Blackstone and Tricon Residential recently announced that they have entered into an arrangement agreement under which Blackstone Real Estate Partners X, together with Blackstone Real Estate Income Trust, Inc. (BREIT), will acquire all outstanding common shares of Tricon for $11.25 (approximately C$15.17) per common share in cash.
The deal price represents a premium of 30% to Tricon’s closing share price on the NYSE on January 18, 2024, the last trading day before the announcement of the Transaction, and a 42% premium to the volume-weighted average share price on the NYSE over the previous 90 days, and equates to a $3.5 billion equity transaction value based on fully-diluted shares outstanding. BREIT will maintain its approximately 11% ownership stake post-closing.
Tricon offers quality rental homes and apartments in great neighborhoods and exceptional resident services through its tech-enabled operating platform and dedicated on-the-ground operating teams. And Tricon serves communities in high-growth markets like Atlanta, Charlotte, Dallas, Tampa and Phoenix, and Toronto, Canada. In addition to managing a single-family rental housing portfolio, Tricon has a single-family rental development platform in the U.S. with about 2,500 houses under development and numerous land development projects that can support the future development of nearly 21,000 single-family homes. The Company also has a Canadian multifamily development platform building approximately 5,500 market-rate and affordable multifamily rental apartments.
Under Blackstone’s ownership, the company plans to complete its $1 billion development pipeline of new single-family rental homes in the U.S. and $2.5 billion of new apartments in Canada (together with its existing joint venture partners). And the company will also continue to enhance the quality of existing single-family homes in the U.S. through an additional $1 billion of planned capital projects over the next several years.
This announcement of the deal follows the unanimous recommendation of a committee of independent members of Tricon’s board of directors. The Board, after receiving the unanimous recommendation of the Special Committee and in consultation with its financial and legal advisors, has determined that the deal is in the best interests of Tricon and fair to Tricon shareholders (other than Blackstone and its affiliates) and recommends that Tricon shareholders vote in favor of the Transaction.
Deal Details
The deal is structured as a statutory plan of arrangement under the Business Corporations Act (Ontario). The completion of the transaction, which is expected to occur in the second quarter of this year, is subject to customary closing conditions, including court approval, the approval of Tricon shareholders (as further described below) and regulatory approval under the Canadian Competition Act and Investment Canada Act.
As part of the Transaction, Tricon agreed that its regular quarterly dividend during the pendency of the deal will not be declared and the company’s dividend reinvestment plan will be suspended. If the Arrangement Agreement is terminated, Tricon intends to resume declaring and paying regular quarterly distributions and reinstate the dividend reinvestment plan.
Morgan Stanley & Co. LLC and RBC Capital Markets, LLC are acting as financial advisors to Tricon. And Scotiabank is acting as independent financial advisor and independent valuator to the Special Committee.
Goodmans LLP and Paul, Weiss, Rifkind, Wharton & Garrison LLP are acting as legal counsel to Tricon in connection with the deal. And Osler, Hoskin & Harcourt LLP is acting as independent legal counsel to the Special Committee.
BofA Securities, Deutsche Bank Securities Inc., J.P. Morgan Securities LLC and Wells Fargo are acting as Blackstone’s financial advisors. And Simpson Thacher & Bartlett LLP and Davies Ward Phillips & Vineberg LLP are acting as legal counsel.
KEY QUOTES:
“We are proud of the significant and immediate value that this transaction will deliver to our shareholders, while allowing us to continue providing an exceptional rental experience for our residents. Blackstone shares our values and our unwavering commitment to resident satisfaction, and we look forward to benefitting from their expertise and capital as we partner in building thriving communities.”
– Gary Berman, President & CEO of Tricon
“Tricon provides access to high-quality housing, and we are fully committed to delivering an exceptional resident experience together. We are excited that our capital will propel Tricon’s efforts to add much needed housing supply across the U.S. and in Toronto, Canada.”
– Nadeem Meghji, Global Co-Head of Blackstone Real Estate
“Following a thoughtful and comprehensive process, the Special Committee and Board concluded that the transaction with Blackstone is in the best interests of Tricon and its shareholders, and that the transaction price represents compelling and certain value for Tricon’s shares,” said
– Peter Sacks, Chair of the Special Committee and Independent Lead Director of Tricon
