Home Properties announced that it has entered into a definitive agreement to be acquired by an affiliate of Lone Star Funds. This transaction was valued at approximately $7.6 billion and this includes Home Properties existing debt. Upon completion of the transaction, Home Properties will become a privately held company.
Lone Star Funds will purchase all of the outstanding common stock of Home Properties for $75.23 per share in an all-cash transaction. The offer price represents a premium of approximately 9% over Home Properties’ unaffected closing stock price on April 24, 2015, the last trading day prior to media reports on a potential transaction, and a premium of approximately 11% over the average closing price of Home Properties’ common stock for the 60 days ended April 24, 2015.
Edward J. Pettinella, President and Chief Executive Officer of Home Properties, mentioned in an interview: “The Home Properties team has built a great company, as reflected by our strong platform, unique assets, and differentiated business strategy.” He added, “We believe this transaction with Lone Star Funds provides our stockholders with compelling value for their investment, consistent with our long-term strategy.”
Hugh J. Ward III, Co-Head of Real Estate Investments at Lone Star Funds, added, “We are pleased to enter into an agreement to acquire Home Properties and look forward to working with their talented team to complete this transaction and integrate the Company’s portfolio into Lone Star Funds’ existing multifamily portfolio. This is Lone Star Funds’ second large, recent apartment purchase following the 2014 acquisition of a 64 property, 20,439 unit portfolio, and is consistent with our strategy of buying primarily Class B apartments, including workforce housing, located in in-fill markets with strong underlying fundamentals.”
Before the Home Properties Merger will be enacted and pursuant to the Merger Agreement, Lone Star Funds will acquire all of the Home Properties OP Units that are not owned by Home Properties and have not been exchanged as described above pursuant to a merger of Home Properties OP with a wholly owned subsidiary of Lone Star Funds. In connection with the OP Merger, holders of Home Properties OP Units that have not exchanged OP Units as described above will receive $75.23 per unit in cash upon the closing of the OP Merger.
Tom Toomey, President and Chief Executive Officer of UDR, also mentioned, “We appreciate Home Properties and Lone Star Funds reaching out to create an opportunity for UDR to offer the Home Properties OP Unitholders an alternative that will allow them to continue to participate in the strong multifamily space and continued growth in UDR.”
Approvals, Anticipated Closing The Board of Directors of Home Properties have unanimously approved the merger agreement and have recommended approval of the Home Properties Merger by the Home Properties stockholders and of the Home Properties OP Merger by the Home Properties OP unitholders.
The transaction is expected to close during the fourth quarter of 2015, subject to the approval of the Home Properties Merger by the Home Properties stockholders and the approval of the Home Properties OP Merger by the Home Properties OP unitholders.
About Home Properties
Home Properties, Inc. is a publicly traded apartment real estate investment trust that owns, operates, develops, acquires and rehabilitates apartment communities primarily in selected Northeast and Mid-Atlantic markets. It operates over 38,000 apartment units. The company is headquartered in Rochester, New York. Home Properties, Inc. stock market evolution http://www.marketwatch.com/investing/stock/hme
About Edward Pettinella
Mr. Edward J. Pettinella is President, Chief Executive Officer, Director of Home Properties Inc., since January 1, 2004. He is also a Director. He joined the Company in 2001 as an Executive Vice President and Director. He is also a Board member of Rochester Business Alliance, National Multi Housing Council and Syracuse University, as well as a member of ULI and NAREIT. Mr. Pettinella is a graduate of the State University of New York at Geneseo and holds a Masters in Business Administration degree in Finance from Syracuse University.
About Lone Star Funds
Lone Star Funds is a private equity firm that invests in distressed assets both in the United States and internationally. The founder established its first fund in 1995 (under a different name) and Lone Star has to date organized fifteen private equity funds with total capital commitments since inception of over $59 billion (as of June 2015). Lone Star’s investors include corporate and public pension funds, sovereign wealth funds, university endowments, foundations, fund of funds and high-net-worth individuals. Lone Star Funds has affiliate offices in North America, Europe and Japan.
About Hugh J. Ward III
Hugh J. Ward III is the Senior Managing Director and Co-Head of Real Estate Investments at Lone Star Funds