After Blackstone raised its biggest real estate fund in its history last year, it is putting billions of that funding toward taking a publicly traded single-family rental developer private.

Blackstone, through the Blackstone Real Estate Partners X fund and its Blackstone Real Estate Income Trust, has reached a deal to purchase Tricon Residential for $11.25 per share, or $3.5B in cash, the firms announced Friday.

The price amounts to a 30% premium on Tricon’s Jan. 18 closing price on the New York Stock Exchange. The transaction is expected to close in the second quarter and will give Blackstone control of 38,000 single-family rental homes in the Sun Belt as well as apartment developments in Toronto, according to a release.

Tricon will continue operations and maintain its Toronto headquarters while completing its $1B pipeline of single-family rentals currently under development in the U.S. as well as $2.5B worth of new apartments currently under development in Canada.

Blackstone will also invest a further $1B into the firm for additional single-family home development in the U.S. over the next several years.

“We are proud of the significant and immediate value that this transaction will deliver to our shareholders, while allowing us to continue providing an exceptional rental experience for our residents,” Gary Berman, CEO of Tricon and a former Goldman Sachs banker, said in the release.

Tricon’s shareholders have yet to vote on the deal, and the transaction will require a two-thirds vote to approve it at a future special meeting.

BREIT is among Tricon’s major shareholders following a $240M equity investment in 2020 and has said it will vote in favor of the acquisition. It will maintain a roughly 11% ownership stake in Tricon after the deal closes.

In the meantime, Tricon will suspend disbursement of its regular quarterly dividend. It will resume payments if the deal fails to materialize.

“We are excited that our capital will propel Tricon’s efforts to add much needed housing supply across the U.S. and in Toronto, Canada,” Nadeem Meghji, the newly appointed global co-head of Blackstone Real Estate, said in a release.

Blackstone Real Estate Partners X raised $30.4B when it closed in April, 48% more cash than the investment giant’s previous real estate fund, which closed in 2019. It had an original target of $25B.

Kathleen McCarthy, Blackstone’s other global co-head of real estate, told Bisnow in April that the fund would focus on industrial assets, rental housing, data centers and life sciences projects, affirming the firm's decade-long shift away from office.

“Those sectors were 3% of our portfolio a dozen years ago, now they’re more than 80%,” she said at the time. “We’ve got that right, and that has allowed us to perform in a choppy environment, but [it has] also given us so much data to go on the offensive now in those sectors where we shine the brightest.”

The privatization of Tricon signals that major merger and acquisition activity could rebound this year after a down 2023. Between 2018 and June 2022, 20 public REITs were taken off the market in deals totaling $86B, with $22B of that coming from Blackstone.

BREIT acquired American Campus Communities, a student housing REIT, for $12.8B in April 2018. Three years later, it paid $6B for Home Partners of America, a single-family rental firm that owned more than 17,000 units.

The shift away from office assets hasn’t been enough to fully shield BREIT from volatility in the commercial real estate sector. The private REIT posted a 0.5% loss last year, the fund's worst yearly performance since its creation in 2017, compared to a 26% gain across the S&P 500.

Blackstone has countered that its long-term results counterbalance the shortfall last year.

“BREIT has delivered an 11% annualized net return on Class I since inception seven years ago, approximately 2x publicly traded REITs, making it one of the best performing REIT investments through the pandemic and this period of rising rates,” a Blackstone spokesperson said in a statement.

UPDATE, JAN. 19, 3:30 P.M. ET: This story has been updated to include a statement from Blackstone.