Home Featured Pure Multi-Family to be Acquired by Cortland

Pure Multi-Family to be Acquired by Cortland


Pure Multi-Family REIT LP has entered into an arrangement agreement with an affiliate of Cortland Partners LLC, pursuant to which Cortland will acquire all of the outstanding Class A units of Pure Multi-Family for US$7.61 per Unit1 in an all-cash transaction valued at $1.2 billion including net debt.

Robert King, Chairman of Pure Multi-Family’s Board of Directors and Chairman of the special committee of independent directors said, “Since our initial public offering in July 2012, Pure Multi-Family has generated a total unaffected return in excess of 176%, approximately 16% on a compounded annual basis. We have accomplished significant growth over the past seven years, having built an institutional quality multi-family apartment portfolio in highly desirable markets in the US Sunbelt. We believe that Cortland’s all-cash Transaction provides certainty from a well-respected organization, and represents significant value for our unitholders with the flexibility to explore other potential superior proposals. ”

Stephen Evans, Pure Multi-Family’s founder and CEO commented, that the announcement “can be attributed to Pure Multi-Family’s high-quality portfolio of multi-family properties located in the most dynamic economies of the US Sunbelt, our recently internalized state of the art property management platform, and the high quality of our team who have repeatedly demonstrated tremendous commitment, passion and integrity. Under Pure Multi-Family’s management, the income and value of the investment properties have grown significantly. Pure Multi-Family delivered the second best total unitholder returns in the Canadian REIT sector since our initial public offering in July 2012, using Canadian dollar returns. Pure Multi-Family ranked twelfth in the Canadian REIT sector, during that same period, using US dollar returns. Today’s transaction delivers certain value to unitholders at a premium to Pure Multi-Family’s recent trading range.”

Steven DeFrancis, Chief Executive Officer of Cortland remarked, “After participating in last year’s sale process, we continued to closely monitor Pure Multi-Family’s performance and updated our underwriting regularly. We believe the terms put forward in the Transaction are highly attractive to Pure Multi-Family’s unitholders. We are thrilled to add Pure Multi-Family’s high-quality communities to the Cortland family and further expand our platform in markets that we know very well.”

Unitholders to receive US$7.61 per Unit in cash, representing a premium of 15% to the closing price per Unit on the TSX on June 26, 2019, the last trading day prior to the public announcement of an unsolicited conditional proposal and a premium of 15% to the 20 day volume-weighted average price per Unit on the TSX for the period ending June 26, 20192;

The transaction reflects an attractive value for Pure Multi-Family’s apartment portfolio and a premium of 12% to Pure Multi-Family’s IFRS book value per Unit (US$6.793) and a premium of 5% to the current research consensus net asset value per Unit (US$7.24) estimate;

The Transaction is fully financed, not subject to due diligence, and backstopped by Cortland with a $50 million reverse termination fee;

The Transaction is the culmination of a comprehensive strategic review that commenced in April 2018 and continued over the past 15 months with Scotiabank having contacted approximately 90 potential strategic and financial purchasers;

“Go shop” period of 25 calendar days to proactively solicit potentially higher bids with minimal friction costs, modest termination fee of US$9.5 million (1.5% of equity value; US$0.11 per Unit) until August 20, 2019 and increasing to US$22.5 million (3.5% of equity value; US$0.27 per Unit) thereafter;

The Board of Directors of Pure Multi-Family, excluding the Chief Executive Officer, are recommending that unitholders vote in favour of the Transaction; and

Pure Multi-Family’s senior officers and directors, including the Chief Executive Officer, will enter into voting and support agreements in favour of the Transaction.

The Transaction is expected to close by Q4 2019.