GO Residential Grows Into Canada’s Second-Largest REIT
Two months after the latest report on the fate of H&R Real Estate Investment Trust, a deal is in place for the Canadian firm to be sold to a group including Josh Gotlib and Meyer Orbach’s GO Residential REIT.
GO Residential announced the acquisition of H&R’s assets in a cash-and-units deal valuing the 27 properties at roughly $2.8 billion. The deal includes the assumption of roughly $1.1 billion in property-level debt.
Other investors alongside GO Residential include affiliated funds with Blackstone Real Estate, Crestpoint Real Estate Investments, the Public Sector Pension Investment Board and an affiliate of H&R’s chief executive officer, Tom Hofstedter.
H&R investors are receiving a 14.5 percent premium of the closing unit price from June 10, before reports emerged of Blackstone’s interest in H&R. Former unitholders of H&R will indirectly own about 67 percent of GO Residential.
Most of the properties are in the Sun Belt, representing an expansion from GO Residential’s core of holdings in New York City as the REIT tries to seize on “favorable regulatory environments for multifamily housing,” according to the announcement. The portfolio sale also includes a 50 percent stake in Jackson Park in New York City, plus interest in additional assets in Dallas, Miami and another in New York City.
The acquisition is expected to close during the fourth quarter. Upon completion, GO Residential will become Canada’s second-largest publicly traded residential REIT by enterprise value.
“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,” Gotlib said in a statement.
A consortium including Blackstone, TPG and Crestpoint Real Estate Investments engaged in takeover talks for H&R last year but those negotiations fell apart.
Hedge fund K2 & Associates Investment Management has pressured H&R to consider a sale, noting how the company is trading at a big discount compared to the value of its real estate. The stock has lagged behind the rest of the Canadian real estate sector.
GO Residential debuted last June on the Toronto Stock Exchange with a $2.7 billion portfolio of more than 2,000 Manhattan apartments. Its initial holdings included luxury high-rises such as the American Copper Buildings, now known as Copper Apartments, which Gotlib and Orbach picked up in 2022 for $837 million.
Over the summer, it acquired RXR’s preferred equity positions in One East River Place and the Sutton Place North properties for $339.5 million. In February, it agreed to buy three multifamily properties in Manhattan for $380.5 million.
And in March, GO Residential made two acquisitions in Manhattan and Brooklyn, totaling $440 million.
GO Residential’s portfolio will span more than 13,000 units across 35 properties in the United States.
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