H&R unitholders vote against GO REIT takeover bid

Investors in H&R Real Estate Investment Trust HR-UN-T voted down a proposed $3.4-billion takeover offer from a consortium led by GO Residential Real Estate Investment Trust GO-U-T, a move that will mean a new CEO takes the helm at H&R.

Unitholders in Toronto-based H&R turned down an offer that consisted of cash and units in GO after multiple institutional investors and two proxy advisory services criticized the role in the deal played by H&R’s founder and chief executive officer, Tom Hofstedter.

The terms of the takeover, negotiated over a two-year process at H&R, would have seen Mr. Hofstedter’s family company pay $1.56-billion to acquire properties that H&R held at a book value of $11.98-billion, according to regulatory filings.

On Friday, H&R independent lead trustee Stephen Gross said in a press release the board will respect the vote against the transaction and launch a plan that includes “a board refreshment process that will include CEO succession planning.”

H&R will also retroactively pay monthly dividends and intends to declare a special cash distribution of approximately $2.30 per unit before the end of the year. In recent months, the REIT has sold a number of properties.

Opinion: H&R REIT takeover deal: A vote of no confidence

In a report last month, proxy adviser Institutional Shareholders Services Inc. said H&R’s owners should vote against the offer because of “concerns over the sale process, conflicts, deal logic and whether disinterested unitholders are capturing fair value relative to insiders.”

The proposed H&R takeover would see U.S. private equity giant Blackstone Inc. BX-N, Toronto-based Crestpoint Real Estate Investments Ltd. and the Montreal-based Public Sector Pension Investment Board acquire H&R’s industrial properties, most of which are warehouses.

In recent weeks, a number of H&R’s institutional investors have publicly stated they would vote against the takeover for the same reasons cited by ISS. The asset managers that have come out against the deal include Mill Pond Capital LLC, RBC Global Asset Management, Sandpiper Group and Scheer Rowlett & Associates Investment Management Ltd.