H&R Real Estate Investment Trust (HR) M&A announcement summary

Deal rationale and strategic fit

• The transaction concludes a multi-year repositioning, transforming from a diversified trust to a pure-play residential platform focused on New York City and high-growth Sun Belt markets, combining 37 properties and over 13,300 suites across eight U.S. markets.

• H&R unitholders receive immediate value, a majority stake in the combined entity, and ongoing participation in future upside, with ongoing governance representation via two new trustees on GO REIT's board.

• The deal enhances geographic and asset diversification, supporting more consistent earnings growth and expanded deal flow.

• The pure-play focus is expected to attract stronger institutional ownership and higher valuation multiples.

• The transaction is the result of an exhaustive and independent review of strategic alternatives, deemed the best path forward for unitholders.

Financial terms and conditions

• H&R unitholders receive $4.28 in cash plus 0.5688 GO REIT units per H&R unit, totaling $12.01 per unit, structured as a tax-deferred rollover for eligible Canadian residents.

• The deal values H&R at approximately $3.4 billion in equity and $6.7 billion in enterprise value, including assumed debt.

• H&R unitholders will own approximately 67% of the combined platform on a fully diluted basis.

• GO will assume about $1.1 billion in property debt (USD) and CAD 550 million in unsecured bonds.

• Termination fees include $102 million payable by H&R and $27 million by GO REIT in certain circumstances, with a $136 million reverse termination fee if the Purchaser fails to fund.

Synergies and expected cost savings

• Approximately $15 million in annualized synergies are projected within 12-18 months post-closing, driven by operational savings, procurement efficiencies, and overhead reductions.

• The transaction is expected to be accretive to GO's FFO and AFFO per unit and to reduce pro forma leverage by more than 2x at close.

• NOI margins for the Lantower portfolio are expected to rise from the mid-50s to the low/mid-60s, aligning with public Sun Belt REIT peers.

• Further improvement is anticipated from operational synergies and income support.

• The combined entity will have greater scale, a stronger balance sheet, and significant growth potential.