Tricon Residential Inc. is selling 80% interest in its wholly-owned portfolio of 23 U.S. multifamily apartments to two institutional investors in a transaction which reflects a total portfolio value of US$1.331 billion including in-place debt.
Tricon, a Toronto-based rental housing company, has reached an agreement in principle to enter into a joint venture arrangement with the investors.
Tricon will retain 20% interest in the portfolio. Under the terms of the joint venture, Tricon will control day-to-day matters and the two investors will pay US$425 million for their stakes in Tricon’s U.S. multifamily portfolio.
The joint venture will have an initial term of ten years. Tricon and the investors are also in discussions to form a separate growth-oriented joint venture to acquire additional multi-family properties in the U.S.
Tricon said it intends to use the US$425 million of gross proceeds from the sale of its 80% equity interest primarily to repay outstanding debt and for general corporate purposes.
“When we acquired our U.S. multi-family portfolio in 2019, we saw an opportunity to create a platform for growth within the largest investible property type in residential real estate and to explore synergies with our single-family rental business. Our intent has always been to pursue this strategy in partnership with third-party investors, and we are thrilled to work with two leading investors to add scale to our portfolio and to harness operational efficiencies over time,” said Gary Berman, President and CEO of Tricon Residential.
“Moreover, today’s announcement marks a significant step in our commitment to deleveraging our balance sheet. In the midst of a pandemic, we have been able to not only grow our business but also, upon closing this syndication, reduce leverage to 50% net debt/assets, a reduction of approximately 1100 basis points over the past year,” he added.