Continuum Residential Real Estate Investment Trust’s proposed initial public offering (IPO) has been taken off the table with the announcement Starlight Investments has an agreement to acquire the REIT’s multiresidential portfolio for $1.732 billion.
The portfolio is comprised of 44 high-rise concrete buildings located primarily in the Greater Toronto Area. They include 6,271 rental suites.
Continuum filed a prospectus with the Ontario Securities Commission on Oct. 21, with the intention of completing an IPO of the REIT’s units.
“We felt that an IPO would give each investor the flexibility to make their own independent decision of whether they wanted to stay invested in the portfolio or take some liquidity, or all liquidity, or put more money into the portfolio,” Continuum senior vice-president of corporate affairs Lorne Stephenson told RENX in an interview Friday afternoon.
“We pursued the IPO aggressively and during that process we were approached by numerous parties,” Continuum president and chief executive officer Dan Argiros said during the same phone interview.
“With an IPO, the beautiful thing is that you have a prospectus which gives everybody pretty well all of the information they need to make a bid. We obviously answered inquiries and told everyone that we were not going to disrupt the IPO process. Everyone was aware of our filing dates and our pricing dates, and they responded accordingly and worked within those time frames.”
Since filing the prospectus, Continuum’s senior management had been marketing the IPO in Canada and the United States, which resulted in an order book of more than $1 billion. The IPO opportunity would have been priced between $15.50 and $16.50 per unit, according to Argiros.
Starlight made superior offer
Stephenson said Continuum was approached “with some very significant opportunities” to acquire the portfolio during the process, but Starlight’s offer of $20.10 for each trust unit was one “we couldn’t say no to.”
Starlight CEO and president Daniel Drimmer couldn’t be reached for comment by publication time. However, he said this in a media release:
“The opportunity to acquire a 44-building, concrete, multi-residential high-rise portfolio located in the Greater Toronto Area is an extremely compelling opportunity to continue Starlight’s strategic growth.
“We look forward to completing this significant transaction and integrating the portfolio into our multi-residential platform as we continue addressing Canada’s rental housing shortage.”
The deal still requires regulatory approval and is expected to close in December.
Continuum and Starlight
Continuum is an affiliate of Q Management LP, a real estate asset and property management entity actively engaged in the multifamily residential sector in Ontario. In addition to the REIT, Q Management LP manages two private equity multi-residential funds in Ontario consisting of 5,234 suites that are owned and under contract in 45 buildings.
Starlight is a privately held, Toronto-based, full-service, multifamily and commercial real estate investment and asset management company with more than 200 employees. It manages more than $11 billion of direct real estate as well as real estate investment securities.
Starlight’s investment vehicles include institutional joint ventures, True North Commercial REIT, Starlight U.S. Multi-Family Funds and Starlight Capital Funds. Its portfolio consists of approximately 36,000 multiresidential units across Canada and the U.S., and more than 6.2 million square feet of commercial properties.