Starlight, KingSett Capital Announce $3.6B Deal
- Feb 21, 2020
Starlight Investments has notched another Canadian mega-deal by offering to acquire the country’s third-largest publicly traded multifamily REIT in partnership with KingSett Capital for $3.6 billion (C$4.8 billion).
The two private Canadian firms agreed to purchase Northview Apartment REIT, which has a portfolio of roughly 27,000 residential units across the country, for $27.34 (C$36.25) per unit in an all-cash transaction. The offer price represents a 12 percent premium over the REIT’s closing price on Wednesday.
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Under the terms of the proposed deal, Northview unitholders will have the option to take a stake in a new multifamily fund that will own properties across six Canadian provinces and two territories. The vehicle is expected to have a distribution yield of more than 10 percent with a portfolio of more than 10,900 multifamily suites, 340 furnished executive suites and 1.1 million square feet of commercial space, all from Northview’s existing property holdings.
Starlight will operate the Northview properties and intends to keep substantially all of the REIT’s site-level employees and operational staff as well as its offices in Calgary, Alberta (the company’s headquarters) and Toronto. The new deal is expected to close in the third quarter of this year, according to a statement by the buyers.
Canadian giants get bigger
Under the proposed transaction, a joint venture between Starlight and KingSett Canadian Real Estate Income Fund LP will acquire certain “core” properties that account for about 17 percent of the Northview portfolio. The remaining assets, except for those comprising the new High Yield Fund, will be acquired by a JV between Starlight and KingSett Real Estate Growth LP.
Northview was formed in 2015 through Northern Property REIT’s acquisition of True North Apartment REIT and a Starlight Investments apartment portfolio. Starlight President & CEO Daniel Drimmer is Northview’s largest unitholder, with a roughly 13 percent stake.
The announcement comes two months after Starlight completed the acquisition of a 44-building multifamily portfolio centered around the Greater Toronto Area from Continuum Residential Real Estate Investment Trust for $1.3 billion (C$1.7 billion). Through the transaction, Starlight added 32 income-producing rental properties with 6,271 suites to its North American platform.
The company now manages more than $10.6 billion (C$14 billion) of direct real estate and real estate investment securities, with a portfolio totaling roughly 43,000 multifamily units in Canada and the U.S., along with commercial space.
KingSett Capital is one of Canada’s largest private equity real estate investment firms, with ownership interests in a $11.3 billion (C$15 billion) nationwide asset portfolio through its various funds. The company’s multifamily holdings total more than 3,382 units in urban centers across the country.