On Tuesday, Ottawa-based InterRent REIT (TSX: IIP.UN) announced that it had entered into an agreement to be acquired by Carriage Hill Properties Acquisition Corp, confirming rumours that have been swirling for several months that it was going to be sold.
Carriage Hill Properties Acquisition Corp is a new entity formed by CLV Group and GIC. InterRent REIT's Executive Chair is Mike McGahan, who is the President & CEO of CLV Group, which previously served as the property manager for the REIT until February 15, 2018. GIC is the Singaporean sovereign wealth fund that also has a joint venture with Dream Industrial REIT (TSX: DIR.UN).
The all-cash transaction to take the REIT private has a total equity value of $2 billion, on a fully-diluted basis, and has a total value of approximately $4 billion including the assumption of debt, said the REIT, whose units will be acquired for $13.55 per unit — a 35% premium on its closing unit price on March 7, and a 29% premium on its 90-day volume-weighted average price as of yesterday.
The REIT notes that March 7 was the last trading day prior to media speculation regarding the REIT. It is also said that BMO Capital Markets and National Bank Financial have provided fairness opinions to the Board concluding that the fair market value of the units as of May 26 was between $12.75 and $14.00.
InterRent REIT will now have an initial 40-day go-shop period, beginning May 28, to solicit and consider other bids. The go-shop period ends on July 6, but can be extended to July 11 under certain circumstances, and Carriage Hill Properties Acquisition Corp will have the right to match any superior offer that is received both during or after the go-shop period.
The current agreement has a termination fee of approximately $49 million if it is terminated by the REIT during the go-shop period and approximately $79 million if it is terminated after the go-shop period. It also includes a reverse termination fee of $89 million payable to the REIT if the agreement is terminated by Carriage Hill Properties Acquisition Corp.
InterRent REIT said it does not intend to provide updates about the go-shop period unless the Board of Trustees determines that further disclosures are required.
The transaction will require approval from 66.67% of votes cast by unitholders, as well as approval by a simple majority of votes cast by unitholders — excluding CLV Group and its affiliates. A special meeting of unitholders to consider the transaction has not been scheduled, but is expected to be held in Q3 2025. The REIT's trustees and some of its officers have entered into support agreements resulting in 6.3% of issued and outstanding units already secured in favour of the transaction.
The Toronto Stock Exchange has also allowed the REIT to defer its annual general meeting, which is now expected to be held concurrently with the special meeting.
The transaction is also subject to court approval, regulatory approval, approval from the Canada Mortgage and Housing Corporation, and approval from certain existing lenders. If all the necessary approvals are received as expected, the transaction could close in late-2025 or early-2026, after which InterRent REIT will be de-listed from the TSX.
"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, who previously served as the REIT's CEO from 2009 to 2022, in the press release. "We look forward to continuing to deliver exceptional value to residents through the operational excellence of our combined CLV and InterRent teams."
"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," added InterRent CEO and Trustee Brad Cutsey. "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."
Founded in 2006, InterRent REIT's portfolio now consists of over 13,000 units across 126 communities primarily in Ontario, but also in Quebec and British Columbia. In its Q1 2025 report published earlier this month, the REIT said it had a total portfolio occupancy rate of 96.8% and outstanding mortgage debt totalling to $1.7 billion, and that it continued to sell non-core assets in order to increase unit buyback activity and to address the disconnect between the intrinsic value of the units and their trading price.
