Tricon has dropped more than other real estate stocks in the last week and is considerably below book value .... something that I would have given the stock more of a floor. How realistic do you consider their book value if all their homes/properties were liquidated tomorrow and the company was wound down or sold?
It seems , given the price of building materials, you could not begin to build houses for what Tricon bought many of these houses at - many after the 2009 real estate melt down, plus there is so much pent up demand for more housing given inflows of immigrants.
How would you rate the quality of management?
Do you see it as having compelling inherent value and would you add to a partial position now?
Much thanks
Stuart
We think management is good, but maybe not 'great'. They have build a solid portfolio of US rental exposure, and have grown assets 20-fold in the past decade. We could fault them for highly variable earnigs but that is the nature of real estate. Book value is probably fairly accurate, or understated somewhat. Of course, if they did sell everything at once there would be a price impact. But we agree that with inflation the portfolio would be hard to replace at anywhere near book value. Rents continue to increase. It is priced well, and while down 10% YTD it has held up better than many REITs. With fear working its way back into the market, particularly with more concern on housing/banks/rates, we think it is attractive but if already owned we are not sure we would want 'more' just yet. There could be some year end selling or simply more concern on economic conditions.