BOSTON, Oct. 7, 2026 /CNW/ -- Daniel Farb, Managing Member of Mill Pond Capital, LLC ("Mill Pond"), who beneficially owns 2.2 million units of H&R Real Estate Investment Trust (TSX: HR.UN) ("H&R"), today released the letter below to H&R's independent trustees. Farb intends to vote all of his units AGAINST the proposed transaction with GO Residential Real Estate Investment Trust (TSX: GO.U) ("GO Residential REIT") and 1001700058 Ontario Inc. at the November 13, 2026 special meeting.
The full text of the letter follows.
* * * * * *
Independent Trustees, H&R Real Estate Investment Trust
Attention: Stephen Gross, Independent Lead Trustee
3625 Dufferin Street, Suite 500, Toronto, Ontario M3K 1N4
To the Independent Trustees:
I am the Managing Member of Mill Pond Capital, LLC and a long-time H&R unitholder. I beneficially own 2.2 million H&R units, and I intend to vote all of those units against the proposed transaction with GO Residential REIT at the November 13, 2026 special meeting[9]. This letter sets out the reasons for that decision.
In my view, the proposed transaction does not deliver fair value to H&R's public unitholders. It provides one form of consideration for the units held by the Chief Executive Officer's family group and another for every other unit, and it exchanges H&R units for cash and units of a more highly levered REIT whose unit price has fallen by more than 50% since its initial public offering in July 2025.
1. One deal for the CEO's family, a worse deal for everyone else
The headline price of $12.01 depended on GO's August 10 unit price[2]. GO has since fallen from US$9.75 to US$7.18 at the October 6 close[10], cutting H&R's consideration to roughly $10.09[12], a price 7% below the $10.89 per unit H&R traded at prior to the proposed transaction announcement [13]. The $10.09 per unit consideration assumes GO does not fall further once legacy H&R unitholders, who will own ~67% of the combined REIT, but never chose to own GO, sell into a market with no index buying.
H&R units traded at $9.23 at the October 6 close[11], about 43% below H&R's own reported NAV of $16.23 per unit[1].
Meanwhile, H&R has disclosed that the units held by CRAL, a company controlled by members of the family of Tom Hofstedter, H&R's Executive Chairman and Chief Executive Officer, together with units owned or controlled by certain of CRAL's affiliates and associates and the units of Mr. Hofstedter himself, will be redeemed and cancelled as partial consideration for CRAL's purchase price. A total of 44,038,986 units, approximately 16% of the units and exchangeable units outstanding, are expected to be cancelled, and those units "will not receive any GO REIT units or cash consideration"[1][2]. No other unitholder was offered consideration in that form.
The prices of the assets CRAL seeks to acquire have not been disclosed. The filed purchase agreement defines the price by formula, to be confirmed by the parties before closing[15]. Mr. Hofstedter describes these as "non-core" assets[8]. I believe they are being acquired at a discount to NAV, but without a disclosed price unitholders cannot assess what CRAL is paying, or compare it with the consideration offered to everyone else.
| Hofstedter family (CRAL) | All other unitholders |
What they receive | H&R assets they selected, in exchange for ~44 million H&R units plus cash payment | $4.28 cash + 0.5688 GO REIT units |
Value per unit | Not disclosed | $12.01 at announcement; ~$10.09 at the October 6 close.
H&R traded at $9.23 as of October 6th close and at $10.89 the day prior to the proposed deal announcement |
Exposure to GO Board and Management | None | ~66.9% of GO REIT, controlled by GO's Board and Management |
Tax on cash consideration | No taxable cash distribution received | Cash includes recaptured depreciation and capital gains, taxable to Canadian holders |
Asked why he was not taking GO units like everyone else, Mr. Hofstedter said CRAL is the best fit for non-core assets that require a long-term, private-market orientation[8]. That explains why CRAL wants the assets. It does not explain why the insider with the best information declined the GO consideration, or why no other unitholder was offered the same choice. H&R's trustees nonetheless concluded the transaction is fair to unitholders, with Mr. Hofstedter abstaining[2].
The Trustees owe unitholders a clear explanation of why consideration the CEO and his family would not accept is fair to everyone else.
2. Control passes to a GO team with a record of underperformance
GO listed on the TSX at US$15.00 in July 2025[6] and trades at US$7.18[10] as of the October 6th close, down ~52% from its IPO price, while US REIT ETF USRT rose ~7% over the same period[13].
H&R holders will own about 66.9% of the combined REIT but receive only two GO Board seats,[2] while GO's existing executives run the company.[2][5] GO unitholders will hold a minority of the equity but a majority of the Board seats.
3. Higher leverage and a heavy tax bill
H&R reported debt to total assets of 41.8% and debt to EBITDA of 7.1x at Q2 2026[3]. GO reported debt to gross book value of 53.5%, up from 48.5% at December 31, 2025[4], and the joint investor presentation shows GO's standalone debt to EBITDA at 12.5x[5]. GO's promise to cut leverage by "more than ~2x" is measured from its own elevated starting point[7]. I estimate pro forma leverage well above H&R's ~7x standalone. Unitholders have not been shown a pro forma figure that compares favourably with H&R today.
The $4.28 cash portion of the consideration is not a clean return of capital. H&R states it will include recaptured depreciation and capital gains that Canadian unitholders must report as income[2]. H&R holders will likely pay a meaningful share of that cash in tax, while CRAL receives no taxable cash distribution.
4. H&R loses index membership, while H&R unitholders effectively pay a premium for GO
H&R is a constituent of the S&P/TSX Capped REIT Index[14]. GO is not in that index; its own release says it may qualify only "over time"[7]. Since the announcement, H&R has fallen about 15% and GO about 25%, versus ~6% declines for both the Canadian REIT ETF XRE and US REIT ETF USRT[13]. In my view, the market is saying H&R unitholders are effectively paying a premium to buy GO units while handing GO's Board and Management the H&R multifamily portfolio along with other assets.
5. The Trustees' duty is to all unitholders
On these facts, there are better paths. One is to complete the industrial sales, distribute the cash and retire debt, and keep Lantower and the assets CRAL seeks to acquire within the current structure. Alternatively, H&R could continue as is, sell assets at or near NAV one at a time, and use the proceeds to retire debt and repurchase units trading at a deep discount to NAV or sell the entire company for cash. Each of the above proposals treats all unit holders equally.
What is not acceptable is asking unitholders to accept a dilutive, tax-inefficient transaction into a more levered entity at a large discount to the company's stated NAV, while the CEO and his family receive an entirely different form of consideration and use it to acquire, in my estimation, select H&R assets at a discount to NAV.
For the reasons outlined above, I intend to vote my 2.2 million units AGAINST this transaction.
Respectfully,
Daniel Farb
Managing Member
Mill Pond Capital, LLC
This letter is a public announcement by Daniel Farb, a unitholder of H&R and Managing Member of Mill Pond Capital LLC, of how he intends to vote at the special meeting and the reasons for that decision, and is published in reliance on paragraph (i) of the definition of "solicit" in section 1.1 of National Instrument 51-102 – Continuous Disclosure Obligations. It is not a solicitation of proxies. Neither Mill Pond Capital nor the author is requesting a proxy from any unitholder, is requesting that any unitholder execute, not execute or revoke a proxy, is sending a form of proxy or is seeking authority to act as proxyholder for any unitholder. Historical performance figures reflect the author's calculations using publicly available data, and all financial figures come from publicly available reports and corporate disclosures. Unless otherwise noted, unit prices are as of the October 6, 2026 close. This letter does not constitute investment, tax, or legal advice. Daniel Farb and or Mill Pond Capital LLC may increase or decrease their position in H&R at any time.
Sources:
[1] H&R REIT news release, "H&R REIT Reports Second Quarter 2026 Financial Results" (Aug 12, 2026): NAV per unit of $16.23 as at June 30, 2026; 44,038,986 units to be redeemed and cancelled. https://www.newswire.ca/news-releases/h-amp-r-reit-reports-second-quarter-2026-financial-results-828342694.html
[2] H&R REIT news release, "H&R REIT to be Acquired in $6.7 Billion Transaction" (Aug 11, 2026). https://www.newswire.ca/news-releases/h-amp-r-reit-to-be-acquired-in-6-7-billion-transaction-898751585.html
[3] H&R REIT Q2 2026 MD&A (June 30, 2026): debt to total assets of 41.8% and debt to adjusted EBITDA of 7.1x at the REIT's proportionate share. https://www.hr-reit.com/wp-content/uploads/2026/08/Q2-2026-Jun-30-Complete-Report.pdf
[4] GO Residential REIT news release, second quarter 2026 results (Aug 14, 2026): debt to gross book value of 53.5% as at June 30, 2026 and 48.5% as at December 31, 2025. https://www.newswire.ca/news-releases/go-residential-real-estate-investment-trust-reports-strong-second-quarter-2026-results-outperforming-forecast-815820775.html
[5] GO Residential REIT and H&R REIT joint investor presentation (Aug 11, 2026): GO standalone debt to EBITDA of 12.5x; nine-member board; existing executive team. https://www.hr-reit.com/wp-content/uploads/2026/08/GO-Acquires-HR-Joint-Presentation-2026-08-11.pdf
[6] GO Residential REIT news release, completion of initial public offering at US$15.00 per unit (Jul 31, 2025). https://s206.q4cdn.com/416337205/files/doc_news/GO-RESIDENTIAL-REAL-ESTATE-INVESTMENT-TRUST-COMPLETES-US410-MILLION-INITIAL-PUBLIC-OFFERING-2025.pdf
[7] GO Residential REIT news release on the transaction (Aug 11, 2026): leverage reduction of "more than ~2x" and index inclusion "over time". https://www.newswire.ca/news-releases/go-residential-reit-to-acquire-strategic-portfolio-of-27-properties-from-h-amp-r-reit-creating-a-premier-new-york-metro-area-and-sunbelt-region-focused-residential-reit-positioned-for-growth-820167894.html
[8] The Globe and Mail, "H&R REIT CEO to buy $410-million worth of properties to smooth way for takeover bid" (Aug 13, 2026). https://www.theglobeandmail.com/business/article-hr-reit-ceo-buy-properties-takeover-bid-tom-hofstedter/
[9] H&R REIT news release, record date and special meeting date (Sep 25, 2026). https://www.newswire.ca/news-releases/h-amp-r-reit-announces-record-date-and-meeting-date-for-special-meeting-in-connection-with-proposed-transaction-811970640.html
[10] TMX Money quote, GO Residential REIT (GO.U): closing price of US$7.18 on Oct 6, 2026. https://money.tmx.com/en/quote/GO.U
[11] TMX Money quote, H&R REIT (HR.UN): closing price of $9.23 on Oct 6, 2026. https://money.tmx.com/en/quote/HR.UN
[12] Bank of Canada daily exchange rates (USD/CAD 1.3942 on Aug 10, 2026 and 1.4226 on Oct 6, 2026). https://www.bankofcanada.ca/rates/exchange/daily-exchange-rates/
[13] Historical closing prices for HR.UN, GO.U and XRE (TSX) and USRT (NYSE Arca) on Jul 24, 2025, Aug 10, 2026 and Oct 6, 2026, Yahoo Finance. https://finance.yahoo.com/quote/HR-UN.TO/history/
[14] S&P/TSX Capped REIT Index constituents, TMX Money; see also the holdings of the iShares S&P/TSX Capped REIT Index ETF (XRE) as at Oct 1, 2026 (www.blackrock.com/ca), which include H&R and not GO. https://money.tmx.com/en/quote/%5ERTRE/constituents
[15] Agreement of Purchase and Sale dated Aug 10, 2026 between 1001700058 Ontario Inc. and CRAL Class B Limited (definition of "Purchase Price"; confirmation of the Purchase Price before closing), filed on SEDAR+ under H&R REIT's issuer profile. https://www.sedarplus.ca/csa-party/records/document.html?id=25ddda47cb3b547cc90411c90179c4a2a95b01b9e12826d7642af71cce1063efhttps://www.ad-hoc-news.de/boerse/news/nebenwerte/h-and-r-real-estate-investment-trust-stock-trades-21-10-percent-below/70184282https://www.konekoresearch.com/p/h-and-r-reit-offers-received-specialhttps://www.tradingview.com/news/prnewswire:e3543deac979e:0-h-r-reit-reports-second-quarter-2026-financial-results/https://www.investing.com/news/transcripts/earnings-call-transcript-hr-reit-posts-lower-q2-2026-ffo-as-deal-reshapes-portfolio-93CH-4858445https://nuggetcapitalpartners.substack.com/p/is-this-what-securities-fraud-lookshttps://www.newswire.ca/news-releases/h-amp-r-reit-to-be-acquired-in-6-7-billion-transaction-898751585.htmlhttps://ca.investing.com/news/company-news/hr-real-estate-investment-trust-hruff-q2-2026-earnings-call-highlights-strategic-4--4802553https://www.investing.com/news/company-news/go-residential-q2-2026-slides-strong-beat-overshadowed-by-hr-deal-93CH-4861249https://s206.q4cdn.com/416337205/files/doc_news/GO-RESIDENTIAL-REAL-ESTATE-INVESTMENT-TRUST-COMPLETES-US410-MILLION-INITIAL-PUBLIC-OFFERING-2025.pdfhttps://www.konekoresearch.com/p/h-and-r-reit-i-dont-wanna-gohttps://www.konekoresearch.com/p/h-and-r-reit-whats-the-real-trackhttps://www.konekoresearch.com/p/h-and-r-reit-step-downhttps://www.newswire.ca/news-releases/h-amp-r-reit-announces-record-date-and-meeting-date-for-special-meeting-in-connection-with-proposed-transaction-811970640.htmlhttps://money.tmx.com/en/quote/GO.Uhttps://money.tmx.com/en/quote/HR.UNhttps://www.theglobeandmail.com/business/article-hr-reit-ceo-buy-properties-takeover-bid-tom-hofstedter/https://money.tmx.com/en/quote/%5ERTRE/constituentshttps://www.citybiz.co/article/887142/go-residential-reit-to-acquire-2-8-billion-hr-portfolio-expanding-sunbelt-footprint/
SOURCE Daniel Farb
View original content: http://www.newswire.ca/en/releases/archive/October2026/07/c6091.html