Blackstone Said to Be in Talks to Buy Canada Property Firm H&R REIT

Blackstone Inc. is in discussions with Canada’s H&R Real Estate Investment Trust about a potential acquisition, according to people with knowledge of the matter.

The talks come after takeover negotiations last year involving H&R, Blackstone, TPG Inc. and Crestpoint Real Estate Investments Ltd. fell apart, said the people, asking not to be identified because the discussions are private. There’s no guarantee a deal will be reached this time around.

Blackstone declined to comment on the potential acquisition. H&R didn’t reply to a request for comment.

H&R, which managed C$8.1 billion ($5.8 billion) of assets as of March 31, has spent several years moving its portfolio away from struggling office and retail holdings and increasing its exposure to apartment and industrial assets in the US and Canada.

But its shares have underperformed the rest of the Canadian real estate sector with a total return of about 13% over the past 10 years, according to data compiled by Bloomberg. H&R has a market capitalization of about C$2.9 billion.

Hedge fund K2 & Associates Investment Management Inc. has pushed the company to explore a sale, arguing that it continues to trade at a substantial discount to the value of its real estate holdings.

While Blackstone remains engaged in discussions with H&R, TPG is no longer involved, according to the people. It remains unclear whether TPG or Crestpoint would participate in any transaction should Blackstone ultimately reach a takeover deal for the REIT, the people said. Neither TPG nor Crestpoint would comment on the matter.

Last November, H&R agreed to sell a portfolio of Canadian and US office and retail properties to several buyers for about C$1.5 billion.