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TORONTO, Feb. 25, 2021 /CNW/ - Tricon Residential Inc.
("Tricon" or the "Company") (TSX: TCN), a rental housing company
catering to the middle-market demographic throughout the United States and Canada, announced today that it has reached an
agreement in principle to enter into a joint venture arrangement
(the "Joint Venture" or "JV") with two institutional investors (the
"Investors") to invest in Tricon's wholly-owned portfolio of 23
U.S. multi-family apartments. Under the Joint Venture, the
Investors will acquire a combined 80% interest in the existing
portfolio, with Tricon retaining a 20% interest. The transaction
reflects a total portfolio value of $1.331
billion including in-place debt, which is in line with the
portfolio's fair value reflected on Tricon's balance sheet as of
December 31, 2020.
In addition to the announced Joint Venture, Tricon and the
Investors are in discussions to form a separate growth-oriented
joint venture to acquire additional multi-family properties in the
U.S. Sun Belt, adding scale and diversification to Tricon's
portfolio.
Tricon intends to use the ~$425
million of gross proceeds from the sale of its 80% equity
interest primarily to repay outstanding debt and for general
corporate purposes. As a result, Tricon expects to reduce its
leverage by over 500 basis points to approximately 50% net
debt/assets (excluding convertible debentures), significantly
enhancing its balance sheet flexibility.
"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."
Transaction Details
Under the terms of the Joint Venture, Tricon will control
day-to-day matters and the two Investors will invest ~$425 million in aggregate for an 80% interest in
Tricon's U.S. multi-family portfolio. The Joint Venture will have
an initial term of ten years.
Throughout the term of the JV, Tricon and the Investors will
each earn their proportionate share of investment income or net
cash flow from the properties. Tricon will also be entitled to
receive asset management fees, property management fees and
potentially performance fees for managing the JV.
The transaction remains subject to finalizing definitive
documentation and customary closing conditions including obtaining
the necessary lender consents, and is expected to close in
March of 2021.
About Tricon Residential Inc.
Founded in 1988, Tricon is a rental housing company catering to
the middle-market demographic throughout the United States and Canada. We own and
manage over 30,000 single-family rental homes and multi-family
rental units through an integrated, technology-enabled operating
platform. More information about Tricon is available at
www.triconresidential.com.
This press release contains forward-looking statements and
information relating to expected future events and the Company's
financial and operating results and projections that involve risks
and uncertainties, including statements regarding the Company's
intentions, growth and investment opportunities, and performance
goals and expectations. Such forward-looking information is
typically indicated by the use of words such as "will", "may",
"expects" or "intends".
The forward-looking statements and information contained in
this press release include, without limitation, statements
regarding: the formation of the JV, its participants and its terms,
including investor liquidity options; the syndication of an
interest in the Company's US multi-family portfolio, the proceeds
to be received in connection therewith and the intended use of
those proceeds; the timing of the transactions described herein;
the benefits of the transactions described herein, including
building scale and efficiencies; the Company's leverage levels
following the transactions described herein and associated balance
sheet flexibility; and the proposed formation of a separate
multi-family joint venture.
If unknown risks arise, or if any of the assumptions
underlying the forward-looking statements prove incorrect, actual
results may differ materially from management expectations as
projected in such forward-looking statements. Examples of such
risks and uncertainties include, but are not limited to, the
inability to complete the transactions described herein due to the
failure to satisfy their requisite conditions (including the
failure to obtain the required consents from the Company's lenders
or to enter into definitive documentation reflecting the terms
described herein) and other risk factors described in the Company's
continuous disclosure materials from time to time, available on
SEDAR at www.sedar.com. Accordingly, although we believe that our
anticipated future results, performance or achievements expressed
or implied by the forward-looking statements and information are
based upon reasonable assumptions and expectations, the reader
should not place undue reliance on forward-looking statements and
information. The Company disclaims any intention or obligation to
update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, unless
required by applicable law.
SOURCE Tricon Residential Inc.