Toronto-based Tricon Residential Inc. (TCN-T) says it has an agreement to sell its remaining 20 per cent stake in a portfolio of 23 U.S. Sun Belt apartment buildings to a “vertically integrated residential real estate investment and property management company” for $315 million.
Tricon plans to use the proceeds to reduce its debt load and enhance the flexibility of its balance sheet for future growth.
The buyer will also assume all asset and property management responsibilities.
Tricon had divested an 80 per cent stake in the properties to two investors early in 2021, in a transaction which valued the properties at $1.33 billion at that time. It received about $425 million from each of the investors in that transaction.
Portfolio spread across U.S. Sun Belt
The portfolio comprises about 7,300 apartments at the 23 properties: 10 in Texas, five in Florida, five in the Carolinas and Georgia, and one each in Phoenix, Denver and Las Vegas.
Founded in 1988, Tricon is a rental housing company catering to the middle-market demographic throughout the United States and Canada. The firm owns interests in, and/or manages over 30,000 single-family rental homes and multifamily rental units.
“The sale of our U.S. multifamily business marks a significant step in our quest to simplify our business and focus our balance sheet exposure primarily on single-family rental, where we continue to see strong demand and growth opportunities,” said Gary Berman, president & CEO of Tricon Residential, in the announcement.
“Our investment in this portfolio has generated an attractive IRR of over 20 per cent to Tricon since inception, inclusive of fees, and helps validate the difference between private and public market valuations in today’s economic environment.”
Founded in 1988, Tricon Residential Inc. is an owner and operator of a portfolio of approximately 41,000 single-family rental homes and multifamily rental apartments in the United States and Canada with a primary focus on the U.S. Sun Belt. The firm has built what it calls a “technology-enabled operating platform and innovative approach to rental housing”.
The joint venture is the latest in a series of significant organizational moves by Tricon during the past two years.
In 2021, Tricon completed a major reorganization of its operations which included a rebranding to Tricon Residential. The move brought all its verticals – single-family, multifamily and investment – under one brand.
“To the dedicated employees that have made our U.S. multi-family business a success: I want to thank you all for your hard work and for consistently going above and beyond to elevate our resident experience,” Berman said in the release.
“We expect the vast majority of onsite property management staff to remain in their roles after a smooth transition to the new owner of the portfolio – a respected operator that shares our principles and commitment to putting the needs of our employees and residents first.”
Eastdil Secured acted as Tricon’s exclusive financial advisor on this transaction.