Tricon to acquire U.S. multifamily portfolio for $1.4b

Tricon Capital Group and Starlight U.S. Multi-Family (No. 5) Core Fund have entered into an arrangement agreement whereby Tricon will acquire all of the issued and outstanding limited partnership units of the fund in an all-share transaction, resulting in the acquisition of the fund’s portfolio of 23 multifamily properties totaling 7,289 units located primarily in the U.S. Sun Belt (the fund portfolio).

The transaction is valued at approximately $1.4 billion, which reflects the appraised value of the fund portfolio. The transaction includes equity consideration of approximately $496 million that will be funded by issuing 50,779,314. Tricon common shares to the fund’s unitholders at an implied price of C$13.10 ($9.8) per Tricon share. Tricon will also indirectly assume approximately $916 million of the fund’s existing debt.

The fund portfolio consists of 23 high-quality properties with an average vintage of 2012; the assets are primarily garden-style apartment complexes featuring resort-style amenities and are located in desirable suburban neighborhoods.

Upon completion of the transaction, Tricon is expected to have a market capitalization of approximately C$2.3 billion ($1.7 billion) and approximately 194.2 million Tricon shares outstanding, providing fund unitholders with enhanced liquidity from their ownership of TSX-listed shares

“The transaction will provide Tricon a significant presence in U.S. multifamily, which is the largest investible property type in residential real estate. The portfolio enhances our exposure to high-growth markets and aligns with our U.S. rental focus on the middle-market demographic. With this acquisition, we will have created a strong foundation for future growth, as well as a major source of recurring rental income to complement our thriving single-family rental and Canadian build-to-core multifamily rental businesses,” said Gary Berman, Tricon’s president and CEO.