Canadian residential property companies plan new stock exchange listings

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Two Canadian property managers with substantial US holdings have filed preliminary documents for initial public offerings, seeking capital to grow their rental portfolios in North America.

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Tricon Residential Inc., which already trades on the Toronto Stock Exchange, is pursuing a dual listing on the New York Stock Exchange in a US$350 million offering. Starlight US Residential Fund, Starlight Group Property Holdings Inc. is preparing to trade some of its units on TSX, and intends to raise up to US$198-million.

Tricon’s portfolio includes more than 33,000 residential housing in the United States and Canada, including multi-family and single-family rentals. The net proceeds of the offering will go towards repayment of the loan and acquiring property.

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In the United States, Tricon focuses on renting to middle-income tenants in warm-weather states who make between US$70,000 and US$110,000 per year.

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Along with the listing, Tricon will sell shares worth US$45 million to Blackstone Real Estate Investment Trust Inc. in a private placement deal.

Morgan Stanley, RBC Dominion Securities, Citigroup Inc. and Goldman Sachs is the bookrunner of the IPO.

Starlight’s offering will raise capital for its US Residential Fund, which will invest in residential properties in several US states, primarily in the South and Sun Belt. The company manages $23 billion in real estate properties in the US and Canada.

The fund’s units are divided into different classes, and will cost $10 or US$10. Two classes of units will be sold on the TSX Venture Exchange.

CIBC World Markets is the lead agent on the offering, which will be required to raise a minimum of US$99-million for the company to close.

The fund will be the fifth publicly traded entity of Starlight. Investors can access the market three residential funds and one commercial real estate investment trust.

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Tricon and Starlight, both Toronto-based, are traditional players in the North American property management industry, which have seen new entrants in recent years. Digital upstarts such as Zillow and Redfin, and asset managers such as BlackRock, are buying homes for resale or rental, capitalizing on the limited housing supply in markets across the continent at a time when young adults have become increasingly concerned about housing affordability. I have expressed concern. Tricon accepts these factors as market conditions that suit its business.

The company said in its prospectus, “Homeownership in the United States is rapidly becoming out of reach due to rising home prices … Millennials in the United States now have much less real estate than Baby Boomers their age. ” Rent “Tricon’s” [single-family residential] The homes provide an attractive housing option for young families as they build new homes.”

This summer, Canadian developer Core Development Group Ltd. announced plans to spend $1 billion over five years to buy and rent individual homes. The news sparked outrage online from many young Canadians, who said they were concerned that home ownership has become too difficult, and that having more corporate players in the market makes it even more difficult.

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