In an emailed statement, Managing Director Hanif Mamdani said RBC Global Asset Management, one of H&R's biggest equity holders, will vote its 9.3 million units against the transaction. He did not provide reasons. That makes RBC the second investor in two days to publicly oppose the plan.
Boston-based Mill Pond Capital sent a letter to H&R's trustees arguing the complex proposal "does not deliver fair value to H&R's public unitholders." Daniel Farb framed it as "one deal for the CEO's family, a worse deal for everyone else," adding his view that the Hofstedters are buying "non-core" assets for less than the company's stated NAV. Farb also wrote: "What is not acceptable is asking unitholders to accept a dilutive, tax-inefficient transaction into a more levered entity at a large discount to the company's stated NAV, while the CEO and his family receive an entirely different form of consideration," and noted that Mill Pond intends to cast its 2.2 million units in opposition to the deal.
The offer would break H&R into parts. Blackstone Inc. and other investors would receive a set of Canadian industrial properties.
In a Thursday letter urging investors to vote in favor, H&R's board called Hofstedter's participation "an essential element." The board said the family-controlled vehicle, CRAL, is set to acquire nine office properties in Canada, three Canadian development sites, a 50% share in a U.S. mixed-use asset, as well as U.S. land parcels and various joint-venture stakes, among other items. "CRAL's willingness to acquire these specific assets and associated liabilities, which had attracted limited interest from other potential purchasers, was a critical component" of getting the deal done, wrote Stephen Gross, who serves as H&R's independent lead trustee. On Thursday, GO REIT likewise encouraged its investors to back the transaction.
Breakup fights turn on whether the parts are worth more than the whole. Market Briefs covers REIT strategy free every morning.
H&R holders would receive C$4.28 in cash plus 0.5688 GO REIT units for each H&R unit, a package valued at about C$10.16 based on GO's Wednesday close. H&R ended that day at C$9.26. Since the transaction was announced, GO's stock has dropped roughly 25% in US dollar terms.
Under Canada's "majority of the minority" rules, the transaction needs approval from a majority of the votes cast by shareholders excluding insiders and related parties.
If the deal passes, H&R investors wind up with a blend of cash and GO REIT units while industrial assets move to Blackstone and other investors, and CRAL takes on a set of office and development properties. With prominent holders publicly balking, the sticking points are clear: who gets which assets, how the consideration stacks up against stated NAV, and whether the new entity's taxes and leverage look attractive after GO's slide. If you track Canadian income real estate, watch how these terms settle and what the final vote reveals about sentiment.
Analyst opposition can stall a restructuring entirely. Get the free Market Briefs daily newsletter and follow the vote.
