Blackstone-Backed REIT to Buy Canada’s H&R in C$3.4 Billion Deal

H&R has spent several years moving its portfolio away from struggling office and retail holdings and increasing its exposure to apartment and industrial assets in the US and Canada. Photo by James MacDonald /Bloomberg

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(Bloomberg) — GO Residential Real Estate Investment Trust, backed by a group of investors including Blackstone Inc., agreed to buy H&R REIT in a cash-and-units deal valuing the Canadian property owner at around C$3.4 billion ($2.4 billion).

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The deal will see the breakup of H&R, which has endured years of difficult restructuring as it shifted its portfolio away from office and retail properties to focus on apartment and industrial assets in North America. 

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In addition to Blackstone, the transaction is backed by a group comprising Crestpoint Real Estate Investments Ltd., Canada’s Public Sector Pension Investment Board and a company controlled by family members of Tom Hofstedter, the executive chairman and chief executive officer of H&R.

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GO will get 23 residential properties in the US sunbelt, along with H&R’s 50% stake in the Jackson Park luxury high-rise apartment complex in New York and other assets. Blackstone, PSP and Crestpoint will acquire H&R’s Canadian industrial properties, while the Hofstedter family will receive the company’s remaining non-core assets, according to a statement on Tuesday.

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Under the terms, H&R investors will receive C$4.28 in cash plus 0.5688 GO REIT units for every unit they hold. That represents a total price of C$12.01 per unit, a premium of 14.5% to H&R’s undisturbed closing unit price on June 10, the statement said. Bloomberg News reported at that time that Blackstone was in early-stage talks with H&R. 

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If the deal goes through, H&R unitholders would collectively wind up with a 67% stake in GO Residential, a New York-based company that listed on the Toronto Stock Exchange last year. 

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Stephen Gross, H&R’s independent lead trustee, said the company went through an “exhaustive” review of its options last year. H&R has badly underperformed other Canadian real estate companies over the past 10 years. “The independent trustees are confident this transaction represents the best path forward for our unitholders,” Gross said. 

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Including debt, the deal values H&R at around C$6.7 billion. It’s expected to close in the fourth quarter. 

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—With assistance from Melissa Shin.

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(Updates with additional information about the deal, beginning in the second paragraph.)

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