Toronto-based Tricon Capital Group Inc. (TCN-T) has purchased a portfolio of 708 single-family rental homes in Nashville via its Tricon American Homes JV1 joint venture. The fund paid about $278 million (all figures Cdn) for the fully stabilized portfolio.

The acquisition means Tricon and its funds have invested almost $2.2 billion in U.S. residential properties during 2019.

In a release this week, Tricon said the portfolio averages 11 years old and is 97 per cent occupied. It also said the vendor, Invitation Homes of Dallas, has renovated and maintained the portfolio “to a high standard.”

The portfolio expands Tricon’s presence in Nashville to approximately 850 homes. Part of the reason for the acquisition was to provide scale and diversify the fund’s existing portfolio in the city.

“We are excited to add such a high-calibre portfolio to our single-family rental business and gain immediate scale in Nashville, one of the fastest-growing cities in North America,” said CEO and president Gary Berman in the release.

“The portfolio is a compelling fit with our middle-market strategy and consistent with the acquisition objectives of TAH-JV1, which has now deployed more than half of its committed capital.”

Invitation divests Nashville holdings

Invitation Homes is divesting all its properties in Nashville, the company says, to focus on markets where it has larger scale. In most of the markets in which Invitation does business, the company owns 5,000 or more homes.

“This is an opportune time for Invitation Homes to monetize our investment in Nashville, as we optimize our footprint and focus on growing accretively in high-growth locations where we have greater scale and density,” said Dallas Tanner, Invitation Homes’ president and CEO, in a prepared statement.

“While our Nashville investment has performed well, and we have loved being part of an outstanding community of residents, associates, neighbours and other partners, the size of our portfolio in Nashville was smaller than in the other markets we serve.”

The sale leaves Invitation with just 87 homes in Nashville, all of which are for sale.

Tricon, meanwhile, is scaling up in the city, which now represents about four per cent of its portfolio. It initially entered the Nashville market in Q1 2019, attracted by strong housing fundamentals and a growing local economy.

“We anticipate a smooth integration of the acquired homes onto our platform and we look forward to welcoming many new Nashville residents and Invitation Homes employees to Tricon,” Berman said in the release.

Tricon and TAH-JV1

Tricon has added significant scale to its U.S. holdings during 2019.

In one of the largest transactions of 2019, it acquired the Starlight U.S. Multi-Family No. 5 fund for $1.9 billion in June. That fund comprised 23 properties and 7,289 units located primarily in the U.S. Sunbelt.

That transaction alone increased Tricon’s total assets under management by almost 25 per cent, as the company held about $7.6 billion in assets prior to the acquisition.

TAH-JV1, which is separate from that deal, was created in 2018 with two international institutional investors. Each partner has invested $330 million into the fund, with the intention to purchase about $2.6 billion worth of properties.

At that time, Berman said the plan was to build TAH from its then total of about 15,500 rental homes in 16 primary markets to between 25,000 to 30,000 properties. Tricon American Homes was initially founded in 2012.

In Canada, Tricon entered a partnership with TAS earlier this year to develop a 600-unit project in Toronto’s Regent Park. Across the GTA, it has a development pipeline of more than 3,000 apartments at seven developments.

Three of those projects are either under construction or leasing, and a fourth is scheduled to begin construction soon.

About Tricon Capital Group Inc.

Tricon is a residential real estate company primarily focused on rental housing in North America, with approximately $10.5 billion of assets under management.

The firm invests in single-family rental homes, multifamily rental apartments and for-sale housing assets, and manages third-party capital in connection with its investments. Since its inception in 1988, Tricon has invested in real estate and development projects valued at approximately $22 billion.

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