Tricon Residential (TCN) Acquired by Blackstone for $3.5B, Portfolio Overview

What did Blackstone acquire? Portfolio holdings, gross rental yields, purchase and sale activity, and more for TCN.

Jan 19, 2024

∙ Paid

Blackstone (BX) will acquire all outstanding shares of Tricon (TCN) for $11.25 per share in cash. Valued at $3.5 billion, the price represents a 30.35% premium over Tricon's last closing stock price. Upon the announcement, U.S.-listed shares of Tricon jumped about 28%, reaching a near one-and-a-half-year high. The transaction is expected to close in the second quarter of this year.
Tricon has built a portfolio of 38,000+ single-family rental properties across the US, with almost half of the portfolio held in Georgia, Texas, and Florida.
Blackstone started Invitation Homes in 2012, acquiring large numbers of foreclosed homes when the housing market was bottoming out following the 2007-2008 recession. Invitation Homes grew rapidly, becoming the largest owner of single-family homes in the US, holding more than 48,000 by 2017. Invitation Homes went public in 2017, and Blackstone divested its stake in the company in 2019 over two separate transactions. Acquiring Tricon represents Blackstone directly expanding their footprint in the single-family residential business in a meaningful way.
Following the high purchase volume and rent growth period of 2021, the SFR market has been quiet lately with few new homes acquired and rent growth slowing for homes held within SFR portfolios. What does Blackstone see in the market looking forward?

Introduction

Tricon Residential (TCN) is one of three publicly listed Single-Family Rental (SFR) Real Estate Investment Trusts (REITs). SFR REITs have become a prominent player within residential real estate, with the three publicly listed SFR REITs owning a combined 180k+ homes alone.

All three began SFR activity in 2012 acquiring properties in the early recovery period following the 2008 global financial crisis; Invitation Homes, started by Blackstone, scaled most aggressively, buying ~40,000 homes in 2012-2013 alone.

The Sun Belt has been a popular acquisition target for these SFR REITs, offering attractive underlying population and employment growth paired with reasonably priced homes relative to prevailing rental yields.

These days, acquisition pace has slowed with funds struggling to find properties that offer attractive yields, driven by fewer homeowners being willing to sell and larger holding costs associated with higher interest rates.

However, demand for SFR units from renters remains strong, and market conditions have driven a rise in interest for built-to-rent (BTR) projects.

Data Overview

At SFR Analytics, we leverage nationwide deed, assessor, and rental listing data to track the single family rental market. To generate this analysis, we’ve:

Identified and reconciled the entities that Tricon has purchased homes under
Matched rental listing data to the underlying ownership information that links an entity to Tricon
Aggregated additional sources of data, like school ratings, to provide additional context about the neighborhoods where properties are held

Note: A more detailed breakdown of data and methodology used is available at the bottom of the post.

Analysis & Results

Geographic Distribution

Tricon has built a 38,000+ single-family rental portfolio spanning the Sunbelt.

Tricon’s largest states by ownership are Georgia and Texas, followed by Florida and North Carolina. For comparison, the top three states that American Homes 4 Rent owns properties in are Texas, Florida, and North Carolina; for Invitation Homes, the top three states are Florida, Georgia, and California.

Purchase Price Distribution

Moderately priced to lower priced homes make up the bulk of Tricon’s portfolio, with a median purchase price of $189k nationwide. On average, homes owned by Tricon have a square footage of roughly 1,600 square feet, compared to closer to 2,000 square feet for homes owned by Invitation Homes and American Homes 4 Rent.

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In line with Tricon’s lower purchase price and square footage compared to Invitation Homes and American Homes 4 Rent, the distribution of ratings for schools near homes owned by Tricon is lower than its publicly listed SFR REIT peers, but higher than the distribution for affordability-focused workforce housing providers like VineBrook and SFR3.

Market-Level Gross Yields and Rent Growth

To find new rental tenants, Tricon has had to engage in near record-levels of price cuts on listings, contributing to much lower year-over-year rent growth.

Note: the remainder of this article is available to paid subscribers, sign up below for access. Paid subscribers get full access to weekly data-rich articles about the SFR market and select additional articles only available to paid subscribers.