Investing in Communities Q2 2018 Earnings Presentation August 2018 - PowerPoint PPT Presentation

Investing in Communities Q2 2018 Earnings Presentation August 2018

General You are advised to read this disclaimer carefully before reading, standardized definitions prescribed by IFRS, they are less accessing or making any other use of the information included likely to be comparable with other issuers or peer companies. herewith. These materials are not an offer or the solicitation of A description of the non-IFRS measures used by the Company an offer to purchase any securities or make any investment. in measuring its performance is included in its Management Discussion and Analysis available on the Company’s website This presentation includes information about Tricon Capital Group Inc. and its subsidiaries and investees (together, the at www.triconcapital.com and on SEDAR at www.sedar.com. “Company”) as of June 30, 2018, unless otherwise stated. These materials should also be reviewed in conjunction This presentation may contain information and statistics with the Company’s Financial Statements and Management regarding the markets in which the Company and its investees Discussion and Analysis for the periods ending June 30, 2018. operate. Some of this information has been obtained from All dollar amounts are expressed in U.S. Dollars unless market research, publicly available information and industry otherwise stated. publications. This information has been obtained from sources believed to be reliable, but the accuracy or completeness of The Company measures the success of its business in part such information has not been independently verified by the by employing several key performance indicators that are Company and cannot be guaranteed. not recognized under IFRS. These indicators should not be considered an alternative to IFRS financial measures, such as net income. As non-IFRS financial measures do not have many of which are not in the Company’s control, and including This presentation may contain forward-looking statements Forward-Looking and information relating to expected future events and the known and unknown risks, general and local market conditions Company’s financial and operating results and projections, and general economic conditions (such as prevailing interest including statements regarding the Company’s growth rates and rates of inflation) may cause actual investment Statements and investment opportunities and the performance goals and performance and fee income to differ from current projections. expectations of its investees, including, in particular, targeted Accordingly, although we believe that our anticipated future returns, that involve risks and uncertainties. Such forward- results, performance or achievements expressed or implied looking information is typically indicated by the use of words by the forward-looking statements and information are based such as “will”, “may”, “expects” or “intends”. The forward- upon reasonable assumptions and expectations, the reader looking statements and information contained in this should not place undue reliance on forward-looking statements presentation include statements regarding expected or targeted and information. If known or unknown risks materialize, or investment returns and performance including project timing if any of the assumptions underlying the forward-looking and cash flow; the ability of the Company to generate fee statements prove incorrect, actual results may differ materially income from investments and the quantum of these fees; the from management expectations as projected in such forward- ability to attract third-party investment; the timing and looking statements. Examples of such risks are described in the Company’s continuous disclosure materials from time-to- availability of new investment opportunities, future net income from investments; expectations for the growth in the business; time, as available on SEDAR at www.sedar.com. The Company and the availability and quantum of debt reduction opportunities disclaims any intention or obligation to update or revise and the Company’s ability to avail itself of them. These any forward-looking statements, whether as a result of new statements are based on management’s current expectations, information, future events or otherwise, unless required by intentions and assumptions which management believes to be applicable law. reasonable having regard to its understanding of prevailing market conditions and the current terms on which investment opportunities may be available. Projected returns and performance fees are based in part on projected cash flows for incomplete projects. Numerous factors, 2

Financial Review Wissam Francis Executive Vice President and Chief Financial Officer

Q2 2018 Results Tricon reported strong year-over-year growth during the second quarter IFRS Results Non-IFRS Results For the three months ended June 30 For the three months ended June 30 Q2 2018 Q2 2017 YoY% Q2 2018 Q2 2017 YoY% In millions of U.S. dollars In millions of U.S. dollars PF&A Revenue $7.5 $6.4 PF&A Revenue, net of NCI $6.8 $5.8 TAH Investment Income 40.7 (2.0) TAH Adjusted EBITDA 67.7 42.0 THP Investment Income 3.3 6.6 THP Adjusted EBITDA 3.6 6.2 TLR Investment Income 2.5 2.8 TLR Adjusted EBITDA 3.3 2.2 Total Revenue 54.0 13.8 290.8% TLC Adjusted EBITDA 23.2 2.3 Compensation Expense (10.0) (9.8) Adjusted EBITDA before overhead 104.5 58.5 78.5% G&A Expense (2.7) (2.1) Adjusted Compensation Expense (8.9) (8.9) Interest Expenses (8.6) (6.5) Adjusted G&A Expense (2.7) (2.1) Other Expense (10.9) (21.5) Adjusted EBITDA $92.9 $47.6 95.3% Realized and Unrealized FX gain 1.3 1.8 Adjusted Interest Expenses (27.3) (21.3) Total Operating Expenses (30.8) (38.0) 18.9% Adjusted Other Expenses 3 (1.1) (1.1) Income from Discontinued Operations 19.6 1.4 NMF Adjusted Tax Expense (4.4) (3.4) Net Income $39.8 ($21.7) NMF Adjusted Net Income $60.1 $21.8 175.5% Diluted Earnings Per Share $0.29 ($0.17) NMF Diluted Earnings Per Share $0.39 $0.17 129.4% Bridge from IFRS Results to Non-IFRS Results For the three months ended June 30 Q2 2018 Q2 2017 YoY% In millions of U.S. dollars Net Income $39.8 ($21.7) NMF Non-recurring adjustments 1 10.7 30.0 Non-cash adjustments 2 9.6 13.5 Adjusted Net Income $60.1 $21.8 175.5% 1 Includes transaction costs and formation costs. 2 Includes non-controlling interest, unrealized foreign exchange loss or gain, LTIP expense, change in fair value of derivative, and tax adjustments. 3 Includes adjusted stock option expense and adjusted amortization expense. 4

Financial Tricon has a flexible balance sheet with considerable cash flow visibility Position Cash Generation Sources of Liquidity As at June 30, 2018 CORPORATE LEVEL INVESTMENT LEVEL Equity 2017 2018 2019 2020 In millions of U.S. dollars Revolving Facility $365.0 Tricon American Homes Disposition of non-core homes Less: Amount Drawn 194.6 Amount Available 170.5 Completed Tricon Lifestyle Communities Cash on Hand 21.8 Divestiture of 14 park portfolio Tricon Lifestyle Rentals U.S. Look-through Leverage Divestiture of U.S. multi-family assets (excluding Convertible Debentures) (in progress) Debt Tricon Housing Partners Debt Assets TCN TLR THP Strong net cash flow profile 63% 60% Tricon American Homes Convertible Operating cash flow Debentures $3.6B $3.3B Tricon Lifestyle Rentals Operating cash flow TAH Private Funds and Advisory $2.1B $2.2B Recurring fee income related to third-party capital in all verticals Q2 2017 Q2 2018 There can be no assurance that these liquidity events will occur in line with current expectations or at all. 5

Operational Review Gary Berman President and Chief Executive Officer

Increasing Contribution Tricon now earns fees from all its investment verticals and aims to grow its fee revenue by attracting more from Recurring Fee third-party AUM Streams For the three months ended June 30 Q2 2018 Q2 2017 YoY% Drivers In thousands of U.S. dollars $498M third-party AUM TAH $44 1 NMF $1.08B third-party AUM THP 3,114 2,950 6% $268M third-party AUM TLR 745 579 29% + fees earned on development cost 3-5% development fees on land sales Johnson 2,733 2,475 10% $66M+ projected over life of Performance Fees 838 355 136% investment vehicles 2 Total $7,474 $6,359 18% 1 Fees earned in Q2 2018 are from the TAH JV, which commenced on June 27, 2018 . 2 Performance fees are based on current business plans for the projects. There can be no assurance these estimates will remain accurate. 7

Solid results at TAH were driven by rent growth, continued cost TAH Consolidated efficiencies and realized acquisition synergies Operating Results Consolidated Portfolio Metrics For the three months ended June 30 % of % of Q2 2018 Q2 2017 YoY% In millions of U.S. dollars revenue revenue Rental Homes 15,995 16,660 Stabilized Occupancy 97.1% 97.2% 9.4% on new leases Blended Rental Growth 6.4% 4.9% 4.8% on renewals Annualized Turnover 30.9% 31.2% Total Revenue $58.9 $45.4 30% Repair, Maintenance & Turnover (6.7) (5.4) 11.4% 11.8% Property Taxes (8.8) (6.8) 14.9% 15.0% Property Management Fees (4.1) (3.2) 7.0% 7.1% Insurance, HOA & Other Expenses (2.7) (2.4) 4.6% 5.3% Total Operating Expenses ($22.4) 38.0% ($17.8) 39.2% 26% Net Operating Income $36.5 $27.6 32% NOI Margin 62.0% 60.8% 120 bps Core FFO $11.3 $7.3 56% Q2 2018 Annualized Core FFO of ~$45.2 million 8