New York real estate moguls embrace Canada with $3.4-billion takeover bid for Toronto-based H&R

For the native New Yorkers intent on building the leading luxury apartment owner in the Big Apple, the road to expansion runs through Toronto.

GO Residential Real Estate Investment Trust GO-U-T founders Joshua Gotlib, the company’s chief executive officer, and chair Meyer Orbach are doing the rounds with investors this week trying to sell what is proving to be an unpopular $3.4-billion takeover bid for H&R REIT HR-UN-T.

GO, which assembled a portfolio of high-end Manhattan apartments with more than 3,000 units since being launched four years ago, will vault into the ranks of North America’s largest residential REITs if investors accept its units-and-cash offer for H&R. Toronto-based H&R owns a portfolio of properties across Canada and the U.S., including the marquee Jackson Point high-rise in the borough of Queens plus 26 other properties, mainly in Florida and Texas.

The price of both GO and H&R units fell after the complex transaction was announced on Aug. 11, as investors attempt to understand GO’s national growth strategy and H&R founder and CEO Tom Hofstedter’s role in the transaction. GO’s bid came after H&R ran a two-year sales process. One analyst called the offer “underwhelming.” The potential buyers, however, are pitching the upside that comes with swapping H&R units for GO’s.

“This is a unique opportunity to take a leader in luxury New York residential real estate into gateway, high-growth Sun Belt cities,” Mr. Gotlib said in his first media interview since GO went public on the Toronto Stock Exchange just over a year ago.

Mr. Gotlib and Mr. Orbach, co-owner of the NBA’s Minnesota Timberwolves, made their national ambitions clear when they launched GO – a play on the two executive’s initials, the CEO said.

If GO and H&R unitholders approve the takeover, GO will become the second largest residential REIT in the domestic market, behind the $5.1-billion Canadian Apartment Properties REIT, and seventh largest in North America.

Mr. Gotlib said with this scale, GO will attract additional interest from institutional investors. After the acquisition, GO plans to list on a U.S. exchange and should join the S&P/TSX index and U.S. benchmarks such as the Russell index. Mr. Gotlib said this could result in demand for up to 40 million units from passive fund managers.

The planned takeover will see H&R’s owners receive $4.28 a unit in cash plus 0.5688 GO units for each H&R unit.

U.S. private equity giant Blackstone Inc. plans to purchase some of H&R’s industrial properties for cash. Two institutional fund managers, Crestpoint Real Estate Investments Ltd. and the Public Sector Pension Investment Board, will pay cash for the other 50 per cent of H&R industrial buildings initially acquired as part of a partnership struck between the three parties in 2014.

The remainder of the cash will come from a family company owned by H&R’s Mr. Hofstedter, who founded the REIT 30 years ago, and will purchase a number of properties.

Several investors are questioning Mr. Hofstedter’s role in the transaction, including his lack of continuing commitment to the REIT.

Cole Smead, CEO of fund manager Smead Capital Management, owns 490,000 H&R units worth roughly $5-million. In an e-mail, he questioned why Mr. Hofstedter is cashing out his family’s 44-million-unit stake in the company, while urging other unitholders to accept GO units as partial payment.

“He praised the new GO team that will lead the existing shareholders,” Mr. Smead said. “If he loves them so much, why will he own zero of the combined company?”

GO’s founders said Mr. Hofstedter is playing a crucial role by agreeing to purchase properties other bidders don’t want, including raw land and office buildings. He will continue to co-own a property in Miami with GO. Mr. Hofstedter also pledged up to $51-million in support payments to GO over the next two years, if buildings fail to fill up with tenants.

“Tom’s commitment to this transaction is massive, and we have no issue with his decisions on his personal holdings,” Mr. Gotlib said.

Mr. Gotlib and Mr. Orbach, who each own more than US$50-million of GO units, grew up in New York and began their careers independently as investors in affordable residential properties. After selling each other buildings, the two became friends.

During the COVID-19 pandemic, Mr. Gotlib and his family relocated to Florida, and he began working from Mr. Orbach’s home in New Jersey when he was in the region. The idea of teaming up to buy a luxury apartment building portfolio was born at Mr. Orbach’s kitchen table.

“During the pandemic, the real estate world divided between those who thought New York would become a zombie city and those who still believed,” Mr. Gotlib said. “We never lost faith in New York.”

In March, 2022, GO made its first major acquisition, buying a Manhattan complex called the American Copper Buildings for US$837-million.

The company decided to go public on the TSX after being pitched by dealmakers from Canadian Imperial Bank of Commerce, and raised US$410-million in July, 2025. Mr. Gotlib said: “Canadian REIT investors have proved to be a sophisticated, supportive community.”