Canada’s H&R REIT is set to be acquired by a group of buyers led by GO Residential REIT, which will acquire 27 properties and expand its portfolio fourfold in the deal.
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H&R said Tuesday the cash and unit acquisition transaction is valued at about $4.8B, or 6.7B Canadian dollars, including the assumption of certain debt. The consortium of co-purchasers includes Blackstone Real Estate, Crestpoint Real Estate Investments, PSP Investments and a company controlled by the family of H&R CEO Tom Hofstedter.
Blackstone was reportedly in talks in June to buy H&R REIT and its portfolio of more than 20M SF of North American real estate. The Toronto-based REIT spent years pivoting its portfolio away from underperforming office and retail assets and toward multifamily and industrial assets.
But the firm has significantly underperformed against other Canadian real estate companies over the past decade, and it went through an exhaustive review of its options last year, H&R Lead Independent Trustee Stephen Gross told Bloomberg.
H&R owned about $5.8B of assets at the end of March, with residential assets making up 60% and industrial accounting for another 25%.
Blackstone, PSP and Crestpoint will acquire the Canadian industrial properties. The REIT had 66 industrial properties totaling 8.3M SF at the end of March.
Toronto-based GO Residential REIT will get a 27-property portfolio, including 23 Sun Belt residential properties, a 50% interest in a mixed-use Miami property, a New York office tower and a mixed-use office asset in Dallas.
GO Residential REIT was launched last year to invest in luxury high-rise multifamily properties, primarily in the New York metropolitan area. The transaction brings GO’s portfolio to 35 properties across eight U.S. markets, making it the second-largest publicly traded residential REIT in Canada, according to GO.
“We have built one of the highest-quality luxury residential portfolios in New York City, and this transaction takes that foundation and adds Sunbelt scale, balance sheet strength, and earnings growth — transforming GO into one of Canada's largest publicly-traded residential REITs,” GO Residential REIT CEO Joshua Gotlib said in a statement. “It will be a platform with a greater opportunity set, and competing for a different category of investor.”
The Hofstedter family will absorb H&R’s remaining noncore assets.
H&R investors will receive CA$4.28 in cash plus 0.57 GO REIT units for each H&R unit they hold. That is a 14.5% premium over H&R’s closing price on June 10, when Blackstone was in early-stage talks, Bloomberg reported. The deal values H&R’s equity at about $2.4B.
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