BSR Real Estate Investment Trust (HOM.UN) M&A Announcement summary

Deal rationale and strategic fit

• Sale of a 9-property, 2,701-unit portfolio for $618.5 million to AvalonBay validates IFRS NAV, unlocks intrinsic value, and addresses public market mispricing.

• Reduces legacy Class B unit holders' influence, simplifying capital structure and strengthening governance.

• Provides capital for reinvestment into high-growth, high-quality assets in the Texas Triangle, leveraging management’s repositioning expertise.

• Enables divestment of older assets and redeployment into newer developments in target markets.

• Focus remains on high-quality, diversified multifamily assets in core Texas markets.

Financial terms and conditions

• Total sale price is $618.5 million: $187 million in cash for Austin assets, $431.5 million for Dallas assets (mix of $193 million cash and up to 15 million Class B units exchanged/cancelled).

• Total consideration includes $380 million in cash and up to $238.5 million in AVB DownREIT Partnership equity to Class B unit holders.

• Sale represents about 30% of assets for 40% of total portfolio market value, with a profit of over $2 per REIT unit and a $111 million value lift over original acquisition cost.

• $48.4 million of cash proceeds to repay existing mortgage debt; $190 million intended for new acquisitions.

• Termination fees: $7.5 million payable by BSR Trust to AVB for certain breaches; $15 million payable by AVB to BSR Trust for discretionary termination.

Synergies and expected cost savings

• Elimination of Class B unit veto rights and reduction in board representation streamlines decision-making and increases nimbleness in capital allocation.

• Proceeds to be redeployed into higher-return properties, supporting earnings growth and asset stabilization.

• Transaction expected to generate an approximate $111 million value lift over original acquisition price.

• Enables continued focus on younger, higher-growth assets, improving portfolio quality and average rent.