UPDATED June 22, 2022, 6:05 p.m.: Dallas-based Transcontinental Realty Investors (TCI) and Australia’s Macquarie Group’s multifamily joint venture Victory Abode Apartments has agreed to sell up to 45 jointly owned properties and one owned outright by TCI to two unnamed private equity funds for $2.04 Billion, according to a Securities Exchange Commission filing.
If the transaction is completed, TCI is expected to net $420 million from the sale of VAA’s properties, according to the filing. After the sale is complete, TCI intends to distribute a $100 million dividend to company shareholders to cover their tax liabilities from the transaction since TCI is a “look through” company for tax purposes.
The two unnamed funds can decrease the number of properties they have agreed to purchase by up to five properties, according to the filing.
The seven remaining properties out of VAA’s 52 property portfolio will be sold to TCI.
The two funds have made a nonrefundable $50 million deposit in an escrow account. The deal is expected to close no later than 75 days after the official signing date of June 19. The funds can postpone the closing of the deal for an additional 15 days with another $10 million deposit into the escrow account.
Terms of the sale can be adjusted within 120 days from the date of when the deal was completed, including the calculation of rental fees, income and expenses related to the properties and potential cash distributions that will be sourced from ongoing and real estate property tax appeals.
Subsidiaries of Dallas-based Transcontinental Realty Investors, which specializes in Texas Class-A multifamily developments, and Australia’s Macquarie Group formed VAA to invest in Class A properties, acquire existing complexes and build new ones in “focused secondary and tertiary markets.”
The joint venture sought to create a “business platform that will allow dramatic expansion in the multifamily arena,” according to a statement by the companies carried in a HousingWire report in 2018.
Victory Abode Apartments did business as Abode Properties Services. At the time of the report, VAA owned 10,133 units in 11 states and was developing three more multifamily complexes.
Publicly-traded TCI and its subsidiary Southern Properties Capital contributed more than 50 multifamily assets to the joint venture’s portfolio, while Macquarie made a “substantial equity investment.”
Macquarie’s investment contribution wasn’t disclosed.
Over the past decade, Sun Belt multifamily properties have attracted global players.
Sydney-based Macquarie plans to move its American operations into new digs at the Kushner Companies-owned 666 Fifth Avenue office tower in 2024.
Correction: An earlier version of this story incorrectly identified Macquarie’s address.