RBC plans to vote against H&R REIT's $2.8B GO Residential asset sale

RBC Global Asset Management plans to vote against H&R Real Estate Investment Trust's asset sale to GO Residential, according to Bloomberg reporting cited by The Real Deal. RBC is one of H&R's largest equity investors and follows Mill Pond Capital, which said the sale "does not deliver fair value to H&R's public unitholders."

GO Residential announced the acquisition in August: 27 properties in a cash-and-units deal valued at $2.8 billion, including the assumption of $1.1 billion in debt. Blackstone Real Estate and Crestpoint Real Estate Investments are among the investors. The report says completion would make GO Residential Canada's second-largest publicly traded residential REIT by enterprise value.

The structure splits assets among separate buyers, with GO Residential taking the residential properties and a 50 percent stake in Jackson Park, a luxury complex in New York. Blackstone and the other investors would acquire the industrial assets, and H&R chief executive Tom Hofstedter would keep several assets within his family company. The report says the deal would push GO Residential beyond its New York City core into Sun Belt markets, resulting in a portfolio of more than 13,000 units across 35 properties.

Since the announcement, H&R's stock has fallen roughly 25 percent, according to The Real Deal. The report notes growing concern that the Hofstedter family is benefiting from favorable terms; H&R's board has said the family is "essential" to the deal.

GO Residential listed on the Toronto Stock Exchange last June with a $2.7 billion portfolio of more than 2,000 Manhattan apartments. Its initial holdings included Copper Apartments, the American Copper Buildings complex that Josh Gotlib and Meyer Orbach bought in 2022 for $837 million.

The acquisition was expected to close during the fourth quarter, according to the August announcement.