Blackstone Remains Committed to Tricon’s
Extensive Housing Development Platform, Including its Pipeline of
$1 Billion of New Single-Family Homes in the U.S. and $2.5 Billion
of New Apartments in Canada
Plans to Improve Quality of Existing U.S.
Single-Family Homes through an Additional $1 Billion of Capital
Projects
All financial and share price-related information is
presented in U.S. dollars unless otherwise indicated.
Blackstone (NYSE: BX) and Tricon Residential Inc. (NYSE: TCN,
TSX: TCN) (“Tricon” or the “Company”) today announced that they
have entered into an arrangement agreement (the “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 (“Common Shares”)
for $11.25 (approximately C$15.17) per Common Share in cash (the
“Transaction”). The Transaction price represents a premium of 30%
to Tricon’s closing share price on the NYSE on January 18, 2024,
the last trading day prior to 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 provides quality rental homes and apartments in great
neighborhoods, along with exceptional resident services through its
tech-enabled operating platform and dedicated on-the-ground
operating teams. Tricon serves communities in high-growth markets
such as Atlanta, Charlotte, Dallas, Tampa and Phoenix as well as
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 approximately 2,500 houses under
development, as well as 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 that is 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). 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.
“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,” said 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,” said Nadeem Meghji, Global Co-Head of Blackstone Real
Estate. “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.”
The announcement of the Transaction follows the unanimous
recommendation of a committee (the “Special Committee”) of
independent members of Tricon’s board of directors (the “Board”).
The Board, after receiving the unanimous recommendation of the
Special Committee and in consultation with its financial and legal
advisors, has determined that the Transaction 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.
“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.
Transaction Details
The Transaction is structured as a statutory plan of arrangement
under the Business Corporations Act (Ontario). 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 has agreed that its regular
quarterly dividend during the pendency of the Transaction 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.
The Arrangement Agreement provides for, among other things,
customary representations, warranties and covenants, including
customary non-solicitation covenants from Tricon, subject to the
ability of the Board to accept a superior proposal in certain
circumstances, with a "right to match" in favour of Blackstone, and
conditioned upon payment of a $122,750,000 termination fee to
Blackstone, except that the termination fee will be reduced to
$61,250,000 if the Arrangement Agreement is terminated by the
Company prior to March 3, 2024 in order to enter into a definitive
agreement providing for the implementation of a superior proposal.
In certain circumstances, Blackstone is required to pay a
$526,000,000 reverse termination fee to Tricon upon the termination
of the Arrangement Agreement.
Completion of the Transaction will be subject to various closing
conditions, including the approval of at least (i) two-thirds (66
2/3%) of the votes cast by shareholders present in person or
represented by proxy at the special meeting of shareholders to be
called to approve the Transaction (the “Special Meeting”), voting
as a single class (each holder of Common Shares being entitled to
one vote per Common Share) and (ii) the majority of the holders of
Common Shares present in person or represented by proxy at the
Special Meeting, excluding the votes of Blackstone and its
affiliates, and any other shareholders whose votes are required to
be excluded for the purposes of “minority approval” under
Multilateral Instrument 61-101 – Protection of Minority Security
Holders in Special Transactions (“MI 61-101”) in the context of a
“business combination” as defined thereunder. Further details
regarding the applicable voting requirements will be contained in a
management information circular to be filed with applicable
regulatory authorities and mailed to Tricon shareholders in
connection with the Special Meeting to approve the Transaction.
Copies of the Arrangement Agreement and of the management
information circular for the Special Meeting will be filed with
Canadian securities regulators and will be available on the SEDAR+
profile of Tricon at www.sedarplus.ca. In addition, Tricon will
furnish to the U.S. Securities and Exchange Commission (the “SEC”)
a current report on Form 6-K regarding the Transaction, which will
include as an exhibit thereto the Arrangement Agreement and will be
available at the SEC’s website www.sec.gov. All parties desiring
details regarding the Transaction are urged to read those and other
relevant materials when they become available.
In connection with the Transaction, Tricon will prepare and mail
a Schedule 13E-3 Transaction Statement (the “Schedule 13E-3”). The
Schedule 13E-3 will be filed with the SEC. INVESTORS AND
SHAREHOLDERS ARE URGED TO READ CAREFULLY AND IN THEIR ENTIRETY THE
SCHEDULE 13E-3 AND OTHER MATERIALS FILED WITH THE SEC WHEN THEY
BECOME AVAILABLE, AS THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT
TRICON, THE TRANSACTION AND RELATED MATTERS. In addition to
receiving the Schedule 13E-3 by mail, shareholders will also be
able to obtain these documents, as well as other filings containing
information about Tricon, the Transaction and related matters,
without charge from the SEC’s website (http://www.sec.gov).
BREIT, which made an initial $240 million exchangeable preferred
equity investment in Tricon in 2020 and is maintaining its
ownership stake, has entered into a support agreement whereby it
has agreed to vote its Common Shares in favor of the
Transaction.
Subject to and upon completion of the Transaction, the Common
Shares will no longer be listed on the NYSE or TSX. Tricon will
remain headquartered in Toronto, Ontario.
Formal Valuation and Fairness Opinions
In connection with its review of the Transaction, the Special
Committee retained Scotia Capital Inc. (“Scotiabank”) as
independent valuator and financial advisor to provide financial
advice and prepare a formal valuation of the Common Shares (the
“Formal Valuation”) as required under MI 61-101. Scotiabank
concluded that, as of January 18, 2024, and subject to certain
assumptions, limitations and qualifications, the fair market value
of the Common Shares was in the range of $9.80 to $12.90 per Common
Share. Scotiabank has also provided its oral opinion (to be
subsequently confirmed by delivery of a written opinion) to the
Special Committee that, as of January 18, 2024, and subject to
certain assumptions, limitations and qualifications, the
consideration to be received by the holders of the Common Shares
(other than Blackstone and its affiliates) pursuant to the
Transaction is fair, from a financial point of view, to the holders
of the Common Shares.
Advisors
Morgan Stanley & Co. LLC and RBC Capital Markets, LLC are
acting as financial advisors to Tricon. 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
Transaction 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.
About Tricon Residential Inc.
Tricon Residential Inc. (NYSE: TCN, TSX: TCN) is an owner,
operator and developer of a growing portfolio of approximately
38,000 single-family rental homes in the U.S. Sun Belt and
multi-family apartments in Toronto, Canada. Our commitment to
enriching the lives of our employees, residents and local
communities underpins Tricon’s culture and business philosophy. We
provide high-quality rental housing options for families across the
United States and in Toronto, Canada through our technology-enabled
operating platform and dedicated on-the-ground operating teams. Our
development programs are also delivering thousands of new rental
homes and apartments as part of our commitment to help solve the
housing supply shortage. At Tricon, we imagine a world where
housing unlocks life’s potential. For more information, visit
www.triconresidential.com.
About Blackstone
Blackstone is the world’s largest alternative asset manager. We
seek to create positive economic impact and long-term value for our
investors. We do this by relying on extraordinary people and
flexible capital to help strengthen the companies we invest in. Our
over $1 trillion in assets under management include investment
vehicles focused on private equity, real estate, public debt and
equity, infrastructure, life sciences, growth equity,
opportunistic, non-investment grade credit, real assets and
secondary funds, all on a global basis. Further information is
available at www.blackstone.com. Follow @blackstone on LinkedIn, X
(Twitter), and Instagram.
Additional Early Warning Disclosure
BREIT currently indirectly owns 6,815,242 Common Shares and
240,000 preferred units of Tricon PIPE LLC that are exchangeable
into 28,235,294 Common Shares, representing approximately 11% of
the outstanding Common Shares, assuming the conversion of all
preferred units held by BREIT. Pursuant to the support agreement,
BREIT has agreed to exchange at least 75% of its preferred units
for Common Shares prior to the Special Meeting to vote on the
Transaction and the balance of its preferred units prior to
closing. Following the completion of the Transaction, funds
affiliated with Blackstone Real Estate together with BREIT will own
100% of the outstanding Common Shares. Tricon intends to apply to
cease to be a reporting issuer under applicable Canadian securities
laws following the completion of the Transaction. An early warning
report with additional information in respect of the foregoing
matters will be filed and made available on SEDAR+ at
www.sedarplus.ca under Tricon’s profile or may be obtained directly
upon request by contacting the Blackstone contact person named
below. The head office of Blackstone Real Estate and BREIT is
located at 345 Park Avenue, New York, New York 10154. The head
office of Tricon is located at 7 St. Thomas Street, Suite 801,
Toronto, Ontario M5S 2B7.
Forward-Looking
Information
Certain statements contained in this news release may constitute
forward-looking information within the meaning of applicable
Canadian securities laws. Forward-looking information is often, but
not always, identified by the use of words such as "anticipate",
"plan", "expect", "may", "will", "intend", "should", and similar
expressions. This information involves known and unknown risks,
uncertainties and other factors that may cause actual results or
events to differ materially from those anticipated in such
forward-looking information. Forward-looking information in this
news release includes, but is not limited to, the following:
statements with respect to the expected completion of the
Transaction and the timing thereof, the anticipated benefits to the
shareholders of Tricon, satisfaction of the conditions to closing
the Transaction, the holding of the Special Meeting, the suspension
and resumption of quarterly distributions and the Company’s
dividend reinvestment plan, and delisting of the Common Shares and
ceasing to be a reporting issuer following closing of the
Transaction.
Such forward-looking information and statements involve risks
and uncertainties and are based on management’s current
expectations, intentions and assumptions, including expectations
and assumptions concerning receipt of required approvals and the
satisfaction of other conditions to the completion of the
Transaction, and that the Arrangement Agreement will not be amended
or terminated. There can be no assurance that the proposed
Transaction will be completed, or that it will be completed on the
terms and conditions contemplated in the Arrangement Agreement.
Accordingly, although the Company believes that the expectations
and assumptions on which the forward-looking information contained
in this news release is based are reasonable, undue reliance should
not be placed on the forward-looking information because Tricon can
give no assurance that it will prove to be correct. Since
forward-looking information addresses future events and conditions,
by its very nature it involves inherent risks and uncertainties.
Actual results could differ materially from those currently
anticipated due to a number of factors and risks. These include,
but are not limited to: the failure to obtain necessary approvals
or satisfy (or obtain a waiver of) the conditions to closing the
Transaction as contained in the Arrangement Agreement; the
occurrence of any event, change or other circumstance that could
give rise to the termination of the Arrangement Agreement; material
adverse changes in the business or affairs of Tricon; Tricon’s
ability to obtain the necessary Tricon shareholder approval
(including the “minority approval”); the parties’ ability to obtain
requisite regulatory approvals; either party’s failure to
consummate the Transaction when required or on the terms as
originally negotiated; risks related to the disruption of
management time from ongoing business operations due to the
Transaction and possible difficulties in maintaining customer,
supplier, key personnel and other strategic relationships;
potential litigation relating to the Transaction, including the
effects of any outcomes related thereto; the possibility of
unexpected costs and liabilities related to the Transaction;
competitive factors in the industries in which Tricon operates;
interest rates, currency exchange rates, prevailing economic
conditions; and other factors, many of which are beyond the control
of Tricon. Additional factors and risks which may affect Tricon,
its business and the achievement of the forward-looking statements
contained herein are described in Tricon’s annual information form
and Tricon’s management’s and discussion and analysis for the year
ended December 31, 2022 and in the other subsequent reports filed
on the SEDAR+ profile of Tricon at www.sedarplus.ca and Tricon’s
filings with the SEC as well as the Schedule 13E-3 and management
information circular to be filed by Tricon.
The forward-looking information contained in this news release
represents Tricon’s expectations as of the date hereof, and is
subject to change after such date. Tricon disclaims any intention
or obligation to update or revise any forward-looking information
whether as a result of new information, future events or otherwise,
except as required under applicable securities laws.
This press release also includes forward-looking statements
within the meaning of the federal securities laws and the Private
Securities Litigation Reform Act of 1995. These forward-looking
statements can be identified by the use of forward -looking
terminology such as “outlook,” “indicator,” “believes,” “expects,”
“potential,” “continues,” “identified,” “may,” “will,” “should,”
“seeks,” “approximately,” “predicts,” “intends,” “plans,”
“estimates,” “anticipates”, “confident,” “conviction” or other
similar words or the negatives thereof. These may include financial
estimates and their underlying assumptions, statements about plans,
objectives, intentions, and expectations with respect to
positioning, including the impact of macroeconomic trends and
market forces, future operations, repurchases, acquisitions, future
performance and statements regarding identified but not yet closed
acquisitions. Such forward-looking statements are inherently
uncertain and there are or may be important factors that could
cause actual outcomes or results to differ materially from those
indicated in such statements. Some of the factors that could cause
actual results to differ materially are, among others, the timing
and ability to consummate the pending transaction; the occurrence
of any event, change or other circumstance that could delay the
closing of the transaction, or result in the termination of the
agreement for the transaction; and adverse effects on BREIT's
common stock because of a failure to complete the transaction.
Other factors include but are not limited to those described under
the section entitled “Risk Factors” in BREIT's prospectus and
annual report for the most recent fiscal year, and any such updated
factors included in BREIT's periodic filings with the SEC, which
are accessible on the SEC's website at www.sec.gov. These factors
should not be construed as exhaustive and should be read in
conjunction with the other cautionary statements that are included
herein (or in BREIT's public filings). Except as otherwise required
by federal securities laws, BREIT undertakes no obligation to
publicly update or revise any forward -looking statements, whether
as a result of new information, future developments or
otherwise.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240119101417/en/
For further information, please contact:
Wissam Francis EVP & Chief Financial Officer Email:
IR@triconresidential.com
Wojtek Nowak Managing Director, Capital Markets
Tricon Media: Tara Tucker Senior Vice President,
Corporate and Public Affairs Email:
mediarelations@triconresidential.com
Blackstone Media:
Jillian Kary 212-583-5379 Jillian.Kary@Blackstone.com
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