Key facts
- Blackstone is reportedly in negotiations to acquire H&R REIT.
- H&R REIT possesses a diversified portfolio of over 20 million square feet of North American real estate.
- Previous suitors TPG and Crestpoint Real Estate Investments have withdrawn from talks.
- H&R REIT's portfolio is increasingly focused on residential and industrial assets.
- Residential properties now represent 60% of H&R REIT's holdings.
Blackstone is reportedly engaged in discussions to acquire H&R REIT, a diversified real estate investment trust with a substantial portfolio across North America. The potential deal, which began last year, has seen other interested parties, TPG and Crestpoint Real Estate Investments, withdraw from negotiations, leaving Blackstone as the primary contender.
H&R REIT, based in Toronto, reported approximately $5.8 billion in assets as of the end of March. The REIT has been strategically repositioning its portfolio, divesting from struggling office and retail sectors to focus on apartment and industrial assets. Currently, residential properties constitute 60% of its holdings, with industrial assets making up a quarter, and the remainder split between office and retail.
In the first quarter, H&R REIT generated $1.1 billion in cash through the sale of several assets, including three office buildings, 26 Canadian retail properties, and its stake in Echo Realty. Proceeds from these sales were used to repay corporate debt. The REIT's multifamily operations are managed by Lantower Residential, which oversees 26 properties with a 91% occupancy rate and a fair-market value of $2.7 billion. Its industrial portfolio comprises 66 properties totaling 8.3 million square feet.
Recent activity in the REIT sector has seen significant merger and acquisition deals. Blackstone itself was involved in a $1.5 billion acquisition of Alexander & Baldwin in December and recently launched a data center mortgage REIT. Additionally, major apartment landlords AvalonBay Communities and Equity Residential agreed to merge, creating a combined entity with 180,000 units.