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TORONTO, Feb. 5, 2019 /CNW/ - Tricon Capital Group
Inc. ("Tricon" or the "Company") (TSX:TCN), an investment manager
focused on residential real estate, today announced an expansion of
its Toronto multi-family
development (Tricon Lifestyle Rentals or "TLR") program to over
3,000 units with the addition of its seventh project in downtown
Toronto. The new mixed-use
development built in partnership with TAS is located at the corner
of Labatt and River streets ("7 Labatt") in Toronto's downtown east submarket on a 1.3
acre site that is fully zoned for a ~560,000 square foot
building.
The addition of the project at 7 Labatt brings Tricon's
multi-family development pipeline to over 3,000 units with an
estimated total cost of approximately $1.2
billion and targeted development yields of 5-6%; Tricon's
average ownership stake in this portfolio is approximately 30%. The
seven projects are expected to be completed over the next three to
four years.
"Tricon has committed to building a market leading purpose-built
rental platform in Toronto and
continues to execute on this plan with the addition of its latest
project in the thriving Corktown neighbourhood. Even in the context
of a competitive land market, we have been able to secure
compelling sites at an attractive land basis by partnering with
strategic developers and institutional investors seeking long-term
cash flow," said Tricon's President and CEO Gary Berman.
"Toronto continues to support
extremely compelling rental economics with immigration in excess of
100,000 each year, a diverse economy, high quality of life, and
growing status as a global city. During 2018, year-over-year rental
growth topped 10% and vacancy remained very constrained at less
than 1%, according to UrbanRental. Tricon is at the forefront of
providing class-A multi-family rental apartments within the most
sought-after locations across the city, and is leveraging 30 years
of development experience to pursue strong investment returns for
our investment partners and shareholders."
Profile of the 7 Labatt Acquisition
The project at 7 Labatt is immediately south of the Regent Park
re-vitalization, a 69 acre master plan that has been transformed to
a vibrant, family-oriented urban community. The site is in close
proximity to cultural, community and state of the art athletic
amenities, and offers convenient access to three downtown streetcar
lines as well as the Don Valley Parkway. The project will include
approximately 600 residential units, expected to be split evenly
between rental and for-sale condominium units. Tricon's interest in
the project site was acquired from TAS, a community-centric
mixed-used developer, and the project will be developed in
partnership with TAS with construction expected to commence in
mid-2020 and completion anticipated in late 2023. The total equity
commitment for the project is approximately $60 million (~C$80million), with 30% from Tricon, 50% from an
institutional investor, and 20% from TAS.
Update on Tricon's Canadian Multi-Family Development
Projects
|
TLR
Ownership
|
Projected
construction
|
Projected
Rental Units
|
Start
|
End
|
The Selby (592
Sherbourne)
|
15%
|
Q1 2015
|
Q4 2018
|
502
|
The Taylor (57
Spadina)
|
30%
|
Q1 2018
|
Q1 2021
|
286
|
The James (Scrivener
Square)
|
50%
|
TBD
|
TBD
|
TBD
|
West Don Lands - Two
Projects
|
33%
|
Q2 2019
|
~2023
|
1,500
|
8
Gloucester
|
47%
|
Q4 2019
|
Q3 2022
|
232
|
7 Labatt
|
30%
|
Q2 2020
|
Q4 2023
|
300
|
|
|
|
|
~3,000
|
The Selby, located at Bloor and Sherbourne streets, commenced
initial leasing in December 2018.
Interest in the building has been strong across multiple
demographic cohorts, with leasing activity picking up into the new
year and per-square-foot pricing well above underwritten
assumptions. Leasing activity is expected to accelerate as upper
floor suites are released and additional amenities are opened
including an Oliver and Bonacini restaurant, the mansion, spa, and
pool. In addition, the launch of The Selby marks the
introduction of the Tricon House operating brand, which brings
customer-focused and lifestyle-oriented apartment living to
Toronto. Tricon House buildings
are defined by architecture and design excellence, exceptional
amenities and common areas, service levels that simplify our
residents' lives, and a commitment to resident community.
The Taylor at 57 Spadina Ave., commenced construction in Q1 2018
with the demolition of the existing retail building and has
materially completed site excavation. The Entertainment District
submarket where the project is located has sustained above-average
rent growth as it continues to be one of the most sought-after
rental neighbourhoods in Toronto
for renters; average rents in this node were C$4.10 per square
foot as of Q4 2018, according to Urbanation, which is meaningfully
above Tricon's underwritten rents. Meanwhile,~40% of construction
costs have been awarded and are in line with budgeted
expectations.
Tricon Lifestyle Rental's other developments, including
Scrivener Square in the Rosedale/Summerhill neighborhood, two sites at
the West Don Lands adjacent to the historic Distillery District (in
partnership with Dream Unlimited Corp. and Kilmer Group), and 8
Gloucester in the Yonge & Bloor neighborhood, are all currently
in the design stage with construction projected to start in
2019-2020.
Update on Tricon's U.S. Multi-Family Development
Projects
In the U.S., Tricon is pursuing an orderly exit of its two
multi-family development projects. Both buildings are expected to
be sold in 2019 with the net proceeds used primarily to reduce
Tricon's corporate debt. Going forward, Tricon intends to only
invest in businesses where it can obtain scale and hold a
leadership position, and aims to increase its exposure to
investments with predictable rental income and cash flows which may
include multi-family investments.
At The McKenzie, adjacent to Dallas' affluent Highland Park neighbourhood,
construction of the 183-unit rental building was substantially
completed during the fourth quarter of 2018 and lease-up is
progressing well. The building is being actively marketed for sale.
At The Maxwell in Frisco, construction of the 325-unit rental
building continued as planned and is expected to be substantially
completed in early 2019, while lease-up is currently in the early
stages.
About Tricon Capital Group Inc.
Tricon is an investment manager focused on the residential real
estate industry in North America
with approximately $5.7 billion
(C$7.3 billion) of assets under
management. Tricon invests in a portfolio of single-family rental
homes, purpose-built rental apartments and for-sale housing assets,
and manages third-party capital in connection with its investments.
Since its inception in 1988, Tricon has invested in real estate and
development projects valued at approximately $20 billion. More information about Tricon is
available at www.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 expected project development
timelines, anticipated development costs and development yields,
planned building features, and statements regarding the intended
growth of Tricon Lifestyle Rentals' portfolio. Such statements are
based on the Company's internal underwriting assumptions, current
project business plans and current transaction pipeline and 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. 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 including but not limited to the
assumptions, risks and uncertainties described above. 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 Company has included herein certain supplemental measures
of key performance, including development yields. The Company
utilizes these measures in managing its business, including
performance measurement and capital allocation, and believes that
providing these performance measures on a supplemental basis is
helpful to investors in assessing the overall performance of the
Company's business. However, these measures are not recognized
under IFRS. Because non-IFRS measures do not have standardized
meanings prescribed by IFRS, Tricon's use of these measures may not
be comparable to similar measures reported by other issuers and
they should not be construed as alternatives to net income (loss)
or cash flow from the Company's activities, determined in
accordance with IFRS, in measuring the Company's performance. The
definition, calculation and reconciliation of the non-IFRS measures
used herein are provided in Sections 6 and 7 of the Company's
MD&A for the three and nine months ended September 30, 2018, which is available on SEDAR
at www.sedar.com.
SOURCE Tricon Capital Group Inc.