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TORONTO, April 15, 2014 /CNW/ - Tricon Capital Group Inc. (TSX: TCN)
("Tricon") today announced that it has closed on a US$18.5 million
strategic investment (the "Transaction") in The Johnson Companies LP,
the development management division of The Johnson Development Corp.
("Johnson" or the "Company"). Johnson is one of the most active
development managers of master planned communities in the United States
and the only development manager in the country to have four
communities ranked in the top 20 in 2013 (see chart below). With
fourteen master planned communities under active development, this
Transaction will be immediately accretive to Tricon, delivering income
growth as a result of in-place contractual management fees, thereby
bolstering its Private Funds & Advisory business.
"I believe that under the leadership of Larry Johnson, The Johnson
Development Corp. is one of the top land development managers in the
United States. We have been extremely impressed with the experience and
talent of their senior management team since we first partnered with
them in early 2012 and we are excited about the opportunity to grow the
Johnson brand over the coming years," said David Berman, Tricon's Chief
Executive Officer. Mr. Berman continued, "In addition, while the
in-place development management contracts will provide Tricon with a
stable, recurring cash flow stream, we believe that the proprietary
investment pipeline from this Transaction will generate significantly
more upside for both Tricon shareholders and our institutional
investors as we continue to grow our platform of fee generating
Johnson will provide a proprietary investment pipeline that will allow
Tricon to continue to grow its Land & Homebuilding and Private Funds &
Advisory business lines; to date, Tricon has already committed US$27.5
million of its own capital and raised US$247.3 million in third party
institutional capital commitments to support Johnson-managed
investments since early 2012.
A strategic relationship with one of the most active development
managers for master planned communities in the United States provides
institutional investors with "one stop shopping" in some of the highest
growth U.S. housing markets, improving Tricon's competitive advantage
in sourcing third party capital.
Johnson earns fee and commission income from in-place development
management contracts at fourteen active communities it manages;
management fees and sales commissions are earned as lots and land are
sold, but are not contingent on underlying project-level returns as
Tricon is not acquiring an interest in Johnson's project-level equity
Johnson-managed communities achieved 2,720 new home sales in 2013, year
over year growth of 32%, and resulted in it being recognized as the
Developer of the Year and Humanitarian of the Year from the Greater
Houston Builder's Association.
Over the long term, recurring contractual fee income will be generated
by the development and sale of over 20,000 residential lots and 1,250
acres of commercial land already under control by Johnson in the
Houston MSA. From an earnings perspective, Tricon's investment in
Johnson will be immediately accretive.
Company revenue is expected to grow as new communities are brought
online and as the national housing market continues to recover; Johnson
may look to strategically expand to other major U.S. markets to take
advantage of large acquisition and recapitalization opportunities
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 single-family 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.
About The Johnson Development Corp.
The Johnson Development Corp. was founded over 35 years ago and has
grown into one of the nation's leading land companies, focused on the
development and sale of highly amenitized master-planned residential
and mixed-use communities. Johnson currently operates in the Houston
and Atlanta markets with fourteen communities under active development,
including four of the top 20 selling master planned communities in the
United States. More information about Johnson is available at www.johnsondevelopment.com.
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. Forward-looking 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 final long form prospectus dated May
14, 2010, the risks disclosed in the Company's subsequent final short
form prospectuses issued through July 26, 2013 and the risks described
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.
PDF available at: http://stream1.newswire.ca/media/2014/04/15/20140415_C9947_DOC_EN_39308.pdf
SOURCE: Tricon Capital Group Inc.
For further information:
Chief Financial Officer