H&R has signed a transaction valued at approximately $6.7 billion, including assumed debt, that will divide one of Canada’s largest real estate investment trusts among several major property investors.
GO Residential and a purchasing consortium that includes Blackstone, Crestpoint Real Estate Investments, PSP Investments and a company controlled by the family of H&R CEO Tom Hofstedter will acquire the assets.
The agreement confirms speculation that H&R could be sold. The Toronto-based company acknowledged in June that it was discussing a possible transaction with Blackstone, but the final arrangement involves several purchasers.
The transaction gives H&R an equity value of approximately $3.4 billion.
H&R owns interests in more than 20 million square feet of apartments, industrial buildings, offices and other properties across Canada and the U.S.
GO Residential will acquire most of H&R’s U.S. apartment portfolio, along with properties in New York and Miami. Blackstone will purchase certain Canadian industrial properties, while Crestpoint and PSP Investments will acquire industrial properties in which they already hold ownership interests.
The Hofstedter family-controlled company, CRAL, will acquire H&R’s remaining non-core assets.
H&R said its unitholders will receive $4.28 in cash and 0.5688 GO Residential units for each H&R unit. The cash and unit consideration was worth C$12.01 per H&R unit, based on GO Residential’s Aug. 10 closing price and the Canada-U.S. exchange rate that day.
H&R unitholders will own approximately 66.9 per cent of the enlarged GO Residential. The combined company is expected to own 35 residential properties containing more than 13,300 suites.
Because Hofstedter’s family is participating as a buyer, he abstained from the H&R board vote. The agreement requires minority unitholder, court and regulatory approvals.
Special unitholder meetings are expected in October. The transaction is scheduled to close during the fourth quarter.
Pictured: Two Gotham Center in Long Island City, N.Y., is among the H&R assets GO Residential will acquire.
Credit: Jim.henderson/Wikimedia Commons
