Blackstone to Take Tricon Residential Private for $3.5B

Blackstone is taking Canadian real estate firm Tricon Residential private in a $3.5 billion deal.

Under the deal, Blackstone will acquire all outstanding shares of Tricon for $11.25 per share in cash, which is a 30.35% premium to the stock’s last close.

The transaction will return Blackstone to the rental housing market and signals the private equity giant’s confidence in the sector.

Blackstone said it will continue with Tricon’s plans to build $1 billion of new rental homes and that it would spend another $1 billion updating the firm’s existing houses.

Tricon Residential owns about 38,000 US rental homes and these houses are leased to people who typically earn less than the six-figure-salaries of the renters sought by competing REITs Invitation Homes and AMH, according to the Wall Street Journal.

Rent growth in the single-family rental sector has been dropping since 2022 and in November it didn’t break 3% growth, returning the sector to pre-pandemic levels, according to a recent report by CoreLogic.  These renters are also proving to be more price sensitive and open to other options than in past years as inflation continues to wear down budgets. ““Many renters are renewing their current leases, and others who are moving are seeking lower-priced alternatives,” said Molly Boesel, principal economist for CoreLogic. “For example, rents in Austin, Texas climbed by nearly 30% from early 2020 to mid-2023 but have now posted five consecutive months of annual declines. An uptick in newly constructed, multifamily rental properties is contributing to the decrease in single-family prices in Austin, as tenants now have more options.”

Still, that has not stopped institutional investors from gravitating to the asset class or its cousin, build to rent.