Tricon Residential Inc.

Wojtek Nowak - Director, Corporate Finance and Investor Relations Wissam Francis - Chief Financial Officer Gary Berman - President & Chief Executive Officer Jonathan Ellenzweig - Managing Director

Mark Rothschild - Canaccord Genuity Jonathan Kelcher - TD Securities Stephen MacLeod - BMO Capital Markets Dean Wilkinson - CIBC World Markets Inc Geoffrey Kwan - RBC Capital Markets Jimmy Khing Shan - GMP Securities

Thank you, Julie. Good morning, everyone, and thank you for joining us to discuss Tricon’s results for the three and six months ended June 30, 2017, which were shared in the news release we distributed yesterday.

I’d like to remind you that our remarks and answers to your questions may contain forward-looking statements and information. This information is subject to risks and uncertainties that may cause actual events or results to differ materially.

For more information, please refer to our most recent Management’s Discussion and Analysis, and Annual Information Form, which are available on SEDAR. Our remarks also include references to non-GAAP financial measures which are explained and reconciled in our MD&A.

I would also like to remind everyone that all figures are being quoted in U.S. dollars, unless otherwise stated.

Please note that this call is available by Webcast at triconcapital.com and a replay will be accessible there following the call. Lastly, please note that during this call, we will be referring to a Supplementary Conference Call Presentation posted on our website.

If you haven’t accessed it already, it will be a useful tool to help you follow along during the call. You can find the presentation in the Investor Information section of triconcapital.com, under Events & Presentations.

With that, I will turn the call over to Wissam Francis, CFO of Tricon Capital Group.

Thank you, Wojtek, and good morning, everyone. Our prepared remarks this morning will include highlights of our quarterly results and a discussion of our various investments protocols.

Starting on Side 5 of our presentation, Tricon continues to deliver strong growth in the second quarter of 2017, with assets under management increasing by 53% year-over-year to $4.6 billion. During the quarter, the acquisition of Silver Bay added $1.4 billion to our Tricon American Homes AUM.

In addition to that, TAH also had a fair value gain of approximately $20 million resulting from strong home price appreciation of 1.2% this quarter, or 4.8% annualized for Silver Bay homes held at cost. Tricon Housing Partners added $80 million of AUM, mostly related to a higher third-party commitment, Arantine Hills, a land development project in California, where additional capital has been approved to allow for more flexibility to the business plan.

And Tricon Luxury Residences added $30 million of AUM, as they continue to advance construction on its existing projects. The overall growth in AUM was partly offset by distributions from maturing investments within Tricon Housing Partners.

Moving on to our financial results on Slide 6, you can see that on an IFRS basis, we reported diluted loss per share of $0.17, compared to diluted earnings per share of $0.13 last year. There are two important variances here to highlight.

First, TAH incurred $28.7 million of non-recurring transaction costs related to the Silver Bay acquisition, which are expensed under IFRS. And second, Tricon incurred a $19.2 million loss related to a change in the fair value of a derivative financial instrument this quarter versus a $2.4 million gain in prior-year period.

This loss was caused by an increase in the value of the conversion, feature of our convertible debenture, as our share price strengthened during the quarter. These two items caused the vast majority of the year-over-year variance in our reported EPS to provide a more normalized deal of our performance, we present the adjusted income metrics that you see on Slide 7, which removed the transaction costs and change in the fair value of the derivative, as well as other non-recurring and non-cash items.

As such, on an adjusted basis, we ported strong basic and diluted earnings per share of $0.17, which is 42% increase from the $0.12 reported in last year’s results. Looking deeper into these metrics, you can see at the bottom of Slide 7, that our adjusted EBITDA almost doubled year-over-year to $47.6 million, reflecting the substantial growth in our operations.

The main contributing factors include. First, strong growth in investment income at Tricon Housing Partners, as we added new investments over the past year, namely Trinity Falls and THP US SP2.

And we also experienced consistent operating results across other investments. Second, a strong quarter for Tricon American Homes, where net operating income doubled mainly as a result of the Silver Bay acquisition, while robust home price appreciation continued to drive fair value gains.

Of note, Silver Bay is included in our results as of May 9, and there were no fair value gains recognized on Silver Bay homes this quarter, given the close proximity of the transaction costs of the transaction date to our quarter-end. Third, solid growth in investment income at Tricon Lifestyle Communities, as a result included 14 parks, as compared to 10 parks last year.

The growth in investment income also reflects the value added from implementing capital expenditure programs across various parks. And lastly, strong results at Tricon Luxury Residences, driven by increasing value of the existing development projects, as construction continue to advance.

These items were partially offset by higher corporate overheads, as we expanded the scale of our company and added staffs. While we experienced solid growth in adjusted EBITDA, you can see that as you bridge from adjusted EBITDA to adjusted net income, we also incurred higher interest expense year-over-year.

The adjusted interest expense presented here captures the interest expense across all investment verticals, and most of – most notably, from the incremental debt used to finance Silver Bay acquisition, as well as the recently issued convertible debenture, which accrued interest as of March 17. To wrap up our financial overview, I would like to touch on our balance sheet and liquidity position on Slide 8.

The acquisition of Silver Bay was completed with a very efficient capital structure from our – for our shareholders involving approximately $1.2 billion of debt and $32 million of equity in convertible debentures. We’re comfortable taking on additional debt at TAH, given our strong corporate liquidity profile, the high visibility we have into our future cash flows across various businesses and the minimal leverage we carry within our THP vertical.

At the corporate level, we continue to have a flexible liquidity profile to our corporate revolving credit facility. We had $93 million drawn under facility at the end of Q2 with $272 million of available capacity, given us ample room to continue our growth trajectory into THP, TAH and TLR Canada.

In terms of cash flow visibility, we have four key sources of cash flows to highlight. First, we have identified 1,600 homes, including 1,300 homes from Silver Bay and 300 homes from TAH as non-core homes that we plan to dispose of.

These homes are generally geographic outliers or those that do not fit our middle market focus with rents that are either too low or too high. We may sell these homes – non-core homes on a portfolio basis to national buyers or sell them one off over time.

Second, we continue to anticipate significant cash flows from Tricon Housing Partners. In aggregate, we expect approximately $517 million of net distributions from THP to Tricon over the next eight to 10 years.

We continue to forecast approximately $125 million to come from THP1 US over the next two years. The remaining cash flows are largely expected to come from various separate accounts, which all – are long dated master planned community investments projected to generate fairly consistent cash flows over eight to 10 years.

Lastly, we expect the disposition of our manufactured housing portfolio in U.S. multi-family assets to generate meaningful cash proceeds to Tricon.

All of this combined, we estimate approximately $400 million to $500 million of cash flow to be generated from these sources over the near-term, given us significant flexibility to invest in attractive growth opportunities and to pay down debt. At the same time, we’re working on implementing a more flexible capital structure at TAH.

We’re in the process of refinancing the $1.2 billion Silver Bay acquisition credit facility with more permanent long-term financing. We recently launched a new five-year fixed rate private label securitization of approximately $460 million, encompassing about 3,500 homes, of which 90% were acquired from Silver Bay, with the proceeds of this financing to be used to reduce the balance of the Silver Bay acquisition credit facility.

We’re also evaluating a number of options to refinance the remaining balance, including private label securitization, as well as bank or insurance company originated term loan and potential GSE financing with a goal of laddering debt maturities, utilizing both fixed and floating rate instruments and mitigating refinance risk by diversifying our financing sources. With that, I’ll now turn the call over to Gary, the proud new father of a new baby girl to provide institutional – to provide additional insight into our business verticals.

Wissam, thank you very much for the plug. We didn’t announce major acquisition this quarter, so I figured, we could sneak in a baby.

Second quarter was a period of remarkable growth for Tricon and we achieved solid operating results across all our investment verticals. Let’s begin with Tricon Housing Partners, or THP, a land and homebuilding vertical on Slide 10.

THP continue to generate solid results this quarter with investment income of $6.6 million increasing by 33% from the prior year. For the first six months of this year, THP generated an investment income of $12.2 million against outstanding invested capital of $241 million, translating to a 10.1% annualized net return on invested capital, which is in line with our expectation of 9% to 11% net return for the full-year.

Please recall that the net return numbers we highlight here are net of asset management fees, development fees, and performance fees paid to our private funds and advisory business. So in many cases, the growth returns on the investments are substantially higher.

As you can see, the key driver of THP’s investment income was Trinity Falls a master-plan community we acquired last July, which generated $1.8 million of investment income in the quarter. As a new principal investment with growing investment income, Trinity Falls provides a good counter rate to THP1 US, where the investment balance and investment income are decreasing because of the advanced nature of many of the projects and the fund and the related cash distributions.

The performance of THP’s other investment vehicles was also stronger than last year and consistent with our expectations. THP’s performance this quarter reflects a robust market fundamentals underpinning the U.S.

housing market. As summarized on Slide 11, we’re seeing a number of positive indicators, including strong existing home sales and home prices, as well as low unemployment.

Meanwhile, new housing starts remain well below historical long run averages and are struggling to keep up with household information, driving new home prices upward and benefiting owners of well-located land, such as THP’s master-planned community portfolio. We view these as favorable tailwind to support ongoing strength in THP’s operating results and growth in the business.

As we think about the future outlook, we often describe Tricon Housing Partners is the rocket fuel that propelled us, which refers to the strong, albeit, episodic cash flow generation and above the average risk adjusted returns that this business is capable of producing for us. THP remains an important part of our business and we see it being roughly 20% to 25% of our asset mix going forward.

We’ll look to add new project to some of the older ones roll off and are currently tracking a meaningful pipeline of deals. But we remain selective and only pursue the very best opportunities.

Let’s now turn to Tricon American Homes, our single family rental business on Slide 12. TAH achieved very strong operational results in Q2, while successfully navigating the closing and integration of Silver Bay.

Let me share with you some of the operational highlights. TAH’s net operating income increased by 98% year-over-year.

This is driven by 96% increase in total revenue, mainly as a result of adding Silver Bay, but also from achieving strong portfolio occupancy of 96.9%, while generating above average rental growth of 4.9%, including 4.4% of renewals and 5.7% on new move-ins. On the expense side, TAH is focused its attention on controllable expenses, such as repairs, maintenance and turnover costs.

In particular, TAH is in the midst of internalizing the majority of the R&M function, which has reduced cost and improved customer service and provides an opportunity to spend more time inside their homes, which allows TAH’s field staff to spot potential issues and address them proactively. All of these efforts will allow TAH to achieve a very healthy NOI margin of 60.8%.

We’re very pleased with these results, especially given that our anticipated synergies from the Silver Bay transaction are still in the process of being realized. We still remain comfortable projecting the full-year NOI margin of 60% that with an upward bias, given the trends we are seeing thus far.

As we move down TAH’s income statement, this quarter included the contribution of Silver Bay revenues as of May 9, but essentially carried a full quarter’s personnel and overhead cost burden, as we prepared for the acquisition and worked with the integration. As a result, you’ll notice high corporate level expenses and fairly flat core FFO relative to last year, which we expect will improve over the coming quarters, as our integration initiatives and G&A synergies are completed.

I think the best way to try TAH’s operational progresses is through same home metrics, which provide a glimpse of what is achievable for entire portfolio on a stabilized basis. Turning to Slide 13, the same home porthole metrics for TAH include 4,700 rental homes that have been stabilized for, at least, 90 days prior to the start of the comparable period last year.

TAH’s same home portfolio generated NOI growth 9.3% year-over-year, driven by 230 basis point increase in occupancy, a 5% increase in average monthly rent, and tight expense control that resulted in NOI margin expanding to 61.5% compared to 60.6% last year. Although, we continue to see property taxes increase as a percentage of revenue, largely a byproduct of rising home prices, this is partially offset by lower repairs, maintenance and turnover costs as a percent of our revenue, partly as a result of the R&M internalization initiatives.

Annualized turnover on a same home basis was 31.7% this quarter, compared to 33.9% last year, which also serves as a driver of expense reduction and NOI margin improvement during the quarter. If you recall that a key part of our investment strategy is to focus on the middle market, or those households earning between 50,000 and 95,000 per year, or expect to see low resident turnover translating to stronger margins and returns over time.

Moving on to Slide 14, let’s turn our attention to the Silver Bay acquisition and integration process. Following the acquisition of Silver Bay, TAH is now the fourth largest publicly-owned company in the SFR industry, with 16,660 homes concentrated in high growth U.S.

Sun Belt markets actually third pro forma for the invitation Starwood merger announced today. Last quarter, we spoke about how the combination of two complementary single-family rental portfolio is expected to unlock meaningful operating benefits and efficiencies and how we expect to realize substantial cost synergies from doubling our SFR portfolio.

We’re happy to report that the integration is progressing well and is ahead of schedule. Even before announcing the acquisition, the TAH team had carefully crafted an implementation plan during the due diligence process to ensure that all critical functions were integrated seamlessly upon closing of the transaction.

Within two days of closing, all Silver Bay residents were transitioned onto the Tricon American Homes online portal, allowing them to pay rent and access through account information. Also, within two days of closing, all unleased Silver Bay homes were added to the TAH leasing website and all Silver Bay yard signs were subsequently replaced with Tricon American Homes signs.

On the staffing side, Tricon American Homes has hired 60 field operating staffs in Silver Bay on a full-time basis, and local facilities were combining all markets with geographic overlap. The Silver Bay field staffs are promptly transitioned on to TAH’s technology platform and receive upfront training on TAH’s standard operating procedures.

Lastly, the accounting and back-office assistance were integrated as planned, which allowed for timely and accurate financial reporting. As a result of the smooth integration process, the operating performance of the Silver Bay portfolio was better than expected this quarter.

The NOI margin for Silver Bay homes on a standalone basis was 60.7%, which was above our initial expectations of 60% for the full-year. In terms of corporate overhead synergies, we’d outlined a plan to remove approximately $10 million of annualized overhead costs from Silver Bay operation from an initial run rate of about $14 million.

This included eliminating duplicate head office expenses, facility costs and public company reporting costs. These initiatives are largely complete.

Although, we continue to retain a number of Silver Bay staff on a consulting basis and continue to incur various transitional costs, which are reflected in our corporate overhead expenses. That said, we are comfortably ahead of schedule and expect to fully realize our projected synergies in the first-half of 2018.

Looking ahead, we remain excited about the growth prospects of Tricon American Homes. The institutional SFR companies represent only 2% of the $16 million rental homes across the U.S.

The vast majority of the market is managed by inefficient mom-and-pop operators who cannot deliver the high-quality product and customer service that we believe we can for our residents. As such, we believe there’s a tremendous role of opportunity and we are aiming or resume our acquisition program in Q1 2018.

While our business plan assumes a onesie-twosie acquisition program, we’re evaluating various options to accelerate growth, including bill to rent and portfolio acquisitions. Moving on to Tricon Lifestyle Communities, our manufactured housing land lease business.

2017 is a year focused on asset management, as TLC works to complete capital expenditure programs of the existing parks and repositions communities to drive higher occupancy in rent in order to ultimately maximize value when the portfolio is sold. As you can see on Slide 15, TLC has completed the capital expenditure programs with six parks and the remaining eight parks in various stages of their enhancement programs which should be completed by the end of the year.

We can see this value-added strategy to work when we isolate the operating results of the 10 parks owned since last year. For these parks, long-term occupancy has gone up by 2.3% from 67.7% to 70%, and average monthly rent increased by 5% from $376 to $392 in the past 12 months.

Since we announced our intention to exit the TLC vertical few months ago, we received strong unsolicited interest in the portfolio from many parties and plan to run a broker process once the capital expenditure program is complete. Turning to Tricon Luxury Residences, our multi-family in development and rental platform, where progress continued on the three Canadian and two U.S.

projects that are currently under development. On Slide 16, you can see the status of the three projects that are already under construction.

The Maxwell and McKenzie in Dallas, our TLR U.S. projects are both on track, completion by late 2018.

We expect to exit from these investments once the buildings are stabilized. The Selby, which is our first development in Toronto located in Bloor, Sherbourne, is tracking ahead of schedule is expected to start lease up in the second-half of 2018.

Our second development, 57 Spadina located in Toronto’s Entertainment District is scheduled to start construction in early 2018. We would also like to share some exciting news on the news development, Scrivener Square, a prime site located in the Rosedale/Summerhill neighborhood Toronto.

We submitted the zoning application for the project on May 29, and on Slide 17, we are sharing with you the preliminary rendering of the project. Let me introduce some of the key attributes.

The proposal entails a mixed-used development consisting of 182-unit Class A rental building, with integrated retail and public court yard space at street level. We ran an international design competition involving various world-class architectural firms to arrive at a design concept.

We selected, COBE, a leading Danish architecture firm, based on their track record designing residential projects centered around a vibrant public round that puts people first and incorporates heritage buildings. Our project includes a central open-air courtyard that will serve as a gathering place for the community to interact and experience outdoor entertainment and art exhibits.

The COBE design integrates multiple brick patterns and colors inspired by the surrounding structures, while telling – tying in a lighter material used at the adjacent LCBO and Scribner buildings. We see tremendous potential for this project, while this is a highly desirable rental property and is a vibrant amenity in retail note for this surrounding community.

We look forward to sharing with you the details, as the zoning process advances. As we think about the growth for the TLR business vertical, we remain focused on expanding in Canada, where multi-family fundamentals remain very compelling, particularly in the City of Toronto.

The growth opportunities in Toronto are driven by rising rents, declining vacancy rates, elevated home prices and a lack of Class A rental product. As you can see on Slide 18, average monthly rents in Downtown Toronto have experienced a 10% increase year-over-year to $3.24 per square foot in Q2 2017.

Meanwhile, the vacancy rate for newer purpose-built rental stock was almost nonexistent at a record low of 0.1%, compared to 0.4% in the previous year. On the supply side, we believe there will be a slowdown in construction starts for new purpose-built rental apartments in Toronto, following the introduction of the Ontario Fair Housing Plan, which enacted rent control for all buildings constructed after 1991 amongst other measures.

Lower purpose-built rental construction starts will further reduce rental inventory and could possibly have the unintended consequence of raising market rents higher. To give you some context of how these market dynamics translate into returns for Tricon, let’s take the Selby as an example.

We underwrote the project assuming average rents of $2.90 per square foot and annual rent growth of 2% to 3%. The current market is already above our rent assumptions.

Moreover, our projective development yields on the Canadian projects are 5.25% to 5.75%, compared to current cap rates sometimes below 4% for older product. Putting these fundamentals and metrics together, you can see why we’re excited about the opportunity for TLR Canada to earn compelling returns, while providing a much needed housing alternative.

I will also remind you the purpose-built rental investments are very capital efficient from Tricon’s perspective, since we aim to combine Tricon’s equity co-investment with a larger equity contribution from pension fund partners, along with construction financing at currently attractive rates. This structure allows us to earn investment income, as we add value for the development base, as well as recurring rental income once the buildings are stabilized and recurring fee income for managing third-party capital.

We see significant appetite for multi-family product from third-party institutional investors and believe we have a unique opportunity to leverage our 30 years of development expertise to build a sizable Class A rental portfolio that currently does not exist in Canada. Lastly, I would like to speak to our Private Funds and Advisory business on Slide 19.

PF&A generated $6.4 million of revenue in Q2, a 6% increase from the prior year’s results. Within this figure, we saw an increase in private investment vehicle fee income offset by slight decrease in development fees from our Johnson business.

In response to current market conditions, Johnson has proactively shifted its product mix towards smaller lots, which in turn, allowed builders to sell more affordable product a new home buyers. This shift drove a 25% increase in the number of lots sold compared to the prior quarter that resulted in lower development fees per lot.

On a year-to-date basis, Johnson revenues were up 8% from last year. We are also pleased to announce that Johnson was the only development manager in the U.S.

to have six communities ranked in the top 50 master-plan communities for the first-half of 2017 in terms of wholesale – home sales, as reported by RCLCO, a leader in master-plan community market research and consulting. Over the past 12 months, we’ve extensively focused our efforts on principal investment opportunities.

The private funds and advisory has always been a core aspect of our business and we intend to use third-party capital to proactively grow all of our business verticals going forward. With that in mind, we are pleased to announce the addition of Evelyne Dubé as our new Managing Director of Private Funds.

As profiled on Slide 20, Evelyne is a Senior Executive with over 20 years of experience in real estate investment and capital raising. She has held Senior Business Development, Investor Relations and Fund Raising positions with a number of leading European real estate private equity firms, including Forum Partners, Apollo, Citi Property Investors and AEW Europe, and has developed key institutional relationships throughout North America, Europe, the Middle East and Asia.

Evelyne’s mandate is to help us broaden our relationships with private investors and educate the private market about our investment opportunities, helping us raise third-party capital and grow our stream of recurring management fees. Another aspect of our growth strategies is our evolution towards integrating operating businesses within each of our investment verticals.

This evolution requires a talent of senior executives with extensive backgrounds in operating mature consumer-oriented businesses. In this regard, we are pleased to announce the hiring of Andy Carmody and Alexander Blum.

Andy Carmodywill join us as Managing Director and Co-Head of Tricon Housing Partners alongside Jon Ellenzweig. Andy has extensive experience in the acquisition development and asset management of large-scale master-plan and mixed-used communities.

Most recently, he was President of the Residential Business at Crescent Communities overseeing $680 million portfolio of residential investments. In addition, he has a broad management background spending previous roles at Kitson, a large institutional land developer based in Florida; Centex, a former top five public homebuilder; and McKinsey Consulting.

In his new role, Andy will oversee all aspects of THP strategy stakeholder relationships, asset management, sourcing new investment opportunities and management of our investment team. The key aspect of Andy’s mandate is to expand THP’s master-plan communities business by leveraging our Johnson platform.

Andy will be taking over from Craig Mode, who recently left us after 10 years with Tricon. Craig was a valuable member of our investment team.

We would like to thank him for his meaningful contribution, and we wish him luck in his future endeavors. We also welcome Alexander Blum who joins us in the role of Chief Marketing Officer.

Alex comes to us from Fairmont Hotels, where she was Vice President of Global Public Relationships and Global Public Relations and Partnerships providing management, leadership, and guidance in all the areas of external communications and contract strategy from nearly 120 luxury hotels. As a key strategist and brand champion, Alex will be in-charge of building and maintaining our brand, including aligning marketing programs with the business goals of our operating subsidiaries.

Our focus initially will be on our Canadian multi-year family platform as we launch a consumer-facing marketing strategy in conjunction with the public launch of The Selby. With these new additions to our team, we are very well-positioned to execute on our strategy of building scale and leadership in our targeted housing verticals and creating value for our shareholders and private investors by taking an integrated operating approach to each business.

We also remain encouraged by the robust trends we see in the U.S. housing market, as well as in the Toronto rental market.

Lastly, I would like to commend our team not only for the progress they’ve made in integrating Silver Bay, but also for the strong performance across all business verticals, which is reflected in this quarter’s results. With that, I will pass the call back to Julie to take questions, and we’ll be joined by other members of our senior management team, including Jon Ellenzweig, Andrew Joyner and Kevin Baldrige.

Thanks. Good morning and congrats, Gary.

Thank you, Mark. Good morning.

In regard to the Silver Bay acquisition, you made a point of noting that there were no fair value gains yet in this portfolio. But obviously, you have some strong mark-to-market in your original portfolio.

Is it possible to give any guidance at all, or any information for us to have some idea of the quantum of gains that we should expect? And what the timing could be?

How this will flow through for the Silver Bay portfolio, because it does appear that this could be pretty powerful?

So we’re just in the process of pricing our first securitization, which largely includes Silver Bay homes. And that process will evolve as we do other securitizations or other financings, let’s see, over the next 12 to 18 months.

So as we do that, we expect to see a pickup, but I can’t comment any more specifically than that.

But would it be entirely in one quarter that we would see it though all of the asset mark, or would it take a number of quarters?

No, it would take a number of quarters.

Okay. And with the announcement today of the transaction between a couple of the other SFR companies in the U.S., does this send a message as far as scale that may be needed, or is that – there’s a big benefit from in this sector in the U.S., and something that we should think about for you guys going forward that there’s continued benefit with getting larger and larger?

Well, I think, it’s a really exciting development for the industry, because it raises the profile of the business. And it certainly potentially unlock some value for some of the smaller players like us.

It’s definitely a scale business. But I think, the real scale comes from G&A and corporate savings, not necessarily from property level savings.

I was interested to note that they only showed $15 million of projected property level synergies, which is basically less than $200 per home per year or less than 1% of revenue. So I’m not convinced at this point that by being much larger the substantial property level synergies, but there’s definitely G&A synergies and we seen that with Silver Bay.

And the market should start to see the benefits of our synergies from Silver Bay as we move into 2018.

Okay. And then maybe just one more question in regard to the Toronto residential market and the rental apartment, in particular, you’ve been very bullish and your comments on that market.

But you’re not the only one we’re seeing from whether it’s retail REIT in Canada or pension funds private FD funds in Toronto, we’re seeing a lot of interest in that market. Do you think maybe there’s a risk that it’s going to – that it’s too hot as far as development going forward?

And that there’s going to be too much money flowing into this over the next few years?

No, I think there’s, I mean, I think relative to other construction in Toronto, including condo starts, it’s a very, very small part of the market. I – so I think what could happen over time depending what happens with rent control is that, purpose-built multi-family development could become a larger part of all multi-family starts as you would see in U.S.

markets. But at this point, I mean, there’s a lot of interest in the sector, which is obviously very good for us.

We’ve seen a lot of interest from pension plans. But in terms of actual construction starts, there’s really not a lot.

Great. Thank you very much.

Thanks. Good morning and congrats, Gary.

Thank you.

Just sticking with the – or going back to, I guess, the Tricon American Homes valuation gains. When you do the securitization and get the BPO gains there, would you flow those through in that quarter?

Yes, we would.

Okay. So you should have a pretty good jump in Q3 then?

Well, I can’t comment on the quantum, but – look, it will definitely be reflected in Q3, and I would expect upside.

Okay. And then, on the actual FFO that you generated for the quarter, I guess, there’s a big increase in the overhead, and it was there before Silver Bay closes, is that $5.2 million?

Is that a good run rate?

Yes, I think $5.2 million for 2016 is definitely a good run rate. I think, we had a tough comp this quarter and, obviously, it was a bit of a noisy quarter with the Silver Bay acquisition.

But the FFO was definitely lower this quarter, because we had substantially ramp up of overhead in anticipation of the acquisition and the integration. But I think, as time goes on, we’ll see a pickup.

Okay. So the 5 – and how scalable will that $5.2 million will be, like how big a part is your $16,600 now?

Yes it’s – I mean, we should – like we should really start to see G&A synergies as we move forward, but it’s going to take us a bit of time. I think, we’ll start to see pickup really probably more in Q4, but definitely by the first-half of 2018, we should see the full benefit of those synergies.

Okay. I was more asking the question as how – like if you assume, kind of, $5 million in overhead is a good run rate, how big a portfolio can that support?

Oh, I see. So I didn’t understand your question, my apologies.

Jon, you want to talk to that?

Yes, sure. So I would say, Jon, if you look at our G&A side and you look at the senior management team, we have a team in place now that could manage a significantly larger portfolio a lot more than double what we have.

I would say, below that, we might add a few bodies as a portfolio grow. So I would say, it’s largely scalable, If we were to double the business, it wouldn’t stay at $5.2 million a quarter, but it certainly wouldn’t double either.

Okay. Thanks I’ll turn it back.

Thank you. Good morning and congrats on your new addition, Gary.

Thanks, Steve.

Just sticking with TAH, can you talk a little bit about some of the factors that led to Silver Bay’s NOI margin being so strong relative to what you’ve added up, was there anything specific in the quarter, maybe some seasonality, or is it just something that went on in the quarter?

Okay. That’s great.

And can you give an update on your disposition activities for the combined portfolio like if you already started that and is that supposed – is that expected to be loaded to the front-end of your synergy period, or is it pretty evenly distributed?

Yes, Jon, I’ll let Jon answer that.

Sure. And I think as we noted in the script, we plan to sell approximately 1,300 homes that we acquired from Silver Bay and also our plans to sell about 300 of our preexisting homes.

So combine those 1,600 homes, we project it will be sold over an 18-month period, and we’re looking at a few avenues for those dispositions, in some cases one-by-one, in some case smaller portfolios, but also we are speaking with some larger national buyers. But our business plans shows those sales over an 18-month period.

Okay, great. Thank you.

And then just finally, on the THP business, with THP1 US, the investment balance is declining. And Gary, you mentioned on – in your script that the deal pipeline was strong.

You’ve obviously added a new body, specifically focused on capital raising. Can you talk a little bit about, has your expectation for new projects in THP accelerated?

And are you focused on separate account, or still, sort of smaller separate accounts, or even some larger co-mingled funds going forward?

Yes, I mean, the focus is definitely going to be on one-off acquisitions. We got a pretty robust pipeline.

Although, I’d say and it’s really geared, I think, more towards master-plan communities. But the stuff, I would say, is still more in the preliminary stage.

But I think with our new additions not just Evelyne Dubé who helps us on the private fund side, but Andy Carmody, who is going to help lead THP with Jon. And we have more bodies to really focus on it.

And I think, so I think, we’ve got pretty good compelling pipeline Steve, but what we pull the trigger on is a different story. We’re tending to be very, very selective, and at this point really just replace what’s rolling off.

So THP1 US is obviously rolling off pretty quickly. Trinity Falls is providing a counter way as other investments start to roll off we’ll be looking at other master-plan communities or other land investments to bolster that.

Great. Okay, that’s helpful.

Thanks so much.

Thank you.

Thank you, Julie. Good morning, everybody.

Good morning, Dean.

Congratulations, Gary. I’m sure she’s already accretive.

Absolutely, absolutely. Accretive to sleep, not accretive to sleep.

Not to sleep, yes, that you’ll catch that up one year older. When you look at the invitations of Starwood as a point of reference, how do those homes compare to sort of what you’ve got in the portfolio now?

It looks like they’ve got a much higher investment in there on a per dollar basis, but the rents might only be sort of a dime or a square foot difference from where you are. Could you sort of just comment and address?

Yes, sure. So, yes, so I mean, if you look at the combined portfolio, I’d take a quick look at their presentation.

I mean, their average rents were above $1,600. Their average rent per foot is $0.89, or $0.90.

Our average rent is about $1,250 and it’s about $0.80 per foot. So their debt – we’re playing in a lot of the same markets.

We also have a cost of focus. We certainly have a media bit more of a sunbelt focus than they do.

But we’re largely playing in the same markets. The difference more is that we have more of a middle market approach.

So we talk about what that means, it’s really appealing to households that earn 50 to, let’s say, 95,000 and can pay a 1,000 and 1,600 a month in rent. They’re in the upper end of that and we’re really more smack in the middle, and it’s a conscious strategy decision.

Obviously, we could have bought more expensive homes, we could also buy cheaper homes. But we feel that by focusing on the middle market, we’ll have a lower turnover over time, and we’ll be able to run at a steadier business.

So they’re really two different business models. But I think, the combination of invitation in Starwood now really, if you’ve got that group and AMH really just focused on the upper end of the market, and we’re alone focused on the middle market, which we think prevents – presents a very compelling opportunity for us to keep on growing.

Okay, great. And then just the integration cost of the acquisition are all of the one times behind you there, or is there some residual stuff that might flow over into the next quarter?

Yes, Wissam is going to talk about that.

Hi, Dean

Hi, Wissam.

The – most of the big chunks have already been incorporated. But there’s a few more coming over the next few quarters as more as more invoices are received to more closer book, but don’t expect a very large number over the next quarter or two.

Okay. So should be back to a normalized amount and in terms of the G&A that we should expect for that?

That’s correct.

And have you guys got any indicative pricing of where the securitization might end out rolling out?

Yes, Jon will talk about.

Yes. Sure, Dean.

So as you recall last year, we priced the securitization at 3.59%. I would expect this transaction to price plus or minus 10 basis points of that.

But recall that securitization was at a about 72% loan to value, this one is closer to 76. And so, all in all, we’re very happy with where the execution looks like, it’s playing out on this deal.

And frankly, what’s happened is the spreads have tightened, but swaps have widened. So at at almost the same place with few different factors that are driving it.

Okay, fair enough. And you are looking for a five-year IO?

Five-year fixed IO, correct.

Perfect. Okay, great.

And then just a last one for me is, in terms of the initiatives for raising capital and more third-party management, given the new hire and the focus there, what’s your capacity to be able to bring new dollars in the door and what should we be thinking about over the next 18 to 24 months on that front?

Well, I mean, it’s really increased substantially, because in the past, I mean, for example, Dave and I were largely doing it as a hobby, and now we’re trying to professionally organize our private funds business just as we’ve done in the public market side. So it’s a great opportunity for us.

We’re out meeting with some of the largest private institutions, and quite frankly, those meetings are going really, really well. We’d like to bring in private capital to all of our businesses.

And so it’s a function now of finding new opportunities and then bringing them to private investors. I think, the wild card, Dean, obviously is single-family rental.

Right now, all the private capital we raise we’ve used for development, which is very efficient, obviously, from a public company perspective. The real question is, do we ultimately bring in private capital into single-family rental?

So that’s something we’re continuing to explore. We have spent the last year or two really educating private institutions on the industry.

To give us an opportunity if we want in the future to raise private capital, so we can do that.

Okay. That’s great.

Good color. I mean, I wish we could all have such successful hobbies.

That’s it for me. I’ll hand it back.

Thanks.

Thank you.

Hi, good morning. All my questions have been asked.

But the one that I did have was on the Taylor said, I think, you mentioned in the past, Gary, that obviously, you’ve got the focus currently in Toronto, but say, looking out to Vancouver, that wasn’t an area, and I can’t remember who was just you wanted to focus on Toronto more, when you look at Vancouver, the rents are high and are – have good increases, vacancy rates are low, but you do have a bit of an offset of finding real estate, as well as construction costs, just wanted to get your thoughts on that?

Yes, I mean, if we’re going to do multi-family development in any other city in Canada, the next logical city would be Vancouver, and we did highlight that upfront in our strategy. But at the end of the day, this is a scale business as well.

And so, I think at this point, we’re better off to just focus on Toronto and get more scale in the GTA before spreading our wings further. But certainly, as you said, the – I think, the economics would be compelling in Vancouver.

The offset to that is, can we find enough sites to get scale? It’s obviously a very, very competitive market from a real state perspective.

I would say in some cases more so than Toronto. At this point in time, we just think we can do a lot in the GTA.

Okay. Thank you.

Great.

Thank you. Good morning, guys.

Just on the acquisition pace at TAH, you mentioned you intend to resume the program early next year. How do you plan to finance these acquisitions?

And also you made reference to potentially seeing some portfolios, I’m wondering, if you could talk about what you’re seeing out there in terms of size, portfolios and pricing points?

Yes. So I think looking ahead to 2018, we’ll continue our normal pace of acquisitions, which is roughly 400 to 500 a quarter.

We can finance that through internal cash flow potentially from any proceeds we earn – also from refinancing existing debt. So I think, that will largely be financed organically.

And in terms of – there – actually, since Silver Bay we – it’s certainly increased to raise our own profile and we’ve seen quite a few portfolios. There are probably four to six, relatively large portfolios out there from, call it, 1,000 to 3,000 homes.

The issue with many of them is that, they may be cats and dogs in terms of where we want to concentrate our portfolio. In some cases, the pricing expectations from the seller are too high, but ultimately, those portfolios are going to move.

So if those type of things would happen, it certainly would allow us to go a little bit faster. And certainly, if we’re able to buy smaller portfolios, there’s lots of groups out there that don’t fit your 100 homes.

That’s another way to accelerated growth. But our business plan just assumes onesie-twosie acquisition plan.

Okay. And these portfolios usually come at a bit of a premium in terms of a cap rate, or how…?

Yes, I mean, yes, there’s definitely a premium. I mean, for example, was with Silver Bay, we obviously paid a bit of a premium compared to where we would buy that one-by-one in the market.

But obviously, takes time to buy one-by-one at 3,000 home portfolios. So it’s a trade-off between paying them.

I would say, a fairly slight premium to taking the time to get a higher yield one of the time. So – but we are typically seeing premiums.

And certainly the GI portfolio that took our, I guess now, Starwood, certainly went into the premium.

Okay. Just going back to the Colony Starwood limitation homes announcement, so you certainly point out to the fact that property synergies doesn’t seem to be that meaningful.

I wondered if you – any thoughts as to why they didn’t go ahead with the merger? And whether there’s any broader implications, how we should think about that transaction to the industry?

Yes. Well, I – look, I said, I mean, as I said upfront, I think it’s great for the industry.

It raises the profile. It potentially unlocks some value for some of the smaller players like us.

It’s just really good. I think single-family rental now will be viewed in the same class as some of the more established REIT peer groups.

So I just think it’s a very, very positive thing. I can only surmise of what the expectations are – what each group was looking for.

The cynic in me would say that Blackstone was really just looking for a way to accelerate their monetization. The stock price hasn’t increased a lot since they went public, maybe it was fully valued and maybe they feel here with all the G&A synergies, which are pretty substantial.

They’re going to see a higher price, and that’ll be able to make it easier for them to obviously exit their position. And I think, with respect to Starwood, I never – my personal opinion was, I never saw Colony or Starwood as long-term players.

The initial investments came from private funds And so it just seemed at some point that those companies would go away, I’m surprised of how quickly it happened. But I think on the whole, it’s a real positive.

Okay. Well, thanks for that, and congrats, Gary.

Thank you so much.

Thank you, Julie. I would like to thank all of you on the call for your participation.

We look forward to speaking in November when we discuss our results for the third quarter 2017.