Atlanta-based multifamily developer Cortland Partners LLC has agreed to buy the outstanding units of a Canada-based real estate investment trust for $7.61 per unit, the equivalent of about $1.2 billion.
Pure Multi-Family REIT, a publicly traded company, settled on Cortland after entertaining interest from some 90 potential buyers since 2018 through its advisor, Scotiabank, the Vancouver-based firm said in a news release announcing the deal.
REITs are vehicles that give investors exposure to a portfolio of real estate assets that generates income distributed as dividends. Pure Multi-Family, which developed 22 communities with 7,085 units in Texas and Arizona, said it has averaged a 16 percent compounded annual return since going public in 2012.
Cortland has agreed to a deal that requires no due diligence, and the multi-family developer will even pay a “reverse termination fee” of $50 million should it fail to complete the deal. Cortland sees Pure’s assets as complementary to its own: The Atlanta-based firm has 155 communities, mainly across the South. Regional offices are based in Charlotte, Dallas, Denver, Houston and Orlando.
Pure Multi-Family, meanwhile, has 25 days to shop for a higher bidder, with its own termination fee set to rise from $9.5 million before Aug. 20 to $22.5 million thereafter.
Pure Multi-Family’s board is recommending approval of the deal, with the parties expecting it to close by the fourth quarter of this year.
Cortland started in 2005 and now manages 50,000 homes. The developer entered the United Kingdom development market with an acquisition in 2017 and is still working on projects there. The company’s CASK Industries unit sources high-end finishes from an office in Shanghai, China. Cortland Partners runs its own in-house design and architecture team, Cortland Design, as well as the Cortland Build construction firm.
Learn more about the deal in the news release here.