Just before the weekend, Toronto-based H&R REIT (TSX: HR.UN) disclosed that it had formed a special committee in February "to review and consider strategic alternatives after receiving an unsolicited expression of interest," confirming the possibility that the REIT may be sold.
H&R REIT says that after receiving that unsolicited proposal, it has received other proposals for potential transactions.
Details about the received offers were not provided, with H&R REIT only saying that the special committee has retained National Bank Financial as its independent financial advisor and Fasken Martineau Dumoulin LLP as its independent legal counsel. CIBC Capital Markets and Blake Cassels & Graydon LLP are also serving as advisors.
"The Special Committee continues to discharge its mandate and is currently considering and in discussions in respect of confidential non-binding offers received from a number of interested parties," said the REIT in a press release. "No decision has been made as to whether the REIT should proceed with a Potential Transaction, nor has any agreement been reached with a counterparty, and there can be no assurance that the Special Committee’s process will result in any Potential Transaction or any other alternative transaction. In addition, the timing, structure and terms of any Potential Transaction remain uncertain. The REIT continues to believe in its long-term strategy and its strategic repositioning plan, and will only pursue a Potential Transaction that is in the best interests of the REIT."
The REIT said that it will not be providing further comment on the process unless it is warranted and required by securities laws.
H&R REIT is one of the largest REITs in Canada, although a significant portion of its portfolio includes assets in the United States. As of March 31, 2025, H&R REIT had $10.5 billion in assets under management, split between residential, industrial, office, and retail properties across North America that totalled over 25 million square feet.
An overview of H&R REIT's portfolio as of Q1 2025. / H&R REIT
H&R REIT was founded in 1996 by Thomas J. Hofstedter, who currently holds the title of Executive Chairman and CEO. The firm began with a collection of office assets owned by the Hofstedter family and grew substantially in the years after going public. It has also made several large acquisitions over the years, including The Bow in Calgary and a stake in Scotia Plaza in Toronto, both of which have since been sold.
In 2013, H&R REIT made an attempt to purchase Primaris REIT (TSX: PMZ.UN) for $2.7 billion in a deal that would have made H&R REIT the largest REIT in Canada. However, H&R faced strong competition from Toronto-based private equity real estate investment firm KingSett Capital, and the two ultimately split Primaris' portfolio, with H&R REIT acquiring the rights to Primaris' name.
In 2022, H&R REIT then spun out its various enclosed shopping centres to Primaris REIT, which then immediately acquired a portfolio of properties from the Healthcare of Ontario Pension Plan (HOOPP). Today, Primaris REIT continues to target enclosed shopping centres and this year made several large acquisitions, including the Lime Ridge Mall in Hamilton for $416 million, although it has also been affected by the insolvency of the Hudson's Bay Company.
For H&R REIT, it currently has several notable development projects in its pipeline, although it is unclear when those projects will proceed as a result of the market downturn. Notable projects in Toronto include a 60-storey tower at 145 Wellington Street W, a 66-storey tower at 53-55 Yonge Street, two 65-storey towers at 310-330 Front Street W, and a multi-tower project at 77 Union Street.
H&R REIT's unit price jumped approximately $1.75 to a peak of $12.55 on Friday after it made the disclosure, but has since cooled off by approximately $0.35 on Monday as of time of publishing. If a transaction for H&R REIT is secured it would be the second big REIT sale of the year with the first being the pending sale of InterRent REIT (TSX: IIP.UN).
