Home Properties To Be Taken Private By Lone Star Funds In $7.6 Bln Deal

(RTTNews) - Real estate investment trust Home Properties, Inc. (HME) agreed Monday to be taken private by Lone Star Funds for $75.23 per share in an all-cash deal valued at about $7.6 billion, including the assumption of existing debt.

The offer price represents a premium of 9.2 percent over Home Properties' unaffected closing stock price of $68.91 on April 24, the last trading day prior to media reports on a potential deal. It also represents a 3.4 percent premium over Home Properties' closing stock price of $72.73 on Friday.

The deal, which has the unanimously approval of the Board of Directors of Home Properties, is expected to close during the fourth quarter of 2015. The closure of the deal is primarily subject to the approval by the Home Properties stockholders.

The asset portfolio of Home Properties will be integrated into Lone Star Funds' existing multifamily portfolio.

The acquisition is consistent with Lone Star Funds' strategy of buying primarily Class B apartments, including workforce housing, located in in-fill markets with strong underlying fundamentals.

"The Home Properties team has built a great company, as reflected by our strong platform, unique assets, and differentiated business strategy. We believe this transaction with Lone Star Funds provides our stockholders with compelling value for their investment, consistent with our long-term strategy," Home Properties President and CEO Edward Pettinella said.

This is the second largest recent apartment purchase by Lone Star Funds following the 2014 acquisition of a 64 property, 20,439 unit portfolio.

The agreement also provides for a "go shop" provision under which Home Properties may solicit alternative proposals from third parties during the next 30 calendar days on customary terms and conditions for transactions of this nature.

The 30-day period will be used by the Home Properties Board to actively solicit third-party acquisition proposals, with the assistance of its advisors.

Rochester, New York-based Home Properties also said it will concurrently sell a portfolio of up to six properties containing as many as 3,246 units to REIT UDR, Inc. (UDR) in exchange for a combination of cash and newly issued units of a newly formed subsidiary of UDR.

The deal will see existing holders of partnership units of Home Properties, L.P. being provided an opportunity to elect to exchange their units for 2.15 newly issued UDR DownREIT Units for each unit held, plus $3.01 in cash from Lone Star Funds. The closure of the deal is primarily subject to the approval by the unitholders.

Lone Star Funds has received $6.1 billion of fully committed financing from Goldman, Sachs & Co., and the deals are not subject to a financing condition. Each of the transactions is subject to certain customary closing conditions.

In Monday's regular trading session, HME is currently trading at $74.67, up $1.94 or 2.67% on a volume of 0.11 million shares, and UDR is trading at $33.39, up $0.12 or 0.36% on a volume of 40,860 shares.