Unlike most REITs, H&R owns a mixed bag of properties across North America that include high-end apartments, warehouses and office buildings.Fred Lum/The Globe and Mail
H&R Real Estate Investment Trust chief executive officer Tom Hofstedter is buying approximately $410-million of properties from the Toronto-based company he founded 30 years ago to pave the way for a $3.4-billion takeover.
On a conference call with analysts on Thursday, Mr. Hofstedter detailed his role in the planned purchase of H&R by a consortium led by rival New York-based GO Residential Real Estate Investment Trust, which was announced on Tuesday.
Mr. Hofstedter plans to sell his family’s 44 million H&R units back to the company prior to the GO takeover, a stake worth $466-million at the current price of the REIT’s units.
The Hofstedter family’s holding company, called CRAL, will then commit $51-million to “income supports and other payments to GO” over the next two years. The rest of the money will be used to purchase H&R real estate that other buyers don’t want, including undeveloped land and office properties.
CRAL will also remain a joint venture partner with GO on a high-end development in Miami called River Landing. The project opened in 2020 and features 528 rental units and a marina along with restaurants, retail outlets and office buildings.
Mr. Hofstedter said his family company’s support was essential to finding a buyer for H&R after a lengthy search for suitors.
H&R REIT reaches $3.4-billion asset sale deal with GO Residential REIT and other buyers
Unlike most REITs, which specialize in one real estate sector, H&R owns a mixed bag of properties across North America that include high end apartments, warehouses and office buildings. In recent years, units in the REIT traded at a significant discount to the valuation of pure-play real estate peers.
Two years ago, H&R’s trustees launched a strategic review that included a potential sale of the company. On Thursday, Mr. Hofstedter said: “At the end of the day, there is no natural single buyer for a portfolio of this breadth and complexity.”
The proposed sale will see GO acquire H&R and get control of its residential properties in New York and sunbelt cities such as Miami, Dallas and Charlotte, plus a stake in a New York office tower.
GO CEO Joshua Gotlib will run the combined company, which is chaired by Meyer Orbach, who is also co-owner of the NBA’s Minnesota Timberwolves. Mr. Gotlib and Mr. Orbach – their initials make up the G and O in GO – founded the REIT in 2022 by purchasing apartment buildings in New York and took it public in 2025 on the Toronto Stock Exchange.
GO will pay $4.28 in cash plus 0.5688 of its own units for each H&R unit, an offer the buyer valued at $12 a unit. If the takeover is approved by investors on both REITs, H&R unit holders will own 66.9 per cent of the combined company.
U.S. private equity giant Blackstone Inc. plans to purchase some of H&R’s industrial properties, a collection of warehouses used by companies such as Canadian Tire Corp. Ltd., Sleep Country Canada Inc. and Caterpillar heavy-machinery dealer Finning International Inc.
Two institutional fund managers, Crestpoint Real Estate Investments Ltd. and the Public Sector Pension Investment Board, will buy the other 50 per cent of H&R industrial buildings initially acquired as part of a partnership struck between the three parties in 2014.
“Each partner was selected because they are the right buyer for their specific piece,” Mr. Hofstedter said, adding CRAL was the best fit for “the non-core assets that require a long-term, private market orientation.”
Mr. Hofstedter will have no role in GO if the transaction is approved. The takeover is expected to close by the end of the year.
Last year, H&R paid Mr. Hofstedter $4.3-million, compensation made up of $1.2-million salary, a $1.5-million bonus and $1.6-million in unit-based awards.
CIBC and National Bank advised H&R and its trustees on the sale and said the GO offer is fair to unitholders. J.P. Morgan Securities LLC advised GO on the purchase while BMO Capital Markets worked with CRAL.
Several other residential-focused REITs have been taken over in the past year in transactions backed by their founders.
The purchase of Minto Apartment REIT by Ottawa’s Greenberg family and Crestpoint for $2.3-billion was recently completed, while InterRent REIT was acquired for $2-billion by its executive chair, Mike McGahan, with the backing of Singapore sovereign wealth fund GIC.