Private Equity Returns to REIT Takeovers After Portfolio Cleanup
Blackstone is in early-stage talks to acquire assets from H&R Real Estate Investment Trust, a Canadian firm with C$8.1 billion in managed assets as of March 31. H&R confirmed Thursday it is in preliminary, non-exclusive discussions with Blackstone regarding a potential asset sale. The REIT had a market capitalization of approximately C$3.1 billion as of Thursday’s close. Talks collapsed last year when Blackstone, TPG, and Crestpoint Real Estate Investments failed to reach terms with H&R.
H&R has spent several years repositioning its portfolio away from office and retail toward apartments and industrial properties in the United States and Canada. Last November the company agreed to sell a portfolio of Canadian and U.S. office and retail properties to multiple buyers for roughly C$1.5 billion. Hedge fund K2 & Associates Investment Management has pressed H&R to explore a sale, pointing to a persistent discount between its share price and the underlying real estate value. TPG is no longer involved in the current discussions, though it remains unclear whether TPG or Crestpoint would join any final transaction.
H&R shares have delivered a total return of about 22 percent over the past decade, trailing the broader Canadian real estate sector. Blackstone’s renewed interest follows a period in which H&R streamlined its holdings and exited weaker asset classes. If completed, the deal would add to a recent wave of REIT take-privates as institutional buyers target firms trading below net asset value.
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