Tricon Residential Inc. (“Tricon” or the “Company”) (TSX: TCN), an owner and operator of single-family rental homes and multi-family rental apartments in the United States and Canada, recently announced that it has launched a marketed public offering of common shares of Tricon (“Common Shares”) in the United States and Canada (the “Offering”), representing Tricon’s initial public offering in the United States, as well as a concurrent private placement of Common Shares (the “Private Placement”) to Blackstone Real Estate Investment Trust, Inc. (“BREIT”).
In connection with the initial public offering in the United States, Tricon has filed an application to list the Common Shares on the New York Stock Exchange (the “NYSE”) under the symbol “TCN”. Trading of the Common Shares is expected to commence on the NYSE following pricing of the Offering. The Common Shares will continue to trade on the Toronto Stock Exchange (the “TSX”) under the symbol “TCN”.
A total of approximately US$395 million of Common Shares will be offered by Tricon for sale in the Offering and the Private Placement. The Offering and the Private Placement will be priced in the context of the market, with the price (the “Offering Price”) and total size of the Offering and the Private Placement to be determined at the time of entering into an underwriting agreement for the Offering (the “Underwriting Agreement”).
Morgan Stanley, RBC Capital Markets, Citigroup and Goldman Sachs & Co. LLC are acting as joint book-running managers in the Offering. Morgan Stanley and RBC Capital Markets are also acting as representatives of the underwriters in the Offering.
Tricon will also grant the underwriters an over-allotment option, exercisable for a period of 30 days from the date of the Underwriting Agreement, to purchase up to US$52.5 million of additional Common Shares, representing 15% of the total number of Common Shares to be sold pursuant to the Offering.
In connection with the Offering, BREIT has exercised its participation right, pursuant to the investor rights agreement with the Company dated September 3, 2020, to acquire approximately US$45 million of Common Shares in the Private Placement. Following the completion of the Offering and the Private Placement, BREIT’s effective ownership interest in the Company will be approximately 11.87% (assuming the exchange of its preferred units of Tricon PIPE LLC for Common Shares and assuming no exercise of the over-allotment option).
Tricon expects that the net proceeds of the Offering and the Private Placement will be used to repay a portion of the total amount outstanding under its 2017-1 pass-through certificates in respect of the Company’s single-family rental securitization debt maturing in 2022, in addition to funding future property acquisitions and for general corporate purposes. Closing of the Offering will be subject to a number of customary conditions, including the entering into of the Underwriting Agreement, the listing of the Common Shares on the NYSE and the TSX, and any required approvals of the NYSE and the TSX.
Tricon also announced that it intends to change the denomination of its quarterly dividends declared and paid on Common Shares to U.S. dollars from Canadian dollars following the listing of the Common Shares on the NYSE. Subject to the approval of the Board of Directors, the change is anticipated to become effective upon the declaration of Tricon’s next quarterly dividend, which is projected to be paid on or around January 15, 2022 to shareholders of record as of December 31, 2021. Tricon will fix the amount of its U.S. dollar-denominated quarterly dividend prior to its declaration, with such amount anticipated to be the U.S. dollar equivalent of Tricon’s current quarterly C$0.07 dividend, converted at the time of declaration. Shareholders do not have a right to dividends on Common Shares unless declared by the Board of Directors. The declaration of dividends is at the discretion of the Board of Directors even if the Company has sufficient funds, net of its liabilities, to pay such dividends.
