 



	(4)	 Includes property management fees of 4% of rental revenue from Canadian multi-family rental properties and
other ancillary fees. 


 Revenue from private funds and advisory services for the three and twelve months ended December 31, 2020
decreased by $1.8 million and $7.0 million, respectively, compared to the same periods in the prior year. Refer to the variance commentary in Section 3.1 for more details. 

  
 64 2020 ANNUAL REPORT
TRICON RESIDENTIAL 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 

			
	4.4 Private Funds and Advisory	  	





  

 The Company also earns significant fees from managing the single-family rental homes and Canadian
multi-family developments held in controlled subsidiaries, which are eliminated upon consolidation. The tables below provide an overview of the gross fees earned, followed by consolidation eliminations to arrive at the net fees earned in the three
and twelve months ended December 31, 2020 as well as the comparative periods. 
  

																					
	 (in thousands of U.S. dollars)
	  	Asset
management fees	 	  	Performance
fees	 	  	Development
fees	 	 	Property
management fees(1)	 	 	Total	 
	 For the three months ended December 31, 2020
	  				  				  				 				 			
	 Gross management fees
	  	$	2,815	 	  	$	1,691	 	  	$	6,027	 	 	$	12,597	 	 	$	23,130	 
	 Less fees eliminated upon consolidation:
	  				  				  				 				 			
	 Development fees eliminated
	  	 	—  	 	  	 	—  	 	  	 	(374	) 	 	 	—  	 	 	 	(374	) 
	 Property management fees eliminated
	  	 	—  	 	  	 	—  	 	  	 	—  	 	 	 	(12,417	) 	 	 	(12,417	) 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Total revenue from private funds and advisory services
	  	$	2,815	 	  	$	1,691	 	  	$	5,653	 	 	$	180	 	 	$	10,339	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 For the three months ended December 31, 2019
	  				  				  				 				 			
	 Gross management fees
	  	$	3,355	 	  	$	2,565	 	  	$	5,876	 	 	$	13,692	 	 	$	25,488	 
	 Less fees eliminated upon consolidation:
	  				  				  				 				 			
	 Property management fees eliminated
	  	 	—  	 	  	 	—  	 	  	 	—  	 	 	 	(13,350	) 	 	 	(13,350	) 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Total revenue from private funds and advisory services
	  	$	3,355	 	  	$	2,565	 	  	$	5,876	 	 	$	342	 	 	$	12,138	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 
						
	 (in thousands of U.S. dollars)
	  	Asset
management fees	 	  	Performance
fees	 	  	Development
fees	 	 	Property
management fees(1)	 	 	Total	 
	 For the twelve months ended December 31, 2020
	  				  				  				 				 			
	 Gross management fees
	  	$	12,061	 	  	$	2,836	 	  	$	19,038	 	 	$	45,464	 	 	$	79,399	 
	 Less fees eliminated upon consolidation:
	  				  				  				 				 			
	 Development fees eliminated
	  	 	—  	 	  	 	—  	 	  	 	(740	) 	 	 	—  	 	 	 	(740	) 
	 Property management fees eliminated
	  	 	—  	 	  	 	—  	 	  	 	—  	 	 	 	(44,569	) 	 	 	(44,569	) 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Total revenue from private funds and advisory services
	  	$	12,061	 	  	$	2,836	 	  	$	18,298	 	 	$	895	 	 	$	34,090	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 For the twelve months ended December 31, 2019
	  				  				  				 				 			
	 Gross management fees
	  	$	15,099	 	  	$	7,448	 	  	$	17,736	 	 	$	46,892	 	 	$	87,175	 
	 Less fees eliminated upon consolidation:
	  				  				  				 				 			
	 Property management fees eliminated
	  	 	—  	 	  	 	—  	 	  	 	—  	 	 	 	(46,115	) 	 	 	(46,115	) 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Total revenue from private funds and advisory services
	  	$	15,099	 	  	$	7,448	 	  	$	17,736	 	 	$	777	 	 	$	41,060	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 

  

	(1)	 Property management fees also include leasing, acquisition and construction management fee revenue.




  
 TRICON RESIDENTIAL
2020 ANNUAL REPORT 65 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 

			
	4.4 Private Funds and Advisory	  	





  

 Future performance fees 

The table below provides a summary of projected performance fees by business that Tricon could earn over time based on current business plans (forward-looking
information; see page 1). Projected performance fees are based on Tricon’s analysis of projected cash flows over the expected life of existing projects and Investment Vehicles in each business. Projected cash flows are determined based
on detailed quarterly and/or annual budgets prepared by management or third-party developers or in certain cases based on third-party appraisals performed in the current quarter. 

 

																	
	 (in thousands of U.S. dollars)
	  	1 to 2 years	 	  	3 to 5 years	 	  	More than
5 years	 	  	Total	 
	 Single-family rental
	  	$	—  	 	  	$	—  	 	  	$	60,000	 	  	$	60,000	 
	 Canadian multi-family rental developments
	  	 	—  	 	  	 	—  	 	  	 	18,891	 	  	 	18,891	 
	 For-sale housing
	  	 	5,224	 	  	 	9,786	 	  	 	6,760	 	  	 	21,770	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Estimated future performance fees
	  	$	5,224	 	  	$	9,786	 	  	$	85,651	 	  	$	100,661	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 

 Assets under management 

Third-party AUM increased by $118.7 million or 5% to $2.6 billion as at December 31, 2020, from $2.4 billion as at December 31, 2019. Refer to
Section 7.2 for a definition of AUM. 
 CHANGES IN THIRD-PARTY AUM 

 
 



 
 The primary changes in third-party AUM since December 31, 2019 were: 

 

	 	•	 	 An increase of $279.2 million in single-family rental AUM, driven primarily by a new securitization transaction
used to finance a growing portfolio of single-family rental homes in SFR JV-1. This transaction increased the outstanding property-level debt, which is a component of single-family rental AUM (see Section 7.2) . 



 

	 	•	 	 An increase of $150.7 million in multi-family rental AUM, as The Selby approached stabilization and thus was
reclassified from the residential development business segment to the multi-family rental business segment. 


  

	 	•	 	 An offsetting decrease of $147.9 million in Canadian multi-family rental development AUM, primarily driven by the
reclassification of The Selby discussed above, along with the reclassification of The James and The Shops of Summerhill, given the Company has acquired its former partners’ interests in those properties. These decreases were partially offset by
additional funded debt as construction progressed at various projects in the portfolio. 


  

	 	•	 	 An additional decrease of $163.3 million in for-sale housing AUM, primarily attributable to $102.5 million of
distributions from commingled funds and separate accounts to third-party investors, and the disposition by Tricon and its partners of the separate account investment at Fulshear Farms (Houston, Texas), among other items. 



  
 66 2020 ANNUAL REPORT
TRICON RESIDENTIAL 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 

			
	4.4 Private Funds and Advisory	  	





  

 The following table provides a further breakdown of the components of third-party AUM. 

 

																																	
	 (in thousands of U.S. dollars)
	  	December 31,
2020(1)	 	  	September 30,
2020(1)	 	  	June 30,
2020(1)	 	  	March 31,
2020(1)	 	  	December 31,
2019(1)	 	  	September 30,
2019(1)	 	  	June 30,
2019(1)	 	  	March 31,
2019(1)	 
	 Single-family rental
	  	$	1,137,936	 	  	$	1,042,386	 	  	$	933,947	 	  	$	935,134	 	  	$	858,723	 	  	$	738,717	 	  	$	673,754	 	  	$	609,957	 
	 Multi-family rental
	  	 	150,659	 	  	 	134,527	 	  	 	132,666	 	  	 	127,780	 	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	—  	 
	 Residential development
	  				  				  				  				  				  				  				  			
	 Canadian multi-family rental developments
	  	 	231,945	 	  	 	208,933	 	  	 	226,812	 	  	 	242,244	 	  	 	379,812	 	  	 	369,078	 	  	 	364,062	 	  	 	345,576	 
	 For-sale housing
	  	 	1,032,818	 	  	 	1,089,535	 	  	 	1,100,417	 	  	 	1,175,016	 	  	 	1,196,075	 	  	 	1,224,623	 	  	 	804,686	 	  	 	836,330	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Residential development
	  	 	1,264,763	 	  	 	1,298,468	 	  	 	1,327,229	 	  	 	1,417,260	 	  	 	1,575,887	 	  	 	1,593,701	 	  	 	1,168,748	 	  	 	1,181,906	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Third-party AUM
	  	$	2,553,358	 	  	$	2,475,381	 	  	$	2,393,842	 	  	$	2,480,174	 	  	$	2,434,610	 	  	$	2,332,418	 	  	$	1,842,502	 	  	$	1,791,863	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 

  

	(1)	 USD/CAD exchange rates used at each balance sheet date are: at December 31, 2020:
1.2732; September 30, 2020: 1.3339; June 30, 2020: 1.3628; March 31, 2020: 1.4187; December 31, 2019: 1.2988; September 30, 2019: 1.3243; June 30, 2019: 1.3087; March 31, 2019:
1.3363. 


 The table below provides a reconciliation, by business, of the outstanding third-party capital investment balances to AUM (KPI
measure; refer to Section 7.2). 
  

																	
	 (in thousands of U.S. dollars)
	  	Outstanding
invested capital
(at cost)	 	  	Share of
outstanding
project debt	 	  	Unfunded equity
commitment(1)	 	  	Third-party AUM
as at
December 31, 2020	 
	 Single-family rental(2)
	  	$	341,471	 	  	$	729,266	 	  	$	67,199	 	  	$	1,137,936	 
	 Multi-family rental(3)
	  	 	40,368	 	  	 	110,291	 	  	 	—  	 	  	 	150,659	 
	 Canadian multi-family rental
developments(4)
	  	 	75,427	 	  	 	95,069	 	  	 	61,449	 	  	 	231,945	 
	 For-sale housing(5)
	  	 	588,813	 	  	 	—  	 	  	 	444,005	 	  	 	1,032,818	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Total
	  	$	1,046,079	 	  	$	934,626	 	  	$	572,653	 	  	$	2,553,358	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 

  

	(1)	 Commitments to projects include guarantees made under loan agreements plus reserves. Project commitments can
exceed total capitalization as a result of reinvestment rights. 



	(2)	 Single-family rental includes SFR JV-1. Limited partners’ share of the outstanding debt includes their
share of the JV-1 warehouse credit facility, JV-1 securitization debt 2019-1, JV-1 securitization debt 2020-1, and the JV-1 subscription facility, the latter of which is a substitute for invested capital and can be replaced by equity funding at
management’s discretion. As at December 31, 2020, Tricon’s share of outstanding invested capital and its unfunded equity commitment for SFR JV-1 were $151,590 and $77,185, respectively. 



	(3)	 Multi-family rental includes The Selby commencing in Q1 2020, as construction was substantially completed.




	(4)	 Canadian multi-family rental developments include The Taylor, West Don Lands, The Ivy and 7 Labatt. Comparative
periods also include The Selby, which was reclassified to income-producing multi-family rental properties in Q1 2020, and The James (Scrivener Square) and The Shops of Summerhill, which are wholly-owned by Tricon effective June 23, 2020. Other
than in respect of The Selby, The Taylor and 7 Labatt, Tricon has partnered with strategic partners that do not pay asset management or performance fees to the Company for management of their invested capital (but for clarity do pay development and
property management fees). Refer to the AIF for a description of these Investment Vehicles. 



	(5)	 For-sale housing includes THP1 US, THP2 US, THP2 Canada, THP3 Canada, Mahogany, Cross Creek Ranch, Grand
Central Park, Trilogy at Verde River, Viridian, THP US SP1, THP US SP2, Trilogy at Vistancia West, Trilogy Lake Norman, Arantine Hills and THPAS JV-1 (including single-family rental build-to-rent communities). Refer to the AIF for a description of
these Investment Vehicles. 



  
 TRICON RESIDENTIAL
2020 ANNUAL REPORT 67 













 



 
 5 SUMMARY OF NON-IFRS SEGMENT INFORMATION 













 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 
  

 5. SUMMARY OF NON-IFRS SEGMENT INFORMATION 

Management considers Core FFO and AFFO to be key measures of the Company’s operating performance (refer to Section 7.1 for KPI definitions). These
are metrics commonly used by securities analysts, investors and other interested parties in the evaluation of real estate entities, particularly those that own and operate income-producing properties. Management believes that providing these
performance measures on a supplemental basis is helpful to investors in assessing the overall performance of the Company’s business. Refer to the discussion of non-IFRS measures on page 1, including FFO, Core FFO and AFFO. 

The discussion and presentation of non-IFRS measures throughout this section reflect Tricon’s proportionate share of the business, unless otherwise
stated. 
 The following table reconciles FFO, Core FFO and AFFO to the net income reflected in the Company’s income statement for the three
and twelve months ended December 31, 2020. Comparative periods have been reclassified to conform with the current period presentation. 
  

																									
	For the periods ended December 31	  	Three months	 	 	Twelve months	 
	 (in thousands of U.S. dollars)
	  	2020	 	 	2019	 	 	Variance	 	 	2020	 	 	2019	 	 	Variance	 
	 Net income attributable to Tricon’s shareholders
	  	$	79,678	 	 	$	42,354	 	 	$	37,324	 	 	$	113,322	 	 	$	107,762	 	 	$	5,560	 
	 Fair value gain on rental
properties(1)
	  	 	(106,995	) 	 	 	(32,025	) 	 	 	(74,970	) 	 	 	(198,314	) 	 	 	(116,548	) 	 	 	(81,766	) 
	 Loss from investments in for-sale
housing(2)
	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	79,579	 	 	 	—  	 	 	 	79,579	 
	 Fair value loss (gain) on derivative financial instruments and other liabilities(1)
	  	 	16,418	 	 	 	1,462	 	 	 	14,956	 	 	 	7,461	 	 	 	(2,357	) 	 	 	9,818	 
	 Other adjustments(3)
	  	 	12,204	 	 	 	3,029	 	 	 	9,175	 	 	 	30,388	 	 	 	5,585	 	 	 	24,803	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 FFO attributable to Tricon’s shareholders
	  	$	1,305	 	 	$	14,820	 	 	$	(13,515	) 	 	$	32,436	 	 	$	(5,558	) 	 	$	37,994	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Other income(1)
	  	 	(1,774	) 	 	 	—  	 	 	 	(1,774	) 	 	 	(1,774	) 	 	 	—  	 	 	 	(1,774	) 
	 Transaction costs(1)
	  	 	2,491	 	 	 	6,532	 	 	 	(4,041	) 	 	 	14,016	 	 	 	36,415	 	 	 	(22,399	) 
	 Deferred tax expense(1)
	  	 	33,133	 	 	 	3,228	 	 	 	29,905	 	 	 	40,425	 	 	 	11,934	 	 	 	28,491	 
	 Amortization and depreciation
expense(1)
	  	 	2,614	 	 	 	2,733	 	 	 	(119	) 	 	 	10,848	 	 	 	10,543	 	 	 	305	 
	 Foreign exchange (gain) loss(1)
	  	 	(948	) 	 	 	(178	) 	 	 	(770	) 	 	 	166	 	 	 	(42	) 	 	 	208	 
	 Interest incurred on convertible
debentures(4)
	  	 	2,506	 	 	 	2,492	 	 	 	14	 	 	 	9,927	 	 	 	9,902	 	 	 	25	 
	 Interest on Due to Affiliate(4)
	  	 	4,312	 	 	 	—  	 	 	 	4,312	 	 	 	5,654	 	 	 	—  	 	 	 	5,654	 
	 Amortization of deferred financing costs, discounts and lease obligations(4)
	  	 	3,730	 	 	 	2,055	 	 	 	1,675	 	 	 	10,922	 	 	 	7,081	 	 	 	3,841	 
	 Gain on sale of U.S. multi-family
developments(1)
	  	 	—  	 	 	 	(1,113	) 	 	 	1,113	 	 	 	—  	 	 	 	(9,718	) 	 	 	9,718	 
	 Non-cash compensation(5)
	  	 	702	 	 	 	704	 	 	 	(2	) 	 	 	4,979	 	 	 	3,979	 	 	 	1,000	 
	 Non-recurring compensation
	  	 	—  	 	 	 	27	 	 	 	(27	) 	 	 	107	 	 	 	1,184	 	 	 	(1,077	) 
	 Other adjustments(6)
	  	 	(7,452	) 	 	 	(9,060	) 	 	 	1,608	 	 	 	(15,559	) 	 	 	(9,072	) 	 	 	(6,487	) 
	 Limited partners’ share of
	  				 				 				 				 				 			
	 Core FFO adjustments(7)
	  	 	(709	) 	 	 	(492	) 	 	 	(217	) 	 	 	(2,563	) 	 	 	(1,637	) 	 	 	(926	) 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Core FFO attributable to Tricon’s shareholders
	  	$	39,910	 	 	$	21,748	 	 	$	18,162	 	 	$	109,584	 	 	$	55,011	 	 	$	54,573	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Recurring capital expenditures
	  	 	(7,445	) 	 	 	(5,825	) 	 	 	(1,620	) 	 	 	(27,875	) 	 	 	(26,623	) 	 	 	(1,252	) 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 AFFO attributable to Tricon’s shareholders
	  	$	32,465	 	 	$	15,923	 	 	$	16,542	 	 	$	81,709	 	 	$	28,388	 	 	$	53,321	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 

  

	(1)	 Refer to consolidated income statement in Section 3.1. 



	(2)	 Relates to a one-time unrealized fair value loss taken on the for-sale housing assets in Q1 2020.




	(3)	 Relates to limited partners’ share of FFO adjustments for fair value gains/(losses).




	(4)	 Refer to the breakdown of interest expense in Section 3.1. 



	(5)	 Comprised of equity-settled AIP and LTIP expense, which is presented in Section 3.1.




	(6)	 Comprised of amortization, unrealized foreign exchange and deferred taxes within income from equity-accounted
investments and investments held at FVTPL, non-controlling interests’ share of amortization and depreciation and other income from government assistance, other non-recurring expenses and lease payments related to the Company’s right-of-use
assets. Fair value gains from investments in Canadian multi-family developments are also included as eliminations. 



	(7)	 Comprised of limited partners’ share of transaction costs and amortization of deferred financing fees.




  
 TRICON RESIDENTIAL
2020 ANNUAL REPORT 69 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 
  

 The following table provides a breakdown of Core FFO by business segment, AFFO, Core FFO per share and AFFO
per share. Core FFO and AFFO per share amounts are calculated based on the weighted average common shares outstanding in the period, assuming the conversion of all potentially dilutive shares (including convertible debt and exchangeable preferred
units of Tricon PIPE LLC). 
  

																											
	For the periods ended December 31	 	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 (in thousands of U.S. dollars, except

per share amounts which are in U.S. dollars)
	 	 	  	Three months	 	 	Twelve months	 
	  	2020	 	 	2019	 	 	Variance	 	 	2020	 	 	2019	 	 	Variance	 
	 Single-family rental Core FFO(1)
	 		  	$	28,678	 	 	$	23,031	 	 	$	5,647	 	 	$	110,685	 	 	$	84,663	 	 	$	26,022	 
	 Multi-family rental Core FFO
	 		  	 	7,196	 	 	 	7,056	 	 	 	140	 	 	 	27,988	 	 	 	15,470	 	 	 	12,518	 
	 Residential development Core FFO(2)
	 		  	 	11,532	 	 	 	3,076	 	 	 	8,456	 	 	 	18,913	 	 	 	8,240	 	 	 	10,673	 
	 Private funds and advisory Core
FFO(1)
	 		  	 	5,815	 	 	 	8,154	 	 	 	(2,339	) 	 	 	20,813	 	 	 	28,141	 	 	 	(7,328	) 
		 		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
		 		  	$	53,221	 	 	$	41,317	 	 	$	11,904	 	 	$	178,399	 	 	$	136,514	 	 	$	41,885	 
	 Corporate overhead
	 	 




	  	 	(19,627	) 	 	 	(15,586	) 	 	 	(4,041	) 	 	 	(60,295	) 	 	 	(62,230	) 	 	 	1,935	 
	 Corporate interest expense
	 	 




	  	 	(1,018	) 	 	 	(5,297	) 	 	 	4,279	 	 	 	(13,032	) 	 	 	(18,173	) 	 	 	5,141	 
	 Current income tax recovery
	 	 




	  	 	7,334	 	 	 	1,314	 	 	 	6,020	 	 	 	4,512	 	 	 	(1,100	) 	 	 	5,612	 
		 		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Core funds from operations (Core FFO)
	 		  	$	39,910	 	 	$	21,748	 	 	$	18,162	 	 	$	109,584	 	 	$	55,011	 	 	$	54,573	 
		 		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Recurring capital expenditures
	 	 




	  	 	(7,445	) 	 	 	(5,825	) 	 	 	(1,620	) 	 	 	(27,875	) 	 	 	(26,623	) 	 	 	(1,252	) 
		 		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Adjusted funds from operations (AFFO)
	 		  	$	32,465	 	 	$	15,923	 	 	$	16,542	 	 	$	81,709	 	 	$	28,388	 	 	$	53,321	 
		 		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Core FFO per share
	 		  	$	0.16	 	 	$	0.10	 	 	$	0.06	 	 	$	0.49	 	 	$	0.29	 	 	$	0.20	 
	 Core FFO per share (CAD)(3)
	 		  	$	0.21	 	 	$	0.13	 	 	$	0.08	 	 	$	0.66	 	 	$	0.38	 	 	$	0.28	 
	 AFFO per share
	 		  	$	0.13	 	 	$	0.07	 	 	$	0.06	 	 	$	0.36	 	 	$	0.15	 	 	$	0.21	 
	 AFFO per share (CAD)(3)
	 		  	$	0.17	 	 	$	0.09	 	 	$	0.08	 	 	$	0.48	 	 	$	0.20	 	 	$	0.28	 
	 Core FFO payout ratio(4)
	 		  	 	27	% 	 	 	48	% 	 	 	(21	%) 	 	 	37	% 	 	 	70	% 	 	 	(33	%) 
	 AFFO payout ratio(4)
	 		  	 	33	% 	 	 	66	% 	 	 	(33	%) 	 	 	49	% 	 	 	136	% 	 	 	(87	%) 
	 Weighted average shares outstanding – diluted
	 		  	 	248,247,018	 	 	 	213,682,237	 	 	 	34,564,781	 	 	 	224,015,498	 	 	 	191,081,128	 	 	 	32,934,370	 

  

	(1)	 Certain fees earned from limited partners totalling $1,489 in the first quarter of 2020 (Q1 2019 – $1,295)
have been reclassified from single-family rental Core FFO to private funds and advisory Core FFO to conform with the current period presentation. This change in classification did not result in any changes to total Core FFO and AFFO.




	(2)	 Certain fair value gains recognized on equity-accounted investments totalling $5,099 in the first quarter of
2020 have been removed from residential development Core FFO to conform with the current period presentation. This change resulted in a $5,099 decrease to Core FFO for the year ended December 31, 2020. 



	(3)	 USD/CAD exchange rates used are 1.3030 and 1.3415 for the three and twelve months ended December 31, 2020,
respectively. For the three and twelve months ended December 31, 2019, USD/CAD exchange rates used are 1.3200 and 1.3269, respectively. (4) Core FFO and AFFO payout ratios are computed by dividing dividends declared for the period by Core
FFO and AFFO, respectively. 


 For the three months ended December 31, 2020, Core FFO increased by $18.2 million to $39.9 million
compared to $21.7 million in the same period of the prior year. The variance is explained by: 
  

	 	•	 	 An increase in single-family rental Core FFO of $5.6 million, primarily attributable to higher NOI on a larger
rental portfolio. This increase in NOI was bolstered by strong rent growth and higher occupancy, alongside successful cost containment aided by a lower turnover rate. 



 

	 	•	 	 An increase in multi-family rental Core FFO of $0.1 million from the inclusion of The Selby as the property was
stabilized in 2020. The U.S. multi-family rental Core FFO remained relatively flat as a decrease in NOI, reflecting the negative impact of the COVID-19 pandemic, was completely offset by savings in interest expense associated with a lower LIBOR and
a reduced debt balance. 


  

	 	•	 	 An increase in residential development Core FFO of $8.5 million, driven largely by Tricon’s investments in
for-sale housing. Despite the negative impact of the COVID-19 pandemic in early 2020, sales in several projects have recovered to pre-COVID-19 levels. For-sale housing investments distributed $12.7 million of cash to Tricon during the quarter,
excluding performance fees. 


  

	 	•	 	 A decrease in Core FFO from private funds and advisory of $2.3 million, driven by lower performance fees and
asset management fees as a result of lower investment balances for maturing for-sale housing investments, along with a decrease in Johnson development fees. 



  
 70 2020 ANNUAL REPORT
TRICON RESIDENTIAL 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 
  


	 	•	 	 An increase in corporate overhead of $4.0 million, driven by higher cash compensation arising from
performance-based AIP awards, which were finalized in the fourth quarter of 2020, as well as payroll costs that correspond with the Company’s ongoing growth plans. This increase was partially offset by a decrease in general and administration
expense that was higher in 2019 attributable to various consulting fees related to the formal implementation of the Company’s ESG roadmap. 


  

	 	•	 	 A decrease in corporate interest expense of $4.3 million, resulting from a significant repayment of the corporate
credit facility using the proceeds of the Due to Affiliate (see Section 3.2) as well as lower average effective interest rates. As at December 31, 2020, the corporate credit facility balance was $26.0 million compared to $297.0
million at the end of the prior year. 


  

	 	•	 	 An increase in the current income tax recovery of $6.0 million from the Company’s application of a loss
carryback provision which enabled the Company to recover current year losses in certain corporate entities from taxes paid in prior years. 



For the twelve months ended December 31, 2020, Core FFO increased by $54.6 million to $109.6 million compared to $55.0 million in the prior year,
primarily driven by the same reasons noted above. In addition, the current year includes a full twelve months of U.S. multi-family rental operating results compared to approximately seven months of results in 2019. Corporate overhead also decreased
as more property management personnel costs were allocated to property direct operating costs, as the rental portfolio under management continued to expand. 

AFFO for the three and twelve months ended December 31, 2020 increased by $16.5 million and $53.3 million, respectively, from the same periods in the
prior year. These variances reflect the increase in Core FFO noted above, along with higher recurring capital expenditures attributable to the full-year inclusion of the U.S. multi-family rental portfolio results. While Tricon’s single-family
rental portfolio has expanded in 2020, the Company was able to lower recurring capital expenditures as a result of lower turnover and a targeted reduction in elective capital projects during the COVID-19 pandemic. 

Core FFO per share increased by $0.06 and $0.20 to $0.16 and $0.49, respectively, for the three and twelve months ended December 31, 2020 compared to the
same periods in the prior year for the reasons discussed above. AFFO per share increased by $0.06 and $0.21 to $0.13 and $0.36, respectively, for the three and twelve months ended December 31, 2020 compared to the same periods in the prior year
for the reasons discussed above. These increases were partially offset by a higher number of weighted average dilutive shares, which includes the impact of the exchangeable preferred units of Tricon PIPE LLC. 

  
 TRICON RESIDENTIAL
2020 ANNUAL REPORT 71 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 
  

 The following table provides reconciliations of the items marked “A” and “C” above, from
the corporate-level expenses, as shown in the Corporate column of the proportionate income statement by business segment. Refer to the proportionate income statement below for a reconciliation of corporate-level costs to proportionate and
consolidated results per IFRS. 
 The breakdown of recurring capital expenditures by business segment is also presented and reconciled to the item marked as
“D” in the table above. 
  

																													
	For the periods ended December 31	  	 	 	  	Three months	 	 	Twelve months	 
	 (in thousands of U.S. dollars)
	  	 	 	  	2020	 	 	2019	 	 	Variance	 	 	2020	 	 	2019	 	 	Variance	 
	 Property management overhead
	  				  	$	5,872	 	 	$	5,675	 	 	$	(197	) 	 	$	22,654	 	 	$	25,875	 	 	$	3,221	 
	 Cash compensation expense(1)
	  				  	 	10,468	 	 	 	6,296	 	 	 	(4,172	) 	 	 	23,748	 	 	 	22,954	 	 	 	(794	) 
	 General and administration
expense(2)
	  				  	 	3,287	 	 	 	3,615	 	 	 	328	 	 	 	13,893	 	 	 	13,401	 	 	 	(492	) 
		  				  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Corporate overhead
	  	 	



	 	  	$	19,627	 	 	$	15,586	 	 	$	(4,041	) 	 	$	60,295	 	 	$	62,230	 	 	$	1,935	 
		  				  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Interest expense
	  				  	$	10,212	 	 	$	8,974	 	 	$	(1,238	) 	 	$	35,048	 	 	$	32,648	 	 	$	(2,400	) 
	 Convertible debentures
	  				  	 	(2,506	) 	 	 	(2,492	) 	 	 	14	 	 	 	(9,927	) 	 	 	(9,902	) 	 	 	25	 
	 Interest on Due to Affiliate
	  				  	 	(4,312	) 	 	 	—  	 	 	 	4,312	 	 	 	(5,654	) 	 	 	—  	 	 	 	5,654	 
	 Amortization of deferred financing costs, discounts and lease obligations
	  				  	 	(2,376	) 	 	 	(1,185	) 	 	 	1,191	 	 	 	(6,435	) 	 	 	(4,573	) 	 	 	1,862	 
		  				  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Corporate interest expense
	  	 	



	 	  	$	1,018	 	 	$	5,297	 	 	$	4,279	 	 	$	13,032	 	 	$	18,173	 	 	$	5,141	 
		  				  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Current income tax expense
	  				  	$	(7,334	) 	 	$	(1,997	) 	 	$	5,337	 	 	$	(4,512	) 	 	$	5,201	 	 	$	9,713	 
	 Tax on sale of U.S. multi-family developments
	  				  	 	—  	 	 	 	683	 	 	 	683	 	 	 	—  	 	 	 	(4,101	) 	 	 	(4,101	) 
		  				  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Total income tax expense
	  	 	



	 	  	$	(7,334	) 	 	$	(1,314	) 	 	$	6,020	 	 	$	(4,512	) 	 	$	1,100	 	 	$	5,612	 
		  				  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Single-family rental
	  				  	$	5,550	 	 	$	4,117	 	 	$	(1,433	) 	 	$	22,462	 	 	$	23,165	 	 	$	703	 
	 U.S. multi-family rental
	  				  	 	1,875	 	 	 	1,708	 	 	 	(167	) 	 	 	5,373	 	 	 	3,458	 	 	 	(1,915	) 
	 Canadian multi-family rental
	  				  	 	20	 	 	 	—  	 	 	 	(20	) 	 	 	40	 	 	 	—  	 	 	 	(40	) 
		  				  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Recurring capital expenditures
	  	 	



	 	  	$	7,445	 	 	$	5,825	 	 	$	(1,620	) 	 	$	27,875	 	 	$	26,623	 	 	$	(1,252	) 
		  				  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 

  

	(1)	 Compensation expense for Core FFO purposes excludes equity-settled, non-cash compensation and non-recurring
compensation. The table below reconciles salaries and benefits and cash-settled AIP and LTIP expense to total compensation expense in the Corporate segment. 


  


																									
	For the periods ended December 31	  	Three months	 	 	Twelve months	 
	 (in thousands of U.S. dollars)
	  	2020	 	  	2019	 	  	Variance	 	 	2020	 	 	2019	 	  	Variance	 
	 Salaries and benefits
	  	$	2,738	 	  	$	2,402	 	  	$	(336	) 	 	$	10,493	 	 	$	8,539	 	  	$	(1,954	) 
	 Cash-settled AIP
	  	 	6,233	 	  	 	2,577	 	  	 	(3,656	) 	 	 	15,393	 	 	 	11,572	 	  	 	(3,821	) 
	 Cash-settled LTIP
	  	 	1,497	 	  	 	1,317	 	  	 	(180	) 	 	 	(2,138	) 	 	 	2,843	 	  	 	4,981	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	  	  
	  
	 
	 Compensation expense for FFO
	  	$	10,468	 	  	$	6,296	 	  	$	(4,172	) 	 	$	23,748	 	 	$	22,954	 	  	$	(794	) 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	  	  
	  
	 
	 Non-cash compensation
	  	$	558	 	  	$	335	 	  	$	(223	) 	 	$	4,593	 	 	$	3,508	 	  	$	(1,085	) 
	 Non-recurring compensation
	  	 	—  	 	  	 	27	 	  	 	27	 	 	 	107	 	 	 	1,184	 	  	 	1,077	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	  	  
	  
	 
	 Total compensation expense in Corporate segment
	  	$	11,026	 	  	$	6,658	 	  	$	(4,368	) 	 	$	28,448	 	 	$	27,646	 	  	$	(802	) 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	  	  
	  
	 

  

	(2)	 General and administration expense for Core FFO purposes refers to the general and administration expense in
the Corporate segment, plus $569 and $2,415 related to lease payments on right-of-use assets for the three and twelve months ended December 31, 2020, respectively (2019 – $933 and $2,291, respectively). The twelve months ended
December 31, 2019 also includes an add-back of $20 related to gain on disposition of fixed assets. 



  
 72 2020 ANNUAL REPORT
TRICON RESIDENTIAL 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 
  

 Proportionate income statement by business segment 

The tables below present Tricon’s proportionate share of the consolidated financial results for the three and twelve months ended December 31, 2020
by deducting third-party interests’ share of each income statement line item in the single-family rental business segment. Third-party interests and inter-segment eliminations are adjusted for in the IFRS reconciliation column to arrive
at the consolidated results under IFRS. Net income attributable to non-controlling interests is deducted in the Private Funds and Advisory segment to arrive at net income attributable to Tricon’s shareholders. 

 

																																	
	 	  	Tricon’s proportionate share of results by business segment	 	 	 	 	 	 	 
	 For the three months ended December 31,
2020
(in thousands of
U.S. dollars)
	  	Single-Family
Rental	 	 	Multi-Family
Rental	 	 	Residential
Development	 	 	Private Funds
and Advisory	 	 	Corporate	 	 	Total
proportionate
results	 	 	IFRS
reconciliation	 	 	Tricon results
as reported	 
	 	  	Section 4.1	 	 	Section 4.2	 	 	Section 4.3	 	 	Section 4.4	 	 	 	 	 	 	 	 	 	 	 	Section 3.1	 
	 Revenue from rental properties
	  	$	75,254	 	 	$	27,583	 	 	$	—  	 	 	$	—  	 	 	$	—  	 	 	$	102,837	 	 	$	19,146	 	 	$	121,983	 
	 Direct operating expenses
	  	 	(24,778	) 	 	 	(11,979	) 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	(36,757	) 	 	 	(5,903	) 	 	 	(42,660	) 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Net operating income from rental properties
	  	 	50,476	 	 	 	15,604	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	66,080	 	 	 	13,243	 	 	 	79,323	 
	 Revenue from private funds and advisory services
	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	10,339	 	 	 	—  	 	 	 	10,339	 	 	 	—  	 	 	 	10,339	 
	 Income from investments in
	  				 				 				 				 				 				 				 			
	 Canadian multi-family developments
	  	 	—  	 	 	 	427	 	 	 	8,293	 	 	 	—  	 	 	 	—  	 	 	 	8,720	 	 	 	—  	 	 	 	8,720	 
	 Other income from Canadian development properties
	  	 	—  	 	 	 	—  	 	 	 	309	 	 	 	—  	 	 	 	—  	 	 	 	309	 	 	 	—  	 	 	 	309	 
	 Income from investments in for-sale housing
	  	 	—  	 	 	 	—  	 	 	 	10,191	 	 	 	—  	 	 	 	—  	 	 	 	10,191	 	 	 	—  	 	 	 	10,191	 
	 Other income
	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	1,774	 	 	 	—  	 	 	 	1,774	 	 	 	—  	 	 	 	1,774	 
	 Property management overhead
	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	(5,872	) 	 	 	(5,872	) 	 	 	—  	 	 	 	(5,872	) 
	 Compensation expense
	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	(3,914	) 	 	 	(11,026	) 	 	 	(14,940	) 	 	 	—  	 	 	 	(14,940	) 
	 General and administration expense
	  	 	(1,826	) 	 	 	(406	) 	 	 	—  	 	 	 	(172	) 	 	 	(2,718	) 	 	 	(5,122	) 	 	 	(626	) 	 	 	(5,748	) 
	 Other expense
	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	(791	) 	 	 	(791	) 
	 Interest expense
	  	 	(20,365	) 	 	 	(8,077	) 	 	 	(226	) 	 	 	—  	 	 	 	(10,212	) 	 	 	(38,880	) 	 	 	(5,541	) 	 	 	(44,421	) 
	 Fair value gain on rental properties
	  	 	94,791	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	94,791	 	 	 	12,204	 	 	 	106,995	 
	 Fair value loss on derivative financial instruments and other liabilities
	  	 	(11	) 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	(16,407	) 	 	 	(16,418	) 	 	 	—  	 	 	 	(16,418	) 
	 Transaction costs
	  	 	(24	) 	 	 	(505	) 	 	 	—  	 	 	 	—  	 	 	 	(1,962	) 	 	 	(2,491	) 	 	 	—  	 	 	 	(2,491	) 
	 Amortization and depreciation expense
	  	 	—  	 	 	 	(6	) 	 	 	—  	 	 	 	(747	) 	 	 	(1,861	) 	 	 	(2,614	) 	 	 	—  	 	 	 	(2,614	) 
	 Foreign exchange gain
	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	948	 	 	 	948	 	 	 	—  	 	 	 	948	 
	 Leasing commission income (expense)
	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	709	 	 	 	—  	 	 	 	709	 	 	 	(709	) 	 	 	—  	 
	 Net change in fair value of limited partners’ interests in rental business
	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	(17,780	) 	 	 	(17,780	) 
	 Current income tax (expense) recovery
	  	 	(249	) 	 	 	5	 	 	 	—  	 	 	 	(3	) 	 	 	7,334	 	 	 	7,087	 	 	 	—  	 	 	 	7,087	 
	 Deferred income tax recovery (expense)
	  	 	—  	 	 	 	—  	 	 	 	287	 	 	 	—  	 	 	 	(33,420	) 	 	 	(33,133	) 	 	 	—  	 	 	 	(33,133	) 
	 Non-controlling interest
	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	(1,800	) 	 	 	—  	 	 	 	(1,800	) 	 	 	—  	 	 	 	(1,800	) 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Net income (loss) attributable to Tricon’s shareholders
	  	$	122,792	 	 	$	7,042	 	 	$	18,854	 	 	$	6,186	 	 	$	(75,196	) 	 	$	79,678	 	 	$	—  	 	 	$	79,678	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Fair value gain on rental properties
	  	 	(94,791	) 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	(94,791	) 	 	 	(12,204	) 	 	 	(106,995	) 
	 Fair value loss on derivative financial instruments and other liabilities
	  	 	11	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	16,407	 	 	 	16,418	 	 	 	—  	 	 	 	16,418	 
	 Other adjustments
	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	12,204	 	 	 	12,204	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 FFO attributable to Tricon’s shareholders
	  	$	28,012	 	 	$	7,042	 	 	$	18,854	 	 	$	6,186	 	 	$	(58,789	) 	 	$	1,305	 	 	$	—  	 	 	$	1,305	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Other income
	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	(1,774	) 	 	 	—  	 	 	 	(1,774	) 	 	 	—  	 	 	 	(1,774	) 
	 Transaction costs
	  	 	24	 	 	 	505	 	 	 	—  	 	 	 	—  	 	 	 	1,962	 	 	 	2,491	 	 	 	—  	 	 	 	2,491	 
	 Deferred tax (recovery) expense
	  	 	—  	 	 	 	—  	 	 	 	(287	) 	 	 	—  	 	 	 	33,420	 	 	 	33,133	 	 	 	—  	 	 	 	33,133	 
	 Amortization and depreciation expense
	  	 	—  	 	 	 	6	 	 	 	—  	 	 	 	747	 	 	 	1,861	 	 	 	2,614	 	 	 	—  	 	 	 	2,614	 
	 Foreign exchange gain
	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	(948	) 	 	 	(948	) 	 	 	—  	 	 	 	(948	) 
	 Interest incurred on convertible debentures
	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	2,506	 	 	 	2,506	 	 	 	—  	 	 	 	2,506	 
	 Interest on Due to Affiliate
	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	4,312	 	 	 	4,312	 	 	 	—  	 	 	 	4,312	 
	 Amortization of deferred financing costs, discounts and lease obligations
	  	 	642	 	 	 	—  	 	 	 	3	 	 	 	—  	 	 	 	2,376	 	 	 	3,021	 	 	 	709	 	 	 	3,730	 
	 Non-cash compensation(1)
	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	144	 	 	 	558	 	 	 	702	 	 	 	—  	 	 	 	702	 
	 Other adjustments(2)
	  	 	—  	 	 	 	(357	) 	 	 	(7,038	) 	 	 	512	 	 	 	(569	) 	 	 	(7,452	) 	 	 	—  	 	 	 	(7,452	) 
	 Limited partners’ share of Core FFO adjustments
	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	(709	) 	 	 	(709	) 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Core FFO attributable to Tricon’s shareholders
	  	$	28,678	 	 	$	7,196	 	 	$	11,532	 	 	$	5,815	 	 	$	(13,311	) 	 	$	39,910	 	 	$	—  	 	 	$	39,910	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Recurring capital expenditures
	  	 	(5,550	) 	 	 	(1,895	) 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	(7,445	) 	 	 	—  	 	 	 	(7,445	) 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 AFFO attributable to Tricon’s shareholders
	  	$	23,128	 	 	$	5,301	 	 	$	11,532	 	 	$	5,815	 	 	$	(13,311	) 	 	$	32,465	 	 	$	—  	 	 	$	32,465	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 

  

	(1)	 Comprised of equity-settled AIP and LTIP expense, which is presented in Section 3.1.




	(2)	 Comprised of amortization, unrealized foreign exchange and deferred taxes within income from equity-accounted
investments and investments held at FVTPL, non-controlling interests’ share of amortization and depreciation and other income from government assistance, other non-recurring expenses and lease payments related to the Company’s right-of-use
assets. Fair value gains from investments in Canadian multi-family developments are also included as eliminations. 



  
 TRICON RESIDENTIAL
2020 ANNUAL REPORT 73 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 
  


																																	
	 	  	Tricon’s proportionate share of results by business segment	 	 	 	 	 	 	 
	 For the twelve months ended
December 31, 2020 (in thousands
of
U.S. dollars)
	  	Single-Family
Rental	 	 	Multi-Family
Rental	 	 	Residential
Development	 	 	Private
Funds and
Advisory	 	 	Corporate	 	 	Total
proportionate
results	 	 	IFRS
reconciliation	 	 	Tricon
results as
reported	 
	 	  	Section 4.1	 	 	Section 4.2	 	 	Section 4.3	 	 	Section 4.4	 	 	 	 	 	 	 	 	 	 	 	Section 3.1	 
	 Revenue from rental properties
	  	$	296,940	 	 	$	111,205	 	 	$	—  	 	 	$	—  	 	 	$	—  	 	 	$	408,145	 	 	$	70,042	 	 	$	478,187	 
	 Direct operating expenses
	  	 	(99,412	) 	 	 	(48,296	) 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	(147,708	) 	 	 	(21,830	) 	 	 	(169,538	) 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Net operating income from rental properties
	  	 	197,528	 	 	 	62,909	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	260,437	 	 	 	48,212	 	 	 	308,649	 
	 Revenue from private funds and advisory
services(1)
	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	34,090	 	 	 	—  	 	 	 	34,090	 	 	 	—  	 	 	 	34,090	 
	 Income from investments in
	  				 				 				 				 				 				 				 			
	 Canadian multi-family developments
	  	 	—  	 	 	 	746	 	 	 	13,378	 	 	 	—  	 	 	 	—  	 	 	 	14,124	 	 	 	—  	 	 	 	14,124	 
	 Other income from Canadian development properties
	  	 	—  	 	 	 	—  	 	 	 	791	 	 	 	—  	 	 	 	—  	 	 	 	791	 	 	 	—  	 	 	 	791	 
	 Loss from investments in for-sale housing
	  	 	—  	 	 	 	—  	 	 	 	(61,776	) 	 	 	—  	 	 	 	—  	 	 	 	(61,776	) 	 	 	—  	 	 	 	(61,776	) 
	 Other income
	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	1,774	 	 	 	—  	 	 	 	1,774	 	 	 	—  	 	 	 	1,774	 
	 Property management overhead
	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	(22,654	) 	 	 	(22,654	) 	 	 	—  	 	 	 	(22,654	) 
	 Compensation expense
	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	(11,652	) 	 	 	(28,448	) 	 	 	(40,100	) 	 	 	—  	 	 	 	(40,100	) 
	 General and administration expense
	  	 	(6,878	) 	 	 	(2,111	) 	 	 	—  	 	 	 	(879	) 	 	 	(11,478	) 	 	 	(21,346	) 	 	 	(2,223	) 	 	 	(23,569	) 
	 Other expense
	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	(3,173	) 	 	 	(3,173	) 
	 Interest expense
	  	 	(81,564	) 	 	 	(33,464	) 	 	 	(524	) 	 	 	—  	 	 	 	(35,048	) 	 	 	(150,600	) 	 	 	(20,010	) 	 	 	(170,610	) 
	 Fair value gain (loss) on rental properties
	  	 	190,461	 	 	 	(22,535	) 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	167,926	 	 	 	30,388	 	 	 	198,314	 
	 Fair value loss on derivative financial instruments and other liabilities
	  	 	(39	) 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	(7,422	) 	 	 	(7,461	) 	 	 	—  	 	 	 	(7,461	) 
	 Transaction costs
	  	 	(24	) 	 	 	(2,409	) 	 	 	—  	 	 	 	—  	 	 	 	(11,583	) 	 	 	(14,016	) 	 	 	—  	 	 	 	(14,016	) 
	 Amortization and depreciation expense
	  	 	—  	 	 	 	(22	) 	 	 	—  	 	 	 	(3,079	) 	 	 	(7,747	) 	 	 	(10,848	) 	 	 	—  	 	 	 	(10,848	) 
	 Foreign exchange gain (loss)
	  	 	—  	 	 	 	4	 	 	 	—  	 	 	 	—  	 	 	 	(170	) 	 	 	(166	) 	 	 	—  	 	 	 	(166	) 
	 Leasing commission
income
(expense)(1)
	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	2,613	 	 	 	—  	 	 	 	2,613	 	 	 	(2,613	) 	 	 	—  	 
	 Net change in fair value of limited partners’ interests in rental business
	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	(50,581	) 	 	 	(50,581	) 
	 Current income tax (expense) recovery
	  	 	(319	) 	 	 	5	 	 	 	(145	) 	 	 	(3	) 	 	 	4,512	 	 	 	4,050	 	 	 	—  	 	 	 	4,050	 
	 Deferred income tax recovery (expense)
	  	 	—  	 	 	 	—  	 	 	 	8,118	 	 	 	—  	 	 	 	(48,543	) 	 	 	(40,425	) 	 	 	—  	 	 	 	(40,425	) 
	 Non-controlling interest
	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	(3,091	) 	 	 	—  	 	 	 	(3,091	) 	 	 	—  	 	 	 	(3,091	) 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Net income (loss) attributable to Tricon’s shareholders
	  	$	299,165	 	 	$	3,123	 	 	$	(40,158	) 	 	$	19,773	 	 	$	(168,581	) 	 	$	113,322	 	 	$	—  	 	 	$	113,322	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Fair value (gain) loss on rental properties
	  	 	(190,461	) 	 	 	22,535	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	(167,926	) 	 	 	(30,388	) 	 	 	(198,314	) 
	 Loss from investments in for-sale housing
	  	 	—  	 	 	 	—  	 	 	 	79,579	 	 	 	—  	 	 	 	—  	 	 	 	79,579	 	 	 	—  	 	 	 	79,579	 
	 Fair value loss on derivative
	  				 				 				 				 				 				 				 			
	 financial instruments and other liabilities
	  	 	39	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	7,422	 	 	 	7,461	 	 	 	—  	 	 	 	7,461	 
	 Other adjustments
	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	30,388	 	 	 	30,388	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 FFO attributable to Tricon’s shareholders
	  	$	108,743	 	 	$	25,658	 	 	$	39,421	 	 	$	19,773	 	 	$	(161,159	) 	 	$	32,436	 	 	$	—  	 	 	$	32,436	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Other income
	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	(1,774	) 	 	 	—  	 	 	 	(1,774	) 	 	 	—  	 	 	 	(1,774	) 
	 Transaction costs
	  	 	24	 	 	 	2,409	 	 	 	—  	 	 	 	—  	 	 	 	11,583	 	 	 	14,016	 	 	 	—  	 	 	 	14,016	 
	 Deferred tax (recovery) expense
	  	 	—  	 	 	 	—  	 	 	 	(8,118	) 	 	 	—  	 	 	 	48,543	 	 	 	40,425	 	 	 	—  	 	 	 	40,425	 
	 Amortization and depreciation expense
	  	 	—  	 	 	 	22	 	 	 	—  	 	 	 	3,079	 	 	 	7,747	 	 	 	10,848	 	 	 	—  	 	 	 	10,848	 
	 Foreign exchange (gain) loss
	  	 	—  	 	 	 	(4	) 	 	 	—  	 	 	 	—  	 	 	 	170	 	 	 	166	 	 	 	—  	 	 	 	166	 
	 Interest incurred on convertible debentures
	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	9,927	 	 	 	9,927	 	 	 	—  	 	 	 	9,927	 
	 Interest on Due to Affiliate
	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	5,654	 	 	 	5,654	 	 	 	—  	 	 	 	5,654	 
	 Amortization of deferred financing costs, discounts and lease obligations
	  	 	1,918	 	 	 	—  	 	 	 	6	 	 	 	—  	 	 	 	6,435	 	 	 	8,359	 	 	 	2,563	 	 	 	10,922	 
	 Non-cash compensation(2)
	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	386	 	 	 	4,593	 	 	 	4,979	 	 	 	—  	 	 	 	4,979	 
	 Non-recurring compensation
	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	107	 	 	 	107	 	 	 	—  	 	 	 	107	 
	 Other adjustments(3)
	  	 	—  	 	 	 	(97	) 	 	 	(12,396	) 	 	 	(651	) 	 	 	(2,415	) 	 	 	(15,559	) 	 	 	—  	 	 	 	(15,559	) 
	 Limited partners’ share of Core FFO adjustments
	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	(2,563	) 	 	 	(2,563	) 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Core FFO attributable to Tricon’s shareholders
	  	$	110,685	 	 	$	27,988	 	 	$	18,913	 	 	$	20,813	 	 	$	(68,815	) 	 	$	109,584	 	 	$	—  	 	 	$	109,584	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Recurring capital expenditures
	  	 	(22,462	) 	 	 	(5,413	) 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	(27,875	) 	 	 	—  	 	 	 	(27,875	) 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 AFFO attributable to Tricon’s shareholders
	  	$	88,223	 	 	$	22,575	 	 	$	18,913	 	 	$	20,813	 	 	$	(68,815	) 	 	$	81,709	 	 	$	—  	 	 	$	81,709	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 

  

	(1)	 Certain fees earned from limited partners totalling $1,489 in the first quarter of 2020 have been reclassified
from single-family rental Core FFO to private funds and advisory Core FFO to conform with the current period presentation. This change in classification did not result in any changes to total Core FFO and AFFO. 



	(2)	 Comprised of equity-settled AIP and LTIP expense, which is presented in Section 3.1.




	(3)	 Comprised of amortization, unrealized foreign exchange and deferred taxes within income from equity-accounted
investments and investments held at FVTPL, non-controlling interests’ share of amortization and depreciation and other income from government assistance, other non-recurring expenses and lease payments related to the Company’s right-of-use
assets. Fair value gains from investments in Canadian multi-family developments are also included as eliminations. 



  
 74 2020 ANNUAL REPORT
TRICON RESIDENTIAL 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 
  

 Proportionate balance sheet by business segment 

The table below presents Tricon’s proportionate share of net assets as at December 31, 2020 by deducting third-party interests’ share of each
balance sheet line item in the single-family rental business segment. Third-party interests and inter-segment eliminations are adjusted for in the IFRS reconciliation column to arrive at the consolidated net assets under IFRS. Net assets
attributable to non-controlling interests are deducted in the Private Funds and Advisory segment to arrive at net assets attributable to Tricon’s shareholders. 
  

																																	
	 	  	Tricon’s proportionate share of balance sheet by business segment	 	 	 	 	  	 	 
	 (in thousands of U.S. dollars)
	  	Single-Family
Rental	 	  	Multi-Family
Rental	 	  	Residential
Development	 	  	Private
Funds and
Advisory	 	  	Corporate	 	 	Total
proportionate
results	 	 	IFRS
reconciliation	 	  	Tricon results
as reported	 
	 	  	Section 4.1	 	  	Section 4.2	 	  	Section 4.3	 	  	Section 4.4	 	  	 	 	 	 	 	 	 	 	  	Section 3.2	 
	 Assets
	  				  				  				  				  				 				 				  			
	 Rental properties
	  	$	3,941,085	 	  	$	1,331,376	 	  	$	—  	 	  	$	—  	 	  	$	—  	 	 	$	5,272,461	 	 	$	1,049,457	 	  	$	6,321,918	 
	 Investments in Canadian multi-family developments
	  	 	—  	 	  	 	19,913	 	  	 	74,955	 	  	 	—  	 	  	 	—  	 	 	 	94,868	 	 	 	—  	 	  	 	94,868	 
	 Canadian development properties
	  	 	—  	 	  	 	—  	 	  	 	110,018	 	  	 	—  	 	  	 	—  	 	 	 	110,018	 	 	 	—  	 	  	 	110,018	 
	 Investments in for-sale housing
	  	 	—  	 	  	 	—  	 	  	 	164,842	 	  	 	—  	 	  	 	—  	 	 	 	164,842	 	 	 	—  	 	  	 	164,842	 
	 Restricted cash
	  	 	73,165	 	  	 	18,268	 	  	 	4,194	 	  	 	—  	 	  	 	—  	 	 	 	95,627	 	 	 	20,675	 	  	 	116,302	 
	 Intangible assets
	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	8,599	 	  	 	3,764	 	 	 	12,363	 	 	 	—  	 	  	 	12,363	 
	 Goodwill and other assets
	  	 	—  	 	  	 	100	 	  	 	—  	 	  	 	324	 	  	 	156,404	 	 	 	156,828	 	 	 	—  	 	  	 	156,828	 
	 Deferred income tax assets
	  	 	—  	 	  	 	—  	 	  	 	10,558	 	  	 	1,052	 	  	 	90,834	 	 	 	102,444	 	 	 	—  	 	  	 	102,444	 
	 Derivative financial instruments
	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	841	 	 	 	841	 	 	 	—  	 	  	 	841	 
	 Cash
	  	 	14,909	 	  	 	3,582	 	  	 	637	 	  	 	7,178	 	  	 	5,713	 	 	 	32,019	 	 	 	23,139	 	  	 	55,158	 
	 Other working capital items(1)
	  	 	9,758	 	  	 	6,411	 	  	 	1,811	 	  	 	3,204	 	  	 	17,530	 	 	 	38,714	 	 	 	538	 	  	 	39,252	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	  	  
	  
	 
	 Total assets
	  	$	4,038,917	 	  	$	1,379,650	 	  	$	367,015	 	  	$	20,357	 	  	$	275,086	 	 	$	6,081,025	 	 	$	1,093,809	 	  	$	7,174,834	 
	 Liabilities
	  				  				  				  				  				 				 				  			
	 Debt
	  	$	2,412,210	 	  	$	910,340	 	  	$	60,018	 	  	$	—  	 	  	$	37,089	 	 	$	3,419,657	 	 	$	717,849	 	  	$	4,137,506	 
	 Convertible debentures
	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	165,956	 	 	 	165,956	 	 	 	—  	 	  	 	165,956	 
	 Due to Affiliate
	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	251,647	 	 	 	251,647	 	 	 	—  	 	  	 	251,647	 
	 Long-term incentive plan
	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	17,930	 	 	 	17,930	 	 	 	—  	 	  	 	17,930	 
	 Deferred income tax liabilities
	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	298,071	 	 	 	298,071	 	 	 	—  	 	  	 	298,071	 
	 Other liabilities(2)
	  	 	68,967	 	  	 	23,023	 	  	 	4,037	 	  	 	2,322	 	  	 	86,177	 	 	 	184,526	 	 	 	375,960	 	  	 	560,486	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	  	  
	  
	 
	 Total liabilities
	  	 	2,481,177	 	  	 	933,363	 	  	 	64,055	 	  	 	2,322	 	  	 	856,870	 	 	 	4,337,787	 	 	 	1,093,809	 	  	 	5,431,596	 
	 Non-controlling interest
	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	8,142	 	  	 	—  	 	 	 	8,142	 	 	 	—  	 	  	 	8,142	 
	 Net assets attributable to
	  				  				  				  				  				 				 				  			
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	  	  
	  
	 
	 Tricon’s shareholders
	  	$	1,557,740	 	  	$	446,287	 	  	$	302,960	 	  	$	9,893	 	  	$	(581,784	) 	 	$	1,735,096	 	 	$	—  	 	  	$	1,735,096	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	  	  
	  
	 
	 Net debt to assets(3)
	  				  				  				  				  				 	 	55.3	% 	 				  			
		  				  				  				  				  				 	  
	  
	 	 				  			

  

	(1)	 Other working capital items include amounts receivable and prepaid expenses and deposits.




	(2)	 Other liabilities include derivative financial instruments, other liability, limited partners’ interests,
dividends payable, resident security deposits and amounts payable and accrued liabilities. 



	(3)	 Calculated by dividing net debt by total assets (net of cash and restricted cash). 



  
 TRICON RESIDENTIAL
2020 ANNUAL REPORT 75 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 
  

 Summary of selected income statement, balance sheet and operating items 

Management considers net assets (book value) per share to be an important component of the Company’s value, and it reflects the IFRS value of its rental
and development businesses. The Company also creates additional franchise value through its Private Funds and Advisory business and vertically integrated, technology-enabled operating platform which allows it to generate various forms of contractual
fees that are not reflected in the IFRS book values disclosed below. 
  

																					
	 	  	Rental portfolio(1)	 
	 (in thousands of U.S. dollars,
except
units, average monthly rent, percentages and per share amounts)
	  	Single-Family
Rental




	 	 	Multi-Family
Rental




	 	 	Tricon
proportionate
results




+



	 	 	Consolidation
reconciliation




	 	 	Consolidated
results




+



+



	 
	 Total rental units managed
	  	 	22,766	 	 	 	7,289	 	 				 				 	 	30,055	 
	 Tricon’s proportionate share of rental units
	  	 	17,859	 	 	 	7,289	 	 	 	25,148	 	 	 	4,907	 	 	 	30,055	 
	 Average monthly rent
	  	$	1,464	 	 	$	1,217	 	 				 				 			
	 Occupancy
	  	 	96.4	% 	 	 	93.6	% 	 				 				 			
	 NOI margin
	  	 	67.1	% 	 	 	56.6	% 	 				 				 			
	 Quarterly NOI
	  	 	50,476	 	 	 	15,604	 	 	 	66,080	 	 	 	13,243	 	 	 	79,323	 
	 Annualized NOI
	  	 	201,904	 	 	 	62,416	 	 	 	264,320	 	 	 	52,972	 	 	 	317,292	 
	 Rental properties
	  	 	3,941,085	 	 	 	1,331,376	 	 	 	5,272,461	 	 	 	1,049,457	 	 	 	6,321,918	 
	 Investments in Canadian multi-family developments (The Selby)
	  	 	—  	 	 	 	19,913	 	 	 	19,913	 	 	 	—  	 	 	 	19,913	 
	 Net debt
	  	 	(2,324,136	) 	 	 	(888,490	) 	 	 	(3,212,626	) 	 	 	(674,035	) 	 	 	(3,886,661	) 
	 Other liabilities
	  	 	(59,209	) 	 	 	(16,512	) 	 	 	(75,721	) 	 	 	(375,422	) 	 	 	(451,143	) 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Net assets attributable to Tricon’s shareholders
	  	$	1,557,740	 	 	$	446,287	 	 	$	2,004,027	 	 	$	—  	 	 	$	2,004,027	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Net assets per share(2)
	  	$	8.06	 	 	$	2.31	 	 	$	10.37	 	 				 			
	 Net assets per share (CAD)(2)
	  	$	10.26	 	 	$	2.94	 	 	$	13.20	 	 				 			

  

	(1)	 Figures presented exclude Canadian multi-family rental (The Selby) except for investments in Canadian
multi-family developments (The Selby) of $19,913. (2) As at December 31, 2020, common shares outstanding were 193,175,802 and the USD/CAD exchange rate was 1.2732. 



 

																					
	 	  	Development portfolio	 
	 (in thousands of U.S. dollars, except
except per share
amounts)
	  	Canadian
Multi-Family
Rental




	 	 	For-Sale
Housing




	 	 	Tricon
proportionate
results




+



	 	  	Consolidation
reconciliation




	 	 	Consolidated
results




+



+



	 
	 Estimated annual NOI upon
stabilization(1)
	  	$	39,203	 	 				 				  				 			
	 Projected distributions net of advances remaining
	  				 	$	322,580	 	 				  				 			
	 Property value(2)
	  	$	184,973	 	 	$	164,842	 	 	$	349,815	 	  	$	—  	 	 	$	349,815	 
	 Net debt
	  	 	(55,187	) 	 	 	—  	(55,187) 	 				  	 	—  	(55,187) 	 			
	 Other (liabilities) assets
	  	 	(1,670	) 	 	 	10,002	 	 	 	8,332	 	  	 	—  	 	 	 	8,332	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	  	  
	  
	 	 	  
	  
	 
	 Net assets attributable to Tricon’s shareholders
	  	$	128,116	 	 	$	174,844	 	 	$	302,960	 	  	$	—  	 	 	$	302,960	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	  	  
	  
	 	 	  
	  
	 
	 Net assets per share(3)
	  	$	0.66	 	 	$	0.91	 	 	$	1.57	 	  				 			
	 Net assets per share (CAD)(3)
	  	$	0.84	 	 	$	1.16	 	 	$	2.00	 	  				 			

  

	(1)	 Calculated on a total portfolio basis excluding The Selby, and based on current project development plans
assuming a target development yield of 4.75% on cost. 



	(2)	 Includes investments in Canadian multi-family developments, investments in for-sale housing and Canadian
development properties. 



	(3)	 As at December 31, 2020, common shares outstanding were 193,175,802 and the USD/CAD exchange rate was
1.2732. 



  
 76 2020 ANNUAL REPORT
TRICON RESIDENTIAL 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 
  


													
	 	  	Corporate assets and liabilities(1)	 
	 (in thousands of U.S. dollars, except per share amounts)
	  	Tricon
proportionate
results	 	  	Consolidation
reconciliation	 	  	Consolidated
results	 
	 Intangible assets and other assets
	  	$	169,091	 	  	$	—  	 	  	$	169,091	 
	 Deferred income tax liabilities
	  	 	(206,185	) 	  	 	—  	 	  	 	(206,185	) 
	 Net debt
	  	 	(24,198	) 	  	 	—  	 	  	 	(24,198	) 
	 Convertible debentures
	  	 	(165,956	) 	  	 	—  	 	  	 	(165,956	) 
	 Due to Affiliate
	  	 	(251,647	) 	  	 	—  	 	  	 	(251,647	) 
	 Other liabilities
	  	 	(92,996	) 	  	 	—  	 	  	 	(92,996	) 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Net assets attributable to Tricon’s shareholders
	  	$	(571,891	) 	  	$	—  	 	  	$	(571,891	) 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Net assets per share(2)
	  	$	(2.96	) 	  				  			
	 Net assets per share (CAD)(2)
	  	$	(3.77	) 	  				  			
		  				  				  			

  

	(1)	 Includes the assets and liabilities of the Private Funds and Advisory and Corporate segments.




	(2)	 As at December 31, 2020, common shares outstanding were 193,175,802 and the USD/CAD exchange rate was
1.2732. 


  

																	
	 	  	Future performance fees	 
	 (in thousands of U.S. dollars, except per share amounts)
	  	Single-Family
Rental 




	 	  	Canadian
Multi-Family
Rental




	 	  	For-Sale
Housing 




	 	  	Tricon
proportionate
results 




+



+




	 
	 Estimated future performance
fees(1)
	  	$	60,000	 	  	$	18,891	 	  	$	21,770	 	  	$	100,661	 
	 Net assets per share(2)
	  				  				  				  	$	0.52	 
	 Net assets per share (CAD)(2)
	  				  				  				  	$	0.66	 

  

	(1)	 Includes estimated future performance fees before the deduction of any amounts paid to employees under the
LTIP. 



	(2)	 As at December 31, 2020, common shares outstanding were 193,175,802 and the USD/CAD exchange rate was
1.2732. 


  

																					
	 	  	Summary of net assets (book value) per share	 
	 (in thousands of U.S. dollars, except per share amounts)
	  	Rental
portfolio




	 	  	Development
portfolio




	 	  	Corporate
assets and
liabilities




	 	 	Tricon
proportionate
results 




+



+




	 	  	Future
performance
fees	 
	 Net assets attributable to Tricon’s shareholders
	  	$	2,004,027	 	  	$	302,960	 	  	$	(571,891	) 	 	$	1,735,096	 	  			
	 Net assets per share(1)
	  	$	10.37	 	  	$	1.57	 	  	$	(2.96	) 	 	$	8.98	 	  	$	0.52	 
	 Net assets per share (CAD)(1)
	  	$	13.20	 	  	$	2.00	 	  	$	(3.77	) 	 	$	11.43	 	  	$	0.66	 

  

	(1)	 As at December 31, 2020, common shares outstanding were 193,175,802 and the USD/CAD exchange rate was
1.2732. 



  
 TRICON RESIDENTIAL
2020 ANNUAL REPORT 77 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 
  

 Corporate overhead 

The cost of the Company’s integrated, technology-enabled operating platform and other overhead costs are presented below (based on the activities within
Tricon’s Private Funds and Advisory and Corporate segments). While Tricon is intent on reducing its overhead as a percentage of revenue from rental properties and of total assets over time by growing its rental business and managing more
third-party capital, it should be noted that the Company employs talented and relatively well-paid investment, development and computer engineering professionals that add to its cost structure but which position Tricon for future growth and
longer-term operating efficiencies. 
  

									
	For the years ended	  	 	 	 	 	 
	 (in thousands of U.S. dollars, except percentages)
	  	December 31, 2020	 	 	December 31, 2019	 
	 Property management overhead
	  	$	22,654	 	 	$	25,875	 
	 Compensation expense
	  	 	40,100	 	 	 	37,681	 
	 General and administration expense
	  	 	12,357	 	 	 	12,144	 
		  	  
	  
	 	 	  
	  
	 
	 Total overhead costs(1)
	  	 	75,111	 	 	 	75,700	 
	 Net of revenue from private funds and advisory services
	  	 	(34,090	) 	 	 	(41,060	) 
		  	  
	  
	 	 	  
	  
	 
	 Net overhead costs
	  	$	41,021	 	 	$	34,640	 
	 As a % of revenue from rental properties
	  	 	8.6	% 	 	 	9.6	% 
	 As a % of total assets
	  	 	0.6	% 	 	 	0.5	% 

  

	(1)	 Includes the sum of the corporate overhead of the Private Funds and Advisory and Corporate segments.




  
 78 2020 ANNUAL REPORT
TRICON RESIDENTIAL 













 



 
 6 LIQUIDITY AND CAPITAL RESOURCES 
7 OPERATIONAL
KEY PERFORMANCE INDICATORS 
8 ACCOUNTING ESTIMATES AND POLICIES, CONTROLS AND PROCEURES, AND RISK ANALYSIS 
9 HISTORICAL FINANCIAL INFORMATION 













 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 
  

 6. LIQUIDITY AND CAPITAL RESOURCES 

6.1 Financing strategy 
 The Company seeks to maintain
financial strength and flexibility by lowering its cost of debt and equity capital and minimizing interest rate fluctuations over the long term. Some key elements of Tricon’s financing strategy are: 

 

	 	•	 	 Using various forms of debt such as floating-rate bank financing and unsecured debentures with conversion
features, and attempting to stagger the maturity of its obligations. 


  

	 	•	 	 Using convertible or exchangeable securities where the principal can be redeemed by the issuance of common shares
at the Company’s option. 


  

	 	•	 	 Where appropriate, raising equity through the public or private markets to finance its growth and strengthen its
financial position. 


 6.2 Liquidity 

Tricon generates substantial liquidity through: 
  

	 	•	 	 Stable cash flow received from our single-family rental and multi-family rental businesses.



  

	 	•	 	 Cash distributions from land, lot and home sales in our legacy for-sale housing business. 



 

	 	•	 	 Fee income from our PF&A business. 



 

	 	•	 	 Repatriation of capital extracted through refinancings. 



 

	 	•	 	 Cash distributions generated from the turnover of assets with shorter investment horizons. 



 

	 	•	 	 Syndicating investments to private investors and thereby extracting Tricon’s invested capital.



 To enable us to react to attractive acquisition or investment opportunities and deal with contingencies when they arise, we typically
maintain sufficient liquidity at the corporate level and within our key operating platforms. Our primary sources of liquidity consist of cash and a corporate credit facility. 

Working capital 
 As at December 31, 2020, Tricon had
a net working capital deficit of $333.9 million, reflecting current assets of $94.4 million, offset by current liabilities of $428.3 million. The working capital deficit is driven primarily by debt coming due in 2021. Of this debt, $116,000 relates
to the SFR JV-1 subscription facility that is expected to be partially repaid with limited partners’ capital contributions and $109,890 relates to the U.S. multi-family credit facility that is expected be repaid upon syndication of a majority
interest in the portfolio. The Company has determined that its current financial obligations and working capital deficit are adequately funded from the available borrowing capacity and from operating cash flows. 

6.3 Capital resources 
 Debt structure 

Management mitigates interest rate risk by maintaining the majority of its debt at fixed rates. The impact of variable interest rate increases or decreases is
discussed in the Company’s consolidated financial statements. Management also mitigates its exposure to fixed-rate interest risk by staggering maturities with the objective of achieving even, annual maturities over a ten-year time horizon to
reduce Tricon’s exposure to interest rate fluctuations in any one period. The Company’s long-term debt structure is summarized in Section 3.2. 

The Company provides limited financial guarantees for land loans and construction loans in its Canadian multi-family developments. 

As at December 31, 2020, the Company was in compliance with all of its financial covenants. 

Equity issuance and cancellations 
 The Company’s
Dividend Reinvestment Plan (“DRIP”) provides eligible holders of common shares with the opportunity to reinvest their cash dividends paid on the Company’s common shares to purchase additional common shares at a price equal to the
average market price (as defined in the DRIP) on the applicable dividend payment date, less an applicable discount of up to 5% determined by the Board from time to time. 

As of December 31, 2020, there were 193,544,915 common shares issued by the Company, of which 193,175,802 were outstanding and 369,113 were reserved to
settle restricted share awards in accordance with the Company’s Restricted Share Plan. 
 As of December 31, 2020, there was $172.4 million in
outstanding aggregate principal amount of 5.75% extendible convertible unsecured subordinated debentures (the “2022 convertible debentures”). The 2022 convertible debentures bear interest at 5.75% per annum and are convertible into
16,481,837 common shares of the Company at a conversion rate of 95.6023 common shares per $1,000 principal amount, or a conversion price of approximately $10.46 per common share. 

  
 80 2020 ANNUAL REPORT
TRICON RESIDENTIAL 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 
  

 As of December 31, 2020, there was $300.0 million in outstanding aggregate principal amount of Due to
Affiliate in connection with the exchangeable preferred units issued by Tricon PIPE LLC (see Section 3.2). Pursuant to the Transaction Documents, the Investors have rights to exchange the Preferred Units into common shares of the Company
at an initial exchange price of $8.50 (C$11.18 as of August 26, 2020) per common share, as may be adjusted from time to time in accordance with the terms of the Transaction Documents. As at December 31, 2020, this equates to
35,801,471 common shares of the Company. 
 7. OPERATIONAL KEY PERFORMANCE INDICATORS 

7.1 Key performance indicators 
 The KPIs discussed
throughout this MD&A for each of the Company’s business segments are calculated based on Tricon’s proportionate share of each portfolio or business and are defined below. 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 “Non-IFRS measures and forward-looking statements” on page 1. 

Single-family and multi-family rental 
  

	 	•	 	 Net operating income (“NOI”) represents total revenue from rental properties, less direct operating
expenses and property management expenses. NOI excludes non-property specific and indirect overhead expenses, interest expense and non-core income or expenses such as gains or losses on the disposition of rental properties. Tricon believes NOI is a
helpful metric to evaluate the performance of its rental business and compare it to industry peers. 


  

	 	•	 	 Net operating income (“NOI”) margin represents net operating income as a percentage of total revenue
from rental properties. 


  

	 	•	 	 Occupancy rate represents the total number of days that units were occupied during the measurement period,
divided by the total number of days that the units were owned during the measurement period (excluding units held for sale). Management believes occupancy is a main driver of rental revenues and that comparing occupancy across different periods is
helpful in evaluating changes in rental revenues. 


  

	 	•	 	 Annualized turnover rate during the period represents the number of resident move-outs divided by the weighted
average number of rental units (excluding units held for sale) in the period, annualized for a twelve-month period. Management believes the annualized turnover rate impacts occupancy and therefore revenue, as well as the cost to maintain the rental
portfolios. 


  

	 	•	 	 Average monthly rent represents average monthly rental income per unit for occupied units and reflects the impact
of rent concessions amortized over the life of the related leases. Tricon believes average monthly rent reflects pricing trends which impact rental revenue over time. 



 

	 	•	 	 Average rent growth during the period represents the percentage difference between the monthly rent from an
expiring lease and the monthly rent from the next lease and reflects the impact of rent concessions amortized over the life of the related lease. Leases are either renewal leases, where a current resident chooses to stay for a subsequent lease term,
or a new lease, where a previous resident moves out and a new resident signs a lease to occupy the same unit. Average rent growth drives average monthly rent and management finds it is useful to evaluate changes in rental revenue across periods.



 Residential Development 
  

	 	•	 	 Development yield represents the estimated stabilized net operating income of a property following its completion
as a percentage of its estimated total development cost. 


  

	 	•	 	 Core funds from operations, specifically for residential developments, presents net income as a normalized
figure, adjusting for transaction costs and non-recurring and non-cash items, and is a metric that management believes to be helpful in evaluating Tricon’s residential development business and comparing its performance to industry peers. Core
funds from operations as a metric used in measuring Company performance is described below. 



  
 TRICON RESIDENTIAL
2020 ANNUAL REPORT 81 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 
  

 Private Funds and Advisory 
  

	 	•	 	 Total fee revenue represents total asset management, property management, development management and performance
fees earned, excluding inter-company fees earned. 


 Company operating performance 

Funds from operations (“FFO”), core funds from operations (“Core FFO”) and adjusted funds from operations (“AFFO”) are metrics
that management believes to be helpful in evaluating the Company’s operating performance, considering the recent expansion of its residential rental portfolio. These are metrics commonly used by securities analysts, investors and other
interested parties in the evaluation of real estate entities, particularly those that own and operate income-producing properties. Management believes that providing these performance measures on a supplemental basis is helpful to investors in
assessing the overall performance of the Company’s business. 
  

	 	•	 	 FFO represents net income excluding the impact of fair value adjustments and amortization of intangibles arising
from business combinations. The Company’s definition of FFO 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 any fair value gains that arise as a result of reporting under IFRS, except for fair value gains arising from Tricon’s for-sale housing business which are intended to act as a proxy for cash generation. 



 

	 	•	 	 Core FFO presents FFO as a normalized figure, adjusting for transaction costs, convertible debentures interest,
interest on Due to Affiliate, non-recurring and non-cash items. 


  

	 	•	 	 AFFO represents Core FFO less recurring capital expenditures. 



Core FFO and AFFO per share amounts are calculated based on the weighted average common shares outstanding in the period, assuming the conversion of all
potentially dilutive shares (including convertible debt and exchangeable preferred units). 
 7.2 Assets under management 

Management believes that monitoring changes in the Company’s AUM is key to evaluating trends in fee revenue. Growth in AUM is driven by principal
investments and capital commitments to our managed Investment Vehicles by private investors. 
 For reporting purposes, AUM includes balance sheet capital
invested in the Company’s principal investments and capital managed on behalf of third-party investors in the Private Funds and Advisory business, and is calculated as follows: 

 

			
	ASSETS UNDER MANAGEMENT
	 
	Principal Assets Under Management
	 	 
	Single-family rental, multi-family rental and multi-family developments	  	Fair value of rental and development properties plus unfunded commitment
	 	 
	For-sale housing	  	Fair value of invested capital plus unfunded commitment
	 
	Third-Party Assets Under Management
	 	 
	Single-family rental, multi-family rental and multi-family developments	  	Outstanding invested capital and project-level funded debt plus unfunded commitment less return of capital
	 	 
	For-sale housing	  	 Commingled funds

 
 •  During the investment period,
AUM = capital commitment
  

•  After the investment period, AUM = outstanding invested capital

 
 Separate accounts/side-cars/syndicated investments/joint ventures

 
 •  Outstanding invested capital
and unfunded commitment less return of capital



  
 82 2020 ANNUAL REPORT
TRICON RESIDENTIAL 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 
  

 8. ACCOUNTING ESTIMATES AND POLICIES, CONTROLS AND PROCEDURES, AND RISK ANALYSIS 

8.1 Revenue and income recognition 
 The following table
summarizes the revenue earned from the Company’s business segments. 
  

			
	TOTAL REVENUE
	 
	Revenue
	 	 
	Revenue from rental properties	  	 •  Lease revenue is
primary rental revenue from a lease contract, earned directly from leasing the homes within the single-family rental business and the apartment suites within the multi-family rental business.

 
 •  Ancillary revenue is income
earned from residents that is not primary rental revenue from a lease contract. Ancillary revenue includes pet fees, early termination fees and other service fees.
  

•  Non-lease revenue includes property management services, such as repairs and maintenance performed
on the properties.

	 	 
	Revenue from private funds and advisory services	  	
•  Asset management fees from managing third-party capital invested through Investment Vehicles
within the single-family rental, multi-family rental and residential development businesses.
  

•  Performance fees from Investment Vehicles.

 
 •  Development management and
advisory fees generated from residential development projects.
  

•  Property management fees from managing single-family rental homes and multi-family rental
properties.


 Revenue from rental properties 

Revenue recognition under a lease commences when a resident has a right to use the leased asset, which is typically when the resident takes possession of, or
controls the physical use of, the leased property. Generally, this occurs on the lease commencement date. 
 Lease contracts with residents normally include
lease and non-lease components, which may be bundled into one fixed gross lease payment. Lease revenue earned directly from leasing the homes and apartment suites is recognized and measured on a straight-line basis over the lease term in accordance
with IFRS 16, Leases (“IFRS 16”). Leases for single-family rental homes and multi-family rental properties are generally for a term of one to two years. 

Ancillary revenue is income the Company generates from providing services that is not primary rental revenue from a lease contract. Ancillary revenue includes
pet fees, early termination fees and other service fees. Ancillary revenue is measured at the amount of consideration which the Company expects to receive in exchange for providing services to a resident. Ancillary revenue is included in revenue
from rental properties in the consolidated statements of comprehensive income. 
 Revenue from private funds and advisory services 

The Company’s vertically integrated management platform provides asset management, property management and development management services. 

The Company provides asset management services to joint venture partners and third-party investors for which it earns market-based fees in connection with its
portfolio of properties and equity investments in the U.S. and Canada. These contractual fees are typically 1–2% of committed or invested capital throughout the lives of the Investment Vehicles managed. Contractual fees earned in exchange for
providing asset management services are billed on a quarterly basis, provided that the Company’s services are rendered as per the contract over the project period. 

The Company also earns performance fees and they are earned once targeted returns are achieved. The Company recognizes performance fee revenue only to the
extent that it is highly probable that a significant amount of the cumulative revenue recognized will not reverse. Consideration for these services is variable as it is dependent upon the occurrence of a future event that is the repayment of
investor capital and a predetermined rate of return. Revenue from performance fees is typically earned and recognized towards the end of the life of an Investment Vehicle. 

  
 TRICON RESIDENTIAL
2020 ANNUAL REPORT 83 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 
  

 The Company also earns fees for development management and advisory services provided to third parties and/or
related parties. Development management and advisory services are satisfied over time. Revenues are recognized based on the best estimate of the amounts earned for those services, which typically reflects contractual fees of 2–5% of the sales
price of single-family lots, residential land parcels and commercial land within master-planned communities, and 4–5% of overall development costs of Canadian multi-family rental apartments. The Company includes variable consideration in
revenue only to the extent that it is highly probable that a significant amount of the cumulative revenue recognized will not reverse. Specifically for Johnson, consideration for these services is variable as it is dependent upon the occurrence of a
future event that is the sale of the developed property. Revenue is typically recognized as the development of the property is completed, and control has been transferred to the respective buyer. Contractual fees earned in exchange for providing
development management and advisory services are billed upon the sale of the property. 
 The Company earns property management fees, leasing fees,
acquisition and disposition fees, and construction management fees from the rental portfolio through its technology-enabled rental platform. These management services are satisfied over time and revenues for such services are recognized as services
are provided in accordance with IFRS 15, Revenue from Contracts with Customers. 
 Income from investments in for-sale housing 

The Company also earns income from investments in for-sale housing, which is calculated based on its share of the changes in the fair value of the net assets
of each of the Investment Vehicles in which it invests. The fair value of each Investment Vehicle’s net assets is determined by the waterfall distribution calculations specified in the relevant governing agreements. The inputs into the
waterfall distribution calculations include the fair values of the land development and homebuilding projects and working capital held by the Investment Vehicles. The fair values of the land development and homebuilding projects are based on
appraisals prepared by external third-party valuators or on internal valuations using comparable methodologies and assumptions. 
 Income from
investments in Canadian multi-family developments 
 The Company recognizes income from investments in Canadian multi-family developments under the
equity method. The Company’s investments in Canadian multi-family developments are initially recognized at cost, and adjusted thereafter to recognize the Company’s share of profit or loss of the investee in accordance with Tricon’s
accounting policies, which are discussed in Note 3 to the consolidated financial statements. 
 8.2 Accounting estimates and policies 

The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual
results. Refer to the notes to the consolidated financial statements for details on critical accounting estimates. 
 Transition to a rental housing
company 
 In January 2020, the Company completed its previously announced transition to an owner and operator of diversified rental housing, resulting
in the Company determining that it no longer meets the criteria for being an investment entity (“Investment Entity Accounting”) under IFRS 10, Consolidated Financial Statements (“IFRS 10”). The exact timing of the
transition from an investment entity to a rental housing company is highly judgmental and the Company concluded that this transition occurred in January 2020. As a result, effective January 1, 2020 (the “Transition Date”), the Company
was required to apply the acquisition method of accounting as per IFRS 3, Business Combinations (“IFRS 3”), to all subsidiaries that were previously measured at fair value through profit or loss (“FVTPL”). 

Consequently, the Company began consolidating the financial results of controlled subsidiaries including those holding its investments in single-family rental
homes and U.S. multi-family rental properties, resulting in the inclusion of these subsidiaries’ assets, liabilities and non-controlling interests on the balance sheet of the Company. Similarly, these subsidiaries’ income and expenses have
been reported on the Company’s consolidated statement of comprehensive income together with the non-controlling interests’ share of income. 

Concurrently, the Company’s investments in Canadian multi-family developments are accounted for in one of two ways: (i) proportionate consolidation
for joint operations for the period between January 1, 2020 and June 22, 2020, during which time the Company owned 50% and 25% interests in The James and The Shops of Summerhill, respectively; and (ii) equity accounting for associates
and joint ventures, in accordance with IFRS 11, Joint Arrangements and IAS 28, Investments in Associates and Joint Ventures. The remaining investments in for-sale housing in the U.S. will continue to be accounted for as
portfolio investments (financial assets) measured at FVTPL in accordance with IFRS 9, Financial Instruments. 

  
 84 2020 ANNUAL REPORT
TRICON RESIDENTIAL 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 
  

 The accounting impact of the Company’s businesses and their presentation in the Company’s
consolidated financial statements on the Transition Date are summarized in the table below. 
  

											
	  	  	ACCOUNTING	  	PRESENTATION
	Business segment	  	Accounting assessment	  	Accounting methodology	  	Presentation in Balance Sheet	  	Presentation in Statement of Income	  	Presentation of Non-controlling interest
	Single-Family Rental
	Tricon wholly-owned	  	Controlled subsidiary	  	Consolidation	  	Rental properties	  	Revenue from rental properties	  	N/A
	SFR JV-1	  	Controlled subsidiary	  	Consolidation	  	Limited partners’ interests (Component of liabilities)
	Multi-Family Rental
	U.S. multi-family	  	Controlled subsidiary	  	Consolidation	  	Rental properties	  	Revenue from rental properties	  	N/A
	Canadian multi-family: 592 Sherbourne (The Selby)	  	Investments in associate	  	Equity method	  	Investments in Canadian multi-family developments	  	Income from investments in Canadian multi-family developments	  	N/A
	Canadian Multi-Family
Developments
	The Shops of Summerhill(1)	  	Joint operation for the period between January 1, 2020 and June 22, 2020, and controlled subsidiary from June 23, 2020	  	Proportionate consolidation between January 1, 2020 and June 22, 2020, and consolidation from June 23, 2020	  	Canadian development properties	  	Other income from Canadian development properties	  	N/A
	The James (Scrivener
Square)(1)	  	N/A
	57 Spadina (The Taylor)	  	Investments in associate	  	Equity method	  	Investments in Canadian multi-family developments	  	Income from investments in Canadian multi-family developments	  	N/A
	WDL – Block 8	  	Joint venture	  	Equity method	  	N/A
	WDL – Block 20	  	Joint venture	  	Equity method	  	N/A
	WDL – Blocks 3/4/7	  	Joint venture	  	Equity method	  	N/A
	WDL – Block 10	  	Joint venture	  	Equity method	  	N/A
	6–8 Gloucester (The Ivy)	  	Joint venture	  	Equity method	  	N/A
	7 Labatt	  	Joint venture	  	Equity method	  	N/A
	Private Funds and Advisory
	Private funds GP entities	  	Controlled subsidiary	  	Consolidation	  	Consolidated	  	Revenue from private funds and advisory	  	N/A
	Johnson development management	  	Controlled subsidiary	  	Consolidation	  	Consolidated	  	Component of equity
	For-Sale Housing
	Commingled funds	  	Portfolio investments	  	FVTPL	  	Investments in for-sale housing	  	 Income from investments in

for-sale housing
	  	N/A
	Separate accounts, side-cars and joint ventures	  	Portfolio investments	  	FVTPL	  	N/A

  

	(1)	 On June 23, 2020, Tricon acquired the remaining ownership interests of 50% and 75% in The James and The
Shops of Summerhill, respectively. As a result, these investees ceased to be accounted for as joint operations, and the Company began to consolidate these subsidiaries on a prospective basis. 



These financial reporting changes are material to the Company and have been applied on a prospective basis in accordance with the relevant guidance of IFRS 10
and, as such, the comparative period presentation reflects Investment Entity Accounting as previously reported. 

  
 TRICON RESIDENTIAL
2020 ANNUAL REPORT 85 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 
  

 Significant estimates 

Income taxes 
 The determination of the Company’s
income and other tax liabilities requires interpretation of complex laws and regulations often involving multiple jurisdictions. Significant estimates are required in determining the Company’s consolidated income tax provision. There are many
transactions and calculations for which the ultimate tax determination is uncertain. The Company recognizes liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these
matters is different from the amounts that were initially recorded, such differences will impact the current tax and deferred tax provisions. Furthermore, deferred income tax balances are recorded using enacted or substantively enacted future income
tax rates. Changes in enacted income tax rates are not within the control of management. However, any such changes in income tax rates may result in actual income tax amounts that may differ significantly from estimates recorded in deferred tax
balances. 
 Valuation of rental properties 
 Fair value
is determined using independent external valuations prepared by management’s specialists or detailed internal valuations prepared by management using market-based assumptions, each in accordance with recognized valuation techniques as set out
in Note 6 to the consolidated financial statements. Significant estimates used in determining the fair value of the Company’s rental properties include estimating, among other things, future stabilized net operating income, capitalization
rates, discount rates, and other future cash flows applicable to rental properties (all considered Level 3 inputs) as well as market comparables based on recent transaction prices. A change to any one of these inputs could significantly alter the
fair value of a rental property. In addition, the novel coronavirus (“COVID-19”) pandemic and related market and economic uncertainty that occurred in 2020 had a significant impact on estimates used in the valuation of the rental
properties and this impact may continue into 2021. Management will continue to monitor the situation and its impact on the Company. 
 Fair value and
impairment of financial instruments 
 Certain financial instruments are recorded in the Company’s consolidated balance sheets at values that are
representative of or approximate fair value. 
 The fair values of the Company’s investments in for-sale housing are determined using the valuation
methodologies described in Note 9 to the consolidated financial statements. By their nature, these valuation techniques require the use of assumptions that are mainly based on market conditions existing at the end of each reporting period. Changes
in the underlying assumptions could materially impact the determination of the fair value of a financial instrument. Imprecision in determining fair value using valuation techniques may affect the investment income recognized in a particular period.
Any significant changes to the inputs and assumptions owing to the COVID-19 pandemic as discussed above could further impact the valuation of the for-sale housing investments in future periods. 

Fair value of incentive plans 
 Management is required to
make certain assumptions and to estimate future financial performance in order to estimate the fair value of incentive plans at each consolidated balance sheet date. Significant estimates and assumptions relating to such incentive plans are
disclosed in Notes 3 and 30 to the consolidated financial statements. The LTIP requires management to estimate future non-IFRS earnings measures, namely future performance fees relative to each Investment Vehicle. Future non-IFRS measures are
estimated based on current projections, and are updated at least annually, taking into account actual performance since inception. 
 Goodwill impairment

 Assessment of impairment is based on management’s judgment of whether there are internal and external factors that would indicate that an asset
or cash-generating unit (“CGU”) is impaired. The determination of the Company’s goodwill impairment involves management’s significant estimates and assumptions with respect to future cash flows, growth rates and discount rates of
the underlying CGU. The risk premiums expected by market participants related to uncertainties about the industry and assumptions relating to future cash flows may differ, depending on economic conditions and other events. Changes in any of these
underlying assumptions could materially affect the assessment of the recoverable value of a CGU. 
 Due to Affiliate 

In connection with the Due to Affiliate transaction, the Company made certain key assumptions about the structure, cash flow and terms of the issued
instruments. In addition, management was required to make significant estimates in determining the initial recognition and measurement of the Due to Affiliate and related derivative instruments. 

  
 86 2020 ANNUAL REPORT
TRICON RESIDENTIAL 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 
  

 Significant judgments 

Acquisition of rental properties 
 The Company’s
accounting policies relating to rental properties are described in Note 3 to the consolidated financial statements. In applying these policies, judgment is exercised in determining whether certain costs are additions to the carrying amount of a
rental property and whether properties acquired are considered to be asset acquisitions or business combinations. Should the purchase meet the criteria of a business combination then transaction costs such as appraisal and legal fees are expensed
immediately and included in the consolidated statements of comprehensive income. If the purchase is an asset acquisition, transaction costs form part of the purchase price and earnings are not immediately affected. 

Basis of consolidation 
 The consolidated financial
statements of the Company include the accounts of Tricon and its wholly-owned subsidiaries, as well as entities over which the Company exercises control on a basis other than majority ownership of voting interests within the scope of IFRS 10.
Judgment is applied in determining if an entity meets the criteria of control as defined in the accounting standard. 
 Investments in joint ventures and
joint arrangements 
 The Company makes judgments in determining the appropriate accounting for investments in other entities. These judgments include
determining the significant relevant activities and assessing the level of influence Tricon has over the activities through contractual arrangements. In addition, the Company also determines whether Tricon’s rights and obligations are directly
related to the assets and liabilities of the arrangement or to the net assets of the joint arrangement. 
 CGU determination for goodwill impairment
assessment 
 The determination of CGUs is based on management’s judgment and is an assessment of the smallest group of assets that generate cash
inflows independently of other assets. Factors considered include whether an active market exists for the output produced by the asset or group of assets as well as how management monitors and makes decisions about the Company’s operations.

 8.3 Controls and procedures 
 Pursuant to National
Instrument 52-109 – Certification of Disclosure in Issuers’ Annual and Interim Filings released by the Canadian Securities Administrators, the Company’s CEO and CFO have evaluated the design and operating effectiveness of the
Company’s disclosure controls and procedures and the Company’s internal controls over financial reporting for the year ended December 31, 2020. The CEO and CFO did not identify any material weaknesses in the Company’s system of
internal controls over financial reporting. 
 During the year ended December 31, 2020, there were no changes to policies, procedures and processes
that comprise the system of internal controls over financial reporting that may have affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting. Such controls and procedures are subject to
continuous review and changes to such controls and procedures may require management resources and systems in the future. 
 Management does not expect that
the disclosure controls or internal controls over financial reporting of the Company will prevent or detect all errors and all fraud or will be effective under all potential future conditions. A control system is subject to inherent limitations and,
no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a control system must reflect that there are resource constraints, and the
benefits of controls must be considered relative to their costs. Inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple errors or mistakes. Controls can also be
circumvented by individual acts of some persons, by collusion of two or more people or by management override of the controls. Due to the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not
be detected. The design of any control system is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential
conditions. Projections of any evaluations of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate. 
 8.4 Transactions with related parties 

Senior management of the Company own units, directly or indirectly, in the various Tricon private funds, as well as common shares and debentures of the
Company. 
 Refer to the related party transactions and balances note in the consolidated financial statements for further details concerning the
Company’s transactions with related parties. 

  
 TRICON RESIDENTIAL
2020 ANNUAL REPORT 87 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 
  

 8.5 Dividends 

On March 2, 2021, the Board of Directors of the Company declared a dividend of seven cents per common share in Canadian dollars payable on or after
April 15, 2021 to shareholders of record on March 31, 2021. 
 8.6 Compensation incentive plans 

The Company’s annual compensation incentive plans include an annual incentive plan (“AIP”) and a long-term incentive plan (“LTIP”).

 The Company’s AIP provides for an aggregate bonus pool based on the sum of all employees’ individual AIP targets. The portion of the pool
attributable to senior executive management is market-benchmarked and subject to an adjustment factor, as approved by the Board, of between 50% and 150%, based on achievement of Company performance objectives determined by the Board at the beginning
of each year. The final pool is then allocated among employees based on individual and collective performance. AIP awards will be made in cash and equity-based grants, with the proportion of equity-based awards being correlated to the seniority of
an individual’s role within the Company. 
 LTIP expense is generated from two sources: (i) 50% of the Company’s share of performance fees or
carried interest from Investment Vehicles, paid in cash when received; and (ii) 15% of income earned from THP1 US (a for-sale housing Investment Vehicle), payable in deferred share units which vest in equal tranches over a three-year period
(previously a five-year period) pursuant to the LTIP. Amounts under the LTIP are allocated among employees in accordance with the plan. 
 Complete details
concerning the Company’s compensation plans are set out in the Company’s most recent Management Information Circular, available on SEDAR at www.sedar.com and on the Company’s website at www.triconresidential.com. 

8.7 Risk definition and management 
 There are certain
risks inherent in the Company’s activities and those of its investees, including the ones described below, which may impact the Company’s financial and operating performance, the value of its investments and the value of its securities.
The risks described below are not the only ones facing the Company and holders of common shares. Additional risks not currently known to us or that we currently consider to be immaterial may also affect our activities. 

General economic conditions 
 The success of our business
is highly dependent upon conditions in the Canadian and United States real estate markets (and in particular the residential sector) and economic conditions throughout North America that are outside our control and difficult to predict. Factors such
as interest rates, housing prices, availability of credit, inflation rates, energy prices, economic uncertainty, changes in laws (including laws relating to taxation), trade barriers, currency exchange rates and controls, and national and
international political circumstances (including wars, terrorist acts or security operations) could have a material negative impact on our financial performance and the value of our investments. 

Unpredictable or unstable market conditions, adverse economic conditions, or volatility in the capital markets may result in reduced opportunities to find
suitable risk-adjusted investments to deploy capital, may reduce the market value of our assets, and may make it more difficult for the Company and its investment vehicles to exit and realize value from existing real estate holdings, any of which
could materially adversely affect our revenues, the value of our investments, and our ability to raise and deploy new capital and sustain our profitability and growth. 

Real estate industry conditions 
 The residential real
estate industry is cyclical and is significantly affected by changes in general and local economic and industry conditions, such as employment levels, availability of financing for homebuyers, interest rates, consumer confidence, levels of new and
existing homes for sale, demographic trends and housing demand. In addition, an oversupply of new homes or alternatives to new homes, such as resale homes, including homes held for sale by investors and speculators, foreclosed homes and rental
properties, may reduce the ability to rent or sell residential properties, depress prices and reduce margins from the rental and sale of residential properties. Conversely, if property prices in target markets increase at a rate faster than rents,
this could result in downward pressure on gross rental yields and impact the ability to make acquisitions. Any of these factors could negatively impact the value of the Company’s financial condition and performance. 

Builders, developers and renovators are also subject to risks related to the availability and cost of materials and labour, and adverse weather conditions
that can cause delays in construction schedules and cost overruns. Furthermore, the market value of undeveloped land, buildable lots and housing inventories can fluctuate significantly as a result of changing economic and real estate market
conditions and may result in impairment charges. If there are significant adverse changes in economic or real estate market conditions, residential properties may have to be sold at a loss, rented at less than expected rates, or held longer than
planned. These circumstances can result in losses in a poorly performing investment or market. If market conditions deteriorate, the Company’s financial condition and performance may be adversely impacted. 

  
 88 2020 ANNUAL REPORT
TRICON RESIDENTIAL 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 
  

 Portfolio concentration 

Although our real estate holdings span numerous markets across North America, real estate is a local business, and our revenues are directly and indirectly
derived from residential real estate located in our primary geographic markets. A prolonged downturn in the economies of these markets, or the impact that a downturn in the overall national economies of the United States or Canada may have upon
these markets, could negatively impact the value of our financial condition and performance. 
 Furthermore, because we are focused on residential real
estate (as compared to a more diversified real estate portfolio), a decrease in demand specifically for residential real estate could adversely affect the value of our investments and our financial condition and performance. 

Competition 
 The residential real estate business is
competitive and each segment of our business is subject to competition in varying degrees. We compete on the basis of a number of factors, including, but not limited to: the quality of our employees, transaction execution, innovation, reputation and
above all, our rental operations. Numerous developers, managers and owners of properties compete with the Company in seeking attractive residents and home purchasers, in the efficiency of their operations, and in the quality of their service
offering. In addition, there is significant competition for suitable real property investments, with other operators and investors seeking similar assets to those targeted by the Company. A number of these investors may have greater financial
resources than those of the Company, or operate without the same investment or operating restrictions. An increase in competition for real property investments may increase purchase prices, diminish the number of suitable investments available, and
reduce the ability to achieve optimal portfolio size or expected yields, which could impact the Company’s investments and financial performance. 

Furthermore, we compete in pursuit of investor capital to be invested in our securities and investment vehicles. Competition for investor capital, in
particular, is intense and investors are increasingly seeking to manage their own assets or reduce their management fees. Further, our competitors may have certain competitive advantages, including greater financial, technical, marketing and other
resources, more personnel, less onerous regulatory requirements, or a lower cost of capital, and access to funding sources or other resources that are not available to us. 

These pressures, or an increase in competition, could impact our revenues and operating margins and negatively affect our overall financial condition. 

The residential development, homebuilding, renovation and rental industries are themselves highly competitive. Residential developers, homebuilders,
renovators and operators compete not only for homebuyers and/or tenants on the basis of price and product offering, but also for desirable properties, building materials, labour and capital. Competitive conditions in the industry could result in:
difficulty in acquiring suitable properties at acceptable prices; increased selling or rental incentives; lower sales volumes and prices; higher vacancy; lower profit margins and development yields; impairments in the value of inventory and other
assets; increased construction costs; and delays in construction. These factors may negatively impact the Company’s financial condition and performance. 

Investment pipeline 
 An important component of the
Company’s growth strategy is the ongoing availability of attractive real estate acquisition or investment opportunities. If we are not able to find sufficient residential real estate investments in a timely manner, our performance could be
adversely affected. Furthermore, if we do not have sufficient investment opportunities, we may elect to limit our growth and reduce the rate at which we attract third-party capital, which could impact our growth plans and revenues. Finally, a
scarcity of desirable investment opportunities may lead us to make investments with lower expected returns than those we have historically targeted. Any of these factors could negatively impact our financial condition and performance. 

Liquidity risk 
 Residential real estate assets generally
cannot be sold quickly, particularly if local market conditions are poor. As a result, the Company may not be able to acquire or sell assets promptly in response to economic or other conditions. This inability to promptly reallocate capital or exit
the market in a timely manner could adversely affect the Company’s financial condition and performance. Additionally, financial difficulties of other property owners resulting in distressed sales could depress real estate values in the markets
in which we invest. These restrictions could reduce our ability to respond to changes in the performance of our portfolios and could adversely affect our financial condition and performance. 

  
 TRICON RESIDENTIAL
2020 ANNUAL REPORT 89 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 
  

 Transaction execution 

Before making investments, we conduct extensive due diligence reviews that we deem reasonable and appropriate based on the facts and circumstances applicable
to each asset. Our due diligence process includes in-depth reference checks of developers (where applicable), environmental audits, market analysis, site analysis, financial and construction cost analysis and legal review. When conducting due
diligence, we may be required to evaluate important and complex business, financial, tax, accounting, environmental and legal issues. Outside consultants, legal advisors, accountants and investment banks may be involved in the due diligence process
in varying degrees depending on the asset class and size of transaction. Nevertheless, when conducting due diligence, we rely on the resources available to us, including information provided by the developer or operating partner (where applicable)
and, in some circumstances, third-party investigations. The due diligence investigation that we carry out with respect to any investment opportunity may not reveal or highlight all relevant facts that may be necessary or helpful in evaluating such
opportunity. Moreover, such an investigation will not necessarily result in the investment being successful. Unknown factors or unforeseen risks may cause performance to fall short of expectations and may negatively impact our financial condition
and performance. 
 Indebtedness and rising interest rates 

The degree to which the Company is leveraged could have important consequences to the Company, including: (i) the Company’s future ability to obtain
additional financing for working capital, capital expenditures or other purposes may be limited; (ii) the Company may be unable to refinance indebtedness on terms acceptable to the Company or at all; (iii) a significant portion of the
Company’s cash flow could be dedicated to the payment of the principal of and interest on its indebtedness, thereby reducing funds available for future operations, capital expenditures and/or dividends on its common shares and increasing the
risk of default on the Company’s debt obligations; (iv) the Company may be negatively impacted by rising interest rates; and (v) the Company may be more vulnerable to economic downturns and be limited in its ability to withstand
competitive pressures. 
 Moreover, rising interest rates, decreased availability of mortgage financing or of certain mortgage programs, higher down payment
requirements or increased monthly mortgage costs may increase the cost of capital for the Company and may lead to reduced demand for new home sales and resales and mortgage loans, which could negatively impact our financial condition and
performance. 
 Benchmark interest rate reform risk 

Regulators in the United Kingdom and elsewhere have recommended and are seeking to implement broad changes to benchmark interest rates, such as LIBOR. It is
expected that a transition away from the widespread use of LIBOR and such other benchmark rates to alternative reference rates and other potential interest rate benchmark reforms will occur over the course of the next few years. For example, the
United Kingdom’s Financial Conduct Authority has announced that LIBOR is to be phased out by the end of 2021. As a result, there is near-term uncertainty about how the currently dominant benchmarks will be phased out, the speed at which
modified or replacement benchmarks will take their place, the acceptance of such alternatives, and the ultimate effect any such changes may have on markets for financial instruments and the access to and cost of debt. Abandonment of or modifications
to such benchmarks could have adverse impacts on the Company’s newly-issued financial instruments and existing financial instruments that reference such benchmarks. While some of the Company’s debt instruments may contemplate a scenario
where LIBOR or another applicable benchmark is no longer available by providing for an alternative rate-setting methodology, not all of our instruments may have such provisions, and the impact of any such alternative methodologies is unclear.
Abandonment of or modifications to LIBOR or another relevant benchmark could lead to market instability, and could adversely impact the pricing, liquidity, value or return of the Company’s debt instruments, affect the Company’s ability to
meet its payment obligations thereunder, require extensive changes to documentation, result in disputes, or cause the Company to incur additional costs. Depending on these and several other factors, many of which are beyond the Company’s
control, the Company’s business, financial condition and results of operations could be materially adversely impacted by any such market transition or reform of benchmark interest rates. It remains uncertain how such changes would be
implemented and the effects such changes may have on the Company, its business, financial condition and results of operations, its investees and financial markets generally. The Company continues to actively monitor these potential changes and to
include alternative rate-setting methodologies in its newly-issued debt instruments. 
 Sustaining growth 

Our continuing growth has caused, and if it continues will continue to cause, significant demands on our legal, accounting and operational infrastructure, and
increased expenses. In addition, we are required to continuously develop our systems and infrastructure in response to the increasing sophistication of the residential real estate investment industry, the investment management market, and legal,
accounting and regulatory developments. 
 Our future growth will depend, among other things, on our ability to maintain an operating platform and
management systems sufficient to address our growth, and will require us to incur additional expenses and to commit additional senior management and operational resources. There can be no assurance that we will be able to manage our expanding
operations effectively or that we will be able to continue to grow, and any failure to do so could adversely affect our ability to generate revenue and control our expenses. 

  
 90 2020 ANNUAL REPORT
TRICON RESIDENTIAL 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 
  

 Insurance 

We have various types of insurance, including errors and omissions insurance and general commercial liability insurance, as well as relevant insurance obtained
to protect the value of our assets. The adequacy of insurance coverage is evaluated on an ongoing basis, including the cost relative to the benefits. However, there can be no assurance that potential claims or losses will not exceed the limits, or
fall outside the scope, of available insurance coverage or that any claim or claims will be ultimately satisfied by an insurer. A loss or judgment in excess of available insurance or in respect of which insurance is not available could have a
material adverse effect on our financial condition and the value of our assets. There can be no assurance that insurance coverage on favourable economic terms will continue to be available in the future. 

Environmental risk 
 Our real estate portfolios are
subject to various Canadian and United States federal, provincial, state and municipal laws relating to environmental matters. These laws could hold developers or property owners liable for the costs of removal and remediation of certain hazardous
substances or wastes released or deposited on properties or disposed of at other locations. The failure to remove or remediate such substances, if any, could adversely affect the developer’s or owner’s ability to sell the properties or to
borrow using real estate as collateral, and could potentially result in claims or other proceedings. We are not aware of any material non-compliance with environmental laws in respect of our assets or those in which our investment vehicles invest.
We are also not aware of any material pending or threatened investigations or actions by environmental regulatory authorities, or any material pending or threatened claims relating to environmental conditions, in connection with any of the
residential real estate in which we or our investment vehicles invest. Environmental laws and regulations can change rapidly and may impose more stringent environmental laws and regulations in the future, increasing the risk of non-compliance.
Non-compliance with applicable environmental laws and regulations, or compliance with more stringent legislative frameworks, could have an adverse effect on our financial condition and performance. 

Disease outbreak risks 
 A local, regional, national or
international outbreak of a contagious disease, including the current COVID-19 pandemic, Middle East Respiratory Syndrome, Severe Acute Respiratory Syndrome, H1N1 influenza virus, avian flu, or any other similar illness could result in: a general or
acute decline in economic activity in the regions the Company holds assets and conducts business, a decrease in the willingness or ability of the general population to travel, staff and labour shortages, diversion of management attention, reduced
tenant and customer traffic and demand, reduced employment and financial wherewithal of our residents, mobility restrictions and other quarantine measures, supply shortages, increased government regulation (including regulations impacting property
operations, limiting rent increases or limiting eviction actions), and the quarantine or contamination of one or more of the Company’s rental properties. These and other related consequences could negatively impact: rental revenue, the ability
to collect rent and enforce leases, fee income and other revenue sources, rental rates and for-sale housing prices, property values, bad debt expense, liquidity, the Company’s ability to grow and expand its portfolios, development timelines,
project cash flows, compliance with debt covenants and default risk, and the Company’s ability to achieve its financial and strategic goals and targets. In addition, the Company’s response to such a crisis may be made in the context of
economic and epidemiological uncertainty and changing legal regulations which may increase the risk of legal or regulatory liability to the Company. 

Climate change risks 
 To the extent that significant
changes in the climate occur in areas where our properties are located, increasingly extreme weather, changes in precipitation, flooding, wildfires, hurricanes and rising temperatures in those areas may result in physical damage to, or a decrease in
demand for, properties located in those areas or affected by those conditions. Should the impact of climate change be material in nature, including significant property damage to or destruction of our properties, or occur for lengthy periods of
time, our financial condition and performance may be adversely affected. Climate change, to the extent it causes changes in weather patterns, could also increase the cost of property insurance and utilities at our properties and impact demographic
trends in ways that result in decreased demand for our properties. In addition, changes in federal, provincial, state and local laws based on concerns about climate change could result in reduced operational flexibility and/or increased expenses on
our existing properties (for example, to improve their energy efficiency and/or resistance to inclement weather or to reduce their carbon footprint) without a corresponding increase in revenue, which could adversely affect our performance. 

Conflicts of interest 
 Some of the parties in which and
with which we currently invest may have competing interests in the markets in which Tricon invests. While the Company takes precautions and negotiates contractual restrictions in definitive legal documentation in order to avoid such conflicts,
conflicts of interest may nonetheless arise and may have an adverse effect on the Company’s financial condition and performance. 
 Certain of the
directors and officers of the Company may also serve as directors and/or officers of other companies and consequently the possibility exists for such directors and officers to be in a position of conflict. Any decision made by any such director or
officer involving the Company is to be made in accordance with their duties and obligations to deal fairly and in good faith with a view to the best interests of the Company, but there can be no assurance that a conflict of interest will not have an
adverse effect on the Company or its financial condition. 

  
 TRICON RESIDENTIAL
2020 ANNUAL REPORT 91 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 
  

 Management team 

The Company’s executive officers and other senior management have a significant role in our success and oversee the execution of our strategy. Our
continued ability to respond promptly to opportunities and challenges as they arise depends on cooperation across our organization and our team-oriented management structure, which benefits greatly from management continuity. Our ability to retain
our management group or attract suitable replacements, should any members of the management group leave, is dependent on, among other things, the competitive nature of the employment market and the career opportunities that we can offer. Ensuring
that we continue to pay market compensation in order to retain key professionals may lead to increasing costs. We have experienced departures of key professionals in the past and may do so in the future, and we cannot predict the impact that any
such departures will have on our ability to achieve our objectives. Competition for the best people is intense and the loss of services from key members of the management group or a limitation in their availability could adversely impact our
financial performance. Furthermore, such a loss could be negatively perceived in the capital markets. 
 Government regulation 

The Company’s activities are subject to numerous regulations across various jurisdictions in North America. Changes in legislation and regulation could
result in increased costs and increased risk of non-compliance, which could adversely affect the Company’s financial condition and performance. 

Certain jurisdictions have enacted residential tenancy legislation which imposes, among other things, rent control guidelines that limit the ability to raise
rental rates at residential properties. In addition to limiting the ability to raise rental rates, residential tenancy legislation in some jurisdictions prescribes certain limitations on terminations of residential tenancies. Certain jurisdictions
have enacted rent control regulations and/or eviction moratoria in response to the COVID-19 pandemic. Any limits on the Company’s ability to raise rental rates at its properties, or to terminate defaulting tenancies, may adversely affect our
financial condition and performance. 
 Acquisitions and development projects undertaken by the Company may require zoning and other approvals from local
government agencies. The process of obtaining such approvals may take months or years, and there can be no assurance that the necessary approvals for any particular project will be obtained. Holding costs accrue while regulatory approvals are being
sought, and delays could negatively impact performance. 
 Construction industry risks 

Our success is very often dependent on stability in the construction industry. This industry may from time to time experience significant difficulties in the
supply of materials and services, including with respect to: shortages of qualified tradespeople; labour disputes; shortages of building materials; unforeseen environmental and engineering problems; and increases in the cost of certain materials.
When any of these difficulties occur, it may cause delays and increase anticipated costs, which could adversely affect the Company’s financial condition and performance. 

Taxation risks 
 We endeavour to structure our holdings
and operations to be efficient under the prevailing U.S. and Canadian tax frameworks. Changes in tax legislation or policy could adversely affect the after-tax return we can earn on our investments and activities, capital available for growth and
investment (including from our institutional investors), and the willingness of investors to acquire our securities or invest in our investment vehicles. A number of other factors may increase our effective tax rates, which would have a negative
impact on our net income. These include, but are not limited to, changes in the valuation of our deferred tax assets and liabilities, and any reassessment of taxes by a taxation authority. 

Furthermore, tax changes (such as rising property and franchise tax rates) could impact the efficiency of our operations and could also impact the overall
economic conditions relevant to the success of our business. For example, in the United States, the significant expenses of owning a home, including mortgage interest and state and property tax, are generally deductible for tax purposes (subject to
various limitations). Any changes to modify these benefits could increase the after-tax cost of owning a new home, which could adversely impact housing demand and/or sales prices. 

Cybersecurity risk 
 Cyberattacks are increasingly common
and sophisticated, leading to unauthorized access and fraudulent activities threatening the confidentiality, integrity or availability of our information resources. Cyberattacks could cause disruption of operations, data corruption or theft of
confidential information. The consequences of cybersecurity risk may include remediation costs, additional regulatory scrutiny, litigation and reputational damage, any of which could negatively impact our financial condition and performance. We have
security procedures and measures in place to protect our systems and information from cyberattacks and we monitor our systems for malicious threats in an effort to ensure we maintain high privacy and security standards. 

  
 92 2020 ANNUAL REPORT
TRICON RESIDENTIAL 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 
  

 Lease renewal and turnover risk 

If a tenant decides to vacate a rental property, whether as a result of deciding not to renew their lease or by vacating prior to the expiry of the lease, the
Company may not be able to re-let that property in a short amount of time or at all. Additionally, even if we are successful in renewing a lease or re-letting a property, the terms of the renewal or re-letting may be less favourable than the
original terms. 
 The ability to rent residential properties is affected by many factors, including changes in general economic conditions (such as the
availability and cost of mortgage funds, vacancy rates, the availability of suitable potential tenants and the job market for prospective tenants), local conditions (such as an oversupply of space or a reduction in demand for real estate in the
area), government regulations, changing demographics or social preferences, competition from other available properties, and various other factors. 
 If
the Company is unable to promptly renew leases or re-let properties, or if the rental rates upon renewal or re-letting are significantly lower than expected rates, our financial condition and performance may be negatively impacted. 

Furthermore, if a significant number of tenants are unable to meet their obligations under their leases or if a significant number of properties become vacant
and cannot be re-let on economically favourable terms, the Company may not generate revenues sufficient to meet operating expenses, including debt service and capital expenditures. 

Resident default 
 The success of the Company’s
rental operations depends in large part upon the ability to attract and retain qualified residents. This will depend, in turn, upon the ability to screen applicants, identify qualified residents, and avoid residents who may default. The Company
relies on information supplied by prospective residents in their rental applications to make leasing decisions, and this information may not be accurate. The Company may not successfully screen applicants, and as a result, may rent to residents who
default on leases or fail to comply with the terms of the lease or applicable homeowners’ association regulations, which may negatively affect financial performance, reputation, and the quality and value of our properties. 

In the event of a resident default or bankruptcy, we may experience delays in enforcing our rights as landlord and obtaining possession of the premises and
may incur legal, maintenance and other costs in protecting the value of our assets. In addition, we will incur turnover costs associated with re-letting the property such as marketing and brokerage commissions, will not collect revenue while the
property sits vacant, and may be unable to re-let the property at the rental rate previously received. 
 Reliance on vendors 

The Company relies on local vendors and service providers, including house renovation professionals, maintenance providers, leasing agents, and property
management companies in situations where it is cost-effective to do so or if our internal staff is unable to perform these functions. We generally do not have exclusive or long-term contractual relationships with any of these providers, and can
provide no assurance that we will have uninterrupted or unlimited access to their services. Furthermore, selecting, managing and supervising these service providers requires significant management resources and expertise. Poor performance by service
providers, especially those who interact with residents at our properties, will reflect poorly on the Company, could significantly damage our reputation among desirable residents and potentially impact financial performance. Moreover,
notwithstanding efforts to implement and enforce strong policies and practices regarding service providers, we may not successfully detect and prevent fraud, incompetence or theft by service providers, which could expose us to liability or
responsibility for associated damages and cause us to incur fines or penalties. In addition, any delay in identifying a service provider or removal or termination of existing service providers would require the Company to seek new vendors or
providers, which could create delays and adversely affect financial and operating results. 
 Increased expenses 

The failure to maintain stable or increasing average monthly rental rates combined with acceptable occupancy levels would likely have a material adverse effect
on our business, cash flows, financial condition and results of operations. Certain significant expenditures, including property taxes, maintenance costs, mortgage payments, insurance costs and related charges, must be made throughout the period of
ownership of real property regardless of whether a property is producing any income. There is a risk that property taxes may be increased as a result of revaluations of properties and their adherent tax rates. In some instances, enhancements to
properties may result in significant increases in property assessments following a revaluation. Additionally, utility expenses have been subject to considerable price fluctuations over the past several years and any significant increase in these
costs that we cannot charge back to our residents may have an adverse effect on our business, cash flows, financial condition and results of operations. 

  
 TRICON RESIDENTIAL
2020 ANNUAL REPORT 93 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 
  

 Substitutions for rental properties 

Demand for rental properties is impacted by and inversely related to the relative cost of home ownership. The cost of home ownership depends upon, among other
things, interest rates offered by financial institutions on mortgages and similar home financing transactions. If the interest rates offered by financial institutions for home ownership financing remain low or fail to rise, demand for rental
properties may be adversely affected. 
 An economic downturn may also impact job markets and the ability of tenants to afford the rents associated with
certain rental properties, which may result in increased demand for lower-cost rental options. Such a reduction in demand may have an adverse effect on rental revenues. 

Tenant relief laws 
 As the landlord of numerous
properties, the Company is involved from time to time in evicting residents who are not paying their rent or who are otherwise in material violation of the terms of their lease. Eviction activities impose legal and managerial expenses that increase
costs and expose us to potential negative publicity. The eviction process is typically subject to legal barriers, mandatory “cure” policies, internal policies and procedures and other sources of expense and delay, each of which may delay
our ability to gain possession and stabilize the property. Additionally, state, provincial and local landlord-tenant laws may impose legal duties to assist residents in relocating to new housing, or restrict the landlord’s ability to remove the
resident on a timely basis or to recover certain costs or charge residents for damage residents cause to the landlord’s premises. Because such laws vary by state, province and locality, the Company must be familiar with and take all appropriate
steps to comply with all applicable landlord-tenant laws, and needs to incur supervisory and legal expenses to ensure such compliance. To the extent that we do not comply with state, provincial or local laws, we may be subjected to civil litigation
filed by individuals, in class actions or actions by state or local law enforcement and the Company’s reputation and financial results may suffer. The Company may be required to pay adversaries’ litigation fees and expenses if judgment is
entered against us in such litigation or if we settle such litigation. 
 Title risk 

The Company’s acquisition of single-family rental homes is often completed through a title company with an owner’s title insurance policy being
obtained. However, U.S. distressed single-family homes may also be acquired through trustee auctions. Although the Company conducts due diligence and employs a title company to review title on target housing assets prior to purchasing such homes,
title on the homes purchased through foreclosure sales and auctions is occasionally only assumed weeks after the purchase. Furthermore, an owner’s title insurance policy is not available to protect against the inherent title risk arising
through the foreclosure auction process. In the event that the Company fails to independently and properly assess a title risk or fails to assume one or more homes because of such failed analysis, it may not achieve its expected financial
performance. 
 Homeowners’ association issues 
 A
number of our properties are located within homeowners associations (“HOAs”), which are private entities that regulate the activities of and levy assessments on properties in a residential subdivision. HOAs in which we own properties may
have or enact onerous or arbitrary rules that restrict our ability to renovate, market or lease our properties or require us to renovate or maintain such properties at standards or costs that are in excess of our planned operating budgets. Such
rules may include requirements for landscaping, limitations on signage promoting a property for lease or sale, or the use of specific construction materials in renovations. Some HOAs also impose limits on the number of property owners who may rent
their homes, which if met or exceeded, would cause us to incur additional costs to resell properties within the HOA and may also result in opportunity costs of lost rental income. Many HOAs impose restrictions on the conduct of occupants of homes
and the use of common areas, and we may have residents who violate HOA rules and for which we may be liable as the property owner. The boards of directors of the HOAs in which we own properties may not make important disclosures about the properties
or may block our access to HOA records, initiate litigation, restrict our ability to sell our properties, impose assessments, or arbitrarily change the HOA rules. We may be unaware of or unable to review or comply with HOA rules before purchasing a
property and any such excessively restrictive or arbitrary regulations may cause us to sell such property at a loss, prevent us from renting such property, or otherwise reduce our cash flow from such property, which would have an adverse effect on
our financial condition and performance. 
 Government subsidies 

Some of our rental income is derived from government subsidized rental support programs, such as the Section 8 program operated by the U.S. Department of
Housing and Urban Development. A reduction or elimination of government funding of such programs could result in higher rental turnover and downward pressure on rental rates, which could negatively impact our financial performance. 

  
 94 2020 ANNUAL REPORT
TRICON RESIDENTIAL 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 
  

 Guarantees of project debt 

The Company may agree to provide financial assistance to the subsidiary entities through which it carries on its activities. Such financial assistance may
include the provision of payment guarantees to a project entity’s lenders of acquisition financing, construction debt or long-term financing, and the provision of construction completion guarantees. Such guarantees may be joint or several with
other partners in a particular investment. The Company’s and its partners’ guarantees of project-level obligations may not be in proportion to their respective investments in the project entity. The provision of such guarantees may reduce
the Company’s capacity to borrow funds under its separate credit facilities, which may impact its ability to finance its operations. If such guarantees are called upon for payment or performance, they may have a negative impact on the
Company’s cash position and financial performance. If the Company provides a joint guarantee with an investment partner, a default by the partner in its payment or performance obligation under the guarantee could cause the Company to pay a
disproportionate amount in satisfaction of the guarantee, which may have a negative impact on the Company’s cash position and financial performance. 

Operational and credit risks 
 On a strategic and
selective basis, we and our for-sale housing investment vehicles provide financing to develop properties. The residential real estate development business involves significant risks that could adversely affect performance, including: the developer
may not be able to complete construction on schedule or within budget, resulting in increased debt service expense and construction costs and delays in selling the properties; the developer may not be able to obtain, or may experience delays in
obtaining, all necessary zoning, land-use, building, occupancy and other governmental permits and authorizations for the properties; the developer may not be able to sell properties on favourable terms or at all; construction costs, total investment
amounts and the Company’s or investment vehicle’s share of remaining funding may exceed our estimates; and projects may not be completed and delivered as planned. 

Our for-sale housing investments are made through the financing of local developers, including Johnson, and, consequently, we rely to a great extent on those
developers to successfully manage their development projects. Furthermore, given the Company’s majority interest in Johnson, we rely on Johnson’s ability to execute on portions of our for-sale housing business strategy. Investments in
partnerships, joint ventures or other entities may involve risks not present were a third party not involved, including the possibility that the development partners might become bankrupt or otherwise fail to fund their share of required capital
contributions. Additionally, the development partners might at any time have economic or other business interests or goals which are inconsistent with our business interests or goals. In addition, we do not have sole control of certain important
decisions relating to these development properties, including decisions relating to: the sale of the development properties; refinancing; timing and amount of distributions of cash from such development properties; and capital improvements. Any of
these factors could negatively impact the value of our investments and our financial condition and performance. 
 Long investment periods 

The investment horizons in our for-sale housing assets are relatively long and these extended timelines increase the risk that circumstances will arise which
delay investment realization, and that markets may deteriorate between the time of our initial investment and our exit. This may be the result of many factors that present themselves over the duration of an investment, including local and overall
market and economic conditions, increasing competition over time, market value fluctuation and changing interest rates. Delays or market deterioration over time could have an adverse effect on the returns from our investments, our fee revenue, and
our financial condition and performance. 
 Formation of future investment vehicles 

The ability to raise capital for any future investment vehicles remains subject to various conditions which Tricon cannot control, including the negotiation
and execution of definitive legal documentation and commitments made by third-party investors. There can be no assurance that any capital will be raised through future investment vehicles or that any future warehoused investments of the Company will
be acquired by any other future vehicles. A failure to raise sufficient capital through other investment vehicles could impair our future revenues and growth. 

Structure of future investment vehicles 
 There can be no
assurance that the manner in which our private funds and advisory revenues and/or investment income are calculated in respect of future investment vehicles will be the same as the active investment vehicles. Any such changes could result in the
Company earning lesser fees from investment vehicles of the same nature and size as the active investment vehicles and could expose the Company’s co-investments in such future investment vehicles to increased risk, including, but not limited
to, the risk of reduced income (at comparable investment performance levels) and the increased risk of loss of capital of the Company. 
 Ongoing
investment performance 
 We believe that our ongoing investment performance is one of the most important factors for the success and growth of Private
Funds and Advisory activities. Poor investment performance could impair our ability to raise future private capital, which could impact our ability to earn private funds and advisory revenue. In addition, our ability to earn performance fees is
directly related to our investment performance and therefore poor investment performance may cause us to earn less or no performance fees. 

  
 TRICON RESIDENTIAL
2020 ANNUAL REPORT 95 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 
  

 Investment vehicle governance 

The governing agreements for certain active investment vehicles provide that the general partner or manager of the investment vehicle may be removed by the
investors in certain prescribed circumstances, including in some cases (and with the approval of a prescribed number of investors) without cause. These agreements may not provide for termination payments to the general partner or manager in the
event of removal without cause. The removal of the general partner or the manager of an active investment vehicle prior to the termination of such investment vehicle could materially adversely affect the reputation of Tricon, reduce our private
funds and advisory revenue, and have a negative impact on our financial condition and performance. 
 Capital commitment 

The third-party investors in Tricon’s investment vehicles comprise a relatively small group of reputable, primarily institutional, investors. To date,
each of these investors has met its commitments on called capital and we have received no indications that any investor will be unable to meet its capital commitments in the future. While our experience with our investors suggests that commitments
will be honoured, and notwithstanding the adverse consequences to a defaulting investor under the terms of the applicable investment vehicle, no assurances can be given that an investor will meet its entire commitment over the life of an investment
vehicle. A failure by one or more investors to satisfy a drawdown request could impair an investment vehicle’s ability to fully finance its investment, which could have a material adverse effect on the performance and value of that investment,
which in turn could negatively impact the Company’s financial condition and performance. 
 Stock exchange prices 

The market price of our common shares could fluctuate significantly as a result of many factors, including the following: 

 

	 	•	 	 economic and stock market conditions generally and specifically as they may impact participants in the real
estate industry; 


  

	 	•	 	 our earnings and results of operations and other developments affecting our business; 



 

	 	•	 	 changes in financial estimates and recommendations by securities analysts following our common shares;



  

	 	•	 	 earnings and other announcements by, and changes in market evaluations of, participants in the real estate
industry; 


  

	 	•	 	 changes in business or regulatory conditions affecting participants in the real estate industry;



  

	 	•	 	 addition or departure of the Company’s executive officers and other key personnel; 



 

	 	•	 	 sales or perceived sales of additional common shares; and 



 

	 	•	 	 trading volume of the common shares. 



In addition, the financial markets may experience significant price and volume fluctuations that affect the market prices of equity securities of companies
and that are unrelated to the operating performance, underlying asset value or prospects of such companies. Accordingly, the market price of our common shares may decline even if our operating results or prospects have not changed. The value of the
common shares is also subject to market fluctuations based upon factors which influence the Company’s operations, such as legislative or regulatory developments, competition, technological change and global capital market activity. As well,
certain institutional investors may base their investment decisions on consideration of the Company’s environmental, social and governance practices and performance against such institutions’ respective investment guidelines and criteria,
and failure to meet such criteria may result in limited or no investment in the common shares by those institutions, which could adversely affect the trading price of the common shares. 

Additional capital 
 The Company’s ability to carry
on its business generally, and in particular to take advantage of investment opportunities, may require it to raise additional capital. Additional capital may be sought through public or private debt or equity financings by Tricon or another Tricon
entity and may result in dilution to or otherwise may have a negative effect on existing Tricon shareholders. Further, there can be no assurances that additional financing will be available to Tricon when required or desired by Tricon, on
advantageous terms or at all, which may adversely affect Tricon’s ability to carry on its business. 
 Dividends 

Holders of common shares do not have a right to dividends on such shares unless declared by the Board of Directors. Although the Board has established a
dividend policy authorizing the declaration and payment of dividends to holders of common shares on a quarterly basis, the declaration of dividends is at the discretion of the Board of Directors even if the Company has sufficient funds, net of its
liabilities, to pay such dividends. 
 The Company may not declare or pay a dividend if there are reasonable grounds to believe that (i) the Company
is, or would after the payment be, unable to pay its liabilities as they become due, or (ii) the realizable value of the Company’s assets would thereby be less than the aggregate quantum of its liabilities. Liabilities of the Company will
include those arising in the ordinary course of business and indebtedness. 

  
 96 2020 ANNUAL REPORT
TRICON RESIDENTIAL 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 
  

 Future sales and dilution 

The Company’s articles permit the issuance of an unlimited number of common shares, and shareholders have no pre-emptive rights in connection with such
further issuances. The Board has the discretion to determine the price and the terms of issue of further issuances of common shares and securities convertible into common shares. Any future issuances of common shares could be dilutive to shareholder
interests at the time of issuance. 
 Holding company 

Tricon Residential Inc. is a holding company and a substantial portion of its assets are the equity interests in its subsidiaries. As a result, investors are
subject to the risks attributable to its subsidiaries. As a holding company, the Company conducts substantially all of its business and makes its investments through its subsidiaries, which generate substantially all of its revenues. Consequently,
the Company’s performance and growth are dependent on the earnings of its subsidiaries and the distribution of those earnings to the Company. The ability of these entities to pay distributions will depend on their operating results and may be
subject to applicable laws and regulations and to contractual restrictions contained in the instruments governing their debt. In the event of a bankruptcy, liquidation or reorganization of any of the Company’s subsidiaries, holders of
indebtedness and trade creditors will generally be entitled to payment of their claims from the assets of those subsidiaries before any assets are made available for distribution to the Company. 

Financial reporting and other public company requirements 

The Company is subject to reporting and other obligations under applicable Canadian securities laws and Toronto Stock Exchange rules, including National
Instrument 52-109 – Certification of Disclosure in Issuers’ Annual and Interim Filings. These reporting and other obligations place significant demands on Tricon’s management, administrative, operational and accounting
resources. Moreover, any failure to maintain effective internal controls could cause the Company to fail to meet its reporting obligations or result in material misstatements in its consolidated financial statements. If the Company cannot provide
reliable financial reports or prevent fraud, its reputation and operating results could be materially harmed, which could also cause investors to lose confidence in the Company’s reported financial information, and could result in a lower
trading price of its common shares. 
 Management does not expect that Tricon’s disclosure controls and procedures and internal controls over financial
reporting will prevent all errors and all fraud. A control system, no matter how well designed and implemented, can provide only reasonable, not absolute, assurance that its objectives will be met. Further, the design of a control system must
reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all
control issues within a company are detected. The inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple errors or mistakes. Controls can also be circumvented by
individual acts of some persons, by collusion of two or more people or by management override of the controls. Due to the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected in a
timely manner or at all. 

  
 TRICON RESIDENTIAL
2020 ANNUAL REPORT 97 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 
  

 9. HISTORICAL FINANCIAL INFORMATION 

The following table shows selected IFRS measures for the past eight quarters. 

Effective January 1, 2020, the Company commenced consolidation of the financial statements of single-family rental and multi-family rental entities that
are considered controlled subsidiaries. On the date of transition, the Company applied the requirements of IFRS 3 to all subsidiaries that were previously measured at fair value through profit or loss. As the requirements of IFRS 3 are applied
prospectively, the IFRS measures below for all quarters prior to January 1, 2020 have not been recast and are presented under investment entity accounting in accordance with IFRS 10. 

 

																	
	 For the three months ended

(in thousands of U.S. dollars, except per share amounts which are in U.S. dollars)
	  	December 31,
2020	 	  	September 30,
2020	 	  	June 30,
2020	 	  	March 31,
2020	 
	 Financial statement results
	  				  				  				  			
	 Net operating income from rental properties
	  	$	79,323	 	  	$	77,867	 	  	$	77,000	 	  	$	74,459	 
	 Total revenue
	  	 	132,322	 	  	 	128,934	 	  	 	127,034	 	  	 	123,987	 
	 Net income (loss)
	  	 	81,478	 	  	 	58,099	 	  	 	17,341	 	  	 	(40,505	) 
	 Basic earnings (loss) per share
	  	 	0.41	 	  	 	0.30	 	  	 	0.09	 	  	 	(0.21	) 
	 Diluted earnings (loss) per share
	  	 	0.39	 	  	 	0.23	 	  	 	0.09	 	  	 	(0.21	) 
					
	 For the three months ended

(in thousands of U.S. dollars, except per share amounts which are in U.S. dollars)
	  	December 31,
2019	 	  	September 30,
2019	 	  	June 30,
2019	 	  	March 31,
2019	 
	 Financial statement results
	  				  				  				  			
	 Total revenue
	  	$	11,716	 	  	$	11,323	 	  	$	9,367	 	  	$	7,489	 
	 Net income
	  	 	45,259	 	  	 	32,457	 	  	 	12,356	 	  	 	24,063	 
	 Basic earnings per share
	  	 	0.23	 	  	 	0.16	 	  	 	0.08	 	  	 	0.17	 
	 Diluted earnings per share
	  	 	0.22	 	  	 	0.15	 	  	 	0.04	 	  	 	0.16	 

 The following tables show selected IFRS measures for the past three years. 

 

													
	 For the twelve months ended

(in thousands of U.S. dollars, except per share amounts which are in U.S. dollars)
	  	December 31,
2020	 	  	December 31,
2019	 	  	December 31,
2018	 
	 Financial statement results
	  				  				  			
	 Total revenue(1)
	  	  $	512,277	 	  	  $	39,895	 	  	  $	30,347	 
	 Net income
	  	 	116,413	 	  	 	114,135	 	  	 	216,355	 
	 Basic earnings per share
	  	 	0.58	 	  	 	0.65	 	  	 	1.57	 
	 Diluted earnings per share
	  	 	0.58	 	  	 	0.63	 	  	 	1.28	 
	 Dividends per share
	  	C$	0.28	 	  	C$	0.28	 	  	C$	0.28	 

  

	(1)	 For the years ended December 31, 2019 and 2018, excludes investment income recognized under Investment
Entity accounting. 


  

													
	 (in thousands of U.S. dollars)
	  	December 31,
2020	 	  	December 31,
2019	 	  	December 31,
2018	 
	 Total Assets
	  	$	7,174,834	 	  	$	2,302,289	 	  	$	1,687,662	 
	 Debt
	  	 	4,137,506	 	  	 	470,553	 	  	 	374,716	 


  
 98 2020 ANNUAL REPORT
TRICON RESIDENTIAL 














 MANAGEMENT’S DISCUSSION AND ANALYSIS 

for the year ended December 31, 2020 
  

 The following factors have caused material changes to the Company’s financial results over the past
three years: 
  

	 	•	 	 On June 27, 2018, the Company entered into a joint venture arrangement (“SFR JV-1”) with two
leading institutional investors to acquire and manage a portfolio of 10,000–12,000 single-family rental homes, thus introducing third-party capital to the single-family business segment and growing Tricon’s total managed homes by 7,439
homes or 47% to date. Since the launch of the joint venture, the value of Tricon’s single-family rental portfolio has grown by $1.6 billion. 


  

	 	•	 	 On June 29, 2018, Tricon completed the sale of its 14 manufactured housing communities in an effort to
simplify the Company’s overall business model and focus on housing sectors where it can achieve scale and industry leadership. As a result of the sale, in 2018, Tricon recognized a gain of $21.2 million and a reduction in total assets of $83.5
million. 


  

	 	•	 	 On June 11, 2019, the Company completed the acquisition of Starlight U.S. Multi-Family (No. 5) Core Fund
(the “U.S. multi-family rental portfolio”), thus establishing a new U.S. multi-family platform for Tricon. The acquisition of the portfolio, which consists of 23 properties totalling 7,289 suites in 13 major markets, increased the value of
Tricon’s rental portfolio by $1.3 billion and contributed $111.2 million of rental revenue for the year ended December 31, 2020. 


  

	 	•	 	 In January 2020, the Company completed its transition to an owner and operator of diversified rental housing,
resulting in the Company determining that it no longer meets the criteria for being an investment entity under IFRS 10, Consolidated Financial Statements (“IFRS 10”). As a result, the Company began consolidating the financial
results of controlled subsidiaries including those holding its investments in single-family rental homes and U.S. multi-family rental properties, resulting in the inclusion of these subsidiaries’ assets, liabilities and non-controlling
interests in the balance sheet of the Company on a prospective basis in accordance with the relevant guidance of IFRS 10. 



  
 TRICON RESIDENTIAL
2020 ANNUAL REPORT 99 













 



 
 7 St. Thomas Street, Suite 801 Toronto, Ontario M5S 2B7 
T 416 925 7228 F 416 925 7964 www.triconresidential.com