InterRent REIT to be Acquired by CLV Group in Partnership with GIC in $4 Billion All-Cash Transaction

Cision Canada

27-05-2025

Transaction Highlights
InterRent unitholders to receive cash consideration of $13.55 per unit, representing a:
35% premium to InterRent's unaffected closing unit price on the TSX as of March 7, 2025, the last trading day prior to media speculation regarding the REIT, and a
29% premium to InterRent's 90-day VWAP on the TSX as of May 26, 2025 Board of Trustees of InterRent (the "Board") unanimously recommends that unitholders vote in favour of the Transaction
The Board and the Special Committee have obtained fairness opinions from BMO Capital Markets and National Bank Financial Inc. ("NBF"), and the Special Committee has obtained a formal valuation from NBF
Agreement includes a "Go-Shop" period of 40 days during which InterRent may actively solicit, evaluate and enter into negotiations with third parties that express an interest in acquiring InterRent
InterRent to issue a proxy circular, including full reasons for its voting recommendation and instructions for unitholders, in due course
OTTAWA, ON, May 27, 2025 /CNW/ - InterRent Real Estate Investment Trust ("InterRent" or the "REIT") (TSX: IIP.UN) announced today that it has entered into an arrangement agreement (the "Arrangement Agreement") with Carriage Hill Properties Acquisition Corp. (the "Purchaser"), a newly formed entity owned by CLV Group and GIC, pursuant to which the Purchaser will acquire InterRent in an all-cash transaction valued at approximately $4 billion, including the assumption of net debt (the "Transaction").
Under the terms of the Arrangement Agreement, InterRent unitholders (other than Retained Interest Holders, as such term is defined in the Arrangement Agreement and which, as of the date of the Arrangement Agreement included CLV Group and its affiliated entities) will receive $13.55 per unit in cash, which represents a 35% premium to InterRent's unaffected closing unit price on the TSX as of March 7, 2025 and a 29% premium to InterRent's 90-day VWAP on the TSX as of May 26, 2025.
"We are pleased to provide immediate and certain premium value to our unitholders through this all-cash transaction with CLV Group and GIC, while also allowing InterRent to solicit superior proposals through a go-shop period of 40 days," said Brad Cutsey, Chief Executive Officer and Trustee of InterRent. "The entire Board of Trustees and management team are proud to have executed on our strategy to build a best-in-class operating platform and assemble a portfolio of well-located properties in some of Canada's strongest urban rental markets. Leveraging that platform, we have repositioned these assets into high-quality communities, generating industry-leading growth and creating significant value for all stakeholders."
"We are delighted to partner together with GIC on this transformative transaction, combining our 50 years of operating experience and GIC's strong track record as a long-term investor in Canada and around the world," said Mike McGahan, President and Chief Executive Officer, CLV Group. "We look forward to continuing to deliver exceptional value to residents through the operational excellence of our combined CLV and InterRent teams."
InterRent expects to continue to pay its regular monthly distribution per unit through closing of the Transaction.
Transaction Details
Pursuant to the Arrangement Agreement, the Purchaser will acquire all of the units of the REIT (other than the units of Retained Interest Holders) for $13.55 per unit in cash by way of a statutory plan of arrangement under the provisions of the Business Corporations Act (Ontario) (such plan of arrangement to include a transfer of all or substantially all of the assets of the REIT and/or its subsidiaries, on the terms and conditions set out in such plan of arrangement). The total equity value of the Transaction is approximately $2 billion on a fully diluted basis, and the total transaction value is approximately $4 billion including the assumption of net debt.
To ensure the process remains fair, open and in the best interests of the unitholders, and pursuant to the Arrangement Agreement, InterRent has an initial 40-day go-shop period, beginning on May 28, 2025 and ending on July 6, 2025 (the "Go-Shop Period"), during which InterRent, with the assistance of its advisors, may actively solicit and consider superior proposals from third parties that express an interest in acquiring InterRent. InterRent has the option to extend the Go-Shop Period by up to 5 days (to July 11, 2025) in certain circumstances. The Purchaser will have the right to match any superior proposals received either during or after the Go-Shop Period, on the terms and conditions set forth in the Arrangement Agreement.
The Arrangement Agreement also includes customary provisions, including non-solicitation by the REIT of alternative transactions following the conclusion of the Go-Shop Period, which is subject to customary "fiduciary out" provisions that enable InterRent to terminate the Arrangement Agreement and accept a superior proposal in certain circumstances.
A termination fee of approximately $49 million or $79 million would be payable to the Purchaser under certain customary circumstances if the Arrangement Agreement is terminated during or after the Go-Shop Period, respectively. A reverse termination fee of approximately $89 million would be payable to the REIT if the Arrangement Agreement is terminated in certain circumstances.
There can be no assurance that the go-shop process will result in a superior proposal. InterRent does not intend to disclose developments with respect to the go-shop process unless and until the Board of Trustees makes a determination requiring further disclosure.
Completion of the Transaction requires approval of at least 66 2/3% of the votes cast by unitholders, as well as the approval by a simple majority of votes cast by unitholders, excluding CLV Group, its affiliates and any other unitholders required to be excluded under Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions ("MI 61-101"). The Transaction is also subject to court approval, regulatory approvals, consents and approvals from Canada Mortgage and Housing Corporation ("CMHC") and certain existing lenders (including in respect of the Purchaser's debt financing in connection with the Transaction and the security granted thereunder) and satisfaction of other customary closing conditions.
A special meeting of unitholders to consider the Transaction is expected to be held in Q3 2025. Further details regarding the Transaction, including the rationale for the Board of Trustees' recommendation, will be provided in a management information circular to be mailed to unitholders in advance of the meeting.
The TSX has approved the deferral of the REIT's annual general meeting, which will now be held concurrently with the special meeting to be called to consider the Transaction.
Assuming the timely receipt of all required key regulatory approvals and consents and approvals from CMHC and certain existing lenders, the Transaction is expected to close in late 2025 or early 2026.
In addition to CLV Group and its affiliates, InterRent's trustees and certain of its officers have entered into customary voting and support agreements pursuant to which they have agreed, subject to the terms thereof, to support and vote their units in favour of the Transaction. Consequently, holders of approximately 6.3% of the issued and outstanding trust units have agreed to vote their units in favour of the Transaction.
Following closing, InterRent will be de-listed from the TSX and it is anticipated that InterRent will apply to cease to be a reporting issuer.
The foregoing summary is qualified in its entirety by the provisions of the Arrangement Agreement, a copy of which will be filed under InterRent's profile on SEDAR+ at www.sedarplus.ca.
Special Committee and Board of Trustees Recommendation
As Mr. Mike McGahan is the President and Chief Executive Officer and controlling shareholder of CLV Group, as well as the Executive Chair of the Board of InterRent, the Transaction, if consummated, will constitute a "business combination" for purposes of MI 61-101. Consistent with its fiduciary duties, the Board formed a special committee composed entirely of independent trustees of InterRent (the "Special Committee") to, among other things, review and evaluate the terms of the initial and subsequent proposals received from the Purchaser, make recommendations to the Board in respect of such proposals, negotiate the terms of any transaction and supervise the preparation of a formal valuation of the fair market value of the units of InterRent in accordance with MI 61-101 (the "Formal Valuation").
The Board of Trustees (with the interested trustee abstaining from voting), acting on the unanimous recommendation of the Special Committee, composed entirely of independent trustees and advised by independent financial and legal advisors, has unanimously approved the Transaction and recommends that unitholders vote in favour of the Transaction. The Special Committee, after receiving advice from its financial and legal advisors, determined that the Transaction is in the best interests of InterRent and is fair, from a financial point of view, to the REIT's unitholders (other than Retained Interest Holders).
BMO Capital Markets and NBF have each provided a fairness opinion to the Board and the Special Committee that, subject to the assumptions, limitations and qualifications set out in such opinions, the consideration to be received by unitholders pursuant to the Transaction is fair, from a financial point of view, to unitholders (other than the Purchaser and its affiliates).
In addition, NBF has delivered the Formal Valuation to the Special Committee, which determined that as of May 26, 2025, and based on the assumptions, limitations and qualifications set forth in such Formal Valuation, the fair market value of the units is in the range of $12.75 to $14.00 per unit.
Copies of each of the fairness opinions and the Formal Valuation, as well as additional details regarding the terms and conditions of the Transaction and the rationale for the recommendation made by the Special Committee and the Board will be set out in the management proxy circular to be sent in connection with the Transaction and filed by InterRent on its profile on SEDAR+ at www.sedarplus.ca.
BMO Capital Markets is acting as financial advisor to InterRent and has provided the Board of Trustees and Special Committee with a fairness opinion in respect of the Transaction. National Bank Financial provided an independent fairness opinion and the Formal Valuation to the Special Committee.
Norton Rose Fulbright Canada LLP is acting as legal counsel to the Special Committee. Gowling WLG (Canada) LLP is acting as legal counsel to InterRent.
Scotiabank is acting as financial advisor to the Purchaser and Goodmans LLP and Stikeman Elliott LLP are acting as legal counsel to CLV Group and GIC, respectively. LaBarge Weinstein LLP is counsel to CLV Group in connection with the joint venture arrangements and Skadden, Arps, Slate, Meagher & Flom LLP is counsel to GIC in connection with the joint venture arrangements. The Bank of Nova Scotia is acting as sole underwriter on the credit facilities in support of the acquisition.
About InterRent
InterRent REIT is a growth-oriented real estate investment trust engaged in increasing unitholder value and creating a growing and sustainable distribution through the acquisition and ownership of multi-residential properties.
InterRent's strategy is to expand its portfolio primarily within markets that have exhibited stable market vacancies, sufficient suites available to attain the critical mass necessary to implement an efficient portfolio management structure, and offer opportunities for accretive acquisitions.
InterRent's primary objectives are to use the proven industry experience of the trustees, management and operational team to: (i) to grow both funds from operations per unit and net asset value per unit through investments in a diversified portfolio of multi-residential properties; (ii) to provide unitholders with sustainable and growing cash distributions, payable monthly; and (iii) to maintain a conservative payout ratio and balance sheet.
About CLV Group
Since 1969, CLV Group has been dedicated to building stronger, more resilient portfolios for its investors, partners, communities, and most importantly, our valued residents, through a fully integrated real estate management platform. By adeptly navigating the market, the CLV Group team has optimized a range of complimentary services spanning residential and mixed-use development, acquisitions, investment portfolios, construction, realty, and property management.
Firmly rooted in a commitment to fostering sustainable, inclusive communities, CLV Group offers solid risk-adjusted returns supported by a robust portfolio of real estate assets nationwide. With $3 billion in assets under management, over 5 million square feet of development in its pipeline, and a wide range of residential units, CLV Group's track record itself proudly speaks to its relentless pursuit of excellence.
About GIC
GIC is a leading global investment firm established in 1981 to secure Singapore's financial future. As the manager of Singapore's foreign reserves, GIC takes a long-term, disciplined approach to investing and is uniquely positioned across a wide range of asset classes and active strategies globally. These include equities, fixed income, real estate, private equity, venture capital, and infrastructure. Its long-term approach, multi-asset capabilities, and global connectivity enable it to be an investor of choice. GIC seeks to add meaningful value to its investments. Headquartered in Singapore, GI Chas a global talent force of over 2,300 people in 11 key financial cities and has investments in over 40 countries. For more information, please visit www.gic.com.sg or follow on LinkedIn.
Cautionary Statement and Forward-Looking Statements
This press release contains "forward-looking statements" within the meaning of applicable securities legislation. Forward-looking statements generally include, but are not limited to, statements with respect to management's beliefs, plans, estimates and intentions, and similar statements concerning the Transaction, the ability to complete the Transaction and the other transactions contemplated by the Arrangement Agreement and the timing thereof, including the parties' ability to satisfy the conditions to the consummation of the Transaction, the receipt of the required shareholder approvals, regulatory approvals, consents and approvals of CMHC and certain existing lenders and court approval and other customary closing conditions, the possibility of any termination of the Arrangement Agreement in accordance with its terms, and the expected benefits to InterRent and its unitholders and other stakeholders of the Transaction, and other statements that are not historical facts. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected","budget","scheduled","estimates","forecasts","intends","anticipates"or"does not anticipate", or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved".
Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of InterRent to be materially different from those expressed or implied by such forward-looking statements, including, but not limited to: the possibility that the Transaction will not be completed on the terms and conditions, or on the timing, currently contemplated, and that it may not be completed at all, due to a failure to obtain or satisfy, in a timely manner or otherwise, required regulatory, CMHC and certain existing lenders consent, shareholder and court approvals and other conditions to the closing of the Transaction or for other reasons; the negative impact that the failure to complete the Transaction for any reason could have on the price of InterRent's securities or on its business; the Purchaser's failure to pay the consideration at closing of the Transaction; the failure to realize the expected benefits of the Transaction; the restrictions imposed on InterRent while the Transaction is pending; the business of InterRent may experience significant disruptions, including loss of clients or employees due to Transaction-related uncertainty, industry conditions or other factors; risks relating to employee retention; the risk of regulatory changes that may materially impact the business or the operations of InterRent; the risk that legal proceedings maybe instituted against InterRent; significant Transaction costs or unknown liabilities; and risks related to the diversion of management's attention from InterRent's ongoing business operations while the Transaction is pending; and other risks and uncertainties affecting InterRent. For more information on the risks and uncertainties affecting InterRent, please refer to the "Forward-Looking Statements" section of InterRent's Management's Discussion and Analysis for the year ended December 31,2024 and Annual Information Form for the financial year ended December 31,2024(the "AIF"), as well as the "Risk Factors" section of the AIF.
Although the forward-looking information contained herein is based upon what management believes are reasonable assumptions, there can be no assurance that actual results will be consistent with these forward-looking statements. InterRent has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, however, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. InterRent does not undertake to update any forward-looking statements, except in accordance with applicable securities laws.
This press release shall not constitute an offer to purchase or a solicitation of an offer to sell any securities, or a solicitation of a proxy of any securityholder of any person in any jurisdiction. Any offers or solicitations will be made in accordance with the requirements under applicable law. Unitholders are advised to review any documents that may be filed with securities regulatory authorities and any subsequent announcements because they will contain important information regarding the Transaction and the terms and conditions thereof. The circulation of this press release and the Transaction may be subject to a specific regulation or restrictions in some countries. Consequently, persons in possession of this press release must familiarize themselves and comply with any restrictions that may apply to them.