Tricon Residential announced that a syndicate of investors led by Blackstone Real Estate Income Trust (“BREIT”) has agreed to make a $300 million preferred equity investment in the company.
This investment will provide several immediate benefits to Tricon, including validating the strength and stability of its rental housing portfolio while also strengthening its balance sheet.
“This investment in Tricon illustrates Blackstone Real Estate’s confidence in our business fundamentals and the value in our stock,” said Gary Berman, CEO of Tricon Residential. “Blackstone inherently understands our business and is exceptionally well-positioned to help us bring our tech-enabled operating platform to its full potential. We are excited to have the support of one of the world’s largest real estate investors, and we are confident that this investment will create significant value for both Tricon’s and BREIT’s shareholders.”
Frank Cohen, Chairman and CEO of BREIT, said, “We are pleased to make this preferred equity investment in Tricon. We continue to see strong underlying fundamentals in the rental housing sector and believe the company’s high quality, income-generating assets are poised to generate stable performance under the leadership of its best-in-class management team.”
On the closing date of the investment, Cohen will join Tricon’s board of directors as BREIT’s initial nominee in connection with its investment.
Key terms of the Investment and Preferred Equity include:
- Quarterly cash dividend of 5.75 per cent per annum through to the seventh anniversary of the Investment closing, subject to increases thereafter;
- Exchangeable for common shares of Tricon (“Common Shares”) at any time at the option of the holder at an initial exchange price of US$8.50 per share (approximately C$11.18), representing a 16% premium to the 30-day VWAP of the Common Shares on the Toronto Stock Exchange (the “TSX”) as of August 26. On an as-exchanged basis, the Preferred Equity will represent approximately 14% of the pro forma fully diluted outstanding Common Shares at closing. The exchange price will be subject to adjustment from time to time in accordance with the terms of the Preferred Equity;
- The Preferred Equity will not entitle the holders to vote as common shareholders of Tricon.
In connection with the Investment, Tricon Residential and its subsidiary will enter into an investor rights agreement with BREIT providing for, among other things, customary registration rights, participation rights, consent rights, certain standstill and transfer restrictions and the right to nominate one director to Tricon’s board.
Additional information regarding the Investment and the terms of the Preferred Equity will be included in a material change report to be filed by Tricon on www.sedar.com.