H&R REIT has accepted a takeover offer from an investment group headed by GO Residential Real Estate Investment Trust.
H&R unitholders will get a combination of cash and units of GO REIT.
H&R REAL ESTATE INVESTMENT TRUST (Toronto symbol HR.UN; www.hr-reit.com) spun off most of its retail properties to Primaris Real Estate Investment Trust (Toronto symbol PMZ.UN) in January 2022.
At the time, unitholders received one unit of Primaris for every four H&R units they held.
Today, H&R owns 105 residential, industrial, office and retail properties in Canada and the U.S.
The trust’s overall occupancy rate is a solid 91.3%.
H&R Unitholders should tender to the takeover offer
Meanwhile, H&R REIT has accepted a takeover offer from an investment group headed by GO Residential Real Estate Investment Trust (Toronto symbol GO.U).
Under the terms of the deal, H&R investors will receive $4.28 in cash plus 0.5688 of a GO unit for every unit they hold. As a group, H&R unitholders will hold 66.9% of the combined REIT. Investors will not be liable for capital gains taxes until they sell their new GO units.
GO will retain H&R’s U.S. portfolio of 27 residential properties. As a result, it will own 37 residential properties in four U.S. states—New York State, North Carolina, Florida and Texas. Following the acquisition, GO will transfer H&R’s industrial and other properties to its partners.
[ofie_ad]
The merger should also let GO cut its annual costs by $15 million U.S. within 12 to 18 months.
H&R suspended its distributions following the August 14, 2026, payment. If GO is unable to complete the purchase by January 1, 2027, H&R will resume regular monthly distributions.
GO expects to keep paying its monthly distribution of $0.05325 U.S. a unit following the transaction. The annual rate of $0.639 U.S. yields 8.5%.
Based on current prices, the offer is worth $10.30 per H&R unit. That’s above H&R’s current price, which indicates that investors expect a higher offer. If unitholders and regulators approve, GO expects to complete the transaction by the end of 2026.
Unitholders should tender to the takeover offer. Note, however, that even if you do tender, you will still get any higher bid that may emerge for H&R’s units.
We’ll say more about GO REIT later.
Recommendation in Dividend Advisor: H&R REIT is a hold.
