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In a move poised to impact the real estate sector in the Greater Toronto Area and beyond, Blackstone Real Estate Partners X, in collaboration with Blackstone Real Estate Income Trust, Inc. (BREIT), has announced its plan to acquire all outstanding shares of Tricon Residential Inc for $11.25 per common share. This acquisition, with an approximate equity transaction value of $3.5 billion, not only transforms Tricon into a private entity but also signals a strategic expansion of Blackstone's housing development initiatives.
Based in New York and Toronto respectively, Blackstone and Tricon Residential disclosed the details of this acquisition through an arrangement agreement. The offered price per share represents a 30% premium over Tricon's closing share price as of January 18, 2024, showcasing a robust valuation of the company. Furthermore, this offer reflects a 42% premium over the volume-weighted average share price of Tricon on the NYSE for the 90 days preceding the announcement.
Tricon Residential, recognized for providing high-quality rental homes and apartments in thriving neighbourhoods, has been a prominent player in the real estate market across the USA and Canada. The company's substantial footprint in cities like Atlanta, Charlotte, Dallas, Tampa, Phoenix, and Toronto makes it a valuable addition to Blackstone's portfolio. The acquisition is set to bring about significant operational investments yet will not alter the established identity of Tricon Residential. Post-transaction, Tricon will continue to operate under its current name.
The acquisition, according to Blackstone, is not just a financial transaction but an expressed commitment to enhance the quality of housing. Blackstone plans to invest significantly in Tricon's development pipeline, which includes $1 billion for new single-family rental homes in the USA and $2.5 billion for new apartments in Canada. Additionally, an investment of $1 billion is earmarked for capital projects aimed at improving existing American single-family homes.
Gary Berman, President & CEO of Tricon, expressed confidence in the transaction, highlighting the shared values and commitment to resident satisfaction between Tricon and Blackstone. Nadeem Meghji, Global Co-Head of Blackstone Real Estate, echoed this sentiment, emphasizing the goal of adding much-needed housing supply in both the USA and Canada.
The transaction, advised by a special committee of independent board members from Tricon and recommended unanimously, is structured as a statutory plan of arrangement under the Business Corporations Act (Ontario). Subject to customary closing conditions, including regulatory approvals and shareholder votes, the deal is poised for completion in the second quarter of the year.
This arrangement also sees BREIT maintaining its approximately 11% ownership stake in Tricon post-closing. The transaction will result in the delisting of Tricon's common shares from the NYSE and TSX, with the company continuing to be headquartered in Toronto.
The comprehensive valuation and fairness opinions provided by Scotia Capital Inc. affirm the financial fairness of the transaction. This acquisition marks a strategic move by Blackstone, enhancing its position as a major player in the global real estate market and solidifying its commitment to providing quality housing solutions.
This move reflects the evolving landscape of real estate and housing development, underscoring the importance of strategic investments in this sector and the potential for such collaborations to shape the future of housing in key markets not just in the Greater Toronto Area, but across North America.
For more detailed information, the pertinent documents will be filed with Canadian securities regulators and the U.S. Securities and Exchange Commission, and will be made available on Tricon’s SEDAR+ profile.
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