Issue 23 – Activity in Single Family Rental
The Palos Funds have been investing in US single family rentals (SFR) via Tricon Capital Group (TSX:TCN) for the past few years. On May 9, 2017, TCN completed its acquisition of Silver Bay Realty Trust Corp. The enterprise value of Silver Bay is approximately $1.4 billion. On June 05, 2017, Colony Starwood Homes (CSH) announced that they were buying a portfolio of 3,106 SFR for $815 million. After comparing the two portfolios acquired, we concluded that the TCN portfolio acquired was done at a higher discount. The CSA portfolio acquired has an implied gross yield of approximately 7.5% while that of the TCN portfolio is 9.0%. Our conviction is that the TCN acquisition has been further solidified by the substantial discount it was acquired at.