Tricon Capital Group Inc. (TSX: TCN), a principal investor and asset manager focused on the residential real estate industry, has closed previously announced acquisition of Silver Bay Realty Trust Corp. for an enterprise value of approximately US $1.4 billion (all figures in US dollars)
The purchase price, before transaction costs, consists of an equity purchase price of approximately $820 million ($21.50 per share) and approximately $600 million of existing debt (net of cash on hand), which was concurrently refinanced.
The transaction was structured as a merger of a subsidiary of Tricon American Homes (TAH) and Silver Bay and was financed with the net proceeds of previously completed bought deal public offerings of 20,326,250 subscription receipts and $172.5 million aggregate principal amount of 5.75% extendible convertible unsecured subordinated debentures, as well as through a draw on a new $1.2 billion warehouse credit facility at TAH. In connection with the transaction, the company’s existing corporate revolving credit facility was also increased from $235 million to $365 million.
“The combination of Tricon American Homes (TAH) and Silver Bay is a transformative event for our company which strengthens TAH’s position as a leader in the burgeoning single-family rental industry,” said Gary Berman, President and CEO of Tricon. “This transaction creates the fourth largest publicly-owned SFR company in the U.S., with approximately 16,800 homes concentrated in high-growth Sun Belt markets and a singular focus on the middle market. By more than doubling our SFR portfolio, we expect to realize substantial cost savings and operating synergies, leading to meaningful accretion to Tricon’s EPS and NAV per share. Moreover, the acquisition serves as a catalyst towards simplifying Tricon’s business model by focusing on scale and industry leadership in select housing verticals.”
Silver Bay Realty Trust Corp. is focused on the acquisition, renovation, leasing and management of single-family properties for rental income and long-term capital appreciation. Silver Bay owns single-family properties in Arizona, California, Florida, Georgia, Nevada, North Carolina, Ohio, South Carolina and Texas. Silver Bay is headquartered in Plymouth, Minnesota.
RBC Capital Markets is acting as the sole financial advisor to Tricon. Paul, Weiss, Rifkind, Wharton & Garrison LLP, Goodmans LLP and Goulston & Storrs PC are acting as legal advisors to Tricon in connection with the acquisition and proposed financing.
Goldman, Sachs & Co. acted as sole financial advisor to Silver Bay on the transaction. Orrick, Herrington & Sutcliffe LLP acted as legal advisor to Silver Bay.