With unitholder votes to approve a GO Residential REIT-led (GO-U-T) $6.7-billion takeover of H&R REIT (HR-UN-T) set to take place next month, an H&R activist investor has written a public letter outlining opposition to the deal.

Daniel Farb, the managing member of Mill Pond Capital, wrote to H&R independent trustees citing a number of issues with the proposed deal, including the severe erosion in the value for H&R unitholders as a result of the GO Residential's falling stock performance.

Farb said Mill Pond would vote its 2.2 million units against the transaction.

"In my view, the proposed transaction does not deliver fair value to H&R's public unitholders," Farb wrote.

"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."

The acquisition deal was originally announced in August and under its terms H&R REIT would be broken up with GO taking over a 27-property U.S. residential portfolio; a number of Canadian industrial properties would be acquired by Blackstone and; CRAL, a company controlled by H&R executive chairman and CEO Tom Hofstedter's family, would take the remaining commercial and non-core holdings.

Management circulars released

Unitholders of both GO Residential REIT and H&R REIT must approve the deal and this morning the independent trustees for each issued press releases in support of the acquisition proposal. Management circulars on the deal were also released.

H&R trustees unanimously recommended that unitholders vote in favour before its special meeting to be held on November 13.

"This Transaction marks the conclusion of a multi-year strategic review process and represents the best available path for H&R unitholders," independent lead trustee of H&R Stephen Gross said in the release.

"This Transaction provides H&R unitholders with a compelling opportunity to realize immediate liquidity through the cash consideration while participating in the longer-term upside potential of a larger, stronger GO REIT. We are encouraging H&R unitholders to review the Circular and vote IN FAVOUR of the Transaction today."

GO Residential's board of trustees also unanimously supported a recommendation that unitholders vote in favour of the acquisition prior to its special meeting, also on November 13.

Mill Pond opposition letter

In his letter of opposition to the deal, however, Farb says the value of the deal offered to H&R unitholders has fallen alongside GO's stock. 

"The headline price of $12.01 depended on GO's August 10 unit price," he wrote. "GO has since fallen from US$9.75 to US$7.18 at the October 6 close, cutting H&R's consideration to roughly $10.09, a price 7% below the $10.89 per unit H&R traded at prior to the proposed transaction announcement. 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."

He added: "H&R units traded at $9.23 at the October 6 close, about 43% below H&R's own reported NAV of $16.23 per unit."

He also took issue with aspects of the deal pertaining to the Hofstedter family, noting the prices of the assets CRAL seeks to acquire have not been disclosed.

"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," he wrote. 

"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. No other unitholder was offered consideration in that form."