InterRent REIT (IIP-UN-T) one of Canada’s largest owners and operators of multifamily housing, confirmed it has agreed to be acquired by CLV Group and Singapore’s sovereign wealth fund GIC in a cash deal which values the trust at about $4 billion.

Mike McGahan is the president, CEO and controlling shareholder of CLV Group, as well as the executive chairman of the board of InterRent. Thus, the transaction is a "business combination" under Canadian business and trading law. It will also require the approval of minority unitholders.

InterRent unitholders are to receive $13.55 per unit of the trust, which InterRent says represents a 29 per cent premium to its average value on the TSX during the previous 90 days as of May 26. InterRent also notes the price is a 35 per cent premium on its closing price as of March 7, which it calls “the last trading day prior to media speculation regarding the REIT” and its future.

The agreement also includes a 40-day "go-shop" period during which InterRent may actively solicit and negotiate with third parties that also express an interest in acquiring the trust.

"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 McGahan in the announcement Tuesday morning. "We look forward to continuing to deliver exceptional value to residents through the operational excellence of our combined CLV and InterRent teams."

InterRent board supports transaction

InterRent’s board has unanimously thrown its support behind the offer.

The transaction would include approximately $2 billion in equity and the assumption of the REIT’s debt. No details have been provided regarding the equity positions of CLV and GIC.

"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."

InterRent, CLV Group and GIC

Ottawa-based InterRent owned and operated a portfolio of 123 apartment properties, comprising 13,435 apartments concentrated in four major Canadian markets, the Greater Toronto Area, Montreal, Vancouver and its home city of Ottawa, as of year-end 2024.

CLV Group was founded in 1969 to serve its investors, partners, communities and residents through a fully integrated real estate management platform. Its services span residential and mixed-use development, acquisitions, investment portfolios, construction, realty and property management.

Also based in Ottawa, the firm has $3 billion in assets under management and over five million square feet of development in its pipeline.

GIC is a major global investment firm established in 1981 in Singapore. As the manager of Singapore's foreign reserves, GIC invests in a wide range of vehicles including equities, fixed income, real estate, private equity, venture capital and infrastructure. 

GIC has a global workforce of over 2,300 people in 11 key financial cities and has investments in over 40 countries.

Additional transaction details

The TSX has approved the deferral of the REIT's annual general meeting, which will be held concurrently with the special meeting to consider the transaction.

InterRent expects to continue to pay its regular monthly distribution per unit through closing of the transaction.

InterRent states in the announcement that a formal valuation of InterRent, initiated for the transaction, resulted in a range of $12.75 to $14 per unit. BMO Capital Markets is acting as financial advisor to InterRent and provided the fairness opinion; National Bank Financial provided an independent fairness opinion and the formal valuation.

A series of termination fees are also in effect if this deal is not consummated: 

• approximately $49 million or $79 million potentially payable to the purchaser if the agreement is terminated during or after the go-shop period; and 
• a reverse termination fee of approximately $89 million payable to the REIT if the agreement is terminated under certain other circumstances.

Norton Rose Fulbright Canada LLP is acting as legal counsel to the REIT's special committee considering the transaction. 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.