H&R REIT’s 14.5% Takeover Premium Is Now 0.2%. Two Holders Have Said No.
Daniel Farb of Boston-based Mill Pond Capital told H&R REIT’s independent trustees on Wednesday October 7 that he will vote 2.2 million units against the GO Residential transaction. On Thursday October 8, RBC Global Asset Management said it will vote 9.3 million units the same way, and H&R filed its circular that morning asking unitholders to vote in favour. The special meeting is Friday November 13, 2026. Since the deal was announced in August, the 14.5% takeover premium H&R advertised has walked down to 0.2%.
Running H&R’s own formula forward leaves a 0.2% premium
The consideration is fixed in units, not dollars, and all figures here are Canadian unless marked US. Each H&R unit receives $4.28 in cash plus 0.5688 of a GO Residential unit, which trades on the TSX in US dollars under GO.U. H&R priced the package at $12.01 in its August 11, 2026 announcement of the $6.7 billion transaction, on GO’s August 10 close and a USD/CAD rate of 1.3942, and called it a 14.5% premium to H&R’s close on June 10, “the last trading day prior to media speculation regarding H&R being in talks with Blackstone”. The cash cannot move. The paper reprices every session.
Run it on the August 10 inputs: US$9.75 times 1.3942 times 0.5688, plus $4.28, is $12.0120 against the $12.01 H&R published, which is why the same formula on every close since can be trusted.
| Date | GO.U close (USD) | BoC USD/CAD | GO unit (CAD) | Consideration (CAD) | H&R close (CAD) |
|---|---|---|---|---|---|
| Aug 10 (announcement basis) | $9.75 | 1.3942 | $13.59 | $12.01 | $10.89 |
| Oct 6 | $7.18 | 1.4226 | $10.21 | $10.09 | $9.23 |
| Oct 9 (last close) | $7.68 | 1.4271 | $10.96 | $10.51 | $9.57 |
Data as of the October 9, 2026 close.
The consideration is down $1.50 a unit since the announcement basis, or 12.5%, which turns H&R’s 14.5% premium into 0.2%. That base is four months old. The live alternative is H&R’s own units, which closed Friday at $9.57, below the package. H&R’s two published figures imply an unaffected June 10 close near $10.49, our arithmetic rather than a quoted price.
What one H&R unit is actually being offered on every close since the deal was announced, in Canadian dollars. Our arithmetic on the 4.28 cash and 0.5688 exchange ratio in H&R’s August 11, 2026 release, GO Residential (TSX: GO.U) closing prices from StockAnalysis and the Bank of Canada daily USD/CAD rate.
The currency has worked in unitholders’ favour. At the August 10 rate of 1.3942, Friday’s package would be worth $10.37 rather than the $10.51 on offer, so the weaker loonie added about 14 cents. Friday was soft for both names inside a rising market: the S&P/TSX Composite closed up 1.48% at 35,664.62 on our market close pull of Yahoo Finance data, while GO.U fell 1.29% and H&R 0.31%. A market repricing a deal the board recommended is not peculiar to this one: the market’s verdict and the board’s diverged on announcement day in our coverage of the Emera and Canadian Utilities merger.
Fixed cash, shrinking paper
The split inside the offer has changed without either term changing. The cash sits at $4.28. The GO paper has gone from $7.73 to $5.81 on October 6 and back to $6.23 on Friday, so the cash is now 40.7% of the package, up from 35.6%, purely because the other half shrank.
Both halves sit well under H&R’s own stated net asset value. Its second quarter 2026 results release put NAV per unit at $16.23 as at June 30, 2026. Friday’s consideration is 35.2% below that and H&R’s unit price of $9.57 is 41.0% below it. NAV per unit is a non-GAAP measure H&R calculates itself, down from $20.92 at the end of 2024 and $16.09 at the end of 2025.
The two halves of the offer, in Canadian dollars per unit. Our arithmetic on the terms in H&R’s August 11, 2026 release, GO Residential closing prices from StockAnalysis and the Bank of Canada daily USD/CAD rate. NAV per unit of 16.23 as at June 30, 2026 is from H&R’s second quarter 2026 results release and is a non-GAAP measure management calculates itself.
What H&R argues
The deal is a court-approved plan of arrangement in which GO REIT and a consortium of Blackstone Real Estate funds, Crestpoint, the Public Sector Pension Investment Board and CRAL, controlled by the family of H&R’s Executive Chairman and Chief Executive Officer Tom Hofstedter, acquire all of H&R’s assets for about $6.7 billion including assumed debt. GO takes the residential platform, Blackstone and the Crestpoint and PSP pair take Canadian industrial, and CRAL takes the remaining non-core assets for cash. H&R holders end up with about 66.9% of the pro forma entity and two nominated trustees, with closing expected in the fourth quarter of 2026.
The 0.5688 buys a share of a bigger landlord. GO REIT owns ten properties comprising 3,034 suites in the New York City metro area. On closing, GO says it will own 13,026 suites across 35 properties in eight US markets, taking in the 10,295 suites and 27 properties coming from H&R, which would make it the second-largest publicly traded residential REIT in Canada by enterprise value.
In the October 8 circular release recommending a vote in favour, Independent Lead Trustee Stephen Gross framed the deal as immediate liquidity from the cash plus participation in the upside of “a larger, stronger GO REIT.” H&R says CRAL’s purchase of the non-core assets “was a critical component that enabled the en bloc Transaction to proceed and unlocked the cash consideration for all H&R unitholders, a result that would likely not have been achievable through a third-party transaction alone.” Both CIBC World Markets and National Bank of Canada Capital Markets gave fairness opinions that the consideration is fair, from a financial point of view, to unitholders other than the Purchaser, CRAL and their affiliates. The board recommended it with Hofstedter declaring his conflict and abstaining, and trustee Juli Morrow abstaining as a result of having provided legal advice on real estate matters to H&R.
The formal valuation is the most striking figure H&R publishes: National Bank ascribed US$14.79 to US$17.19 per GO unit, which H&R says indicates the units traded at a significant discount to that valuation as of August 10, 2026. On that range the consideration including cash implied $16.01 to $17.91 per H&R unit. GO units closed at US$7.68 on Friday, about 52% of the bottom of the range.
The GO units are a tax-deferred rollover for eligible holders resident in Canada. The cash is not: H&R says it “will include certain income, including recaptured depreciation, and capital gains” that holders resident in Canada must include in income, the capital gains to the extent of the taxable portion. And the cheque has stopped: “No further distributions will be declared or paid for September through December 2026.” Income holders weighing how exposed a payout is to an event like this can compare the sector in our ranking of Canadian REIT stocks on distribution safety.
What Mill Pond Capital argues
Farb’s position, in his October 7 letter to H&R’s independent trustees, is that in his view “the proposed transaction does not deliver fair value to H&R’s public unitholders,” which he frames as “one deal for the CEO’s family, a worse deal for everyone else.” He argues the $12.01 relied on the August 10 price and that GO’s fall to US$7.18 by October 6 cut the consideration to roughly $10.09, below the $10.89 he says H&R traded at before the announcement. Our series puts the consideration at $10.09 on October 6, the same figure he cites.
Farb says the prices CRAL will pay have not been disclosed, that the filed purchase agreement sets them by formula to be confirmed before closing, and that in his own estimate the assets are going at a discount to NAV. He asks the trustees why “consideration the CEO and his family would not accept is fair to everyone else,” and notes H&R holders will own about 66.9% of the combined REIT but get two board seats while GO’s executives run it.
He argues too that the combined REIT will carry more debt. That turns on debt to EBITDA, which sets borrowings against a year of operating earnings, and our guide to reading financial ratios sets out what each one divides. He cites H&R at 7.1x debt to adjusted EBITDA and 41.8% debt to total assets at Q2 2026, both confirmed in H&R’s own Q2 release and both stated at the REIT’s proportionate share. The same table puts debt to total assets at 30.9% per the REIT’s financial statements, and both ratios are non-GAAP measures, as NAV per unit is. He cites GO at 53.5% debt to gross book value at June 30 against 48.5% at the end of 2025, from GO’s Q2 release, and GO standalone at 12.5x debt to EBITDA from the August 11 joint investor presentation. His conclusion is labelled an estimate: “I estimate pro forma leverage well above H&R’s ~7x standalone.” He would rather H&R returned cash from its own asset sales or sold the company outright.
RBC Global Asset Management’s managing director Hanif Mamdani said by email that it will vote 9.3 million units against, as reported by Bloomberg on October 8, 2026, giving no reasons. H&R had issued no news release since the circular filing as of Friday’s close.
The approvals the deal still needs
H&R’s trustees determined the Purchaser, CRAL and their affiliates may constitute a related party, making this a business combination under Multilateral Instrument 61-101. Completion needs three approvals from H&R holders, each measured on votes cast: two thirds of Units and Special Voting Units voting together; two thirds of those two plus Class B LP Units; and a simple majority of all three classes excluding units held by CRAL, its joint actors and affiliates and others excluded under MI 61-101, the Minority Approval.
Turnout therefore sets the denominator. As at June 30, 2026, H&R had 264,637,000 units and 15,372,000 exchangeable units, 280,009,000 in total. Of those, 44,038,986 are expected to be cancelled as partial consideration for CRAL’s purchase price, being units of CRAL, certain affiliates and associates and the CEO himself, which H&R says “will not receive any GO REIT units or cash consideration.” That block is 15.73% of the total by our arithmetic, and it is the floor on what MI 61-101 excludes rather than necessarily the whole exclusion. Against the 235.97 million units left, RBC’s 9.3 million is 3.9% and Mill Pond’s 2.2 million is 0.9%. GO’s own circular puts its issuance at roughly 134.2 million units, which at the 0.5688 ratio is about 236 million H&R units, the same pool.
A bloc has already committed the other way. H&R’s trustees and executive officers and companies controlled by the Hofstedter family, “collectively holding approximately 3.5% of H&R trust units, 100% of special voting units and 43% of Class B LP Units”, have entered a voting and support agreement with GO and the Purchaser under which they will vote all of their units in favour. The special voting units are one of the two classes inside the first threshold.
The dates ahead, and the spread the market is charging
The record date was October 2. Proxies are due at 10:30 a.m. Toronto time on November 11, two days before the virtual meeting at the same hour. GO REIT unitholders vote the same day at their own special meeting, where TSX rules require a simple majority to approve the roughly 134.2 million units GO would issue. The deal also needs clearances under the Competition Act (Canada). If the vote carries, final approval goes before the Court of King’s Bench of Alberta on November 17 at 10:00 a.m. Calgary time. GO REIT intends to introduce a Canadian dollar listing before closing, itself a condition to closing. Markets are shut Monday October 12 for Thanksgiving.
The agreement also defines the alternative. It carries reciprocal fiduciary outs with a right to match, a termination fee of about $102 million payable by H&R on a superior proposal, $27 million payable by GO on one of its own, and a $136 million reverse termination fee if the Purchaser fails to fund the cash. H&R says that if the deal has not closed by January 1, 2027 it intends to resume distributions at no more than $0.05 per unit per month.
H&R closed Friday at $9.57 against a package worth $10.51 on the same day’s inputs, a gross gap of 9.9% by our arithmetic. That spread is what the market charges to hold the units through the vote, the court hearing and closing, and it prices the risk that the GO units move again before and after completion.
Disclaimer: The content on bestcanadianstocks.ca is for informational and entertainment purposes only and does not constitute financial advice. Past performance is not indicative of future results. Always consult a qualified financial advisor before making investment decisions. The value of the consideration on every date is our arithmetic on the terms in H&R REIT’s August 11, 2026 news release, C$4.28 in cash plus 0.5688 of a GO Residential unit, applied to GO Residential (TSX: GO.U) closing prices from StockAnalysis, which quote in US dollars, converted at the Bank of Canada daily USD/CAD rate (FXUSDCAD). Run on the August 10, 2026 inputs the formula reproduces H&R’s own published $12.01 exactly. Unadjusted closing prices are used because the package is valued on the traded price, not a distribution-adjusted series. September 30, 2026 carries the previous Bank of Canada rate because the Bank publishes none that day. The implied unaffected June 10 close of about $10.49 is derived from H&R’s own two published figures, the $12.01 value and the 14.5% premium it represents, and is labelled as ours in the article. H&R unit counts, NAV per unit, leverage ratios and the 44,038,986 units to be cancelled are from H&R’s second quarter 2026 results release of August 12, 2026. The approval thresholds, the voting and support agreement, the GO unitholder vote, the Competition Act clearance and the termination fees are from the August 11, 2026 release. GO Residential’s pro forma portfolio figures and the roughly 134.2 million unit issuance are from GO’s own October 8, 2026 circular release. All claims attributed to Daniel Farb are from his letter of October 7, 2026 and are that unitholder’s argument, not findings. RBC Global Asset Management’s voting intention was reported by Bloomberg on October 8, 2026 and is credited in plain text without a link. The S&P/TSX Composite close is from our market close pull of Yahoo Finance data.
