Market News

Tricon Expands Rental Units in U.S. Sun Belt

Tricon Residential (TCN) announced Tuesday it plans to deliver more than 3,000 build-to-rent homes in 23 new communities across the U.S. Sun Belt.

Tricon is a rental housing company operating single-family rental homes and multi-residential rental apartments in the United States and Canada. (See Analysts’ Top Stocks on TipRanks)

Satisfying Growing Demand for Housing

The communities are under development or under contract to be developed within the existing single-family rental investment vehicles of Tricon THPAS-JV1 and Homebuilder Direct JV. They are being built by a number of national and regional builders, including four of the top 25 largest homebuilders in the United States.

The planned communities target mid-market residents and are located in high-growth Sun Belt states, aligning with Tricon’s broader single-family home rental strategy. The 23 communities are spread over ten MSAs, including: Texas (Dallas-Fort Worth, Houston, Austin and San Antonio); California (Sacramento and Inland Empire); Phoenix, Arizona; Jacksonville, Florida; and Reno, Nevada.

Tricon is currently on track to have more than 600 new homes built in these communities and available for rent by the end of 2022, with the full pipeline due to be delivered by the end of 2024.

Management Commentary

Tricon Residential president and CEO Gary Berman said, “COVID-19 has cast light on the shortage of affordable housing options across the U.S. At Tricon, we are committed to expanding the supply of accessible, high-quality housing for families who are seeking a single-family home and prefer the convenience and flexibility of a rental lifestyle.

“We are also focused on building sustainable communities that enrich the lives of our residents and the local neighborhoods they live in, which is central to our corporate strategy and our Environmental, Social and Governance (“ESG”) priorities. Our build-to-rent pipeline makes a positive contribution to alleviating America’s housing shortage, while stimulating local economic growth and catering to the needs of modern residents.”

Wall Street’s Take

Earlier in November, CIBC analyst Dean Wilkinson maintained a Buy rating on TCN with a C$21 price target. This implies 18.4% upside potential.

Consensus on the Street is that TCN is a Strong Buy based on six Buys and one Hold. The average Tricon Residential price target of C$19.86 implies 12% upside potential to current levels.

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