Blackstone Inc. is in early-stage discussions regarding a potential acquisition of H&R Real Estate Investment Trust, a Canadian owner of apartment buildings and other properties.
Preliminary Discussions Underway
H&R disclosed on Thursday evening that it is engaged in "preliminary, non-exclusive discussions with Blackstone regarding a potential sale of certain assets." This confirmation followed an earlier report from Bloomberg News, which triggered a surge of more than eight percent in H&R's share price.
The talks come after previous takeover negotiations involving H&R, Blackstone, TPG Inc., and Crestpoint Real Estate Investments Ltd. collapsed last year, according to sources familiar with the matter who requested anonymity due to the private nature of the discussions. There is no certainty that a deal will materialize this time.
Market Context and Company Performance
H&R had a market capitalization of approximately $3.1 billion based on Thursday's closing price. As of March 31, the company managed $8.1 billion in assets. Over the past several years, H&R has been actively shifting its portfolio away from struggling office and retail properties, increasing its focus on apartment and industrial assets in both the United States and Canada.
Despite these efforts, H&R's shares have underperformed the broader Canadian real estate sector, delivering a total return of about 22 percent over the last decade, according to Bloomberg-compiled data.
Investor Pressure and Deal Dynamics
Hedge fund K2 & Associates Investment Management Inc. has been urging the company to explore a sale, arguing that H&R continues to trade at a substantial discount to the underlying value of its real estate holdings.
While Blackstone remains actively engaged in discussions with H&R, TPG is no longer part of the talks, according to sources. It remains unclear whether TPG or Crestpoint would participate in any transaction if Blackstone ultimately reaches a takeover agreement for the REIT. Neither TPG nor Crestpoint commented on the matter.
In November of last year, H&R agreed to sell a portfolio of Canadian and U.S. office and retail properties to multiple buyers for approximately $1.5 billion.
