Tricon Residential (NYSE: TCN), a Canadian real estate firm, saw its shares surge by over 28% on Friday following the announcement of its acquisition by Blackstone Real Estate Partners for $3.5 billion. This strategic move is set to expand Blackstone’s footprint in the United States and Canadian rental markets.
Blackstone, a leading investment management company, has confirmed its plans to privatize Tricon Residential with a cash deal of $11.25 per share. This represents a premium of 30.35% over the last closing price of Tricon’s stock.
Post-acquisition, Tricon aims to execute its development pipeline worth $1 billion for new single-family rental homes in the U.S. and $2.5 billion for new apartments in Canada. The deal is expected to close in the second quarter of this year amidst an ongoing affordable housing crisis in Canada.
The Canadian government announced last year the removal of the federal 5% consumption tax on the construction of new rental apartment buildings. This move is aimed at stimulating supply in the housing market.
Tricon Residential (NYSE: TCN), established in 1988, is one of the largest rental apartment owners in Toronto, with ambitious plans to construct six downtown developments along transit routes over the next three to five years. The company also owns 37,000 single-family homes in various U.S. cities.
Despite facing financial challenges and pressure from an activist investor to improve its financial performance, Tricon is set to accelerate the construction of apartment buildings in Toronto, backed by Blackstone’s recently raised $30.4 billion real estate fund.
Blackstone, already a significant player in the Canadian real estate market with approximately $14 billion worth of assets, is also investing in data centers, anticipating increased demand as more companies integrate artificial intelligence into their operations.
In Toronto, the construction of new rental properties witnessed a decline of 54% in the first nine months of 2023 compared to the same period in 2021, as per a report from Urbanation, a real estate data service. The city’s rental vacancy rates are near historic lows, hovering around 3%.
As of Friday’s close, TCN stock was up 28.27%, with 95.44 million shares traded, exceeding the company’s daily average trading volume of 1.49 million.