Deal Target Description

Home Properties (NYSE:HME) is an East Coast apartment REIT.

Deal Terms

Home Properties (HME) announced a definitive deal in which Lone Star Funds will buy HME for $75.23 per share in cash. Under the merger agreement, HME may not pay further dividends except as required to maintain its REIT status.

Deal Financing

Lone Star Funds secured $6.1 billion of fully committed financing from Goldman Sachs (NYSE:GS). The deal is not subject to a financing condition. The deal target worked with Bank of America (NYSE:BAC).

Deal Conditions

The deal is subject to the approval by HME stockholders and the approval of the Home Properties OP Merger by the Home Properties OP unitholders. Each of the deals is subject to certain normal closing conditions.

Deal Price

The deal price is reasonable in the context of historically comparable transactions.

Deal History

This deal was widely speculated upon in April 2015 and announced in June. In July, the go-shop period expired with no new offers. HME shareholders approved the deal in August.

Deal Alternatives

While no other bids are expected at this point, if this deal collapsed an alternative buyer could be Brookfield Asset Management (NYSE:BAM) or Camden Property (NYSE:CPT).

Conclusion

This is a reasonably good reward relative to the risks.