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Exteriors of Chartwell Select Scarlett Heights building at Eglinton Ave. West and Scarlett Rd., a rental retirement residence in Toronto's west end.

Fred Lum/The Globe and Mail

The plans to privatize TransGlobe Apartment Real Estate Investment Trust are still being hashed out, and have yet to be approved by shareholders, but there is already speculation that the buyer could take the company public again in the near future.

In April, Starlight Investments struck a friendly deal with a few partners to privatize TransGlobe for an equity value of just over $1-billion. Since then, Daniel Drimmer, Starlight's head, has conveniently converted a capital pool company he owned called Wand Capital Corp. into True North Apartment REIT.

Very little has been said about this new REIT, and Mr. Drimmer could not be reached for comment. But people in the industry speculate that Mr. Drimmer will somehow take the TransGlobe assets public again through True North, along with a slew of other properties he already owns.

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It wouldn't be the first time Mr. Drimmer surprised the market: the deal to privatize TransGlobe caught everybody off guard. It was Mr. Drimmer who originally owned the TransGlobe assets, yet he sold them through the IPO in 2010, back when the market wasn't nearly as hot. That he repurchased them when the real estate market was steaming – meaning he sold low and bought high – was shocking.

There are some who say Mr. Drimmer never wanted to part ways with the assets. According to people in the industry, Starlight had a credit line pulled in 2010, which forced the company to raise cash by selling the TransGlobe properties into a public company. That may be, but Starlight kept selling properties into TransGlobe over the last two years... so it wasn't as though Mr. Drimmer did a one-off deal.

The entire privatization has been messy, partly because TransGlobe wanted to remain independent. When the deal was first announced, chief executive officer Kelly Hanczyk all but said he didn't want to sell, but was forced to after Mr. Drimmer approached his board with a compelling offer. TransGlobe's takeover circular is now out, and the details confirm this interpretation. Mr. Drimmer approached the company with a bid of $13.50 per unit, and was later convinced to bump the purchase price to $14.25.

Because the price was right, and because Mr. Drimmer agreed to 60-day go-shop period, there really wasn't much TransGlobe's board could refuse.

Now, however, the looming marriage between Starlight and TransGlobe has has another awkward angle.

A recent investigation by the CBC uncovered a raft of repairs in TransGlobe-branded properties that went unfixed for years, including mould and ceiling holes. The REIT laid much of the blame on its external property manager, TransGlobe Property Management Services – a company owned by Mr. Drimmer.

In other words, TransGlobe has now agreed to a takeover by the very firm that it said had poorly managed its properties. Asked about this in April, Mr. Hanczyk said he could not comment on past allegations of shoddy building management, and simply noted that "my board has a fiduciary duty to look at the best interests of the unitholders."

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All of this could make for a very interesting shareholder meeting later this month.

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