Tricon Residential Inc. (Form: F-10, Received: 10/05/2021 06:57:07)

Board Voting Recommendations

Election of each of the nominees to the Board of Directors

FOR each of the nominees

Appointment of PricewaterhouseCoopers LLP, Chartered Professional Accountants, as auditor of the Company and authorizing the Board of Directors to fix the auditor’s remuneration

To approve the setting of the Exchange Price on accrued Distributions in respect of Preferred Units at $8.50, as may be adjusted from time to time in accordance with the Tricon PIPE LLC Agreement, subject to the Exchange Maximum, in connection with the Blackstone Private Placement

As filed with the Securities and Exchange Commission on October 5, 2021

Registration No. 333-

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM F-10

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

Form F-10

TRICON RESIDENTIAL INC.

(Exact name of registrant as specified in its charter)

Ontario, Canada

(Province or other jurisdiction of incorporation or organization)

6510

(Primary Standard Industrial Classification Code Number, if applicable)

Not applicable

(I.R.S. Employer Identification No., if applicable)

7 St. Thomas Street, Suite 801

Toronto, ON M5S 2B7

Tel: 416-323-2482

Attention: David Veneziano

(Address and telephone number of Registrant’s principal executive offices)

Corporation Service Company

1180 Avenue of the Americas, Suite 210, New York, NY 10036-8401

Tel: (800) 927-9800

(Name, address (including zip code) and telephone number (including area code) of agent for service in the United States)

Copies to:

Christopher J. Cummings
Paul, Weiss, Rifkind, Wharton & Garrison LLP
1285 Avenue of the Americas
New York, NY 10019
Tel: 212-373-3000

John Connon

Goodmans LLP

Bay Adelaide Centre

333 Bay Street, Suite 3400

Toronto, Ontario M5H 2S7, Canada

Tel: 416-597-5499

Ryan J. Dzierniejko

David J. Goldschmidt

Michael J. Hong
Skadden, Arps, Slate, Meagher & Flom LLP

One Manhattan West

New York, NY, 10001-8602

Tel: 212-735-3000

Eric Moncik
Blake, Cassel & Graydon LLP
199 Bay Street Suite 4000
Commerce Court West
Toronto ON M5L 1A9

Tel: 416-863-2536

Approximate date of commencement of proposed sale to the public:

As soon as practicable after this Registration Statement becomes effective.

Province of Ontario, Canada

(Principal jurisdiction regulating this offering)

It is proposed that this filing shall become effective (check appropriate box below):


A.	☐	upon filing with the Commission pursuant to Rule 467(a) (if in connection with an offering being made contemporaneously in the United States and Canada).

B.	☒	at some future date (check the appropriate box below):

	1.	☐	pursuant to Rule 467(b) on ( ) at ( ) (designate a time not sooner than 7 calendar days after filing).

	2.	☐	pursuant to Rule 467(b) on ( ) at ( ) (designate a time 7 calendar days or sooner after filing) because the securities regulatory authority in the review jurisdiction has issued a receipt or notification of clearance on ( ).

	3.	☐	pursuant to Rule 467(b) as soon as practicable after notification of the Commission by the Registrant or the Canadian securities regulatory authority of the review jurisdiction that a receipt or notification of clearance has been issued with respect hereto.

	4.	☒	after the filing of the next amendment to this Form (if preliminary material is being filed).

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to the home jurisdiction’s shelf prospectus offering procedures, check the following box. ☒

CALCULATION OF REGISTRATION FEE



Title of Each Class of Securities to be Registered	Amount to be Registered⁽¹⁾	Proposed Maximum Offering Price per Unit	Proposed Maximum Aggregate Offering Price⁽¹⁾⁽²⁾	Amount of Registration Fee⁽²⁾
Common Shares, no par value
Debt Securities
Warrants
Subscription Receipts
Units
Total	US$1,185,450,000.00	(3)	US$1,185,450,000.00	US$109,891.22

(1)

There are being registered under this Registration Statement such indeterminate number of Common Shares, debt securities, warrants, subscription receipts and/or units comprised of one or more securities of the Registrant listed above in any combination as shall have an aggregate initial offering price of up to US$1,185,450,000.00 (C$1,500,000,000.00, based on the daily exchange rate on October 1, 2021 as reported by the Bank of Canada, for the conversion of U.S. dollars into Canadian dollars of C$1.00 equals US$0.7903). The proposed maximum offering price per security will be determined, from time to time, by the Registrant in connection with the sale of the securities under this Registration Statement. Prices, when determined, may be in U.S. dollars or the equivalent thereof in Canadian dollars.

(2)	Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended (the “Securities Act”).

(3)	The proposed maximum initial offering price per security will be determined, from time to time, by the Registrant in connection with the sale of the securities under this Registration Statement.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registration Statement shall become effective as provided in Rule 467 under the Securities Act of 1933, as amended (the “Act”) or on such date as the Commission, acting pursuant to Section 8(a) of the Act, may determine.

PART I

INFORMATION REQUIRED TO BE DELIVERED TO OFFEREES OR PURCHASERS

I-1

Information contained herein is subject to completion or amendment. A registration statement relating to these securities has been filed with the U.S. Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This prospectus supplement shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

Subject to completion, dated October 5, 2021

PRELIMINARY PROSPECTUS SUPPLEMENT

TO THE SHORT FORM BASE SHELF PROSPECTUS

DATED AUGUST 26, 2021


New Issue		, 2021

LOGO

US$350,000,000

Common Shares

This offering (the “Offering”) is the initial public offering of common shares (the “Common Shares”) of Tricon Residential Inc. (the “Company”, “Tricon”, “us”, “we” or “our”) in the United States and a new issue of Common Shares in Canada by the Company. This preliminary prospectus supplement (this “Prospectus Supplement”), together with the accompanying short form base shelf prospectus dated August 26, 2021 (the “Shelf Prospectus”), qualifies the distribution of Common Shares (the “Offered Shares”) at a price of US$ per Common Share (the “Offering Price”).

Investing in the Common Shares involves significant risk. Prospective investors should consider the risks outlined in this Prospectus Supplement, the accompanying Shelf Prospectus and in the documents incorporated by reference herein and therein. See “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors”.

Price: US$ per Offered Share


	Price to the Public⁽¹⁾	Underwriters’ Fee⁽²⁾	Net Proceeds to the Company⁽³⁾
Per Offered Share	US$	US$	US$
Total Offering⁽⁴⁾	US$	US$	US$

Notes:

(1)	The Offering Price was determined by negotiation among the Company and the Underwriters (as defined herein), with reference to the then-current market price for the Common Shares on the TSX.

(2)

Pursuant to the terms of the Underwriting Agreement (as defined herein), and in consideration of the services rendered by the Underwriters in connection with the Offering, the Underwriters will receive an aggregate fee (the “Underwriters’ Fee”) of US$ , representing % of the gross proceeds from the Offering. For additional information regarding underwriter compensation, see “Plan of Distribution”.

(3)	After deducting the Underwriters’ Fee payable by the Company, but before deducting expenses in respect of the Offering to be paid by the Company, estimated to be approximately US$ (exclusive of all applicable taxes).

(4)

The Company has granted to the Underwriters an option (the “Over-Allotment Option”), exercisable in whole or in part for a period of 30 days following the date of the Underwriting Agreement, to purchase up to an additional Common Shares at the Offering Price, less the Underwriters’ Fee, on the same terms as set forth above solely to cover over-allotments, if any, and for market stabilization purposes. If the Over-Allotment Option is exercised in full, the total price to the public, the Underwriters’ Fee and net proceeds to the Company (before deducting expenses of the Offering) will be US$ , US$ and US$ , respectively. This Prospectus Supplement qualifies the distribution of the Over-Allotment Option and the Common Shares issuable on the exercise thereof. A purchaser who acquires Common Shares forming part of the Underwriters’ over-allocation position acquires those Common Shares under this Prospectus Supplement, regardless of whether the over-allocation position is ultimately filled through the exercise of the Over-Allotment Option or secondary market purchases. See “Plan of Distribution”.


Morgan Stanley		RBC Capital Markets		Citigroup		Goldman Sachs & Co. LLC

The Offering is being made concurrently in Canada under the terms of this Prospectus Supplement and in the United States under the terms of the Company’s registration statement on Form F-10 (the “Registration Statement”) filed with the U.S. Securities and Exchange Commission (the “SEC”).

The Company will use the net proceeds from the Offering as described in this Prospectus Supplement. See “Use of Proceeds”.

The outstanding Common Shares are listed and posted for trading on the Toronto Stock Exchange (the “TSX”) under the symbol “TCN”. On October 4, 2021, the last trading day before the filing of this Prospectus Supplement, the closing price per share of the Common Shares on the TSX was C$16.74 or US$13.30 (based on the daily exchange rate for the U.S. dollar in terms of Canadian dollars, as quoted by the Bank of Canada, of US$1.0000 = C$1.2583). The Company has applied to list the Offered Shares, additional Common Shares to be issued by the Company if the Over-Allotment Option (as defined herein) is exercised in full (the “Additional Shares”) and the Blackstone Shares (as defined below) on the TSX and has applied to list the Offered Shares, the Additional Shares, the Blackstone Shares and the outstanding Common Shares on the New York Stock Exchange (“NYSE”) under the trading symbol “TCN”. Listing is subject to the Company fulfilling all of the listing requirements of the TSX and NYSE, respectively.

All dollar amounts in this Prospectus Supplement are in United States dollars, unless otherwise indicated. See “Currency Presentation and Exchange Rate Information”.

The Offered Shares are being offered in the United States by Morgan Stanley & Co. LLC (“Morgan Stanley”), RBC Capital Markets, LLC (“RBC”), Citigroup Global Markets Inc. and Goldman Sachs & Co. LLC (collectively, the “U.S. Underwriters”) and in Canada by Morgan Stanley Canada Limited, RBC Dominion Securities Inc., Citigroup Global Markets Canada Inc. and Goldman Sachs Canada Inc. (collectively, the “Canadian Underwriters”, and together with the U.S. Underwriters, the “Underwriters”) pursuant to an underwriting agreement dated , 2021 (the “Underwriting Agreement”). See “Plan of Distribution”.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC OR ANY STATE SECURITIES COMMISSION OR ANY OTHER REGULATORY AUTHORITY NOR HAVE THESE AUTHORITIES PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

The Offering is made in the United States by a foreign issuer that is permitted, under a multijurisdictional disclosure system adopted in the United States and Canada, to prepare this Prospectus Supplement and the accompanying Shelf Prospectus in accordance with Canadian disclosure requirements. Prospective investors should be aware that such requirements are different from those of the United States. Financial statements incorporated by reference herein have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”), and may be subject to foreign auditing and auditor independence standards, and thus may not be comparable to financial statements of United States companies.

Prospective investors should be aware that the acquisition of Common Shares may have tax consequences both in Canada and the United States. Such consequences for investors who are resident in, or citizens of, Canada or the United States may not be described fully herein. See “Certain Canadian Federal Income Tax Considerations” and “Certain U.S. Federal Income Tax Considerations”.

The enforcement by investors of civil liabilities under the United States federal securities laws may be affected adversely by the fact that the Company is incorporated under and governed by the Business Corporations Act (Ontario) (the “OBCA”), that most of its directors and officers reside principally in Canada, that some or all of the Underwriters or experts named in the Registration Statement may be residents of a foreign country, and that all or a substantial portion of the assets of the Company and said persons may be located outside the United States. See “Enforcement of Civil Liabilities”.

The Underwriters, as principals, conditionally offer the Offered Shares qualified under this Prospectus Supplement and the Shelf Prospectus, subject to prior sale, when, as and if delivered by the Company to the Underwriters and accepted by them subject to the conditions contained in the Underwriting Agreement, as described under “Plan of Distribution”.

Certain legal matters relating to Canadian law with respect to the Offering will be passed on our behalf by Goodmans LLP and on behalf of the Underwriters by Blake, Cassels & Graydon LLP. Certain legal matters relating to United States law with respect to the Offering will be passed upon on the Company’s behalf by Paul, Weiss, Rifkind, Wharton & Garrison LLP and on behalf of the Underwriters by Skadden, Arps, Slate, Meagher & Flom LLP. See “Legal Matters”.

Subject to applicable laws, the Underwriters may, in connection with the Offering, over-allot or effect transactions that stabilize or maintain the market price of the Common Shares at levels other than those that might otherwise prevail on the open market. Such transactions, if commenced, may be discontinued at any time. After the Underwriters have made reasonable efforts to sell the Offered Shares at the Offering Price, the Underwriters may offer the Offered Shares to the public at prices lower than the Offering Price. See “Plan of Distribution”.

Subscriptions will be received subject to rejection or allotment in whole or in part and the right is reserved to close the subscription books at any time without notice. Closing of the Offering is expected to take place on or about , 2021 (the “Closing Date”), or such earlier or later date as the Company and the Underwriters may agree, but in any event no later than , 2021.

It is expected that the Company will arrange for the instant deposit of the Offered Shares under the book-based system of registration, to be registered to The Depository Trust Company (“DTC”) or its nominee and deposited with DTC on the Closing Date, or as may otherwise be agreed to among the Company and the Underwriters. In the case of certain Canadian purchasers, we may alternatively arrange for the electronic deposit of the Offered Shares distributed under the Offering under the book-based system of registration, to be registered in the name of CDS Clearing and Depository Services Inc. (“CDS”) or its nominee and deposited with CDS on the Closing Date. No certificates evidencing the Offered Shares will be issued to purchasers of the Offered Shares. Purchasers of the Offered Shares will receive only a customer confirmation from the Underwriter or other registered dealer from or through whom a beneficial interest in the Offered Shares is purchased. See “Plan of Distribution”.

Certain of our directors and officers reside outside of Canada and have appointed Tricon Residential Inc., 7 St. Thomas Street, Suite 801, Toronto, Ontario, M5S 2B7, as their agent for service of process in Ontario. Purchasers are advised that it may not be possible for investors to enforce judgments obtained in Canada against any person or company that is incorporated, continued or otherwise organized under the laws of a foreign jurisdiction or resides outside of Canada, even if the party has appointed an agent for service of process. See “Enforcement of Judgments Against Foreign Persons”.

Bank affiliates of Morgan Stanley and RBC are lenders to the Company under existing credit facilities. Consequently, the Company may be considered a “connected issuer” of each of these Underwriters within the meaning of applicable Canadian securities legislation. See “Relationship Between the Company and Certain Underwriters”.

Concurrently with the Offering, BREIT Debt Parent LLC (“Blackstone”), a subsidiary of Blackstone Real Estate Income Trust, Inc., will, pursuant to the exercise of its Participation Right (as defined below) in full to maintain its as-exchanged ownership interest in the Company, purchase, on a private placement basis (the “Private Placement”), Common Shares (the “Blackstone Shares”) at a price of US$ per Common Share (the Offering Price net of underwriting discounts) for gross proceeds of approximately US$44.67 million. Blackstone currently holds an approximate 11.87% effective interest in the Company (assuming all its preferred units of Tricon PIPE LLC are exchanged for Common Shares), and is accordingly an insider of the Company. Blackstone has entered into a securities subscription agreement with the Company governing the terms and conditions of the Private Placement. Morgan Stanley is acting as placement agent in connection with the Private Placement and may receive a placement agent fee with respect to the sale of Blackstone Shares pursuant to the Private Placement. This Prospectus Supplement does not qualify the distribution of any securities issued pursuant to the Private Placement. The sale of the Common

iii

Shares pursuant to the Private Placement will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”). The closing of the Private Placement is subject to acceptance by the TSX. The closing of the Offering is not conditioned upon the closing of the Private Placement. See “Participation Right”.

The Company’s principal and registered office is located at 7 St. Thomas Street, Suite 801, Toronto, Ontario, M5S 2B7.

TABLE OF CONTENTS

PROSPECTUS SUPPLEMENT


	Page
TABLE OF CONTENTS		v
ABOUT THIS PROSPECTUS SUPPLEMENT		S-1
CURRENCY PRESENTATION AND EXCHANGE RATE INFORMATION		S-2
DOCUMENTS INCORPORATED BY REFERENCE		S-2
U.S. REGISTRATION STATEMENT		S-4
MARKETING MATERIALS		S-4
NON-IFRS FINANCIAL MEASURES AND KEY METRICS		S-5
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS		S-6
MARKET AND INDUSTRY DATA		S-8
WHERE YOU CAN FIND MORE INFORMATION		S-8
SUMMARY DESCRIPTION OF THE BUSINESS OF THE COMPANY		S-9
INVESTMENT OPPORTUNITY		S-11
RECENT DEVELOPMENTS		S-26
RISK FACTORS		S-27
USE OF PROCEEDS		S-34
CONSOLIDATED CAPITALIZATION		S-35
DESCRIPTION OF SECURITIES		S-36
PARTICIPATION RIGHT		S-37
PLAN OF DISTRIBUTION		S-38
CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS		S-46
CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS		S-50
PRIOR SALES		S-55
TRADING PRICE AND VOLUME		S-56
LEGAL MATTERS		S-56
INTERESTS OF EXPERTS		S-56
REGISTRAR AND TRANSFER AGENT		S-56
ENFORCEMENT OF CIVIL LIABILITIES		S-56
DOCUMENTS FILED AS PART OF THE REGISTRATION STATEMENT		S-57
APPENDIX A		A-1

SHELF PROSPECTUS


	Page
Table of Contents		iv
General Matters		1
Reliance		1
Cautionary Note Regarding Forward–Looking Statements		1
Exchange Rate Information		3
Non-IFRS Measures		3
Documents Incorporated by Reference		3
Summary Description of the Business of the Company		5
Recent Developments		7
Consolidated Capitalization of the Company		7
Use of Proceeds		8
Participation Right		8
Plan of Distribution		8
Earnings Coverage Ratios		9
Description of the Securities		9
Prior Sales		14
Selling Securityholders		14
Price Range and Trading Volume of Common Shares		14
Certain Income Tax Considerations		14
Risk Factors		15
Interests of Management and Others in Material Transactions		17
Legal Matters and Interests of Experts		17
Auditors, Transfer Agent and Registrar		18
Glossary of Terms		18

ABOUT THIS PROSPECTUS SUPPLEMENT

This document is composed of two parts. The first part is this Prospectus Supplement, which describes the specific terms of the Offering and adds to and supplements information contained in the accompanying Shelf Prospectus and the documents incorporated by reference therein. The second part is the Shelf Prospectus, which gives more general information, some of which may not apply to the Offering. This Prospectus Supplement is deemed to be incorporated by reference into the Shelf Prospectus solely for the purpose of the Offering.

Neither the Company nor the Underwriters has authorized any person to provide readers with information different from that contained in this Prospectus Supplement and the accompanying Shelf Prospectus (or incorporated by reference herein or therein). Neither we nor the Underwriters take responsibility for, or can provide any assurance as to the reliability of, any other information that others may give readers of this Prospectus Supplement and the accompanying Shelf Prospectus. If the description of the Offered Shares or any other information varies between this Prospectus Supplement and the accompanying Shelf Prospectus (including the documents incorporated by reference herein and therein), the information in this Prospectus Supplement supersedes the information in the accompanying Shelf Prospectus or documents incorporated by reference herein or therein.

Readers should not assume that the information contained or incorporated by reference in this Prospectus Supplement and the accompanying Shelf Prospectus is accurate as of any date other than the date of this Prospectus Supplement and the accompanying Shelf Prospectus or the respective dates of the documents incorporated by reference herein or therein, unless otherwise noted herein or as required by law. It should be assumed that the information appearing in this Prospectus Supplement, the accompanying Shelf Prospectus and the documents incorporated by reference herein and therein are accurate only as of their respective dates. The business, financial condition, results of operations and prospects of the Company may have changed since those dates.

This Prospectus Supplement shall not be used by anyone for any purpose other than in connection with the Offering. We do not undertake to update the information contained or incorporated by reference herein or in the Shelf Prospectus, except as required by applicable securities laws. Information contained on, or otherwise accessed through, our website, www.triconresidential.com, shall not be deemed to be a part of this Prospectus Supplement, the accompanying Shelf Prospectus or any document incorporated by reference herein or therein and such information is not incorporated by reference herein or therein and prospective investors should not rely on such information when deciding whether or not to invest in the Offered Shares.

Unless otherwise indicated, information contained in this Prospectus Supplement assumes or reflects no exercise of the Over-Allotment Option, no exercise of outstanding stock options and no vesting and settlement of deferred share units.

This Prospectus Supplement does not constitute, and may not be used in connection with, an offer to sell, or a solicitation of an offer to buy, any securities offered by this Prospectus Supplement by any person in any jurisdiction in which it is unlawful for such person to make such an offer or solicitation.

S-1

CURRENCY PRESENTATION AND EXCHANGE RATE INFORMATION

We express all amounts in this Prospectus Supplement in U.S. dollars, except where otherwise indicated. References to “$”and “US$” are to U.S. dollars and references to “C$” are to Canadian dollars. This Prospectus Supplement, the Shelf Prospectus and the documents incorporated by reference herein and therein contain translations of certain U.S. dollar amounts into Canadian dollars solely for your convenience.

The following table sets forth, for the periods indicated, the high, low, average and end of period daily average exchange rates for one U.S. dollar, expressed in Canadian dollars, published by the Bank of Canada during the respective periods.


	Nine Months Ended September 30, 2021		Six Months Ended June 30, 2021		Fiscal Year Ended December 31, 2020		Fiscal Year Ended December 31, 2019
Low		1.2040		1.2040		1.2718		1.2988
High		1.2856		1.2828		1.4496		1.3600
Average		1.2513		1.2474		1.3415		1.3269
End		1.2741		1.2394		1.2732		1.2988

On October 4, 2021, the Bank of Canada daily exchange rate was US$1.0000 = C$1.2583.

DOCUMENTS INCORPORATED BY REFERENCE

This Prospectus Supplement is deemed to be incorporated by reference into the accompanying Shelf Prospectus solely for the purposes of the Offering. Other documents are also incorporated, or are deemed to be incorporated by reference, into the Shelf Prospectus and reference should be made to the Shelf Prospectus for full particulars thereof.

Copies of the documents incorporated by reference in this Prospectus Supplement and the accompanying Shelf Prospectus may be obtained on request without charge from the office of the Corporate Secretary of Tricon at 7 St. Thomas Street, Suite 801, Toronto, Ontario, M5S 2B7, by telephone at (416) 925-7228, and are also available electronically on the System for Electronic Document Analysis and Retrieval (“SEDAR”) at www.sedar.com and on the Electronic Data Gathering, Analysis, and Retrieval System (“EDGAR”) at www.sec.gov.

The following documents, filed by the Company with securities commissions or similar regulatory authorities in the provinces and territories of Canada, are specifically incorporated by reference into, and form an integral part of, this Prospectus Supplement and the accompanying Shelf Prospectus:

(a)

the audited consolidated financial statements of the Company as at and for the years ended December 31, 2020 and 2019, together with the notes thereto and the auditors’ report thereon (as re-filed on October 5, 2021 with the securities commissions or similar regulatory authorities in the provinces and territories of Canada to refer to IFRS as issued by the International Accounting Standards Board) (the “Annual Financial Statements”);

(b)

the management’s discussion and analysis of the results of operations and financial condition of the Company for the years ended December 31, 2020 and 2019 (the “Annual MD&A”);

(c)

the unaudited condensed consolidated interim financial statements of the Company for the three and six months ended June 30, 2021 and 2020, together with the notes thereto (the “Interim Financial Statements”);

(d)

the interim management’s discussion and analysis of the results of operations and financial condition of the Company for the three and six months ended June 30, 2021 and 2020 (the “Interim MD&A”);

(e)

the annual information form of the Company dated March 2, 2021 for the year ended December 31, 2020 (the “Annual Information Form”);

S-2

(f)

the management information circular of the Company dated May 11, 2021 in respect of the annual and special meeting of the Company’s shareholders held on June 23, 2021 (the “Management Information Circular”);

(g)

the material change report of the Company dated May 25, 2021 in respect of the announcement of the public offering of Common Shares by the Company on May 18, 2021;

(h)

the material change report of the Company dated July 30, 2021 in respect of the announcement of the intended redemption by the Company of its 5.75% extendible convertible unsecured subordinated debentures issued on March 17, 2017; and

(i)

appendix A of the short form prospectus of the Company dated June 2, 2021 (to assist readers in understanding the impacts on the previous financial statements of the Company’s discontinued operations).

Any statement contained in this Prospectus Supplement, in the accompanying Shelf Prospectus or in any document incorporated or deemed to be incorporated by reference herein or therein shall be deemed to be modified or superseded, for purposes of this Prospectus Supplement, to the extent that a statement contained in any subsequently filed document which also is, or is deemed to be, incorporated by reference herein or in the accompanying Shelf Prospectus modifies or supersedes such prior statement. The modifying or superseding statement need not state that it has modified or superseded a prior statement or include any other information set forth in the document that it modifies or supersedes. The making of a modifying or superseding statement shall not be deemed an admission for any purposes that the modified or superseded statement, when made, constituted a misrepresentation, an untrue statement of a material fact or an omission to state a material fact that is required to be stated or that is necessary to prevent a statement that is made from being false or misleading in the circumstances in which it was made. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute part of this Prospectus Supplement.

Any document of the type required by National Instrument 44-101 – Short Form Prospectus Distributions to be incorporated by reference into a short form prospectus, including any annual information forms, material change reports (except confidential material change reports), business acquisition reports, interim financial statements, annual financial statements and the independent auditor’s report thereon, management’s discussion and analysis and information circulars of the Company, filed by the Company with securities commissions or similar authorities in Canada after the date of this Prospectus Supplement and for the duration of the Offering, shall be deemed to be incorporated by reference into this Prospectus Supplement. In addition, all documents filed on Form 6-K or Form 40-F by the Company with the SEC on or after the date of this Prospectus Supplement shall be deemed to be incorporated by reference into the Registration Statement of which this Prospectus Supplement forms a part of, if and to the extent, in the case of any Report on Form 6-K, expressly provided in such document.

Furthermore, any “template version” of any “marketing materials” (each such term as defined in National Instrument 41-101—General Prospectus Requirements) filed on SEDAR in connection with the Offering after the date of the final form of this Prospectus Supplement but prior to the termination of the distribution of the Offered Shares pursuant to the Offering is deemed to be incorporated by reference in the final form of this Prospectus Supplement and in the accompanying Shelf Prospectus.

The documents incorporated or deemed to be incorporated herein by reference contain meaningful and material information relating to the Company and readers should review all information contained in this Prospectus Supplement, the accompanying Shelf Prospectus and the documents incorporated or deemed to be incorporated by reference herein and therein.

S-3

U.S. REGISTRATION STATEMENT

The Offering is being made concurrently in Canada pursuant to this Prospectus Supplement and the accompanying Shelf Prospectus and in the United States pursuant to the Registration Statement filed with the SEC under the U.S. Securities Act. This Prospectus Supplement and the accompanying Shelf Prospectus do not contain all of the information set forth in the Registration Statement, certain items of which are contained in the exhibits to the Registration Statement as permitted or required by the rules and regulations of the SEC.

MARKETING MATERIALS

Before filing the final prospectus supplement in respect of the Offering, Tricon and the Underwriters intend to hold road shows that potential investors in the United States and in certain of the provinces and territories of Canada will be able to attend.

In doing so, Tricon and the Underwriters are relying on a provision in applicable Canadian securities legislation that allows issuers in certain U.S. cross-border offerings to not have to file marketing materials relating to those road shows on SEDAR or include or incorporate by reference those marketing materials in the final prospectus supplement in respect of the offering. To rely on this exemption, Tricon and the Underwriters must give contractual rights to Canadian investors in the event the marketing materials contain a misrepresentation.

Accordingly, the Canadian Underwriters, in signing the certificate to be contained in the final prospectus supplement, and Tricon, in signing the certificate contained in the Shelf Prospectus, in each case in respect of the Offering have agreed that in the event the marketing materials relating to the road shows described above contain a misrepresentation (as defined in securities legislation in each of the provinces and territories of Canada), a purchaser resident in a province or territory of Canada who was provided with those marketing materials in connection with the road shows and who purchases Offered Shares under the final prospectus supplement in respect of the Offering during the period of distribution shall have, without regard to whether the purchaser relied on the misrepresentation, rights against Tricon and each such Canadian Underwriter with respect to the misrepresentation that are equivalent to the rights under the securities legislation of the jurisdiction of Canada where the purchaser is resident, subject to the defences, limitations and other terms of that legislation, as if the misrepresentation was contained in the final prospectus supplement in respect of the Offering.

However, this contractual right does not apply (i) to the extent that the contents of the marketing materials relating to the road shows have been modified or superseded by a statement in the final prospectus supplement in respect of the Offering, and (ii) to any “comparables” as such term is defined in National Instrument 41-101—General Prospectus Requirements in the marketing materials provided in accordance with applicable securities legislation.

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NON-IFRS FINANCIAL MEASURES AND KEY METRICS

In this Prospectus Supplement, the Company uses certain non-IFRS financial measures, including certain real estate industry metrics, to measure, compare and explain the operating results and financial performance of the Company. 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 related financial information prepared in accordance with IFRS.

The Company’s non-IFRS and key performance measures include: 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, adjusted earnings before interest, taxes, depreciation and amortization for real estate (“Adjusted EBITDAre”), net debt to Adjusted EBITDAre (“Net Debt / Adjusted EBITDAre”), same home (“Same Home”), same property (“Same Property”), assets under management, NOI margin, occupancy rate, annualized turnover rate, average monthly rent, average rent growth, development yield, and total fee revenue. The Company has provided the required disclosure regarding these non-IFRS measures and key performance indicators in documents filed by the Company with securities commissions or similar authorities in Canada, including the Annual Information Form, the Annual MD&A and the Interim MD&A incorporated by reference in this Prospectus Supplement as set forth under the heading “Documents Incorporated by Reference”, and otherwise below and in Appendix A hereto.

Adjusted EBITDAre

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

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

Net Debt / Adjusted EBITDAre

The Company also discloses its Net Debt/Adjusted EBITDAre ratio to assist investors in accounting for the Company’s unconsolidated joint ventures and equity-accounted investments, in both debt and Adjusted EBITDAre, by calculating pro-rata leverage on a look-through basis.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Prospectus Supplement, including the documents incorporated by reference herein, contains “forward-looking information” and “forward-looking statements” as defined under applicable securities laws (collectively, “forward-looking information”) which reflect management’s expectations regarding objectives, plans, goals, strategies, future growth, results of operations, performance and business prospects and opportunities of the Company. The words “plans”, “expects”, “does not expect”, “goals”, “seek”, “strategy”, “future”, “estimates”, “intends”, “anticipates”, “does not anticipate”, “projected”, “believes” or variations of such words and phrases or statements to the effect that certain actions, events or results “may”, “will”, “could”, “would”, “should”, “might”, “likely”, “occur”, “be achieved” or “continue” and similar expressions identify forward-looking information. In addition, any statements that refer to expectations, intentions, projections or other characterizations of future events or circumstances contain forward-looking information. Statements containing forward-looking information are not historical facts but instead represent management’s expectations, estimates and projections regarding future events or circumstances.

Some of the specific forward-looking information in this Prospectus Supplement may include, but is not limited to, statements with respect to information regarding: (a) the Company’s strategic priorities; (b) expected or targeted financial and operating performance including project timing; (c) projected cash flow, fees, revenue, NOI and other projected performance metrics, including expense reduction; (d) the ability of the Company to extend debt maturities and refinance debt; (e) FFO growth and the potential drivers of that growth; (f) expectations for the growth in the business; (g) the availability and quantum of debt reduction opportunities and the Company’s ability to avail itself of them; (h) the Company’s future balance sheet composition; the anticipated quantum and availability of leverage to facilitate home acquisitions and development activities; (i) the anticipated value of the Company’s assets and managed portfolios; (j) the Company’s acquisition program and the anticipated pace, number and timing of home acquisitions; (k) Tricon’s growth strategies and projections for its single-family rental business; (l) the Company’s ability to deploy equity committed to its investment vehicles; (m) the Company’s dividend policy and currency; and (n) the impact of the novel coronavirus (“COVID-19”) pandemic on the foregoing. In addition, information regarding any intention of the Company to complete the Offering and the Private Placement on the terms and conditions described herein, including the expected Closing Date thereof, the use of net proceeds of the Offering and the Private Placement, the granting of an Over-Allotment Option in connection with the Offering, the listing of the Common Shares on the TSX and the NYSE, the anticipated effect of the Offering and the Private Placement on the Company, including pro-forma information regarding the Company’s financial position, and the Company’s statements regarding the Company’s business and the environment in which it operates, is forward-looking information. These statements reflect the Company’s current intentions and strategic plans, however, the items noted may not occur in line with the Company’ expectations or at all. These statements are based on management’s current expectations, intentions and assumptions which management believes to be reasonable having regard to its understanding of prevailing market conditions and the current terms on which investment opportunities may be available. Further, such forward-looking information is qualified in its entirety by the inherent risks, uncertainties and changes in circumstances surrounding future expectations which are difficult to predict and many of which are beyond the control of the Company, including that the transactions contemplated herein are completed. Also note that the certain forward-looking financial information included in this document has been prepared by, and is the responsibility of, the Company’s management. PricewaterhouseCoopers LLP has not audited, reviewed, examined, compiled nor applied agreed-upon procedures with respect to the accompanying forward-looking financial information and, accordingly, PricewaterhouseCoopers LLP does not express an opinion or any other form of assurance with respect thereto.

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(b) results of operations; (c) future prospects and opportunities; (d) demographic and industry trends remaining unchanged; (e) a stable workforce; (f) no change in legislative or regulatory matters; (g) future levels of indebtedness; (h) the tax laws as currently in effect; (i) the effectiveness of mitigation strategies undertaken with respect to the COVID-19 pandemic, and the severity, duration and impacts of the COVID-19 pandemic on the economy and the Company’s business, which is highly uncertain and cannot reasonably be predicted; (j) the continuing availability of capital; (k) current economic conditions; and (l) anticipated asset growth in the Company’s investment vehicles assuming management of such assets on terms similar to current management activities.

Regarding the strategic goals, targets and potential value creation opportunities presented in this Prospectus Supplement, these are based on the assumed impact of the growth drivers, proposed transactions or events, and sources of cash flow described, on the assumption that other drivers of performance will not deteriorate over the relevant period, and on the specific assumptions concerning performance and market conditions noted specifically herein. Projected returns and financial performance are based in part on projected cash flows for incomplete projects as well as management estimates and future Company plans. There can be no assurance that such growth drivers, transactions, events, cash flow, returns or performance will occur, be realized, or have their anticipated impact, and the assumptions underlying such statements are subject to known and unknown risks, including market risks, which may not be in the Company’s control, and therefore there can be no assurance that actual performance will align with the Company’s targets or that the value creation opportunities presented herein will be realized.

When relying on forward-looking information to make decisions, the Company cautions readers not to place undue reliance on these statements, as forward-looking information involves significant risks and uncertainties. Forward-looking information should not be read as a guarantee of future performance or results and will not necessarily be an accurate indication of whether or not the times at or by which such performance or results will be achieved. A number of factors could cause actual results to differ, possibly materially, from the results discussed in the forward-looking information, including, but not limited to: (a) a change in economic or real estate industry conditions (including prevailing interest rates and rates of inflation); (b) competition in the real estate investment business; (c) availability of attractive investment opportunities; (d) long investment horizons; (e) changes in legislation and government regulation; (f) changes in tax legislation or policy; (g) the impact of the COVID-19 pandemic on the Offering, the Private Placement or the operations, business and financial results of the Company; and (h) such other factors referred to under “Risk Factors” in this Prospectus Supplement and under similar headings contained in the Company’s filings with securities commissions or similar authorities in Canada, including the Annual Information Form, the Annual MD&A and the Interim MD&A.

If any risks or uncertainties with respect to the above materialize, or if the opinions, estimates or assumptions underlying the forward-looking information prove incorrect, actual results or future events might vary materially from those anticipated in the forward-looking information. The opinions, estimates or assumptions referred to above and described in greater detail under “Risk Factors” should be considered carefully by readers. Although management has attempted to identify important risk factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other risk factors not presently known that management believes are not material that could also cause actual results or future events to differ materially from those expressed in such forward-looking information.

Certain statements included in this Prospectus Supplement 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 to understand management’s current expectations and plans relating to the future, as disclosed in this Prospectus Supplement. All forward-looking information is based only on information currently available to the Company and is made as of the date of this Prospectus Supplement. Except as expressly required by applicable securities law, the Company assumes no obligation to publicly update or revise any forward-looking information, whether as a result of new information, future events or otherwise. All forward-looking information in this Prospectus Supplement is qualified by these cautionary statements.

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MARKET AND INDUSTRY DATA

This Prospectus Supplement may include market and industry data that were 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 applicable real estate markets in which the Company operates (including management’s estimates and assumptions relating to the industry based on that knowledge). Management’s knowledge of the real estate industry in the U.S. and Canada 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 cited herein 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, neither the Company nor the Underwriters have independently verified any of the data from management or third-party sources referred to in this Prospectus Supplement, 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.

WHERE YOU CAN FIND MORE INFORMATION

Tricon is subject to the full informational requirements of the securities commissions or similar regulatory authority in all provinces and territories of Canada. Following this Offering, Tricon will also file reports and other information with the SEC. Purchasers are invited to read and copy any reports, statements or other information, other than confidential filings, that Tricon files with the Canadian provincial and territorial securities commissions, the SEC or similar regulatory authorities. These filings are also electronically available from SEDAR at www.sedar.com and from EDGAR at www.sec.gov. Except as expressly provided herein, documents filed on SEDAR or on EDGAR are not, and should not be considered, part of this Prospectus Supplement or the accompanying Shelf Prospectus.

Tricon has filed with the SEC under the U.S. Securities Act the Registration Statement relating to the Offered Shares, of which this Prospectus Supplement and the accompanying Shelf Prospectus form a part. This Prospectus Supplement and the accompanying Shelf Prospectus do not contain all of the information set forth in the Registration Statement, certain items of which are contained in the exhibits to the Registration Statement as permitted or required by the rules and regulations of the SEC. Items of information omitted from this Prospectus Supplement but contained in the Registration Statement are available on the SEC’s website at www.sec.gov.

Tricon’s reports and other information filed or furnished with or to the SEC are available from EDGAR at www.sec.gov, as well as from commercial document retrieval services.

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SUMMARY DESCRIPTION OF THE BUSINESS OF THE COMPANY

Tricon is a residential real estate company primarily focused on owning and operating rental housing in the United States and Canada. The Company is governed by the Business Corporations Act (Ontario). The Company’s head and registered office is located at 7 St. Thomas Street, Suite 801, Toronto, Ontario, M5S 2B7.

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.

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 middle-market demographic consists of over seven million working-class U.S. renter households.¹ The Company defines the middle-market cohort as those households earning between US$70,000 and US$110,000 per year and with monthly rental payments of US$1,300 to US$2,100. These rent levels typically represent approximately 20–25% of household income, which provides each household with a 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.

Single-Family Rental

Tricon owns and operates one of the largest portfolios of single-family rental (“SFR”) homes in the U.S. Sun Belt, with approximately 25,000 homes in 19 markets across ten states. 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 SFR 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 that 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. See “Investment Opportunity”.

Multi-Family Rental

In the U.S., Tricon owns a portfolio of high-quality, affordably priced suburban garden-style apartments primarily in the U.S. Sun Belt, comprised of 23 properties totalling 7,289 suites in 13 major markets. Subsequent to Q2 2021, the Company assumed property management responsibilities for the majority of its U.S. multi-family properties and prior to the end of Q3 2021 completed the full internalization of the property management function for the entire portfolio. This internalization is expected to produce additional synergies by leveraging Tricon’s existing technology, infrastructure and centralized property management functions. On March 31, 2021, the Company completed a recapitalization transaction whereby two leading global institutional investors acquired a combined 80% interest in the existing portfolio, with Tricon retaining a 20% interest.

¹	Source: U.S. Census Bureau.

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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 (a) Class A multi-family rental apartments in Canada; (b) its recently launched strategy to develop “build-to-rent” single-family rental communities in the U.S.; and (c) legacy land development and homebuilding projects predominantly in the U.S.

The Company’s build-to-rent strategy, which is focused on developing a portfolio of well-designed, dedicated single-family home rental communities, commenced in Q3 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.

Private Funds and Advisory

Through its private funds and advisory business, Tricon earns fees from managing third-party capital co-invested in its real estate assets through commingled funds, separate accounts and joint ventures. Activities of this business include asset management of third-party capital, development management and related advisory services, and property management of rental properties.

Consistent with the Company’s past practices and in the normal course of business, the Company is continuously engaged in discussions with respect to possible acquisitions of and investments in new assets and businesses, dispositions of existing assets, including those contemplated as a part of the Company’s recently announced investment vehicle formation initiatives, and related financings and refinancings. There can be no assurance that any of these discussions will result in a definitive agreement, and, if they do, what the terms or timing of any acquisition, investment, disposition, financing or refinancing would be, if consummated. The Company expects to continue current discussions and actively pursue acquisition, investment, disposition, financing and refinancing opportunities, which currently, or may from time to time, involve entering into purchase and sale agreements that are subject to various conditions, including due diligence. As of the date hereof, there are no significant probable acquisitions identified by the Company, whereby financial statements would be required to be included in this Prospectus in order for this Prospectus Supplement to contain full, true and plain disclosure.

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INVESTMENT OPPORTUNITY

Company Overview & Differentiated Strategy

Founded in 1988, Tricon is an owner and operator of a growing portfolio of over 33,000 SFR homes and multi-family rental apartments in 21 markets across the United States and Canada, with a primary focus on the U.S. Sun Belt and a low-turnover middle-market resident demographic. Our commitment to enriching the lives of our residents and local communities underpins Tricon’s culture and business philosophy. We strive to continuously improve the resident experience through our technology-enabled operating platform and innovative approach to rental housing.

Tricon was among the first to enter into and institutionalize the U.S. SFR industry. Since 2012, we have expanded the size of our SFR portfolio at a compound annual growth rate (CAGR) of approximately 34% to 24,961 managed homes as of Q2 2021 and have delivered an 18% annualized total shareholder return as of the end of 2020. Within the SFR space, we believe that we operate with a unique strategy highlighted by a superior growth profile, a strategic partnership model, and a sophisticated tech-enabled operating platform. These key factors have enabled us to deliver strong performance to our investors while maintaining high resident satisfaction. We achieved 27% year-over-year Core FFO per share growth in Q2 2021, and delivered 8.0% Same Home blended rent growth and 6.1% Same Home NOI growth for the SFR portfolio. We have remained disciplined in pursuing growth while strengthening our balance sheet, having successfully reduced our leverage to 10.3x Net Debt / Adjusted EBITDAre in Q2 2021 compared to 15.3x in Q1 2020.²

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Notes:

(1)	Source: John Burns Real Estate Consulting.

(2)	Maximum third-party equity raised with SFR JV-2, Homebuilder Direct JV, and Canadian Multi-family JV with Canadian Pension Plan Investment Board ( “CPP Investments JV”).

²	Refer to reconciliations of non-IFRS financial measures in Appendix A to this Prospectus Supplement.

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Our History & Evolution

We have invested in residential real estate since our inception in 1988 and have evolved into an SFR-focused owner and operator over the past decade. We completed our initial public offering on the TSX in 2010, entered the U.S. single family rental business in 2012, and grew our asset base significantly in 2017 with the acquisition of Silver Bay Realty Trust. Over the past four years, we have further accelerated our growth in the SFR business through strategic partnerships with leading global institutional investors. Going forward, we intend to continue growing our SFR business and our objective is to roughly double our number of homes over the next three years.

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Notes:

(1)	Investment vehicle sizes for SFR JV 1& 2, Homebuilder Direct, U.S. multi-family recapitalization and CPP Investments JV reflect total anticipated value of properties, including associated debt.

Portfolio Overview & Balance Sheet Asset Composition

With nearly 25,000 total SFR homes owned and operated, Tricon has one of the largest portfolios of SFR homes in the U.S. Sun Belt. The portfolio represents 93% of our balance sheet assets. The remaining 7% of our assets are in adjacent businesses of residential development (5%) and multi-family rental (2%), each noted above, which offer operating synergies and which management believes represent a source of significant potential value creation over the near to medium term.

97% of our assets are located in the United States with a focus on the Sun Belt states, and the remaining 3% are located in Canada.

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LOGO

Source: Company information.

Notes:

(1)	Total assets based on reported fair market value of consolidated assets as of Q2 2021.

(2)	Excludes the impact of a severe winter storm in Texas in Q1 2021.

Favorable Industry Trends that Support Our Strategy

Long-term trends in the residential real estate sector and broader economy support our SFR strategy, including but not limited to demographic shifts, population growth across our Sun Belt markets, affordability of homeownership, shifting consumer preferences, and capital availability in the SFR space. Our business is benefitting from these strong fundamental tailwinds that have been in place for years, but are accelerating further as a result of the COVID-19 pandemic. Homeownership in the United States is becoming increasingly out of reach due to rapidly rising home prices. Given these affordability constraints and a growing preference for a flexible lifestyle, millennials in the United States now own far less real estate than baby boomers did at their age, with a homeownership rate of 4% for millennials versus 32% for baby boomers at age 31.³ Tricon’s SFR homes provide an attractive housing option for young families as they form new households. Furthermore, work-from-home and hybrid work models are increasingly expected to become a permanent trend, spurring additional demand for spacious SFR homes versus smaller apartments.

Against this backdrop, SFR has experienced soaring interest from private investors and highly receptive debt capital markets, with $8.3 billion of equity commitments in the first half of the year and over $20 billion of debt capital raised over the past 36 months.⁴ We expect these trends to contribute to an attractive cost of capital for the SFR business, allowing Tricon to continue to execute on its growth plans.

Positioning Within the Single-Family Rental Sector

Our portfolio is broadly diversified across the U.S. Sun Belt with a preference for more moderate home sizes and rents than our public market peers, catering to the low-turnover middle-market resident base. We believe this middle market strategy has contributed to outsized Same Home rent growth and lower annualized Same Home turnover relative to our peers. As of Q2 2021, our portfolio had average monthly rent of $1,513 with an average home size of 1,630 square feet. In the trailing six quarters ending Q2 2021, we achieved average Same Home

³	Source: Pew Research Center.

⁴	Source: Company estimates, Wall Street Research.

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rent growth of 11.4%, 3.8%, and 6.0% on new leases, renewals, and on a blended basis, respectively, and an average Same Home turnover of 22.4%. In August of this year, we recorded Same Home rent growth of 19.7%, 5.0%, and 9.1% on new leases, renewals, and on a blended basis, respectively. We also have a distinct Sun Belt presence as compared to our public market peers, which have a higher concentration of homes in West Coast and Midwestern markets. Our Same Home NOI composition as of Q2 2021 was as follows: Southeast (35%), Florida (19%), Southwest (20%), Texas (12%), West (11%), and the Midwest (3%).⁵

Investment Highlights

Dynamic Leadership Team Focused on Corporate Culture and Growth

We have a dynamic, high-performing team of industry leaders and housing experts leading 800+ dedicated employees. The management team, as detailed below, has a combined 146 years of industry experience, including 61 at Tricon, and is supported by a deep bench of experienced employees with a broad range of expertise. Our head office is located in Toronto, Ontario, Canada, and our U.S. operations hub is based in Orange County, California.

In addition, the board of directors of the Company (the “Board”) has extensive industry expertise, with individual directors having experience operating real estate investment trusts in both the U.S. and Canada. Our board composition aligns with our governance initiatives, with seven independent directors out of 10 and 30% representation by women. We recently adopted a new shareholder engagement policy to provide further clarity of discussion topics between the Board and shareholders, most notably progressing with material changes to our executive compensation program to better align with shareholder interests. We successfully finalized and implemented our business continuity plans during the onset of the COVID-19 pandemic.

We believe that our focus on corporate culture is a competitive advantage and contributes to a superior resident experience, innovative housing solutions and superior operating performance. We are driven by our purpose statement – Imagine a world where housing unlocks life’s potential – and we expect all employees to conduct themselves according to the following guiding principles:

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Care and Compassion: Go above and beyond to enrich the lives of our residents

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Dedication and Excellence: Commit to and inspire excellence in everything we do

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Curiosity and Innovation: Ask questions, embrace problems, thrive on the process of innovation

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Integrity and Honesty: Do what is right, not what is easy

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Leadership and Legacy: Elevate each other so together we leave an enduring legacy

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 positively impact local communities. When our residents are satisfied, they rent with us for longer periods, 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.

Tricon’s purpose and guiding principles are also deeply intertwined with our Environmental, Social and Governance (“ESG”) commitments, which focus on Our People, Our Residents, Our Innovation, Our Impact and Our Governance. ESG is engrained in everything we do, and recent enhancements to our ESG reporting provide a valuable framework to track and communicate our progress, detailed below. In May 2021, we issued our inaugural ESG annual report, providing details of key ESG commitments, initiatives and performance to date. This includes our commitment to the BlackNorth Initiative (3.5% Black leaders by 2025), an updated security policy and assessments of IT processes and controls, and a new third-party-based anonymous whistleblower platform.

⁵	Southeast includes: GA/NC/SC/TN; Southwest includes AZ/NV/CO/UT; West includes CA/OR/WA; Midwest includes IN.

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Overview of Our Management Team


Member of Management	Years with Tricon		Years of Industry Experience
Gary Berman, President & Chief Executive Officer		19		23
Wissam Francis, EVP & Chief Financial Officer		7		21
Jonathan Ellenzweig, Chief Investment Officer		16		19
Kevin Baldrige, Chief Operating Officer		6		37
Sherrie Suski, Chief People Officer		6		29
David Veneziano, Chief Legal Officer		7		17
Andy Carmody, Managing Director (U.S. Residential Development)		4		20
Andrew Joyner, Managing Director (Canadian Multi-Family)		6		15
Wojtek Nowak, Managing Director (Capital Markets)		7		20
Evelyne Dubé, Managing Director (Private Funds)		5		26
Reshma Block, Head of Technology and Innovation		1		25
Alan O’Brien, Head of Property Operations		7		16
Bill Richard, Head of Asset Management & SFR Acquisitions		5		17

Overview of Our Approach to Sustainability

Our People

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Established minimum living wage: $36,400 in U.S. and C$46,000 in Canada.

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Certified great place to work: Earned an employee satisfaction score of 81% for U.S. and Canada Great Place to Work surveys; attained a Glassdoor rating of 4.8 out of 5 stars.

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Diverse and inclusive workplace: surpassed 30% Club Canada targets and BlackNorth CEO pledge commitments.

Our Residents

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Focus on resident retention: Achieved occupancy of 97.2% and turnover of 22.8% for the SFR Same Home portfolio in 2020, aided by self-governing on renewals to drive retention.

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Customer lifecycle surveys: Achieved average SFR resident satisfaction rate of 80% and SFR industry-leading Google score of 4.4 out of 5.

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Helping in times of need: Doubled the Resident Emergency Assistance Fund to $200,000.

Our Impact

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Smart home technology: Installed smart thermostats in 33% of SFR homes, and ENERGY STAR^® certified appliances in 90% of SFR homes.

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Fleet optimization technology: Improved route optimization of 174-truck fleet by 27% and reduced average fuel consumption by 5%.

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LEED-Certified development pipeline: Attained LEED Gold certification at The Selby (Toronto multi-family), with more LEED-certified developments planned through 2025.

Our Governance

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Strong business ethics, integrity, and compliance: Updated and published internal compliance manual.

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Disclosure and reporting: Completed inaugural ESG Report and GRESB submission in 2021.

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Enterprise risk management: In process of enhancing enterprise-level risk management program.

Targeting the Middle-Market Demographic and High-Growth Sun Belt States

Our U.S. rental strategy is focused on serving the middle market, an addressable cohort of approximately 25 million households with household income of $70,000 to $110,000 and strong long-term fundamentals for rental housing. This cohort has more than 7 million renters, with targeted monthly rent between $1,300 and $2,100. These rent levels typically represent approximately 20% to 25% of household income, which provides each household with meaningful cushion to continue paying rent in times of economic hardship. 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. Our middle-market resident profile currently consists of a $79,600 average household income, an average 650 FICO^® Score, and a healthy 23% rent-to-income ratio.

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Source: U.S. Census Bureau; monthly rent by income level per Tricon estimates.

Geographically, our SFR portfolio is positioned in the U.S. Sun Belt, which is home to approximately 40% of all U.S. households and is expected to experience population growth in excess of 10% in most states from 2020 to 2030. More than 85% of our SFR portfolio Same Home NOI is located in states expecting such population growth.⁶^,⁷ 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.

⁶	Source: John Burns Real Estate Consulting Analysis.

⁷	Source: The Cooper Center at the University of Virginia.

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Notes:

(1)	Source: The Cooper Center at the University of Virginia.

(2)	Source: NOI concentration based on Same Home single-family rental NOI as of Q2 2021.

Each of our top 10 markets based on home count experienced population and job growth greater than the national average over the past decade, which has driven strong rent growth and occupancy metrics in our Same Home portfolio.

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Source: U.S. Census Data, U.S. Bureau of Labor Statistics.

Notes:

(1)	Based on population and job growth data at a metropolitan statistical area (“MSA”) level.

(2)	Consists of: Sacramento-Roseville-Folsom and Vallejo-Fairfield MSAs.

(3)	Consists of: Miami-Fort Lauderdale-Pompano Beach MSA.

(4)	Figures represent Tricon’s proportionate share of managed portfolio.

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Scalable Technology-Enabled Operating Platform

Technology and innovation are at the core of our success. We believe that our technology-enabled operating platform provides us with a significant competitive advantage, allowing us to scale our business, drive operating efficiencies and continuously improve the resident experience. We have utilized technology from end-to-end across our business, including our acquisition platform, resident underwriting and leasing, repair and maintenance platform, call center, and asset management activities:

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Positioned to Deliver Outsized Growth

U.S. rental housing is a deep market with institutionally owned SFR operators owning approximately just 2% of the SFR universe. Of the 2% institutionally owned homes, Tricon’s portfolio represents approximately 10%. Our existing U.S. Sun Belt markets present a growth opportunity with a deep supply of resale homes—approximately 1.3 million annual listings. We believe this will enable the Company to organically acquire more than 7,000 SFR homes per year that meet its acquisition criteria (relative to a ~3,200 historical annual run rate). At an average estimated acquisition cost of $315,000, 7,000+ SFR homes equates to approximately $2.2 billion of potential annual acquisitions.

Our SFR acquisition platform spans multiple existing and new home channels to facilitate rapid portfolio growth, including existing homes through the traditional multiple listing service (“MLS”) channel, off-market acquisitions (including iBuyers such as Zillow and Opendoor), and portfolio acquisitions. We acquire new homes by buying scattered individual homes, acquiring new home communities, and developing new home communities. We anticipate that successfully pursuing available opportunities in each of these channels will enable us to reach our goal of approximately doubling our SFR home count over the next three years to an aggregate of approximately 50,000 units.

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Furthermore, we have partnered with leading global real estate investors to form three complementary SFR joint ventures, each with a unique acquisition strategy that provides potential residents with additional housing options at an accessible price point. We aim to acquire homes at targeted cap rates of 5.0% to 5.5% with long-term fixed rate debt financing currently available near 2.0%, resulting in compelling levered returns. Overall, we expect the total capitalization of our three most recent joint ventures to range from approximately $7.2 to $7.7 billion, targeting 25,000 to 26,500 SFR home acquisitions or approximately 8,500 to 9,000 homes annually. The anticipated total equity commitment is $2.3 to $2.5 billion, and our share of equity commitment in these vehicles is anticipated to be $600 to $650 million over time. As previously discussed, we expect to source acquisitions from across a range of channels. We maintain a right of first refusal on acquisitions of our partner interests.

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Notes:

(1)	Tricon maintains a right of first refusal on acquisitions of our partner interests.

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Industry-Leading Operating Metrics with Upside Potential

Our operational performance and economies of scale have contributed to significant FFO growth, with a 27% year-over-year increase in Core FFO per share in Q2 2021. 2020 full-year Core FFO per share grew 72% over 2019. Strong Same Home rent growth has been key to this strong performance, with Tricon achieving a 6.0% average blended Same Home rent growth over the past six quarters, representing 120 bps of outperformance relative to peers. The Company has also achieved higher average Same Home NOI growth over the same six quarters (5.5% relative to 4.2% for peers) while maintaining 640 bps lower Same Home annualized turnover (22.4% on average over the past six quarters).⁸

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Notes:

(1)	Tricon’s 2020 FFO per share has been recast to present the consolidated results in conformity with the other periods shown.

(2)	Metrics reflect the last six quarters of Tricon’s proportionate share of the managed portfolio and exclude limited partners’ interests in the SFR JV-1 portfolio.

(3)	Figures as of Q2 2021 for Tricon and its SFR peers (INVH and AMH); reflects last six quarters average; excludes impact of Texas storms for Tricon.

(4)	Excludes impact of a severe winter storm in Texas in Q1 2021 for Tricon’s metrics.

Strong Same Home revenue growth over the near term is expected to be driven by ongoing rent growth, roll-out of new ancillary services and lower bad debt expense. We estimate loss-to-lease of 15% to 20% is embedded in the SFR portfolio due to active management of renewals and occupancy, with an opportunity to capture that loss-to-lease as new leases are signed. Fees and other revenue contributed 4.0% of total revenue as of Q2 2021, but had an outsized impact on growth, contributing 1.0% of our 5.4% year-over-year Same Home revenue growth in the quarter.⁹ Fees and other revenue represented approximately $640 per home monthly, including ancillary business revenue from Smart Home offerings (30% deployed), renters insurance (45% deployed), and other programs such as Telecom partnerships, appliance upgrades, air filter replacements, solar panels, security deposit alternatives, and other services.¹⁰ In total, these new additional services will enable us to expand our

⁸	Refer to reconciliations of non-IFRS financial measures in Appendix A to this Prospectus Supplement.

⁹	Reflects Q2 2021 proportionate Same Home portfolio of 18,157 homes.

¹⁰	Deployment figures are approximate figures on Same Home portfolio, excluding Smart Home and renters insurance; other programs are planned to be deployed in 2021 and beyond.

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monthly fees and other revenue to $850 to $950 per home. Lastly, as COVID-19-related economic impacts subside, we expect our bad debt expense to normalize to historical levels of sub-1% of rental revenue by the end of 2022.

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Our property-level expense control is focused on internalization of maintenance activities, maintaining low turnover, and improving efficiencies of scale as our portfolio grows. We expect to fulfill 75% of work orders internally by the end of 2022, up from approximately 66% today. We have also centralized procurement, leveraging nationwide vendor relationships to achieve cost savings on key components and materials. Our annualized cost to maintain per home has fallen from approximately $3,200 per home in 2018 to approximately $2,700 per home in 2019, and to approximately $2,500 per home (annualized) as of end of Q3 2021. As of Q2 2021, on a year-over-year basis, we have grown our Same Home revenue for our proportionate Same Home portfolio by 5.4% while our Same Home expenses grew approximately 4.1% in the same period (excluding impact of a severe winter storm in Texas in Q1 2021).

We also expect to increase the fee revenue that we earn from managing third-party capital on behalf of institutional investors who invest in our residential strategies. Such fees are anticipated to improve our operating efficiency, as we believe that we can grow fee revenue by more than 10% annually while keeping overhead expenses relatively stable. Growth in fee income is expected to be driven by increased asset management, property management, and development fees from committed joint ventures and managed assets (including asset management fees eliminated on consolidation for certain JVs, which are approximately 1% of committed capital relating to SFR JV-2 and Homebuilder Direct JV). We also are striving to generate more than $150 million of performance fees over the next five years. In Q2 2021, fee revenue was approximately 45% of gross overhead.

Balance Sheet Management

We have demonstrated a successful track record of reducing balance sheet leverage over time. We have prioritized deleveraging through the syndication of our U.S. multi-family portfolio, issuance of common and preferred equity securities, and the redemption of Debentures (as defined below) for Common Shares. Our deleveraging strategy has been coupled with significant growth in the business while navigating a global recession and pandemic to reduce Net Debt / Adjusted EBITDAre from 15.3x in Q1 2020 to 10.3x in Q2 2021, and 8.6x pro forma for the Offering and Private Placement as at Q2 2021.¹¹

¹¹	Refer to reconciliations of non-IFRS financial measures in Appendix A to this Prospectus Supplement.

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Source: Management estimates.

Notes:

(1)

Figures shown based on last quarter annualized adjusted EBITDAre and proportional net debt, inclusive of its ownership share in U.S. SFR, U.S. multi-family, stabilized Canadian multi-family, and total corporate borrowings, but excluding Tricon’s proportionate share of construction financing associated with Canadian multi-family developments.

(2)	Excludes Debentures redeemed for Common Shares and de-listed from the TSX on September 9, 2021.

(3)	Q2 2021 PF assumes net Offering and Private Placement proceeds of $400 million.

Additionally, our near-term debt maturities present an opportunity for material interest expense savings upon refinancing. We expect our prevailing interest rates on maturing debt, on a blended basis, to fall from 3.09% currently to near 2% beginning in Q4 2021. On a consolidated basis, as of Q2 2021, our weighted average cost of debt is 2.97% and our weighted average time to maturity is about 3.3 years. We continue to maintain a strong liquidity profile with approximately $570 million of available liquidity via our credit facilities and unrestricted cash balances, which we expect has the potential to provide ample capacity to fund our growth runway in the coming years.

Significant Value Creation Opportunities from Adjacent Real Estate Businesses

Our residential development business (in both the United States and Canada) and stabilized U.S. multi-family portfolio represent a meaningful source of potential value creation, and an opportunity to simplify the business for shareholders over time. We believe that these three strategies have the potential to represent $1.0 billion of net asset value over time compared to $478 million of net asset value as of Q2 2021.

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1.2470 USD/CAD exchange rate as of June 30, 2021. Per share values are based on 209 million basic shares outstanding as of Q2 2021.

Notes:

(1)	Reflects book value per basic share outstanding as of Q2 2021.

(2)	Current IFRS net asset value includes development properties and The Selby.

(3)	Assumes development yield of 4.75% on cost and current market stabilized cap rates for downtown Class A multi-family assets. Net asset value per share is based on 209 million basic shares outstanding as of Q2 2021. The CPP Investments JV currently only includes the Queen & Ontario project.

(4)	Investment vehicle size reflects total anticipated value of properties including associated debt.

(5)	Valuation based on Tricon’s proportionate share of in-place NOI as of Q2 2021; cap rate represents current market stabilized cap rate for the portfolio’s U.S. Sun Belt markets as per Green Street Real Estate Analytics, July 2021.

Canadian Multi-Family Development

Our Toronto-based multi-family build-to-core portfolio is focused on prime locations in North America’s fastest-growing city, with proximity to jobs and transit; our $1.1 billion¹² CPP Investments JV provides a projected path of growth to approximately 7,000 units and approximately $50 million + of annual NOI upon stabilization.¹³

U.S. Multi-Family Rental

Our U.S. multi-family portfolio complements our SFR portfolio by providing additional operating synergies and efficiencies of scale, with minimal balance sheet exposure (20% ownership interest or $121 million fair market value). It consists of 23 properties, with 7,289 units and an average build year of 2012. The portfolio is located across eight states with an average occupancy rate of 95.6%, average monthly rent of $1,226 and pro rata NOI of

¹²	Investment vehicle size reflects total anticipated value of properties including associated debt.

¹³	Refers to management’s projection of Tricon’s proportionate share of NOI upon stabilization.

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$3.5 million as of Q2 2021 (our share of $17.4 million total NOI for the portfolio). The U.S. multi-family rental portfolio achieved 10.2% average blended rent growth and 5.9% Same Home NOI growth as of Q2 2021.¹⁴

U.S. Residential Development

Our legacy for-sale housing investments are projected to generate strong cash flow over time, which we intend to reinvest into growing our core SFR portfolio.¹⁵ Our U.S. development portfolio consists of 13 active investments across four states and our target is for it to distribute approximately $300 million to us over the next five-plus years, relative to our share of investment fair value of $154 million. In Q2 2021, we received $20 million in distributions.

¹⁴	Refer to reconciliations of non-IFRS financial measures in Appendix A to this Prospectus Supplement.

¹⁵

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

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RECENT DEVELOPMENTS

There have been no material developments in the business of the Company since June 30, 2021, the date of the Company’s most recent Interim Financial Statements, that have not been disclosed in this Prospectus or the documents incorporated by reference herein, other than as follows.

On September 9, 2021, Tricon completed the redemption (the “Debenture Redemption”) of its outstanding 5.75% extendible convertible unsecured subordinated debentures due March 31, 2022 (the “Debentures “). The Company elected to satisfy the redemption price for each Debenture by issuing Common Shares in accordance with the terms of the Debentures. The aggregate outstanding principal amount of the Debentures was US$171,424,000 on July 30, 2021, the date Tricon announced its intention to complete the Redemption. The Debentures were redeemed by the Company and de-listed from the TSX. Pursuant to the conversion option available to holders of the Debentures, an aggregate of 16,097,218 Common Shares were issued in relation to conversion requests received by Tricon between the date of the redemption announcement and September 8, 2021. The remaining balance of the outstanding principal amount of the Debentures was redeemed on the September 9, 2021 for an aggregate of 259,455 Common Shares. Accrued interest of US$25.52 per US$1,000 principal amount of Debentures was paid in cash.

On September 16, 2021, investors in the Company’s previously announced “SFR JV-2” joint venture to acquire single-family rental homes targeting the middle-market demographic in the U.S. Sun Belt exercised their option to increase the total capital commitments of that vehicle to US$1.55 billion (including the US$450 million commitment from Tricon), effective August 11, 2021.

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RISK FACTORS

An investment in the Offered Shares is subject to a number of risks. Before deciding whether to invest in the Offered Shares, investors should consider carefully the risks factors set forth below and in the documents incorporated by reference in this Prospectus Supplement and the Shelf Prospectus (including those discussed under the heading “Risk Factors” in the Annual Information Form and under the heading “Risk definition and management” in the Annual MD&A and the Interim MD&A) and all of the other information in this Prospectus Supplement (including, without limitation, the documents incorporated by reference herein).

The risks described herein are not the only risks that affect the Company. Other risks and uncertainties that the Company does not presently consider to be material, or of which the Company is not presently aware, may become important factors that affect the Company’s future financial condition and results of operations. If any of such or other risks occur, the Company’s business, prospects, financial condition, results of operations and cash flows could be materially adversely impacted. In that case, the trading price of the Common Shares could decline and investors could lose all or part of their investment. There is no assurance that risk management steps taken will avoid future loss due to the occurrence of the below described or other unforeseen risks.

Risk Factors Related to the Offering

Market Volatility

The stock market experiences significant price and volume volatility that may affect the market price of the Common Shares for reasons unrelated to the Company’s performance. 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.

The market price of the Common Shares may be volatile. The volatility may affect the ability of the Company’s shareholders to sell the Common Shares at a favourable price. Market price fluctuations in the Common Shares may be due to:

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actual or anticipated fluctuations in the Company’s quarterly results of operations;

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recommendations by securities research analysts;

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changes in the economic performance or market valuations of companies in the industry in which the Company operates;

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addition to or departure of the Company’s executive officers, directors and other key personnel;

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release or expiration of transfer restrictions on outstanding Common Shares (including Common Shares subject to lock-up restrictions);

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sales or perceived sales of additional Common Shares;

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operating and financial performance that vary from the expectations of management, securities analysts and investors;

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regulatory changes affecting the Company’s industry generally and its business and operations;

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announcements of developments and other material events by the Company or its competitors;

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fluctuations to the costs of vital production materials and services;

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changes in global financial markets and global economies and general market conditions, such as interest rates;

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significant acquisitions or business combinations, strategic partnerships, joint ventures or capital commitments by or involving the Company or its competitors;

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litigation or regulatory action against us;

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operating and share price performance of other companies that investors deem comparable to the Company or from a lack of market comparable companies;

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news reports relating to trends, concerns, technological or competitive developments, regulatory changes and other related issues in the Company’s industry or target markets; and

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current and future global economic, political and social conditions, including the COVID-19 pandemic;

along with a variety of additional factors, including, without limitation, those set forth under “Cautionary Note Regarding Forward-Looking Statements”.

In addition, the market price for securities in the stock markets, including the TSX and the NYSE, have recently experienced significant price and trading fluctuations, most recently in 2020 as a result of the COVID-19 pandemic. These fluctuations resulted in volatility in the market prices of securities that often has been unrelated or disproportionate to changes in operating performance. Accordingly, broad market fluctuations may adversely affect the market prices of the Common Shares.

Dilution

The number of Common Shares that the Company is authorized to issue is unlimited. Subject to the rules of any applicable stock exchange on which the Common Shares are listed (including the TSX and the NYSE) and applicable securities laws, the Company may, in its sole discretion, issue additional Common Shares from time to time, and the interests of the Company’s shareholders may be diluted thereby. The Company cannot predict the size or nature of future sales or issuances of securities or the effect, if any, that such future sales and issuances will have on the market price of the Common Shares. Sales or issuances of substantial numbers of Common Shares or other securities that are convertible or exchangeable into Common Shares, or the perception that such sales or issuances could occur, may adversely affect prevailing market prices of the Common Shares. With any additional sale or issuance of Common Shares or other securities that are convertible or exchangeable into Common Shares, investors will suffer dilution to their voting power and economic interest in the Company. Furthermore, to the extent holders of the Company’s stock options or other convertible securities convert or exercise their securities and sell the Common Shares they receive, the trading price of the Common Shares may decrease due to the additional amount of Common Shares available in the market.

Discretion in Use of Proceeds

The Company cannot specify with certainty the particular uses of the net proceeds that it will receive from the Offering and the Private Placement. The Company’s management will have broad discretion in the application of the net proceeds, including for any of the purposes described in “Use of Proceeds”. Accordingly, a purchaser of Common Shares will have to rely upon the judgment of management with respect to the use of the proceeds of the Offering and the Private Placement, with only limited information concerning management’s specific intentions. The Company’s management may spend a portion or all of the net proceeds from the Offering and the Private Placement in ways that its shareholders might not desire, that might not yield a favourable return and that might not increase the value of a purchaser’s investment. The failure by management to apply these funds effectively could harm the Company’s business. Pending use of such funds, the Company might invest the net proceeds from the Offering and the Private Placement in a manner that does not produce income or that loses value.

No Active Market for Common Shares in the United States

Our Common Shares are currently listed only on the TSX. Prior to the Offering, the Common Shares have not been listed on a stock exchange in the United States. We have applied to list our Common Shares on the NYSE in connection with the Offering. However, if an active trading market does not develop in the United States, you

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may have difficulty selling any of the Common Shares that you buy over a U.S. exchange. We cannot predict the extent to which investor interest in the Company will lead to the development of an active trading market on the NYSE or otherwise, or how liquid that market might become. The price of the Common Shares in the Offering may not be indicative of prices that will prevail in the United States trading market or otherwise following the Offering. Listing of our Common Shares on the NYSE in addition to the TSX may increase price volatility on the TSX and also result in volatility of the trading price on the NYSE because trading will be in two markets, which may result in less liquidity on both exchanges. In addition, different liquidity levels, volumes of trading, currencies and market conditions on the two exchanges may result in different prevailing trading prices.

No Guarantee of Return on Investment

A holding of Common Shares is speculative and involves a high degree of risk and should be undertaken only by holders whose financial resources are sufficient to enable them to assume such risks and who have no need for immediate liquidity in their investment. A holding of Common Shares is appropriate only for holders who have the capacity to absorb a loss of some or all of their holdings.

Additional Capital

The Company’s ability to generally carry on its business, and in particular to take advantage of opportunities in its investment verticals and possible new verticals, 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 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

Shareholders do not have a right to dividends on such Common Shares unless declared by the Board. The declaration of dividends is at the discretion of the Board 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 of its liabilities. Liabilities of the Company will include those arising in the ordinary course of business and indebtedness.

Analyst Reports

The trading market for our Common Shares depends, in part, on the research and reports that securities or industry analysts publish about us or our business. We do not have any control over these analysts. If one or more of the analysts who cover us downgrade our stock or publish inaccurate or unfavorable research about our business, the price of our Common Shares would likely decline. In addition, if our results of operations fail to meet the forecast of analysts, the price of our Common Shares would likely decline. If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, demand for our Common Shares could decrease, which might cause the price and trading volume of our Common Shares to decline.

U.S. Public Company Costs

As a public company in the United States, we will incur additional legal, accounting, NYSE, reporting and other expenses that we did not incur as a public company in Canada. The additional demands associated with being a U.S. public company may disrupt regular operations of our business by diverting the attention of some of our senior management team away from revenue-producing activities to additional management and administrative

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oversight, adversely affecting our ability to attract and complete business opportunities and increasing the difficulty in both retaining professionals and managing and growing our business. Any of these effects could harm our business, results of operations and financial condition.

If our efforts to comply with new U.S. laws, regulations and standards differ from the activities intended by regulatory or governing bodies, such regulatory bodies or third parties may initiate legal proceedings against us and our business may be adversely affected. As a public company in the United States, it is more expensive for us to obtain director and officer liability insurance, and we will be required to accept reduced coverage or incur substantially higher costs to continue our coverage. These factors could also make it more difficult for us to attract and retain qualified directors.

The U.S. Sarbanes-Oxley Act 2002, as amended (the “U.S. Sarbanes-Oxley Act”), requires that we maintain effective disclosure controls and procedures and internal control over financial reporting. Pursuant to Section 404 of the U.S. Sarbanes-Oxley Act (“Section 404”), we will be required to furnish a report by our management on our internal control over financial reporting (“ICFR”), which, if or when we are no longer an emerging growth company, must be accompanied by an attestation report on ICFR issued by our independent registered public accounting firm.

To achieve compliance with Section 404 within the prescribed period, we will document and evaluate our ICFR, which is both costly and challenging. In this regard, we will need to continue to dedicate internal resources, potentially engage outside consultants and adopt a detailed work plan to assess and document the adequacy of our ICFR, continue steps to improve control processes as appropriate, validate through testing that controls are functioning as documented and implement a continuous reporting and improvement process for ICFR. Despite our efforts, there is a risk that neither we nor our independent registered public accounting firm will be able to conclude within the prescribed timeframe that our ICFR is effective as required by Section 404. This could result in a determination that there are one or more material weaknesses in our ICFR, which could cause an adverse reaction in the financial markets due to a loss of confidence in the reliability of our consolidated financial statements. In addition, in the event that we are not able to demonstrate compliance with the Sarbanes-Oxley Act, that our internal control over financial reporting is perceived as inadequate, or that we are unable to produce timely or accurate financial statements, investors may lose confidence in our operating results and the price of our Common Shares may decline. In addition, if we are unable to continue to meet these requirements, we may not be able to remain listed on the NYSE.

Foreign Private Issuer

We are a “foreign private issuer” as such term is defined in Rule 405 under the U.S. Securities Act, and are permitted, under a multijurisdictional disclosure system adopted by the United States and Canada, to prepare our disclosure documents filed under the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”), in accordance with Canadian disclosure requirements. Under the Exchange Act, we are subject to reporting obligations that, in certain respects, are less detailed and less frequent than those of U.S. domestic reporting companies. As a result, we will not file the same reports that a U.S. domestic issuer would file with the SEC, although we will be required to file or furnish to the SEC the continuous disclosure documents that we are required to file in Canada under Canadian securities laws. In addition, our officers, directors, and principal shareholders are exempt from the reporting and “short swing” profit recovery provisions of Section 16 of the Exchange Act. Therefore, our shareholders may not know on as timely a basis when our officers, directors and principal shareholders purchase or sell shares, as the reporting deadlines under the corresponding Canadian insider reporting requirements are longer.

As a foreign private issuer, we are exempt from the rules and regulations under the Exchange Act related to the furnishing and content of proxy statements. We are also exempt from Regulation FD, which prohibits issuers from making selective disclosures of material non-public information. While we expect to comply with the corresponding requirements relating to proxy statements and disclosure of material non-public information under

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Canadian securities laws, these requirements differ from those under the Exchange Act and Regulation FD and shareholders should not expect to receive in every case the same information at the same time as such information is provided by U.S. domestic companies.

In addition, as a foreign private issuer, we have the option to follow certain Canadian corporate governance practices, except to the extent that such laws would be contrary to U.S. securities laws, and provided that we disclose the requirements we are not following and describe the Canadian practices we follow instead. For example, we do not intend to follow the minimum quorum requirements for shareholder meetings as well as certain shareholder approval requirements prior to the issuance of securities under NYSE listing standards, as permitted for foreign private issuers. As a result, our shareholders may not have the same protections afforded to shareholders of U.S. domestic companies that are subject to all U.S. corporate governance requirements.

Following the completion of the Offering, we may cease to qualify as a foreign private issuer. If we cease to qualify, we will be subject to the same reporting requirements and corporate governance requirements as a U.S. domestic issuer which may increase our costs of being a public company in the United States.

Emerging Growth Company

We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012. We will remain an emerging growth company until the earliest to occur of (i) the last day of the fiscal year in which we have total annual gross revenue of US$1.07 billion or more; (ii) December 31, 2026 (the last day of the fiscal year ending after the fifth anniversary of the effective date of the Registration Statement); (iii) the date on which we have issued more than US$1.0 billion in non-convertible debt securities during the prior three-year period; or (iv) the date we qualify as a “large accelerated filer” under the rules of the SEC, which means the market value of our Common Shares held by non-affiliates exceeds US$700 million as of the last business day of its most recently completed second fiscal quarter after we have been a reporting company in the United States for at least 12 months. For so long as we remain an emerging growth company, we are permitted to and intend to rely upon exemptions from certain disclosure requirements that are applicable to other public companies that are not emerging growth companies. These exemptions include not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act.

We may take advantage of some, but not all, of the exemptions available to emerging growth companies. We cannot predict whether investors will find our Common Shares less attractive if we rely on these exemptions. If some investors find our Common Shares less attractive as a result, there may be a less active trading market for our Common Shares and the price of our Common Shares may be more volatile.

Canadian Corporate and Securities Laws

The Company is governed by the OBCA and other relevant laws, which may affect the rights of shareholders differently than those of a company governed by the laws of a U.S. jurisdiction, and may, together with the Company’s constating documents, have the effect of delaying, deferring or discouraging another party from acquiring control of the Company by means of a tender offer, a proxy contest or otherwise, or may affect the price an acquiring party would be willing to offer in such an instance. The material differences between the OBCA and Delaware General Corporation Law (“DGCL”) that may have the greatest such effect include, but are not limited to, the following: (i) for material corporate transactions (such as mergers and amalgamations, other extraordinary corporate transactions or amendments to the Company’s articles) the OBCA generally requires a two-thirds majority vote by shareholders, whereas DGCL generally requires only a majority vote; and (ii) under the OBCA, holders of 5% or more of the Company’s shares that carry the right to vote at a meeting of shareholders can requisition a special meeting of shareholders, whereas such right does not exist under the DGCL.

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Enforcement of Judgments Against Foreign Persons

The Company is governed by the OBCA with its principal place of business in Canada, most of its directors and officers reside or are organized in Canada or the provinces thereof and a portion of the Company’s assets or the assets of these persons may be located outside the United States. Consequently, it may be difficult for investors who reside in the United States to effect service of process in the United States upon the Company or upon such persons who are not residents of the United States, or to realize upon judgments of courts of the United States predicated upon the civil liability provisions of the U.S. federal securities laws. A judgment of a U.S. court predicated solely upon such civil liabilities may be enforceable in Canada by a Canadian court if the U.S. court in which the judgment was obtained had jurisdiction, as determined by the Canadian court, in the matter. Investors should not assume that Canadian courts: (i) would enforce judgments of U.S. courts obtained in actions against the Company or such persons predicated upon the civil liability provisions of the U.S. federal securities laws or the securities or blue sky laws of any state within the United States, or (ii) would enforce, in original actions, liabilities against the Company or such persons predicated upon the U.S. federal securities laws or any such state securities or blue sky laws. Similarly, some of the Company’s directors and officers are residents of countries other than Canada and all or a substantial portion of the assets of such persons are located outside Canada. As a result, it may be difficult for Canadian investors to initiate a lawsuit within Canada against these persons. In addition, it may not be possible for Canadian investors to collect from these persons judgments obtained in courts in Canada predicated on the civil liability provisions of securities legislation of certain of the provinces and territories of Canada. It may also be difficult for Canadian investors to succeed in a lawsuit in the United States based solely on violations of Canadian securities laws.

Controlled Foreign Corporation

If a United States person is treated as owning (directly, indirectly, or constructively) at least 10% of the value or voting power of our Common Shares, such person may be treated as a “United States shareholder” with respect to each “controlled foreign corporation” in our group. Because our group includes one or more U.S. subsidiaries, we expect that, because of certain recent changes in U.S. federal tax constructive ownership rules, certain of our non-U.S. subsidiaries will be treated as controlled foreign corporations (regardless of whether or not we are treated as a controlled foreign corporation). A United States shareholder of a controlled foreign corporation may be required to report annually and include in its U.S. taxable income its pro rata share of “Subpart F income,” “global intangible low-taxed income,” and investments in U.S. property by controlled foreign corporations, regardless of whether we make any distributions. An individual that is a United States shareholder with respect to a controlled foreign corporation generally would not be allowed certain tax deductions or foreign tax credits that would be allowed to a United States shareholder that is a U.S. corporation. Failure to comply with these reporting obligations may subject a United States shareholder to significant monetary penalties and may toll the statute of limitations with respect to such shareholder’s U.S. federal income tax return for the year for which reporting was due. We cannot provide any assurances that we will assist investors in determining whether any of our non-U.S. subsidiaries is treated as a controlled foreign corporation or whether any investor is treated as a United States shareholder with respect to any such controlled foreign corporation or furnish to any United States shareholders information that may be necessary to comply with the aforementioned reporting and tax paying obligations. A United States investor should consult its advisors regarding the potential application of these rules to an investment in our Common Shares.

Passive Foreign Investment Company

Generally, if for any taxable year 75% or more of our gross income is passive income, or at least 50% of the average quarterly value of our assets are held for the production of, or produce, passive income, we would be characterized as a passive foreign investment company (“PFIC”) for U.S. federal income tax purposes. Based on the nature of our income and the value and composition of our assets, we do not believe we were a PFIC during the taxable year ended December 31, 2020 and do not believe we are currently a PFIC for U.S. federal income tax purposes. Because PFIC status is determined on an annual basis and generally cannot be determined until the end of the taxable year, there can be no assurance that we will not be a PFIC for the current or future taxable

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years. If we are characterized as a PFIC, our shareholders who are U.S. Holders (as defined below) may suffer adverse tax consequences, including the treatment of gains realized on the sale of our Common Shares as ordinary income, rather than as capital gain, the loss of the preferential rate applicable to dividends received on our Common Shares by individuals who are U.S. Holders, and the addition of interest charges to the tax on such gains and certain distributions. A U.S. shareholder of a PFIC generally may mitigate these adverse U.S. federal income tax consequences by making a Qualified Electing Fund (“QEF”) election, or, to a lesser extent, a mark-to-market election. However, we do not intend to provide the information necessary for U.S. Holders to make QEF elections if we are classified as a PFIC.

Changes in taxation rates or law

Changes in taxation rates or law, or misinterpretation of the law or any failure to manage tax risks adequately could result in increased charges, financial loss, including penalties and reputational damage, and which could have a material adverse effect on our prospects, business, financial condition and results of operations.

COVID-19

A local, regional, national or international outbreak of a contagious disease, including, but not limited to, the ongoing COVID-19 pandemic or any mutations or escalations thereof, could result in, or continue to result in, a general or acute decline in economic activity in the regions the Company operates in, a decrease in the willingness of the general population to travel, staff shortages, reduced tenant traffic, inability of tenants to pay rent, mobility restrictions and other quarantine measures, supply shortages, increased government regulation, and the quarantine or contamination of one or more of the Company’s properties. Contagion in one of the Company’s buildings or a market in which the Company operates could adversely affect the ability of tenants to meet their payment obligations to the Company or disrupt supply chains and transactional activities that are important to the Company’s operations and development activities, and consequently, could negatively impact the Company’s occupancy, its reputation or attractiveness of that market generally.

The length of the COVID-19 pandemic and severity of such outbreak across the globe is currently unknown, may worsen, may continue to cause general economic uncertainty in key global markets and a worsening of global economic conditions and may cause low levels of economic growth. The pace of recovery following the COVID-19 pandemic cannot be accurately predicted and may be slow.

All of the foregoing occurrences may have a material adverse effect on the business, financial condition and results of operations of the Company, and accordingly, the trading price of the Common Shares.

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USE OF PROCEEDS

The aggregate net proceeds to be received by us from the sale of the Offered Shares under the Offering and the sale of the Blackstone Shares under the Private Placement are approximately US$ after deducting the Underwriters’ Fee and other expenses relating to the Offering and Private Placement payable by us, which are estimated to be US$ . If the Over-Allotment Option is exercised in full, the estimated net proceeds of the Offering and the Private Placement, after deducting the Underwriters’ Fee payable to the Underwriters and the estimated expenses of the Offering and the Private Placement, are expected to be US$ .

Tricon expects that the net proceeds of the Offering and the Private Placement will be used to repay a portion of the total amount outstanding under the Company’s 2017-1 pass-through certificates in respect of the Company’s single-family rental securitization debt maturing in 2022 (with a current outstanding balance of approximately US$455 million, and as further described in the Annual Information Form), in addition to funding future property acquisitions and for general corporate purposes. However, management of the Company will have discretion with respect to the actual use of the net proceeds of the Offering and the Private Placement. In addition, the Company may, from time to time, issue securities (including equity securities) other than pursuant to this Prospectus Supplement. See “Risk Factors”.

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CONSOLIDATED CAPITALIZATION

Since June 30, 2021, being the date of the Interim Financial Statements, there have been no material changes in the capitalization of the Company, other than in respect of the Debenture Redemption and associated conversions.

The following table sets forth the consolidated capitalization of the Company as at June 30, 2021 and the as-adjusted consolidated capitalization of the Company as at June 30, 2021 after giving effect to the Offering (without giving effect to the exercise of the Over-Allotment Option), the Private Placement and the Debenture Redemption. The table should be read in conjunction with the Interim Financial Statements and notes thereto incorporated by reference in this Prospectus Supplement.


	June 30, 2021		June 30, 2021 (as-adjusted after giving effect to the Offering, the Private Placement and the Debenture Redemption) ⁽¹⁾⁽²⁾
	(US$000s – except Common Shares)		(US$000s – except Common Shares)
Indebtedness
Credit Facilities and Other Indebtedness	US$	3,273,072	US$
2022 Debentures	US$	167,513	US$
Due to Affiliate⁽³⁾	US$	253,954	US$

Total Indebtedness⁽⁴⁾	US$	3,694,539	US$	⁽⁵⁾

Equity	US$	2,003,244	US$
Common Shares		209,618,719		⁽⁶⁾
(Authorized – unlimited; Issued – 226,122,875)

Total Capitalization	US$	5,697,783	US$

Notes:

(1)	Assumes proceeds of the Offering of US$ (gross proceeds of US$ , net of Underwriters’ Fees of US$ ), proceeds of the Private Placement of US$ , and expenses of the Offering and Private Placement of approximately US$ , increased by estimated deferred tax recoveries of US$ .

(2)	Assumes Common Shares are issued in connection with the Offering (without exercise of the Over-Allotment Option) and Common Shares are issued in connection with the Private Placement.

(3)	Intercompany indebtedness owing to Tricon PIPE LLC, an affiliate of the Company, in connection with the issuance of exchangeable preferred units of Tricon PIPE LLC on September 3, 2020.

(4)	Excluding interest expense payable, representing the fair value of derivative financial instruments associated with the exchangeable preferred units of Tricon PIPE LLC.

(5)

Assumes entire US$455 million balance outstanding under the 2017-1 pass-through certificates in respect of the Company’s single-family rental securitization debt maturing in 2022 is repaid (including using net proceeds from the Offering and Private Placement, together with draws on other credit facilities and/or cash on hand in the case of any shortfall).

(6)	Includes the issuance of 140,835 Common Shares pursuant to the Company’s dividend reinvestment plan on July 15, 2021, and issuances of 6,648 Common Shares upon the exercise of deferred share units from July 1, 2021 to August 13, 2021.

After giving effect to the Offering and the Private Placement, Common Shares ( Common Shares if the Over-Allotment Option is exercised in full) will be issued from the treasury. See “Plan of Distribution”.

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DESCRIPTION OF SECURITIES

The Offered Shares shall be identical in their terms to all other Common Shares. The following is a summary of the rights, privileges, restrictions and conditions of or attaching to the Common Shares. For additional information respecting the Common Shares, see the Company’s articles, which are available electronically at www.sedar.com, and the Annual Information Form, which is incorporated by reference herein. The Company is authorized to issue an unlimited number of Common Shares pursuant to the articles. As at October 4, 2021, there were 226,122,875 Common Shares issued and outstanding.

Shareholders are entitled to receive notice of and to attend and vote at all meetings of Shareholders of the Company, except meetings of holders of another class of shares. Each Common Share entitles the holder thereof to one vote. No Common Share has any preference or priority over another Common Share.

Subject to the preferences accorded to holders of any other securities of the Company or a subsidiary ranking senior to the Common Shares from time to time with respect to the payment of dividends, holders of Common Shares are entitled to receive, if, as and when declared by the Board, such dividends as may be declared thereon by the Board from time to time in equal amounts per share on the Common Shares at the time outstanding, without preference or priority.

Since the first quarter of 2016, the Company has paid quarterly cash dividends of C$0.07 per Common Share. Tricon intends to change the denomination of its quarterly dividends declared and paid on Common Shares to U.S. dollars from Canadian dollars following the listing of the Common Shares on the NYSE. Subject to the approval of the Board, the change is anticipated to become effective upon the declaration of Tricon’s next quarterly dividend, which is projected to be paid on or around January 15, 2022 to shareholders of record as of December 31, 2021. Tricon will fix the amount of its U.S. dollar-denominated quarterly dividend prior to its declaration, with such amount anticipated to be the U.S. dollar equivalent of Tricon’s current quarterly C$0.07 dividend, converted at the time of declaration. Shareholders do not have a right to dividends on Common Shares unless declared by the Board. The declaration of dividends is at the discretion of the Board even if the Company has sufficient funds, net of its liabilities, to pay such dividends. The ability of the Company to pay cash dividends going forward, and the actual amount distributed, will be entirely dependent on the operations and assets of the Company and will be subject to various factors including financial performance, obligations under applicable credit facilities and restrictions on payment of dividends thereunder on the occurrence of an event of default, fluctuations in working capital, the sustainability of income derived from the residents of the Company’s properties and any capital expenditure requirements. See “Risk Factors”.

In the event of the voluntary or involuntary liquidation, dissolution or winding-up of the Company, or any other distribution of its assets among its shareholders for the purpose of winding-up its affairs, Shareholders are entitled, after payment of debts and other liabilities, in each case subject to the preferences accorded to the holders of any other securities of the Company or a subsidiary ranking senior to the Common Shares from time to time with respect to payment on such a distribution, to share equally, share for share, in the remaining property of the Company.

Common Shares will be issued and registered to CDS or its nominee, or DTC or its nominee, under the book-entry only system. Except in limited circumstances, no Shareholder will be entitled to a certificate evidencing that person’s interest in or ownership of a Common Share.

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PARTICIPATION RIGHT

Pursuant to the investor rights agreement dated September 3, 2020 entered into by and among the Company, Tricon PIPE LLC and Blackstone, so long as (a) Blackstone and its affiliates beneficially own or control at least 35% of the preferred units in Tricon PIPE LLC, which preferred units are exchangeable for Common Shares, originally purchased on September 3, 2020; or (b) Blackstone’s and its affiliates’ as-exchanged ownership in the Company is at least 5.0%, then Blackstone has the right to maintain its as-exchanged ownership interest in the Company immediately prior to the Offering (the “Participation Right”) in respect of certain equity financings of the Company, including the Offering, by subscribing for such equity securities on the same terms and conditions as the financing. No other person currently holds any participation rights or other pre-emptive rights to participate in the Offering.

Blackstone currently holds an approximate 11.87% effective interest in the Company (assuming all its preferred units of Tricon PIPE LLC are exchanged for Common Shares), and is accordingly an insider of the Company. Blackstone has notified the Company that it will exercise its Participation Right in respect of the Offering in full to maintain its as-exchanged ownership interest (prior to giving effect to the Over-Allotment Option). Concurrently with the completion of the Offering, Blackstone will, pursuant to the exercise of its Participation Right and under the Private Placement, purchase Common Shares at a price of US$ per Common Share (the Offering Price net of underwriting discounts) for gross proceeds of approximately US$44.67 million. Blackstone has entered into a securities subscription agreement with the Company governing the terms and conditions of the Private Placement. Morgan Stanley is acting as placement agent in connection with the Private Placement and may receive a placement agent fee with respect to the sale of Blackstone Shares pursuant to the Private Placement. This Prospectus Supplement does not qualify the distribution of any securities issued pursuant to the Private Placement. The sale of the Common Shares pursuant to the Private Placement will not be registered under the U.S. Securities Act. The closing of the Private Placement is subject to acceptance by the TSX. The closing of the Offering is not conditioned upon the closing of the Private Placement.

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PLAN OF DISTRIBUTION

General

Pursuant to the Underwriting Agreement, the Company has agreed to issue and sell and the Underwriters have agreed to purchase, as principals, severally and not jointly (within the meaning of such terms under the laws of the State of New York) on the Closing Date, or such earlier or later date as the Company and the Underwriters may agree, but in any event no later than , 2021, the number of Offered Shares set out opposite their respective names below, representing an aggregate of Offered Shares, at a price of US$ per Offered Share, for an aggregate gross consideration of US$ , payable in cash against delivery of the Offered Shares.

The Offering Price was determined by negotiation between the Company and the Underwriters, with reference to the then-current market price for the Common Shares.


Underwriter		Number of Offered Shares
Morgan Stanley & Co. LLC
RBC Dominion Securities Inc.
Citigroup Global Markets Inc.
Goldman Sachs & Co. LLC

Total

The Offered Shares are being offered in the United States by the U.S. Underwriters and in Canada by the Canadian Underwriters pursuant to the Underwriting Agreement. The Offering is being made concurrently in Canada under the terms of the Shelf Prospectus and this Prospectus Supplement and in the United States under the terms of the Registration Statement, of which the Shelf Prospectus and this Prospectus Supplement form part, through the Underwriters and/or affiliates thereof registered to offer the Offered Shares for sale in such jurisdictions in accordance with applicable securities laws and such other registered dealers as may be designated by the Underwriters. Subject to applicable law, the Underwriters, their affiliates, or such other registered dealers as may be designated by the Underwriters, may offer the Offered Shares outside of Canada and the United States.

The Underwriting Agreement provides that the Company will pay the Underwriters at the time of closing of the Offering a fee of US$ per Offered Share sold pursuant to the Offering, including any Additional Shares sold pursuant to the exercise of the Over-Allotment Option. The Company has agreed to reimburse the Underwriters for FINRA and other expenses in an amount not to exceed US$35,000. The Company has granted to the Underwriters an Over-Allotment Option, in whole or in part, from time to time until the date that is 30 days following the date of the Underwriting Agreement, to purchase Additional Shares from the Company on the same terms as set out above solely to cover the Underwriters’ over-allocation position, if any, and for market stabilization purposes. This Prospectus Supplement also qualifies the grant of the Over-Allotment Option and the distribution of up to Additional Shares, in aggregate, to be sold by the Company upon exercise of the Over-Allotment Option. A purchaser who acquires Common Shares forming part of the over-allocation position acquires those shares under this Prospectus Supplement regardless of whether the over allocation position is ultimately filled through the exercise of the Over-Allotment Option or secondary market purchases.

The obligations of the Underwriters under the Underwriting Agreement are several and not joint (within the meaning of such terms under the laws of the State of New York) and are subject to certain closing conditions. The Underwriters may terminate their obligations under the Underwriting Agreement by notice given by their representatives to the Company, if after the execution and delivery of the Underwriting Agreement and prior to the Closing Date (i) trading generally shall have been suspended or materially limited on, or by, as the case may be, any of the NYSE, Nasdaq or the TSX, (ii) trading of any securities of the Company shall have been suspended on the NYSE or TSX, (iii) a material disruption in securities settlement, payment or clearance services in the United States or Canada shall have occurred, (iv) any moratorium on commercial banking activities shall

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have been declared by U.S. Federal or New York State or Canadian authorities or (v) there shall have occurred any outbreak or escalation of hostilities, or any change in financial markets, currency exchange rates or controls or any calamity or crisis that, in the representatives’ judgment, is material and adverse and which, singly or together with any other event specified in this clause (v), makes it, in the representatives’ judgment, impracticable or inadvisable to proceed with the offer, sale or delivery of the Offered Shares on the terms and in the manner contemplated in this Prospectus Supplement. The Underwriters are, however, obligated to take up and pay for all of the Offered Shares if any Offered Shares are purchased under the Underwriting Agreement.

Subject to the terms of the Underwriting Agreement, the Company has also agreed to indemnify the Underwriters and their respective directors, officers, employees and agents against certain liabilities, including civil liabilities under Canadian and United States securities legislation, or to contribute to any payments the Underwriters may be required to make in respect thereof. The Underwriters, as principals, conditionally offer the Offered Shares qualified under this Prospectus Supplement and the Shelf Prospectus, subject to prior sale, when, as and if delivered to and accepted by them, subject to approval of legal matters by their counsel, including the validity of the Offered Shares, and other conditions contained in the Underwriting Agreement, such as the receipt by the Underwriters of officers’ certificates and legal opinions. The Underwriters reserve the right to withdraw, cancel or modify offers to the public and to reject orders in whole or in part.

Pursuant to the Underwriting Agreement, the Company has agreed that until the date that is 90 days following the date of the Underwriting Agreement (the “Restricted Period”), it will not, directly or indirectly, and will not publicly disclose any intention to, without the prior written consent of Morgan Stanley & Co. LLC and RBC Dominion Securities Inc., subject to certain exceptions: (i) issue, offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any Common Shares or any other securities convertible into or exercisable or exchangeable for Common Shares, (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the Common Shares, or, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Common Shares or such other securities, in cash or otherwise, (iii) file any registration statement with the SEC or prospectus with any Canadian securities regulatory authority relating to the offering of any Common Shares or any securities convertible into or exercisable or exchangeable for Common Shares. The exceptions include: (a) the Offered Shares (and any Additional Shares) to be sold in the Offering; (b) the issuance of incentive compensation or equity (including Common Shares underlying equity awards) in accordance with the terms and conditions of the benefit plans described in the Registration Statement, the Time of Sale Prospectus and the Prospectuses (each such term as defined in the Underwriting Agreement), as such benefit plans may be adopted, amended or restated, (c) any Common Shares issued pursuant to any non-employee director stock plan or dividend reinvestment plan referred to in the Registration Statement, the Time of Sale Prospectus and the Prospectuses, (d) the sale of any Common Shares pursuant to the Investor Rights Agreement, (e) the issuance of Common Shares upon exchange of preferred units of Tricon PIPE LLC, (f) the filing of one or more registration statements on Form S-8 relating to stock options, other equity awards, or employee benefit plans of the Company described in the Registration Statement, the Time of Sale Prospectus and the Prospectuses, including plans to be adopted during the Restricted Period, provided that any awards issued pursuant to such plans adopted during the Restricted Period shall not vest during the Restricted Period; (g) the issuance of up to 10% of the outstanding Common Shares, or securities convertible into, exercisable for or which are otherwise exchangeable for Common Shares, immediately following the Closing Date as consideration for the acquisition of real property or assets from an arm’s length vendor; provided that in the case of any such issuance in connection with such transactions prior to the expiration of the Restricted Period, the issuee shall sign and deliver a lock-up letter substantially in the form of Exhibit A to the Underwriting Agreement; or (h) the establishment of a trading plan pursuant to Rule 10b5-1 under the Exchange Act or similar plan under Canadian securities laws for the transfer of Common Shares, provided that (i) such plan does not provide for the transfer of Common Shares, during the Restricted Period and (ii) to the extent a public announcement or filing under the Exchange Act, if any, is required of or voluntarily made by or on behalf of the Company regarding the establishment of such plan, such announcement

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or filing shall include a statement to the effect that no transfer of Common Shares may be made under such plan during the Restricted Period.

In addition, the directors, officers and certain shareholders of the Company have executed “lockup” letters pursuant to which, until the date that is 90 days following the date of the final prospectus supplement relating to the Offering, they have agreed that they will not, and will not publicly disclose the intention to, without the consent of Morgan Stanley & Co. LLC and RBC Dominion Securities Inc., subject to certain exceptions: (i) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer (which, for the avoidance of doubt, shall not include transfers from any account directly or beneficially owned by the locked-up party to any other account directly or beneficially owned by the locked-up party) or dispose of, directly or indirectly, any Common Shares beneficially owned (as such term is used in Rule 13d-3 of the Exchange Act) by them or any other securities convertible into or exercisable or exchangeable for Common Shares, or (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the Common Shares. The exceptions include: (a) the Offered Shares and Additional Shares sold pursuant to the Underwriting Agreement; (b) transactions relating to Common Shares or other securities acquired in open market transactions after the completion of the Offering, subject to certain exceptions; (c) transfers of Common Shares or any security convertible into Common Shares as a bona fide gift or gifts or for bona fide estate planning purposes, including charitable contributions; (d) distributions of Common Shares or any security convertible into Common Shares to general or limited partners, members or stockholders or other equity holders of the signatory; (e) transfers of Common Shares or any security convertible into Common Shares to certain affiliates of the signatory, subject to certain exceptions, (f) a bona fide third-party tender offer, take-over bid, plan of arrangement, merger, consolidation or other similar transaction made to all holders of Common Shares involving a change of control of the Company, provided that certain conditions are met; (g) the establishment of a trading plan pursuant to Rule 10b5-1 under the Exchange Act or similar plan under Canadian securities laws for the transfer of Common Shares, provided that certain conditions are met and (h) receipt of securities on a “net” basis solely made in connection with exercises of outstanding stock options or warrants or vesting and/or redemptions of restricted shares units or other equity awards of the Company, if issued, provided that certain conditions are met. See “Risk Factors – Dilution and – Discretion in Use of Proceeds.”

The outstanding Common Shares are listed and posted for trading on the TSX under the symbol “TCN”. On October 4, 2021, the last trading day before the filing of this Prospectus Supplement, the closing price per share of the Common Shares on the TSX was C$16.74 or US$13.30 (based on the daily exchange rate for the U.S. dollar in terms of Canadian dollars, as quoted by the Bank of Canada, of US$1.0000 = C$1.2583). The Company has applied to list the Offered Shares, the Additional Shares and the Blackstone Shares on the TSX and has applied to list the Offered Shares, the Additional Shares, the Blackstone Shares and the outstanding Common Shares on the NYSE under the trading symbol “TCN”. Listing is subject to the Company fulfilling all of the listing requirements of the TSX and NYSE, respectively.

The Underwriters propose to offer the Offered Shares initially at the Offering Price. After the Underwriters have made reasonable efforts to sell the Offered Shares at the Offering Price, the Underwriters may offer the Offered Shares to the public at prices lower than the Offering Price, and the compensation realized by the Underwriters pursuant to the Offering will effectively be decreased by the amount that the price paid by purchasers for the Offered Shares is less than the original Offering Price. Any such reduction will not affect the net proceeds of the Offering received by the Company.

Pursuant to the rules and policy statements of certain Canadian securities regulatory authorities, the Underwriters may not, throughout the period of distribution under this Prospectus Supplement, bid for or purchase Common Shares. The foregoing restriction is subject to certain exceptions. These exceptions include a bid or purchase permitted under the by-laws and rules of applicable Canadian regulatory authorities and the TSX including the Universal Market Integrity Rules for Canadian Marketplaces administered by the Investment Industry Regulatory Organization of Canada relating to market stabilization and market-balancing activities and a bid or purchase made on behalf of a client where the client’s order was not solicited during the period of distribution.

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Subject to applicable laws, the Underwriters may, in connection with the Offering, over-allot or effect transactions that stabilize or maintain the market price of the Common Shares at levels other than those which might otherwise prevail on the open market, including: stabilizing transactions; short sales; purchases to cover positions created by short sales; imposition of penalty bids; and syndicate covering transactions. Such transactions, if commenced, may be discontinued at any time.

Stabilizing transactions consist of bids or purchases made for the purpose of preventing or delaying a decline in the market price of the Common Shares while the Offering is in progress. Short sales involve the sale by the Underwriters of a greater number of Common Shares than they are required to purchase in the Offering. Short sales may be “covered short sales”, which are short positions in an amount not greater than the Over-Allotment Option, or may be “naked short sales”, which are short positions in excess of that amount.

The Underwriters may close out any covered short position either by exercising the Over-Allotment Option, in whole or in part, or by purchasing Common Shares in the open market. In making this determination, the Underwriters will consider, among other things, the price of the Common Shares available for purchase in the open market compared with the price at which they may purchase Common Shares through the Over-Allotment Option. If, following the closing of the Offering, the market price of the Common Shares decreases, the short position created by the over-allocation position in the Common Shares may be filled through purchases in the open market, creating upward pressure on the price of the Common Shares. If, following the closing of the Offering, the market price of Common Shares increases, the over-allocation position in the Common Shares may be filled through the exercise of the Over-Allotment Option.

The Underwriters must close out any naked short position by purchasing Common Shares in the open market. A naked short position is more likely to be created if the Underwriters are concerned that there may be downward pressure on the price of the Common Shares in the open market that could adversely affect investors who purchase in the Offering. Any naked short position would form part of the Underwriters’ over-allocation position. A purchaser who acquires Common Shares forming part of the Underwriters’ over-allocation position resulting from any covered short sales or naked short sales will acquire such Common Shares under this Prospectus Supplement, regardless of whether the over-allocation position is ultimately filled through the exercise of the Over-Allotment Option or secondary market purchases.

Subscriptions will be received subject to rejection or allotment in whole or in part and the Underwriters reserve the right to close the subscription books at any time without notice. It is expected that the Company will arrange for the instant deposit of the Offered Shares by the Underwriters under the book-based system of registration, to be registered to DTC and deposited with DTC on the Closing Date, or as otherwise may be agreed to among the Company and the Underwriters. In the case of certain Canadian purchasers, the Company may alternatively arrange for the electronic deposit of the Offered Shares distributed under the Offering under the book-based system of registration, to be registered in the name of CDS or its nominee and deposited with CDS on the Closing Date. No certificates evidencing the Offered Shares will be issued to purchasers of the Offered Shares. Purchasers of the Offered Shares will receive only a customer confirmation from the Underwriter or other registered dealer from or through whom a beneficial interest in the Offered Shares is purchased.

Relationship Between the Company and Certain Underwriters

The Underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include sales and trading, commercial and investment banking, advisory, investment management, investment research, principal investment, hedging, market making, brokerage and other financial and non-financial activities and services. Certain of the Underwriters and their respective affiliates have provided, and may in the future provide, a variety of these services to the issuer and to persons and entities with relationships with the issuer, for which they received or will receive customary fees and expenses.

Specifically, bank affiliates of Morgan Stanley and RBC (such bank affiliates, collectively, the “Banks”) are lenders to the Company under a sixth amended and restated credit agreement dated June 30, 2021, as amended

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from time to time, among the Company, the Banks and certain other financial institutions, pursuant to which the Banks and other financial institutions have made available to the Company US$500 million in revolving credit facilities, in addition to an aggregate of US$ made available by certain of the Banks pursuant to various project-level loan agreements (collectively, the “Credit Facilities”). Consequently, the Company may be considered a connected issuer of each of the Banks under applicable Canadian securities laws. As at the date of this Prospectus, US$ has been drawn under the Credit Facilities and the Company is in compliance with all material terms of the agreements governing the Credit Facilities. Since the execution of the agreements governing the Credit Facilities, the lenders have not waived a breach thereunder. The financial position of the Company has not changed in any material adverse manner since the Credit Facilities were entered into. Indebtedness under the Credit Facilities is secured by certain assets of the Company and guarantees provided by certain subsidiaries of the Company.

The decision to distribute the Common Shares offered hereunder and the determination of the terms of the distribution were made through negotiations between the Company and the Underwriters. The Banks did not have any involvement in such decision or determination but have been advised of the issuance and terms thereof. As a consequence of this issuance, each of Morgan Stanley and RBC will receive its respective share of the Underwriters’ Fee referred to under “Plan of Distribution”.

In the ordinary course of their various business activities, the Underwriters and their respective affiliates, officers, directors and employees may purchase, sell or hold a broad array of investments and actively trade securities, derivatives, loans, commodities, currencies, credit default swaps and other financial instruments for their own account and for the accounts of their customers, and such investment and trading activities may involve or relate to assets, securities and/or instruments of the Company (directly, as collateral securing other obligations or otherwise) and/or persons and entities with relationships with the Company. The Underwriters and their respective affiliates may also communicate independent investment recommendations, market color or trading ideas and/or publish or express independent research views in respect of such assets, securities or instruments and may at any time hold, or recommend to clients that they should acquire, long and/or short positions in such assets, securities and instruments.

Selling Restrictions

European Economic Area and United Kingdom

In relation to each Member State of the EEA and the United Kingdom (each a “Relevant State”), no Common Shares have been offered or will be offered pursuant to the Offering to the public in that Relevant State prior to the publication of a prospectus in relation to the Common Shares which has been approved by the competent authority in that Relevant State or, where appropriate, approved in another Relevant State and notified to the competent authority in that Relevant State, all in accordance with the Prospectus Regulation, except that offers of Common Shares may be made to the public in that Relevant State at any time under the following exemptions under the Prospectus Regulation:

(a)

to any legal entity which is a qualified investor as defined under the Prospectus Regulation;

(b)

to fewer than 150 natural or legal persons (other than qualified investors as defined under the Prospectus Regulation), subject to obtaining the prior consent of the Underwriters for any such offer; or

(c)

in any other circumstances falling within Article 1(4) of the Prospectus Regulation;

provided that no such offer of Common Shares shall require the Company or any Underwriter to publish a prospectus pursuant to Article 3 of the Prospectus Regulation or supplement a prospectus pursuant to Article 23 of the Prospectus Regulation.

For the purposes of this provision, the expression an “offer to the public” in relation to any Common Shares in any Relevant State means the communication in any form and by any means of sufficient information on the

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terms of the offer and the Common Shares to be offered so as to enable an investor to decide to purchase or subscribe for any Common Shares, and the expression “Prospectus Regulation” means Regulation (EU) 2017/1129 (including, in the United Kingdom, as it forms part of domestic law, whether by virtue of the European Union (Withdrawal) Act 2018 or as otherwise implemented).

In the United Kingdom, this Prospectus Supplement is being distributed only to, and is directed only at, and any offer subsequently made may only be directed at persons who are “qualified investors” (as defined in the Prospectus Regulation) (i) who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended, the “FPO”) and/or (ii) who are high net worth companies (or persons to whom it may otherwise be lawfully communicated) falling within Article 49(2)(a) to (d) of the FPO (all such persons together being referred to as “relevant persons”). Any person in the United Kingdom that is not a relevant person should not act or rely on the information included in this Prospectus Supplement or use it as the basis for taking any action, In the United Kingdom, any investment or investment activity that this Prospectus Supplement relates to may be made or taken exclusively by relevant persons. Any person in the United Kingdom that is not a relevant person should not act or rely on this Prospectus Supplement or any of its contents.

Each Underwriter has represented and agreed that: (a) it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000 (as amended, the “FSMA”)) received by it in connection with the issue or sale of the Common Shares in circumstances in which Section 21(1) of the FSMA does not apply to the Company; and (b) it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the Common Shares in, from or otherwise involving the United Kingdom.

Notice to Prospective Investors in Switzerland

This Prospectus Supplement is not intended to constitute an offer or solicitation to purchase or invest in the Common Shares. The Common Shares may not be publicly offered, directly or indirectly, in Switzerland within the meaning of the Swiss Financial Services Act (“FinSA”), and no application has or will be made to admit the Common Shares to trading on any trading venue (exchange or multilateral trading facility) in Switzerland. Neither this Prospectus Supplement nor any other offering or marketing material relating to the Common Shares constitutes a prospectus pursuant to the FinSA, and neither this Prospectus Supplement nor any other offering or marketing material relating to the Common Shares may be publicly distributed or otherwise made publicly available in Switzerland.

Notice to Prospective Investors in the Dubai International Financial Centre

This Prospectus Supplement relates to an Exempt Offer in accordance with the Offered Securities Rules of the Dubai Financial Services Authority (“DFSA”). This Prospectus Supplement is intended for distribution only to persons of a type specified in the Offered Securities Rules of the DFSA. It must not be delivered to, or relied on by, any other person. The DFSA has no responsibility for reviewing or verifying any documents in connection with Exempt Offers. The DFSA has not approved this Prospectus Supplement nor taken steps to verify the information set forth herein and has no responsibility for the Prospectus. The Common Shares to which this Prospectus Supplement relates may be illiquid and/or subject to restrictions on their resale. Prospective purchasers of the Common Shares offered should conduct their own due diligence on the Common Shares. If you do not understand the contents of this Prospectus Supplement you should consult an authorized financial advisor.

Hong Kong

The Common Shares have not been offered or sold and will not be offered or sold in Hong Kong, by means of any document, other than (a) to “professional investors” as defined in the Securities and Futures Ordinance (Cap.

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571) of Hong Kong and any rules made under that Ordinance; or (b) in other circumstances which do not result in the document being a “prospectus” as defined in the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) of Hong Kong or which do not constitute an offer to the public within the meaning of that Ordinance. No advertisement, invitation, or document relating to the Common Shares has been or may be issued or has been or may be in the possession of any person for the purposes of issuance, whether in Hong Kong or elsewhere, which is directed at, or the contents of which are likely to be accessed or read by, the public of Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to the Common Shares which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” as defined in the Securities and Futures Ordinance and any rules made under that Ordinance.

Japan

No registration pursuant to Article 4, paragraph 1 of the Financial Instruments and Exchange Law of Japan (Law No. 25 of 1948, as amended) (FIEL) has been made or will be made with respect to the solicitation of the application for the acquisition of the Common Shares. Accordingly, the Common Shares have not been, directly or indirectly, offered or sold and will not be, directly or indirectly, offered or sold in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan), or to others for re-offering or re-sale, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan except pursuant to an exemption from the registration requirements, and otherwise in compliance with, the FIEL and the other applicable laws and regulations of Japan. For Qualified Institutional Investors (QII) please note that the solicitation for newly-issued or secondary securities (each as described in Paragraph 2, Article 4 of the FIEL) in relation to the Common Shares constitutes either a “QII only private placement” or a “QII only secondary distribution”(each as described in Paragraph 1, Article 23-13 of the FIEL). Disclosure regarding any such solicitation, as is otherwise prescribed in Paragraph 1, Article 4 of the FIEL, has not been made in relation to the Common Shares. The Common Shares may be transferred only to QIIs. For Non-QII Investors please note that the solicitation for newly-issued or secondary securities (each as described in Paragraph 2, Article 4 of the FIEL) in relation to the Common Shares constitutes either a “small number private placement” or a “small number private secondary distribution”(each as is described in Paragraph 4, Article 23-13 of the FIEL). Disclosure regarding any such solicitation, as is otherwise prescribed in Paragraph 1, Article 4 of the FIEL, has not been made in relation to the Common Shares. The Common Shares may be transferred only en bloc without subdivision to a single investor.

Singapore

This Prospectus Supplement and the accompanying Shelf Prospectus have not been registered as a prospectus with the Monetary Authority of Singapore under the Securities and Futures Act, Chapter 289 of Singapore (the “SFA”). Accordingly, this Prospectus Supplement and the accompanying Shelf Prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the Common Shares may not be circulated or distributed, nor may the Common Shares be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the SFA, (ii) to a relevant person, or any person pursuant to Section 275(1A) of the SFA, and in accordance with the conditions, specified in Section 275 of the SFA, or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.

Where the Common Shares are subscribed or purchased under Section 275 of the SFA by a relevant person which is: (a) a corporation (which is not an accredited investor) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or (b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary is an accredited investor, shares, debentures and units of shares and debentures of that corporation or the beneficiaries’ rights and interest in that trust shall not be transferable for six months after that

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corporation or that trust has acquired the Common Shares under Section 275 of the SFA except: (1) to an institutional investor under Section 274 of the SFA or to a relevant person, or any person pursuant to Section 275(1A) of the SFA, and in accordance with the conditions, specified in Section 275 of the SFA; (2) where no consideration is given for the transfer; (3) by operation of law; (4) pursuant to Section 276(7) of the SFA; or (5) as specified in Regulation 32 of the Securities and Futures (Offer of Investments) (Shares and Debentures) Regulations 2005 of Singapore.

Notification under Section 309B(1)(c) of the SFA

The Company has determined that the Common Shares are (A) prescribed capital markets products (as defined in the Securities and Futures (Capital Markets Products) Regulations 2018) and (B) Excluded Investment Products (as defined in MAS Notice SFA 04-N12: Notice on the Sale of Investment Products and MAS Notice FAA-N16: Notice on Recommendations on Investment Products).

Solely for the purposes of its obligations pursuant to Section 309B of the SFA, the Company has determined, and hereby notifies all relevant persons (as defined in the CMP Regulations 2018), that the Common Shares are “prescribed capital markets products”(as defined in the CMP Regulations 2018) and Excluded Investment Products (as defined in MAS Notice SFA 04-N12: Notice on the Sale of Investment Products and MAS Notice FAA-N16: Notice on Recommendations on Investment Products).

Australia

No “prospectus” or other “disclosure document”, as each of those terms are defined in the Corporations Act 2001 of Australia (the “Australian Corporations Act”), in relation to the Common Shares has been, or will be, lodged with the Australian Securities and Investments Commission. Each Underwriter has represented and agreed that it: (a) has not made (directly or indirectly) or invited, and will not make (directly or indirectly) or invite, an offer of the Common Shares for issue or sale in Australia (including an offer or invitation which is received by a person in Australia); and (b) has not distributed or published, and will not distribute or publish, this Prospectus Supplement, the accompanying Shelf Prospectus or any other offering material or advertisement relating to the Common Shares in Australia, unless: (i) the aggregate consideration payable for such Common Shares on acceptance of the offer is at least A $500,000 (or its equivalent in any other currency, in either case calculated in accordance with both section 708(9) of the Australian Corporations Act and regulation 7.1.18 of the Corporations Regulations 2001 of Australia) or the offer or invitation does not otherwise require disclosure to investors under Parts 6D.2 or 7.9 of the Australian Corporations Act; (ii) the offer or invitation constitutes an offer to either a “wholesale client” or “sophisticated investor” for the purposes of Chapter 7 of the Australian Corporations Act; (iii) such action complies with any applicable laws, regulations and directives (including without limitation, the licensing requirements set out in Chapter 7 of the Australian Corporations Act) in Australia; and (iv) such action does not require any document to be lodged with Australian Securities and Investments Commission or any other regulatory authority in Australia.

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CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS

In the opinion of Goodmans LLP, counsel to the Company, and Blake, Cassels & Graydon LLP, counsel to the Underwriters, the following is, as of the date of this Prospectus Supplement, a general summary of the principal Canadian federal income tax considerations pursuant to the Income Tax Act (Canada) and the regulations thereunder (the “Tax Act”) generally applicable to a holder (i) who acquires Common Shares pursuant to this Offering as beneficial owner and (ii) who, for purposes of the Tax Act and at all relevant times, holds the Common Shares as capital property, deals at arm’s length with the Company and each of the Underwriters and is not affiliated with the Company or any of the Underwriters (a “Holder”). Generally, Common Shares will be considered to be capital property to a holder provided the holder does not hold or acquire, and is not deemed to hold or acquire, the Common Shares in the course of carrying on a business of trading or dealing in securities and has not acquired them in one or more transactions considered to be an adventure or concern in the nature of trade.

This summary is not applicable to a holder (i) that is a “financial institution” (as defined in the Tax Act for the purposes of the mark-to-market rules), (ii) an interest in which would be a “tax shelter investment” (as defined in the Tax Act), (iii) that is a “specified financial institution” (as defined in the Tax Act), (iv) that makes or has made a functional currency reporting election pursuant to section 261 of the Tax Act, or (v) that has entered or will enter into a “derivative forward agreement”, a “synthetic disposition arrangement” or a “dividend rental arrangement” (each as defined in the Tax Act) with respect to the Common Shares. In addition, this summary does not address the deductibility of interest by a holder who has borrowed money to acquire Common Shares pursuant to the Offering. Any such holder should consult its own tax advisor with respect to an investment in the Common Shares.

This summary does not address the possible application of the “foreign affiliate dumping” rules in section 212.3 of the Tax Act to a holder that (i) is a corporation resident in Canada and (ii) is (or does not deal at arm’s length for the purposes of the Tax Act with a corporation resident in Canada that is), or becomes as part of a transaction or event or series of transactions or events that includes the acquisition of Common Shares, controlled by a non-resident person or, if no single non-resident person has control, by a group of non-resident persons that do not deal with each other at arm’s length, for the purposes of such rules. Any such holder should consult its own tax advisors with respect to the possible application of these rules.

This summary is based upon the provisions of the Tax Act in force as of the date hereof, all specific proposals to amend the Tax Act that have been publicly announced by or on behalf of the Minister of Finance (Canada) prior to the date hereof (the “Proposed Amendments”) and counsel’s understanding of the current administrative policies and assessing practices of the Canada Revenue Agency (the “CRA”) published in writing prior to the date hereof. This summary assumes the Proposed Amendments will be enacted in the form proposed; however, no assurance can be given that the Proposed Amendments will be enacted in the form proposed, if at all. This summary is not exhaustive of all possible Canadian federal income tax considerations and, except for the Proposed Amendments, does not take into account any changes in the law or in the administrative policies or assessing practices of the CRA, whether by legislative, governmental or judicial action, nor does it take into account any other federal or any provincial, territorial or foreign tax considerations, which may differ significantly from those discussed herein.

Generally, for the purposes of the Tax Act, all amounts relating to the acquisition, holding or disposition of a Common Share must be expressed in Canadian dollars. Amounts denominated in another currency must be converted into Canadian dollars using the applicable rate of exchange (for the purposes of the Tax Act) quoted by the Bank of Canada on the date such amounts arose, or such other rate of exchange as is acceptable to the CRA.

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This summary is of a general nature only and is not intended to be, nor should it be construed to be, legal or tax advice to any particular holder or prospective holder of Common Shares, and no representations with respect to the income tax consequences to any holder or prospective holder are made. Consequently, holders and prospective holders of Common Shares should consult their own tax advisors for advice with respect to the tax consequences to them of acquiring Common Shares pursuant to this Offering, having regard to their particular circumstances.

Canadian Holders

This part of the summary is applicable to a Holder who, for purposes of the Tax Act and any applicable income tax convention and at all relevant times, is or is deemed to be resident in Canada (a “Canadian Holder”). Certain Canadian Holders who might not otherwise be considered to hold their Common Shares as capital property may, in certain circumstances, be entitled to have the Common Shares, and all other “Canadian securities” (as defined in the Tax Act) owned by such Holders in the year of the election or any subsequent year, treated as capital property by making the irrevocable election permitted by subsection 39(4) of the Tax Act. Such Holders should consult their own tax advisors for advice with respect to whether an election under subsection 39(4) of the Tax Act is available or advisable having regard to their particular circumstances.

Dividends on Common Shares

Dividends received or deemed to be received on Common Shares held by a Canadian Holder will be included in computing the Canadian Holder’s income for purposes of the Tax Act.

In the case of a Canadian Holder who is an individual (including certain trusts), such dividends will be subject to the gross-up and dividend tax credit rules in the Tax Act normally applicable to dividends received from “taxable Canadian corporations”, including the enhanced gross-up and dividend tax credit in respect of dividends designated by the Company as “eligible dividends”. A dividend will be eligible for the enhanced gross-up and dividend tax credit if the recipient receives written notice (which may include a notice published on the Company’s website) from the Company designating the dividend as an eligible dividend.

Taxable dividends received or deemed to be received by a Canadian Holder who is an individual (including certain trusts) may result in such Canadian Holder being liable for alternative minimum tax under the Tax Act. Canadian Holders who are individuals should consult their own tax advisors in this regard.

In the case of a Canadian Holder that is a corporation, dividends received or deemed to be received on Common Shares held by the Canadian Holder will generally be deductible in computing its taxable income, with the result that no tax will be payable by it in respect of such dividends. In certain circumstances, subsection 55(2) of the Tax Act will treat a taxable dividend received by a Canadian Holder that is a corporation as proceeds of a disposition or a capital gain. A Canadian Holder that is a “private corporation” or “subject corporation” (as such terms are defined in the Tax Act) may be liable under Part IV of the Tax Act to pay a refundable tax on dividends received or deemed to be received on the Common Shares to the extent such dividends are deductible in computing the Canadian Holder’s taxable income. Canadian Holders that are corporations should consult their own tax advisors having regard to their own circumstances.

Disposition of Common Shares

A disposition or a deemed disposition of a Common Share by a Canadian Holder (other than to the Company, unless purchased by the Company in the open market in the manner in which shares are normally purchased by any member of the public in the open market) generally will result in the Canadian Holder realizing a capital gain (or capital loss) equal to the amount, if any, by which the proceeds of disposition of the Common Share, net of any reasonable costs of disposition, exceed (or are less than) the adjusted cost base to the Canadian Holder immediately before the disposition or deemed disposition. Such capital gain (or capital loss) will be subject to the tax treatment described below under “Taxation of Capital Gains and Capital Losses”.

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The adjusted cost base to a Canadian Holder of Common Shares acquired pursuant to this Offering will be determined at any particular time by averaging the cost of such Common Shares with the adjusted cost base of all other Common Shares (if any) held by the Canadian Holder as capital property immediately before that time. The Canadian Holder’s cost for the purposes of the Tax Act of Common Shares generally will include all amounts paid or payable by the Canadian Holder for the Common Shares, subject to certain adjustments under the Tax Act.

Taxation of Capital Gains and Capital Losses

Generally, one-half of any capital gain (a “taxable capital gain”) realized by a Canadian Holder in a taxation year must be included in the Canadian Holder’s income for the year. One-half of any capital loss (an “allowable capital loss”) realized by a Canadian Holder in a taxation year must generally be deducted from taxable capital gains realized by the Canadian Holder in the year of disposition. Allowable capital losses in excess of taxable capital gains realized in a taxation year may be carried back and deducted in any of the three preceding taxation years or carried forward and deducted in any subsequent taxation year (against net taxable capital gains realized in such years), to the extent and under the circumstances described in the Tax Act.

The amount of any capital loss realized by a Canadian Holder that is a corporation on the disposition of a Common Share may be reduced by the amount of dividends received or deemed to be received by it on such Common Share (or on a share for which the Common Share has been substituted) to the extent and under the circumstances described by the Tax Act. Similar rules may apply where a corporation is a member of a partnership or a beneficiary of a trust that owns Common Shares directly or indirectly through a partnership or a trust. Such Canadian Holders should consult their own tax advisors.

A Canadian Holder that is, throughout the relevant taxation year, a “Canadian-controlled private corporation” (as defined in the Tax Act) may be liable to pay a refundable tax on its “aggregate investment income”, which is defined in the Tax Act to include taxable capital gains.

Capital gains realized by a Canadian Holder who is an individual (including certain trusts) may give rise to alternative minimum taxes calculated under the detailed rules set out in the Tax Act. Canadian Holders who are individuals should consult their own tax advisors in this regard.

Non-Resident Holders

This part of the summary is generally applicable to a Holder who, at all relevant times, for purposes of the Tax Act and any applicable income tax convention (i) is not, and is not deemed to be, resident in Canada, and (ii) does not use or hold the Common Shares in a business carried on in Canada (a “Non-Resident Holder”). This part of the summary is not applicable to a Non-Resident Holder that is an insurer carrying on an insurance business in Canada and elsewhere or an “authorized foreign bank” (as defined in the Tax Act). Any such holder should consult its own tax advisor with respect to an investment in the Common Shares.

Dividends on Common Shares

Any dividends paid or credited, or deemed to be paid or credited, on the Common Shares to a Non-Resident Holder will be subject to Canadian withholding tax at the rate of 25% of the gross amount of the dividend (subject to reduction under an applicable income tax convention between Canada and the Non-Resident Holder’s country of residence). For instance, where the Non-Resident Holder is a resident of the United States that is entitled to full benefits under the Canada-United States Income Tax Convention (1980), as amended, and is the beneficial owner of the dividends, the rate of Canadian withholding tax applicable to dividends is generally reduced to 15%.

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Disposition of Common Shares

A Non-Resident Holder will not be subject to tax under the Tax Act in respect of any capital gain realized by such Non-Resident Holder on a disposition of a Common Share, unless the Common Share constitutes taxable Canadian property of the Non-Resident Holder at the time of disposition and the Non-Resident Holder is not entitled to relief under an applicable tax convention between Canada and the Non-Resident Holder’s country of residence.

Provided the Common Shares are listed on a designated stock exchange (which currently includes the TSX and the NYSE) at the time of disposition of a Common Share, the Common Share will generally not constitute taxable Canadian property of a Non-Resident Holder at that time, unless at any time during the 60-month period immediately preceding the disposition of the Common Share: (a) one or any combination of (i) the Non-Resident Holder, (ii) persons with whom the Non-Resident Holder does not deal at arm’s length and (iii) partnerships in which the Non-Resident Holder or a person described in (ii) holds a membership interest directly or indirectly through one or more partnerships, has owned 25% or more of the issued shares of any class or series of the Company, and (b) more than 50% of the fair market value of the Common Shares was derived directly or indirectly from one or any combination of: (i) real or immovable property situated in Canada; (ii) “Canadian resource properties”, as defined in the Tax Act; (iii) “timber resource properties”, as defined in the Tax Act; and (iv) options in respect of, or interests in or for civil law rights in, property described in any of the foregoing whether or not the property exists. A Non-Resident Holder contemplating a disposition of Common Shares that may constitute taxable Canadian property should consult its own tax advisors.

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CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS

The following discussion describes the material U.S. federal income tax consequences relating to the acquisition, ownership and disposition of Common Shares by U.S. Holders (as defined herein). This discussion applies to U.S. Holders that purchase Common Shares pursuant to this Offering and hold such Common Shares as capital assets (generally, assets held for investment purposes). This discussion is based on the Internal Revenue Code of 1986, as amended (the “IRC”), U.S. Treasury regulations promulgated thereunder and administrative and judicial interpretations thereof, all as in effect on the date hereof and all of which are subject to change, possibly with retroactive effect. This discussion does not address all of the U.S. federal income tax consequences that may be relevant to specific U.S. Holders in light of their particular circumstances or to U.S. Holders subject to special treatment under U.S. federal income tax law (such as certain financial institutions, thrifts, insurance companies, broker-dealers and traders in securities or other persons that generally mark their securities to market for U.S. federal income tax purposes, tax-exempt entities, governmental organizations, retirement plans, regulated investment companies, real estate investment trusts, certain former citizens or residents of the United States, U.S. Holders who hold Common Shares as part of a “straddle,” “hedge,” “conversion transaction,” “synthetic security” or integrated investment, U.S. Holders whose “functional currency” (as defined in the IRC) is not the U.S. dollar, U.S. Holders that own directly, indirectly or through attribution 10% or more of the voting power or value of our shares, corporations that accumulate earnings to avoid U.S. federal income tax, partnerships and other pass-through entities (or arrangements treated as a partnership for U.S. federal income tax purposes), and investors in such pass-through entities. This discussion does not address any U.S. state or local or non-U.S. tax consequences or any U.S. federal estate, gift or alternative minimum tax consequences or the requirements of Section 451 of the IRC with respect to conforming the timing of income accruals to financial statements. We have not requested, and will not request, a ruling from the Internal Revenue Service (the “IRS”) with respect to any of the U.S. federal income tax consequences described below, and as a result there can be no assurance that the IRS will not disagree with or challenge any of the conclusions described herein.

As used in this discussion, the term “U.S. Holder” means a beneficial owner of Common Shares that is, (1) an individual who is a citizen or resident alien of the United States for U.S. federal income tax purposes, (2) a corporation (or entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state thereof, or the District of Columbia, (3) an estate the income of which is subject to U.S. federal income tax regardless of its source or (4) a trust (x) with respect to which a court within the United States is able to exercise primary supervision over its administration and one or more U.S. persons have the authority to control all of its substantial decisions or (y) that has elected under applicable U.S. Treasury regulations to be treated as a domestic trust for U.S. federal income tax purposes. If a partnership or pass-through entity for U.S. federal income tax purposes is the beneficial owner of Common Shares, the U.S. federal income tax consequences relating to an investment in the Common Shares will depend in part upon the status and activities of such entity and the particular partner. A U.S. Holder that is a partner (or other owner) of a pass-through entity that acquires Common Shares is urged to consult its own tax advisors regarding the U.S. federal income tax consequences applicable to it and its partners of the purchase, ownership and disposition of Common Shares.

Persons considering an investment in Common Shares are urged to consult their own tax advisors as to the particular tax consequences applicable to them relating to the purchase, ownership and disposition of Common Shares, including the applicability of U.S. federal, state and local tax laws and non-U.S. tax laws.

Passive Foreign Investment Company Consequences

If the Company were to constitute a PFIC for any year during a U.S. Holder’s holding period or the immediately preceding year, then certain potentially adverse rules would affect the U.S. federal income tax consequences to a U.S. Holder resulting from the purchase, ownership and disposition of the Common Shares. In general, a non-U.S. corporation will be treated as a PFIC, for any taxable year in which either (1) at least 75% of its gross income is “passive income” under the PFIC rules or (2) on average at least 50% of the value of its assets, determined on a quarterly basis, are assets that produce passive income or are held for the production of passive

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income. Passive income for this purpose generally includes, among other things, dividends, interest, royalties, rents (other than rents generated in the active conduct of a trade or business), and gains from the sale or exchange of property that gives rise to passive income. Assets that produce or are held for the production of passive income generally include cash, even if held as working capital or raised in a public offering, marketable securities, and other assets that may produce passive income. Generally, in determining whether a non-U.S. corporation is a PFIC, a proportionate share of the income and assets of each corporation or partnership in which it owns, directly or indirectly, at least a 25% interest (by value) is taken into account.

We do not believe we were a PFIC for the year ended December 31, 2020, and do not expect to be treated as a PFIC for the current taxable year for U.S. federal income tax purposes. However, because PFIC status is determined on an annual basis and generally cannot be determined until the end of the taxable year, there can be no assurance that we will not be a PFIC for the current taxable year. Even if we determine that we are not a PFIC for a taxable year, there can be no assurance that the IRS will agree with our conclusion and that the IRS would not successfully challenge our position. Our status as a PFIC is a fact-intensive determination made on an annual basis.

If we are classified as a PFIC in any taxable year during which a U.S. Holder owns Common Shares, such U.S. Holder would be liable for additional taxes and interest charges under the “PFIC excess distribution regime” upon (1) a distribution paid during a taxable year that is greater than 125% of the average annual distributions paid in the three preceding taxable years, or, if shorter, the U.S. Holder’s holding period for the Common Shares, and (2) any gain recognized on a sale, exchange or other disposition, including a pledge, of the Common Shares, whether or not we continue to be a PFIC. Under the PFIC excess distribution regime, the tax on such distribution or gain would be determined by allocating the distribution or gain ratably over the U.S. Holder’s holding period for Common Shares. The amount allocated to the current taxable year (i.e., the year in which the distribution occurs or the gain is recognized) and any year prior to the first taxable year in which we are a PFIC will be taxed as ordinary income earned in the current taxable year. The amount allocated to other taxable years will be taxed at the highest marginal rates in effect for individuals or corporations, as applicable, to ordinary income for each such taxable year, and an interest charge, generally applicable to underpayments of tax, will be added to the tax.

If we are a PFIC for any year during which a U.S. Holder holds Common Shares, we must generally continue to be treated as a PFIC by that holder for all succeeding years during which the U.S. Holder holds the Common Shares, unless we cease to meet the requirements for PFIC status and the U.S. Holder makes a “deemed sale” election with respect to the Common Shares. If the election is made, the U.S. Holder will be deemed to sell the Common Shares it holds at their fair market value on the last day of the last taxable year in which we qualified as a PFIC, and any gain recognized from such deemed sale would be taxed under the PFIC excess distribution regime. After the deemed sale election, the U.S. Holder’s Common Shares would not be treated as shares of a PFIC unless we subsequently become a PFIC.

If we are a PFIC for any taxable year during which a U.S. Holder holds Common Shares and one of our non- U.S. corporate subsidiaries is also a PFIC (i.e., a lower-tier PFIC), such U.S. Holder would be treated as owning a proportionate amount (by value) of the shares of the lower-tier PFIC and would be taxed under the PFIC excess distribution regime on distributions by the lower-tier PFIC and on gain from the disposition of shares of the lower-tier PFIC even though such U.S. Holder would not receive the proceeds of those distributions or dispositions. Each U.S. Holder is urged to consult its own tax advisors regarding the application of the PFIC rules to our non-U.S. subsidiaries.

If we are a PFIC, a U.S. Holder will not be subject to tax under the PFIC excess distribution regime on distributions or gain recognized on Common Shares if such U.S. Holder makes a valid “mark-to-market” election for our Common Shares. A mark-to-market election is available to a U.S. Holder only for “marketable stock.” Our Common Shares will be marketable stock as long as they remain listed on the NYSE and are regularly traded, other than in de minimis quantities, on at least 15 days during each calendar quarter. If a mark-to-market election is in effect, a U.S. Holder generally would take into account, as ordinary income each year, the excess of the fair market value of Common Shares held at the end of such taxable year over the adjusted tax basis of such

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Common Shares. The U.S. Holder would also take into account, as an ordinary loss each year, the excess of the adjusted tax basis of such Common Shares over their fair market value at the end of the taxable year, but only to the extent of the excess of amounts previously included in income over ordinary losses deducted as a result of the mark-to-market election. The U.S. Holder’s tax basis in Common Shares would be adjusted to reflect any income or loss recognized as a result of the mark-to-market election. Any gain from a sale, exchange or other disposition of Common Shares in any taxable year in which we are a PFIC would be treated as ordinary income and any loss from such sale, exchange or other disposition would be treated first as an ordinary loss (to the extent of any net mark-to-market gains previously included in income) and thereafter as a capital loss.

A mark-to-market election will not apply to Common Shares for any taxable year during which we are not a PFIC, but will remain in effect with respect to any subsequent taxable year in which we become a PFIC. Such election will not apply to any non-U.S. subsidiaries that we may organize or acquire in the future. Accordingly, a U.S. Holder may continue to be subject to tax under the PFIC excess distribution regime with respect to any lower-tier PFICs that we may organize or acquire in the future notwithstanding the U.S. Holder’s mark-to-market election for the Common Shares.

The tax consequences that would apply if we are a PFIC would also be different from those described above if a U.S. Holder were able to make a valid QEF election. At this time we do not expect to provide U.S. Holders with the information necessary for a U.S. Holder to make a QEF election, and therefore prospective investors should assume that a QEF election will not be available.

As discussed below under “Distributions,” notwithstanding any election made with respect to the Common Shares, if we are a PFIC in either the taxable year of the distribution or the preceding taxable year, dividends received with respect to the Common Shares will not qualify for reduced rates of taxation.

Each U.S. person that is an investor in a PFIC is generally required to file an annual information return on IRS Form 8621 containing such information as the U.S. Treasury Department may require. The failure to file IRS Form 8621 could result in the imposition of penalties and the extension of the statute of limitations with respect to U.S. federal income tax.

The U.S. federal income tax rules relating to PFICs are very complex. Prospective U.S. investors are strongly urged to consult their own tax advisors with respect to the impact of PFIC status on the purchase, ownership and disposition of Common Shares, the consequences to them of an investment in a PFIC, any elections available with respect to the Common Shares and the IRS information reporting obligations with respect to the purchase, ownership and disposition of Common Shares of a PFIC.

Distributions

Subject to the discussion above under “Passive Foreign Investment Company Consequences,” a U.S. Holder that receives a distribution with respect to Common Shares generally will be required to include the gross amount of such distribution (including amounts withheld to pay Canadian withholding taxes) in gross income as a dividend when actually or constructively received to the extent paid out of our current and/or accumulated earnings and profits, as determined under U.S. federal income tax principles. To the extent that a distribution exceeds our current and accumulated earnings and profits, it will be treated first as a tax-free return of capital and reduce (but not below zero) the adjusted tax basis of the U.S. Holder’s Common Shares. To the extent the distribution exceeds the adjusted tax basis of the U.S. Holder’s Common Shares, the remainder will be taxed as capital gain recognized on a sale, exchange or other taxable disposition (as discussed below). Because we may not account for our earnings and profits in accordance with U.S. federal income tax principles, U.S. Holders should expect all distributions to be reported to them as dividends. Distributions on Common Shares that are treated as dividends generally will constitute income from sources outside the United States for foreign tax credit purposes and generally will constitute passive category income. Such dividends will not be eligible for the “dividends received” deduction generally allowed to corporate shareholders with respect to dividends received from U.S. corporations.

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Dividends paid by a “qualified foreign corporation” are eligible for taxation in the case of non-corporate U.S. Holders at a reduced long-term capital gains rate rather than the marginal tax rates generally applicable to ordinary income provided that certain requirements are met.

A non-U.S. corporation (other than a corporation that is classified as a PFIC for the taxable year in which the dividend is paid or the preceding taxable year) generally will be considered to be a qualified foreign corporation (a) if it is eligible for the benefits of a comprehensive tax treaty with the United States which the Secretary of Treasury of the United States determines is satisfactory for purposes of this provision and which includes an exchange of information provision, or (b) with respect to any dividend it pays on Common Shares that are readily tradable on an established securities market in the United States. We believe that we qualify as a resident of Canada for purposes of, and are eligible for the benefits of, the U.S.-Canada Treaty, which the IRS has determined is satisfactory for purposes of the qualified dividend rules and that it includes an exchange of information provision, although there can be no assurance in this regard as of this filing or prospectively. Further, our Common Shares will generally be considered to be readily tradable on an established securities market in the United States if they are listed on the NYSE, as we intend the Common Shares to be. Therefore, subject to the discussion above under “Passive Foreign Investment Company Consequences”, if the U.S.-Canada Treaty is applicable, or if the Common Shares are readily tradable on an established securities market in the United States, dividends paid on Common Shares will more likely be treated as “qualified dividend income” in the hands of non-corporate U.S. Holders, provided that certain conditions are met, including conditions relating to holding period and the absence of certain risk reduction transactions. Each non-corporate U.S. Holder is advised to consult its tax advisors regarding the availability of the reduced tax rate on dividends with regard to its particular circumstances.

Sale, Exchange or Other Taxable Disposition of Common Shares

Subject to the discussion above under “Passive Foreign Investment Company Consequences,” a U.S. Holder generally will recognize capital gain or loss for U.S. federal income tax purposes upon the sale, exchange or other taxable disposition of Common Shares in an amount equal to the difference, if any, between the amount realized (i.e., the amount of cash plus the fair market value of any property received) on the sale, exchange or other disposition and such U.S. Holder’s adjusted tax basis in the Common Shares. If any foreign tax is imposed on the sale, exchange or other disposition of the Common Shares, a U.S. Holder’s amount realized will include the gross amount of the proceeds of the disposition before deduction of the tax. A U.S. Holder’s initial tax basis in the Common Shares generally will equal the cost of such Common Shares. Such capital gain or loss generally will be long-term capital gain taxable at a reduced rate for non-corporate U.S. Holders or long-term capital loss if, on the date of sale, exchange or other disposition, the Common Shares were held by the U.S. Holder for more than one year. Any capital gain of a non-corporate U.S. Holder that is not long term capital gain is taxed at ordinary income rates. For both corporate and non-corporate U.S. Holders, the deductibility of capital losses is subject to limitations. Any gain or loss recognized by a U.S. Holder from the sale or other disposition of Common Shares will generally be gain or loss from sources within the United States for U.S. foreign tax credit purposes.

Receipt of Foreign Currency

The gross amount of any payment in a currency other than U.S. dollars will be included by each U.S. Holder in income in a U.S. dollar amount calculated by reference to the exchange rate in effect on the day such U.S. Holder actually or constructively receives the payment in accordance with its regular method of accounting for U.S. federal income tax purposes regardless of whether the payment is in fact converted into U.S. dollars at that time. If the foreign currency is converted into U.S. dollars on the date of the payment, the U.S. Holder should not be required to recognize any foreign currency gain or loss with respect to the receipt of foreign currency. If, instead, the foreign currency is converted at a later date, any currency gains or losses resulting from the conversion of the foreign currency will be treated as U.S. source ordinary income or loss for U.S. foreign tax credit purposes. U.S. Holders are urged to consult their own U.S. tax advisors regarding the U.S. federal income tax consequences of receiving, owning, and disposing of foreign currency.

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Foreign Tax Credit

Subject to the discussion above under “Passive Foreign Investment Company Consequences”, a U.S. Holder that pays (whether directly or through withholding) Canadian income tax with respect to dividends paid on the Common Shares generally will be entitled, at the election of such U.S. Holder, to receive either a deduction or a credit for such Canadian income tax. Generally, a credit will reduce a U.S. Holder’s U.S. federal income tax liability on a dollar-for-dollar basis, whereas a deduction will reduce a U.S. Holder’s income that is subject to U.S. federal income tax. This election is made on a year-by-year basis and applies to all foreign taxes paid (whether directly or through withholding) by a U.S. Holder during a year. The foreign tax credit rules are complex and involve the application of rules that depend on a U.S. Holder’s particular circumstances. Accordingly, U.S. Holders are urged to consult their own tax advisors regarding the foreign tax credit rules.

Additional Tax on Net Investment Income

U.S. Holders that are individuals, estates or trusts are required to pay an additional 3.8% tax on the lesser of (1) the U.S. Holder’s “net investment income” for the relevant taxable year and (2) the excess of the U.S. Holder’s modified adjusted gross income for the taxable year over a certain threshold. A U.S. Holder’s “net investment income” generally includes, among other things, dividends and net gains from disposition of property (other than property held in the ordinary course of the conduct of a trade or business).

Accordingly, dividends on and capital gain from the sale, exchange or other taxable disposition of Common Shares may be subject to this additional tax. U.S. Holders are urged to consult their own tax advisors regarding the additional tax on passive income.

Information Reporting and Backup Withholding

In general, dividends paid to a U.S. Holder in respect of Common Shares and the proceeds received by a U.S. Holder from the sale, exchange or other disposition of Common Shares within the United States or through certain U.S.- related financial intermediaries will be subject to U.S. information reporting rules, unless a U.S. Holder is a corporation or other exempt recipient and properly establishes such exemption. Backup withholding may apply to such payments if a U.S. Holder does not establish, in the manner provided by law, an exemption from backup withholding, or fails to provide a correct taxpayer identification number or make any other required certifications.

Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules will be allowed as a refund or credit against U.S. federal income tax liability, provided that the required information is timely furnished to the IRS.

In addition, U.S. Holders should be aware of reporting requirements with respect to the holding of certain foreign financial assets, including stock of foreign issuers which is not held in an account maintained by certain financial institutions, if the aggregate value of all of such assets exceeds US$50,000. U.S. Holders must attach a complete IRS Form 8938, Statement of Specified Foreign Financial Assets, with their return for each year in which they hold our Common Shares. U.S. Holders should also be aware that if we are considered a PFIC, they would generally be required to file IRS Form 8621, Information Return by a Shareholder of a Passive Foreign Investments Company or Qualified Electing Fund, during any taxable year in which such U.S. Holder recognizes gain or receives an excess distribution or with respect to which the U.S. Holder has made certain elections. U.S. Holders are urged to consult their own tax advisors regarding the application of the information reporting rules to the Common Shares and their particular situations.

EACH PROSPECTIVE INVESTOR IS URGED TO CONSULT ITS OWN TAX ADVISORS ABOUT THE TAX CONSEQUENCES TO IT OF AN INVESTMENT IN COMMON SHARES IN LIGHT OF THE INVESTOR’S OWN CIRCUMSTANCES.

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PRIOR SALES

The following table sets forth the details regarding all issuances of Common Shares and securities that are convertible or exchangeable into Common Shares during the 12-month period preceding the date of this Prospectus Supplement.


Date of Issuance	Security Issued	Reason for Issuance	Number of Securities Issued	Price
October 1, 2020 – July 31, 2021	Common Shares	Common Shares issued under dividend reinvestment plan (DRIP)	619,223	C$11.24 – C$14.40
October 1, 2020 – March 26, 2021	Common Shares	Common Shares issued pursuant to exercise of stock options	156,966	C$11.01 – C$12.98
October 1, 2020 – August 13, 2021	Common Shares	Common Shares issued pursuant to redemption of deferred share units (DSUs)	333,789	C$10.97 – C$15.35
June 8, 2021	Common Shares	Public offering of Common Shares pursuant to a short form prospectus dated June 2, 2021	15,224,226	C$13.00
June 8, 2021	Common Shares	Private Placement	256,499⁽¹⁾	C$13.00
June 24, 2021 – September 8, 2021	Common Shares	Conversion of Debentures	16,190,525	C$12.88 – C$13.45
September 9, 2021	Common Shares	Redemption of Debentures	259,455	C$14.88

Note:

(1)	Issued to Blackstone in connection with the exercise of the over-allotment option and pursuant to Blackstone’s Participation Right in respect of the Company’s public offering of Common Shares pursuant to a short form prospectus dated June 2, 2021.

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TRADING PRICE AND VOLUME

The Common Shares are listed for trading on the TSX under the symbol “TCN”. The following table shows the monthly range of high and low prices per Common Share and total monthly volumes traded on the TSX for the 12-month period prior to the date of this Prospectus Supplement, based on historical TSX data obtained from TMX Datalinx.


Month	High (C$)		Low (C$)		Volume
October 2020		11.80		10.73		8,202,860
November 2020		11.61		10.70		9,767,086
December 2020		11.89		10.85		8,323,176
January 2021		13.12		11.00		9,249,211
February 2021		13.00		12.07		7,158,862
March 2021		13.21		11.79		12,241,889
April 2021		13.46		12.56		6,055,358
May 2021		13.73		12.63		10,775,591
June 2021		14.60		12.91		26,393,434
July 2021		15.21		14.20		10,035,176
August 2021		16.25		14.66		11,873,694
September 2021		17.02		15.71		17,759,524
October 4, 2021		17.00		16.52		789,433

LEGAL MATTERS

Certain legal matters relating to the Offering will be passed upon on our behalf by Goodmans LLP with respect to Canadian legal matters and Paul, Weiss, Rifkind, Wharton & Garrison LLP with respect to U.S. legal matters, and on behalf of the Underwriters by Blake, Cassels & Graydon LLP with respect to Canadian legal matters and Skadden, Arps, Slate, Meagher & Flom LLP with respect to U.S. legal matters. As at the date of this Prospectus Supplement, the partners and associates of each of Goodmans LLP and Blake, Cassels & Graydon LLP beneficially own, directly and indirectly, less than one percent of our outstanding securities or other property, or that of our affiliates.

INTERESTS OF EXPERTS

PricewaterhouseCoopers LLP has advised that they are independent of the Company within the meaning of the Rules of Professional Conduct of the Chartered Professional Accountants of Ontario, and are independent with respect to the Company within the meaning of the U.S. Securities Act and the applicable rules and regulations thereunder adopted by the SEC and the Public Company Accounting Oversight Board (United States).

REGISTRAR AND TRANSFER AGENT

The transfer agent and registrar of the Company in Canada is TSX Trust Company at its principal office in Toronto, Ontario and in the United States is Continental Stock Trust and Trust Company at its principal office in New York, New York.

ENFORCEMENT OF CIVIL LIABILITIES

Certain of our operations and assets are located outside the United States, and certain of our officers, directors and shareholders, reside outside of the United States.

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The Company has appointed an agent for service of process in the United States. It may be difficult for investors who reside in the United States to effect service of process in the United States upon the Company, or to enforce a U.S. court judgment predicated upon the civil liability provisions of the U.S. federal securities laws against the Company or its directors and officers. There is substantial doubt whether an action could be brought in Canada in the first instance predicated solely upon U.S. federal securities laws.

The Company filed with the SEC, concurrently with the Registration Statement of which this Prospectus Supplement forms a part, an appointment of agent for service of process on Form F-X. Under Form F-X, the Company appointed Corporation Service Company at 19 West 44th Street, Suite 200, New York, NY 10036 as its agent for service of process in the United States in connection with any investigation or administrative proceeding conducted by the SEC and any civil suit or action brought against or involving Tricon in a United States court arising out of or related to or concerning the offering of securities under this Prospectus Supplement.

Certain of our operations and assets are also located outside of Canada, and certain of our officers, directors and shareholders, reside outside of Canada. See “Enforcement of Judgments Against Foreign Persons”.

DOCUMENTS FILED AS PART OF THE REGISTRATION STATEMENT

The following documents have been filed or furnished with the SEC as part of the Registration Statement of which this Prospectus Supplement forms a part: (i) the documents listed under the heading “Documents Incorporated by Reference”; (ii) powers of attorney from Tricon’s directors and officers, as applicable; (iii) the consent of PricewaterhouseCoopers LLP; (iv) the consent of Goodmans LLP; (v) the consent of Blake, Cassels & Graydon LLP; and (vi) the Underwriting Agreement.

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APPENDIX A

FFO and Core FFO Reconciliation

Historical Proportionate Income Statement


In USD (‘000), except per share amounts which are in USD	Q2/21			Q1/21			2020			Q4/20			Q3/20			Q2/20			Q1/20
Revenue from single-family rental properties		81,056			77,161			296,940			75,254			75,446			73,861			72,379
Direct operating expenses		(26,999	)		(25,534	)		(99,412	)		(24,778	)		(25,254	)		(24,669	)		(24,711	)
Net operating income from single-family rental properties		54,057			51,627			197,528			50,476			50,192			49,192			47,668
Revenue from private funds and advisory services		13,113			8,930			34,090			10,339			7,814			8,122			7,815
Asset management fees eliminated upon consolidation		272			—			—			—			—			—			—
Income (loss) from equity-accounted investments in multi-family rental		14,272			(457	)		746			427			102			162			55
Income (loss) from equity-accounted investments in Canadian residential developments		27			(3	)		13,378			8,293			(5	)		(7	)		5,097
Income (loss) from investments in US. residential developments		8,251			6,659			(61,776	)		10,191			4,457			3,155			(79,579	)
Compensation expense		(20,253	)		(17,750	)		(53,150	)		(18,303	)		(11,062	)		(13,377	)		(10,408	)
General and administration expense		(7,659	)		(6,896	)		(28,839	)		(7,225	)		(6,792	)		(6,512	)		(8,310	)
Interest expense		(30,320	)		(30,007	)		(117,136	)		(30,803	)		(28,921	)		(27,626	)		(29,786	)
Fair value gain on rental properties		211,570			92,184			190,461			94,791			47,968			29,358			18,344
Fair value (loss) gain on derivative financial instruments and other liabilities		(41,437	)		(37,172	)		(7,461	)		(16,418	)		11,551			(450	)		(2,144	)
Other expenses		(8,451	)		(2,557	)		(17,425	)		(854	)		(6,357	)		(4,024	)		(6,190	)
Current income tax (expense) recovery		(16	)		44,473			4,045			7,082			(3,261	)		286			(62	)
Deferred income tax (expense) recovery		(47,104	)		(67,127	)		(41,830	)		(32,188	)		(12,489	)		(8,114	)		10,961
Non-controlling interest		(805	)		(571	)		(3,091	)		(1,800	)		(490	)		(294	)		(507	)
Net income (loss) from continuing operations attributable to Tricon’s shareholders		145,517			41,333			109,546			74,008			52,707			29,871			(47,040	)

A-1


In USD (‘000), except per share amounts which are in USD	Q2/21			Q1/21			2020			Q4/20			Q3/20			Q2/20			Q1/20
Fair value gain on rental properties		(211,570	)		(92,184	)		(190,461	)		(94,791	)		(47,968	)		(29,358	)		(18,344	)
Fair value loss (gain) on derivative financial instruments and other liabilities		41,437			37,172			7,461			16,418			(11,551	)		450			2,144
Loss from investments in U.S. residential developments		—			—			79,579			—			—			—			79,579
FFO attributable to Tricon’s Shareholders		(24,616	)		(13,679	)		6,125			(4,365	)		(6,812	)		963			16,339
Core FFO from U.S. and Canadian multi-family rental		1,919			7,530			27,977			7,199			6,478			7,057			7,243
(Income) loss from equity-accounted investments in multi-family rental		(14,272	)		457			(746	)		(427	)		(102	)		(162	)		(55	)
(Income) loss from equity-accounted investments in Canadian residential developments		(27	)		3			(13,378	)		(8,293	)		5			7			(5,097	)
Deferred tax expense (recovery)		47,104			67,127			41,824			32,188			12,489			8,114			(10,967	)
Current tax impact on sale of U.S. multi-family rental portfolio		—			(44,502	)		—			—			—			—			—
Interest incurred on convertible debentures		2,477			2,451			9,927			2,506			2,492			2,464			2,465
Interest on Due to Affiliate		4,312			4,313			5,654			4,312			1,342			—			—
Amortization of deferred financing costs, discounts and lease obligations		3,665			3,180			8,359			3,021			2,096			1,648			1,594
Non-cash and non-recurring compensation		3,180			815			5,086			702			941			793			2,650
Other adjustments		11,984			4,827			22,389			4,587			7,166			3,315			7,321
Core FFO Attributable to Tricon’s shareholders		35,726			32,522			113,217			41,430			26,095			24,199			21,493
Recurring capital expenditures		(7,500	)		(6,705	)		(27,875	)		(7,445	)		(7,904	)		(5,883	)		(6,643	)
AFFO attributable to Tricon’s shareholders		28,226			25,817			85,342			33,985		$	18,191		$	18,316			14,850
Core FFO per share	$	0.14		$	0.13		$	0.50		$	0.17		$	0.12		$	0.11		$	0.10
Weighted average shares outstanding – diluted		252,511,687			248,103,423			224,015,498			248,247,018			222,822,876			211,677,963			212,934,511

A-2

FFO and Core FFO Reconciliation (Continued)

Reconciliation of Net Income to Core FFO and AFFO


In USD (‘000), except per share amounts which are in USD	2019
Net income attributable to Tricon’s shareholders		107,762
Fair value gain on rental properties		(116,548	)
Loss from investments in for-sale housing		—
Fair value loss (gain) on derivative financial instruments other liabilities		(2,357	)
Other adjustments ⁽¹⁾		5,585
FFO attributable to Tricon’s shareholders		(5,558	)
Other income		—
Transaction costs		36,415
Deferred tax expense		11,934
Amortization and depreciation expense		10,543
Foreign exchange (gain) loss		(42	)
Interest incurred in convertible debentures		9,902
Interest on Due to Affiliate		—
Amortization of dereffed financing costs, discounts and lease obligations		7,081
Gain on sale of U.S. multi-family developments		(9,718	)
Non-cash compensation		3,979
Non-recurring compensation		1,184
Other adjustments ⁽²⁾		(9,072	)
Limited partner’s share of Core FFO adjustments ⁽³⁾		(1,637	)
Core FFO attributable to Tricon’s shareholders		55,011
Recurring capital expenditures		(26,623	)
AFFO attributable to Tricon’s shareholders		28,388
Core FFO per share	$	0.29
Weighted average shares outstanding – diluted		191,081,128

Notes:

(1)	Relates to limited partner’s share of FFO adjustments for fair value gains/(losses).

(2)

Comprised of amortization, unrealized foreign exchange and deferred taxes within income from equity-accounted investments and investments held at FVTPL, non-controlling interest’s 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.

(3)	Comprised of limited partner’s share of transaction costs and amortization of deferred financing fees.

A-3

Leverage and EBITDAre Reconciliation

In USD (‘000)

Pro-rata Net Debt Reconciliation


	Q1/20			2020			Q2/21			Q2/21 PF⁽¹⁾
Pro-rata net debt of consolidated entities
Single-family rental properties borrowing		2,269,105			2,412,210			2,272,148			2,272,148
Rental properties under development borrowing (The James and Shops of Summerhill)		12,730			12,023			11,760			11,760
Corporate borrowing		335,648			37,089			25,236			25,236
Less: cash and restricted cash		(101,433	)		(127,646	)		(135,030	)		(535,030	)
Total pro-rata net debt of consolidated entities		2,516,050			2,333,676			2,174,114			1,774,114
Pro-rata debt of unconsolidated entities
U.S. Multi-family rental		914,840			910,340			160,090			160,090
Canadian Multi-family rental		17,645			18,901			19,295			19,295
Total pro-rata debt of unconsolidated entities		932,485			929,241			179,385			179,385
Total pro-rata net debt		3,448,535			3,262,918			2,353,499			1,953,499
Net Debt to Adj. EBITDAre Reconciliation
Adj. EBITDAre at share
Core FFO (per FFO statement)⁽²⁾		21,493			113,217			35,726			35,726
Add back: interest expense		25,727			93,196			19,866			19,866
Add: interest expense in Canadian multi-family rental at share		—			469			133			133
Add: interest expense in U.S. multi-family rental at share		9,054			33,467			1,374			1,374
Add back: current income tax (expense) recovery		62			(4,045	)		16			16
Total Adj. EBITDAre at share		56,336			236,304			57,115			57,115
Net debt to Adj. EBITDAre (annualized pro-rata)		15.3x			12.8x			10.3x			8.6x

Pro-rata Assets Reconciliation


	Q1/20			2020			Q2/21			Q2/21 PF ⁽¹⁾
Pro-rata assets of consolidated entities
Rental properties		4,991,776			5,272,461			4,513,858			4,513,858
Rental properties under development borrowing
(The James and Shops of Summerhill)		33,030			110,018			117,885			117,885
Investments in US Residential developments		171,398			164,842			154,370			154,370
Restricted cash		68,334			95,627			77,473			77,473
Goodwill, intangibles and other		168,182			170,032			122,484			122,484
Deferred income tax assets		101,486			102,444			70,984			70,984
Other working capital		35,774			38,714			38,124			38,124
Total pro-rata assets of consolidated entities		5,569,980			5,954,138			5,095,178			5,095,178
Pro-rata assets of unconsolidated entities
U.S. Multi-family rental		—			—			285,245			285,245
Canadian Multi-family rental		37,378			39,758			39,980			39,980
Canadian Multi-family Development		98,246			154,741			222,426			222,426
Total pro-rata assets of unconsolidated entities		135,624			194,499			547,651			547,651
Total pro-rata assets (net of cash)		5,705,604			6,148,637			5,642,829			5,642,829
Net debt to Assets		60	%		53	%		42	%		35	%

Notes:

(1)	Q2/21 PF column represents pro forma metrics assuming the Offering and the Private Placement.

(2)	Refer to Core FFO reconciliation above; 2020 Core FFO reflects summation of Q1/20 to Q4/20.

A-4

Proportionate Same Home SFR NOI Reconciliation

In USD (‘000)

Same Home SFR NOI Reconciliation


	Q2/21			Q2/20
Rental Revenue		70,004			66,665
Concessions and abatements		(406	)		(133	)
Fees and other revenue		2,774			2,079
Bad debt expense ⁽¹⁾		(1,241	)		(1,106	)
Total revenue from rental properties		71,131			67,505
Property taxes		11,045			10,537
Repairs and maintenance		4,064			3,425
Turnover		909			1,437
Property management expenses		4,669			4,419
Property insurance		1,082			998
Marketing and leasing		151			249
Homeowners’ association (HOA) costs		931			826
Other direct expense		936			758
Total direct operating expenses		23,787			22,649
Net operating income (NOI) ⁽²⁾		47,344			44,856
Net operating income (NOI) margin ⁽²⁾		66.6	%		66.4	%

	Q2/21			Q2/20
Total revenue from rental properties		71,177			67,505
Total direct operating expenses		23,582			22,649
Net operating income (NOI), excluding storm impact		47,595			44,856
Net operating income (NOI) margin, excluding storm impact		66.9	%		66.4	%

Notes:

(1)	The Company has reserved 100% of residents’ accounts receivable balances aged more than 30 days. The bad debt expense during the quarter represented 1.7% of revenue, compared to historical bad debt levels (pre-COVID-19) of approximately 0.8%.

(2)	NOI and NOI margin include the impact of a severe winter storm in Texas in Q1/21.

A-5

Proportionate Same Property Multi-Family Rental NOI Reconciliation

In USD (‘000)

Same Property Multi-Family Rental NOI Reconciliation


	Q2/21			Q2/20⁽¹⁾
Rental Revenue		5,192			5,041
Concessions and abatements		(25	)		(71	)
Fees and other revenue		830			688
Bad debt expense ⁽²⁾		(120	)		(100	)
Total revenue from rental properties		5,877			5,558
Property taxes		985			971
Repairs, maintenance and turnover		237			201
Property management expenses ⁽³⁾		482			470
Utilities and other direct costs ⁽⁴⁾		379			362
Property insurance		135			123
Marketing and leasing		97			63
Other property operating expenses		91			91
Total direct operating expenses ⁽³⁾		2,406			2,281
Net operating income (NOI) ⁽³⁾		3,471			3,277
Net operating income (NOI) margin ⁽³⁾		59.1	%		59.0	%

Notes:

Given that the suite count did not change from 2020 to 2021, this should also be considered the “Same Property” portfolio.

(1)	Results prior to the syndication of the U.S. multi-family portfolio have been recast to reflect Tricon’s current 20% ownership in the portfolio to assist the reader with comparability.

(2)

The Company has reserved 100% of residents’ accounts receivable balances aged more than 30 days. The bad debt for three months ended June 30, 2021 represents 2.0% of revenue compared to 1.8% for the same period in the prior year. Bad debt has shown sequential improvement quarter-over-quarter from 3.2% in the first quarter of 2021 to 2.0% in the second quarter as the result of the recovering labour market, improved collections and additional government rental assistance. The Company continues to work directly with residents on collections.

(3)

The Company elected to present its third-party property management service expenses as part of corporate operating expenses effective January 1, 2021. The property management expense above represents on-site property management personnel costs. The comparative period has therefore been reclassified to conform with the current period presentation.

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

A-6

SHORT FORM BASE SHELF PROSPECTUS


New Issue and/or Secondary Offering		August 26, 2021

LOGO

TRICON RESIDENTIAL INC.

C$1,500,000,000

Common Shares

Debt Securities

Subscription Receipts

Warrants

Units

Tricon Residential Inc. (“Tricon” or the “Company”) is a residential real estate company primarily focused on owning and operating rental housing in the United States and Canada. Tricon may from time to time offer and issue the following securities: (a) common shares in the capital of the Company (“Common Shares”); (b) debentures, notes or other evidence of indebtedness of any kind, nature or description and which may be issuable in series (“Debt Securities”); (c) subscription receipts of the Company exchangeable for Common Shares and/or other securities of the Company (“Subscription Receipts”); (d) warrants exercisable to acquire Common Shares and/or other securities of the Company (“Warrants”); and (e) securities comprised of more than one of Common Shares, Debt Securities, Subscription Receipts and/or Warrants offered together as a unit (“Units”), or any combination thereof, up to an aggregate offering price of C$1,500,000,000 (or the equivalent thereof, at the date of issue, in any other currency or currencies, as the case may be) at any time during the 25-month period that this short form base shelf prospectus (including any amendments hereto, the “Prospectus”) remains valid. The Common Shares, Debt Securities, Subscription Receipts, Warrants and Units (collectively, the “Securities”) offered hereby may be offered for sale separately or in combination with one or more other Securities and may be sold from time to time in one or more transactions at a fixed price or prices (which may be changed) or at market prices prevailing at the time of sale, at prices determined by reference to such prevailing market prices or at negotiated prices, and on terms to be set forth in one or more prospectus supplements (collectively or individually, as the case may be, “Prospectus Supplements”). One or more securityholders of the Company may also offer and sell Securities under this Prospectus. See “Selling Securityholders”.

All shelf information permitted under applicable securities legislation to be omitted from this Prospectus including, without limitation, the information disclosed in the specific terms of any offering of Securities, as discussed above, will be contained in one or more Prospectus Supplements that will be delivered to purchasers together with this Prospectus, except in cases where an exemption from such delivery requirements has been obtained. Each Prospectus Supplement will be incorporated by reference into this Prospectus for the purposes of securities legislation as of the date of such Prospectus Supplement and only for the purposes of the distribution of the Securities to which that Prospectus Supplement pertains.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY ANY CANADIAN SECURITIES COMMISSION OR REGULATORY AUTHORITY NOR HAS ANY CANADIAN SECURITIES COMMISSION OR REGULATORY AUTHORITY PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE.

Prospective investors should be aware that the acquisition of the Securities described herein may have tax consequences. Prospective investors should read the tax disclosure in any applicable Prospectus Supplement; however, this Prospectus or any applicable Prospectus Supplement may not fully describe these tax consequences, and investors should consult their tax adviser prior to making any investment in the Securities.

The specific terms of any offering of Securities will be set forth in the applicable Prospectus Supplement and may include, without limitation, where applicable: (a) in the case of Common Shares, the number of Common Shares being offered, the currency, the offering price (in the event the offering is a fixed price distribution) or the manner of determining the offering price(s) (in the event the offering is not a fixed price distribution) and any other specific terms; (b) in the case of Debt Securities, the specific designation, aggregate principal amount, the currency or the currency unit for which the Debt Securities may be purchased, maturity, interest provisions, authorized denominations, offering price, covenants, events of default, any terms for redemption at the option of the Company or the holder, any exchange or conversion terms and any other specific terms; (c) in the case of Subscription Receipts, the number of Subscription Receipts being offered, the currency, the offering price, the terms, conditions and procedures for the exchange of the Subscription Receipts into or for Common Shares and/or other securities of the Company and any other specific terms; (d) in the case of Warrants, the number of such Warrants offered, the currency, the offering price, the terms, conditions and procedures for the exercise of such Warrants into or for Common Shares and/or other securities of the Company and any other specific terms; and (e) in the case of Units, the number of Units being offered, the currency, the offering price, the terms of the Common Shares, Debt Securities, Subscription Receipts and/or Warrants, as the case may be, underlying the Units, and any other specific terms. A Prospectus Supplement relating to a particular offering of Securities may include terms pertaining to the Securities being offered thereunder that are not within the terms and parameters described in this Prospectus. Where required by statute, regulation or policy, and where the Securities are offered in currencies other than Canadian dollars, appropriate disclosure of foreign exchange rates applicable to the Securities will be included in the Prospectus Supplement describing the Securities.

The Company or any selling securityholders may sell the Securities to or through one or more underwriters or dealers purchasing as principals and may also sell the Securities to one or more purchasers directly, through applicable statutory exemptions, or through one or more agents designated by the Company from time to time. The Securities may be sold from time to time in one or more transactions at fixed prices or not at fixed prices, such as market prices prevailing at the time of sale, prices related to such prevailing market prices or prices to be negotiated with purchasers, which prices may vary as between purchasers and during the period of distribution of the Securities. The Prospectus Supplement relating to a particular offering of Securities will identify each underwriter, dealer, agent or selling securityholder engaged in connection with the offering and sale of such Securities, as well as the method of distribution and the terms of the offering of such Securities, including the initial offering price (in the event the offering is a fixed price distribution), the manner of determining the offering price(s) (in the event the offering is not a fixed price distribution), the net proceeds to the Company and, to the extent applicable, any fees, discounts or any other compensation payable to underwriters, dealers or agents and any other material terms. See “Plan of Distribution”.

This Prospectus may qualify an “at-the-market distribution” (as defined under applicable Canadian securities legislation) by the Company. Only the Company, and not a selling securityholder, may sell Securities in an “at-the-market distribution”.

In connection with any offering of the Securities other than an “at-the-market distribution”, unless otherwise specified in the relevant Prospectus Supplement, the underwriters or agents may over-allot or effect transactions that stabilize or maintain the market price of the offered Securities at a level above that which might otherwise prevail on the open market. Such transactions, if commenced, may be interrupted or discontinued at any time. See “Plan of Distribution”.

No underwriter or dealer of an “at-the-market distribution” under this Prospectus, no affiliate of such an underwriter or dealer and no person or company acting jointly or in concert with such underwriter or dealer will

over-allot securities in connection with such distribution or effect any other transactions that are intended to stabilize or maintain the market price of the Securities or securities of the same class as the Securities distributed under this Prospectus, including selling an aggregate number or principal amount of securities that would result in the underwriter or dealer creating an over-allocation position in the Securities.

The Company is incorporated under the Business Corporations Act (Ontario) and its head and registered office is located at 7 St. Thomas Street, Suite 801, Toronto, Ontario, M5S 2B7. The outstanding Common Shares are listed and posted for trading on the Toronto Stock Exchange (the “TSX”) under the symbol “TCN”. On August 25, 2021, the last trading day prior to the date of this Prospectus, the closing price of the outstanding Common Shares on the TSX was C$15.56.

Owning the Securities may subject investors to tax consequences. This Prospectus and any applicable Prospectus Supplement may not describe the tax consequences fully. Prospective investors should read the tax discussion in any applicable Prospectus Supplement and consult with a tax advisor with respect to their own particular circumstances.

Each series or issue of Debt Securities, Warrants, Subscription Receipts or Units will be a new issue of securities with no established trading market. Unless otherwise specified in the applicable Prospectus Supplement, the Debt Securities, Subscription Receipts, Warrants and Units will not be listed on any securities exchange. There is no market through which these Securities may be sold and purchasers may not be able to resell such Securities purchased under this Prospectus. This may affect the pricing of such Securities in the secondary market, the transparency and availability of trading prices, the liquidity of such Securities, and the extent of issuer regulation. See “Cautionary Note Regarding Forward–Looking Statements” and “Risk Factors”.

No underwriter, agent or dealer has been involved in the preparation of this Prospectus or performed any review of the contents of this Prospectus.

Any investment in Securities involves significant risks that should be carefully considered by prospective investors before purchasing Securities. The risks outlined in this Prospectus and in the documents incorporated by reference herein, including the applicable Prospectus Supplement, should be carefully reviewed and considered by prospective investors in connection with any investment in Securities. See “Risk Factors”.

iii

TABLE OF CONTENTS


	Page
Table of Contents		iv

General Matters		1

Reliance		1

Cautionary Note Regarding Forward–Looking Statements		1

Exchange Rate Information		3

Non-IFRS Measures		3

Documents Incorporated by Reference		3

Summary Description of the Business of the Company		5

Recent Developments		7

Consolidated Capitalization of the Company		7

Use of Proceeds		8

Participation Right		8

Plan of Distribution		8

Earnings Coverage Ratios		9

Description of the Securities		9

Prior Sales		14

Selling Securityholders		14

Price Range and Trading Volume of Common Shares		14

Certain Income Tax Considerations		14

Risk Factors		15

Interests of Management and Others in Material Transactions		17

Legal Matters and Interests of Experts		17

Auditors, Transfer Agent and Registrar		18

Glossary of Terms		18

GENERAL MATTERS

In this Prospectus, unless the context otherwise requires, references to “Tricon” or the “Company” refer to Tricon Residential Inc. and its subsidiaries on a consolidated basis; “Common Shares” means the common shares in the capital of the Company; and “Shareholders” means holders of Common Shares.

References to U.S. dollars, “$” or “US$” are to U.S. currency and references to Canadian dollars or “C$” are to Canadian currency.

All capitalized terms referred to above are defined elsewhere in this Prospectus including, under “Glossary of Terms”.

References to “management” in this Prospectus means the persons acting in the capacities of the Company’s President and Chief Executive Officer, Executive Vice President and Chief Financial Officer, Chief Investment Officer, Chief Operating Officer and Chief Legal Officer. Any statements in this Prospectus or incorporated in this Prospectus by reference made by or on behalf of management are made in such persons’ capacities as officers of the Company and not in their personal capacities.

RELIANCE

A prospective investor should rely on the information contained in this Prospectus and in the documents incorporated by reference herein and is not entitled to rely on parts of the information contained in this Prospectus or documents incorporated by reference herein to the exclusion of others. The Company has not authorized anyone to provide investors with additional or different information. This Prospectus is not an offer to sell or a solicitation of an offer to buy the Securities in any jurisdiction where it is unlawful. The information contained in this Prospectus or in the documents incorporated by reference herein is accurate only as of the date of this Prospectus or the respective date of the applicable document incorporated by reference herein, regardless of the time of delivery of this Prospectus or of any sale of the Securities. The Company’s business, financial condition and results of operations may have changed since the date of this Prospectus. The Company does not undertake to update the information contained or incorporated by reference herein, except as required by the applicable securities laws.

Statements included or incorporated by reference in this Prospectus about the contents of any contract, agreement or other documents referred to are not necessarily complete, and in each instance, prospective investors should refer to the actual agreement for a complete description of the matter involved. Each such statement is qualified in its entirety by such reference. Each time the Company sells Securities under this Prospectus, it will provide a Prospectus Supplement that will contain specific information about the terms of that offering. The Prospectus Supplement may also add, update or change information contained in this Prospectus.

CAUTIONARY NOTE REGARDING FORWARD–LOOKING STATEMENTS

This Prospectus, including the documents incorporated by reference herein, contains “forward-looking information” and “forward-looking statements” as defined under Canadian securities laws (collectively, “forward-looking information”) which reflect management’s expectations regarding objectives, plans, goals, strategies, future growth, results of operations, performance and business prospects and opportunities of the Company. The words “plans”, “expects”, “does not expect”, “goals”, “seek”, “strategy”, “future”, “estimates”, “intends”, “anticipates”, “does not anticipate”, “projected”, “believes” or variations of such words and phrases or statements to the effect that certain actions, events or results “may”, “will”, “could”, “would”, “should”, “might”, “likely”, “occur”, “be achieved” or “continue” and similar expressions identify forward-looking information. In addition, any statements that refer to expectations, intentions, projections or other characterizations of future

events or circumstances contain forward-looking information. Statements containing forward-looking information are not historical facts but instead represent management’s expectations, estimates and projections regarding future events or circumstances.

Some of the specific forward-looking information in this Prospectus includes, but is not limited to, statements with respect to information regarding the Company’s financial position, business strategy, growth strategies, budgets, operations, financial results, taxes, dividend policy, plans, objectives and the impact of the novel coronavirus (“COVID-19”) pandemic on the foregoing. In addition, information regarding any intention of the Company to complete an offering, the listing of any Securities, the proposed use of proceeds thereof, the impact of COVID-19 on the business and the Company’s statements regarding the Company’s business and the environment in which it operates, is forward-looking information. Such forward-looking information is qualified in its entirety by the inherent risks, uncertainties and changes in circumstances surrounding future expectations which are difficult to predict and many of which are beyond the control of the Company, including that the transactions contemplated herein are completed.

Forward-looking information is necessarily based on a number of estimates and assumptions that, while considered reasonable by management of the Company as of the date of this Prospectus, are inherently subject to significant business, economic and competitive uncertainties and contingencies. The Company’s estimates, beliefs and assumptions, which may prove to be incorrect, include the various assumptions set forth herein, including, but not limited to: (a) the Company’s future growth potential; (b) results of operations; (c) future prospects and opportunities; (d) demographic and industry trends remaining unchanged; (e) a stable workforce; (f) no change in legislative or regulatory matters; (g) future levels of indebtedness; (h) the tax laws as currently in effect; (i) the effectiveness of mitigation strategies undertaken with respect to COVID-19, and the severity, duration and impacts of the COVID-19 pandemic on the economy and the Company’s business, which is highly uncertain and cannot reasonably be predicted; (j) the continuing availability of capital; and (k) current economic conditions.

When relying on forward-looking information to make decisions, the Company cautions readers not to place undue reliance on these statements, as forward-looking information involves significant risks and uncertainties. Forward-looking information should not be read as a guarantee of future performance or results and will not necessarily be an accurate indication of whether or not the times at or by which such performance or results will be achieved. A number of factors could cause actual results to differ, possibly materially, from the results discussed in the forward-looking information, including, but not limited to: (a) a change in economic or real estate industry conditions; (b) competition in the real estate investment business; (c) availability of attractive investment opportunities; (d) long investment horizons; (e) changes in legislation and government regulation; (f) changes in tax legislation or policy; (g) the impact of the COVID-19 pandemic on an offering or the operations, business and financial results of the Company; and (h) such other factors referred to under “Risk Factors“ in this Prospectus and under similar headings contained in the Company’s filings with Securities Commissions or similar authorities in Canada, including the Annual Information Form, the Annual MD&A and the Interim MD&A (each, as defined herein).

Certain statements included in this Prospectus 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

Prospectus. All forward-looking information is based only on information currently available to the Company and is made as of the date of this Prospectus. Except as expressly required by applicable Canadian securities law, the Company assumes no obligation to publicly update or revise any forward-looking information, whether as a result of new information, future events or otherwise. All forward-looking information in this Prospectus is qualified by these cautionary statements.

EXCHANGE RATE INFORMATION

The Company discloses certain financial information contained in this Prospectus in U.S. dollars. The following table sets forth, for the periods indicated, the high, low, average and period-end rates of exchange for US$1.0000, expressed in Canadian dollars, published by the Bank of Canada.


	Six months ended June 30 (C$)	Year ended December 31 (C$)
	2021	2020	2019
Highest rate during the period	1.2828	1.4496	1.3600
Lowest rate during the period	1.2040	1.2718	1.2988
Average rate for the period	1.2474	1.3415	1.3269
Rate at the end of the period	1.2394	1.2732	1.2988

On August 25, 2021, the daily average rate of exchange posted by the Bank of Canada for conversion of U.S. dollars into Canadian dollars was US$1.0000 equals C$1.2619.

NON-IFRS MEASURES

In this Prospectus, the Company uses certain non-IFRS financial measures, including certain real estate industry metrics, to measure, compare and explain the operating results and financial performance of the Company. 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 related financial information prepared in accordance with IFRS.

The Company’s non-IFRS and key performance measures include: 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, assets under management, NOI margin, occupancy rate, annualized turnover rate, average monthly rent, average rent growth, development yield, and total fee revenue. The Company has provided the required disclosure regarding these non-IFRS measures and key performance indicators in documents filed by the Company with Securities Commissions or similar authorities in Canada, including the Annual Information Form, the Annual MD&A and the Interim MD&A incorporated by reference in this Prospectus as set forth under the heading “Documents Incorporated by Reference”.

DOCUMENTS INCORPORATED BY REFERENCE

Information has been incorporated by reference in this Prospectus from documents filed with Securities Commissions or similar authorities in Canada. Copies of the documents incorporated herein by reference may be obtained on request without charge from the from the office of the Corporate Secretary of Tricon at 7 St. Thomas Street, Suite 801, Toronto, Ontario, M5S 2B7, by telephone at (416) 925-7228, or electronically on SEDAR at www.sedar.com.

Except to the extent that their contents are modified or superseded by a statement contained in this Prospectus or in any other subsequently filed document that is also incorporated by reference in this Prospectus, the following documents, filed by the Company with the Securities Commissions or similar authorities in the provinces and territories of Canada, are specifically incorporated by reference into and form an integral part of this Prospectus:

(a)

the audited consolidated annual financial statements of the Company for the years ended December 31, 2020 and 2019, together with the notes thereto and the auditors’ report thereon (the “Annual Financial Statements”);

(b)

the annual management’s discussion and analysis of the results of operations and financial condition of the Company for the years ended December 31, 2020 and 2019 (the “Annual MD&A”);

(c)

(d)

(e)

the annual information form of the Company dated March 2, 2021 for the year ended December 31, 2020 (the “Annual Information Form”);

(f)

the management information circular of the Company dated May 11, 2021 in respect of the annual and special meeting of Shareholders held on June 23, 2021 (the “Management Information Circular”);

(g)

the material change report of the Company dated May 25, 2021 in respect of the announcement of the public offering of Common Shares by the Company on May 18, 2021;

(h)

the material change report of the Company dated July 30, 2021 in respect of the announcement of the intended redemption by the Company of its 2022 Debentures; and

(i)

appendix A of the short form prospectus of the Company dated June 2, 2021.

Any documents of the type described in Item 11 of Form 44-101F1 – Short Form Prospectus Distributions which are filed by the Company with the Securities Commissions or similar authorities in the provinces and territories of Canada subsequent to the date of this Prospectus and prior to the termination of this distribution shall be deemed to be incorporated by reference in this Prospectus.

Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for the purposes of this Prospectus to the extent that a statement contained herein or in any other subsequently filed document which also is, or is deemed to be, incorporated by reference herein modifies or supersedes such statement. The modifying or superseding statement need not state that it has modified or superseded a prior statement or include any other information set forth in the document that it modifies or supersedes. The making of a modifying or superseding statement shall not be deemed an admission for any purposes that the modified or superseded statement, when made, constituted a misrepresentation, an untrue statement of a material fact or an omission to state a material fact that was required to be stated or that was necessary to make a statement not misleading in light of the circumstances in which it was made. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus.

Upon a new annual information form and consolidated annual financial statements being filed by the Company with the Securities Commissions or similar authorities in Canada during the period that this Prospectus is effective, the previous annual information form, the previous consolidated annual financial statements and all consolidated interim financial statements and, in each case, the accompanying management’s discussion and analysis and material change reports filed prior to the commencement of the financial year of the Company in

which the new annual information form is filed shall be deemed to no longer be incorporated into this Prospectus for purpose of future offers and sales of Securities under this Prospectus. Upon consolidated interim financial statements and the accompanying management’s discussion and analysis being filed by the Company with the Securities Commissions or similar authorities in Canada during the period that this Prospectus is effective, all consolidated interim financial statements and the accompanying management’s discussion and analysis filed prior to such new consolidated interim financial statements and management’s discussion and analysis shall be deemed to no longer be incorporated into this Prospectus for purposes of future offers and sales of Securities under this Prospectus. In addition, upon a new management information circular for an annual meeting of Shareholders being filed by the Company with the Securities Commissions or similar authorities in Canada during the period that this Prospectus is effective, the previous management information circular filed in respect of the prior annual meeting of Shareholders shall no longer be deemed to be incorporated into this Prospectus for purposes of future offers and sales of Securities under this Prospectus.

A Prospectus Supplement containing the specific variable terms in respect of an offering of the Securities will be delivered to purchasers of such Securities together with this Prospectus, unless an exemption from the prospectus delivery requirements has been granted or is otherwise available, and will be deemed to be incorporated by reference into this Prospectus as of the date of such Prospectus Supplement only for the purposes of the offering of the Securities covered by such Prospectus Supplement.

SUMMARY DESCRIPTION OF THE BUSINESS OF THE COMPANY

Tricon is a residential real estate company primarily focused on owning and operating rental housing in the United States and Canada. The Company is governed by the Business Corporations Act (Ontario). The Company’s head and registered office is located at 7 St. Thomas Street, Suite 801, Toronto, Ontario, M5S 2B7.

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 33,000 single-family rental homes and multi-family rental units in 22 markets across the United States and Canada. 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.

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 middle-market demographic consists of over seven million working-class U.S. renter households (source: U.S. Census Bureau). The Company defines the middle-market cohort as those households earning between US$70,000 and US$110,000 per year and with monthly rental payments of US$1,300 to US$2,100. These rent levels typically represent approximately 20–25% of household income, which provides each household with a 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.

Single-Family Rental

Tricon owns and operates one of the largest portfolios of single-family rental homes in the U.S. Sun Belt, with approximately 25,000 homes in 19 markets across ten states. 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 that 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.

Multi-Family Rental

In the U.S., Tricon owns a portfolio of high-quality, affordably priced suburban garden-style apartments primarily in the U.S. Sun Belt, comprised of 23 properties totalling 7,289 suites in 13 major markets. Subsequent to the second quarter of 2021, the Company assumed property management responsibilities for the majority of its U.S. multi-family properties and plans to complete the full internalization of the property management function for the entire portfolio by the end of the third quarter of 2021. This internalization is expected to produce additional synergies by leveraging Tricon’s existing technology, infrastructure and centralized property management functions. On March 31, 2021, the Company completed a recapitalization transaction whereby two leading global institutional investors acquired a combined 80% interest in the existing portfolio, with Tricon retaining a 20% interest. Tricon’s long-term strategy is to continue to grow this business and drive operating synergies through incremental scale.

Residential Development

The Company’s 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.

Private Funds and Advisory

dispositions of existing assets, including those contemplated as a part of the Company’s recently announced investment vehicle formation initiatives, and related financings and refinancings. There can be no assurance that any of these discussions will result in a definitive agreement, and, if they do, what the terms or timing of any acquisition, investment, disposition, financing or refinancing would be, if consummated. The Company expects to continue current discussions and actively pursue acquisition, investment, disposition, financing and refinancing opportunities, which currently, or may from time to time, involve entering into purchase and sale agreements that are subject to various conditions, including due diligence. As of the date hereof, there are no significant probable acquisitions identified by the Company, whereby financial statements would be required to be included in this Prospectus in order for this Prospectus to contain full, true and plain disclosure.

RECENT DEVELOPMENTS

CONSOLIDATED CAPITALIZATION OF THE COMPANY

Since June 30, 2021, being the date of the Company’s most recently completed Interim Financial Statements, there have been no material changes in the capitalization of the Company.

The following table sets forth the consolidated capitalization of the Company as at June 30, 2021. The table should be read in conjunction with the Interim Financial Statements and notes thereto incorporated by reference in this Prospectus.


	June 30, 2021 (unaudited)
	(C$000s – except Common Shares)⁽¹⁾
Indebtedness
Credit Facilities and Other Indebtedness	C$	4,056,645
2022 Debentures	C$	207,616
Due to Affiliate⁽²⁾	C$	314,751
Equity	C$	2,482,821
Common Shares		209,618,719
(Authorized – unlimited; Issued – 209,618,719)

Total Capitalization	C$	7,061,833

Notes:

(1)	On June 30, 2021, the daily average rate of exchange posted by the Bank of Canada for conversion of U.S. dollars into Canadian dollars was US$1.0000 equals C$1.2394.

(2)	Intercompany indebtedness owing to Tricon PIPE LLC, an affiliate of the Company, in connection with the issuance of exchangeable preferred units of Tricon PIPE LLC on September 3, 2020.

The applicable Prospectus Supplement will describe any material change, and the effect of such material change, on the share and loan capitalization of the Company that will result from the issuance of Securities pursuant to such Prospectus Supplement.

USE OF PROCEEDS

The use of proceeds from the issue and sale of specific Securities pursuant to this Prospectus will be described in the Prospectus Supplement relating to the issuance and sale of such Securities. The Company will not receive any proceeds from any sale of any Securities by selling securityholders.

PARTICIPATION RIGHT

Pursuant to the investor rights agreement dated September 3, 2020 entered into by and among the Company, Tricon PIPE LLC and BREIT (the “Investor Rights Agreement”), so long as (a) BREIT and its affiliates beneficially own or control at least 35% of the preferred units in Tricon PIPE LLC, which preferred units are exchangeable for Common Shares, originally purchased on September 3, 2020; or (b) BREIT’s and its affiliates’ as-exchanged ownership in the Company is at least 5.0%, then Blackstone has the right to maintain its as-exchanged ownership interest in the Company immediately prior to an offering by participating in certain equity financings of the Company, including any offering under this Prospectus.

Pursuant to the Investor Rights Agreement, BREIT also has certain demand and piggyback registration rights in respect of the sale of its securities of the Company, including pursuant to a Prospectus Supplement to this Prospectus as a selling securityholder.

PLAN OF DISTRIBUTION

The Company and/or any selling securityholder may from time to time during the 25-month period that this Prospectus, including any amendments hereto, remains valid, offer for sale and issue up to an aggregate of C$1,500,000,000 in Securities hereunder. The Company and/or any selling securityholders may offer and sell the Securities to or through underwriters, agents, or dealers purchasing as principals, and may also sell directly to one or more purchasers or through agents or pursuant to applicable statutory exemptions.

The Prospectus Supplement relating to a particular offering of Securities will identify each underwriter, dealer or agent, as the case may be, engaged by the Company and/or any selling securityholder in connection with the offering and sale of the Securities, and will set forth the terms of the offering of such Securities, including, to the extent applicable, any fees, discounts or any other compensation payable to underwriters, dealers or agents in connection with the offering, the method of distribution of the Securities, the initial issue price, the proceeds that the Company and/or any selling securityholder will receive and any other material terms of the plan of distribution. Any initial offering price and discounts, concessions or commissions allowed or re-allowed or paid to dealers may be changed from time to time.

The Securities may be sold from time to time in one or more transactions at a fixed price or prices or at prices which may be changed or at market prices prevailing at the time of sale, at prices related to such prevailing prices or at negotiated prices, including sales in transactions that are deemed to be “at-the-market distributions” as defined in NI 44-102 – Shelf Distributions (“NI 44-102”), including sales made directly on the TSX or other existing trading markets for the Securities. Only the Company, and not a selling securityholder, may sell Securities in an “at-the-market distribution. Any such transactions that are deemed “at-the-market-distributions” will be subject to regulatory approval. No underwriter, dealer or agent, no affiliate of such an underwriter, dealer or agent and no person acting jointly or in concert with such an underwriter, dealer or agent involved in an “at-the-market distribution” will over-allot Securities in connection with such distribution or effect any other transactions that are intended to stabilize or maintain the market price of the Securities.

The price at which the Securities will be offered and sold may vary from purchaser to purchaser and during the period of distribution.

In connection with the sale of the Securities, underwriters, dealers or agents may receive compensation, including in the form of underwriters’, dealers’ or agents’ fees, commissions or concessions. Underwriters, dealers and agents that participate in the distribution of the Securities may be deemed to be underwriters for the purposes of applicable Canadian securities legislation and any such compensation received by them from the Company and/or any selling securityholder and any profit on the resale of the Securities by them may be deemed to be underwriting commissions. In connection with any offering of Securities, except as otherwise set out in a Prospectus Supplement relating to a particular offering of Securities and other than in relation to an “at-the-market” distribution, the underwriters, dealers or agents, as the case may be, may over-allot or effect transactions intended to fix, stabilize, maintain or otherwise affect the market price of the Securities at a level other than those which otherwise might prevail on the open market. Such transactions may be commenced, interrupted or discontinued at any time.

Underwriters, dealers or agents who participate in the distribution of the Securities may be entitled, under agreements to be entered into with the Company and/or any selling securityholders, to indemnification by the Company and/or any selling securityholders against certain liabilities, including liabilities under Canadian securities legislation or to contribution with respect to payments which such underwriters, dealers or agents may be required to make in respect thereof. Such underwriters, dealers and agents may be customers of, engage in transactions with, or perform services for, the Company and/or any selling securityholders in the ordinary course of business.

Unless otherwise specified in the applicable Prospectus Supplement, each series or issue of Securities (other than Common Shares) will be a new issue of Securities with no established trading market. Accordingly, there is currently no market through which the Securities (other than Common Shares) may be sold and purchasers may not be able to resell such Securities purchased under this Prospectus and the applicable Prospectus Supplement. This may affect the pricing of such Securities in the secondary market, the transparency and availability of trading prices, the liquidity of such Securities and the extent of issuer regulation. See “Risk Factors”.

EARNINGS COVERAGE RATIOS

Earnings coverage ratios will be provided as required in the applicable Prospectus Supplement with respect to the issuance of Debt Securities pursuant to this Prospectus.

DESCRIPTION OF THE SECURITIES

The following is a brief summary of certain general terms and provisions of the Securities as at the date of this Prospectus. The summary does not purport to be complete and is indicative only. The specific terms of any Securities to be offered under this Prospectus, and the extent to which the general terms described in this Prospectus apply to such Securities, will be set forth in the applicable Prospectus Supplement. Moreover, a Prospectus Supplement relating to a particular offering of Securities may include terms pertaining to the Securities being offered thereunder that are not within the terms and parameters described in this Prospectus. The Securities will not include any novel derivatives or asset-backed securities as discussed under Part 4 of NI 44-102.

Common Shares

The Company is authorized to issue an unlimited number of Common Shares. Shareholders are entitled to receive notice of and to attend and vote at all meetings of Shareholders of the Company, except meetings of holders of another class of shares. Each Common Share entitles the holder thereof to one vote. No Common Share has any preference or priority over another Common Share.

Subject to the preferences accorded to holders of any other securities of the Company or a subsidiary ranking senior to the Common Shares from time to time with respect to the payment of dividends, holders of Common Shares are entitled to receive, if, as and when declared by the Board of Directors, such dividends as may be declared thereon by the Board of Directors from time to time in equal amounts per share on the Common Shares at the time outstanding, without preference or priority.

In the event of the voluntary or involuntary liquidation, dissolution or winding-up of the Company, or any other distribution of its assets among its Shareholders for the purpose of winding-up its affairs, Shareholders are entitled, after payment of debts and other liabilities, in each case subject to the preferences accorded to the holders of any other securities of the Company or a subsidiary ranking senior to the Common Shares from time to time with respect to payment on such a distribution, to share equally, share for share, in the remaining property of the Company.

Debt Securities

The Company may issue Debt Securities in one or more series under an indenture (each, an “Indenture”), to be entered into between the Company and a trustee. The following description sets forth certain general material terms and provisions of the Debt Securities. If Debt Securities are issued, the Company will describe in the applicable Prospectus Supplement the particular material terms and provisions of any series of the Debt Securities and a description of how the general material terms and provisions described below may apply to that series of the Debt Securities. Prospective investors should read both the Prospectus and the Prospectus Supplement for a complete summary of all material terms relating to a particular series of Debt Securities. Prospective investors should be aware that information in the applicable Prospectus Supplement may update, amend and supersede the following information regarding the general material terms and provisions of the Debt Securities. Prospective investors also should refer to the Indenture, as it may be supplemented, for a complete description of all terms relating to the Debt Securities. The Company will file the final Indenture for any offering of Debt Securities on SEDAR.

The Company may issue Debt Securities and incur additional indebtedness other than through the offering of Debt Securities pursuant to this Prospectus. The Debt Securities will be direct obligations of the Company and may be guaranteed by an affiliate or associate of the Company. The Debt Securities may be senior or subordinated indebtedness of the Company and may be secured or unsecured, all as described in the relevant Prospectus Supplement. In the event of insolvency or winding up of the Company, the subordinated indebtedness of the Company, including the subordinated Debt Securities, will be subordinate in right of payment to the prior payment in full of all other liabilities of the Company (including senior indebtedness), except those which by their terms rank equally in right of payment with or are subordinate to such subordinated indebtedness.

Each Indenture may provide that Debt Securities may be issued thereunder up to the aggregate principal amount, which may be authorized from to time by the Company.

The applicable Prospectus Supplement for any series of Debt Securities that the Company offers will describe the specific terms of the Debt Securities and may include, but is not limited to, any of the following (where applicable):

(a)

the title of the Debt Securities;

(b)

the aggregate principal amount and percentage of the principal amount at which such Debt Securities will be issued;

(c)

the trustee of the Debt Securities under the Indenture pursuant to which the Debt Securities are to be issued;

(d)

any limit on the aggregate principal amount of the Debt Securities and, if no limit is specified, the Company will have the right to re-open such series for the issuance of additional Debt Securities from time to time;

(e)

the extent and manner, if any, to which payment on or in respect of the Debt Securities of the series will be senior or will be subordinated to the prior payment of other liabilities and obligations;

(f)

whether payment of the Debt Securities will be guaranteed by any other person;

(g)

whether or not the Debt Securities will be secured or unsecured, and the terms of any secured debt including a general description of the collateral and of the material terms of any related security, pledge or other agreement;

(h)

the date or dates, or the method by which such date or dates will be determined or extended, on which the principal (and premium, if any) of the Debt Securities of the series is payable;

(i)

the rate or rates (whether fixed or variable) at which the Debt Securities of the series shall bear interest, if any, or the method by which such rate or rates shall be determined, whether such interest shall be payable in cash or additional Debt Securities of the same series or shall accrue and increase the aggregate principal amount outstanding of such series, the date or dates from which such interest shall accrue, or the method by which such date or dates shall be determined;

(j)

the place or places where the Company will pay principal, premium and interest, if any, and the place or places where Debt Securities can be presented for registration of transfer, exchange or conversion;

(k)

whether and under what circumstances the Company will be required to pay any additional amounts for withholding or deduction for taxes with respect to the Debt Securities, and whether and on what terms the Company will have the option to redeem the Debt Securities rather than pay the additional amounts;

(l)

whether the Company will be obligated to redeem, repay or repurchase the Debt Securities pursuant to any sinking or other provision, or at the option of a holder, and the terms and conditions of such redemption, repayment or repurchase;

(m)

whether the Company may redeem the Debt Securities, in whole or in part, prior to maturity and the terms and conditions of any such redemption;

(n)

the denominations in which the Company will issue any registered Debt Securities, if other than denominations of $2,000 and any multiple of $1,000 and, if other than denominations of $5,000, the denominations in which any unregistered Debt Security shall be issuable;

(o)

whether the Company will make payments on the Debt Securities in a currency other than Canadian dollars;

(p)

whether payments on the Debt Securities will be payable with reference to any index, formula or other method;

(q)

whether the Debt Securities will be listed on any securities exchange;

(r)

whether the Company will issue the Debt Securities as global securities and, if so, the identity of the depositary for the global securities;

(s)

whether the Company will issue the Debt Securities as unregistered securities, registered securities or both;

(t)

any changes or additions to, or deletions of, events of default or covenants, whether or not such events of default or covenants are consistent with the events of default or covenants in the Indenture;

(u)

whether the holders of any series of Debt Securities have special rights if specified events occur;

(v)

the terms, if any, for any conversion or exchange of the Debt Securities for any other securities of the Company;

(w)

provisions as to modification, amendment or variation of any rights or terms attaching to the Debt Securities;

(x)

certain material tax consequences of owning the Debt Securities; and

(y)

any other material terms and conditions of the Debt Securities.

Debt Securities may be issued at various times with different maturity dates, may bear interest at different rates and may otherwise vary. A Prospectus Supplement may include specific variable terms pertaining to the Debt Securities that are not within the alternatives and parameters described in this Prospectus.

Subscription Receipts

Subscription Receipts may be issued under a subscription receipt agreement. Subscription Receipts may be offered separately or together with other Securities, as the case may be. The applicable Prospectus Supplement will include details of the subscription receipt agreement, if any, governing the Subscription Receipts being offered. The Company will file a copy of any subscription receipt agreement relating to an offering of Subscription Receipts on SEDAR.

The applicable Prospectus Supplement will describe the specific terms of the Subscription Receipts and may include, but is not limited to, any the following (where applicable):

(a)

the aggregate number of Subscription Receipts offered;

(b)

the price (including whether the price is payable in installments) at which the Subscription Receipts will be offered;

(c)

the manner of determining the offering price(s) of the Subscription Receipts;

(d)

the terms, conditions and procedures for the conversion of the Subscription Receipts into other securities of the Company;

(e)

the dates or periods during which the Subscription Receipts are convertible into other securities of the Company;

(f)

if applicable, the identity of the Subscription Receipt agent;

(g)

the designation, number and terms of the other securities of the Company that may be exchanged upon conversion of each Subscription Receipt;

(h)

the designation, number and terms of any other Securities with which the Subscription Receipts will be offered, if any, and the number of Subscription Receipts that will be offered with each Security;

(i)

whether the Subscription Receipts will be listed on any securities exchange;

(j)

whether such Subscription Receipts are to be issued in registered form, “book-entry only” form, bearer form or in the form of temporary or permanent global securities and the basis of exchange, transfer and ownership thereof;

(k)

certain material tax consequences of owning the Subscription Receipts; and

(l)

any other material terms and conditions of the Subscription Receipts.

Warrants

Each series of Warrants may be issued under a separate warrant indenture or warrant agency agreement to be entered into between the Company and one or more banks or trust companies acting as Warrant agent or may be issued as stand-alone certificates. Warrants may be offered separately or together with other Securities, as the case may be. The applicable Prospectus Supplement will include details of the warrant agreements, if any, governing the Warrants being offered. The Warrant agent, if any, will be expected to act solely as the agent of the Company and will not assume a relationship of agency with any holders of Warrant certificates or beneficial owners of Warrants. The Company will file any warrant indenture or any warrant agency agreement relating to an offering of Warrants on SEDAR.

The applicable Prospectus Supplement will describe the specific terms of the Warrants and may include, but is not limited to, any the following (where applicable):

(a)

the designation of the Warrants;

(b)

the aggregate number of Warrants offered and the offering price;

(c)

the designation, number and terms of the other securities of the Company purchasable upon exercise of the Warrants, and procedures that will result in the adjustment of those numbers;

(d)

the exercise price of the Warrants;

(e)

the dates or periods during which the Warrants are exercisable including any “early termination” provisions;

(f)

if applicable, the identity of the Warrant agent;

(g)

the designation, number and terms of any Securities with which the Warrants are issued;

(h)

if the Warrants are issued as a unit with another Security, the date on and after which the Warrants and the other Security will be separately transferable;

(i)

whether the Warrants will be listed on any securities exchange;

(j)

whether such Warrants are to be issued in registered form, “book-entry only” form, bearer form or in the form of temporary or permanent global securities and the basis of exchange, transfer and ownership thereof;

(k)

any minimum or maximum amount of Warrants that may be exercised at any one time;

(l)

any terms, procedures and limitations relating to the transferability, exchange or exercise of the Warrants;

(m)

certain material tax consequences of owning the Warrants; and

(n)

any other material terms and conditions of the Warrants.

Units

Units may be offered separately or together with other Securities, as the case may be. The applicable Prospectus Supplement will describe the specific terms of the Units and Securities and may include, but is not limited to, any the following (where applicable):

(a)

the aggregate number of Units offered;

(b)

the price at which the Units will be offered;

(c)

the manner of determining the offering price(s) of the Units;

(d)

the designation, number and terms of the Securities comprising the Units;

(e)

whether the Units will be issued with any other Securities and, if so, the amount and terms of these Securities;

(f)

terms applicable to the gross or net proceeds from the sale of the Units plus any interest earned thereon;

(g)

the date on and after which the Securities comprising the Units will be separately transferable;

(h)

whether the Securities comprising the Units will be listed on any securities exchange;

(i)

whether such Units or the Securities comprising the Units are to be issued in registered form, “book-entry only” form, bearer form or in the form of temporary or permanent global securities and the basis of exchange, transfer and ownership thereof;

(j)

any terms, procedures and limitations relating to the transferability, exchange or exercise of the Units;

(k)

certain material tax consequences of owning the Units; and

(l)

any other material terms and conditions of the Units.

PRIOR SALES

Information regarding prior sales of Securities will be provided as required in a Prospectus Supplement with respect to the issuance of Securities pursuant to such Prospectus Supplement.

SELLING SECURITYHOLDERS

Securities may be sold under this Prospectus by way of secondary offering by or for the account of certain of the Company’s securityholders. The terms under which the Securities will be offered by selling securityholders will be described in the applicable Prospectus Supplement. The Prospectus Supplement for or including any offering of the Securities by selling securityholders will include (where applicable):

(a)

the names of the selling securityholders;

(b)

the number or amount of Securities owned, controlled or directed of the class being distributed by each selling securityholder;

(c)

the number or amount of Securities of the class being distributed for the account of each selling securityholder;

(d)

the number or amount of Securities of any class to be owned, controlled or directed by the selling securityholders after the distribution and the percentage that number or amount represents of the total number of the Company’s outstanding Securities;

(e)

whether the Securities are owned by the selling securityholders both of record and beneficially, of record only, or beneficially only;

(f)

if a selling securityholder purchased any of the Securities held by it in the 24 months preceding the date of the applicable Prospectus Supplement, the date or dates the selling securityholder acquired the Securities; and

(g)

if a selling securityholder acquired the Securities held by it in the 12 months preceding the date of the applicable Prospectus Supplement, the cost thereof to the selling securityholder in the aggregate and on an average per security basis.

PRICE RANGE AND TRADING VOLUME OF COMMON SHARES

Information regarding trading price and volume of the Securities will be provided as required for all of the Company’s issued and outstanding Securities that are listed on any securities exchange, as applicable, in each Prospectus Supplement.

CERTAIN INCOME TAX CONSIDERATIONS

The applicable Prospectus Supplement may describe certain income tax consequences to an investor acquiring any Securities offered thereunder, including, for investors who are non-residents of Canada, whether the payments of principal, interest or distributions, if any, on the Securities will be subject to Canadian non-resident withholding tax. Prospective investors should consult their own tax advisers prior to deciding to purchase any of the Securities.

RISK FACTORS

Before deciding to invest in any Securities, prospective investors of the Securities should consider carefully the risk factors and the other information contained and incorporated by reference in this Prospectus and the applicable Prospectus Supplement relating to a specific offering of Securities before purchasing the Securities, including those risks identified and discussed under the heading “Risk Factors” in the Annual Information Form, which is incorporated by reference herein. See “Documents Incorporated by Reference”.

An investment in the Securities offered hereunder is speculative and involves a high degree of risk. Additional risks and uncertainties, including those that the Company is unaware of or that are currently deemed immaterial, may also become important factors that affect the Company and its business. If any such risks actually occur, the Company’s business, financial condition and results of operations could be materially adversely affected. Prospective investors should carefully consider the risks below and in the Annual Information Form and the other information elsewhere in this Prospectus, including the documents incorporated by reference herein, and the applicable Prospectus Supplement and consult with their professional advisers to assess any investment in the Company.

There is no guarantee that the Securities will earn any positive return in the short term or long term.

A holding of Securities is speculative and involves a high degree of risk and should be undertaken only by holders whose financial resources are sufficient to enable them to assume such risks and who have no need for immediate liquidity in their investment. A holding of Securities is appropriate only for holders who have the capacity to absorb a loss of some or all of their holdings.

Management of the Company will have broad discretion with respect to the application of net proceeds received by the Company from the sale of Securities under this Prospectus and a future Prospectus Supplement.

Management of the Company may spend net proceeds received by the Company from a sale of Securities in ways that do not improve the Company’s results of operations or enhance the value of the Common Shares or its other securities issued and outstanding from time to time. Any failure by management to apply these funds effectively could result in financial losses that could have a material adverse effect on the Company’s business or cause the price of the securities of the Company issued and outstanding from time to time to decline.

The Company may sell additional Common Shares or other Securities that are convertible or exchangeable into Common Shares in subsequent offerings or may issue additional Common Shares or other Securities to finance future acquisitions.

The Company cannot predict the size or nature of future sales or issuances of securities or the effect, if any, that such future sales and issuances will have on the market price of the Common Shares. Sales or issuances of substantial numbers of Common Shares or other Securities that are convertible or exchangeable into Common Shares, or the perception that such sales or issuances could occur, may adversely affect prevailing market prices of the Common Shares. With any additional sale or issuance of Common Shares or other Securities that are convertible or exchangeable into Common Shares, investors will suffer dilution to their voting power and economic interest in the Company. Furthermore, to the extent holders of the Company’s stock options or other convertible securities convert or exercise their securities and sell the Common Shares they receive, the trading price of the Common Shares may decrease due to the additional amount of Common Shares available in the market.

The market price for the Common Shares may be volatile and subject to wide fluctuations in response to numerous factors, many of which are beyond the Company’s control. The factors which may contribute to market price fluctuations of the Common Shares include the following:

(a)

actual or anticipated fluctuations in the Company’s quarterly results of operations;

(b)

recommendations by securities research analysts;

(c)

changes in the economic performance or market valuations of companies in the industry in which the Company operates;

(d)

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

(e)

sales or perceived sales of additional Common Shares;

(f)

operating and financial performance that vary from the expectations of management, securities analysts and investors;

(g)

regulatory changes affecting the Company’s industry generally and its business and operations;

(h)

announcements of developments and other material events by the Company or its competitors;

(i)

fluctuations to the costs of vital production materials and services;

(j)

changes in global financial markets and global economies and general market conditions, such as interest rates;

(k)

significant acquisitions or business combinations, strategic partnerships, joint ventures or capital commitments by or involving the Company or its competitors;

(l)

operating and share price performance of other companies that investors deem comparable to the Company or from a lack of market comparable companies; and

(m)

news reports relating to trends, concerns, technological or competitive developments, regulatory changes and other related issues in the Company’s industry or target markets.

There is currently no market through which the Securities, other than the Common Shares, may be sold.

Purchasers may not be able to resell the Debt Securities, Warrants, Subscription Receipts or Units purchased under this Prospectus and any Prospectus Supplement. This may affect the pricing of the Securities, other than the Common Shares, in the secondary market, the transparency and availability of trading prices, the liquidity of these securities and the extent of issuer regulation. There can be no assurance that an active trading market for the Securities, other than the Common Shares, will develop or, if developed, that any such market, including for the Common Shares, will be sustained. The public offering prices of the Securities may be determined by negotiation between the Company and underwriters based on several factors and may bear no relationship to the prices at which the Securities will trade in the public market subsequent to such offering. See “Plan of Distribution”.

Shareholders of the Company may be unable to sell significant quantities of Common Shares into the public trading markets without a significant reduction in the price of their Common Shares, or at all. There can be no assurance that there will be sufficient liquidity of the Common Shares on the trading markets, or that the Company will continue to meet the listing requirements of the TSX or any other public stock exchange.

The Debt Securities may be unsecured and may rank equally in right of payment with all of the Company’s other future unsecured debt.

The Debt Securities may be unsecured. Any unsecured Debt Securities will rank equally in right of payment with all of the Company’s other existing and future unsecured debt. The Debt Securities may be effectively

subordinated to all of the Company’s existing and future secured debt to the extent of the assets securing such debt. If the Company is involved in any bankruptcy, dissolution, liquidation or reorganization, the secured debt holders would, to the extent of the value of the assets securing the secured debt, be paid before the holders of unsecured debt securities, including the Debt Securities. In that event, a holder of Debt Securities may not be able to recover any principal or interest due to it under the Debt Securities.

In addition, the collateral, if any, and all proceeds therefrom, securing any Debt Securities may be subject to higher priority liens in favor of other lenders and other secured parties which may mean that, at any time that any obligations that are secured by higher ranking liens remain outstanding, actions that may be taken in respect of the collateral (including the ability to commence enforcement proceedings against the collateral and to control the conduct of such proceedings) may be at the direction of the holders of such indebtedness.

There is no assurance that any credit rating assigned to Securities issued hereunder will remain in effect for any given period of time or that any rating will not be lowered or withdrawn entirely by the relevant rating agency. A lowering or withdrawal of such rating may have an adverse effect on the market value of the Securities.

COVID-19 may have a material adverse effect on the business, financial condition and results of operations of the Company.

INTERESTS OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS

Other than as disclosed in this Prospectus and as disclosed in the Annual Information Form and in the notes to the Interim Financial Statements incorporated by reference herein, there are no material interests, direct or indirect, of the Directors or officers of the Company, any Shareholder that beneficially owns more than 10% of the Common Shares or any associate or affiliate of any of the foregoing persons in any transaction within the last three years or any proposed transaction that has materially affected or would materially affect the Company or any of its subsidiaries.

LEGAL MATTERS AND INTERESTS OF EXPERTS

Unless otherwise specified in the Prospectus Supplement relating to an offering and sale of Securities, certain legal matters relating to such offering and sale of Securities will be passed upon on behalf of the Company by

Goodmans LLP with respect to matters of Canadian law, and by counsel to be designated at the time of such offering and sale by the Company with respect to matters of United States or other foreign law, if applicable. In addition, certain legal matters in connection with an offering and sale of Securities will be passed upon for any underwriters, dealers or agents by counsel to be designated at the time of such offering and sale by such underwriters, dealers or agents with respect to matters of Canadian and, if applicable, United States or other foreign law. As at the date hereof, the partners and associates of Goodmans LLP, as a group, own less than 1% of the outstanding securities of the Company.

AUDITORS, TRANSFER AGENT AND REGISTRAR

The Company’s auditors are PricewaterhouseCoopers LLP, Chartered Professional Accountants, Licensed Public Accountants. PricewaterhouseCoopers LLP has advised the Company that it is independent in accordance with the Rules of Professional Conduct of the Chartered Professional Accountants of Ontario.

The transfer agent and registrar for the Common Shares is TSX Trust Company at its principal office located in Toronto, Ontario.

GLOSSARY OF TERMS

In this Prospectus, the following terms will have the meanings set forth below, unless otherwise indicated. Words importing the singular include the plural and vice versa and words importing any gender include all genders:

“2022 Debentures” means the 5.75% extendible convertible unsecured subordinated debentures of Tricon issued on March 17, 2017;

“affiliate” has the meaning ascribed thereto in the Securities Act (Ontario);

“AFFO” has the meaning ascribed thereto under “Non-IFRS Measures”;

“Annual Financial Statements” has the meaning ascribed thereto under “Documents Incorporated by Reference”;

“Annual Information Form” has the meaning ascribed thereto under “Documents Incorporated by Reference”;

“Annual MD&A” has the meaning ascribed thereto under “Documents Incorporated by Reference”;

“Board of Directors” means the board of directors of the Company from time to time;

“BREIT” means Blackstone Real Estate Income Trust, Inc.;

“CDS” has the meaning ascribed thereto on the cover page of this Prospectus;

“Common Shares” means common shares in the capital of the Company;

“Company” means Tricon Residential Inc.;

“Core FFO” has the meaning ascribed thereto under “Non-IFRS Measures”;

“COVID-19” has the meaning ascribed thereto under “Cautionary Note Regarding Forward–Looking Statements”;

“Directors” means the directors of the Company from time to time;

“FFO” has the meaning ascribed thereto under “Non-IFRS Measures”;

“IFRS” means International Financial Reporting Standards;

“Indenture” has the meaning ascribed thereto under “Description of the Securities – Debt Securities”;

“Interim Financial Statements” has the meaning ascribed thereto under “Documents Incorporated by Reference”;

“Interim MD&A” has the meaning ascribed thereto under “Documents Incorporated by Reference”;

“Investor Rights Agreement” has the meaning ascribed thereto under “Participation Right”;

“Management Information Circular” has the meaning ascribed thereto under “Documents Incorporated by Reference”;

“NI 44-102” has the meaning ascribed thereto under “Plan of Distribution”;

“NOI” has the meaning ascribed thereto under “Non-IFRS Measures”;

“Prospectus” means this short form base shelf prospectus of the Company;

“Securities Act” has the meaning ascribed thereto under “Purchasers’ Contractual Rights”;

“Securities Commissions” means each securities commission or securities regulatory authority in the provinces and territories of Canada in which the Company is a reporting issuer;

“SEDAR” means the System for Electronic Document Analysis and Retrieval;

“Shareholder” means a holder of Common Shares;

“subsidiary” has the meaning ascribed thereto in Ontario Securities Commission Rule 45-501 — Ontario Prospectus and Registration Exemptions;

“Tax Act” means the Income Tax Act (Canada) and the regulations thereunder, as amended;

“Tricon” means Tricon Residential Inc.;

“TSX” has the meaning ascribed thereto on the cover page of this Prospectus;

“U.S. Securities Act” has the meaning ascribed thereto on the cover page of this Prospectus.

LOGO

PART II

INFORMATION NOT REQUIRED TO BE DELIVERED

TO OFFEREES OR PURCHASERS

Indemnification of Directors and Officers

Under the Business Corporations Act (Ontario) (the “OBCA”), the Registrant may indemnify a director or officer of the Registrant, a former director or officer of the Registrant or another individual who acts or acted at the Registrant’s request as a director or officer, or an individual acting in a similar capacity, of another entity (each of the foregoing, an “individual”), against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred by the individual in respect of any civil, criminal, administrative, investigative or other proceeding in which the individual is involved because of that association with the Registrant or other entity, on the condition that (i) such individual acted honestly and in good faith with a view to the best interests of the Registrant or, as the case may be, to the best interests of the other entity for which the individual acted as a director or officer or in a similar capacity at the Registrant’s request; and (ii) if the matter is a criminal or administrative action or proceeding that is enforced by a monetary penalty, the Registrant shall not indemnify the individual unless the individual had reasonable grounds for believing that his or her conduct was lawful. The Registrant may advance money to an individual in relation to the foregoing matters, but the individual shall repay the money if the individual does not fulfill the conditions set out in (i) and (ii) above.

Further, the Registrant may, with the approval of a court, indemnify an individual in respect of an action by or on behalf of the Registrant or other entity to obtain a judgment in its favor, to which the individual is made a party because of the individual’s association with the Registrant or other entity against all costs, charges and expenses reasonably incurred by the individual in connection with such action, if the individual fulfills the conditions in (i) and (ii) above. Such individuals are entitled to indemnification from the Registrant in respect of all costs, charges and expenses reasonably incurred by the individual in connection with the defense of any civil, criminal, administrative, investigative or other proceeding to which the individual is subject because of the individual’s association with the Registrant or other entity as described above, provided the individual seeking an indemnity: (A) was not judged by a court or other competent authority to have committed any fault or omitted to do anything that the individual ought to have done; and (B) fulfills the conditions in (i) and (ii) above.

The by-laws of the Registrant provide that, subject to the OBCA, the Registrant shall indemnify the directors and officers of the Registrant, former directors or officers of the Registrant, any person who acts or has acted at the Registrant’s request as a director or officer of a body corporate of which the Registrant is or was a shareholder or creditor (or an individual who undertakes or has undertaken any liability on behalf of the Registrant or any such body corporate), and that individual’s heirs and legal representatives (each an “Indemnified Person”) against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred by such Indemnified Person in respect of any civil, criminal, or administrative action or proceeding to which such Indemnified Person is made party by reason of being or having been a director or officer of the Registrant or body corporate, provided that (i) such Indemnified Person acted honestly and in good faith with a view to the best interests of the Registrant; and (ii) in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, such Indemnified Person had reasonable grounds for believing that its conduct was lawful.

The Registrant maintains directors’ and officers’ liability insurance which insures directors and officers for losses as a result of claims against the directors and officers of the Registrant in their capacity as directors and officers and also reimburses the Registrant for payments made pursuant to the indemnity provisions under the by-laws of the Registrant and the OBCA.

Underwriters, dealers or agents who participate in a distribution of securities registered hereunder may be entitled under agreements to be entered into with the Registrant to indemnification by the Registrant against

II-1

certain liabilities, including liabilities under the Securities Act of 1933, as amended, and applicable Canadian securities legislation, or to contribution with respect to payments which such underwriters, dealers or agents may be required to make in respect thereof.

* * *

Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended, may be permitted to directors, officers or persons controlling the Registrant pursuant to the foregoing provisions, the Registrant has been informed that in the opinion of the U.S. Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933, as amended, and is therefore unenforceable.

The exhibits listed in the exhibit index, appearing elsewhere in this Registration Statement, have been filed as part of this Registration Statement.

II-2

PART III

UNDERTAKING AND CONSENT TO SERVICE OF PROCESS

Item 1. Undertaking

The Registrant undertakes to make available, in person or by telephone, representatives to respond to inquiries made by the Commission staff, and to furnish promptly, when requested to do so by the Commission staff, information relating to the securities registered pursuant to Form F-10 or to transactions in said securities.

Item 2. Consent to Service of Process

A written Appointment of Agent for Service of Process and Undertaking on Form F-X for the Registrant and its agent for service of process is being filed concurrently herewith.

Any change to the name or address of the agent for service of process of the Registrant shall be communicated promptly to the Commission by amendment to Form F-X referencing the file number of this Registration Statement on Form F-10.

III-1

EXHIBIT INDEX


Exhibit Number		Description

4.1		Annual information form of the Registrant dated March 2, 2021 for the year ended December 31, 2020.

4.2		Audited consolidated financial statements of the Registrant as at and for the years ended December 31, 2020 and 2019, together with the notes thereto and the Independent Auditor’s Report thereon (as re-filed on October 5, 2021 with the securities commissions or similar regulatory authorities in the provinces and territories of Canada to refer to IFRS as issued by the International Accounting Standards Board).

4.3		Management’s discussion and analysis of the results of operations and financial of the Registrant for the years ended December 31, 2020 and 2019.

4.4		Unaudited condensed consolidated interim financial statements of the Registrant as at June 30, 2021 and for the three and six months ended June 30, 2021 and 2020, together with the notes thereto.

4.5		Interim management’s discussion and analysis of the results of operations and financial condition of the Registrant for the three and six months ended June 30, 2021 and 2020.

4.6		Management information circular of the Registrant dated May 11, 2021 in respect of the annual and special meeting of the Registrant’s shareholders held on June 23, 2021.

4.7		Material change report of the Registrant dated July 30, 2021 in respect of the announcement of the intended redemption by the Registrant of its 5.75% extendible convertible unsecured subordinated debentures issued on March 17, 2017.

4.8		Material change report of the Registrant dated May 25, 2021 in respect of the announcement of the public offering of Common Shares by the Registrant on May 18, 2021.

5.1		Consent of PricewaterhouseCoopers LLP.

5.2		Consent of Goodmans LLP.

5.3		Consent of Blake, Cassels & Graydon LLP.

6.1		Powers of Attorney (included on the signature page of this Registration Statement).

III-2

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form F-10 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Toronto, Ontario, on October 5, 2021.


TRICON RESIDENTIAL INC.

By:		/s/ Wissam Francis
		Name: Wissam Francis
		Title: Executive Vice President and Chief Financial Officer

III-3

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Gary Berman and Wissam Francis, or any of them, his or her true and lawful attorneys-in-fact and agents, each of whom may act alone, with full powers of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any or all amendments to this Registration Statement, including post-effective amendments, and any and all additional registration statements (including amendments and post-effective amendments thereto) in connection with any increase in the amount of securities registered with the Securities and Exchange Commission, and to file the same, with all exhibits thereto, and other documents and in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, and hereby ratifies and confirms all his or her said attorneys-in-fact and agents or any of them or his or her substitute or substitutes may lawfully do or cause to be done by virtue hereof. This Power of Attorney may be executed in multiple counterparts, each of which shall be deemed an original, but which taken together shall constitute one instrument.

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities indicated and on the dates indicated.


Signature	Capacity	Date

/s/ Gary Berman	President and Chief Executive Officer	October 5, 2021
Gary Berman	(Principal Executive Officer)

/s/ Wissam Francis	Executive Vice President and Chief Financial Officer	October 5, 2021
Wissam Francis	(Principal Financial and Accounting Officer)

/s/ David Berman	Executive Chairman	October 5, 2021
David Berman

/s/ Geoff Matus	Director	October 5, 2021
Geoff Matus

/s/ Frank Cohen	Director	October 5, 2021
Frank Cohen

/s/ Camille Douglas	Director	October 5, 2021
Camille Douglas

/s/ Ira Gluskin	Director	October 5, 2021
Ira Gluskin

/s/ Michael Knowlton	Director	October 5, 2021
Michael Knowlton

/s/ Siân M. Matthews	Director	October 5, 2021
Siân M. Matthews

/s/ Peter D. Sacks	Director	October 5, 2021
Peter D. Sacks

/s/ Renee Lewis Glover	Director	October 5, 2021
Renee Lewis Glover

III-4

AUTHORIZED REPRESENTATIVE

Pursuant to the requirements of Section 6(a) of the Securities Act of 1933, as amended, the undersigned has signed this Registration Statement, in the capacity of the duly authorized representative of the Registrant in the United States, on October 5, 2021.


TRICON HOLDINGS USA LLC

By:		/s/ David Veneziano
		Name: David Veneziano
		Title: Vice President

III-5

Exhibit 4.1

LOGO

Annual Information Form FOR THE FISCAL YEAR ENDED DECEMBER 31, 2020 March 2, 2021


TABLE OF CONTENTS

GENERAL MATTERS			1

GLOSSARY OF TERMS			2

CORPORATE STRUCTURE			4

DESCRIPTION OF THE BUSINESS			5

VISION AND GUIDING PRINCIPLES			5

BUSINESS OBJECTIVES AND STRATEGY			6

ACTIVE INVESTMENT VEHICLES			9

GENERAL DEVELOPMENT OF THE BUSINESS			10

OUR REVENUES			11

SENIOR MANAGEMENT TEAM			12

EMPLOYEES			16

RISK FACTORS			16

DIVIDENDS			26

DESCRIPTION OF CAPITAL STRUCTURE			26

MARKET FOR SECURITIES			29

ESCROW OF SECURITIES			29

DIRECTORS AND OFFICERS			30

PROMOTERS			34

LEGAL PROCEEDINGS AND REGULATORY ACTIONS			34

TRANSFER AGENT AND REGISTRAR			34

AUDIT COMMITTEE INFORMATION			34

INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS			35

INTERESTS OF EXPERTS			36

MATERIAL CONTRACTS			36

ADDITIONAL INFORMATION			36

ADDENDA			37

SCHEDULE A – AUDIT COMMITTEE CHARTER			37

2020 ANNUAL INFORMATION FORM

GENERAL MATTERS

Unless otherwise indicated or the context otherwise requires, “Company” or “Tricon” refers to Tricon Residential Inc. and its material direct and indirect subsidiary entities. The terms “we” and “our” are references to the Company. Unless otherwise indicated, all dollar amounts in this Annual Information Form (“AIF”) are expressed in U.S. dollars and references to “$” are to U.S. dollars; references to “C$” are to Canadian dollars.

Market data and other statistical information in this AIF are based on independent industry publications, government publications, reports by market research firms, or other published independent sources. Some data is also based on the Company’s good faith estimates that are derived from its review of internal data and information, as well as independent sources, including those listed above. Although the Company believes these sources are reliable, the Company has not independently verified the information and cannot guarantee its accuracy or completeness.

The information contained in this AIF is as of December 31, 2020, unless otherwise indicated.

Forward-Looking Statements

Certain statements in this AIF 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. In addition to the specific assumptions noted below, such assumptions include, but are not limited to: Tricon’s positive future growth potential; continuing positive investment and operating performance; continuing positive future prospects and opportunities; demographic and industry trends remaining unchanged; availability of a stable workforce; future levels of indebtedness; and current economic conditions not deteriorating.

This AIF may include forward-looking statements pertaining to the following (see “Description of the Business”):

•

Anticipated investment and operating performance (including, in particular: projected returns, timelines, development plans, sales expectations, unrealized investment value, and projected cash flows). These measures are based on Tricon’s own analysis of relevant market conditions and the prospects for its business and investments, and on projected cash flows and project plans for incomplete projects in its Investment Vehicles. Projected cash flows are determined based on detailed quarterly and annual budgets and cash flow projections prepared by developers for all incomplete projects. Numerous factors may cause actual investment performance to differ from current projections, including those factors noted under “Risk Factors”.

•

Anticipated demand for single-family and multi-family rental properties, apartment suites and homebuilding, and any corresponding effect on occupancy rates and more generally on the Company’s performance. These statements are based on management’s analysis of demographic and employment data and other information that it considers to be relevant indicators of trends in residential real property demand in the markets in which the Company operates. Housing demand is dependent on a number of factors, including macroeconomic factors, many of which are discussed in this AIF under “Risk Factors”. If these or other factors lead to declining demand, occupancy and the pace or pricing of home sales may be negatively impacted, with a corresponding negative impact on the value of the Company’s investments and its financial performance.

•

The pace of acquisition and the ongoing availability of single-family rental homes at prices that match the Company’s underwriting model. These statements are based on management’s analysis of market data that it considers to be relevant indicators of trends in home pricing and availability in the markets in which the Company carries on its business. Home prices are dependent on a number of factors, including macroeconomic factors, many of which are discussed in this AIF under “Risk Factors”. If these or other factors lead to increases in home prices above expectations, it may become more difficult for the Company to find rental homes at prices that match its underwriting model.

•

The intentions to build portfolios and attract further third-party investment in the Company’s businesses. These statements are based on management’s current intentions in light of its analysis of current market conditions, the growth prospects for the Company’s businesses, and the Company’s understanding of investor interest in the sectors, which are factors outside of the Company’s control. Should market conditions or other factors impact the Company’s ability to build portfolios or its ability to execute on its current strategies, actual results may differ from its current intentions.

•

The intention to internalize property management of the Company’s assets and syndicate an interest in its U.S. multi-family rental portfolio and the expected synergies and other benefits arising therefrom. These statements are based on management’s current intentions in light of its continuing financial and operational analysis of its businesses; however, there can be no assurance that these plans will be undertaken or that any expected benefits will be realized.

TRICON RESIDENTIAL 2020 ANNUAL INFORMATION FORM 1

2020 ANNUAL INFORMATION FORM

Forward-looking statements involve significant known and unknown risks, uncertainties and assumptions. Many factors, including those noted above, could cause Tricon’s actual results, performance or achievements to be materially different from any results, performance or achievements that may be expressed or implied by forward-looking statements in this AIF, including, without limitation, those listed under “Risk Factors”. 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 AIF. See “Risk Factors” 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, which could cause actual results to deviate from the forward-looking statements.

Although the forward-looking statements contained in this AIF 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 AIF are expressly qualified in their entirety by this cautionary statement. We caution that the foregoing list of important factors that may affect future results is not exhaustive. 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 AIF 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, whether written or oral, to reflect new information, events, results or circumstances or otherwise after the date on which such statement is made to reflect the occurrence of unanticipated events, except as required by law, including securities laws.

Non-IFRS Measures

The Company measures the success of the business by employing several key performance indicators that are 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 standardized definitions prescribed by IFRS, they are less likely to be comparable with other issuers or peer companies. The key performance indicators used by the Company are described in detail in the 2020 MD&A.

GLOSSARY OF TERMS

In this Annual Information Form, the following terms have the meanings set forth below, unless otherwise indicated. Words importing the singular include the plural and vice versa, and words importing any gender include all genders: “2020 MD&A” means the Company’s Management’s Discussion and Analysis for the year ended December 31, 2020, available on SEDAR at www.sedar.com.

“2022 Convertible Debenture Indenture” has the meaning set out under “Description of Capital Structure – Convertible Debentures”.

“2022 Debentures” has the meaning set out under “Description of Capital Structure – Convertible Debentures”.

“Active Investment Vehicles” means, collectively, the Separate Accounts, commingled funds, Side-cars and Syndicated Investments described under “Description of the Business – Active Investment Vehicles”.

“ASRS” means Arizona State Retirement System.

“Audit Committee” means the audit committee of the Board of Directors.

“Board of Directors” or “Board” means the board of directors of Tricon Residential Inc.

“commingled fund” means a closed-end commingled fund managed by Tricon and formed for the purpose of investing in development properties or other transactions.

“Common Shares” means the common shares in the capital of Tricon Residential Inc.

“institutional investors” means entities that generally have substantial assets and investment experience including, but not limited to, sovereign wealth funds, pension funds, endowment funds, insurance companies and banks.

“Investment Vehicle” means an investment vehicle managed by Tricon, including commingled funds, Separate Accounts and Side-cars.

“Johnson” means The Johnson Companies LP.

“middle market” means U.S. households with household incomes of $60,000 to $100,000 per annum that would be expected, based on this income level, to seek home rental rates of $1,200 to $1,800 per month.

2 2020 ANNUAL INFORMATION FORM TRICON RESIDENTIAL

2020 ANNUAL INFORMATION FORM

“MPC” means master-planned community.

“Multi-Family Fund” means Starlight U.S. Multi-Family (No. 5) Core Fund.

“Performance Fees” means incentive or performance fees earned from achieving target investment returns in an Investment Vehicle.

“Separate Account” means an Investment Vehicle in which the Company manages an investment on behalf of one or two institutional investors (and invests alongside those investors) for a singular investment or strategy and in respect of which Tricon earns fee income.

“SFR JV-1” means the joint venture arrangement entered into between the Company and two institutional investors to assemble a portfolio of single-family rental homes that will be acquired and managed by the Company.

“Side-car” or “Side-car Investment” or “Syndicated Investment” means an Investment Vehicle that invests alongside a commingled fund in respect of a particular investment.

“Sun Belt” means the series of states in the southwestern and southern U.S. commonly known as the “Sun Belt”. “Syndicated Investment” – see “Side-car”.

“THP US SP1” means Tricon Housing Partners US Syndicated Pool 1, a Separate Account formed in 2016. “THP US SP2” means Tricon Housing Partners US Syndicated Pool 2, a Separate Account formed in 2017.

“THP1 Canada” means Tricon Housing Partners Canada LP (formerly Tricon VIII Limited Partnership), a limited partnership formed under the laws of the Province of Ontario, together with associated fund entities.

“THP1 US” means Tricon Housing Partners US LP (formerly Tricon IX, L.P.), a limited partnership formed under the laws of the State of Delaware, together with associated fund entities.

“THP2 Canada” means Tricon Housing Partners Canada II LP (formerly Tricon X Limited Partnership), a limited partnership formed under the laws of the Province of Ontario, together with associated fund entities.

“THP2 US” means Tricon Housing Partners US II LP (formerly Tricon XI, L.P.), a limited partnership formed under the laws of the State of Delaware, together with associated fund entities.

“THP3 Canada” means Tricon Housing Partners Canada III LP (formerly Tricon XII Limited Partnership), a limited partnership formed under the laws of the Province of Ontario, together with associated fund entities.

“THPAS JV-1” means the joint venture arrangement entered into between the Company and ASRS to fund the single-family rental build-to-rent development projects and some for-sale housing development projects.

“TSX” means the Toronto Stock Exchange.

TRICON RESIDENTIAL 2020 ANNUAL INFORMATION FORM 3

2020 ANNUAL INFORMATION FORM

CORPORATE STRUCTURE

Name, Address and Information

A predecessor of the Company was incorporated under the Business Corporations Act (Ontario) on June 3, 1988 as “Tri Continental Capital Management Inc.” On June 16, 1997, the Company was incorporated under the Business Corporations Act (Ontario) as “Tri Continental Management Inc.”, and continued to carry on the business. The Company changed its name to “TCC Management Inc.” on July 10, 1997, to “Tri Continental Capital Ltd.” on March 19, 1999, and to “Tricon Capital Group Inc.” on May 20, 2005, before changing its name to “Tricon Residential Inc.” on July 7, 2020. The Company’s head and registered office is located at 7 St. Thomas Street, Suite 801, Toronto, Ontario M5S 2B7.

Inter-Corporate Relationships

The following diagram depicts the inter-corporate relationships among the Company’s key subsidiaries as at the date hereof and indicates which of the Company’s investments and activities are carried on through them:

LOGO

The diagram above does not depict the structure of further subsidiary entities through which specific investments or activities are undertaken within the various investment verticals. The voting securities of all subsidiaries depicted are beneficially owned, directly or indirectly as depicted, entirely by the Company. Tricon American Homes LLC, Tricon Single-Family Rental REIT LLC, Tricon US Topco LLC, Tricon US Rental Topco LLC, Tricon US Rental REIT LLC, Tricon US Multi-Family Aggregator LLC, SFR JV-1 Investor LLC, Tricon Holdings USA LLC, Tricon USA Inc. and Tricon JDC LLC are Delaware entities. Tricon US Multi-Family REIT Inc. is a Maryland corporation. All other entities are Ontario corporations or limited partnerships.

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DESCRIPTION OF THE BUSINESS

Tricon is a rental housing company focused on serving the middle-market demographic. Tricon owns and operates approximately 31,000 single-family rental homes and multi-family rental units in 21 markets across the United States and Canada, managed with an integrated technology-enabled operating platform. More information about Tricon is available at www.triconresidential.com.

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 is 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

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.

Tricon’s activities are also guided by Environmental, Social and Governance (“ESG”) factors, as outlined in section 1.3 of the 2020 MD&A and our inaugural ESG roadmap, published in January 2020 and available on SEDAR at www.sedar.com. 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.

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.

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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.

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 Sun Belt and targets the middle-market resident demographic. The 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).

Within its targeted geographic markets in the United States, 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 with professional property management.

Single-Family Rental

Tricon owns and operates one of the largest portfolios of single-family rental homes in the 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.

Additional details of the Company’s single-family rental business, including financial performance and key performance indicators, are set out in Section 4.1 of the 2020 MD&A.

Multi-Family Rental

In the U.S., Tricon owns a portfolio of high-quality, affordably priced garden-style apartments primarily in the 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.

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In Canada, Tricon operates The Selby, a 500-unit Class A rental property situated at Bloor Street East and Sherbourne Street in downtown Toronto, which was completed in 2019 and is now substantially stabilized. Tricon partnered with a major Canadian pension plan to form a Separate Account on an 85/15 basis (Investor/Tricon). The project was developed by Tricon and is being managed through Tricon’s vertically integrated platform, including local property management employees.

Additional details of the Company’s multi-family rental business, including financial performance and key performance indicators, are set out in Section 4.2 of the 2020 MD&A.

Residential Development

In its residential development business, Tricon participates in the development of 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) the Company’s 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.

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 competitive advantage and is able to develop properties designed specifically to serve rental residents in a Toronto market saturated with investor-driven condominium projects.

The Company’s Canadian multi-family development projects are described briefly below. 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.

The Taylor is an approximately 286-unit tower located immediately south of King Street West on Spadina Avenue. Tricon partnered with a major Canadian pension plan to form a Separate Account for this project on a 70/30 basis (Investor/Tricon). The project is being developed by Tricon.

The James is Tricon’s flagship rental development prominently located in the Rosedale/Summerhill neighbourhood. The development site is adjacent to The Shops of Summerhill, a commercial property also owned by Tricon. The James had been owned on a 50/50 basis with Diamond Corporation, and Tricon had owned a 25% interest of the Shops at Summerhill in a joint venture with RioCan REIT; however on June 23, 2020, Tricon acquired the remaining 50% and 75% of The James and The Shops of Summerhill, respectively, and now wholly owns these properties.

The West Don Lands is a large-scale mixed-income community under development comprising four projects in multiple blocks in Toronto’s West Don Lands, immediately adjacent to the Distillery District. The projects are being developed in a partnership with Dream Unlimited Corp. and Kilmer Group on an equal ownership basis and will comprise approximately 2,525 rental units, made up of 70% market-rate units and 30% affordable units, as well as ancillary retail and potential office space, as part of the Provincial Affordable Housing Lands Program.

The Ivy is a 231-unit rental building development located just south of the Yonge and Bloor Street intersection. For this project, Tricon partnered with a strategic investor on a 53/47 basis (Investor/Tricon). The project is being co-developed by Tricon and Angel Developments.

7 Labatt is a 1.3-acre site situated immediately south of the Regent Park revitalization project expected to be developed into approximately 300 purpose-built rental units and some condominium units. The project is owned in a Separate Account with TAS Design Build and a major Canadian pension plan on a 20/50/30 basis (TAS/Investor/Tricon) and is being co-developed by Tricon and TAS.

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 THPAS JV-1 (see “Active Investment Vehicles”, below). 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.

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Land Development and Homebuilding (For-Sale Housing)

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. The investments are structured as self-liquidating transactions, generally with cash flow generated as land, lots and homes are sold to third-party buyers (typically large homebuilders in the case of land and master-planned communities, and end consumers in other cases).

Tricon also serves as the developer of certain of its MPCs through its Houston-based subsidiary, The Johnson Companies LP, 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.

As part of its transformation to a rental housing company, Tricon plans to continue to reduce its balance sheet exposure to for-sale housing assets over time through natural liquidation and, where possible, the strategic disposition of assets. In furtherance of this objective, on January 22, 2020, the Company completed the syndication of 50% of one of its direct for-sale housing investments to THPAS JV-1 (see “Active Investment Vehicles”, below). Notwithstanding this goal, investments in for-sale housing remain an important source of cash flow for the Company.

Additional details of Tricon’s residential development business, including portfolio composition, financial performance and key performance indicators are set out in Section 4.3 of the 2020 MD&A.

Private Funds and Advisory

Through its Private Funds and Advisory business, Tricon earns fees from managing third-party capital co-invested in its Investment Vehicles. 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 might 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. 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 across its single-family rental, multi-family rental and residential development businesses.

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.

(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 Investment Vehicles) and Canadian multi-family assets and intends to internalize 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.

Section 4.4 of the 2020 MD&A contains a summary of the performance of the Company’s Private Funds and Advisory activities as of December 31, 2020.

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Active Investment Vehicles

Each of the Company’s Active Investment Vehicles is profiled briefly below.

Single-Family Rental Separate Accounts

On June 27, 2018, the Company entered into SFR JV-1, a joint venture arrangement with two leading institutional investors to assemble a portfolio of single-family rental homes to be acquired and managed by Tricon. The joint venture is funded by a total equity commitment of $750 million.

Canadian Multi-Family Separate Accounts

The Company has a number of Separate Accounts in respect of its Canadian multi-family rental stabilized assets and development projects which are described above under the headings “Multi-Family Rental” and “Residential Development”.

U.S. Residential Development Investment Vehicles

THPAS JV-1 Separate Account

On August 20, 2019, Tricon entered into THPAS JV-1 with ASRS. The total equity committed to this venture is $450 million, including $400 million from ASRS and $50 million from Tricon. Through this joint venture, Tricon aims to fund the development of single-family build-to-rent communities to be incorporated into the Company’s rental operations platform, with some secondary investments in for-sale housing assets.

Tricon Housing Partners US Syndicated Pool 2

THP US SP2 is a Separate Account formed in March 2017 to support the acquisition and development of a land parcel located in Queen Creek, Arizona. Tricon has committed approximately 20% of the required capital for the investment, with the remainder being committed by its partner.

Tricon Housing Partners US Syndicated Pool 1

THP US SP1 is a Separate Account formed in 2016 to invest in two for-sale housing projects in Belmont, California and Phoenix Arizona. Tricon has committed approximately 20% of the required capital for the investments, with the remainder being committed by its partner.

Viridian Separate Account

Viridian is a Separate Account formed in 2015 to support the acquisition and development of an existing 2,083-acre master-planned community in Dallas-Fort Worth, Texas. Tricon committed approximately 18% of the required capital for the investment, with the balance being committed by an institutional investor. The property is being developed by Johnson.

Trilogy at Verde River Separate Account

Trilogy at Verde River was a Separate Account formed in 2014 to support the acquisition and for-sale development of an age-targeted, resort-style community located in Phoenix, Arizona. Tricon committed approximately 10% of the required capital for the transaction, with the remainder being committed by an institutional investor. In February 2021, the underlying project was sold to a third party and the separate account is being unwound.

Lake Norman Side-car Investment

Lake Norman is a Side-car Investment made in 2014 to support the acquisition and for-sale development of an age-targeted, resort-style community located in Charlotte, North Carolina. THP2 US committed approximately 27% of the required capital for the transaction, with the remaining capital being committed 90% by an institutional investor and 10% by Tricon. The property is being developed by Trilogy Active Lifestyle Communities. In December 2020, Tricon’s institutional capital partner sold its interest in the project to the developer. Tricon and THP2 US remain invested in the project.

Arantine Hills Side-car Investment

Arantine Hills is a Side-car Investment made in 2014 to support the acquisition and development of a master-planned community located in Corona, California. THP2 US committed approximately 25% of the required capital for the transaction, with the remaining capital being committed 90% by an institutional investor and 10% by Tricon.

Grand Central Park Separate Account

Grand Central Park is a Separate Account formed in 2013 to support the acquisition and development of a large mixed-use master-planned community in the city of Conroe (Houston MSA), Texas. Tricon committed approximately 10% of the required capital for the Separate Account, with the balance being committed by an institutional partner. The property is being developed by Johnson.

Vistancia West Side-car Investment

Vistancia West is a Side-car Investment made in 2013 to support the acquisition and for-sale development of an age-targeted, resort-style community in Phoenix, Arizona. THP2 US committed approximately 27% of the required capital for the transaction, with the remaining capital being committed 90% by an institutional investor and 10% by Tricon. The property is being developed by Trilogy Active Lifestyle Communities. In December 2020, Tricon’s institutional capital partner sold its interest in the project to the developer. Tricon and THP2 US remain invested in the project.

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THP2 US

THP2 US is a commingled fund that had its final closing in December 2013 with approximately $334 million of total capital commitments. The fund is fully invested in for-sale housing projects in the U.S.

THP3 Canada

THP3 Canada is a commingled fund that had its final closing in early 2012 with total committed capital of approximately C$196 million. The fund is fully invested in for-sale housing projects in selected urban markets in Canada.

Cross Creek Ranch Separate Account

Cross Creek Ranch is a Separate Account formed in 2012 to invest in the acquisition and development of a master-planned community located just southwest of Houston, Texas. Tricon committed approximately 10% of the required capital for the Separate Account, with the balance being committed by an institutional partner. The property is being developed by Johnson.

THP1 US

THP1 US is a commingled fund that had its final closing in January 2009 with total committed capital of $332.8 million. The fund is fully invested in for-sale housing projects in the U.S. The Company acquired an approximate 68.4% limited partnership interest in THP1 US in 2013.

THP2 Canada

THP2 Canada is a commingled fund that had its final closing in April 2009 with total committed capital of approximately C$85 million. THP2 Canada is fully invested in for-sale housing projects in Toronto and Alberta.

THP1 Canada

THP1 Canada is a commingled fund that had its final closing in December 2005 with total committed capital of approximately C$100 million. THP1 Canada is fully invested in for-sale housing projects in Toronto and Alberta.

Canadian Syndicated Investments

The Company has three Canadian Syndicated Investments (5 St. Joseph, Heritage Valley and Mahogany) that have co-invested alongside its three active Canadian commingled funds.

General Development of the Business

The general development of the Company’s business over the past three fiscal years is summarized below. See also the description of the Company’s businesses above under the headings “Business Objectives and Strategy” and “Active Investment Vehicles”.

On May 14, 2020, Tricon announced that, as a final step in its transformation to a rental housing company, the Company was realigning its operating structure, rebranding itself and its operations, and changing its name to “Tricon Residential Inc.”, which name change was duly approved at the last meeting of the Company’s shareholders and became effective on July 7, 2020.

The Company’s new operating structure establishes one unified company and eliminates the parent company/operating subsidiary model that existed under investment entity accounting (including the elimination of the monikers “Tricon American Homes” (single-family rental) “Tricon Lifestyle Rentals” (multi-family rental) and “Tricon Housing Partners” (for-sale housing)).

In keeping with the restructuring, changes were made to Tricon’s executive leadership team to reflect the realignment and harmonization of the Company’s operations (see “Description of the Business – Senior Management Team” and “Directors and Officers”).

Rental Businesses

The Company has grown its managed portfolio of U.S. single-family rental homes to 22,794 homes in 18 core markets across ten states as of December 31, 2020.

In January 2020, the Company completed the internalization of property management for its Canadian multi-family portfolio.

In June 2019, Tricon completed the acquisition of the Multi-Family Fund, valued at approximately $1.3 billion, which established a new multi-family rental platform for Tricon in the United States. The acquired portfolio consists of 23 high-quality properties comprised of predominantly garden-style apartment complexes located in desirable suburban neighbourhoods, primarily within the Sun Belt states. In January 2020, all asset management functions for this portfolio were fully transitioned to Tricon.

In November 2018, Tricon announced that it had opened the doors on the Selby, its first purpose-built Class A rental apartment building in Toronto.

On June 27, 2018, the Company entered into SFR JV-1. Further details are set out above under “Active Investment Vehicles”.

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Private Funds and Advisory

On February 24, 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 terms of this new Investment Vehicle, the formation of which remains subject to outstanding conditions described in the Company’s news release, 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.

On March 31, 2020, the Fulshear Farms Separate Account was unwound following the sale of the underlying project. The Separate Account had been formed in 2013 to acquire and develop a large master-planned community in Houston, Texas, with Tricon committing approximately 10% of the required capital for the transaction and the remainder being committed by an institutional partner.

On August 11, 2019, the Company entered into THPAS JV-1. Further details are set out above under “Active Investment Vehicles”.

See also “Active Investment Vehicles”, for further relevant developments in the Company’s Active Investment Vehicles.

Public Financing and Reporting

On August 26, 2020, Tricon and its subsidiary, Tricon PIPE LLC, entered into subscription agreements pursuant to which a syndicate of investors subscribed for exchangeable preferred units of the subsidiary, which are exchangeable into Common Shares, for an aggregate subscription price of $300 million. The transaction was completed on September 3, 2020 and its material terms are summarized in the Company’s related material change report which, together with the material transaction documents, is available on SEDAR at www.sedar.com.

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.

On June 11, 2019, the Company issued 50,779,311 Common Shares in consideration for the acquisition of the Multi-Family Fund. On October 2, 2019, the Company announced the early removal of the transfer restrictions, or “lock-up”, that had been put in place on such Common Shares at the time of issuance and all such Common Shares are now freely tradeable on the TSX. On March 4, 2020, the Company acquired and cancelled 1,867,675 of the Common Shares issued in connection with the acquisition pursuant to the exercise of associated put rights by their holders.

On October 9, 2018, the Company completed the redemption of its then-outstanding 5.60% convertible unsecured subordinated debentures.

Our Revenues

The Company earns revenues from its rental properties and through its Private Funds and Advisory business. The business segment contribution to the Company’s revenues over the past two fiscal years is detailed in the Company’s financial statements and the 2020 MD&A, which also contain more detailed explanations of the Company’s revenue recognition.

Revenue from Rental Properties

Revenue from rental properties is generated from leasing single-family rental homes and multi-family rental units. 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. 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 are not primary rental revenue from a lease contract. Ancillary revenue includes application fees, late fees, early termination fees, pet fees, smart home technology and other service fees.

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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 Investment Vehicle partners for which it earns market-based fees. These contractual fees are typically 1–2% of committed or invested capital throughout the lives of the Investment Vehicles under management. The Company may also earn Performance Fees once targeted returns are achieved by an Investment Vehicle. The Company recognizes Performance Fees 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 includes 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.

The Company also earns development management and advisory service fees from 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 these revenues 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 future 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. The management fees earned in exchange for providing development management and advisory services are billed upon the sale of the property. A summary of Johnson’s development advisory fees and sales activity is provided in the 2020 MD&A.

The Company also earns property management fees, leasing fees, acquisition and disposition fees, and construction management fees through its rental operating platform. These management services are satisfied over time and revenues are recognized as services are provided.

Income from Investments in For-Sale Housing

The Company 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.

Senior Management Team

The strategic direction and leadership of Tricon are provided by a senior management team that has substantial expertise in all aspects of the Company’s business. The Company believes that the quality and commitment of its management team are the most important factors in the Company’s success. Biographies of the members of the senior management team as of the date of this AIF are set out below and on the Company’s website at www.triconresidential.com.

Gary Berman, President and Chief Executive Officer

Gary Berman is responsible for Tricon’s overall operations, including strategic planning, investment decisions, capital commitments, relationship management and private fundraising. Since joining the Company in 2002, Mr. Berman has helped transform Tricon from a private provider of equity and mezzanine capital to the for-sale housing industry to a publicly-listed company focused on rental housing. Under his leadership, Tricon has established itself as a diversified residential company with a growing portfolio of single-family rental homes, multi-family properties, development projects, and build-to-rent communities. Mr. Berman is a member of the Company’s Board of Directors as well as its Investment Committee and Executive Committee.

Mr. Berman is a Trustee of the Urban Land Institute, a member of the University of Toronto Real Estate Advisory Committee, and a Governor of the Corporation of Massey Hall and Roy Thomson Hall, where he also serves on the Massey Hall Revitalization Committee. He is the co-founder of the Pug Awards, an online awards and education-based charity that, for a decade, helped to increase architectural awareness and elevate planning and design standards in Toronto.

Mr. Berman has a Master of Business Administration degree from Harvard Business School, where he was designated a Baker Scholar, and a Bachelor of Commerce degree from McGill University, where he graduated first overall in the Faculty of Management.

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David Berman, Co-Founder and Executive Chairman

David Berman has been involved in all phases of Tricon’s development since co-founding the Company in 1988. He served as the Company’s Chairman and Chief Executive Officer until March 2015, and has since transitioned into the role of Executive Chairman. Mr. Berman is a member of Tricon’s Executive Committee and is Chair of its Investment Committee. He has close to 50 years of experience in the real estate industry in the United States, Canada and abroad.

Mr. Berman began his career in North America in 1978 at what is now Citibank Canada, where he was Vice President of real estate lending. In 1982, he joined First City Development Corporation as Vice President, focusing on real estate acquisitions and equity lending. Prior to co-founding Tricon, Mr. Berman was an Executive Vice President for Lakeview Estates Limited, where he was responsible for land development and single-family homebuilding.

Mr. Berman serves on the board of the Royal Conservatory of Music in Toronto. At the end of 2019, he stepped down from the University of Toronto’s Real Estate Advisory Committee, where he had served for many years. He previously held a similar position at the Fisher Center at the University of California at Berkeley.

Mr. Berman has a Master of Business Administration degree, graduating with High Distinction, and a Bachelor of Science degree from the University of the Witwatersrand in Johannesburg, South Africa.

Geoff Matus, Co-Founder and Director

Geoff Matus co-founded Tricon in 1988 and continues to provide consulting services to the Company. He is a member of the Board of Directors, chairs the Executive Committee and is a member of the Investment Committee.

Mr. Matus is the Chair and co-founder of Cidel Bank of Canada, an international financial services group. He is also the Chair of The Team Companies, a payroll provider for the advertising and entertainment industries. He is a past member of the board of Mount Sinai Hospital (where he currently serves on the Research Advisory Committee), the board of Governing Council of the University of Toronto (where he currently chairs the Pension and Endowment Investment Advisory Committee and the Real Estate Committee) and the Canadian Opera Company. He is a director of the MaRS Discovery District (where he is Chair of the Real Estate Committee) and an honorary director and past Chair of the board of directors of the Baycrest Centre for Geriatric Care. He is the honorary Chair of the Hospital for Sick Kids/Nelson Mandela Children’s Hospital Project. Mr. Matus has founded several other companies and remains a director of some of them.

In 2005, Mr. Matus received the Jewish Federation award for outstanding service to his community. In 2010, he received the Arbor Award for outstanding service to the University of Toronto and, in 2011, was honoured as a “Man of Distinction” by the Israel Cancer Research Fund.

Mr. Matus has Bachelor of Commerce and Law degrees from the University of the Witwatersrand in Johannesburg, South Africa, and a Master of Laws degree from Columbia University in New York. In 2018, the University of Toronto conferred upon Mr. Matus an honorary Doctor of Laws degree.

Wissam Francis, Executive Vice President and Chief Financial Officer

Wissam Francis oversees all aspects of Tricon’s financial management, including financial reporting and analysis, treasury, capital market strategies, investor relations, private capital fundraising, internal audit and tax functions.

Mr. Francis has extensive experience in financial reporting, capital markets, mergers and acquisitions, corporate finance and strategy formulation. He has more than 20 years of experience in real estate, and has been actively involved in a variety of projects and sectors, including residential, retail, industrial, office, mixed-use and development.

Before joining Tricon in 2014, Mr. Francis was a senior member of Ernst & Young’s Transaction Real Estate advisory practice. Prior to that, he was the Director of Finance and Acquisitions at First Capital Realty. Mr. Francis has a CPA, CMA designation and a Master of Business Administration degree from Wilfrid Laurier University, a Master of Arts degree in Economics and Statistics from the University of Waterloo, and a Bachelor of Arts degree in Finance and an Honours degree in Economics from the University of Western Ontario. He also completed Harvard Business School’s Leadership for Senior Executives Program.

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Jonathan Ellenzweig, Chief Investment Officer

Jonathan Ellenzweig is responsible for the strategic oversight of Tricon’s rental housing and development platforms. He helps design and implement investment strategy, manages relationships with key stakeholders, sources new opportunities and oversees teams responsible for business plan execution and asset management. In addition, Mr. Ellenzweig is a member of Tricon’s Investment Committee and leads its San Francisco office.

Since joining Tricon in 2005, Mr. Ellenzweig has been an integral part of many of its defining strategic initiatives, including its initial public offering in 2010, the launch of its single-family rental business in 2012 and its entry into U.S. multi-family rental in 2019.

Prior to joining Tricon, Mr. Ellenzweig worked in investment banking in New York and Toronto for Citigroup Global Markets, where he was a member of the coverage and transaction execution teams for financial services and media/telecom companies. He is a member of the Policy Advisory Board of the Fisher Center for Real Estate and Urban Economics at the University of California, Berkeley, plays a leadership role in the Urban Land Institute, and serves on the Board of Directors of the Lark Theatre, a non-profit single-screen arthouse cinema in Marin County, California.

Mr. Ellenzweig has an Honours Bachelor of Commerce degree with First Class Honours from Queen’s University.

Kevin Baldridge, Chief Operating Officer

Kevin Baldridge is responsible for the operational oversight of Tricon’s U.S. single-family rental and U.S. and Canadian multi-family rental businesses and is a key partner in establishing the strategic direction of the business. Mr. Baldridge leads Tricon’s organic single-family rental acquisition program and its daily operating activities, including marketing, innovation and IT initiatives.

Prior to joining Tricon in 2015, Mr. Baldridge was the President of Irvine Company Apartment Communities, where he was responsible for overseeing all property operations, asset management and acquisitions. Prior to that, he was a Senior Vice President of Boston-based General Investment and Development. Mr. Baldridge is the President and a board member of the National Rental Housing Council and an advisory board member of Zillow. Mr. Baldridge and his wife founded and run Hope in Motion International, a charity that provides medical assistance to orphanages and villages in Latin America. He has also held board positions on the National Multifamily Housing Council, the California Apartment Association, Serving People in Need and JSerra High School.

Mr. Baldridge has a Bachelor of Arts degree in Economics from the University of California, Los Angeles and a Master of Science degree in Finance and Accounting from the London School of Economics.

David Veneziano, Chief Legal Officer and Corporate Secretary

David Veneziano is responsible for overseeing all legal affairs and governance matters related to Tricon Residential’s operational and strategic objectives. Mr. Veneziano has been Tricon’s General Counsel since 2014, providing advice on all aspects of its operations, investments, corporate structuring and finance, compliance and corporate governance. He is also Tricon’s Corporate Secretary and its Chief Compliance Officer.

Before joining Tricon in 2014, Mr. Veneziano served as Vice President and General Counsel of Leisureworld Senior Care Corporation (now Sienna Senior Living), where he was responsible for all legal and governance matters. Prior to working at Leisureworld, Mr. Veneziano practiced law at Goodmans LLP, where he advised a wide array of public and private enterprises in matters relating to tax, mergers and acquisitions, corporate finance, compliance and restructuring.

Mr. Veneziano is a graduate of the University of Toronto Law School and has a Bachelor of Science (Honours) degree in Human Biology and Bioethics from the University of Toronto, from which he graduated with High Distinction.

Sherrie Suski, Chief People Officer

Sherrie Suski is responsible for overseeing Tricon’s human resources function, including the sourcing, recruiting, vetting, hiring, development and retention of employees. She acts as a strategic business advisor to the executive team and departmental heads regarding key business and management issues, organizational strategy and operational effectiveness, and helps elevate team performance through innovative leadership. In order to further Tricon’s ambitious growth plans, Ms. Suski focuses on the hiring, training and development of caring, talented employees – as they are the foundation and future leaders of Tricon Residential.

Ms. Suski brings to Tricon more than 20 years of experience in building, inspiring and retaining high-performance teams. Prior to joining Tricon in 2015, she led human resources and administrative functions for several large multinational organizations and numerous venture-backed start-ups, including in the high-tech and big data space. Ms. Suski is a member of the invitation-only Forbes Human Resources Council and is a regular contributor to Forbes.

Ms. Suski has a Bachelor of Arts degree in Psychology from the University of California, Irvine, where she graduated Cum Laude and Phi Beta Kappa, and a Master of Arts degree in Organizational Psychology from California State University, Long Beach.

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Dean Bender, Head of Marketing

Dean Bender is responsible for overseeing all aspects of Tricon’s marketing and brand communications, including brand development and management, integrated marketing strategy across both traditional and digital channels, public relations and corporate sponsorships. Mr. Bender’s full biography can be found on the Company’s website.

Reshma Block, Head of Technology and Innovation

Reshma Block is responsible for providing IT leadership and strategic direction for Tricon and for introducing innovative new technologies that improve the resident experience and advance the enterprise’s operating efficiencies. Ms. Block’s full biography can be found on the Company’s website.

Julie Burdick, Director, Investments

Julie Burdick is responsible for providing strategic oversight and day-to-day investment management of Tricon’s U.S. multi-family rental business. Ms. Burdick’s full biography can be found on the Company’s website.

Andrew Carmody, Managing Director, Investments

Andrew Carmody oversees Tricon’s U.S. residential development and single-family build-to-rent business, in which role he designs and implements strategy, manages relationships with key stakeholders, sources investment opportunities and oversees the investment team responsible for business plan execution and asset management. Mr. Carmody’s full biography can be found on the Company’s website.

Evelyne Dubé, Managing Director, Private Funds

Evelyne Dubé is responsible for Tricon’s private capital-raising team, business development efforts and sustainability initiatives and serves as the primary liaison with institutional investors in private investment strategies, including pension funds, insurance companies and sovereign wealth funds. Ms. Dubé’s full biography can be found on the Company’s website.

John English, Head of Development

John English is responsible for overseeing the development of all Tricon Residential Canadian multi-family projects and leads cross-functional teams through the project underwriting, municipal approvals, design, budgeting and construction processes. Mr. English’s full biography can be found on the Company’s website.

Kyle Jordan, Director, Investments

Kyle Jordan is responsible for sourcing, evaluating and managing investments for Tricon’s U.S. build-to-rent strategy. Mr. Jordan’s full biography can be found on the Company’s website.

Andrew Joyner, Managing Director, Investments

Andrew Joyner leads Tricon’s Canadian multi-family rental business, in which role he designs and implements strategy, sources investment opportunities, manages senior relationships with joint venture partners and oversees teams responsible for business plan execution, including development, construction and ongoing asset management. Mr. Joyner’s full biography can be found on the Company’s website.

David Mark, Managing Director, Finance

David Mark is responsible for Tricon’s debt financing activities in the U.S. and Canada, including managing the origination, structuring, negotiation and execution of all debt solutions. Mr. Mark’s full biography can be found on the Company’s website.

Gina McMullan, Senior Vice President, Corporate Reporting

Gina McMullan is responsible for overseeing all aspects of Tricon Residential’s corporate reporting and financial management, including public company reporting and various aspects of private reporting. Ms. McMullan’s full biography can be found on the Company’s website.

Wojtek Nowak, Managing Director, Capital Markets

Wojtek Nowak is responsible for managing Tricon’s budgeting, planning and financial analysis functions, public markets investor relations and sustainability initiatives and also serves as a key liaison for Tricon’s shareholders, research analysts and capital markets partners. Mr. Nowak’s full biography can be found on the Company’s website.

Alan O’Brien, Head of Property Operations

Alan O’Brien is responsible for oversight of Tricon’s property management business, including leasing, maintenance, call centre operations and customer service, and is a thought leader in process improvement and efficiency through innovation and the employment of technology. Mr. O’Brien’s full biography can be found on the Company’s website.

Sandra Pereira, Senior Vice President, Head of Tax Services

Sandra Pereira is responsible for the Company’s global tax function, including strategy, planning, reporting, governance and compliance tax matters. Ms. Pereira’s full biography can be found on the Company’s website.

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Douglas P. Quesnel, Chief Accounting Officer

Douglas Quesnel is responsible for all aspects of Tricon’s financial management, including external public reporting, private funds and advisory reporting, investment fund administration and the property accounting operations of Tricon’s single-family and multi-family rental portfolios. Mr. Quesnel’s full biography can be found on the Company’s website.

Bill Richard, Head of SFR Acquisitions & Asset Management

Bill Richard oversees the asset management of Tricon’s rental housing portfolio, as well as single-family rental acquisitions, in which roles he is responsible for portfolio analytics and optimization, revenue management, ancillary revenue, and Tricon’s national organic single-family rental acquisition program. Mr. Richard’s full biography can be found on the Company’s website.

Rick Timmins, Director, Investments

Rick Timmins manages strategic growth initiatives for Tricon’s U.S. multi-family and single-family rental businesses and is responsible for joint venture capital-raising and structuring, investment management and strategic growth planning, as well as maintaining key private investor relationships. Mr. Timmins’ full biography can be found on the Company’s website.

Thomas Walsh, Head of Property Operations Legal

Thomas Walsh is responsible for overseeing all property-related legal, compliance and strategic risk management for Tricon. Mr. Walsh’s full biography can be found on the Company’s website.

Employees

As of December 31, 2020, Tricon had 639 employees in Toronto, Ontario, San Francisco and Orange County, California, and in its field offices across the United States and Canada. The Johnson Companies LP and its subsidiaries employ approximately 104 individuals.

RISK FACTORS

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 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.

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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 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 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.

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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.

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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.

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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.

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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 INFORMATION FORM 21

2020 ANNUAL INFORMATION FORM

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 our 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 homeowner 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.

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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.

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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.

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.

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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.

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 TSX 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.

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DIVIDENDS

All dividends paid by the Company are subject to declaration by Tricon’s Board of Directors. The Company expects that, to the extent permitted under applicable laws, the Board will declare, and the Company will pay, quarterly dividends on its Common Shares in the aggregate annualized amount of C$0.28 per share. The Board re-evaluates its dividend policy from time to time and on February 27, 2018 increased the annualized dividend from C$0.26 to C$0.28 per Common Share. The payment of dividends is not guaranteed, however, and the amount and timing of any dividends payable by the Company will be at the discretion of the Board of Directors and will be established on the basis of a number of factors, including, but not limited to: Tricon’s earnings; financial requirements for the Company’s operations; the satisfaction of solvency tests imposed by applicable corporate law for the declaration and payment of dividends; and the satisfaction of any applicable regulatory capital requirements.

The table below sets out the amount of cash dividends paid by the Company in each of the three most recently completed fiscal years.


Year Ended	Cash Dividend per Common Share (C$)
2018		$ 0.275
2019		$ 0.280
2020		$ 0.280

DESCRIPTION OF CAPITAL STRUCTURE

As at December 31, 2020: (i) 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; (ii) the Company had outstanding $172,400,000 in aggregate principal amount of 2022 Debentures, convertible into 16,481,837 Common Shares; and (iii) a subsidiary of the Company had $300.0 million in outstanding exchangeable preferred units exchangeable into Common Shares at an exchange price of $8.50 per Common Share, as may be adjusted from time to time in accordance with the terms governing the preferred units. As at December 31, 2020, this equates to 35,801,471 Common Shares underlying such exchangeable preferred units.

Common Shares

Holders of Common Shares are entitled to receive notice of and to attend and vote at all meetings of shareholders of the Company, except meetings of holders of another class of shares. Each Common Share entitles the holder thereof to one vote.

Subject to the preferences accorded to holders of any other shares of the Company ranking senior to the Common Shares from time to time with respect to the payment of dividends, holders of Common Shares are entitled to receive, if, as and when declared by the Board, such dividends as may be declared thereon by the Board from time to time in equal amounts per share on the Common Shares at the time outstanding, without preference or priority.

In the event of the voluntary or involuntary liquidation, dissolution or winding-up of the Company, or any other distribution of its assets among its shareholders for the purpose of winding-up its affairs (a “Distribution”), holders of Common Shares are entitled, after payment of debts and other liabilities, in each case subject to the preferences accorded to the holders of any other shares of the Company ranking senior to the Common Shares from time to time with respect to payment on a Distribution, to share equally, share for share, in the remaining property of the Company.

Convertible Debentures

2022 Debentures

On March 17, 2017, Tricon issued $172.5 million in aggregate principal amount of 5.75% extendible convertible unsecured subordinated debentures (the “2022 Debentures”). The 2022 Debentures have a maturity date of March 31, 2022 and are convertible into Common Shares at a conversion rate of 95.6023 Common Shares per $1,000 principal amount of 2022 Debentures (equivalent to a conversion price of approximately $10.46 per Common Share).

The 2022 Debentures bear interest at 5.75% per annum, which is payable semi-annually in arrears in March and September, and were issued pursuant to a trust indenture dated as of March 17, 2017 between Tricon and TSX Trust Company (the “2022 Convertible Debenture Indenture”).

On or after March 31, 2020 and prior to March 31, 2021, the 2022 Debentures may be redeemed by the Company in whole or in part from time to time, on not more than 60 days’ and not less than 30 days’ prior notice, at a price equal to the principal amount thereof plus accrued and unpaid interest, provided that the U.S. dollar equivalent of the volume-weighted average trading price of the Common Shares on the TSX for the 20 consecutive trading days ending on the fifth trading day immediately preceding the date on which notice of redemption is given is not less than 125% of the conversion price. On or after March 31, 2021 and prior to their final maturity date, the 2022 Debentures may be redeemed by the Company in whole or in part and from time to time, on not more than 60 days’ and not less than 30 days’ prior notice, at a price equal to the principal amount thereof plus accrued and unpaid interest.

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Ratings

The pass-through certificates (the “Certificates”), representing an interest in the Company’s outstanding single-family rental securitized loans, the key terms of which are described in the 2020 MD&A (together, the “Securitized Loans”), have been assigned the following ratings by Kroll Bond Rating Agency, Inc. (“KBRA”), Moody’s Investors Service Inc. (“Moody’s”) and/or Morningstar Credit Ratings, LLC (“Morningstar” and, collectively with KBRA and Moody’s, the “Rating Agencies”, and each a “Rating Agency”):


2020-1 Certificates		2020-2 Certificates

Class of Certificates	Rating (KBRA/Moody’s/ Morningstar)	Class of Certificates	Rating (KBRA/Moody’s/ Morningstar)
Class A	AAA(sf)/Aaa(sf)/NA	Class A	NA/Aaa(sf)/AAA(sf)
Class B	AA-(sf)/Aa1(sf)/NA	Class B	NA/Aa3(sf)/AA(sf)
Class C	A-(sf)/A2(sf)/NA	Class C	NA/A3(sf)/A(sf)
Class D	BBB(sf)/Baa3(sf)/NA	Class D	NA/Baa3(sf)/BBB (high)(sf)
Class E	BBB-(sf)/NR/NA	Class E-1	NA/NR/BBB(sf)
Class F	BB-(sf)/NR/NA	Class E-2	NA/NR/BBB(low)(sf)

2019 Certificates		2018 Certificates

Class of Certificates	Rating (KBRA/Moody’s/ Morningstar)	Class of Certificates	Rating (KBRA/Moody’s/ Morningstar)
Class A	AAA(sf)/Aaa(sf)/AAA	Class A	AAA(sf)/Aaa(sf)/AAA
Class B	AA-(sf)/Aa2(sf)/AAA	Class B	AA-(sf)/Aa2(sf)/AA+
Class C	A-(sf)/A2(sf)/AAA	Class C	A-(sf)/A2(sf)/A+
Class D	BBB+(sf)/Baa2(sf)/AA	Class D	BBB(sf)/Baa2(sf)/A-
Class E	BBB-(sf)/NR/A-	Class E	BBB-(sf)/NR/BBB+
Class F	NR/NR/BBB	Class F	BB-(sf)/NR/NR

2017-2 Certificates		2017-1 Certificates

Class of Certificates	Rating (KBRA/Moody’s/ Morningstar)	Class of Certificates	Rating (KBRA/Moody’s/ Morningstar)
Class A	AAA(sf)/Aaa(sf)/AAA	Class A	AAA(sf)/Aaa(sf)/AAA
Class B	AA(sf)/Aa2(sf)/AA	Class B	AA(sf)/Aa2(sf)/AA
Class C	A-(sf)/A1(sf)/A	Class C	A-(sf)/A1(sf)/A
Class D	BBB+(sf)/Baa1(sf)/BBB+	Class D	BBB+(sf)/A3(sf)/BBB+
Class E	BBB-(sf)/-/BBB-	Class E	BBB-(sf)/–/BBB-
Class F	B-(sf)/NR/NR	Class F	NR/NR/B-

The ratings address the likelihood of the timely receipt by certificate holders of interest and principal. The ratings take into consideration the credit quality of the underlying single-family rental homes and the Securitized Loans, structural and legal aspects associated with the Certificates, and the extent to which the payment streams of the Securitized Loans are adequate to make the payments required under the Certificates.

The ratings are not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time by any Rating Agency. In addition, these ratings do not address: (i) the likelihood, timing or frequency of prepayments (both voluntary and involuntary) and their impact on interest payments; (ii) the possibility that a certificate holder might suffer a lower than anticipated yield; (iii) the likelihood of receipt of spread maintenance premiums or default interest; (iv) the likelihood of experiencing prepayment interest shortfalls or of receiving compensating interest payments; (v) the tax treatment of the Certificates or the effect of taxes on the payments received; (vi) the likelihood or willingness of the parties to the respective documents to meet their contractual obligations; or (vii) other non-credit risks.

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The following information relating to the credit rating methodology of each Rating Agency is based on information made available to the public by the Rating Agencies.

Morningstar uses a set of letter ratings ranging from AAA to D to express its opinion of the credit quality of an obligor or security, based on its policies and procedures. Morningstar also provides finer gradations of the ratings ranging from AA to CCC by adding a plus (+) or minus (-) sign to indicate relative strength within the rating categories.

Moody’s uses a set of letter ratings ranging from Aaa to C to express its opinion of the relative credit risks of financial obligations, based on its policies and procedures. Moody’s appends numerical modifiers 1, 2 and 3 to each generic rating classification from Aa through Caa. The modifier 1 indicates that the obligation ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates a ranking in the lower end of that generic rating category. Moody’s appends an “(sf)” indicator to ratings assigned to structured finance obligations.

KBRA uses a set of letter ratings ranging from AAA to D to express its opinion of the relative credit risks of financial obligations, based on its policies and procedures. KBRA may also provide finer gradations of the ratings ranging from AA to CCC by adding a plus (+) or minus (-) sign to indicate relative strength within the rating categories. KBRA appends an “(sf)” indicator to ratings assigned to structured finance obligations.

Dividend Reinvestment Plan

The Company’s Dividend Reinvestment Plan (“DRIP”) dated November 15, 2012, and amended as of May 10, 2016, provides eligible holders of Common Shares with the opportunity to reinvest their cash dividends paid on the 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. The Common Shares acquired under the DRIP will, at the discretion of the Company, either be purchased through the facilities of the TSX or issued by the Corporation from treasury. Details on the DRIP are available on the Company’s website at www.triconresidential.com.

Normal Course Issuer Bid

On July 10, 2019, the TSX approved the Company’s notice of intention to make a normal course issuer bid (“NCIB”) for a portion of its Common Shares. Under the NCIB, the Company was permitted to repurchase for cancellation up to 2.0 million Common Shares during the 12-month period commencing July 15, 2019. The Company repurchased and cancelled 495,402 Common Shares for C$4.9 million under the NCIB.

Shareholder Rights Plan

The Company has in place a Rights Plan, which was continued, amended and restated by the Company’s shareholders on June 26, 2019. The Rights Plan is intended to ensure that a person seeking to acquire control of Tricon gives shareholders and the Board of Directors sufficient time to evaluate a potential bid, negotiate with the initial bidder and encourage competing bids to emerge. The Rights Plan protects shareholders by requiring all potential bidders to comply with certain “Permitted Bid” conditions, or else such bidders will be subject to the dilutive features of the Rights Plan. A more detailed summary and the full text of the Rights Plan are included in the Company’s Management Information Circular dated May 6, 2019, available at www.sedar.com.

28 2020 ANNUAL INFORMATION FORM TRICON RESIDENTIAL

2020 ANNUAL INFORMATION FORM

MARKET FOR SECURITIES

The Common Shares are listed and posted for trading on the TSX under the trading symbol TCN. The high and low trading prices (in Canadian dollars) and total volume traded of the Common Shares on the TSX for each month of the most recently completed fiscal year are set out below.


Month	High (C$)		Low (C$)		Volume
January		11.22		10.45		7,071,874
February		12.11		10.92		12,041,276
March		11.66		5.45		17,277,942
April		8.45		6.47		8,247,482
May		8.39		7.03		7,513,144
June		9.65		7.98		9,722,845
July		9.81		8.94		7,358,981
August		11.05		9.40		7,507,667
September		11.50		10.38		10,721,901
October		11.80		10.73		8,202,860
November		11.61		10.70		9,767,086
December		11.89		10.85		8,323,176

The 2022 Debentures (described under “Description of Capital Structure – Convertible Debentures”) are listed and posted for trading on the TSX under the trading symbol “TCN.DB.U”. The high and low trading prices per $100 principal amount of debentures and total volume traded of the 2022 Debentures on the TSX for each month of the most recently completed fiscal year are set out below.


Month	High (C$)		Low (C$)		Volume
January		104.46		102.75		1,106,000
February		105.52		102.50		3,491,000
March		103.99		83.15		4,646,000
April		94.00		87.00		5,969,000
May		97.00		90.38		12,385,000
June		100.00		95.00		8,471,000
July		100.00		98.50		3,993,000
August		103.81		99.75		8,185,000
September		103.90		100.50		5,664,000
October		103.23		100.80		2,011,000
November		103.00		100.85		5,794,000
December		104.00		100.50		3,180,000

ESCROW OF SECURITIES

The following chart sets out the Common Shares held in escrow in connection with the Company’s Restricted Share Plan as of December 31, 2020.


Designation of class	Number of securities held in escrow or that are subject to a contractual restriction on transfer		Percentage of class
Common Shares		369,113		0.19	%

The Common Shares listed above were acquired pursuant to the Company’s Restricted Share Plan and are held by Solium Capital Inc., as custodian, on behalf of plan participants while the applicable restrictions remain unsatisfied. The restrictions on the Common Shares listed above will lapse in December 2030 and December 2031, subject to earlier forfeiture in accordance with the terms of the Company’s Restricted Share Plan.

TRICON RESIDENTIAL 2020 ANNUAL INFORMATION FORM 29

2020 ANNUAL INFORMATION FORM

DIRECTORS AND OFFICERS

The Company’s Board of Directors is comprised of 10 directors, seven of whom are independent in accordance with the meaning given to such term in National Policy 58-201 – Corporate Governance Guidelines. The by-laws of the Company require that all directors stand for re-election on an annual basis at a meeting of shareholders.

Two of the 10 directors have served since the initial public offering of Tricon’s Common Shares in May 2010. Michael Knowlton was first elected to the Board on May 18, 2011. Peter Sacks and Gary Berman were first elected to the Board on May 21, 2014. Siân Matthews was first elected to the Board on May 20, 2015. Ira Gluskin was first appointed to the Board on November 7, 2016. Camille Douglas was first appointed to the Board on August 7, 2018. Tracy Sherren was first appointed to the Board on June 11, 2019. Frank Cohen was appointed to the Board on September 3, 2020. The term of office for each director expires at the end of the next annual meeting of shareholders, unless re-elected.

Except as described in their biographies below, or above under the heading “Description of the Business – Senior Management Team”, none of the directors are currently directors of other issuers that are also reporting issuers (or the equivalent) in a territory of Canada or in a foreign territory.

The following table lists the directors and executive officers of Tricon as of the date hereof, their municipality of residence, position with the Company and current principal occupation, if different than the position held with the Company. The principal occupations of the directors and executive officers during the past five years are included in their biographies below, or above under the heading “Description of the Business – Senior Management Team”.


Name and Municipality of Residence	Position With the Company	Current Principal Occupation (If Different than Position Held)
David Berman Toronto, Ontario	Co-Founder and Executive Chairman	–

Peter Sacks⁽²⁾ Toronto, Ontario	Lead Director	Corporate Director

Michael Knowlton^(1),(2) Toronto, Ontario	Director	Corporate Director

Siân Matthews⁽²⁾ Calgary, Alberta	Director	Corporate Director

Camille Douglas⁽¹⁾ New York, NY, USA	Director	Senior Managing Director, LeFrak

Ira Gluskin⁽¹⁾ Toronto, Ontario	Director	Chief Investment Officer, Irager + Associates Inc.

Tracy Sherren Halifax, Nova Scotia	Director	Chief Financial Officer, True North Commercial REIT and President, Canadian Commercial, Starlight

Frank Cohen New York, NY, USA	Director	Senior Managing Director, Blackstone

Geoffrey Matus Toronto, Ontario	Co-Founder and Director	Consultant and Corporate Director

Gary Berman Toronto, Ontario	Director, President and Chief Executive Officer	–

Wissam Francis Toronto, Ontario	Executive Vice President and Chief Financial Officer	–

Jonathan Ellenzweig Larkspur, CA, USA	Chief Investment Officer	–

Kevin Baldridge Laguna Beach, CA, USA	Chief Operating Officer	–

Sherrie Suski Mission Viejo, CA, USA	Chief People Officer	–

David Veneziano Toronto, Ontario	Chief Legal Officer and Corporate Secretary	–

(1)	Member of the Audit Committee of the Board.

(2)	Member of the Compensation, Nominating and Corporate Governance Committee of the Board.

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The directors and executive officers of the Company, as a group, directly or indirectly, beneficially own, control or direct, 8,087,285 Common Shares of the Company, representing approximately 4.2% of the total issued and outstanding Common Shares as of December 31, 2020.

The following are brief biographies of the directors of the Company other than David Berman, Geoff Matus and Gary Berman, whose biographies are included above under “Description of the Business – Senior Management Team”.

Peter D. Sacks is the Lead Director of the Company.

Peter Sacks (B.Comm., CA) retired as the founding partner of Cidel Asset Management Inc., now part of Cidel – a Canadian Private Bank. His experience in Wealth Management followed an extensive career in banking during which he held executive positions in Treasury Management at CIBC, Chase Manhattan Bank Canada and Midland Bank Canada.

Mr. Sacks is an independent director/trustee of several U.S. publicly-traded closed-end and open-end funds managed by Standard Life Aberdeen PLC. His past directorships include Kinross Mortgage Corporation Ltd., CIBC Trust Company Ltd., CIBC Limited and Horizons BetaPro ETFs. He also served on the Investment Advisory Committee of the Ontario Public Guardian and Trustee and was Chair of the Independent Review Committee of Children’s Education Funds Inc. His community service has included directorships of Young People’s Theatre, Childhood Now and TSCC 1849.

J. Michael Knowlton is a Director of the Company and the Chair of the Audit Committee.

Michael Knowlton retired from Dundee Realty Corporation in 2011, where he was President and COO of Dundee Real Estate Investment Trust. He joined Dundee Realty in 1998, and held a variety of positions with Dundee Realty and Dundee Real Estate Investment Trust, including Executive Vice President and COO, Executive Vice President and CFO and Managing Director of Limited Partnerships, before becoming President of the REIT in 2006. Prior to that, he was Senior Vice President and CFO of OMERS Realty Corp. from 1990 until 1998.

Mr. Knowlton is a trustee and the Chair of Crombie Real Estate Investment Trust (TSX: CRR.UN) and a trustee and member of the Audit Committee and Governance Committee of Dream Industrial Real Estate Investment Trust (TSX: DIR.UN). He is a former member of the boards of trustees of Dream Global Real Estate Investment Trust, True North Apartment Real Estate Investment Trust and Northwest Healthcare Properties Real Estate Investment Trust.

Mr. Knowlton has a Bachelor of Science (Engineering) degree and a Master of Business Administration degree from Queen’s University. He is a Chartered Accountant and has an ICD.D designation.

Siân Matthews is a Director of the Company and Chair of the Compensation, Nominating and Corporate Governance Committee of the Board.

Siân Matthews is a corporate director. Until 2009, she was a partner and head of the Private Services Group at Bennett Jones LLP and she began her legal career at Macleod Dixon LLP in Calgary.

Ms. Matthews is also a director of Cidel Bank Canada, The Calgary Foundation and the Southern Alberta Opera Association, and a past director and Chair of the Governance Committee of the Calgary Municipal Lands Corporation, a past director and Chair of the Governance Committee of the Heritage Park Society and a past director of the Calgary Opera Association. She is also a director of several private corporations.

Ms. Matthews is the past Chair of Canada Post Corporation, where she had also served as Chair of the Strategic Initiatives Oversight Committee, Chair of the Corporate Social Responsibility and Environmental Risks Committee and a member of the Audit Committee, Governance Committee, Human Resources Committee and Pension Committee.

Ms. Matthews has nationally recognized legal expertise in the areas of taxation and governance and has been distinguished by her peers by inclusion on the Best Lawyers in Canada and the Lexpert Leading Practitioners lists.

Ms. Matthews is a member of the Law Society of Alberta and has a Bachelor of Arts degree from the University of Waterloo, a Juris Doctor degree from the University of Ottawa and an ICD.D designation.

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Ira Gluskin is a Director of the Company.

Ira Gluskin is the Chief Investment Officer of Irager + Associates Inc., a family office overseeing strategy and investments. He is also the co-founder of Gluskin Sheff + Associates Inc., one of Canada’s pre-eminent wealth management firms. He served as the firm’s President and Chief Investment Officer until 2009, and as a Director and the firm’s Vice-Chairman until 2013. Before co-founding Gluskin Sheff, Mr. Gluskin was a highly-ranked real estate securities analyst at a leading Canadian investment dealer.

Mr. Gluskin serves on the Board of Directors of European Residential Real Estate Investment Trust (TSX-V: ERE.UN) and is a member of the Advisory Boards of Vision Capital Corporation, Ewing Morris & Co. Investment Partners Ltd. and the University of Toronto’s Real Estate Advisory Committee. He is also a member of the University of Toronto’s Boundless Campaign Executive Committee, the Sinai Health System’s Board of Directors and Investment Committee and the boards of the Canadian Jewish News, The Walrus Magazine, Capitalize for Kids and the National Theatre School of Canada.

Mr. Gluskin is the former Chair of the University of Toronto Asset Management Corporation and the former Chair of the Investment Advisory Committee for the Jewish Foundation of Greater Toronto, where he is currently a member of its Investment Committee. Mr. Gluskin has a Bachelor of Commerce degree from the University of Toronto. In 2019, he received an Honorary Doctorate of Laws degree from Wilfrid Laurier University.

Camille Douglas is a Director of the Company.

Camille Douglas is a senior executive in the real estate industry with more than 30 years of experience in real estate transactions and financial strategy. Her work has included corporate and project-based acquisitions, dispositions and financing, including pioneering work on commercial mortgage-backed securities and cross-border equity investment.

Ms. Douglas is Senior Managing Director, Acquisitions and Capital Markets at LeFrak, a real estate investment and development company. Since joining LeFrak in 2010, she has been responsible for strategic real estate acquisition and development initiatives. Ms. Douglas serves on the Board of Trustees of Starwood Property Trust (NYSE: STWD), where she is a member of the Audit Committee. In addition, she has been an Adjunct Professor in Finance and Economics at Columbia Business School since 2004. Ms. Douglas has a Master of Urban Planning degree from Harvard University Graduate School of Design and a Bachelor of Arts degree from Smith College.

Tracy Sherren is a Director of the Company.

Tracy Sherren joined Starlight Group Property Holdings Inc., a real estate and investment company, in October 2012 as the Chief Financial Officer of True North Commercial REIT (TSX: TNT.UN). She is Chief Financial Officer of Starlight and is the President of Canadian Commercial. Prior to joining Starlight, Ms. Sherren was the Chief Financial Officer of Pacrim Hospitality Services Inc. from January 2005 to September 2012 and the Chief Financial Officer of Holloway Lodging Corp. from its inception in 2005 until July 2011. While at Holloway, she was responsible for construction and long-term financing of commercial properties, operations management, financial reporting, investor relations and corporate tax planning.

Ms. Sherren serves on the Board of Directors of VM Hotel Acquisition Corp. (TSX: VMH.V). With more than 25 years of experience, Ms. Sherren has participated in over $1 billion of financings and led asset management teams, acquisition due diligence and real estate development, and has extensive experience in transaction structuring and risk management.

Ms. Sherren is a Chartered Accountant and has a Bachelor of Business Administration degree from Acadia University. Frank Cohen is a Director of the Company.

Frank Cohen is a Senior Managing Director at Blackstone, a leading global investment firm that he joined in 1996. In this capacity, he is the Global Head of Core+ Real Estate and the Chairman and CEO of Blackstone Real Estate Income Trust. During his career with the firm, he has been involved in more than $100 billion of real estate transactions.

He serves as a director for several Blackstone-affiliated companies, including Blackstone Real Estate Income Trust and EQ Office, and was formerly a director of Hudson Pacific Properties (NYSE: HPP). He is also active in several industry and civic organizations; he is a Trustee of the Urban Land Institute, on the NAREIT Advisory Board of Governors, on the Board of the Regional Plan Association and on the Board of Visitors of the Weinberg College of Arts and Sciences at Northwestern University.

Mr. Cohen has a Bachelor of Arts degree from Northwestern University, where he graduated from the Honours Program in Mathematical Methods in the Social Sciences, with a double major in political science.

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Cease Trade Orders, Bankruptcies, Penalties or Sanctions

None of the directors or executive officers or proposed directors of the Company is, as at the date of this Annual Information Form, or has been within the ten years before the date of this Annual Information Form, a director, chief executive officer or chief financial officer of any person or company (including the Company) that was subject to one of the following orders, that was in effect for a period of more than 30 consecutive days:

(a)	a cease trade order, an order similar to a cease trade order or an order that denied the company access to any exemption under securities legislation that was issued while the director or executive officer was acting in his or her capacity as director or executive officer; or

(b)

a cease trade order, an order similar to a cease trade order or an order that denied the company access to any exemption under securities legislation that was issued after the director or executive officer ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while that person was acting in his or her capacity as director, chief executive officer or chief financial officer.

None of the directors or executive officers of the Company, or shareholders holding a sufficient number of securities of the Company to materially affect its control:

(a)

is, as at the date of this Annual Information Form, or has been within the ten years before the date of this Annual Information Form, a director or executive officer of any company (including the Company) that, while that person was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets; or

(b)

has, within the ten years before the date of this Annual Information Form, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of the director, executive officer or shareholder; or

(c)

has had imposed any penalties or sanctions by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority or has had imposed any penalties or sanctions by a court or a regulatory body that would likely be considered important to a reasonable investor in making an investment decision.

Conflicts of Interest

The directors of the Company are required by law to act honestly and in good faith with a view to the best interest of the Company and to disclose any interests which they may have in any project or opportunity of the Company. However, the Company’s directors and officers may serve on the boards and/or as officers of other companies which may compete in the same industry as the Company, giving rise to potential conflicts of interest. To the extent that such other companies may participate in ventures in which the Company may participate or enter into contracts with the Company, they may have a conflict of interest in negotiating and concluding terms respecting the extent of such participation. In the event that a conflict of interest arises at a meeting of the directors of the Company, such conflict of interest must be declared and the declaring parties must recuse themselves from the meeting and abstain from participating and voting for or against the approval of any project or opportunity in which they may have an interest. Provided such steps are followed and subject to any limitations in the Company’s constating documents, a transaction would not be void or voidable because it was made between the Company and one or more of its directors or by reason of such director being present at the meeting at which such agreement or transaction was approved. The remaining directors will determine whether or not the Company will participate in any such project or opportunity.

To the best of the Company’s knowledge, there are no known existing or potential conflicts of interest among the Company’s directors, executive officers or other members of management of the Company as a result of their outside business interests.

The directors and officers of the Company are aware of the existence of laws governing accountability of directors and officers for corporate opportunity and requiring disclosures by directors of conflicts of interest, and the Company will rely upon such laws in respect of any directors’ or officers’ conflicts of interest or in respect of any breaches of duty by any of its directors or officers.

TRICON RESIDENTIAL 2020 ANNUAL INFORMATION FORM 33

2020 ANNUAL INFORMATION FORM

PROMOTERS

No person was considered a promoter of Tricon for the purposes of applicable securities legislation during the last two completed fiscal years of the Company.

LEGAL PROCEEDINGS AND REGULATORY ACTIONS

The Company was not party to, nor was its property the subject of, any material legal proceedings during the 2020 fiscal year, nor is it aware that any such proceedings are contemplated.

No penalties or sanctions relating to securities legislation were imposed, nor were any related settlement agreements entered into, nor were there any other material penalties or sanctions imposed by a court or regulatory body, on or by the Company during the 2020 fiscal year.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Common Shares is TSX Trust Company at its principal office located at 301–100 Adelaide Street West, Toronto, Ontario M5H 4H1.

AUDIT COMMITTEE INFORMATION

Audit Committee Charter

The full text of the Charter of the Audit Committee is set out in Schedule A.

Audit Committee Composition

The Audit Committee is composed of three independent,¹ financially literate² directors as of the date of this AIF: Michael Knowlton (who chairs the committee), Ira Gluskin and Camille Douglas. An outline of the Audit Committee members’ work experience and education is set out above under “Directors and Officers”. The Board believes that the composition of the Audit Committee reflects a high level of financial literacy. Each member of the Audit Committee has education and experience that is relevant to his or her performance as an Audit Committee member and has, in particular, education and experience that have provided the member with:

(a)	an understanding of the accounting principles used by the Company to prepare its financial statements;

(b)	the ability to assess the general application of the above-noted principles in connection with estimates, accruals and reserves;

(c)

experience preparing, auditing, analyzing or evaluating financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised by the Company’s financial statements, or experience actively supervising individuals engaged in such activities; and

(d)	an understanding of internal controls and procedures for financial reporting.

(1)

Pursuant to National Instrument 52-110 – Audit Committees, as amended, of the Canadian Securities Administrators (“NI 52-110”), a member of an audit committee is independent if the member has no direct or indirect material relationship with the Company, which could, in the view of the Board, reasonably interfere with the exercise of a member’s independent judgment.

(2)

An individual is financially literate if he or she has the ability to read and understand a set of financial statements that present a breadth of complexity of accounting issues that are generally comparable to the breadth and complexity of the issues that can reasonably be expected to be raised by the Company’s financial statements. The Board has determined that each member of the Audit Committee is financially literate, having reference to the definition contained in NI 52-110 and based on consideration of the relevant education and experience of each member of the Audit Committee.

Reliance on Certain Exemptions

At no time since the commencement of the Company’s most recently completed fiscal year has the Company relied on the exemptions in Sections 2.4 (De Minimis Non-Audit Services), 3.2 (Initial Public Offerings), 3.3(2) (Controlled Companies), 3.4 (Events Outside Control of Members), 3.5 (Death, Disability or Resignation of Audit Committee Member), 3.6 (Temporary Exemption for Limited and Exceptional Circumstances), or 3.8 (Acquisition of Financial Literacy) of NI 52-110, or an exemption from NI 52-110, in whole or in part, granted under Part 8 thereof.

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Audit Committee Oversight

At no time since the commencement of the Company’s most recently completed fiscal year has the Audit Committee made a recommendation to nominate or compensate an external auditor that was not adopted by the Board.

The Audit Committee is authorized by the Board to review the performance of the Company’s external auditors, to approve in advance the provision of services other than auditing and to consider the independence of the external auditors, including conducting a review of the range of services provided in the context of all consulting services provided to the Company. The Audit Committee is authorized to approve in writing any non-audit services or additional work which the Chair of the Audit Committee deems necessary, and the Chair will notify the other members of the Audit Committee of such non-audit or additional work and the reasons for such non-audit work for the Audit Committee’s consideration, and, if thought advisable, approval in writing.

External Auditor Service Fees

PricewaterhouseCoopers LLP was first appointed as auditors of the Company on January 26, 2010. The aggregate fees paid to PricewaterhouseCoopers LLP for the fiscal years 2018 through 2020 are as follows.


Fiscal Year Ended December 31	Company Audit Fees		Company Audit- Related Fees		Audit of Tricon- Managed Funds		All Other Fees
2020	$	469,538	$	110,324	$	450,801	$	290,125
2019		491,500		162,500		312,295		360,454
2018		496,500		80,000		245,675		204,225

“Company Audit-Related Fees” comprise services performed on the Company’s quarterly interim reviews and prospectus audit work done. “All Other Fees” relate to additional consulting services in support of the Company’s transactional activities. An additional 7% administrative fee (5% in 2018 and 2019) was charged on the fee amounts noted above.

INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS

No director, executive officer or shareholder who beneficially owns, directly or indirectly, or exercises control or direction over, more than 10% of the outstanding Common Shares, or any known associate or affiliate of any such person, has or had any material interest, direct or indirect, in any transaction or proposed transaction within the three most recently completed fiscal years or during the current fiscal year that has materially affected or will materially affect the Company or a subsidiary of the Company.

In connection with Tricon’s acquisition of an approximate 68.4% limited partnership interest in THP1 US in 2013, certain directors and executive officers of the Company sold their indirect interests in THP1 US to Tricon. As set forth in the prospectus filed in connection with the transaction, Tricon relied on an exemption from the valuation and minority approval requirements for “related party transactions” within the meaning of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”), on the basis that neither the fair market value of, nor the fair market value of the consideration for, the transaction as it related to such individuals was greater than 25% of the Company’s market capitalization calculated in accordance with MI 61-101.

At the time of the Company’s initial public offering, certain contractual arrangements were confirmed pursuant to which all management fees and Performance Fees received in respect of funds created prior to January 1, 2000 are for the account of certain directors, employees and other individuals and will be allocated and paid to such individuals by way of bonus or other contractual payment.

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2020 ANNUAL INFORMATION FORM

INTERESTS OF EXPERTS

The Company’s auditors are PricewaterhouseCoopers LLP, Chartered Professional Accountants, who have prepared an independent auditors’ report dated March 2, 2021 in respect of the Company’s financial statements with accompanying notes as at December 31, 2020 and December 31, 2019 and for the years then ended. PricewaterhouseCoopers LLP has advised that it is independent with respect to the Company within the meaning of the Chartered Professional Accountants of Ontario CPA Code of Professional Conduct.

MATERIAL CONTRACTS

The following are the only material contracts, other than contracts in the ordinary course of business, which have been entered into by the Company and which are still in effect:

•

The 2022 Convertible Debenture Indenture (see “Description of Capital Structure – Convertible Debentures”), as supplemented by a first supplemental indenture dated as of May 9, 2017.

•

A fifth amended and restated credit agreement dated as of July 31, 2019, as amended from time to time, among the Company, Royal Bank of Canada and other financial institutions, pursuant to which such financial institutions have made available to the Company a $500 million revolving credit facility. Amounts borrowed under the facility bear interest at an applicable reference rate (LIBOR, Canadian prime rate, or U.S. base rate, all as defined in the credit agreement), depending on the type of loan advanced, plus an applicable margin, depending on the type of loan and the Company’s debt-to-EBITDA ratio (as calculated under the agreement). The range of applicable margins is 275–375 basis points for LIBOR loans and 175–275 basis points for other loan types. Tricon Residential Inc. is the borrower under the facility and the facility is guaranteed by certain of its subsidiaries and is subject to customary financial and non-financial covenants.

ADDITIONAL INFORMATION

Additional financial information relating to the Company is available in its financial statements and the 2020 MD&A.

These documents, as well as additional information relating to the Company, are available on SEDAR at www.sedar.com. Additional information, including directors’ and officers’ remuneration and indebtedness, principal holders of the Company’s securities and securities authorized for issuance under equity compensation plans, will be contained in the Company’s Management Information Circular for its annual meeting of shareholders to be held in 2021.

Toronto, Ontario

March 2, 2021

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SCHEDULE A – AUDIT COMMITTEE CHARTER (THE “CHARTER”)

1. Purpose

The Audit Committee (the “Committee”) is appointed by the board of directors (the “Board”) of Tricon Residential Inc. (the “Corporation”) to assist in the oversight and evaluation of:

•

the quality and integrity of the financial statements of the Corporation;

•

the internal control and financial reporting systems of the Corporation;

•

the compliance by the Corporation with legal and regulatory requirements in respect of financial disclosure;

•

the qualification, independence and performance of the Corporation’s independent auditors;

•

the performance of the Corporation’s Chief Financial Officer; and

•

any additional duties set out in this Charter or otherwise delegated to the Committee by the Board.

In addition, the Committee provides an avenue for communication between the independent auditor, financial management, other employees and the Board concerning accounting and auditing matters.

The Committee is directly responsible for the appointment, compensation, retention (and termination) and oversight of the work of the independent auditor (including oversight of the resolution of any disagreements between management and the independent auditor regarding financial reporting) for the purpose of preparing audit reports or performing other audit, review or attest services for the Corporation.

The Committee is not responsible for:

•

planning or conducting audits;

•

certifying or determining the completeness or accuracy of the Corporation’s financial statements or that those financial statements are in accordance with generally accepted accounting principles; or

•

guaranteeing the report of the Corporation’s independent auditor.

The fundamental responsibility for the Corporation’s financial statements and disclosure rests with management and the independent auditors are responsible for auditing those financial statements. It is not the duty of the Committee to conduct investigations, to itself resolve disagreements (if any) between management and the independent auditor or to ensure compliance with applicable legal and regulatory requirements.

2. Reports

The Committee shall report to the Board on a regular basis and, in any event, before the public disclosure by the Corporation of its quarterly and annual financial results. The reports of the Committee shall include any issues of which the Committee is aware with respect to:

•

the quality and integrity of the Corporation’s financial statements;

•

compliance by the Corporation with legal or regulatory requirements in respect of financial matters and disclosure;

•

the performance and independence of the Corporation’s independent auditor;

•

the effectiveness of systems of control (including risk management) established by management to safeguard the assets (real and intangible) of the Corporation; and

•

the proper maintenance of accounting and other records.

The Committee shall also prepare, as required by applicable law, any audit committee report required for inclusion in the Corporation’s publicly-filed documents.

3. Composition

The members of the Committee shall be three or more individuals who are appointed (and may be replaced) by the Board. Each of the members of the Committee shall meet the standards for independence required by applicable regulatory, stock exchange and securities law requirements and, without limitation, shall be financially literate (or acquire that familiarity within a reasonable period after appointment). This shall, at a minimum, include the ability to read and understand a set of financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity that can reasonably be expected to be raised by the Corporation’s financial statements. No member of the Committee shall accept (directly or indirectly) any consulting, advisory or other compensatory fee from the Corporation (other than remuneration for acting in his or her capacity as a director) or be an “affiliated person” of the Corporation. (For this purpose, an “affiliate” of a person is a person that, directly or indirectly, through one or more intermediaries, controls, or is controlled by, or is under common control with the first person.) Without the approval of the Board, no member of the Committee shall concurrently serve on the audit committee of a competitor or client.

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4. Responsibilities

It is recognized that, in fulfilling their responsibilities, members of the Committee are not full-time employees of the Corporation. As such, it is not the duty or responsibility of the Committee or its members to conduct “field work” or other types of auditing or accounting reviews or procedures or to determine that the Corporation’s financial statements are complete and accurate. Each member of the Committee shall be entitled to rely on (i) the integrity of those persons and organizations within and outside the Corporation from which it receives information, and (ii) the accuracy of the financial and other information provided to the Committee by such persons or organizations absent actual knowledge to the contrary (which shall be promptly reported to the Board).

The Committee shall have authority over, and shall be responsible for, the following specific matters:

4.1. Independent Auditors

For the purposes of this Section 4.1, references to “independent auditors” include a reference to the independent auditors of any material subsidiary of the Corporation (other than a subsidiary that has an audit committee comprised of individuals who are independent from the Corporation) if different than the independent auditors of the Corporation (a “Subsidiary Auditor”).

The Committee shall:

•

Recommend to the Board the independent auditor to be nominated for the purpose of preparing or issuing an auditor’s report or performing other audit, review or attestation services for the Corporation.

•

Establish the compensation of the independent auditor.

•

Obtain confirmation from the independent auditor that it ultimately is accountable, and will report directly, to the Committee and the Board.

•

Oversee the independent auditor and, in the context thereof, require the independent auditor to report to the Committee (among other things) any disagreement between management and the independent auditor regarding financial reporting and the resolution of each such disagreement.

•

Adopt policies and procedures for the pre-approval of the retention of the Corporation’s independent auditor for all audit and permitted non-audit services (subject to any restrictions on such services imposed by applicable legislation), including procedures for the delegation of authority to provide such approval to one or more members of the Committee.

•

At least annually, review the qualifications, performance and independence of the independent auditor. In doing so, the Committee should, among other things, undertake the measures set forth in Appendix “A” to this Charter.

•

At least annually, review and approve a strategy for the appointment of independent auditors by any of the Corporation’s subsidiaries (other than its material subsidiaries or any subsidiary that has an audit committee comprised of individuals who are independent from the Corporation).

4.2. The Audit Process, Financial Statements and Related Disclosure

The Committee shall, as it determines to be appropriate:

•

Review with management and the independent auditor and, where appropriate, any Subsidiary Auditor:

•

the proposed audit plan and scope of review by the independent auditor or Subsidiary Auditor;

•

before public disclosure, the Corporation’s annual audited financial statements and quarterly unaudited financial statements, the Corporation’s accompanying disclosure of management’s discussion and analysis of financial condition and results of operations (“MD&A”) and earnings press releases and make recommendations to the Board as to the approval and dissemination of those statements and disclosure;

•

the adequacy of the procedures for the review of the Corporation’s public disclosure of financial information extracted or derived from the Corporation’s financial statements, other than the public disclosure referred to in the immediately preceding paragraph and periodically assess the adequacy of those procedures and consider whether they are complete and consistent with the information known to committee members;

•

financial information and any earnings guidance provided to analysts and rating agencies, recognizing that this review and discussion may be done generally (consisting of a discussion of the types of information to be disclosed and the types of presentations to be made) and need not take place in advance of the disclosure of each release or provision of guidance;

•

any significant financial reporting issues and judgments made in connection with the preparation of the Corporation’s financial statements, including any significant changes in the selection or application of accounting principles, any major issues regarding auditing principles and practices, and the adequacy of internal controls that could significantly affect the Corporation’s financial statements;

•

all critical accounting policies and practices used;

•

all alternative treatments of financial information within International Financial Reporting Standards (“IFRS”) that have been discussed with management, ramifications of the use of such alternative disclosures and treatments, and the treatment preferred by the independent auditor;

•

the use of “pro forma” or “adjusted” non-IFRS information;

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•

the effect of regulatory and accounting initiatives, as well as any off-balance sheet structures, transactions, arrangements and obligations (contingent or otherwise), on the Corporation’s financial statements;

•

any disclosures concerning any weaknesses or any deficiencies in the design or operation of internal controls or disclosure controls made to the Committee by the Chief Executive Officer and the Chief Financial Officer during their certification process in documents filed with applicable securities regulators;

•

the adequacy of the Corporation’s internal accounting controls and management information systems and its financial, auditing and accounting organizations and personnel and any special steps adopted in light of any material control deficiencies; and

•

the establishment, and periodic review, of procedures for the review of financial information extracted or derived from the Corporation’s consolidated financial statements.

•

Review with management the Corporation’s guidelines and policies with respect to risk assessment and the Corporation’s major financial and business risk exposures and the steps management has taken to monitor and control such exposures.

•

Review with the independent auditor or any Subsidiary Auditor:

•

the quality as well as the acceptability of the accounting principles that have been applied;

•

any problems or difficulties the independent auditor may have encountered during the provision of its audit-related services, including any restrictions on the scope of activities or access to requested information and any significant disagreements with management, any management letter provided by the independent auditor or other material communication (including any schedules of unadjusted differences) to management and the Corporation’s response to that letter or communication; and

•

any changes to the Corporation’s significant accounting principles and practices suggested by the independent auditor and members of management.

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Review with management all related party transactions and the development of policies and procedures related to those transactions.

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Following completion of the annual audit, review with each of management and the independent auditors (or Subsidiary Auditors) any significant issues, concerns or difficulties encountered during the course of the audit including:

•

restrictions on the scope of work or on access to required or requested information;

•

issues or concerns that arose during the course of the audit concerning the Corporation’s internal accounting controls, or the fair presentation, completeness or accuracy of the financial statements; and

•

analyses prepared by management or the auditors setting forth significant financial reporting issues and judgments made in connection with preparation of the financial statements (including analysis of the effects of alternative treatments under generally accepted accounting principles).

•

Periodically review reports on the Corporation’s information technology systems that support the financial reporting process.

•

Receive and review reports from other Board committees with regard to matters that could affect the audit or results of operations.

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Oversee appropriate disclosure of the Charter, and other information required to be disclosed by applicable legislation in the Corporation’s public disclosure documents, including any management information circular distributed in connection with the solicitation of proxies from the Corporation’s security holders.

4.3. Compliance

The Committee shall, as it determines appropriate:

•

Review with the Corporation’s Chief Financial Officer, other members of management and the independent auditor any correspondence with regulators or governmental agencies and any employee complaints or published reports, which raise material issues regarding the Corporation’s financial statements or accounting policies.

•

Review with the Corporation’s external legal counsel legal matters that may have a material impact on the financial statements or accounting policies.

•

Establish procedures for:

•

the receipt, retention and treatment of complaints regarding accounting, internal accounting controls or auditing matters; and

•

the confidential, anonymous submission by employees of the Corporation with concerns regarding any accounting or auditing matters.

•

Review independent financial analyst commentary concerning the Corporation and its financial reporting.

4.4. Delegation

To avoid any confusion, the Committee responsibilities identified above are the sole responsibility of the Committee and may not be delegated to a different committee.

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5. Meetings

The Chair of the Committee shall be selected by the Board. If the Chair of the Committee is not present, the members of the Committee may designate a Chair for the meeting by majority vote of the members of the Committee present.

The Committee shall meet in accordance with a schedule established each year by the Committee, and at other times that the Committee may determine. Quorum for all meetings shall be a majority of the Committee members. Minutes shall be maintained of all meetings of the Committee and copies of the minutes shall be made available to all members of the Board.

The Committee shall meet periodically with the Chief Financial Officer, the independent auditors and external legal counsel in separate sessions. Meeting agendas shall be developed by the Chair of the Committee in consultation with the Corporation’s management and the independent auditors. Committee members may propose agenda items through communication with the Chair of the Committee or the Chief Financial Officer. Agendas, together with appropriate briefing materials, shall be circulated to Committee members prior to meetings. At the discretion of the Committee, members of management and others may attend Committee meetings other than the separate sessions with the independent auditors, the Chief Financial Officer and the external legal counsel.

6. Resources and Authority

The Committee shall have the resources and the authority appropriate to discharge its responsibilities, including the authority to engage and establish the compensation of, at the expense of the Corporation, outside advisors including experts in particular areas of accounting, legal counsel and other experts or consultants as it determines necessary to carry out its duties, without seeking approval of the Board or management. The Committee will advise the Board of any such action taken.

The Committee has the authority to conduct any investigation appropriate to fulfilling its responsibilities, and has direct access to the independent auditors as well as anyone in the Corporation.

7. Annual Evaluation

At least annually, the Committee shall, in a manner it determines to be appropriate:

•

Perform a review and evaluation of the performance of the Committee and its members, including the compliance of the Committee with this Charter.

•

Review and assess the adequacy of its Charter (including with respect to the procedures regarding the review of the Corporation’s public disclosure of financial information extracted or derived from the Corporation’s financial statements) and recommend to the Board any improvements to this Charter that the Committee determines to be appropriate.

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APPENDIX A

QUALIFICATIONS, PERFORMANCE AND INDEPENDENCE OF INDEPENDENT AUDITOR

At least annually, the Committee shall, in a manner it determines to be appropriate:

•

Review the experience and qualifications of the senior members of the independent auditor’s team.

•

Confirm with the independent auditor that it is in compliance with applicable legal, regulatory and professional standards relating to auditor independence.

•

Review and approve clear policies for the hiring by the Corporation of employees or partners or former employees or former partners of the current and former independent auditor.

•

Review annual reports from the independent auditor regarding its independence and consider whether there are any non-audit services or relationships that may affect the objectivity and independence of the independent auditor and, if so, recommend that the Board take appropriate action to satisfy itself of the independence of the independent auditor.

•

Obtain and review such report(s) from the independent auditor as may be required by applicable legal and regulatory requirements.

•

Conduct an evaluation (taking into account the opinions of management) of the independent auditor’s qualifications, performance and independence and present to the Board the Committee’s conclusion in such regard.

•

Review, as required, the independent auditor’s plans with respect to the partner rotation.

TRICON RESIDENTIAL 2020 ANNUAL INFORMATION FORM 41

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

Exhibit 4.2

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Independent auditor’s report

To the Shareholders of Tricon Residential Inc.

Our opinion

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of Tricon Residential Inc. and its subsidiaries (together, the Company) as at December 31, 2020 and 2019, and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (IFRS).

What we have audited

The Company’s consolidated financial statements comprise:

•

the consolidated balance sheets as at December 31, 2020 and 2019;

•

the consolidated statements of comprehensive income for the years then ended;

•

the consolidated statements of changes in equity for the years then ended;

•

the consolidated statements of cash flows for the years then ended; and

•

the notes to the consolidated financial statements, which include significant accounting policies and other explanatory information.

Basis for opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the consolidated financial statements section of our report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence

We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada. We have fulfilled our other ethical responsibilities in accordance with these requirements.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the year ended December 31, 2020. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

PricewaterhouseCoopers LLP

PwC Tower, 18 York Street, Suite 2600, Toronto, Ontario, Canada M5J 0B2

T: +1 416 863 1133, F: +1 416 365 8215


“PwC” refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership.		TRICON RESIDENTIAL 2020 ANNUAL REPORT 1

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Key audit matter

Valuation of rental properties, Canadian development properties and investments in for-sale housing

Refer to note 4 – Critical Accounting Estimates and Judgments, note 6 – Rental Properties, note 8 – Canadian Development Properties and note 9 – Investments in For-Sale Housing to the consolidated financial statements.

As at December 31, 2020, the Company had $6,322 million of rental properties, $110 million of Canadian development properties and $165 million of investments in for-sale housing.

Rental properties (single-family rental homes and multi-family rental properties), Canadian development properties and investments in for-sale housing are recorded at fair value. The valuation techniques and models used to determine the fair value of rental properties, Canadian development properties and investments in for-sale housing involve assumptions (observable and unobservable) that require significant judgment and estimation by management. The Company’s Valuation Committee is responsible for reviewing and approving the valuation results every quarter.

The valuation techniques and models used include the following:

1) Broker Price Opinion (BPO) and Home Price Index (HPI) methodologies for single-family rental homes. BPOs are quoted by independent brokers who hold an active real estate license and have market experience in the locations and segments of the properties being valued. The brokers value

How our audit addressed the key audit matter

Our approach to addressing the matter included the following procedures, among others:

•

For a sample of rental properties, Canadian development properties and investments in for-sale housing, tested the fair value determined by management, by performing the following:

•

Read the minutes of the quarterly Valuation Committee meetings to understand the Company’s valuation estimates.

•

Evaluated the appropriateness of the valuation techniques and models used by management to determine the fair value of rental properties, Canadian development properties and investments in for-sale housing.

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Tested the underlying data used in each valuation technique and model, including the BPO/HPI methodologies, direct income capitalization method, waterfall distribution calculations and asset purchase model.

•

Professionals with specialized skill and knowledge in the field of valuation further assisted us in assessing the appropriateness of management’s valuation techniques, methodologies and models and assessed the reasonableness of key assumptions used, including BPO/HPI, discount rates, capitalization rates, projected stabilized NOI, estimate of future cash flows and project-specific construction/development costs and selling prices, by benchmarking them to market data.

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Key audit matter

each property based on recent comparable sales and active comparable listings in the area. HPI is used to update the value, on a quarterly basis, of homes that were most recently valued using a BPO, as well as homes held for more than six months following initial acquisition. The HPI is calculated based on a repeat-sales model using large real estate information databases compiled from public records.

2) Direct income capitalization method for multi-family rental properties. This method requires that a projected stabilized net operating income (NOI) for each property is divided by the appropriate capitalization rate to determine a property’s fair value. Key assumptions used in the method included capitalization rates and projected stabilized NOI.

3) Asset purchase model for Canadian development properties. The fair value of these properties is determined based on the property’s transaction price and any directly attributable expenditures, including transaction costs.

4) Waterfall distribution calculations for investments in for-sale housing. The fair value of these investments 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. Key assumptions used in the calculations included discount rate, estimate of future

How our audit addressed the key audit matter

•

Tested the disclosures made in the consolidated financial statements, particularly with regard to the sensitivity of the key assumptions.

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Key audit matter

cash flows and project-specific construction/development costs and selling prices.

Given the unpredictable long-term economic impact due to the global COVID-19 pandemic and corresponding reductions in real estate transactions in the markets in which the Company operates, the uncertainty inherent in any valuation model and technique is heightened, requiring greater levels of management judgment in the estimation of fair value.

We considered this a key audit matter due to the significant judgments made by management in determining the key assumptions used in the valuation techniques and models. This has resulted in a high degree of subjectivity and audit effort in performing audit procedures to test the key assumptions. Professionals with specialized skill and knowledge in the field of valuation assisted us in performing our procedures.

How our audit addressed the key audit matter

Transition to consolidation of controlled investments

Refer to note 2 – Basis of Presentation and note 5 – Business Combinations to the consolidated financial statements.

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 to apply Investment Entity Accounting. As a result, effective January 1, 2020, the Company was required to apply the acquisition method of accounting to all

Our approach to addressing the matter included the following procedures, among others:

•

Assessed the transition and timing thereof by reading meeting minutes of the Board of Directors and public announcements made by the Company leading up to its planned transition.

•

Obtained an understanding of management’s consolidation process and the accounting policies to be applied to underlying assets and liabilities and transactions, and considered their compliance with relevant accounting standards and guidelines.

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Key audit matter

subsidiaries that were previously measured at fair value through profit or loss.

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 in the consolidated balance sheet of the Company. Similarly, these subsidiaries’ revenues and expenses have been reported in the Company’s consolidated statement of comprehensive income together with the non-controlling interests’ share of income.

The indicators that the Company no longer met the definition of an investment company and the timing thereof, as well as the determination of which entities are controlled by the Company, represent significant judgment made by management.

We considered this a key audit matter due to the significant judgment applied by management in assessing the transition and its timing, including the significant impact on the presentation of the consolidated financial statements and disclosures. This has resulted in a high degree of subjectivity and audit effort in performing audit procedures to test the change in basis of presentation.

How our audit addressed the key audit matter

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Evaluated management’s assessment of control over each entity, with reference to relevant accounting standards and guidelines, by considering whether:

•

the decisions over relevant activities as set out in the executed agreements required consent of the Company without the need for consent of other parties;

•

the Company has exposure to variable returns from its investment;

•

the Company has the ability to use its power to affect the amount of returns; and

•

the structure of the arrangement as outlined in the executed agreements includes any significant rights held by other parties.

•

Assessed the appropriateness of the change in basis of presentation, the impacts on the presentation of the primary financial statements and the related disclosures made in the consolidated financial statements.

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Key audit matter

Initial recognition and measurement of Tricon PIPE LLC arrangement

Refer to note 3 – Summary of Significant Accounting Policies, note 19 – Due to Affiliate and note 20 – Derivative Financial Instruments to the consolidated financial statements.

As at December 31, 2020, the Company reported a $252 million amount as a promissory note due to affiliate and a related $45 million of derivative financial liabilities in connection with the issuance of Tricon PIPE LLC preferred units.

On August 26, 2020, the Company and its affiliate, Tricon PIPE LLC (the Affiliate) entered into subscription agreements with each investor in a syndicate of investors (the Investors), pursuant to which the Investors subscribed for preferred units of the Affiliate for an aggregate subscription price of $300 million. The Affiliate is an unconsolidated structured entity as it was created for the sole purpose of issuing its preferred units to investors and offering financing to the Company, and the Company does not have exposure to variable returns or make the relevant decisions for the entity. Through the agreements that the Company and the Affiliate entered into with the Investors, holders of preferred units have the right to exchange the preferred units into common shares of the Company at any time, which is accounted for as a derivative.

The Company borrowed the subscription proceeds of $300 million from the Affiliate, which is evidenced by a promissory note with a maturity of September 3, 2032. The promissory note contains certain mandatory prepayment

How our audit addressed the key audit matter

Our approach to addressing the matter included the following procedures, among others:

•

Obtained an understanding of the structure of the financing arrangement by reading the transaction documents.

•

Assessed management’s determination that Tricon PIPE LLC is an unconsolidated structured entity by considering the nature and scope of its operations and related exposure to variable returns.

•

With the assistance of professionals with specialized skill and knowledge in the field of valuation, developed independent point estimates of the initial fair values of the promissory note, derivative and embedded derivative. This involved the use of available market data to independently develop assumptions related to volatility of the underlying equity, expected life of the investment horizon of the Investors and expected cash flows of the promissory note. The independent point estimates were compared to management’s estimates to evaluate the reasonableness of the fair values of the promissory note, derivative and embedded derivative.

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Key audit matter

provisions that are measured separately from the promissory note and classified as an embedded derivative. This embedded derivative factors in certain assumptions regarding the exchange provisions of the underlying preferred units, as prepayment of the promissory note effectively terminates such exchange rights.

As a result, the values of the embedded derivative and derivative resulting from the prepayment provisions and the exchange provisions are determined on a combined basis using an option pricing model. Key assumptions included in the model are implied volatility of the underlying equity and expected life of the investment horizon of the Investors.

The promissory note, which management valued using a discounted cash flow model, also contains step-up interest clauses that require significant estimates to be made about the expected cash flows and term of the note for purposes of determining the initial fair value of the promissory note. For this purpose, the Company used an amortization period of nine years and nine months determined by using a probability weighted methodology.

Significant judgment was made by management in determining the key assumptions related to the initial recognition and measurement of the promissory note, the derivative and the embedded derivative.

We considered this a key audit matter due to the complexity of the Tricon PIPE LLC arrangement and the significant judgment applied by management in determining the initial

How our audit addressed the key audit matter

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Key audit matter

recognition and measurement of the promissory note, the derivative and the embedded derivative. This has resulted in a high degree of subjectivity and audit effort in performing audit procedures to assess control and test the initial recognition and measurement of the promissory note, the derivative and the embedded derivative. Professionals with specialized skill and knowledge in the field of valuation assisted us in performing our procedures.

How our audit addressed the key audit matter

Other information

Management is responsible for the other information. The other information comprises the Management’s Discussion and Analysis, which we obtained prior to the date of this auditor’s report and the information, other than the consolidated financial statements and our auditor’s report thereon, included in the annual report, which is expected to be made available to us after that date.

Our opinion on the consolidated financial statements does not cover the other information and we do not and will not express an opinion or any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

If, based on the work we have performed on the other information that we obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. When we read the information, other than the consolidated financial statements and our auditor’s report thereon, included in the annual report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance.

Responsibilities of management and those charged with governance for the consolidated financial statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

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In preparing the consolidated financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company’s financial reporting process.

Auditor’s responsibilities for the audit of the consolidated financial statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

•

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

•

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.

•

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

•

Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

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•

Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

•

Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in this independent auditor’s report is Derek Hatoum.

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Chartered Professional Accountants, Licensed Public Accountants

Toronto, Ontario

March 2, 2021

10 2020 ANNUAL REPORT TRICON RESIDENTIAL

CONSOLIDATED BALANCE SHEETS

(in thousands of U.S. dollars)


	Notes		December 31, 2020		December 31, 2019
ASSETS
Non-current assets
Rental properties		6	$	6,321,918	$	—
Investments in Canadian multi-family developments		3, 7		94,868		—
Canadian development properties		3, 8		110,018		—
Investments in for-sale housing		3, 9		164,842		300,653
Investments – Tricon American Homes		2		—		1,365,007
Investments – Tricon Lifestyle Rentals		2		—		525,932
Restricted cash				116,302		—
Goodwill		5, 12		108,838		219
Intangible assets		24		12,363		16,396
Other assets		25		47,990		30,677
Deferred income tax assets		13		102,444		44,749
Derivative financial instruments		20		841		—

Total non-current assets				7,080,424		2,283,633

Current assets
Cash				55,158		8,908
Amounts receivable		16		25,593		8,952
Prepaid expenses and deposits				13,659		796

Total current assets				94,410		18,656

Total assets			$	7,174,834	$	2,302,289

LIABILITIES
Non-current liabilities
Long-term debt		17	$	3,863,316	$	307,869
Convertible debentures		18		165,956		161,311
Due to Affiliate		19		251,647		—
Derivative financial instruments		20		45,494		657
Limited partners’ interests in rental business		5		356,305		—
Long-term incentive plan		30		17,930		21,409
Other liabilities		26		4,599		14,329
Deferred income tax liabilities		13		298,071		98,584

Total non-current liabilities				5,003,318		604,159

Current liabilities
Amounts payable and accrued liabilities		11		98,290		26,190
Resident security deposits				45,157		—
Dividends payable		27		10,641		10,474
Current portion of long-term debt		17		274,190		284

Total current liabilities				428,278		36,948

Total liabilities				5,431,596		641,107

Equity
Share capital		28		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	$	2,302,289

The accompanying notes are an integral part of these consolidated financial statements.

Approved by the Board of Directors


David Berman		Michael Knowlton

TRICON RESIDENTIAL 2020 ANNUAL REPORT 11

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands of U.S. dollars, except per share amounts which are in U.S. dollars, unless otherwise indicated)


For the years ended	Notes		December 31, 2020			December 31, 2019
Revenue from rental properties		14	$	478,187		$	—
Direct operating expenses		22		(169,538	)		—

Net operating income from rental properties				308,649			—
Revenue from private funds and advisory services		15	$	34,090		$	39,895
Income from investments in Canadian multi-family developments		7		14,124			—
Other income from Canadian development properties		8		791			—
(Loss) income from investments in for-sale housing		9		(61,776	)		9,646
Property management overhead		22		(22,654	)		—
Compensation expense		30		(40,100	)		(37,681	)
General and administration expense				(23,569	)		(11,683	)
Other income (expense)		23		(1,399	)		—
Interest expense		21		(170,610	)		(32,439	)
Fair value gain on rental properties		6		198,314			—
Fair value (loss) gain on derivative financial instruments and other liabilities		20		(7,461	)		2,961
Transaction costs				(14,016	)		(32,626	)
Amortization and depreciation expense		24, 25		(10,848	)		(6,274	)
Realized and unrealized foreign exchange (loss) gain				(166	)		42
Net change in fair value of limited partners’ interests in rental business		5		(50,581	)		—
Investment income – Tricon American Homes				—			162,193
Investment income – Tricon Lifestyle Rentals				—			34,980

				(189,951	)		89,119

Income before income taxes			$	152,788		$	129,014
Income tax recovery (expense) – current		13		4,050			(5,410	)
Income tax expense – deferred		13		(40,425	)		(9,469	)

Net income			$	116,413		$	114,135

Attributable to:
Shareholders of Tricon				113,322			111,562
Non-controlling interest				3,091			2,573

Net income			$	116,413		$	114,135

Other comprehensive income
*Items that will be reclassified subsequently to net income*
Cumulative translation reserve				3,999			(129	)

Comprehensive income for the year			$	120,412		$	114,006

Attributable to:
Shareholders of Tricon				117,321			111,433
Non-controlling interest				3,091			2,573

Comprehensive income for the year			$	120,412		$	114,006

Basic earnings per share attributable to shareholders of Tricon		29	$	0.58		$	0.65
Diluted earnings per share attributable to shareholders of Tricon		29	$	0.58		$	0.63
Weighted average shares outstanding – basic		29		194,627,127			172,735,776
Weighted average shares outstanding – diluted		29		195,795,473			191,081,128

The accompanying notes are an integral part of these consolidated financial statements.

12 2020 ANNUAL REPORT TRICON RESIDENTIAL

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(in thousands of U.S. dollars)


	Notes		Share capital			Share Capital Reserve			Contributed surplus			Cumulative translation adjustment			Retained earnings			Total shareholders’ equity			Non- controlling interest			Total
Balance at January 1, 2020			$	1,201,061		$	(13,057	)	$	20,223		$	19,396		$	425,515		$	1,653,138		$	8,044		$	1,661,182
Net income				—			—			—			—			113,322			113,322			3,091			116,413
Shares repurchased under put rights on common shares issued to acquire
Starlight U.S.
Multi-Family (No. 5)
Core Fund		28		(14,922	)		13,057			—			—			—			(1,865	)		—			(1,865	)
Cumulative translation reserve				—			—			—			3,999			—			3,999			—			3,999
Distributions to non-controlling interest				—			—			—			—			—			—			(2,993	)		(2,993	)
Dividends/Dividend reinvestment plan		27		4,388			—			—			—			(40,192	)		(35,804	)		—			(35,804	)
Stock options		30		1,615			—			(2,394	)		—			355			(424	)		—			(424	)
Shares reserved for restricted share awards		30		(541	)		—			276			—			—			(265	)		—			(265	)
Deferred share units		30		1,362			—			1,633			—			—			2,995			—			2,995

Balance at December 31, 2020			$	1,192,963		$	—		$	19,738		$	23,395		$	499,000		$	1,735,096		$	8,142		$	1,743,238

Balance at January 1, 2019			$	793,521		$	—		$	17,468		$	19,525		$	353,220		$	1,183,734		$	8,864		$	1,192,598
Net income				—			—			—			—			111,562			111,562			2,573			114,135
Shares issued to acquire Starlight
U.S. Multi-Family
(No. 5) Core Fund		28		405,491			(13,057	)		—			—			—			392,434			—			392,434
Cumulative translation reserve				—			—			—			(129	)		—			(129	)		—			(129	)
Distributions to non-controlling interest				—			—			—			—			—			—			(3,393	)		(3,393	)
Dividends/Dividend reinvestment plan		27		3,793			—			—			—			(38,575	)		(34,782	)		—			(34,782	)
Repurchase of common shares		28		(3,067	)		—			—			—			(692	)		(3,759	)		—			(3,759	)
Debentures conversion		28		100			—			—			—			—			100			—			100
Stock options		30		258			—			579			—			—			837			—			837
Shares repurchased and reserved for restricted share awards		30		(590	)		—			225			—			—			(365	)		—			(365	)
Deferred share units				1,555			—			1,951			—			—			3,506			—			3,506

Balance at December 31, 2019			$	1,201,061		$	(13,057	)	$	20,223		$	19,396		$	425,515		$	1,653,138		$	8,044		$	1,661,182

The accompanying notes are an integral part of these consolidated financial statements.

TRICON RESIDENTIAL 2020 ANNUAL REPORT 13

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands of U.S. dollars)


For the years ended	Notes		December 31, 2020			December 31, 2019
CASH PROVIDED BY (USED IN)
Operating activities
Net income			$	116,413		$	114,135
Adjustments for non-cash items
Fair value gain on rental properties		6		(198,314	)		—
Fair value loss (gain) on derivative financial instruments and other liabilities		20		7,461			(2,961	)
Loss (income) from investments in for-sale housing		9		61,776			(9,646	)
Income from investments in Canadian multi-family developments		7		(14,124	)		—
Amortization and depreciation expense		24, 25		10,848			6,274
Deferred income taxes		13		40,425			9,469
Net change in fair value of limited partners’ interests in rental business		5		50,581			—
Other non-cash items		35		22,340			(176,291	)
Cash paid for AIP and LTIP				(16,733	)		(14,083	)
Distributions to non-controlling interests				(2,993	)		(3,393	)
Advances made to investments		7, 9		(7,702	)		(197,067	)
Distributions received from investments		7, 9		78,378			200,631
Changes in non-cash working capital items		35		(5,343	)		28,631

Net cash (used in) provided by operating activities			$	143,013		$	(44,301	)

Investing activities
Cash acquired in deemed acquisitions		5		22,199			—
Acquisition of remaining interest of Canadian development properties		8		(7,643	)		—
Acquisition of rental properties		6		(356,514	)		—
Capital additions to rental properties		6		(102,635	)		—
Disposition of rental properties		6		18,070			—
Additions to fixed assets and other non-current assets		8, 25		(13,025	)		(10,017	)

Net cash (used in) provided by investing activities			$	(439,548	)	$	(10,017	)

Financing activities
Lease payments		26		(2,415	)		(180	)
Repurchase of common shares		28		(14,922	)		(3,759	)
Equity issuance costs				—			(223	)
Proceeds from corporate borrowing		36		163,500			547,000
Repayments of corporate borrowing		36		(434,775	)		(455,683	)
Proceeds from rental and development properties borrowing		36		1,361,458			—
Repayments of rental and development properties borrowing		36		(969,979	)		—
Proceeds from Due to Affiliate		19		287,798			—
Dividends paid		27		(35,637	)		(31,725	)
Change in restricted cash				(32,220	)		—
Advances from limited partners		5		66,112			—
Distributions to limited partners		5		(46,162	)		—

Net cash (used in) provided by financing activities			$	342,758		$	55,430

Effect of foreign exchange rate difference on cash				27			23
Change in cash during the year				46,250			1,135
Cash – beginning of year				8,908			7,773

Cash – end of year			$	55,158		$	8,908

Supplementary information
*Cash paid on*
Income taxes			$	226		$	1,224
Interest			$	155,053		$	27,824

The accompanying notes are an integral part of these consolidated financial statements.

14 2020 ANNUAL REPORT TRICON RESIDENTIAL

1. NATURE OF BUSINESS

Tricon Residential Inc. (“Tricon” or the “Company”), formerly Tricon Capital Group Inc., is a residential real estate company primarily focused on owning and operating rental housing in North America. 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. 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 associated with its businesses.

Tricon was incorporated on June 16, 1997 under the Business Corporations Act (Ontario) and its head office is located at 7 St. Thomas Street, Suite 801, Toronto, Ontario, M5S 2B7. The Company is domiciled in Canada. Tricon became a public company on May 20, 2010, and its common shares are listed on the Toronto Stock Exchange (“TSX”) (symbol: TCN).

These consolidated financial statements were approved for issue on March 2, 2021 by the Board of Directors of Tricon.

2. BASIS OF PRESENTATION

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”) (Note 5).

Concurrent with the consolidation of the single-family and multi-family rental properties, the Company’s investments in Canadian multi-family developments are accounted for as follows: (i) proportionate consolidation for joint operations in accordance with IFRS 11, Joint Arrangements (“IFRS 11”) 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 under IAS 28, Investments in Associates and Joint Ventures (“IAS 28”). The Company’s legacy 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 (“IFRS 9”).

TRICON RESIDENTIAL 2020 ANNUAL REPORT 15

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

for the year ended December 31, 2020

(in thousands of U.S. dollars, except per share amounts and percentage amounts)

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	Rental properties	Revenue from rental properties	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⁾			Canadian development properties	Other income from Canadian development properties	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	Revenue from private funds and advisory	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	Investments in for-sale housing	Income from investments in for-sale housing	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 (see Note 8). 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.

16 2020 ANNUAL REPORT TRICON RESIDENTIAL

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

for the year ended December 31, 2020

(in thousands of U.S. dollars, except per share amounts and percentage amounts)

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.

Preparation of consolidated financial statements

The consolidated financial statements are prepared on a going-concern basis and have been presented in U.S. dollars, which is also the Company’s functional currency. All financial information is presented in thousands of U.S. dollars except where otherwise indicated.

These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). The preparation of consolidated financial statements in accordance with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying Tricon’s accounting policies. The estimates involving a high degree of judgment or complexity, or estimates where assumptions are significant to the consolidated financial statements, are disclosed in Note 4.

These consolidated financial statements have been prepared under the historical cost convention, except for:

(i)	Rental properties, which are recorded at fair value with changes in fair value recorded in the consolidated statements of comprehensive income;

(ii)	Canadian development properties, which are recorded at fair value with changes in fair value recorded in the consolidated statements of comprehensive income;

(iii)

Investments in for-sale housing, which are accounted for as portfolio investments (financial assets) and are recorded at fair value through profit or loss;

(iv)	Derivative financial instruments, which are recorded at fair value through profit or loss; and

(v)	Limited partners’ interests, which are recorded at fair value through profit or loss.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of the significant accounting policies applied in the preparation of these consolidated financial statements.

Consolidation

The consolidated financial statements include the financial statements of the Company and its controlled subsidiaries. The Company controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.

The accounting policies of subsidiaries have been modified where necessary to align them with the policies adopted by the Company. When the Company does not own all of the equity in a subsidiary, the non-controlling equity interest is disclosed in the consolidated balance sheet as a separate component of total equity. A non-controlling interest may also be classified as a financial liability if the non-controlling interest contains an option or a redemption feature, which is the case for SFR JV-1. All intra-group balances and transactions are fully eliminated upon consolidation.

The Company currently consolidates Tricon Single-Family Rental REIT LLC and its wholly-owned subsidiaries, along with SFR JV-1 (collectively, the “single-family rental” business), Tricon US Multi-Family REIT Inc. and its wholly-owned subsidiaries (collectively, the “multi-family rental” business), and The James (Scrivener Square) and The Shops of Summerhill (collectively, the “Canadian development properties”). The single-family and multi-family rental businesses were previously held through Tricon SF Home Rental ULC and TLR Saturn Master LP until the Company reorganized and simplified its legal structure in May 2020.

Joint arrangements and interests in associates

Investments in joint arrangements are classified as either joint operations or joint ventures depending on the contractual rights and obligations of each investor. Joint operations are accounted for using proportionate consolidation as per IFRS 11 while joint ventures apply the equity method in accordance with IAS 28.

Joint operations – proportionate consolidation

A joint operation is a joint arrangement under which the investors involved have joint control and usually results from the investors holding direct interests in the assets and liabilities of an investee (without establishing a separate legal entity). At the Transition Date, the Company had interests in one development project (The James) and an adjacent commercial property (The Shops of Summerhill) in Toronto that were accounted for as joint operations. On June 23, 2020, Tricon acquired the remaining ownership interests of 50% and 75% in The James and The Shops of Summerhill, respectively, and as a result, the Company began to consolidate these subsidiaries on a prospective basis (Note 8).

TRICON RESIDENTIAL 2020 ANNUAL REPORT 17

Joint ventures – equity method of accounting

A joint venture is a joint arrangement under which the investors have joint control through a separate legal entity established and hold an interest in the net assets (as opposed to a direct interest in the underlying project). The Company accounts for its joint ventures using the equity method. The Company currently has six active Canadian multi-family developments that are governed by joint venture arrangements.

Interests in associates – equity method of accounting

An associate is an entity over which the Company has significant influence, but not control (or joint control), in accordance with IAS 28. Generally, the Company is considered to exert significant influence when it holds, directly or indirectly, 20% or more of the voting power of the investee. However, determining significant influence is a matter of judgment and specific circumstances. The Company’s interests in 592 Sherbourne LP (The Selby) and 57 Spadina LP (The Taylor) are accounted for using the equity method. Under the equity method, a contribution to an investee is 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. Distributions received from an investee reduce the carrying amount of the investment.

The Company’s associates and joint ventures that are equity-accounted include:


Name	Type		Principal place of business		Country of incorporation		Ownership interest %			Voting rights %⁽¹⁾
Associates
592 Sherbourne LP (The Selby)		Limited Partnership		Canada		Canada		15	%		50	%
57 Spadina LP (The Taylor)		Limited Partnership		Canada		Canada		30	%		50	%
Joint ventures
WDL 3/4/7 LP		Limited Partnership		Canada		Canada		33	%		33	%
WDL 8 LP		Limited Partnership		Canada		Canada		33	%		33	%
WDL 20 LP		Limited Partnership		Canada		Canada		33	%		33	%
DKT B10 LP		Limited Partnership		Canada		Canada		33	%		33	%
6–8 Gloucester LP (The Ivy)		Limited Partnership		Canada		Canada		47	%		50	%
Labatt Village Holding LP		Limited Partnership		Canada		Canada		38	%		50	%

(1)	In respect of major decisions only.

Structured entity – unconsolidated

A structured entity is an entity created to accomplish a narrow and well-defined objective. Those entities’ activities are restricted to the extent that they are, in essence, not directed by voting or similar rights. The Company concluded that Tricon PIPE LLC is a structured entity as it was created for the sole purpose of issuing its preferred units to investors and offering financing to the Company (Note 19), and the Company does not have exposure to variable returns related to its involvement in the entity or make the relevant decisions for the entity. Under IFRS 10, such a structured entity does not meet the criteria for control and is not required to be consolidated.

Investments in for-sale housing

Investments that are held as part of the Company’s for-sale housing portfolio are carried on the consolidated balance sheets at fair value even though the Company may have significant influence over those companies. This treatment is permitted by IAS 28, which allows portfolio investments that are held by the Company to be recognized and measured at FVTPL and accounted for in accordance with IFRS 9 and IFRS 13, Fair Value Measurement (“IFRS 13”), with changes in fair value recognized in the consolidated statements of comprehensive income.

The Company invests in for-sale housing by providing equity or equity-type financing to experienced local or regional developers and builders primarily in the United States. The investments are typically made through co-investments in commingled funds, separate accounts, side-cars and joint ventures (“Investment Vehicles”) which hold interests in land development and homebuilding projects.

18 2020 ANNUAL REPORT TRICON RESIDENTIAL

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

for the year ended December 31, 2020

(in thousands of U.S. dollars, except per share amounts and percentage amounts)

The Company’s investments in for-sale housing include:


Name	Type	Principal place of business	Country of incorporation	Ownership interest %			Voting rights %⁽¹⁾
Tricon Housing Partners US LP⁽²⁾	Limited Partnership	USA	USA		68	%		68	%
Tricon Housing Partners US Syndicated Pool I LP	Limited Partnership	USA	USA		20	%		50	%
Tricon Housing Partners US Syndicated Pool II LP	Limited Partnership	USA	USA		20	%		50	%
Tricon Housing Partners US II LP⁽²⁾	Limited Partnership	USA	USA		8	%		>50	%
Tricon Housing Partners Canada III LP⁽²⁾	Limited Partnership	Canada	Canada		10	%		>50	%
CCR Texas Equity LP	Limited Partnership	USA	USA		10	%		50	%
Vistancia West Equity LP	Limited Partnership	USA	USA		7	%		50	%
Conroe CS Texas Equity LP	Limited Partnership	USA	USA		10	%		50	%
Tegavah Equity LP	Limited Partnership	USA	USA		10	%		50	%
Lake Norman Equity LP	Limited Partnership	USA	USA		7	%		50	%
Arantine Hills Equity LP	Limited Partnership	USA	USA		7	%		50	%
Viridian Equity LP	Limited Partnership	USA	USA		18	%		50	%
THPAS Holdings JV-1 LLC	Limited Partnership	USA	USA		11	%		50	%
McKinney Project Equity LLC	Limited Partnership	USA	USA		44	%		50	%

(1)	In respect of major decisions only.

(2)	For the purposes of analysis under IFRS, it was determined that Tricon acts primarily as an agent for the benefit of its investors in these partnership entities, and thus Tricon does not control these entities in accordance with the criteria set out in IFRS 10.

Business combination

The Company assesses whether an acquisition transaction should be accounted for as an asset acquisition or a business combination under IFRS 3. A business combination is defined as an acquisition of assets and liabilities that constitute a business that is an integrated set of activities consisting of inputs (such as assets), and processes that when applied to those inputs have the ability to create outputs that provide a return to the Company and its shareholders.

The Company applies the acquisition method to account for business combinations in accordance with IFRS 3. The consideration transferred for the acquisition of the business is the fair value of the assets transferred net of the liabilities assumed, any non-controlling interest in the acquiree, as well as any goodwill or bargain purchase gain recognized and measured by the Company. These identifiable assets acquired and liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. All acquisition costs associated with a transaction identified as a business combination are expensed as incurred.

Goodwill

Goodwill arises on the acquisition (or deemed acquisition) of subsidiaries and represents the excess of the consideration transferred over the Company’s interest in the net fair value of the net identifiable assets, liabilities and contingent liabilities of the acquiree and the fair value of any non-controlling interest in the acquiree. Upon initial recognition, goodwill is allocated to the cash-generating unit to which it relates. The Company identifies a cash-generating unit (“CGU”) as the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or group of assets. For example, a CGU can be an individual property or a group of properties. Goodwill acquired in business combinations is allocated to the CGUs that are expected to benefit from the synergies of that business combination.

Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a potential impairment. The Company’s goodwill impairment test is performed at the CGU level as it is the lowest level within the Company at which goodwill is monitored for internal management purposes. Any goodwill impairment is recognized immediately as an expense in the consolidated statements of comprehensive income in the period in which it arises and is not subsequently reversed.

Rental properties

The Company’s rental properties consist of single-family rental homes and multi-family rental properties held to earn rental income.

At the time of the acquisition of a property, the Company applies judgment when determining if the acquisition is an asset acquisition or a business combination. The Company classifies its acquisitions as asset acquisitions when it acquires a single asset (or a group of similar assets) and it has not assumed any employees or acquired an operating platform. Where the Company has concluded that it has acquired an asset, the Company uses the asset purchase model whereby the initial cost of a rental property is comprised of its purchase price and any directly attributable expenditures. Directly attributable expenditures include transaction costs such as due diligence costs, appraisal fees, environmental fees, legal fees, land transfer taxes and brokerage fees.

Subsequent to initial recognition, rental properties are recorded at fair value in accordance with IAS 40, Investment Property (“IAS 40”). Fair value is determined based on a combination of internal and external processes and valuation techniques according to the valuation policy discussed in Note 6. Gains or losses arising from changes in the fair value and capitalized costs of rental properties are recorded in the consolidated statements of comprehensive income in the period in which they arise.

TRICON RESIDENTIAL 2020 ANNUAL REPORT 19

In determining whether certain costs are additions to the carrying amount of rental properties or period expenses, management applies judgment based on whether these costs are incurred to enhance the service potential of the property. All costs associated with upgrading and extending the economic life of the existing properties, including internal amounts that are directly attributable to a specific rental property, other than ordinary repairs and maintenance, are capitalized to rental property.

Rental income and operating expenses from rental properties are reported within rental revenue and direct operating expenses incurred for rental properties, respectively, in the consolidated statements of comprehensive income.

Foreign currency translation

Currency translation

Foreign currency transactions (Canadian dollar) are translated into U.S. dollars using exchange rates in effect at the date of the transaction. Monetary assets and liabilities denominated in Canadian dollars are translated into U.S. dollars using the exchange rate in effect at the measurement date. Non-monetary assets and liabilities denominated in Canadian dollars are translated into U.S. dollars using the historical exchange rate or the exchange rate in effect at the measurement date for items recognized at FVTPL. Gains and losses arising from foreign exchange are included in the consolidated statements of comprehensive income.

Consolidated entities

For subsidiaries that are required to be consolidated, the results and financial position of those subsidiaries with a functional currency different from the presentation currency are translated into the presentation currency as follows:

(i)	assets and liabilities are translated at the closing rate at the date of the balance sheet;

(ii)	income and expenses are translated at average exchange rates. The Company uses monthly average exchange rates due to the volume of transactions each month; and

(iii)

all resulting exchange differences are recognized in other comprehensive income.

Other assets

Other assets include fixed assets, leasehold improvements and right-of-use assets.

Fixed assets and leasehold improvements

Fixed assets (building, property-related systems software, vehicles, furniture and office equipment and computer equipment) and leasehold improvements are accounted for at cost less accumulated depreciation and impairment. Leasehold improvements are amortized on a straight-line basis over their useful lives, which are typically their lease terms. All other depreciation expense is recorded on a straight-line basis over the estimated useful lives of the fixed assets, as follows:


Building		30 years
Property-related systems software		15 years
Vehicles		5 years
Furniture and office equipment		2–7 years
Computer equipment		2–7 years
Computer software		3 years

The estimated useful lives of fixed assets are reviewed and adjusted, if appropriate, at each financial year-end. As described below under Impairment of non-financial assets, fixed assets are also reviewed at each balance sheet date to determine whether there is an indication of impairment.

Right-of-use assets and lease liabilities

At the lease commencement date, a right-of-use asset and lease liability are recognized on the consolidated balance sheets for all leases, with the exception of short-term and low-value leases. The right-of-use assets and lease liabilities are initially measured at the present value of the lease payments.

Lease payments are apportioned between the implicit finance charge and the implicit repayment of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognized in the consolidated statements of comprehensive income using the effective interest method.

Right-of-use assets are amortized on a straight-line basis over their lease terms and are accounted for at cost less accumulated amortization and reviewed at each balance sheet date to determine whether there is an indication of impairment.

20 2020 ANNUAL REPORT TRICON RESIDENTIAL

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

for the year ended December 31, 2020

(in thousands of U.S. dollars, except per share amounts and percentage amounts)

Intangible assets

Intangible assets include capitalized placement fees, customer relationship and contractual development fees.

Placement fees represent costs incurred to secure investment management contracts. Performance fee rights represent costs incurred to obtain rights to receive future performance fees from joint venture projects. These are accounted for as intangible assets carried at cost less accumulated amortization. Amortization is recorded using the straight-line method and is based on the estimated useful lives of the associated joint ventures, which are generally eight years.

The customer relationship intangible relates to the Company’s ownership of The Johnson Companies LP (“Johnson”), in which Tricon owns a 50.1% interest, and represents an estimate of the potential management fees, development fees and commissions that Tricon could collect, based on potential future projects resulting from Johnson’s existing customer relationships at the time of the acquisition of Johnson, and as such are considered to be definite-life intangibles. Similarly, the contractual development fee intangibles from Johnson represent an estimate of the future lot development fees and commissions that Tricon expects to collect over the lives of the projects that Johnson managed at the time of acquisition. They are amortized by project over the estimated periods that the Company expects to collect these fees, which is approximately seven years for both management fees and lot development fees.

Impairment of non-financial assets

Assets that are subject to amortization and depreciation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest CGU level. Non-financial assets are reviewed for possible impairment or reversal of a previously recorded impairment as at each reporting date.

Financial instruments

Financial assets

The Company’s financial assets are comprised of cash, restricted cash, amounts receivable, derivative financial instruments and investments in for-sale housing accounted for as portfolio investments. Financial assets within the scope of IFRS 9 are initially measured at fair value and subsequently classified and measured in one of three categories in accordance with IFRS 9: amortized cost, fair value through other comprehensive income (“FVOCI”) or FVTPL.

Transaction costs related to derivative financial instruments and investments in for-sale housing are expensed as incurred and charged to income within the consolidated statements of comprehensive income.

Gains and losses arising from changes in the fair value of investments in for-sale housing are presented in the consolidated statements of comprehensive income within income from investments in for-sale housing. Gains and losses arising from changes in the fair value of derivative financial instruments are presented in the consolidated statements of comprehensive income together with gains and losses arising from changes in the fair value of other liabilities.

Financial assets and liabilities classified and measured at FVTPL are presented within changes in operating assets and liabilities in the consolidated statements of cash flows.

Financial assets are derecognized only when the contractual rights to the cash flows from the financial assets expire or the Company transfers substantially all of the risks and rewards of ownership.

The Company assesses, at each balance sheet date, whether or not there is an expected credit loss with respect to amounts receivable. If in a subsequent period the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed, to the extent that the carrying value of the receivable does not exceed its amortized cost at the reversal date. Any subsequent reversal of an impairment loss is recognized in net income.

Financial liabilities

Financial liabilities within the scope of IFRS 9 are initially measured at fair value and subsequently classified and measured at FVTPL or amortized cost, as appropriate.

A financial liability is derecognized when the obligation under the liability is discharged or cancelled, or expires.

The Company’s financial liabilities consist of amounts payable and accrued liabilities, resident security deposits, dividends payable, debt, convertible debentures, Due to Affiliate, derivative financial instruments, limited partners’ interests in rental business and other liabilities.

Interest expense is accounted for using the effective interest rate method.

TRICON RESIDENTIAL 2020 ANNUAL REPORT 21

The effective interest rate method is a method of calculating the amortized cost of a financial asset or financial liability and of allocating the interest income or interest expense over the expected life of the instrument. The effective interest rate is the rate that discounts estimated future cash payments or receipts throughout the expected life of the financial instrument, or a shorter period where appropriate, to the net carrying amount of the financial asset or financial liability. When calculating the effective interest rate, the Company estimates cash flows considering all contractual terms of the financial instrument but does not consider future credit losses. The calculation includes all fees paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs and all other premiums or discounts.

Gains or losses from the modification of borrowing terms during the year are recognized over the remaining life of the borrowing by adjusting the effective interest rate, on the basis that the terms and conditions of the liability remained largely unchanged. Should the modification be considered substantial, the original financial liability is derecognized and a new financial liability is recognized at fair value.

Convertible debentures

Convertible debentures issued by the Company are comprised of convertible unsecured subordinated debentures that can be converted to share capital at the option of the holder. The Company may settle the conversion right in cash in lieu of common shares unless the holder has explicitly indicated that they do not wish to receive cash. The cash settlement amount depends on the weighted average trading price of the common shares of the Company. This settlement option requires the Company to record the conversion option as a derivative financial instrument measured at fair value at each reporting period, with changes in fair value recorded in the consolidated statements of comprehensive income.

In addition, the debentures contain a redemption option, subject to several conditions, which allows the Company to redeem the debentures, in whole or in part, and the Company may settle the redemption option either in cash at par plus accrued and unpaid interest or in common shares, with the number of common shares to be issued depending on the weighted average trading price of the common shares of the Company. The redemption option is recorded as a derivative financial instrument measured at fair value at each reporting period, with changes in fair value recorded in the consolidated statements of comprehensive income.

The host liability component of a compound financial instrument is recognized initially at the fair value of a similar liability that does not have an equity conversion option. The conversion and redemption options are considered to be interrelated and therefore are treated as a single compound embedded derivative which is recognized at fair value.

Any directly attributable transaction costs are allocated entirely to the host liability component.

Derivative financial instruments

Derivative financial instruments are initially recognized at fair value on the date a derivative contract is entered into and are subsequently remeasured at fair value with the resulting gain or loss reflected in net income. The Company has two derivative financial instruments: (i) the conversion and redemption options related to its outstanding convertible debentures; and (ii) the mandatory prepayment provision related to the Due to Affiliate, along with the exchange and redemption provisions of the underlying preferred units (Note 20). Derivatives are valued using model calibration. Inputs to the valuation model are determined from observable market data wherever possible, including prices available from exchanges, over-the-counter markets and consensus pricing. Certain inputs may not be observable in the market directly, but can be determined from observable prices via model calibration procedures or estimated from historical data or other sources. Any directly attributable transaction costs are allocated between the derivative and the host liability component, and the portion attributed to the derivative is expensed in the consolidated statements of comprehensive income.

Offsetting financial instruments

Financial assets and liabilities are offset and the net amount is reported on the consolidated balance sheets when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. As of December 31, 2020, the Company does not have any assets or liabilities that are subject to an offsetting agreement.

Limited partners’ interests in rental business

The interests of the limited partners in SFR JV-1 Holdings LP, SFR JV-1 REIT 1 LLC, SFR JV-1 REIT 2 LLC, SFR JV-1 Equity LLC and SFR JV-1 LP (collectively, “SFR JV-1”) are recognized as financial liabilities in accordance with IAS 32, Financial Instruments: Presentation (“IAS 32”). Limited partners’ interests in rental business are recorded at fair value through profit or loss and reflect the fair value of the underlying investments in SFR JV-1, along with any contributions by and distributions to limited partners during the period. Changes in the fair value of the limited partners’ interests in rental business are reflected in the consolidated statements of comprehensive income.

22 2020 ANNUAL REPORT TRICON RESIDENTIAL

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

for the year ended December 31, 2020

(in thousands of U.S. dollars, except per share amounts and percentage amounts)

Cash

Cash includes cash deposited in banks. The Company maintains its cash in financial institutions with high credit quality in order to minimize its credit loss exposure.

Restricted cash

Restricted cash primarily consists of resident security deposits held by the Company in separate bank accounts, as well as property tax reserves, capital reserves, and collateralized rent payment receipts held in bank accounts controlled by lenders.

Share capital

Common shares are classified as equity. Incremental costs directly attributable to the issuance of new shares are shown as a deduction, net of tax, from the proceeds.

Where the Company purchases its equity share capital to settle restricted share awards or for cancellation, the consideration paid, including any directly attributable incremental costs, is deducted from equity attributable to the Company’s equity holders.

Earnings per share

Basic

Basic earnings per share is determined using the weighted average number of shares outstanding including vested deferred share units, taking into account on a retrospective basis any increases or decreases caused by share splits or reverse share splits occurring after the reporting period, but prior to the consolidated financial statements being authorized for issue.

Diluted

The Company considers the effects of stock compensation, convertible debentures and exchange rights in connection with the preferred unit issuance of Tricon PIPE LLC in calculating diluted earnings per share. Diluted earnings per share is calculated by adjusting net income attributable to shareholders of the Company and the weighted average number of shares outstanding based on the assumption of the conversion of all potentially dilutive shares on a weighted average basis from the beginning of the year or, if later, the date the stock compensation, convertible debentures or conversion rights were issued to the balance sheet date.

Dividends

Dividends on common shares are recognized in the consolidated financial statements in the period in which the dividends are approved by Tricon’s Board of Directors.

Current and deferred income taxes

Income tax expense includes current and deferred income taxes. Income tax expense is recognized in the consolidated statements of comprehensive income, except to the extent that it relates to items recognized directly in equity, in which case the tax is also recognized directly in equity.

Current income taxes are the expected taxes payable on the taxable income for the period, using income tax rates enacted, or substantively enacted, at the end of the reporting period, and any adjustment to income taxes payable in respect of previous years. The Company uses the liability method to recognize deferred income taxes on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts. Deferred income tax assets are only recorded if it is probable that they will be realized. Enacted or substantively enacted rates in effect at the consolidated balance sheet date that are expected to apply when the deferred income tax asset is realized or the deferred tax liability is settled are used to calculate deferred income taxes.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

Revenue

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.

TRICON RESIDENTIAL 2020 ANNUAL REPORT 23

Ancillary revenue is income the Company generates from providing services that are 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 with revenue from rental properties in the consolidated statements of comprehensive income, and the details of revenue, including ancillary income, are discussed in Note 14.

In addition to revenue generated from the lease component, revenue from rental properties includes a non-lease component earned from the residents, which is recognized under IFRS 15, Revenue from Contracts with Customers (“IFRS 15”). Non-lease revenue includes property management services, such as repairs and maintenance performed on the properties. These services represent a single performance obligation and revenue is recognized over time as the services are provided, regardless of when the payment is received. Revenue from rental properties is allocated to non-lease components using a cost-plus margin approach whereby the Company separates the operating costs that pertain to the services provided to the residents and applies a reasonable profit margin.

The Company has concluded that it is the principal in all of its revenue arrangements since it is the primary obligor in all of the revenue arrangements, it has pricing latitude and it is also exposed to credit risks.

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 businesses 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 under management. The Company may also earn performance fees once targeted returns are achieved by an Investment Vehicle. The Company recognizes performance fees 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 includes 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.

The Company also earns development management and advisory service fees from 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 the revenues 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. These management 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 through its rental operating platform. These management services are satisfied over time and revenues are recognized as services are provided in accordance with IFRS 15.

Compensation arrangements

Stock option plan

The Company accounts for its stock option plan by calculating the fair value of the options as of the grant date using a Black-Scholes option pricing model and observable market inputs. This fair value is recognized as compensation cost using the graded vesting method over the vesting period of the options.

Annual Incentive Plan (“AIP”)

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 the 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. Equity-based AIP awards are granted in a combination of deferred share units (“DSUs”), performance share units (“PSUs”), stock options and restricted shares, pursuant to the Company’s Deferred Share Unit Plan (“DSUP”), Performance Share Unit Plan (“PSUP”), stock option plan and Restricted Share Plan, respectively.

24 2020 ANNUAL REPORT TRICON RESIDENTIAL

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

for the year ended December 31, 2020

(in thousands of U.S. dollars, except per share amounts and percentage amounts)

Long-term incentive plan (“LTIP”)

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 the income from THP1 US (a for-sale housing Investment Vehicle), payable in DSUs which vest in equal tranches over a three-year period (previously a five-year period) pursuant to the LTIP as amended on May 6, 2019. Amounts under the LTIP are allocated among employees in accordance with the plan.

For the LTIP generated from the Company’s share of performance fees or carried interest from certain Investment Vehicles, the Company estimates the LTIP liability by determining the performance fees at each reporting date based on the estimated fair value of the underlying investments. Changes in the LTIP liability are recognized in the consolidated statements of comprehensive income.

Directors’ fees

One-half of each independent Director’s base annual retainer is paid in DSUs which vest immediately upon their grant. An independent Director may also elect each year to receive a portion of the balance of his or her fees (including his or her base annual retainer and any additional retainer) in DSUs, which also vest on the date of their grant. Any remaining balance of such fees not payable in DSUs is paid in cash. The DSUs granted to Directors are governed by the DSUP.

Reportable segments

Tricon is comprised of four operating segments: Single-Family Rental, Multi-Family Rental, Residential Development and Private Funds and Advisory. Including the Company’s corporate activities, there are five reportable segments for internal and external reporting purposes. The reportable segments are business units offering different products and services, and are managed separately due to their distinct operating natures. These five reportable segments have been determined by the Company’s chief operating decision-makers (Note 31).

Accounting standards and interpretations adopted

Effective January 1, 2020, the Company has adopted amendments to IFRS 3, Business Combinations. The amendments provide further guidance on the determination of whether a transaction should be accounted for as a business combination or as an asset acquisition. The Company has also adopted amendments to IAS 1, Presentation of Financial Statements (“IAS 1”), and IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors, which provide further clarification on the definition of materiality, specifying that materiality will depend on the nature or magnitude of information. The adoption of these standards did not have a significant impact on the Company’s consolidated financial statements.

Accounting standards and interpretations issued but not yet adopted

In August 2020, the International Accounting Standards Board (“IASB”) issued amendments to IFRS 9, Financial Instruments,

IAS 39, Financial Instruments: Recognition and Measurement, IFRS 7, Financial Instruments: Disclosure, IFRS 4, Insurance Contracts, and IFRS 16, Leases, as part of phase 2 of its project related to interest rate benchmark reform. The amendments address issues that might affect financial reporting after the reform of an interest rate benchmark, including its replacement with alternative benchmark rates. The amendments are effective for annual periods beginning on or after January 1, 2021, with earlier application permitted.

The Company is currently finalizing its assessment of the impact of the adoption of the phase 2 amendments. As a result of the adoption, it is not expected that interest rate benchmark reform will have a material impact on the Company’s financial statements. In January 2020, the IASB issued amendments to IAS 1 to provide a more general approach to the classification of liabilities under IAS 1 based on the contractual arrangements in place at the reporting date. The amendments to IAS 1 are effective for annual reporting periods beginning on or after January 1, 2023.

There are no other standards, interpretations or amendments to existing standards that are not yet effective that are expected to have a material impact on the consolidated financial statements of the Company.

TRICON RESIDENTIAL 2020 ANNUAL REPORT 25

4. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS

The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The following are the accounting policies subject to judgments and estimation uncertainty that management believes could have a significant risk of causing material adjustments to the amounts recognized in the consolidated financial statements. Actual results could differ from these estimates and the differences may be material.

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. 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 has 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. 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. 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 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 (Note 12).

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 (Notes 19 and 20).

26 2020 ANNUAL REPORT TRICON RESIDENTIAL

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

for the year ended December 31, 2020

(in thousands of U.S. dollars, except per share amounts and percentage amounts)

Significant judgments

Acquisition of rental properties

The Company’s accounting policies relating to rental properties are described in Note 3. 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.

5. BUSINESS COMBINATIONS

As discussed in Note 2, the Company successfully completed its transition to a rental housing company effective January 1, 2020, and as a result, it was required to apply the acquisition method of accounting in accordance with IFRS 3 to all subsidiaries that were previously measured at FVTPL (the “Deemed Acquisition”), as discussed in further detail below.

Deemed acquisition of single-family and multi-family rental businesses

On the Transition Date, Tricon SF Home Rental ULC and its wholly-owned subsidiaries, along with SFR JV-1 (collectively, the “single-family rental” business), and TLR Saturn Master LP and its wholly-owned subsidiaries (collectively, the “multi-family rental” business) were deemed to have been acquired by the Company and were accounted for as business combinations in accordance with IFRS 3.

TRICON RESIDENTIAL 2020 ANNUAL REPORT 27

The following table summarizes the deemed consideration paid and the estimates of the fair values of identified assets acquired and liabilities assumed from both businesses on the Transition Date. The deemed consideration paid reflects the fair value of the Company’s interests in the single-family and multi-family rental businesses as portfolio investments immediately prior to the Transition Date.


(in thousands of U.S. dollars)	Single-Family Rental⁽¹⁾		Multi-Family Rental
Deemed consideration transferred	$	1,270,293	$	429,060
Recognized amounts of assets acquired
Cash	$	18,948	$	2,537
Restricted cash		67,519		16,563
Amounts receivable		1,033		3,436
Derivative financial instruments		28		–
Prepaid expenses and deposits		9,829		720
Rental properties		4,337,681		1,344,844
Deferred income tax assets		40,000		–
Other assets		11,255		90

Total identifiable assets	$	4,486,293	$	1,368,190

Recognized amount of liabilities assumed
Amounts payable and accrued liabilities	$	49,623	$	20,759
Resident security deposits		30,094		2,031
Other liabilities		5,435		–
Debt		2,716,840		916,340
Deferred income tax liabilities		157,741		79,112
Limited partners’ interests in rental business		285,774		–
Total identifiable liabilities		3,245,507		1,018,242

Total identifiable assets and liabilities	$	1,240,786	$	349,948

Goodwill		29,507		79,112

Total	$	1,270,293	$	429,060

(1)	The deemed consideration transferred reflects the fair value of the Company’s interests in the single-family rental business as a portfolio investment immediately prior to the Transition Date, net of the Company’s deferred tax liabilities associated with the investment of $94,714.

The purchase price allocation resulted in $29,507 and $79,112 of goodwill being recognized from the Deemed Acquisition of the single-family rental and multi-family rental businesses, respectively, due to the recognition of deferred tax liabilities because the tax bases of the net assets are lower than their acquisition date fair values.

Ownership interests in SFR JV-1 are in the form of limited partnership interests which are classified as liabilities under the provisions of IAS 32. Limited partners’ interests in rental business are measured as a percentage of net assets acquired.

The following table presents the changes in the limited partners’ interests in rental business balance for the year ended December 31, 2020, representing third-party limited partners’ 66.33% ownership interests in the net assets of SFR JV-1.


(in thousands of U.S. dollars) For the year ended December 31	2020
Balance, beginning of year⁽¹⁾	$	285,774
Contributions		66,112
Distributions		(46,162	)
Net change in fair value of limited partners’ interests in rental business		50,581

Balance, end of year	$	356,305

(1)	The initial balance was recognized as a result of the Deemed Acquisition of the single-family rental business.

28 2020 ANNUAL REPORT TRICON RESIDENTIAL

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

for the year ended December 31, 2020

(in thousands of U.S. dollars, except per share amounts and percentage amounts)

Deemed acquisition of Canadian multi-family development business under joint operations (proportionate consolidation)

In the Company’s Canadian multi-family development business, TLR Investment LP through its wholly-owned subsidiaries (collectively, the “Canadian multi-family development” business) held a 50% and 25% direct ownership interest, respectively, of the properties known as The James (Scrivener Square) and The Shops of Summerhill, which were classified as joint operations under IFRS 11. As at the Transition Date, the Company’s proportionate interests in these properties were deemed to be acquired by the Company and were treated as business combinations in accordance with IFRS 3.

The following table summarizes the deemed consideration paid for the Canadian multi-family development business and the estimates of the fair values of identified assets acquired and liabilities assumed, on a proportionate basis, from the Canadian multi-family development business on the Transition Date.


(in thousands of U.S. dollars)	The James (Scrivener Square)		The Shops of Summerhill		Other entities⁽¹⁾		Canadian multi-family developments
Deemed consideration transferred	$	14,682	$	7,339	$	74,851	$	96,872
Recognized amounts of assets acquired
Cash	$	420	$	65	$	229	$	714
Amounts receivable		131		51		248		430
Prepaid expenses and deposits		12		1		—		13
Other assets		—		—		49		49
Investments in Canadian multi-family developments⁽²⁾		—		—		75,141		75,141
Canadian development properties		25,170		10,455		—		35,625

Total identifiable assets	$	25,733	$	10,572	$	75,667	$	111,972

Recognized amount of liabilities assumed
Amounts payable and accrued liabilities	$	272	$	84	$	816	$	1,172
Debt		10,779		3,149		—		13,928

Total identifiable liabilities		11,051		3,233		816		15,100

Total identifiable assets and liabilities – proportionate basis	$	14,682	$	7,339	$	74,851	$	96,872

(1)	Other entities include Tricon Lifestyle Rentals LP and its wholly-owned subsidiaries.

(2)	Includes Tricon’s investment in The Selby.

On June 23, 2020, Tricon acquired the remaining 50% and 75% ownership interests in The James and The Shops of Summerhill, respectively (Note 8). The acquisition of the remaining ownership is considered to be an asset acquisition as it does not meet the definition of a business combination as prescribed by IFRS 3.

6. RENTAL PROPERTIES

The Company’s Valuation Committee is responsible for fair value measurements included in the financial statements, including Level 3 measurements. The valuation processes and results are reviewed and approved by the Valuation Committee once every quarter, in line with the Company’s quarterly reporting dates. The Valuation Committee consists of individuals who are knowledgeable and have experience in the fair value techniques for the real estate properties held by the Company. The Valuation Committee decides on the appropriate valuation methodologies for new real estate properties and contemplates changes in the valuation methodology for existing real estate holdings. Additionally, the Valuation Committee analyzes the movements in each property’s (or group of properties’) value, which involves assessing the validity of the inputs applied in the valuation.

The following table presents the changes in the rental property balances for the year ended December 31, 2020.


	December 31, 2020
(in thousands of U.S. dollars)	Single-Family Rental			Multi-Family Rental			Total
Initial recognition on Deemed Acquisition (Note 5)	$	4,337,681		$	1,344,844		$	5,682,525
Acquisitions⁽¹⁾		356,514			—			356,514
Capital expenditures		93,568			9,067			102,635
Dispositions		(18,070	)		—			(18,070	)
Fair value adjustments		220,849			(22,535	)		198,314

Balance, end of year	$	4,990,542		$	1,331,376		$	6,321,918

(1)	The total purchase price includes $1,913 of capitalized transaction costs in relation to the acquisitions.

TRICON RESIDENTIAL 2020 ANNUAL REPORT 29

The Company used the following techniques to determine the fair value measurements included in the consolidated financial statements categorized under Level 3.

Single-family rental homes

Valuation methodology

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. In addition, homes that were purchased in the last three to six months (or properties purchased in the year that are not yet stabilized) from the reporting date are recorded at their purchase price plus the cost of capital expenditures as the home values typically do not change materially in the short term, and capital expenditures generally do not significantly impact values in those periods.

BPOs are quoted by independent brokers who hold active real estate licenses and have market experience in the locations and segments of the properties being valued. The brokers value each property based on recent comparable sales and active comparable listings in the area, assuming the properties were all renovated to an average standard in their respective areas. The Company typically obtains a BPO for a property once every three years or when a home is included in a new debt facility.

The HPI methodology is used to update the value, on a quarterly basis, of single-family rental homes that were most recently valued using a BPO as well as single-family rental homes held for more than six months following initial acquisition. The HPI is calculated based on a repeat-sales model using large real estate information databases compiled from public records. The Company uses the twelve-month trailing average HPI change to update the value of its single-family rental homes. The quarterly HPI change is then applied to the previously recorded fair value of the rental homes. The data used to determine the fair value of the Company’s single-family rental homes is specific to the zip code in which the property is located.

The Company performed a valuation at November 30, 2020 for rental homes acquired prior to October 1, 2020, according to its valuation policy and based on the best information available. HPI growth continued across all markets during the year at 4.2% (net of capital expenditures) compared to 3.0% during the prior year. There were 6,980 homes valued using the BPO method during the year. The combination of the HPI and BPO methodologies resulted in a fair value gain of $220,849 for the year ended December 31, 2020. Management has assessed the impact of any market changes that occurred subsequent to the date of the valuation and has determined that the values were valid as of December 31, 2020.

Sensitivity

The weighted average of the quarterly HPI change was 1.5% . If the change in the quarterly HPI increased or decreased by 0.5%, the impact on the rental properties at December 31, 2020 would be $19,294 and ($19,294), respectively.

Multi-family rental properties

Valuation methodology

Fair value is determined using independent valuations prepared by management’s specialists or detailed internal valuations prepared by management using market-based assumptions, each in accordance with recognized valuation techniques. The Company utilizes the direct income capitalization approach to determine the fair value of its multi-family rental properties. This method requires that a projected stabilized net operating income (“NOI”) for each property is divided by the appropriate capitalization rate to determine a property’s fair value. NOI is calculated as a one-year income forecast based on rental income from current leases and key assumptions about rental income, vacancies and inflation rates, among other factors, less property operating costs. Fair value also considers any forecasted capital expenditures within the year to maintain the property in good condition. Given the short-term nature of residential leases (typically one to two years), revenue and costs are not discounted. The capitalization rate is determined for each property based on location, size and quality/vintage of the property and takes into account market information related to recent sales of comparable buildings within a similar geographic location.

In applying the Company’s valuation policies, external valuations are obtained from third-party valuation professionals on a rotational basis based on a cross-section of properties from different geographic locations and markets across the Company’s multi-family rental portfolio, as determined by management and approved by the Valuation Committee. The fair value of the remainder of the Company’s rental properties is determined internally by management using the same assumptions and valuation techniques as those used by the external valuation professionals.

Management assessed changes in capitalization rates in each of the markets in which it owns multi-family rental properties by consulting third-party data based on market transactions. In contrast to the single-family rental market, multi-family rental market conditions were negatively impacted by the COVID-19 pandemic. A decline in demand for multi-family living contributed to a downward adjustment in the stabilized NOI assumptions, which led to a fair value loss of $22,535 for the year ended December 31, 2020. Management will continue to monitor rental market conditions that could adversely affect the valuation of the Company’s rental properties.

30 2020 ANNUAL REPORT TRICON RESIDENTIAL

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

for the year ended December 31, 2020

(in thousands of U.S. dollars, except per share amounts and percentage amounts)

The key valuation assumptions for the Company’s multi-family rental properties are set out below.


	December 31, 2020			December 31, 2019
Capitalization rates – range		4.00% to 5.50	%		4.50% to 5.00	%
Capitalization rate – weighted average		4.76	%		4.71	%

Sensitivity

Any fluctuations in either NOI from rental operations or the capitalization rate could significantly alter the fair value of the properties. Generally, an increase in stabilized NOI will result in an increase to the fair value of a rental property. An increase in the capitalization rate will result in a decrease to the fair value of a rental property. The capitalization rate magnifies the effect of a change in NOI, with a lower capitalization rate causing more change in fair value than a higher capitalization rate when applied to NOI. The table below summarizes the impact of changes in both the capitalization rates and NOI on the fair value of the Company’s multi-family rental properties.


	Net operating income
Capitalization rate	–3%			–1%			As projected			+1%			+3%
–0.25%	$	31,497		$	59,472		$	73,459		$	87,447		$	115,422
As reported		(39,759	)		(13,253	)		—			13,253			39,759
+0.25%		(103,903	)		(78,720	)		(66,129	)		(53,537	)		(28,354	)

7. INVESTMENTS IN CANADIAN MULTI-FAMILY DEVELOPMENTS

The Company has entered into certain arrangements in the form of jointly controlled entities and investments in associates for various Canadian multi-family rental developments, as well as The Selby, an income-producing multi-family rental property in Toronto. Joint ventures represent development properties held in partnership with third parties where decisions relating to the relevant activities of the joint venture require the unanimous consent of the partners. These arrangements are accounted for under the equity method.

The following table presents the change in the balance of investments in joint ventures and associates for the year ended December 31, 2020.


(in thousands of U.S. dollars)	December 31, 2020
Initial recognition on Deemed Acquisition (Note 5)	$	75,141
Advances		4,294
Distributions		(935	)
Income from investments in Canadian multi-family developments		14,124
Translation adjustment		2,244

Total investments in joint ventures and associates	$	94,868

TRICON RESIDENTIAL 2020 ANNUAL REPORT 31

The following tables present the ownership interests and carrying values of the Company’s equity-accounted investments. The financial information below discloses each investee at 100% and at Tricon’s ownership interests in the net assets of the investee.


	December 31, 2020
(in thousands of U.S. dollars)	Location		Tricon’s ownership %			Current assets		Non-current assets		Current liabilities		Non-current liabilities		Net assets		Tricon’s share of net assets⁽¹⁾
Joint ventures
WDL 3/4/7 LP		Toronto, ON		33	%	$	1,050	$	70,918	$	7,813	$	35,454	$	28,701	$	9,575
WDL 8 LP		Toronto, ON		33	%		6,659		112,488		8,083		88,635		22,429		7,483
WDL 20 LP		Toronto, ON		33	%		770		45,697		24		43,653		2,790		937
DKT B10 LP⁽²⁾		Toronto, ON		33	%		2,683		2,551		966		—		4,268		2,994
6–8 Gloucester LP (The Ivy)		Toronto, ON		47	%		3,587		40,799		3,091		6,676		34,619		16,398
Labatt Village Holding LP⁽³⁾		Toronto, ON		38	%		—		43,160		16		—		43,144		16,180

							14,749		315,613		19,993		174,418		135,951		53,567

Associates
592 Sherbourne LP (The Selby)		Toronto, ON		15	%		12,988		252,065		2,201		126,008		136,844		19,913
57 Spadina LP (The Taylor)		Toronto, ON		30	%		448		113,215		3,419		39,724		70,520		21,388

							13,436		365,280		5,620		165,732		207,364		41,301

Total						$	28,185	$	680,893	$	25,613	$	340,150	$	343,315	$	94,868

(1)	Tricon’s share of net assets of $94,868 is comprised of $93,541 as per the investees’ financial statements plus $1,327 of fair value differences arising from the initial recognition on January 1, 2020 and foreign exchange translation adjustments.

(2)	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.

(3)	Labatt Village Holding LP has an 80% ownership interest in the Labatt Village LP project partnership, and therefore Tricon has a 30% effective interest in the project.


(in thousands of U.S. dollars)	For the year ended December 31, 2020
(in thousands of U.S. dollars)	Location		Tricon’s ownership %			Revenue		Expenses			Fair value gains			Net and other comprehensive income			Tricon’s share of net income
Joint ventures
WDL 3/4/7 LP		Toronto, ON		33	%	$	198	$		(104)	$	21,742		$	21,836		$	7,279
WDL 8 LP		Toronto, ON		33	%		—		(75	)		15,299			15,224			5,074
WDL 20 LP		Toronto, ON		33	%		—		(2	)		—			(2	)		(1	)
DKT B10 LP		Toronto, ON		33	%		—		(16	)		—			(16	)		(5	)
6–8 Gloucester LP (The Ivy)		Toronto, ON		47	%		—		(2	)		—			(2	)		(1	)
Labatt Village
Holding LP		Toronto, ON		38	%		—		(34	)		(345	)		(379	)		(142	)

							198		(233	)		36,696			36,661			12,204

Associates
592 Sherbourne LP (The Selby)		Toronto, ON		15	%		10,763		(5,791	)		—			4,972			746
57 Spadina LP (The Taylor)		Toronto, ON		30	%		—		(20	)		3,933			3,913			1,174

							10,763		(5,811	)		3,933			8,885			1,920

Total						$	10,961	$	(6,044	)	$	40,629		$	45,546		$	14,124

Based on the assessment of current economic conditions, there are no indicators of impairment of the Company’s equity-accounted investments in Toronto as of December 31, 2020. Management will continue to monitor the situation as market conditions may change rapidly which could adversely affect the Company’s underlying valuation of such investments.

32 2020 ANNUAL REPORT TRICON RESIDENTIAL

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

for the year ended December 31, 2020

(in thousands of U.S. dollars, except per share amounts and percentage amounts)

8. CANADIAN DEVELOPMENT PROPERTIES

The Company’s Canadian development properties include one development project (The James) and an adjacent commercial property (The Shops of Summerhill) in Toronto that were previously accounted for as joint operations (Note 2).

The following table presents the changes in the Canadian development properties balance for the year ended December 31, 2020.


(in thousands of U.S. dollars)	December 31, 2020
Initial recognition on Deemed Acquisition (Note 5)	$	35,625
Acquisitions		65,861
Development expenditures		2,998
Translation adjustment		5,534

Balance, end of year	$	110,018

On June 23, 2020, Tricon acquired the remaining ownership interests of 50% and 75% in The James and The Shops of Summerhill, respectively, and began consolidating these entities. These two properties are recorded at fair value with changes in fair value recorded in the consolidated statements of comprehensive income in accordance with IAS 40, with the acquired portion added to the fair value of the properties based on the purchase price paid. The Company utilized the asset purchase model whereby the initial cost of a development property is comprised of its purchase price and any directly attributable expenditures, including transaction costs.

The following table summarizes the purchase price paid for each of the properties.


(in thousands of U.S. dollars)	The James (Scrivener Square)			The Shops of Summerhill			Total
Canadian development properties	$	40,669		$	25,192		$	65,861
Net working capital		(3,689	)		(1,189	)		(4,878	)
Assumed debt and vendor take-back loans		(34,156	)		(19,184	)		(53,340	)

Cash paid	$	2,824		$	4,819		$	7,643

Property values typically do not change materially in the short term, and development expenditures generally do not significantly impact values in the first twelve months after purchase. Accordingly, Canadian development properties acquired within the past twelve months are recorded at their purchase price plus the cost of development expenditures.

The Company earned $791 of commercial rental income from The Shops of Summerhill for the year ended December 31, 2020, which is classified as Other income from Canadian development properties.

9. INVESTMENTS IN FOR-SALE HOUSING

The Company makes investments in for-sale housing via equity investments and loan advances. Advances made to investments are added to the carrying value when paid; distributions from investments are deducted from the carrying value when received.

In the year ended December 31, 2020, the Company recorded a cumulative fair value loss of $61,776, primarily related to the risk of both extended timelines and a reduction in expected future cash flows from these investments brought on by the COVID-19 pandemic.

The following table presents the changes in the investments in for-sale housing for the years ended December 31, 2020 and December 31, 2019.


(in thousands of U.S. dollars)	December 31, 2020			December 31, 2019
Balance, beginning of year	$	300,653		$	307,564
Advances		3,408			35,389
Distributions		(77,443	)		(51,946	)
(Loss) income from investments in for-sale housing		(61,776	)		9,646

Balance, end of year	$	164,842		$	300,653

Internal debt instruments	$	13,937		$	16,757
Equity		150,905			283,896

Total investments in for-sale housing	$	164,842		$	300,653

TRICON RESIDENTIAL 2020 ANNUAL REPORT 33

The investments are measured at fair value as determined by the Company’s proportionate share of the fair value of each Investment Vehicle’s net assets at each measurement date. 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.

The residential real estate development business involves significant risks that could adversely affect the fair value of Tricon’s investments in for-sale housing, especially in times of economic uncertainty. Quantitative information about fair value measurements of the investments uses the following significant unobservable inputs (Level 3):

December 31, 2020

December 31, 2019

Description

Valuation

technique(s)

Significant

unobservable input

Range
of inputs

Weighted
average
of inputs

Range
of inputs

Weighted
average
of inputs

Other inputs and key information

Commingled funds

Equity investments

Net asset value,

determined

using discounted

cash flow

a) Discount rate⁽¹⁾

8.0% –15.0%

12.9%

8.0% – 20.0%

14.4%

Entitlement risk, sales risk and construction risk are taken into account in determining the discount rate.

b) Future cash flow⁽²⁾

1 – 7 years

3.3 years

1 – 9 years

2.3 years

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

Equity investments^(3),(4)

Waterfall

distribution

model

a) Discount rate⁽¹⁾

12.5% –20.0%

17.1%

12.5% – 24.0%

17.2%

Entitlement risk, sales risk and construction risk are taken into account

in determining the discount rate.

b) Future cash flow⁽²⁾

1 – 7 years

6.2 years

1 – 16 years

13.0 years

c) Appraised value⁽³⁾

Price per acre of land, timing of project funding requirements and distributions.

Debt investments⁽³⁾

Net asset value,

determined

using discounted

cash flow

a) Discount rate⁽¹⁾

20.0%

15.0% –20.0%

17.1%

Estimated probability of default.

b) Future cash flow⁽²⁾

6 years

3 – 9 years

7.2 years

(1)

Generally, an increase in future cash flow will result in an increase in the fair value of debt instruments and fund equity investments. An increase in the discount rate will result in a decrease in the fair value of debt instruments and fund equity investments. The same percentage change in the discount rate will result in a greater change in fair value than the same absolute percentage change in future cash flow.

(2)

Estimating future cash flows involves modelling developers’ cash flows to determine the quantum and timing of project funding requirements and cash distributions to the Investment Vehicle. Estimates of developers’ cash flows are based on detailed quarterly and annual budgets and include estimates of construction and development costs, anticipated selling prices and absorption rates for each project.

(3)

On an annual basis, the Company normally obtains external valuations for its separate account equity and side-car investments. As at December 31, 2020, the external valuations for Tricon’s interest in four separate account equity and side-car investments totalled $41,595. The Company’s investment team and finance team verify all major inputs to the valuation and review the results with the independent appraiser prior to seeking Valuation Committee approval. The significant input within the appraised value is the value of land per acre. The separate account and side-car investments that were not appraised were valued utilizing an expected sales price calibration method. As at December 31, 2020, only one debt investment remained valued using the discounted cash flow methodology.

(4)

On January 22, 2020, the Company completed the syndication of 50% of its direct investment in Trinity Falls to THPAS JV-1, subsequent to which Tricon’s investment in Trinity Falls was remeasured based on the transaction price. As a result, there was a significant change in the range of inputs and weighted average inputs disclosed compared to December 31, 2019 driven by the exclusion of Trinity Falls from the discounted cash flow model.

Sensitivity

For those investments valued using discounted cash flows, an increase of 2.5% in the discount rate results in a decrease in fair value of $4,144 and a decrease of 2.5% in the discount rate results in an increase in fair value of $4,568 (December 31, 2019 – ($10,656) and $11,541, respectively).

34 2020 ANNUAL REPORT TRICON RESIDENTIAL

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

for the year ended December 31, 2020

(in thousands of U.S. dollars, except per share amounts and percentage amounts)

10. FAIR VALUE ESTIMATION

Fair value measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these consolidated financial statements is determined on this basis, unless otherwise noted.

Inputs to fair value measurement techniques are disaggregated into three hierarchical levels, which are based on the degree to which inputs to fair value measurement techniques are observable by market participants:

Level 1 – Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.

Level 2 – Inputs (other than quoted prices included in Level 1) are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the asset’s or liability’s anticipated life.

Level 3 – Inputs are unobservable and reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs in determining the estimate.

Fair value measurements are adopted by the Company to calculate the carrying amounts of various assets and liabilities.

Acquisition costs, other than those related to financial instruments classified as FVTPL which are expensed as incurred, are capitalized to the carrying amount of the instrument and amortized using the effective interest method.

The following table provides information about assets and liabilities measured at fair value on the balance sheet and categorized by level according to the significance of the inputs used in making the measurements:


	December 31, 2020						December 31, 2019
(in thousands of U.S. dollars)	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Assets
Rental properties (Note 6)	$	—	$	—	$	6,321,918	$	—	$	—	$	—
Canadian development properties (Note 8)		—		—		110,018		—		—		—
Investments in for-sale housing (Note 9)		—		—		164,842		—		—		300,653
Investments – Tricon American Homes		—		—		—		—		—		1,365,007
Investments – Tricon Lifestyle Rentals		—		—		—		—		—		525,932
Derivative financial instruments (Note 20)		—		841		—		—		—		—

	$	—	$	841	$	6,596,778	$	—	$	—	$	2,191,592

Liabilities
Derivative financial instruments (Note 20)	$	—	$	45,494	$	—	$	—	$	657	$	—
Limited partners’ interests in rental business (Note 5)		—		—		356,305		—		—		—

	$	—	$	45,494	$	356,305	$	—	$	657	$	—

There have been no transfers between levels for the year ended December 31, 2020.

Cash, restricted cash, amounts receivable, amounts payable and accrued liabilities, lease liabilities (included in other liabilities), resident security deposits and dividends payable are measured at amortized cost, which approximates fair value because they are short-term in nature.

TRICON RESIDENTIAL 2020 ANNUAL REPORT 35

11. AMOUNTS PAYABLE AND ACCRUED LIABILITIES

Amounts payable and accrued liabilities consist of the following:


(in thousands of U.S. dollars)	December 31, 2020		December 31, 2019
Trade payables and accrued liabilities	$	31,182	$	17,789
Accrued property taxes		37,987		—
AIP liability (Note 30)		7,120		2,742
Income taxes payable		337		1,947
Interest payable		18,566		3,577
Deferred income		1,294		—
Current portion of lease obligations (Note 26)		1,804		135

Total amounts payable and accrued liabilities	$	98,290	$	26,190

12. GOODWILL

In connection with the Company’s deemed acquisitions (Note 5), the Company has allocated material amounts of the related deemed purchase prices to goodwill. Such goodwill is tested for impairment at least annually on December 31, using estimates and assumptions affected by factors such as economic and industry conditions and changes in operating performance. The goodwill recorded in the consolidated financial statements relates to three groups of CGUs: the single-family rental group CGU, the multi-family rental group CGU and the Johnson CGU. The net carrying amount of goodwill is as follows.


(in thousands of U.S. dollars)	December 31, 2020		December 31, 2019
Johnson	$	219	$	219
Multi-Family Rental		79,112		—
Single-Family Rental		29,507		—

Total goodwill	$	108,838	$	219

The Company’s assumptions used in goodwill impairment testing are affected by current market conditions and the expected net operating income in each of the CGUs. The Company compared the aggregate recoverable amount of the group of assets included in the relevant CGUs to their respective carrying amounts. The recoverable amount was determined based on the fair value less costs of disposal of the CGUs. This fair value measurement is categorized as Level 3 in the fair value hierarchy and requires assumptions about revenue and operating expense growth rates as well as discount rates, which are discussed below.


	December 31, 2020
	Single-Family Rental			Multi-Family Rental
Weighted average growth rate – Years 1–5		3.3	%		3.5	%
Long-term growth rate		1.0	%		1.0	%
Discount rate		5.0	%		6.0	%

Growth rates

Growth rates over the five-year period are a combination of management’s estimate of annual growth for the next fiscal year based on historical growth rates achieved for the two preceding years, where appropriate. Management also used available market forecasts and data for the growth rate for the next two to five years based on industry reports. The projections also take into account future expected capital expenditures to maintain the condition of the rental properties to drive future revenue growth.

Long-term growth rates

Cash flows beyond the five-year period are based largely on management’s estimate of the ability of the CGU to grow in a mature and stable market.

Discount rates

Discount rates represent the current market assumption of the risks specific to each CGU regarding the time value of money and individual risks of the underlying assets, rather than the Company’s specific discount rates.

Based on the assessment of current economic conditions and of the underlying cash flows at the CGU level, management concluded that there was no impairment of goodwill as at December 31, 2020, as the recoverable amounts of the individual CGUs exceeded their carrying values.

36 2020 ANNUAL REPORT TRICON RESIDENTIAL

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

for the year ended December 31, 2020

(in thousands of U.S. dollars, except per share amounts and percentage amounts)

Sensitivity

The fair value less costs of disposal model utilized in calculating recoverable value is sensitive to changes in the discount rate and long-term growth rate, especially for the multi-family rental group of CGUs. If the discount rate increased by 0.1% or if the perpetual growth rate decreased by 0.1%, the carrying amount of the multi-family rental group of CGUs would exceed the recoverable amount by approximately $20,000 to $25,000; hence, it would trigger an impairment. For the single-family rental group of CGUs, no reasonable change in assumptions would cause the recoverable amounts to fall below the carrying values. Management will continue to monitor the market and economic uncertainty related to the COVID-19 pandemic that could impact the significant estimates used in the discounted cash flow for annual impairment testing.

13. INCOME TAXES


(in thousands of U.S. dollars)
For the years ended December 31	2020			2019
Income tax recovery (expense) – current	$	4,050		$	(5,410	)
Income tax expense – deferred		(40,425	)		(9,469	)

Income tax expense	$	(36,375	)	$	(14,879	)

The tax on the Company’s income differs from the theoretical amount that would arise using the weighted average tax rate applicable to income of the consolidated entities as follows:


(in thousands of U.S. dollars)
For the years ended December 31	2020			2019
Income before income taxes	$	152,788		$	129,014
Combined statutory federal and provincial income tax rate		26.50	%		26.50	%
Expected income tax expense		40,489			34,189
Non-taxable gains on investments		(1,460	)		(24,684	)
Non-taxable losses (gains) on derivative financial instruments		1,912			(785	)
Foreign tax rate differential⁽¹⁾		(8,854	)		77
Other, including permanent differences⁽²⁾		4,288			6,082

Income tax expense	$	36,375		$	14,879

(1)	Effective January 1, 2020, the Company’s single-family rental and U.S. multi-family rental businesses are subject to the U.S. ordinary income tax rate of 21%, resulting in a reduction in Tricon’s effective tax rate from the Canadian combined statutory income tax rate of 26.5%.

(2)	Other permanent differences are comprised of non-deductible share compensation, non-deductible debentures discount amortization and non-deductible interest expense.

TRICON RESIDENTIAL 2020 ANNUAL REPORT 37

The expected realization of deferred income tax assets and deferred income tax liabilities is as follows:


(in thousands of U.S. dollars)	December 31, 2020		December 31, 2019
Deferred income tax assets
Deferred income tax assets to be recovered after more than 12 months	$	102,444	$	41,049
Deferred income tax assets to be recovered within 12 months		—		3,700

Total deferred income tax assets	$	102,444	$	44,749

Deferred income tax liabilities
Deferred income tax liabilities reversing after more than 12 months	$	298,071	$	98,360
Deferred income tax liabilities reversing within 12 months		—		224

Total deferred income tax liabilities	$	298,071	$	98,584

Net deferred income tax liabilities	$	195,627	$	53,835

The movement of the deferred income tax accounts was as follows:


(in thousands of U.S. dollars)	December 31, 2020			December 31, 2019
Change in net deferred income tax liabilities
Net deferred income tax liabilities, beginning of year	$	53,835		$	45,091
Initial recognition on Deemed Acquisition (Note 5)		196,853			—
Reversal of deferred income tax liabilities related to Deemed Acquisition (Note 5)		(94,714	)		—
Charge to the statement of comprehensive income		40,425			9,469
Other		(772	)		(725	)

Net deferred income tax liabilities, end of year	$	195,627		$	53,835

The tax effects of the significant components of temporary differences giving rise to the Company’s deferred income tax assets and liabilities were as follows:


(in thousands of U.S. dollars)	Investments		Long-term incentive plan accrual			Issuance costs		Net operating losses		Other		Total
Deferred income tax assets
At December 31, 2019	$	—	$	6,456		$	1,068	$	31,800	$	5,425	$	44,749
Addition/(reversal)⁽¹⁾		16,677		(245	)		634		40,492		137		57,695

At December 31, 2020	$	16,677	$	6,211		$	1,702	$	72,292	$	5,562	$	102,444


(in thousands of U.S. dollars)	Investments			Rental properties		Convertible debentures			Deferred placement fees			Other		Total
Deferred income tax liabilities
At December 31, 2019	$	97,338		$	—	$	187		$	1,059		$	—	$	98,584
(Reversal)/addition⁽¹⁾		(97,338	)		297,057		(12	)		(220	)		—		199,487

At December 31, 2020	$	—		$	297,057	$	175		$	839		$	—	$	298,071

(1)	Includes $40,000 and $142,139 of deferred income tax assets and deferred income tax liabilities, respectively, recognized as part of the business combinations (Note 5).

The Company believes it will have sufficient future income to realize the deferred income tax assets.

38 2020 ANNUAL REPORT TRICON RESIDENTIAL

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

for the year ended December 31, 2020

(in thousands of U.S. dollars, except per share amounts and percentage amounts)

14. REVENUE FROM RENTAL PROPERTIES

The components of the Company’s revenue from rental properties are described as follows:


For the years ended December 31	2020						2019
(in thousands of U.S. dollars)	Single-Family Rental		Multi-Family Rental		Total		Total
Base rent	$	301,538	$	90,290	$	391,828	$	—
Other revenue⁽¹⁾		13,946		14,700		28,646		—
Non-lease component		51,498		6,215		57,713		—

Total revenue from rental properties	$	366,982	$	111,205	$	478,187	$	—

(1)	Other revenue includes revenue earned on ancillary services and amenities as well as lease administrative fees.

15. REVENUE FROM PRIVATE FUNDS AND ADVISORY SERVICES

The components of the Company’s revenue from private funds and advisory services are described in the tables below. Intercompany revenues and expenses between the Company and its subsidiaries, such as property management fees, are 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.


(in thousands of U.S. dollars)	Asset management fees		Performance fees		Development fees			Property management fees			Total
For the year 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 year ended December 31, 2019
Total revenue from private funds and advisory services	$	15,099	$	7,448	$	17,348		$	—		$	39,895

16. AMOUNTS RECEIVABLE

Amounts receivable consist of rent receivables, trade receivables, income tax recoverable and other receivables.


(in thousands of U.S. dollars)	December 31, 2020		December 31, 2019
Rent receivables	$	4,274	$	—
Trade receivables		5,263		3,057
Income tax recoverable		3,282		152
Other receivables⁽¹⁾		12,774		5,743

Total amounts receivable	$	25,593	$	8,952

(1)	Other receivables are comprised of amounts due from affiliates and various amounts recoverable from third parties.

The Company has $4,274 of rent receivables from residents as at December 31, 2020 under the relevant lease arrangements. As a result of the current COVID-19 pandemic and the resulting economic uncertainty, certain residents may experience financial difficulty which may impact their ability to continue to pay rent due and in the future.

TRICON RESIDENTIAL 2020 ANNUAL REPORT 39

17. DEBT

The following table presents a summary of the Company’s outstanding debt as at December 31, 2020:


	December 31, 2020
(in thousands of U.S. dollars)	Maturity dates		Coupon/stated interest rates			Interest rate cap or floor	Effective interest rates			Extension options⁽¹⁾		Total facility		Outstanding balance
SFR JV-1 subscription facility		August 2021		LIBOR+1.75	%	N/A		2.31	%		N/A	$	150,000	$	116,000
SFR JV-1 warehouse credit facility⁽²⁾		October 2021		LIBOR+2.65	%	3.25% LIBOR cap		3.21	%		One-year		300,000		96,610
						0.25% LIBOR floor
Term loan 2⁽³⁾		October 2021		LIBOR+1.95	%	2.50% LIBOR cap		2.51	%		One-year		96,077		96,077
						0.50% LIBOR floor
Warehouse credit facility⁽⁴⁾		November 2021		LIBOR+2.75	%	3.00% LIBOR cap		3.31	%		One-year		50,000		10,209
						0.25% LIBOR floor
Securitization debt 2017-1⁽³⁾		September 2022		3.59	%	N/A		3.59	%		N/A		459,530		459,530
Term loan⁽³⁾		October 2022		LIBOR+2.00	%	2.50% LIBOR cap		2.56	%		N/A		375,000		374,745
						0.50% LIBOR floor
Securitization debt 2017-2⁽³⁾		January 2024		3.66	%	N/A		3.66	%		N/A		363,598		363,598
Securitization debt 2018-1⁽³⁾		May 2025		3.96	%	N/A		3.96	%		N/A		312,540		312,540
SFR JV-1 securitization debt 2019-1⁽³⁾		March 2026		3.12	%	N/A		3.12	%		N/A		333,358		333,358
SFR JV-1 securitization debt 2020-1^(3),(5)		July 2026		2.43	%	N/A		2.43	%		N/A		553,428		553,428
Securitization debt 2020-2^(3),(6)		November 2027		1.94	%	N/A		1.94	%		N/A		440,506		440,506

Single-family rental properties borrowings								2.94	%				3,434,037		3,156,601
U.S. multi-family credit facility		December 2021		LIBOR+3.75	%	N/A		4.39	%		N/A		109,890		109,890
Mortgage tranche A⁽⁷⁾		November 2023		LIBOR+1.15	%	5.35% cap		1.77	%		N/A		160,090		160,090
Mortgage tranche B⁽⁷⁾		November 2024		3.92	%	N/A		3.92	%		N/A		400,225		400,225
Mortgage tranche C⁽⁷⁾		November 2025		3.95	%	N/A		3.95	%		N/A		240,135		240,135

Multi-family rental properties borrowings								3.61	%				910,340		910,340
Land loan⁽⁸⁾		July 2021		Prime+1.50	%	3.95% floor		4.17	%		N/A		21,991		21,991
Vendor take-back (VTB) loan 2021		August 2021		–		N/A		6.00	%		N/A		25,564		25,564
Mortgage⁽⁸⁾		September 2022		3.67	%	N/A		3.67	%		N/A		12,482		12,482

Canadian development properties borrowings								4.85	%				60,037		60,037
Corporate credit facility⁽⁹⁾		July 2022		LIBOR+2.75	%	N/A		4.48	%		N/A		500,000		26,000
Corporate office mortgages		November 2024		4.25	%	N/A		4.30	%		N/A		11,089		11,089

Corporate borrowings								4.42	%				511,089		37,089

														$	4,164,067

Transaction costs (net of amortization)															(25,019	)
Debt discount (net of amortization)															(1,542	)

Total debt								3.12	%			$	4,915,503	$	4,137,506

Current portion of long-term debt⁽¹⁾														$	274,190
Long-term debt														$	3,863,316
Fixed-rate debt – principal value								3.24	%					$	3,152,455
Floating-rate debt – principal value								2.76	%					$	1,011,612

(1)	The Company has the ability to extend the maturity of the loans where an extension option exists and intends to exercise such options wherever available. The current portion of long-term debt reflects the balance after all extension options have been exercised.

(2)	On October 23, 2020, SFR JV-1 amended its warehouse credit facility and extended its maturity date to October 25, 2021, with a one-year extension option available.

(3)	The term loans and securitization debt are secured, directly and indirectly, by approximately 21,200 single-family rental homes.

(4)	On November 20, 2020, Tricon amended its warehouse credit facility and extended its maturity date to November 22, 2021, with a one-year extension option available.

(5)

On July 21, 2020, SFR JV-1 closed a new securitization transaction involving the issuance and sale of six classes of fixed-rate pass-through certificates with a face amount of $553,428, a weighted average coupon of 2.43% and a term to maturity of six years. The transaction proceeds were used to repay existing short-term SFR JV-1 debt.

(6)

On November 10, 2020, Tricon closed a new securitization transaction involving the issuance and sale of six classes of fixed-rate pass-through certificates with a face amount of $440,506, a weighted average coupon of 1.94% and a term to maturity of seven years. The transaction proceeds were used to repay existing debt and to acquire single-family rental homes.

(7)	The mortgages are secured by 23 multi-family properties owned by the Company.

(8)	The land loan and mortgage are secured by the land under development at The James (Scrivener Square) and The Shops of Summerhill.

(9)

The Company has provided a general security agreement creating a first priority security interest on the assets of the Company, excluding, among other things, single-family rental homes, multi-family rental properties and interests in for-sale housing. As part of the corporate credit facility, the Company has designated $15,000 to issue letters of credit as security against contingent obligations related to its Canadian multi-family developments. As at December 31, 2020, the letters of credit outstanding totalled $10,707 (C$13,632). During the year, the Company used proceeds from the Due to Affiliate (see Note 19) to pay down the corporate credit facility, resulting in an ending balance of $26,000 (2019 – $297,000).

40 2020 ANNUAL REPORT TRICON RESIDENTIAL

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

for the year ended December 31, 2020

(in thousands of U.S. dollars, except per share amounts and percentage amounts)


	December 31, 2019
(in thousands of U.S. dollars)	Maturity dates		Coupon/stated interest rates			Interest rate cap or floor		Effective interest rates			Extension options		Total facility		Outstanding balance
Corporate credit facility		July 2022		LIBOR+3.75	%		N/A		5.91	%		N/A	$	500,000	$	297,000
Corporate office mortgages		November 2024		4.25	%		N/A		4.30	%		N/A		11,153		11,153

Total debt									5.85	%			$	511,153	$	308,153

Current portion of debt															$	284
Long-term debt															$	307,869

The Company was in compliance with the covenants and other undertakings outlined in all loan agreements.

The scheduled principal repayments and debt maturities are as follows, reflecting the maturity dates after all extensions have been exercised:


(in thousands of U.S. dollars)	Single-family rental borrowings		Multi-family rental borrowings		Canadian development properties borrowings		Corporate borrowings		Total
2021	$	116,000	$	110,255	$	47,969	$	302	$	274,526
2022		1,037,171		4,366		12,068		26,313		1,079,918
2023		—		156,293		—		329		156,622
2024		363,598		403,760		—		10,145		777,503
2025		312,540		235,666		—		—		548,206
2026 and thereafter		1,327,292		—		—		—		1,327,292

		3,156,601		910,340		60,037		37,089		4,164,067

Transaction costs (net of amortization)										(25,019	)
Debt discount (net of amortization)										(1,542	)

Total debt									$	4,137,506

Fair value of debt

The table below presents the fair value and the carrying value (net of unamortized deferred financing fees and debt discount) of the fixed-rate loans as at December 31, 2020.


	December 31, 2020
(in thousands of U.S. dollars)	Fair value		Carrying value
Securitization debt 2017-1	$	466,210	$	459,530
Securitization debt 2017-2		373,583		362,683
Securitization debt 2018-1		329,876		311,913
SFR JV-1 securitization debt 2019-1		347,177		326,767
SFR JV-1 securitization debt 2020-1		567,635		543,803
Securitization debt 2020-2		440,506		432,817
Mortgage tranche B		413,778		400,225
Mortgage tranche C		248,936		240,135
Vendor take-back (VTB) loan 2021		26,356		25,564
Mortgage		12,641		12,463
Corporate office mortgages		11,728		11,089

Total	$	3,238,426	$	3,126,989

The carrying value of variable term loans approximates their fair value, since their variable interest terms are indicative of prevailing market prices.

TRICON RESIDENTIAL 2020 ANNUAL REPORT 41

18. CONVERTIBLE DEBENTURES

On March 17, 2017, the Company completed the offering, on a bought deal basis, of $172,500 aggregate principal amount of 5.75% extendible convertible unsecured debentures (the “2022 convertible debentures”), including $22,500 aggregate principal amount of 2022 convertible debentures issued pursuant to the exercise of underwriters’ over-allotment options. The net offering proceeds to the Company were $164,554 after transaction costs of $7,946.

Upon the closing of the acquisition of Silver Bay on May 9, 2017, the 2022 convertible debentures became convertible to common shares of the Company in accordance with their terms, and their maturity date was extended to March 31, 2022.

The 2022 convertible debentures bear interest at 5.75% per annum, which is payable semi-annually in arrears in March and September, and are convertible into common shares of the Company at a conversion rate of 95.6023 common shares per $1,000 principal amount of 2022 convertible debentures (equivalent to a conversion price of approximately $10.46 per common share (equivalent to C$13.32 as of December 31, 2020)).

The Company may settle the conversion right in cash in lieu of common shares unless the holder has explicitly indicated that it does not wish to receive cash.

On or after March 31, 2020 and prior to March 31, 2021, the 2022 convertible debentures may be redeemed by the Company at a price equal to the principal amount thereof plus accrued and unpaid interest, provided that the Current Market Price (as defined in the trust indenture governing the 2022 convertible debentures) of the Company’s common shares on the fifth trading day immediately preceding the date on which notice of redemption is given is not less than 125% of the conversion price. On or after March 31, 2021 and prior to their final maturity date, the 2022 convertible debentures may be redeemed by the Company at a price equal to the principal amount thereof plus accrued and unpaid interest. The Company has an option to settle the redemption right, where applicable, by delivering the number of common shares determined by dividing the principal amount of the convertible debentures by 95% of the Current Market Price of the Company’s common shares on the fifth trading day immediately preceding the date fixed for redemption or the maturity date. For the year ended December 31, 2020, there were no conversions of the 2022 convertible debentures ($100 principal amount was converted into 9,560 common shares during the year ended December 31, 2019).

The host liability component of the outstanding 2022 convertible debentures recognized on the consolidated balance sheets was calculated as follows:


(in thousands of U.S. dollars)	December 31, 2020			December 31, 2019
Principal amount outstanding	$	172,400		$	172,400
Less: Transaction costs (net of amortization)		(2,249	)		(3,884	)

Liability component on initial recognition		170,151			168,516
Debentures discount (net of amortization)		(4,195	)		(7,205	)

2022 convertible debentures	$	165,956		$	161,311

The above carrying values were recognized at amortized cost after discounting the future interest and principal payments using the effective interest rates. The fair value of the host liability component of the 2022 convertible debentures was $178,412 as of December 31, 2020 and $177,777 as of December 31, 2019. The difference between the amortized cost and implied fair value is a result of the difference between the effective interest rate and the market interest rate for debt with similar terms.

42 2020 ANNUAL REPORT TRICON RESIDENTIAL

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

for the year ended December 31, 2020

(in thousands of U.S. dollars, except per share amounts and percentage amounts)

19. 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 Preferred Units of the Affiliate (the “Preferred Units”) for an aggregate subscription price of $300,000 (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”).

Transaction – between Tricon and Investors

Pursuant to the Transaction Documents, holders of 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 (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 (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). These exchange rights are classified as a derivative financial instrument (Note 20). 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).

Promissory note – between Tricon entities

In connection with the Transaction, the Company borrowed the subscription proceeds of $300,000 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 above. The Company incurred $15,192 of transaction costs in connection with the Transaction, of which $12,202 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. In determining the initial fair value of the Promissory Note, the Company used a discounted cash flow model and an amortization period of nine years and nine months determined by a probability weighted methodology under IFRS 9.

The Promissory Note payable to Tricon PIPE LLC is subsequently measured at amortized cost using the effective interest rate method. Under the effective interest rate method, the transaction costs along with the discount of the Promissory Note are amortized over the expected life and recorded as net interest expense in the consolidated statements of comprehensive income. This amortization period is subject to re-estimation on a regular basis as adjustments to the carrying value are made under the effective interest rate method. During the period from September 3, 2020 to December 31, 2020, the Company recorded interest expense of $7,116, including accretion expense of $1,462 with respect to the amortization of transaction costs and the discount.

TRICON RESIDENTIAL 2020 ANNUAL REPORT 43

The fair values of the Promissory Note and the derivative on September 3, 2020 are as follows:


(in thousands of U.S. dollars)	Principal value		Fair value of derivative			Fair value of Promissory Note
Promissory Note principal value as at September 3, 2020	$	300,000	$	37,613		$	262,387
Transaction costs⁽¹⁾		15,192		(2,990	)		(12,202	)

Liability component on initial recognition			$	37,613		$	250,185

(1)	Transaction costs of $2,990 that were attributed to the derivative component were expensed in the consolidated statements of comprehensive income during the period while transaction costs of $12,202 were capitalized into the underlying promissory note and reduced the fair value at inception.

The movement of the derivative financial liability in connection with the Promissory Note (or Due to Affiliate) from September 3, 2020 to December 31, 2020 is shown below:


(in thousands of U.S. dollars)
Fair value of derivative on initial recognition as at September 3, 2020	$	37,613
Fair value loss on derivative during the period		7,881

Fair value of derivative as at December 31, 2020 (Note 20)	$	45,494

The fair value loss on the derivative was primarily driven by an increase in Tricon’s share price, on a USD converted basis, which served to increase the probability of exchange of the preferred units into Tricon’s common shares (Note 20).

The Promissory Note payable to Tricon PIPE LLC is subsequently measured at amortized cost using the effective interest rate method and the carrying value of Due to Affiliate is shown below. The fair value of the Promissory Note was $293,465 as of December 31, 2020. The difference between the amortized cost and the implied fair value is a result of the difference between the effective interest rate and the market interest rate for debt with similar terms.


(in thousands of U.S. dollars)	December 31, 2020			September 3, 2020
Principal amount outstanding	$	300,000		$	300,000
Less: Discount and transaction costs (net of amortization)		(48,353	)		(49,815	)

Due to Affiliate	$	251,647		$	250,185

Structured entity – Tricon PIPE LLC (“Affiliate” or “LLC”)

Tricon PIPE LLC was incorporated on August 7, 2020 for the purpose of raising third-party capital through the issuance of preferred units for an aggregate amount of $300,000. The Company has a 100% voting interest in this LLC; however, the Company is not required to consolidate this structured entity, as discussed in Note 3.

As of December 31, 2020, the LLC has a preferred unit liability of $300,000 and a Promissory Note receivable of $300,000. During the year ended December 31, 2020, the LLC earned interest income of $5,654 from the Company and recognized dividends declared of $5,654.

The Company’s obligation with respect to its involvement with the structured entity is equal to the cash flows under the Promissory Note payable (or Due to Affiliate). The Company has not recognized any income or losses in connection with its interest in this unconsolidated structured entity from September 3, 2020 to December 31, 2020.

44 2020 ANNUAL REPORT TRICON RESIDENTIAL

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

for the year ended December 31, 2020

(in thousands of U.S. dollars, except per share amounts and percentage amounts)

20. DERIVATIVE FINANCIAL INSTRUMENTS

The conversion and redemption features of the convertible debentures are combined pursuant to IFRS 9, Financial Instruments: Recognition and Measurement, and are measured at fair value at each reporting period using model calibration. The conversion and redemption components were valued using a binomial pricing model and then the valued amount was calibrated to the traded price of the underlying debentures. The valuation model uses market-based inputs, including the spot price of the underlying equity, implied volatility of the equity and USD/CAD foreign exchange rates, risk-free rates from the U.S. dollar swap curves and dividend yields related to the equity. The valuation of the conversion and redemption components assumes that the debentures are held to maturity.

Quantitative information about fair value measurements (Level 2) using significant observable inputs other than quoted prices included in Level 1 is as follows:


2022 convertible debentures	December 31, 2020			December 31, 2019
Risk-free rate⁽¹⁾		0.21	%		1.70	%
Implied volatility⁽²⁾		30.69	%		20.78	%
Dividend yield⁽³⁾		2.45	%		2.63	%

(1)	Risk-free rates were from the U.S. dollar swap curves matching the terms to maturity of the debentures.

(2)	Implied volatility was computed from the trading volatility of the Company’s stock over a comparable term to maturity and the volatility of USD/CAD exchange rates.

(3)	Dividend yields were from the forecast dividend yields matching the terms to maturity of the debentures.

The Company recognized a new derivative in connection with its Transaction completed during the year (Note 19). The Promissory Note contains the Mandatory Prepayment that is intermingled with other options pursuant to the Transaction, as exercising the Mandatory Prepayment effectively terminates the other options. Although the Exchange Right and Redemption Right exist at the Affiliate level, the Affiliate is unable to issue the common shares of the Company upon exercise of one or all of the rights by either party. As a result, such options, in essence, were deemed to be written by the Company and are treated as a single combined financial derivative instrument for valuation purposes in accordance with IFRS 9. The option pricing model for the derivative uses market-based inputs, including the spot price of the underlying equity, implied volatility of the equity and USD/CAD foreign exchange rates, risk-free rates from the U.S. dollar swap curves and dividend yields related to the underlying equity. The valuation of the derivative assumes a 9.75-year expected life of the investment horizon of the unitholders.

Quantitative information about fair value measurements (Level 2) using significant observable inputs other than quoted prices included in Level 1 is as follows:


Due to Affiliate	December 31, 2020			December 31, 2019
Risk-free rate⁽¹⁾		0.40	%		N/A
Implied volatility⁽²⁾		31.78	%		N/A
Dividend yield⁽³⁾		2.45	%		N/A

(1)	Risk-free rates were from the U.S. dollar swap curves matching the expected maturity of the Due to Affiliate.

(2)	Implied volatility was computed from the trading volatility of the Company’s stock over a comparable term to maturity and the volatility of USD/CAD exchange rates.

(3)	Dividend yields were from the forecast dividend yields matching the expected maturity of the Due to Affiliate.

The Company also has other types of derivative financial instruments that consist of interest rate caps on the Company’s floating-rate debt and are classified and measured at FVTPL. Interest rate caps are valued using model calibration. Inputs to the valuation model are determined from observable market data wherever possible, including market volatility and interest rates.

TRICON RESIDENTIAL 2020 ANNUAL REPORT 45

The values attributed to the derivative financial instruments are shown below:


(in thousands of U.S. dollars)	Conversion/ redemption options			Exchange/ prepayment options			Interest rate caps⁽¹⁾			Total
For the year ended December 31, 2020
Derivative financial assets (liabilities), beginning of year	$	(657	)	$	–		$	28		$	(629	)
Addition of derivative financial liability in connection with Due to Affiliate		–			(37,613	)		–			(37,613	)
Addition of interest rate caps		–			–			11			11
Fair value gain (loss)		1,498			(7,881	)		(39	)		(6,422	)

Derivative financial assets (liabilities), end of year	$	841		$	(45,494	)	$	–		$	(44,653	)


For the year ended December 31, 2019
Derivative financial assets (liabilities), beginning of year	$	(3,936	)	$	–		$	–		$	(3,936	)
Fair value gain (loss)		3,279			–			–			3,279

Derivative financial assets (liabilities), end of year	$	(657	)	$	–		$	–		$	(657	)

(1)	Initial balance was recognized as part of the Deemed Acquisition of the single-family rental business (Note 5).

As at December 31, 2020, the conversion and redemption features of the 2022 convertible debentures are presented as an asset of $841, and the exchange and prepayment features related to the Due to Affiliate are presented as a liability of $45,494.

For the year ended December 31, 2020, there was a fair value gain on the embedded derivative on the 2022 convertible debentures of $1,498. For the period from September 3 to December 31, 2020, there was a fair value loss on the derivative recognized on the Due to Affiliate of $7,881. The fair value gain on the embedded derivative on the 2022 convertible debentures was driven by an increase in the value of Tricon’s redemption option relative to the holders’ conversion option, resulting in the embedded derivative being an asset as at December 31, 2020 (December 31, 2019 – liability). The fair value loss on the derivative related to the Due to Affiliate was primarily driven by an increase in Tricon’s share price, on a USD converted basis, which served to increase the probability of exchange of the preferred units into Tricon’s common shares.

For the year ended December 31, 2020, the Company recognized a $6,422 fair value loss on derivative financial instruments (2019 – fair value gain of $3,279) and a $1,039 fair value loss on the put liability (2019 – fair value loss of $318), for a total loss of $7,461 (2019 – fair value gain of $2,961). The put liability was redeemed on March 4, 2020 in connection with the Company’s acquisition and cancellation of 1,867,675 outstanding common shares (Note 28).

46 2020 ANNUAL REPORT TRICON RESIDENTIAL

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

for the year ended December 31, 2020

(in thousands of U.S. dollars, except per share amounts and percentage amounts)

21. INTEREST EXPENSE

Interest expense is comprised of the following:


(in thousands of U.S. dollars)
For the years ended December 31	2020		2019
SFR JV-1 subscription facility	$	3,763	$	–
SFR JV-1 warehouse credit facility		6,091		–
Term loan 2		2,796		–
Warehouse credit facility		1,246		–
Securitization debt 2017-1		16,612		–
Term loan		10,891		–
Securitization debt 2017-2		13,408		–
Securitization debt 2018-1		12,473		–
SFR JV-1 securitization debt 2019-1		10,385		–
SFR JV-1 securitization debt 2020-1		6,030		–
Securitization debt 2020-2		1,221		–
Securitization debt 2016-1⁽¹⁾		12,177		–

Single-family rental interest expense		97,093		–

U.S. multi-family credit facility		5,006		–
Mortgage tranche A		2,865		–
Mortgage tranche B		15,950		–
Mortgage tranche C		9,643		–

Multi-family rental interest expense		33,464		–

Mortgage		285		–
Vendor take-back (VTB) loan 2020⁽¹⁾		233		–

Canadian development properties interest expense⁽²⁾		518		–

Corporate credit facility		12,582		17,819
Corporate office mortgages		450		354

Corporate interest expense		13,032		18,173

Amortization of financing costs		5,900		1,570
Amortization of debt discounts		4,694		2,729
Debentures interest		9,927		9,902
Interest on Due to Affiliate		5,654		–
Interest on lease obligation		328		65

Total interest expense	$	170,610	$	32,439

(1)	The securitization debt 2016-1 and vendor take-back (VTB) loan 2020 were fully repaid during the year.

(2)	Canadian development properties capitalized $1,708 of interest for the year ended December 31, 2020.

TRICON RESIDENTIAL 2020 ANNUAL REPORT 47

22. EXPENSES

The Company’s expenses are comprised of direct operating expense for rental properties, property management overhead, compensation, general and administration, interest and depreciation and amortization. Direct operating expense for rental properties includes all attributable expenses incurred at the property level. Property management overhead expenses are incurred in running the Company’s property management platform headquartered in Orange County, California, and include all direct expenses associated with managing rental properties, acquisitions and dispositions activities and other service activities.

The following table lists details of the direct operating expenses for rental properties by type.


(in thousands of U.S. dollars) For the year ended December 31, 2020	Single-Family Rental		Multi-Family Rental		Total
Property taxes	$	55,615	$	18,623	$	74,238
Repairs, maintenance and turnover		24,575		4,411		28,986
Property management expenses		25,686		12,097		37,783
Property insurance		5,306		2,472		7,778
Homeowners’ association (HOA) costs		4,906		52		4,958
Other direct expense⁽¹⁾		5,154		10,641		15,795

Direct operating expenses	$	121,242	$	48,296	$	169,538

(1)	Other direct expense includes property marketing, utilities and other property operating costs.

The following table provides details of direct expenses incurred at the property management platform by nature.


(in thousands of U.S. dollars)
For the year ended December 31, 2020
Salaries and benefits⁽¹⁾	$	12,903
General and administration expense⁽²⁾		7,926
Travel and entertainment		373
Marketing		1,173
Other expense		279

Property management overhead	$	22,654

(1)	Salaries and benefits incurred at the property management platform exclude property management salaries and benefits allocated to direct operating expenses of $25,686 for the year ended December 31, 2020.

(2)	General and administration expense incurred at the property management platform includes professional fees, insurance and other miscellaneous office expenses.

23. OTHER INCOME (EXPENSE)

Other income (expense) includes government assistance received by Johnson in the amount of $1,774, net of other expense.

48 2020 ANNUAL REPORT TRICON RESIDENTIAL

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

for the year ended December 31, 2020

(in thousands of U.S. dollars, except per share amounts and percentage amounts)

24. INTANGIBLE ASSETS

The intangible assets are as follows:


(in thousands of U.S. dollars)	December 31, 2020		December 31, 2019
Placement fees	$	3,764	$	4,747
Customer relationship intangible		3,215		3,731
Contractual development fees		5,384		7,918

Total intangible assets	$	12,363	$	16,396

Intangible assets represent future management fees, development fees and commissions that Tricon expects to receive over the life of the assets and Investment Vehicles that the Company manages. They are amortized over the estimated periods that the Company expects to collect these fees, which range from 2 to 13 years. Amortization expense for the year ended December 31, 2020 was $4,034 (2019 – $4,338).


(in thousands of U.S. dollars) For the year ended December 31, 2020	Opening		Additions		Amortization expense			Translation adjustment		Ending
Placement fees	$	4,747	$	–	$	(984	)	$	1	$	3,764
Customer relationship intangible		3,731		–		(516	)		–		3,215
Contractual development fees		7,918		–		(2,534	)		–		5,384

Intangible assets	$	16,396	$	–	$	(4,034	)	$	1	$	12,363


(in thousands of U.S. dollars) For the year ended December 31, 2019	Opening		Additions		Amortization expense			Translation adjustment		Ending
Placement fees	$	5,735	$	–	$	(989	)	$	1	$	4,747
Rights to performance fees		65		–		(65	)		–		–
Customer relationship intangible		4,245		–		(514	)		–		3,731
Contractual development fees		10,688		–		(2,770	)		–		7,918

Intangible assets	$	20,733	$	–	$	(4,338	)	$	1	$	16,396

In light of the COVID-19 pandemic and the related market and economic uncertainty, the Company recognized a fair value write-down with respect to its for-sale housing investments in the first quarter of 2020 (Note 9). As a result, management has also assessed whether the write-down impacted the carrying value of the intangible assets recognized as part of the acquisition of Johnson in 2014. Specifically, contractual development fees and customer relationship intangibles were initially recognized through the purchase price allocation performed in 2014. Management has assessed the potential impact on the underlying business at Johnson and its existing contracts with developers in determining if an impairment exists on intangibles as at December 31, 2020. Management has concluded there was no impairment of the intangibles but will continue to monitor the situation closely.

TRICON RESIDENTIAL 2020 ANNUAL REPORT 49

25. OTHER ASSETS


(in thousands of U.S. dollars)	December 31, 2020		December 31, 2019
Building	$	30,602	$	24,987
Furniture, computer and office equipment		8,015		4,272
Right-of-use assets (Note 26)		6,018		987
Leasehold improvements		1,251		431
Property-related systems software		1,478		–
Vehicles		626		–

Total other assets	$	47,990	$	30,677


(in thousands of U.S. dollars) For the year ended December 31, 2020	Opening		Initial recognition for business combinations (Note 5)		Additions		Depreciation expense			Translation adjustment		Ending
Building	$	24,987	$	–	$	5,462	$	(539	)	$	692	$	30,602
Furniture, computer and office equipment		4,272		2,795		4,072		(3,172	)		48		8,015
Right-of-use assets⁽¹⁾		987		5,379		1,966		(2,314	)				6,018
Leasehold improvements		431		1,141		178		(499	)		–		1,251
Property-related systems software		–		1,604		37		(163	)		–		1,478
Vehicles		–		475		278		(127	)		–		626

Other assets	$	30,677		$11,394	$	11,993	$	(6,814	)	$	740	$	47,990


(in thousands of U.S. dollars) For the year ended December 31, 2019	Opening		Additions		Depreciation expense			Translation adjustment		Ending
Building	$	15,540	$	9,002	$	(527	)	$	972	$	24,987
Furniture, computer and office equipment		4,247		1,010		(1,183	)		198		4,272
Right-of-use assets⁽¹⁾		1,140		5		(158	)		–		987
Leasehold improvements		499		–		(68	)		–		431

Other assets	$	21,426	$	10,017	$	(1,936	)	$	1,170	$	30,677

(1)	Right-of-use assets include leased space in office buildings with a carrying value of $3,862 (December 31, 2019 – $987) and maintenance vehicles with a carrying value of $1,965 (December 31, 2019 – nil). The remaining balance of right-of-use assets relates to office equipment.

For the year ended December 31, 2020, the Company incurred $5,462 related to the expansion of its head office in Toronto, comprised of $4,774 for the acquisition of commercial condominium units and $688 for the development and construction of the new office space. The Company also incurred $4,072 of costs for technology hardware and software and office furniture for the new office space.

Depreciation expense for the year ended December 31, 2020 was $6,814 (2019 – $1,936).

50 2020 ANNUAL REPORT TRICON RESIDENTIAL

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

for the year ended December 31, 2020

(in thousands of U.S. dollars, except per share amounts and percentage amounts)

26. OTHER LIABILITIES

Other liabilities consist of the non-current portion of lease obligations and a put liability, as follows:


(in thousands of U.S. dollars)	December 31, 2020		December 31, 2019
Put liability⁽¹⁾	$	–	$	13,375
Non-current portion of lease obligations⁽²⁾		4,599		954

Total other liabilities	$	4,599	$	14,329

(1)	The put liability was redeemed in full on March 4, 2020 in connection with the Company’s acquisition and cancellation of 1,867,675 common shares (Note 28).

(2)	The current portion of lease obligations is presented in amounts payable and accrued liabilities (Note 11).

The Company has multiple office leases, maintenance vehicle leases and office equipment leases. Tricon has 15 leases for office space with fixed lease terms ranging from one to eight years remaining. The Company’s property management operation, located in Orange County, California, leases 108 maintenance vehicles under five-year leases in connection with its property management operations. The Company has not entered into any lease modification arrangements with its landlords as a result of the COVID-19 pandemic.

The carrying value of the Company’s lease obligations is as follows:


(in thousands of U.S. dollars)	December 31, 2020			December 31, 2019
Balance, beginning of year	$	1,089		$	1,204
Initial recognition on Deemed Acquisition (Note 5)		5,435			–
Addition of lease obligation		1,966			–
Interest expense		328			65
Cash payments		(2,415	)		(180	)

Balance, end of year	$	6,403		$	1,089

Current portion of lease obligations (Note 11)	$	1,804		$	135
Non-current portion of lease obligations	$	4,599		$	954

As at December 31, 2020, the carrying value of the Company’s lease obligations was $6,403 (December 31, 2019 – $1,089) and the carrying value of the right-of-use asset was $6,018. During the year ended December 31, 2020, the Company incurred depreciation expense of $2,314 (2019 – $158) on the right-of-use asset.

The present value of the minimum lease payments required for the leases over the next five years and thereafter is as follows:


(in thousands of U.S. dollars)
2021	$	2,053
2022		1,891
2023		1,231
2024		998
2025		465
2026 and thereafter		551

Minimum lease payments obligation		7,189
Imputed interest included in minimum lease payments		(786	)

Lease obligations	$	6,403

The current portion of lease obligations is included in amounts payable and accrued liabilities, and the non-current portion of lease obligations is classified as other liabilities.

TRICON RESIDENTIAL 2020 ANNUAL REPORT 51

27. DIVIDENDS


(in thousands of dollars, except per share amounts)					Dividend amount per share				Total dividend amount				Dividend reinvestment plan (“DRIP”)
Date of declaration	Record date	Payment date	Common shares outstanding		CAD		USD⁽¹⁾		CAD		USD⁽¹⁾		CAD		USD⁽²⁾
February 24, 2020	March 31, 2020	April 15, 2020		192,772,071	$	0.070	$	0.049	$	13,494	$	9,512	$	512	$	369
May 14, 2020	June 30, 2020	July 15, 2020		192,848,390		0.070		0.051		13,499		9,906		1,773		1,302
August 4, 2020	September 30, 2020	October 15, 2020		193,082,192		0.070		0.052		13,516		10,133		1,978		1,505
November 9, 2020	December 31, 2020	January 15, 2021		193,544,915		0.070		0.055		13,548		10,641		1,780		1,407

									$	54,057	$	40,192	$	6,043	$	4,583

February 25, 2019	March 31, 2019	April 15, 2019		143,442,251	$	0.070	$	0.052	$	10,041	$	7,514	$	1,159	$	870
May 6, 2019	June 30, 2019	July 15, 2019		194,389,386		0.070		0.053		13,607		10,398		1,097		842
August 6, 2019	September 30, 2019	October 15, 2019		194,044,544		0.070		0.053		13,583		10,257		1,517		1,148
November 4, 2019	December 31, 2019	January 15, 2020		194,328,744		0.070		0.054		13,603		10,474		1,581		1,212

									$	50,834	$	38,643	$	5,354	$	4,072

(1)

Dividends are issued and paid in Canadian dollars. For reporting purposes, amounts recorded in equity are translated to U.S. dollars using the daily exchange rate on the date of record. Dividends payable of $10,641 recorded on the Company’s balance sheet are translated to U.S. dollars using the period-end exchange rate and include $20 related to restricted shares.

(2)	Dividends reinvested are translated to U.S. dollars using the daily exchange rate on the date common shares are issued.

The Company has a Dividend Reinvestment Plan (“DRIP”) under which eligible shareholders may elect to have their cash dividends automatically reinvested into additional common shares. These additional shares are issued from treasury (or purchased in the open market) at a discount, in the case of treasury issuances, of up to 5% of the Average Market Price, as defined under the DRIP, of the common shares as of the dividend payment date. If common shares are purchased in the open market, they are priced at the average weighted cost to the Company of the shares purchased.

Brokerage, commissions and service fees are not charged to shareholders for purchases or withdrawals of the Company’s shares under the DRIP, and all DRIP administrative costs are assumed by the Company.

For the year ended December 31, 2020, 584,974 common shares were issued under the DRIP (2019 – 491,716) for a total amount of $4,388 (2019 – $3,793).

52 2020 ANNUAL REPORT TRICON RESIDENTIAL

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

for the year ended December 31, 2020

(in thousands of U.S. dollars, except per share amounts and percentage amounts)

28. SHARE CAPITAL

The Company is authorized to issue an unlimited number of common shares. The common shares of the Company do not have par value.

As of December 31, 2020, there were 193,544,915 common shares issued by the Company (December 31, 2019 – 194,328,744), of which 193,175,802 were outstanding (December 31, 2019 – 194,021,133) and 369,113 were reserved to settle restricted share awards in accordance with the Company’s Restricted Share Plan (December 31, 2019 – 307,611) (Note 30).


(in thousands of dollars)	December 31, 2020									December 31, 2019
	Number of shares issued (repurchased)			Share capital						Number of shares issued (repurchased)			Share capital
	Number of shares issued (repurchased)			USD			CAD			Number of shares issued (repurchased)			USD			CAD
Beginning balance		194,021,133		$	1,201,061		$	1,529,568			143,011,130		$	793,521		$	988,711
Shares issued to acquire Starlight U.S. Multi-Family (No. 5) Core Fund		–			–			–			50,779,311			405,491			537,967
Shares repurchased under put rights on common shares issued to acquire Starlight U.S. Multi-Family (No. 5) Core Fund⁽¹⁾		(1,867,675	)		(14,922	)		(19,797	)		–			–			–
Shares issued under DRIP⁽²⁾		584,974			4,388			5,844			491,716			3,793			5,046
Stock options exercised⁽³⁾		291,832			1,615			2,133			73,263			258			340
Normal course issuer bid (NCIB)		–			–			–			(495,402	)		(3,067	)		(3,906	)
Deferred share units exercised⁽⁴⁾		207,040			1,362			1,791			223,328			1,555			2,056
Debentures conversion		–			–			–			9,560			100			135
Shares repurchased and reserved for restricted share awards⁽⁵⁾		(61,502	)		(541	)		(694	)		(71,773	)		(590	)		(781	)

Ending balance		193,175,802		$	1,192,963		$	1,518,845			194,021,133		$	1,201,061		$	1,529,568

(1)

On March 4, 2020, the Company repurchased 1,867,675 common shares as a result of holders exercising their put rights in connection with certain shares issued on June 11, 2019 in consideration for the acquisition of Starlight U.S. Multi-Family (No. 5) Core Fund. The fair value of the Company’s common shares was $7.99 (C$10.60) per share on the acquisition date and $8.70 (C$11.65) per share on the exercise date.

(2)	In 2020, 584,974 common shares were issued under the DRIP at an average price of $7.50 (C$9.99) per share.

(3)	In 2020, 644,717 vested stock options were exercised and settled by issuing 291,832 common shares.

(4)	In 2020, 207,040 common shares were issued for deferred share units (DSUs) redeemed at an average price of $6.58 (C$8.65) per share.

(5)

In 2020, 61,502 shares were reserved at $8.80 (C$11.28) per share in order to settle restricted share awards granted to employees in 2020 and DRIP with respect to restricted share awards granted in prior years. The restricted shares granted in 2020 will vest on the 10th anniversary of the grant date.

TRICON RESIDENTIAL 2020 ANNUAL REPORT 53

29. EARNINGS PER SHARE

Basic

Basic earnings per share is calculated by dividing net income attributable to shareholders of Tricon by the sum of the weighted average number of shares outstanding and vested deferred share units during the period.


(in thousands of U.S. dollars, except per share amounts which are in U.S. dollars)
For the years ended December 31	2020		2019
Net income	$	116,413	$	114,135
Non-controlling interest		3,091		2,573

Net income attributable to shareholders of Tricon	$	113,322	$	111,562

Weighted average number of common shares outstanding		192,973,343		171,427,128
Adjustments for vested units		1,653,784		1,308,648

Weighted average number of common shares outstanding for basic earnings per share		194,627,127		172,735,776

Basic earnings per share	$	0.58	$	0.65

Diluted

Diluted earnings per share is calculated by adjusting the weighted average number of shares outstanding to assume conversion of all potentially dilutive shares. The Company has five categories of potentially dilutive shares: stock options (Note 30), restricted shares (Note 28), deferred share units (Note 30), convertible debentures (Note 18) and the preferred units issued by the Affiliate that are exchangeable into the common shares of the Company (Note 19). For the stock options, the number of dilutive shares is based on the number of shares that could have been acquired at fair value with the assumed proceeds, if any, from their exercise (determined using the average market price of the Company’s shares for the period then ended). For restricted shares and deferred share units, the number of dilutive shares is equal to the total number of unvested restricted shares and deferred share units. For the convertible debentures and exchangeable preferred units, the number of dilutive shares is based on the number of common shares into which the elected amount would then be convertible or exchangeable. The number of shares calculated as described above is comparable to the number of shares that would have been issued assuming the vesting of the stock compensation arrangement, the conversion of debentures and the exchange of preferred units.

Stock options, restricted shares and deferred share units

For the year ended December 31, 2020, the Company’s stock compensation plans resulted in 1,168,346 dilutive share units (2019 – 1,859,639), given that it would be advantageous to the holders to exercise their associated rights to acquire common shares, as the exercise prices of these potential shares are below the Company’s average market share price of $7.41 (C$9.94) for the period. Restricted shares and deferred share units are always considered dilutive as there is no price to the holder associated with receiving or exercising their entitlement, respectively.

Convertible debentures

For the year ended December 31, 2020, the Company’s 2022 convertible debentures were anti-dilutive, as debentures interest expense, net of tax, and the fair value gain on derivative financial instruments would result in increased earnings per share upon conversion. Therefore, in computing the diluted weighted average shares outstanding and the associated earnings per share amount for the year ended December 31, 2020, the impact of the 2022 convertible debentures was excluded (2019 – included).

54 2020 ANNUAL REPORT TRICON RESIDENTIAL

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

for the year ended December 31, 2020

(in thousands of U.S. dollars, except per share amounts and percentage amounts)

Preferred units issued by the Affiliate

For the year ended December 31, 2020, the impact of exchangeable preferred units of Tricon PIPE LLC (Note 19) was anti-dilutive, as the associated interest expense, net of tax, and the fair value loss on derivative financial instruments would result in increased earnings per share upon the exchange of the underlying preferred units. Therefore, in computing the diluted weighted average common shares outstanding and the associated earnings per share amount for the year ended December 31, 2020, the impact of the preferred units was excluded (2019 – N/A).


(in thousands of U.S. dollars, except per share amounts which are in U.S. dollars)
For the years ended December 31	2020		2019
Net income attributable to shareholders of Tricon	$	113,322	$	111,562
Adjustment for convertible debentures interest expense – net of tax		–		11,161
Adjustment for preferred units interest expense – net of tax		–		–
Fair value gain on derivative financial instruments and other liabilities		–		(3,279	)

Adjusted net income attributable to shareholders of Tricon	$	113,322	$	119,444

Weighted average number of common shares outstanding		194,627,127		172,735,776
Adjustments for stock compensation		1,168,346		1,859,639
Adjustments for convertible debentures		–		16,485,713
Adjustments for preferred units		–		–

Weighted average number of common shares outstanding for diluted earnings per share		195,795,473		191,081,128

Diluted earnings per share	$	0.58	$	0.63

30. COMPENSATION EXPENSE

The breakdown of compensation expense, including the annual incentive plan (“AIP”) and long-term incentive plan (“LTIP”) related to various compensation arrangements, is set out below. AIP awards include both short-term (cash and one-year DSUs) and long-term (three-year DSUs, stock options, restricted shares and PSUs) incentives.


(in thousands of U.S. dollars)
For the years ended December 31	2020		2019
Salaries and benefits	$	21,451	$	19,198
Annual incentive plan (“AIP”)		17,787		13,855
Long-term incentive plan (“LTIP”)		862		4,628

Total compensation expense	$	40,100	$	37,681

The changes to transactions of the various cash-settled and equity-settled arrangements during the year are detailed in the sections below.

Annual incentive plan


(in thousands of U.S. dollars)
For the years ended December 31	2020		2019
Cash component	$	12,088	$	9,806
Restricted shares, share units and stock options		5,699		4,049

Total AIP expense	$	17,787	$	13,855

TRICON RESIDENTIAL 2020 ANNUAL REPORT 55

Cash component

For the year ended December 31, 2020, the Company recognized $12,088 in cash-based AIP expense (2019 – $9,806), of which $11,457 was paid in cash in December 2020 (2019 – $9,786) and $631 remained payable (2019 – $20) as at December 31, 2020. During the year, the Company paid total cash of $11,477 (2019 – $10,215) in connection with the AIP, including $20 of amounts payable from the prior year, which is reflected in the statement of cash flows.

Restricted shares, share units and stock options

For the year ended December 31, 2020, the Company recognized $5,699 in equity-based AIP expense (2019 – $4,049), of which $1,631 relates to performance share units (PSUs), deferred share units (DSUs), stock options and restricted shares granted in December 2020.

The remaining $4,068 relates to the amortization of PSUs, DSUs, stock options and restricted shares granted in prior years, along with the revaluation of PSUs at each reporting date as the total liability amount is dependent on the Company’s share price.

Long-term incentive plan


(in thousands of U.S. dollars)
For the years ended December 31	2020			2019
Cash component	$	(2,051	)	$	2,843
Share units and stock options		2,913			1,785

Total LTIP expense	$	862		$	4,628

Cash component

A liability for cash-component LTIP awards is accrued based on expected performance fees that would be generated from the fair value of the assets within each Investment Vehicle but disbursed only when such performance fees are earned and recognized as revenue. Changes in LTIP are primarily caused by changes to fair values of investments in for-sale housing, which result from timing and cash flow changes at the project level of each Investment Vehicle, and changing business conditions.

For the year ended December 31, 2020, the Company decreased its accrual related to cash-component LTIP by $2,051 (2019 – increase of $2,843) as a result of a decrease in expected future performance fees from Investment Vehicles that will be paid to management when cash is received from each investment over time.

The following table summarizes the movement in the LTIP liability:


(in thousands of U.S. dollars)	December 31, 2020			December 31, 2019
Balance, beginning of year	$	21,409		$	21,407
LTIP (recovery) expense		(2,051	)		2,843
Payments		(1,579	)		(3,868	)
Translation adjustment		151			1,027

Balance, end of year	$	17,930		$	21,409

Share units and stock options

For the year ended December 31, 2020, the Company recorded $2,913 in equity-based LTIP expense (2019 – $1,785), which relates to DSUs and stock options granted in prior years. LTIP expense related to income from THP1 US (a for-sale housing investment) is paid in DSUs vesting in equal tranches over a three-year period commencing on the anniversary date of each grant, pursuant to the LTIP as amended on May 6, 2019. LTIP DSU awards prior to this LTIP amendment date vested equally over a five-year period commencing on the anniversary of each grant. Compensation expense related to the stock options is recognized on a graded vesting basis. No LTIP expense was recognized relating to current-year entitlements for the year ended December 31, 2020.

56 2020 ANNUAL REPORT TRICON RESIDENTIAL

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

for the year ended December 31, 2020

(in thousands of U.S. dollars, except per share amounts and percentage amounts)

Stock option plan

For the year ended December 31, 2020, the Company recorded a stock option expense of $2,321 (2019 – $764), comprised of $90 of AIP expense (2019 – $173) and $2,231 of LTIP expense (2019 – $591).

The following table summarizes the movement in the stock option plan during the specified periods:


For the years ended December 31	2020					2019
	Number of options			Weighted average exercise price (CAD)		Number of options			Weighted average exercise price (CAD)
Opening balance – outstanding		4,572,010		$	9.24		4,823,960		$	9.18
Granted		199,380			11.50		–			–
Exercised		(644,717	)		7.87		(215,450	)		7.47
Cancelled		(1,750,334	)		8.55		–			–
Forfeited		(135,000	)		9.74		(36,500	)		11.10

Ending balance – outstanding		2,241,339		$	10.34		4,572,010		$	9.24

The following table presents the inputs used to value the stock options granted in 2020:


For the year ended December 31	2020
Risk-free interest rate (%)		0.45
Expected option life (years)		4.97
Expected volatility (%)		27.11
Average share price (CAD) during the year		9.93
Weighted average exercise price (CAD)		11.50

The following table summarizes the stock options outstanding as at December 31, 2020:


Grant date	Expiration date	December 31, 2020
Grant date	Expiration date	Options outstanding		Options exercisable		Exercise price of outstanding options (CAD)
November 14, 2016	November 14, 2023		650,000		650,000	$	8.85
December 15, 2017	December 15, 2024		965,000		965,000		11.35
December 17, 2018	December 17, 2025		426,959		284,634		9.81
December 15, 2020	December 15, 2027		199,380		—		11.50

Total			2,241,339		1,899,634	$	10.34

AIP liability is recorded within amounts payable and accrued liabilities, and the equity component is included in the contributed surplus. The breakdown is presented below.


(in thousands of U.S. dollars)	December 31, 2020		December 31, 2019
Amounts payable and accrued liabilities (Note 11)	$	7,120	$	2,742
Equity – contributed surplus		8,755		7,115

Total AIP	$	15,875	$	9,857

LTIP liability and equity components are presented on the balance sheet as follows:


(in thousands of U.S. dollars)	December 31, 2020		December 31, 2019
LTIP – liability	$	17,930	$	21,409
Equity – contributed surplus		9,557		11,872

Total LTIP	$	27,487	$	33,281

TRICON RESIDENTIAL 2020 ANNUAL REPORT 57

31. SEGMENTED INFORMATION

In accordance with IFRS 8, Operating Segments (“IFRS 8”), the Company discloses information about its reportable segments based upon the measures used by management in assessing the performance of those reportable segments. The Company evaluates segment performance based on the revenue and net income of each operating segment.

Tricon is comprised of four operating segments and five reportable segments. The Company’s corporate office provides support functions, and therefore, it does not represent an operating segment but rather it is included as a reportable segment. The reportable segments are business units offering different products and services, and are managed separately due to their distinct natures although they are related and complementary.

These five reportable segments have been determined by the Company’s chief operating decision-makers.

•

Single-Family Rental business includes owning and operating single-family rental homes primarily within major cities in the U.S. Sun Belt.

•

Residential Development business includes designing and developing premier multi-family rental properties in Toronto. Canadian development properties (The James and The Shops of Summerhill) and the Company’s remaining equity-accounted Canadian multi-family development activities are included in this segment. The segment also includes Tricon’s legacy investments in for-sale housing developments.

•

Private Funds and Advisory business includes providing asset management, property management and development management services. The Company’s asset management services are provided to Investment Vehicles that own the single-family rental homes, multi-family rental properties and residential developments described above. The Company’s property management function generates property management fees, construction management fees and leasing commissions through its technology-enabled platform used to operate the Company’s rental portfolio. In addition, Tricon earns market-based development management fees from its residential developments in the U.S. and Canada.

•

Corporate activities include providing support functions in the areas of accounting, treasury, credit management, information technology, legal, and human resources. Certain corporate costs such as directly identifiable compensation expense incurred on behalf of the Company’s operating segments are allocated to each operating segment, where appropriate. Certain property management activities are also considered as part of corporate-level costs for the purpose of segment reporting. Those costs include salaries of employees engaged in leasing, acquisition, disposition and other property management-related activities.

Any direct property-level operating expenses are included in the net operating income of the single-family rental and multi-family rental businesses to which they belong.

The financial reporting changes to the Company’s basis of preparation, effective January 1, 2020 and as outlined in Note 2, have been applied on a prospective basis in accordance with the relevant guidance of IFRS 10 and, as such, the presentation of comparative periods reflects Investment Entity Accounting as previously reported.

58 2020 ANNUAL REPORT TRICON RESIDENTIAL

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

for the year ended December 31, 2020

(in thousands of U.S. dollars, except per share amounts and percentage amounts)

Inter-segment revenues adjustments

Inter-segment revenues are determined under terms that approximate market value. For the year ended December 31, 2020, the adjustment to external revenues when determining segmented revenues consists of property management revenues earned from consolidated entities totalling $44,569 and development revenues earned from consolidated entities totalling $740, which were eliminated on consolidation to arrive at the Company’s consolidated revenues in accordance with IFRS.


(in thousands of U.S. dollars)
For the year ended December 31, 2020	Single-Family Rental⁽¹⁾			Multi-Family Rental⁽¹⁾			Residential Development⁽¹⁾			Private Funds and Advisory⁽¹⁾			Corporate⁽¹⁾			Consolidated results
Revenue from rental properties	$	366,982		$	111,205		$	–		$	–		$	–		$	478,187
Direct operating expenses		(121,242	)		(48,296	)		–			–			–			(169,538	)

Net operating income from rental properties		245,740			62,909			–			–			–			308,649

Revenue from private funds and advisory services		–			–			–			34,090			–			34,090

Income from investments in Canadian multi-family developments		–			746			13,378			–			–			14,124
Other income from Canadian development properties		–			–			791			–			–			791
Loss from investments in for-sale housing		–			–			(61,776	)		–			–			(61,776	)
Property management overhead		–			–			–			–			(22,654	)		(22,654	)
Compensation expense		–			–			–			(11,652	)		(28,448	)		(40,100	)
General and administration expense		(9,101	)		(2,111	)		–			(879	)		(11,478	)		(23,569	)
Other (expense) income		(3,173	)		–			–			1,774			–			(1,399	)
Interest expense		(101,574	)		(33,464	)		(524	)		–			(35,048	)		(170,610	)
Fair value gain (loss) on rental properties		220,849			(22,535	)		–			–			–			198,314
Fair value loss on derivative financial instruments and other liabilities		(39	)		–			–			–			(7,422	)		(7,461	)
Transaction costs		(24	)		(2,409	)		–			–			(11,583	)		(14,016	)
Amortization and depreciation expense		–			(22	)		–			(3,079	)		(7,747	)		(10,848	)
Realized and unrealized foreign exchange gain (loss)		–			4			–			–			(170	)		(166	)
Net change in fair value of limited partners’ interests in rental business		(50,581	)		–			–			–			–			(50,581	)
Income tax (expense) recovery		(319	)		5			7,973			(3	)		(44,031	)		(36,375	)

Net income (loss)	$	301,778		$	3,123		$	(40,158	)	$	20,251		$	(168,581	)	$	116,413

(1)	Financial information for each segment is presented on a consolidated basis.

TRICON RESIDENTIAL 2020 ANNUAL REPORT 59

(in thousands of U.S. dollars)

For the year ended December 31, 2019

Single-Family
Rental

Multi-Family
Rental

Residential
Development

Private Funds
and Advisory

Corporate⁽¹⁾

Consolidated
results

Revenue from private funds and advisory services

–

39,895

–

39,895

Income from investments in for-sale housing

–

9,646

–

9,646

Compensation expense

–

(37,681

)

(37,681

)

General and administration expense

–

(11,683

)

(11,683

)

Interest expense

–

(32,439

)

(32,439

)

Fair value gain on derivative financial instruments and other liabilities

–

2,961

Transaction costs

–

(32,626

)

(32,626

)

Amortization and depreciation expense

–

(6,274

)

(6,274

)

Realized and unrealized foreign exchange gain

–

Investment income – Tricon American Homes

162,193

–

162,193

Investment income – Tricon Lifestyle Rentals

–

13,508

11,754

–

9,718

34,980

Income tax expense

–

(14,879

)

(14,879

)

Net income (loss)

162,193

13,508

21,400

39,895

(122,861

)

114,135

(1)	Investment income from Tricon Lifestyle Rentals assets held for sale is included in the Corporate column.

60 2020 ANNUAL REPORT TRICON RESIDENTIAL

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

for the year ended December 31, 2020

(in thousands of U.S. dollars, except per share amounts and percentage amounts)

32. RELATED PARTY TRANSACTIONS AND BALANCES

Related parties include subsidiaries, associates, joint ventures, structured entities, key management personnel, the Board of Directors (“Directors”), immediate family members of key management personnel and Directors, and entities which are directly or indirectly controlled by, jointly controlled by or significantly influenced by key management personnel, Directors or their close family members.

In the normal course of operations, the Company executes transactions on market terms with related parties that have been measured at the exchange value and are recognized in the consolidated financial statements, including, but not limited to: asset management fees, performance fees and incentive distributions; loans, interest and non-interest bearing deposits; purchase and sale agreements; capital commitments to Investment Vehicles; and development of residential real estate assets. In connection with the Investment Vehicles, the Company has unfunded capital commitments of $199,952 as at December 31, 2020. Transactions and balances between consolidated entities are fully eliminated upon consolidation. Transactions and balances with unconsolidated structured entities are disclosed in Note 19.

Transactions with related parties

The following table lists the related party balances included within the consolidated financial statements.


(in thousands of U.S. dollars)
For the years ended December 31	2020			2019
Revenue from private funds and advisory services	$	34,090		$	39,895
Income from investments in Canadian multi-family developments		14,124			–
(Loss) income from investments in for-sale housing		(61,776	)		9,646
Other expense		(3,173	)		–
Investment income – Tricon American Homes		–			162,193
Investment income – Tricon Lifestyle Rentals		–			34,980

Net (loss) income recognized from related parties	$	(16,735	)	$	246,714

Balances arising from transactions with related parties

The items set out below are included on various line items in the Company’s consolidated financial statements.


(in thousands of U.S. dollars)	December 31, 2020		December 31, 2019
Receivables from related parties included in amounts receivable
Contractual fees and other receivables from investments managed	$	8,855	$	5,404
Employee relocation housing loans⁽¹⁾		2,001		2,065
Loan receivables from portfolio investments		13,937		16,757
Annual incentive plan⁽²⁾		15,875		9,857
Long-term incentive plan⁽²⁾		27,487		33,281
Dividends payable		440		399
Other payables to related parties included in amounts payable and accrued liabilities		972		161

(1)	The employee relocation housing loans are non-interest bearing for a term of ten years, maturing between 2024 and 2028.

(2)	Balances from compensation arrangements are due to employees deemed to be key management of the Company.

The receivables are unsecured and non-interest bearing. There are no provisions recorded against receivables from related parties at December 31, 2020 (December 31, 2019 – nil).

TRICON RESIDENTIAL 2020 ANNUAL REPORT 61

Key management compensation

Key management includes the Named Executive Officers (“NEOs”), who are the Chief Executive Officer, Chief Financial Officer and the three other most highly-compensated executive officers or the three most highly compensated individuals acting in a similar capacity at the end of the financial year. Compensation paid and awarded to key management for employee services is based on employment agreements and is as follows:


(in thousands of U.S. dollars)
For the years ended December 31	2020		2019
Total salaries and benefits	$	2,090	$	2,007
Total AIP		7,955		7,725
Total LTIP		740		2,590

Total key management compensation	$	10,785	$	12,322

33. FINANCIAL RISK MANAGEMENT

The Company is exposed to the following risks as a result of holding financial instruments: market risk (i.e., interest rate risk, foreign currency risk and other price risk that may impact the fair value of financial instruments), credit risk and liquidity risk. The following is a description of these risks and how they are managed.

Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk includes the risk of changes in interest rates, foreign currency rates and changes in market prices due to other factors, such as changes in equity prices or credit spreads. The Company manages market risk from foreign currency assets and liabilities and the impact of changes in currency exchange rates and interest rates by funding assets with financial liabilities in the same currency and with similar interest rate characteristics, and by holding financial contracts such as interest rate derivatives to minimize residual exposures.

The sensitivities to market risks included below are based on a change in one factor while holding all other factors constant. In practice, this is unlikely to occur, and changes in some of the factors may be correlated – for example, changes in interest rates and changes in foreign currency rates.

Financial instruments held by the Company that are subject to market risk include other financial assets, borrowings and derivative instruments such as interest rate cap contracts.

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The observable impacts on the fair values and future cash flows of financial instruments that can be directly attributable to interest rate risk include changes in the net income from financial instruments whose cash flows are determined with reference to floating interest rates and changes in the value of financial instruments whose cash flows are fixed in nature.

The Company’s assets largely consist of long-term interest-sensitive physical real estate assets. Accordingly, the Company’s financial liabilities consist primarily of long-term fixed-rate debt or floating-rate debt that has been swapped with interest rate derivatives. These financial liabilities are recorded at their amortized cost. The Company also holds interest rate caps to limit its exposure to increases in interest rates on floating-rate debt that has not been swapped, and sometimes holds interest rate contracts to lock in fixed rates on anticipated future debt issuances and as an economic hedge against the changes in the value of long-term interest-sensitive physical real estate assets that have not been otherwise matched with fixed-rate debt. Borrowings issued at variable rates expose the Company to cash flow interest rate risk. To limit its exposure to interest rate risk, the Company has a mixed portfolio of fixed-rate and variable-rate debt, with $3,152,455 in fixed-rate debt and $1,011,612 in variable-rate debt as at December 31, 2020. If interest rates had been 50 basis points higher or lower, with all other variables held constant, interest expense would have increased (decreased) by:


For the years ended December 31	2020					2019
(in thousands of U.S. dollars)	50 bps increase		50 bps decrease			50 bps increase		50 bps decrease
Interest expense	$	6,791	$	(4,585	)	$	1,415	$	(1,415	)

62 2020 ANNUAL REPORT TRICON RESIDENTIAL

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

for the year ended December 31, 2020

(in thousands of U.S. dollars, except per share amounts and percentage amounts)

Foreign currency risk

Changes in foreign currency rates will impact the carrying value of financial instruments denominated in currencies other than the U.S. dollar, which is the functional and presentation currency of the Company. The Company has exposure to monetary and non-monetary foreign currency risk due to the effects of changes in foreign exchange rates related to consolidated Canadian subsidiaries, equity-accounted investments, and cash and debt in Canadian dollars held at the corporate level. The Company manages foreign currency risk by raising equity in Canadian dollars and by matching its principal cash outflows to the currency in which the principal cash inflows are denominated.

The impact of a 1% increase or decrease in the Canadian dollar exchange rate would result in the following impacts to assets and liabilities:


	December 31, 2020					December 31, 2019
(in thousands of U.S. dollars)	1% increase		1% decrease			1% increase		1% decrease
Assets
Investments in Canadian multi-family developments	$	954	$	(954	)	$	–	$	–
Canadian development properties		1,107		(1,107	)		–		–
Investments in for-sale housing		6		(6	)		54		(54	)
Investments – Tricon Lifestyle Rentals		–		–			969		(969	)

	$	2,067	$	(2,067	)	$	1,023	$	(1,023	)

Liabilities
Canadian debt	$	715	$	(715	)	$	112	$	(112	)
Other liabilities		–		–			134		(134	)

	$	715	$		(715)	$	246	$		(246)

Foreign exchange volatility is already embedded in the fair value of derivative financial instruments (Note 20), and therefore is excluded from the sensitivity calculations above.

Other price risk

Other price risk is the risk of variability in fair value due to movements in equity prices or other market prices such as commodity prices and credit spreads. The Company does not hold any financial instruments that are exposed to equity price risk including equity securities and equity derivatives.

Credit risk

Credit risk is the risk that one party to a financial instrument will cause financial loss for the other party by failing to discharge an obligation. Management believes the credit risk on cash is low because the counterparties are banks with high credit ratings.

Credit risk arises from the possibility that residents may experience financial difficulty and be unable to fulfill their lease commitments. A provision for bad debt (or expected credit loss) is taken for all anticipated collectability risks. The Company also manages credit risk by performing resident underwriting due diligence during the leasing process. As at December 31, 2020, the Company had rent receivable of $4,274 (December 31, 2019 – N/A), net of bad debt, which adequately reflects the Company’s credit risk.

The Company has no significant concentrations of credit risk and its exposure to credit risk arises through loans and receivables which are due primarily from associates. The loans and receivables due from associates are subject to the risk that the underlying real estate assets may not generate sufficient cash inflows in order to recover them. The Company manages this risk by:

•

Ensuring a due diligence process is conducted on each investment prior to funding;

•

Approving all loan disbursements by management;

•

Approving of total loan facilities by the Investment Committee; and

•

Actively monitoring the loan portfolio and initiating recovery procedures when necessary.

The Company assesses all counterparties, including its partners, for credit risk before contracting with them. The Company does not include any collateral or other credit risk enhancers, which may reduce the Company’s exposure.

The Company provides loans to land developers, which are represented as debt investments. The credit quality of these investments is based on the financial performance of the underlying real estate assets. For those assets that are not past due, it is believed that the capital repayments and interest payments will be made in accordance with the agreed terms and conditions. No terms or conditions have been renegotiated.

At December 31, 2020, the Company’s exposure to credit risk arising from its investment in debt instruments was $13,937 (December 31, 2019 – $16,757). Through the equity portion of its investments, the Company is also indirectly exposed to credit risk arising on loans advanced by investees to individual real estate development projects.

TRICON RESIDENTIAL 2020 ANNUAL REPORT 63

Liquidity risk

The real estate industry is highly capital intensive. Liquidity risk is the risk that the Company may have difficulty in meeting obligations associated with its financial liabilities as they fall due. Liquidity risk also includes the risk of not being able to liquidate assets in a timely manner at a reasonable price. The Company’s liquidity risk management includes maintaining sufficient cash on hand and the availability of funding through an adequate amount of committed credit facilities, as well as performing periodic cash flow forecasts to ensure the Company has sufficient cash to meet operational and financing costs. The Company’s primary source of liquidity consists of cash and other financial assets, net of deposits and other associated liabilities, and undrawn available credit facilities. Cash flow generated from operating the rental property portfolio represents the primary source of liquidity used to service the interest on the property-level debt and fund direct property operating expenses, as well as reinvest in the portfolio through capital expenditures.

The Company is subject to the risks associated with debt financing, including the ability to refinance indebtedness at maturity. The Company believes these risks are mitigated through the use of long-term debt secured by high-quality assets, by maintaining certain debt levels that are set by management, and by staggering maturities over an extended period.

Despite the Company’s prudent liquidity management, the ongoing COVID-19 pandemic has introduced new challenges to the business environment which called for a necessary reassessment of its impact on the Company’s cash flow, earnings and balance sheet profile. Current lending markets are re-evaluating capital allocations, and this may affect new loan originations by reducing the availability of funds or increasing the cost of interest. To date, there has not been any indication that existing credit facilities or Tricon’s ability to originate new debt has been impacted by the COVID-19 pandemic. During the year ended December 31, 2020, Tricon raised $993,934 of gross proceeds through two securitization transactions which reduced the Company’s effective interest rate and extended the weighted average maturity of its debt.

The following tables present the contractual maturities of the Company’s financial liabilities at December 31, 2020 and December 31, 2019, excluding remaining unamortized deferred financing fees and debt discount:


(in thousands of U.S. dollars) As at December 31, 2020	Due on demand and within the year		From 1 to 2 years		From 3 to 4 years		From 5 years and later		Total
Liabilities
Debt⁽¹⁾	$	274,526	$	1,236,540	$	1,325,709	$	1,327,292	$	4,164,067
Other liabilities		–		3,122		1,463		551		5,136
Limited partners’ interests in rental business		–		–		–		356,305		356,305
Convertible debentures		–		172,400		–		–		172,400
Derivative financial instruments⁽²⁾		–		–		–		45,494		45,494
Due to Affiliate		–		–		–		300,000		300,000
Amounts payable and accrued liabilities		98,290		–		–		–		98,290
Resident security deposits		45,157		–		–		–		45,157
Dividends payable		10,641		–		–		–		10,641

Total	$	428,614	$	1,412,062	$	1,327,172	$	2,029,642	$	5,197,490

(1)	The contractual maturities reflect the maturity dates after all extensions have been exercised. The Company intends to exercise the extension options available on all loans.

(2)	Includes the exchange/prepayment option related to Due to Affiliate (Note 20). Excludes the conversion and redemption options related to the 2022 convertible debentures as the fair value is an asset to the Company as at December 31, 2020.


(in thousands of U.S. dollars) As at December 31, 2019	Due on demand and within the year		From 1 to 2 years		From 3 to 4 years		From 5 yearsand later		Total
Liabilities
Debt	$	284	$	297,605	$	10,264	$	–	$	308,153
Other liabilities		13,375		311		374		269		14,329
Convertible debentures		–		172,400		–		–		172,400
Derivative financial instruments		–		657		–		–		657
Amounts payable and accrued liabilities		26,190		–		–		–		26,190
Dividends payable		10,474		–		–		–		10,474

Total	$	50,323	$	470,973	$	10,638		$269	$	532,203

64 2020 ANNUAL REPORT TRICON RESIDENTIAL

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

for the year ended December 31, 2020

(in thousands of U.S. dollars, except per share amounts and percentage amounts)

The future repayments of principal and interest on financial liabilities are as follows, excluding remaining unamortized deferred financing fees and debt discount:


(in thousands of U.S. dollars) As at December 31, 2020	Within the year		From 1 to 2 years		From 3 to 4 years		From 5 years and later		Total
Principal
Debt^(1),(2)	$	274,526	$	1,236,540	$	1,325,709	$	1,327,292	$	4,164,067
Convertible debentures		–		172,400		–		–		172,400
Due to Affiliate		–		–		–		300,000		300,000

Interest
Debt⁽¹⁾		126,939		194,297		117,017		27,523		465,776
Convertible debentures		9,913		4,957		–		–		14,870
Due to Affiliate⁽³⁾		17,250		34,500		34,500		161,896		248,146

Total	$	428,628	$	1,642,694	$	1,477,226	$	1,816,711	$	5,365,259

(1)	Certain mortgages’ principal and interest repayments were translated to U.S. dollars at the year-end exchange rate.

(2)	The contractual maturities reflect the maturity dates after all extensions have been exercised. The Company intends to exercise the extension options available on all loans.

(3)	Reflects the contractual maturity date of September 3, 2032.

The details of the net liabilities are shown below:


(in thousands of U.S. dollars)	December 31, 2020			December 31, 2019
Cash	$	55,158		$	8,908
Amounts receivable		25,593			8,952
Prepaid expenses and deposits		13,659			796

Current assets		94,410			18,656

Amounts payable and accrued liabilities		98,290			26,190
Resident security deposits		45,157			–
Dividends payable		10,641			10,474
Current portion of long-term debt		274,190			284

Current liabilities		428,278			36,948

Net current liabilities	$	(333,868	)	$	(18,292	)

During the year ended December 31, 2020, the change in the Company’s liquidity resulted in a working capital deficit of $333,868 (December 31, 2019 – deficit of $18,292). The working capital deficit is driven primarily by debt coming due in 2021, including $116,000 relating to the SFR JV-1 subscription facility and $109,890 relating to the U.S. multi-family credit facility. The SFR JV-1 subscription facility will be partially repaid with limited partners’ capital contributions as per the joint venture agreement, and the U.S. multi-family credit facility is expected to be repaid prior to maturity in connection with the syndication of the Company’s majority interest in its U.S. multi-family 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. In addition, the Company has set aside cash in separate bank accounts, presented as non-current restricted cash on the consolidated balance sheets, to settle its obligations for resident security deposits.

As of December 31, 2020, the outstanding amount under the corporate credit facility was $26,000 (December 31, 2019 – $297,000) and $474,000 of the corporate credit facility remained available to the Company. During the year ended December 31, 2020, the Company received distributions of $78,378 (2019 – $200,631) from its investments.

TRICON RESIDENTIAL 2020 ANNUAL REPORT 65

34. CAPITAL MANAGEMENT

The Company’s objectives when managing capital are: (i) to safeguard its ability to meet financial obligations and growth objectives, including future acquisitions; (ii) to provide an appropriate return to its shareholders; and (iii) to maintain an optimal capital structure that allows multiple financing options, should a financing need arise. The Company’s capital consists of debt (including credit facilities, term loans, mortgages, securitizations, convertible debentures and Due to Affiliate), cash and shareholders’ equity. In order to maintain or adjust the capital structure, the Company manages equity as capital and may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or subsidiary entity interests, repurchase and cancel shares or sell assets.

The Company discussed the potential effect of the current COVID-19 pandemic in relation to the Company’s liquidity risk in Note 33. Management believes that understanding the alternative funding options that are available during times of volatility and how to access those are also a prudent part of capital management of the Company.

As of December 31, 2020, the Company was in compliance with all financial covenants in its debt facilities (Note 17).

35. WORKING CAPITAL CHANGES AND OTHER NON-CASH ITEMS

The details of the adjustments for other non-cash items presented in operating activities of the cash flow statement are shown below:


(in thousands of U.S. dollars)
For the years ended December 31	2020			2019
Amortization of debt and debentures discount and financing costs (Note 21)	$	10,594		$	4,299
Interest on lease obligation (Note 21)		328			65
Long-term incentive plan (Note 30)		862			4,628
Annual incentive plan (Note 30)		17,787			13,855
Unrealized foreign exchange gain		(7,231	)		(1,965	)
Accrued investment income from single-family rental		–			(162,193	)
Accrued investment income from multi-family rental		–			(34,980	)

Other non-cash items	$	22,340		$	(176,291	)

The following table presents the changes in non-cash working capital items for the years ended December 31, 2020 and December 31, 2019.


(in thousands of U.S. dollars)
For the years ended December 31	2020			2019
Amounts receivable	$	(16,641	)	$	8,982
Prepaid expenses and deposits		(12,863	)		23
Resident security deposits		45,157			–
Amounts payable and accrued liabilities		72,100			19,626
Non-cash working capital items acquired on Deemed Acquisition (Note 5)		(88,218	)		–
Non-cash working capital items acquired with Canadian development properties (Note 8)		(4,878	)		–

Changes in non-cash working capital items	$	(5,343	)	$	28,631

66 2020 ANNUAL REPORT TRICON RESIDENTIAL

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

for the year ended December 31, 2020

(in thousands of U.S. dollars, except per share amounts and percentage amounts)

36. FINANCING ACTIVITIES


(in thousands of U.S. dollars)	As at December 31, 2019		Cash flows			Non-cash changes
(in thousands of U.S. dollars)	As at December 31, 2019		Cash flows			Foreign exchange movement		Fair value changes		Additions⁽¹⁾			Other⁽²⁾		As at December 31, 2020
SFR JV-1 subscription facility	$	–	$	(70,001	)	$	–	$	–	$	185,161		$	504	$	115,664
SFR JV-1 warehouse credit facility		–		(115,340	)		–		–		209,998			1,292		95,950
Term loan 2		–		–			–		–		96,077			–		96,077
Warehouse credit facility		–		(19,770	)		–		–		29,864			16		10,110
Securitization debt 2016-1		–		(357,478	)		–		–		357,478			–		–
Securitization debt 2017-1		–		(1,771	)		–		–		461,301			–		459,530
Term loan		–		(255	)		–		–		375,000			–		374,745
Securitization debt 2017-2		–		(897	)		–		–		363,357			223		362,683
Securitization debt 2018-1		–		(1,403	)		–		–		313,093			223		311,913
SFR JV-1 securitization debt 2019-1		–		(10	)		–		–		325,511			1,266		326,767
SFR JV-1 securitization debt 2020-1		–		543,001			–		–		–			802		543,803
Securitization debt 2020-2		–		432,662			–		–		–			155		432,817
U.S. multi-family credit facility		–		(6,000	)		–		–		115,890			–		109,890
Mortgage tranche A		–		–			–		–		160,090			–		160,090
Mortgage tranche B		–		–			–		–		400,225			–		400,225
Mortgage tranche C		–		–			–		–		240,135			–		240,135
Vendor take-back (VTB) loan 2020⁽³⁾		–		(10,880	)		566		–		10,314			–		–
Land loan		–		–			940		–		21,051			–		21,991
Vendor take-back (VTB) loan 2021		–		–			1,680		–		23,884			–		25,564
Mortgage		–		(379	)		817		–		12,019			6		12,463
Corporate credit facility		297,000		(271,000	)		–		–		–			–		26,000
Corporate office mortgages		11,153		(275	)		211		–		–			–		11,089
2022 convertible debentures		161,311		–			–		–		–			4,645		165,956
Due to Affiliate		–		287,798			–		–		(37,613	)		1,462		251,647
Derivative financial instruments⁽⁴⁾		657		–			–		6,422		37,574			841		45,494
Limited partners’ interests in rental business		–		19,950			–		50,581		285,774			–		356,305
Lease obligations		1,089		(2,415	)		–		–		7,401			328		6,403
Other liabilities		13,375		(14,922	)		–		1,039		508			–		–

Total liabilities from financing activities	$	484,585	$	410,615		$	4,214	$	58,042	$	3,994,092		$	11,763	$	4,963,311

(1)

Includes debt of $3,647,108, lease liability of $5,435 and derivative financial instruments of $28 recognized as part of the Deemed Acquisition (Note 5) and $53,340 of assumed debt and vendor take-back loans in connection with Tricon’s purchase of the remaining ownership interests of 50% and 75% in The James and The Shops of Summerhill, respectively (Note 8).

(2)	Includes amortization of transaction costs and debt discount and interest on lease obligations.

(3)	Tricon entered into VTB loan 2020 as part of its acquisition of the remaining interests in the Canadian development properties (Note 8), and this loan was fully repaid during the year.

(4)	As at December 31, 2020, the embedded derivative on the 2022 convertible debentures was an asset of $841, and was reclassified from liability to asset on the consolidated balance sheet.

TRICON RESIDENTIAL 2020 ANNUAL REPORT 67


(in thousands of U.S. dollars)	As at December 31, 2018		Cash flows			Non-cash changes
(in thousands of U.S. dollars)	As at December 31, 2018		Cash flows			Foreign exchange movement		Fair value changes			Additions		Other⁽¹⁾		As at December 31, 2019
Corporate credit facility	$	209,250	$	87,750		$	–	$	–		$	–	$	–	$	297,000
Corporate office mortgages		7,150		3,567			436		–			–		–		11,153
2022 convertible debentures		157,112		–			–		–			–		4,199		161,311
Derivative financial instruments		3,936		–			–		(3,279	)		–		–		657
Lease obligations		1,204		(180	)		–		–			–		65		1,089
Other liabilities		–		–			–		318			13,057		–		13,375

Total liabilities from financing activities	$	378,652	$	91,137			$436	$	(2,961	)	$	13,057	$	4,264	$	484,585

(1)	Includes amortization of debentures discount and amortization of debentures issuance costs, offset by the conversion of $100 principal amount of the 2022 convertible debentures into common shares, along with interest on lease obligation.

37. INDEMNIFICATION

Pursuant to Indemnification Agreements with certain General Partners of Limited Partnerships managed by the Company and certain shareholders of the Company (who are also officers and directors of the Company), the Company has agreed to indemnify the General Partners and those shareholders and, where applicable, any of their directors, officers, agents and employees (collectively, the Indemnified Parties) for any past, present or future amounts paid or payable by any of the Indemnified Parties to the Limited Partnership in the form of a capital contribution or clawback guarantee relating to performance fees for any claim or obligation, as set out in the Limited Partnership Agreements. There are no amounts payable in respect of this indemnification as of December 31, 2020 (December 31, 2019 – nil).

38. SUBSEQUENT EVENTS

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 $1,331,000 including in-place debt, and is expected to generate gross proceeds of approximately $425,000 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.

68 2020 ANNUAL REPORT TRICON RESIDENTIAL

LOGO

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

Exhibit 4.3

LOGO

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

LOGO

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

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.

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.

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)

LOGO

(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.)

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 RESIDENTIAL 2020 ANNUAL REPORT 7

MANAGEMENT’S DISCUSSION AND ANALYSIS

for the year ended December 31, 2020

LOGO

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.

LOGO

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.

LOGO

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.

LOGO

(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)

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.

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*

LOGO

*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

LOGO

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

LOGO

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)

LOGO

*	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

36 2020 ANNUAL REPORT TRICON RESIDENTIAL

LOGO

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	Rental homes		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	Rental homes		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)

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)

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)

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).

LOGO

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

INVESTMENTS IN FOR-SALE HOUSING BY LOCATION

LOGO

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

LOGO

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

LOGO

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
LOGO

Canadian
Multi-Family
Rental
LOGO

For-Sale
Housing
LOGO

Tricon
proportionate
results

LOGO + LOGO + LOGO

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
LOGO

Development
portfolio
LOGO

Corporate
assets and
liabilities
LOGO

Tricon
proportionate
results

LOGO + LOGO + LOGO

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

LOGO

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 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

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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

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.

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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.

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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	Rental properties	Revenue from rental properties	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⁾			Canadian development properties	Other income from Canadian development properties	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	Revenue from private funds and advisory	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	Investments in for-sale housing	Income from investments in for-sale housing	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.

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for the year ended December 31, 2020

Significant estimates

Income taxes

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

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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

Investments in joint ventures and joint arrangements

CGU determination for goodwill impairment assessment

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.

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MANAGEMENT’S DISCUSSION AND ANALYSIS

for the year ended December 31, 2020

8.5 Dividends

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”).

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

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

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.

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for the year ended December 31, 2020

Portfolio concentration

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

Liquidity risk

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MANAGEMENT’S DISCUSSION AND ANALYSIS

for the year ended December 31, 2020

Transaction execution

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.

Benchmark interest rate reform risk

Sustaining growth

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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

Climate change risks

Conflicts of interest

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MANAGEMENT’S DISCUSSION AND ANALYSIS

for the year ended December 31, 2020

Management team

Government regulation

Construction industry risks

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.

Cybersecurity risk

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for the year ended December 31, 2020

Lease renewal and turnover risk

Resident default

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

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for the year ended December 31, 2020

Substitutions for rental properties

Tenant relief laws

Title risk

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

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for the year ended December 31, 2020

Guarantees of project debt

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.

Long investment periods

Formation of future investment vehicles

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.

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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

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

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.

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

LOGO

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

Exhibit 4.4

LOGO

CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS

Unaudited (in thousands of U.S. dollars)


	Notes		June 30, 2021		December 31, 2020
ASSETS
Non-current assets
Rental properties		4	$	5,977,912	$	6,321,918
Equity-accounted investments in multi-family rental properties		5		140,532		19,913
Equity-accounted investments in Canadian residential developments		6		93,165		74,955
Canadian development properties		7		117,885		110,018
Investments in U.S. residential developments		8		154,370		164,842
Restricted cash				110,758		116,302
Goodwill		11		29,726		108,838
Deferred income tax assets		12		70,984		102,444
Intangible assets		22		10,649		12,363
Other assets		23		82,099		47,990
Derivative financial instruments		19		30		841

Total non-current assets				6,788,110		7,080,424

Current assets
Cash				84,770		55,158
Amounts receivable		15		29,742		25,593
Prepaid expenses and deposits				15,038		13,659

Total current assets				129,550		94,410

Total assets			$	6,917,660	$	7,174,834

LIABILITIES
Non-current liabilities
Long-term debt		16	$	3,248,072	$	3,863,316
Convertible debentures		17		—		165,956
Due to Affiliate		18		253,954		251,647
Derivative financial instruments		19		108,562		45,494
Deferred income tax liabilities		12		322,500		298,071
Limited partners’ interests in single-family rental business		24		559,893		356,305
Long-term incentive plan		29		22,594		17,930
Other liabilities		25		27,128		4,599

Total non-current liabilities				4,542,703		5,003,318

Current liabilities
Amounts payable and accrued liabilities		10		98,291		98,290
Resident security deposits				48,414		45,157
Dividends payable		26		11,839		10,641
Current portion of long-term debt		16		25,000		274,190
Convertible debentures		17		167,513		—
Derivative financial instruments		19		14,681		—

Total current liabilities				365,738		428,278

Total liabilities				4,908,441		5,431,596

Equity
Share capital		27		1,359,587		1,192,963
Contributed surplus				20,644		19,738
Cumulative translation adjustment				27,356		23,395
Retained earnings				595,657		499,000

Total shareholders’ equity				2,003,244		1,735,096
Non-controlling interest				5,975		8,142

Total equity				2,009,219		1,743,238

Total liabilities and equity			$	6,917,660	$	7,174,834

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

Approved by the Board of Directors


David Berman		Michael Knowlton

TRICON RESIDENTIAL 2021 SECOND QUARTER REPORT 1

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Unaudited (in thousands of U.S. dollars, except per share amounts which are in U.S. dollars, unless otherwise indicated)


			For the three months ended						For the six months ended
	Notes		June 30, 2021			June 30, 2020			June 30, 2021			June 30, 2020
Revenue from single-family rental properties		13	$	105,921		$	91,180		$	204,395		$	178,851
Direct operating expenses		21		(35,177	)		(29,932	)		(67,479	)		(59,583	)

Net operating income from single-family rental properties				70,744			61,248			136,916			119,268
Revenue from private funds and advisory services		14	$	13,113		$	8,122		$	22,043		$	15,937
Income from equity-accounted investments in multi-family rental properties		5		14,272			162			13,815			217
Income (loss) from equity-accounted investments in Canadian residential developments		6		27			(7	)		24			5,090
Other income		7		330			108			535			156
Income (loss) from investments in U.S. residential developments		8		8,251			3,155			14,910			(76,424	)
Compensation expense		29		(20,253	)		(13,377	)		(38,003	)		(23,785	)
General and administration expense				(9,270	)		(7,686	)		(17,673	)		(17,397	)
Transaction costs				(4,408	)		(3,214	)		(5,637	)		(4,445	)
Interest expense		20		(37,396	)		(31,990	)		(73,471	)		(66,879	)
Fair value gain on rental properties		4		254,312			32,839			366,614			53,476
Fair value loss on derivative financial instruments and other liabilities		19		(41,475	)		(450	)		(78,647	)		(2,594	)
Amortization and depreciation expense		22, 23		(2,849	)		(2,775	)		(5,499	)		(5,548	)
Realized and unrealized foreign exchange (loss) gain				(2,710	)		1,172			(2,540	)		(1,752	)
Net change in fair value of limited partners’ interests in single-family rental business		24		(49,246	)		(9,314	)		(75,387	)		(14,765	)

				109,585			(31,377	)		99,041			(154,650	)

Income (loss) before income taxes from continuing operations			$	193,442		$	37,993		$	258,000		$	(19,445	)
Income tax (expense) recovery – current		12		(16	)		286			44,457			224
Income tax (expense) recovery – deferred		12		(47,104	)		(8,114	)		(114,231	)		2,853

Net income (loss) from continuing operations			$	146,322		$	30,165		$	188,226		$	(16,368	)

Loss before income taxes from discontinued operations		3		—			(16,612	)		(77,224	)		(10,085	)
Income tax expense – current		3		—			—			(46,502	)		—
Income tax recovery – deferred		3		—			3,788			56,164			3,289

Net loss from discontinued operations				—			(12,824	)		(67,562	)		(6,796	)

Net income (loss)			$	146,322		$	17,341		$	120,664		$	(23,164	)

Attributable to:
Shareholders of Tricon				145,517			17,047			119,288			(23,965	)
Non-controlling interest				805			294			1,376			801

Net income (loss)			$	146,322		$	17,341		$	120,664		$	(23,164	)

Other comprehensive income
Items that will be reclassified subsequently to net income
Cumulative translation reserve				1,966			3,356			3,961			(3,282	)

Comprehensive income (loss) for the period			$	148,288		$	20,697		$	124,625		$	(26,446	)

Attributable to:
Shareholders of Tricon				147,483			20,403			123,249			(27,247	)
Non-controlling interest				805			294			1,376			801

Comprehensive income (loss) for the period			$	148,288		$	20,697		$	124,625		$	(26,446	)

Basic income (loss) per share attributable to shareholders of Tricon
Continuing operations		28		0.73			0.16			0.95			(0.09	)
Discontinued operations		28		—			(0.07	)		(0.34	)		(0.03	)

Basic income (loss) per share attributable to shareholders of Tricon			$	0.73		$	0.09		$	0.61		$	(0.12	)

Diluted income (loss) per share attributable to shareholders of Tricon
Continuing operations		28		0.72			0.16			0.94			(0.09	)
Discontinued operations		28		—			(0.07	)		(0.34	)		(0.03	)

Diluted income (loss) per share attributable to shareholders of Tricon			$	0.72		$	0.09		$	0.60		$	(0.12	)

Weighted average shares outstanding – basic		28		199,113,835			194,001,974			197,024,375			194,562,871
Weighted average shares outstanding – diluted		28		200,742,510			195,196,126			198,586,256			194,562,871

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

2 2021 SECOND QUARTER REPORT TRICON RESIDENTIAL

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

Unaudited (in thousands of U.S. dollars)


	Notes		Share capital			Share capital reserve			Contributed surplus			Cumulative translation adjustment			Retained earnings			Total shareholders’ equity			Non- controlling interest			Total
Balance at January 1, 2021			$	1,192,963		$	—		$	19,738		$	23,395		$	499,000		$	1,735,096		$	8,142		$	1,743,238
Net income				—			—			—			—			119,288			119,288			1,376			120,664
Bought deal offering		27		161,842			—			—			—			—			161,842			—			161,842
Cumulative translation reserve				—			—			—			3,961			—			3,961			—			3,961
Distributions to non-controlling interest				—			—			—			—			—			—			(3,543	)		(3,543	)
Dividends/Dividend reinvestment plan		26		2,890			—			—			—			(22,631	)		(19,741	)		—			(19,741	)
Debentures conversion		27		976			—			—			—			—			976			—			976
Stock options				120			—			4			—			—			124			—			124
Shares reserved for restricted share awards				(41	)		—			173			—			—			132			—			132
Deferred share units				837			—			729			—			—			1,566			—			1,566

Balance at June 30, 2021			$	1,359,587		$	—		$	20,644		$	27,356		$	595,657		$	2,003,244		$	5,975		$	2,009,219

Balance at January 1, 2020			$	1,201,061		$	(13,057	)	$	20,223		$	19,396		$	425,515		$	1,653,138		$	8,044		$	1,661,182
Net loss				—			—			—			—			(23,965	)		(23,965	)		801			(23,164	)
Shares repurchased under put rights on common shares issued to acquire Starlight U.S. Multi-Family (No. 5) Core Fund		27		(14,922	)		13,057			—			—			—			(1,865	)		—			(1,865	)
Cumulative translation reserve				—			—			—			(3,282	)		—			(3,282	)		—			(3,282	)
Distributions to non-controlling interest				—			—			—			—			—			—			(997	)		(997	)
Dividends/Dividend reinvestment plan		26		1,581			—			—			—			(19,387	)		(17,806	)		—			(17,806	)
Stock options				499			—			(1,878	)		—			334			(1,045	)		—			(1,045	)
Shares reserved for restricted share awards				(32	)		—			133			—			—			101			—			101
Deferred share units				176			—			760			—			—			936			—			936

Balance at June 30, 2020			$	1,188,363		$	—		$	19,238		$	16,114		$	382,497		$	1,606,212		$	7,848		$	1,614,060

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

TRICON RESIDENTIAL 2021 SECOND QUARTER REPORT 3

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

Unaudited (in thousands of U.S. dollars)


			For the three months ended						For the six months ended
	Notes		June 30, 2021			June 30, 2020			June 30, 2021			June 30, 2020
CASH PROVIDED BY (USED IN)
Operating activities
Net income (loss)			$	146,322		$	17,341		$	120,664		$	(23,164	)
Net loss from discontinued operations		3		—			12,824			67,562			6,796
Adjustments for non-cash items		34		(126,223	)		(13,186	)		(99,570	)		41,371
Cash paid for AIP and LTIP				(1,793	)		(28	)		(7,732	)		(3,499	)
Distributions to non-controlling interests				(1,397	)		—			(3,543	)		(997	)
Advances made to investments		5, 6, 8		(15,905	)		(1,351	)		(19,131	)		(5,480	)
Distributions received from investments		5, 8		17,388			7,279			30,088			58,757
Changes in non-cash working capital items		34		23,485			16,459			(31,655	)		1,083

Net cash provided by operating activities from continuing operations				41,877			39,338			56,683			74,867

Net cash provided by (used in) operating activities from discontinued operations		3		—			9,082			(2,593	)		7,535

Net cash provided by operating activities			$	41,877		$	48,420		$	54,090		$	82,402

Investing activities
Cash acquired in deemed acquisitions				—			—			—			19,662
Acquisition of remaining interest of Canadian development properties		7		—			(7,643	)		—			(7,643	)
Acquisition of rental properties		4		(393,763	)		(14,819	)		(557,685	)		(109,383	)
Capital additions to rental properties		4		(39,055	)		(17,334	)		(71,314	)		(42,748	)
Disposition of rental properties		4		5,066			3,330			8,243			8,086
Additions to fixed assets and other non-current assets		7, 23		(13,648	)		(1,323	)		(17,933	)		(7,646	)

Net cash used in investing activities from continuing operations				(441,400	)		(37,789	)		(638,689	)		(139,672	)

Net cash provided by (used in) investing activities from discontinued operations		3		13,958			(1,583	)		421,269			(1,080	)

Net cash used in investing activities			$	(427,442	)	$	(39,372	)	$	(217,420	)	$	(140,752	)

Financing activities
Lease payments		25, 35		(550	)		(568	)		(1,173	)		(1,205	)
Issuance (repurchase) of common shares – net of issuance costs		27		160,121			—			160,121			(14,922	)
Proceeds from corporate borrowing		35		11,000			12,000			71,000			96,000
Repayments of corporate borrowing		35		(16,089	)		(8,153	)		(83,155	)		(63,721	)
Proceeds from rental and development properties borrowing		35		305,690			14,499			459,797			109,292
Repayments of rental and development properties borrowing		35		(358,433	)		(29,666	)		(406,885	)		(31,675	)
Proceeds from other liabilities		35		—			1,774			—			1,774
Dividends paid		26		(10,216	)		(9,143	)		(19,450	)		(18,405	)
Change in restricted cash				(13,459	)		(2,579	)		(12,724	)		(8,622	)
Contributions from limited partners		24		98,306			—			130,955			16,746
Distributions to limited partners		24		(764	)		(1,187	)		(2,754	)		(1,187	)

Net cash provided by (used in) financing activities from continuing operations				175,606			(23,023	)		295,732			84,075

Net cash used in financing activities from discontinued operations		3		—			(5,796	)		(102,849	)		(1,164	)

Net cash provided by (used in) financing activities			$	175,606		$	(28,819	)	$	192,883		$	82,911

Effect of foreign exchange rate difference on cash				36			41			59			(51	)
Change in cash during the period				(209,923	)		(19,730	)		29,612			24,510
Cash – beginning of period				294,693			53,148			55,158			8,908

Cash – end of period			$	84,770		$	33,418		$	84,770		$	33,418

Supplementary information
*Cash paid on*
Income taxes			$	—		$	—		$	—		$	226
Interest			$	31,888		$	36,559		$	77,218		$	80,730

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

4 2021 SECOND QUARTER REPORT TRICON RESIDENTIAL

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

for the three and six months ended June 30, 2021

(in thousands of U.S. dollars, except per share amounts and percentage amounts)

1. NATURE OF BUSINESS

Tricon Residential Inc. (“Tricon” or the “Company”) is an owner and operator of a growing portfolio of approximately 33,000 single-family rental homes and multi-family rental apartments in the United States and Canada with a primary focus on the U.S. Sun Belt. Through its fully integrated operating platform, the Company earns rental income and ancillary revenue from single-family rental properties, income from its investments in multi-family rental properties and residential developments, as well as fees from managing third-party capital associated with its businesses.

These condensed interim consolidated financial statements were approved for issue on August 10, 2021 by the Board of Directors of Tricon.

2. BASIS OF PRESENTATION

The following is a summary of the significant accounting policies applied in the preparation of these condensed interim consolidated financial statements.

Basis of preparation and measurement

The condensed interim consolidated financial statements are prepared on a going-concern basis and have been presented in U.S. dollars, which is also the Company’s functional currency. All financial information is presented in thousands of U.S. dollars except where otherwise indicated.

These condensed interim consolidated financial statements have been prepared in accordance with IAS 34, Interim Financial Reporting and the same significant accounting policies and methods as those used in the Company’s annual financial statements. They should be read in conjunction with the annual Audited Financial Statements for the year ended December 31, 2020, which have been prepared in accordance with International Financial Reporting Standards (“IFRS”) under the historical cost convention, except for:

(i)	Rental properties, which are recorded at fair value with changes in fair value recorded in the consolidated statements of comprehensive income;

(ii)	Canadian development properties, which are recorded at fair value with changes in fair value recorded in the consolidated statements of comprehensive income;

(iii)

Investments in U.S. residential developments, which are accounted for as equity investments and recorded at fair value through profit or loss, as permitted by IAS 28, Investments in Associates and Joint Ventures (“IAS 28”);

(iv)	Derivative financial instruments, which are recorded at fair value through profit or loss; and

(v)	Limited partners’ interests, which are recorded at fair value through profit or loss.

On March 31, 2021, the Company completed the syndication of its U.S. multi-family rental subsidiary, Tricon US Multi-Family REIT LLC, which resulted in a disposition of 80% of the Company’s interest in that subsidiary. Accordingly, the Company reclassified the current- and prior-year period results and cash flows of the U.S. multi-family rental subsidiary as discontinued operations separate from the Company’s continuing operations in accordance with IFRS 5 (Note 3).

TRICON RESIDENTIAL 2021 SECOND QUARTER REPORT 5

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

for the three and six months ended June 30, 2021

(in thousands of U.S. dollars, except per share amounts and percentage amounts)

The accounting impact of the Company’s businesses and their presentation in the Company’s consolidated financial statements 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

single-family rental

properties

N/A

SFR JV-1

Controlled subsidiary

Consolidation

Limited partners’

interests

(Component

of liabilities)

SFR JV-HD

Controlled subsidiary

Consolidation

Multi-Family Rental

U.S. multi-family⁽¹⁾

Controlled subsidiary for the period between January 1, 2020 and March 30, 2021, and joint venture from March 31, 2021

Consolidation between January 1, 2020 and March 30, 2021, and equity method from March 31, 2021

Rental properties as at December 31, 2020

Equity-accounted investments in multi-family rental properties as at June 30, 2021

Net income (loss) from discontinued operations between January 1, 2020 and March 30, 2021

Income from equity- accounted investments in multi-family rental properties from March 31, 2021

N/A

Canadian multi-family: 592 Sherbourne (The Selby)

Investments in associate

Equity method

Equity-accounted investments in multi-family rental properties

Income from equity- accounted investments in multi-family rental properties

N/A

Canadian residential developments

The Shops of Summerhill

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

N/A

The James (Scrivener Square)

N/A

57 Spadina (The Taylor)

Investments in associate

Equity method

Equity-accounted investments in Canadian residential developments

Income from equity- accounted investments in Canadian residential 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

Queen & Ontario

Joint venture

Equity method

N/A

U.S. residential developments

Build-to-rent

Investments in associates

Equity method⁽²⁾

Investments in U.S.

residential developments

Income from investments

in U.S. residential developments

N/A

For-sale housing

Investments in associates

Equity method⁽²⁾

N/A

Private Funds and Advisory

Private funds GP entities

Controlled subsidiary

Consolidation

Consolidated

Revenue from private

funds and advisory

services

N/A

Johnson development

management

Controlled subsidiary

Consolidation

Consolidated

Component of equity

(1)	On March 31, 2021, the Company sold an 80% ownership interest in its U.S. multi-family rental portfolio (Note 3).

(2)

The Company’s investments in U.S. residential developments meet the definition of associates per IAS 28; however, Tricon has elected to apply the exception in paragraph IAS 28.36A, which permits a non-investment company investor to elect to retain investment entity accounting for associates that themselves qualify as investment entities.

6 2021 SECOND QUARTER REPORT TRICON RESIDENTIAL

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

for the three and six months ended June 30, 2021

(in thousands of U.S. dollars, except per share amounts and percentage amounts)

Under IFRS 10, Consolidated Financial Statements, an investment entity is an entity that (i) obtains funds from one or more investors for the purpose of providing them with investment management services, (ii) commits to its investors that its business purpose is to invest funds solely for returns from capital appreciation, investment income (including rental income), or both, and (iii) measures and evaluates the performance of substantially all of its investments on a fair value basis.

The following associates meet the definition of an investment entity, and therefore, all of their project assets held through subsidiaries are measured at fair value.


Name	Dissolution date		Remaining extension period (years)
Tricon Housing Partners US LP		7/1/2022		—
Tricon Housing Partners US Syndicated Pool I LP		6/7/2022		2
Tricon Housing Partners US Syndicated Pool II LP		3/2/2024		2
Tricon Housing Partners US II A LP		11/30/2021		2
Tricon Housing Partners US II B LP		11/30/2021		2
Tricon Housing Partners US II B2 LP		11/30/2021		2
Tricon Housing Partners US II C LP		11/30/2021		2
Tricon Housing Partners Canada III LP		3/22/2022		—
CCR Texas Equity LP		12/31/2022		2
Conroe CS Texas Equity LP		12/31/2023		1
Viridian Equity LP		12/31/2027		1
Vistancia West Holdings LP		12/31/2025		—
Lake Norman Holdings LP		12/31/2025		2
Tegavah Equity LP		10/17/2022		2
Arantine Hills Equity LP		12/31/2028		1
THPAS Holdings JV-1 LLC		N/A		N/A
McKinney Project Equity LLC		N/A		N/A

Changes to comparative figures

Certain comparative figures have been adjusted to conform with the current period presentation, as shown in the table below.


(in thousands of U.S. dollars)	As previously reported			Reclassify property management overhead			Presentation change of asset management fees			Reclassify U.S. multi-family rental to discontinued operations		As adjusted
For the three months ended June 30, 2020
Revenue from private funds and advisory services	$	7,328		$	—		$	794		$	—	$	8,122
Property management overhead		(5,288	)		5,288			—			—		—
Compensation expense		(9,912	)		(3,465	)		—			—		(13,377	)
General and administration expense		(5,675	)		(1,823	)		(794	)		606		(7,686	)


(in thousands of U.S. dollars)	As previously reported			Reclassify property management overhead			Presentation change of asset management fees			Reclassify U.S. multi-family rental to discontinued operations		As adjusted
For the six months ended June 30, 2020
Revenue from private funds and advisory services	$	14,344		$	—		$	1,593		$	—	$	15,937
Property management overhead		(11,754	)		11,754			—			—		—
Compensation expense		(17,010	)		(6,775	)		—			—		(23,785	)
General and administration expense		(11,844	)		(4,979	)		(1,593	)		1,019		(17,397	)


(in thousands of U.S. dollars)	As previously reported		Reclassify investment in 592 Sherbourne LP			As adjusted
As at December 31, 2020
Equity-accounted investments in multi-family rental properties	$	—	$	19,913		$	19,913
Equity-accounted investments in Canadian residential developments		94,868		(19,913	)		74,955

TRICON RESIDENTIAL 2021 SECOND QUARTER REPORT 7

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

for the three and six months ended June 30, 2021

(in thousands of U.S. dollars, except per share amounts and percentage amounts)

Accounting standards and interpretations adopted

Effective January 1, 2021, the Company has adopted the amendments to IFRS 9, Financial Instruments, IAS 39, Financial Instruments: Recognition and Measurement, IFRS 7, Financial Instruments: Disclosure, IFRS 4, Insurance Contracts, and IFRS 16, Leases, as part of phase 2 of its project related to interest rate benchmark reform. The amendments address issues that might affect financial reporting after the reform of an interest rate benchmark, including its replacement with alternative benchmark rates. The adoption of these amendments did not have a significant impact on the Company’s consolidated financial statements.

Accounting standards and interpretations issued but not yet adopted

In January 2020, the IASB issued amendments to IAS 1 to provide a more general approach to the classification of liabilities under IAS 1 based on the contractual arrangements in place at the reporting date. In February 2021, the IASB added an IFRS practice statement to IAS 1 and IAS 8. The amendments to IAS 1 and IAS 8 are effective for annual reporting periods beginning on or after January 1, 2023.

In May 2021, the IASB issued amendments to IAS 12, Income Taxes, to clarify how companies should account for deferred tax on transactions, such as leases and decommissioning obligations. The amendments are effective for annual periods beginning on or after January 1, 2023.

3. DISCONTINUED OPERATIONS

On March 31, 2021, the Company sold an 80% interest in its subsidiary, Tricon US Multi-Family REIT LLC, to two institutional investors for net cash consideration of $431,583. Tricon recognized its remaining 20% interest at fair value on the transaction date and proceeded to account for it as an equity-accounted investment (Note 5).

In accordance with IFRS 5, Non-current Assets Held for Sale and Discontinued Operations, the Company reclassified the current-and prior-period results and cash flows of Tricon US Multi-Family REIT LLC as discontinued operations separate from the Company’s continuing operations.

Tricon US Multi-Family REIT LLC became the Company’s subsidiary effective January 1, 2020 through the Company’s transition to a rental housing company. On the date of transition, the Company was required to apply the acquisition method of accounting in accordance with IFRS 3 to all subsidiaries that were previously measured at fair value under investment entity accounting. Accordingly, Tricon US Multi-Family REIT LLC (previously TLR Saturn Master LP and its wholly-owned subsidiaries, collectively) were deemed to have been acquired by the Company. The Company recognized $79,112 of goodwill from Tricon US Multi-Family REIT LLC on the corporate balance sheet on transition due to the recognition of deferred tax liabilities that arose from the difference in the tax bases and the fair values of the net assets acquired.

On March 31, 2021, the goodwill balance was deemed to have been disposed of as part of the disposal group from an accounting perspective. As a result, the Company recognized a loss of $84,427 for the three months ended March 31, 2021, mainly attributable to the derecognition of goodwill as described below.


(in thousands of U.S. dollars)	March 31, 2021
Total consideration⁽¹⁾	$	431,583
Net asset value on disposition		(431,583	)
Transaction costs		(3,285	)
Derecognition of goodwill and other assets		(81,142	)

Loss on sale	$	(84,427	)

(1)	The balance includes $505 of amounts receivable from investors as at June 30, 2021.

8 2021 SECOND QUARTER REPORT TRICON RESIDENTIAL

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

for the three and six months ended June 30, 2021

(in thousands of U.S. dollars, except per share amounts and percentage amounts)

The table below presents the carrying values of the net assets of the disposal group at the date of sale.


(in thousands of U.S. dollars)	March 31, 2021
Net assets
Rental properties	$	1,333,406
Goodwill		79,112
Cash and restricted cash		18,553
Net working capital and other		(10,001	)
Long-term debt		(800,450	)

Net assets of U.S. multi-family rental		620,620
Derecognition of goodwill		(79,112	)
Rental properties marked to market on disposition		(2,030	)

Net assets value available for sale		539,478
Net assets retained by the Company at 20%		(107,895	)

Net assets value for disposition	$	431,583

The profit or loss of the discontinued operations was as follows:


	For the three months ended June 30					For the six months ended June 30
(in thousands of U.S. dollars)	2021		2020			2021			2020
Net operating income from multi-family rental properties	$	—	$	16,388		$	16,224		$	33,473
Interest expense		—		(8,260	)		(7,845	)		(17,314	)
Other expenses		—		(2,205	)		(1,176	)		(3,709	)
Fair value loss on rental properties		—		(22,535	)		—			(22,535	)
Loss on sale		—		—			(84,427	)		—

Loss before income taxes from discontinued operations	$	—	$	(16,612	)	$	(77,224	)	$	(10,085	)
Income tax expense – current		—		—			(46,502	)		—
Income tax recovery – deferred		—		3,788			56,164			3,289

Net loss from discontinued operations	$	—	$	(12,824	)	$	(67,562	)	$	(6,796	)

The table below provides a summary of the Company’s cash flows attributed to the discontinued operations.


	For the three months ended June 30					For the six months ended June 30
(in thousands of U.S. dollars)	2021		2020			2021			2020
Net cash provided by (used in) operating activities from discontinued operations	$	—	$	9,082		$	(2,593	)	$	7,535
Net cash provided by (used in) investing activities from discontinued operations⁽¹⁾		13,958		(1,583	)		421,269			(1,080	)
Net cash used in financing activities from discontinued operations⁽²⁾		—		(5,796	)		(102,849	)		(1,164	)

Change in cash during the period from discontinued operations	$	13,958	$	1,703		$	315,827		$	5,291

(1)	The balance for the three months ended June 30, 2021 relates to the receipt of cash proceeds from the sale of the portfolio. There were $505 of amounts receivable from investors remaining as at June 30, 2021.

(2)	Includes repayments of the U.S. multi-family credit facility totalling $109,890 for the six months ended June 30, 2021 (2020 – $3,000), net of changes in the restricted cash balance.

TRICON RESIDENTIAL 2021 SECOND QUARTER REPORT 9

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

for the three and six months ended June 30, 2021

(in thousands of U.S. dollars, except per share amounts and percentage amounts)

4. RENTAL PROPERTIES

The following tables present the changes in the rental property balances for the six months ended June 30, 2021 and the year ended December 31, 2020.


	June 30, 2021
(in thousands of U.S. dollars)	Single-Family Rental			Multi-Family Rental			Total
Opening balance	$	4,990,542		$	1,331,376		$	6,321,918
Acquisitions⁽¹⁾		557,685			—			557,685
Capital expenditures		71,314			2,030			73,344
Fair value adjustments⁽²⁾		366,614			—			366,614
Dispositions⁽³⁾		(8,243	)		(1,333,406	)		(1,341,649	)

Balance, end of period	$	5,977,912		$	—		$	5,977,912

(1)	The total purchase price includes $1,356 of capitalized transaction costs in relation to the acquisitions.

(2)	Fair value adjustments include realized fair value gains of $5 for the six months ended June 30, 2021.

(3)	Dispositions for Multi-Family Rental reflect the deconsolidation of the U.S. multi-family rental portfolio on March 31, 2021 (Note 3).


	December 31, 2020
(in thousands of U.S. dollars)	Single-Family Rental			Multi-Family Rental			Total
Opening balance	$	4,337,681		$	1,344,844		$	5,682,525
Acquisitions⁽¹⁾		356,514			—			356,514
Capital expenditures		93,568			9,067			102,635
Fair value adjustments⁽²⁾		220,849			(22,535	)		198,314
Dispositions		(18,070	)		—			(18,070	)

Balance, end of year	$	4,990,542		$	1,331,376		$	6,321,918

(1)	The total purchase price includes $1,913 of capitalized transaction costs in relation to the acquisitions.

(2)	Fair value adjustments include realized fair value losses of $1,685 for the year ended December 31, 2020.

The Company used the following techniques to determine the fair value measurements included in the consolidated financial statements categorized under Level 3.

Single-family rental homes

Valuation methodology

10 2021 SECOND QUARTER REPORT TRICON RESIDENTIAL

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

for the three and six months ended June 30, 2021

(in thousands of U.S. dollars, except per share amounts and percentage amounts)

The HPI methodology is used to update the value, on a quarterly basis, of single-family rental homes that were most recently valued using a BPO as well as single-family rental homes held for more than six months following initial acquisition. The HPI is calculated based on a repeat-sales model using large real estate information databases compiled from public records. The Company uses a probability-weighted twelve-month trailing average HPI change to update the value of its single-family rental homes. The quarterly HPI change is then applied to the previously recorded fair value of the rental homes. The data used to determine the fair value of the Company’s single-family rental homes is specific to the zip code in which the property is located.

The Company performed a valuation at May 31, 2021 for rental homes acquired prior to April 1, 2021, according to its valuation policy and based on the best information available. HPI growth continued across all markets during the quarter (5.2% net of capital expenditures) compared to 0.9% in the same period in the prior year. There were 224 homes valued using the BPO method during the quarter. The combination of the HPI and BPO methodologies resulted in a fair value gain of $254,312 and $366,614 for the three and six months ended June 30, 2021, respectively (2020 – $32,839 and $53,476). Management has assessed the impact of any market changes that occurred subsequent to the date of the valuation and has determined that there were no material changes to the values as at June 30, 2021.

Sensitivity

The weighted average of the quarterly HPI change was 5.2% (2020 – 0.9%). If the change in the quarterly HPI increased or decreased by 0.5%, the impact on the rental properties at June 30, 2021 would be $23,582 and ($23,582), respectively (2020 – $18,417 and ($18,417)).

5. EQUITY-ACCOUNTED INVESTMENTS IN MULTI-FAMILY RENTAL PROPERTIES

The Company’s equity-accounted investments in multi-family rental properties include a joint venture arrangement that operates 23 properties in the U.S. Sun Belt markets, effective as of March 31, 2021, and one 500-suite class A multi-family rental property in Toronto.

On March 31, 2021, the Company completed its previously announced joint venture arrangement with two institutional investors to operate 23 multi-family rental properties (Note 3). The joint venture represents rental properties held in partnership with third parties where decisions relating to the relevant activities of the joint venture require the unanimous consent of all partners.

The Company also holds an investment in an associate (“592 Sherbourne LP”, operating as “The Selby”), a multi-family rental property in Toronto, over which it has significant influence.

These arrangements are accounted for under the equity method.

The following table presents the change in the balance of equity-accounted investments in multi-family rental properties for the six months ended June 30, 2021 and the year ended December 31, 2020.


(in thousands of U.S. dollars)	June 30, 2021			December 31, 2020
Opening balance	$	19,913		$	19,733
Initial recognition of equity-accounted investment in U.S. multi-family rental properties (Note 3)		107,895			—
Advances		453			—
Distributions		(2,082	)		(935	)
Income from equity-accounted investments in multi-family rental properties		13,815			746
Translation adjustment		538			369

Balance, end of period	$	140,532		$	19,913

TRICON RESIDENTIAL 2021 SECOND QUARTER REPORT 11

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

for the three and six months ended June 30, 2021

(in thousands of U.S. dollars, except per share amounts and percentage amounts)

The following tables present the ownership interests and carrying values of the Company’s equity-accounted investments in multi-family rental properties. The financial information below discloses each investee at 100% and at Tricon’s ownership interests in the net assets of the investee.


	June 30, 2021
(in thousands of U.S. dollars)	Location	Tricon’s ownership %		Current assets		Non-current assets		Current liabilities		Non-current liabilities		Net assets		Tricon’s share of net assets⁽¹⁾
Joint venture
Tricon US Multi-Family REIT LLC	U.S. Sun Belt		20%	$	11,022	$	1,415,203	$	20,714	$	801,567	$	603,944	$	120,789
Associate
592 Sherbourne LP (The Selby)	Toronto, ON		15%		7,319		259,216		2,077		128,635		135,823		19,743

Total				$	18,341	$	1,674,419	$	22,791	$	930,202	$	739,767	$	140,532


	December 31, 2020
(in thousands of U.S. dollars)	Location	Tricon’s ownership %		Current assets		Non-current assets		Current liabilities		Non-current liabilities		Net assets		Tricon’s share of net assets⁽¹⁾
Associate
592 Sherbourne LP (The Selby)	Toronto, ON		15%	$	12,988	$	252,065	$	2,201	$	126,008	$	136,844	$	19,913

Total				$	12,988	$	252,065	$	2,201	$	126,008	$	136,844	$	19,913

(1)

Tricon’s share of net assets of $140,532 (December 31, 2020 – $19,913) is comprised of $141,170 (December 31, 2020 – $20,534) as per the investees’ financial statements less $638 (December 31, 2020 – less $621) of fair value differences arising from the initial recognition of 592 Sherbourne LP on January 1, 2020 and foreign exchange translation adjustments.


	For the three months ended June 30, 2021
(in thousands of U.S. dollars)	Location	Tricon’s ownership %		Revenue		Expenses			Fair value gains		Net and other comprehensive income		Tricon’s share of net income
Joint venture
Tricon US Multi-Family REIT LLC	U.S. Sun Belt		20%	$	29,385	$	(21,727	)	$	63,367	$	71,025	$	14,204
Associate
592 Sherbourne LP (The Selby)	Toronto, ON		15%		2,613		(2,163	)		—		450		68

Total				$	31,998	$	(23,890	)	$	63,367	$	71,475	$	14,272


	For the three months ended June 30, 2020
(in thousands of U.S. dollars)	Location	Tricon’s ownership %		Revenue		Expenses			Fair value gains		Net and other comprehensive income		Tricon’s share of net income
Associate
592 Sherbourne LP (The Selby)	Toronto, ON		15%	$	2,692	$	(1,611	)	$	—	$	1,081	$	162

Total				$	2,692	$	(1,611	)	$	—	$	1,081	$	162

12 2021 SECOND QUARTER REPORT TRICON RESIDENTIAL

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

for the three and six months ended June 30, 2021

(in thousands of U.S. dollars, except per share amounts and percentage amounts)


	For the six months ended June 30, 2021
(in thousands of U.S. dollars)	Location	Tricon’s ownership %			Revenue		Expenses			Fair value gains		Net and other comprehensive income		Tricon’s share of net income
Joint venture
Tricon US Multi-Family REIT LLC	U.S. Sun Belt		20	%	$	29,385	$	(24,473	)	$	63,367	$	68,279	$	13,655
Associate
592 Sherbourne LP (The Selby)	Toronto, ON		15	%		5,270		(4,206	)		—		1,064		160

Total					$	34,655	$	(28,679	)	$	63,367	$	69,343	$	13,815


	For the six months ended June 30, 2020
(in thousands of U.S. dollars)	Location	Tricon’s ownership %			Revenue		Expenses			Fair value gains		Net and other comprehensive income		Tricon’s share of net income
Associate
592 Sherbourne LP (The Selby)	Toronto, ON		15%		$	5,304	$	(3,856	)	$	—	$	1,448	$	217

Total					$	5,304	$	(3,856	)	$	—	$	1,448	$	217

Based on the assessment of current economic conditions, there are no indicators of impairment for the Company’s equity-accounted investments in multi-family rental properties as at June 30, 2021.

6. EQUITY-ACCOUNTED INVESTMENTS IN CANADIAN RESIDENTIAL DEVELOPMENTS

The Company has entered into certain arrangements in the form of jointly controlled entities and investments in associates for various Canadian multi-family rental developments. Joint ventures represent development properties held in partnership with third parties where decisions relating to the relevant activities of the joint venture require the unanimous consent of the partners. These arrangements are accounted for under the equity method.

The following table presents the change in the balance of equity-accounted investments in Canadian residential developments for the six months ended June 30, 2021 and the year ended December 31, 2020.


(in thousands of U.S. dollars)	June 30, 2021		December 31, 2020
Opening balance	$	74,955	$	55,408
Advances		16,054		4,294
Income from equity-accounted investments in Canadian residential developments		24		13,378
Translation adjustment		2,132		1,875

Balance, end of period	$	93,165	$	74,955

TRICON RESIDENTIAL 2021 SECOND QUARTER REPORT 13

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

for the three and six months ended June 30, 2021

(in thousands of U.S. dollars, except per share amounts and percentage amounts)

The following tables present the ownership interests and carrying values of the Company’s equity-accounted investments in Canadian residential developments. The financial information below discloses each investee at 100% and at Tricon’s ownership interests in the net assets of the investee.


	June 30, 2021
(in thousands of U.S. dollars)	Location	Tricon’s ownership %		Current assets		Non-current assets		Current liabilities		Non-current liabilities		Net assets		Tricon’s share of net assets⁽¹⁾
Joint ventures
WDL 3/4/7 LP	Toronto, ON		33%	$	6,800	$	82,043	$	13,030	$	44,800	$	31,013	$	10,345
WDL 8 LP	Toronto, ON		33%		8,996		146,375		15,708		113,827		25,836		8,620
WDL 20 LP	Toronto, ON		33%		1,529		49,256		395		45,354		5,036		1,686
DKT B10 LP⁽²⁾	Toronto, ON		33%		2,339		18,491		2,596		13,849		4,385		3,075
6–8 Gloucester LP (The Ivy)	Toronto, ON		47%		1,883		62,474		2,255		26,540		35,562		16,845
Labatt Village Holding LP⁽³⁾	Toronto, ON		38%		—		44,914		—		—		44,914		16,844
Queen Ontario LP	Toronto, ON		30%		602		111,416		1,540		64,544		45,934		13,780

					22,149		514,969		35,524		308,914		192,680		71,195

Associates
57 Spadina LP (The Taylor)	Toronto, ON		30%		634		128,605		4,289		52,509		72,441		21,970

Total				$	22,783	$	643,574	$	39,813	$	361,423	$	265,121	$	93,165


	December 31, 2020
(in thousands of U.S. dollars)	Location	Tricon’s ownership %		Current assets		Non-current assets		Current liabilities		Non-current liabilities		Net assets		Tricon’s share of net assets⁽¹⁾
Joint ventures
WDL 3/4/7 LP	Toronto, ON		33%	$	1,050	$	70,918	$	7,813	$	35,454	$	28,701	$	9,575
WDL 8 LP	Toronto, ON		33%		6,659		112,488		8,083		88,635		22,429		7,483
WDL 20 LP	Toronto, ON		33%		770		45,697		24		43,653		2,790		937
DKT B10 LP⁽²⁾	Toronto, ON		33%		2,683		2,551		966		—		4,268		2,994
6–8 Gloucester LP (The Ivy)	Toronto, ON		47%		3,587		40,799		3,091		6,676		34,619		16,398
Labatt Village Holding LP⁽³⁾	Toronto, ON		38%		—		43,160		16		—		43,144		16,180

					14,749		315,613		19,993		174,418		135,951		53,567

Associates
57 Spadina LP (The Taylor)	Toronto, ON		30%		448		113,215		3,419		39,724		70,520		21,388

Total				$	15,197	$	428,828	$	23,412	$	214,142	$	206,471	$	74,955

(1)

Tricon’s share of net assets of $93,165 (December 31, 2020 – $74,955) is comprised of $91,164 (December 31, 2020 – $73,007) as per the investees’ financial statements plus $2,001 (December 31, 2020 – $1,948) of fair value differences arising from the initial recognition on January 1, 2020 and foreign exchange translation adjustments.

(2)	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.

(3)	Labatt Village Holding LP has an 80% ownership interest in the Labatt Village LP project partnership, and therefore Tricon has a 30% effective interest in the project.

14 2021 SECOND QUARTER REPORT TRICON RESIDENTIAL

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

for the three and six months ended June 30, 2021

(in thousands of U.S. dollars, except per share amounts and percentage amounts)


	For the three months ended June 30, 2021
(in thousands of U.S. dollars)	Location	Tricon’s ownership %		Revenue			Expenses			Fair value gains		Net and other comprehensive income			Tricon’s share of net income
Joint ventures
WDL 3/4/7 LP	Toronto, ON		33%	$	—		$	(1	)	$	—	$	(1	)	$	—
WDL 8 LP	Toronto, ON		33%		—			(8	)		—		(8	)		(4	)
WDL 20 LP	Toronto, ON		33%		—			—			—		—			—
DKT B10 LP	Toronto, ON		33%		—			—			—		—			—
6–8 Gloucester LP (The Ivy)	Toronto, ON		47%		—			—			—		—			—
Labatt Village Holding LP	Toronto, ON		38%		—			(3	)		19		16			7
Queen Ontario LP	Toronto, ON		30%		96			(17	)		—		79			24

					96			(29	)		19		86			27

Associates
57 Spadina LP (The Taylor)	Toronto, ON		30%		—			—			—		—			—

Total				$	96		$	(29	)	$	19	$	86		$	27


	For the three months ended June 30, 2020
(in thousands of U.S. dollars)	Location	Tricon’s ownership %		Revenue			Expenses			Fair value gains		Net and other comprehensive income			Tricon’s share of net income
Joint ventures
WDL 3/4/7 LP	Toronto, ON		33%	$	(5	)	$	(7	)	$	—	$	(12	)	$	(4	)
WDL 8 LP	Toronto, ON		33%		—			(13	)		—		(13	)		(5	)
WDL 20 LP	Toronto, ON		33%		—			(1	)		—		(1	)		—
DKT B10 LP	Toronto, ON		33%		—			—			—		—			—
6–8 Gloucester LP (The Ivy)	Toronto, ON		47%		—			—			—		—			—
Labatt Village Holding LP	Toronto, ON		38%		—			—			5		5			2

					(5	)		(21	)		5		(21	)		(7	)

Associates
57 Spadina LP (The Taylor)	Toronto, ON		30%		—			—			—		—			—

Total				$	(5	)	$	(21	)	$	5	$	(21	)	$	(7	)

TRICON RESIDENTIAL 2021 SECOND QUARTER REPORT 15

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

for the three and six months ended June 30, 2021

(in thousands of U.S. dollars, except per share amounts and percentage amounts)


	For the six months ended June 30, 2021
(in thousands of U.S. dollars)	Location	Tricon’s ownership %		Revenue		Expenses			Fair value gains		Net and other comprehensive income			Tricon’s share of net income
Joint ventures
WDL 3/4/7 LP	Toronto, ON		33%	$	2	$	(14	)	$	—	$	(12	)	$	(4	)
WDL 8 LP	Toronto, ON		33%		—		(8	)		—		(8	)		(4	)
WDL 20 LP	Toronto, ON		33%		—		—			—		—			—
DKT B10 LP	Toronto, ON		33%		—		—			—		—			—
6–8 Gloucester LP (The Ivy)	Toronto, ON		47%		—		—			—		—			—
Labatt Village Holding LP	Toronto, ON		38%		—		(3	)		23		20			8
Queen Ontario LP	Toronto, ON		30%		96		(17	)		—		79			24

					98		(42	)		23		79			24

Associates
57 Spadina LP (The Taylor)	Toronto, ON		30%		—		—			—		—			—

Total				$	98	$	(42	)	$	23	$	79		$	24


	For the six months ended June 30, 2020
(in thousands of U.S. dollars)	Location	Tricon’s ownership %		Revenue		Expenses			Fair value gains		Net and other comprehensive income			Tricon’s share of net income
Joint ventures
WDL 3/4/7 LP	Toronto, ON		33%	$	54	$	(51	)	$	—	$	3		$	1
WDL 8 LP	Toronto, ON		33%		—		(45	)		15,300		15,255			5,085
WDL 20 LP	Toronto, ON		33%		—		(1	)		—		(1	)		—
DKT B10 LP	Toronto, ON		33%		—		—			—		—			—
6–8 Gloucester LP (The Ivy)	Toronto, ON		47%		—		(2	)		—		(2	)		(1	)
Labatt Village Holding LP	Toronto, ON		38%		—		(13	)		25		12			5

					54		(112	)		15,325		15,267			5,090

Associates
57 Spadina LP (The Taylor)	Toronto, ON		30%		—		—			—		—			—

Total				$	54	$	(112	)	$	15,325	$	15,267		$	5,090

Based on the assessment of current economic conditions, there are no indicators of impairment of the Company’s equity-accounted investments in Canadian residential developments as at June 30, 2021.

16 2021 SECOND QUARTER REPORT TRICON RESIDENTIAL

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

for the three and six months ended June 30, 2021

(in thousands of U.S. dollars, except per share amounts and percentage amounts)

7. CANADIAN DEVELOPMENT PROPERTIES

The Company’s Canadian development properties include one development project (The James) and an adjacent commercial property (The Shops of Summerhill) in Toronto. The following table presents the changes in the Canadian development properties balance for the six months ended June 30, 2021 and the year ended December 31, 2020.


(in thousands of U.S. dollars)	June 30, 2021		December 31, 2020
Opening balance	$	110,018	$	35,625
Acquisitions		—		65,861
Development expenditures		4,818		2,998
Translation adjustment		3,049		5,534

Balance, end of period	$	117,885	$	110,018

The Company earned $330 and $535 of commercial rental income from The Shops of Summerhill for the three and six months ended June 30, 2021, respectively (2020 – $108 and $156), which is classified as other income.

8. INVESTMENTS IN U.S. RESIDENTIAL DEVELOPMENTS

The Company makes investments in U.S. residential developments via equity investments and loan advances. Advances made to investments are added to the carrying value when paid; distributions from investments are deducted from the carrying value when received.

The following table presents the changes in the investments in U.S. residential developments for the six months ended June 30, 2021 and the year ended December 31, 2020.


(in thousands of U.S. dollars)	June 30, 2021			December 31, 2020
Opening balance	$	164,842		$	300,653
Advances		2,624			3,408
Distributions		(28,006	)		(77,443	)
Income (loss) from investments in U.S. residential developments⁽¹⁾		14,910			(61,776	)

Balance, end of period	$	154,370		$	164,842

Internal debt instruments	$	8,814		$	13,937
Equity		145,556			150,905

Total investments in U.S. residential developments	$	154,370		$	164,842

(1)	There were no realized gains or losses included in the income from investments in U.S. residential developments for the six months ended June 30, 2021 (2020 – realized loss of $921).

TRICON RESIDENTIAL 2021 SECOND QUARTER REPORT 17

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

for the three and six months ended June 30, 2021

(in thousands of U.S. dollars, except per share amounts and percentage amounts)

June 30, 2021

December 31, 2020

Valuation technique(s)

Significant
unobservable input

Range of inputs

Weighted
average of inputs

Range of inputs

Weighted
average of inputs

Other inputs and key information

Net asset value, determined using discounted cash flow

a) Discount rate⁽¹⁾

b) Future cash flow

c) Appraised value⁽²⁾

8.0% –

20.0%

1 – 10 years

16.5%

6.3 years

8.0% –

20.0%

1 – 7 years

14.9%

4.5 years

Entitlement risk, sales risk and construction risk are taken into account in determining the discount rate.

Waterfall distribution model

Price per acre of land, timing of project funding requirements and distributions.

(1)

(2)

As of June 30, 2021, Trinity Falls was measured using the discounted cash flow methodology, whereas it was measured at the transaction price in the comparative period. As a result, there was a significant change in the range of inputs and weighted average inputs disclosed compared to December 31, 2020.

Sensitivity

For those investments valued using discounted cash flows, an increase of 2.5% in the discount rate results in a decrease in fair value of $11,330 and a decrease of 2.5% in the discount rate results in an increase in fair value of $12,712 (December 31, 2020 – ($4,144) and $4,568, respectively).

9. FAIR VALUE ESTIMATION

Fair value measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these condensed interim consolidated financial statements is determined on this basis, unless otherwise noted.

Level 1 – Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.

Fair value measurements are adopted by the Company to calculate the carrying amounts of various assets and liabilities.

18 2021 SECOND QUARTER REPORT TRICON RESIDENTIAL

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

for the three and six months ended June 30, 2021

(in thousands of U.S. dollars, except per share amounts and percentage amounts)


	June 30, 2021						December 31, 2020
(in thousands of U.S. dollars)	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Assets
Rental properties (Note 4)	$	—	$	—	$	5,977,912	$	—	$	—	$	6,321,918
Canadian development properties (Note 7)		—		—		117,885		—		—		110,018
Investments in U.S. residential developments (Note 8)		—		—		154,370		—		—		164,842
Derivative financial instruments (Note 19)		—		30		—		—		841		—

	$	—	$	30	$	6,250,167	$	—	$	841	$	6,596,778

Liabilities
Derivative financial instruments (Note 19)	$	—	$	123,243	$	—	$	—	$	45,494	$	—
Limited partners’ interests in single-family rental business (Note 24)		—		—		559,893		—		—		356,305

	$	—	$	123,243	$	559,893	$	—	$	45,494	$	356,305

There have been no transfers between levels for the six months ended June 30, 2021.

10. AMOUNTS PAYABLE AND ACCRUED LIABILITIES

Amounts payable and accrued liabilities consist of the following:


(in thousands of U.S. dollars)	June 30, 2021		December 31, 2020
Trade payables and accrued liabilities	$	32,767	$	31,182
Accrued property taxes		33,314		37,987
AIP liability (Note 29)		12,078		7,120
Income taxes payable		2,303		337
Interest payable		15,443		18,566
Deferred income		81		1,294
Current portion of lease obligations (Note 25)		2,305		1,804

Total amounts payable and accrued liabilities	$	98,291	$	98,290

11. GOODWILL

On March 31, 2021, the Company disposed of 80% of its interest in the U.S. multi-family rental business and deconsolidated its underlying assets and liabilities (Note 3). Accordingly, $79,112 of goodwill associated with the U.S. multi-family rental business has been removed from the Company’s balance sheet as of March 31, 2021. This resulted in an ending goodwill balance as at June 30, 2021 of $29,726 (December 31, 2020 – $108,838).

Management concluded that the remaining goodwill of $29,726, which was attributable to the Company’s single-family rental business, was not impaired as at June 30, 2021, after considering current economic conditions and underlying cash flows at the single-family rental CGU level.

TRICON RESIDENTIAL 2021 SECOND QUARTER REPORT 19

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

for the three and six months ended June 30, 2021

(in thousands of U.S. dollars, except per share amounts and percentage amounts)

12. INCOME TAXES


	For the three months ended June 30						For the six months ended June 30
(in thousands of U.S. dollars)	2021			2020			2021			2020
Income tax (expense) recovery – current	$	(16	)	$	286		$	44,457		$	224
Income tax (expense) recovery – deferred		(47,104	)		(8,114	)		(114,231	)		2,853

Income tax (expense) recovery from continuing operations	$	(47,120	)	$	(7,828	)	$	(69,774	)	$	3,077

Income tax expense from discontinued operations – current		–			–			(46,502	)		–
Income tax recovery from discontinued operations – deferred		–			3,788			56,164			3,289

Income tax recovery from discontinued operations		–			3,788			9,662			3,289

Income tax (expense) recovery	$	(47,120	)	$	(4,040	)	$	(60,112	)	$	6,366

The tax on the Company’s income differs from the theoretical amount that would arise using the weighted average tax rate applicable to income of the consolidated entities as follows:


	For the three months ended June 30						For the six months ended June 30
(in thousands of U.S. dollars)	2021			2020			2021			2020
Income (loss) before income taxes from continuing operations	$	193,442		$	37,993		$	258,000		$	(19,445	)
Combined statutory federal and provincial income tax rate		26.50	%		26.50	%		26.50	%		26.50	%
Expected income tax expense (recovery)		51,262			10,068			68,370			(5,153	)
Non-taxable (gains) losses on investments		(48	)		372			(76	)		1,111
Non-taxable losses on derivative financial instruments		9,966			115			18,607			693
Foreign tax rate differential⁽¹⁾		(12,334	)		(3,930	)		(17,033	)		(3,313	)
Other, including permanent differences⁽²⁾		(1,726	)		1,203			(94	)		3,585

Income tax expense (recovery) from continuing operations	$	47,120		$	7,828		$	69,774		$	(3,077	)

(1)	Effective January 1, 2020, the Company’s single-family rental business is subject to the U.S. ordinary income tax rate of 21%, resulting in a reduction in Tricon’s effective tax rate from the Canadian combined statutory income tax rate of 26.5% .

(2)	Other permanent differences are comprised of non-deductible share compensation, non-deductible debentures discount amortization and non-deductible interest expense.

The expected realization of deferred income tax assets and deferred income tax liabilities is as follows:


(in thousands of U.S. dollars)	June 30, 2021		December 31, 2020
Deferred income tax assets
Deferred income tax assets to be recovered after more than 12 months	$	69,830	$	102,444
Deferred income tax assets to be recovered within 12 months		1,154		–

Total deferred income tax assets	$	70,984	$	102,444


Deferred income tax liabilities
Deferred income tax liabilities reversing after more than 12 months	$	322,325	$	298,071
Deferred income tax liabilities reversing within 12 months		175		–

Total deferred income tax liabilities	$	322,500	$	298,071

Net deferred income tax liabilities	$	251,516	$	195,627

20 2021 SECOND QUARTER REPORT TRICON RESIDENTIAL

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

for the three and six months ended June 30, 2021

(in thousands of U.S. dollars, except per share amounts and percentage amounts)

The movement of the deferred income tax accounts was as follows:


(in thousands of U.S. dollars)	June 30, 2021			December 31, 2020
Change in net deferred income tax liabilities
Net deferred income tax liabilities, beginning of period	$	195,627		$	155,974
Charge to the statement of comprehensive income		58,067			40,425
Credit to equity		(1,721	)		–
Other		(457	)		(772	)

Net deferred income tax liabilities, end of period	$	251,516		$	195,627

The tax effects of the significant components of temporary differences giving rise to the Company’s deferred income tax assets and liabilities were as follows:


(in thousands of U.S. dollars)	Investments			Long-term incentive plan accrual		Issuance costs		Net operating losses			Other		Total
Deferred income tax assets
At December 31, 2020	$	16,677		$	6,211	$	1,702	$	72,292		$	5,562	$	102,444
Addition/(Reversal)		(3,278	)		1,055		4,526		(34,401	)		638		(31,460	)

At June 30, 2021	$	13,399		$	7,266	$	6,228	$	37,891		$	6,200	$	70,984


(in thousands of U.S. dollars)	Investments		Rental properties		Convertible debentures			Deferred placement fees			Other		Total
Deferred income tax liabilities
At December 31, 2020	$	–	$	297,057	$	175		$	839		$	–	$	298,071
Addition/(Reversal)		–		24,569		(31	)		(109	)		–		24,429

At June 30, 2021	$	–	$	321,626	$	144		$	730		$	–	$	322,500

The Company believes it will have sufficient future income to realize the deferred income tax assets.

13. REVENUE FROM SINGLE-FAMILY RENTAL PROPERTIES

The components of the Company’s revenue from single-family rental properties are as follows:


	For the three months ended June 30				For the six months ended June 30
(in thousands of U.S. dollars)	2021		2020		2021		2020
Base rent	$	87,589	$	75,651	$	170,462	$	147,350
Other revenue⁽¹⁾		4,726		3,063		8,379		6,660
Non-lease component		13,606		12,466		25,554		24,841

Total revenue from single-family rental properties⁽²⁾	$	105,921	$	91,180	$	204,395	$	178,851

(1)	Other revenue includes revenue earned on ancillary services and amenities as well as lease administrative fees.

(2)	Revenue from U.S. multi-family rental properties for the three and six months ended June 30, 2021 and 2020 has been reclassified to discontinued operations (Note 3).

TRICON RESIDENTIAL 2021 SECOND QUARTER REPORT 21

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

for the three and six months ended June 30, 2021

(in thousands of U.S. dollars, except per share amounts and percentage amounts)

14. REVENUE FROM PRIVATE FUNDS AND ADVISORY SERVICES


	For the three months ended June 30, 2021							For the three months ended June 30, 2020
(in thousands of U.S. dollars)	Gross management fees		Less fees eliminated upon consolidation			Total		Gross management fees		Less fees eliminated upon consolidation			Total
Asset management fees⁽¹⁾	$	3,781	$	(272	)	$	3,509	$	3,079	$	–		$	3,079
Performance fees		3,881		–			3,881		131		–			131
Development fees		5,944		(397	)		5,547		4,692		–			4,692
Property management fees		16,568		(16,392	)		176		10,381		(10,161	)		220

Total revenue from private funds and advisory services	$	30,174	$	(17,061	)	$	13,113	$	18,283	$	(10,161	)	$	8,122


	For the six months ended June 30, 2021							For the six months ended June 30, 2020
(in thousands of U.S. dollars)	Gross management fees		Less fees eliminated upon consolidation			Total		Gross management fees		Less fees eliminated upon consolidation			Total
Asset management fees⁽¹⁾	$	6,379	$	(272	)	$	6,107	$	6,412	$	–		$	6,412
Performance fees		4,573		–			4,573		445		–			445
Development fees		11,793		(782	)		11,011		8,614		–			8,614
Property management fees		29,716		(29,364	)		352		21,880		(21,414	)		466

Total revenue from private funds and advisory services	$	52,461	$	(30,418	)	$	22,043	$	37,351	$	(21,414	)	$	15,937

(1)	Comparative figures have been adjusted to conform with the current period presentation (Note 2).

15. AMOUNTS RECEIVABLE

Amounts receivable consist of rent receivables, trade receivables, income tax recoverable and other receivables.


(in thousands of U.S. dollars)	June 30, 2021		December 31, 2020
Rent receivables	$	3,300	$	4,274
Trade receivables		8,102		5,263
Income tax recoverable		3,249		3,282
Other receivables⁽¹⁾		15,091		12,774

Total amounts receivable	$	29,742	$	25,593

(1)	Other receivables are comprised of amounts due from affiliates and various amounts recoverable from third parties, including $505 of amounts receivable from investors in relation to the syndication of the U.S. multi-family rental portfolio (Note 3).

22 2021 SECOND QUARTER REPORT TRICON RESIDENTIAL

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

for the three and six months ended June 30, 2021

(in thousands of U.S. dollars, except per share amounts and percentage amounts)

16. DEBT

The following table presents a summary of the Company’s outstanding debt as at June 30, 2021:


	June 30, 2021
(in thousands of U.S. dollars)	Maturity dates		Coupon/stated interest rates			Interest rate cap or floor	Effective interest rates			Extension options⁽¹⁾		Total facility		Outstanding balance
SFR JV-1 subscription facility		August 2021		LIBOR+1.75	%	0.50% LIBOR floor		2.25	%	N/A $			24,389	$	24,335
SFR JV-1 warehouse credit facility⁽²⁾		October 2021		LIBOR+2.65	%	3.25% LIBOR cap		2.90	%		One-year		600,000		493,907
						0.25% LIBOR floor
Warehouse credit facility		November 2021		LIBOR+2.75	%	3.00% LIBOR cap		3.00	%		One-year		50,000		10,209
						0.25% LIBOR floor
Securitization debt 2017-1⁽³⁾		September 2022		3.59	%	N/A		3.59	%		N/A		457,508		457,508
Term loan⁽³⁾		October 2022		LIBOR+2.00	%	2.50% LIBOR cap		2.50	%		N/A		245,694		220,694
						0.50% LIBOR floor
SFR JV-HD subscription facility⁽⁴⁾		May 2023		LIBOR+1.90	%	0.15% LIBOR floor		2.05	%		One-year		100,000		30,500
Securitization debt 2017-2⁽³⁾		January 2024		3.67	%	N/A		3.67	%		N/A		362,493		362,493
SFR JV-HD warehouse credit facility⁽⁵⁾		May 2024		LIBOR+1.90	%	2.60% LIBOR cap		2.05	%		One-year		375,000		–
						0.15% LIBOR floor
Securitization debt 2018-1⁽³⁾		May 2025		3.96	%	N/A		3.96	%		N/A		312,255		312,255
SFR JV-1 securitization debt 2019-1⁽³⁾		March 2026		3.12	%	N/A		3.12	%		N/A		333,245		333,245
SFR JV-1 securitization debt 2020-1⁽³⁾		July 2026		2.43	%	N/A		2.43	%		N/A		553,185		553,185
Securitization debt 2020-2⁽³⁾		November 2027		1.94	%	N/A		1.94	%		N/A		440,177		440,177

Single-family rental properties borrowings								2.96	%				3,853,946		3,238,508
Land loan^(6),(7)		July 2022		Prime+1.50	%	3.95% floor		3.95	%		N/A		22,590		22,590
Mortgage⁽⁶⁾		September 2022		3.67	%	N/A		3.67	%		N/A		12,611		12,611

Canadian development properties borrowings								3.85	%				35,201		35,201
Corporate credit facility^(8),(9)		June 2024		LIBOR+2.75	%	N/A		3.23	%		N/A		500,000		14,000
Corporate office mortgages		November 2024		4.25	%	N/A		4.30	%		N/A		11,236		11,236

Corporate borrowings								3.71	%				511,236		25,236

														$	3,298,945

Transaction costs (net of amortization)															(24,554	)
Debt discount (net of amortization)															(1,319	)

Total debt								2.97	%			$	4,400,383	$	3,273,072

Current portion of long-term debt⁽¹⁾														$	25,000
Long-term debt														$	3,248,072
Fixed-rate debt – principal value								3.04	%					$	2,482,710
Floating-rate debt – principal value								2.78	%					$	816,235

(1)	The Company has the ability to extend the maturity of the loans where an extension option exists and intends to exercise such options wherever available. The current portion of long-term debt reflects the balance after the Company’s extension options have been exercised.

(2)	On May 12, 2021, SFR JV-1 amended its warehouse credit facility and increased the total facility to $600,000. The maturity date, extension option and coupon rate of the facility remained unchanged.

(3)	The term loans and securitization debt are secured, directly and indirectly, by approximately 20,500 single-family rental homes.

(4)	On May 28, 2021, SFR JV-HD entered into a new subscription facility agreement. The facility has a commitment value of $100,000 and a one-year extension option at the lender’s discretion.

(5)	On May 12, 2021, SFR JV-HD entered into a new warehouse credit facility agreement. The facility has a commitment value of $375,000 and a one-year extension option.

(6)	The land loan and mortgage are secured by the land under development at The James (Scrivener Square) and The Shops of Summerhill.

(7)	On June 17, 2021, the maturity date was extended to July 1, 2022, the interest rate was amended to Prime + 1.25%, and the interest rate floor was amended to 3.70%. The changes to the interest rate and the interest rate floor are effective July 1, 2021.

(8)

The Company has provided a general security agreement creating a first priority security interest on the assets of the Company, excluding, among other things, single-family rental homes, multi-family rental properties and interests in for-sale housing. As part of the corporate credit facility, the Company has designated $15,000 to issue letters of credit as security against contingent obligations related to its Canadian multi-family developments. As at June 30, 2021, the letters of credit outstanding totalled $13,516 (C$16,752).

(9)	On June 30, 2021, the Company and its syndicate of lenders completed an amendment and restatement of Tricon’s corporate credit facility, extending the maturity of the facility to June 30, 2024.

TRICON RESIDENTIAL 2021 SECOND QUARTER REPORT 23

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

for the three and six months ended June 30, 2021

(in thousands of U.S. dollars, except per share amounts and percentage amounts)


	December 31, 2020
(in thousands of U.S. dollars)	Maturity dates		Coupon/stated interest rates			Interest rate cap or floor	Effective interest rates			Extension options		Total facility		Outstanding balance
SFR JV-1 subscription facility		August 2021		LIBOR+1.75	%	N/A		2.31	%		N/A	$	150,000	$	116,000
SFR JV-1 warehouse credit facility		October 2021		LIBOR+2.65	%	3.25% LIBOR cap		3.21	%		One-year		300,000		96,610
						0.25% LIBOR floor
Term loan 2⁽¹⁾		October 2021		LIBOR+1.95	%	2.50% LIBOR cap		2.51	%		One-year		96,077		96,077
						0.50% LIBOR floor
Warehouse credit facility		November 2021		LIBOR+2.75	%	3.00% LIBOR cap		3.31	%		One-year		50,000		10,209
						0.25% LIBOR floor
Securitization debt 2017-1		September 2022		3.59	%	N/A		3.59	%		N/A		459,530		459,530
Term loan		October 2022		LIBOR+2.00	%	2.50% LIBOR cap		2.56	%		N/A		375,000		374,745
						0.50% LIBOR floor
Securitization debt 2017-2		January 2024		3.66	%	N/A		3.66	%		N/A		363,598		363,598
Securitization debt 2018-1		May 2025		3.96	%	N/A		3.96	%		N/A		312,540		312,540
SFR JV-1 securitization debt 2019-1		March 2026		3.12	%	N/A		3.12	%		N/A		333,358		333,358
SFR JV-1 securitization debt 2020-1		July 2026		2.43	%	N/A		2.43	%		N/A		553,428		553,428
Securitization debt 2020-2		November 2027		1.94	%	N/A		1.94	%		N/A		440,506		440,506

Single-family rental properties borrowings								2.94	%				3,434,037		3,156,601
U.S. multi-family credit facility		December 2021		LIBOR+3.75	%	N/A		4.39	%		N/A		109,890		109,890
Mortgage tranche A		November 2023		LIBOR+1.15	%	5.35% cap		1.77	%		N/A		160,090		160,090
Mortgage tranche B		November 2024		3.92	%	N/A		3.92	%		N/A		400,225		400,225
Mortgage tranche C		November 2025		3.95	%	N/A		3.95	%		N/A		240,135		240,135

Multi-family rental properties borrowings								3.61	%				910,340		910,340
Land loan		July 2021		Prime+1.50	%	3.95% floor		4.17	%		N/A		21,991		21,991
Vendor take-back (VTB) loan 2021⁽¹⁾		August 2021		–		N/A		6.00	%		N/A		25,564		25,564
Mortgage		September 2022		3.67	%	N/A		3.67	%		N/A		12,482		12,482

Canadian development properties borrowings								4.85	%				60,037		60,037
Corporate credit facility		July 2022		LIBOR+2.75	%	N/A		4.48	%		N/A		500,000		26,000
Corporate office mortgages		November 2024		4.25	%	N/A		4.30	%		N/A		11,089		11,089

Corporate borrowings								4.42	%				511,089		37,089

														$	4,164,067

Transaction costs (net of amortization)															(25,019	)
Debt discount (net of amortization)															(1,542	)

Total debt								3.12	%			$	4,915,503	$	4,137,506

Current portion of long-term debt														$	274,190
Long-term debt														$	3,863,316
Fixed-rate debt – principal value								3.24	%					$	3,152,455
Floating-rate debt – principal value								2.76	%					$	1,011,612

(1)	The Company made early repayments on Term loan 2 and the Vendor take-back (VTB) loan 2021. These facilities were fully repaid on May 27, 2021 and June 24, 2021, respectively.

24 2021 SECOND QUARTER REPORT TRICON RESIDENTIAL

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

for the three and six months ended June 30, 2021

(in thousands of U.S. dollars, except per share amounts and percentage amounts)

The Company was in compliance with the covenants and other undertakings outlined in all loan agreements.

The scheduled principal repayments and debt maturities are as follows, reflecting the maturity dates after all extensions have been exercised:


(in thousands of U.S. dollars)	Single-family rental borrowings		Canadian development properties borrowings		Corporate borrowings		Total
2021	$	24,335	$	214	$	155	$	24,704
2022		1,182,318		34,987		324		1,217,629
2023		30,500		—		338		30,838
2024		362,493		—		24,419		386,912
2025		312,255		—		—		312,255
2026 and thereafter		1,326,607		—		—		1,326,607

		3,238,508		35,201		25,236		3,298,945

Transaction costs (net of amortization)								(24,554	)
Debt discount (net of amortization)								(1,319	)

Total debt							$	3,273,072

Fair value of debt

The table below presents the fair value and the carrying value (net of unamortized deferred financing fees and debt discount) of the fixed-rate loans as at June 30, 2021.


	June 30, 2021
(in thousands of U.S. dollars)	Fair value		Carrying value
Securitization debt 2017-1	$	457,329	$	457,508
Securitization debt 2017-2		368,335		361,730
Securitization debt 2018-1		323,262		311,699
SFR JV-1 securitization debt 2019-1		341,187		327,289
SFR JV-1 securitization debt 2020-1		559,318		544,431
Securitization debt 2020-2		437,350		433,049
Mortgage		12,697		12,597
Corporate office mortgages		11,722		11,236

Total	$	2,511,200	$	2,459,539

The carrying value of variable term loans approximates their fair value, since their variable interest terms are indicative of prevailing market prices.

17. CONVERTIBLE DEBENTURES

The host liability component of the outstanding convertible debentures (the “2022 convertible debentures”) recognized on the condensed interim consolidated balance sheets was calculated as follows:


(in thousands of U.S. dollars)	June 30, 2021			December 31, 2020
Principal amount outstanding⁽¹⁾	$	171,424		$	172,400
Less: Transaction costs (net of amortization)		(1,337	)		(2,249	)

Liability component on initial recognition		170,087			170,151
Debentures discount (net of amortization)		(2,574	)		(4,195	)

2022 convertible debentures	$	167,513		$	165,956

(1)	In the first six months of 2021, $976 principal amount of 2022 convertible debentures was converted into 93,307 common shares.

The above carrying values were recognized at amortized cost after discounting the future interest and principal payments using the effective interest rates. The fair value of the host liability component of the 2022 convertible debentures was $176,434 as of June 30, 2021 and $178,412 as of December 31, 2020. The difference between the amortized cost and implied fair value is a result of the difference between the effective interest rate and the market interest rate for debt with similar terms.

TRICON RESIDENTIAL 2021 SECOND QUARTER REPORT 25

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

for the three and six months ended June 30, 2021

(in thousands of U.S. dollars, except per share amounts and percentage amounts)

18. DUE TO AFFILIATE

Structured entity – Tricon PIPE LLC (the “Affiliate”)

Tricon PIPE LLC was incorporated on August 7, 2020 for the purpose of raising third-party capital through the issuance of preferred units for an aggregate amount of $300,000. The Company has a 100% voting interest in this Affiliate; however, the Company is not required to consolidate this structured entity.

As of June 30, 2021, the Affiliate has a preferred unit liability of $300,000 and a promissory note receivable from Tricon of $300,000. During the six months ended June 30, 2021, the Affiliate earned interest income of $8,625 from the Company and recognized dividends declared of $8,625.

The Company’s obligation with respect to its involvement with the structured entity is equal to the cash flows under the promissory note payable. The Company has not recognized any income or losses in connection with its interest in this unconsolidated structured entity in the six months ended June 30, 2021.

Promissory note – between Tricon entities

The promissory note payable to Tricon PIPE LLC (“Promissory Note” or “Due to Affiliate”) recognized on the condensed interim consolidated balance sheets was calculated as follows:


(in thousands of U.S. dollars)	June 30, 2021			December 31, 2020
Principal amount outstanding	$	300,000		$	300,000
Less: Discount and transaction costs (net of amortization)		(46,046	)		(48,353	)

Due to Affiliate	$	253,954		$	251,647

The fair value of the Promissory Note was $279,596 as of June 30, 2021 and $293,465 as of December 31, 2020. The difference between the amortized cost and the implied fair value is a result of the difference between the effective interest rate and the market interest rate for debt with similar terms.

19. DERIVATIVE FINANCIAL INSTRUMENTS

The conversion and redemption features of the convertible debentures are combined pursuant to IFRS 9, Financial Instruments: Recognition and Measurement, and are measured at fair value at each reporting period using model calibration. The conversion and redemption components were valued using a binomial pricing model and then the valued amount was calibrated to the traded price of the underlying debentures. The valuation model uses market-based inputs, including the spot price of the underlying equity, implied volatility of the equity and USD/CAD foreign exchange rates, risk-free rates from the U.S. dollar swap curves and dividend yields related to the equity. The valuation of the conversion and redemption components assumes that the debentures are held to maturity.

Quantitative information about fair value measurements (Level 2) using significant observable inputs other than quoted prices included in Level 1 is as follows:


2022 convertible debentures	June 30, 2021			December 31, 2020
Risk-free rate⁽¹⁾		0.20	%		0.21	%
Implied volatility⁽²⁾		26.00	%		30.69	%
Dividend yield⁽³⁾		1.96	%		2.45	%

(1)	Risk-free rates were from the U.S. dollar swap curves matching the terms to maturity of the debentures.

(2)	Implied volatility was computed from the trading volatility of the Company’s stock over a comparable term to maturity and the volatility of USD/CAD exchange rates.

(3)	Dividend yields were from the forecast dividend yields matching the terms to maturity of the debentures.

26 2021 SECOND QUARTER REPORT TRICON RESIDENTIAL

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

for the three and six months ended June 30, 2021

(in thousands of U.S. dollars, except per share amounts and percentage amounts)

The Promissory Note contains a mandatory prepayment option that is intermingled with other options in connection with the preferred units issued by Tricon PIPE LLC (including exchange and redemption rights), as exercising the mandatory prepayment option effectively terminates the other options. Although the exchange and redemption rights exist at the Affiliate level, the Affiliate is unable to issue the common shares of the Company upon exercise of one or all of the rights by either party. As a result, such options, in essence, were deemed to be written by the Company and are treated as a single combined financial derivative instrument for valuation purposes in accordance with IFRS 9. The option pricing model for the derivative uses market-based inputs, including the spot price of the underlying equity, implied volatility of the equity and USD/CAD foreign exchange rates, risk-free rates from the U.S. dollar swap curves and dividend yields related to the underlying equity. The valuation of the derivative assumes a 9.75-year expected life of the investment horizon of the unitholders.

Quantitative information about fair value measurements (Level 2) using significant observable inputs other than quoted prices included in Level 1 is as follows:


Due to Affiliate	June 30, 2021			December 31, 2020
Risk-free rate⁽¹⁾		0.82	%		0.40	%
Implied volatility⁽²⁾		26.43	%		31.78	%
Dividend yield⁽³⁾		1.96	%		2.45	%

(1)	Risk-free rates were from the U.S. dollar swap curves matching the expected maturity of the Due to Affiliate.

(2)	Implied volatility was computed from the trading volatility of the Company’s stock over a comparable term to maturity and the volatility of USD/CAD exchange rates.

(3)	Dividend yields were from the forecast dividend yields matching the expected maturity of the Due to Affiliate.

The values attributed to the derivative financial instruments are shown below:


(in thousands of U.S. dollars)	Conversion/ redemption options⁽¹⁾			Exchange/ prepayment options			Interest rate caps			Total
For the six months ended June 30, 2021
Derivative financial assets (liabilities), beginning of period	$	841		$	(45,494	)	$	—		$	(44,653	)
Addition of interest rate caps		—			—			87			87
Fair value loss		(15,522	)		(63,068	)		(57	)		(78,647	)

Derivative financial instruments – end of period	$	(14,681	)	$	(108,562	)	$	30		$	(123,213	)

For the year ended December 31, 2020
Derivative financial (liabilities) assets, beginning of year	$	(657	)	$	—		$	28		$	(629	)
Addition of derivative financial liability in connection with Due to Affiliate		—			(37,613	)		—			(37,613	)
Addition of interest rate caps		—			—			11			11
Fair value gain (loss)		1,498			(7,881	)		(39	)		(6,422	)

Derivative financial instruments – end of year	$	841		$	(45,494	)	$	—		$	(44,653	)

(1)	The conversion/redemption options on the 2022 convertible debentures have a maturity date of March 31, 2022 and are presented as current liabilities on the consolidated balance sheets.

For the six months ended June 30, 2021, there was a fair value loss on the embedded derivatives on the 2022 convertible debentures and the Due to Affiliate of $78,590. The fair value loss on the derivatives was primarily driven by an increase in Tricon’s share price, on a USD-converted basis, which served to increase the probability of conversion of debentures and exchange of the preferred units of Tricon PIPE LLC into Tricon common shares.

TRICON RESIDENTIAL 2021 SECOND QUARTER REPORT 27

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

for the three and six months ended June 30, 2021

(in thousands of U.S. dollars, except per share amounts and percentage amounts)

20. INTEREST EXPENSE

Interest expense is comprised of the following:


	For the three months ended June 30				For the six months ended June 30
(in thousands of U.S. dollars)	2021		2020		2021		2020
SFR JV-1 subscription facility	$	385	$	1,069	$	1,026	$	2,739
SFR JV-1 warehouse credit facility		2,845		2,061		4,280		4,688
Warehouse credit facility		153		320		305		733
Securitization debt 2017-1		4,142		4,159		8,289		8,318
Term loan		2,344		2,561		4,762		6,052
SFR JV-HD subscription facility		90		—		90		—
Securitization debt 2017-2		3,341		3,407		6,689		6,709
SFR JV-HD warehouse credit facility		166		—		166		—
Securitization debt 2018-1		3,109		3,120		6,219		6,242
SFR JV-1 securitization debt 2019-1		2,594		2,597		5,190		5,193
SFR JV-1 securitization debt 2020-1		3,367		—		6,734		—
Securitization debt 2020-2		2,151		—		4,303		—
Term loan 2		573		658		1,191		1,559
Securitization debt 2016-1⁽¹⁾		—		3,324		—		6,661

Single-family rental interest expense		25,260		23,276		49,244		48,894
Mortgage		117		28		230		56
Vendor take-back (VTB) loan 2020⁽¹⁾		—		7		—		7

Canadian development properties interest expense⁽²⁾		117		35		230		63
Corporate credit facility		734		3,925		1,820		8,466
Corporate office mortgages		120		108		235		221

Corporate interest expense		854		4,033		2,055		8,687
Amortization of financing costs		2,203		1,234		4,251		2,449
Amortization of debt discounts		1,926		864		3,792		1,692
Debentures interest		2,477		2,464		4,928		4,929
Interest on Due to Affiliate		4,312		—		8,625		—
Interest on lease obligation		247		84		346		165

Total interest expense⁽³⁾	$	37,396	$	31,990	$	73,471	$	66,879

(1)	The securitization debt 2016-1 and vendor take-back (VTB) loan 2020 were fully repaid in 2020.

(2)	Canadian development properties capitalized $656 and $1,164 of interest for the three and six months ended June 30, 2021, respectively (2020 – $205 and $317).

(3)

On March 31, 2021, the Company sold an 80% interest in its U.S. multi-family rental portfolio. As a result, interest expense incurred on the U.S. multi-family rental portfolio has been reclassified to net loss from discontinued operations for the three and six months ended June 30, 2020 to conform with the current period presentation (Note 3).

28 2021 SECOND QUARTER REPORT TRICON RESIDENTIAL

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

for the three and six months ended June 30, 2021

(in thousands of U.S. dollars, except per share amounts and percentage amounts)

21. DIRECT OPERATING EXPENSES

The Company’s expenses are comprised of direct operating expenses for rental properties, compensation, general and administration, interest and depreciation and amortization. Direct operating expenses for rental properties include all attributable expenses incurred at the property level.

The following table lists details of the direct operating expenses for rental properties by type.


	For the three months ended June 30				For the six months ended June 30
(in thousands of U.S. dollars)	2021		2020		2021		2020
Property taxes	$	15,749	$	13,726	$	30,992	$	27,692
Repairs and maintenance⁽¹⁾		5,457		4,226		10,053		8,370
Turnover⁽¹⁾		1,699		1,758		3,042		3,338
Property management expenses⁽¹⁾		7,016		6,003		13,566		11,976
Property insurance⁽¹⁾		1,443		1,232		2,856		2,442
Marketing and leasing⁽¹⁾		419		396		775		728
Homeowners’ association (HOA) costs		1,513		1,232		2,838		2,413
Other direct expense⁽²⁾		1,881		1,359		3,357		2,624

Direct operating expenses	$	35,177	$	29,932	$	67,479	$	59,583

(1)

The comparative period has been reclassified to conform with the current period presentation. Marketing and leasing expenses that were previously included in property management expenses have now been reclassified as a separate line item. Additionally, broker fees of $85 and $170 for the three and six months ended June 30, 2020, respectively, have been reclassified from property insurance to property management expenses.

(2)	Other direct expense includes property utilities and other property operating costs.

22. INTANGIBLE ASSETS

The intangible assets are as follows:


(in thousands of U.S. dollars)	June 30, 2021		December 31, 2020
Placement fees	$	3,273	$	3,764
Customer relationship intangible		2,958		3,215
Contractual development fees		4,418		5,384

Intangible assets	$	10,649	$	12,363

Amortization expense for the six months ended June 30, 2021 was $1,714 (2020 – $2,063).

23. OTHER ASSETS

The other assets are as follows:


(in thousands of U.S. dollars)	June 30, 2021		December 31, 2020
Building	$	32,090	$	30,602
Furniture, computer and office equipment		10,085		8,015
Right-of-use asset⁽¹⁾		28,439		6,018
Leasehold improvements		9,584		1,251
Property-related systems software		1,289		1,478
Vehicles		612		626

Other assets⁽²⁾	$	82,099	$	47,990

(1)

On May 1, 2021, the Company entered into an agreement to lease office space in Tustin, California for its own use as its property management headquarters. The lease agreement covers the entire office portion of the property (approximately 78,000 square feet) and has an initial term of 11.5 years with two five-year renewal options. The right-of-use asset and the corresponding lease obligation were initially recognized at $21,638 on May 1, 2021 (Note 25).

(2)

On March 31, 2021, the Company sold an 80% interest in its U.S. multi-family rental portfolio, and as a result, $94 of other assets in relation to the U.S. multi-family rental portfolio were derecognized and corresponding depreciation expense of $6 (2020 – $10) was reclassified to net income from discontinued operations for the six months ended June 30, 2021 (Note 3).

Depreciation expense for the six months ended June 30, 2021 was $3,785 (2020 – $3,485).

TRICON RESIDENTIAL 2021 SECOND QUARTER REPORT 29

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

for the three and six months ended June 30, 2021

(in thousands of U.S. dollars, except per share amounts and percentage amounts)

24. LIMITED PARTNERS’ INTERESTS IN SINGLE-FAMILY RENTAL BUSINESS

Third-party ownership interests in single-family joint ventures are in the form of limited partnership interests which are classified as liabilities under the provisions of IAS 32. Limited partners’ interests in single-family rental business represent a 66.33% interest in the net assets of the underlying joint ventures.

On May 10, 2021, the Company entered into a new joint venture (“SFR JV-HD”) with two institutional investors to acquire new single-family homes from national and regional homebuilders.

The following table presents the changes in the limited partners’ interests in single-family rental business balance for the six months ended June 30, 2021 and year ended December 31, 2020.


(in thousands of U.S. dollars)	June 30, 2021			December 31, 2020
Balance, beginning of period	$	356,305		$	285,774
Contributions		130,955			66,112
Distributions		(2,754	)		(46,162	)
Net change in fair value of limited partners’ interests in single-family rental business		75,387			50,581

Balance, end of period	$	559,893		$	356,305

The net change in fair value of limited partners’ interests in single-family rental business of $75,387 for the six months ended June 30, 2021 represents only unrealized fair value changes driven by increases in the net assets of SFR JV-1 and SFR JV-HD and is linked to fair value changes of the rental properties. If the fair value of rental properties increased or decreased by 1.0%, the impact on the limited partners’ interests in single-family rental business at June 30, 2021 would be $14,641 and ($14,641), respectively (December 31, 2020 – $10,495 and ($10,495)).

25. OTHER LIABILITIES

The Company has multiple office leases, maintenance vehicle leases and office equipment leases. Tricon has 17 leases for office space with fixed lease terms ranging from one to ten years remaining, along with 179 maintenance vehicles under five-year leases in connection with its property management operations.

The carrying value of the Company’s lease obligations is as follows:


(in thousands of U.S. dollars)	June 30, 2021			December 31, 2020
Balance, beginning of period	$	6,403		$	6,524
Addition of lease obligation⁽¹⁾		23,857			1,966
Interest expense		346			328
Cash payments		(1,173	)		(2,415	)

Balance, end of period	$	29,433		$	6,403

Current portion of lease obligations (Note 10)	$	2,305		$	1,804
Non-current portion of lease obligations	$	27,128		$	4,599

(1)	Includes $21,638 resulting from a new office lease located in Tustin, California, which commenced on May 1, 2021 (Note 23).

As at June 30, 2021, the carrying value of the Company’s lease obligations was $29,433 (December 31, 2020 – $6,403) and the carrying value of the right-of-use asset was $28,439. During the six months ended June 30, 2021, the Company incurred depreciation expense of $1,473 (2020 – $1,190) on the right-of-use asset.

The present value of the minimum lease payments required for the leases over the next five years and thereafter is as follows:


(in thousands of U.S. dollars) 2021	$	1,193
2022		2,576
2023		3,683
2024		4,004
2025		3,708
2026 and thereafter		21,681

Minimum lease payments obligation		36,845
Imputed interest included in minimum lease payments		(7,412	)

Lease obligations	$	29,433

The current portion of lease obligations is included in amounts payable and accrued liabilities, and the non-current portion of lease obligations is classified as other liabilities.

30 2021 SECOND QUARTER REPORT TRICON RESIDENTIAL

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

for the three and six months ended June 30, 2021

(in thousands of U.S. dollars, except per share amounts and percentage amounts)

26. DIVIDENDS


(in thousands of dollars, except per share amounts)					Common shares outstanding		Dividend amount per share				Total dividend amount				Dividend reinvestment plan (“DRIP”)
Date of declaration	Record date		Payment date		Common shares outstanding		CAD		USD⁽¹⁾		CAD		USD⁽¹⁾		CAD		USD⁽²⁾
May 11, 2021		June 30, 2021		July 15, 2021		209,618,719	$	0.070	$	0.056	$	14,673	$	11,839	$	2,028	$	1,623
March 2, 2021		March 31, 2021		April 15, 2021		193,856,464		0.070		0.056		13,570		10,792		1,858		1,483

											$	28,243	$	22,631	$	3,886	$	3,106

February 24, 2020		March 31, 2020		April 15, 2020		192,772,071	$	0.070	$	0.049	$	13,494	$	9,512	$	512	$	369
May 14, 2020		June 30, 2020		July 15, 2020		192,848,390		0.070		0.051		13,499		9,906		1,773		1,302
August 4, 2020		September 30, 2020		October 15, 2020		193,082,192		0.070		0.052		13,516		10,133		1,978		1,505
November 9, 2020		December 31, 2020		January 15, 2021		193,544,915		0.070		0.055		13,548		10,641		1,780		1,407

											$	54,057	$	40,192	$	6,043	$	4,583

(1)

Dividends are issued and paid in Canadian dollars. For reporting purposes, amounts recorded in equity are translated to U.S. dollars using the daily exchange rate on the date of record. Dividends payable of $11,839 recorded on the Company’s balance sheet are translated to U.S. dollars using the period-end exchange rate.

(2)	Dividends reinvested are translated to U.S. dollars using the daily exchange rate on the date common shares are issued.

For the six months ended June 30, 2021, 304,808 common shares were issued under the DRIP (2020 – 215,329) for a total amount of $2,890 (2020 – $1,581).

27. SHARE CAPITAL

The Company is authorized to issue an unlimited number of common shares. The common shares of the Company do not have par value.

As of June 30, 2021, there were 209,618,719 common shares issued by the Company (December 31, 2020 – 193,544,915), of which 209,245,258 were outstanding (December 31, 2020 – 193,175,802) and 373,461 were reserved to settle restricted share awards in accordance with the Company’s Restricted Share Plan (December 31, 2020 – 369,113) (Note 29).


	June 30, 2021									December 31, 2020
	Number of shares issued (repurchased)			Share capital						Number of shares issued (repurchased)			Share capital
(in thousands of dollars)	Number of shares issued (repurchased)			USD			CAD			Number of shares issued (repurchased)			USD			CAD
Beginning balance		193,175,802		$	1,192,963		$	1,518,845			194,021,133		$	1,201,061		$	1,529,568
Bought deal offering⁽¹⁾		15,480,725			161,842			195,438			—			—			—
Shares issued under DRIP⁽²⁾		304,808			2,890			3,638			584,974			4,388			5,844
Stock options exercised⁽³⁾		21,245			120			160			291,832			1,615			2,133
Deferred share units exercised⁽⁴⁾		173,719			837			1,060			207,040			1,362			1,791
Debentures conversion		93,307			976			1,203			—			—			—
Shares repurchased and reserved for restricted share awards⁽⁵⁾		(4,348	)		(41	)		(52	)		(61,502	)		(541	)		(694	)
Shares repurchased under put rights on common shares issued to acquire Starlight U.S.
Multi-Family (No. 5) Core Fund		—			—			—			(1,867,675	)		(14,922	)		(19,797	)

Ending balance		209,245,258		$	1,359,587		$	1,720,292			193,175,802		$	1,192,963		$	1,518,845

(1)

On June 8, 2021, the Company completed the offering, on a bought deal basis, of 15,480,725 common shares at a price of $10.77 (C$13.00) per common share of the Company for gross proceeds of $166,694 (C$201,249 translated to U.S. dollars using the June 8, 2021 exchange rate). Net proceeds from the offering were $161,842 (C$195,438), which reflects $6,573 of equity issuance costs incurred partially offset by $1,721 of deferred tax recoveries.

(2)	In the first six months of 2021, 304,808 common shares were issued under the DRIP at an average price of $9.48 (C$11.94) per share.

(3)	In the first six months of 2021, 85,000 vested stock options were exercised and settled by issuing 21,245 common shares.

(4)	In the first six months of 2021, 220,130 vested deferred share units (DSUs) were exercised and settled by issuing 173,719 common shares.

(5)	In the first six months of 2021, 4,348 shares were reserved at $9.43 (C$11.96) per share in accordance with the DRIP with respect to restricted share awards granted in prior years.

TRICON RESIDENTIAL 2021 SECOND QUARTER REPORT 31

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

for the three and six months ended June 30, 2021

(in thousands of U.S. dollars, except per share amounts and percentage amounts)

28. EARNINGS PER SHARE

Basic


(in thousands of U.S. dollars, except per share amounts which are in U.S. dollars)	For the three months ended June 30					For the six months ended June 30
	2021		2020			2021			2020
Net income (loss) from continuing operations	$	146,322	$	30,165		$	188,226		$	(16,368	)
Non-controlling interest		805		294			1,376			801

Net income (loss) attributable to shareholders of Tricon from continuing operations		145,517		29,871			186,850			(17,169	)
Net loss attributable to shareholders of Tricon from discontinued operations		—		(12,824	)		(67,562	)		(6,796	)

Net income (loss) attributable to shareholders of Tricon	$	145,517	$	17,047		$	119,288		$	(23,965	)

Weighted average number of common shares outstanding		197,562,437		192,520,545			195,472,977			193,081,442
Adjustments for vested units		1,551,398		1,481,429			1,551,398			1,481,429

Weighted average number of common shares outstanding for basic earnings per share		199,113,835		194,001,974			197,024,375			194,562,871

Basic earnings (loss) per share
Continuing operations	$	0.73	$	0.16		$	0.95		$	(0.09	)
Discontinued operations		—		(0.07	)		(0.34	)		(0.03	)

Basic earnings (loss) per share	$	0.73	$	0.09		$	0.61		$	(0.12	)

Diluted

Diluted earnings per share is calculated by adjusting the weighted average number of shares outstanding to assume conversion of all potentially dilutive shares. The Company has five categories of potentially dilutive shares: stock options (Note 29), restricted shares (Note 27), deferred share units (Note 29), convertible debentures (Note 17) and the preferred units issued by the Affiliate that are exchangeable into the common shares of the Company (Note 18). For the stock options, the number of dilutive shares is based on the number of shares that could have been acquired at fair value with the assumed proceeds, if any, from their exercise (determined using the average market price of the Company’s shares for the period then ended). For restricted shares and deferred share units, the number of dilutive shares is equal to the total number of unvested restricted shares and deferred share units. For the convertible debentures and exchangeable preferred units, the number of dilutive shares is based on the number of common shares into which the elected amount would then be convertible or exchangeable. The number of shares calculated as described above is comparable to the number of shares that would have been issued assuming the vesting of the stock compensation arrangement, the conversion of debentures and the exchange of preferred units.

Stock options, restricted shares and deferred share units

For the three months ended June 30, 2021, the Company’s stock compensation plans resulted in 1,628,675 dilutive share units (2020 – 1,194,152), given that it would be advantageous to the holders to exercise their associated rights to acquire common shares, as the exercise prices of these potential shares are below the Company’s average market share price of $10.84 (C$13.31) for the period. Restricted shares and deferred share units are always considered dilutive, as there is no price to the holder associated with receiving or exercising their entitlement, respectively.

For the six months ended June 30, 2021, the Company’s stock compensation plans resulted in 1,561,881 dilutive share units, given that it would be advantageous to the holders to exercise their associated rights to acquire common shares, as the exercise prices of these potential shares are below the Company’s average market share price of $10.27 (C$12.80) for the period. For the six months ended June 30, 2020, the adjustments for stock compensation were anti-dilutive, as their inclusion would result in a lower diluted loss per share; therefore, the impact of stock compensation was excluded.

Convertible debentures

For the three and six months ended June 30, 2021, the Company’s 2022 convertible debentures were anti-dilutive, as debentures interest expense, net of tax, and the fair value loss on derivative financial instruments would result in increased earnings per share upon conversion. Therefore, in computing the diluted weighted average shares outstanding and the associated earnings per share amounts for the three and six months ended June 30, 2021, the impact of the 2022 convertible debentures was excluded (2020 – excluded).

32 2021 SECOND QUARTER REPORT TRICON RESIDENTIAL

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

for the three and six months ended June 30, 2021

(in thousands of U.S. dollars, except per share amounts and percentage amounts)

Preferred units issued by the Affiliate

For the three and six months ended June 30, 2021, the impact of exchangeable preferred units of Tricon PIPE LLC (Note 18) was anti-dilutive, as the associated interest expense, net of tax, and the fair value loss on derivative financial instruments would result in increased earnings per share upon the exchange of the underlying preferred units. Therefore, in computing the diluted weighted average common shares outstanding and the associated earnings per share amounts for the three and six months ended June 30, 2021, the impact of the preferred units was excluded (2020 – N/A).


(in thousands of U.S. dollars, except per share amounts which are in U.S. dollars)	For the three months ended June 30					For the six months ended June 30
	2021		2020			2021			2020
Net income (loss) attributable to shareholders of Tricon from continuing operations	$	145,517	$	29,871		$	186,850		$	(17,169	)
Adjustment for convertible debentures interest expense – net of tax		—		—			—			—
Adjustment for preferred units interest expense – net of tax		—		—			—			—
Fair value loss on derivative financial instruments and other liabilities		—		—			—			—

Adjusted net income (loss) attributable to shareholders of Tricon from continuing operations		145,517		29,871			186,850			(17,169	)
Net loss attributable to shareholders of Tricon from discontinued operations		—		(12,824	)		(67,562	)		(6,796	)

Adjusted net income (loss) attributable to shareholders of Tricon	$	145,517	$	17,047		$	119,288		$	(23,965	)

Weighted average number of common shares outstanding		199,113,835		194,001,974			197,024,375			194,562,871
Adjustments for stock compensation		1,628,675		1,194,152			1,561,881			—
Adjustments for convertible debentures		—		—			—			—
Adjustments for preferred units		—		—			—			—

Weighted average number of common shares outstanding for diluted earnings per share		200,742,510		195,196,126			198,586,256			194,562,871

Diluted earnings (loss) per share
Continuing operations	$	0.72	$	0.16		$	0.94		$	(0.09	)
Discontinued operations⁽¹⁾		—		(0.07	)		(0.34	)		(0.03	)

Diluted earnings (loss) per share	$	0.72	$	0.09		$	0.60		$	(0.12	)

(1)

For the six months ended June 30, 2021, diluted loss per share from discontinued operations is calculated based on 197,024,375 weighted average number of common shares outstanding. The 1,561,881 units of adjustments for stock compensation are anti-dilutive, as their inclusion would result in a lower diluted loss per share from discontinued operations.

For the three months ended June 30, 2020, diluted loss per share from discontinued operations is calculated based on 194,001,974 weighted average number of common shares outstanding. The 1,194,152 units of adjustments for stock compensation are anti-dilutive, as their inclusion would result in a lower diluted loss per share from discontinued operations.

29. COMPENSATION EXPENSE


	For the three months ended June 30				For the six months ended June 30
(in thousands of U.S. dollars)	2021		2020		2021		2020
Salaries and benefits⁽¹⁾	$	9,750	$	8,620	$	19,567	$	17,045
Annual incentive plan (“AIP”)		5,326		4,073		11,922		6,749
Long-term incentive plan (“LTIP”)		5,177		684		6,514		(9	)

Total compensation expense⁽¹⁾	$	20,253	$	13,377	$	38,003	$	23,785

(1)	Comparative figures have been adjusted to conform with the current period presentation (Note 2).

TRICON RESIDENTIAL 2021 SECOND QUARTER REPORT 33

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

for the three and six months ended June 30, 2021

(in thousands of U.S. dollars, except per share amounts and percentage amounts)

The changes to transactions of the various cash-settled and equity-settled arrangements during the period are detailed in the sections below.

Annual incentive plan


	For the three months ended June 30				For the six months ended June 30
(in thousands of U.S. dollars)	2021		2020		2021		2020
Cash component	$	3,250	$	2,259	$	6,706	$	4,768
Restricted shares, share units and stock options		2,076		1,814		5,216		1,981

Total AIP expense	$	5,326	$	4,073	$	11,922	$	6,749

Cash component

For the six months ended June 30, 2021, the Company recognized $6,706 in cash-based AIP expense (2020 – $4,768), of which $6,500 will be settled in cash in December 2021. The remainder relates to prior-year adjustments that were paid during 2021.

Restricted shares, share units and stock options

For the six months ended June 30, 2021, the Company recognized $5,216 in equity-based AIP expense (2020 – $1,981), of which $827 will be granted in performance share units (PSUs), deferred share units (DSUs), stock options and restricted shares in December 2021. The remaining $4,389 relates to the amortization of PSUs, DSUs, stock options and restricted shares granted in prior years, along with the revaluation of PSUs at each reporting date as the total liability amount is dependent on the Company’s share price.

Long-term incentive plan


	For the three months ended June 30				For the six months ended June 30
(in thousands of U.S. dollars)	2021		2020		2021		2020
Cash component	$	5,083	$	502	$	6,383	$	(2,154	)
Share units and stock options		94		182		131		2,145

Total LTIP expense	$	5,177	$	684	$	6,514	$	(9	)

Cash component

A liability for cash-component LTIP awards is accrued based on expected performance fees that would be generated from the fair value of the assets within each Investment Vehicle but disbursed only when such performance fees are earned and recognized as revenue. Changes in LTIP are primarily caused by changes to fair values of the underlying investments, which result from timing and cash flow changes at the project level of each Investment Vehicle, and changing business conditions.

For the six months ended June 30, 2021, the Company increased its accrual related to cash-component LTIP by $6,383 (2020 – decrease of $2,154) as a result of an increase in expected future performance fees from Investment Vehicles that will be paid to management when cash is received from each investment over time.

The following table summarizes the movement in the LTIP liability:


(in thousands of U.S. dollars)	June 30, 2021			December 31, 2020
Balance, beginning of period	$	17,930		$	21,409
LTIP expense (recovery)		6,383			(2,051	)
Payments		(2,173	)		(1,579	)
Translation adjustment		454			151

Balance, end of period	$	22,594		$	17,930

34 2021 SECOND QUARTER REPORT TRICON RESIDENTIAL

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

for the three and six months ended June 30, 2021

(in thousands of U.S. dollars, except per share amounts and percentage amounts)

Share units and stock options

For the six months ended June 30, 2021, the Company recorded $131 in equity-based LTIP expense (2020 – $2,145), which relates to current-year entitlements as well as DSUs and stock options granted in prior years. LTIP expense related to income from THP1 US (a U.S. residential development investment) is paid in DSUs vesting in equal tranches over a three-year period commencing on the anniversary date of each grant, pursuant to the LTIP as amended on May 6, 2019. LTIP DSU awards prior to this LTIP amendment date vested equally over a five-year period commencing on the anniversary of each grant. Compensation expense related to the stock options is recognized on a graded vesting basis.

Stock option plan

For the six months ended June 30, 2021, the Company recorded a stock option expense of $125 (2020 – $1,857), comprised of $115 of AIP expense (2020 – $40) and $10 of LTIP expense (2020 – $1,817).

The following table summarizes the movement in the stock option plan during the specified periods:


	For the six months ended June 30, 2021					For the year ended December 31, 2020
	Number of options			Weighted average exercise price (CAD)		Number of options			Weighted average exercise price (CAD)
Opening balance – outstanding		2,241,339		$	10.34		4,572,010		$	9.24
Granted		—			—		199,380			11.50
Exercised		(85,000	)		9.59		(644,717	)		7.87
Cancelled		—			—		(1,750,334	)		8.55
Forfeited		—			—		(135,000	)		9.74

Ending balance – outstanding		2,156,339		$	10.37		2,241,339		$	10.34

The following table summarizes the stock options outstanding as at June 30, 2021:


		June 30, 2021
Grant date	Expiration date	Options outstanding		Options exercisable		Exercise price of outstanding options (CAD)
November 14, 2016	November 14, 2023		590,000		590,000	$	8.85
December 15, 2017	December 15, 2024		940,000		940,000		11.35
December 17, 2018	December 17, 2025		426,959		284,634		9.81
December 15, 2020	December 15, 2027		199,380		—		11.50

Total			2,156,339		1,814,634	$	10.37

AIP liability is recorded within amounts payable and accrued liabilities, and the equity component is included in the contributed surplus. The breakdown is presented below.


(in thousands of U.S. dollars)	June 30, 2021		December 31, 2020
Amounts payable and accrued liabilities (Note 10)	$	12,078	$	7,120
Equity – contributed surplus		10,045		8,755

Total AIP	$	22,123	$	15,875

LTIP liability and equity components are presented on the balance sheet as follows:


(in thousands of U.S. dollars)	June 30, 2021		December 31, 2020
LTIP – liability	$	22,594	$	17,930
Equity – contributed surplus		9,010		9,557

Total LTIP	$	31,604	$	27,487

TRICON RESIDENTIAL 2021 SECOND QUARTER REPORT 35

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

for the three and six months ended June 30, 2021

(in thousands of U.S. dollars, except per share amounts and percentage amounts)

30. SEGMENTED INFORMATION

These five reportable segments have been determined by the Company’s chief operating decision-makers.

•

Single-Family Rental business includes owning and operating single-family rental homes primarily within major cities in the U.S. Sun Belt.

•

Multi-Family Rental business includes owning and operating garden-style multi-family rental properties primarily in the U.S. Sun Belt and condominium-quality rental apartments in downtown Toronto. The Selby, a Canadian multi-family rental property, is included within this segment; however, given that it is an equity-accounted investment, its operational results are presented as a single line within this segment. Effective March 31, 2021, Tricon’s investments in U.S. multi-family rental are also presented within income from equity-accounted investments in multi-family rental properties (Note 6).

•

Residential Development business includes designing and developing premier multi-family rental properties in Toronto. Canadian development properties (The James and The Shops of Summerhill) and the Company’s remaining equity-accounted Canadian residential development activities are included in this segment. The segment also includes Tricon’s investments in U.S. residential developments.

•

Any direct property-level operating expenses are included in the net operating income of the single-family rental and multi-family rental businesses to which they belong.

36 2021 SECOND QUARTER REPORT TRICON RESIDENTIAL

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

for the three and six months ended June 30, 2021

(in thousands of U.S. dollars, except per share amounts and percentage amounts)

Inter-segment revenues adjustments

Inter-segment revenues are determined under terms that approximate market value. For the six months ended June 30, 2021, the adjustment to external revenues when determining segmented revenues consists of property management revenues earned from consolidated entities totalling $29,364 (2020 – $21,414), development revenues earned from consolidated entities totalling $782 (2020 – nil) and asset management revenues earned from consolidated entities totalling $272 (2020 – nil), which were eliminated on consolidation to arrive at the Company’s consolidated revenues in accordance with IFRS.


(in thousands of U.S. dollars) For the three months ended June 30, 2021	Single-Family Rental⁽¹⁾			Multi-Family Rental⁽¹⁾		Residential Development⁽¹⁾		Private Funds and Advisory⁽¹⁾		Corporate⁽¹⁾			Consolidated results
Revenue from single-family rental properties	$	105,921		$	—	$	—	$	—	$	—		$	105,921
Direct operating expenses		(35,177	)		—		—		—		—			(35,177	)

Net operating income from single-family rental properties		70,744			—		—		—		—			70,744
Revenue from private funds and advisory services		—			—		—		13,113		—			13,113
Income from equity-accounted investments in multi-family rental properties		—			14,272		—		—		—			14,272
Income from equity-accounted investments in Canadian residential developments		—			—		27		—		—			27
Other income		—			—		330		—		—			330
Income from investments in U.S. residential developments		—			—		8,251		—		—			8,251
Compensation expense		—			—		—		—		(20,253	)		(20,253	)
General and administration expense		—			—		—		—		(9,270	)		(9,270	)
Transaction costs		—			—		—		—		(4,408	)		(4,408	)
Interest expense		—			—		—		—		(37,396	)		(37,396	)
Fair value gain on rental properties		—			—		—		—		254,312			254,312
Fair value loss on derivative financial instruments		—			—		—		—		(41,475	)		(41,475	)
Amortization and depreciation expense		—			—		—		—		(2,849	)		(2,849	)
Realized and unrealized foreign exchange loss		—			—		—		—		(2,710	)		(2,710	)
Net change in fair value of limited partners’ interests in single-family rental business		—			—		—		—		(49,246	)		(49,246	)
Income tax expense		—			—		—		—		(47,120	)		(47,120	)

Net income from continuing operations	$	70,744		$	14,272	$	8,608	$	13,113	$	39,585		$	146,322
Net loss from discontinued operations		—			—		—		—		—			—

Net income	$	70,744		$	14,272	$	8,608	$	13,113	$	39,585		$	146,322

(1)	Financial information for each segment is presented on a consolidated basis.

TRICON RESIDENTIAL 2021 SECOND QUARTER REPORT 37

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

for the three and six months ended June 30, 2021

(in thousands of U.S. dollars, except per share amounts and percentage amounts)


(in thousands of U.S. dollars) For the three months ended June 30, 2020	Single-Family Rental⁽¹⁾			Multi-Family Rental⁽¹⁾			Residential Development⁽¹⁾			Private Funds and Advisory⁽¹⁾		Corporate⁽¹⁾			Consolidated results
Revenue from single-family rental properties	$	91,180		$	—		$	—		$	—	$	—		$	91,180
Direct operating expenses		(29,932	)		—			—			—		—			(29,932	)

Net operating income from single-family rental properties		61,248			—			—			—		—			61,248
Revenue from private funds and advisory services		—			—			—			8,122		—			8,122
Income from equity-accounted investments in multi-family rental properties		—			162			—			—		—			162
Loss from equity-accounted investments in Canadian residential developments		—			—			(7	)		—		—			(7	)
Other income		—			—			108			—		—			108
Income from investments in U.S. residential developments		—			—			3,155			—		—			3,155
Compensation expense		—			—			—			—		(13,377	)		(13,377	)
General and administration expense		—			—			—			—		(7,686	)		(7,686	)
Transaction costs		—			—			—			—		(3,214	)		(3,214	)
Interest expense		—			—			—			—		(31,990	)		(31,990	)
Fair value gain on rental properties		—			—			—			—		32,839			32,839
Fair value loss on derivative financial instruments and other liabilities		—			—			—			—		(450	)		(450	)
Amortization and depreciation expense		—			—			—			—		(2,775	)		(2,775	)
Realized and unrealized foreign exchange gain		—			—			—			—		1,172			1,172
Net change in fair value of limited partners’ interests in single-family rental business		—			—			—			—		(9,314	)		(9,314	)
Income tax expense		—			—			—			—		(7,828	)		(7,828	)

Net income (loss) from continuing operations	$	61,248		$	162		$	3,256		$	8,122	$	(42,623	)	$	30,165
Net loss from discontinued operations		—			(12,824	)		—			—		—			(12,824	)

Net income (loss)	$	61,248		$	(12,662	)	$	3,256		$	8,122	$	(42,623	)	$	17,341

(1)	Financial information for each segment is presented on a consolidated basis.

38 2021 SECOND QUARTER REPORT TRICON RESIDENTIAL

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

for the three and six months ended June 30, 2021

(in thousands of U.S. dollars, except per share amounts and percentage amounts)


(in thousands of U.S. dollars) For the six months ended June 30, 2021	Single-Family Rental⁽¹⁾			Multi-Family Rental⁽¹⁾			Residential Development⁽¹⁾		Private Funds and Advisory⁽¹⁾		Corporate⁽¹⁾			Consolidated results
Revenue from single-family rental properties	$	204,395		$	—		$	—	$	—	$	—		$	204,395
Direct operating expenses		(67,479	)		—			—		—		—			(67,479	)

Net operating income from single-family rental properties		136,916			—			—		—		—			136,916
Revenue from private funds and advisory services		—			—			—		22,043		—			22,043
Income from equity-accounted investments in multi-family rental properties		—			13,815			—		—		—			13,815
Income from equity-accounted investments in Canadian residential developments		—			—			24		—		—			24
Other income		—			—			535		—		—			535
Income from investments in U.S. residential developments		—			—			14,910		—		—			14,910
Compensation expense		—			—			—		—		(38,003	)		(38,003	)
General and administration expense		—			—			—		—		(17,673	)		(17,673	)
Transaction costs		—			—			—		—		(5,637	)		(5,637	)
Interest expense		—			—			—		—		(73,471	)		(73,471	)
Fair value gain on rental properties		—			—			—		—		366,614			366,614
Fair value loss on derivative financial instruments		—			—			—		—		(78,647	)		(78,647	)
Amortization and depreciation expense		—			—			—		—		(5,499	)		(5,499	)
Realized and unrealized foreign exchange loss		—			—			—		—		(2,540	)		(2,540	)
Net change in fair value of limited partners’ interests in single-family rental business		—			—			—		—		(75,387	)		(75,387	)
Income tax expense		—			—			—		—		(69,774	)		(69,774	)

Net income (loss) from continuing operations	$	136,916		$	13,815		$	15,469	$	22,043	$	(17	)	$	188,226
Net loss from discontinued operations		—			(67,562	)		—		—		—			(67,562	)

Net income (loss)	$	136,916		$	(53,747	)	$	15,469	$	22,043	$	(17	)	$	120,664

(1)	Financial information for each segment is presented on a consolidated basis.

TRICON RESIDENTIAL 2021 SECOND QUARTER REPORT 39

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

for the three and six months ended June 30, 2021

(in thousands of U.S. dollars, except per share amounts and percentage amounts)


(in thousands of U.S. dollars) For the six months ended June 30, 2020	Single-Family Rental⁽¹⁾			Multi-Family Rental⁽¹⁾			Residential Development⁽¹⁾			Private Funds and Advisory⁽¹⁾		Corporate⁽¹⁾			Consolidated results
Revenue from single-family rental properties	$	178,851		$	—		$	—		$	—	$	—		$	178,851
Direct operating expenses		(59,583	)		—			—			—		—			(59,583	)

Net operating income from single-family rental properties		119,268			—			—			—		—			119,268
Revenue from private funds and advisory services		—			—			—			15,937		—			15,937
Income from equity-accounted investments in multi-family rental properties		—			217			—			—		—			217
Income from equity-accounted investments in Canadian residential developments		—			—			5,090			—		—			5,090
Other income		—			—			156			—		—			156
Loss from investments in U.S. residential developments		—			—			(76,424	)		—		—			(76,424	)
Compensation expense		—			—			—			—		(23,785	)		(23,785	)
General and administration expense		—			—			—			—		(17,397	)		(17,397	)
Transaction costs		—			—			—			—		(4,445	)		(4,445	)
Interest expense		—			—			—			—		(66,879	)		(66,879	)
Fair value gain on rental properties		—			—			—			—		53,476			53,476
Fair value loss on derivative financial instruments and other liabilities		—			—			—			—		(2,594	)		(2,594	)
Amortization and depreciation expense		—			—			—			—		(5,548	)		(5,548	)
Realized and unrealized foreign exchange loss		—			—			—			—		(1,752	)		(1,752	)
Net change in fair value of limited partners’ interests in single-family rental business		—			—			—			—		(14,765	)		(14,765	)
Income tax recovery		—			—			—			—		3,077			3,077

Net income (loss) from continuing operations	$	119,268		$	217		$	(71,178	)	$	15,937	$	(80,612	)	$	(16,368	)
Net loss from discontinued operations		—			(6,796	)		—			—		—			(6,796	)

Net income (loss)	$	119,268		$	(6,579	)	$	(71,178	)	$	15,937	$	(80,612	)	$	(23,164	)

(1)	Financial information for each segment is presented on a consolidated basis.

40 2021 SECOND QUARTER REPORT TRICON RESIDENTIAL

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

for the three and six months ended June 30, 2021

(in thousands of U.S. dollars, except per share amounts and percentage amounts)

31. RELATED PARTY TRANSACTIONS AND BALANCES

In the normal course of operations, the Company executes transactions on market terms with related parties that have been measured at the exchange value and are recognized in the consolidated financial statements, including, but not limited to: asset management fees, performance fees and incentive distributions; loans, interest and non-interest bearing deposits; purchase and sale agreements; capital commitments to Investment Vehicles; and development of residential real estate assets. In connection with the Investment Vehicles, the Company has unfunded capital commitments of $264,019 as at June 30, 2021. Transactions and balances between consolidated entities are fully eliminated upon consolidation. Transactions and balances with unconsolidated structured entities are disclosed in Note 18.

Transactions with related parties

The following table lists the related party balances included within the condensed interim consolidated financial statements.


	For the three months ended June 30					For the six months ended June 30
(in thousands of U.S. dollars)	2021		2020			2021		2020
Revenue from private funds and advisory services	$	13,113	$	8,122		$	22,043	$	15,937
Income from equity-accounted investments in multi-family rental properties		14,272		162			13,815		217
Income (loss) from equity-accounted investments in Canadian residential developments		27		(7	)		24		5,090
Income (loss) from investments in U.S. residential developments		8,251		3,155			14,910		(76,424	)

Net income (loss) recognized from related parties	$	35,663	$	11,432		$	50,792	$	(55,180	)

Balances arising from transactions with related parties

The items set out below are included on various line items in the Company’s condensed interim consolidated financial statements.


(in thousands of U.S. dollars)	June 30, 2021		December 31, 2020
Receivables from related parties included in amounts receivable
Contractual fees and other receivables from investments managed	$	14,742	$	8,855
Employee relocation housing loans⁽¹⁾		1,974		2,001
Loan receivables from portfolio investments		8,814		13,937
Annual incentive plan⁽²⁾		22,123		15,875
Long-term incentive plan⁽²⁾		31,604		27,487
Dividends payable		452		440
Other payables to related parties included in amounts payable and accrued liabilities		237		972

(1)	The employee relocation housing loans are non-interest bearing for a term of ten years, maturing between 2024 and 2028.

(2)	Balances from compensation arrangements are due to employees deemed to be key management of the Company.

The receivables are unsecured and non-interest bearing. There are no provisions recorded against receivables from related parties at June 30, 2021 (December 31, 2020 – nil).

TRICON RESIDENTIAL 2021 SECOND QUARTER REPORT 41

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

for the three and six months ended June 30, 2021

(in thousands of U.S. dollars, except per share amounts and percentage amounts)

32. FINANCIAL RISK MANAGEMENT

Market risk

Financial instruments held by the Company that are subject to market risk include other financial assets, borrowings and derivative instruments such as interest rate cap contracts.

Interest rate risk

The Company’s assets largely consist of long-term interest-sensitive physical real estate assets. Accordingly, the Company’s financial liabilities consist primarily of long-term fixed-rate debt or floating-rate debt. These financial liabilities are recorded at their amortized cost. The Company also holds interest rate caps to limit its exposure to increases in interest rates on floating-rate debt and sometimes holds interest rate contracts to lock in fixed rates on anticipated future debt issuances and as an economic hedge against the changes in the value of long-term interest-sensitive physical real estate assets that have not been otherwise matched with fixed-rate debt. Borrowings issued at variable rates expose the Company to cash flow interest rate risk. To limit its exposure to interest rate risk, the Company has a mixed portfolio of fixed-rate and variable-rate debt, with $2,482,710 in fixed-rate debt and $816,235 in variable-rate debt as at June 30, 2021. If interest rates had been 50 basis points higher or lower, with all other variables held constant, interest expense would have increased (decreased) by:


For the six months ended June 30 (in thousands of U.S. dollars)	2021					2020
	50 bps increase		50 bps decrease			50 bps increase		50 bps decrease
Interest expense	$	921	$	(75	)	$	3,274	$	(3,274	)

Foreign currency risk

42 2021 SECOND QUARTER REPORT TRICON RESIDENTIAL

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

for the three and six months ended June 30, 2021

(in thousands of U.S. dollars, except per share amounts and percentage amounts)

The impact of a 1% increase or decrease in the Canadian dollar exchange rate would result in the following impacts to assets and liabilities:


For the six months ended June 30	2021					2020
(in thousands of U.S. dollars)	1% increase		1% decrease			1% increase		1% decrease
Assets
Equity-accounted investments in multi-family rental properties	$	198	$	(198	)	$	189	$	(189	)
Equity-accounted investments in Canadian residential developments		935		(935	)		609		(609	)
Canadian development properties		1,184		(1,184	)		1,001		(1,001	)
Investments in U.S. residential developments		3		(3	)		13		(13	)

	$	2,320	$	(2,320	)	$	1,812	$	(1,812	)

Liabilities
Debt		466		(466	)		766		(766	)

	$	466	$	(466	)	$	766	$	(766	)

Foreign exchange volatility is already embedded in the fair value of derivative financial instruments (Note 19), and therefore is excluded from the sensitivity calculations above.

Other price risk

Credit risk

Credit risk is the risk that one party to a financial instrument will cause financial loss for the other party by failing to discharge an obligation. The Company has no significant concentrations of credit risk and its exposure to credit risk arises primarily through loans and receivables which are due primarily from associates. At June 30, 2021, the Company’s exposure to credit risk arising from its investment in debt instruments was $8,814 (December 31, 2020 – $13,937). Through the equity portion of its investments, the Company is also indirectly exposed to credit risk arising on loans advanced by investees to individual real estate development projects.

Credit risk also arises from the possibility that residents may experience financial difficulty and be unable to fulfill their lease commitments. A provision for bad debt (or expected credit loss) is taken for all anticipated collectability risks. The Company also manages credit risk by performing resident underwriting due diligence during the leasing process. As at June 30, 2021, the Company had rent receivables of $3,300 (December 31, 2020 – $4,274), net of bad debt, which adequately reflects the Company’s credit risk.

Liquidity risk

TRICON RESIDENTIAL 2021 SECOND QUARTER REPORT 43

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

for the three and six months ended June 30, 2021

(in thousands of U.S. dollars, except per share amounts and percentage amounts)

The following tables present the contractual maturities of the Company’s financial liabilities at June 30, 2021 and December 31, 2020, excluding remaining unamortized deferred financing fees and debt discount:


(in thousands of U.S. dollars) As at June 30, 2021	Due on demand and within the year		From 1 to 2 years		From 3 to 4 years		From 5 years and later		Total
Liabilities
Debt⁽¹⁾	$	24,704	$	1,248,467	$	699,167	$	1,326,607	$	3,298,945
Other liabilities		—		5,147		7,712		21,681		34,540
Limited partners’ interests in single-family rental business		—		—		—		559,893		559,893
Convertible debentures		—		171,424		—		—		171,424
Derivative financial instruments		—		14,681		—		108,562		123,243
Due to Affiliate		—		—		—		300,000		300,000
Amounts payable and accrued liabilities		98,291		—		—		—		98,291
Resident security deposits		48,414		—		—		—		48,414
Dividends payable		11,839		—		—		—		11,839

Total	$	183,248	$	1,439,719	$	706,879	$	2,316,743	$	4,646,589

(1)	The contractual maturities reflect the maturity dates after all extensions have been exercised. The Company intends to exercise the extension options available on all loans.


(in thousands of U.S. dollars) As at December 31, 2020	Due on demand and within the year		From 1 to 2 years		From 3 to 4 years		From 5 years and later		Total
Liabilities
Debt⁽¹⁾	$	274,526	$	1,236,540	$	1,325,709	$	1,327,292	$	4,164,067
Other liabilities		—		3,122		1,463		551		5,136
Limited partners’ interests in single-family rental business		—		—		—		356,305		356,305
Convertible debentures		—		172,400		—		—		172,400
Derivative financial instruments⁽²⁾		—		—		—		45,494		45,494
Due to Affiliate		—		—		—		300,000		300,000
Amounts payable and accrued liabilities		98,290		—		—		—		98,290
Resident security deposits		45,157		—		—		—		45,157
Dividends payable		10,641		—		—		—		10,641

Total	$	428,614	$	1,412,062	$	1,327,172	$	2,029,642	$	5,197,490

(1)	The contractual maturities reflect the maturity dates after all extensions have been exercised. The Company intends to exercise the extension options available on all loans.

(2)	Includes the exchange/prepayment option related to Due to Affiliate (Note 18). Excludes the conversion and redemption options related to the 2022 convertible debentures as the fair value is an asset to the Company as at December 31, 2020.

44 2021 SECOND QUARTER REPORT TRICON RESIDENTIAL

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

for the three and six months ended June 30, 2021

(in thousands of U.S. dollars, except per share amounts and percentage amounts)

The future repayments of principal and interest on financial liabilities are as follows, excluding remaining unamortized deferred financing fees and debt discount:


(in thousands of U.S. dollars) As at June 30, 2021	Within the year		From 1 to 2 years		From 3 to 4 years		From 5 years and later		Total
Principal
Debt^(1),(2)	$	24,704	$	1,248,467	$	699,167	$	1,326,607	$	3,298,945
Convertible debentures		—		171,424		—		—		171,424
Due to Affiliate		—		—		—		300,000		300,000
Interest
Debt⁽¹⁾		47,568		136,585		84,711		13,822		282,686
Convertible debentures		4,957		4,957		—		—		9,914
Due to Affiliate⁽³⁾		12,938		34,500		34,500		153,271		235,209

Total	$	90,167	$	1,595,933	$	818,378	$	1,793,700	$	4,298,178

(1)	Certain mortgages’ principal and interest repayments were translated to U.S. dollars at the period-end exchange rate.

(2)	The contractual maturities reflect the maturity dates after all extensions have been exercised. The Company intends to exercise the extension options available on all loans.

(3)	Reflects the contractual maturity date of September 3, 2032.

The details of the net liabilities are shown below:


(in thousands of U.S. dollars)	June 30, 2021			December 31, 2020
Cash	$	84,770		$	55,158
Amounts receivable		29,742			25,593
Prepaid expenses and deposits		15,038			13,659

Current assets		129,550			94,410
Amounts payable and accrued liabilities		98,291			98,290
Resident security deposits		48,414			45,157
Dividends payable		11,839			10,641
Current portion of long-term debt		25,000			274,190
Convertible debentures		167,513			—
Derivative financial instruments		14,681			—

Current liabilities		365,738			428,278

Net current liabilities	$	(236,188	)	$	(333,868	)

During the six months ended June 30, 2021, the change in the Company’s liquidity resulted in a working capital deficit of $236,188 (December 31, 2020 – deficit of $333,868). The working capital deficit is primarily due to the convertible debentures of $167,513 which mature on March 31, 2022. Subsequent to quarter-end, on July 30, 2021, the Company gave notice to debenture holders of its intention to redeem in full all of the outstanding balance of 2022 convertible debentures, and has elected to satisfy the redemption price by the issuance of common shares of the Company (Note 36). 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. In addition, the Company has set aside cash in separate bank accounts, presented as non-current restricted cash on the consolidated balance sheets, to settle its obligations for resident security deposits.

As of June 30, 2021, the outstanding amount under the corporate credit facility was $14,000 (December 31, 2020 – $26,000) and $486,000 of the corporate credit facility remained available to the Company. During the six months ended June 30, 2021, the Company received distributions of $30,088 (2020 – $58,757) from its investments.

TRICON RESIDENTIAL 2021 SECOND QUARTER REPORT 45

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

for the three and six months ended June 30, 2021

(in thousands of U.S. dollars, except per share amounts and percentage amounts)

33. CAPITAL MANAGEMENT

As of June 30, 2021, the Company was in compliance with all financial covenants in its debt facilities (Note 16).

34. SUPPLEMENTARY CASH FLOW DETAILS

The details of the adjustments for non-cash items from continuing operations presented in operating activities of the cash flow statement are shown below:


	For the three months ended June 30						For the six months ended June 30
(in thousands of U.S. dollars)	2021			2020			2021			2020
Fair value gain on rental properties (Note 4)	$	(254,312	)	$	(32,839	)	$	(366,614	)	$	(53,476	)
Fair value loss on derivative financial instruments and other liabilities (Note 19)		41,475			450			78,647			2,594
(Income) loss from investments in U.S. residential developments (Note 8)		(8,251	)		(3,155	)		(14,910	)		76,424
Income from equity-accounted investments in multi-family rental properties (Note 5)		(14,272	)		(162	)		(13,815	)		(217	)
(Income) loss from equity-accounted investments in Canadian residential developments (Note 6)		(27	)		7			(24	)		(5,090	)
Amortization and depreciation expense (Notes 22, 23)		2,849			2,775			5,499			5,548
Deferred income taxes (Note 12)		47,104			8,114			114,231			(2,853	)
Net change in fair value of limited partners’ interests in single-family rental business (Note 24)		49,246			9,314			75,387			14,765
Amortization of debt discount and financing costs (Note 20)		4,129			2,098			8,043			4,141
Interest on lease obligation (Note 20)		247			84			346			165
Long-term incentive plan (Note 29)		5,177			684			6,514			(9	)
Annual incentive plan (Note 29)		5,326			4,073			11,922			6,749
Unrealized foreign exchange gain		(4,914	)		(4,629	)		(4,796	)		(7,370	)

Adjustments for non-cash items from continuing operations	$	(126,223	)	$	(13,186	)	$	(99,570	)	$	41,371

The following table presents the changes in non-cash working capital items from continuing operations for the periods ended June 30, 2021 and June 30, 2020.


	For the three months ended June 30						For the six months ended June 30
(in thousands of U.S. dollars)	2021			2020			2021			2020
Amounts receivable	$	11,061		$	(4,846	)	$	(4,149	)	$	(8,799	)
Prepaid expenses and deposits		2,703			7,450			(1,379	)		(11,994	)
Resident security deposits		1,480			8,661			3,257			42,998
Amounts payable and accrued liabilities		22,199			13,225			1			67,049
Non-cash working capital items acquired on deemed acquisition⁽¹⁾		—			—			—			(69,584	)
Non-cash working capital items acquired with Canadian development properties (Note 7)		—			(4,878	)		—			(4,878	)
Deduct non-cash working capital items from discontinued operations		(13,958	)		(3,153	)		(29,385	)		(13,709	)

Changes in non-cash working capital items from continuing operations	$	23,485		$	16,459		$	(31,655	)	$	1,083

(1)

The comparative figure has been adjusted to conform with the current period presentation to exclude $18,634 of non-cash working capital items acquired on the deemed acquisition of the U.S. multi-family rental business on January 1, 2020, which is now presented as discontinued operations (Notes 2 and 3).

46 2021 SECOND QUARTER REPORT TRICON RESIDENTIAL

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

for the three and six months ended June 30, 2021

(in thousands of U.S. dollars, except per share amounts and percentage amounts)

35. FINANCING ACTIVITIES


						Non-cash changes
(in thousands of U.S. dollars)	As at December 31, 2020		Cash flows			Foreign exchange movement		Fair value changes		Additions/ (Dispositions)⁽¹⁾			Other⁽²⁾			As at June 30, 2021
SFR JV-1 subscription facility	$	115,664	$	(91,665	)	$	—	$	—	$	—		$	252		$	24,251
SFR JV-1 warehouse credit facility		95,950		397,061			—		—		—			499			493,510
Warehouse credit facility		10,110		(67	)		—		—		—			85			10,128
Securitization debt 2017-1		459,530		(2,022	)		—		—		—			—			457,508
Term loan		374,745		(154,051	)		—		—		—			—			220,694
SFR JV-HD subscription facility		—		29,856			—		—		—			27			29,883
Securitization debt 2017-2		362,683		(1,105	)		—		—		—			152			361,730
SFR JV-HD warehouse credit facility⁽⁴⁾		—		(1,567	)		—		—		—			44			(1,523	)
Securitization debt 2018-1		311,913		(285	)		—		—		—			71			311,699
SFR JV-1 securitization debt 2019-1		326,767		(113	)		—		—		—			635			327,289
SFR JV-1 securitization debt 2020-1		543,803		(243	)		—		—		—			871			544,431
Securitization debt 2020-2		432,817		(329	)		—		—		—			561			433,049
Term loan 2⁽³⁾		96,077		(96,077	)		—		—		—			—			—
U.S. multi-family credit facility⁽¹⁾		109,890		(109,890	)		—		—		—			—			—
Mortgage tranche A⁽¹⁾		160,090		—			—		—		(160,090	)		—			—
Mortgage tranche B⁽¹⁾		400,225		—			—		—		(400,225	)		—			—
Mortgage tranche C⁽¹⁾		240,135		—			—		—		(240,135	)		—			—
Land loan		21,991		—			599		—		—			—			22,590
Mortgage		12,463		(210	)		338		—		—			6			12,597
Vendor take-back (VTB) loan 2021⁽³⁾		25,564		(26,271	)		707		—		—			—			—
Corporate credit facility		26,000		(12,000	)		—		—		—			—			14,000
Corporate office mortgages		11,089		(155	)		302		—		—			—			11,236
2022 convertible debentures⁽⁵⁾		165,956		—			—		—		—			1,557			167,513
Due to Affiliate		251,647		—			—		—		—			2,307			253,954
Derivative financial instruments^(6),(7)		45,494		—			—		78,590		—			(841	)		123,243
Limited partners’ interests in single-family rental business		356,305		128,201			—		75,387		—			—			559,893
Lease obligations		6,403		(1,173	)		—		—		23,857			346			29,433

Total liabilities from financing activities	$	4,963,311	$	57,895		$	1,946	$	153,977	$	(776,593	)	$	6,572		$	4,407,108

(1)

On March 31, 2021, U.S. multi-family rental mortgages totalling $800,450 were deconsolidated from the Company’s balance sheet in connection with the sale of an 80% interest in the U.S. multi-family rental portfolio (Note 3). The Company fully repaid the U.S. multi-family credit facility with the proceeds of the syndication, which is presented within change in cash from discontinued operations on the consolidated statement of cash flow.

(2)	Includes amortization of transaction costs and debt discount and interest on lease obligations.

(3)	Term loan 2 and the vendor take-back (VTB) loan 2021 were fully repaid during the year.

(4)	On May 12, 2021, SFR JV-HD entered into a new warehouse credit facility agreement with a total commitment value of $375,000. There was no balance drawn on the facility as at June 30, 2021.

(5)	Includes the amortization of debentures discount and issuance costs, net of the conversion of $976 principal amount of 2022 convertible debentures into common shares.

(6)	The embedded derivative on the 2022 convertible debentures was an asset of $841 as at December 31, 2020 and a liability of $14,681 as at June 30, 2021; as a result, the balance was reclassified from asset to liability on the consolidated balance sheet.

(7)	The interest rate cap component included in the derivative financial instruments was an asset of $30 as at June 30, 2021 and as a result is excluded from the above table and classified as an asset on the consolidated balance sheet.

TRICON RESIDENTIAL 2021 SECOND QUARTER REPORT 47

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

for the three and six months ended June 30, 2021

(in thousands of U.S. dollars, except per share amounts and percentage amounts)


						Non-cash changes
(in thousands of U.S. dollars)	As at December 31, 2019		Cash flows			Foreign exchange movement			Fair value changes		Additions			Other⁽¹⁾		As at June 30, 2020
SFR JV-1 subscription facility	$	185,161	$	(4,900	)	$	—		$	—	$	—		$	251	$	180,512
SFR JV-1 warehouse credit facility		209,998		88,792			—			—		—			733		299,523
Term loan 2		96,077		—			—			—		—			—		96,077
Warehouse credit facility		29,864		(1,124	)		—			—		—			—		28,740
Securitization debt 2016-1		357,478		(3,027	)		—			—		—			—		354,451
Securitization debt 2017-1		461,301		(957	)		—			—		—			—		460,344
Term loan		375,000		—			—			—		—			—		375,000
Securitization debt 2017-2		363,357		(433	)		—			—		—			72		362,996
Securitization debt 2018-1		313,093		(550	)		—			—		—			151		312,694
SFR JV-1 securitization debt 2019-1		325,511		—			—			—		—			622		326,133
SFR JV-1 securitization debt 2020-1		—		—			—			—		—			—		—
Securitization debt 2020-2		—		—			—			—		—			—		—
U.S. multi-family credit facility		115,890		(3,000	)		—			—		—			—		112,890
Mortgage tranche A		160,090		—			—			—		—			—		160,090
Mortgage tranche B		400,225		—			—			—		—			—		400,225
Mortgage tranche C		240,135		—			—			—		—			—		240,135
Vendor take-back (VTB) loan 2020		—		—			—			—		10,314			—		10,314
Land loan		10,779		—			(505	)		—		10,272			—		20,546
Vendor take-back (VTB) loan 2021		—		—			—			—		23,805			—		23,805
Mortgage		3,149		(184	)		(9	)		—		8,870			1		11,827
Corporate credit facility		297,000		32,500			—			—		—			—		329,500
Corporate office mortgages		11,153		(221	)		(436	)		—		—			—		10,496
2022 convertible debentures		161,311		—			—			—		—			2,311		163,622
Due to Affiliate		—		—			—			—		—			—		—
Derivative financial instruments⁽²⁾		657		—			—			1,555		(28	)		—		2,184
Limited partners’ interests in single-family rental business		285,774		15,559			—			14,765		—			—		316,098
Lease obligations		6,524		(1,205	)		—			—		565			165		6,049
Other liabilities		13,375		(13,148	)		—			1,039		508			—		1,774

Total liabilities from financing activities	$	4,422,902	$	108,102		$	(950	)	$	17,359	$	54,306		$	4,306	$	4,606,025

(1)	Includes amortization of transaction costs and debt discount and interest on lease obligations.

(2)	Represents the embedded derivative liability on the 2022 convertible debentures.

48 2021 SECOND QUARTER REPORT TRICON RESIDENTIAL

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

for the three and six months ended June 30, 2021

(in thousands of U.S. dollars, except per share amounts and percentage amounts)

36. SUBSEQUENT EVENTS

SFR JV-2

On July 19, 2021, the Company announced a new single-family rental joint venture (“SFR JV-2”) with three institutional investors to acquire single-family rental homes targeting the middle-market demographic in the U.S. Sun Belt. The joint venture will have an initial equity capitalization of $1,400,000, with the partners having the option to increase their commitment to $1,550,000, including Tricon’s co-investment of $450,000.

2022 convertible debentures

On July 30, 2021, the Company gave notice to debenture holders of its intention to redeem in full all of the outstanding balance of 5.75% extendible convertible unsecured subordinated debentures (the “2022 convertible debentures”) effective September 9, 2021, and has elected to satisfy the redemption price by the issuance of common shares of the Company. As at July 30, 2021, the outstanding 2022 convertible debentures are convertible into 16,388,528 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 (equivalent to C$13.02 as of July 30, 2021).

Quarterly dividend

On August 10, 2021, the Board of Directors of the Company declared a dividend of seven cents per common share in Canadian dollars payable on or after October 15, 2021 to shareholders of record on September 30, 2021.

TRICON RESIDENTIAL 2021 SECOND QUARTER REPORT 49

LOGO

Imagine a world where housing unlocks life’s potential 7 St. Thomas Street, Suite 801 Toronto, Ontario M5S 2B7 T 416 925 7228 F 416 925 7964 www.triconresidential.com

Exhibit 4.5

LOGO

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	5
	1.3	Environmental, Social and Governance	11

2.	HIGHLIGHTS		13

3.	CONSOLIDATED FINANCIAL RESULTS		16

	3.1	Review of income statements	16
	3.2	Review of selected balance sheet items	26
	3.3	Subsequent events	30

4.	OPERATING RESULTS OF BUSINESSES		32

	4.1	Single-Family Rental	34
	4.2	Multi-Family Rental	46
	4.3	Residential Development	49
	4.4	Private Funds and Advisory	53

5.	SUMMARY OF NON-IFRS SEGMENT INFORMATION		57

6.	LIQUIDITY AND CAPITAL RESOURCES		69

	6.1	Financing strategy	69
	6.2	Liquidity	69
	6.3	Capital resources	69

7.	OPERATIONAL KEY PERFORMANCE INDICATORS		70

	7.1	Defined terms	70
	7.2	Assets under management	71

8.	ACCOUNTING ESTIMATES AND POLICIES, CONTROLS AND PROCEDURES, AND RISK ANALYSIS		72

	8.1	Accounting estimates and policies	72
	8.2	Controls and procedures	72
	8.3	Transactions with related parties	72
	8.4	Dividends	72
	8.5	Compensation incentive plans	72
	8.6	Risk definition and management	72

9.	HISTORICAL FINANCIAL INFORMATION		73

MANAGEMENT’S DISCUSSION AND ANALYSIS

for the three and six months ended June 30, 2021

NON-IFRS MEASURES AND FORWARD-LOOKING STATEMENTS

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; 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. and Canadian multi- family rental apartments; and the ongoing impact of the most recent Texas winter storms and 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”) and its 2020 annual MD&A (as supplemented by Section 8.6 of this document), both of which are 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 8.6 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.

TRICON RESIDENTIAL 2021 SECOND QUARTER REPORT 1

MANAGEMENT’S DISCUSSION AND ANALYSIS

for the three and six months ended June 30, 2021

Market and industry data

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 2021 SECOND QUARTER REPORT TRICON RESIDENTIAL

LOGO

INTRODUCTION

MANAGEMENT’S DISCUSSION AND ANALYSIS

for the three and six months ended June 30, 2021

1. INTRODUCTION

This Management’s Discussion and Analysis (“MD&A”) is dated as of August 10, 2021, the date it was approved by the Board of Directors of Tricon Residential Inc. (“Tricon”, “us”, “we” or the “Company”), and reflects all material events up to that date. It should be read in conjunction with the Company’s unaudited condensed interim consolidated financial statements and related notes for the three and six months ended June 30, 2021, which were prepared using International Financial Reporting Standards (“IFRS”) accounting policies consistent with the Company’s audited annual consolidated financial statements for the year ended December 31, 2020.

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

1.1 Vision and guiding principles

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.

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 2021 SECOND QUARTER REPORT TRICON RESIDENTIAL

MANAGEMENT’S DISCUSSION AND ANALYSIS

for the three and six months ended June 30, 2021

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. This is why Our People and Our Residents are two of the key priorities in our ESG principles (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 which it aims to achieve by 2022. 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 8.6).

•

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 leverage target of 50–55% net debt to assets.

1.2 Business objectives and strategy

Tricon is an owner and operator of a growing portfolio of approximately 33,000 single-family rental homes and multi-family rental apartments in the United States and Canada with a primary focus on the U.S. Sun Belt. 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. As at June 30, 2021, about 95% of the Company’s real estate assets are stabilized rental housing assets, and the remaining 5% are invested in residential development projects.

LOGO

(Based on the fair value of single-family homes, equity-accounted investments in multi-family rental properties, equity-accounted investments in Canadian residential developments, Canadian development properties (net of debt) and investments in U.S. residential developments.)

TRICON RESIDENTIAL 2021 SECOND QUARTER REPORT 5

MANAGEMENT’S DISCUSSION AND ANALYSIS

for the three and six months ended June 30, 2021

Through its fully integrated operating platform, the Company earns (i) rental income and ancillary revenue from single-family rental properties, (ii) income from its investments in multi-family rental properties and residential developments, and (iii) fees from managing third-party capital co-invested in its real estate asset.

LOGO

*	Excludes 47 single-family rental homes held for sale.

**	Includes estimated Canadian residential development units based on development plans as of June 30, 2021.

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 over seven million U.S. renter households (source: U.S. Census Bureau). The Company defines the middle-market cohort as those households earning between $70,000 and $110,000 per year (upsized from $60,000 to $100,000 per year to incorporate geographic expansion and market changes) and with monthly rental payments of $1,300 to $2,100 (previously, $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 is focused on the Greater Toronto Area, a region that is 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.

6 2021 SECOND QUARTER REPORT TRICON RESIDENTIAL

MANAGEMENT’S DISCUSSION AND ANALYSIS

for the three and six months ended June 30, 2021

LOGO

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 24,961 homes (excluding 47 homes held for sale) in 19 markets across ten states as of June 30, 2021. 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.

LOGO

TRICON RESIDENTIAL 2021 SECOND QUARTER REPORT 7

MANAGEMENT’S DISCUSSION AND ANALYSIS

for the three and six months ended June 30, 2021

Multi-Family Rental

In the U.S., Tricon invests in, manages and operates 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. Tricon holds these assets in partnerships with institutional investors who have an investment bias towards long-term ownership and stable recurring cash flows. The institutional investors pay Tricon asset management fees and possibly performance fees, enabling the Company to enhance its return on investment.

Subsequent to quarter-end, the Company assumed property management responsibilities for the majority of its U.S. multi-family properties and plans to complete the full internalization of the property management function for the entire portfolio by the end of the third quarter of 2021. This internalization is expected to produce additional synergies by leveraging Tricon’s existing technology, infrastructure and centralized property management functions and will enable the Company to earn property management fees. 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-suite 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.

LOGO

Residential Development

(i) Canadian Class A multi-family rental apartments:

Tricon is one of the most active multi-family rental developers in downtown Toronto with nine projects under development, totalling approximately 4,535 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.

8 2021 SECOND QUARTER REPORT TRICON RESIDENTIAL

MANAGEMENT’S DISCUSSION AND ANALYSIS

for the three and six months ended June 30, 2021

(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 the first half of 2021 according to RCLCO Real Estate Consulting.

LOGO

(Residential development investments of $337.0 million represent 5% of Tricon’s real estate asset value. The investment balance includes Tricon’s equity-accounted investments in Canadian residential developments, Canadian development properties (net of debt) and investments in U.S. residential developments as at June 30, 2021. Refer to Section 4.3.)

TRICON RESIDENTIAL 2021 SECOND QUARTER REPORT 9

MANAGEMENT’S DISCUSSION AND ANALYSIS

for the three and six months ended June 30, 2021

Private Funds and Advisory

Through its Private Funds and Advisory (“PF&A”) business, Tricon earns fees from managing third-party capital 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 $4.3 billion of third-party capital (of total AUM of $9.9 billion) across its single-family rental, multi-family rental and residential development business segments.

Tricon manages third-party capital for eleven of the top 100 largest institutional real estate investors in the world (source: “PERE Global Investor 100” ranking, October 2020). In 2021, Tricon ranked 58th globally and second in Canada (compared to 65th and second, respectively, in 2020) among global real estate investment managers based on the institutional equity they raised since 2016 (source: “2021 PERE 100” manager ranking, June 2021). In aggregate, the Company has approximately 20 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.

(ii)

(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 has commenced the internalization of property management for its U.S. multi-family rental portfolio, which is expected to be completed in the latter half of 2021. 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 SIX MONTHS ENDED JUNE 30, 2021*

LOGO

*Certain asset management fees and 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 six months ended June 30, 2021.

10 2021 SECOND QUARTER REPORT TRICON RESIDENTIAL

MANAGEMENT’S DISCUSSION AND ANALYSIS

for the three and six months ended June 30, 2021

1.3 Environmental, Social and Governance

Environmental, Social and Governance (“ESG”) principles have guided Tricon throughout its 33-year history of delivering business excellence. In our inaugural ESG Roadmap, published in 2020, we identified the following five strategic priorities to guide our future ESG commitments:

Our People: Tricon has long maintained a “People First” culture, where our priority is to take care of our employees and enrich our residents’ lives. Diversity and inclusion are part of the character of our Company, and we recognize the increasing importance of being guided by these values. They strengthen our culture, unite our teams, and inspire us to lead and advocate for a better shared future. In recognition of the diverse communities we support, Tricon kicked off the month of June supporting LGBTQ Pride Month celebrations and observed Juneteenth as a Company-wide paid holiday on June 19th. Additionally, on National Indigenous Peoples Day on June 21st, Tricon celebrated the groundbreaking of the first Indigenous Hub in Toronto. The Hub will be the new home for Anishnawbe Health Toronto and Miziwe Biik Aboriginal Employment and Training, and will integrate education, childcare, and healing into one purpose-built Indigenous community centre.

Our Residents: We aspire to build communities that make a real difference in the lives of our residents and foster a true sense of connectivity, growth and prosperity. In 2019, prior to the pandemic, Tricon underwrote a Resident Emergency Assistance Fund which provides grants to select residents that have fallen on hard times. In 2020, Tricon doubled the program’s funding to help more residents address the challenges experienced during COVID-19. In the same spirit of going above and beyond for our residents, Tricon further governed its rent increases on renewals, including giving no increases during the height of the COVID-19 crisis. These measures were in addition to waiving late and early termination fees, offering flexible payment plans and relocation programs, and curtailing evictions, even when not required by government moratoriums. Tricon is developing a resident financial literacy platform to raise resident credit scores and savings rates, lower debt, and improve banking relationships.

Our Innovation: Tricon is firmly committed to leveraging innovative technologies and housing solutions 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. Innovative technologies are deployed throughout our operation, from proprietary acquisition software and smart home technologies to self-showings, virtual move-ins and an automated leasing process for our residents.

Our Impact: Tricon is committed to making investments and operational decisions that reduce our environmental impact and enhance our projects’ sustainability and resource efficiency. Our focus remains on investigating and investing in new technologies, materials, design principles, and renovation processes that reduce energy and water consumption, minimize waste, source sustainable materials, and protect biodiversity.

Our Governance: Tricon is firmly committed to continuously improving our governance practices and procedures to manage any new or evolving risks effectively. We also recognize the value and importance of having diverse perspectives across our organization and in our boardroom. Tricon is pleased to announce the appointment of Ms. Renee Lewis Glover to its Board of Directors, effective July 13, 2021. Ms. Glover has been honoured by HousingWire as one of 40 Women of Influence in Real Estate. With this new appointment, the Company has met or exceeded our commitments to both the 30% Club Canada campaign and BlackNorth Initiative’s CEO pledge to increase gender diversity and Black, Indigenous and people of colour (“BIPOC”) representation at board and senior management levels. Tricon remains committed to taking demonstrable and positive action to create a strong and healthy culture and to acknowledge and counter systemic anti-Black racism.

As part of its continuing effort to maintain high standards of transparency and disclosure, Tricon completed its inaugural Global Real Estate Sustainability Benchmark (“GRESB”) assessment at the end of June, the results of which will underpin the development and execution of our ESG strategy. Tricon also achieved a major milestone by publishing its inaugural ESG annual report on May 18th, 2021. The report is available on our website at www.triconresidential.com/investors/sustainability/ and provides details of our key ESG commitments, initiatives, and performance progress.

TRICON RESIDENTIAL 2021 SECOND QUARTER REPORT 11

LOGO

2
HIGHLIGHTS

MANAGEMENT’S DISCUSSION AND ANALYSIS

for the three and six months ended June 30, 2021

2. HIGHLIGHTS

The following section presents highlights for the quarter on a consolidated and proportionate basis.

On March 31, 2021, the Company completed the syndication of its U.S. multi-family rental subsidiary to two institutional investors, which resulted in a disposition of 80% of the Company’s interest in that subsidiary. Accordingly, the Company deconsolidated the subsidiary and reclassified its current-and prior-year period results as discontinued operations separate from the Company’s continuing operations in accordance with IFRS 5. Refer to Notes 2 and 3 to the condensed interim consolidated financial statements for more details.


For the periods ended June 30	Three months					Six months
(in thousands of U.S. dollars, except per share amounts which are in U.S. dollars, unless otherwise indicated)	2021		2020			2021			2020
*Financial highlights on a consolidated basis*
Net income (loss) from continuing operations, including:	$	146,322	$	30,165		$	188,226		$	(16,368	)
Fair value gain on rental properties		254,312		32,839			366,614			53,476
Income (loss) from investments in U.S. residential developments		8,251		3,155			14,910			(76,424	)
Basic earnings (loss) per share attributable to shareholders of Tricon from continuing operations		0.73		0.16			0.95			(0.09	)
Diluted earnings (loss) per share attributable to shareholders of Tricon from continuing operations		0.72		0.16			0.94			(0.09	)
Net loss from discontinued operations		—		(12,824	)		(67,562	)		(6,796	)
Basic loss per share attributable to shareholders of Tricon from discontinued operations		—		(0.07	)		(0.34	)		(0.03	)
Diluted loss per share attributable to shareholders of Tricon from discontinued operations		—		(0.07	)		(0.34	)		(0.03	)
Dividends per share	$	0.07	$	0.07		$	0.14		$	0.14
Weighted average shares outstanding – basic		199,113,835		194,001,974			197,024,375			194,562,871
Weighted average shares outstanding – diluted		200,742,510		195,196,126			198,586,256			194,562,871
*Non-IFRS⁽¹⁾measures on a proportionate basis*
Core funds from operations (“Core FFO”)⁽²⁾	$	35,726	$	24,199		$	68,248		$	45,692
Adjusted funds from operations (“AFFO”)⁽²⁾		28,226		18,316			54,043			33,166
Core FFO per share⁽³⁾		0.14		0.11			0.27			0.22
Core FFO per share (CAD)^(3),(4)		0.17		0.15			0.34			0.30
AFFO per share⁽³⁾		0.11		0.09			0.22			0.16
AFFO per share (CAD)^(3),(4)		0.14		0.12			0.27			0.22

*Select balance sheet items reported on a consolidated basis*						June 30, 2021			December 31, 2020
Total assets						$	6,917,660		$	7,174,834
Total liabilities							4,908,441			5,431,596
Net assets attributable to shareholders of Tricon							2,003,244			1,735,096
Rental properties							5,977,912			6,321,918
Debt							3,273,072			4,137,506

(1)	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.

(2)

Fair value gains recognized on equity-accounted investments in Canadian residential developments of $5,099 in the first quarter of 2020 and performance share unit (PSU) expense of $1,232 and $790 for the three and six months ended June 30, 2020, respectively, have been removed from Core FFO to conform with the current period presentation. This change resulted in a $1,232 increase in Core FFO and AFFO for the three months ended June 30, 2020, and a $4,309 decrease in Core FFO and AFFO for the six months ended June 30, 2020.

(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 was 252,511,687 and 250,358,803 for the three and six months ended June 30, 2021, respectively, and 211,677,963 and 212,281,634 for the three and six months ended June 30, 2020, respectively.

(4)	USD/CAD exchange rates used are 1.2282 and 1.2470 for the three and six months ended June 30, 2021 (2020 – 1.3853 and 1.3651), respectively.

TRICON RESIDENTIAL 2021 SECOND QUARTER REPORT 13

MANAGEMENT’S DISCUSSION AND ANALYSIS

for the three and six months ended June 30, 2021

IFRS measures on a consolidated basis

Net income from continuing operations in the second quarter of 2021 was $146.3 million compared to $30.2 million in the second quarter of 2020, and included:

•

Revenue from single-family rental properties of $105.9 million compared to $91.2 million in the second quarter of 2020 reflecting 15.7% growth in the portfolio size and 5.7% growth in average effective monthly rent, partially offset by a 1.0% decrease in occupancy driven by an accelerated pace of acquisition of vacant homes.

•

Direct operating expenses of $35.2 million compared to $29.9 million in the second quarter of 2020 driven by higher costs associated with the aforementioned growth in the single-family rental business and partially offset by turnover expense savings. The turnover expense savings were attributable to a slightly lower turnover rate (23.1% in Q2 2021 compared to 23.5% in Q2 2020), higher resident recoveries, and a higher percentage of turnover costs being capitalized as non-essential capital projects were curtailed in the comparative period.

•

Income from investments in U.S. residential developments of $8.3 million compared to $3.2 million in the second quarter of 2020 resulting from a continued post-pandemic economic recovery, low mortgage rates and favourable demographic trends which all contributed to strong demand for for-sale housing and positive residential development project performance.

•

Fair value gain on rental properties of $254.3 million compared to $32.8 million in the second quarter of 2020 as a result of higher home values for the single-family rental portfolio. The appreciation in home prices was primarily driven by higher demand for suburban housing due to lower mortgage rates, population growth in the U.S. Sun Belt markets, and the constricted supply of new homes.

Net income from continuing operations for the six months ended June 30, 2021 was $188.2 million compared to a net loss of $16.4 million for the six months ended June 30, 2020, and included:

•

Revenue from single-family rental properties of $204.4 million and direct operating expenses of $67.5 million, compared to $178.9 million and $59.6 million in the prior year, respectively, which translated to a net operating income (“NOI”) increase of $17.6 million driven by the growth in the single-family rental portfolio.

•

Income from investments in U.S. residential developments of $14.9 million compared to a loss of $76.4 million in the same period of the prior year, attributable to strong project performance in the current period compared to a one-time fair value write-down in the comparative period due to the onset of the COVID-19 pandemic.

•

Fair value gain on rental properties of $366.6 million compared to $53.5 million in the same period of the prior year, for the reasons discussed above.

Net loss from discontinued operations was $67.6 million for the six months ended June 30, 2021 compared to a net loss of $6.8 million for the six months ended June 30, 2020, driven primarily by the non-cash loss related to a $79.1 million goodwill derecognition. This goodwill was initially recognized when Tricon transitioned to a rental housing company on January 1, 2020 based on the difference in the tax bases and the fair values of the assets deemed to have been acquired on the transition day. The Company’s sale of its 80% interest in the U.S. multi-family rental business on March 31, 2021 constituted a loss of control from an accounting perspective, and therefore, the entire balance sheet of the business and the associated goodwill on the corporate balance sheet were deconsolidated.

Non-IFRS measures on a proportionate basis

Core funds from operations (“Core FFO”) for the second quarter of 2021 was $35.7 million, an increase of $11.5 million or 48% compared to $24.2 million in the second quarter of 2020. This increase was driven by strong operating results from Tricon’s growing single-family rental portfolio as discussed above, and improved performance of the Company’s U.S. residential development investments which resulted in higher investment income and performance fees recognized during the quarter. For these same reasons, Core FFO increased by $22.6 million or 49% to $68.2 million for the six months ended June 30, 2021, compared to $45.7 million in the same period of the prior year.

Adjusted funds from operations (“AFFO”) for the three and six months ended June 30, 2021 was $28.2 million and $54.0 million, respectively, an increase of $9.9 million (54%) and $20.9 million (63%) from the same periods in the prior year. This growth in AFFO reflects the increase in Core FFO discussed above, partially offset by a moderate increase in capital expenditures. Recurring capital expenditures increased year-over-year in the single-family rental portfolio reflecting $0.5 million incurred for Texas storm-related damage, a 15.7% expansion in the portfolio size and suppressed activity in the comparative period as non-essential capital projects were curtailed at the height of the COVID-19 pandemic.

14 2021 SECOND QUARTER REPORT TRICON RESIDENTIAL

LOGO

3
CONSOLIDATED
FINANCIAL RESULTS

MANAGEMENT’S DISCUSSION AND ANALYSIS

for the three and six months ended June 30, 2021

3. CONSOLIDATED FINANCIAL RESULTS

The following section should be read in conjunction with the Company’s unaudited condensed interim consolidated financial statements and related notes for the three and six months ended June 30, 2021.

On March 31, 2021, the Company completed the syndication of its U.S. multi-family rental subsidiary to two institutional investors, which resulted in a disposition of 80% of the Company’s interest in that subsidiary. Accordingly, the Company deconsolidated the subsidiary and reclassified its current- and prior-year period results as discontinued operations separate from the Company’s continuing operations in accordance with IFRS 5. Refer to Notes 2 and 3 to the condensed interim consolidated financial statements for more details.

3.1 Review of income statements

Consolidated statements of income


For the periods ended June 30	Three months									Six months
(in thousands of U.S. dollars, except per share amounts which are in U.S. dollars)	2021			2020			Variance			2021			2020			Variance
Revenue from single-family rental properties	$	105,921		$	91,180		$	14,741		$	204,395		$	178,851		$	25,544
Direct operating expenses		(35,177	)		(29,932	)		(5,245	)		(67,479	)		(59,583	)		(7,896	)

Net operating income from single-family rental properties		70,744			61,248			9,496			136,916			119,268			17,648
Revenue from private funds and advisory services		13,113			8,122			4,991			22,043			15,937			6,106
Income from equity-accounted investments in multi-family rental properties⁽¹⁾		14,272			162			14,110			13,815			217			13,598
Income (loss) from equity-accounted investments in Canadian residential developments⁽²⁾		27			(7	)		34			24			5,090			(5,066	)
Other income⁽³⁾		330			108			222			535			156			379
Income (loss) from investments in U.S. residential developments⁽⁴⁾		8,251			3,155			5,096			14,910			(76,424	)		91,334
Compensation expense		(20,253	)		(13,377	)		(6,876	)		(38,003	)		(23,785	)		(14,218	)
General and administration expense		(9,270	)		(7,686	)		(1,584	)		(17,673	)		(17,397	)		(276	)
Transaction costs		(4,408	)		(3,214	)		(1,194	)		(5,637	)		(4,445	)		(1,192	)
Interest expense		(37,396	)		(31,990	)		(5,406	)		(73,471	)		(66,879	)		(6,592	)
Fair value gain on rental properties		254,312			32,839			221,473			366,614			53,476			313,138
Fair value loss on derivative financial instruments and other liabilities		(41,475	)		(450	)		(41,025	)		(78,647	)		(2,594	)		(76,053	)
Amortization and depreciation expense		(2,849	)		(2,775	)		(74	)		(5,499	)		(5,548	)		49
Realized and unrealized foreign exchange (loss) gain		(2,710	)		1,172			(3,882	)		(2,540	)		(1,752	)		(788	)
Net change in fair value of limited partners’ interests in single-family rental business		(49,246	)		(9,314	)		(39,932	)		(75,387	)		(14,765	)		(60,622	)

		109,585			(31,377	)		140,962			99,041			(154,650	)		253,691

Income (loss) before income taxes from continuing operations	$	193,442		$	37,993		$	155,449		$	258,000		$	(19,445	)	$	277,445
Income tax (expense) recovery from continuing operations		(47,120	)		(7,828	)		(39,292	)		(69,774	)		3,077			(72,851	)

Net income (loss) from continuing operations	$	146,322		$	30,165		$	116,157		$	188,226		$	(16,368	)	$	204,594

Basic earnings (loss) per share attributable to shareholders of Tricon from continuing operations		0.73			0.16			0.57			0.95			(0.09	)		1.04
Diluted earnings (loss) per share attributable to shareholders of Tricon from continuing operations		0.72			0.16			0.56			0.94			(0.09	)		1.03
Net loss from discontinued operations		—			(12,824	)		12,824			(67,562	)		(6,796	)		(60,766	)
Basic loss per share attributable to shareholders of Tricon from discontinued operations		—			(0.07	)		0.07			(0.34	)		(0.03	)		(0.31	)
Diluted loss per share attributable to shareholders of Tricon from discontinued operations		—			(0.07	)		0.07			(0.34	)		(0.03	)		(0.31	)
Weighted average shares outstanding – basic		199,113,835			194,001,974			5,111,861			197,024,375			194,562,871			2,461,504
Weighted average shares outstanding – diluted⁽⁵⁾		200,742,510			195,196,126			5,546,384			198,586,256			194,562,871			4,023,385

(1)	Includes income from The Selby and the U.S. multi-family rental portfolio, which was syndicated on March 31, 2021 (Section 4.2).

(2)	Includes income from The Taylor, West Don Lands, The Ivy, 7 Labatt and Queen & Ontario (Section 4.3.1) .

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

(4)	Reflects the net change in the fair values of the underlying investments in the legacy for-sale housing business (Section 4.3.2).

(5)

For the three and six months ended June 30, 2021, the Company’s 2022 convertible debentures and the exchangeable preferred units of Tricon PIPE LLC were anti-dilutive. For the three and six months ended June 30, 2020, the 2022 convertible debentures were anti-dilutive. Refer to Note 28 to the condensed interim consolidated financial statements.

16 2021 SECOND QUARTER REPORT TRICON RESIDENTIAL

MANAGEMENT’S DISCUSSION AND ANALYSIS

for the three and six months ended June 30, 2021

Revenue from single-family rental properties

The following table provides further details regarding revenue from single-family rental properties for the three and six months ended June 30, 2021 and 2020.


For the periods ended June 30	Three months									Six months
(in thousands of U.S. dollars)	2021			2020			Variance			2021			2020			Variance
Rental revenue	$	103,517		$	89,957		$	13,560		$	200,688		$	175,528		$	25,160
Concessions and abatements		(565	)		(368	)		(197	)		(1,007	)		(1,172	)		165
Fees and other revenue		4,728			3,077			1,651			8,409			6,676			1,733
Bad debt expense		(1,759	)		(1,486	)		(273	)		(3,695	)		(2,181	)		(1,514	)

Revenue from single-family rental properties	$	105,921		$	91,180		$	14,741		$	204,395		$	178,851		$	25,544

Revenue from single-family rental properties for the three months ended June 30, 2021 totalled $105.9 million, an increase of $14.7 million or 16.2% compared to $91.2 million for the same period in the prior year. The increase is attributable to:

•

An increase of $13.6 million in rental revenue reflecting a 15.7% portfolio expansion (24,961 rental homes compared to 21,582) and a 5.7% growth in average effective monthly rent per home ($1,513 compared to $1,432) driven by continued strong demand for single-family rental homes. This increase in revenue was partially offset by a 1.0% decrease in occupancy (96.1% compared to 97.1%) attributable to an accelerated pace of acquisition of vacant homes this quarter.

•

An increase of $1.7 million in fees and other revenue driven by portfolio expansion as well as incremental ancillary revenue earned on additional services provided to residents, including the roll-out of the smart-home technology program (as at June 30, 2021 approximately 40% of single-family rental homes were smart-home enabled compared to 13% at June 30, 2020).

•

A partially offsetting increase of $0.2 million in concessions and abatements owing to operational concessions, such as late fee and maintenance concessions offered to residents impacted by the winter storm in Texas.

•

A partially offsetting increase of $0.3 million in bad debt expense as a result of portfolio revenue expansion. Bad debt expense represented 1.6% of revenue for both the current and comparative periods. Management expects the pace of collections to accelerate further in the latter half of 2021 as the economy continues to improve, and the labour market tightens.

Revenue from single-family rental properties for the six months ended June 30, 2021 totalled $204.4 million, an increase of $25.5 million or 14.3% compared to the same period in the prior year, primarily driven by the expansion of the single-family rental portfolio as well as an improvement in the average monthly rent, along with higher other revenue for the reasons discussed above. The favourable variance was partially offset by a $1.5 million increase in bad debt expense largely as a result of higher, but improving, resident delinquency from the COVID-19 pandemic when compared to pre-pandemic levels.

Direct operating expenses

The following table provides further details regarding direct operating expenses from the single-family rental portfolio for the three and six months ended June 30, 2021 and 2020.


For the periods ended June 30	Three months							Six months
(in thousands of U.S. dollars)	2021		2020⁽¹⁾		Variance			2021		2020⁽¹⁾		Variance
Property taxes	$	15,749	$	13,726	$	(2,023	)	$	30,992	$	27,692	$	(3,300	)
Repairs and maintenance		5,457		4,226		(1,231	)		10,053		8,370		(1,683	)
Turnover		1,699		1,758		59			3,042		3,338		296
Property management expenses		7,016		6,003		(1,013	)		13,566		11,976		(1,590	)
Property insurance		1,443		1,232		(211	)		2,856		2,442		(414	)
Marketing and leasing		419		396		(23	)		775		728		(47	)
Homeowners’ association (HOA) costs		1,513		1,232		(281	)		2,838		2,413		(425	)
Other direct expense⁽²⁾		1,881		1,359		(522	)		3,357		2,624		(733	)

Direct operating expenses	$	35,177	$	29,932	$	(5,245	)	$	67,479	$	59,583	$	(7,896	)

(1)

(2)	Other direct expense includes property utilities and other property operating costs.

TRICON RESIDENTIAL 2021 SECOND QUARTER REPORT 17

MANAGEMENT’S DISCUSSION AND ANALYSIS

for the three and six months ended June 30, 2021

Direct operating expenses for the three months ended June 30, 2021 were $35.2 million, an increase of $5.2 million or 17.5% compared to the same period in the prior year. The variance is primarily attributable to:

•

An increase of $2.0 million in property taxes from the single-family rental portfolio driven by 15.7% growth in the size of the portfolio (3,379 more rental homes in service in Q2 2021 compared to Q2 2020), as well as a higher property tax expense per home as a result of higher assessed property values propelled by home price appreciation.

•

An increase of $1.2 million in repairs and maintenance owing to a larger portfolio of homes along with $0.3 million of incremental repair costs incurred as a result of the winter storm in Texas (see Section 4.1) . In addition, the comparative period expenses were unusually low as non-essential maintenance activities were deferred at the height of the COVID-19 pandemic.

•

An increase of $1.0 million in property management expenses as a result of additional operations personnel costs incurred in managing a growing rental portfolio.

•

An increase of $0.5 million in other direct expenses resulting from additional costs of providing access to smart-home technology to more residents (these costs are offset by higher fees and other revenue earned from residents), as well as higher utilities expenses on vacant homes acquired during the quarter.

•

A partially offsetting decrease of $0.1 million in turnover expenses attributable to a lower turnover rate (23.1% in Q2 2021 compared to 23.5% in Q2 2020), increased capital improvement activities during the turn, as well as higher resident recoveries. Tricon resumed its turn-related capital program in the current year, having temporarily paused the program in the same period last year due to the pandemic.

Direct operating expenses for the six months ended June 30, 2021 were $67.5 million, an increase of $7.9 million or 13.3% compared to the same period in the prior year for the reasons described above.

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 six months ended June 30, 2021 and 2020, net of inter-segment revenues eliminated upon consolidation.


For the periods ended June 30	Three months							Six months
(in thousands of U.S. dollars)	2021		2020		Variance			2021		2020		Variance
Asset management fees	$	3,509	$	3,079	$	430		$	6,107	$	6,412	$	(305	)
Performance fees		3,881		131		3,750			4,573		445		4,128
Development fees⁽¹⁾		5,547		4,692		855			11,011		8,614		2,397
Property management fees		176		220		(44	)		352		466		(114	)

Revenue from private funds and advisory services	$	13,113	$	8,122	$	4,991		$	22,043	$	15,937	$	6,106

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


For the periods ended June 30	Three months							Six months
(in thousands of U.S. dollars)	2021		2020		Variance			2021		2020		Variance
The Johnson Companies (“Johnson”)	$	3,903	$	2,923	$	980		$	7,625	$	6,450	$	1,175
Tricon Development Group (“TDG”)		1,644		1,769		(125	)		3,386		2,164		1,222

Development fees	$	5,547	$	4,692	$	855		$	11,011	$	8,614	$	2,397

Revenue from private funds and advisory services for the three months ended June 30, 2021 totalled $13.1 million, an increase of $5.0 million from the same period in the prior year, primarily driven by:

•

An increase of $3.8 million in performance fees generated from the Company’s U.S. residential development investments portfolio. The Company earns performance fees when an Investment Vehicle’s realized returns exceed third-party investor return thresholds; therefore, performance fees are episodic in nature and can vary significantly from period to period.

•

An increase of $0.9 million in development fees, primarily attributable to 11% more lots sold at Johnson communities compared to the second quarter of 2020 (see below).

•

An increase of $0.4 million in asset management fees, driven by the creation of a new Investment Vehicle through the syndication of the U.S. multi-family rental portfolio on March 31, 2021.

18 2021 SECOND QUARTER REPORT TRICON RESIDENTIAL

MANAGEMENT’S DISCUSSION AND ANALYSIS

for the three and six months ended June 30, 2021

Revenue from private funds and advisory services for the six months ended June 30, 2021 totalled $22.0 million, an increase of $6.1 million from the same period in the prior year. The variance is primarily attributable to :

•

An increase of $4.1 million in performance fees as described above.

•

An increase of $2.4 million in development fees, including $1.2 million from Canadian residential developments, as several projects commenced development over the past year. In addition, Johnson development fees increased by $1.2 million, which corresponded to a 21% increase in lots sold on a year-over-year basis.

•

A partially offsetting decrease of $0.3 million in asset management fees, as the natural liquidation and strategic disposition of for-sale housing investments has resulted in significant distributions to third-party investors over the past twelve months, thereby reducing the outstanding invested capital upon which asset management fees are based. However, the reduction in asset management fees from for-sale housing investments was partially offset by new Investment Vehicles in Tricon’s other business segments, including the U.S. multi-family rental joint venture formed on March 31, 2021.

Johnson’s development fees are earned based on the number of lots sold to homebuilders, as mentioned above. While Johnson does not generate revenues from third-party home 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 interest rates, de-densification and de-urbanization trends and extended work-from-home orders, which have all led to higher demand for detached houses. As a result of labour and materials supply shortages caused by the COVID-19 pandemic, homebuilders at Johnson’s communities are at or nearing production capacity. Following record third-party home sales in 2020, which continued to trend upward in the first quarter of 2021, homebuilders are now deliberately restricting home sales until they catch up on the backlog, which has impacted third-party home sales during the quarter (Q2 2021 – 883 vs. Q2 2020 – 1,241). Nevertheless, homebuyer traffic has remained strong, and as a result, homebuilders are still actively acquiring lots to fill their projections (Q2 2021 – 911 vs. Q2 2020 – 822).

The Company also earns significant fees from managing the single-family rental homes and Canadian residential 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 six months ended June 30, 2021 and 2020.


For the three months ended	June 30, 2021							June 30, 2020
(in thousands of U.S. dollars)	Gross management fees		Less fees eliminated upon consolidation			Total		Gross management fees		Less fees eliminated upon consolidation			Total
Asset management fees⁽¹⁾	$	3,781	$	(272	)	$	3,509	$	3,079	$	—		$	3,079
Performance fees		3,881		—			3,881		131		—			131
Development fees		5,944		(397	)		5,547		4,692		—			4,692
Property management fees^(2),(3)		16,568		(16,392	)		176		10,381		(10,161	)		220

Total revenue from private funds and advisory services	$	30,174	$	(17,061	)	$	13,113	$	18,283	$	(10,161	)	$	8,122


For the six months ended	June 30, 2021							June 30, 2020
(in thousands of U.S. dollars)	Gross management fees		Less fees eliminated upon consolidation			Total		Gross management fees		Less fees eliminated upon consolidation			Total
Asset management fees⁽¹⁾	$	6,379	$	(272	)	$	6,107	$	6,412	$	—		$	6,412
Performance fees		4,573		—			4,573		445		—			445
Development fees		11,793		(782	)		11,011		8,614		—			8,614
Property management fees^(2),(3)		29,716		(29,364	)		352		21,880		(21,414	)		466

Total revenue from private funds and advisory services	$	52,461	$	(30,418	)	$	22,043	$	37,351	$	(21,414	)	$	15,937

(1)	Asset management fees earned from the limited partners of SFR JV-HD are eliminated upon the consolidation of this Investment Vehicle. Asset management fees eliminated upon consolidation are accounted for within Tricon’s proportionate Core FFO (see Section 5).

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

(3)

Under IFRS, property management fees earned from consolidated Investment Vehicles are eliminated against direct operating expenses upon consolidation. Compensation expense for direct property-level management personnel is then presented as a component of direct operating expenses as part of the NOI calculation, while compensation expense for operating platform-level personnel is presented as a component of compensation expense of the Company.

TRICON RESIDENTIAL 2021 SECOND QUARTER REPORT 19

MANAGEMENT’S DISCUSSION AND ANALYSIS

for the three and six months ended June 30, 2021

Income from equity-accounted investments in multi-family rental properties

Equity-accounted investments in multi-family rental properties include Tricon’s 20% interest in the new U.S. multi-family rental joint venture formed on March 31, 2021, along with its 15% investment in 592 Sherbourne LP, which owns The Selby.

The following table provides further details regarding income from equity-accounted investments in multi-family rental properties for the three and six months ended June 30, 2021 and 2020.


For the periods ended June 30	Three months							Six months
(in thousands of U.S. dollars)	2021		2020		Variance			2021		2020		Variance
U.S. multi-family rental portfolio	$	14,204	$	—	$	14,204		$	13,655	$	—	$	13,655
592 Sherbourne LP (The Selby)		68		162		(94	)		160		217		(57	)

Income from equity-accounted investments in multi-family rental properties	$	14,272	$	162	$	14,110		$	13,815	$	217	$	13,598

Income from equity-accounted investments in multi-family rental properties for the three months ended June 30, 2021 was $14.3 million, a $14.1 million increase from the prior year. The variance is attributable to the inclusion of the U.S. multi-family rental portfolio as an equity-accounted investment in the current period and the incorporation of its associated income. While net operating income in the U.S. multi-family rental joint venture has now surpassed pre-pandemic levels, the majority of the income during the quarter was driven by fair value gains recorded on select properties (determined using the direct income capitalization approach). Prior to March 31, 2021, the financial results of the U.S. multi-family portfolio were accounted for under income from discontinued operations.

Income from equity-accounted investments in multi-family rental properties for the six months ended June 30, 2021 was $13.8 million, a $13.6 million increase from the prior year, attributable to the reasons discussed above.

Income (loss) from equity-accounted investments in Canadian residential developments

Equity-accounted investments in Canadian residential developments include joint ventures and equity holdings in development projects, namely The Taylor, West Don Lands, The Ivy, 7 Labatt and Queen & Ontario. 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 presented as other income.

The following table presents the income (loss) from equity-accounted investments in Canadian residential developments for the three and six months ended June 30, 2021 and 2020.


For the periods ended June 30	Three months							Six months
(in thousands of U.S. dollars)	2021		2020			Variance		2021		2020		Variance
Income (loss) from equity-accounted investments in Canadian residential developments	$	27	$	(7	)	$	34	$	24	$	5,090	$	(5,066	)

Income from investments in Canadian residential developments for the three months ended June 30, 2021 was largely unchanged compared to the same period in the prior year, representing net income (loss) from incidental operations at the development properties during the pre-demolition period.

Income from investments in Canadian residential developments for the six months ended June 30, 2021 was nominal compared to income of $5.1 million in the same period of the prior year, which relates primarily to fair value gains recognized on the West Don Lands project (Block 8) upon the commencement of construction.

Income (loss) from investments in U.S. residential developments

The following table presents the income (loss) from investments in U.S. residential developments for the three and six months ended June 30, 2021 and 2020.


For the periods ended June 30	Three months						Six months
(in thousands of U.S. dollars)	2021		2020		Variance		2021		2020			Variance
Income (loss) from investments in U.S. residential developments	$	8,251	$	3,155	$	5,096	$	14,910	$	(76,424	)	$	91,334

Income from investments in U.S. residential developments for the three months ended June 30, 2021 was $8.3 million, an increase of $5.1 million from the same period in the prior year as a result of strong for-sale housing demand that stemmed from historically low mortgage rates, positive demographic and employment trends, and a continued shift towards work-from-home arrangements, with a preference for larger living spaces in suburban locations.

20 2021 SECOND QUARTER REPORT TRICON RESIDENTIAL

MANAGEMENT’S DISCUSSION AND ANALYSIS

for the three and six months ended June 30, 2021

Income from investments in U.S. residential developments for the six months ended June 30, 2021 was $14.9 million, an increase of $91.3 million from the same period in the prior year. This year-over-year increase reflects healthy project performance in the current period, compared to a one-time fair value write-down incurred in the comparative period due to rapidly deteriorating business fundamentals at the onset of the COVID-19 pandemic.

While the for-sale housing market outlook for the remainder of the year appears favourable, management continues to monitor possible headwinds from rising construction costs driven by material and labour scarcity and the impact of new for-sale housing supply on the market. In addition, the rising cost of home ownership has created greater barriers to entry for potential buyers, which could impact today’s high absorption rates, and therefore, ultimately affect future cash flows.

Compensation expense

The following table provides further details regarding compensation expense for the three and six months ended June 30, 2021 and 2020.


For the periods ended June 30		Three months							Six months
(in thousands of U.S. dollars)		2021		2020		Variance			2021		2020			Variance
Salaries and benefits		$	9,750	$	8,620	$	(1,130	)	$	19,567	$	17,045		$	(2,522	)
Cash component			3,250		2,259		(991	)		6,706		4,768			(1,938	)
Restricted shares, share units and stock options			2,076		1,814		(262	)		5,216		1,981			(3,235	)

Annual incentive plan (“AIP”)			5,326		4,073		(1,253	)		11,922		6,749			(5,173	)
Cash component			5,083		502		(4,581	)		6,383		(2,154	)		(8,537	)
Share units and stock options			94		182		88			131		2,145			2,014

Long-term incentive plan (“LTIP”)			5,177		684		(4,493	)		6,514		(9	)		(6,523	)

Total compensation expense	+ +	$	20,253	$	13,377	$	(6,876	)	$	38,003	$	23,785		$	(14,218	)

Compensation expense for the three months ended June 30, 2021 was $20.3 million, an increase of $6.9 million compared to the same period in the prior year. The variance is attributable to:

•

An increase of $4.6 million in cash-settled LTIP expense, driven by higher estimated future performance fees that are expected to be paid to participants under the LTIP once the performance fees are realized. The increase in estimated future performance fees correlates with the significant fair value gains recognized across Tricon’s various business segments during the quarter, whereas fair value gains were muted in the comparative period following the onset of the COVID-19 pandemic.

•

An increase of $1.3 million in AIP expense, largely related to a higher AIP accrual for the current period, which reflects an increase in headcount (described below) and overall financial results, along with expanded AIP eligibility as Tricon transitioned to a unified company and realigned the senior management team.

•

An increase of $1.1 million in payroll costs related to a 10% increase in headcount to support Tricon’s continued growth as well as normal course salary adjustments.

Compensation expense for the six months ended June 30, 2021 was $38.0 million, an increase of $14.2 million compared to the same period in the prior year, corresponding to:

•

An increase of $6.5 million in LTIP expense, primarily related to an $8.5 million increase in cash-settled LTIP expense as described above, whereas the comparative period reflects a reduction, driven by the one-time write-down of Tricon’s investments in for-sale housing brought on by the COVID-19 pandemic. The increase in cash-settled LTIP expense was partially offset by a $2.1 million decrease in share-based LTIP expense, as a majority of outstanding stock options were settled in 2020.

•

An increase of $5.2 million in AIP expense, primarily driven by the revaluation of performance share units (“PSUs”) to reflect changes in the Company’s share price, which increased by $2.53 per share, on a USD-converted basis, for the six months ended June 30, 2021 (2020 – a decrease of $1.47 per share). In addition, a larger AIP accrual was made for the current year as described above.

•

An increase of $2.5 million in payroll costs as described above.

TRICON RESIDENTIAL 2021 SECOND QUARTER REPORT 21

MANAGEMENT’S DISCUSSION AND ANALYSIS

for the three and six months ended June 30, 2021

General and administration expense

The following table presents general and administration expense for the three and six months ended June 30, 2021 and 2020.


For the periods ended June 30	Three months							Six months
(in thousands of U.S. dollars)	2021		2020		Variance			2021		2020		Variance
General and administration expense	$	9,270	$	7,686	$	(1,584	)	$	17,673	$	17,397	$	(276	)

General and administration expense for the three months ended June 30, 2021 was $9.3 million, an increase of $1.6 million compared to the same period in the prior year, driven by a significant increase in business activity amid third-party fundraising and office reopening efforts, whereas business activities were constrained in the comparative period as a result of the COVID-19 pandemic.

General and administration expense for the six months ended June 30, 2021 was $17.7 million, a nominal increase of $0.3 million compared to the same period in the prior year, as the increase in business activity in the second quarter of 2021 was largely offset by muted activity in the first quarter of 2021 as a result of the COVID-19 pandemic.

Interest expense

The following table provides details regarding interest expense for the three and six months ended June 30, 2021 and 2020 by borrowing type and nature.


For the periods ended June 30	Three months							Six months
(in thousands of U.S. dollars)	2021		2020		Variance			2021			2020			Variance
Corporate borrowings	$	854	$	4,033	$	3,179		$	2,055		$	8,687		$	6,632
Property-level borrowings		25,377		23,311		(2,066	)		49,474			48,957			(517	)
Convertible debentures		2,477		2,464		(13	)		4,928			4,929			1
Due to Affiliate		4,312		—		(4,312	)		8,625			—			(8,625	)
Amortization of deferred financing costs, discounts and lease obligations		4,376		2,182		(2,194	)		8,389			4,306			(4,083	)

Total interest expense	$	37,396	$	31,990	$	(5,406	)	$	73,471		$	66,879		$	(6,592	)

Weighted average interest rate									2.97	%		3.52	%		0.55	%

Interest expense was $37.4 million for the three months ended June 30, 2021, an increase of $5.4 million compared to $32.0 million for the same period last year. The variance is primarily attributable to:

•

An increase of $4.3 million in interest expense on the Due to Affiliate balance in connection with the preferred unit issuance in September 2020. These interest payments are to fund dividend payments by Tricon PIPE LLC.

•

An increase of $2.2 million 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.

•

An increase of $2.1 million in interest expense on property-level borrowings driven by an increase in the debt balance of $400.7 million, outweighing the impact of a 0.27% decrease in the average effective interest rate. The additional debt was incurred at the property-level in order to finance the Company’s growing portfolio of single-family rental homes.

•

A partially offsetting decrease of $3.2 million in interest expense on corporate borrowings, primarily resulting from lower outstanding balances at period end (a reduction of $314.8 million from $340.0 million on June 30, 2020 to $25.2 million on June 30, 2021).

Interest expense was $73.5 million for the six months ended June 30, 2021, an increase of $6.6 million compared to $66.9 million for the same period last year. The variance is primarily attributable to a year-over-year increase in the Due to Affiliate and property-level debt balances, offset by a decrease in corporate borrowings, as discussed above.

22 2021 SECOND QUARTER REPORT TRICON RESIDENTIAL

MANAGEMENT’S DISCUSSION AND ANALYSIS

for the three and six months ended June 30, 2021

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 six months ended June 30, 2021 and 2020.


For the periods ended June 30	Three months						Six months
(in thousands of U.S. dollars)	2021		2020		Variance		2021		2020		Variance
Fair value gain on rental properties	$	254,312	$	32,839	$	221,473	$	366,614	$	53,476	$	313,138

Fair value gain on single-family rental properties was $254.3 million for the three months ended June 30, 2021, an increase of $221.5 million compared to $32.8 million for the same period last year. For the six months ended June 30, 2021, the fair value gain totalled $366.6 million, an increase of $313.1 million from the prior year. The fair value of single-family rental homes is typically determined by using a combination of Broker Price Opinion (“BPO”) and Home Price Index (“HPI”) methodologies. Refer to Note 4 in the condensed interim consolidated financial statements for further details.

The higher home values for Tricon’s single-family rental portfolio are attributable to a number of factors, including population growth in desirable Sun Belt markets, low mortgage interest rates and continued work-from-home trends, all of which have strengthened demand for single-family rental homes. Meanwhile, the supply of new housing continues to be constrained by ongoing challenges related to securing entitlements for new lots and by a shortage of labour and materials, including pandemic-related supply chain bottlenecks, which in turn has created a very competitive housing market. This imbalance of supply and demand drove HPI growth to 5.2% (20.8% annualized), net of capital expenditures, compared to 0.9% (3.6% annualized) in the same period in the prior year. The HPI and BPO methodologies were also applied to a larger portfolio of homes (24,961 homes in Q2 2021 compared to 21,582 in Q2 2020), driving even higher fair value gains.

Fair value loss on derivative financial instruments and other liabilities

The following table presents the fair value loss on derivative financial instruments and other liabilities for the three and six months ended June 30, 2021 and 2020.


For the periods ended June 30	Three months									Six months
(in thousands of U.S. dollars)	2021			2020			Variance			2021			2020			Variance
Fair value loss on derivative financial instruments and other liabilities	$	(41,475	)	$	(450	)	$	(41,025	)	$	(78,647	)	$	(2,594	)	$	(76,053	)

For the three months ended June 30, 2021, the fair value loss on derivative financial instruments and other liabilities increased by $41.0 million to $41.5 million compared to a loss of $0.5 million in the same period in the prior year. This unfavourable variance is mainly attributable to the new derivative liability recognized in the third quarter of 2020 in connection with the exchangeable preferred units issued by Tricon PIPE LLC.

The fair value loss on the derivative financial instruments was driven by an overall increase in Tricon’s share price, on a USD-converted basis, which served to increase the probability of exchange of the exchangeable preferred units and conversion of the 2022 debentures into Tricon’s common shares. This increased conversion probability drove the increase in the derivative liability of the Company.

For the six months ended June 30, 2021, the fair value loss on derivative financial instruments and other liabilities increased by $76.1 million to $78.6 million compared to a loss of $2.6 million in the same period in the prior year. This unfavourable variance is mainly attributable to the reasons discussed above.

TRICON RESIDENTIAL 2021 SECOND QUARTER REPORT 23

MANAGEMENT’S DISCUSSION AND ANALYSIS

for the three and six months ended June 30, 2021

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

Limited partner ownership interests in the single-family rental joint ventures, “SFR JV-1” and “SFR JV-HD” (see Section 4.1), 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 the single-family rental business for the three and six months ended June 30, 2021 and 2020.


For the periods ended June 30	Three months									Six months
(in thousands of U.S. dollars)	2021			2020			Variance			2021			2020			Variance
Net change in fair value of limited partners’ interests in single-family rental business	$	(49,246	)	$	(9,314	)	$	(39,932	)	$	(75,387	)	$	(14,765	)	$	(60,622	)

For the three months ended June 30, 2021, the change in fair value of limited partners’ interests in the single-family rental business was $49.2 million compared to $9.3 million for the same period in the prior year, representing an increase in non-controlling limited partners’ interests of $39.9 million. This increase mainly reflects additional income earned from SFR JV-1 during the period that is attributable to the Company’s joint venture partners. The higher income was mainly driven by a $39.3 million increase in the limited partners’ share of the fair value gain on rental properties and a $4.6 million increase in NOI, which were partially offset by a $2.7 million increase in interest expense.

The SFR JV-HD joint venture closed on May 10, 2021 and did not have a meaningful impact on the net change in the fair value of limited partners’ interests in the single-family rental business.

For the six months ended June 30, 2021, the change in fair value of limited partners’ interests in the single-family rental business was $75.4 million compared to $14.8 million for the same period in the prior year, representing an increase of $60.6 million. The factors driving this change are consistent with those discussed above.

Income tax (expense) recovery from continuing operations

The following table provides details regarding income tax (expense) recovery from continuing operations for the three and six months ended June 30, 2021 and 2020.


For the periods ended June 30	Three months									Six months
(in thousands of U.S. dollars)	2021			2020			Variance			2021			2020		Variance
Income tax (expense) recovery – current	$	(16	)	$	286		$	(302	)	$	44,457		$	224	$	44,233
Income tax (expense) recovery – deferred		(47,104	)		(8,114	)		(38,990	)		(114,231	)		2,853		(117,084	)

Income tax (expense) recovery from continuing operations	$	(47,120	)	$	(7,828	)	$	(39,292	)	$	(69,774	)	$	3,077	$	(72,851	)

For the three months ended June 30, 2021, income tax expense from continuing operations was $47.1 million, an increase of $39.3 million compared to $7.8 million in the same period in the prior year. This change is primarily driven by a higher fair value gain on the single-family rental properties.

For the six months ended June 30, 2021, income tax expense from continuing operations was $69.8 million, an increase of $72.9 million compared to an income tax recovery of $3.1 million in the same period in the prior year. This change is primarily driven by an increase in deferred tax expense. The Company’s higher deferred tax expense resulted from (i) a higher fair value gain on the single-family rental properties, and (ii) the crystallization of tax losses carried forward from prior years, which were previously recorded as deferred tax recoveries. The crystallization of tax losses allowed the Company to largely offset cash taxes triggered by the sale of the Company’s 80% interest in the U.S. multi-family portfolio, and hence Tricon recorded a $44.5 million current tax recovery from continuing operations.

24 2021 SECOND QUARTER REPORT TRICON RESIDENTIAL

MANAGEMENT’S DISCUSSION AND ANALYSIS

for the three and six months ended June 30, 2021

Net loss from discontinued operations


For the periods ended June 30	Three months								Six months
(in thousands of U.S. dollars)	2021		2020			Variance			2021			2020			Variance
Net operating income from multi-family rental properties	$	—	$	16,388		$	(16,388	)	$	16,224		$	33,473		$	(17,249	)
Interest expense		—		(8,260	)		8,260			(7,845	)		(17,314	)		9,469
Other expenses		—		(2,205	)		2,205			(1,176	)		(3,709	)		2,533
Goodwill derecognition		—		—			—			(79,112	)		—			(79,112	)
Transaction costs		—		—			—			(3,285	)		—			(3,285	)
Marked to market adjustment on rental properties		—		(22,535	)		22,535			(2,030	)		(22,535	)		20,505

Loss before income taxes from discontinued operations	$	—	$	(16,612	)	$	16,612		$	(77,224	)	$	(10,085	)	$	(67,139	)
Current income tax expense arising from the sale⁽¹⁾		—		—			—			(46,502	)		—			(46,502	)
Deferred income tax recovery		—		3,788			(3,788	)		56,164			3,289			52,875

Net loss from discontinued operations	$	—	$	(12,824	)	$	12,824		$	(67,562	)	$	(6,796	)	$	(60,766	)

(1)	The sale gave rise to current income tax expense since the transaction value exceeded the tax cost basis and resulted in a taxable gain.

On March 31, 2021, the Company completed its previously announced joint venture arrangement with two institutional investors. Under the arrangement, the two third-party investors acquired a combined 80% interest in the existing U.S. multi-family rental portfolio with Tricon retaining a 20% interest in the joint venture. The sale reflected a total portfolio value of $1.331 billion including in-place debt, which was in line with the portfolio’s fair value reflected on Tricon’s balance sheet as of December 31, 2020. Tricon recognized its remaining 20% interest at fair value on the transaction date and proceeded to account for it as an equity-accounted investment. The business’ current- and prior-period results were reclassified as discontinued operations separate from the Company’s continuing operations.

The transaction resulted in a derecognition of goodwill that was previously recognized by the Company when Tricon transitioned to a rental housing company effective January 1, 2020. Goodwill of $79.1 million arose from the initial recognition of deferred tax liabilities based on the difference in the tax bases and the fair values of the net assets deemed to have been acquired on the transition day. The Company’s disposition of an 80% interest in the business constituted a loss of control from an accounting perspective, and therefore, the entire balance sheet of the U.S. multi-family rental business and the associated goodwill on the corporate balance sheet were deconsolidated. This deconsolidation loss was partially offset by a $9.7 million favourable tax impact, including (i) a $56.2 million tax recovery achieved through the reversal of the deferred tax liability associated with the portfolio, and (ii) a $46.5 million current tax expense arising from the sale. The current tax expense was then applied against the $44.5 million current tax recovery from continuing operations, resulting in only $2.0 million of current tax payable. The sale resulted in cash consideration of $431.6 million, which Tricon used in part to repay $295.2 million of debt (including $107.6 million of its U.S. multi-family credit facility, $112.6 million of single-family rental property-level debt and $75.0 million of the corporate credit facility), resulting in a 10.8% reduction in the Company’s net debt to assets leverage ratio to 45.8% from 56.6% at December 31, 2020 (see Section 3.2), enhancing its balance sheet flexibility. The Company used the remaining proceeds from the sale to fund growth in the single-family rental portfolio and for general corporate purposes. The joint venture also gives Tricon the opportunity to earn incremental property management, asset management and performance fees from managing the associated third-party capital.

TRICON RESIDENTIAL 2021 SECOND QUARTER REPORT 25

MANAGEMENT’S DISCUSSION AND ANALYSIS

for the three and six months ended June 30, 2021

3.2 Review of selected balance sheet items


As at
(in thousands of U.S. dollars)	June 30, 2021		December 31, 2020
ASSETS
Non-current assets
Rental properties	$	5,977,912	$	6,321,918
Equity-accounted investments in multi-family rental properties		140,532		19,913
Equity-accounted investments in Canadian residential developments		93,165		74,955
Canadian development properties		117,885		110,018
Investments in U.S. residential developments		154,370		164,842
Restricted cash		110,758		116,302
Goodwill		29,726		108,838
Deferred income tax assets		70,984		102,444
Intangible assets		10,649		12,363
Other assets		82,099		47,990
Derivative financial instruments		30		841

Total non-current assets		6,788,110		7,080,424

Current assets
Cash		84,770		55,158
Amounts receivable		29,742		25,593
Prepaid expenses and deposits		15,038		13,659

Total current assets		129,550		94,410

Total assets	$	6,917,660	$	7,174,834

LIABILITIES
Non-current liabilities
Long-term debt	$	3,248,072	$	3,863,316
Convertible debentures		—		165,956
Due to Affiliate		253,954		251,647
Derivative financial instruments		108,562		45,494
Deferred income tax liabilities		322,500		298,071
Limited partners’ interests in single-family rental business		559,893		356,305
Long-term incentive plan		22,594		17,930
Other liabilities		27,128		4,599

Total non-current liabilities		4,542,703		5,003,318

Current liabilities
Amounts payable and accrued liabilities		98,291		98,290
Resident security deposits		48,414		45,157
Dividends payable		11,839		10,641
Current portion of long-term debt		25,000		274,190
Convertible debentures		167,513		—
Derivative financial instruments		14,681		—

Total current liabilities		365,738		428,278

Total liabilities		4,908,441		5,431,596

Equity
Share capital		1,359,587		1,192,963
Contributed surplus		20,644		19,738
Cumulative translation adjustment		27,356		23,395
Retained earnings		595,657		499,000

Total shareholders’ equity		2,003,244		1,735,096
Non-controlling interest		5,975		8,142

Total equity		2,009,219		1,743,238

Total liabilities and equity	$	6,917,660	$	7,174,834

26 2021 SECOND QUARTER REPORT TRICON RESIDENTIAL

MANAGEMENT’S DISCUSSION AND ANALYSIS

for the three and six months ended June 30, 2021

Rental properties

The table below presents the changes in the fair value of rental properties by business segment for the six months ended June 30, 2021 and the year ended December 31, 2020.


	June 30, 2021									December 31, 2020
(in thousands of U.S. dollars)	Single-Family Rental			Multi-Family Rental			Total			Single-Family Rental			Multi-Family Rental			Total
Opening balance	$	4,990,542		$	1,331,376		$	6,321,918		$	4,337,681		$	1,344,844		$	5,682,525
Acquisitions		557,685			—			557,685			356,514			—			356,514
Capital expenditures		71,314			2,030			73,344			93,568			9,067			102,635
Fair value adjustments		366,614			—			366,614			220,849			(22,535	)		198,314
Dispositions		(8,243	)		(1,333,406	)		(1,341,649	)		(18,070	)		—			(18,070	)

Balance, end of period	$	5,977,912		$	—		$	5,977,912		$	4,990,542		$	1,331,376		$	6,321,918

Rental properties decreased by $0.3 billion to $6.0 billion as at June 30, 2021, from $6.3 billion as at December 31, 2020. The decrease was driven by:

•

The disposition of an 80% interest in the U.S. multi-family portfolio on March 31, 2021, which resulted in the deconsolidation of $1.3 billion of rental properties. The Company’s remaining 20% interest in the U.S. multi-family rental joint venture is equity-accounted effective March 31, 2021.

•

Acquisitions of 2,266 single-family rental homes in the first six months of 2021 for $557.7 million, partially offset by the disposition of 52 properties with an aggregate carrying value of $8.2 million.

•

Capital expenditures of $73.3 million of which $47.9 million was attributable to the renovation of newly-acquired single-family homes, and the remainder to the maintenance and improvement of homes across the existing single-family rental portfolio.

•

Fair value gain of $366.6 million on the single-family rental portfolio driven by very strong 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.

Equity-accounted investments in multi-family rental properties

Equity-accounted investments in multi-family rental properties include Tricon’s 20% interest in the new U.S. multi-family rental joint venture formed on March 31, 2021 along with its 15% investment in 592 Sherbourne LP, which owns The Selby. The table below presents the change in equity-accounted investments in multi-family rental properties for the six months ended June 30, 2021 and the year ended December 31, 2021.


(in thousands of U.S. dollars)	June 30, 2021			December 31, 2020
Opening balance⁽¹⁾	$	19,913		$	19,733
Initial recognition of equity-accounted investment in U.S. multi-family rental properties		107,895			—
Advances		453			—
Distributions		(2,082	)		(935	)
Income from equity-accounted investments in multi-family rental properties		13,815			746
Translation adjustment		538			369

Balance, end of period	$	140,532		$	19,913

(1)	As at December 31, 2020, Tricon’s equity-accounted investments in multi-family properties include The Selby only.

Equity-accounted investments in multi-family rental properties increased by $120.6 million to $140.5 million as at June 30, 2021 compared to $19.9 million as at December 31, 2020. The increase was primarily attributable to the initial recognition of Tricon’s equity-accounted investment in the U.S. multi-family rental joint venture on March 31, 2021 as well as subsequent income from this portfolio driven by fair value gains on selected properties, partially offset by distributions from the joint venture.

TRICON RESIDENTIAL 2021 SECOND QUARTER REPORT 27

MANAGEMENT’S DISCUSSION AND ANALYSIS

for the three and six months ended June 30, 2021

Equity-accounted investments in Canadian residential developments

The table below presents the change in equity-accounted investments in Canadian residential developments for the six months ended June 30, 2021 and the year ended December 31, 2021.


(in thousands of U.S. dollars)	June 30, 2021		December 31, 2020
Opening balance	$	74,955	$	55,408
Advances		16,054		4,294
Income from equity-accounted investments in Canadian residential developments		24		13,378
Translation adjustment		2,132		1,875

Balance, end of period	$	93,165	$	74,955

Equity-accounted investments in Canadian residential developments increased by $18.2 million to $93.2 million as at June 30, 2021 compared to $75.0 million as at December 31, 2020. The increase was attributable to advances of $16.1 million relating primarily to the acquisition of the first project under the joint venture with the Canada Pension Plan Investment Board, as well as a favourable foreign exchange translation adjustment of $2.1 million.

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 six months ended June 30, 2021 and the year ended December 31, 2020.


(in thousands of U.S. dollars)	June 30, 2021		December 31, 2020
Opening balance	$	110,018	$	35,625
Acquisitions		—		65,861
Development expenditures		4,818		2,998
Translation adjustment		3,049		5,534

Balance, end of period	$	117,885	$	110,018

Canadian development properties increased by $7.9 million to $117.9 million as at June 30, 2021 compared to $110.0 million as at December 31, 2020. The increase was primarily driven by $4.8 million of development expenditures at The James and a favourable foreign exchange translation adjustment of $3.0 million.

Investments in U.S. residential developments

The table below presents the change in investments in U.S. residential developments for the six months ended June 30, 2021 and the year ended December 31, 2020.


(in thousands of U.S. dollars)	June 30, 2021			December 31, 2020
Opening balance	$	164,842		$	300,653
Advances		2,624			3,408
Distributions		(28,006	)		(77,443	)
Income (loss) from investments in U.S. residential developments		14,910			(61,776	)

Balance, end of period	$	154,370		$	164,842

Investments in U.S. residential developments decreased by $10.5 million to $154.4 million as at June 30, 2021 compared to $164.8 million as at December 31, 2020. The decrease was primarily attributable to distributions of $28.0 million, which were generated from the strategic disposition of the Company’s interest in an active-adult project and the receipt of cash flows ahead of budget as a result of favourable economic conditions. This decrease was partially offset by investment income of $14.9 million as a result of healthy project performance mainly driven by strong housing demand and favourable economic conditions further discussed in Section 3.1.

28 2021 SECOND QUARTER REPORT TRICON RESIDENTIAL

MANAGEMENT’S DISCUSSION AND ANALYSIS

for the three and six months ended June 30, 2021

Debt

The following table summarizes the consolidated net debt position of the Company.


As at
(in thousands of U.S. dollars)	June 30, 2021			December 31, 2020			Variance
Single-family rental properties borrowings	$	3,238,508		$	3,156,601		$	81,907
Multi-family rental properties borrowings		—			910,340			(910,340	)
Canadian development properties borrowings		35,201			60,037			(24,836	)
Corporate borrowings		25,236			37,089			(11,853	)

	$	3,298,945		$	4,164,067		$	(865,122	)
Transaction costs (net of amortization)		(24,554	)		(25,019	)		465
Debt discount (net of amortization)		(1,319	)		(1,542	)		223

Total debt per balance sheet⁽¹⁾	$	3,273,072		$	4,137,506		$	(864,434	)
Cash and restricted cash		(195,528	)		(171,460	)		(24,068	)

Net debt	$	3,077,544		$	3,966,046		$	(888,502	)

Total assets	$	6,917,660		$	7,174,834		$	(257,174	)
Net debt to assets⁽²⁾		45.8	%		56.6	%

(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 decreased by $0.9 billion to $3.1 billion as at June 30, 2021, from $4.0 billion as at December 31, 2020. The variance was primarily attributable to:

•

A reduction of $910.3 million in multi-family rental borrowings in connection with the Company’s sale of 80% of its interests in the U.S. multi-family rental business on March 31, 2021. This transaction resulted in the deconsolidation of $800.5 million of long-term debt and the full repayment of an associated $109.9 million credit facility with a portion of the proceeds from the sale.

•

A decrease of $24.8 million in Canadian development properties borrowings attributable to the full repayment of the vendor take-back loan relating to The James.

•

An offsetting increase of $81.9 million in single-family rental properties borrowings driven by additional net debt incurred to finance home acquisitions.

•

An increase in cash and restricted cash of $24.1 million, which further reduced the net debt balance, primarily attributable to a higher cash balance being maintained to finance the acquisition of single-family rental homes expected to close next quarter.

The weighted average interest rate applicable to debt owed by the Company as at June 30, 2021 was 2.97% . The following table summarizes the debt structure and leverage position as at June 30, 2021:


(in thousands of U.S. dollars) Debt structure	Balance		% of total			Weighted average interest rate			Weighted average time to maturity (years)
Fixed	$	2,482,710		75.3	%		3.04	%		4.0
Floating		816,235		24.7	%		2.78	%		1.3

Total/Weighted average	$	3,298,945		100.0	%		2.97	%		3.3

As at June 30, 2021, the SFR JV-1 subscription facility of $24.3 million comprises the majority of Tricon’s near-term debt maturities. The SFR JV-1 subscription facility will be repaid jointly with the limited partners as per the joint venture agreement. The Company repaid $346.3 million of near-term debt during the second quarter, resulting in a relatively unchanged weighted average time to maturity of 3.3 years as at June 30, 2021 compared to 3.4 years in the previous quarter.

On June 30, 2021, Tricon and its syndicate of lenders completed the amendment and restatement of the Company’s revolving corporate credit facility. The primary substance of the amendments was to extend the maturity date of the facility to June 2024 and to update the financial covenants under the facility, which had originally been designed to reflect investment entity accounting, to bring them in line with the Company’s financial performance measurement under consolidated accounting.

TRICON RESIDENTIAL 2021 SECOND QUARTER REPORT 29

MANAGEMENT’S DISCUSSION AND ANALYSIS

for the three and six months ended June 30, 2021

Tricon’s debt maturities as at June 30, 2021 are presented below, assuming the exercise of all extension options.

DEBT MATURITY ANALYSIS*

(in millions of U.S. dollars)

LOGO

*	Assumes the exercise of all extension options.

3.3 Subsequent events

SFR JV-2

Subsequent to quarter-end, on July 19, 2021, the Company announced a new single-family rental joint venture (“SFR JV-2”) with three institutional investors to acquire single-family rental homes targeting the middle-market demographic in the U.S. Sun Belt. The joint venture will have an initial equity capitalization of $1.4 billion, with the partners having the option to increase their commitment to $1.55 billion, including Tricon’s co-investment of $450 million. This represents approximately $5.0 billion of purchasing potential when including associated leverage and will enable the joint venture to acquire approximately 18,000 single-family homes over the next three years, primarily from resale channels complementing Tricon’s other single-family rental Investment Vehicles.

2022 convertible debentures

Quarterly dividend

30 2021 SECOND QUARTER REPORT TRICON RESIDENTIAL

LOGO

4 OPERATING RESULTS OF BUSINESSES

MANAGEMENT’S DISCUSSION AND ANALYSIS

for the three and six months ended June 30, 2021

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 business-by-business 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.

32 2021 SECOND QUARTER REPORT TRICON RESIDENTIAL

MANAGEMENT’S DISCUSSION AND ANALYSIS

for the three and six months ended June 30, 2021

Operational highlights by segment

The following table summarizes Tricon’s proportionate share of operating results and key performance metrics for each business segment.


For the periods ended June 30	Three months						Six months
(in thousands of U.S. dollars, except percentages and units)	2021			2020			2021			2020
SINGLE-FAMILY RENTAL (Refer to Section 4.1)
Total rental homes managed		24,961			21,582
Net operating income (NOI)⁽¹⁾	$	54,057		$	49,192		$	105,684		$	96,860
Same home net operating income (NOI) margin⁽¹⁾		66.6	%		66.4	%		66.6	%		66.2	%
Same home net operating income (NOI) margin,excluding storm impact^(1),(2)		66.9	%		66.4	%		67.0	%		66.2	%
Same home net operating income (NOI) growth⁽¹⁾		5.5	%		N/A			4.9	%		N/A
Same home net operating income (NOI) growth,excluding storm impact^(1),(2)		6.1	%		N/A			5.5	%		N/A
Same home occupancy⁽¹⁾		97.6	%		97.5	%		97.5	%		97.0	%
Same home annualized turnover⁽¹⁾		22.6	%		23.0	%		21.5	%		22.2	%
Same home average quarterly rent growth – renewal⁽¹⁾		4.7	%		3.3	%		4.4	%		4.1	%
Same home average quarterly rent growth – new move-in⁽¹⁾		17.0	%		8.0	%		14.8	%		7.4	%
Same home average quarterly rent growth – blended⁽¹⁾		8.0	%		4.6	%		7.4	%		5.1	%
MULTI-FAMILY RENTAL (Refer to Section 4.2)
U.S. multi-family rental⁽³⁾–See Section 4.2.1
Total suites managed		7,289			7,289
Net operating income (NOI)⁽⁴⁾	$	3,471		$	3,277		$	6,716		$	6,693
Net operating income (NOI) margin⁽⁴⁾		59.1	%		59.0	%		58.3	%		59.4	%
Net operating income (NOI) growth⁽⁴⁾		5.9	%		N/A			0.3	%		N/A
Occupancy⁽⁴⁾		95.6	%		93.5	%
Annualized turnover⁽⁴⁾		49.6	%		46.5	%
Average quarterly rent growth – renewal⁽⁴⁾		5.9	%		—
Average quarterly rent growth – new move-in⁽⁴⁾		14.3	%		(5.5	%)
Average quarterly rent growth – blended⁽⁴⁾		10.2	%		(2.2	%)
Canadian multi-family rental⁽⁵⁾–See Section 4.2.2
Total suites managed		500			500
Net operating income (NOI)⁽⁶⁾	$	214		$	252		$	445		$	495
Net operating income (NOI) margin⁽⁶⁾		54.5	%		62.1	%		56.3	%		62.3	%
Occupancy⁽⁶⁾		85.6	%		88.2	%
Annualized turnover⁽⁶⁾		40.0	%		27.2	%
Average quarterly rent growth – blended⁽⁶⁾		(17.4	%)		0.7	%
RESIDENTIAL DEVELOPMENT (Refer to Section 4.3)
Investments in residential developments⁽⁷⁾	$	337,009		$	348,605
Cash distributions from investments to Tricon excluding performance fees		15,772			7,279		$	28,006		$	58,757
PRIVATE FUNDS AND ADVISORY (Refer to Sections 3.1 and 4.4)
Revenue from private funds and advisory services	$	13,113		$	8,122		$	22,043		$	15,937
Third-party AUM⁽⁸⁾		4,289,486			2,393,842

(1)

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

(2)	The same home NOI margin and NOI growth exclude the impact of a severe winter storm in Texas in 2021.

(3)	For the three and six months ended June 30, 2021, the total property results equate to same property results for the U.S. multi-family rental portfolio.

(4)	Results prior to the syndication of the U.S. multi-family portfolio have been recast to reflect Tricon’s current 20% ownership in the portfolio. All operating metrics are stated at Tricon’s proportionate share of the managed portfolio.

(5)

Presented within equity-accounted investments in multi-family rental properties and income from equity-accounted investments in multi-family rental properties, 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.

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

(7)	Represents Tricon’s equity-accounted investments in Canadian residential developments, Canadian development properties (net of debt) and investments in U.S. residential developments.

(8)	KPI measure; see Section 7.2.

TRICON RESIDENTIAL 2021 SECOND QUARTER REPORT 33

MANAGEMENT’S DISCUSSION AND ANALYSIS

for the three and six months ended June 30, 2021


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 ventures (“SFR JV-1” and “SFR JV-HD”), unless otherwise stated.

Business update

The Company’s single-family rental business continued to benefit from increased demand for high-quality rental homes. Throughout the COVID-19 pandemic, the business experienced an acceleration of pre-existing trends including migration to desirable Sun Belt markets and a preference for flexible and affordable rental living. In addition, single-family rentals have been rewarded by the shift towards work-from-home employment, with families prioritizing larger living spaces. In the quarter, Tricon continued to benefit from these entrenched fundamentals as well as improving employment metrics, which in turn have contributed to sustained high occupancy levels and record blended rent growth of 8.0%, including 16.7% on new move-ins and 4.6% on renewals. Meanwhile, the supply of new housing continues to be constrained by ongoing challenges related to securing entitlements for new lots and by a shortage of labour and materials, including pandemic-related supply chain bottlenecks. Tricon’s more affordable rental homes provide a much-needed alternative to the rising cost of home ownership, particularly for new households and young families.

Texas storm update

During the quarter, the Company continued restoring properties damaged by the winter storm in Texas and incurred additional costs of $0.3 million ($0.6 million YTD) for minor repairs and $0.5 million ($1.1 million YTD) in relation to major restoration work that was capitalized. This program is now substantially complete, and the majority of storm-affected homes have been repaired. Aggregate insurance claims of $2.1 million (including $1.7 million of damage insurance) have been submitted, and all insurance proceeds are expected to be recognized as income in the second half of the year.

Portfolio details – total

The table below provides 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, SFR JV-HD and homes wholly-owned by Tricon.


	Q2 2021			Q1 2021			Q4 2020			Q3 2020			Q2 2020			Q1 2020
Tricon wholly-owned homes		15,507			15,375			15,355			15,384			15,410			15,429
SFR JV homes (34% TCN / 66% JV Partners)		9,501			8,160			7,439			6,597			6,212			6,154

Total homes managed		25,008			23,535			22,794			21,981			21,622			21,583
Less homes held for sale		47			33			28			33			40			48

Rental homes		24,961			23,502			22,766			21,948			21,582			21,535
Homes acquired		1,504			762			842			388			68			538
Less homes disposed		(31	)		(21	)		(29	)		(29	)		(29	)		(32	)

Net homes acquired during the quarter⁽¹⁾		1,473			741			813			359			39			506

(1)	Of the homes acquired during the quarter, 1,341 were acquired by the joint ventures and 163 wholly-owned homes were acquired (these are expected to be sold into a new joint venture, “SFR JV-2” in Q3). All homes disposed of during the period were wholly-owned.

During the quarter, the Company expanded its portfolio through the organic acquisition of a record 1,504 homes at an average cost per home of $268,000, including up-front renovations. Management expects to exceed pre-pandemic acquisition levels by targeting an average of 1,500 home acquisitions per quarter for the remainder of 2021.

On May 10, 2021, the Company entered into the Homebuilder Direct joint venture (“SFR JV-HD”) to acquire new single-family homes primarily from homebuilders and developers in its target markets, which naturally complements its existing organic and portfolio acquisition programs. Subsequent to quarter-end, the Company announced a new joint venture (“SFR JV-2”) which will enable it to increase its purchasing potential of resale or existing homes (see Section 3.3) .

34 2021 SECOND QUARTER REPORT TRICON RESIDENTIAL

MANAGEMENT’S DISCUSSION AND ANALYSIS

for the three and six months ended June 30, 2021


4.1 Single-Family Rental

While home prices continued to appreciate in Tricon’s acquisition markets, rents have also been increasing at a similar pace, allowing the Company to maintain its targeted pace of acquisitions at attractive cap rates. Management continues to see a vast growth opportunity in single-family rental as Tricon’s annual acquisitions represent a negligible percentage (estimated to be less than 0.5%) of resale home volumes in its Sun Belt markets.


Geography	Rental homes		Average vintage		Average total cost per home (in U.S. dollars)		Average size (sq. feet)		Tricon % ownership
Atlanta		5,655		1997	$	166,000		1,752		76.0	%
Charlotte		2,936		1999		183,000		1,601		65.3	%
Nashville		1,195		2009		291,000		1,905		33.7	%
Columbia		979		1997		142,000		1,511		62.6	%
Raleigh		369		2006		224,000		1,534		33.7	%
Greensboro⁽¹⁾		8		2007		255,000		1,863		83.4	%

Southeast United States		11,142		1999	$	184,000		1,700		66.1	%
Phoenix		2,186		1996	$	197,000		1,693		98.8	%
Northern California		995		1970		226,000		1,303		100.0	%
Las Vegas		686		1997		205,000		1,674		99.9	%
Southern California		267		1963		193,000		1,312		100.0	%
Reno		248		1981		182,000		1,549		100.0	%

Western United States		4,382		1987	$	204,000		1,570		99.4	%
Dallas		1,945		1992	$	180,000		1,594		72.5	%
Houston		1,606		1994		166,000		1,613		69.7	%
San Antonio⁽²⁾		719		2001		181,000		1,622		56.9	%

Texas		4,270		1995	$	175,000		1,606		68.9	%
Tampa		1,971		1988	$	189,000		1,565		82.2	%
Jacksonville		844		1996		179,000		1,523		68.5	%
Southeast Florida		672		1968		182,000		1,434		100.0	%
Orlando		533		1990		195,000		1,484		86.3	%

Florida		4,020		1987	$	187,000		1,523		82.9	%
Indianapolis		1,147		2002	$	164,000		1,641		58.9	%

Midwest United States		1,147		2002	$	164,000		1,641		58.9	%

Total/Weighted average		24,961		1995	$	185,000		1,630		74.8	%

(1)	Newly entered market in the current period.

(2)	Includes one property acquired in Austin.

TRICON RESIDENTIAL 2021 SECOND QUARTER REPORT 35

MANAGEMENT’S DISCUSSION AND ANALYSIS

for the three and six months ended June 30, 2021


4.1 Single-Family Rental

Dedicated rental home communities (build-to-rent)

Tricon currently owns seven build-to-rent communities totalling 619 homes and has a robust acquisition and development pipeline that is expected to increase its community count by an additional 15 to 20 communities over the next two years (see “Non-IFRS measures and forward-looking statements” on page 1). These communities are located across Tricon’s target geographic markets and offer residents the benefit of living in a new home and typically include shared amenities such as parks, playgrounds, pools and community gathering spaces.

Community

Location

Number of homes
(at completion)

Status

Vistancia

Phoenix, AZ

136

Stabilized

Canterbury Crossings

Charlotte, NC

Stabilized

Hillwood Court

Nashville, TN

Stabilized

Hickory Station

Nashville, TN

Stabilized

Carriage Hills

Atlanta, GA

Stabilized

Palomino Ranch

Houston, TX

134

Under development

Trails at Culebra⁽¹⁾

San Antonio, TX

124

Under development

Total

619

(1)	The homes in this community are not included in the rental homes portfolio; however, they are part of Tricon’s build-to-rent strategy currently being pursued within the existing THPAS JV-1 joint venture investment vehicle (see Section 4.3.2) .

Quarterly operating trends – Tricon’s proportionate share of the total portfolio

Operating metric highlights

Operating highlights for the total portfolio included strong occupancy of 96.1% in spite of a record number of organic acquisitions during the quarter. In addition, the single-family rental business experienced accelerating rent growth during the quarter and achieved record blended rent growth of 8.0%, comprised of 16.7% growth on new leases as well as 4.6% growth on renewals. The Company continues to maintain an occupancy bias by self-governing rent growth for existing residents resulting in increased resident tenure at the expense of modestly higher renewal rent growth. Management expects that a favourable supply-demand imbalance coupled with inherent portfolio loss-to-lease, estimated to be 12% to 15% of current rents, will continue to drive robust rent growth in 2021 and beyond (see “Non-IFRS measures and forward-looking statements” on page 1). The annualized turnover rate was 23.1% during the second quarter of 2021, a 0.4% decline from 23.5% recorded in the same period in 2020, reflecting Tricon’s continued focus on exceptional customer service and resident retention.


Proportionate operating metrics	Q2 2021			Q1 2021			Q4 2020			Q3 2020			Q2 2020			Q1 2020
Occupancy		96.1	%		96.3	%		96.4	%		97.3	%		97.1	%		95.5	%
Annualized turnover rate		23.1	%		20.8	%		22.3	%		26.3	%		23.5	%		21.4	%
Average monthly rent	$	1,513		$	1,483		$	1,464		$	1,450		$	1,432		$	1,420
Average quarterly rent growth – renewal		4.6	%		4.0	%		2.9	%		2.4	%		3.2	%		5.3	%
Average quarterly rent growth – new move-in		16.7	%		12.1	%		10.7	%		11.6	%		7.5	%		7.5	%
Average quarterly rent growth – blended		8.0	%		6.4	%		5.4	%		5.1	%		4.5	%		5.9	%

36 2021 SECOND QUARTER REPORT TRICON RESIDENTIAL

MANAGEMENT’S DISCUSSION AND ANALYSIS

for the three and six months ended June 30, 2021


4.1 Single-Family Rental

Operating results – Tricon’s proportionate share of the total portfolio


For the three months ended June 30 (in thousands of U.S. dollars)	2021			% of revenue			2020⁽¹⁾			% of revenue			Variance			% Variance
Rental revenue	$	79,542					$	72,892					$	6,650			9.1	%
Concessions and abatements		(450	)					(206	)					(244	)		(118.4	%)
Fees and other revenue		3,359						2,383						976			41.0	%
Bad debt expense		(1,393	)					(1,208	)					(185	)		(15.3	%)

Total revenue from rental properties	$	81,058			100.0	%	$	73,861			100.0	%	$	7,197			9.7	%
Property taxes		12,319			15.2	%		11,370			15.4	%		(949	)		(8.3	%)
Repairs and maintenance		4,444			5.5	%		3,624			4.9	%		(820	)		(22.6	%)
Turnover		1,058			1.3	%		1,504			2.0	%		446			29.7	%
Property management expenses		5,333			6.6	%		4,829			6.5	%		(504	)		(10.4	%)
Property insurance		1,189			1.5	%		1,077			1.5	%		(112	)		(10.4	%)
Marketing and leasing		238			0.3	%		298			0.4	%		60			20.1	%
Homeowners’ association (HOA) costs		1,163			1.4	%		971			1.3	%		(192	)		(19.8	%)
Other direct expenses		1,257			1.6	%		996			1.3	%		(261	)		(26.2	%)

Total direct operating expenses	$	27,001					$	24,669					$	(2,332	)		(9.5	%)
Net operating income (NOI)^(2),(3)	$	54,057					$	49,192					$	4,865			9.9	%
Net operating income (NOI) margin^(2),(3)		66.7	%					66.6	%

(1)

The Company elected to replace its property management expense with directly incurred property-level compensation costs effective January 1, 2021. The property management expense above represents property-level operations personnel costs. Marketing and leasing expenses that were previously included in the property management expense have now been reclassified as a separate line item. The comparative period has been reclassified to conform with the current period presentation, and there was no impact on NOI or NOI margin as a result of this change in presentation.

(2)	KPI measures; see Section 7.1.

(3)	NOI and NOI margin include the impacts of a severe winter storm in Texas in 2021. The following table excludes the non-recurring repairs and concessions offered in relation to the Texas storm:


For the three months ended June 30
(in thousands of U.S. dollars)	2021			2020			% Variance
Total revenue from rental properties	$	81,107		$	73,861			9.8	%
Total direct operating expenses		26,772			24,669			(8.5	%)

Net operating income (NOI), excluding storm impact	$	54,335		$	49,192			10.5	%
Net operating income (NOI) margin, excluding storm impact		67.0	%		66.6	%

TRICON RESIDENTIAL 2021 SECOND QUARTER REPORT 37

MANAGEMENT’S DISCUSSION AND ANALYSIS

for the three and six months ended June 30, 2021


4.1 Single-Family Rental


For the six months ended June 30 (in thousands of U.S. dollars)	2021			% of revenue			2020⁽¹⁾			% of revenue			Variance			% Variance
Rental revenue	$	156,008					$	143,459					$	12,549			8.7	%
Concessions and abatements		(786	)					(627	)					(159	)		(25.4	%)
Fees and other revenue		6,000						5,196						804			15.5	%
Bad debt expense		(3,005	)					(1,788	)					(1,217	)		(68.1	%)

Total revenue from rental properties	$	158,217			100.0	%	$	146,240			100.0	%	$	11,977			8.2	%
Property taxes		24,534			15.5	%		22,910			15.7	%		(1,624	)		(7.1	%)
Repairs and maintenance		8,297			5.2	%		7,279			5.0	%		(1,018	)		(14.0	%)
Turnover		1,890			1.2	%		2,841			1.9	%		951			33.5	%
Property management expenses		10,467			6.6	%		9,770			6.7	%		(697	)		(7.1	%)
Property insurance		2,381			1.5	%		2,147			1.5	%		(234	)		(10.9	%)
Marketing and leasing		485			0.3	%		542			0.4	%		57			10.5	%
Homeowners’ association (HOA) costs		2,186			1.4	%		1,912			1.3	%		(274	)		(14.3	%)
Other direct expenses		2,293			1.4	%		1,979			1.4	%		(314	)		(15.9	%)

Total direct operating expenses	$	52,533					$	49,380					$	(3,153	)		(6.4	%)
Net operating income (NOI)^(2),(3)	$	105,684					$	96,860					$	8,824			9.1	%
Net operating income (NOI) margin^(2),(3)		66.8	%					66.2	%

(1)

(2)	KPI measures; see Section 7.1.

(3)	NOI and NOI margin include the impacts of a severe winter storm in Texas in 2021. The following table excludes the non-recurring repairs and concessions offered in relation to the Texas storm:


For the six months ended June 30
(in thousands of U.S. dollars)	2021			2020			% Variance
Total revenue from rental properties	$	158,356		$	146,240			8.3	%
Total direct operating expenses		52,042			49,380			(5.4	%)

Net operating income (NOI), excluding storm impact	$	106,314		$	96,860			9.8	%
Net operating income (NOI) margin, excluding storm impact		67.1	%		66.2	%

Total portfolio NOI increased by $4.9 million or 9.9% to $54.1 million in the second quarter of 2021 compared to $44.9 million in the second quarter of 2020. Excluding the impact of the Texas storm-related expenses, NOI would have been $54.3 million, representing a 10.5% increase year-over-year. The variance in NOI is primarily driven by a $6.7 million or 9.1% increase in rental revenue as a result of higher average monthly rent ($1,513 in Q2 2021 vs. $1,432 in Q2 2020) and a larger rental portfolio (Tricon’s proportionate share of homes was 18,662 in Q2 2021 compared to 17,461 in Q2 2020). Fees and other revenue also increased by $1.0 million, driven by portfolio expansion as well as incremental ancillary revenue earned on additional services provided to residents, such as the roll-out of the smart-home technology program.

Direct operating expenses in the quarter increased by $2.3 million or 9.5% driven by higher costs incurred on a larger portfolio of homes, which were partially offset by savings on turnover as well as marketing and leasing expenses. The turnover expense savings were attributable to a slightly lower turnover rate, higher resident recoveries, and a higher percentage of turnover costs being capitalized as non-essential capital projects were curtailed in the comparative period.

38 2021 SECOND QUARTER REPORT TRICON RESIDENTIAL

MANAGEMENT’S DISCUSSION AND ANALYSIS

for the three and six months ended June 30, 2021


4.1 Single-Family Rental

Cost to maintain – Tricon’s proportionate share of the total portfolio


(in thousands of U.S. dollars, except cost to maintain per home and cost to maintain per square foot)	Q2 2021		Q1 2021		Q4 2020		Q3 2020		Q2 2020		Q1 2020
Recurring operating expense
Repairs and maintenance operating expense	$	4,444	$	3,853	$	4,057	$	4,023	$	3,680	$	3,655
Turnover operating expense		1,058		832		986		1,368		1,504		1,337

Total recurring operating expense	$	5,502	$	4,685	$	5,043	$	5,391	$	5,184	$	4,992
Recurring capital expenditures
Repairs and maintenance capital expense	$	5,861	$	4,748	$	5,129	$	5,666	$	4,330	$	4,136
Turnover capital expense		1,089		555		421		726		628		1,426

Total recurring capital expenditures	$	6,950	$	5,303	$	5,550	$	6,392	$	4,958	$	5,562
Total cost to maintain		12,452		9,988		10,593		11,783		10,142		10,554
Annualized recurring operating expense per home		1,216		1,056		1,152		1,238		1,193		1,160
Annualized recurring capital expense per home		1,536		1,195		1,267		1,468		1,141		1,293

Total annualized cost to maintain per home	$	2,752	$	2,251	$	2,419	$	2,706	$	2,334	$	2,453

Total annualized cost to maintain per square foot	$	1.69	$	1.39	$	1.50	$	1.68	$	1.45	$	1.52

Total cost to maintain was $12.5 million for the three months ended June 30, 2021, an increase of $2.3 million or 22.8% compared to the same period in the prior year. This increase was driven by higher repairs and maintenance expense on a larger portfolio of homes, an increase in repair activities related to the Texas winter storm, and suppressed recurring capital expenditures in the comparative period as non-essential capital projects were delayed as a result of the COVID-19 pandemic.

Capital expenditures – Tricon’s proportionate share of the total portfolio


(in thousands of U.S. dollars)	Q2 2021		Q1 2021		Q4 2020		Q3 2020		Q2 2020		Q1 2020
Up-front renovation capital expenditures	$	14,380	$	13,738	$	13,376	$	6,020	$	5,952	$	9,006
Recurring capital expenditures		6,950		5,303		5,550		6,392		4,958		5,562
Value-enhancing capital expenditures		4,979		2,245		2,141		2,525		2,728		2,659

Total capital expenditures	$	26,309	$	21,286	$	21,067	$	14,937	$	13,638	$	17,227

Total capital expenditures were $26.3 million for the three months ended June 30, 2021, an increase of $12.7 million or 93% compared to the same period in the prior year. The variance was primarily attributable to an increase in up-front renovation capital expenditures as a high number of homes requiring renovations were acquired through organic channels during the quarter, whereas home acquisition activity was temporarily paused in the comparative period as a result of the pandemic.

Recurring capital expenditures increased year-over-year as a result of the Texas winter storm-related charges, growth in the portfolio size and the delay of non-essential capital expenditures in the comparative period as discussed above. Additionally, the Company saw increased recurring capital spending needs for homes that have not turned for a prolonged period of time, driven by the record low turnover rates throughout the pandemic.

The Company also incurred higher value-enhancing capital expenditures during the quarter as a result of a national pool fencing enhancement program, which increased the safety and security of its homes.

Rental properties balance sheet activities – Tricon’s proportionate share of the total portfolio


For the six months ended June 30 (in thousands of U.S. dollars)	2021			2020
Cost basis of rental properties, beginning of period	$	3,086,918		$	2,913,716
Acquisition of rental properties		234,768			40,004
Disposition of rental properties		(6,810	)		(8,481	)
Up-front renovation capital expenditures		28,118			14,958
Recurring capital expenditures		12,253			10,520
Value-enhancing capital expenditures		7,225			5,387

Total cost basis of rental properties	$	3,362,472		$	2,976,104
Cumulative fair value adjustment		1,151,385			713,519

Fair value of rental properties	$	4,513,857		$	3,689,623

TRICON RESIDENTIAL 2021 SECOND QUARTER REPORT 39

MANAGEMENT’S DISCUSSION AND ANALYSIS

for the three and six months ended June 30, 2021


4.1 Single-Family Rental

Same home operating results – Tricon’s proportionate share

The same home portfolio includes homes that have been stabilized since September 30, 2019 as per the NAREIT guidelines (see Section 7.1).

Operating metric highlights

For the same home portfolio, blended rent growth for the quarter was 8.0% (including 17.0% on new leases and 4.7% on renewals), accompanied by a 0.1% increase in occupancy to 97.6% from 97.5% recorded in the same period in 2020. The Company’s continued focus on resident retention and its occupancy bias helped it achieve an annualized turnover rate of 22.6% on the same home portfolio, a 0.4% decrease compared to 23.0% in the second quarter of 2020.


For the periods ended June 30 (in U.S. dollars)	Three months									Six months
For the periods ended June 30 (in U.S. dollars)	2021			2020			Variance			2021			2020			Variance
Operating metrics – same home⁽¹⁾
Tricon wholly-owned rental homes		14,783			14,783			—			14,783			14,783			—
SFR JV-1 homes (34% TCN / 66% JV Partners)		3,374			3,374			—			3,374			3,374			—

Rental homes		18,157			18,157			—			18,157			18,157			—
Occupancy		97.6	%		97.5	%		0.1	%		97.5	%		97.0	%		0.5	%
Annualized turnover rate		22.6	%		23.0	%		0.4	%		21.5	%		22.2	%		0.7	%
Average monthly rent	$	1,509		$	1,431		$	78		$	1,496		$	1,426		$	70
Average rent growth – renewal		4.7	%		3.3	%		1.4	%		4.4	%		4.1	%		0.3	%
Average rent growth – new move-in		17.0	%		8.0	%		9.0	%		14.8	%		7.4	%		7.4	%
Average rent growth – blended		8.0	%		4.6	%		3.4	%		7.4	%		5.1	%		2.3	%

(1)	The operating metrics reflect Tricon’s proportionate share of the same home portfolio, other than the total number of homes comprising the same home portfolio which is presented in aggregate.


For the three months ended June 30 (in thousands of U.S. dollars)	2021			% of revenue			2020			% of revenue			Variance			% Variance
Rental revenue	$	70,004					$	66,665					$	3,339			5.0	%
Concessions and abatements		(406	)					(133	)					(273	)		(205.3	%)
Fees and other revenue		2,774						2,079						695			33.4	%
Bad debt expense⁽¹⁾		(1,241	)					(1,106	)					(135	)		(12.2	%)

Total revenue from rental properties	$	71,131			100.0	%	$	67,505			100.0	%	$	3,626			5.4	%
Property taxes		11,045			15.5	%		10,537			15.6	%		(508	)		(4.8	%)
Repairs and maintenance		4,064			5.7	%		3,425			5.1	%		(639	)		(18.7	%)
Turnover		909			1.3	%		1,437			2.1	%		528			36.7	%
Property management expenses		4,669			6.6	%		4,419			6.5	%		(250	)		(5.7	%)
Property insurance		1,082			1.5	%		998			1.5	%		(84	)		(8.4	%)
Marketing and leasing		151			0.2	%		249			0.4	%		98			39.4	%
Homeowners’ association (HOA) costs		931			1.3	%		826			1.2	%		(105	)		(12.7	%)
Other direct expenses		936			1.3	%		758			1.1	%		(178	)		(23.5	%)

Total direct operating expenses	$	23,787					$	22,649					$	(1,138	)		(5.0	%)
Net operating income (NOI)⁽²⁾	$	47,344					$	44,856					$	2,488			5.5	%
Net operating income (NOI) margin⁽²⁾		66.6	%					66.4	%

(1)	The Company has reserved 100% of residents’ accounts receivable balances aged more than 30 days. The bad debt expense during the quarter represented 1.7% of revenue, compared to historical bad debt levels (pre-COVID-19) of approximately 0.8%.

(2)	NOI and NOI margin include the impact of a severe winter storm in Texas in Q1 2021. The following table excludes the non-recurring repairs and concessions associated directly with the Texas storm.


For the three months ended June 30 (in thousands of U.S. dollars)	2021			2020			% Variance
Total revenue from rental properties	$	71,177		$	67,505			5.4	%
Total direct operating expenses		23,582			22,649			(4.1	%)

Net operating income (NOI), excluding storm impact	$	47,595		$	44,856			6.1	%
Net operating income (NOI) margin, excluding storm impact		66.9	%		66.4	%

40 2021 SECOND QUARTER REPORT TRICON RESIDENTIAL

MANAGEMENT’S DISCUSSION AND ANALYSIS

for the three and six months ended June 30, 2021


4.1 Single-Family Rental


For the six months ended June 30 (in thousands of U.S. dollars)	2021			% of revenue			2020			% of revenue			Variance			% Variance
Rental revenue	$	138,645					$	131,985					$	6,660			5.0	%
Concessions and abatements		(695	)					(366	)					(329	)		(89.9	%)
Fees and other revenue		5,017						4,586						431			9.4	%
Bad debt expense		(2,716	)					(1,644	)					(1,072	)		(65.2	%)

Total revenue from rental properties	$	140,251			100.0	%	$	134,561			100.0	%	$	5,690			4.2	%
Property taxes		22,186			15.8	%		21,286			15.8	%		(900	)		(4.2	%)
Repairs and maintenance		7,609			5.4	%		6,776			5.0	%		(833	)		(12.3	%)
Turnover		1,664			1.2	%		2,709			2.0	%		1,045			38.6	%
Property management expenses		9,278			6.6	%		9,008			6.7	%		(270	)		(3.0	%)
Property insurance		2,177			1.6	%		1,999			1.5	%		(178	)		(8.9	%)
Marketing and leasing		349			0.2	%		456			0.3	%		107			23.5	%
Homeowners’ association (HOA) costs		1,783			1.3	%		1,632			1.2	%		(151	)		(9.3	%)
Other direct expenses		1,730			1.2	%		1,550			1.2	%		(180	)		(11.6	%)

Total direct operating expenses	$	46,776					$	45,416					$	(1,360	)		(3.0	%)
Net operating income (NOI)⁽¹⁾	$	93,475					$	89,145					$	4,330			4.9	%
Net operating income (NOI) margin⁽¹⁾		66.6	%					66.2	%

(1)	NOI and NOI margin include the impact of a severe winter storm in Texas in Q1 2021. The following table excludes the non-recurring repairs and concessions associated directly with the Texas storm.


For the six months ended June 30 (in thousands of U.S. dollars)	2021			2020			% Variance
Total revenue from rental properties	$	140,374		$	134,561			4.3	%
Total direct operating expenses		46,331			45,416			(2.0	%)

Net operating income (NOI), excluding storm impact	$	94,043		$	89,145			5.5	%
Net operating income (NOI) margin, excluding storm impact		67.0	%		66.2	%

Total revenue for the same home portfolio increased by $3.6 million or 5.4% to $71.1 million in the second quarter of 2021 compared to $67.5 million for the same period in the prior year. This favourable change was primarily attributable to the following:

•

Rental revenue – Rental revenue was $70.0 million compared to $66.7 million in the comparative period, representing an increase of 5.0%. This favourable variance was primarily driven by a higher average monthly rent per occupied home ($1,509 in Q2 2021 compared to $1,431 in Q2 2020) and a 0.1% increase in occupancy from 97.5% to 97.6%.

•

Fees and other revenue – Fees and other revenue were $2.8 million compared to $2.1 million in the second quarter of 2020, an increase of 33.4%. This increase was mainly driven by incremental ancillary fees from the roll-out of the Company’s smart-home technology program, which offers residents convenient and controlled access to their homes (approximately 25% of same home properties were smart-home enabled in the current quarter compared to 7% in the same period in the prior year). This program is being added to Tricon’s entire portfolio as new homes are acquired or existing homes are vacated.

•

Concessions and abatements – Concessions and abatements were $0.4 million compared to $0.1 million in the comparative period. This variance was primarily attributable to operational concessions, such as late fee and maintenance concessions offered to residents inconvenienced by the winter storm in Texas.

•

Bad debt expense – Bad debt expense remained relatively stable at $1.2 million compared to $1.1 million in the second quarter of 2020, representing 1.7% and 1.6% of revenues, respectively. The comparative period reflected the early onset of the COVID-19 pandemic; bad debt subsequently increased to a peak of 2.8% of revenues in the fourth quarter of 2020 but has since decreased as the economy continues to recover.

Same home operating expenses increased by $1.1 million or 5.0% to $23.8 million in the second quarter of 2021 from $22.6 million during the same period in 2020. The variance is largely attributable to the following:

•

Property taxes – Property taxes were $11.0 million compared to $10.5 million in the comparative period, an increase of 4.8% as a result of higher assessed property values. The rise in property values is driven by continued robust demand for single-family homes in the U.S. Sun Belt, coupled with constrained housing supply. These trends are expected to further inflate assessed property values in the latter half of 2021 and property tax expenses are expected to increase as a result.

•

Repairs and maintenance – Repairs and maintenance expenses were $4.1 million compared to $3.4 million in the comparative period, an increase of 18.7%. This movement was driven by higher work order activity (17,873 work orders completed in Q2 2021 compared to 16,113 in Q2 2020) attributable primarily to one-time repairs associated with the winter storm in Texas. The comparative period activity was also unusually low as the Company deferred non-essential maintenance activities in order to prioritize the health and safety of its residents and maintenance personnel at the height of the pandemic.

TRICON RESIDENTIAL 2021 SECOND QUARTER REPORT 41

MANAGEMENT’S DISCUSSION AND ANALYSIS

for the three and six months ended June 30, 2021


4.1 Single-Family Rental

•

Turnover expense – Turnover expense was $0.9 million compared to $1.4 million in the comparative period, a decrease of 36.7%. This favourable variance was attributable to (i) a lower annualized turnover rate of 22.6% (compared to 23.0% in Q2 2020), (ii) increased capital improvements on turned homes which lowered expense activities during the turn and (iii) higher resident recoveries. Tricon resumed its turn-related capital investment program throughout the quarter, having temporarily paused the program in the same period last year due to the pandemic.

•

Property insurance – Property insurance expense was $1.1 million compared to $1.0 million in the comparative period, an increase of 8.4%. The variance was driven by higher premiums on 2021 renewals in line with insurance premium increases across the industry.

•

Other direct expenses – Other direct expenses were $0.9 million compared to $0.8 million in the comparative period, an increase of $0.2 million or 23.5%, driven by additional costs of providing smart-home technology to more residents, as discussed above. With strong revenue growth outpacing expense growth, NOI increased by 5.5% to $47.3 million in the second quarter of 2021 compared to $44.9 million in the second quarter of 2020. Excluding the impact of the Texas storm-related expenses and concessions, same home NOI would have been $47.6 million, representing a 6.1% increase year-over-year. Same home NOI margin increased to 66.6% in the second quarter of 2021, or to 66.9% when excluding the impact of the Texas storm, from 66.4% in the same period in the prior year.

Same home operating results comparisons – Tricon’s proportionate share

Same home year-over-year comparisons – proportionate


			NOI							NOI margin
Geography	Homes		Q2 2021		Q2 2020		Change (%)			Q2 2021			Q2 2020			Change (%)
Atlanta		4,413	$	10,862	$	10,155		7.0	%		67.7	%		67.5	%		0.2	%
Charlotte		2,032		4,590		4,357		5.3	%		71.2	%		71.4	%		(0.2	%)
Columbia		700		1,121		976		14.9	%		60.0	%		56.0	%		4.0	%
Nashville		47		63		62		1.6	%		75.8	%		80.8	%		(5.0	%)
Raleigh		45		50		42		19.0	%		76.0	%		70.4	%		5.6	%

Southeast United States		7,237	$	16,686	$	15,592		7.0	%		68.1	%		67.8	%		0.3	%

Phoenix		1,896	$	6,144	$	5,636		9.0	%		73.7	%		73.1	%		0.6	%
Northern California		985		4,349		4,298		1.2	%		77.8	%		78.4	%		(0.6	%)
Las Vegas		588		2,026		1,865		8.6	%		75.9	%		74.7	%		1.2	%
Reno		247		1,059		1,013		4.5	%		80.1	%		81.2	%		(1.1	%)
Southern California		239		970		943		2.9	%		70.9	%		71.5	%		(0.6	%)

Western United States		3,955	$	14,548	$	13,755		5.8	%		75.4	%		75.4	%		—

Tampa		1,630	$	4,590	$	4,239		8.3	%		62.8	%		61.4	%		1.4	%
Southeast Florida		640		1,870		1,873		(0.2	%)		55.3	%		55.1	%		0.2	%
Jacksonville		568		1,339		1,233		8.6	%		65.2	%		64.3	%		0.9	%
Orlando		440		1,251		1,196		4.6	%		63.3	%		64.5	%		(1.2	%)

Florida		3,278	$	9,050	$	8,541		6.0	%		61.5	%		60.7	%		0.8	%

Dallas		1,441	$	3,174	$	3,008		5.5	%		57.3	%		56.8	%		0.5	%
Houston		1,201		1,957		2,187		(10.5	%)		50.2	%		56.4	%		(6.2	%)
San Antonio		383		648		643		0.8	%		55.2	%		56.3	%		(1.1	%)

Texas		3,025	$	5,779	$	5,838		(1.0	%)		54.5	%		56.6	%		(2.1	%)

Indianapolis		662	$	1,281	$	1,130		13.4	%		63.9	%		61.0	%		2.9	%
Midwest United States		662	$	1,281	$	1,130		13.4	%		63.9	%		61.0	%		2.9	%

Total/Weighted average		18,157	$	47,344	$	44,856		5.5	%		66.6	%		66.4	%		0.2	%

42 2021 SECOND QUARTER REPORT TRICON RESIDENTIAL

MANAGEMENT’S DISCUSSION AND ANALYSIS

for the three and six months ended June 30, 2021


4.1 Single-Family Rental

Same home year-over-year comparisons – proportionate


	Rental		Average monthly rent							Occupancy
Geography	homes		Q2 2021		Q2 2020		Change (%)			Q2 2021			Q2 2020			Change (%)
Atlanta		4,413	$	1,412	$	1,326		6.5	%		97.6	%		97.3	%		0.3	%
Charlotte		2,032		1,368		1,291		6.0	%		97.5	%		97.5	%		—
Columbia		700		1,275		1,218		4.7	%		97.4	%		96.4	%		1.0	%
Nashville		47		1,660		1,615		2.8	%		96.7	%		96.3	%		0.4	%
Raleigh		45		1,425		1,328		7.3	%		99.4	%		95.3	%		4.1	%

Southeast United States		7,237	$	1,368	$	1,289		6.1	%		97.6	%		97.2	%		0.4	%

Phoenix		1,896	$	1,468	$	1,349		8.8	%		98.5	%		98.4	%		0.1	%
Northern California		985		1,954		1,875		4.2	%		98.8	%		98.9	%		(0.1	%)
Las Vegas		588		1,511		1,424		6.1	%		98.8	%		98.1	%		0.7	%
Reno		247		1,801		1,699		6.0	%		97.4	%		97.8	%		(0.4	%)
Southern California		239		1,941		1,867		4.0	%		99.6	%		98.4	%		1.2	%

Western United States		3,955	$	1,645	$	1,544		6.5	%		98.7	%		98.4	%		0.3	%

Tampa		1,630	$	1,616	$	1,550		4.3	%		98.6	%		97.7	%		0.9	%
Southeast Florida		640		1,852		1,801		2.8	%		96.1	%		98.3	%		(2.2	%)
Jacksonville		568		1,413		1,343		5.2	%		97.6	%		96.9	%		0.7	%
Orlando		440		1,541		1,466		5.1	%		97.8	%		97.7	%		0.1	%

Florida		3,278	$	1,617	$	1,552		4.2	%		97.8	%		97.7	%		0.1	%

Dallas		1,441	$	1,542	$	1,476		4.5	%		96.6	%		96.9	%		(0.3	%)
Houston		1,201		1,408		1,373		2.5	%		94.5	%		96.3	%		(1.8	%)
San Antonio		383		1,389		1,346		3.2	%		95.7	%		96.5	%		(0.8	%)

Texas		3,025	$	1,469	$	1,418		3.6	%		95.7	%		96.6	%		(0.9	%)

Indianapolis		662	$	1,321	$	1,250		5.7	%		98.2	%		97.7	%		0.5	%

Midwest United States		662	$	1,321	$	1,250		5.7	%		98.2	%		97.7	%		0.5	%

Total/Weighted average		18,157	$	1,509	$	1,431		5.5	%		97.6	%		97.5	%		0.1	%

TRICON RESIDENTIAL 2021 SECOND QUARTER REPORT 43

MANAGEMENT’S DISCUSSION AND ANALYSIS

for the three and six months ended June 30, 2021


4.1 Single-Family Rental

Same home sequential quarter comparisons – proportionate


	Rental		Average monthly rent							Occupancy
Geography	homes		Q2 2021		Q1 2021		Change (%)			Q2 2021			Q1 2021			Change (%)
Atlanta		4,413	$	1,412	$	1,380		2.3	%		97.6	%		97.0	%		0.6	%
Charlotte		2,032		1,368		1,344		1.8	%		97.5	%		97.0	%		0.5	%
Columbia		700		1,275		1,258		1.4	%		97.4	%		98.6	%		(1.2	%)
Nashville		47		1,660		1,651		0.5	%		96.7	%		98.6	%		(1.9	%)
Raleigh		45		1,425		1,410		1.1	%		99.4	%		95.7	%		3.7	%

Southeast United States		7,237	$	1,368	$	1,340		2.1	%		97.6	%		97.1	%		0.5	%

Phoenix		1,896	$	1,468	$	1,432		2.5	%		98.5	%		98.7	%		(0.2	%)
Northern California		985		1,954		1,934		1.0	%		98.8	%		98.7	%		0.1	%
Las Vegas		588		1,511		1,480		2.1	%		98.8	%		98.6	%		0.2	%
Reno		247		1,801		1,755		2.6	%		97.4	%		97.8	%		(0.4	%)
Southern California		239		1,941		1,917		1.3	%		99.6	%		99.5	%		0.1	%

Western United States		3,955	$	1,645	$	1,613		2.0	%		98.7	%		98.7	%		—

Tampa		1,630	$	1,616	$	1,594		1.4	%		98.6	%		97.6	%		1.0	%
Southeast Florida		640		1,852		1,828		1.3	%		96.1	%		96.5	%		(0.4	%)
Jacksonville		568		1,413		1,385		2.0	%		97.6	%		96.4	%		1.2	%
Orlando		440		1,541		1,518		1.5	%		97.8	%		97.5	%		0.3	%

Florida		3,278	$	1,617	$	1,593		1.5	%		97.8	%		97.2	%		0.6	%

Dallas		1,441	$	1,542	$	1,520		1.4	%		96.6	%		96.3	%		0.3	%
Houston		1,201		1,408		1,392		1.1	%		94.5	%		95.4	%		(0.9	%)
San Antonio		383		1,389		1,373		1.2	%		95.7	%		93.8	%		1.9	%

Texas		3,025	$	1,469	$	1,450		1.3	%		95.7	%		95.7	%		—

Indianapolis		662	$	1,321	$	1,294		2.1	%		98.2	%		98.0	%		0.2	%

Midwest United States		662	$	1,321	$	1,294		2.1	%		98.2	%		98.0	%		0.2	%

Total/Weighted average		18,157	$	1,509	$	1,482		1.8	%		97.6	%		97.3	%		0.3	%

44 2021 SECOND QUARTER REPORT TRICON RESIDENTIAL

MANAGEMENT’S DISCUSSION AND ANALYSIS

for the three and six months ended June 30, 2021


4.1 Single-Family Rental

Same home lease-over-lease rent growth


	Rent growth
Geography	Renewal			New move-in			Blended
Atlanta		5.3	%		22.4	%		8.9	%
Charlotte		4.9	%		18.7	%		10.3	%
Columbia		4.0	%		12.9	%		7.6	%
Nashville		3.3	%		10.0	%		6.6	%
Raleigh⁽¹⁾		N/A			N/A			N/A

Southeast United States		5.1	%		19.8	%		9.1	%

Phoenix		5.5	%		25.9	%		9.1	%
Northern California		5.2	%		6.9	%		5.6	%
Las Vegas		5.2	%		27.7	%		8.4	%
Reno		5.4	%		19.2	%		9.3	%
Southern California		5.0	%		8.2	%		5.6	%

Western United States		5.4	%		20.7	%		8.3	%

Tampa		3.5	%		15.5	%		7.4	%
Southeast Florida		3.0	%		11.9	%		5.4	%
Jacksonville		4.5	%		14.1	%		7.5	%
Orlando		4.6	%		15.0	%		7.7	%

Florida		3.8	%		14.4	%		7.1	%

Dallas		4.2	%		14.6	%		7.6	%
Houston		2.2	%		9.9	%		5.5	%
San Antonio		1.7	%		12.9	%		7.4	%

Texas		3.1	%		12.1	%		6.7	%

Indianapolis		4.7	%		14.5	%		8.2	%

Midwest United States		4.7	%		14.5	%		8.2	%

Total/Weighted average		4.7	%		17.0	%		8.0	%

(1)	There were no new leases or lease renewals in Raleigh during the quarter.

TRICON RESIDENTIAL 2021 SECOND QUARTER REPORT 45

MANAGEMENT’S DISCUSSION AND ANALYSIS

for the three and six months ended June 30, 2021


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 nine other properties in downtown Toronto are currently under development and are discussed in Section 4.3).

4.2.1 U.S. multi-family rental

Syndication of the U.S. multi-family rental portfolio

On March 31, 2021, the Company entered into a joint venture arrangement with two institutional investors, with Tricon retaining a 20% interest in the existing U.S. multi-family rental portfolio and the investors acquiring a combined 80% interest. Following the syndication, effective April 1, 2021, the Company began reporting only on its 20% proportionate share of the U.S. multi-family rental operating results and, as a result, comparative results have been recast, where appropriate.

Operating results overview

During the second quarter of 2021, the Company’s U.S. multi-family rental business delivered strong operational performance resulting from the reopening of local economies and active asset management efforts. Improved employment fundamentals and heightened consumer confidence drove strong leasing demand and resulted in significant improvements to both occupancy and rent growth. Specifically, the portfolio achieved occupancy of 95.6% (a 1.0% increase sequentially and 2.1% year-over-year) and blended average rent growth of 10.2%, with both KPIs exceeding pre-pandemic levels. Average monthly rent also improved sequentially for the first time since the start of the pandemic.

For the three months ended June 30, 2021, NOI increased by $0.2 million or 5.9% year-over-year to $3.5 million. This favourable variance was attributable to a $0.3 million revenue increase, partially offset by $0.1 million in incremental expenses, as explained below.

Revenue increased by $0.3 million or 5.7% to $5.9 million compared to $5.6 million for the same period in 2020. This was primarily a result of (i) a 2.1% year-over-year increase in occupancy (95.6% in Q2 2021 vs. 93.5% in Q2 2020) and (ii) incremental fee revenue from ancillary services offered to new residents (such as bundled entertainment packages) as well as additional new lease application fees driven by higher leasing traffic.

Total operating expenses increased moderately by $0.1 million or 5.5% to $2.4 million compared to $2.3 million for the same period in 2020, driven by expenses returning to pre-pandemic levels. Some non-essential maintenance activities were deferred in the prior year in light of COVID-19 safety protocols.

Texas storm update

During the quarter, the Company capitalized $0.8 million (Tricon’s share – $0.2 million) of costs related to major restoration work on its properties affected by the winter storm in Texas. Management estimates total property damage between $2.5 million and $3.0 million (Tricon’s share – $0.5 to $0.6 million) of which approximately 70% is expected to be covered by insurance. As of June 30, 2021, $1.1 million (Tricon’s share – $0.2 million) of insurance proceeds have been received and recognized as other income and excluded from NOI.

Quarterly operating trends


	Q2 2021			Q1 2021			Q4 2020			Q3 2020			Q2 2020			Q1 2020
Number of properties		23			23			23			23			23			23
Number of suites		7,289			7,289			7,289			7,289			7,289			7,289
Average vintage		2012			2012			2012			2012			2012			2012
Occupancy		95.6	%		94.6	%		93.6	%		92.8	%		93.5	%		94.4	%
Annualized turnover rate		49.6	%		43.8	%		46.5	%		61.8	%		46.5	%		47.5	%
Average monthly rent	$	1,226		$	1,212		$	1,217		$	1,228		$	1,240		$	1,244
Average quarterly rent growth – renewal		5.9	%		3.5	%		2.3	%		1.2	%		—			3.4	%
Average quarterly rent growth – new move-in		14.3	%		2.4	%		(5.6	%)		(4.5	%)		(5.5	%)		(1.7	%)
Average quarterly rent growth – blended		10.2	%		2.9	%		(1.8	%)		(2.0	%)		(2.2	%)		1.1	%

46 2021 SECOND QUARTER REPORT TRICON RESIDENTIAL

MANAGEMENT’S DISCUSSION AND ANALYSIS

for the three and six months ended June 30, 2021


4.2 Multi-Family Rental

Operating results – Tricon’s proportionate share of the total portfolio


For the three months ended June 30 (in thousands of U.S. dollars)	2021			% of revenue			2020⁽¹⁾			% of revenue			Variance			% Variance
Rental revenue	$	5,192					$	5,041					$	151			3.0	%
Concessions and abatements		(25	)					(71	)					46			64.8	%
Fees and other revenue		830						688						142			20.6	%
Bad debt expense⁽²⁾		(120	)					(100	)					(20	)		(20.0	%)

Total revenue from rental properties	$	5,877			100.0	%	$	5,558			100.0	%	$	319			5.7	%
Property taxes		985			16.8	%		971			17.5	%		(14	)		(1.4	%)
Repairs, maintenance and turnover		237			4.0	%		201			3.6	%		(36	)		(17.9	%)
Property management expenses⁽³⁾		482			8.2	%		470			8.5	%		(12	)		(2.6	%)
Utilities and other direct costs⁽⁴⁾		379			6.4	%		362			6.5	%		(17	)		(4.7	%)
Property insurance		135			2.3	%		123			2.2	%		(12	)		(9.8	%)
Marketing and leasing		97			1.7	%		63			1.1	%		(34	)		(54.0	%)
Other property operating expenses		91			1.5	%		91			1.6	%		—			—

Total direct operating expenses⁽³⁾	$	2,406					$	2,281					$	(125	)		(5.5	%)
Net operating income (NOI)^(3),(5)	$	3,471					$	3,277					$	194			5.9	%
Net operating income (NOI) margin^(3),(5)		59.1	%					59.0	%

Note: Given that the suite count did not change from 2020 to 2021, this should also be considered the “Same Property” portfolio.

(1)	Results prior to the syndication of the U.S. multi-family portfolio have been recast to reflect Tricon’s current 20% ownership in the portfolio to assist the reader with comparability.

(2)

The Company has reserved 100% of residents’ accounts receivable balances aged more than 30 days. The bad debt for the three months ended June 30, 2021 represents 2.0% of revenue compared to 1.8% for the same period in the prior year. Bad debt has shown sequential improvement quarter-over-quarter from 3.2% in the first quarter of 2021 to 2.0% in the second quarter as a result of the recovering labour market, improved collections and additional government rental assistance. The Company continues to work directly with residents on collections.

(3)

The Company elected to present its third-party property management service expenses as part of the corporate operating expenses effective January 1, 2021. The property management expense above represents on-site property management personnel costs. The comparative period has therefore been reclassified to conform with the current period presentation.

(4)	Utilities and other direct costs include water and sewer expense, valet waste expense, electricity and gas and cable contract costs. (5) KPI measures; see Section 7.1.


For the six months ended June 30 (in thousands of U.S. dollars)	2021⁽¹⁾			% of revenue			2020⁽¹⁾			% of revenue			Variance			% Variance
Rental revenue	$	10,270					$	10,158					$	112			1.1	%
Concessions and abatements		(69	)					(87	)					18			20.7	%
Fees and other revenue		1,618						1,398						220			15.7	%
Bad debt expense⁽²⁾		(304	)					(198	)					(106	)		(53.5	%)

Total revenue from rental properties	$	11,515			100.0	%	$	11,271			100.0	%	$	244			2.2	%
Property taxes		1,969			17.1	%		1,932			17.1	%		(37	)		(1.9	%)
Repairs, maintenance and turnover		449			3.9	%		431			3.8	%		(18	)		(4.2	%)
Property management expenses⁽³⁾		973			8.4	%		934			8.3	%		(39	)		(4.2	%)
Utilities and other direct costs⁽⁴⁾		770			6.7	%		711			6.3	%		(59	)		(8.3	%)
Property insurance		270			2.3	%		246			2.2	%		(24	)		(9.8	%)
Marketing and leasing		192			1.7	%		134			1.2	%		(58	)		(43.3	%)
Other property operating expenses		176			1.5	%		190			1.7	%		14			7.4	%

Total direct operating expenses⁽³⁾	$	4,799					$	4,578					$	(221	)		(4.8	%)
Net operating income (NOI)^(3),(5)	$	6,716					$	$6,693					$	23			0.3	%
Net operating income (NOI) margin^(3),(5)		58.3	%					59.4	%

Note: Given that the suite count did not change from 2020 to 2021, this should also be considered the “Same Property” portfolio.

(1)	Results prior to the syndication of the U.S. multi-family portfolio have been recast to reflect Tricon’s current 20% ownership in the portfolio to assist the reader with comparability.

(2)	Tricon has reserved 100% of residents’ accounts receivable balances aged more than 30 days.

(3)

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

(5)	KPI measures; see Section 7.1.

TRICON RESIDENTIAL 2021 SECOND QUARTER REPORT 47

MANAGEMENT’S DISCUSSION AND ANALYSIS

for the three and six months ended June 30, 2021


4.2 Multi-Family Rental

4.2.2 Canadian multi-family rental – The Selby

Operating results overview

Leasing demand at The Selby improved modestly during the second quarter of 2021 as Ontario progressed through Stage 2 of its reopening plan. During the quarter, management continued its strong occupancy bias which drove a 2.0% sequential increase in occupancy to 85.6%, although rent growth remained negative as a result of market-level concessions and drove a decline in year-over-year and sequential NOI. By the end of June, corporate offices had begun to welcome employees back to the workplace, more businesses reopened, and Toronto’s universities began preparations for a return to in-person learning in the fall. This positive reopening momentum resulted in a significant uptick in demand subsequent to quarter-end and pushed occupancy above 90% in July.

Quarterly operating trends – proportionate


	Q2 2021			Q1 2021			Q4 2020			Q3 2020			Q2 2020			Q1 2020
Number of properties		1			1			1			1			1			1
Number of suites		500			500			500			500			500			500
Average vintage		2018			2018			2018			2018			2018			2018
Occupancy		85.6	%		83.6	%		87.0	%		87.1	%		88.2	%		85.8	%
Annualized turnover rate		40.0	%		24.8	%		41.6	%		52.8	%		27.2	%		10.4	%
Average monthly rent⁽¹⁾	$	2,532		$	2,589		$	2,648		$	2,664		$	2,675		$	2,666
Average quarterly rent growth – renewal		(7.2	%)		(1.9	%)		1.3	%		(0.7	%)		0.8	%		2.2	%
Average quarterly rent growth – new move-in		(22.3	%)		(11.1	%)		(11.3	%)		(3.8	%)		—			4.2	%
Average quarterly rent growth – blended		(17.4	%)		(6.5	%)		(5.1	%)		(2.0	%)		0.7	%		2.4	%
Net operating income (NOI)⁽¹⁾	$	263		$	290		$	287		$	278		$	338		$	339
Net operating income (NOI) margin		54.5	%		57.8	%		55.6	%		54.0	%		62.1	%		62.4	%
Net operating income (NOI)⁽¹⁾	US$	214		US$	231		US$	220		US$	212		US$	252		US$	243

(1)	All dollar amounts in this table 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.

48 2021 SECOND QUARTER REPORT TRICON RESIDENTIAL

MANAGEMENT’S DISCUSSION AND ANALYSIS

for the three and six months ended June 30, 2021


4.3 Residential Development

4.3 Residential Development


As at

(in thousands of U.S. dollars)	June 30, 2021			December 31, 2020
Canadian residential developments – See Section 4.3.1	$	182,639		$	128,116
U.S. residential developments – See Section 4.3.2		154,370			164,842

Net investments in residential developments – see Section 5	$	337,009		$	292,958

Net investments in residential developments as a % of total real estate assets		5	%		5	%

4.3.1 Canadian residential developments

The Company is one of the most active rental developers in downtown Toronto with nine projects totalling 4,535 units (including select condominium units) under construction or in pre-construction as at June 30, 2021. The Company’s portfolio also includes an existing commercial property, The Shops of Summerhill, adjacent to one of its multi-family development properties. Once construction is complete and lease-up stabilization occurs, newly built Canadian multi-family rental apartments will transition from the residential development business segment to Tricon’s multi-family rental business segment.

In May 2021, Tricon and its joint venture partner, Canada Pension Plan Investment Board (“CPP Investments”), closed on its first investment, a 1.8-acre development site in Toronto’s Queen East neighbourhood (“Queen & Ontario”), which will consist of two towers totalling 824 units. Tricon continues to evaluate additional investment opportunities as part of its recently announced joint venture with CPP Investments and other strategic partners.

TRICON RESIDENTIAL 2021 SECOND QUARTER REPORT 49

MANAGEMENT’S DISCUSSION AND ANALYSIS

for the three and six months ended June 30, 2021


4.3 Residential Development

As at June 30, 2021, the carrying value of Tricon’s net assets in its Canadian multi-family development portfolio was $182.6 million. The following table summarizes the net assets by project.


	June 30, 2021										December 31, 2020
(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
7 Labatt	$	25,846	$	(9,054	)	$	52		$	16,844	$	24,941	$	(8,814	)	$	53		$	16,180
West Don Lands – Block 20		16,419		(15,118	)		385			1,686		15,232		(14,551	)		256			937
Queen & Ontario		33,432		(19,368	)		(284	)		13,780		—		—			—			—

Subtotal – Projects in pre-construction	$	75,697	$	(43,540	)	$	153		$	32,310	$	40,173	$	(23,365	)	$	309		$	17,117
Projects under construction
The Taylor (57 Spadina)	$	38,591	$	(15,756	)	$	(865	)	$	21,970	$	33,972	$	(11,920	)	$	(664	)	$	21,388
West Don Lands – Block 8		48,792		(37,942	)		(2,230	)		8,620		37,496		(29,545	)		(468	)		7,483
West Don Lands – Blocks 3/4/7		27,348		(14,933	)		(2,070	)		10,345		23,639		(11,818	)		(2,246	)		9,575
West Don Lands – Block 10⁽³⁾		6,164		(4,616	)		1,527			3,075		850		—			2,144			2,994
The Ivy (8 Gloucester)		29,363		(12,474	)		(44	)		16,845		19,175		(3,138	)		361			16,398
The James (Scrivener Square)		80,165		(22,590	)		4,848			62,423		73,299		(47,555	)		1,514			27,258

Subtotal – Projects under construction	$	230,423	$	(108,311	)	$	1,166		$	123,278	$	188,431	$	(103,976	)	$	641		$	85,096
Stabilized projects
The Shops of Summerhill	$	37,720	$	(12,597	)	$	1,928		$	27,051	$	36,719	$	(12,463	)	$	1,647		$	25,903

Subtotal – Stabilized projects		37,720		(12,597	)		1,928			27,051		36,719		(12,463	)		1,647			25,903

Total	$	343,840	$	(164,448	)	$	3,247		$	182,639	$	265,323	$	(139,804	)	$	2,597		$	128,116

Equity-accounted investments in Canadian residential developments	$	225,955	$	(129,261	)	$	(3,529	)	$	93,165	$	155,305	$	(79,786	)	$	(564	)	$	74,955
Canadian development properties, net of debt		117,885		(35,187	)		6,776			89,474		110,018		(60,018	)		3,161			53,161

Total	$	343,840	$	(164,448	)	$	3,247		$	182,639	$	265,323	$	(139,804	)	$	2,597		$	128,116

(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.

50 2021 SECOND QUARTER REPORT TRICON RESIDENTIAL

MANAGEMENT’S DISCUSSION AND ANALYSIS

for the three and six months ended June 30, 2021


4.3 Residential Development

Project details and projections

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”.


	Neighbourhood/ Major intersections in Toronto		Fee simple interest/ ground lease		Tricon’s percentage interest			Projected units⁽¹⁾		Estimated residential area (sq. feet)		Estimated commercial area (sq. feet)
Projects in pre-construction
7 Labatt		Downtown East – Corktown		Fee simple interest		30	%		558		362,400		51,000
West Don Lands – Block 20		Downtown East – Distillery District		Ground lease		33	%		654		466,000		260,000
Queen & Ontario		Queen East		Fee simple interest		30	%		824		581,191		164,488

Subtotal – Projects in pre-construction									2,036		1,409,591		475,488
Projects under construction
The Taylor (57 Spadina)		Entertainment District		Fee simple interest		30	%		286		217,600		44,000
West Don Lands – Block 8		Downtown East – Distillery District		Ground lease		33	%		770		567,800		3,900
West Don Lands – Blocks 3/4/7		Downtown East – Distillery District		Ground lease		33	%		855		667,600		39,000
West Don Lands – Block 10		Downtown East – Distillery District		Ground lease		33	%		237		155,100		TBD
The Ivy (8 Gloucester)		Yonge & Bloor		Fee simple interest		47	%		231		158,400		1,600
The James (Scrivener Square)		Rosedale		Fee simple interest		100	%		120		189,300		31,000

Subtotal – Projects under construction									2,499		1,955,800		119,500

Total/Weighted average						45	%		4,535		3,365,391		594,988

(1)	Includes 4,234 projected rental units and 301 projected condominium units.


(in thousands of U.S. dollars)	Cost to date		Projected remaining costs		Projected total cost		Percentage completed⁽¹⁾			Tricon’s unfunded equity commitment		Significant updates
Projects in pre-construction
7 Labatt	$	65,000	$	229,000	$	294,000		3	%	$	8,093		—
West Don Lands – Block 20		4,000		390,000		394,000		1	%		—		—
Queen & Ontario		110,000		373,000		483,000		—			32,733		Site acquired in Q2 2021; currently pursuing final form zoning approvals

Subtotal – Projects in pre-construction		179,000		992,000		1,171,000					40,826
Projects under construction
The Taylor (57 Spadina)		86,000		49,000		135,000		54	%		—		Form work completed on 29 of 36 floors; topping out expected in Q3 2021 and first occupancy expected in Q1 2022
West Don Lands – Block 8⁽²⁾		82,000		204,000		286,000		28	%		—		Form work progressed past level 8 on towers A, B & C
West Don Lands – Blocks 3/4/7⁽²⁾		9,000		389,000		398,000		2	%		7,423		Construction commenced and construction loan closed in Q2 2021
West Don Lands – Block 10		2,000		95,000		97,000		2	%		7,250		Construction commenced in Q2 2021
The Ivy (8 Gloucester)		55,000		69,000		124,000		30	%		—		Construction loan closed in Q2 2021; below-grade forming commenced
The James (Scrivener Square)		78,000		194,000		272,000		11	%		23,447		Shoring commenced in Q2 2021

Subtotal – Projects under construction		312,000		1,000,000		1,312,000					38,120

Total	$	491,000	$	1,992,000	$	2,483,000				$	78,946

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

(2)	The remaining development costs are expected to be largely funded from construction loan financing for West Don Lands – Blocks 3/4/7 and Block 8.

TRICON RESIDENTIAL 2021 SECOND QUARTER REPORT 51

MANAGEMENT’S DISCUSSION AND ANALYSIS

for the three and six months ended June 30, 2021


4.3 Residential Development

LOGO

4.3.2 Investments in U.S. residential developments

The Company’s U.S. residential developments include (i) build-to-rent, dedicated single-family communities, and (ii) legacy investments in for-sale housing, including land development and homebuilding projects.

(1) Investments in build-to-rent

The Company’s build-to-rent strategy is focused on developing well-designed, dedicated single-family home rental communities, which include shared amenities such as parks, playgrounds, pools and community gathering spaces. This strategy adds another growth channel to Tricon’s single-family rental business, and leverages the Company’s complementary expertise in land development, homebuilding and single-family rental property management. Once developed and stabilized, these build-to-rent communities will be integrated into the Company’s technology-enabled property management platform. See the list of build-to-rent communities currently being placed under contract or developed in the Single-Family Rental section (see Section 4.1) .

The build-to-rent strategy is currently being pursued within the existing THPAS JV-1 joint venture investment vehicle, which is capitalized with $450 million of equity commitments, including $50 million from Tricon and $400 million from an institutional investor. This investment represents $2.2 million of Tricon’s $154.4 million total U.S. residential development investments at fair value.

(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. For-sale housing investments are structured as self-liquidating investments 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). These investments represent $152.2 million of Tricon’s $154.4 million total U.S. residential development investments at fair value. In aggregate, the Company’s U.S. residential development investments represent 2.2% of the Company’s total assets but are expected to generate approximately $294.7 million of net cash flow to Tricon over the next ten years. These assets generated $19.7 million of distributions to Tricon in the second quarter of 2021, including $3.9 million in performance fees (see Section 4.4), and $80.3 million during the full year of 2020.


(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⁾
Investments in U.S. residential developments	$	522,690	$	479,992	$	154,370	$	294,699

(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”.

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	$	66,598	$	118,451	$	109,650	$	294,699

52 2021 SECOND QUARTER REPORT TRICON RESIDENTIAL

MANAGEMENT’S DISCUSSION AND ANALYSIS

for the three and six months ended June 30, 2021


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 business include providing asset management, property management and development management services. In aggregate, Tricon manages $4.3 billion of third-party AUM 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.

Third-party assets under management (refer to Section 7.2 for definition)

Third-party AUM increased by $0.4 billion or 11% to $4.3 billion as at June 30, 2021, from $3.9 billion as at March 31, 2021, primarily related to:

•

Single-family rental – the formation of the SFR JV-HD joint venture, along with an increase in property-level debt to finance the growing rental portfolio of SFR JV-1; and

•

Canadian residential development – an increase in funded debt to acquire the first project under the joint venture with CPP Investments, along with additional construction debt across the portfolio; partially offset by

•

U.S. residential development – a decrease in investment balances driven by a natural liquidation and expedited return of capital for certain investments.


(in thousands of U.S. dollars)	Balance as at March 31, 2021		Additions		Distributions			Other			Revaluation		Balance as at June 30, 2021
Single-family rental
SFR JV-1	$	1,223,444	$	177,797	$	—		$	—		$	—	$	1,401,241
SFR JV-HD		—		199,000		—			—			—		199,000

Single-family rental	$	1,223,444	$	376,797	$	—		$	—		$	—	$	1,600,241
Multi-family rental
U.S.		1,080,360		—		(4,857	)		—			—		1,075,503
Canada		152,097		—		—			(456	)		2,222		153,863

Multi-family rental	$	1,232,457	$	—	$	(4,857	)	$	(456	)	$	2,222	$	1,229,366
Residential development
U.S.		897,498		—		(32,490	)		—			796		865,804
Canada		498,657		88,974		—			—			6,444		594,075

Residential development	$	1,396,155	$	88,974	$	(32,490	)	$	—		$	7,240	$	1,459,879

Total	$	3,852,056	$	465,771	$	(37,347	)	$	(456	)	$	9,462	$	4,289,486


(in thousands of U.S. dollars)	Outstanding invested capital (at cost)		Share of outstanding project debt⁽¹⁾		Unfunded equity commitment⁽²⁾		Third-party AUM as at June 30, 2021		Percentage of third-party AUM
Single-family rental
SFR JV-1⁽¹⁾	$	463,670	$	931,766	$	5,805	$	1,401,241		33	%
SFR JV-HD⁽¹⁾		8,756		20,232		170,012		199,000		4	%

Single-family rental	$	472,426	$	951,998	$	175,817	$	1,600,241		37	%
Multi-family rental
U.S.		428,027		640,360		7,116		1,075,503		25	%
Canada		41,468		112,395		—		153,863		4	%

Multi-family rental	$	469,495	$	752,755	$	7,116	$	1,229,366		29	%
Residential development
U.S.		459,547		—		406,257		865,804		20	%
Canada		113,380		181,661		299,034		594,075		14	%

Residential development	$	572,927	$	181,661	$	705,291	$	1,459,879		34	%

Total	$	1,514,848	$	1,886,414	$	888,224	$	4,289,486		100	%

(1)	The SFR JV-1 and SFR JV-HD have outstanding subscription facilities which are a substitute for invested capital and can be replaced by equity funding at management’s discretion.

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

TRICON RESIDENTIAL 2021 SECOND QUARTER REPORT 53

MANAGEMENT’S DISCUSSION AND ANALYSIS

for the three and six months ended June 30, 2021


4.4 Private Funds and Advisory


(in thousands of U.S. dollars)	June 30, 2021		March 31, 2021		December 31, 2020		September 30, 2020		June 30, 2020		March 31, 2020
Single-family rental
SFR JV-1	$	1,401,241	$	1,223,444	$	1,137,936	$	1,042,386	$	933,947	$	935,134
SFR JV-HD		199,000		—		—		—		—		—

Single-family rental	$	1,600,241	$	1,223,444	$	1,137,936	$	1,042,386	$	933,947	$	935,134
Multi-family rental
U.S.		1,075,503		1,080,360		—		—		—		—
Canada		153,863		152,097		150,659		134,527		132,666		127,780

Multi-family rental	$	1,229,366	$	1,232,457	$	150,659	$	134,527	$	132,666	$	127,780
Residential development
U.S.		865,804		897,498		1,032,818		1,089,535		1,100,417		1,175,016
Canada		594,075		498,657		231,945		208,933		226,812		242,244

Residential development	$	1,459,879	$	1,396,155	$	1,264,763	$	1,298,468	$	1,327,229	$	1,417,260

Third-party AUM	$	4,289,486	$	3,852,056	$	2,553,358	$	2,475,381	$	2,393,842	$	2,480,174

Performance overview

The following table provides details of revenue from private funds and advisory services for the three and six months ended June 30, 2021 and 2020, before the elimination of intercompany fees earned.


For the periods ended June 30	Three months						Six months
(in thousands of U.S. dollars)	2021		2020		Variance		2021		2020		Variance
Asset management fees⁽¹⁾	$	3,781	$	3,079	$	702	$	6,379	$	6,412	$	(33	)
Performance fees⁽²⁾		3,881		131		3,750		4,573		445		4,128
Development fees⁽³⁾		5,944		4,692		1,252		11,793		8,614		3,179
Property management fees^(4),(5)		16,568		10,381		6,187		29,716		21,880		7,836

Revenue from private funds and advisory services – gross	$	30,174	$	18,283	$	11,891	$	52,461	$	37,351	$	15,110

(1)	Ranges typically from 0.5–2% 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 7% of rental revenue from single-family rental homes, 4% of rental revenue from Canadian multi-family rental properties and other ancillary fees.

(5)	Higher year-over-year property management fees reflect a 16% increase in the number of single-family rental homes managed, along with higher fees earned from increased home acquisition and leasing activities compared to the three and six months ended June 2020.

54 2021 SECOND QUARTER REPORT TRICON RESIDENTIAL

MANAGEMENT’S DISCUSSION AND ANALYSIS

for the three and six months ended June 30, 2021


4.4 Private Funds and Advisory

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 six months ended June 30, 2021 and 2020.


For the three months ended	June 30, 2021							June 30, 2020
(in thousands of U.S. dollars)	Gross management fees		Less fees eliminated upon consolidation			Total		Gross management fees		Less fees eliminated upon consolidation			Total
Asset management fees⁽¹⁾	$	3,781	$	(272	)	$	3,509	$	3,079	$	—		$	3,079
Performance fees		3,881		—			3,881		131		—			131
Development fees		5,944		(397	)		5,547		4,692		—			4,692
Property management fees^(2),(3)		16,568		(16,392	)		176		10,381		(10,161	)		220

Total revenue from private funds and advisory services	$	30,174	$	(17,061	)	$	13,113	$	18,283	$	(10,161	)	$	8,122


For the six months ended	June 30, 2021							June 30, 2020
(in thousands of U.S. dollars)	Gross management fees		Less fees eliminated upon consolidation			Total		Gross management fees		Less fees eliminated upon consolidation			Total
Asset management fees⁽¹⁾	$	6,379	$	(272	)	$	6,107	$	6,412	$	—		$	6,412
Performance fees		4,573		—			4,573		445		–—			445
Development fees		11,793		(782	)		11,011		8,614		—			8,614
Property management fees^(2),(3)		29,716		(29,364	)		352		21,880		(21,414	)		466

Total revenue from private funds and advisory services	$	52,461	$	(30,418	)	$	22,043	$	37,351	$	(21,414	)	$	15,937

(1)	Asset management fees earned from the limited partners of SFR JV-HD are eliminated upon the consolidation of this Investment Vehicle. Asset management fees eliminated upon consolidation are accounted for within Tricon’s proportionate Core FFO (see Section 5).

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

(3)

Estimated future performance fees

(in thousands of U.S. dollars)

1 to 2 years

3 to 5 years

More than 5 years

Total

Estimated future performance fees⁽¹⁾

8,000

30,000

115,000

153,000

(1)	Forward-looking information; see page 1.

TRICON RESIDENTIAL 2021 SECOND QUARTER REPORT 55

LOGO

5 SUMMARY OF NON-IFRS SEGMENT INFORMATION

MANAGEMENT’S DISCUSSION AND ANALYSIS

for the three and six months ended June 30, 2021

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 and page 1 for discussion of non-IFRS measures).

The presentation of non-IFRS measures throughout this section reflects Tricon’s proportionate share of the business, unless otherwise stated.

Reconciliation of net income to Core FFO and AFFO


For the periods ended June 30	Three months									Six months
(in thousands of U.S. dollars)	2021			2020			Variance			2021			2020			Variance
Net income (loss) from continuing operations attributable to Tricon’s shareholders	$	145,517		$	29,871		$	115,646		$	186,850		$	(17,169	)	$	204,019
Fair value gain on rental properties		(254,312	)		(32,839	)		(221,473	)		(366,614	)		(53,476	)		(313,138	)
Fair value loss on derivative financial instruments and other liabilities		41,475			450			41,025			78,647			2,594			76,053
Loss from investments in U.S. residential developments		– —			– —			– —			– —			79,579			(79,579	)
Limited partners’ share of FFO adjustments		42,704			3,481			39,223			62,822			5,774			57,048

FFO attributable to Tricon’s shareholders	$	(24,616	)	$	963		$	(25,579	)	$	(38,295	)	$	17,302		$	(55,597	)

Core FFO from U.S. and Canadian multi-family rental	$	1,919		$	7,057		$	(5,138	)	$	9,449		$	14,300		$	(4,851	)
Income from equity-accounted investments in multi-family rental properties		(14,272	)		(162	)		(14,110	)		(13,815	)		(217	)		(13,598	)
(Income) loss from equity-accounted investments in Canadian residential developments⁽¹⁾		(27	)		7			(34	)		(24	)		(5,090	)		5,066
Deferred tax expense (recovery)		47,104			8,114			38,990			114,231			(2,853	)		117,084
Current tax impact on sale of U.S. multi-family rental portfolio		—			—			—			(44,502	)		—			(44,502	)
Interest on convertible debentures		2,477			2,464			13			4,928			4,929			(1	)
Interest on Due to Affiliate		4,312			—			4,312			8,625			—			8,625
Amortization of deferred financing costs,discounts and lease obligations		4,475			2,182			2,293			8,389			4,306			4,083
Non-cash and non-recurring compensation⁽²⁾		3,180			793			2,387			3,995			3,443			552
Other adjustments^(1),(3)		11,174			2,781			8,393			15,267			9,572			5,695

Core FFO attributable to Tricon’s shareholders	$	35,726		$	24,199		$	11,527		$	68,248		$	45,692		$	22,556

Recurring capital expenditures		(7,500	)		(5,883	)		(1,617	)		(14,205	)		(12,526	)		(1,679	)

AFFO attributable to Tricon’s shareholders	$	28,226		$	18,316		$	9,910		$	54,043		$	33,166		$	20,877

(1)

(2)

Includes $3,180 and $3,995 of equity-settled and non-cash AIP and LTIP expense for the three and six months ended June 30, 2021 (2020 – $764 and $3,336), respectively. The comparative periods also include non-recurring compensation of $29 and $107 for the three and six months ended June 30, 2020, respectively.

(3)	Includes the following adjustments:


For the periods ended June 30	Three months								Six months
(in thousands of U.S. dollars)	2021			2020			Variance		2021			2020			Variance
Transaction costs	$	4,408		$	3,214		$	1,194	$	5,637		$	4,445		$	1,192
Amortization and depreciation expense		2,849			2,775			74		5,499			5,548			(49	)
Realized and unrealized foreign exchange loss (gain)		2,710			(1,172	)		3,882		2,540			1,752			788
Performance share units		1,320			1,232			88		3,682			790			2,892
Other adjustments		(113	)		(3,268	)		3,155		(2,091	)		(2,963	)		872

Total other adjustments	$	11,174		$	2,781		$	8,393	$	15,267		$	9,572		$	5,695

TRICON RESIDENTIAL 2021 SECOND QUARTER REPORT 57

MANAGEMENT’S DISCUSSION AND ANALYSIS

for the three and six months ended June 30, 2021

Summary of non-IFRS measures – proportionate


For the periods ended June 30	Three months									Six months
(in thousands of U.S. dollars, except per share amounts which are in U.S. dollars)	2021			2020			Variance			2021			2020			Variance
Revenue from single-family rental properties	$	81,056		$	73,861		$	7,195		$	158,217		$	146,240		$	11,977
Direct operating expenses		(26,999	)		(24,669	)		(2,330	)		(52,533	)		(49,380	)		(3,153	)

Net operating income from single-family rental properties		54,057			49,192			4,865			105,684			96,860			8,824
Revenue from private funds and advisory services		13,113			8,122			4,991			22,043			15,937			6,106
Asset management fees eliminated upon consolidation		272			—			272			272			—			272
Core FFO from U.S. and Canadian multi-family rental⁽¹⁾		1,919			7,057			(5,138	)		9,449			14,300			(4,851	)
Core FFO from U.S. residential developments		8,251			3,252			4,999			14,910			3,252			11,658
Other income (expense)		1,958			(1,764	)		3,722			1,918			(61	)		1,979
Corporate overhead		(23,962	)		(18,432	)		(5,530	)		(46,054	)		(35,579	)		(10,475	)
Interest expense		(19,866	)		(23,514	)		3,648			(39,929	)		(49,241	)		9,312
Current income tax (expense) recovery		(16	)		286			(302	)		(45	)		224			(269	)

Core funds from operations (Core FFO)	$	35,726		$	24,199		$	11,527		$	68,248		$	45,692		$	22,556

Recurring capital expenditures		(7,500	)		(5,883	)		(1,617	)		(14,205	)		(12,526	)		(1,679	)

Adjusted funds from operations (AFFO)	$	28,226		$	18,316		$	9,910		$	54,043		$	33,166		$	20,877

Core FFO per share	$	0.14		$	0.11		$	0.03		$	0.27		$	0.22		$	0.05
Core FFO per share (CAD)⁽²⁾	$	0.17		$	0.15		$	0.02		$	0.34		$	0.30		$	0.04
AFFO per share	$	0.11		$	0.09		$	0.02		$	0.22		$	0.16		$	0.06
AFFO per share (CAD)⁽²⁾	$	0.14		$	0.12		$	0.02		$	0.27		$	0.22		$	0.05
Core FFO payout ratio⁽³⁾		33	%		41	%		(8	%)		33	%		42	%		(9	%)
AFFO payout ratio⁽³⁾		42	%		54	%		(12	%)		42	%		59	%		(17	%)
Weighted average shares outstanding – diluted		252,511,687			211,677,963			40,833,724			250,358,803			212,281,634			38,077,169

(1)

Effective March 31, 2021, the Company sold an 80% interest in its U.S. multi-family rental portfolio, and as a result, its 20% remaining interest in the joint venture is presented as equity-accounted investments on the balance sheet and income from equity-accounted investments on the income statement. For the three months ended March 31, 2021 and the six months ended June 30, 2020, Core FFO from U.S. multi-family rental represents Tricon’s legacy 100% ownership interest in the portfolio. For the three months ended June 30, 2021, Core FFO from U.S. multi-family rental represents Tricon’s remaining 20% ownership interest in the portfolio.

(2)	USD/CAD exchange rates used are 1.2282 and 1.2470 for the three and six months ended June 30, 2021 (2020 – 1.3853 and 1.3651), respectively.

(3)	Core FFO and AFFO payout ratios are computed by dividing dividends declared for the period by Core FFO and AFFO, respectively.

58 2021 SECOND QUARTER REPORT TRICON RESIDENTIAL

MANAGEMENT’S DISCUSSION AND ANALYSIS

for the three and six months ended June 30, 2021

Reconciliation to proportionate income statement


For the periods ended June 30	Three months									Six months
(in thousands of U.S. dollars)	2021			2020			Variance			2021			2020			Variance
Net operating income from U.S. multi-family rental	$	3,471		$	16,387		$	(12,916	)	$	19,695		$	33,472		$	(13,777	)
General and administration expense from U.S. multi-family rental		(269	)		(1,210	)		941			(1,229	)		(2,136	)		907
Interest expense from U.S. multi-family rental		(1,374	)		(8,260	)		6,886			(9,219	)		(17,314	)		8,095

Core FFO from U.S. multi-family rental⁽¹⁾		1,828			6,917			(5,089	)		9,247			14,022			(4,775	)

Net operating income from Canadian multi-family rental		214			252			(38	)		445			495			(50	)
General and administration expense from Canadian multi-family rental		(6	)		(4	)		(2	)		(12	)		(8	)		(4	)
Interest expense from Canadian multi-family rental		(117	)		(101	)		(16	)		(231	)		(200	)		(31	)

Core FFO from Canadian multi-family rental		91			147			(56	)		202			287			(85	)

Core FFO from Canadian residential developments		—			(7	)		7			—			(9	)		9

Core FFO from U.S. and Canadian multi-family rental	$	1,919		$	7,057		$	(5,138	)	$	9,449		$	14,300		$	(4,851	)

Other income	$	330		$	108		$	222		$	535		$	156		$	379
Leasing income		1,186			685			501			2,060			1,375			685
Other adjustments		1,491			(1,884	)		3,375			1,316			—			1,316
Non-controlling interests’ share of Core FFO		(1,049	)		(673	)		(376	)		(1,993	)		(1,592	)		(401	)

Other income (expense)	$	1,958		$	(1,764	)	$	3,722		$	1,918		$	(61	)	$	1,979

Cash compensation expense⁽²⁾	$	(15,753	)	$	(11,352	)	$	(4,401	)	$	(30,326	)	$	(19,552	)	$	(10,774	)
General and administration expense⁽³⁾		(8,209	)		(7,080	)		(1,129	)		(15,728	)		(16,027	)		299

Corporate overhead	$	(23,962	)	$	(18,432	)	$	(5,530	)	$	(46,054	)	$	(35,579	)	$	(10,475	)

Interest expense	$	(30,320	)	$	(27,626	)	$	(2,694	)	$	(60,327	)	$	(57,412	)	$	(2,915	)
Convertible debentures		2,477			2,464			13			4,928			4,929			(1	)
Due to Affiliate		4,312			—			4,312			8,625			—			8,625
Amortization of deferred financing costs, discounts and lease obligations⁽⁴⁾		3,665			1,648			2,017			6,845			3,242			3,603

Interest expense⁽⁵⁾	$	(19,866	)	$	(23,514	)	$	3,648		$	(39,929	)	$	(49,241	)	$	9,312

Current income tax (expense) recovery	$	(16	)	$	286		$	(302	)	$	44,457		$	224		$	44,233
Tax on sale of U.S. multi-family rental portfolio		—			—			—			(44,502	)		—			(44,502	)

Current income tax (expense) recovery	$	(16	)	$	286		$	(302	)	$	(45	)	$	224		$	(269	)

Single-family rental	$	(6,950	)	$	(4,958	)	$	(1,992	)	$	(12,253	)	$	(10,520	)	$	(1,733	)
U.S. multi-family rental		(530	)		(925	)		395			(1,913	)		(1,998	)		85
Canadian multi-family rental		(20	)		—			(20	)		(39	)		(8	)		(31	)

Recurring capital expenditures	$	(7,500	)	$	(5,883	)	$	(1,617	)	$	(14,205	)	$	(12,526	)	$	(1,679	)

(1)

For the three months ended March 31, 2021 and the six months ended June 30, 2020, Core FFO from U.S. multi-family rental represents Tricon’s legacy 100% ownership interest in the portfolio. For the three months ended June 30, 2021, Core FFO from U.S. multi-family rental represents Tricon’s remaining 20% ownership interest in the portfolio.

(2)

Compensation expense for Core FFO purposes excludes performance share units (PSUs), non-cash compensation and non-recurring compensation. The table below reconciles cash compensation expense for Core FFO purposes to total compensation expense. Performance share unit (PSU) expense of $1,232 and $790 in the three and six months ended June 30, 2020, respectively, has been removed from cash compensation expense to conform with the current period presentation. See Section 3.1 for further detail.


For the periods ended June 30	Three months							Six months
(in thousands of U.S. dollars)	2021		2020		Variance			2021		2020		Variance
Cash compensation expense	$	15,753	$	11,352	$	(4,401	)	$	30,326	$	19,552	$	(10,774	)
Performance share units		1,320		1,232		(88	)		3,682		790		(2,892	)
Non-cash and non-recurring compensation		3,180		793		(2,387	)		3,995		3,443		(552	)

Compensation expense per financial statements	$	20,253	$	13,377	$	(6,876	)	$	38,003	$	23,785	$	(14,218	)

(3)	In the three and six months ended June 30, 2021, includes general and administration expense of $7,659 and $14,555 (2020 – $6,512 and $14,822) and lease payments of $550 and $1,173 (2020 – $568 and $1,205), respectively.

(4)	In the three and six months ended June 30, 2021, includes $857 and $1,659 related to property-level borrowings (2020 – $383 and $766) and $2,808 and $5,186 related to corporate borrowings (2020 – $1,265 and $2,476), respectively.

(5)	In the three and six months ended June 30, 2021, includes $19,012 and $37,874 related to property-level borrowings (2020 – $19,481 and $40,554) and $854 and $2,055 related to corporate borrowings (2020 – $4,033 and $8,687), respectively.

TRICON RESIDENTIAL 2021 SECOND QUARTER REPORT 59

MANAGEMENT’S DISCUSSION AND ANALYSIS

for the three and six months ended June 30, 2021

Proportionate income statement


	June 30, 2021									June 30, 2020
For the three months ended	IFRS									IFRS
(in thousands of U.S. dollars)	Proportionate			reconciliation			Consolidated			Proportionate			reconciliation			Consolidated
Revenue from single-family rental properties	$	81,056		$	24,865		$	105,921		$	73,861		$	17,319		$	91,180
Direct operating expenses		(26,999	)		(8,178	)		(35,177	)		(24,669	)		(5,263	)		(29,932	)

Net operating income from single-family rental properties		54,057			16,687			70,744			49,192			12,056			61,248
Revenue from private funds and advisory services		13,113			—			13,113			8,122			—			8,122
Asset management fees eliminated upon consolidation		272			(272	)		—			—			—			—
Income from equity-accounted investments
in multi-family rental properties		14,272			—			14,272			162			—			162
Income (loss) from equity-accounted investments
in Canadian residential developments		27			—			27			(7	)		—			(7	)
Income from investments in U.S. residential developments		8,251			—			8,251			3,155			—			3,155
Compensation expense		(20,253	)		—			(20,253	)		(13,377	)		—			(13,377	)
General and administration expense		(7,659	)		(1,611	)		(9,270	)		(6,512	)		(1,174	)		(7,686	)
Interest expense		(30,320	)		(7,076	)		(37,396	)		(27,626	)		(4,364	)		(31,990	)
Fair value gain on rental properties		211,570			42,742			254,312			29,358			3,481			32,839
Fair value loss on derivative financial instruments and other liabilities		(41,437	)		(38	)		(41,475	)		(450	)		—			(450	)
Other expenses		(8,451	)		(1,186	)		(9,637	)		(4,024	)		(685	)		(4,709	)
Net change in fair value of limited partners’ interests
in single-family rental business		—			(49,246	)		(49,246	)		—			(9,314	)		(9,314	)
Current income tax (expense) recovery		(16	)		—			(16	)		286			—			286
Deferred income tax expense		(47,104	)		—			(47,104	)		(8,114	)		—			(8,114	)
Non-controlling interest		(805	)		—			(805	)		(294	)		—			(294	)

Net income from continuing operations	$	145,517		$	—		$	145,517		$	29,871		$	—		$	29,871

Fair value gain on rental properties		(211,570	)		(42,742	)		(254,312	)		(29,358	)		(3,481	)		(32,839	)
Fair value loss on derivative financial instruments and other liabilities		41,437			38			41,475			450			—			450
Limited partners’ share of FFO adjustments		—			42,704			42,704			—			3,481			3,481

FFO attributable to Tricon’s shareholders	$	(24,616	)	$	—		$	(24,616	)	$	963		$	—		$	963

Core FFO from U.S. and Canadian multi-family rental		1,919			—			1,919			7,057			—			7,057
Income from equity-accounted investments in multi-family rental properties		(14,272	)		—			(14,272	)		(162	)		—			(162	)
(Income) loss from equity-accounted investments in Canadian residential developments		(27	)		—			(27	)		7			—			7
Deferred tax recovery		47,104			—			47,104			8,114			—			8,114
Interest on convertible debentures		2,477			—			2,477			2,464			—			2,464
Interest on Due to Affiliate		4,312			—			4,312			—			—			—
Amortization of deferred financing costs, discounts and lease obligations		3,665			810			4,475			1,648			534			2,182
Non-cash and non-recurring compensation⁽²⁾		3,180			—			3,180			793			—			793
Other adjustments^(1),(3)		11,984			(810	)		11,174			3,315			(534	)		2,781

Core FFO attributable to Tricon’s shareholders	$	35,726		$	—		$	35,726		$	24,199		$	—		$	24,199

Recurring capital expenditures		(7,500	)		—			(7,500	)		(5,883	)		—			(5,883	)

AFFO attributable to Tricon’s shareholders	$	28,226		$	—		$	28,226		$	18,316		$	—		$	18,316

(1)	Performance share unit (PSU) expense of $1,232 for the three months ended June 30, 2020 has been removed from Core FFO to conform with the current period presentation. This change resulted in a $1,232 increase in Core FFO and AFFO for the three months ended June 30, 2020

(2)	Includes $3,180 of equity-settled and non-cash AIP and LTIP expense for the three months ended June 30, 2021 (2020 – $764). The comparative period also includes non-recurring compensation of $29.

(3)	Includes the following adjustments:


	June 30, 2021								June 30, 2020
For the three months ended			IFRS									IFRS
(in thousands of U.S. dollars)	Proportionate		reconciliation			Consolidated			Proportionate			reconciliation			Consolidated
Transaction costs	$	4,408	$	—		$	4,408		$	3,214		$	—		$	3,214
Amortization and depreciation expense		2,849		—			2,849			2,775			—			2,775
Realized and unrealized foreign exchange loss (gain)		2,710		—			2,710			(1,172	)		—			(1,172	)
Performance share units		1,320		—			1,320			1,232			—			1,232
Other adjustments		697		(810	)		(113	)		(2,734	)		(534	)		(3,268	)

Total other adjustments	$	11,984	$	(810	)	$	11,174		$	3,315		$	(534	)	$	2,781

60 2021 SECOND QUARTER REPORT TRICON RESIDENTIAL

MANAGEMENT’S DISCUSSION AND ANALYSIS

for the three and six months ended June 30, 2021


	June 30, 2021									June 30, 2020
For the six months ended (in thousands of U.S. dollars)	Proportionate			IFRS reconciliation			Consolidated			Proportionate			IFRS reconciliation			Consolidated
Revenue from single-family rental properties	$	158,217		$	46,178		$	204,395		$	146,240		$	32,611		$	178,851
Direct operating expenses		(52,533	)		(14,946	)		(67,479	)		(49,380	)		(10,203	)		(59,583	)

Net operating income from single-family rental properties		105,684			31,232			136,916			96,860			22,408			119,268
Revenue from private funds and advisory services		22,043			—			22,043			15,937			—			15,937
Asset management fees eliminated upon consolidation		272			(272	)		—			—			—			—
Income from equity-accounted investments in multi-family rental properties		13,815			—			13,815			217			—			217
Income from equity-accounted investments in Canadian residential developments		24			—			24			5,090			—			5,090
Income (loss) from investments in U.S. residential developments		14,910			—			14,910			(76,424	)		—			(76,424	)
Compensation expense		(38,003	)		—			(38,003	)		(23,785	)		—			(23,785	)
General and administration expense		(14,555	)		(3,118	)		(17,673	)		(14,822	)		(2,575	)		(17,397	)
Interest expense		(60,327	)		(13,144	)		(73,471	)		(57,412	)		(9,467	)		(66,879	)
Fair value gain on rental properties		303,754			62,860			366,614			47,702			5,774			53,476
Fair value loss on derivative financial instruments and other liabilities		(78,609	)		(38	)		(78,647	)		(2,594	)		—			(2,594	)
Other expenses		(11,008	)		(2,133	)		(13,141	)		(10,214	)		(1,375	)		(11,589	)
Net change in fair value of limited partners’ interests in single-family rental business		—			(75,387	)		(75,387	)		—			(14,765	)		(14,765	)
Current income tax recovery		44,457			—			44,457			224			—			224
Deferred income tax (expense) recovery		(114,231	)		—			(114,231	)		2,853			—			2,853
Non-controlling interest		(1,376	)		—			(1,376	)		(801	)		—			(801	)

Net income (loss) from continuing operations attributable to Tricon’s shareholders	$	186,850		$	—		$	186,850		$	(17,169	)	$	—		$	(17,169	)

Fair value gain on rental properties		(303,754	)		(62,860	)		(366,614	)		(47,702	)		(5,774	)		(53,476	)
Fair value loss on derivative financial instruments and other liabilities		78,609			38			78,647			2,594			—			2,594
Loss from investments in U.S. residential developments		—			—			—			79,579			—			79,579
Limited partners’ share of FFO adjustments		—			62,822			62,822			—			5,774			5,774

FFO attributable to Tricon’s shareholders	$	(38,295	)	$	—		$	(38,295	)	$	17,302		$	—		$	17,302

Core FFO from U.S. and Canadian multi-family rental		9,449			—			9,449			14,300			—			14,300
Income from equity-accounted investments in multi-family rental properties		(13,815	)		—			(13,815	)		(217	)		—			(217	)
Income from equity-accounted investments in Canadian residential developments⁽¹⁾		(24	)		—			(24	)		(5,090	)		—			(5,090	)
Deferred tax expense (recovery)		114,231			—			114,231			(2,853	)		—			(2,853	)
Current tax impact on sale of U.S. multi-family rental portfolio		(44,502	)		—			(44,502	)		—			—			—
Interest on convertible debentures		4,928			—			4,928			4,929			—			4,929
Interest on Due to Affiliate		8,625			—			8,625			—			—			—
Amortization of deferred financing costs, discounts and lease obligations		6,845			1,544			8,389			3,242			1,064			4,306
Non-cash and non-recurring compensation⁽²⁾		3,995			—			3,995			3,443			—			3,443
Other adjustments^(1),(3)		16,811			(1,544	)		15,267			10,636			(1,064	)		9,572

Core FFO attributable to Tricon’s shareholders	$	68,248		$	—		$	68,248		$	45,692		$	—		$	45,692

Recurring capital expenditures		(14,205	)		—			(14,205	)		(12,526	)		—			(12,526	)

AFFO attributable to Tricon’s shareholders	$	54,043		$	—		$	54,043		$	33,166		$	—		$	33,166

(1)

Fair value gains recognized on equity-accounted investments in Canadian residential developments of $5,099 and performance share unit (PSU) expense of $790 for the six months ended June 30, 2020 have been removed from Core FFO to conform with the current period presentation. This change resulted in a $4,309 net decrease in Core FFO and AFFO for the six months ended June 30, 2020.

(2)	Includes $3,995 of equity-settled and non-cash AIP and LTIP expense for the six months ended June 30, 2021 (2020 — $3,336). The comparative period also includes non-recurring compensation of $107.

(3)	Includes the following adjustments:


	June 30, 2021									June 30, 2020
For the six months ended (in thousands of U.S. dollars)	Proportionate			IFRS reconciliation			Consolidated			Proportionate			IFRS reconciliation			Consolidated
Transaction costs	$	5,564		$	73		$	5,637		$	4,445		$	—		$	4,445
Amortization and depreciation expense		5,499			—			5,499			5,548			—			5,548
Realized and unrealized foreign exchange loss		2,540			—			2,540			1,752			—			1,752
Performance share units		3,682			—			3,682			790			—			790
Other adjustments		(474	)		(1,617	)		(2,091	)		(1,899	)		(1,064	)		(2,963	)

Total other adjustments	$	16,811		$	(1,544	)	$	15,267		$	10,636		$	(1,064	)	$	9,572

TRICON RESIDENTIAL 2021 SECOND QUARTER REPORT 61

MANAGEMENT’S DISCUSSION AND ANALYSIS

for the three and six months ended June 30, 2021

Proportionate balance sheet


(in thousands of U.S. dollars)	Total proportionate results		IFRS reconciliation		Consolidated results/Total
Assets
Rental properties	$	4,513,858	$	1,464,054	$	5,977,912
Equity-accounted investments in multi-family rental properties		140,532		—		140,532
Equity-accounted investments in Canadian residential developments		93,165		—		93,165
Canadian development properties		117,885		—		117,885
Investments in U.S. residential developments		154,370		—		154,370
Restricted cash		77,473		33,285		110,758
Goodwill, intangible and other assets		122,484		20		122,504
Deferred income tax assets		70,984		—		70,984
Cash		57,557		27,213		84,770
Other working capital items⁽¹⁾		38,124		6,656		44,780

Total assets	$	5,386,432	$	1,531,228	$	6,917,660
Liabilities
Debt		2,332,571		940,501		3,273,072
Convertible debentures		167,513		—		167,513
Due to Affiliate		253,954		—		253,954
Deferred income tax liabilities		322,500		—		322,500
Other liabilities⁽²⁾		300,675		590,727		891,402

Total liabilities	$	3,377,213	$	1,531,228	$	4,908,441
Non-controlling interest		5,975		—		5,975

Net assets attributable to Tricon’s shareholders	$	2,003,244	$	—	$	2,003,244

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

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

Proportionate leverage

Net debt to assets

Corporate

Tricon

Rental

Development

assets and

proportionate

portfolio

liabilities

results

Consolidation

reconciliation

Consolidated

results

(in thousands of U.S. dollars, except percentages)

Total assets

4,778,478

375,016

232,938

5,386,432

1,531,228

6,917,660

Total debt

2,272,148

35,187

25,236

2,332,571

940,501

3,273,072

Net debt to assets⁽¹⁾

41.8

45.8

(1)	Calculated by dividing net debt by total assets (net of cash and restricted cash of $135,030 on a proportionate basis or $195,528 on a consolidated basis).

62 2021 SECOND QUARTER REPORT TRICON RESIDENTIAL

MANAGEMENT’S DISCUSSION AND ANALYSIS

for the three and six months ended June 30, 2021

Summary of selected income statement, balance sheet and operating items


	Rental portfolio
(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 + +
Tricon’s proportionate share of rental homes		18,706					18,706			6,255			24,961
Average monthly rent	$	1,513
Occupancy		96.1	%
NOI margin		66.7	%
Quarterly NOI	$	54,057				$	54,057		$	16,687		$	70,744
Annualized NOI		216,228					216,228			66,748			282,976
Rental properties	$	4,513,858		$	—	$	4,513,858		$	1,464,054		$	5,977,912
Equity-accounted investments in multi-family rental properties		—			140,532		140,532			—			140,532
Net debt		(2,159,002	)		—		(2,159,002	)		(880,003	)		(3,039,005	)
Other liabilities		(66,329	)		—		(66,329	)		(584,051	)		(650,380	)

Net assets attributable to Tricon’s shareholders	$	2,288,527		$	140,532	$	2,429,059		$	—		$	2,429,059

Net assets per share⁽¹⁾	$	10.94		$	0.67	$	11.61
Net assets per share (CAD)⁽¹⁾	$	13.56		$	0.83	$	14.39

(1)	As at June 30, 2021, common shares outstanding were 209,245,258 and the USD/CAD exchange rate was 1.2394.


	Development portfolio
(in thousands of U.S. dollars, except per share amounts)	Canadian residential developments			U.S. residential developments		Tricon proportionate results +			Consolidation reconciliation		Consolidated results + +
Estimated annual NOI upon stabilization⁽¹⁾	$	47,289
Projected distributions net of advances remaining				$	294,699
Investments in residential developments	$	93,165		$	154,370	$	247,535		$	—	$	247,535
Canadian development properties		117,885			—		117,885			—		117,885
Net debt		(27,464	)		—		(27,464	)		—		(27,464	)
Other liabilities		(947	)		—		(947	)		—		(947	)

Net assets attributable to Tricon’s shareholders	$	182,639		$	154,370	$	337,009		$	—	$	337,009

Net assets per share⁽²⁾	$	0.87		$	0.74	$	1.61
Net assets per share (CAD)⁽²⁾	$	1.08		$	0.92	$	2.00

(1)	Calculated on a total portfolio basis, and based on current project development plans assuming a target development yield of 4.75% on cost. Refer to page 1, “Non-IFRS measures and forward-looking statements”.

(2)	As at June 30, 2021, common shares outstanding were 209,245,258 and the USD/CAD exchange rate was 1.2394.

TRICON RESIDENTIAL 2021 SECOND QUARTER REPORT 63

MANAGEMENT’S DISCUSSION AND ANALYSIS

for the three and six months ended June 30, 2021


	Corporate assets and liabilities
(in thousands of U.S. dollars, except per share amounts)	Tricon proportionate results			Consolidation reconciliation		Consolidated results
Goodwill, intangible and other assets	$	122,474		$	—	$	122,474
Deferred income tax liabilities		(251,516	)		—		(251,516	)
Net debt		(11,075	)		—		(11,075	)
Convertible debentures		(167,513	)		—		(167,513	)
Due to Affiliate		(253,954	)		—		(253,954	)
Other liabilities		(201,240	)		—		(201,240	)

Net assets attributable to Tricon’s shareholders	$	(762,824	)	$	—	$	(762,824	)

Net assets per share⁽¹⁾	$	(3.65	)
Net assets per share (CAD)⁽¹⁾	$	(4.52	)

(1)	As at June 30, 2021, common shares outstanding were 209,245,258 and the USD/CAD exchange rate was 1.2394.

Future performance fees

(in thousands of U.S. dollars, except per share amounts)

1 to 2 years

3 to 5 years

More than
5 years

Total

Estimated future performance fees⁽¹⁾

8,000

30,000

115,000

153,000

Net assets per share⁽²⁾

0.73

Net assets per share (CAD)⁽²⁾

0.90

(1)	Includes estimated future performance fees before the deduction of any amounts paid to employees under the LTIP. Refer to page 1, “Non-IFRS measures and forward-looking statements”.

(2)	As at June 30, 2021, common shares outstanding were 209,245,258 and the USD/CAD exchange rate was 1.2394.

Summary of net assets (book value) per share

(in thousands of U.S. dollars,
except per share amounts)

Rental
portfolio
LOGO

Development
portfolio
LOGO

Corporate
assets and
liabilities
LOGO

Tricon
proportionate
results
LOGO

Future
performance
fees

Net assets attributable to Tricon’s shareholders

2,429,059

337,009

(762,824

)

2,003,244

Net assets per share⁽¹⁾

11.61

1.61

(3.65

)

9.57

0.73

Net assets per share (CAD)⁽¹⁾

14.39

2.00

(4.52

)

11.87

0.90

(1)	As at June 30, 2021, common shares outstanding were 209,245,258 and the USD/CAD exchange rate was 1.2394.

64 2021 SECOND QUARTER REPORT TRICON RESIDENTIAL

MANAGEMENT’S DISCUSSION AND ANALYSIS

for the three and six months ended June 30, 2021

Historical proportionate non-IFRS measures


For the three months ended (in thousands of U.S. dollars, except per share amounts which are in U.S. dollars)	June 30, 2021			March 31, 2021			December 31, 2020			September 30, 2020			June 30, 2020			March 31, 2020
Revenue from single-family rental properties	$	81,056		$	77,161		$	75,254		$	75,446		$	73,861		$	72,379
Direct operating expenses		(26,999	)		(25,534	)		(24,778	)		(25,254	)		(24,669	)		(24,711	)

Net operating income from single-family rental properties		54,057			51,627			50,476			50,192			49,192			47,668
Revenue from private funds and advisory services		13,113			8,930			10,339			7,814			8,122			7,815
Asset management fees eliminated upon consolidation		272			—			—			—			—			—
Core FFO from U.S. and
Canadian multi-family rental⁽¹⁾		1,919			7,530			7,199			6,478			7,057			7,243
Core FFO from U.S. residential developments		8,251			6,659			11,443			4,101			3,252			–
Other income (expense)		1,958			(40	)		(270	)		(7	)		(1,764	)		1,703
Corporate overhead		(23,962	)		(22,092	)		(23,875	)		(16,231	)		(18,432	)		(17,147	)
Interest expense		(19,866	)		(20,063	)		(20,964	)		(22,991	)		(23,514	)		(25,727	)
Current income tax (expense) recovery		(16	)		(29	)		7,082			(3,261	)		286			(62	)

Core funds from operations (Core FFO)	$	35,726		$	32,522		$	41,430		$	26,095		$	24,199		$	21,493

Recurring capital expenditures		(7,500	)		(6,705	)		(7,445	)		(7,904	)		(5,883	)		(6,643	)

Adjusted funds from operations (AFFO)	$	28,226		$	25,817		$	33,985		$	18,191		$	18,316		$	14,850

Core FFO per share	$	0.14		$	0.13		$	0.17		$	0.12		$	0.11		$	0.10
Core FFO per share (CAD)	$	0.17		$	0.16		$	0.22		$	0.16		$	0.15		$	0.13
AFFO per share	$	0.11		$	0.10		$	0.14		$	0.08		$	0.09		$	0.07
AFFO per share (CAD)	$	0.14		$	0.13		$	0.18		$	0.11		$	0.12		$	0.09
Core FFO payout ratio		33	%		33	%		26	%		39	%		41	%		44	%
AFFO payout ratio		42	%		42	%		31	%		56	%		54	%		64	%
Weighted average shares outstanding – diluted		252,511,687			248,103,423			248,247,018			222,822,876			211,677,963			212,934,511

(1)

For the periods up to and including March 31, 2021, Core FFO from U.S. multi-family rental represents Tricon’s legacy 100% ownership interest in the portfolio. For the three months ended June 30, 2021, Core FFO from U.S. multi-family rental represents Tricon’s remaining 20% ownership interest in the portfolio.

TRICON RESIDENTIAL 2021 SECOND QUARTER REPORT 65

MANAGEMENT’S DISCUSSION AND ANALYSIS

for the three and six months ended June 30, 2021

Historical proportionate income statement


For the three months ended (in thousands of U.S. dollars)	June 30, 2021			March 31, 2021			December 31, 2020			September 30, 2020			June 30, 2020			March 31, 2020
Revenue from single-family rental properties	$	81,056		$	77,161		$	75,254		$	75,446		$	73,861		$	72,379
Direct operating expenses		(26,999	)		(25,534	)		(24,778	)		(25,254	)		(24,669	)		(24,711	)

Net operating income from single-family rental properties		54,057			51,627			50,476			50,192			49,192			47,668
Revenue from private funds and advisory services		13,113			8,930			10,339			7,814			8,122			7,815
Asset management fees eliminated upon consolidation		272			—			—			—			—			—
Income (loss) from equity-accounted investments in multi-family rental		14,272			(457	)		427			102			162			55
Income (loss) from equity-accounted investments in Canadian residential developments		27			(3	)		8,293			(5	)		(7	)		5,097
Income (loss) from investments in U.S. residential developments		8,251			6,659			10,191			4,457			3,155			(79,579	)
Compensation expense		(20,253	)		(17,750	)		(18,303	)		(11,062	)		(13,377	)		(10,408	)
General and administration expense		(7,659	)		(6,896	)		(7,225	)		(6,792	)		(6,512	)		(8,310	)
Interest expense		(30,320	)		(30,007	)		(30,803	)		(28,921	)		(27,626	)		(29,786	)
Fair value gain on rental properties		211,570			92,184			94,791			47,968			29,358			18,344
Fair value (loss) gain on derivative
financial instruments and other liabilities		(41,437	)		(37,172	)		(16,418	)		11,551			(450	)		(2,144	)
Other expenses		(8,451	)		(2,557	)		(854	)		(6,357	)		(4,024	)		(6,190	)
Current income tax (expense) recovery		(16	)		44,473			7,082			(3,261	)		286			(62	)
Deferred income tax (expense) recovery		(47,104	)		(67,127	)		(32,188	)		(12,489	)		(8,114	)		10,967
Non-controlling interest		(805	)		(571	)		(1,800	)		(490	)		(294	)		(507	)

Net income (loss) from continuing operations attributable to Tricon’s shareholders	$	145,517		$	41,333		$	74,008		$	52,707		$	29,871		$	(47,040	)

Fair value gain on rental properties		(211,570	)		(92,184	)		(94,791	)		(47,968	)		(29,358	)		(18,344	)
Fair value loss (gain) on derivative financial instruments and other liabilities		41,437			37,172			16,418			(11,551	)		450			2,144
Loss from investments in
U.S. residential developments		—			—			—			—			—			79,579

FFO attributable to Tricon’s shareholders	$	(24,616	)	$	(13,679	)	$	(4,365	)	$	(6,812	)	$	963		$	16,339

Core FFO from U.S. and
Canadian multi-family rental		1,919			7,530			7,199			6,478			7,057			7,243
(Income) loss from equity-accounted investments in multi-family rental		(14,272	)		457			(427	)		(102	)		(162	)		(55	)
(Income) loss from equity-accounted investments in Canadian residential developments		(27	)		3			(8,293	)		5			7			(5,097	)
Deferred tax expense (recovery)		47,104			67,127			32,188			12,489			8,114			(10,967	)
Current tax impact on sale of
U.S. multi-family rental portfolio		—			(44,502	)		—			—			—			—
Interest incurred on convertible debentures		2,477			2,451			2,506			2,492			2,464			2,465
Interest on Due to Affiliate		4,312			4,313			4,312			1,342			—			—
Amortization of deferred financing costs, discounts and lease obligations		3,665			3,180			3,021			2,096			1,648			1,594
Non-cash and non-recurring compensation		3,180			815			702			941			793			2,650
Other adjustments		11,984			4,827			4,587			7,166			3,315			7,321

Core FFO attributable to Tricon’s shareholders	$	35,726		$	32,522		$	41,430		$	26,095		$	24,199		$	21,493

Recurring capital expenditures		(7,500	)		(6,705	)		(7,445	)		(7,904	)		(5,883	)		(6,643	)

AFFO attributable to Tricon’s shareholders	$	28,226		$	25,817		$	33,985		$	18,191		$	18,316		$	14,850

66 2021 SECOND QUARTER REPORT TRICON RESIDENTIAL

MANAGEMENT’S DISCUSSION AND ANALYSIS

for the three and six months ended June 30, 2021

Historical proportionate balance sheet


(in thousands of U.S. dollars, except per share amounts)	June 30, 2021		March 31, 2021		December 31, 2020		September 30, 2020		June 30, 2020		March 31, 2020
Assets
Rental properties	$	4,513,858	$	4,114,315	$	5,272,461	$	5,102,039	$	5,015,782	$	4,991,776
Equity-accounted investments in multi-family rental properties		140,532		127,584		19,913		19,538		19,025		18,120
Equity-accounted investments in Canadian residential developments		93,165		77,152		74,955		63,384		61,223		57,946
Canadian development properties		117,885		112,733		110,018		103,367		167,752		33,030
Investments in U.S. residential developments		154,370		160,784		164,842		167,023		100,605		171,398
Restricted cash		77,473		74,139		95,627		88,256		73,267		68,334
Goodwill, intangible and other assets		122,484		92,271		170,032		168,996		167,755		168,182
Deferred income tax assets		70,984		59,659		102,444		104,711		105,098		101,486
Cash		57,557		271,966		32,019		36,159		29,661		33,099
Other working capital items		38,124		55,101		38,714		32,391		29,282		35,774

Total assets	$	5,386,432	$	5,145,704	$	6,081,025	$	5,885,864	$	5,769,450	$	5,679,145
Liabilities
Debt		2,332,571		2,533,373		3,419,657		3,333,911		3,580,949		3,532,322
Convertible debentures		167,513		167,193		165,956		164,775		163,622		162,441
Due to Affiliate		253,954		252,788		251,647		250,530		—		—
Deferred income tax liabilities		322,500		266,039		298,071		267,921		255,212		247,982
Other liabilities		300,675		217,623		202,456		201,943		155,607		134,806

Total liabilities	$	3,377,213	$	3,437,016	$	4,337,787	$	4,219,080	$	4,155,390	$	4,077,551
Non-controlling interest		5,975		6,567		8,142		8,338		7,848		7,554

Net assets attributable to Tricon’s shareholders	$	2,003,244	$	1,702,121	$	1,735,096	$	1,658,446	$	1,606,212	$	1,594,040

Net assets per share	$	9.57	$	8.80	$	8.98	$	8.60	$	8.34	$	8.28

TRICON RESIDENTIAL 2021 SECOND QUARTER REPORT 67

LOGO

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 three and six months ended June 30, 2021

6. LIQUIDITY AND CAPITAL RESOURCES

6.1 Financing strategy

•

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 business.

•

Cash distributions from operating cash flow generated by our 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.

Working capital

As at June 30, 2021, Tricon had a net working capital deficit of $236.2 million, reflecting current assets of $129.5 million, offset by current liabilities of $365.7 million. The working capital deficit is primarily due to the convertible debentures of $167.5 million which mature on March 31, 2022. Subsequent to quarter-end, on July 30, 2021, the Company gave notice to debenture holders of its intention to redeem in full all of the outstanding balance of 2022 convertible debentures, and has elected to satisfy the redemption price by the issuance of common shares of the Company (see Section 3.3). 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

The Company provides financial guarantees for land loans and construction loans in its residential development business.

As at June 30, 2021, the Company was in compliance with all of its financial covenants.

Equity issuance and cancellations

On June 8, 2021, the Company completed the offering, on a bought deal basis, of 15,480,725 common shares at a price of $10.77 (C$13.00) per common share of the Company for gross proceeds of $166.7 million (C$201.2 million translated to U.S. dollars using the June 8, 2021 exchange rate). Net proceeds from the offering were $161.8 million (C$195.4 million), which reflects $6.6 million of equity issuance costs incurred partially offset by $1.7 million of deferred tax recoveries.

As of June 30, 2021, there were 209,618,719 common shares issued by the Company, of which 209,245,258 were outstanding and 373,461 were reserved to settle restricted share awards in accordance with the Company’s Restricted Share Plan.

TRICON RESIDENTIAL 2021 SECOND QUARTER REPORT 69

MANAGEMENT’S DISCUSSION AND ANALYSIS

for the three and six months ended June 30, 2021

As of June 30, 2021, there was $171.4 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 16,388,528 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. Subsequent to quarter-end, on July 30, 2021, the Company provided notice of its intention to redeem in full the outstanding 2022 convertible debentures (see Section 3.3).

As of June 30, 2021, 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 associated with such issuance, the investors in such preferred units have rights to exchange the preferred units into common shares of the Company at an exchange price of $8.50 per common share, as may be adjusted from time to time in accordance with the terms of such transaction documents. As at June 30, 2021, this equated to 35,294,118 common shares of the Company.

7. OPERATIONAL KEY PERFORMANCE INDICATORS

7.1 Defined terms

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 and discussed 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”) margin represents net operating income as a percentage of total revenue from rental properties.

•

“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 currently included in the same home portfolio will have satisfied the conditions described above prior to September 30, 2019, and those homes have been held in operations throughout the full periods presented in both 2020 and 2021.

•

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.

•

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

•

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

70 2021 SECOND QUARTER REPORT TRICON RESIDENTIAL

MANAGEMENT’S DISCUSSION AND ANALYSIS

for the three and six months ended June 30, 2021

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 U.S. 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.

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

•

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 U.S. residential developments 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.

7.2 Assets under management



ASSETS UNDER MANAGEMENT

Principal Assets Under Management

Single-family rental, multi-family rental and Canadian residential developments		Fair value of rental and development properties plus unfunded commitment

U.S. residential developments		Fair value of invested capital plus unfunded commitment

Third-Party Assets Under Management

Single-family rental, multi-family rental and Canadian residential developments		Outstanding invested capital and project-level funded debt plus unfunded commitment less return of capital

U.S. residential developments		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

TRICON RESIDENTIAL 2021 SECOND QUARTER REPORT 71

MANAGEMENT’S DISCUSSION AND ANALYSIS

for the three and six months ended June 30, 2021

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

Refer to the Company’s MD&A for the year ended December 31, 2020, which is available on SEDAR at www.sedar.com and on the Company’s website at www.triconresidential.com, for detailed discussions of accounting estimates and policies, controls and procedures, and risk analysis.

8.1 Accounting estimates and policies

The Company’s accounting policies are described in Notes 2 and 3 to the consolidated financial statements for the year ended December 31, 2020, and any changes thereto are described in Note 2 to the condensed interim consolidated financial statements for the three and six months ended June 30, 2021.

The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. Refer to Note 4 to the consolidated financial statements for the year ended December 31, 2020 for details on critical accounting estimates.

8.2 Controls and procedures

As at June 30, 2021, 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. The CEO and CFO did not identify any material weaknesses in the Company’s system of internal controls over financial reporting.

During the six months ended June 30, 2021, 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.

8.3 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 condensed interim consolidated financial statements for further details concerning the Company’s transactions with related parties.

8.4 Dividends

8.5 Compensation incentive plans

8.6 Risk definition and management

There are certain risks inherent in the Company’s activities and those of its investees, which may impact the Company’s financial and operating performance, the value of its investments and the value of its securities. The Company’s Annual Information Form dated March 2, 2021 and its MD&A for the year ended December 31, 2020, which are available on SEDAR at www.sedar.com and on the Company’s website at www.triconresidential.com, contain detailed discussions of these risks.

72 2021 SECOND QUARTER REPORT TRICON RESIDENTIAL

MANAGEMENT’S DISCUSSION AND ANALYSIS

for the three and six months ended June 30, 2021

9. HISTORICAL FINANCIAL INFORMATION

The following table shows selected IFRS measures for the past eight quarters. The comparative period results have been recast in conformity with the current period presentation.


For the three months ended (in thousands of U.S. dollars, except per share amounts which are in U.S. dollars)	June 30, 2021			March 31, 2021			December 31, 2020		September 30, 2020
Financial statement results
Net operating income from single-family rental properties from continuing operations	$	70,744		$	66,172		$	63,719	$	62,753
Total revenue from continuing operations		119,034			107,404			104,739		101,545
Net income from continuing operations		146,322			41,904			75,808		53,197
Net (loss) income from discontinued operations		—			(67,562	)		5,670		4,902
Net income (loss)		146,322			(25,658	)		81,478		58,099
Basic earnings per share from continuing operations		0.73			0.21			0.38		0.27
Basic (loss) earnings per share from discontinued operations		—			(0.34	)		0.03		0.03
Basic earnings (loss) per share		0.73			(0.13	)		0.41		0.30
Diluted earnings per share from continuing operations		0.72			0.21			0.36		0.21
Diluted (loss) earnings per share from discontinued operations		—			(0.35	)		0.03		0.02
Diluted earnings (loss) per share		0.72			(0.14	)		0.39		0.23

For the three months ended (in thousands of U.S. dollars, except per share amounts which are in U.S. dollars)	June 30, 2020			March 31, 2020			December 31, 2019		September 30, 2019
Financial statement results
Net operating income from single-family rental properties from continuing operations	$	61,248		$	58,020		$	—	$	—
Total revenue from continuing operations		99,302			95,486			11,716		11,323
Net income (loss) from continuing operations		30,165			(46,533	)		38,526		26,958
Net (loss) income from discontinued operations		(12,824	)		6,028			6,733		5,499
Net income (loss)		17,341			(40,505	)		45,259		32,457
Basic earnings (loss) per share from continuing operations		0.16			(0.24	)		0.20		0.13
Basic (loss) earnings per share from discontinued operations		(0.07	)		0.03			0.03		0.03
Basic earnings (loss) per share		0.09			(0.21	)		0.23		0.16
Diluted earnings (loss) per share from continuing operations		0.16			(0.24	)		0.19		0.12
Diluted (loss) earnings per share from discontinued operations		(0.07	)		0.03			0.03		0.03
Diluted earnings (loss) per share		0.09			(0.21	)		0.22		0.15

TRICON RESIDENTIAL 2021 SECOND QUARTER REPORT 73

LOGO

Imagine a world where housing unlocks life’s potential 7 St. Thomas Street, Suite 801 Toronto, Ontario M5S 2B7 T 416 925 7228 F 416 925 7964 www.triconresidential.com

Exhibit 4.6

LOGO

Notice of Annual and Special Meeting of Shareholders and Management Information Circular AS OF MAY 11, 2021 Annual and Special Meeting of Shareholders to be held on June 23, 2021

NOTICE OF ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS


When:		Where:
Wednesday, June 23, 2021 at		Virtually via live webcast at: https://web.lumiagm.com/253792997
10:00 a.m. (Toronto time)		Password: tricon2021

Business of the Meeting

1.	Receive the financial statements of Tricon Residential Inc. (the “Company”) for the 12-month period ended December 31, 2021, together with the auditor’s report thereon;

2.	Elect Directors of the Company for the ensuing year;

3.	Appoint the auditor of the Company and authorize the Board of Directors to fix their remuneration;

In connection with the Blackstone Private Placement, to consider and, if deemed advisable, to pass, an ordinary resolution (on a disinterested basis) (the full text of which is set out in Appendix C of the Information Circular) approving the setting of the Exchange Price on accrued Distributions in respect of Preferred Units at $8.50, as may be adjusted from time to time in accordance with the Tricon PIPE LLC Agreement, subject to the Exchange Maximum (each capitalized term as defined in the Information Circular); and

5.	Transact any other business which may properly come before the annual and special meeting (the “Meeting”) of holders of the Company’s common shares (“Shareholders”).

Your Vote is Important

If you held common shares of the Company (“Common Shares”) on May 4, 2021, you are entitled to receive notice and to vote on each of the matters listed above to be voted on at the Meeting.

Due to the virtual nature of the Meeting, Shareholders are encouraged to express their vote in advance by completing a form of proxy or voting instruction form, or where advanced voting is not possible, to do so at the virtual Meeting. Detailed voting instructions can be found starting on page 9 of the accompanying management information circular (“Information Circular”).

Virtual Meeting

This year, like last year, in order to mitigate risks to the health and safety of the Company’s Shareholders, communities, employees and other stakeholders posed by the ongoing COVID-19 pandemic, the Meeting will be in a virtual-only format, which will be conducted via live webcast. All Shareholders, regardless of geographic location and equity ownership, will have an equal opportunity to participate at the Meeting. Shareholders will not be able to attend the Meeting in person. Registered shareholders and duly appointed proxyholders will be able to attend, participate and vote at the Meeting online at https://web.lumiagm.com/253792997. Guests and non-registered Shareholders (being shareholders who hold their Common Shares through a broker, investment dealer, bank, trust company, custodian, nominee or other intermediary) who have not duly appointed themselves as proxyholder will not be able to vote or ask questions at the Meeting.

Meeting Materials

This year, the Company is again using notice-and-access delivery to furnish the Notice of Meeting and Information Circular (the “Meeting Materials”) to Shareholders electronically. Therefore, instead of receiving the Meeting Materials by mail, you can view them online under the Company’s profile at www.sedar.com or at https://docs.tsxtrust.com/2234. Requests for paper copies of the Meeting Materials may be made, at no charge, up to one year from the date the Information Circular is filed on SEDAR by calling 1-866-600-5869 or by emailing TMXEInvestorServices@tmx.com.

The Company believes that this delivery process will expedite Shareholders’ receipt of proxy materials and both lower the costs and reduce the environmental impact of the Meeting.

By order of the Board of Directors

“David Veneziano”

David Veneziano

Chief Legal Officer

Toronto, Ontario, Canada

May 11, 2021

TRICON RESIDENTIAL 2021 MANAGEMENT INFORMATION CIRCULAR 1

LETTER TO SHAREHOLDERS

Dear fellow Shareholders,

It is our pleasure to invite you to the 2021 Annual and Special Meeting of Shareholders of Tricon Residential Inc. (“Tricon” or the “Company”) on Wednesday, June 23, 2021 at 10:00 a.m. (Toronto time) (the “Meeting”).

This year, like last year, in order to mitigate risks to the health and safety of the Company’s common shareholders (“Shareholders”), communities, employees and other stakeholders posed by the ongoing COVID-19 pandemic, the Meeting will be in a virtual-only format, which will be conducted via live webcast. All Shareholders, regardless of geographic location and equity ownership, will have an equal opportunity to participate at the Meeting. Shareholders will not be able to attend the Meeting in person. Registered shareholders and duly appointed proxyholders will be able to attend, participate or vote at the Meeting online at https://web.lumiagm.com/253792997. Guests and non-registered Shareholders (being shareholders who hold their common shares through a broker, investment dealer, bank, trust company, custodian, nominee or other intermediary) who have not duly appointed themselves as proxyholder will not be able to vote or ask questions at the Meeting.

As a Shareholder, you have the right to vote your shares on all items that come before the Meeting. Your vote is important, and we encourage you to exercise your right in the manner that suits you best.

The accompanying management information circular provides details about all of the items for consideration at the Meeting, such as information about nominated directors and their compensation, the Company’s auditor, and the proposed setting of the exchange price on accrued distributions in respect of preferred units in connection with the Blackstone Private Placement (as defined in the circular). It also contains detailed information about our philosophy, policies and programs for executive compensation, our corporate governance practices, and how the board of directors receives input from Shareholders on these matters.

At the Meeting, we will review our financial position, business operations and the value we are delivering to Shareholders.

Thank you for your support and continued confidence in Tricon and we look forward to your participation at this year’s virtual Meeting.

Sincerely,

“David Berman”

David Berman

Executive Chairman of the Board of Directors

2 2021 MANAGEMENT INFORMATION CIRCULAR TRICON RESIDENTIAL

2021 MANAGEMENT INFORMATION CIRCULAR

TABLE OF CONTENTS


PROXY SUMMARY			4

ABOUT THIS INFORMATION CIRCULAR			7

VOTING INFORMATION			7

BUSINESS OF THE MEETING			10

DIRECTOR NOMINEES			14

DIRECTOR COMPENSATION			26

GOVERNANCE PRACTICES			28

COMPENSATION, NOMINATING AND CORPORATE GOVERNANCE COMMITTEE LETTER TO SHAREHOLDERS			38

COMPENSATION DISCUSSION AND ANALYSIS			40

APPENDIX A
KEY TERMS OF COMPENSATION PLANS			62

APPENDIX B
MANDATE OF THE BOARD OF DIRECTORS			68

APPENDIX C
EXCHANGE PRICE RESOLUTION			71

APPENDIX D
GLOSSARY OF TERMS			72

TRICON RESIDENTIAL 2021 MANAGEMENT INFORMATION CIRCULAR 3

2021 MANAGEMENT INFORMATION CIRCULAR

TRICON RESIDENTIAL INC.

MANAGEMENT INFORMATION CIRCULAR

This management information circular (the “Information Circular”) is furnished in connection with the solicitation of proxies by management of Tricon Residential Inc. (“Tricon” or the “Company”) for use at the 2021 annual and special meeting of shareholders of Tricon (the “Meeting”) to be held on Wednesday, June 23, 2021 at 10:00 a.m. (Toronto time) and at any postponement or adjournment thereof, for the purposes set forth in the accompanying notice of meeting (“Notice of Meeting”). The Meeting will be held in a virtual-only format. Shareholders will not be able to attend the Meeting in person. A summary of the information shareholders will need to participate in the Meeting online is provided in this Information Circular.

PROXY SUMMARY

This summary sets forth certain performance highlights, as well as information contained elsewhere in this Information Circular. You should read the entire Information Circular before casting your vote. You may also wish to review the Company’s Annual Report for the fiscal year ended December 31, 2020, which is available on the Company’s website at www.triconresidential.com and on SEDAR at www.sedar.com.

Board Voting Recommendations

Director Nominees

Every member of our Board of Directors is elected annually. The Board currently consists of ten Directors. Tracy Sherren is not standing for re-election at the Meeting following the expiry of Starlight’s right to nominate one member of the Board of Directors pursuant to the terms of the Starlight Transaction and her current term as a Director will end on the date of the Meeting. Accordingly, you are being asked to vote on the election of the following nine nominees, each of whom currently serves as a Director, and the size of the Board will be reduced to nine members upon the election of Directors at the Meeting. Mr. Cohen’s nomination has been confirmed by Blackstone pursuant to its right to nominate one member of the Board of Directors in connection with the closing of the Blackstone Private Placement.


				Committee Memberships
Name	Age	Director Since	Independent	Audit	Compensation, Nominating and Corporate Governance
Mr. David Berman	73	Prior to IPO in 2010	No
Mr. J. Michael Knowlton	70	2011	Yes	Chair	✓
Mr. Peter D. Sacks*	75	2014	Yes		✓
Ms. Siân M. Matthews	60	2015	Yes		Chair
Mr. Ira Gluskin	78	2016	Yes	✓
Ms. Camille Douglas	69	2018	Yes	✓
Mr. Frank Cohen	48	2020	Yes
Mr. Gary Berman	47	2014	No
Mr. Geoff Matus	71	Prior to IPO in 2010	No

*	Lead director

4 2021 MANAGEMENT INFORMATION CIRCULAR TRICON RESIDENTIAL

2021 MANAGEMENT INFORMATION CIRCULAR

Corporate Governance Highlights


Governance Elements
Board Independence and Diversity		• Majority of independent Directors (²⁄₃ of nominees are independent)

		• Independent Lead Director

		• Fully independent committees

		• Regular independent Board and committee meetings

		• Gender diversity policy targeting at least ¹⁄₃ of Directors of each gender

Meeting Attendance		• Strong Director engagement with 100% attendance at Board and committee meetings¹

		• There were eleven Board meetings in 2020

		• There were four Audit Committee meetings and five Governance Committee meetings in 2020

Director Age and Tenure		• Balanced Director tenure with an average tenure of approximately six years since IPO in 2010

		• Average director nominee age of 65 years

(1)	Individual meeting attendance of Directors who are nominees for election at the Meeting is set out in the Director profiles beginning on page 16.

Performance and CEO Compensation Highlights

While 2020 was largely defined by challenges created by the COVID-19 pandemic, it was also a transformative year for Tricon, with the completion of our transition to a rental housing company. This transformation culminated in Tricon’s announcement, on May 14, 2020, of its intention to rebrand itself as Tricon Residential and in connection with that rebranding, to change the name of the Company to Tricon Residential Inc. The Company’s name was officially changed on July 7, 2020 following approval at our last meeting of shareholders and our rebranding exercise culminated with the launch of our new resident-centric website in January 2021.

A key accomplishment in the year was the $300 million preferred equity investment in Tricon made on a private placement basis by a syndicate of investors led by Blackstone through the purchase of newly-created Preferred Units issued by a Tricon subsidiary which are exchangeable into a minority common share interest in Tricon. The Blackstone Private Placement represented a validation of Tricon’s business and facilitated a meaningful strengthening of its balance sheet by allowing Tricon to repay its corporate credit facility and reduce its proportionate leverage by approximately 500 basis points to approximately 56% net debt/assets (excluding convertible debentures).

In March 2021, Tricon’s balance sheet was further strengthened by the syndication of its wholly-owned portfolio of 23 U.S. multi-family apartments to two institutional investors. Under the joint venture arrangement, the investors acquired a combined 80% interest in the existing portfolio, with Tricon retaining a 20% interest. The transaction reflected a total portfolio value of $1.331 billion, including in-place debt, and provided Tricon with approximately $425 million of gross proceeds to be used to repay outstanding debt and for general corporate purposes. As a result, Tricon further reduced its leverage by over 500 basis points to approximately 50% net debt/assets (excluding convertible debentures), significantly enhancing its balance sheet flexibility.

Tricon has also made significant progress recently in expanding its third-party assets under management and associated recurring fee streams with the formation of a new joint venture arrangement with the Canada Pension Plan Investment Board (“CPPIB”) in March 2021. The joint venture will invest in build-to-core multi-family rental projects in the Greater Toronto Area with Tricon serving as the projects’ developer, asset manager and property manager. The joint venture will provide up to C$500 million of equity capital, including up to C$350 million from CPPIB and C$150 million from Tricon, allowing for the expected development of 2,000–3,000 units at an expected gross development cost of C$1.4 billion, including leverage.

Operationally, Tricon delivered strong performance in 2020 and benefited from robust demand driven by de-urbanization, de-densification and work-from-home trends that have accelerated over the course of the COVID-19 pandemic. Tricon’s single-family rental business, which accounts for 75% of our real estate assets, recorded a 110-basis point increase in occupancy to 97.2%, a 460-basis point decrease in resident turnover to 22.8%, record net operating income margin of 66.3% and blended rent growth of 5.3% for the same home portfolio. Tricon’s portfolio of managed homes also expanded by 8%, to 22,766 homes. The strong performance of this business, coupled with improved earnings from for-sale housing investments and stable corporate overhead costs drove 2020 core funds from operations (“Core FFO”) per share to $0.49, an increase of 69% year-over-year. Please refer to the Company’s Annual Report for the fiscal year ended December 31, 2020 for further details.

Notwithstanding the Company’s growth achieved in 2020, the President and Chief Executive Officer’s total direct compensation (in Canadian dollars) decreased by 12% compared to 2019 due to a year-over-year reduction in performance, relative to the ambitious annual performance target established by the Board in early 2020, primarily attributable to the impact of the COVID-19 pandemic.

TRICON RESIDENTIAL 2021 MANAGEMENT INFORMATION CIRCULAR 5

2021 MANAGEMENT INFORMATION CIRCULAR

2020 Total Direct Compensation

The Company has structured its executive compensation program to create a high-performance culture by placing a large proportion of executive pay at-risk and deferred over time in order to align the interests of executives with those of long-term Shareholders.

85% of the President and Chief Executive Officer’s total direct compensation for Fiscal 2020 is considered at-risk, and 34% is deferred over time in the form of Deferred Share Units (“DSUs”), Performance Share Units (“PSUs”) and Restricted Shares.


		At-risk pay includes non-dilutive PSUs with vesting based on Adjusted EPS performance over three years

Continuous Assessment of Our Compensation Program

The Company has grown steadily since going public in 2010, especially in its activities in the United States. As an important part of our ongoing strategic initiative to simplify and clarify the Company’s business model, the Compensation, Nominating and Corporate Governance Committee (the “Governance Committee”) undertook a comprehensive review of the Company’s compensation philosophy and practices. As a result of this review, the Compensation Committee and the Board adopted, and in 2018 implemented, significant improvements to our compensation program to better align executive compensation with our corporate strategic plan and Shareholders’ expectations, including:

•

Comprehensive review of our compensation philosophy

•

Complete redesign of the Annual Incentive Plan

•

Compensation structure anchored at market median with predetermined variable pay targets

•

Performance Share Unit Plan with cliff vesting based on annual Adjusted EPS performance over three years

•

Restricted Share Plan with long-term vesting of awards (the Restricted Shares awarded in 2020 will cliff vest in 10 years)

•

Executive Common Share ownership guidelines

We have continued to look for ways to further improve our compensation program and achieve greater Shareholder alignment, and in 2020 the Company amended both the Stock Option Plan and the DSU Plan to convert the plans from “evergreen” to “fixed-number” plans with security-based award caps imposed on both an annual and aggregate basis. In 2021, we have also implemented a new performance assessment process aimed at reinforcing alignment between our CEO’s compensation and the achievement of annual targets set by the Board in respect of six key pillars of our success: shareholder value, employees, residents, innovation, ESG, and risk management.

6 2021 MANAGEMENT INFORMATION CIRCULAR TRICON RESIDENTIAL

2021 MANAGEMENT INFORMATION CIRCULAR

ABOUT THIS INFORMATION CIRCULAR

Unless otherwise indicated, the information presented in this Information Circular is as of May 11, 2021 and all dollar amounts are expressed in U.S. dollars, which is the presentation currency of the Company’s financial statements. All references to “$”, “USD” or “US$” are to U.S. dollars and all references to “C$” or “CAD” are to Canadian dollars. All references to “Fiscal 2020” refer to the 12-month period ended December 31, 2020. Unless stated otherwise, wherever the value of the Common Shares (or securities deriving their value from Common Shares) is expressed in this Information Circular as of a particular date, that value is calculated using the closing share price of the Common Shares on the TSX as of that date. Unless stated more precisely, values and figures expressed herein have been rounded to the nearest thousand.

In this Information Circular, references to ‘‘Tricon’’, the ‘‘Company’’, ‘‘our’’, “us” or ‘‘we’’ mean Tricon Residential Inc. and its direct and indirect subsidiaries. References to “Common Shares” means the common shares in the capital of the Company, and references to “Shareholders” means the holders of Common Shares.

The Meeting will be held as a completely virtual meeting, which will be conducted via live webcast. Shareholders will not be able to attend the Meeting in person. A summary of the information Shareholders will need to attend the Meeting online is provided herein.

This Information Circular is furnished in connection with the solicitation of proxies by and on behalf of management of the Company for use at the Meeting to be held virtually via live webcast at https://web.lumiagm.com/253792997 on Wednesday, June 23, 2021 at 10:00 a.m. (Toronto time) or at any postponement or adjournment thereof, for the purposes set forth in the accompanying Notice of Meeting.

A glossary of defined terms used in this Information Circular can be found in Appendix D.

NON-IFRS MEASURES

The Company uses certain supplemental measures of key performance, some of which may be referred to in this Information Circular, including, but not limited to, net operating income (“NOI”), funds from operations (“FFO”), core funds from operations (“Core FFO”), adjusted funds from operations (“AFFO”), Adjusted EIBITDA, Adjusted Earnings Per Share, 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 supplemental measures 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. See the Company’s most recent management’s discussion and analysis available on the SEDAR website at www.sedar.com for a reconciliation of non-IFRS measures to the most directly comparable IFRS measure.

VOTING INFORMATION

The record date for determining Shareholders entitled to vote is May 4, 2021 and Shareholders as of that date are entitled to one vote for each Common Share held on all business matters proposed to come before the Meeting. As of May 4, 2021, there were 194,039,873 Common Shares outstanding.

To the knowledge of the Directors, there are no persons who beneficially own or exercise control or direction over Common Shares carrying 10% or more of the votes attached to the issued and outstanding Common Shares. However, Blackstone became an insider of the Company in connection with the Blackstone Private Placement and currently owns 240,000 Preferred Units and one Common Share, representing approximately 12.3% of the outstanding Common Shares (assuming the exchange of its Preferred Units at the Exchange Price). See “Business of the Meeting – Approval of Blackstone Private Placement Exchange Price”.

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2021 MANAGEMENT INFORMATION CIRCULAR

Solicitation of Proxies

The solicitation of proxies for the Meeting will be made using the notice-and-access mechanism in accordance with the provisions of National Instrument 51-102 – Continuous Disclosure Obligations and National Instrument 54-101 – Communication with Beneficial Owners of a Reporting Issuer (“NI 54-101”). Under the notice-and-access system, reporting issuers are permitted to deliver Meeting Materials by posting them on SEDAR at www.sedar.com, as well as a website other than SEDAR, and sending a notice package to Shareholders that includes: (i) the relevant form of proxy or voting instruction form; (ii) basic information about the meeting and the matters to be voted on; (iii) instructions on how to obtain a paper copy of the Meeting Materials; and (iv) a plain language explanation of how the notice-and-access system operates and how the Meeting Materials can be accessed online.

Proxies may also be solicited personally, in writing, by mail or by telephone by employees of the Company, at nominal cost. The Company will bear the cost in respect of the solicitation of proxies for the Meeting and will bear the legal, printing and other costs associated with the preparation of the Information Circular.

The Company intends to pay for intermediaries to deliver Meeting Materials and Form 54-101F7 (the request for voting instructions) to “objecting beneficial owners”, in accordance with NI 54-101.

Virtual Meeting

This year, like last year, to mitigate risks to the health and safety of the Company’s Shareholders, communities, employees and other stakeholders posed by the ongoing COVID-19 pandemic, the Meeting will be in a virtual-only format, which will be conducted via live webcast. All Shareholders, regardless of geographic location and equity ownership, will have an equal opportunity to participate at the Meeting. Shareholders will not be able to attend the Meeting in person. Registered shareholders and duly appointed proxyholders will be able to attend, participate or vote at the Meeting online at https://web.lumiagm.com/253792997. Guests and non-registered Shareholders (being shareholders who hold their Common Shares through a broker, investment dealer, bank, trust company, custodian, nominee or other intermediary) who have not duly appointed themselves as proxyholder will not be able to vote or ask questions at the Meeting.

You can participate online using your smartphone, tablet or computer. Confirm that the browser for whichever device you are using is compatible by visiting https://web.lumiagm.com/253792997 in advance of the Meeting. You will need the latest version of Chrome, Safari, Edge or Firefox (please do not use Internet Explorer). As usual, you may also provide voting instructions before the Meeting by completing the form of proxy or voting information form that has been provided to you, and we encourage Shareholders to do so. By participating online as described herein, you will be able to hear / view a live webcast of the Meeting, ask the presenters questions online and, if you have not already voted by proxy, submit your votes in real time. The online Meeting will ensure that Shareholders who attend the Meeting will be afforded the same rights and opportunities to participate as they would at an in-person meeting. Further information regarding the virtual Meeting interface can be found at https://go.lumiglobal.com/faq.

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How to Vote

Due to the virtual nature of the Meeting, Shareholders are encouraged to express their vote in advance by completing a form of proxy or voting instruction form, or where advanced voting is not possible, to do so online at the Meeting. Please follow the instructions below based on whether you are a non-registered (beneficial) Shareholder or a registered Shareholder.


	Registered Shareholders (proxy form)	Non-registered Beneficial Shareholders (voting instruction form)
	Registered shareholders whose names are on record with the Company as the registered holders of Common Shares	Non-registered beneficial holders who own Common Shares, but whose Common Shares are registered in the name of an intermediary (such as a securities broker, financial institution, trustee, custodian or other nominee) Your intermediary will send you a voting instruction form1

Voting Prior to the Meeting	• Complete and sign the Form of Proxy and return the form in the envelope provided or vote online at www.voteproxyonline.com or submit your proxy by fax at 416-595-9593 or as otherwise indicated on the Form of Proxy no later than 10:00 a.m. (Toronto time) on June 21, 2021 • If attending the virtual Meeting, log in by following the instructions below.	• Complete the voting instruction form and return it in the envelope provided or as otherwise permitted by your intermediary no later than 10:00 a.m. (Toronto time) on June 21, 2021 • If attending the virtual Meeting, log in by following the instructions below.

Voting at the Meeting	• If you are unable to vote in advance by completing a Form of Proxy, you may vote online at the Meeting: • Log in at https://web.lumiagm.com/253792997 at least 15 minutes before the Meeting starts • Click on “I have a control number” • Enter your 12-digit control number (on your proxy form) • Enter the password: tricon2021 • You have to be connected to the Internet at all times to be able to vote.	If you are unable to vote in advance by completing a voting instruction form, follow the instructions on your voting instruction form: • Complete your name in the space provided to instruct your intermediary to appoint you as proxyholder • Do not complete the voting instructions section of the form as you will be voting at the Meeting • Sign and return the voting instruction form according to the delivery instructions provided • Get a control number by completing the request for control number form located online at https://tsxtrust.com/resource/en/75 and submitting it by email to tsxtrustproxyvoting@tmx.com by 10:00 a.m. (Toronto time) on June 21, 2021 • Vote online at the Meeting: • Log in at https://web.lumiagm.com/253792997 at least 15 minutes before the Meeting starts • Click on “I have a control number” • Enter the control number provided to you by tsxtrustproxyvoting@tmx.com • Enter the password: tricon2021 • You have to be connected to the Internet at all times to be able to vote.

Changing Your Vote	• Revoke the proxy by: • Completing and signing a proxy bearing a later date and depositing it as described above; • Depositing an instrument in writing executed by the Shareholder or by his, her or its attorney authorized in writing: • at the registered office of the Company at any time up to and including the last business day preceding the day of the Meeting, or any adjournment thereof at which the proxy is to be used, or • with the Chair of the Meeting prior to the commencement of the Meeting on the day of the Meeting or any adjournment thereof; or • In any other manner permitted by law • Change your vote by: • Sending in another properly completed and signed proxy form with a later date, as long as it is received by the cut-off time noted above.	• Contact your intermediary for instructions in advance of the proxy cut-off.

(1)

Intermediaries are required to forward Meeting Materials to non-registered beneficial holders who own Common Shares unless such non-registered beneficial holders have waived the right to receive them. Typically, intermediaries will use a service company, such as Broadridge Investor Communication Solutions, to forward Meeting Materials to non-registered beneficial holders.

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How Your Proxy Will Be Voted

You can choose to vote “For”, “Against” or “Withhold”, depending on the item to be voted on at the Meeting.

When you sign the proxy form or voting instruction form, you authorize Mr. David Berman (or, in his absence, the alternate individuals set out on the forms) to vote your Common Shares in accordance with your instructions.

In the absence of such instructions, such Common Shares will be voted at the Meeting as follows:

•

FOR the election of each of the nominees to the Board of Directors listed under the heading “Business of the Meeting – Election of Directors”;

•

FOR the appointment of PricewaterhouseCoopers LLP, Chartered Professional Accountants, as auditor of the Company and to authorize the Board of Directors to fix the auditor’s remuneration; and

•

FOR the passing of an ordinary resolution, the text of which is included at Appendix C to the Information Circular (the “Exchange Price Resolution”), approving the setting of the Exchange Price on accrued Distributions in respect of Preferred Units at $8.50, as may be adjusted from time to time in accordance with the Tricon PIPE LLC Agreement, subject to the Exchange Maximum, in connection with the Blackstone Private Placement.

You may also appoint another proxyholder, who need not be a Shareholder, to attend the virtual Meeting and vote your Common Shares for you on your behalf by completing the proxy form or voting instruction form accordingly. If you are a non-registered beneficial shareholder, please consult your intermediary for instructions.

BUSINESS OF THE MEETING

1. Financial Statements

The financial statements of the Company for Fiscal 2020 and the auditor’s report thereon, which were filed by the Company, made available at www.sedar.com and mailed to those Shareholders who requested a paper copy, will be tabled at the Meeting. No formal action will be taken at the Meeting to approve the financial statements. If any Shareholder has questions regarding such financial statements, they may be brought forward at the Meeting.

2. Election of Directors

The number of Directors to be elected at the Meeting is nine (9). Information on each of the nominees is presented starting on page 16 of this Information Circular. Each nominee elected as a Director will hold office until the next annual meeting of Shareholders or until his or her successor is elected or appointed. Mr. Cohen’s nomination has been confirmed by Blackstone pursuant to its right to nominate one member of the Board of Directors in connection with the closing of the Blackstone Private Placement.

The Board recommends you vote FOR each nominee

Majority Voting

Effective April 18, 2011, the Board adopted, in accordance with the rules of the TSX, a majority voting policy for the election of Directors at an annual Shareholders’ meeting. This includes the practice of ensuring that the proxy forms used for the election of Directors by Shareholders enable Shareholders to vote in favour of, or withhold their vote for, each Director nominee separately. In an uncontested election, any Director nominee who receives a greater number of votes “withheld” than votes “for” shall promptly submit to the Board her or his resignation, which shall take effect only upon the acceptance by the Board.

The Board, upon the recommendation of the Governance Committee, shall within 90 days following the date of the applicable meeting determine either to accept or not accept the Director’s resignation, and the Board shall promptly disclose, via press release, the determination, including, in cases where the Board has determined not to accept a resignation, the reasons therefor. It is generally expected that the Governance Committee will recommend that the Board accept such resignation except in extraordinary circumstances. If a resignation is accepted, the Board may appoint a new Director to fill any vacancy, or may reduce the size of the Board. A copy of the majority voting policy is available on the Company’s website at www.triconresidential.com/investors/corporate-governance/.

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3. Appointment and Remuneration of Auditor

The Audit Committee of the Board (the “Audit Committee”) has recommended to the Board that it propose to Shareholders that PricewaterhouseCoopers LLP (“PWC”) be reappointed as the auditor of the Company to hold office until the close of the next annual meeting of Shareholders and that the Board of Directors be authorized to fix the auditor’s remuneration. PWC was first appointed as auditor of the Company on January 26, 2010, and has been the auditor of the funds that the Company manages since 1997.

A simple majority of the votes cast at the Meeting, whether by proxy or voted online, will constitute approval of this matter.

The Board recommends you vote FOR PWC as our auditor

External Auditor’s Fees

The aggregate fees paid to PWC for the fiscal years 2018 through 2020 are as follows.


Fiscal Year Ended December 31¹ ($)	Company Audit Fees² ($)		Company Audit- Related Fees ($)		Audit of Tricon- Managed Funds ($)		All Other Fees³ ($)
2020		350,322		82,313		336,343		216,462
2019		370,444		122,476		235,377		271,674
2018		383,348		61,768		189,686		157,682

(1)

An additional 5% administrative fee is charged on the fee amounts noted above. For the purposes of translating these amounts into U.S. dollars, the CAD/USD conversion rates used for Fiscal 2020, 2019 and 2018 were 0.7461, 0.7537 and 0.7721, respectively, based on the average yearly exchange rates posted on the Bank of Canada website.

(2)	“Company Audit-Related Fees” comprise services performed on the Company’s quarterly interim reviews and prospectus audit work done.

(3)	“All Other Fees” relate to additional consulting services in support of the Company’s transactional activities.

4. Approval of Blackstone Private Placement Exchange Price

Background

On August 27, 2020, the Company announced that a syndicate of investors led by Blackstone Real Estate Income Trust, Inc., through its subsidiary, BREIT Debt Parent LLC (“Blackstone”), had agreed to make a $300 million preferred equity investment in Tricon through the purchase of newly-created preferred units (“Preferred Units”) of Tricon PIPE LLC (“Tricon PIPE”), the Company’s indirectly wholly-owned subsidiary, on a private placement basis (the “Blackstone Private Placement”). The Preferred Units were issued for $1,000 per Preferred Unit (the “Liquidation Preference”) and are exchangeable into Common Shares at any time at the option of the holder at an initial exchange price of $8.50 (the “Exchange Price”), subject to adjustment from time to time in accordance with the terms of the amended and restated limited liability company agreement of Tricon PIPE dated September 3, 2020 (the “Tricon PIPE LLC Agreement”). The Blackstone Private Placement was negotiated at arm’s length to the Company. Closing of the Blackstone Private Placement occurred on September 3, 2020 (the “Closing”).

The Exchange Price represented an approximate 13% premium to Tricon’s five-day volume weighted average trading price (“VWAP”) as of August 26, 2020, the date the investors entered into binding securities subscription agreements with respect to the Blackstone Private Placement.

Prior to Closing, Blackstone and its affiliates did not own any equity securities of Tricon. Upon Closing, Blackstone became an insider of Tricon and acquired 240,000 Preferred Units and one Common Share, representing approximately 12.8% of the then-outstanding Common Shares (assuming the exchange of its Preferred Units at the Exchange Price). As of the date hereof, Blackstone owns 240,000 Preferred Units and one Common Share, representing approximately 12.3% of the outstanding Common Shares (assuming the exchange of its Preferred Units at the Exchange Price).

In connection with the Blackstone Private Placement, the Company, Tricon PIPE and Blackstone entered into an investor rights agreement on Closing (the “Blackstone Investor Rights Agreement”), pursuant to which Blackstone, subject to ownership requirements enumerated in the Blackstone Investor Rights Agreement, is entitled to: (a) Board nomination rights for one nominee, (b) participation rights with respect to future offerings of Common Shares and securities exchangeable for, convertible into or exchangeable into Common Shares (excluding certain exempt issuances), (c) registration rights with respect to the Common Shares, and (d) certain other governance rights, including the right to approve certain actions proposed to be taken by the Company and its subsidiaries, as more particularly set out in the Blackstone Investor Rights Agreement. The Blackstone Investor Rights Agreement is available on SEDAR at www.sedar.com.

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Preferred Unit Terms

The LLC Agreement provides for the rights and privileges attaching to the Preferred Units. Key terms of the Preferred Units include:

(a)

The Preferred Units do not have a fixed term. The Preferred Units are entitled to a quarterly cash distribution in perpetuity, at a rate of 5.75% per annum through to the seventh anniversary of Closing, and subject to annual increases of 100 basis points thereafter, to a maximum of 9.75%, and additional increases in the event of non-payment (the “Distributions”).

(b)	In the event of non-payment of the Distributions, the amount of such unpaid Distributions shall automatically accrue and cumulate and the Distribution rate then in effect will increase by 2.00% until all accrued Distributions are paid in full.

(c)

The Preferred Units are exchangeable into Common Shares at any time at the option of the holder at the Exchange Price. In the event the Exchange Price Resolution is passed, accrued Distributions on the Preferred Units that are not paid in cash will also be exchangeable at the Exchange Price, subject to the Exchange Maximum (as defined and described in more detail below).

(d)

The Exchange Price is subject to anti-dilution adjustment from time to time if, as more particularly described in the LLC Agreement: (i) the Company pays a dividend (or other distribution) in Common Shares to holders of the Common Shares, (ii) the Company issues to holders of Common Shares, rights, options, or warrants entitling them to subscribe for or purchase Common Shares at less than market value, (iii) the Company subdivides, consolidates, combines or reclassifies the Common Shares into a greater or lesser number of Common Shares, (iv) a capital reorganization of the Company is effected, or (v) the Company makes a payment of a dividend or other distribution on Common Shares of equity securities of any class or series, or similar equity interests, of or relating to a subsidiary where such equity securities or similar equity interests are listed or quoted on a stock exchange.

(e)

Beginning on the fourth anniversary of Closing, Tricon PIPE has the option, but not the obligation, to require all (but not less than all) the Preferred Units to be exchanged into Common Shares if the VWAP on 20 trading days in a 30 consecutive trading day period of the Common Shares exceeds 135% of the Exchange Price, which shall be reduced to 115% of the Exchange Price beginning on the fifth anniversary.

(f)	Beginning on the fifth anniversary of Closing, Tricon PIPE has the option, but not the obligation, to redeem all (but not less than all) the Preferred Units for an amount in cash equal to 105% of the Liquidation Preference, plus any accrued Distributions.

(g)

In the event of a change of control, Tricon PIPE will offer to redeem all but not less than all Preferred Units for a cash amount equal to the greater of (i) the Liquidation Preference plus a make whole premium based on the Distributions that would have been payable on the Preferred Units from the redemption date until and including the sixth anniversary of Closing, and (ii) the number of Common Shares into which the Preferred Units are exchangeable multiplied by the market price immediately prior to such change of control.

(h)	In the event of a change of control in more limited circumstances, Tricon PIPE shall have the right, at its option, to redeem all but not less than all of the Preferred Units held by any holder of Preferred Units that does not accept the redemption offer noted in (g) above.

(i)

The Preferred Units shall not be exchangeable into Common Shares if and to the extent that, (i) as a result of the delivery of Common Shares upon such exchange, the holder, together with its affiliates or other persons acting together with the holder, would beneficially own or exercise control or direction over in excess of 19.99% of the number of Common Shares outstanding immediately after giving effect to such exchange, or (ii) the holder would become an acquiring person under the Company’s shareholder rights plan.

(j)	The Preferred Units do not entitle the holder thereof to vote as a Shareholder of Tricon.

For further details on the Blackstone Private Placement and the Preferred Units, please refer to the Company’s material change report dated August 31, 2020 and the Tricon PIPE LLC Agreement, each of which may be found on SEDAR at www.sedar.com.

Shareholder Approval

The approval of Shareholders (on a disinterested basis) of the Exchange Price Resolution is required to set the Exchange Price on accrued Distributions in respect of Preferred Units at $8.50, as may be adjusted from time to time in accordance with the Tricon PIPE LLC Agreement, subject to a maximum of 48,071,775 Common Shares being issuable upon the exchange of all Preferred Units and accrued Distributions thereon in the aggregate (the “Exchange Maximum”).

The Preferred Units are exchangeable into Common Shares at any time at the option of the holder at the Exchange Price. Currently, any accrued Distributions on the Preferred Units are not exchangeable for Common Shares and must be paid in cash upon exchange of the underlying Preferred Units. In the event the Exchange Price Resolution is passed at the Meeting, accrued Distributions on the Preferred Units not otherwise paid in cash will also be exchangeable for Common Shares at the Exchange Price, subject to the Exchange Maximum.

Pursuant to the rules of the TSX, using a fixed Exchange Price is not permitted for future Distributions that have not yet accrued, without Shareholder approval. Specifically, under Section 607(e) and Section 610(a) of the TSX Company Manual, the price and exchange price per listed security for any private placement must not be lower than the market price (less the applicable discount), and where the determination of the exchange price could result in an exchange price lower than the market price at the time of issuance or exchange (as is the case for the $8.50 Exchange Price for future accrued Distributions on the Preferred Units as they have not yet accrued) security holder approval is required.

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At the time of the Blackstone Private Placement, the TSX approved the listing of up to 35,294,118 Common Shares issuable upon exchange of the Preferred Units excluding any accrued Distributions thereon (representing 18.3% of the issued and outstanding Common Shares immediately prior to the Closing) until the requisite Shareholder approval is obtained. Conditional upon the receipt of the requisite Shareholder approval, the TSX has approved the listing of up to 48,071,775 Common Shares issuable upon the exchange of the Preferred Units and any accrued Distributions thereon (representing 24.9% of the issued and outstanding Common Shares immediately prior to the Closing).

As of the date hereof, before giving effect to the Exchange Maximum, the Preferred Units would be exchangeable for an aggregate of 35,294,118 Common Shares, representing approximately 15.4% of the outstanding Common Shares.

Exchange Price Resolution

The Company is seeking approval of the Exchange Price Resolution which, if passed, will approve the setting of the Exchange Price on accrued Distributions in respect of Preferred Units at $8.50, as may be adjusted from time to time in accordance with the Tricon PIPE LLC Agreement, subject to the Exchange Maximum. The full text of the Exchange Price Resolution is attached hereto as Appendix C.

The Exchange Price Resolution is an ordinary resolution that, in order to succeed, must be passed by a majority of the votes cast at the Meeting, whether by proxy or voted online, on a disinterested basis (i.e. excluding votes attached to any Common Shares directly or indirectly owned or controlled by holders of Preferred Units or their affiliates). The current holders of Preferred Units are: Blackstone, certain funds managed by Vision Capital Corporation, certain funds managed by 1832 Asset Management L.P., certain funds managed by RBC Global Asset Management Inc., Puddingstone Trust, Craig Peskin and Peter Fleiss. As of the date hereof, holders of Preferred Units and their affiliates owned or controlled 18,298,533 Common Shares in the aggregate, representing approximately 9.4% of the outstanding Common Shares as of the date hereof.

If the Exchange Price Resolution is passed, accrued Distributions on the Preferred Units not paid in cash will be exchangeable for Common Shares at the Exchange Price, subject to the Exchange Maximum. If the Exchange Price Resolution is not passed, accrued Distributions on the Preferred Units will continue to not be exchangeable for Common Shares and must be paid in cash upon exchange of the underlying Preferred Units.

Recommendation of the Board of Directors

In connection with the Blackstone Private Placement and pursuant to the Blackstone Investor Rights Agreement, the Company agreed to seek Shareholder approval for the Exchange Price Resolution at the Meeting. The Board unanimously determined to approve the Blackstone Private Placement and believes that approval of the Exchange Price Resolution is in the best interests of the Company given the benefits of the Blackstone Private Placement as outlined in the Company’s press release dated August 27, 2020.

The Board unanimously recommends that Shareholders vote “FOR” the approval of the Exchange Price Resolution. In the absence of a contrary instruction, the persons designated by management of the Company in the enclosed Form of Proxy intend to vote FOR the Exchange Price Resolution.

The persons named in the Form of Proxy, if not expressly directed to the contrary in such Form of Proxy, will vote such proxies in favour of approving the Exchange Price Resolution. In accordance with the rules of the TSX, a simple majority of the votes cast at the Meeting (on a disinterested basis), whether by proxy or voted online, will constitute approval of this matter.

The Board recommends you vote FOR the approval of the Exchange Price Resolution

Interest of Certain Persons in Matters to be Acted Upon

Other than as disclosed below, no Director or executive officer of the Company, no proposed nominee for election as a Director of the Company, and no associate or affiliate of any such person has any material interest, direct or indirect, by way of beneficial ownership of securities or otherwise, in any matter to be acted upon at the Meeting other than the election of Directors.

Mr. Cohen has an indirect interest in the approval of the Exchange Price Resolution as an affiliate of Blackstone, which itself has an interest in the approval of the Exchange Price Resolution by virtue of its ownership of Preferred Units. However, the Exchange Price Resolution is an ordinary resolution that, in order to succeed, must be passed by a majority of the votes cast at the Meeting, whether by proxy or voted online, on a disinterested basis (i.e. excluding votes attached to any Common Shares directly or indirectly owned or controlled by holders of Preferred Units or their affiliates). Accordingly, any votes attaching to Common Shares held by Mr. Cohen or Blackstone will be excluded from the vote.

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2020 Voting Results

Voting results of the Meeting will be filed on SEDAR at www.sedar.com following the Meeting. The voting results from the Company’s annual and special meeting of Shareholders held on July 7, 2020 were:

1. Election of Directors


Nominee	# of Votes For		% of Votes For		# of Votes Withheld		% of Votes Withheld
David Berman		122,322,887		98.30		2,113,899		1.70
J. Michael Knowlton		122,271,952		98.26		2,164,834		1.74
Peter D. Sacks		122,448,642		98.40		1,988,144		1.60
Siân M. Matthews		114,082,005		91.68		10,354,781		8.32
Ira Gluskin		124,180,638		99.79		256,148		0.21
Camille Douglas		124,089,107		99.72		347,679		0.28
Tracy Sherren		124,115,704		99.74		321,082		0.26
Gary Berman		124,008,774		99.66		428,012		0.34
Geoff Matus		124,059,513		99.70		377,273		0.30

2. Appointment and Remuneration of Auditor


# of Votes For	% of Votes For			# of Votes Withheld		% of Votes Withheld
112,517,282		90.27	%		12,124,437		9.73	%

3. Resolution to Affirm, Ratify and Approve the Company’s Stock Option Plan


# of Votes For	% of Votes For			# of Votes Withheld		% of Votes Withheld
108,245,478		86.99	%		16,191,308		13.01	%

4. Resolution to Affirm, Ratify and Approve the Company’s DSU Plan


# of Votes For	% of Votes For			# of Votes Withheld		% of Votes Withheld
112,325,683		90.27	%		12,111,103		9.73	%

5. Special Resolution Approving the Amendment of the Company’s Articles to Change its Name to ‘Tricon Residential Inc.’


# of Votes For	% of Votes For			# of Votes Withheld		% of Votes Withheld
124,502,532		99.89	%		139,187		0.11	%

DIRECTOR NOMINEES

Every member of our Board of Directors is elected annually. While the Board currently consists of ten Directors, Tracy Sherren is not standing for re-election at the Meeting following the expiry of Starlight’s right to nominate one member of the Board of Directors pursuant to the terms of the Starlight Transaction and her current term as a Director will end on the date of the Meeting. Accordingly, you are being asked to vote on the election of nine nominees, each of whom currently serves as a Director, and the size of the Board will be reduced to nine members upon the election of Directors at the Meeting. Mr. Cohen’s nomination has been confirmed by Blackstone pursuant to its right to nominate one member of the Board of Directors in connection with the closing of the Blackstone Private Placement.

The Governance Committee has commenced a search for a new tenth Director who will further enrich the Board’s collective expertise and perspective and is taking the Company’s leadership diversity priorities firmly into account in that search. This section provides you with information about each of our nine director nominees standing for election.

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LOGO

~5%7 Total Shareholding of our Nominees in Common Shares, Restricted Shares and DSUs (as a percentage of the 194,039,873 Common Shares outstanding on May 1, 2021) 7 YEARS Average Board Tenure (since the IPO in 2010) Independence Each Board committee is 100% independent 2/3 of Directors are Independent Gender Residence Independence Age Range Board Tenure

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DAVID BERMAN, Executive Chairman						Director Since: Pre-IPO
Toronto, Ontario, Canada						Non-Independent

LOGO

Mr. Berman has a Master of Business Administration degree, graduating with High Distinction, and a Bachelor of Science degree from the University of the Witwatersrand in Johannesburg, South Africa.


Equity Ownership/Control (as of May 1, 2021)

Common Shares (voting securities)	DSUs (non-voting securities)	Stock Options (non-voting securities)	5.75% Convertible Debentures (non-voting securities)

3,991,144	461,646	110,000	Nil

Board Committee Membership

None

Other Public Board Membership

None

2020 Meeting Attendance

Board Meetings Attended		Applicable Committee Meetings Attended

11 of 11		N/A

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J. MICHAEL KNOWLTON						Director Since: 2011
Toronto, Ontario						Independent

LOGO

Michael Knowlton is the Chair of the Audit Committee of the Board.

Mr. Knowlton retired from Dundee Realty Corporation in 2011, where he was President and COO of Dundee Real Estate Investment Trust. He joined Dundee Realty in 1998, and held a variety of positions with Dundee Realty and Dundee Real Estate Investment Trust, including Executive Vice President and COO, Executive Vice President and CFO and Managing Director of Limited Partnerships, before becoming President of the REIT in 2006. Prior to that, he was Senior Vice President and CFO of OMERS Realty Corp. from 1990 until 1998.

Mr. Knowlton has a Bachelor of Science (Engineering) degree and a Master of Business Administration degree from Queen’s University. He is a Chartered Accountant and has an ICD.D designation.


Equity Ownership/Control (as of May 1, 2021)

Common Shares (voting securities)	DSUs (non-voting securities)	Stock Options (non-voting securities)	5.75% Convertible Debentures (non-voting securities)

36,496	33,647	75,000	Nil

Board Committee Membership

Audit Committee (Chair)

Compensation, Nominating and Corporate Governance Committee

Other Public Board Membership

Crombie Real Estate Investment Trust (TSX: CRR.UN)

Dream Industrial Real Estate Investment Trust (TSX: DIR.UN)

2020 Meeting Attendance

Board Meetings Attended		Applicable Committee Meetings Attended

11 of 11		4 of 4 (Audit Committee)

		5 of 5 (Governance Committee)

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PETER D. SACKS						Director Since: 2014
Toronto, Ontario, Canada						Independent

LOGO

Peter Sacks (B.Comm., CA) is the Lead Director of the Company.

Mr. Sacks retired as the founding partner of Cidel Asset Management Inc., now part of Cidel – a Canadian Private Bank. His experience in Wealth Management followed an extensive career in banking during which he held executive positions in Treasury Management at CIBC, Chase Manhattan Bank Canada and Midland Bank Canada.

Mr. Sacks was formerly an independent director/trustee of several U.S. publicly-traded closed-end funds managed by Standard Life Aberdeen PLC, and a former trustee of Aberdeen Funds. His past directorships in Canada include Kinross Mortgage Corporation Ltd., CIBC Trust Company Ltd., CIBC Limited and Horizons BetaPro ETFs. He also served on the Investment Advisory Committee of the Ontario Public Guardian and Trustee and was Chair of the Independent Review Committee of Children’s Education Funds Inc. His community service has included directorships of Young People’s Theatre, Childhood Now and TSCC 1849.


Equity Ownership/Control (as of May 1, 2021)

Common Shares (voting securities)	DSUs (non-voting securities)	Stock Options (non-voting securities)	5.75% Convertible Debentures (non-voting securities)

32,978	13,396	50,000	$125,000 (conversion price: $10.46 per share)

Board Committee Membership

Compensation, Nominating and Corporate Governance Committee

Other Public Board Membership

None

2020 Meeting Attendance

Board Meetings Attended		Applicable Committee Meetings Attended

11 of 11		5 of 5

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SIÂN M. MATTHEWS						Director Since: 2015
Calgary, Alberta, Canada						Independent

LOGO

Siân Matthews is the Chair of the Compensation, Nominating and Corporate Governance Committee of the Board.

Ms. Matthews is a corporate director. Until 2009, she was a partner and head of the Private Services Group at Bennett Jones LLP and she began her legal career at Macleod Dixon LLP in Calgary.

Ms. Matthews is a member of the Law Society of Alberta and has a Bachelor of Arts degree from the University of Waterloo, a Juris Doctor degree from the University of Ottawa and an ICD.D designation.


Equity Ownership/Control (as of May 1, 2021)

Common Shares (voting securities)	DSUs (non-voting securities)	Stock Options (non-voting securities)	5.75% Convertible Debentures (non-voting securities)

7,500	58,171	75,000	Nil

Board Committee Membership

Compensation, Nominating and Corporate Governance Committee (Chair)

Other Public Board Membership

None

2020 Meeting Attendance 2020 Meeting Attendance

Board Meetings Attended		Applicable Committee Meetings Attended

11 of 11		5 of 5

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IRA GLUSKIN		Director Since: 2016
Toronto, Ontario, Canada		Independent

LOGO

Mr. Gluskin has a Bachelor of Commerce degree from the University of Toronto. In 2019, he received an Honorary Doctorate of Laws degree from Wilfrid Laurier University.


Equity Ownership/Control (as of May 1, 2021)

Common Shares (voting securities)	DSUs (non-voting securities)	Stock Options (non-voting securities)	5.75% Convertible Debentures (non-voting securities)
975,717	46,356	50,000	Nil

Board Committee Membership

Audit Committee

Other Public Board Membership

European Residential REIT (TSX-V: ERE.UN)

2020 Meeting Attendance



Board Meetings Attended		Applicable Committee Meetings Attended
11 of 11		4 of 4

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CAMILLE DOUGLAS		Director Since: 2018
New York, New York, United States		Independent

LOGO

Ms. Douglas serves on the Board of Trustees of Starwood Property Trust (NYSE: STWD), where she is a member of the Audit Committee. In addition, she has been an Adjunct Professor in Finance and Economics at Columbia Business School since 2004.

Ms. Douglas has a Master of Urban Planning degree from Harvard University Graduate School of Design and a Bachelor of Arts degree from Smith College.


Equity Ownership/Control (as of May 1, 2021)

Common Shares (voting securities)	DSUs (non-voting securities)	Stock Options (non-voting securities)	5.75% Convertible Debentures (non-voting securities)
0	16,685	25,000	Nil

Board Committee Membership

Audit Committee

Other Public Board Membership

Starwood Property Trust (NYSE MKT: STWD)

2020 Meeting Attendance



Board Meetings Attended		Applicable Committee Meetings Attended
11 of 11		4 of 4

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Frank Cohen		Director Since: 2020
New York, New York, United States		Independent



		Frank Cohen is a Senior Managing Director at Blackstone, a leading global investment firm that he joined in 1996. In this capacity, he is the Global Head of Core+ Real Estate and the Chairman and CEO of Blackstone Real Estate Income Trust. During his career with the firm, he has been involved in more than $100 billion of real estate transactions. Mr. Cohen serves as a director for several Blackstone-affiliated companies, including Blackstone Real Estate Income Trust and EQ Office, and was formerly a director of Hudson Pacific Properties (NYSE: HPP). He is also active in several industry and civic organizations; he is a Trustee of the Urban Land Institute, on the NAREIT Advisory Board of Governors, on the Board of the Regional Plan Association and on the Board of Visitors of the Weinberg College of Arts and Sciences at Northwestern University. Mr. Cohen has a Bachelor of Arts degree from Northwestern University, where he graduated from the Honours Program in Mathematical Methods in the Social Sciences, with a double major in political science.

Mr. Cohen was appointed to the Board of Directors on September 3, 2020.


Equity Ownership/Control (as of May 1, 2021)

Common Shares (voting securities)	DSUs (non-voting securities)	Stock Options (non-voting securities)	5.75% Convertible Debentures (non-voting securities)
Nil	Nil	Nil	Nil

Board Committee Membership

N/A

Other Public Board Membership

None

2020 Meeting Attendance



Board Meetings Attended		Applicable Committee Meetings Attended
2 of 2 following appointment¹		N/A

(1)	Mr. Cohen was appointed to the Board on September 3, 2020.

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GARY BERMAN			Director Since: 2014
Toronto, Ontario, Canada			Non-Independent



		Gary Berman is President and Chief Executive Officer of Tricon. Mr. Berman is responsible for Tricon’s overall operations, including strategic planning, investment decisions, capital commitments, relationship management and private fundraising. Since joining the Company in 2002, Mr. Berman has helped transform Tricon from a private provider of equity and mezzanine capital to the for-sale housing industry to a publicly-listed company focused on rental housing. Under his leadership, Tricon has established itself as a diversified residential company with a growing portfolio of single-family rental homes, multi-family properties, development projects, and build-to-rent communities. Mr. Berman is a member of the Company’s Board of Directors as well as its Investment Committee and Executive Committee. Mr. Berman is a Trustee of the Urban Land Institute, a member of the University of Toronto Real Estate Advisory Committee, and a Governor of the Corporation of Massey Hall and Roy Thomson Hall, where he also serves on the Massey Hall Revitalization Committee. He is the co-founder of the Pug Awards, an online awards and education-based charity that, for a decade, helped to increase architectural awareness and elevate planning and design standards in Toronto.
Mr. Berman has a Master of Business Administration degree from Harvard Business School, where he was designated a Baker Scholar, and a Bachelor of Commerce degree from McGill University, where he graduated first overall in the Faculty of Management.

Equity Ownership/Control (as of May 1, 2021)

Common Shares

(voting securities)

(including Restricted Shares)

DSUs
(non-voting securities)

Stock Options
(non-voting securities)

5.75% Convertible Debentures
(non-voting securities)

1,684,442

830,183

525,000

Nil

Board Committee Membership

None

Other Public Board Membership

None

2020 Meeting Attendance

Board Meetings Attended

Applicable Committee Meetings Attended

11 of 11

N/A

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GEOFF MATUS			Director Since: Pre-IPO
Toronto, Ontario, Canada			Non-Independent



		Geoff Matus co-founded Tricon in 1988 and continues to provide consulting services to the Company. He is a member of the Board of Directors, chairs the Executive Committee and is a member of the Investment Committee. Mr. Matus is the Chair and co-founder of Cidel Bank of Canada, an international financial services group. He is also the Chair of The Team Companies, a payroll provider for the advertising and entertainment industries. He is a past member of the board of Mount Sinai Hospital (where he currently serves on the Research Advisory Committee), the board of Governing Council of the University of Toronto (where he currently chairs the Pension and Endowment Investment Advisory Committee and the Real Estate Committee) and the Canadian Opera Company. He is a director of the MaRS Discovery District (where he is Chair of the Real Estate Committee) and an honorary director and past Chair of the board of directors of the Baycrest Centre for Geriatric Care. He is the honorary Chair of the Hospital for Sick Kids/ Nelson Mandela Children’s Hospital Project. Mr. Matus has founded several other companies and remains a director of some of them.
In 2005, Mr. Matus received the Jewish Federation award for outstanding service to his community. In 2010, he received the Arbor Award for outstanding service to the University of Toronto and, in 2011, was honoured as a “Man of Distinction” by the Israel Cancer Research Fund. Mr. Matus has Bachelor of Commerce and Law degrees from the University of the Witwatersrand in Johannesburg, South Africa, and a Master of Laws degree from Columbia University in New York. In 2018, the University of Toronto conferred upon Mr. Matus an honorary Doctor of Laws degree.

Equity Ownership/Control (as of May 1, 2021)

Common Shares

(voting securities)

DSUs
(non-voting securities)

Stock Options
(non-voting securities)

5.75% Convertible Debentures
(non-voting securities)

1,137,655

19,221

207,856

Nil

Board Committee Membership

None

Other Public Board Membership

None

2020 Meeting Attendance

Board Meetings Attended

Applicable Committee Meetings Attended

11 of 11

N/A

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Additional Information About the Director Nominees

Biographies for each Director nominee, which include a summary of such nominee’s principal occupation and employment within the five preceding years, as well as a discussion of such nominee’s independence, are set out in the tables above and in the Company’s Annual Information Form dated March 2, 2021 (the “AIF”), and such information is incorporated by reference herein. The AIF can be found under the Company’s profile at www.sedar.com and on our website at www.triconresidential.com/investors. The Company will promptly provide a copy of the AIF free of charge to a Shareholder upon written request to the Company at 7 St. Thomas Street, Suite 801, Toronto, Ontario, M5S 2B7; Attention: Corporate Secretary.

Advance Notice Provisions

Consistent with its focus on good corporate governance, the Company’s by-laws contain provisions (the “Advance Notice Provisions”) providing a clear framework for advance notice of nominations of individuals for election to the Board. A copy of the relevant by-law of the Company (the enactment of which was approved by Shareholders at the annual and special meeting of Shareholders held on May 14, 2013) is included in the Company’s Management Information Circular dated April 16, 2013, available on SEDAR at www.sedar.com. A copy is also available on the Company’s website at www.triconresidential.com/investors/corporate-governance/.

The Advance Notice Provisions set deadlines a certain number of days before a Shareholders’ meeting for a Shareholder to notify the Company of his, her or its intention to nominate one or more individuals for election to the Board, and explains the information that must be included with the notice for it to be valid. The Advance Notice Provisions apply at an annual meeting of Shareholders or a special meeting of Shareholders that is called to elect Directors, and may be waived by the Board. These provisions do not affect the ability of Shareholders to requisition a meeting or to make a proposal under the Business Corporations Act (Ontario). Pursuant to the Advance Notice Provisions, any nominations of individuals for election at the Meeting are required to be submitted by May 21, 2021. As of the date of this Information Circular, no such nominations had been received.

Cease Trade Orders, Bankruptcies, Penalties or Sanctions

None of the Directors or proposed Directors of the Company is, as at the date of this Information Circular, or has been, within the ten years before the date of this Information Circular, a director, chief executive officer or chief financial officer of any company (including the Company) that was subject to any of the following orders, that was in effect for a period of more than 30 consecutive days:

(a)	a cease trade order, an order similar to a cease trade order or an order that denied the Company access to any exemption under securities legislation that was issued while the Director was acting in his or her capacity as director or executive officer; or

(b)

a cease trade order, an order similar to a cease trade order or an order that denied the Company access to any exemption under securities legislation that was issued after the Director ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while that person was acting in his or her capacity as director, chief executive officer or chief financial officer.

None of the Directors or proposed Directors of the Company:

(c)

is, as at the date of this Information Circular, or has been, within the ten years before the date of this Information Circular, a director or executive officer of any company (including the Company) that, while that person was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets;

(d)

has, within the ten years before the date of this Information Circular, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of the proposed Director; or

(e)

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DIRECTOR COMPENSATION

HIGHLIGHTS

•

No change to the independent Director fee structure in 2020

•

At least 50% of the annual base retainer is deferred in DSUs

•

Minimum share ownership guidelines increased in 2020 to 3 times a Director’s annual retainer

•

Collectively our Directors have approximately C$122 million invested in the Company in Common Shares, DSUs and Restricted Shares (as of May 1, 2021)

The Board of Directors’ compensation is designed to attract and retain committed and qualified Directors and to align their compensation with the long-term interests of Shareholders and the Company.

The Governance Committee is responsible for the development and implementation of the Directors’ compensation arrangements. The Governance Committee reviews and, if necessary, makes recommendations to the Board with respect to the compensation of Board members, the Executive Chairman of the Board, and those acting as committee chairs to, among other things, ensure their compensation appropriately reflects the responsibilities they are assuming.

The fee structure for independent Directors in Fiscal 2020 was as follows:


Board Service
Base Annual Retainer
• Cash	C$	75,000
• DSUs	C$	75,000
Stock options		None
Supplemental retainer for Lead Director	C$	15,000
Committee Service
Chair of the Audit Committee	C$	15,000
Chair of the Governance Committee	C$	10,000
Meeting Fees
Meeting attendance fees		None

Non-independent Directors do not receive any additional remuneration for their role as Directors of the Company. One-half of each independent Director’s base annual retainer is paid in DSUs, which vest immediately upon grant (for DSUs granted prior to 2019, such DSUs vest on the third anniversary of the grant date). In addition, an independent Director may elect each year to receive all or a portion of the balance of his or her fees (including his or her base annual retainer and any additional retainer) in DSUs, which vest immediately upon grant. Any remaining balance of such fees not payable in DSUs is paid in cash.

Highlights of the DSU Plan are presented in the “Compensation Discussion and Analysis” section of this Information Circular and the plan is summarized in detail in Appendix A.

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The following table details the compensation for Fiscal 2020 for Directors who are not NEOs:

Name¹

Fees Paid
in Cash

Fees Paid
in DSUs

Option-Based
Awards²

Non-Equity
Incentive Plan
Compensation

Pension
Value

All Other
Compensation

Total³

J. Michael Knowlton

67,000

56,000

nil

N/A

nil

123,000

Peter D. Sacks

67,000

56,000

nil

N/A

nil

123,000

Siân M. Matthews

—

119,000

nil

N/A

nil

119,000

Ira Gluskin

—

112,000

nil

N/A

nil

112,000

Camille Douglas

56,000

nil

N/A

nil

112,000

Tracy Sherren⁴

56,000

nil

N/A

nil

112,000

Frank Cohen⁵

37,000

nil

N/A

nil

37,000

Geoff Matus⁶

N/A

nil

599,000

N/A

342,000

941,000

(1)	Gary Berman’s and David Berman’s compensation for Fiscal 2020 is summarized in the Summary Compensation Table on page 56.

(2)	No option-based awards were granted in 2020.

(3)	For the purposes of translating all amounts in this table into U.S. dollars, the CAD/USD conversion rate used was 0.7461, being the average yearly exchange rate for Fiscal 2020 posted on the Bank of Canada website.

(4)	Ms. Sherren is not standing for re-election at the Meeting.

(5)	Mr. Cohen was appointed as a Director on September 3, 2020. The terms of the Blackstone Investor Rights Agreement pursuant to which Mr. Cohen was nominated provide that his annual retainer is to be paid entirely in cash.

(6)

Amounts reflect compensation paid to Mandukwe Inc. for the provision of Geoff Matus’ services as a consultant to the Company for Fiscal 2020, including an award of 12,391.30 PSUs and 5,758.24 DSUs, each valued at C$11.50, included under All Other Compensation. The details of Mr. Matus’ consulting arrangement with the Company are provided under the heading “Employment Contracts”.

Minimum Share Ownership Guidelines

The Board compensation structure is designed to encourage the accumulation of equity in the Company through DSUs, and the Company has had Director minimum share ownership guidelines in place since 2019. However, on February 24, 2020, the Board approved an increase to the minimum Common Share ownership guidelines for Directors to three times an independent Board member’s annual retainer (which is currently set at C$150,000, making the minimum required ownership C$450,000). Directors are required to achieve compliance with the more strenuous guidelines by the date that is the later of (i) six years following the respective Director’s appointment to the Board, and (ii) January 1, 2022. The Common Share (including DSU) ownership of Directors who are not NEOs is summarized below.

Minimum Common Share ownership guidelines for Directors increased to three times a Board member’s annual retainer


	Ownership as of December 31, 2020²								Progress⁵
Name¹	Common Shares		DSUs Vested		DSUs Unvested		Total		Requirement		Multiple Achieved⁶
J. Michael Knowlton	$	317,422	$	263,979	$	41,486	$	622,887	$	353,430		1.8x	(meets	)
Peter D. Sacks		296,048		62,454		41,486		399,987		353,430		1.1x	(meets	)
Siân M. Matthews		67,328		442,913		41,486		551,727		353,430		1.6x	(meets	)
Ira Gluskin		8,759,131		340,027		41,486		9,140,643		353,430		25.9x	(meets	)
Camille Douglas		0		119,938		13,220		133,158		353,430		0.4x
Tracy Sherren³		173,438		90,188		0		263,626		353,430		0.7x
Frank Cohen⁴		0		0		0		0		—		—
Geoff Matus		9,900,024		237,390		244,390		10,381,438		353,430		29.4x	(meets	)

(1)	Gary Berman’s and David Berman’s compliance with the minimum share ownership guidelines for senior executives for Fiscal 2020 (representing a higher ownership requirement) is summarized in the Share Ownership of Named Executive Officers Table on page 53.

(2)

Values are based on the market value of the Common Shares as of December 31, 2020 (C$11.43). For the purpose of translating ownership values and requirements into U.S. dollars, a CAD/USD conversion rate of 0.7854 was used, being the daily exchange rate as of December 31, 2020 posted on the Bank of Canada website.

(3)	Ms. Sherren is not standing for re-election at the Meeting.

(4)	Mr. Cohen was appointed to the Board on September 3, 2020. The terms of the Blackstone Investor Rights Agreement pursuant to which Mr. Cohen was nominated provide that his annual retainer is to be paid entirely in cash and that he is exempt from the Company’s minimum share ownership guidelines.

(5)

Compliance with minimum ownership guidelines is a fluid and ongoing requirement determined on the basis of the current market value of the Common Shares. If (i) a drop in the value of the Common Shares, or (ii) an increase in Director compensation, has the effect of reducing any Director’s ownership below the required minimum guidelines, such Director is required to increase his or her ownership accordingly.

(6)

Each Director’s progress toward the minimum Common Share ownership guidelines ignoring his or her unvested DSUs is as follows: Mr. Knowlton 1.6x (meets); Mr. Sacks 1.0x (meets); Ms. Matthews 1.4x (meets); Mr. Gluskin 25.7x (meets); Ms. Douglas 0.3x; Ms. Sherren 0.7x; Mr. Cohen (N/A – see footnote 4 above); and Mr. Matus 28.7x (meets).

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GOVERNANCE PRACTICES

HIGHLIGHTS

•

Governance structure includes clear accountabilities, risk oversight and cross-membership between our two standing committees

•

Well-defined Board roles and responsibilities

•

Written position descriptions for the Chair of the Board, Lead Director, Committee Chairs and President and CEO

•

Board with two-thirds independent Directors

•

Entirely independent Audit Committee and Compensation, Nominating and Corporate Governance Committee

•

Independent Director meetings

•

Directors elected individually (and not by slate voting)

•

Majority voting policy for the election of Directors

•

Gender diversity policy targeting at least 1/3 of Directors of each gender, which target was met in 2020

•

Board evaluation process and Director skills matrix used as tools for Board renewal and succession

•

Director orientation and continuous education

•

Code of Business Conduct and Ethics, Insider Trading Policy and Whistleblower Policy

A strong and engaged Board of Directors with overall meeting attendance of 100% in 2020

Governance Structure

The Company believes that good corporate governance improves corporate performance and benefits all Shareholders and other Company stakeholders. The Company is firmly committed to acting in an ethical manner across all of our business dealings, and to working transparently with stakeholders and investors to enhance trust and reduce risks. The Board of Directors has adopted a structure and a set of policies to provide stewardship to the Company and to ensure compliance with sound corporate governance practices.

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LOGO

Roles and Responsibilities

The Board is responsible for the stewardship of the Company and in that regard is specifically responsible for:

(a)

adopting a strategic planning process and approving, on at least an annual basis, a budget, and evaluating and discussing a strategic plan for the upcoming year which takes into account, among other things, the opportunities and risks of the Company’s business and investments and the Company’s ESG priorities;

(b)	supervising the activities and managing the investments and affairs of the Company;

(c)	approving major decisions regarding the Company;

(d)	defining the roles and responsibilities of management;

(e)	reviewing and approving the business and investment objectives to be met by management;

(f)	assessing the performance of and overseeing management;

(g)	reviewing the Company’s debt strategy;

(h)	identifying and managing risk exposure;

(i)	ensuring the integrity and adequacy of the Company’s internal controls and management information systems;

(j)	succession planning;

(k)	establishing committees of the Board, where required or prudent, and defining their respective mandates;

(l)	receiving and evaluating reports and recommendations from the committees of the Board from time to time;

(m)	maintaining records and providing reports to Shareholders;

(n)	ensuring effective and adequate communication with Shareholders, other stakeholders and the public; and

(o)	determining the amount and timing of dividends or distributions to Shareholders.

The mandate of the Board of Directors is attached as Appendix B to this Information Circular and, along with the charters of the Audit Committee and Governance Committee, can be found on our website at www.triconresidential.com/investors/corporate-governance/.

It is recognized that every Director in exercising powers and discharging duties must act honestly and in good faith with a view to the best interests of the Company. Directors must exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. In this regard, they will comply with their duties of honesty, loyalty, care, diligence, skill and prudence.

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Position Descriptions

The Board has developed written position descriptions for the Chair of the Board, Lead Director, Committee Chairs and President and CEO. These position descriptions are available on our website at www.triconresidential.com/investors/corporate-governance/.

Independence and Diversity

Currently, seven of the ten members of the Board, and all members of the Board’s committees, are independent Directors. Three of the ten current members of the Board (Ms. Matthews, Ms. Douglas and Ms. Sherren) are women. The current composition of the Board is set out below. As noted above, Ms. Sherren is not standing for re-election at the Meeting. The Governance Committee has commenced a search for a new independent tenth Director who will further enrich the Board’s collective expertise and perspective and is taking the Company’s leadership diversity priorities firmly into account in that search.

Director

Audit
Committee

Governance
Committee

Lead
Director

Independent
Director

Non-Independent
Director

Reason for Non-
Independent Status

Mr. David Berman (Co-founder)

✓

Executive Chairman

Mr. J. Michael Knowlton

Chair

Member

✓

Mr. Peter D. Sacks

Member

✓

Ms. Siân M. Matthews

Chair

✓

Mr. Ira Gluskin

Member

✓

Ms. Camille Douglas

Member

✓

Ms. Tracy Sherren

✓

Mr. Frank Cohen

✓

Mr. Gary Berman

✓

President and CEO

Mr. Geoff Matus (Co-founder)

✓

Consultant to the Company and member of management committees

Meetings of Independent Directors

The independent Directors function independently of the non-independent Directors by holding in camera sessions after each Board and committee meeting and informally conferring on Board matters as such members determine necessary or desirable. The Lead Director also chairs all in camera sessions of the independent members of the Board.

Board committees comprised entirely of independent Directors


Board/Committee Meeting		In Camera Sessions Held in 2020
Board		Every Meeting, Chaired by the Lead Director
Audit Committee		Every Meeting
Compensation, Nominating and Corporate Governance Committee		Every Meeting

The opinions of independent Directors are also actively solicited by the Executive Chairman and Lead Director at each meeting of the Board of Directors.

Independent Advice

The independent Directors may also retain the services of legal, financial, executive compensation and other experts at the Company’s expense whenever they decide they need independent advice or analyses.

Selection of Board Nominees

The Governance Committee, which is comprised entirely of independent Directors, is responsible for recommending a proposed list of nominees for election to the Board. On May 11, 2021, the Governance Committee and the Board recommended the nomination of nine of the ten incumbent Directors for election at the Meeting. Mr. Cohen’s nomination has been confirmed by Blackstone pursuant to its right to nominate one member of the Board of Directors in connection with the closing of the Blackstone Private Placement. Tracy Sherren is not standing for re-election at the Meeting following the expiry of Starlight’s right to nominate one member of the Board of Directors pursuant to the terms of the Startlight Transaction, and accordingly, the size of the Board will be reduced to nine members upon the election of Directors at the Meeting. As noted above, the Governance Committee has commenced a search for a new tenth Director who will further enrich the Board’s collective expertise and perspective and is taking the Company’s leadership diversity priorities firmly into account in that search.

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In coming to its recommendation, the Governance Committee considered its assessment of potential candidates; the size, composition, performance and effectiveness of the Board of Directors as a whole; and the competencies, experience, diversity, background and skills of the proposed candidates in view of the Board’s ability to operate efficiently and effectively in fulfilling its mandate. More specifically, the list of nominees is determined annually according to the following nomination process:


Nomination Process	Applicable Practices and Policies

Evaluation	✓	Annual review and assessment of professional skills, abilities, personality and other qualifications of each proposed nominee

	✓	Evaluation of the time and energy that the nominee is able to devote to the role

	✓	Determination of the specific contribution that each nominee can make to the Board

Competencies	✓	Annual review of the competencies of the Board as a whole, and of Directors individually, using a skills matrix identifying key competencies and individual Director’s proficiency

	✓	Any assessed gap triggers a search by the Governance Committee for new nominees with the required missing competencies and qualifications

Term Limits and Renewal	✓	No term limits or formal policy on Board renewal for Directors; Board renewal is ensured through more interactive Director evaluation and succession planning

	✓	Nominees are selected by balancing (i) the benefit of adding new perspectives to the Board from time to time and (ii) the benefits associated with continuity and in-depth knowledge of each facet of Tricon’s business, which necessarily takes time to develop, and is important to retain given the unique nature of our industry

	✓	Annual Director, Board and committee assessments and performance evaluations are the main mechanisms to ensure Board renewal and continuous improvement

	✓	Effectiveness of the Board’s approach to ensuring appropriate Board renewal is evidenced by the fact that seven new Directors (representing 70% of the Board), including six independent Directors, have been elected or appointed to the Board since 2014

Board Interlocks	✓	The Board considers it to be good governance to avoid interlocking Board relationships, if possible

	✓	No formal limit on Board interlocks, but it is a nonexistent issue at the moment

	✓	Interlocking memberships will be considered, as they may arise, on a case-by-case basis based on recommendations from the Governance Committee, taking into account any circumstances which could impact a Director’s ability to exercise independent judgment

Diversity	✓	The Board has adopted a formal gender diversity policy according to which a target of no less than 1/3 of the Board would be of either gender which is in line with the gender diversity standards set by the 30% Club Canada

	✓	The Governance Committee believes that leadership diversity is a matter of importance and needs careful consideration, and remains committed to seeking qualified individuals of diverse backgrounds in selecting candidates for membership on the Board of Directors

	✓	When recruiting new Board members, the Governance Committee ensures that lists of potential candidates include female and racially diverse representation

	✓	Three of our seven independent Directors, and three of the ten current members of the Board, are women

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Orientation and Continuing Education

The Board encourages Directors to take relevant training programs to expand their knowledge of best practices in corporate governance, the nature and operation of the Company’s business, and broader industry issues affecting the Company. It is within the mandate of the Governance Committee to recommend to the Board continuing education activities or programs for Directors. The Company periodically arranges for guest speakers to attend Board or committee meetings to provide information and education to Directors on a variety of subjects relevant to the Company and the role of its Directors. Funds are also set aside for Directors to attend conferences and seminars as they deem appropriate to further their knowledge and ability to carry out their responsibilities. Beginning in 2020, to further facilitate Directors’ continuing education, each regularly-scheduled Board meeting dedicates a segment of the agenda to providing information or training on one or more topics of relevance, and Directors will participate in compliance and other educational programs provided to employees of the Company from time to time.

The Company also pays for publication subscriptions and memberships in associations, such as the Institute of Corporate Directors, to enable the Directors to keep informed of industry trends and best practices in corporate governance.

The Company has an orientation program for new Directors under which a new Director meets with members of senior management and the Board to discuss the role of the Board, its committees and its Directors, as well as the nature and operation of Tricon’s business. In addition, a new Director is presented with a Director manual that contains reference information to assist in the new Director’s orientation to the Company and his or her role, including key Company policies and procedures, the Company’s current strategic plan, the most recent annual and quarterly reports of the Company, and materials relating to key business issues. The Director manual is updated and provided to all Directors at least annually.

Director Assessment and Performance Evaluation

The Board, its committees and individual Directors are assessed annually through surveys of their effectiveness and contribution in order for the Board to satisfy itself that the Board, its committees, and its individual Directors are performing effectively.

The Governance Committee surveys all Directors to provide feedback on the effectiveness of the Board, committees, and individual Directors (with components relating to both self-assessment as well as peer evaluation). The chair of the Governance Committee compiles the results and assesses the operation of the Board and the committees, the adequacy of information provided to Directors, and the strategic direction and processes of the Board and committees. If concerns are raised, the chair of the Governance Committee will review the feedback individually with each affected Director on a confidential basis to encourage the relevant Director to develop an action plan to continue to hone and improve their contribution to the Board. The Board as a group is provided with an opportunity to discuss the assessment results in order to identify and address areas requiring attention or improvement. The assessments are also used by the Governance Committee to inform its recommendation of nominees for election to the Board.

Ethical Business Conduct

The Board of Directors has adopted a code of business conduct and ethics (the “Code”) that sets out the principles that should guide the behaviour of Directors, officers and employees of the Company. The Code addresses, among others, the following issues:

•

Conflicts of interest;

•

Protection and proper use of corporate assets and opportunities;

•

Confidentiality of corporate information;

•

Fair dealing with the Company’s competitors and persons with whom the Company has a business relationship;

•

Obligations to the Company’s advisory clients;

•

Compliance with laws, rules and regulations; and

•

Reporting of any illegal or unethical behaviour.

The Board of Directors (or any committee to which that authority has been delegated) can grant waivers of compliance with the Code. No such waiver has been granted since the adoption of the Code and, consequently, the Company has not filed any material change report during the last fiscal year pertaining to any conduct of a Director or executive officer of the Company that constitutes a departure from the Code.

A copy of the Code is available under the Company’s profile at www.sedar.com, can be found on our website at www.triconresidential.com/ investors/corporate-governance/, and may be obtained upon written request to the Company at 7 St. Thomas Street, Suite 801, Toronto, Ontario, M5S 2B7; Attention: Corporate Secretary.

To ensure the Directors exercise independent judgment in considering transactions, agreements or decisions in respect of which a Director or executive officer has a material interest, the Director or (if in attendance) executive officer is required to recuse himself or herself from the Board meeting at the time such transaction, agreement or decision is considered by the Board and such individual will not be permitted to cast a vote on the matter.

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Whistleblower Policy


Through the Company’s whistleblower policy, the Board has established procedures that allow employees of the Company to confidentially and anonymously submit concerns regarding any accounting or auditing matter or any other matter which such employee believes to be in violation of the Code. Any complaints received are		Our whistleblower procedures allow for the confidential reporting of potential illegal or unethical behaviour
acknowledged and promptly investigated, and a log of all complaints that are received is maintained, tracking their receipt, investigation and resolution. Any complaints that relate to questionable accounting or matters of a financial nature will be immediately brought to the attention, and reviewed under the direction, of the Audit Committee. We believe in fostering an open and honest workplace where our people accept and share the responsibility for reporting misconduct, with the understanding that an ethical workplace is in all our best interests. In November 2020, Tricon launched a new online Whistleblower platform in partnership with ClearView Connects. This ethics reporting system allows employees to report instances of misconduct anonymously and securely and facilitates incident report tracking and data analytics.

Insider Trading Policy

According to the Company’s insider trading policy, no one with any knowledge of a material fact or a material change in the affairs of the Company that has not been generally disclosed to the public should purchase or sell any securities of the Company, inform anyone of such material information (other than in the necessary course of business) or advise anyone to purchase, sell, hold or exchange securities of the Company (or any other securities whose price or value may reasonably be expected to be affected by the material information) until such information has been generally disclosed to the public and sufficient time has elapsed for such information to have been adequately disseminated to the public.

Privacy Policy

Protecting the personal information of shareholders, residents, investors and employees is a key priority of the Company. This is reflected by Tricon’s privacy policy, the recent implementation of more robust procedures aimed at the protection of confidentiality in the course of day-to-day operations, as well as the appointment of a privacy officer tasked with ensuring that the Company remains compliant with privacy-related rules and regulations in each jurisdiction in which it operates. The whistleblower policy, insider trading policy and privacy policy can be found on our website at www.triconresidential.com/investors/corporate-governance/.

Information Technology Policies

Tricon’s information technology policies and procedures cover key topics such as system, data, email and internet usage and access, as well as acceptable use, password protocols and work device protection. All employees participate in regular cybersecurity awareness training to ensure they understand the policies and procedures regarding acceptable use. We also conduct annual assessments of our cybersecurity framework. In 2020, we began an independent assessment of IT governance, key processes and controls to identify gaps and define a continuous improvement plan. This will pave the way for establishing an even more robust IT governance and cybersecurity framework to help govern, execute and monitor all key IT domains and processes.

Respectful Workplace Policy

With the goal of further fostering a respectful and safe work environment, the Company has adopted a formal policy to reflect its commitment to providing a workplace free from discrimination, harassment and violence, to educate employees on their rights and available recourse (including the confidential reporting of incidents of concern), and to set out the procedures to be followed in handling any such complaints. The policy is intended to ensure that the Company’s employees are aware of their rights and responsibilities relating to maintaining a safe and respectful workplace.

Business Continuity Plan

A key element of Tricon’s overall risk management strategy is the Business Continuity Plan (“BCP”), which was finalized in early 2020. The BCP specifies the actions we take in case of potential business disruptions that would lead to inaccessibility of business premises or primary systems and services. The objectives of the plan are to keep Tricon staff, stakeholders and third parties out of harm’s way and to provide the capacity to operate at a level of business activity that meets legal, fiduciary and regulatory obligations.

When the COVID-19 pandemic began in 2020, Tricon was quick to respond and put its Business Continuity Plan into action. Our employees were working from home as early as the beginning of March and were able to leverage our substantial investments in technology to continue to conduct operations without interruption. Tricon’s call centre staff members were fully equipped to begin working from home almost immediately, and leasing activities quickly transitioned to virtual tours and self-showings. In-person contact was minimized for our local market staff and protective equipment was used where necessary in order to continue providing essential maintenance requests and initiatives.

Succession Planning

The Board is responsible for providing guidance and oversight on succession planning, both in terms of immediate response as well as long-term arrangements, for the Chief Executive Officer and each key executive and reviews such succession plans annually. In addition, management works with the Board to assess and enhance talent within its senior management team and internal talent more generally, investing time and resources in developing the managerial capabilities of the Company’s existing and future leaders.

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Leadership Diversity

The Company has adopted a diversity, inclusion and belonging policy. We understand that embracing diversity leads to improved employee performance, more resilient decision-making, and higher rates of innovation and creativity. Tricon is committed to the principles of diversity, inclusion and belonging in our business, free from discrimination and harassment. We seek to enable all Tricon employees, regardless of race, ethnic origin, religion, sexual orientation, gender identity and expression, age, disability, or any other personal characteristics, to achieve their full potential in an environment characterized by equality of value, respect and opportunity. This principle extends across our organization and is embedded into our Company’s policies and practices.

Tricon’s diversity, inclusion and belonging priorities are a key part of our efforts to attract and retain talent, reduce employee turnover, increase job satisfaction, and build a culture of trust and collaboration. These priorities include:

•

Creating policies and programs for fostering diversity in our business, and a culture of inclusivity and open communication;

•

Promoting diverse, inclusive and accessible work environments that facilitate collaboration and give employees the support they need to succeed; and

•

Building teams with a diverse range of thought and perspectives to encourage innovative thinking, and flexible, thoughtful decision-making.

The Board and the Company also consider the level of female representation on the Board and in executive officer positions in identifying and nominating Director candidates and when making executive officer appointments. The policy provides for a target of 1/3 of Directors being of either gender, which target the Company currently meets. This aligns the Company’s policy with the gender diversity standards set by the 30% Club Canada. While the Company has not adopted a similar target for the representation of women in executive officer appointments for the reasons noted below, it does consider the level of female and general diversity representation in such positions as well as in the Company’s succession planning, including in our leadership development programs.

Tricon also signed the BlackNorth Initiative CEO Pledge in 2020, establishing a goal of having at least 3.5% of our executive and Board roles held by Black leaders by 2025.


The Company currently has three female Directors (amounting to female representation of 30% of the Board and 43% of independent Directors). As of May 1, 2021, one of the seven executive officers of the Company (14%) identify as a woman and six of the twenty-four members of the Company’s senior management team (25%), which includes Tricon’s executive officers, identify as women. As noted above, Tracy Sherren is not standing for re-election at the Meeting, but the Governance Committee has commenced a search for a new tenth Director who will further enrich the Board’s collective expertise and perspective and is taking the Company’s leadership diversity priorities firmly into account in that search.		Our gender diversity policy aligns with the standards set by the *30% Club Canada*

While diversity is one issue of significant importance, the Board continues to believe that the key to effective leadership is to choose Directors and officers who, having regard to a wide array of factors, possess the range of necessary skills, experience, commitment and qualifications that are best suited to fostering effective leadership and decision-making at the Company. In addition to adopting a formal gender diversity policy and being proud to support broader diversity initiatives, the Board will continue to identify and select candidates based on additional and indispensable criteria such as:

•

merit, skills, experience and qualifications;

•

expected contribution and value-added to the group as a whole;

•

maximization of Board effectiveness and decision-making abilities; and

•

needs of the Company at the time.

Shareholder Engagement

Maintaining a dialogue with Shareholders is a key priority of the Company, especially on the topics of governance and compensation practices. Shareholders who are interested in engaging with the Company can attend the Meeting and pose questions to management. They can also learn more about the Company through the following:

•

webcasts of our quarterly earnings conference calls with research analysts;

•

webcasts of our annual investor day for institutional investors and analysts with presentations by our executives;

•

executive presentations at institutional and industry conferences; and

•

investor road shows, property tours, and various retail and institutional investor marketing events in Canada and the United States throughout the year.

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The Company takes Shareholder feedback seriously. This is reflected by the Company’s implementation of numerous material changes in recent years in direct response to Shareholder input, including:

•

adopting consolidated accounting and other financial disclosure practices that reduce complexity and improve comparability of results with real estate peers;

•

adopting a comprehensive ESG plan and publishing an inaugural ESG Roadmap, as well as enhancing ESG disclosure in the Company’s quarterly results;

•

launching a new corporate website with easily accessible investor materials, regulatory filings, and ESG disclosure;

•

broadening the application of our diversity policy, setting and meeting a target that no less than 1/3 of Directors would be of either gender; and

•

the multi-year overhaul of our executive compensation program which better aligns management and Shareholder interests and better reflects the latest and best practices employed by our corporate peer group, including the recent adoption of an innovative performance assessment process which aligns our CEO’s compensation with the achievement of annual targets set by the Board in respect of metrics identified as being essential to Tricon’s success.

In order to provide Shareholders with further clarity on ways in which they can engage with the Company, the Board has adopted a Shareholder Engagement Policy (the “Engagement Policy”). The Engagement Policy prescribes governance topics for discussion between the Board and Shareholders, guidelines regarding meeting attendance, and a means for Shareholders to contact the Board to request a meeting. Shareholders who are interested in directly engaging with the Board regarding those topics specified in the Engagement Policy are encouraged to review the Engagement Policy, which can be found on our website (www.triconresidential.com), and to contact the Board at:

Tricon Board of Directors

Tricon Residential Inc.

Attention: Corporate Secretary

7 St. Thomas Street, Suite 801

Toronto, ON M5S 2B7

Email: board@triconresidential.com

Environmental, Social and Governance Program


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 inaugral 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.		Our recently launched ESG roadmap highlights five strategic priorities: Employees, Residents, Innovation, Environmental Impact and Governance

Over the course of 2020, Tricon established a range of ESG programs and related performance measures intended to fulfill its commitments. The design of these programs is substantially complete and will form the Company’s ESG implementation plan. We aim to share our key initiatives and discuss our ESG performance in our inaugural ESG annual report in the second quarter of 2021.

Our People

•

A continued focus on talent management and a succession planning framework to build leadership capacity and strengthen retention. In early 2021, we formally launched a range of corporate training programs spanning our Five Guiding Principles, New Manager Orientation and New Hire Orientation. We also integrated ESG into employee onboarding and ongoing communication, so that our team members are aware of our ESG priorities and can contribute to our ESG journey in a meaningful way.

•

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•

Health, safety and well-being initiatives including programs such as web-based medical services, fitness benefits, employee assistance programs, 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 late 2020. 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 both been certified as a “Great Place to Work”.

At Tricon, living our corporate purpose every day starts with our own employees which has led us to embark 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 Tricon’s employees and their families.

•

Black Girls Code – 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. On September 23, 2020, nearly 700 of our employees across North America participated virtually in Founders’ Day which had a theme of raising consciousness surrounding anti-Black systemic racism and featured discussions with the heads of the Canadian Council of Business Leaders Against Anti-Black Systemic Racism as well as Black Girls Code.

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.

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 on assisting residents in need through several initiatives:		Resident Emergency Assistance Fund provides financial relief annually to residents in need

•

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•

Affordable Housing Lands Program – we partnered with investors and the Ontario government under the Affordable Housing Lands Program to deliver an innovative response to housing affordability concerns 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. Our innovation strategy is 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 of accomplishments to date include:

•

Proprietary self-showing and virtual move-in processes that allow 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 systems which provide: 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.

•

Augmented reality that is used to provide field training to our maintenance technicians virtually, helping to standardize training across all 21 of our markets and identify suitable candidates through a virtual interview process.

Our Impact

Tricon is committed to the sustainability of our business activities over the long term. This effort will involve embracing smarter ways to reduce the environmental impact of our properties 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:

•

Tricon’s first purpose-built residential development in Toronto, The Selby, has been LEED Gold certified. 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.

•

Flood risk assessments are integrated into our proprietary single-family rental acquisition platform to reduce risk and expedite the acquisition process.

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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, which is described above in detail, 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 securities laws, legal requirements and our own standards;

•

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. This 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; and

•

For further details, please refer to the Company’s ESG roadmap, which was published on January 28, 2020 and is available on our website at www.triconresidential.com/investors and on SEDAR at www.sedar.com. Our inaugural ESG annual report is also expected to be available on those sites in the second quarter of 2021.

COMPENSATION, NOMINATING AND CORPORATE GOVERNANCE COMMITTEE LETTER TO SHAREHOLDERS

Strong Governance, Proven Commitment, Exceptional Operating Performance

In 2017, we embarked on a multi-year overhaul of our executive compensation program in order to better align management and Shareholder interests and better reflect the latest and best practices employed by our corporate peer group. Although significant strides have already been made in this effort, we continue in our pursuit of improvement because alignment with Shareholder interests is one of the Board’s primary objectives, and we take this responsibility very seriously.

The most recent example of these efforts is our adoption of an even more robust performance assessment process which creates direct alignment between our CEO’s compensation and the achievement of annual performance goals. Beginning in 2021, at the outset of each calendar year the Governance Committee will review and recommend for Board approval a CEO performance scorecard setting targets for the year in respect of six pillars essential to Tricon’s success: shareholder value, employees, residents, innovation, ESG, and risk management. At year end, the Board will assess the CEO’s performance on these targets with the results dictating the multiplier to be applied to the CEO’s AIP award within a significant range of 80% to 120%.

For NEOs, the full deployment of our new compensation philosophy has resulted in an increased reliance on the use of fully at-risk PSUs which vest based on Adjusted EPS performance over three years. In line with the program’s design, performance-contingent PSUs represented at least 50% of our 2020 equity-based awards for our NEOs. Similarly, the use of the recently implemented Restricted Share Plan aims to allow NEOs (and in particular, the CEO) to demonstrate to Shareholders a commitment to Tricon over the very long term. This is evidenced by the fact that the Restricted Shares awarded to our CEO and CFO in 2020 will not become unrestricted until 2030 (10 years following grant), and will be forfeited in their entirety in the event of a termination for cause or earlier resignation (subject to certain exceptions).

Our executive compensation governance program has also resulted in measurable improvement in our NEOs’ equity ownership levels, with each of them on track to meet, and most currently exceeding, our senior executive share ownership guidelines. Furthermore, this was achieved with a 2020 equity-based compensation burn rate of only 0.28%, thanks in large part to our reliance on our PSU and Restricted Share Plans to create alignment with Shareholders without undue pay-related dilution. Consistent with our continued search for improvements in Shareholder alignment and transparency, the amendments to the DSU Plan and Stock Option Plan adopted on July 7, 2020 have further reduced potential Shareholder dilution by converting the plans from “evergreen” to “fixed-number” plans with security-based award caps imposed on both an annual and aggregate basis. The new limitations allow for no more than 2,000,000 security-based awards to be granted in any one-year period, representing a current burn rate cap of about 1%, a meaningful 50% reduction from the voluntary 2% burn rate limit previously in place.

In line with our overarching strategic focus on clarity and simplicity and in alignment with principles set by the Canadian Coalition for Good Governance, the Board’s compensation program was also recently reworked to eliminate regular meeting fees, abolish annual stock option grants to non-executive Board members and formalize Director stock ownership guidelines. Recognizing an opportunity to further strengthen alignment, the Board increased the stock ownership guidelines meaningfully, to three times an independent Board member’s annual retainer, effective for the 2020 fiscal year.

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Finally, over the last year, our governance has also been meaningfully strengthened. In January 2020, the Company published its ESG roadmap, formalizing the Environmental, Social and Governance principles that have guided Tricon’s decision-making and strategy for the past 32 years and highlighting its ongoing commitment to five strategic priorities: Our People, Our Residents, Our Innovation, Our Impact and Our Governance. The Company continues in its commitment to diversity throughout its business across a range of factors, including expertise and experience, gender, geography, age, race and ethnicity. Examples of this commitment include efforts to achieve consistency between the Company’s diversity policy and the gender diversity standards set by the 30% Club Canada, setting and meeting a target that no less than 1/3 of Directors would be of either gender and Tricon’s support of the BlackNorth Initiative CEO Pledge, committing the Company to longer-term diversity targets and other measures to combat anti-Black systemic racism.

2020 Performance and CEO Pay

Our approach to executive compensation is designed to attract, retain and motivate a world-class executive team, achieve alignment with Shareholders, and reflect best practices in corporate governance.

Tricon’s team once again delivered strong operational and financial results in 2020. Tricon’s Core FFO increased meaningfully by 69% year-over-year to $0.49 per diluted share, driven by strong performance in the growing single-family rental business, improved earnings from for-sale housing investments and stable corporate overhead costs. Given the Company’s strong performance relative to its initial targets for the year, a final AIP pool of 114% of the preliminary pool was recommended by management and approved by the Board on the basis of the 2020 Adjusted EBITDA results. As a result, the cash and equity-based AIP awards made to the CEO were above target. Notwithstanding the Company’s growth achieved in 2020, however, NEO compensation decreased in 2020 compared to 2019 (including a 12% reduction in direct compensation (in Canadian dollars) paid to the CEO) due to a year-over-year reduction in performance, relative to the ambitious performance target established by the Board in early 2020, primarily attributable to the impact of the COVID-19 pandemic. We view this as significantly underscoring the proper functioning of our incentive compensation program and its alignment with Shareholder interests.

Linking compensation with operational performance and total Shareholder return has been, and continues to be, a key priority of the Board. Our executive compensation philosophy has proven to be successful in achieving this goal. As presented in detail in the “Effectiveness of Our Compensation Program over Time” subsection on page 54, the average actual value of every C$100 granted annually to Gary Berman in the form of direct compensation since our 2010 IPO had increased to C$122 as of December 31, 2020, an outcome symmetric with our Shareholders’ total return which reflected an increase to C$193 over the same periods. A similar analysis reflecting the four-year period following our executive compensation overhaul in 2017 shows a consistently tight link between our CEO compensation and our Shareholders’ total returns.

Engagement with Shareholders

We strive to improve continuously in all areas, including our executive compensation design, policies and disclosure and so we aim to gather and constructively assess feedback from Shareholders and other stakeholders. To that end, we have adopted a Shareholder Engagement Policy (a copy of which can be found on our website, www.triconresidential.com) which prescribes governance topics for discussion between the Board and Shareholders, guidelines regarding meeting attendance, and a means for Shareholders to contact the Board to request a meeting. We look forward to continuing our productive and valued dialogue with our Shareholders. Looking ahead, key areas of focus for the Governance Committee and the Board will be to continue to:

•

Attract, retain and motivate the world-class executive team our stakeholders deserve;

•

Preserve our highly entrepreneurial spirit;

•

Link executive pay to performance over the long term; and

•

Manage pay-related shareholder dilution well within industry standards.

On behalf of the Governance Committee and the Board, we thank you for your support. We welcome your feedback at any time by writing to us at board@triconresidential.com, or by mail at 7 St. Thomas Street, Suite 801, Toronto, Ontario, M5S 2B7; Attention: Corporate Secretary.

Sincerely,

“Siân M. Matthews”

Siân M. Matthews

Chair of the Compensation,

Nominating and Corporate Governance Committee

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COMPENSATION DISCUSSION AND ANALYSIS

The Compensation, Nominating and Corporate Governance Committee

With respect to executive compensation governance, the role of the Governance Committee is to:

•

Review the various components of total compensation, either when policies and programs are being developed or when they are being applied, while ensuring compliance with sound compensation governance principles;

•

Ensure that Tricon’s executive compensation policies and programs comply with in-force regulations and standards;

•

Recommend that the Board approve new compensation programs or material changes to existing programs;

•

Ensure that Tricon’s compensation policies and programs promote sound risk management and closely tie executive compensation paid to Tricon’s operational performance and total shareholder return;

•

Consider the expectations of Shareholders and of governance organizations;

•

Ensure that the executive compensation program can attract, motivate and retain the best and brightest executive talent; and

•

Exercise discretion, as it deems necessary, to adjust individual and aggregate variable compensation.

Competencies of Governance Committee Members

All Governance Committee members have human resources, compensation, and risk management competencies. These competencies were gained from the experience they acquired in current or former positions, in particular in their capacities as senior officers at other major corporations, as members of boards of directors or through their educational background. Below is an overview of these competencies:

•

Human resources and compensation: knowledge and experience in managing compensation programs and understanding of principles and practices related to human resources;

•

Risk management: knowledge and experience in risk management, risk assessment and risk communication; and

•

Leadership: experience in a senior position in a major company or institution.

Michael Knowlton serves on the Governance Committee and is also the chair of the Audit Committee of the Company, which helps the Governance Committee make more informed decisions on the alignment of compensation policies and practices with the Company’s financial performance and risk management framework.

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Compensation Philosophy

Our compensation philosophy recognizes that a highly qualified and engaged workforce is critical to our continued success, and guides compensation decisions made by our Board of Directors and our senior management. Our compensation philosophy is intended to reinforce our belief that Shareholders should have an opportunity to fully understand how our compensation principles, policies and programs support the achievement of our performance objectives, as well as the creation of value for our Shareholders over the long term.

Guiding Principles

To achieve these objectives, our approach to compensation is based on the following key philosophical principles:

1. Our compensation approach aligns with Shareholders’ long-term interests

We align the interests of executives with those of long-term Shareholders through effective compensation policies

2. Our compensation approach is transparent and reflects strong corporate governance

We strive to be a leader on governance issues, to continually adopt leading compensation practices, to ensure our compensation program is straightforward, and to communicate openly and clearly about our compensation practices

3. Our compensation approach reflects effective risk management

We ensure that compensation reflects an appropriate balance between risk and reward and does not provide incentives for excessive risk-taking or short-term decision-making

4. We pay for performance

We structure our compensation plan to create a high- performance culture by placing a large proportion of executive pay at-risk, with clear relationships between pay and performance

5. Compensation enables us to attract and retain the best and brightest in the industry

We set target compensation to ensure competitiveness in the markets where we operate and compete for talent. While competitive compensation helps us attract and retain talent, we know it must co-exist with sound business objectives, a healthy corporate culture, and the availability of meaningful and enriching work opportunities

These principles are reviewed periodically by the Governance

Committee to ensure that they remain appropriate and aligned

with our corporate strategy.

What Tricon Does

☑ Rely on a well-defined compensation philosophy to guide pay decisions

☑ Align performance-based compensation with corporate performance:

• The majority of NEO compensation is variable, at-risk

• Newly implemented performance assessment process directly ties the CEO’s AIP award multiplier to performance in respect of annual targets set by the Board

• Annual Incentive Plan awards are approved by the Governance Committee and reflect annual corporate performance, business unit performance and individual performance

• DSU, PSU, stock option and Restricted Share grants tie
NEO compensation to Shareholder returns

☑ Require NEOs to hold Common Shares

☑ Encourage executives to take and retain gains from share-based awards in Common Shares

☑ Prohibit bypassing compensation plan objectives by hedging or speculative transactions in Common Shares

☑ Maintain a clawback policy applicable to any incentive compensation awards

☑ Balance a mix of compensation vehicles spanning various time horizons

☑ Benchmark executive compensation on a total compensation basis, not element by element

☑ Target the size-adjusted (reduced) 50th percentile of our comparator group

☑ Obtain support from an independent external compensation consultant who does not provide any other services to the Company

What Tricon Does Not Do

☒ No supplemental executive retirement plan for the NEOs

☒ No excessive perquisites

☒ No bonus or multi-year grants guarantee

☒ No employment termination clause exceeding 24 months of compensation, or 30 months in the case of termination following a change of control

☒ No exercise price changes for stock options or exercise prices below fair market value

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Compensation Plan Elements and Implementation of Executive Compensation Changes

The table below summarizes the key elements of the Company’s executive compensation program applicable for Fiscal 2020.



Type	Element	Description

Fixed Compensation	Base Salary	Reflects the executive’s level of responsibility, skills and experience, the market value of the position and the executive’s overall performance both individually and in relation to his or her business unit
Fixed Compensation	Benefits and Perquisites	• Executive benefit plans paid for by the Company provide medical and dental coverage, as well as short-term and long-term disability and life insurance • Limited perquisites are provided, including an annual medical examination

Variable Compensation	Annual Incentive Plan (AIP) (See page 46)	Funding: Capped Pool • AIP funding for executive participants is based on a preliminary pool equal to the sum of all such participants’ individual AIP targets, which are based on a benchmarking study • The size of the final pool may vary, up or down, based on Adjusted EBITDA performance, ignoring fair value gains from income-producing assets, compared to budget • The final pool is capped at 150% of target and subject to Board discretion
		Allocation • Executive participants are allocated a portion of the final AIP pool based on their individual and departmental performance. Individual and departmental performance goals for executives are developed through a consultative process with the CEO and the Governance Committee and comprised of subjective, qualitative metrics that align the individual’s specific role with the Company’s long-term corporate strategy. Performance is then assessed based on the individual’s contribution relative to such goals. • AIP awards are allocated based on a target of 50% in cash for the CEO and 60% in cash for other executives • The remainder of executive AIP awards are equity-based and awarded: • At least 50% in PSUs cliff vesting over three years with a performance factor, based on Adjusted EPS, between 0% and 200%, and settled in cash • Target of no more than 50% in awards with only time-based vesting (DSUs, stock options and/or Restricted Shares). Any DSUs or stock options granted will vest over three years from the grant date. Restricted Shares have much longer-term restriction periods (10 years in Fiscal 2020). * Chart above reflects CEO allocation
	Long-Term Incentive Plan (LTIP) (See page 52)	The LTIP provides an opportunity, in the form of cash and DSUs, to share directly in: • The incentive or performance fees earned by the Company in respect of its management of private • funds and other investment vehicles; and • The investment income earned from the Co-Investment

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Setting Executive Target Compensation

The Governance Committee has adopted a comparator group to establish the Company’s executive compensation structure and ensure its competitiveness relative to companies against which we compete for executive talent.

Our executive compensation structure is anchored to the comparator group’s size-adjusted 50th percentile. This target position was selected given the growth objectives of the Company, our management of third-party capital, and the unique skills required of our executive team.

Our current executive compensation comparator group, which was established in 2018 for benchmarking purposes and applied, with necessary adjustments, for Fiscal 2020, originally comprised the companies listed below that:

•

Are publicly-traded, with a market capitalization of at least US$500 million

•

Have operations in North America focused on residential real estate sectors or asset management activities, broadly reflecting Tricon’s business portfolio and investment strategy


Front Yard Residential Corporation ¹		Kennedy-Wilson Holdings, Inc.

American Homes 4 Rent		LGI Homes, Inc.

Starwood Waypoint Homes ¹		Meritage Homes Corporation

Dream Unlimited Corp.		Mid-America Apartment Communities, Inc.

Forest City Realty Trust, Inc. ¹		Morguard Corporation

Forestar Group Inc.		Onex Corporation

Howard Hughes Corp.		Taylor Morrison Home Corporation

Invitation Homes Inc.		The St. Joe Company

KB Home		William Lyon Homes ¹

(1)	These companies have ceased to be standalone entities since last being included in the Company’s comparator group for the purposes of a formal benchmark study.

In 2020, the Governance Committee performed an evaluation of the comparator group and updated the list to reflect changes to the Company and the prevailing market over the prior three years. Beginning in 2021, the executive compensation comparator group will be composed of 14 companies, listed below, that:

•

Are publicly-traded, with a market capitalization of at least US$500 million

•

Have operations in North America focused on residential real estate sectors or asset management activities, broadly reflecting Tricon’s business portfolio and investment strategy


Invitation Homes Inc.		Vornado Realty Trust

Essex Property Trust Inc.		Kennedy-Wilson Holdings, Inc.

Mid-America Apartment Communities Inc.		Morguard Corporation

UDR Inc.		Dream Unlimited Corp.

American Homes 4 Rent		Acadia Realty Trust

Apartment Investment and Management Co		Columbia Property Trust

Camden Property Trust		Independence Realty Trust Inc.

Size-Adjusting

Executive compensation is sensitive to the size and scope of a company. This trend is also observable in Tricon’s comparator group. Because Tricon’s size is below the median size of comparator group companies, the Governance Committee relied on comparator group compensation data size-adjusted downward to reflect Tricon’s scope.

Compensation percentile statistics used by the Governance Committee were size-adjusted using statistical regression methodologies that require an appropriate proxy for company size and scope. Given the diversity of business models in the comparator group, it was determined that market capitalization, adjusted to include the size of assets from third-party investors, is the best proxy of relative size and scope among comparator group companies. Consequently, market capitalization data were adjusted to include the size of assets from third-party investors for comparator companies and for Tricon in statistical regression analyses which resulted in size-adjusted market compensation data.

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Independent External Consultant

The Governance Committee has the authority to select, engage and compensate an external compensation consultant to carry out its duties. In 2020, the Governance Committee engaged Hexarem Inc. (“Hexarem”) as an external independent consultant to carry out a market benchmark study of executive compensation, assess compensation program effectiveness and assist with ongoing improvement of the Company’s compensation program.

The following table presents the fees paid to Hexarem in Fiscal 2019 and 2020.

Independent External Consultant

Executive Compensation-
Related Fees

Other Fees

Total

Fiscal 2020

28,108

Fiscal 2019

16,375

Compensation-Related Risk Management Practices

There are certain risks inherent in the Company’s activities, which may impact the Company’s performance, financial position and the value of its securities. However, the Governance Committee ensures that policies and compensation practices in place do not encourage executives to take excessive risks. The Governance Committee has adopted the following policies and practices to mitigate the risks typically associated with a compensation program and to promote sound risk-taking.

✓ A significant portion of executive variable compensation is deferred over different risk horizons for accountability purposes

Executive incentive compensation spans different risk horizons to balance several business priorities and to align executive interests with those of our Shareholders and private investors. The AIP and LTIP cover the following horizons for executive participants:

•

AIP cash payments reward annual individual and group achievements;

•

AIP payments deferred in PSUs reward sustained medium-term operational and share price performance;

•

AIP payments deferred in DSUs and stock options, respectively, reward medium-term and long-term share price performance and Restricted Share awards are intended to reward even longer-term share price performance; and

•

LTIP awards and payments reward the long-term performance of our private investment vehicles and ensure alignment with the interests of our private investors and Shareholders.

LOGO

(1)

Cash entitlements under the LTIP are allocated or vest over the life of the investment vehicle to which they pertain. DSUs issued in respect of the Co-Investment vest over a three-year period. On May 6, 2019, in order to more closely align the vesting period with the expected remaining life of the Co-Investment, the LTIP was amended by the Board to reduce the vesting period applicable to LTIP DSU awards from five to three years.

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✓ The AIP pool funding is capped at 150% of target and further subject to Board discretion

The AIP pool for executive participants includes a cap to ensure an appropriate sharing of value between management and Shareholders and to limit the incentive to take excessive risks in order to achieve short-term, unsustainable performance. In addition, the Board may exercise discretion to reduce or increase the final AIP funding to ensure that payouts correlate with actual performance as intended at the time performance goals are set.

AIP pool is capped at 150% of target and determined based on Adjusted EBITDA (ignoring fair value gains from income-producing assets) relative to annual budget

✓	Forfeiture and clawback policy

The purpose of Tricon’s Incentive Compensation Clawback Policy is to address and redress situations in which individuals might profit from their misconduct.

The policy applies to all Tricon senior management and grants a committee comprised of independent Board members broad discretion to retract, cancel or seek reimbursement of incentive compensation received by current or former senior members of management in the event of a material restatement of, or inaccuracy in, the Company’s financial statements caused by misconduct or fraud.

✓	Anti-hedging policy

The Company has adopted a policy that prohibits Directors and employees from directly or indirectly hedging the value of Common Shares or equity-based entitlements held as such actions reduce the alignment with Shareholder interests that the Company’s compensation program is intended to create.

More precisely, Directors and executives are prohibited from purchasing put options, selling call options or purchasing any financial instruments such as forward contracts, equity swaps, or collars, that are designed to hedge or offset variation in the market value of Tricon securities, including our Common Shares.

✓ Share ownership guidelines for senior executives

The Board has instituted minimum share ownership requirements for the Company’s senior executives. We believe that requiring our executives to make a very significant direct investment in the Company, and to retain at least that level of investment, strongly aligns the Company’s decision-makers’ interests with those of our long-term Shareholders.

Significant ownership requirements align executives with Shareholders

Our President and CEO is required to accumulate and maintain equity ownership worth at least 1.5 times his variable pay target under the AIP, which corresponds to 637.5% of his base salary. Other NEOs have a requirement equal to 1.0 times their variable pay targets, corresponding to between 300% and 325% of their respective base salaries.

Compensation of Named Executive Officers

The following individuals are our named executive officers (or “NEOs”) for 2020:

Gary Berman

President and Chief Executive Officer

Wissam Francis

Executive Vice President and Chief Financial Officer

David Berman

Executive Chairman

Jonathan Ellenzweig

Chief Investment Officer

Andrew Carmody

Managing Director

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2020 Compensation

Our NEOs receive a mix of fixed and variable compensation with a clear focus on variable compensation and deferred, at-risk components. Each component of our NEOs’ 2020 total direct compensation summarized in the table below is presented in further detail on the following pages.


Name¹	2020 Base Salary		AIP 2020²										LTIP 2020				2020 Total Direct Compensation		% Variable
Name¹	2020 Base Salary		Cash		DSUs		PSUs		Stock Options		Restricted Shares		Cash		DSUs		2020 Total Direct Compensation		% Variable
Gary Berman	$	671,000	$	1,980,000	$	563,000	$	749,000		—	$	187,000	$	313,000		—	$	4,463,000		85	%
Wissam Francis	$	298,000	$	754,000	$	110,000	$	204,000	$	75,000	$	19,000	$	18,000		—	$	1,478,000		80	%
David Berman	$	373,000	$	777,000	$	212,500	$	212,500		—		—	$	244,000		—	$	1,819,000		79	%
Jonathan Ellenzweig	$	375,000	$	879,000		—	$	236,000	$	236,000		—	$	145,000		—	$	1,871,000		80	%
Andrew Carmody	$	298,000	$	623,000	$	183,500	$	183,500		—		—	$	19,000		—	$	1,307,000		77	%

(1)

Compensation-related payments made to Messrs. Gary Berman, David Berman, Francis and Carmody are made, and the value of share-based and option-based awards is computed, in Canadian dollars. For the purposes of translating these amounts into U.S. dollars, a CAD/USD conversion rate of 0.7461 was used, being the average yearly exchange rate posted on the Bank of Canada website for Fiscal 2020.

(2)	See the Summary Compensation Table for the valuation of share-based and option-based awards.

Base Salary

The table below summarizes the NEOs’ base salary for Fiscal 2020, as well as the 2021 salary adjustments approved by the Governance Committee on the basis of a new benchmarking study conducted in 2020 relative to the newly-established comparator group noted above, and taking into account individual performance.

2020
Base Salary

2021
Base Salary

Salaries managed within market-competitive ranges
designed to provide median total compensation for
performance at target

Gary Berman

900,000

1,050,000

Wissam Francis

400,000

500,000

David Berman¹

500,000

Jonathan Ellenzweig

US$

375,000

US$

400,000

Andrew Carmody

400,000

425,000

(1)	Mr. Berman has voluntarily forgone a salary increase for 2021.

These 2021 salaries are all consistent with a salary structure anchored at the size-adjusted median of our comparator group for each individual NEO. Individual positioning within the salary structure takes into account the particular executive’s performance, responsibility, skills and experience.

Annual Incentive Plan (AIP)

Our AIP rewards individual and collective achievement and promotes prudent risk management, as a significant portion of annual awards earned by executive participants must be deferred over time. The AIP is designed to ensure transparency and provide alignment with Shareholders through its use of non-dilutive PSUs, described below, which track the value of Common Shares to ensure Shareholder alignment, but are settled in cash to avoid Shareholder dilution. Restricted Shares are also used as a vehicle for further ensuring very long-term Shareholder alignment without diluting existing Shareholders, as Restricted Shares are acquired on the TSX to satisfy awards. The amendments to the Stock Option Plan and DSU Plan adopted on July 7, 2020 further reduced the potential for Shareholder dilution by converting the plans from “evergreen” to “fixed-number” plans and imposing conservative limits on allowable security-based award grants on both an annual and aggregate basis. In 2021 the Company has adopted a more robust performance assessment process aimed at aligning our CEO’s compensation and the achievement of annual targets set by the Board in respect of six metrics essential to Tricon’s success: shareholder value, employees, residents, innovation, ESG, and risk management. At year end, the CEO’s performance in light of these scorecard targets will dictate a new multiplier to be applied to the CEO’s AIP award (ranging from 80% to 120%), which may increase or decrease the total AIP payout for the year.

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AIP Features


Objective	• The purpose of the AIP is to provide an annual cash opportunity based on the Company’s annual results and to align the interests of executives with the interests of Shareholders over the long term by including a significant portion of equity-based compensation that is at-risk and that rewards future operational and share price performance

Funding	• Funding is based on a formulaic approach with two main parameters: 1. Pre-set and market-benchmarked AIP target compensation level for each participant, the sum of which determines a preliminary pool 2. Company performance compared to performance objectives approved by the Board at the beginning of the year, the result of which determines an adjustment factor

	The Preliminary Pool corresponds to the sum of individual, market benchmarked AIP targets	The Final Pool depends on the annual performance results compared to objectives approved by the Board at the beginning of the year	The Final Pool is capped at 150% of the Preliminary Pool and subject to the Board’s discretion

	• The adjustment factor for Fiscal 2020 is based on Adjusted EBITDA results, ignoring fair value gains from income-producing assets • At the beginning of each year, the Board approves the financial performance goals that will be used to determine the adjustment factor for the year; for 2021, the Board has established a target based on Core FFO.

Allocation	• The final pool is allocated among participants based on their individual and collective performance • AIP awards are allocated based on a target of 50% in cash for the CEO and 60% in cash for other executives • Subject to the Governance Committee’s discretion, the cash portion of an NEO’s AIP award cannot exceed 60%, except in exceptional circumstances, including a participant’s one-time right under the AIP to elect to receive 100% of his or her AIP award for a given year in cash (which is subject to a C$500,000 limit on additional cash payable) • The remainder of executive AIP awards are equity-based and awarded in PSUs, stock options, DSUs and Restricted Shares • At least 50% in PSUs cliff vesting over three years at a rate of between 0% and 200% based on Adjusted EPS performance relative to pre-set annual targets and settled in cash. For 2020, on the basis of the Adjusted EPS performance, a multiplier of 200% was applied • No more than 50% in awards with time-based vesting only (stock options, DSUs and/or Restricted Shares). Any stock options or DSUs granted to executive participants vest in equal tranches over three years from the date of grant while Restricted Shares cliff vest on a longer timeline (10 years for 2020 awards)

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2020 AIP Funding Results

For Fiscal 2020, the Governance Committee approved management’s recommended final AIP pool of 114% of the preliminary pool on the basis of the Company’s 2020 Adjusted EBITDA results. As noted above, the Adjusted EBITDA results are assessed against the Adjusted EBITDA goals set out in the Company’s annual budget and approved by the Board at the beginning of each fiscal year.

2020 AIP Allocation to NEOs

The Fiscal 2020 AIP awards to NEOs approved by the Governance Committee are set out below. These awards are aligned with the Company’s benchmarked market-competitive pay structure and reflect the NEOs’ individual contributions through Fiscal 2020.


	2020 AIP Awards^1,2
	Cash				DSUs				PSUs³				Stock Options⁴				Restricted Shares
Gary Berman	$	1,980,000	57	%	$	563,000	16	%	$	749,000	22	%		—	0	%	$	187,000	5	%
Wissam Francis	$	754,000	65	%	$	110,000	9	%	$	204,000	18	%	$	75,000	6	%	$	19,000	2	%
David Berman	$	777,000	65	%	$	212,500	18	%	$	212,500	18	%		—	0	%		—	0	%
Jonathan Ellenzweig	$	879,000	65	%		—	0	%	$	236,000	17	%	$	236,000	17	%		—	0	%
Andrew Carmody	$	623,000	63	%	$	183,500	19	%	$	183,500	19	%		—	0	%		—	0	%

(1)

Compensation-related payments made to Messrs. Gary Berman, David Berman, Francis and Carmody are made, and the value of all AIP awards is computed, in Canadian dollars. For the purposes of translating these amounts into U.S. dollars, the CAD/USD conversion rate used for Fiscal 2020 was 0.7461, based on the average yearly exchange rate posted on the Bank of Canada website. Values and figures expressed herein have been rounded to the nearest thousand or to the nearest percent, as applicable.

(2)	See the Summary Compensation Table for the valuation of share-based and option-based awards.

(3)	One-third of the PSUs awarded were subject to performance evaluation in Fiscal 2020 and, on the basis of the Company’s Adjusted EPS performance, a multiplier of 200% was applied.

(4)	No stock options were granted by the Company in 2020.

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2020 AIP Life Cycle from Grant to Payout

A significant portion of executive AIP awards are reinvested in the Company’s equity in the form of PSUs, stock options, DSUs and Restricted Shares and remain at-risk over the deferred period. The value of the deferred AIP award will vary upward or downward along with the Company’s total return and operational performance, as illustrated in the following chart.

LOGO

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Deferred Share Unit Key Terms


Objectives		• Link a portion of compensation to the future value of the Company’s Common Shares • Foster employee attraction and retention

Definition		• DSUs are a notional equivalent to the Company’s Common Shares

Dividends		• Quarterly dividends paid by the Company are credited in the form of additional DSUs

Vesting		• Vesting periods are established by the Governance Committee at the time of grant • DSUs awarded under the AIP vest in equal tranches annually over three years from their grant date for executive participants while DSUs awarded under the LTIP vest in equal tranches over (i) five years for DSUs awarded prior to 2019, and (ii) three years for LTIP DSU awards made in and after 2019

Payment		• Vested DSUs are redeemable for Common Shares, issued by the Company from treasury, on a one-for-one basis, or, at the participant’s option and subject to the approval of the Governance Committee, for cash

A more detailed summary of our DSU Plan is included in Appendix A.

PSU Plan Key Terms



Objectives		• Link a significant portion of compensation to corporate goals and to the future value of the Company’s Common Shares • Foster employee attraction and retention

Definition		• PSUs entitle the participant to receive a cash amount equivalent to the value of the Company’s Common Shares at the end of a three-year performance cycle if predetermined annual performance objectives are achieved

Dividends		• Quarterly dividends paid by the Company are credited in the form of additional PSUs

Vesting		• PSUs fully vest following a three-year performance cycle (which includes the year of grant), based on a multiplier between 0% and 200% that depends on the achievement of predetermined annual Adjusted EPS targets

Payment		• Vested PSUs are paid in cash (non-dilutive)

A more detailed summary of our PSU Plan is included in Appendix A.

Stock Option Key Terms


Objectives		• Link a portion of compensation to the future value of the Company’s Common Shares • Foster employee attraction and retention

Definition		• Each option gives the participant the right to purchase one Common Share of the Company at an exercise price, determined at the time of grant, which cannot be less than the Common Shares’ closing price on the TSX on the trading day prior to the grant date • The potential gain therefore lies in the appreciation of the Company’s Common Shares following the grant

Vesting		• Vesting periods are set at the time of grant • Awards typically vest in equal tranches over three years

Exercise		• Once vested, options must be exercised before their expiry date, which is set at the time of grant and may not exceed 10 years

A more detailed summary of our Stock Option Plan is included in Appendix A.

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Restricted Share Plan Key Terms


Objectives		• Link a portion of compensation to the long-term future value of the Company’s Common Shares • Foster employee attraction and retention

Definition		• Restricted Share awards are satisfied with Common Shares that are purchased on the TSX (non-dilutive) and subject to long-term restrictions on sale or transfer

Dividends		• Quarterly dividends paid by the Company are credited in the form of additional Restricted Shares

Vesting		• Vesting periods and restrictions on sale or transfer are set at the time of grant • Awards are expected to cliff vest between 8 and 15 years from the date of grant

Payment		• Vested Restricted Shares are released from custodial arrangements to the participants as the restrictions are lifted

A more detailed summary of our Restricted Share Plan is included in Appendix A.


		Restricted Shares granted in 2020 are non-dilutive and will cliff vest after 10 years
Burn Rate Policy
The amendments to the DSU Plan and Stock Option Plan which were adopted on July 7, 2020 effectively codify a burn rate limit by converting the plans from “evergreen” to “fixed-number” plans with security-based award caps imposed on both an annual and aggregate basis. These limitations allow for no more than		Compensation-driven dilution is capped within industry standards
2,000,000 new security-based awards to be granted in any one-year period, representing a burn rate cap of approximately 1.0%, a meaningful 50% reduction from the voluntary 2% burn rate limit previously in place.

The following table sets out our historical burn rate and projected limit.


	2018			2019			2020			2021 projected
Number of DSUs granted		248,189			463,002			349,825
		(0.18% burn rate)			(0.27% burn rate)			(0.18% burn rate)
Number of stock options granted		426,959			–			199,380
		(0.31% burn rate)						(0.10% burn rate)			Burn Rate
Weighted average number of Common Shares outstanding		136,135,881			171,427,128			192,973,343

Total burn rate		0.50	%		0.27	%		0.28	%		Capped at ~ 1.0	%

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Long-Term Incentive Plan (LTIP)

The Company’s LTIP is designed to align the interests of our employees, private investors and Shareholders based on the success of the private investment vehicles we manage. The key features of the LTIP are summarized below. A more detailed summary of our LTIP is included in Appendix A.


	Cash LTIP Entitlements	LTIP Awards in DSUs

Objective	• Provides an opportunity to share directly in the Performance Fees earned in respect of our management of private funds and other investment vehicles	• Provides an opportunity to share directly in the investment income earned from the Company’s Co-Investment in THP1US. The Company acquired most of the limited partnership interests in THP1US from third-party investors in 2013. Because this reduced the potential Performance Fees payable by this vehicle, the LTIP awards in DSUs serve as a proxy for cash LTIP payments that might otherwise have been earned

Design Features	• 50% of the Performance Fees earned from time to time by the Company in respect of a particular investment vehicle (the “Participant Share”) is paid in cash, over time, to LTIP participants • The LTIP provides for the allocation of points (“Points”) among participants. A total of 100 Points is allocated among participants in respect of each investment vehicle • 20 Points are allocated to participants when the investment vehicle is established and on each of the three anniversaries thereof, and the remaining 20 Points are allocated following the termination of the investment vehicle	• Each year, the Company grants an aggregate number of DSUs having a value equal to 15% of the investment income earned by the Company in the year from the Co-Investment (which income is excluded from the calculation of AIP awards)

Allocation	• Point allocations are subject to Governance Committee approval • As Performance Fees are received by the Company, the Participant Share is paid to individual participants in proportion to the number of vested Points held	• The allocation of such DSUs among participants is subject to Governance Committee approval • Such DSUs are subject to the DSU Plan (described in Appendix A) and vest in equal installments each year from the date of grant, subject to the terms of the LTIP. DSUs awarded in years prior to 2019 vested over a five-year period. LTIP DSU awards made in 2019 and in all future years vest over a three-year period

Termination	• Upon termination of an LTIP participant’s employment without cause, any unvested Points allocated to the participant immediately vest • Upon termination of employment for cause, a participant’s unvested and vested Points are forfeited and reallocated to the remaining LTIP participants	• As per the DSU Plan (see Appendix A)

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The following LTIP payments were received by the NEOs in respect of Fiscal 2020.


	2020 LTIP Payments¹
	LTIP Cash (Performance Fees)		LTIP DSUs (Co-Investment)		Total LTIP Payments
Gary Berman	$	313,000		—	$	313,000
Wissam Francis	$	18,000		—	$	18,000
David Berman	$	244,000		—	$	244,000
Jonathan Ellenzweig	$	145,000		—	$	145,000
Andrew Carmody	$	19,000		—	$	19,000

(1)

Compensation-related payments made to Messrs. Gary Berman, David Berman, Francis and Carmody are made, and the value of DSU awards is computed, in Canadian dollars. For the purposes of translating these amounts into U.S. dollars, the CAD/USD conversion rate used for Fiscal 2020 was 0.7461, based on the average yearly exchange rate posted on the Bank of Canada website.

Share Ownership of Named Executive Officers

In accordance with the minimum share ownership guidelines for senior executives of the Company, including the NEOs, senior executives are expected to accumulate equity ownership (in the form of Common Shares and DSUs) in an amount corresponding to a multiple of their AIP target.

The NEOs’ equity ownership as of December 31, 2020 is summarized below. Compliance with minimum ownership guidelines is a fluid and ongoing requirement determined on the basis of the current market value of the Common Shares. If (i) a drop in the value of the Common Shares, or (ii) an increase in compensation paid to NEO(s), has the effect of reducing an NEO’s ownership below the required minimum guidelines, such NEO is required to increase their ownership accordingly.

The Governance Committee regularly monitors executive equity ownership relative to these requirements and is prepared to implement an “ownership accumulation accelerator” mechanism should the progress of any given executive over time not align with expectations.


	Required Multiple of AIP Target		Ownership as of December 31, 2020¹								Progress
	Required Multiple of AIP Target		Common Shares²		DSUs Vested		DSUs Unvested		Total		Requirement		Multiple Achieved³
Gary Berman		1.5x	$	14,701,000	$	6,432,000	$	1,617,000	$	22,750,000	$	4,506,000		5.1x (meets	)
Wissam Francis		1.0x	$	697,000	$	301,000	$	341,000	$	1,339,000	$	1,021,000		1.3x (meets	)
David Berman		1.0x	$	35,829,000	$	3,155,000	$	941,000	$	39,925,000	$	1,178,000		33.9x (meets	)
Jonathan Ellenzweig		1.0x	$	1,019,000	$	0	$	452,000	$	1,471,000	$	1,125,000		1.3x (meets	)
Andrew Carmody		1.0x	$	0	$	340,000	$	423,000	$	763,000	$	942,000		0.8x

(1)

All values are based on the market value of the Common Shares as of December 31, 2020 (C$11.43). For the purpose of translating ownership values and requirements into U.S. dollars, a CAD/USD conversion rate of 0.7854 was used, being the daily exchange rate as of December 31, 2020 posted on the Bank of Canada website.

(2)	Common Shares include 314,804 and 54,308 Restricted Shares held by Mr. Berman and Mr. Francis, respectively, pursuant to the Company’s Restricted Share Plan.

(3)	The following reflects each NEO’s progress toward the minimum Common Share ownership guidelines in a scenario where unvested DSUs are not accounted for: Mr. Gary Berman 4.7x (meets), Mr. Francis 1.0x, Mr. David Berman 33.1x (meets), Mr. Ellenzweig 0.9x and Mr. Carmody 0.4x.

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Effectiveness of Our Compensation Program over Time

The analysis presented in this subsection compares Gary Berman’s compensation outcomes with total Shareholder return since the Company’s IPO. Both are positively correlated, indicating that our compensation program rewards value creation. This trend is consistent for compensation received following Mr. Berman’s appointment as President and CEO of the Company in March 2015, as well as in the prior period when he was President and Chief Operating Officer.

The following table compares the grant date value of compensation awarded to Gary Berman since the IPO with the actual value received (money “taken home”) from compensation awards. The actual compensation received includes salary and cash incentive payments, as well as the value at maturity of DSUs granted (or current value for DSUs that are outstanding), the value of stock options exercised during the period, and the in-the-money value of stock options that remain outstanding, as well as the value of Restricted Shares outstanding adjusted for the restriction period completed. Actual compensation value is also known as the sum of “realized and realizable compensation”:

•

Realized compensation: Compensation “taken home” by the executive (salary; cash incentive; stock options exercised; monetized DSUs, PSUs and Restricted Shares)

•

Realizable compensation: Compensation not yet monetized (value of unredeemed DSUs and PSUs, in-the-money value of unexercised stock options and the value of Restricted Shares adjusted for the restriction period completed)

The second part of the table below compares the actual value of every C$100 granted annually to Gary Berman since the IPO with the value of C$100 invested on the first day of each fiscal year in Tricon’s Common Shares over the same period.


Fiscal Year¹	Compensation Grant Date Value (C$)		Actual Total Direct Compensation Value (C$)² *Realized + Realizable* *Compensation*
2010³	$	3,494,000	$	7,753,000
2011	$	707,000	$	816,000
2012	$	624,000	$	624,000
2013	$	2,495,000	$	3,002,000
2014	$	2,266,000	$	2,695,000
2015	$	3,502,000	$	3,857,000
2016	$	3,776,000	$	4,460,000
2017	$	4,737,000	$	4,397,000
2018	$	5,519,000	$	7,439,000
2019	$	6,826,000	$	7,517,000
2020	$	5,982,000	$	6,284,000


Comparison between C$100 invested in Tricon’s Common Shares at the beginning of each period and the value of C$100 granted annually to Gary Berman

Period	Gary Berman		Shareholder
May 2010 to Dec. 2020	$	222	$	271
Jan. 2011 to Dec. 2020	$	115	$	317
Jan. 2012 to Dec. 2020	$	100	$	359
Jan. 2013 to Dec. 2020	$	120	$	224
Jan. 2014 to Dec. 2020	$	119	$	179
Jan. 2015 to Dec. 2020	$	110	$	154
Jan. 2016 to Dec. 2020	$	118	$	145
Jan. 2017 to Dec. 2020	$	93	$	135
Jan. 2018 to Dec. 2020	$	135	$	108
Jan. 2019 to Dec. 2020	$	110	$	125
Jan. 2020 to Dec. 2020	$	105	$	111

11-year weighted average	C$	122	C$	193

(1)	Prior to March 2015, Mr. Berman was President and Chief Operating Officer. Mr. Berman’s compensation awards increased following his appointment as President and CEO, commensurate with the change in his role.

(2)	Actual value as of December 31, 2020, as detailed above.

(3)	Includes awards granted in connection with the IPO in consideration for past service to the Company.

On average, actual pay is above targeted (grant date) value since IPO, consistent with positive total Shareholder return over the same period.

Year-over-year variance is symmetric with total Shareholder return.

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Performance Graph

The graph and table below compare the cumulative total Shareholder return per C$100 invested in Tricon Common Shares to the cumulative total return of the S&P/TSX Total Return Index from January 1, 2016 to the end of Fiscal 2020. The calculations assume that all dividends received on the Common Shares are reinvested. Dollar amounts are expressed in Canadian dollars.

CUMULATIVE SHAREHOLDER RETURN PER C$100

(from January 1, 2016 to December 31, 2020)

LOGO


Total Return (C$)	Jan-01-2016		Dec-31-2016		Dec-31-2017		Dec-31-2018		Dec-31-2019		Dec-31-2020		Compound annual return
Tricon (TCN)		100.00		107.49		134.36		115.82		130.46		144.70		7.7	%
S&P/TSX Composite Index		100.00		121.08		132.09		120.36		147.89		156.17		9.3	%

Tricon’s annualized total shareholder return of 7.7% over the last five years is aligned with the S&P/TSX Index annualized total shareholder return of 9.4%. The value of a C$100 investment in Tricon Common Shares made on January 1, 2016 would be C$144.70 on December 31, 2020, while a similar investment in the S&P/TSX Index would be worth C$156.17. Our strong operational and financial results in 2020 resulted in a one-year total shareholder return of 10.9% which outperformed the 5.6% return for the S&P/TSX Index over the same period. As shown in the “Effectiveness of Our Compensation Program over Time” subsection of this Information Circular, the realizable value as of December 31, 2020 of our CEO’s 2016 total direct compensation is 18% above the grant-date value as of December 31, 2020. This outcome indicates that our compensation framework rewards value creation and creates strong alignment with our Shareholders.

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Summary Compensation Table

The following table provides a summary of compensation paid to each of the NEOs in respect of the Company’s last three fiscal years, including Fiscal 2020.


									Non-Equity Incentive Plan Compensation
Name and Principal Position¹	Fiscal Year		Salary		Share-Based Awards²		Option- Based Awards³		Annual Incentive Plan		Long- Term Incentive Plan		All Other Compensation⁴		Total Compensation
Gary Berman⁵ President & Chief Executive Officer		2020	$	671,000	$	1,499,000	$	—	$	1,980,000	$	313,000	$	11,000	$	4,474,000
		2019		622,000		1,829,000		—		1,840,000		854,000		14,000		5,159,000
		2018		618,000		1,575,000		—		1,768,000		294,000		17,000		4,272,000
Wissam Francis EVP & Chief Financial Officer		2020	$	298,000	$	333,000	$	75,000	$	754,000	$	18,000	$	12,000	$	1,490,000
		2019		290,000		477,000		—		779,000		103,000		11,000		1,660,000
		2018		290,000		433,000		—		765,000		40,000		16,000		1,544,000
David Berman⁵ Executive Chairman		2020	$	373,000	$	425,000	$	—	$	777,000	$	244,000	$	6,000	$	1,825,000
		2019		377,000		570,000		—		705,000		687,000		11,000		2,350,000
		2018		386,000		416,000		56,000		703,000		295,000		12,000		1,868,000
Jonathan Ellenzweig Chief Investment Officer		2020	$	375,000	$	236,000	$	236,000	$	879,000	$	145,000	$	36,000	$	1,907,000
		2019		340,000		586,000		—		829,000		406,000		38,000		2,199,000
		2018		330,000		356,000		120,000		733,000		113,000		51,000		1,703,000
Andrew Carmody Managing Director		2020	$	298,000	$	367,000	$	—	$	623,000	$	19,000	$	9,000	$	1,316,000
		2019		290,000		406,000		—		589,000		93,000		14,000		1,392,000
		2018		290,000		312,000		—		484,000		17,000		10,000		1,113,000

(1)

Compensation-related payments made to Messrs. Gary Berman, David Berman, Francis and Carmody are made, and the value of share-based and option-based awards is computed, in Canadian dollars. For the purposes of translating these amounts into U.S. dollars, the CAD/USD conversion rates used for Fiscal 2020, 2019 and 2018 were 0.7461, 0.7537 and 0.7721, respectively, based on the average yearly exchange rates posted on the Bank of Canada website.

(2)

Includes DSUs and PSUs granted in satisfaction of AIP and LTIP awards in respect of each fiscal year, regardless of when granted. Such amounts reflect the fair value of the underlying Common Shares at the time of grant. Share-based awards in respect of Gary Berman and Mr. Francis also include awards made under the Company’s Restricted Share Plan, which have been valued using the purchase price of the Restricted Shares discounted by 54.72%, 54.46% and 52.38% for the Restricted Shares purchased in 2020, 2019 and 2018, respectively, to reflect the fair market value of such Restricted Shares. This fair market value was determined by Hexarem, an external independent consultant, taking into consideration, among other factors, the restrictions on transfer applicable to the Restricted Shares.

(3)

The Company accounts for its stock options by calculating their fair value as of the grant date using a Black-Scholes option pricing model and observable market inputs in accordance with IFRS 2, Share-Based Payments. The Company did not grant any stock options in 2019. The fair value of stock options granted has been estimated based on the following assumptions:


	December 17, 2018			December 15, 2020
Share price	C$	9.58		C$	11.67
Exercise price	C$	9.81		C$	11.50
Expected volatility		22	%		27	%
Expected dividend yield		2.92	%		2.40	%
Expected option life		4.56 years			4.97 years
Risk-free interest rate		1.97	%		0.45	%
Option expiration date		December 17, 2025			December 15, 2030
Option fair value	C$	1.45		C$	2.01

(4)	Includes group health, dental and insurance benefits and annual medical exam.

(5)	No compensation was awarded for duties performed as a Director of the Company.

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Equity Compensation Plans and Incentive Plan Awards

The following table sets out the outstanding share-based awards and option-based awards held by our NEOs and Directors as at the end of Fiscal 2020. As discussed on page 45, the Company has adopted a policy that prohibits the NEOs from purchasing financial instruments that are designed to hedge their equity-based compensation awards or the value of the securities they hold.


	Option-Based Awards								Share-Based Awards
Name	Number of Securities Underlying Unexercised Options		Option Exercise Price		Option Expiration Date		Value of Unexercised In-the-money Options¹		Number of Shares or Units that Have Not Vested		Market or Payout Value of Share- Based Awards that Have Not Vested¹		Market or Payout Value of Vested Share- Based Awards Not Paid Out or Distributed
Gary Berman		250,000	$	8.85		14-Nov-2023	$	507,000		733,122	$	6,581,000	$	7,512,000
Gary Berman		275,000		11.35		15-Dec-2024		17,000
Wissam Francis		60,000	$	8.85		14-Nov-2023	$	122,000		157,665	$	1,415,000	$	598,000
		90,000		11.35		15-Dec-2024		6,000
		49,673		11.50		15-Dec-2027		—
David Berman		60,000	$	11.35		15-Dec-2024	$	4,000		168,972	$	1,517,000	$	3,441,000
David Berman		50,000		9.81		17-Dec-2025		64,000
Jonathan Ellenzweig		85,000	$	8.85		14-Nov-2023		172,000		123,073	$	1,105,000	$	336,000
		75,000		11.35		15-Dec-2024		5,000
		110,029		9.81		17-Dec-2025		140,000
		149,707		11.50		15-Dec-2027		—
Andrew Carmody		75,000	$	11.35		15-Dec-2024	$	5,000		101,609	$	912,000	$	554,000
Michael Knowlton		25,000	$	8.85		14-Nov-2023	$	51,000		4,621	$	41,000	$	264,000
		25,000		11.35		15-Dec-2024		2,000
		25,000		9.81		17-Dec-2025		32,000
Peter Sacks		25,000	$	8.85		14-Nov-2023	$	51,000		4,621	$	41,000	$	62,000
		25,000		11.35		15-Dec-2024		2,000
		25,000		9.81		17-Dec-2025		32,000
Siân Matthews		25,000	$	8.85		14-Nov-2023	$	51,000		4,621	$	41,000	$	443,000
		25,000		11.35		15-Dec-2024		2,000
		25,000		9.81		17-Dec-2025		32,000
Ira Gluskin		25,000	$	11.35		15-Dec-2024		2,000		4,621	$	41,000	$	340,000
Ira Gluskin		25,000		9.81		17-Dec-2025		32,000
Camille Douglas		25,000	$	9.81		17-Dec-2025	$	32,000		1,473	$	13,000	$	120,000
Tracy Sherren²		Nil								—	$	—	$	90,000
Frank Cohen³		Nil								—	$	—	$	—
Geoff Matus		50,000	$	8.85		14-Nov-2023	$	101,000		59,323	$	533,000	$	380,000
		40,000		11.35		15-Dec-2024		3,000
		117,856		9.81		17-Dec-2025		150,000

(1)

The value of share-based awards (being DSUs, PSUs and Restricted Shares) is calculated based on the market value of the Common Shares at the end of Fiscal 2020 (C$11.43) and the value of unexercised in-the-money options is calculated based on the difference between this market value and the exercise prices of the options. For the purposes of translating these amounts into U.S. dollars, a CAD/USD conversion rate of 0.7854 was used, being the daily closing exchange rate as of December 31, 2020 posted on the Bank of Canada website.

(2)	Ms. Sherren is not standing for re-election at the Meeting.

(3)	The terms of the Blackstone Investor Rights Agreement pursuant to which Mr. Cohen was nominated as a Director provide that his annual retainer is to be paid entirely in cash.

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The following table sets forth the value of the NEOs’ and Directors’ option-based awards and share-based awards that (i) vested during Fiscal 2020, and/or (ii) was realized on exercise or redemption during Fiscal 2020, and sets out the value of non-equity incentive plan compensation earned by the NEOs and Directors during Fiscal 2020.


Name	Option-Based Awards – Value Vested During the Year¹		Option-Based Awards – Value Realized During the Year²		Share-Based Awards – Value Vested During the Year¹		Share-Based Awards – Value Realized During the Year²		Non-Equity Incentive Plan Compensation – Value Earned During the Year³
Gary Berman	$	22,000	$	2,226,000	$	1,984,000	$	Nil	$	2,293,000
Wissam Francis		7,000		31,000		436,000		Nil		772,000
David Berman		29,000		711,000		1,035,000		495,000		1,021,000
Jonathan Ellenzweig		59,000		778,000		684,000		357,000		1,024,000
Andrew Carmody		6,000		Nil		356,000		Nil		642,000
Michael Knowlton		14,000		56,000		84,000		Nil		N/A
Peter Sacks		14,000		38,000		80,000		43,000		N/A
Siân Matthews		14,000		31,000		134,000		Nil		N/A
Ira Gluskin		14,000		Nil		124,000		Nil		N/A
Camille Douglas		12,000		Nil		57,000		Nil		N/A
Tracy Sherren⁴		Nil		Nil		56,000		Nil		N/A
Frank Cohen		Nil		Nil		Nil		Nil		Nil
Geoff Matus		60,000		262,000		369,000		Nil		599,000

(1)

Values are based on the market value of the Common Shares on the applicable vesting date(s), less, in the case of stock options, the exercise price. For the purposes of translating all amounts in this table into U.S. dollars, the CAD/USD conversion rate was 0.7461, based on the average yearly exchange rate for Fiscal 2020 posted on the Bank of Canada website.

(2)	Realized values are based on the market value of the Common Shares on the applicable date of redemption or exercise, less, in the case of stock options, the exercise price.

(3)	Amounts relate to the cash component of AIP and LTIP awards as disclosed in the Summary Compensation Table.

(4)	Ms. Sherren is not standing for re-election at the Meeting.

Securities Authorized for Issuance Under Equity Compensation Plans

The following table provides a summary, as at December 31, 2020, of the Company’s compensation plans under which equity securities of the Company are authorized for issuance. On July 7, 2020, the Company adopted certain amendments to the DSU Plan and Stock Option Plan aimed at reducing potential Shareholder dilution by converting the plans from “evergreen” to “fixed-number” plans with security-based award caps imposed on both an annual and aggregate basis. The new limitations allow for no more than (i) 9,538,127 Common Shares in the aggregate to be issuable upon redemption of security-based awards, and (ii) 2,000,000 security-based awards to be granted in any one-year period, representing a current burn rate cap of approximately 1%, a meaningful 50% reduction from the voluntary 2% burn rate limit previously in place.

Plan Category¹

Number of securities
to be issued upon
exercise of
outstanding options,
warrants and rights

Weighted average
exercise price of
outstanding
options, warrants
and rights

Number of securities
remaining available for
future issuance under
equity compensation
plans (excluding
securities reflected in
the first column)²

Equity compensation plans approved by securityholders:

Stock Option Plan

2,241,339

10.34

4,593,254 combined

Deferred Share Unit Plan

2,376,655

N/A

(1)

Additional information relating to the equity compensation plans approved by Shareholders can be found in Appendix A. The Company has no incentive plans that have not been approved by Shareholders under which equity securities of the Company are authorized for issuance. The Common Shares issuable upon exercise or redemption of outstanding stock options and DSUs represent 1.16% and 1.23%, respectively, of the total number of Common Shares issued and outstanding as of December 31, 2020.

(2)	The number of securities remaining available for issuance under the Stock Option Plan and DSU Plan is the aggregate number that is collectively available under both plans and any other security-based compensation arrangement of the Company.

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Employment Contracts

Each NEO is party to an employment agreement with Tricon for an indefinite term. Each agreement provides that the NEO will devote substantially all of his or her working time and attention to the due performance of his or her duties and will act in a manner consistent with the best interests of the Company, its affiliates and clients. Each employment agreement provides the NEO with a compensation package comprised of base salary, incentive plans and benefits (including, in the case of Mr. Ellenzweig, relocation benefits), which is subject to adjustment from time to time at the discretion of the Board of Directors on the recommendation of the Governance Committee.

The Company has entered into a consulting agreement with Mandukwe Inc. for the provision of Geoff Matus’ services as consultant to the Company. The consulting agreement was effective as of January 1, 2013 with an indefinite term. Mandukwe Inc. receives fees under the arrangement and the consulting arrangement is reviewed annually by the Board. Mandukwe Inc. is also eligible to receive additional payments from the Company’s AIP and LTIP. The percentage participation in AIP awards allocated to Mandukwe Inc. annually is equal to approximately one-half of the percentage participation allocated to David Berman. The percentage participation in Performance Fees allocated to Mandukwe Inc. from all investment vehicles raised in years subsequent to 2011 is equal to approximately one-half of the percentage participation allocated to David Berman in respect of such investment vehicles. For the purposes of this Statement of Executive Compensation, the descriptions of the elements of NEO compensation and of NEO employment contracts and termination and change of control benefits apply to Geoff Matus (and/or Mandukwe Inc., as applicable), and Mandukwe Inc.’s consulting arrangements with the Company.

The employment contracts also provide for customary non-competition and non-solicitation covenants in favour of the Company, which continue for six-month and 24-month periods, respectively, following termination of employment or consultancy. The contracts also include confidentiality covenants requiring the NEOs to maintain confidentiality during the term of the agreements and indefinitely thereafter.

Termination and Change of Control Benefits

Under the employment contracts, the Company may terminate the employment or consultancy without cause upon payment of an amount equal to a factor (the “Multiple”, described below) times the sum of (i) the NEO’s base salary (or Mandukwe Inc.’s consulting fees) for the year of termination, and (ii) the average annual AlP award made to the NEO during the last three years. For Gary Berman, David Berman and Mandukwe Inc., the Multiple equals 2.0. For Mr. Carmody, the Multiple equals 1.0. For Mr. Francis and Mr. Ellenzweig, the Multiple, which is subject to a maximum of 2.0 (except as provided below), equals the sum of (i) the number of years of service divided by twelve (12) plus (ii) in the case of Mr. Francis, 0.5, and in the case of Mr. Ellenzweig, 0.75. In all cases, if the date of termination occurs on or within twelve (12) months following a change of control of the Company, then the Multiple for each NEO increases by 0.5 to a maximum of 2.5.

If employment or consultancy, as applicable, is terminated for cause or as a result of death, disability or resignation without good reason, the employee or consultant, as applicable, is entitled to unpaid base salary and vacation pay earned through to the date of termination, and participation in the AlP bonus plan terminates immediately upon the date of termination. In the case of termination as a result of disability or death, the AIP award that may have been earned in the year of termination will be paid to the NEO, pro-rated to the date of termination.

The key termination and change of control provisions of the DSU Plan, Stock Option Plan, PSU Plan and Restricted Share Plan are presented in Appendix A and apply in respect of stock options, DSUs, PSUs and Restricted Shares held by an NEO at the time of cessation of employment.

The following table provides details regarding the estimated incremental payments that the Company would have had to make to each NEO, assuming that such NEO’s employment was terminated on December 31, 2020 by the Company: (i) for any reason other than for cause or on the death of the NEO; and (ii) for any reason other than for cause or on the death of the NEO within 12 months of a change of control of the Company.


	Without Cause^1,2		Change of Control^1,2
Gary Berman	$	15,173,000	$	17,310,000
Wissam Francis	$	3,007,000	$	3,785,000
David Berman	$	4,743,000	$	5,537,000
Jonathan Ellenzweig	$	4,616,000	$	5,453,000
Andrew Carmody	$	2,201,000	$	2,834,000

(1)

All amounts include the value of, and assume the immediate cash payout of, unvested stock options and equity-based awards that vest immediately upon termination without cause. Amounts exclude: (i) the value of any stock options or other equity-based awards that vested prior to December 31, 2020; (ii) ongoing LTIP entitlements, because these are uncertain and are only payable on receipt of Performance Fees; and (iii) any AIP awards made in the year of a change of control of the Company because these would be required to take into account Company achievement for the portion of the year in which the change of control occurs and any other factors that the Governance Committee deems to be appropriate at the time.

(2)	For the purposes of translating amounts payable to all NEOs other than Mr. Ellenzweig into U.S. dollars, a CAD/USD conversion rate of 0.7854 was used, being the daily exchange rate as of December 31, 2020 posted on the Bank of Canada website.

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Directors’ and Officers’ Insurance and Indemnification

The Company has obtained directors’ and officers’ liability insurance coverage with aggregate policy limits of C$55,000,000 for the Directors and officers of the Company. The policies include securities claim coverage insuring against any legal obligation to pay on account of any securities claims brought against the Directors or officers of the Company. The total limit of liability is shared among the Directors and officers of the Company so that the limit of liability is not exclusive to any one of the respective Directors or officers. The premium paid for the directors’ and officers’ liability insurance was C$121,000 in Fiscal 2020, covering the period from July 1, 2020 to July 1, 2021.

The by-laws of the Company provide for the indemnification of its Directors and officers from and against liability and costs in respect of any action or suit brought against them in connection with the execution of their duties of office, subject to certain limitations. The Company will indemnify Directors and officers in accordance with its specific indemnification agreements and to the maximum extent permitted under applicable law.

Indebtedness of Directors and Executive Officers

As of the date hereof, except as described below, no individual who is a Director or executive officer of the Company, or at any time during the most recently completed financial year of the Company was a Director or executive officer of the Company or any of its subsidiaries, no individual proposed as a nominee for election as a Director of the Company and no associate of any such Director, executive officer or proposed nominee, is indebted to the Company.

Aggregate Indebtedness

The aggregate indebtedness to Tricon of all executive officers, Directors, employees and former executive officers, Directors and employees of the Company, excluding “routine indebtedness” (as defined under applicable securities laws), as at May 1, 2021 is approximately $2,003,559, as detailed in the following table.


Purpose	Aggregate Indebtedness to the Company or its Subsidiaries¹		To Another Entity
Share Purchases		Nil		Nil
Other (Relocation and Home Purchase Assistance)	$	2,003,559		Nil

(1)	For the purpose of translating Canadian dollar indebtedness into U.S. dollars, a CAD/USD conversion rate of 0.8140 was used, being the daily exchange rate as of May 1, 2021 posted on the Bank of Canada website.

Indebtedness of Directors and Executive Officers under Securities Purchase and Other Programs

The table below presents amounts outstanding for each individual who is, or at any time during Fiscal 2020 was, a Director or executive officer of Tricon, each proposed nominee for election as Director of the Company, and each associate of any such Director, executive officer or proposed nominee. The indebtedness noted below represents home purchase loans which are non-interest bearing for as long as the executive officers are employed by the Company. There was no indebtedness outstanding in connection with any securities purchase programs.

Name and Principal Position

Involvement
of Company

Largest
Amount
Outstanding
in Fiscal
2020¹

Amount
Currently
Outstanding²

Financially
Assisted
Securities
Purchases

Security for
Indebtedness

Amount
Forgiven
During
Fiscal
2020

Maturity
Date

Andrew Carmody

Managing Director

Lender

1,628,000

N/A

Nil

2028

Jonathan Ellenzweig

Chief Investment Officer

Lender

430,559

375,559

N/A

Nil

2023

(1)	For the purpose of translating Canadian dollar indebtedness into U.S. dollars, a CAD/USD conversion rate of 0.8140 was used, being the daily exchange rate as of May 1, 2021 posted on the Bank of Canada website.

(2)	‘Amount Currently Outstanding’ refers to amounts outstanding as of May 1, 2021.

Interest of Informed Persons in Material Transactions

To the knowledge of the Directors of the Company, no informed person of the Company (as defined in National Instrument 51-102 – Continuous Disclosure Obligations), no proposed Director of the Company and no known associate or affiliate of any such informed person or proposed Director, during Fiscal 2020, has or has had any material interest, direct or indirect, by way of beneficial ownership of securities or otherwise, in any transaction which has or would materially affect Tricon or any of its subsidiaries, except as set forth in the AIF, which is incorporated by reference in this Information Circular and can be accessed on SEDAR at www.sedar.com.

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Additional Information

Financial information about the Company is provided in its financial statements for Fiscal 2020 and related Management’s Discussion and Analysis.

You may obtain a copy of the annual report for Fiscal 2020, containing the Company’s financial statements and Management’s Discussion and Analysis for Fiscal 2020, as well as a copy of the Company’s most recent financial statements and its AIF for Fiscal 2020, by writing to the Company at 7 St. Thomas Street, Suite 801, Toronto, Ontario, M5S 2B7; Attention: Corporate Secretary.

All of these above-mentioned documents, as well as additional information relating to the Company, are available by visiting the Company’s website at www.triconresidential.com or on SEDAR at www.sedar.com.

Approval of Board of Directors

The contents and the sending of this Information Circular to the Shareholders have been approved by the Board of Directors.

By order of the Board of Trustees

“David Berman”

David Berman

Executive Chairman of the Board of Directors

May 11, 2021

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APPENDIX A

KEY TERMS OF COMPENSATION PLANS

Deferred Share Unit Plan

The Shareholders of the Company approved the Company’s DSU Plan at the Company’s annual and special meeting of Shareholders held on July 7, 2020. Under the DSU Plan, the Governance Committee, as designated by the Board, may grant awards in the form of DSUs (each, a “DSU Award”) to eligible participants as it, in its sole discretion, determines. Eligible participants under the DSU Plan include all of the Company’s Directors, officers and employees and any service providers of the Company as determined by the Governance Committee from time to time. In administering the DSU Plan, the Governance Committee may determine participants to whom DSUs are granted, when DSUs are granted, the number of DSUs subject to each award and the date on which each DSU vests (the “Vesting Date”).

In respect of each DSU Award grant, the eligible participant is credited with that number of DSUs equal to the quotient obtained by dividing the value of such participant’s award by the closing price of the Common Shares on the TSX on the last trading day on which Common Shares traded prior to the grant date, such that the grant date value is not less than the market price of the Common Shares. An account (a “DSU Account”) is maintained by the Company for each participant showing the DSUs credited to such participant from time to time.

DSU Plan participants are notionally entitled to receive distributions per DSU equal to the amount of dividends paid per Common Share. Such distributions are credited to the participant’s DSU Account in the form of additional DSUs. The number of DSUs credited for each dividend is equal to the aggregate amount of such dividend divided by the closing price of the Common Shares on the TSX on the last trading day on which Common Shares traded prior to the dividend payment date. All DSUs so credited have the same Vesting Date as those DSUs for which the applicable dividends were notionally declared.

Following their Vesting Date, vested DSUs are redeemable for Common Shares, issued by the Company from treasury, on a one-for-one basis, or, at the participant’s option and subject to the approval of the Governance Committee, for cash. Cash payments are calculated by multiplying the number of DSUs to be redeemed for cash by the closing price of the Common Shares on the TSX on the last trading day on which Common Shares traded prior to the redemption date. Vested DSUs held by participants who are U.S. taxpayers will be redeemed no later than 10 business days following the applicable vesting date. Vested DSUs held by participants who are Canadian residents and who are not U.S. taxpayers may be redeemed at any time following the applicable vesting date, provided that if DSUs held by participants who are not independent Directors are not redeemed prior to the seventh anniversary of the date such DSUs were granted they will be automatically redeemed on such seventh anniversary.

Where a participant in the DSU Plan is terminated without cause or the participant resigns for good reason, all of such participant’s unvested DSUs immediately vest and all vested DSUs are automatically redeemed 10 business days following the date of termination. Where a participant in the DSU Plan is terminated with cause, all of such participant’s vested DSUs that have not yet been redeemed, and all unvested DSUs, at the date of termination terminate immediately. Where a participant in the DSU Plan resigns or retires from the Company or ceases to be an eligible participant because of death or incapacity to work, all of such participant’s unvested DSUs at the date of termination terminate immediately and vested DSUs are automatically redeemed 10 business days following the date of termination. In the event of a Change of Control other than a Board Change of Control (in each case, as defined in the DSU Plan), unvested DSUs automatically vest and are redeemed immediately prior to completion of the Change of Control for Common Shares or cash at the option of the participant. In the event of a Board Change of Control, unvested DSUs automatically vest upon completion of the Board Change of Control and may be redeemed for Common Shares or cash at the option of the participant. The foregoing termination and vesting provisions that apply on termination of eligibility are subject to the discretion of the Governance Committee, as designated by the Board.

Other material terms of the DSU Plan are as follows:

(a)	The aggregate number of Common Shares issuable (or reserved for issuance) upon the redemption of all DSUs granted under the DSU Plan, or any other security-based compensation arrangement of the Company (including, without limitation, the Stock Option Plan), cannot exceed 9,538,127 Common Shares;

(b)	The aggregate number of DSUs granted under the DSU Plan and security-based awards granted under any other security-based compensation arrangement of the Company (including, without limitation, the Stock Option Plan), cannot exceed 2,000,000 in any one-year period;

(c)

The DSU Plan limits insider participation such that the aggregate number of Common Shares: (i) issued to insiders within a one-year period under the DSU Plan and any other security-based compensation arrangement, and (ii) issuable to insiders at any time under the DSU Plan and any other security-based arrangement, cannot exceed 10% of the issued and outstanding Common Shares;

(d)

The DSU Plan limits independent Director participation such that the number of Common Shares reserved for issuance and issuable within a one-year period under the DSU Plan and any other security-based compensation arrangement for any one independent Director cannot exceed 1% of the issued and outstanding Common Shares;

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(e)

The DSU Plan limits the aggregate value of DSUs, together with equity awards granted under any other security-based compensation arrangement, awarded in any one year to individual independent Directors to $150,000 (excluding equity awards under the DSU Plan taken in lieu of any cash retainer or other Director fees), including $100,000 with respect to stock options under the Stock Option Plan specifically;

(f)	The DSU Plan does not provide for a maximum number of Common Shares which may be issued to an individual under the DSU Plan or any other security-based compensation arrangement, other than insiders and independent Directors (as described above);

(g)	The number of Common Shares underlying outstanding DSUs will be adjusted in the event of any consolidation, subdivision, conversion, exchange or reclassification of the Common Shares;

(h)	Subject to the terms of the DSU Plan, DSUs may not be assigned;

(i)

Subject to the rules of the TSX, the Governance Committee, as designated by the Board, may amend the DSU Plan without Shareholder approval in certain instances including, among others: (i) minor changes of a “housekeeping” nature; (ii) amending DSUs awarded under the DSU Plan, provided that such amendment does not adversely alter or impair any DSU previously granted to a participant without the consent of such participant; (iii) making amendments concerning the administration of the DSU Plan or that are necessary to comply with the provisions of applicable law or the applicable rules of the TSX; and (iv) making any other amendment, fundamental or otherwise, not requiring Shareholder approval under applicable laws or the applicable rules of the TSX; and

(j)

Shareholder approval is required for any amendment to the DSU Plan related to: (i) amending the provisions relating to the transferability of a DSU, other than for transfers by will or the law of succession or to corporations controlled by the individual or family trusts; (ii) amending insider participation limits, if any, which result in Shareholder approval being required on a disinterested basis; (iii) amending independent director participation limits; (iv) increasing the maximum number of Common Shares which may be issued under the DSU Plan; and (v) granting additional powers to the administrators to amend the DSU Plan or entitlements without Shareholder approval.

The maximum number of Common Shares available for issuance under the DSU Plan (together with other security-based arrangements of the Company, including, without limitation, the Stock Option Plan) is 9,538,127 Common Shares, representing approximately 4.93% of the total issued and outstanding Common Shares as of December 31, 2020. In 2020, the Company granted 349,824 DSUs under the DSU Plan. As of December 31, 2020, there were 2,376,655 DSUs outstanding, representing approximately 1.23% of the total issued and outstanding Common Shares. As of December 31, 2020, there are 4,593,254 Common Shares remaining available for grant under the DSU Plan (taking into account DSUs granted under the previous Amended and Restated Deferred Share Unit Plan) and other security-based compensation arrangements of the Company (including, without limitation, the Stock Option Plan), representing approximately 2.37% of the total issued and outstanding Common Shares.

Stock Option Plan

The Shareholders of the Company approved the Company’s Stock Option Plan at the Company’s annual and special meeting of Shareholders held on July 7, 2020. The Governance Committee, as designated by the Board, may award stock options to eligible participants pursuant to the Stock Option Plan, as it, in its sole discretion, determines. Eligible participants under the Stock Option Plan include all of the Company’s Directors, officers and employees and any service providers of the Company as determined by the Governance Committee from time to time.

In August 2015, the Board approved a Stock Option Award Policy which provides that, with the exception of stock options awarded in connection with the commencement of employment, stock option awards to employees, if any, may be made once per year at the time the Governance Committee considers annual employee bonus awards. Previous stock option grants are taken into account by the Governance Committee when it considers the granting of new stock options.

The Governance Committee, as designated by the Board, may fix the terms of any stock options (including the vesting date, exercise price and expiry date) at the time such stock options are granted, subject to the terms of the Stock Option Plan. Stock options may not be exercised prior to their vesting date or following their expiry date. Subject to certain exceptions relating to blackout periods of the Company (as defined in the Company’s charters and policies governing trading in the Company’s securities), no stock option shall be exercisable after 10 years from the date on which it is granted (subject to customary blackout extensions). The exercise price of a stock option shall be determined at the time the stock option is granted, provided that such exercise price shall be no less than the closing price of the Common Shares on the TSX on the last trading day on which Common Shares traded prior to the date of grant.

A participant may exercise a vested stock option by delivering, along with the notice of exercise, the aggregate exercise price for the Common Shares to be acquired. Such Common Shares will be issued by the Company from treasury. Alternatively, a participant may elect to surrender her or his stock option in consideration for a payment equal to the difference between: (i) the number of Common Shares subject to the stock option multiplied by the closing price of the Common Shares on the TSX on the last trading day on which Common Shares traded prior to the date of exercise, and (ii) the aggregate exercise price for such option (such difference being the “Option Value”), and such payment shall be in the form of (a) Common Shares, the number of which shall be calculated by dividing the Option Value by the closing price of the Common Shares on the TSX on the last trading day on which Common Shares traded prior to the surrender date or (b) subject to the approval of the Company, cash (the “Cash-Out Right”).

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Where a participant in the Stock Option Plan is terminated without cause, resigns for good reason, or ceases to be an eligible participant because of death or incapacity to work, all of such participant’s unvested stock options immediately vest and all vested stock options generally expire no later than 90 days following the date of termination. Where a participant in the Stock Option Plan is terminated with cause, all of such participant’s vested stock options that have not yet been exercised, and all unvested stock options, at the date of termination terminate immediately. Where a participant in the Stock Option Plan resigns or retires from the Company, all of such participant’s unvested stock options at the date of termination terminate immediately and vested stock options generally expire no later than 90 days following the date of termination. In the event of a change of control, a participant is entitled to exercise all of his or her vested or unvested stock options, provided that if the consideration offered to Shareholders is not all cash, the election to exercise only applies to vested stock options. If the Common Shares subject to the exercised stock options are not taken up under an offer to purchase 50% or more of the Company’s voting securities, the stock options shall remain outstanding on the same terms and conditions and any funds tendered shall be returned to the participant. Upon the occurrence of certain transactions, the Company must make provision that participants who exercise unexpired stock options after the completion of the transaction are entitled to receive the number of securities of the successor entity as they otherwise would have received if the participant had held Common Shares on the effective date of such transaction. The foregoing termination and vesting provisions that apply on termination of eligibility are subject to the discretion of the Governance Committee, as designated by the Board.

Other material terms of the Stock Option Plan are as follows:

(a)

The aggregate number of Common Shares issuable (or reserved for issuance) upon the exercise of all stock options granted under the Stock Option Plan, or any other security-based compensation arrangement of the Company (including, without limitation, the DSU Plan), cannot exceed 11,238,104 Common Shares;

(b)	The aggregate number of stock options granted under the Stock Option Plan and security-based awards granted under any other security-based compensation arrangement of the Company (including, without limitation, the DSU Plan), cannot exceed 2,000,000 in any one-year period;

(c)

The Stock Option Plan limits insider participation such that the aggregate number of Common Shares: (i) issued to insiders within a one-year period under the Stock Option Plan and any other security-based compensation arrangement, and (ii) issuable to insiders at any time under the Stock Option Plan and any other security-based arrangement, cannot exceed 10% of the listed and outstanding Common Shares;

(d)

The Stock Option Plan limits independent Director participation such that the number of Common Shares reserved for issuance and issuable within a one-year period under the Stock Option Plan and any other security-based compensation arrangement for any one independent Director cannot exceed 1% of the issued and outstanding Common Shares;

(e)

The Stock Option Plan limits the aggregate value of stock options, together with equity awards granted under any other security-based compensation arrangement, awarded in any one year to individual independent Directors to $150,000 (excluding equity awards under the DSU Plan taken in lieu of any cash retainer or other Director fees), including $100,000 with respect to stock options under the Stock Option Plan specifically;

(f)	The Stock Option Plan does not provide for a maximum number of Common Shares which may be issued to an individual under the Stock Option Plan or any other security-based compensation arrangement, other than insiders and independent Directors (as described above);

(g)	The number of Common Shares underlying outstanding stock options will be adjusted in the event of any consolidation, subdivision, conversion, exchange or reclassification of the Common Shares;

(h)	Subject to the terms of the Stock Option Plan, stock options may not be assigned;

(i)

Subject to the rules of the TSX, the Governance Committee, as designated by the Board, may amend the Stock Option Plan without Shareholder approval in certain instances including, among others: (i) minor changes of a “housekeeping” nature; (ii) amending stock options granted under the Stock Option Plan, provided that such amendment does not adversely alter or impair any stock option previously granted to a participant without the consent of such participant; (iii) making amendments concerning the administration of the Stock Option Plan or that are necessary to comply with the provisions of applicable law or the applicable rules of the TSX; and (iv) making any other amendment, fundamental or otherwise, not requiring Shareholder approval under applicable laws or the applicable rules of the TSX; and

(j)

Shareholder approval is required for any amendment to the Stock Option Plan related to: (i) amending the provisions relating to the transferability of a stock option, other than for transfers by will or the law of succession or to corporations controlled by the individual or family trusts; (ii) reducing the exercise price of stock options or other entitlements; (iii) extending the term of stock options beyond the expiration date (subject to customary blackout extensions); (iv) amending insider participation limits, if any, which result in Shareholder approval being required on a disinterested basis; (v) amending independent director participation limits; (vi) increasing the maximum number of Common Shares which may be issued under the Stock Option Plan; and (vii) granting additional powers to the administrators to amend the Stock Option Plan or entitlements without Shareholder approval.

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The maximum number of Common Shares available for issuance under the Stock Option Plan (together with other security-based arrangements of the Company, including, without limitation, the DSU Plan) is 11,238,104 Common Shares, representing approximately 5.81% of the total issued and outstanding Common Shares as of December 31, 2020. As of December 31, 2020, there were 2,241,339 stock options outstanding, representing approximately 1.16% of the total issued and outstanding Common Shares. As of December 31, 2020, there are 6,293,231 Common Shares remaining available for grant under the Stock Option Plan (taking into account stock options granted under the Stock Option Plan) and other security-based compensation arrangements of the Company (including, without limitation, the DSU Plan), representing approximately 3.25% of the total issued and outstanding Common Shares.

Long-Term Incentive Plan

The Long-Term Incentive Plan (the “LTIP”) provides long-term variable compensation to NEOs, in the form of cash entitlements and DSUs, that is directly linked to ongoing Company financial performance. The LTIP provides an opportunity for NEOs to share directly in: (i) the incentive or performance fees (“Performance Fees”) earned by the Company in respect of its management of private funds and other investment vehicles (“Investment Vehicles”); and (ii) the investment income earned by the Company from one of its significant investments, as described below.

In order to allow participants to share in Performance Fees, the LTIP provides for the allocation of “Points” among participants. A total of 100 Points is allocated among participants in respect of each Investment Vehicle. 20 Points are allocated to participants and vested when the Investment Vehicle is established and on each of the three anniversaries thereof and the remaining 20 Points are allocated and vested following the termination of the Investment Vehicle. Point allocations are subject to Governance Committee approval.

50% of the Performance Fees earned from time to time by the Company in respect of a particular Investment Vehicle (the “Participant Share”) is paid in cash, over time, to LTIP participants. The aggregate payment made at any given time is a percentage of the Participant Share equal to the percentage of the 100 Points for the Investment Vehicle that has then vested. Payments to individual participants are made in proportion to the number of vested Points held. As additional Points vest, additional “catch-up” payments are made (in proportion to vested Points held) so that the total of all payments made continues to be the percentage of the Participant Share equal to the percentage of the 100 Points that have vested. In respect of certain Investment Vehicles, payments to participants represent proceeds of the disposition of equity interests in the Company subsidiary that is entitled to receive the associated Performance Fees.

Upon termination of an LTIP participant’s employment without cause, any unvested Points allocated to the participant immediately vest. Upon termination of employment for cause or resignation, a participant’s unvested and vested Points are forfeited and reallocated to the remaining LTIP participants.

The LTIP also provides participants with the ability to share in the income earned from the Company’s indirect 68.4% interest in Tricon Housing Partners US LP (the “Co-Investment”). Each year, the Company grants an aggregate number of DSUs having a value equal to the AIP Percentage multiplied by the income the Company earns in the year from the Co-Investment (which income, as noted above, is excluded from the calculation of AIP awards). The allocation of such DSUs among participants is subject to Governance Committee approval. Such DSUs are subject to the DSU Plan (defined and described above) and vest in equal installments each year from the date of grant, subject to the terms of the LTIP. DSUs currently issued in respect of the Co-Investment vest over a five-year period. On May 6, 2019, in order to more closely align the vesting period with the expected remaining life of the Co-Investment, the LTIP was amended by the Board to reduce the vesting period applicable to future LTIP DSU awards to three years.

The LTIP, as amended from time to time, first came into effect as of January 1, 2013, prior to which certain NEOs had entitlements to share in Performance Fees earned in respect of then-existing Investment Vehicles. Such prior arrangements are not affected by the current LTIP.

Performance Share Unit Plan

On August 7, 2018, the Board of Directors adopted a performance share unit plan (the “PSU Plan”) as a new at-risk, variable and non-dilutive component of executive compensation intended to reduce reliance on the Company’s DSUs and stock options as compensation tools. The adoption of the PSU Plan was not subject to Shareholder approval under the rules of the TSX as it will not result in the issuance or potential issuance of securities from treasury.

The purpose of the PSU Plan is to:

•

motivate and reward officers and employees of the Company (“PSU Participants”) for increasing the corporate performance of the Company and the price of the Company’s Common Shares;

•

align the interests of PSU Participants with the interests of Shareholders;

•

reinforce a long-term accountability culture within the Company and foster a common sense of purpose and direction; and

•

provide competitive reward opportunities that will assist in attracting and retaining valuable employees.

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The PSU Plan empowers the Board, directly or through a committee of the Board (the “Administrators”), to make grants of performance share units (“PSUs”) to PSU Participants in such amounts and on such terms as the Administrators determine. Each PSU is economically equivalent to one Common Share.

PSUs granted to PSU Participants vest on the date the Board approves Tricon’s annual financial statements for the final year of the applicable “Performance Period” for any grant of PSUs (which Performance Period shall in no event extend beyond December 31 of the third calendar year following the calendar year in respect of which a PSU award is granted), subject to accelerated vesting or forfeiture on the termination of a PSU Participant’s employment or a change of control (as described below). Vested PSUs are redeemed and settled in cash following the expiration of the Performance Period for an amount equal to the number of vested PSUs held by the PSU Participant at such time multiplied by the weighted average closing price of the Common Shares on the TSX for the 20 trading days immediately prior to the release of the Company’s audited financial statements in respect of the final year of the Performance Period.

The number of PSUs held by a PSU Participant is adjusted annually (such adjusted number, the “Adjusted PSU Number”) based on (i) Tricon’s achievement of certain performance measures consisting of a defined metric or set of metrics and performance objectives (the “Performance Measures”) and an adjustment factor (the “Performance Multiplier”) that is linked to the achievement of thresholds set out in the Performance Measures (with results in between thresholds interpolated or calculated by other methods, as determined by the Administrators) and (ii) any additional PSUs granted to a PSU Participant on account of cash dividends paid on the Company’s Common Shares (as described below).

In the event that cash dividends are paid on the Common Shares, additional PSUs will be credited to the PSU account maintained by the Company for each PSU Participant, as determined by dividing (i) the amount determined by multiplying (A) the PSU Participant’s Adjusted PSU Number for the Performance Period as at the relevant dividend record date by (B) the amount of dividends paid by the Company on each Common Share, by (ii) the fair market value of a Common Share on the dividend payment date. Any such PSUs will accumulate during the Performance Period and will vest and be subject to the same terms, Performance Measures and Performance Multiplier as the original grant to which they relate. PSUs granted to PSU Participants do not otherwise entitle PSU Participants to any dividend rights or any other rights as Shareholders, including voting rights or rights on liquidation.

In the event of the termination of a PSU Participant for cause, upon the voluntary termination of employment or resignation of a PSU Participant or upon a PSU Participant who is not otherwise an employee of the Company ceasing to be an officer of the Company or a subsidiary of the Company, all unvested PSUs and all vested PSUs held by such PSU Participant that have not been redeemed will immediately terminate as of the date of such termination or resignation.

In the event of the termination of a PSU Participant as a result of such PSU Participant’s death or disability, or upon such PSU Participant’s retirement, any PSUs forming part of such PSU Participant’s Adjusted PSU Number as of the end of the year of the Performance Period immediately preceding the year of termination or retirement, plus a pro rata portion of PSUs granted in respect of the year of termination or retirement (without application of any Performance Multiplier in respect of such year) will vest, and any remaining PSUs in such PSU Participant’s PSU account will immediately be cancelled.

In the event of the termination of a PSU Participant’s employment without cause, or upon the resignation of a PSU Participant for any reason that would be considered to amount to constructive dismissal at common law, any PSUs forming part of such PSU Participant’s Adjusted PSU Number as of the end of the year of the Performance Period immediately preceding the year of termination or resignation, plus any PSUs granted to the PSU Participant in respect of the remaining years of the Performance Period (without application of any Performance Multiplier in respect of such years), will vest.

The Administrators may, in their sole and absolute discretion, at any time prior to or following any of the foregoing events of termination, permit the vesting and redemption of any or all PSUs held by the relevant PSU Participant in the manner and on the terms authorized by the Administrators.

In the event of a change of control of the Company, other than as a result of or in connection with a contested election of directors at which at least two-thirds of the director nominees named in the most recent management information circular of the Company for election as directors are not elected (a “Board Change of Control”), all of a PSU Participant’s unvested PSUs will automatically vest and be redeemed immediately prior to the completion of such change of control. In connection with any such redemption, the Administrators shall determine the Performance Multiplier to be applied for each PSU Participant in respect of the fiscal years in a Performance Period that end after the date of the change of control, based on (i) the achievement of each Performance Measure for the fiscal year in which the change of control occurs up to the date of the change of control, (ii) the achievement of the Performance Measures in any earlier fiscal years in the applicable Performance Period, and (iii) any other factors that the Administrators deem to be appropriate.

Upon a Board Change of Control, all of a PSU Participant’s unvested PSUs will automatically vest upon the completion of such Board Change of Control and be redeemed on the same terms as if such PSUs had been redeemed upon the expiration of the Performance Period (as described above).

The Board reserves the right to amend, suspend or terminate the PSU Plan without obtaining the approval of Shareholders, subject to requirements under applicable law and regulations (including the regulations of the TSX).

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Restricted Share Plan

On December 14, 2018, the Board of Directors adopted a restricted share plan (the “Restricted Share Plan”) to serve as a cost-effective long-term incentive plan for select employees of the Company. The adoption of the Restricted Share Plan was not subject to Shareholder approval under the rules of the TSX as it will not result in the issuance or potential issuance of securities from treasury.

The purpose of the Restricted Share Plan is to:

•

advance the interests of the Company and its Shareholders by attracting, retaining and motivating officers, directors and employees of the Company (“RS Participants”);

•

provide RS Participants with a performance incentive for continued and improved service with the Company; and

•

enhance RS Participants’ contribution to increased profit by promoting an alignment of interests between those individuals and Shareholders.

The Restricted Share Plan empowers the Board, directly or through a committee of the Board, to make grants of Restricted Shares to RS Participants for services rendered. A RS Participant’s Restricted Shares are subject to restrictions on sale or transfer for such periods as are determined by the Board on the date of the grant and only become free of the restrictions imposed once the restriction terms and conditions are satisfied.

Restricted Shares granted to RS Participants are purchased on the facilities of the TSX by a third-party broker and are held in custodial arrangements with a designated custodian (the “Custodian”) while the applicable restrictions remain unsatisfied, being released from such custodial arrangements to the RS Participant only as the restrictions are fulfilled (subject to earlier forfeiture or accelerated vesting as described below). It is expected that vesting periods will range from between eight and fifteen years from the date of the grant. Restricted Shares for which restriction terms and conditions are not satisfied are forfeited and the Participant thereafter has no ownership interest in the forfeited Restricted Shares.

Subject to the restrictions on transfer noted above, a RS Participant will have ownership of the Restricted Shares granted and enjoy the same rights and benefits as other Shareholders, including the right to vote and receive any dividends or special distributions, unless otherwise determined by the Board. Dividends earned on Restricted Shares are reinvested in additional Restricted Shares that are subject to the same restrictions as the original grant.

In the event of the termination of a RS Participant for cause, or upon the voluntary termination of employment or resignation of a RS Participant (subject to certain exceptions) prior to the expiry of the applicable restrictions, any Restricted Shares held by the RS Participant that remain subject to restrictions shall be forfeited and deemed to be donated to the Company for no consideration.

In the event of the termination of a RS Participant without cause, or upon the voluntary termination of employment or resignation of a RS Participant for any reason that would amount to constructive dismissal at common law, or upon the death or disability of a RS Participant, the restrictions applicable to the Restricted Shares will immediately lapse and the Custodian will release or dispose of such Restricted Shares on behalf and at the direction of the RS Participant.

In the event of the retirement of a RS Participant, or in the event that a RS Participant who is a director ceases to be a director of the Company, prior to the expiry of the applicable restrictions, the Restricted Shares will continue to be held by the Custodian as nominee and on behalf of such RS Participant and will remain subject to the applicable restrictions and the terms of the Restricted Share Plan.

In the event of a change of control of the Company, all remaining restrictions attaching to the Restricted Shares will immediately expire and the Company shall confirm to the Custodian that all such Restricted Shares may be released as directed by, or disposed on behalf of, the RS Participants, immediately prior to the completion of the change of control.

The Board reserves the right to amend, suspend or terminate the Restricted Share Plan without obtaining the approval of Shareholders, subject to requirements under applicable law and regulations (including the regulations of the TSX).

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APPENDIX B

MANDATE OF THE BOARD OF DIRECTORS

The purpose of this Charter is to set out the mandate and responsibilities of the Board of Directors (the “Board”) of Tricon Residential Inc. (the “Company”), subject to the provisions of applicable statutes.

1. Composition

The Board shall be constituted with a majority of individuals who qualify as “independent” as defined in National Policy 58-201 – Corporate Governance Guidelines.

2. Responsibilities of the Board of Directors

The Board is responsible for the stewardship of the Company and in that regard shall be specifically responsible for:

(a)	adopting a strategic planning process and approving, on at least an annual basis, a budget, and evaluating and discussing a strategic plan for the upcoming year which takes into account, among other things, the opportunities and risks of the Company’s business and investments;

(b)	supervising the activities and managing the investments and affairs of the Company;

(c)	approving major decisions regarding the Company;

(d)	defining the roles and responsibilities of management;

(e)	reviewing and approving the business and investment objectives to be met by management;

(f)	assessing the performance of and overseeing management;

(g)	reviewing the Company’s debt strategy; (h) identifying and managing risk exposure;

(i)	ensuring the integrity and adequacy of the Company’s internal controls and management information systems;

(j)	succession planning;

(k)	establishing committees of the Board, where required or prudent, and defining their respective mandates;

(l)	receiving and evaluating reports and recommendations from the committees of the Board from time to time;

(m)	maintaining records and providing reports to shareholders;

(n)	ensuring effective and adequate communication with shareholders, other stakeholders and the public; and

(o)	determining the amount and timing of dividends or distributions to shareholders.

It is recognized that every Director in exercising powers and discharging duties must act honestly and in good faith with a view to the best interest of the Company. Directors must exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. In this regard, they will comply with their duties of honesty, loyalty, care, diligence, skill and prudence.

In addition, Directors are expected to carry out their duties in accordance with policies adopted by the Board from time to time.

It is expected that management will co-operate in all ways to facilitate compliance by the Board with its legal duties by causing the Company and any subsidiaries of the Company to take such actions as may be necessary in that regard and by promptly reporting any data or information to the Board that may affect such compliance.

The Majority Voting in Director Elections Policy set out in Appendix A to this Charter shall apply with respect to an uncontested election of Directors.

3. Meetings

The Board will meet not less than four (4) times per year: at least three (3) meetings to review quarterly results, and one (1) prior to the issuance of the annual financial results of the Company. The Board shall have an independent lead Director and shall meet periodically without management present to ensure that the Board functions independently of management. At each Board meeting, unless otherwise determined by the Board, an in-camera meeting of independent Directors will take place. Individual Directors shall be permitted to engage outside advisors at the cost of the Company, subject to the prior approval of the Compensation, Nominating and Corporate Governance Committee.

The Board appreciates having certain members of senior management attend each Board meeting to provide information and opinion to assist the Directors in their deliberations. Management attendees will be excused for any agenda items which are reserved for discussion among Directors only.

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4. Board Meeting Agendas and Information

The Chair, in consultation with management, will develop the agenda for each Board meeting. Agendas will be distributed to the Directors before each meeting, and all Board members shall be free to suggest additions to the agenda in advance of the meeting.

Whenever practicable, information and reports pertaining to Board meeting agenda items will be circulated to the Directors in advance of the meeting. Reports may be presented during the meeting by members of the Board, management and/or staff, or by invited outside advisors. It is recognized that under some circumstances, due to the confidential nature of matters to be discussed at a meeting, it will not be prudent or appropriate to distribute written materials in advance.

5. Measures for Receiving Shareholder Feedback

All publicly disseminated materials of the Company shall provide for a mechanism for feedback from shareholders.

6. Telephone Board Meetings

A Director may participate in a meeting of the Board or in a committee meeting by means of telephone, electronic or such other communications facilities as permit all persons participating in the meeting to communicate with each other, and a Director participating in such a meeting by such means is deemed to be present at the meeting.

While it is the intent of the Board to follow an agreed meeting schedule as closely as possible, it is felt that, from time to time, with respect to time-sensitive matters, telephone Board meetings may be required to be called in order for Directors to be in a position to better fulfill their legal obligations. Alternatively, management may request the Board to approve certain matters by unanimous consent.

7. Expectations of Management

Management shall be required to report to the Board at the request of the Board on the performance of the Company, new and proposed initiatives, the Company’s business and investments, management concerns and any other matter the Board or its Chair may deem appropriate. In addition, the Board expects management to promptly report to the Chair any significant developments, changes, transactions or proposals respecting the Company or any of its subsidiaries.

8. Communications Policy

The Board approves the content of the Company’s major communications to shareholders and the investing public including the Annual Report, Management Information Circular, the Annual Information Form and any prospectuses which may be issued. The Audit Committee shall review and recommend to the Board the approval of the quarterly and annual financial statements (including the Management Discussion & Analysis) and press releases relating to financial matters. The Board also has responsibility for monitoring all of the Company’s external communications. However, the Board believes that it is the function of management to speak for the Company in its communications with the investment community, the media, customers, suppliers, employees, governments and the general public.

The Board shall have responsibility for reviewing the Company’s policies and practices with respect to disclosure of financial and other information including insider reporting and trading. The Board shall approve and monitor the disclosure policies designed to assist the Company in meeting its objective of providing timely, consistent and credible dissemination of information, consistent with disclosure requirements under applicable securities law. The Board shall review the Company’s policies relating to communications and disclosure on an annual basis.

Generally, communications from shareholders and the investment community will be directed to the Chief Executive Officer, who will coordinate an appropriate response depending on the nature of the communication. It is expected, if communications from stakeholders are made to the Chair or to other individual Directors, management will be informed and consulted to determine any appropriate response.

9. Internal Control and Management Information Systems

The Board has responsibility for the integrity of the Company’s internal control and management information systems. All material matters relating to the Company and its business, including, for greater certainty and without limitation, any investments made by the Company which are not direct investments in Company-managed funds or syndicates and/or are warehoused for future Company-managed funds, or in any event are in excess of $10 million, require the prior approval of the Board. Management is authorized to act, without Board approval, on all ordinary course matters relating to the Company’s business.

The Audit Committee has responsibility for ensuring internal controls are appropriately designed, implemented and monitored and for ensuring that management and financial reporting is complete and accurate, even though management may be charged with developing and implementing the necessary procedures.

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APPENDIX A TO MANDATE OF THE BOARD OF DIRECTORS

MAJORITY VOTING IN DIRECTOR ELECTIONS POLICY

This policy is applicable if at an uncontested election of Directors of Tricon Residential Inc. (the “Company”) at a meeting of shareholders of the Company, any nominee for Director receives a greater number of votes “withheld” from his or her election than votes “for” such election (a “Majority Withheld Vote”).

In the event of a Majority Withheld Vote with respect to a Director nominee, such Director nominee shall promptly submit to the Board his or her resignation, which shall take effect only upon the acceptance by the Board.

The Board, upon recommendation of the Compensation, Nominating and Corporate Governance Committee (the “Committee”), shall within 90 days following the date of the applicable meeting determine either to accept or not accept the Director’s resignation, and the Board shall promptly disclose, via press release, the determination. In considering whether or not to recommend the Board accept the resignation, the Committee will consider all factors deemed relevant by members of such Committee including, without limitation, the stated reasons why shareholders “withheld” votes from the election of that nominee, the length of service and the qualifications of the Director, such Director’s contributions to the Company and the Company’s corporate governance policies. The Board, in considering the Committee’s recommendation, may consider such additional information and factors that the Board considers to be relevant. The Director nominee will not participate in any Committee or Board deliberations on the resignation offer. However, if each member of the Committee received a Majority Withheld Vote in the same election, or a sufficient number of Committee members received a Majority Withheld Vote such that the Committee no longer has a quorum, then the independent Directors shall appoint a committee amongst themselves to consider the Majority Withheld Votes and whether or not to recommend to the Board that resignations be requested.

If a resignation is accepted, the Board may fill the vacancy in accordance with applicable laws.

In the event that any Director who received a Majority Withheld Vote does not tender his or her resignation in accordance with this policy if requested to do so, he or she will not be re-nominated by the Board for election at the next meeting of shareholders at which Directors are to be elected.

The Committee may adopt such procedures as it sees fit to assist it in its determinations with respect to this policy.

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APPENDIX C

ORDINARY RESOLUTION

OF THE DISINTERESTED SHAREHOLDERS OF

TRICON RESIDENTIAL INC.

(THE “COMPANY”)

BE IT RESOLVED AS AN ORDINARY RESOLUTION OF THE DISINTERESTED SHAREHOLDERS THAT:

The setting of an exchange price of USD$8.50 (the “Exchange Price”) in respect of the valid exchange of distributions that have accrued on preferred units (“Preferred Units”) of Tricon PIPE LLC (“Tricon PIPE”) for common shares of the Company (“Common Shares”), as such Exchange Price may be adjusted from time to time in accordance with the amended and restated limited liability company agreement of Tricon PIPE dated September 3, 2020, and subject to a maximum of 48,071,775 Common Shares being issuable upon the exchange of all Preferred Units and accrued distributions thereon in the aggregate, is hereby authorized and approved.

Any one officer or director of the Company is hereby authorized, for and on behalf of the Company, to execute and, if appropriate, deliver all other documents and instruments and do all other things as in the opinion of such director or officer may be necessary or advisable to implement this resolution and the matters authorized hereby, such determination to be conclusively evidenced by the execution and delivery of any such document or instrument, and the taking of any such action.

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APPENDIX D

GLOSSARY OF TERMS

In this Information Circular, the following terms have the meanings set forth below, unless otherwise indicated. Words importing the singular include the plural and vice versa and words importing any gender include all genders:

“Adjusted EBITDA” has the meaning set out in the Company’s most recent Management’s Discussion and Analysis, available on SEDAR at www.sedar.com.

“Adjusted EPS” means Adjusted Diluted Earnings per Share, as defined in the Company’s most recent Management’s Discussion and Analysis, available on SEDAR at www.sedar.com.

“AIF” means the Company’s Annual Information Form for Fiscal 2020.

“AIP” or “Annual Incentive Plan” means the Company’s Annual Incentive Plan, as amended from time to time.

“Audit Committee” means the Audit Committee of the Board of Directors.

“Blackstone” means BREIT Debt Parent LLC.

“Blackstone Investor Rights Agreement” means the investor rights agreement entered into in connection with the Blackstone Private Placement between the Company, Tricon PIPE LLC and Blackstone on September 3, 2020, pursuant to which Blackstone, subject to ownership requirements enumerated in the Blackstone Investor Rights Agreement, is entitled to: (a) Board nomination rights for one nominee, (b) participation rights with respect to future offerings of Common Shares and securities exchangeable for, convertible into or exchangeable into Common Shares (excluding certain exempt issuances), (c) registration rights with respect to the Common Shares, and (d) certain other governance rights, including the right to approve certain actions proposed to be taken by the Company and its subsidiaries, as more particularly set out in the Blackstone Investor Rights Agreement.

“Blackstone Private Placement” means Blackstone’s $300 million preferred equity investment in Tricon through the purchase of newly-created preferred units of Tricon PIPE LLC, the Company’s indirectly wholly-owned subsidiary, on a private placement basis.

“Board of Directors” or “Board” means the board of directors of Tricon Residential Inc.

“Co-Investment” means the Company’s approximate 68% interest in THP1US.

“Common Shares” means the common shares in the capital of Tricon Residential Inc.

“Director” means a member of the Board of Directors.

“DSU” means a deferred share unit of the Company, governed by the DSU Plan.

“DSU Plan” means Tricon’s Second Amended and Restated Deferred Share Unit Plan, adopted as of July 7, 2020, as may be amended from time to time.

“FFO” means funds from operations as defined and described in the Company’s most recent Management’s Discussion and Analysis.

“Governance Committee” means the Compensation, Nominating and Corporate Governance Committee of the Board of Directors.

“LTIP” means Tricon’s Long-Term Incentive Plan, adopted as of November 22, 2013, as amended from time to time, and, where the context requires, refers to awards or entitlements under the LTIP.

“Meeting” means the annual and special meeting of the Company to be held on Wednesday, June 23, 2021 at 10:00 a.m. (Toronto time), or any adjournment or postponement thereof.

“Meeting Materials” means the Notice of Meeting and this Information Circular.

“NEO” means a named executive officer of the Company for Fiscal 2020.

“Performance Fees” means incentive or performance fees earned from achieving target investment returns in an investment vehicle.

“PSU” means a preferred share unit, governed by the PSU Plan.

“Performance Share Unit Plan” or “PSU Plan” means Tricon’s Performance Share Unit Plan, adopted as of August 7, 2018, as may be amended from time to time.

“Preferred Units” means the exchangeable preferred units of Tricon PIPE issued in connection with the Blackstone Private Placement.

“Restricted Share Plan” means Tricon’s Restricted Share Plan, adopted as of December 14, 2018, as may be amended from time to time.

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“Restricted Shares” means Common Shares of the Company subject to the Restricted Share Plan, including in particular the transfer restrictions provided for under the Restricted Share Plan, as described in Appendix A.

“Rights Plan” means the second amended and restated shareholder rights plan of the Company, adopted as of June 26, 2019, as may be amended from time to time.

“SEDAR” means the System for Electronic Document Analysis and Retrieval.

“Shareholder” means a holder of Common Shares.

“Starlight” means Starlight Group Property Holdings Inc.

“Starlight Transaction” means Tricon’s purchase, on June 11, 2019, of all the partnership units of Starlight U.S. Multi-Family (No. 5) Core Fund resulting in the acquisition of a portfolio of 23 multi-family properties (totalling 7,289 units) located primarily in the U.S. Sun Belt.

“Stock Option Plan” means Tricon’s Third Amended and Restated Stock Option Plan, adopted as of July 7, 2020, as may be amended from time to time.

“THP1US” means Tricon Housing Partners US LP (formerly Tricon IX, L.P.), a limited partnership formed under the laws of the State of Delaware, together with associated fund entities.

“TSX” means the Toronto Stock Exchange.

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LOGO

Imagine a world where housing unlocks life’s potential 7 St. Thomas Street, Suite 801 Toronto, Ontario M5S 2B7 T 416 925 7228 F 416 925 7964 www.triconresidential.com

Exhibit 4.7

FORM 51-102F3

MATERIAL CHANGE REPORT

Item 1.

Name and Address of Company

Tricon Residential Inc. (the “Company”)

7 St. Thomas Street, Suite 801

Toronto, ON

M5S 2B7

Item 2.

Date of Material Change

July 30, 2021

Item 3.

News Release

Attached as Schedule “A” is a copy of the news release relating to the material change, which was disseminated on July 30, 2021 through the newswire services of CNW Group and filed on the System for Electronic Document Analysis and Retrieval (SEDAR) at www.sedar.com.

Item 4.

Summary of Material Change

On July 30, 2021, the Company announced that it intends to redeem in full all of its currently outstanding 5.75% extendible convertible unsecured subordinated debentures due March 31, 2022 (the “Debentures”) and has issued a notice of such redemption to the holders of the Debentures.

Item 5.

Full Description of Material Change

For a full description of the material change, please see Schedule “A” attached hereto.

Item 6.

Reliance on Subsection 7.1(2) of National Instrument 51-102

Not applicable.

Item 7.

Omitted Information

Not applicable.

Item 8.

Executive Officer

The name and business telephone number of the officer of the Company who can answer questions regarding this material change report is as follows:

Wissam Francis

EVP & Chief Financial Officer

Tel: 416-323-2484

Item 9.

Date of Report

July 30, 2021

SCHEDULE “A”

NEWS RELEASE

(see attached)

Not for distribution to U.S. Newswire services or for distribution in the United States.

LOGO

Tricon Announces Redemption of 5.75% Extendible Convertible Unsecured Subordinated Debentures

Toronto, Ontario – July 30, 2021 – Tricon Residential Inc. (“Tricon” or the “Company”) (TSX:TCN), an owner and operator of single-family rental homes and multi-family rental apartments in the United States and Canada, announced today that it has issued a notice of redemption to the holders of its 5.75% extendible convertible unsecured subordinated debentures due March 31, 2022 (the “Debentures”), representing a redemption in full of all of the currently outstanding Debentures. The Debentures will be redeemed on September 9, 2021 (the “Redemption Date”), in accordance with their terms, at a total redemption price of US$1,000 plus accrued and unpaid interest of US$25.52 up to but excluding the Redemption Date, both per US$1,000 principal amount. The redemption price has been determined in accordance with the provisions of the Indenture. Tricon intends to satisfy the redemption price through the issuance of common shares in the capital of Tricon (“Common Shares”) at 95% of the U.S. dollar equivalent of the 20-day weighted average trading price of the Common Shares on the fifth trading day preceding the Redemption Date, with cash to be paid for the accrued and unpaid interest on the Debentures and in lieu any fractional Common Shares that would otherwise be issued.

The Debentures have a conversion price of US$10.46 (C$13.02) per Common Share, which is lower than the current trading price of the Common Shares. Accordingly, at current trading prices, holders of Debentures have an economically advantageous opportunity to convert their Debentures to Common Shares prior to the Redemption Date and may do so in accordance with the terms of the indenture dated March 17, 2017 with respect to the Debentures (the “Indenture”). Registered holders of Debentures that wish to convert must provide written notice of conversion to TSX Trust Company prior to September 8, 2021, being the last business day immediately preceding the Redemption Date. Non-registered holders of Debentures that wish to convert should contact their respective brokerage firm or financial institution well in advance of this deadline to ensure sufficient time to comply with internal deadlines for the redemption process.

Non-registered holders (banks, brokerage firms or other financial institutions) that maintain their interests in the Debentures through CDS & Co. (“CDS”) should contact their CDS customer service representative with any questions about the redemption or conversion. Alternatively, beneficial holders with any questions about the redemption or conversion should contact their respective brokerage firm or financial institution holding interests in the Debentures through CDS on their behalf and comply with all internal redemption processes they may have.

Notices of redemption are being delivered today to TSX Trust Company, the Debenture trustee and to CDS. For more information, holders of Debentures should refer to the redemption notice delivered to them.

Subject to prior regulatory approval, Tricon intends to have the Debentures de-listed from the Toronto Stock Exchange following their redemption.

About Tricon Residential Inc.

Tricon Residential is an owner and operator of a growing portfolio of over 33,000 single-family rental homes and multi-family rental apartments in the United States and Canada with a primary focus on the U.S. Sun Belt. Our commitment to enriching the lives of our residents and local communities underpins Tricon’s culture and business philosophy. We strive to continuously improve the resident experience through our technology-enabled operating platform and innovative approach to rental housing. At Tricon Residential, we imagine a world where housing unlocks life’s potential. For more information visit www.triconresidential.com.

For further information, please contact:

Wissam Francis

EVP & Chief Financial Officer

Tel: 416-323-2484

Email: wfrancis@triconcapital.com

Wojtek Nowak

Managing Director, Capital Markets

Tel: 416-925-2409

Email: wnowak@triconcapital.com

* * * *

Certain statements contained in this news release are forward-looking statements and are provided for the purpose of presenting information about management’s current expectations and plans relating to the future. Readers are cautioned that such statements may not be appropriate for other purposes. These forward-looking statements include statements regarding: the redemption of the Debentures, the issuance of Common Shares as payment of the redemption price, the payment of cash in respect of interest and fractional shares and the anticipated de-listing of the Debentures. In some cases, forward-looking information can be identified by such terms as “will”, “would”, “anticipate”, “anticipated”, “expect” and “expected”. The forward-looking statements in this news release are based on certain assumptions, including assumptions that all required regulatory approvals will be obtained on the necessary terms in a timely manner; and that Tricon will, on the redemption date, meet all of the required terms and conditions of the Debentures (including those set forth in the applicable debenture indenture) in order to effect the redemption on the terms currently contemplated (which includes assumptions respecting trading prices of the Common Shares), as well as with respect to the impact of COVID-19 on the Company’s operations, business and financial results. Such statements are subject to significant known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those expressed or implied by such statements and, accordingly, should not be read as guarantees of future performance or results and will not necessarily be accurate indications of whether or not such results will be achieved. Such risks include the risks described in the Company’s current annual information form and interim management’s discussion and analysis, available on SEDAR at www.sedar.com, which risks may be dependent on market factors and not entirely within the Company’s control. Although management believes that it has a reasonable basis for the expectations reflected in these forward-looking statements, actual results may differ from those suggested by the forward-looking statements for various reasons. These forward-looking statements reflect current expectations of the Company as at the date of this news release and speak only as at the date of this news release. The Company does not

undertake any obligation to publicly update or revise any forward-looking statements except as may be required by applicable law.

The economic advantage for holders of Debentures to convert to Common Shares is based on the current trading price of Common Shares as of the date hereof. If the conversion price becomes greater than 95% of the U.S. dollar equivalent of the 20-day weighted average trading price of the Common Shares on the fifth trading day preceding the Redemption Date, holders of Debentures will no longer have an economic advantage to convert their Debentures prior to the Redemption Date. Tricon does not undertake any obligation to update this news release if these circumstances change.

Exhibit 4.8

FORM 51-102F3

MATERIAL CHANGE REPORT

Item 1.

Name and Address of Company

Tricon Residential Inc. (the “Company”)

7 St. Thomas Street, Suite 801

Toronto, ON

M5S 2B7

Item 2.

Date of Material Change

May 18, 2021

Item 3.

News Release

Attached as Schedule “A” is a copy of the press release relating to the material change, which was disseminated on May 18, 2021 through the newswire services of CNW Group and filed on the System for Electronic Document Analysis and Retrieval (SEDAR) at www.sedar.com.

Item 4.

Summary of Material Change

On May 18, 2021, the Company announced that it had entered into an agreement with a syndicate of underwriters co-led by RBC Dominion Securities Inc., Scotia Capital Inc., Morgan Stanley Canada Limited and Stifel Nicolaus Canada Inc. (collectively, the “Underwriters”), which agreed to purchase, on a “bought deal” basis, 13,461,500 common shares of Tricon (“Common Shares”) at a price of C$13.00 per Common Share (the “Offering Price”) for gross proceeds of approximately C$175 million (the “Offering”). The Company also granted the Underwriters an option (the “Over-Allotment Option”), which may be exercised by the Underwriters at any time up to 30 days following the closing of the Offering, to purchase up to an additional 1,762,726 Common Shares to cover over-allotments, if any, and for market stabilization purposes. In the event that the Over-Allotment Option is exercised in its entirety, the aggregate gross proceeds of the Offering will be C$198 million.

In connection with the Offering, Blackstone Real Estate Investment Trust, Inc. (“BREIT”) has exercised its participation right, to the maximum extent possible, pursuant to the investor rights agreement with the Company dated September 3, 2020 to acquire 1,709,996 Common Shares in the Offering at the Offering Price. Following the completion of the Offering, BREIT’s effective ownership interest in the Company will remain approximately 12.7% (assuming the exchange of its preferred units of Tricon PIPE LLC for Common Shares).

The Company intends to allocate substantially all of the net proceeds of the Offering (including the additional net proceeds if the Over-Allotment Option is exercised) to fund the Company’s future growth initiatives, including future

acquisitions and a portion of the capital commitments expected to be deployed through new and anticipated investment vehicles over the next 3-5 years, and any balance for working capital and general corporate purposes.

Item 5.

Full Description of Material Change

For a full description of the material change, please see Schedule “A” attached hereto.

Item 6.

Reliance on Subsection 7.1(2) of National Instrument 51-102

Not applicable.

Item 7.

Omitted Information

Not applicable.

Item 8.

Executive Officer

The name and business telephone number of the officer of the Company who can answer questions regarding this material change report is as follows:

Wissam Francis

EVP & Chief Financial Officer

Tel: 416-323-2484

Item 9.

Date of Report

May 25, 2021

SCHEDULE “A”

(see attached)

Not for distribution to U.S. Newswire services or for distribution in the United States.

LOGO

Tricon Announces C$175 million Bought Deal Equity Offering

Toronto, Ontario – May 18, 2021 – Tricon Residential Inc. (“Tricon” or the “Company”) (TSX:TCN), an owner and operator of single-family rental homes and multi-family rental apartments in the United States and Canada, announced today that it has entered into an agreement with a syndicate of underwriters co-led by RBC Capital Markets, Scotia Capital, Morgan Stanley and Stifel GMP (collectively, the “Underwriters”), which have agreed to purchase, on a “bought deal” basis, 13,461,500 common shares of Tricon (“Common Shares”) at a price of C$13.00 per Common Share for gross proceeds of approximately C$175 million (the “Offering”). The Company has also granted the Underwriters an option (the “Over-Allotment Option”), which may be exercised by the Underwriters at any time up to 30 days following the closing of the Offering, to purchase up to an additional 1,762,726 Common Shares to cover over-allotments, if any, and for market stabilization purposes. In the event that the Over-Allotment Option is exercised in its entirety, the aggregate gross proceeds of the Offering will be approximately C$198 million.

In connection with the Offering, Blackstone Real Estate Investment Trust, Inc. (“BREIT”), a non-listed, perpetual-life real estate investment trust advised by an affiliate of Blackstone Real Estate, has exercised its participation right, pursuant to the investor rights agreement with the Company dated September 3, 2020 to acquire 1,709,996 Common Shares in the Offering at the Offering Price. Following the completion of the Offering, BREIT’s effective ownership interest in the Company will remain approximately 12.7% (assuming the exchange of its preferred units of Tricon PIPE LLC for Common Shares).

“We continue to see exceptional operating performance and demand trends in our rental housing business which, in turn, is attracting tremendous interest from third-party investors to partner with us,” said Gary Berman, President and CEO of Tricon. “We expect the overall size of our single-family rental joint ventures to be larger than we originally anticipated, creating the opportunity for a larger co-investment from Tricon. Raising additional equity provides us with added flexibility to accelerate the growth of our rental platform and our balance sheet, while maintaining a prudent leverage profile. And as we grow, we remain laser focused on providing a superior resident experience through our technology-enabled operating platform.”

The Company intends to allocate substantially all of the net proceeds of the Offering (including the additional net proceeds if the Over-Allotment Option is exercised) to fund

the Company’s future growth initiatives, including future acquisitions and a portion of the capital commitments expected to be deployed through new and anticipated investment vehicles over the next 3-5 years, and any balance for working capital and general corporate purposes. Tricon’s growth initiatives are expected to significantly increase the scale of its rental business and are expected to be accretive to its core funds from operations (“Core FFO”) and net asset value (“NAV”) per share.

Upon completion of the Offering (and excluding the Over-Allotment Option), Tricon expects to have access to approximately US$915 million of available liquidity to execute on its various growth initiatives, including US$434 million of unrestricted cash and US$480 million of available room on its US$500 million corporate credit facility.

The Offering is expected to close on or about June 8, 2021 and is subject to market and other customary conditions as well as receipt of all necessary regulatory approvals, including from the Toronto Stock Exchange. The Common Shares will be offered by way of a short form prospectus to be filed in all of the provinces and territories of Canada pursuant to National Instrument 44-101 – Short Form Prospectus Distributions and in the United States on a private placement basis pursuant to available exemptions from the registration requirements of the United States Securities Act of 1933, as amended. This news release does not constitute an offer to sell or a solicitation of an offer to buy any Common Shares in the United States or to, or for the account or benefit of, U.S. persons.

About Tricon Residential Inc.

Tricon Residential is an owner and operator of a growing portfolio of over 31,000 single-family rental homes and multi-family rental apartments in the United States and Canada with a primary focus on the U.S. Sun Belt. Our commitment to enriching the lives of our residents and local communities underpins Tricon’s culture and business philosophy. We strive to continuously improve the resident experience through our technology-enabled operating platform and innovative approach to rental housing. At Tricon Residential, we imagine a world where housing unlocks life’s potential. For more information visit www.triconresidential.com.

Non-IFRS Financial Measures

Core FFO and NAV per share are key measures of performance commonly used by real estate operating companies and real estate investment trusts. They are not measures recognized under International Financial Reporting Standards (“IFRS”) and do not have standardized meanings prescribed by IFRS. Core FFO and NAV per share as calculated by the Company may not be comparable to similar measures presented by other issuers. Please refer to the Company’s current management’s discussion and analysis, available on SEDAR at www.sedar.com, for a reconciliation of Core FFO and NAV per share to standardized IFRS measures.

Forward-Looking Information

statements include statements regarding: the anticipated closing of the Offering, the use of proceeds of the Offering, the expected timing, terms and benefits thereof, future growth initiatives and available liquidity and acquisition capacity. In some cases forward-looking information can be identified by such terms as “will”, “would”, “anticipate”, “anticipated”, “expect” and “expected”. The forward-looking statements in this news release are based on certain assumptions, including assumptions regarding the Company’s future growth initiatives, the Company’s ability to complete the Offering and the impact of COVID-19 on the Company’s operations, business and financial results. Such statements are subject to significant known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those expressed or implied by such statements and, accordingly, should not be read as guarantees of future performance or results and will not necessarily be accurate indications of whether or not such results will be achieved. Such risks include the risk that the Offering will not be completed, as well as those risks described in the Company’s current annual information form and management’s discussion and analysis, available on SEDAR at www.sedar.com, which risks may be dependent on market factors and not entirely within the Company’s control. Although management believes that it has a reasonable basis for the expectations reflected in these forward-looking statements, actual results may differ from those suggested by the forward-looking statements for various reasons. These forward-looking statements reflect current expectations of the Company as at the date of this news release and speak only as at the date of this news release. The Company does not undertake any obligation to publicly update or revise any forward-looking statements except as may be required by applicable law.

For further information, please contact:

Wissam Francis

EVP & Chief Financial Officer

Tel: 416-323-2484

Email: wfrancis@triconcapital.com

Wojtek Nowak

Managing Director, Capital Markets

Tel: 416-925-2409

Email: wnowak@triconcapital.com

Exhibit 5.1

Consent of Independent Auditor

We hereby consent to the incorporation by reference in this Registration Statement on Form F-10 of Tricon Residential Inc. of our report dated March 2, 2021 relating to the consolidated financial statements of Tricon Residential Inc., which is filed as Exhibit 4.2 to this Registration Statement. We also consent to the reference of us under the heading “Interests of Experts” in such Registration Statement, and the reference to us under the heading “Interests of Experts” in the Annual Information Form of the Company dated March 2, 2021, which is filed as Exhibit 4.1 to such Registration Statement.

/s/ PricewaterhouseCoopers LLP

Chartered Professional Accountants, Licensed Public Accountants

October 5, 2021

Toronto, Ontario, Canada

Exhibit 5.2


		Barristers & Solicitors

		Bay Adelaide Centre
		333 Bay Street, Suite 3400
		Toronto, Ontario M5H 2S7

		Telephone: 416.979.2211
		Facsimile: 416.979.1234
		goodmans.ca

Tricon Residential Inc.

7 St. Thomas Street, Suite 801

Toronto, Ontario M5S 2B7

Re:

Tricon Residential Inc. (the “Company”)

We hereby consent to the use of our name in the Registration Statement on Form F-10 filed by the Company on October 5, 2021, as such may thereafter be amended or supplemented, and in the short-form base shelf prospectus dated August 26, 2021 included therein, under the heading “Legal Matters and Interest of Experts” and under the headings “Eligibility for Investment”, “Certain Canadian Federal Income Tax Considerations”, “Legal Matters” and “Documents Filed as Part of the Registration Statement” in the preliminary prospectus supplement dated October 5, 2021.

In giving this consent, we do not acknowledge that we come within the category of persons whose consent is required by Section 7 of the United States Securities Act of 1933, as amended, or the rules and regulations thereunder.

/s/ Goodmans LLP

Goodmans LLP

Toronto, Ontario

October 5, 2021

Exhibit 5.3


		Blake, Cassels & Graydon LLP
		Barristers & Solicitors
		Patent & Trademark Agents
		199 Bay Street
		Suite 4000, Commerce Court West
		Toronto, ON M5L 1A9 Canada
		Tel: 416-863-2400 Fax: 416-863-2653

Tricon Residential Inc.

7 St. Thomas Street, Suite 801

Toronto, Ontario M5S 2B7

RE:

Registration Statement on Form F-10

We refer to the registration statement on Form F-10 dated October 5, 2021 (the “Registration Statement”) of Tricon Residential Inc. to which this consent is exhibited. We hereby consent to the use of our firm name on the face page of the Registration Statement and in the shelf prospectus supplement included therein, under the headings “Legal Matters” and “Documents Filed as Part of the Registration Statement” and to the reference to and use of our opinion under the headings “Eligibility for Investment” and “Certain Canadian Federal Income Tax Considerations”.

In giving this consent, we do not thereby acknowledge that we come within the category of persons whose consent is required by the Securities Act of 1933, as amended, or the rules and regulations promulgated thereunder.

/s/ Blake, Cassels & Graydon LLP

Blake, Cassels & Graydon LLP

Toronto, Ontario

October 5, 2021

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