IN THE NEWS


Tricon Capital Group Completes the Sale of its Manufactured Housing Portfolio

Toronto, Ontario – July 3, 2018 – Tricon Capital Group Inc. (“Tricon” or the “Company”) (TSX: TCN), a principal investor and asset manager focused on the residential real estate industry, has completed the previously-announced sale of its 14-park manufactured housing investment vertical known as Tricon Lifestyle Communities (“TLC”) to an institutional asset manager for a gross transaction value of approximately $172 million. The sale resulted in net proceeds to Tricon of approximately $84 million after deducting property-level debt, transaction costs and proceeds due to Tricon’s operating partner.

“We are very pleased with the outcome of the TLC sale process, and we would like to thank our operating partner, Cobblestone, for its meaningful contribution to making TLC a successful investment for Tricon and its shareholders,” said Gary Berman, President and CEO of Tricon Capital. “We intend to apply the net proceeds of the sale largely to reduce our corporate-level debt and create additional flexibility for future investments. TLC has served us well as a stable and predictable business, and we remain committed to expanding our sources of recurring cash flows through our single-family and multifamily
rental businesses which have a much clearer path to scale.” Eastdil Secured acted as Tricon’s financial advisor in connection with the sale of the TLC portfolio.

About Tricon Capital Group Inc.
Tricon is a principal investor and asset manager focused on the residential real estate industry in North America with approximately $5.4 billion (C$7.1 billion) of assets under management. Tricon owns, or manages on behalf of third party investors, a portfolio of investments in land and homebuilding assets, single-family rental homes and multifamily development projects. Our business objective is to invest for investment income and capital appreciation through our Principal Investment business and to earn fee income through our Private Funds and Advisory business. Since its inception in 1988, Tricon has invested in real estate and development projects valued at approximately $19 billion. More information about Tricon is available at www.triconcapital.com.

View the Press Release 7-3-2018

Daily Business News – Manufactured Housing Industry

The Carlyle Group (NYSE: CG) and Tricon Capital Group, Inc. (TSX: TCN), top two stock performers in the MH industry.

Read the full article.

Niche Real Estate Strategies

The Chicago Real Estate Council presents: Niche Real Estate Strategies

CREC is brought together a prestigious group of investors and operators to discuss Niche Real Estate Strategies (Parking, Mobile Home Communities, Storage and Senior Living) – arguably some of the strongest sectors in the real estate market. This discussion featured the investment of each company and its impact to our communities in the future.

Panel:
Moderator, Joseph Calvanico of Loop Capital Financial Consulting
William Glascott, Managing Director, Deputy Chief Investment Officer – Greene Courte Partners
Erik Hagen, President & Chief Executive Officer – Cobblestone Real Estate
Chris Scheuerman, Director of Finance – Banner Real Estate Group
Chad Wells, Senior Vice President of Finance and Real Estate – InterPark

L-R David Horwitch , Joseph Calvanico, William Glascott, Erik Hagen, Chris Scheuerman, Chad Wells, James E Smith

Check out the details for the event!

 

The Carlyle Group (NYSE: CG) and Tricon Capital Group, Inc. (TSX: TCN), top two stock performers in the MH industry

Read the full article here

Cobblestone Announces $30 million Acquisition of Three Manufactured Housing Communities in California

Cobblestone Real Estate LLC, in a joint venture with Tricon Capital Group Inc., (together, “Tricon Lifestyle Communities” or “TLC”) announced today that it acquired a portfolio of three manufactured housing communities (“MHCs”) located in Indio and San Marcos, California. The joint venture is building a portfolio of high-quality MHC and RV resort properties across the United States, predominantly focusing on age-restricted communities in the Sunbelt states. The acquisition, completed on December 1, 2016, includes:

Riverdale Estates – a 185 site, age-restricted MHC property located in Indio, California
Palmdale Estates – a 151 site, age-restricted MHC property located in Indio, California
Springdale Estates – an 85 site, all-ages MHC property located in San Marcos, California

Cobblestone affiliates, Cobblestone Property Management LLC and Cobblestone Asset Management LLC, will manage the communities on behalf of the joint venture.

Commenting on the transaction, Erik Hagen (President & CEO of Cobblestone) stated, “We are excited about our entry into the California market, which is consistent with our business plan of acquiring 3-4 star properties and executing value-add repositioning programs.”

View Official Press Release

View Tricon’s Announcement

Cobblestone/Tricon Lifestyle Communities Purchases Dollbeer Ranch

Pacific Land Company, Derek Harris, Howard Weinstein and Connor Peagler, represented the Buyer in a $8,800,000 Transaction, Dollbeer Ranch, Maricopa County, AZ, purchased by Cobblestone/Tricon Lifestyle Communities. The deal closed escrow on Thursday, August 4 , 2016. TriCon Lifestyle Communities is interested in acquiring more Communities, please contact Pacific Land Company, Derek Harris for more information:

Property:
Dollbeer Ranch/177 Spaces/$8,800,000/$49,718 Space

Google Map: https://goo.gl/maps/bvBDfxgPDkx

Buyer:
Cobblestone/TriCon Lifestyle Communities:
http://triconlifestyle.com

Seller:
EMPIRE MOBILE HOME PARKS LLC

Close of Escrow: August 4, 2016

Tricon Lifestyle Communities (“TLC”) Purchased a Portfolio

On January 11, 2016, Tricon Lifestyle Communities (“TLC”) purchased a portfolio of five age-restricted manufactured housing communities located in the MSA of Phoenix, Arizona for a total purchase price of $34.3 million and a blended cap rate of 6.7%. The portfolio is comprised of 1,355 residential pads located in established residential submarkets. As part of the transaction, TLC assumed existing non-recourse mortgage debt of 64% LTV with a nine year remaining term and a 4.56% blended interest rate. This transaction increases TLC’s portfolio size to 2,474 residential pads with approximately $85 million of assets under management. Tricon Lifestyle Communities is a partnership between Cobblestone Real Estate LLC and Tricon Capital Group, Inc. The communities are managed by Cobblestone Property Management LLC.

Three East Valley RV and mobile home parks have been sold for $25 million

Written by Mike Sunnucks, Senior Reporter – Phoenix Business Journal

Phoenix-based Tricon Lifestyles Communities bought the trio of properties from Saguaro Properties.

The Aztec RV Resort in Mesa and the Desert Holiday and Twin Palms mobile home parks in Apache Junction are all age restricted for those 55 and older. They total 621 spaces.

Howard Weinstein, Derek Harris and Connor Peagler with Pacific Land Co. brokered the sale.

TriCon Lifestyle is a subsidiary of TriCon Capital. It owns other parks in west Phoenix, Mesa and Apache Junction.

Weinstein said TriCon is looking at making additional acquisitions.

Source: bizjournals.com

Written by Philip Haldiman, Editor-in-Chief | Dealmaker – Rose Law Group Reporter

The Delaware limited partnership spent $9.25 million on 191 manufactured home spaces within Apache Junction Mobile Homes Park, located east of the northeast corner of Apache Trail and N. Ironwood Drive (800 W. Apache Trail), in Apache Junction.

The seller was Marvin Sampson.

Pacific Land Company (Derek Harris, Howard Weinstein, founding principals; Connor Peagler, associate) and New Horizons Realty (Ross Cooper, owner) brokered the deal.

The buyer intends to hold the park as an investment and as part of a national acquisition strategy for manufactured housing parks.

Source: roselawgroupreporter.com

National Industry Awards Presented at the 2015 National Congress & Expo for Manufactured and Modular Housing

National Industry Awards Presented at the 2015 National Congress & Expo for Manufactured and Modular Housing

Interior Design ⁄ Home Merchandising

The following interior design⁄home merchandising awards recognize excellence in functionality of space⁄problem solving, visual impact⁄color and balance for a unified look.

Outstanding Interior Design — Land–Lease Community — Cobblestone Real Estate “The Waters”

Members of the manufactured and modular housing industries gathered today at an awards luncheon to recognize individuals and companies for outstanding achievements. The National Industry Awards, presented during the 2015 National Congress and Expo for Manufactured and Modular Housing, recognized companies from all sectors of the manufactured and modular housing industries.

“We were pleased to offer some new home design awards this year — outstanding interior design and merchandising, small home, and green home awards. All the award winners are leading the way in providing outstanding products, customer service, creative solutions and state of the art homes for today’s homebuyers. They are being recognized today for their leadership, vision and dedication to enhancing and moving the manufactured and modular housing industries forward,” said MHI President & CEO Richard Jennison.

MHI National Communities Councel Fall Leadership Forum

Erik Hagen, founder, president and CEO of Cobblestone Real Estate, an Oakbrook, Illinois headquartered commercial real estate investment firm, was a guest panel speaker at the MHI National Communities Councel Fall Leadership Forum held in Chicago.

Tuesday October 28, 2014
MHI – National Communities Council
Fall Leadership Forum: Future Forward, Customer First
General Session
A Capital Conversation

This invigorating panel will discuss why there seems to be a rush to yield and investment in MHC properties. Representatives from newer entrants to the category, active commercial lenders and industry investing veterans will share their views on the capital markets and emerging trends while offering perspective on the financial future for manufactured home communities.

Freddie Mac Multifamily purchased our first Manufactured Housing Community (MHC) Loan

Written by Kelly Brady – Freddie Mac

On October 3, Freddie Mac Multifamily purchased our first Manufactured Housing Community (MHC) loan: a $10.5 million loan to finance Longhaven Estates in Phoenix, Ariz. This inaugural deal brought to fruition a new initiative we have been working on for a while, and announced last spring. You can read about the Longhaven deal here and our initiative announcement here.

But the question I’m often asked is, “How did we do it?” To me, it was about dedication, expertise and tenacity. And almost all of it focused on relationships.

It’s not easy being the last one to the table. Relationships are already established. Track records are already proven. Trust is already built. Our conventional multifamily business had already achieved this status. We needed to prove to the MHC industry that we could be a reliable capital source in this particular market segment. We needed to prove that lenders and borrowers would experience the same high quality level of service and certainty of execution that they currently receive from us on conventional multifamily loans.

In short, we needed to prove that we’re dedicated to serving manufactured housing communities. So what did we do?

I started with myself. I had to prove my own dedication. I knew we wanted to make a big splash at the Manufactured Housing Institute (MHI) conference in Las Vegas last spring. And I didn’t want anything to stop that from happening. So – I kid you not – I actually planned my wedding around the conference! Rather than doing a destination wedding and missing the conference, my fiancée and I agreed to get married in Vegas. And that’s exactly what we did the day after the conference ended. I hope you agree, that’s dedication.

Next, we needed to build expertise. So we hand-picked a core team for MHCs, with the time and desire to develop relationships and with a deep knowledge of the intricacies of this business. Then, we were tenacious in pursuing business. We reached out to community owners. This was the key to our success in purchasing our first MHC loan.

For example, we first met Erik Hagen of Cobblestone Real Estate at the MHI conference. A month later, we met again in his hometown of Chicago. And more recently, we invited him to Freddie Mac headquarters, where he spoke to 200 employees and shared his insight on this business. A relationship was developed.

However, it’s not just the borrowers with whom we need to develop relationships. It is also our lenders. We are working with Seller/Servicers that have done business with us for years, understand MHCs, and know how to do business with us. Because of these relationships, Will Baker of Walker & Dunlop was able to originate our first MHC loan, experience the same high quality level of service as our conventional business, and close the loan within 45 days. A relationship continued to grow.

The first deal of any new initiative is always significant. It is like a first-born child; it sets the standard very high. And early indications suggest that our efforts are making a positive impact. With our announcement to enter this space, lenders and borrowers have told us that they have seen the availability of funding go up and the cost of capital go down. And, while it’s still early, we are bringing mortgage funds to locations we have not been active in before, bringing much needed capital to rural areas where traditional multifamily apartments are scarce. We are committed to an industry that provides affordable housing and a community.

But this is only the beginning.

– Kelly Brady

Kelly Brady is vice president of underwriting and credit at Freddie Mac.

Source: Freddie Mac

www.freddiemac.com

(Bethesda, MD) – PRNewswire

Walker & Dunlop, Inc. (NYSE: WD) announced today that it originated a $10,575,000 loan on Longhaven Estates, a manufactured housing community (MHC) located in Phoenix, Arizona, for Cobblestone Real Estate LLC (Cobblestone) based in Oak Brook, IL and Tricon Capital Group (Tricon), headquartered in Toronto, Canada. This is the first loan done through Freddie Mac’s new manufactured housing loan offering. “Being the first Seller/Servicer to originate a manufactured housing loan for Freddie Mac is a testament to Walker & Dunlop’s extensive experience financing manufactured housing communities, and our deep and rapidly growing partnership with Freddie Mac,” commented Walker & Dunlop’s Chairman and CEO, Willy Walker.

Longhaven Estates is located in a historically strong manufactured housing market and features a clubhouse, banquet hall, community kitchen, game room, library, fitness center, and three laundry facilities. Tenants also enjoy two outdoor pools, a spa, a shuffleboard center, a picnic/barbeque area, an aviary, and RV/boat storage areas on the property grounds.

Bethesda-based senior vice president, Will Baker led the team that structured the loan and commented, “When Cobblestone and Tricon approached us with this acquisition opportunity, we immediately knew it would be a perfect inaugural deal for Freddie Mac. Due to Freddie Mac’s knowledgeable team and the hard work of our underwriting group, we were able to rate lock and fund the loan in less than 45 days from receiving the signed loan application. The fact that Freddie Mac’s very first MHC loan was underwritten, rate-locked and funded within the same time-frame of a typical multifamily loan displays Freddie Mac’s commitment to this program. We are excited to have another financing option to offer our manufactured housing clients and feel that Freddie Mac is going to be a very significant player in the manufactured housing market.”

“We are excited to team up with Walker & Dunlop, Cobblestone and Tricon on the first loan to use our new MHC offering that offers the same certainty of execution as our other loan products,” said Peter Giles, regional managing director of Freddie Mac Multifamily. “With MHC we are expanding our efforts in affordable rental housing.”

About Walker & Dunlop

Walker & Dunlop (NYSE: WD), headquartered in Bethesda, MD, is a leading provider of commercial real estate financing solutions nationwide. Our comprehensive suite of financing solutions allows us to originate loans for our own balance sheet, CMBS conduit, and investment partnerships, or for sale to Fannie Mae, Freddie Mac, HUD, life insurance companies, banks and other CMBS providers. Walker & Dunlop has more than 400 employees located in 20 offices nationwide. For more information, please visit www.walkerdunlop.com and follow us on Twitter at @Walkerdunlop.

Source: Walker & Dunlop, Inc. and PRNewswire

www.walkerdunlop.com

www.prnewswire.com

(McLean, VA)

Erik Hagen, founder, president & chief executive officer of Cobblestone Real Estate, Will Baker, senior vice president of Multifamily Finance at Walker & Dunlop, Amanda Nunnink, national MHC production lead at Freddie Mac, and Dan Din national MHC underwriting lead at Freddie Mac presented to over 250 Freddie Mac staff on the finance and operations of Manufactured House Communities as part of Freddie Mac’s Multifamily Educational Briefing series.

Mobile home park investors bet on older, poorer America

Written by Drew Harwell – Tampa Bay Times
http://www.tampabay.com/news/business/realestate/mobile-home-park-investors-bet-on-older-poorer-america/2180277

Sick of the cold, Una and Howard Kemper followed the warmth 1,000 miles south to a field of asphalt in the Florida pine flats, a mobile home park named CountryWood. They bought a double-wide a third the size of their Baltimore rancher — with a manicured palm out front, like they had seen on TV — and filled it with angel figurines. That was 24 years ago. Una is 76 now, a widow on a fixed income. But this will always be her home. “As far as I’m concerned, I’m in paradise,” she said. “When I leave I want to leave the same way (Howard) did — not going anywhere else, except straight up.”

About 1.8 million Floridians today choose to live in a mobile home, a crowd five times the size of Tampa and mostly earning less than $30,000 a year.

A new wave of investors is spending millions to profit off their business, amid a growing market of retirees and working poor who can’t live anywhere else.

It is a bet on an older, poorer America, to whom mobile homes are a last resort. Millions can’t afford rising apartment rents or home prices, or earn wages that are falling or flat.

That means mobile home park landlords and investors are assured steady business and a captive audience, even in the face of rising fees.

As Frank Rolfe, a park owner who runs Mobile Home University, a boot camp for investors, told Bloomberg, “We’re like a Waffle House where everyone is chained to the booths.”

Though about 18 million Americans live in them, mobile homes are largely a Southern business, with snowbirds fleeing winter for the Sun Belt states. Another 10,000 American baby boomers retire every day, filling the market for 55-and-over parks. Only Polk County has more mobile home parks than Pinellas or Hillsborough. And in Pasco and Hernando, one in five people call a mobile home park home.

Today’s mobile homes are far removed from the prefab trailers of the ’70s. Made in factories, they look a lot like typical “site-built” homes, though they sell for half the price.

Mobile home parks that are not resident-owned charge homeowners every month to rent their square of dirt and concrete. The average resident at Equity LifeStyle Properties, the largest mobile home landlord in the country, will pay $549 a month in site fees this year, and most landlords raise fees every year. More than 90 percent of Tampa Bay parks raised rent over the last year, 2013 data from research firm JLT & Associates show.

Even more enticing for investors: The supply of mobile home parks is largely static. Few developers build mobile home parks anymore, their open land more profitably used for apartment complexes, subdivisions or strip malls.

Many mobile home residents never move because they have weak credit, low savings and no other shot at owning a home. That they’re known as “mobile homes” is a cruel irony: Moving them can cost more than $5,000, much more than residents can usually afford.

“People are living longer today than ever before, and the financial status of those people is changing,” said Jim Ayotte, the director of the Florida Manufactured Housing Association, an industry trade group. “They’re saying, ‘If I’m going to be around till I’m in my 90s, do I have enough money to live?’ ”

Years ago, the mobile home industry was mostly ignored save for a few investment titans. Warren Buffett paid $1.7 billion in 2003 to buy Clayton Homes, one of America’s largest mobile home conglomerates. Sam Zell, the billionaire chairman of Equity LifeStyle, said in a 2012 conference call he liked “the oligopoly nature of our business.”

But the market’s new potential is luring investors, some of whom recently bought single-family homes to fix up and rent. Tricon Capital Group, a Canadian fund, said recently it wants to buy $680 million worth of mobile home parks in Florida, Arizona and California, calling mobile homes a $400 billion industry.

Carlyle Group, a Washington private-equity firm, spent $31 million in October to buy two Florida mobile home parks, including Sun Valley Estates, a Tarpon Springs park where 90 percent of the lots are full and site fees average $580 a month.

Equity LifeStyle saw revenue jump 6 percent last year to $187 million, and its stock price has doubled in the past five years. The firm owns or leases more than 140,000 sites across North America, including in 120 parks in Florida, and has acquired hundreds more over the past year in parks like Rainbow Lake and Fiesta Key.

The firm owns CountryWood, where Kemper lives, and Florida’s largest mobile home park, Colony Cove, a 2,200-lot Ellenton fortress with a wood shop and five swimming pools. Said Patrick Waite, the firm’s executive vice president of operations, “We’re basically running small cities.”

With little incentive for many manufactured housing community owners to improve, some parks have devolved into squalor. But investors said well-maintained parks are easier to market and make more money.

“It’s not a very sexy business,” said Waite, “but it’s a very good investment.”

CountryWood’s looping cul-de-sacs sprawl across a desolate flatness of northern Plant City, near an old cattle ranch and far from everything else. Like many mobile home parks, it is surprisingly upscale. There is a model mobile home with a white picket fence. Vinyl and aluminum siding must be kept to community-regulated shades of taupe, sand and beige. The carports are full at noon, but golf carts buzz to the clubhouse for water aerobics, chair volleyball and canasta.

Before Jim Young and his wife, Carolyn, bought their CountryWood home more than a decade ago for $28,000, Jim, 66, was reluctant to give up the single-family homes he had lived in all his life.

“When he was growing up, he was used to all these little tiny trailer parks,” says Carolyn, 68, slowly drawling every syllable, “all seedy and bad and rundown.”

But they quickly became effusive cheerleaders of the manufactured home lifestyle, just what investors hope for. Their home has an office space, patio seating and an exercise space, all in the same room. A sun deck gives views of the canal, neighbors’ satellite dishes and Adirondack chairs. Jim compares his floors to “the Kennedy compound up in Hyannis Port.”

The Youngs pay $500 a month for basic utilities and lot fees, which Equity LifeStyle has raised about 3 percent every year for the past five years.

But they say they’re happy to pay a sum that’s still less than what they paid for their traditional home.

Both love having a packed social calendar of bingo parties and tennis games. “You can’t live as good as you can live here, out there, for this amount of money,” Jim said.

The couple figures they’ll always have to deal with naysayers thinking they’ll blow away in a hurricane. But for the money they save, they’re happy to call their double-wide a home.

When they had 12 people over for Easter, Carolyn even told them her new name for it: “Our aluminum mansion.”

Drew Harwell can be reached at dharwell@tampabay.com or (727) 893-8252.

Source: Tampa Bay Times

www.TampaBay.com

(Toronto, Ontario) – Tricon

Tricon Capital Group Inc. (TSX: TCN) (“Tricon” or the “Company”) today announced a new strategic initiative focused on acquiring and managing existing manufactured housing communities (“MHCs”) across the United States. Tricon has a successful track record investing in the residential sector and intends to leverage its operational and development experience to build an investment platform which acquires manufactured housing communities and leases land to homeowners. Tricon believes there is an opportunity to assemble a high-yielding, institutional quality portfolio in a highly fragmented market that is largely dominated by private investors. The Company’s aim is to build a diverse portfolio of quality assets that will garner the interest of public markets and strategic investors once critical mass is achieved.

“The entry into the U.S. manufactured housing industry marks the next step for Tricon in establishing our housing brand. As disclosed previously, we expect that our investment focus will expand to include other opportunistic and related residential business lines,” said David Berman,
Tricon’s Chairman and Chief Executive Officer. “Over time, we intend to leverage our development expertise in the land and homebuilding industry and our operational experience in single-family rental to grow methodically so we become a more diversified residential real estate specialist. As
with any investment, we intend to offer a co-investment in this exciting strategy to our institutional partners once critical mass is achieved, thereby further enhancing our third-party asset management business. Ultimately we would like the public markets to think of Tricon as a ‘housing brand’ with related business lines that offer shareholders and limited partners added diversification across the full spectrum of housing, from affordable housing to affordable luxury. I believe that this new initiative, which has been approved by Tricon’s Board of Directors, will be well received by the market and will help grow our assets under management and EBITDA.”

Partnership with Cobblestone Real Estate LLC

Tricon has entered into a definitive partnership agreement with Cobblestone Real Estate LLC (“Cobblestone” and together forming the “Partnership”), a vertically integrated asset and property manager whose principals have a successful 15-year track record acquiring and managing over
16,000 residential pads across the U.S. The Partnership will pursue an acquisition strategy that targets both age-restricted and all-age MHCs in the U.S. “sun belt”, where Tricon can leverage its development and operational expertise through its Single-Family Rental and Land & Homebuilding
businesses. The Partnership will target well-located MHCs that are initially deemed to be at least 3 to 4 star quality and potentially suffering from below market rents, low occupancy and general market perception.

Initially, Tricon intends to capitalize the strategy on the Company’s balance sheet which will provide Tricon with stable rental income and upside potential through: (i) driving rental income through aggressive asset management and a programmatic capex plan; and (ii) taking advantage of the significant positive spread to current financing rates, targeting day one cash-on-cash yields of 10%+. The Partnership’s business plan will provide downside protection by focusing on free cash flow and upside in the terminal value by actively repositioning existing assets to a higher star
classification.

Tricon’s Rationale

An investment in manufactured housing further establishes Tricon as a multi-pronged housing brand with a number of related business lines such as Single-Family Rental, Land & Homebuilding, and now Manufactured Housing Communities where the Company can leverage its operating and
investment expertise. An investment in this strategy also further enhances Tricon’s income profile with a stable cash flowing business that has historically generated rental growth in excess of other major asset classes1. Furthermore, the ownership of MHCs is highly fragmented with institutional
investors representing a minority share. As a result, Tricon believes there is an opportunity to consolidate the smaller private investors in the sector who have difficulty increasing occupancy or driving rents because they lack access to capital.

Overview of Manufactured Housing

MHCs enable owners of pre-fabricated homes to rent residential lots in exchange for a monthly fee. According to the American Housing Survey (“AHS”), there are 9.0 million manufactured homes in the U.S., representing approximately 7% of the total housing stock. Furthermore, manufactured
homes are not as “mobile” as they are generally perceived by the public – of all manufactured homes in the U.S., AHS estimates that 6.2 million or 69% are still affixed to their original site placement.

MHCs offer affordable housing to potential homeowners at a significantly lower price-point than traditional wood frame homes. The sector is primarily classified into two property types: (1) Age restricted – targeting the growing senior (55+) segment; and (2) All ages – geared towards families
in need of affordable housing. Historically, resident turnover has been significantly lower than that of multi-family and single-family rental properties, as non-renewal of a land lease can cost the chattel owner between $5,000-10,000 to remove their home depending on the moving distance. The
sector’s investment fundamentals include high barriers to entry as it is very difficult to achieve entitlements to build a new MHC, and stable double digit cash-on-cash returns from the significant income arbitrage that is available in today’s low interest rate environment.

Raymond James Ltd acted as exclusive financial advisor to Tricon in connection with this strategy.

 

About Tricon Capital Group Inc.

Founded in 1988, Tricon is one of North America’s leading residential real estate investment companies. Tricon provides financing to local operators or developers in select markets in the United States and Canada, with a primary focus on housing in growing markets. Our business
objective is to invest for investment income and capital appreciation through our Principal Investment business segments and to earn fee income through our Private Funds and Advisory business. We currently have $1.9 billion of assets under management, including 22,500 singlefamily
lots, 6,300 multi-family units and a portfolio of over 3,300 U.S. single-family rental homes. Since inception, Tricon has invested in approximately 160 transactions for development projects valued at more than $12 billion. More information about Tricon is available at www.triconcapital.com.

Forward-Looking Statements

This press release may contain forward-looking statements relating to expected future events and financial and operating results and projections of the Company, including statements regarding future plans, objectives or economic performance that involve risks and uncertainties. Forwardlooking
information and statements are based on management’s expectations, intentions and assumptions. If unknown risks arise, or if any of the assumptions underlying the forward-looking statements prove incorrect, actual results may differ materially from management expectations as projected in such forward-looking statements. Examples of such risks include, but are not limited to, the risks disclosed in the Company’s continuous disclosure materials from time-to-time as available on SEDAR at www.sedar.com. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by applicable law.

For further information, please contact:

Margaret Whelan
Chief Financial Officer
Tel: 416-925-9744
Email: mwhelan@triconcapital.com

Stephanie Chow
Financial Analyst
Tel: 416-928-4337
Email: schow@triconcapital.com

Source: www.triconcapital.com

Tricon Targets Upscale Mobile Home Parks in U.S. Bet

Written by Katia Dmitrieva – Bloomberg

Tricon Capital Group Inc. (TCN), the Canadian company whose profit rose five-fold last year after
betting on U.S. housing in the depths of the slump, now plans to expand into upscale mobile-home
parks.

Tricon is looking to buy communities of manufactured homes in the so-called “sun belt” of
Arizona, Florida, and California, where selling prices average $60,800, the cheapest of any U.S.
region. The Toronto-based company aims to buy assets of about C$750 million ($670 million) in
the housing segment, with the first investment possibly this year, according to Chief Operating
Officer Gary Berman.

“If you look at the U.S. population, it’s definitely growing, it’s definitely getting older, and it’s
probably getting poorer,” Berman, 40, said yesterday at Bloomberg’s office in Toronto. “What
single-family rental and manufactured housing do is they provide very affordable housing for
people.”

Tricon has gained 35 percent since it went public in 2010 after purchasing single-family homes in
the U.S. following the 2008 financial crisis and then renovating them for sale. The stock rose 0.9
percent to C$8.18 at 9:52 a.m. in Toronto today.

The company currently owns about 3,500 rental units, in a strategy that competes with private
equity players including Blackstone Group LP.

The U.S. single-family home market is worth $2 trillion to $3 trillion, and manufactured housing is
about a $400 billion business, said Berman, who helps run Tricon with his father David Berman,
the chief executive officer.

Natural Extension

Berman is targeting homes that rise above traditional trailer parks, a term he avoids.

“There’s a star system,” Berman said. “If you looked at a one-to-two-star park, you would see
trailer parks, you would see RVs. If you looked at a five-star park you wouldn’t know the difference
between that and a single-family home. They’re beautiful. That’s what we’re interested in
targeting.”

Entering the sector is a natural extension for the company, which profits from purchasing at a low
price and selling or renting as values rise, according to Trevor Johnson, an analyst at National
Bank Financial.

“It’s in the wheelhouse that they’ve come to know over the years through managing funds and
projects in the U.S.,” Johnson said by phone yesterday. “They’re being opportunistic.”
Tricon, which funds housing development in Canada and the U.S. and manages private real estate
funds for institutions, has about C$1.9 billion under management, with 80 percent of its assets in
the U.S. and 20 percent in Canada.

Canada Stretched

It wants to keep the geographical mix that way as it aims to triple assets under management to
C$5.7 billion in five years. After financing construction in Toronto of such condominium projects
as Lanterra Developments’ Murano and Burano towers near Bay and College Streets and the artdeco
inspired College Park highrises, Tricon hasn’t invested in the city since 2012.

“There’s a lot better risk-adjusted returns in the U.S. than in Canada,” said Berman, who previously
worked in the real estate units of Goldman Sachs Group Inc. and Blackstone Group. “We see that
affordability in Canada is stretched. We can be patient and we can wait for prices to correct and go
back in.”

Tricon’s adjusted net income rose to C$34.7 million in 2013 from C$6.76 million in 2012. The
company closed its largest fund, the $334 million Tricon XI, that invests in distressed U.S.
residential property, and expanded its advisory business.

Affordable Housing

In the U.S., demand for more affordable housing is high as federal subsidies haven’t kept pace with
the growing need, according to Harvard University’s Joint Center for Housing Studies. Family
incomes have fallen while the supply of rentals has remained flat, contributing to a shortage of 4.9
million rentals in 2011 for low-income families, or those making less than about $19,000 a year.
That’s up from a gap of 1.9 million in 2007.

“There’s certainly a tremendous need for more affordable housing — this could be a very profitable
venture,” said Andrew Hamlin, an asset manager at Aston Hill Financial Inc., who helps manage
C$7.8 billion including Tricon shares.

The risk is that distressed homes and communities are a well-targeted asset and it’s getting harder
to find good properties at a good enough discount, Johnson at National Bank said.
Blackstone Group, the biggest U.S. single-family home landlord, is slowing purchases of houses to
rent as prices have risen about 24 percent since March 2012. Private-equity firms, hedge funds,
and other investors spent more than $20 billion buying about 200,000 rental homes in the last
two years.

“It’s a blessing and a curse,” Johnson said. “The assets are cheap but institutions are really involved
in the space now. It makes it a little more challenging but the general population hasn’t quite come
back yet. That’s the bet Tricon’s making — that they’ll buy the inventory from them.”

To contact the reporter on this story: Katia Dmitrieva in Toronto at edmitrieva1@bloomberg.net

To contact the editors responsible for this story: David Scanlan at dscanlan@bloomberg.net

Source: www.bloomberg.com

Private-Equity Firm Adds Trailer Parks to Its Diverse Portfolio

Written by Dawn Wotapka – The Wall Street Journal

Carlyle Group LP, a private-equity firm that has interests in everything from an oil refinery to a vitamin maker, is adding trailer parks to its portfolio.

The Washington-based company has struck a deal to acquire two Florida communities for a total of $30.8 million. The sellers are two entities managed by Shamrock Holdings LLC, a Paradise Valley, Ariz., owner and operator of communities, said owner Patrick O’Malley. The deal is expected to close this month.

Carlyle declined to comment. But analysts said the deal is evidence that big investors are betting that the demand for low-cost manufactured housing, the latest generation of trailers or mobile homes, will rise as other housing alternatives become too expensive for a number of Americans, especially senior citizens.

Landlords like the steady income stream—tenants tend to stay put, especially retirees—and the low maintenance costs. Also, the communities are easy to run and typically stay full and see rents increase during market downturns.

Carlyle’s presence will “create awareness of the industry…and help legitimize this space as worthy of investment,” said Frank Rolfe, vice president of MHP Funds, a private owner of about 9,000 individual lots in 82 communities nationwide. “The industry struggles for respect. It always has.”

According to brokers, investors are particularly interested in communities geared toward retirees who are more likely to have steady income from Social Security and other retirement benefits. Such communities were 92% full in October, according to research firm JLT & Associates.

The two communities that Carlyle is acquiring, Village of Ponce de Leon in Melbourne Beach and Sun Valley Estates in Tarpon Springs, both cater to those 55 and older. At Sun Valley, occupancy is 89% and average rents are $582 a month, Mr. O’Malley said. Village of Ponce de Leon is 82% full and has average rents of $681, he said.

Mr. O’Malley said “less sophisticated” buyers might have been turned off by the vacancy rate, but Carlyle “worked with us to structure a deal around the vacancy so that the price made sense for both parties.”

Manufactured housing has come a long way since its trailer-park days. Many of today’s manufactured homes resemble single-family residences, with several bedrooms, backyard patios or decks, wooden kitchen cabinets and stainless-steel appliances. Some trailer-park communities are located near lakes and rivers and boast amenities ranging from swimming pools to tennis courts.

Prices for the manufactured homes are substantially lower than typical housing. Residents often purchase the homes at prices that can range from less than $10,000 to up to $200,000. In addition, residents also must pay a monthly rental fee to a landlord. Those fees averaged $391 a month in October, up 2.3% from a year ago, according to JLT, the highest level since the firm began tracking in 1996. Owners of the park communities make most of their income on the monthly rental fees, although they also own some of the homes and rent them out to tenants.

Because the cost of relocating a home is expensive, residents are less likely to move away. “Our customers have no alternative shot at homeownership, nor do they [normally] even have the credit scores and quality to seek anything better,” Mr. Rolfe said. “They never leave the park they are in, and the revenues are unbelievably stable as a result.”

Of the three publicly traded owners of manufactured-housing communities, shares of Sun Communities Inc. have climbed 6.8% this year and Equity LifeStyle Properties Inc. are up 5%. UMH Properties Inc. is down 3.6%. In comparison, the MSCI U.S. REIT Index has increased 2.5% in 2013.

To be sure, not everyone wants to own manufactured-housing communities because the sector isn’t widely established as investing in apartments or other real estate.

Still, increased investor demand is pushing up prices of individual lots. Hometown America, a private owner and operator of manufactured-housing communities, recently paid $38 million, or nearly $121,000 a lot, for a 315-space community in Prescott, Ariz. The price was the highest ever paid per unit in Arizona, said Evan C. Barry, an associate director with Marcus & Millichap’s National Manufactured Home Communities Group, which represented the buyer and seller.

Sam Landy, chief executive of UMH Properties said individual lot prices have jumped nearly 50% in the past two years. It expects to pay an average of $40,000 per lot this year, up from $26,000 in 2011. That hasn’t decreased UMH’s appetite for deals: It expects to spend about $38 million on land purchases this year.

“If we could find more deals, we’d do more,” Mr. Landy said. “There are many more players looking to buy.”

The industry has made a remarkable turnaround since the 1990s, when lax lending standards fueled a boom in shipments of new manufactured homes that led to a bust. A wave of repossessions left plenty of cheap, used manufactured housing available. The industry’s woes worsened during the housing boom, when mortgages for traditional homes were easy to obtain.

The WallStreet Journal