H&R REIT $6.7 Billion Breakup|RBC's 9.3 Million Units Versus a CEO-Family Buyer?

Who is buying what

RBC Global Asset Management will vote against the $6.7-billion breakup and sale of H&R REIT led by GO Residential. H&R agreed to this deal, but one of its largest owners says no, and the CEO's family is among the buyers. RBC holds 9.3 million H&R units and plans to cast them against the deal. Managing director Hanif Mamdani would not say why. A day earlier, Boston-based Mill Pond Capital also came out against it.

The headline number is $6.7 billion. But for ordinary unitholders, this deal is better read as a trade into a much smaller REIT whose units have fallen. That is where the case against it is strongest. No single buyer is taking H&R whole. Bloomberg describes a complex cash-and-shares offer that would split H&R into pieces. GO Residential would take 27 U.S. apartment properties in Sunbelt markets and New York.

That includes H&R's 50 per cent stake in the Jackson Park towers. Blackstone, Crestpoint and the Public Sector Pension Investment Board would take Canadian industrial properties. And CRAL, a company controlled by members of Tom Hofstedter's family, would buy H&R's remaining non-core assets for cash. Hofstedter is H&R's executive chairman and chief executive. The biggest piece goes to the youngest player.

GO went public in July 2025. It owns eight luxury towers in New York City, with 3,034 suites. From H&R, it would take 10,295 suites. That is more than three times what it owns today. To pay, GO would issue about 134.2 million new units. Its board unanimously backs that, and GO's own unitholders must approve it. One Motley Fool writer set out the result. H&R investors would own 66.9 per cent of the enlarged GO.

Existing GO holders would own 33.1 per cent. So H&R unitholders are not simply cashing out. They would become GO's majority owners. This vote is really about whether to own that REIT.

What the GO units are worth

RBC gave no reasons. Mill Pond did. It holds 2.2 million units, and it wrote to H&R's lead independent trustee, Stephen Gross. Its managing member, Daniel Farb, wrote: "In my view, the proposed transaction does not deliver fair value to H&R's public unitholders." His first target was the paper. He called GO "a more highly levered REIT."

Its unit price, he wrote, "has fallen by more than 50% since its initial public offering in July 2025." Farb tied that slide directly to H&R holders, citing a severe erosion in the value they would receive as GO's units fell. Here is how that reaches each H&R unit. Holders would get $4.28 in cash, plus 0.5688 GO units for every unit they own. The number of GO units is written into the terms. Their market value is not.

It rises and falls with GO's price. Over the past 52 weeks, GO units have traded as high as 12.35. The low was 7.16. That low sits about 42 per cent below the high. The unit part of each H&R payout swings across that range. Yahoo Finance data put GO's total debt at about 146.6 per cent of its equity. So the cash is the certain part of the price.

The rest is a stake in a REIT with more debt than equity, whose units have slid. That raises what public holders are being asked to risk.

Who gets cash, who gets units

Farb's sharpest point is not about GO's price at all. It is about who gets paid in what. He wrote that the deal "provides one form of consideration for the units held by the Chief Executive Officer's family group." And, he went on, "another for every other unit." Bloomberg summed up the letter as saying the deal gives sweeter terms to Hofstedter and his family.

Mill Pond also raised confusion around the partial sale of assets to Hofstedter, and fears of preferential treatment for his deal. H&R's own history sharpens this. In November 2025, H&R agreed to sell $1.5 billion of retail and office properties. The price was roughly the value those assets carried under IFRS accounting.

Hofstedter said the sales were "positioning the REIT to drive sustainable long-term value for all unitholders." By his account, residential and industrial were 35 per cent of the portfolio in June 2021. After those sales, they would be 83 per cent. Now those core businesses would go to outside buyers, partly for GO units. The commercial and non-core holdings go to the family's company, for cash.

Side by side, the two statements show the split: the family's route is property for cash; everyone else's runs through GO units. There is a standard way to handle an insider on the buying side. An Automotive News analysis of a U.S. buyout laid it out. Minority holders, it said, can face a take-it-or-leave-it dynamic when controlling holders bid.

It called a special committee of independent directors standard practice in such deals. H&R's case is narrower. The family is not buying the whole REIT, only the leftover assets. But Mill Pond wrote to H&R's lead independent trustee, not to management. Its letter is aimed at that safeguard. So the case against the deal now rests on more than GO's price.

It rests on the split itself, and on whether independent trustees can show that split is fair.

The case for the deal

GO's board reads the same deal very differently. It unanimously urges its holders to approve the new units. GO says the deal should add to its funds from operations per unit after closing. Analysts treat that measure roughly the way they treat earnings for ordinary stocks. GO expects about US$15 million a year in synergies. It also cites US$51 million of additional consideration over the first two years.

One Motley Fool writer said the deal could make GO the second-largest residential REIT on the Toronto Stock Exchange. That writer would consider buying GO units. The same writer credits GO's first year, citing 99.3 per cent committed occupancy at its legacy properties. But the writer also said GO's slide was recently worsened by this very deal, because it heavily dilutes existing GO holders.

So the market's early verdict on the deal is visible in GO's price, and it has been skeptical. That verdict is not final, and it cuts both ways. H&R holders would own 66.9 per cent of the enlarged GO. If GO's synergy and earnings case holds up, most of that gain lands with former H&R holders. That narrows the case against the deal. The GO units are not a certain loss. They are a bet.

Public holders carry it, while the family's company pays cash for property.

Can the no side win

The two public opponents are large, but not that large. RBC's 9.3 million units and Mill Pond's 2.2 million add up to 11.5 million. H&R's market value is about 2.6 billion dollars. At roughly $10.32 a unit, that implies about 252 million units. So the two hold roughly 4.6 per cent between them. On their own, they are far from a majority. Bloomberg called RBC the second fund manager in two days to go public.

The Globe and Mail called it a growing campaign. The deal also needs GO's own unitholders, plus court and regulatory approval. H&R holders meet on November 13, and so do GO's. The outcome sits with holders who have not spoken publicly. What the opposition has done is put the terms, not the sale itself, on the ballot. Back to the question: are H&R's public unitholders being paid fairly?

On these terms, the weight falls toward the critics on structure. Public holders get cash plus GO units whose value is still moving. The CEO's family company gets property for cash. That split puts the most uncertain part of the price on the public side. Whether it is unfair in dollars depends on where GO's units go. The thing to watch is GO's unit price into the November 13 meetings.

Each H&R unit is tied to 0.5688 of them. If GO climbs back toward the top of its 52-week range, the payout grows and Mill Pond's fair-value case weakens. Public holders would gain from that. But the split between cash for the family and units for everyone else would remain.

Informational only, not investment advice. Figures and quotes come from the linked reports.