Tom Hofstedter of H&R REIT said the GO team has “a real track record”. What is it? Maybe Josh Gotlib’s extraordinary accumulation of Housing Code violations? GO’s narrative is that rents are rising and occupancy is high. Investors are encouraged to believe that GO’s ownership of its initial five property portfolio has been highly profitable. This report tests that thesis with information from these sources:

• GO Residential REIT Prospectus, especially pages F-29 to F-91 showing the pre-IPO Financial statements for GO Partners

• Colliers Valuation reports for the initial GO REIT portfolio (685 First Avenue, American Copper Building, 1 Sutton Place, 2 Sutton Place, 1 East River Drive)

• Contribution Agreement between GO Partners and GO Residential REIT

• Exhibits filed in the Kassirer vs Gotlib and Gold Wynn vs Kassirer lawsuits.

Key findings:

• GO Partners incurred substantial cash operating losses

• GO Partners operated with extremely high leverage and invested close to zero in property improvements

• Investors in GO Partners appear to have had their equity converted into OpCo units of GO REIT at high valuations (at least $18/unit) and now have significant losses.

685 First Avenue Ownership Structure, Fees, and Returns

The five properties in the initial GO REIT portfolio each had their own equity investors and debt financing. The offering document for 685 1ST AVE LLC (filed in the Kassirer case) shows these terms:

• Expected equity $111mm. Of this $103mm was raised from investors and $8mm was equity compensation, primarily paid to GO Partners. Invested equity was only 27% of the $388mm purchase price.

• Expected property debt of $291mm. Note that the actual debt incurred was much more costly - an extra $5.2mm/year of interest expense.

  

• Class A Shares were raised through the private placement

• Class B Shares were incentive compensation for the manager. GO Partners would receive 20% of returns in excess of a 6% preferred return for the Class A interests.

• The manager also received fees for fundraising and debt guarantees.

In the event of a Like Kind Exchange (as eventually happened with the conversion of 685 1ST AVE equity into OpCo units of GO REIT):

• Manager receives a 1% fee

• Class B units are converted into Class A - the manager realizes the promote, if any.

This cap table filed in the Kassirer case shows contributions from 28 investors:

The property was acquired on 9/23/22 for $387.5mm. Colliers Valuation report notes that it was an arms-length transaction at market levels.

Colliers ignored this demonstration of the true market value of the property and arrived a spreadsheet valuation of $494mm (27% higher) as of 12/31/22 and a final value of $521.1mm as of 3/31/25.

The Contribution Agreement shows that existing equity holders in 685 1ST received 5,085,106.95 OpCo units when the property was acquired by GO REIT.

I don’t think the basis for calculation of the exchange ratio has been publicly disclosed, but investors have undoubtedly suffered a large loss:

Investors did not receive any benefit from the Colliers spreadsheet appreciation. Colliers also showed an income statement for the property with cash losses of $14.6mm for 2023, 2024, and 1Q25.

One remarkable detail in the income statement is how little GO invested in 685 following its acquisition. The GO strategy is exactly what Meyer Orbach said in his TRD interview: “it’s almost like a simple formula. Raise the rents, cut the expenses”.

Cash losses, high fees, deferred maintenance, and negative investor returns - that’s the “real track record”.

Copper Buildings, 1&2 Sutton Place, 1 East River Drive

We have less visibility into investor returns at the other GO properties because they have not, at least not yet, been the subject of lawsuits. From more limited information I estimate that investors in the GO Partners portfolio entities have a basis of at least US$18/unit in GO Residential REIT, had a significant mark-to-market loss at IPO, and a much larger mark-to-market loss as of 9/4/26.

Consolidated GO Partners Operating Results showed an operating loss of $47mm for 2023, 2024, plus 1Q25.

Colliers valuation spreadsheets showed magical appreciation for every property after acquisition.

If these gains were real then management completely failed to deliver their benefits to the investors in the GO Partners LLCs. That’s the "real track record”.

GO Is Addicted To Debt

While GO Partners investors suffered dilution through the IPO pricing below their cost basis, the IPO proceeds allowed a prudent deleveraging. However, GO REIT has since purchased $652mm of additional properties while raising only $72mm in new equity.

The proposed Lantower merger would be a second dilutive deleveraging, but isn’t it probable that GO will just buy more properties again? That’s the “real track record”.

Disclosures & Notes

At the time of publication the author held units of H&R REIT and no position in units of GO Residential. This disclosure should not be interpreted as a recommendation to make any transaction in any security. Investors are encouraged to check all of the key facts cited here from SEDAR filings and other sources prior to making any investment decisions. The author believes all information in the article is accurate as of the date of publication.

A copy of this article was sent to H&R REIT at the time of publication. If the company can identify any factual errors using information that was public at the time of release then corrections will be made as promptly as possible.

I believe this article serves the public interest so it has been published with no paywall. Please share with anybody who might be interested.

Calculation of the Go Partners’ investors’ basis in GO REIT used the facts and assumptions shown. If you disagree with any assumptions or have new facts that would enable an improved calculation then please share.

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Brief sector commentary in the initial publication was expanded on 9/15.

“Living next to [the United States] is in some ways like sleeping with an elephant. No matter how friendly and even-tempered is the beast, if I can call it that, one is affected by every twitch and grunt.” - Pierre Trudeau

The US is no longer “friendly and even tempered”. The Iran War, unsustainable fiscal deficits, trade conflict, and AI mania have huge impacts on the Canadian economy and financial markets. Investors can try to profit in several ways:

1. Correctly forecast all of those factors. Investors can fall into a trap of trying to quickly master each topic that dominates news for a month. It can consume every waking hour, and it’s extremely difficult to have an analytical advantage because so many genuine experts are involved in each field.

2. Forecast nothing and fade the extreme swings in investor sentiment.

3. Invest in well-managed companies with the operational and financial strength to survive crises and take advantage of opportunities that may arise.

I don’t think of it as a forecast, but I believe investors are undervaluing the possibility that AI mania crashes, US moves towards fiscal consolidation (more likely under divided government), US interest rates fall, the USD falls, and real estate rebounds (outside of AI beneficiaries like data centers and NY/SF residential).

Topics:

• Sector Overview

• Institutional Failures in the GO+HR merger

• Equities To Hold Through The Cycles ($) Two profiles

• Canadian Trade Ideas ($) 4 updates

• US & Other Trade Ideas ($) 6 updates

• Valuation Comparison ($)

• Office Sector ($) with comparison of SPNOI growth across North America

• Multifamily Sector ($) with comparison of SPNOI growth across North America and capital allocation choices among Canadian REITs

• Industrial Sector ($) with comparison of SPNOI growth across North America

• Retail Sector ($) with comparison of occupancy levels and SPNOI growth in Canada. Comments on Slate Grocery’s strategic review and a brief comment on Primaris.

• REOCs ($) Comments on Clarke’s first report following the Ravelin acquisition and the Morguard group

Sector Overview:

The yield premium of real estate cap rates over 10-year bond yields is under pressure due to the sharp qtd rise in bond yields.

Canadian yields are still at least 100bp lower than the US at every maturity. For real estate investors, Canadian property offers a positive return over financing cost, but US property buyers may get little or even negative return on leverage. Stability of the Canadian dollar despite a rising interest rate gap hints at greater international confidence in the Canadian economy and institutions.

Insiders at 20 of 34 REIT/REOCs were buyers since 1/1/26 and 7 had net insider sales. REIT/REOCs have repurchased $506mm of equity since 1/1 (reported to 8/87) with the largest buybacks at Boardwalk (6.5% of market cap), Clarke (3.7%), Dream Industrial (2.5% of market cap), Killam (2.2%), and CAPREIT (1.4%).

Institutional Failures

Canadian brokerage firms were highly compensated through underwriting and advisory fees for their failure to investigate suspicious aspects of the GO Residential management, numbers, and narrative. Fees and other expenses related to last year’s $500mm IPO were $57mm. Fees and expenses related to this year’s $37.5mm bought deal were $3.1mm.

On H&R’s 8/13 conference call Tom Hofstedter enthused about his GO deal: “CIBC has been working on this for close to 2 years”. They will undoubtedly be due for a big payday if it closes, and probably even if it doesn’t.

I wrote about GO Valuation and fraud concerns in March 2026 and again in April 2026. If you’re a free subscriber and would have benefitted from that information then consider moving up your subscription level.

Read more

This article provides additional details and comments following my prior article:

Topics:

• H&R is in play. Investors could profit from termination of the GO merger or exercise of Dissent Rights.

• GO is in doubt. The heavy dilution from the proposed merger raises doubt about management and invites greater scrutiny of their backgrounds.

• Hofstedter Consortium members. How do they own 16% of outstanding units without filing an Early Warning Report?

• Was the strategic review process manipulated to favor this outcome?

• Dissent Rights. Unitholders can receive “fair value” in cash through a court process.

• 2 Gotham Center. Heads Tom wins. Tails GO loses.

H&R Is In Play

Another week of management spin has not improved perceptions of the deal. Some buyers of HR may be betting on upside from termination. I hoped that sharing information would contribute to conversations about potential improved outcomes for public investors and I believe those discussions are happening. Every institution involved with H&R or GO has viewed my prior article, as well as some major Canadian and international entities with no known connection. Maybe they all just want the link to the cumgirl8 video…

Based on my prior analyses of GO (Valuation and Gotlib lawsuit, and Teo connection), I knew the HR-GO deal was a disaster as soon as I saw the headline. I told subscribers that I would scale out of HR above $11. It never traded there so I have not sold any units. I left open my idea to “Buy under $10” and I’m sticking with that based on potential upside from deal termination OR exercise of dissent rights.

I estimate a Sum-of-the-parts valuation for H&R segments of $12.31/unit as of 6/30/26. Investors could apply a further conglomerate discount of 20%, or whatever number you like.

Pro-forma Lantower REIT would have an illustrative value of C$8.40 (after a $4.28 distribution) compared to GO merger consideration of C$6.77 (at 8/21 price of US$8.54). Lantower REIT assets would be 84% Residential and related retail (the current Retail “segment” could be eliminated since it is just the River Landing Shops connected to the River Landing Residences). The conglomerate discount should disappear.

• Assumes these Held for Sale assets close at their carrying value of C$736mm

• Assumes the Blackstone and Crestpoint Industrial sales achieve a cap rate of 6.0% (gross proceeds of C$1,345mm)

• Assumes a C$4.28/unit special distribution.

H&R agreed to a single merger termination fee of C$102mm that did not contemplate the possibility that some parts of the deal (e.g. the Industrial sales) could be completed and the others (the GO merger) terminated. I believe that GO blundered by entering into this agreement and should also be seeking termination. Blackstone and Crestpoint should be amenable to completing their portions of the deal rather than accepting termination payments. I believe the transaction structure does not envision any termination fee payable to the Hofstedter consortium. The best outcome for all parties would be a negotiated settlement as soon as possible.

If GO seeks a termination payment then HR could claim that GO breached warranties and representations made by GO in the merger agreement. For example, GO represented that it has charged correct rents, but The Copper Building lawsuit alleges rent overcharges.

If the GO merger is not completed, can Hofstedter be trusted to act in the best interest of public H&R investors?

GO Is In Doubt

Who are these guys? It’s remarkable that GO was able to come public with so little disclosure about the career experience of its principals. They’re from New York City (like Bernie Madoff, Jordan Belfort, and Donald Trump) and Orbach owns an LP interest in a basketball team. Prior to the 2022 GO Partners acquisition spree, they were not players in the NYC market for institutional quality Class A real estate. It wasn’t hard to find the story about Gotlib’s fraud lawsuit because nothing else has been written about him. Meyer Orbach was prominently featured in a 2018 NY Times article about abusive landlords (The Eviction Machine Churning Through New York City).

GO announced 4 property acquisitions earlier this year and Gotlib boasted that vendors were accepting partial consideration in GO units valued at NAV of $23.70 because “they know our portfolio is trading at a significant discount to intrinsic value” (4Q25 conference call). Since the deals were announced, three have closed with only a token total equity consideration of 5000 units and the fourth remains subject to a letter of intent, but has not closed. Evidently nobody, except maybe the trustees of H&R REIT, believes in the financial statement valuation of GO’s assets.

GO’s willingness to conduct two heavily dilutive share issuances in 2026 validates the concerns of skeptics and undermines the faith of anybody who believed in management. If its valuations are real then GO should be selling assets rather than equity.

One GO investor told me he wasn’t concerned about Gotlib’s fraud allegations and Teo’s convictions because as fellow unitholders, the fraudsters interests were now aligned with his. Many institutions are not willing to think that way. I believe GO units will always trade at a low valuation unless or until the fraud connections are resolved.

Hofstedter Consortium Members

Investors were surprised to learn that the Hofstedter Consortium owns 44mm units (16% of outstanding) without ever having filed an Early Warning Report.

Voting Support Agreements filed on SEDAR indirectly provide details of the composition of the consortium, plus fourteen trustees and executives who have committed to vote an additional 2.4mm units in favor of the GO merger.

The big difference from prior disclosures was revelation of the 26.3mm Ordinary units controlled by CRAL, Eric Weiss, and Tomfrim. Adding 13.0mm Special Voting units brings their stake to 40.3mm (14.4% of all units).

HR’s regular annual meeting circular disclosed that Tom Hofstedter “Beneficially Owned, or Controlled or Directed, Directly or Indirectly” only 3.7mm units which appears to include Thomas Hofstedter Family Foundation and TomFam, but exclude Tomfrim.

If Tom Hofstedter is a beneficiary or has direct or indirect control over units held by CRAL or Tomfrim then it looks like he under-reported his ownership. Maybe he’s taking legal advice from Alfred Teo (convicted for false ownership disclosures)? I don’t know the details of Eric Weiss’ connection with the Hofstedter family.

The Hofstedter Consortium appears to be “acting in concert”, “actively working together”, and have an “agreement, commitment, or understanding to acquire, vote, or exercise control over securities, or to effect a transaction”. See guidance on insider reporting requirements from the BC Securities Commission.

Was The Strategic Review Process Manipulated To Favor This Outcome?

HR investors would have been comfortable with a Lantower sale for cash, or equity in a high quality REIT such as AvalonBay (now Vivmark). But GO’s heavily discounted valuation created an opportunity to claim that HR shareholders are receiving NAV comparable to HR’s current level ($16.24). Additional NAV siphoned away by Hofstedter can be hidden. If the merger consideration had been undiscounted cash or only slightly discounted equity then the loss of NAV would have been more apparent.

Hofstedter described the assets he is acquiring as “noncore assets, undeveloped land, suburban and secondary office properties and other assets that are more complex to value and trade than the income-producing industrial and residential portfolios being acquired by Blackstone, Crestpoint and GO REIT. These assets require a buyer with local knowledge and a long-term orientation.” Shareholders’ primary source of information about these assets has been … Tom Hofstedter. Was he also the primary supplier of “local market knowledge” used by National Bank and CIBC in their valuation process and fairness opinions?

Dissent Rights

Under Canadian takeover law, shareholders objecting to a Plan Of Arrangement can compel a corporation to repurchase their shares for cash at “fair value”. The GO-HR merger is structured under the Business Corporations Act of Alberta and dissents will be heard at the Court of King’s Bench of Alberta, most likely in Calgary. Experienced legal representation is essential. Dissenters must:

• Review the meeting circular description of dissent rights

• Be a registered shareholder, not a beneficial owner through a third party. HR has not yet sent a “Notice Of The Meeting And Record Date” that will include a “Beneficial Ownership Determination Date”. After that date it would be too late to become a registered holder and dissent.

• Send a written objection to the transaction and vote against it.

• Following approval of the transaction, send a demand for payment at fair value (determined immediately before a triggering event, typically the day before a shareholder vote).

• Pursue the appraisal process in court to determine ”fair value” which will include interest and possibly legal fees.

The GO-HR agreement covers the process by which the buyers will handle dissents.

• A condition for closing is that no more than 5% of shares have dissented - that’s a low threshold considering the high opposition to the transaction.

• Dissenters will not receive the $4.28 Special Distribution and will not receive any GO units. The payments and GO units they would have received will be held by Hofstedter. His group will be obligated to pay the cash “fair value” to dissenters and that could require a large cash contribution. For example, if 20mm units dissent, fair value is determined to be C$13, and 0.5688 GO plus C$4.28 is only worth C$11, then Tom would have to come up with C$40mm of cash in addition to selling all GO units he holds.

In takeovers of public companies, a Court’s determination of “fair value” is heavily influenced by pricing of a deal negotiated by a special committee through a competitive process. A few implications for HR:

• HR announced that its deal provided “total upfront consideration of $12.01/unit” and presumably the fairness opinions received from CIBC and National Bank support this. That should be a baseline for the “fair value” determined in court.

• Dissenters will argue that the board process was flawed, the merger was not an arms-length transaction due to the role of Tom Hofstedter, and that “fair value” is higher.

Often an activist holder will use a threat to dissent in order to push for improved merger consideration, such as happened with Melcor REIT in 2024. There’s not a lot of scope for a higher merger consideration in the HR deal. Blackstone and Crestpoint are paying fair prices. GO is already overpaying in equity (unless its equity is overvalued). Hofstedter likely does not want to contribute cash, but could offer something like a CVR with value based on future asset sale proceeds.

Gotham Center

This Long Island City Office building (aka 2 Gotham) serves some quirky deal goals. In the near-term it inflates GO’s NYC exposure. In the long-term it gives Hofstedter a valuable option. Background:

• HR acquired the 660ksf tower in 2011 for US$416mm from Tishman Speyer.

• 100% leased to the New York City Department of Health and Mental Hygiene until 2031. From HR disclosures I estimate the rent is approximately US$50/sf.

• Good transit access via subway, bus, commuter rail, and highway

• Unencumbered - It cannot be forfeited to a lender if the value has declined. The mortgage was paid off in 2021 with proceeds from The Bow office sale.

The building is modern and in good condition, but optimized for government use with a utilitarian style.

The market for prime Manhattan office real estate (15 minutes away on the subway) is exceptionally strong right now, but the Long Island City submarket has 27% availability.

NYC Health will probably sign a long-term renewal in a few years and Gotham Center would have a very solid valuation based on discounted cash flows from an A+ rated tenant. But the city will have many options to choose from. If it does not renew then the value of the building would be impaired because it would require a large investment in upgrades and leasing. And even then might struggle due to lack of LIC demand.

GO will acquire the property even though there’s no synergy with its NYC multifamily portfolio. My guess is that GO recognized the Lantower acquisition would dilute the NYC narrative it has pitched to investors. GO says 70% of its pro-forma rents will still be from NYC, without mentioning that approximately 9% of rents will be from this office building that has significant leasing and valuation risk. Hofstedter cleverly negotiated an option to acquire 50% of the building in 2030 when the fate of the NYC Health lease will be known. Heads - TOM wins, Tails - GO loses.

Disclosures & Notes

At the time of publication the author held units of H&R REIT and no position in units of GO Residential. This disclosure should not be interpreted as a recommendation to make any transaction in any security. Investors are encouraged to check all of the key facts cited here from SEDAR filings and other sources prior to making any investment decisions. The author is not a lawyer and has not yet received any legal advice regarding dissent rights or any other legal aspects of the HR and GO transactions so his descriptions of those topics could be wrong. The author believes all information in the article is accurate as of the date of publication.

A copy of this article was sent to H&R REIT at the time of publication. If the company can identify any factual errors using information that was public at the time of release then corrections will be made as promptly as possible.

I believe this article serves the public interest so it has been published with no paywall. Please share with anybody who might be interested.

“it's a golden day we can force them to step down”

They’re from New York City 👊

Emily Watson (H&R President): “Our sunbelt portfolio fair market value is supported by a third-party appraisal and recent market transactions, thereby maintaining a weighted capitalization rate of approximately 4.97%. High-quality multifamily assets across the sunbelt continue to trade at cap rates, driven by the region’s compelling long-term fundamentals, including robust population, employment growth, business-friendly environments and durable migration patterns that underpin lasting value creation.” - H&R conference call 11/14/25

Josh Gotlib (GO Residential CEO): “We’re buying the portfolio [Lantower] at a 7% cap on year one NOI” - GO conference call 8/14/26

Topics:

• Transaction Structure. The deal sets up a huge potential gain for H&R CEO Tom Hofstedter and related parties. Based on the limited disclosure to this point, I estimate they will receive H&R assets valued at $22.47/unit.

• GO Residential’s Fraud Concerns. GO CEO Josh Gotlib is accused of defrauding the widow of the partner who provided the capital for his Black Spruce investment group. GO’s largest independent unitholder Alfred Teo has a history of regulatory violations and spent 11 months in jail following a fraud conviction.

• Go Residential’s Valuation Concerns. Issuance of approximately 134mm GO units to acquire Lantower will dilute GO’s reported NAV to approximately $15.45, a stunning 38% drop in just over a year since IPO. If GO’s valuations were correct then it should be selling assets rather than units.

• GO Residential’s Poor Record As A Property Manager. Gotlib and Orbach have brought a penny-pinching affordable housing mindset to GO properties and tenants are unhappy.

• Deal Prospects. The transactions require approval from a majority of votes cast, excluding those owned by the Hofstedter Consortium. No significant independent unitholders have committed to support the transaction. The market says it’s a bad deal and approval may be difficult.

• Alternative Path? Sell Industrial as contracted, distribute proceeds, launch Lantower as successor to H&R with new CEO in place of Tom Hofstedter, and sell non-core assets over time.

Transaction Structure

H&R’s diversified assets are being split into 3 parts (see H&R Press Release and Presentation):

• Lantower Residential Segment will be merged with GO Residential. Each H&R unit (except those owned by management and related parties - the Hofstedter Consortium) will be exchanged for 0.5688 GO units. GO will assume US$1.1Bn of mortgages and a C$550mm debenture obligation. HR/GO disclosed that the IFRS fair value of assets acquired will be US$3.1Bn which will include the public interest in the Lantower REDT. These implies that the H&R equity attributable to the segment will be about US$1,610mm or C$2,288mm.

  

• Industrial Segment is being acquired by Crestpoint (existing 50/50 JV partner) and Blackstone (presumably buying all the non Crestpoint assets). The price was not disclosed. Proceeds will mostly be returned to investors excluding the Hofstedter Consortium through a $4.28/unit distribution. The valuation of these arms length transactions for stabilized assets should be close to IFRS carrying value, but details have not been disclosed. We don’t know whether these sales will include H&R’s Caledon lands worth about $300mm, including 97 acres worth about $194mm likely sold within a year for development of Highway 413.

• Non-Core Segment will be acquired by H&R CEO Tom Hofstedter and related parties in exchange for 44 units (including exchangeable units). H&R’s Lead Independent Trustee Stephen Gross said “We are not breaking down the individual proceeds by asset class at this stage”.

  We know the equity distributed via the $4.28 distribution, and have estimated the equity exchanged for GO, leaving a balance of $1,059mm HR equity in the Non-Core Segment. Hofstedter has promised C$71mm of support to GO, leaving a net value of $988mm, equal to C$22.47 per Hostedter Consortium unit, and potentially a vastly more attractive outcome than the one imposed on H&R’s public unitholders. It’s no wonder that all of his family and friends are joining his deal. The Non-Core assets have been repeatedly marked down in H&R financial statements over the past 5 years and have further appreciation beyond that value. On 8/13 Hofstedter said: “I am excited about the outcome.”

  

  

As an H&R unitholder, I would love to be proven wrong about the amount of value being transferred to the Hofstedter Consortium. Maybe some positive net working capital is being transferred with Lantower? Anything else? Very little information was provided about plans for consolidation of the Lantower REDT and its existing debt - that might shift my numbers by $100mm, but not alter my conclusion.

GO Residential Fraud Concerns

A 2023 article in the Real Deal about GO CEO Josh Gotlib said: “The source of his capital remains a mystery that even many of New York’s biggest brokers haven’t solved. One person with knowledge of the company said Gotlib taps a small network of private investors.”

Two possible sources:

1) Natalia Legg vs Gotlib

The complaint (link to full text) alleges gross misconduct, fraud, and self-dealing by Joshua Gotlib against the widow and child of his deceased business partner, Oliver Legg. The lawsuit explains that Oliver Legg co-founded the Black Spruce group of real estate entities with Gotlib, making Gotlib an equal (50%) partner, although Oliver provided the capital. Oliver placed his 50% interests into a trust for the benefit of his wife, Natalia, and their daughter, Daria, and appointed Gotlib as trustee in 2014. Gotlib was also the managing member of the trust’s portfolio companies, including Black Spruce Properties and Black Spruce Management.

The complaint details Gotlib’s alleged scheme, which includes:

• Fraudulent Transfer: Days after Oliver’s death in May 2015, Gotlib allegedly misled Natalia into ratifying the transfer of the trust’s 50% interests in BSM and Nieuw Amsterdam Property Management to himself. Gotlib misrepresented that these entities were losing money and that he would personally take responsibility for outstanding loans.

• Breach of Agreement: Gotlib failed to perform his promises, allegedly diverting BSM’s revenues to himself and using the trust’s assets through BSP.

• Self-Dealing: Gotlib allegedly engaged in ongoing self-dealing, including borrowing large, high-risk, unsecured sums from the trust to finance his other businesses, causing the trust to suffer losses.

• Diverting Opportunities: Gotlib allegedly diverted new real estate investment opportunities from BSP to separate shell companies under his ownership, allowing him to reap 100% of the growth of Black Spruce.

Gotlib denies the claims and the case is currently in arbitration.

2) Alfred Teo

Alfred Teo is the largest independent unitholder of GO Residential with a disclosed 18% stake and his son Mark Teo is on the Board of Trustees. Alfred Teo has a history of legal and regulatory troubles:

• He pled guilt in an insider trading case in 2007 and served 11 months of a 30 month prison sentence.

• In 2011 he was fined $49.5mm in a case brought by the SEC.

• He was indicted for a $61mm tax evasion scheme related to activity from 2016-2018.

Teo was a “Retained Interest” holder at the time of GO’s IPO, indicating a prior business relationship with with GO Partners. Has convicted fraudster Alfred Teo been backing alleged fraudster Josh Gotlib for many years?

Troubling Association of Stephen Gross (H&R’s Lead Independent Trustee)

Since 2008 Stephen Gross has served as a Director of New Jersey based Cross River Bank. During that time the bank has been subject to multiple regulatory investigations and enforcement actions:

• 2018 FDIC Settlement for Unfair and Deceptive Practices (LINK)

• House Subcommittee (LINK and LINK) and SBA (LINK) investigations into PPP Loan Fraud

• 2023 FDIC Consent Order for Fair Lending and Oversight Failures (LINK)

Stephen Gross is a longtime Cross River Bank board member and a member of its lending/credit committee, but was not individually cited or sanctioned in any of these investigations. The HR/GO agreement includes appointment of 2 HR trustees to the GO board. Stephen Gross sounds like he might fit in well.

GO Residential Valuation Concerns

GO’s apparent discounted valuation depends on a belief that its portfolio was worth 34% more at IPO than the prices where the buildings were acquired from third parties in 2022.

• The Copper Buildings were acquired by Black Spruce Management for $837mm in March 2022 (link).

• 685 First Avenue was acquired by GO Partners in October 2022 for $387.5mm (link)

• One Sutton Place, Two Sutton Place and One East River Place were acquired by GO Partners in December 2022 for $825mm (link)

  

The benefit to property valuations of rising rents since 2022 has been largely offset by a rise in cap rates of about 166bp (Avison Young Second Quarter 2026 vs Avison Young Second Quarter 2022) due to higher mortgage cost. Avison Young estimated an average 2Q26 Manhattan multifamily cap rate of 5.98% with a range of 4.50-7.50%. GO’s 2Q26 financial statements valued its properties at a 4.16% cap rate:

For comparison, H&R REIT has reduced the valuation of its Jackson Park luxury rental complex in New York by 7.5% since 3Q22 (from $1,987mm to $1,837mm). Another strong comp is 265 East 65th Street which was acquired by GO Partners for $425mm as part of a package with 1&2 Sutton Place and One East River Place. The latter properties were contributed to GO Residential at valuations 42% higher than what GO Partners paid. A 45% stake in 265 East 66th sold this year to a sophisticated buyer (RXR) at a $435mm valuation (only 2% appreciation). If GO’s properties were valued at their 2022 prices then unitholder equity would be US$689mm lower and NAVPU after the IPO would have been $12.37 instead of $24.80.

The financial statement impact of the Lantower acquisition would be heavily dilutive:

GO’s willingness to issue equity far below reported NAV in March 2026 (bought deal at US$9.95/unit) and through the Lantower acquisition raises several possible concerns:

1. NAV might be significantly overstated. The H&R merger justifies sale of Lantower at a discount on the basis that GO is more heavily discounted. If the fair value of the GO portfolio is much lower than reported then the relative values would be reversed, H&R unitholders would suffer dilution from the merger, and the purported valuation upside would be illusory.

2. GO’s portfolio might have undisclosed legal or financial problems in its history. Piling on new clean assets would bury past problems. It gets lost in the deal dazzle.

3. GO management might expect benefits from the REIT independent of the return on their equity interest. For example, GO CEO Josh Gotlib received an $8mm cash bonus from the IPO proceeds.

   

GO has argued that its equity is significantly undervalued and it owns premium quality luxury assets in a supply constrained market. Josh Gotlib says he has heard from unitholders that demand for GO was limited by its scale, liquidity, and balance sheet. In contrast, what I have heard from investors who opted not to invest in GO has been that their primary concerns are governance issues.

This week GO announced that its 2Q26 results exceeded every guidance metric and that the Lantower acquisition would result in increased scale, liquidity, institutional appeal, and improved balance sheet. GO’s unit price continued falling. Maybe those were not the problems. The REIT did nothing to address governance concerns and undermined the prior narrative by diluting NAV and expanding to less appealing assets in weaker markets. It might take 10 years for GO to recover the NAVPU lost through dilutive equity issuance since IPO.

On 8/13 Hofstedter described the GO management team: “These are smart, disciplined buyers and managers with a singular residential mandate and a real track record.” What is that real track record? Prior to entering the luxury segment, The Orbach Group acquired, and continues to own, US$5Bn of affordable housing properties in New York City. Gotlib’s Black Spruce entities acquired US$4.5Bn of affordable housing. That sector has been the worst possible real estate to own in New York City. Did Hofstedter and the H&R Board study the real track record of the Gotlib and Orbach entities through this period:

• 2019 Housing Stability and Tenant Protection Act repealed vacancy decontrol, capped rent increases allowed for Individual Apartment Improvements and Major Capital Improvements.

• 2020-2022 Pandemic eviction moratoria and housing court backlogs led to severe rent arrears while also contributing to expense inflation.

• 2022-2024 Higher interest rates and loss of liquidity from failing banks (Signature and New York Community).

• 2024-2026 Distressed Turnover with forced sales and property values 40-50% lower than 2019 peak. Landlord equity at many buildings has been wiped out.

In my opinion, GO’s reputation would be positively transformed if it were able to sell any of its initial portfolio assets at carrying value.

GO’s Poor Reputation As Property Manager

The average Yelp Review ratings for GO’s One Sutton Place (2.1), The Copper Building (2.5), 685 First Avenue (2.0), and One East River Place (1.8) are below the Rikers Island Correctional Facility (3.2)

Many Google reviews are critical of property management, often citing a deterioration in service following a change in ownership (when GO took over). These summaries were prepared by Google Gemini in response the prompt: “summarize google review comments about management at [Building Name]”

The average rating at these properties still benefits from reviews submitted prior to GO control. Gotlib has a longer “real track record” as property manager of his affordable housing portfolio. New York City Housing Preservation and Development records show him as involved in ownership/management of 224 buildings which have accumulated 42,663 violations, of which 4,232 remained open at 8/14/26. That’s a lot of 🪳🪳🪳.

Lantower has a proven record of success in apartment development and management. GO Residential does not. Gotlib’s track record suggests that the “margin enhancement initiatives” GO intends to apply to the Lantower portfolio will be penny-pinching service cutbacks, maintenance deferrals, and billing surprises. A GO tenant told me that his building has a transient population of new arrivals and divorced dads. Somebody will take every apartment in Manhattan due to limited current supply, but in many Lantower markets renters have abundant choices.

On August 5, 2026, tenants at The Copper Building filed suit alleging that management overcharged approximately 1000 rent stabilized tenants in the building. Plaintiffs attorneys estimate cumulative overcharges since 2020 were about $20mm.

Deal Prospects

H&R and GO held 3 conference calls and distributed 3 presentations last week. If there were good reasons to support this deal then we would have heard them. Tom Hofstedter promised the circular to be released in few weeks would answer investor questions. Mine are:

• What other options were considered for Lantower and why were those rejected? What other cash and equity exchange offers were received?

• Why did the Board accept a transaction valuing Lantower far below the level previously claimed by H&R management?

• Was any investigation made of the background of GO management, their track records, and extensive business activities outside of GO? Did the Board and advisors review the financial condition of the Gotlib and Orbach affordable housing entities? Did the board consider the risk that value could be diverted from GO to support those assets?

• Was any assessment made of legal and regulatory risks of GO management, GO properties, and any connected parties? Were all outstanding legal matters, including the American Copper lawsuit, fully disclosed to H&R?

• Are there any meaningful differences between the asset values assumed in merger negotiations from the IFRS values reported as of 6/30/26?

H&R equity ownership is highly diluted.

Approval of of the deal must pass 3 voting tests:

If the Hofstedter Consortium holds 44mm units (16% of outstanding) then the first 2 are probably achievable. However the third test could be difficult since the vote will be limited to the Non-Hofstedter unitholders who are obviously getting the worst part of the deal. The deal consideration is currently valued at C$11.08 (0.5688 GO at $8.57 plus C$4.28). It’s not credible for HR to promote GO upside when it has destroyed so much unitholder value since IPO through dilutive equity issuances.

Alternative Path

In my opinion these steps would deliver an improved outcome for H&R unitholders:

• Close the Blackstone and Crestpoint Industrial sales. These are arms-length transactions at fair market prices. Proceeds should be distributed to H&R unitholders.

• Launch Lantower Residential as successor to H&R:

  • Emily Watson as CEO. Pass the mic, Tom...

  • Non-Core Assets to be segregated as a legacy segment in financial reporting.

  • Tom Hofstedter to retire as CEO, but remain as an employee or consultant to supervise the orderly liquidation of the non-core assets with all proceeds to be distributed to unitholders. Hofstedter’s compensation should be directly linked to the proceeds.

  • Appointment of a new independent non-executive Chairman. The GO deal shows that Hofstedter can no longer be trusted to protect the interests of public unitholders.

  • Replacement of most of the existing Board with new independent nominees appropriate to the US residential business. Unless the circular reveals super-positive aspects of the GO deal that were somehow not mentioned in the conference calls then Stephen Gross and the other Trustees who approved the deal need to go.

If Josh Gotlib is correct that the existing deal values Lantower at a 7% cap rate then I believe my plan would provide an immediate win for H&R investors. I’ll provide a detailed valuation commentary using the financial information from the Circular once it is released. My guess is that it will end up with a near-term value of $12 to 12.50 with upside over time as proceeds are returned from Non-Core asset sales and Sunbelt rental markets recover. This is not a recommendation to buy or a price target because H&R management is working towards a different outcome that the market correctly views more negatively.

Disclosures & Notes

At the time of publication the author held units of H&R REIT and no position in units of GO Residential. This disclosure should not be interpreted as a recommendation to make any transaction in any security. Investors are encouraged to check all of the key facts cited here from SEDAR filings and other sources prior to making any investment decisions. The author believes all information in the article is accurate as of the date of publication.

A copy of this article was sent to H&R REIT at the time of publication. If the company can identify any factual errors using information that was public at the time of release then corrections will be made as promptly as possible.

I believe this article serves the public interest so it has been published with no paywall. Please share with anybody who might be interested.

I Don’t Wanna GO

Equity markets are near all-time highs despite unresolved macro risks:

• Iran War and Strait of Hormuz closure. None of the US war aims have been achieved and none appear achievable with the strategy employed to this point. The economic crisis that many predicted in March has not developed, however supply interruptions raised prices for energy and any goods and services with high energy inputs. The World Bank’s latest forecast is for global real GDP growth to fall to 2.5% this year (vs 2.9% in 2025) while inflation rises to 4.0% (vs 3.3% in 2025). Stagflation has resulted in higher interest rates that should reduce the value of financial assets.

• AI Bubble. Capital is not scarce in anything connected to AI! I cannot believe that $1Tn/year of capex can be profitably invested, but the competition to spend the not scarce capital is driving demand for hardware, construction materials, electrical generation, and premium NY/SF office space. Equity bubbles over the past 10 years in blockchain, additive manufacturing, crypto, COVID healthcare etc... had much less impact on the real economy.

• Debt Bubble. 15 years ago S&P downgraded the US sovereign credit rating with total public debt outstanding of $15Tn. Now the debt is $40Tn, growing $2Tn/year, and nobody cares.

These factors have pushed the yield-to-maturity of the S&P Global Developed Aggregate Ex-Collateralized Bond Index from 3.65% at 12/31/25 to 4.15% on 8/7/26. US treasury 10-year yields have risen from 4.20% to 4.71%. Canadian 10-year yields have risen from 3.47% to 3.72%. Real estate assets with pricing power can pass along inflationary pressures to tenants through higher rents. On the other hand, most residential real estate is struggling - operating costs and interest expense are higher, but it’s been hard to raise rents.

Catalyst dependent investment ideas are more vulnerable to higher interest rates or bursting bubbles because the catalyst might end up with lower than expected benefits, or none at all. Well-managed real estate platforms without excessive debt may benefit from cyclical downturns by making accretive investments in properties, acquisitions, or their own equity at bargain valuations.

Sector Overview:

The yield premium of real estate cap rates over 10-year bond yields is under pressure due to the sharp qtd rise in bond yields.

Canadian yields are still at least 100bp lower than the US at every maturity. For real estate investors, Canadian property offers a positive return over financing cost, but US property buyers may get little or even negative return on leverage.

Insiders at 20 of 34 REIT/REOCs were buyers since 1/1/26 and 7 had net insider sales. REIT/REOCs have repurchased $460mm of equity since 1/1 (reported to 8/7) with the largest buybacks at Boardwalk (5.4% of market cap), Clarke (3.5%), Dream Industrial (2.4% of market cap), Killam (2.1%), and CAPREIT (1.1%).

Topics:

• Valuation Comparison ($)

• Quick Takes ($)

• Comments on Trade Ideas ($)

Read more

• Bull Case: Asset sales, refinancing of high cost debt, and an office sector recovery could provide a 3X return in 4 years.

• Bear Case: Weak asset quality, high cost debt, and an economic downturn lead to another liquidity crunch within 4 years.

“OPI is a national REIT focused on owning and leasing office properties to high credit quality tenants in markets throughout the United States. As of March 31, 2026, approximately 60% of OPI's revenues were from investment grade rated tenants.”

Topics:

• Company Profile

• Capital Structure & Basic Valuation

• Governance (Trustees and Share Ownership)

• Management Agreement

• Portfolio Insights ($)

• Valuation Perspectives ($)

• CBL Precedent ($)

Company Profile:

• 122 Office Properties, 17.1mm square feet

• 30 states (including DC) - percentages of 2025 rents:

  

• Mediocre portfolio

  • Mostly Class A/B Properties with single or majority tenant

  • 78% leased at 3/31/26

  • 26% of revenue from government tenants

  • WALT 6.4 years

OPI’s portfolio is mostly suburban buildings with low density (under 10 stories) and outdoor parking. It has almost no exposure to new highly amenitized buildings with excellent transit access in top markets.

Capital Structure & Basic Valuation

Bankruptcy eliminated $714mm of pre-petition debt, but all of the $1.7Bn of post-emergence debt bears higher interest rates and leaves minimal free cash flow.

Governance & Ownership

Major Shareholders:

Other significant noteholders who had the option to convert to equity included Exodus Point Capital and Cetus Capital. High yield fund managers with positions included Nuveen, and Mackenzie - they may be sellers of the new OPI equity if it no longer fits their mandates.

Trustees:

• Jonathan Heller (Helix Partners)

• Jonathan Kotlatch (retired from Redwood Capital)

• Irvin Schlussel (family office)

• William Lamkin (formerly Ackrell capital)

• Adam Portnoy (RMR)

Helix Partners is entitled to appoint up to 3 trustees (out of a maximum of 7) as long as it owns at least 15% of the voting stock. Redwood Capital is entitled to appoint up to 2 trustees as long as it owns at least 10% of the voting stock. These two investors are ultimately in control.

Management Agreement

• The notorious RMR Group was retained as the external Business Manager for a fixed annual fee of $14mm for 2 years with subsequent fees subject to negotiation.

• RMR entities have delivered poor long-term shareholder returns

• RMR received 2% of the new OPI equity and will be able to receive an incentive fee of up to an additional 8% if OPI achieves unspecified objectives (“satisfaction of certain financial criteria to be established by the Board”).

• The new OPI management agreement can be terminated after 2 years (in 2028) without any termination fee, not nearly as restrictive as standard RMR agreements (20-year rolling terms and severe termination penalties)

  

  For comparison the prior agreement (filed in 2015) had a rolling 20-year term and severe termination penalties.

  

RMR is heavily incentivized to generate value for OPI shareholders and will be terminated if it doesn’t.

Read more

Sector Overview:

The yield premium of real estate cap rates over 10-year bond yields is near the middle of its historical range. Broker reports show little change in cap rates for 2Q26 (CBRE and Colliers) but the market tone has improved with buyer demand for multifamily properties despite weak renter demand and broadening of the GTA Class A Office leasing recovery to secondary locations.

Yields for government bonds and real estate issuers have risen 15-20bp since quarter-end. Canadian bond yields are over 100bp lower than in the US at every maturity. For real estate investors, Canadian property offers a positive return over financing cost, but US property buyers may get little or even negative return on leverage.

Insiders at 20 of 35 REIT/REOCs were buyers since 1/1/26 and 7 had net insider sales. REIT/REOCs have repurchased $449mm of equity since 1/1 (reported to 7/27) with the largest buybacks at Boardwalk (5.2% of market cap), Clarke (3.5%), Dream Industrial (2.3% of market cap), Killam (1.7%), and CAPREIT (1.1%).

Topics:

• CMHC Mid-Year Outlook

• Valuation Comparison ($)

• Quick Takes ($) Brief comments on Choice, Morguard REIT, Morguard Corporation, Dream Unlimited, Granite, Plaza, and GO Residential

• Previously Previewed New Idea ($) Full article coming this week

• New New Idea Preview ($) A real estate liquidation

CMHC Outlook

The recently issued Summer Update: 2026 Housing Market Outlook forecasts gradual housing market improvement in 2027 and 2028. It incorporates last month’s 2026 Mid-Year Rental Market Update which predicted growth in renter household formation despite the slowdown in population growth. Improved affordability and return-to-office trends will encourage young people to move out of family and shared lodgings.

These tables show data for the 6 major Canadian markets, with Halifax added for relevance to Killam, and Regina+Saskatoon added for relevance to Dream Unlimited. Home prices are expected to be relatively strong in the affordable markets:

Apartment rents will continue growing nationwide with individual markets reflecting a mixture of affordability plus economic opportunity.

This forecast implies that the weakness in asking rents (e.g. Rentals.ca monthly rent report) reflects temporary factors and that Canadian multifamily REITs are attractively valued with a gradually improving outlook.

Read more

Rithm Pooperty (RPT) shares are -18% since announcing a heavily dilutive $300mm equity offering and -62% since announcing in 2024 that Rithm Capital (RITM) would become its external manager.

Key aspects of the financing (prospectus):

• Approximately 48% dilutive to Book Value per share

• Rithm Capital will invest up to $200mm through a combination of common shares (up to the maximum 20% of voting power permitted under NYSE regs) and non-voting convertible preferred that are substantially equivalent to common shares.

• Existing holders other than Rithm Capital will suffer a loss of $96mm from dilution of their current interest in RPT’s book value. A holder could mitigate the impact by purchasing shares in the offering. If RITM purchases $200mm of new equity then it could gain $55mm in attributable book value.

• Proceeds will be used to acquire a $1Bn portfolio of multifamily transition loans (construction, bridge, and renovation) from Rithm Capital’s Genesis division. The portfolio has an estimated levered yield of 13.4%.

The Genesis portfolio might be attractive, however it could never deliver enough gains to offset the huge upfront loss in value from the offering. On the other hand, the deal looks extremely attractive for Rithm Capital which will grow the fee paying AUM of RPT, have a captive vehicle to hold its Genesis loan production, and profit from the dilution of public RPT holders. Unfortunately, there will be reputational damage as I expect for many years investors will point to this offering as an instance where RITM put its own interests ahead of those of its clients (the shareholders of RPT)

Shame on the purportedly independent directors of RPT for approving this equity issuance. Rithm Capital has delivered an excellent long-term return to its own shareholders, but this is a bad deal for RPT. It should be abandoned, but that probably will not happen.

Meet The Bagmakers

RPT’s three independent directors are bagmakers, not bagholders. The recent annual meeting signaled a high level of opposition, however the 4 nominees receiving the most votes serve on the board regardless of the number of votes against them.

The directors receive generous annual cash compensation:

They hold little or no RPT stock and all reported shares were received as compensation rather than purchased in the market.

Share price performance during their terms of service has been terrible:

• Paul Friedman joined the Board of RPT predecessor Great Ajax in July 2016 with the share price at $83.28 (pre-consolidation). RPT claims that he brings an “extensive amount of operational and risk management experience to the Board, as well as a deep knowledge of the financial services industry.” He is also on the board of Oppenheimer Holdings.

  

• Mary Haggerty joined the Board of RPT predecessor Great Ajax in March 2021 with the share price at $70.80 (pre-consolidation). RPT claims that her “background in investment banking paired with her experience in various director roles provide her with the expertise to serve as a director.”

  

• Daniel Hoffman joined the RPT board in June 2024 with the share price at $19.68. RPT claims that his “over 25 years of experience in the mortgage securities market and his broad-based investment banking experience qualify him to serve as a director.” He also serves as CEO of The Monday Group family office (“Compounding intelligence - Amplifying curiosity”).

  

In my opinion, the offering demonstrates that Paul Friedman, Mary Haggerty , and Daniel Hoffman cannot be trusted as financial fiduciaries. Either they don’t understand the cost of the transaction to RPT shareholders, or they don’t care.

Disclosures & Notes

At the time of publication the author held shares of Rithm Capital and Rithm Property Trust. This disclosure should not be interpreted as a recommendation to purchase either security. These holdings vary in size and may change at any time. Investors are encouraged to check all of the key facts cited here from SEC filings, company disclosures, and other sources prior to making any investment decisions. The author believes all information in the article is accurate as of the date of publication.

This article is published free in its entirety because it may be of public interest.

• Transformation into a platform for third party capital investments through blue chip partnerships (Silverlake, CPP, and Oaktree)

• Strong market share in core residential mortgage products (Jumbo residential mortgages, Alt-A, and Business Purpose Lending)

• BVPS $7.12 as of 3/31/26 (est $6.98 for 2Q26)

• 2026 Analyst Consensus Earnings Available for Distribution $1.03/share

Topics:

• Index Deletion - the near-term opportunity

• Segments - background on RWT’s business

• Partnerships

• Balance Sheet Risk - high headline leverage

• Distributions - tax advantaged 16% yield

• Governance

Breaking: RWT estimated a 1-3% decline in 2Q26 BVPS (LINK). This does not change the thesis of this article.

Index Deletion

S&P announced on July 2 that RWT would be removed from the S&P600 on July 8. Approximately $135Bn is directly indexed to the S&P600 and at a 0.03% weighting, that means approximately 8mm shares of RWT. Volume in the past week has probably been sufficient to clear this.

No peer has the same business mix as RWT, but share prices of every company that competes with part of RWT’s business are flat or up in the past month.

RWT’s exchange traded bonds and preferred shares are all up slightly over the past month, showing no sign of company specific problems.

Segments

Redwood purchases loans from banks and other originators then securitizes them or sells in bulk. In 1Q26 it saw record production volume of $8.5Bn and issued 11 securitizations despite relatively weak housing market conditions. Financial performance is detailed in the quarterly supplement.

Sequoia - Prime Jumbo Loans. RWT has been in this business for 30 years, has approximately a 7% market share, and estimates that it works with loan sellers and banks responsible for 45% of all originations. Loans underlying $21Bn of Sequoia securitizations have an average FICO of 772 and 0.2% 90+ delinquency. At 3/31/26 RWT had $230mm of capital invested in Sequoia retained interests and $500mm of working capital invested in current loan production.

Corevest - Investor Loans. RWT formed this segment in 2019 with the acquisition of Colony American Finance. It makes Residential Transition Loans and DSCR-based loans for stabilized properties. Loans underlying $1.9Bn of Corevest securitizations have an average 9.8% 90+ delinquency. At 3/31/26 RWT had $92mm of capital invested in Corevest retained interests and $174mm of working capital invested in current loan production.

Aspire - Non QM loans (Alt-A). In 2025 RWT began leveraging its Sequoia seller relationships to develop an “expanded-prime” platform supporting loans based on wealth or self-employment income. Loans have an average FICO of 754 and 70% LTV. At 3/31/26 RWT had $200mm invested in working capital to support Aspire current loan production.

Investments - Retained Interests. RWT retains equity interests in securitizations. It also holds third-party originated MSRs. Results from this segment include fair value changes that are the primary difference between RWT’s GAAP income and non-GAAP “Earnings Available for Distribution”.

Legacy. In 2025 RWT began segregating assets not aligned with its high volume core business. These included multifamily, home equity, and re-performing loans. Low turnover, higher credit losses, and negative carry made these a drag on earnings. At 3/31/26 RWT had $242mm of capital invested in legacy assets (-54% yoy). As these are wound down, the funds are being re-allocated to the higher ROE core businesses.

The high ROE from the mortgage banking business (60% for Sequoia in 1Q26 😲), strong market presence including relationships with loan sellers and securities investors, and blue-chip capital partnerships make RWT fundamentally different from a traditional mortgage REIT that simply owns a highly leveraged investment portfolio. Focus on its core business lines and successful reallocation of capital from legacy assets could justify a valuation at a premium to book value ($7.12/share)

Partnerships

RWT has transformed its business in recent years through creation of joint ventures to invest in the assets created under the Redwood platform. These partnerships enable RWT to increase volume-based earnings by expanding the scale of its business while also earning management and incentive fees (terms are not disclosed)

• 2023 Oaktree - In June 2023 RWT formed a $1Bn venture with Oaktree for investment in Corevest business purpose loans (LINK)

• 2024 Canada Pension Plan - In March 2024 RWT formed a $4Bn venture to invest in Corevest loans. CPP contributed $400mm of equity and a $250mm secured credit line. (LINK)

• 2026 Castlelake - In April 2026 RWT formed an $8Bn venture to invest in Sequoia prime jumbo loans. (LINK)

It’s very likely that RWT will introduce a capital partner for the Aspire (non-QM) business.

Balance Sheet Risk

RWT’s balance sheet is complex with $890mm of common equity supporting $26,816mm of total assets. However $22,076mm of the assets are in consolidated securitization trusts with permanent non-recourse financing. A majority of the remaining assets are current loan production financed with warehouse lines until securitization. RWT also has $777mm of unsecured long-term corporate debt (including several exchange traded bond issues).

RWT has transformed its liability structure since 2020 when it faced severe pressure from excessive reliance on margin debt. At 12/31/19 RWT had $1,177mm of repo financing for its retained securities. Deleveraging and mark-to-market changes resulted in a $582mm ($5.12/share) loss for 2020. At 3/31/26 RWT had only $104mm of marginable financing for its retained securities so it will be more resilient if a crisis emerges.

Distributions

RWT is a Mortgage REIT with a current quarterly dividend of $0.18/share that is covered by non-GAAP Earnings Available for Distribution ($0.21/share in 1Q26). The current yield of 16% suggests a high risk level, but is largely due to the share price discount. The distribution is about 10% of book value, well below the ROE of each core segment. The payout ratio is declining due to a favorable earnings trend from strong mortgage banking volume, capital from new partnerships, and recycling of capital from legacy assets. There is no risk of a distribution cut in the near-term and the dividend returns a portion of the full NAV that we can currently buy in the market at a large discount.

The 2020 losses created loss carryforwards that have shielded a portion of the tax liability on current distributions. 59% of 2025 dividends and 50% of 2024 dividends were non-taxable return of capital.

Governance

• RWT has over a 30-year history as a public company

• Insider ownership is low and over 50% in the form of incentive Deferred Stock Units rather than common shares.

  

• Institutional Ownership is dominated by passive and traditional value/income investors

  

• Blue chip partnerships are a validation of the quality of management and internal controls

Disclosures and Notes:

At the time of publication the author held shares of Redwood Trust. This disclosure should not be interpreted as a recommendation to purchase this security and this holding may change at any time. Investors are encouraged to check all of the key facts cited here from SEC filings, company disclosures, and other sources prior to making any investment decisions. The author believes all information in the article is accurate as of the date of publication.

This article is published free in its entirety because it does not contain a lot of original work.

Sector Overview:

The yield premium of real estate cap rates over 10-year bond yields is near the middle of its historical range.

Canadian bond yields are over 100bp lower than in the US at every maturity.

Insiders at 21 of 36 REIT/REOCs were buyers since 1/1/26 and 7 had net insider sales. REIT/REOCs have repurchased $375mm of equity since 1/1 (reported to 6/30) with the largest buybacks at Boardwalk (3.9% of market cap), Clarke (3.7%), Dream Industrial (2.4% of market cap), and Dream Unlimited (1.0%).

Topics:

• Valuation Comparison ($)

• Quick Takes ($)

• New Idea Preview ($)

Read more

Since Armoyan became CEO of Clarke Inc in April 2003, investors have enjoyed an IRR of approximately 15% assuming reinvestment of dividends (Clarke calculates an IRR of 11.7% excluding reinvestment). Shareholders’ Equity is +320% and shares outstanding are -51%. The return would be even higher if credit were given for appreciation of Terravest shares since they were distributed to CKI holders in March 2020. Armoyan’s stake has risen from 26% in 2003 to 73% as a result of open market purchases, plus reduction of the public float through NCIB and SIBs.

Armoyan’s willingness to issue CKI shares for the first time in 23 years suggests he must believe strongly in the value that will be realized over time through the Ravelin acquisition.

Topics:

• Armoyan’s involvement with Ravelin

• Clarke’s History of Value Creation

• Armco and G2S2

• Ravelin’s History of Value Destruction

• Pro-Forma Financials

• Summary Of Investment Opinion ($)

• Clarke Business Profile Post-Merger ($)

• Clarke Valuation ($)

Armoyan’s Involvement With Ravelin

Armoyan first reported ownership of 10.1% of Ravelin (f/k/a Slate Office) in May 2022. Based on market prices at that time over $4.50, the position must have cost over $36mm. Subsequently:

• Over the next year he purchased an additional 6.5mm units at a cost of approximately $20mm. He liquidated his entire holding in December 2025 for less than $5mm.

• In February 2023 a settlement agreement added Armoyan and a chosen nominee to the Slate Office board.

• In November 2024 Armoyan became board Chairman and the management agreement with Slate was terminated. The REIT was renamed Ravelin Properties.

• In 2025 Armoyan, through G2S2, acquired C$724mm of defaulted Ravelin debt and provided a brief period of forbearance during which the REIT could develop a restructuring plan.

• In March 2026 Ravelin announced an agreement to be acquired by Clarke and the transaction closed in May. Each Ravelin common unit was exchanged for 0.000582 shares of CKI (value about C$0.015/unit) and Ravelin convertible debentures were exchanged for Clarke shares worth approximately 36% of principal.

The discounted exchange value of $158mm of debentures is responsible for the estimated $94mm bargain purchase gain that Clarke will record from the merger.

Clarke’s History Of Value Creation

Milestones:

• 1921 Clarke Steamship Company founded. By 2000 it was a “transportation and logistics solutions company”.

• 2002 Armoyan (through Geosam) acquired a stake of 20% in Clarke Inc and took over as CEO in February 2003.

• By 2006 CKI described itself as an “activist catalyst investor”. Significant transactions:

  • 2003 Concord Transportation sold to ATS and equity was monetized in 2005

  • 2004 Logistics division sold to PBB Global

  • 2004 Acquired 50% interest in 8 warehouses

  • 2006 Financial statements began to include an “Investment” segment. The segment reported gains in 2006 and 2007 and then a very large loss in 2008. Fortunately, it had no long-term debt due until 2012. BVPS did not recover to its 2007 peak until 2013. Individual investments mentioned over time include Versacold, Advanced Fiber Technologies, “Energy Basket”, Avenex, Bonnett’s Energy, Royal Host, Supremex, Vitran, Highkelly Energy, Imvescor Restaurant, Sherritt, Keck Seng, and Trican.

  • 2008 acquired Home Heating Business

  • 2014 Sold remaining Transportation business

  • 2014 Acquired 35% of Holloway Lodging

  • 2016 Raised stake in Terravest to 31%. The shares were distributed to CKI shareholders in March 2020 when their value during COVID stress was $58mm

  • 2019 Acquired remaining shares of Holloway in September 2019 - unfortunate timing just before COVID

  • 2019 Acquired 3 vacant Houston office buildings far below their replacement cost. They were sold in 2023-24 farther below their replacement cost.

  • 2021 Began building a residential tower in Ottawa.

• 2023 CKI began describing itself as an “Investment and Real Estate Company”.

• 2025 CKI described itself as a “Real Estate Company with holdings across real estate sectors – primarily residential, furnished suites and hospitality”. The latest:

  

The broad investment themes were distressed income trusts in the 2000s, distressed energy in the 2010s, and perhaps distressed real estate in the 2020s.

Armco and G2S2

George Armoyan has a history of additional real estate investments through his private entities:

• Armco Capital became the largest residential land development company in Halifax in the 1980-90s through countercyclical acquisitions of landbank followed by entitlement, servicing, and sale to builders (similar to the Western Canada land businesses of Melcor and Dream). In the past few years it has made large acquisitions of Calgary office properties (First Canadian Centre, Bow Valley Square and others).

• G2S2 primarily makes public equity investments. It acquired over 10% of Cominar REIT in 2020 and sold at a $100mm profit to the Artis consortium in 2022. Armoyan was lucky because Artis overpaid and ultimately lost its entire investment in the buyout. G2S2 has invested over $100mm in Morguard Corporation and $50mm in Morguard REIT. And G2S2 spent over $50mm acquiring 18% of Ravelin/Slate Office - nearly all lost. Outside of real estate, G2S2 has held stakes in Calfrac, Western Energy Services, Tourmaline Oil, Nixon Energy, and Knight Therapeutics.

Ravelin’s History of Value Destruction

Ravelin operated until 2024 as Slate Office REIT (SOT.UN) under external control by Slate Asset Management. The REIT focused on “workplace real estate” in suburban and secondary markets. Higher-yielding non-prime properties, high leverage, and high payout ratio supported a high distribution rate that attracted investors to 4 secondary offerings, ATM issuance, and 2 convertible bond sales. Proceeds financed growth in assets from $271mm at 12/31/14 to $1,869mm at 12/31/22. External asset management fees grew from $0.7mm in 2013 to $5.8mm in 2022.. Armoyan estimated that including fees for property management and transactions, Slate Asset Management earned over $132mm from Slate Office. Book Value per unit dropped from $11.05 at 12/31/13 to ($0.36) at 03/31/26.

The Slate legacy is a portfolio with no great assets. Armoyan’s business grew out of Atlantic Canada so he undoubtedly knows the region well, but even there, Slate focused on smaller markets of Fredericton, Moncton, and St Johns. In 2021 Slate acquired an Irish REIT (Yew Grove) at an valuation of C$255mm, calling it a "transformational jumping-off point" for further expansion in Europe. Armoyan strongly criticized the acquisition as dilutive to Slate’s reported NAV of $8.71. George seems to have put too much faith in the baggy “NAV discount” thesis.

Clarke Pro-Forma Financials

Ravelin’s circular for its acquisition by Clarke included pro-forma financial statements as of 12/31/25. Key points:

• The combined entity is very highly leveraged (debt/assets = 69%). Approximately $724mm of debt acquired through Ravelin is owed to G2S2.

• Cash Flow (net income + depreciation + planning and transaction costs) would have been $39mm for the combined entities.

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Sector Overview

The yield premium of real estate cap rates over 10-year bond yields is near the middle of its historical range.

Most of the Canadian yield curve has moved 15-20bp lower in recent weeks. Rates are over 100bp lower than in the US at every maturity.

Insiders at 20 of 36 REIT/REOCs were buyers since 1/1/26 and 7 had net insider sales. REIT/REOCs have repurchased $361mm of equity since 1/1 (reported to 6/12) with the largest buybacks at Boardwalk (3.9% of market cap), Dream Industrial (2.4% of market cap), Dream Unlimited (1.0%), CAPREIT (0.9%), and Killam (0.8%).

Topics:

• Valuation Comparison ($)

• Quick Takes ($) H&R deal speculation, Canadian multifamily, Canadian Retail, and Dream group annual meetings

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• Hot sector experiencing rapid growth

• Blue chip customer relationships

• CEO’s privatization offer is fully funded with strong financial and strategic partner backing

Complexities:

• Limited liquidity - turnover of $20k/day

• Pink Sheets listing not tradeable through some brokers

• Company is losing money

• High downside (possibly >75%) if the deal fails to close

Due to the limited liquidity and high downside risk I am not putting the issuer name in the preview. I don’t think anybody should buy this without being comfortable with the full story.

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Real estate fundamentals have been favorable with strong demand, limited supply, and improved credit availability in most segments. But it’s hard to assess valuation with an uncertain macro outlook:

• Iran conflict is severely impacting global supplies of critical commodities (oil, LNG, refined products, fertilizer, aluminum, helium, sulphur and more). Resolution of the conflict is extremely important and also extremely difficult to predict.

• Trade tension may return to the headlines in coming months. Conflict and drama are essential aspects of Trump’s personality and politics. This summer’s mandatory review of the USMCA trade agreement will not pass without bluster and confrontation.

• Interest rates in Canada, the US, and globally have risen due to the inflationary implications of Iran war disruptions. Interest sensitive assets such as real estate suffer.

As an exporter of energy and food, Canada benefits in some ways from high prices resulting from Strait of Hormuz closure. The war has also made the US more dependent on imports of Canadian aluminum in spite of tariffs.

Topics

• Sector Overview

• Valuation Comparison ($)

• Office ($) Comments on Allied, Dream Office, and True North.

• Industrial ($) Comparison of 1Q26 SPNOI growth among North American REITs. Comments on Dream Industrial and Nexus.

• Residential ($) Comparison of 1Q26 SPNOI growth among North American REITs. Comments on Morguard Residential, CAPREIT, Killam, and Mainstreet.

• Retail ($) Comments on Primaris and Smartcentres.

• Diversified ($) Comments and H&R and Morguard REIT.

• REOCs ($) Comments on Dream Unlimited.

• Other ($) Comments on Dream Impact and RFA.

Sector Overview

The yield premium of real estate cap rates over 10-year bond yields is near the middle of its historical range.

The Canadian yield curve has moved higher in recent weeks, but rates are over 100bp lower than in the US at every maturity.

Canadian yields have been less impacted by the Iran war:

Insiders at 21 of 36 REIT/REOCs were buyers since 1/1/26 and 7 had net insider sales. REIT/REOCs have repurchased $309mm of equity since 1/1 (reported to 5/22) with the largest buybacks at Boardwalk (3.0% of market cap), Dream Industrial (2.4% of market cap), Dream Unlimited (1.0%), Riocan (0.7%), and CAPREIT (0.7%).

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Cresud’s financial reporting reflects variable weather conditions, commodity prices, and land sales that can obscure the company’s multi-year value creation. If the share price responds negatively to comments about the near-term outlook in the 5/7 earnings release and 5/8 conference call then it would be a great opportunity for long-term investors.

Topics:

• Iran War impacts - fertilizer prices soaring and inventories critically low

• Argentina Economy and Milei Impact - strong rebound

• Argentina’s Economic And Political Cycles

• Cresud Corporate Structure and Governance - Insiders own 42.5% of Cresud and Cresud owns 51.6% of IRSA

• Cresud Dividends - substantial, but variable payments

• Cresud Farm Business ($) Value creation through cyclical landbanking, land upgrading, land sales, and farm operations

• Cresud Commercial Real Estate ($) Value creation through ownership and development

• Cresud Valuation ($) +90% increase in NAV per share over the past 5 years

• Cresud Risks & Catalysts ($)

The Iran War

Argentina is a exporter of many commodities (metals, energy, grains, lithium and more) so it could be a long-term beneficiary of Middle East insecurity, but the near-term impact is mostly negative.

Development of the Vaca Muerta shale oil field over the past 5 year has made Argentina a significant oil exporter. In contrast to past cycles, the country is now self-sufficient in oil, natural gas, refined products (diesel, gasoline, jet fuel). Significant hard currency export revenues support the balance of payments and international reserve position.

However other sectors are dependent on imports affected by the Strait of Homuz closure:

• Argentina imports 65% of its fertilizer, and nitrogen is sourced primarily from the Middle East. Urea prices jumped 54% in March and retail prices in some areas rose even more. Inventories are critically low right ahead of the Southern Hemisphere summer planting season. Farmers are responding by shifting acreage from corn to soybeans and sunflower (less nitrogen intensive), and limiting fertilizer to their most productive land. While corn and soybean prices are higher, increased shipping costs have pressured ex-farm prices. Producers like Cresud may report increased top line revenues, but margins will be the smallest in years. Agriculture and related services account for about 23% of the national economy.

• Fuel prices may add 1% to annual inflation even though state-controlled YPF has cushioned part of the retail impact.

• The ARS exchange rate has a controlled depreciation based on the inflation rate - higher inflation will result in currency depreciation.

Argentina Economy and Milei Impact

Shock therapy has been incredibly successful.

Stabilization of the exchange rate and protections for foreign investments (RIGI) that guarantee 30-year tax and legal stability have resulted in a surge of foreign investment in mining and infrastructure (pipelines, ports, and data centers). The RIGI was structured with layers of protection that could not quickly be unwound by a new government (“Acquired Rights” after 40% of capital has been committed, international arbitration, international treaty commitment, and provincial commitments mirroring RIGI). Annual foreign capital investment in Argentina has increased from about $11Bn in 2020-2022 to about $30Bn forecast for 2026.

The farm sector environment has significantly improved:

• Export taxes have been reduced by about 1/3

  

• Export sales revenues converted at the official exchange rate now receive close to fair value in pesos.

Milei opponents argue that the standard of living for ordinary people has suffered as reduced pensions and removal of subsidies for energy and utilities has squeezed affordability of food, housing etc.. The next national election is not until October 2027, but Milei’s reforms will be more sustainable if they are codified through legislation passed this year.

Argentina’s Economic And Political Cycles

Cresud’s 2024 Roadshow nicely documented Argentina’s cyclical history. The country enjoyed strong growth, stable currency, and a primary fiscal surplus during the 1990s and then during the 2003-2007 commodity boom.

Cresud’s share price has shown similar volatility.

Ironically, the sharp share price decline from 2017-2019 resulted from failed attempts to diversify the business outside of Latin America.

• IRSA suffered cumulative losses of over US$850mm on investments in highly leveraged Israeli conglomerates IDB Development and Discount Investment Corporation. They ultimately went bankrupt in 2000 under COVID stress.

• IRSA lost over US$40mm on its investment through a consortium that purchased the “Lipstick Building” in Manhattan in 2008 and then surrendered it to the ground lessor in 2020.

• IRSA lost approximately US$19mm through an investment in Condor Hospitality (originally Super-tel) that began in 2012 and ended when Condor was acquired by Blackstone in 2021.

If Cresud and IRSA had limited themselves to their core business in Argentina then they would have recorded impressive value creation despite the difficult macro environment from 2012-2022.

Corporate Structure and Governance

Cresud is Argentina’s leading real estate company with the largest farm acreage, largest commercial property GLA, and stakes in complimentary service companies.

Eduardo Elzstain has held a controlling stake and been Cresud Chairman since 1994. His brother Alejandro is CEO. The Board of Directors includes Eduardo Elsztain’s wife, cousin, and two sons. Outside influence is limited.

Alejandro Elsztain recently purchased 17,833 ADS. It only increased his holding by 1.5% so perhaps he wanted to send a signal of confidence in the company amid market uncertainty.

Eduardo Elsztain has investments outside of Cresud/IRSA, including several in Argentina’s mining sector (Austral Gold and Argenta Silver), but I am not aware of any that compete with Cresud or create any potential conflict of interest.

In my opinion, Cresud has treated public shareholders conscientiously. Shareholder communications are excellent with quarterly earnings calls, informative presentations, and occasional investor roadshows. I enjoyed a helpful conversation with Alejandro Elsztain in New York in 2024.

Most importantly, Cresud pays meaningful dividends that deliver a portion of the value it creates each year.

Dividend History

Due to capital controls, Cresud has been paying dividends to ADS holders using a mixture of cash and IRSA ADS.

The irregular timing and mixed consideration results in some information services not correctly recognizing them. Full details are on the Cresud news page.

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Real estate fundamentals have been favorable with strong demand, limited supply, and improved credit availability in most segments. But it’s hard to assess valuation and outlook with an uncertain macro outlook:

• Iran conflict is severely impacting global supplies of critical commodities (oil, LNG, refined products, fertilizer, aluminum, helium, sulphur and more). Arjun Murti says extended closure of the Strait of Hormuz could have an economic impact worse than the 2008 financial crisis and a humanitarian impact worse than COVID. Bad! I think it’s politically impossible for Trump to resume an aggressive bombing campaign or to seize Iranian territory with ground forces, but the diplomatic path to peace is unclear.

• Trade conflict may return to the headlines in coming months. Most Canadian exports to the US are not subject to tariffs as a result of the CUSMA agreement signed with the Trump administration in 2020. Each party has an option to decline renewal of the agreement in July 2026, however that only leads to a mandatory annual review process to try to resolve differences. Even in the absence of resolution, the agreement would not end until 2036. Each party also has the option to withdraw completely from the agreement with six month’s notice. The Canadian government is approaching this summer’s deadline as a “checkpoint, not a cliff”. Trump is unlikely to reciprocate in that orderly approach and may try to create a crisis.

As an exporter of energy and food, Canada benefits in some ways from high prices resulting from Strait of Hormuz closure. The war has also made the US more dependent on imports of Canadian aluminum in spite of tariffs.

Topics

• Sector Overview

• Valuation Comparison ($)

• M&A Perspective ($) Thoughts following the First Capital takeover.

• Office ($) Strong leasing and weak unit/share prices. Comments on Allied and Dream Office.

• Industrial ($) Comments on Dream Industrial and Nexus

• Residential ($) Is this the bottom for Toronto multifamily? Comparison of 2025 SPNOI growth among North American REITs. Comments on Morguard Residential and GO.

• Retail ($) Comparison of 2025 SPNOI growth among Canadian REITs. Comments on Primaris.

• Diversified ($) Comments and H&R and Morguard REIT.

• REOCs ($) Comments on Dream Unlimited and Melcor Developments.

• Other ($) Comments on Dream Impact and Ravelin.

• Trade Ideas Notes ($)

Sector Overview

The yield premium of real estate cap rates over 10-year bond yields is near the middle of its historical range. Rates are close to unchanged since 3/31, but credit spreads for REIT debentures have narrowed a bit.

Most of the Canadian yield curve has moved higher over the past year due to expectations for improved growth and higher inflation. That environment would benefit more economically sensitive properties such as Industrial and Retail. Higher rates are a challenge for low yielding Multifamily assets.

Insiders at 20 of 38 REIT/REOCs were buyers since 1/1/26 and 7 had net insider sales. REIT/REOCs have repurchased $264mm of equity since 1/1 (reported to 4/24) with the largest buybacks at Dream Industrial (2.4% of market cap), Boardwalk (1.9%), Dream Unlimited (0.9%), and Riocan (0.8%).

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My February commentary on Dream Unlimited (TSX:DRM) examined its corporate structure, governance, and history of value creation.

This article will examine its most valuable segment, the Western Canada land development business which provides a strong foundation of asset value and cash flow:

• Dream estimates that its Western Canada Development segment has an asset value of $856mm ($21.14/share). My DCF analysis arrives at a significantly higher intrinsic value.

• Management estimates these lands will generate an average annual cash flow of $75mm ($1.85/share) for the next 10+ years. Review of home prices, lot prices, and servicing costs in each market provides confidence that number is reasonable and may be exceeded.

Volatility of short-term development earnings may create a misleading impression of Dream’s risk. Land is not a perishable asset. A 30+ year inventory will be held through multiple real estate cycles. Lots and acres with zoning approval and servicing plans that are not sold during a weak period such as 2015-2020 will end up selling at higher prices in the next upcycle, like now.

Topics

• Regina:

  • Population is expected to grow 1.5% per year

  • Coopertown is expected to accommodate a majority of this growth for the next 20 years

  • Real Estate Market is healthy. Housing is affordable, inventory is low, and rents are rising.

• Saskatoon:

  • Population is expected to grow 1.8% per year

  • Brighton is a highly successful development nearing completion

  • Holmwood is expected to accommodate about 50% of greenfield housing construction in the next 20+ years. Its multiple phases include large valuable commercial and mixed use areas.

  • Real Estate Market is healthy. Housing is affordable, inventory is low, and rents are rising.

• Calgary:

  • Population is expect to grow at least 1.4% per year

  • Alpine Park (part of the large Providence Area Plan) has strong appeal due to its location

  • Real Estate Market is digesting a surge of population and housing supply in recent years

• Landbank Valuation and Cash Flow

In a later article I will examine Dream’s GTA and National Capital Region developments that share many characteristics with its Western Canada planned communities. Their large scale enables Dream to create desirable mixed-use neighborhoods with distinctive design, parks, civic facilities, and curated retail.

All of the value documented in this article was also in place a year ago and DRM shares had a 2025 total return of -10%. DRM shares are suitable for investors with patience to hold for a multi-year horizon over which they will benefit from the land development cash flow through increased NAV, dividends, and share repurchases.

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Investors should be prepared psychologically and financially for the possibility that equities could fall much further if exports through the Strait of Hormuz remain blocked. Hopefully diplomacy will avert a worst-case outcome. The greatest risks in the real estate sector are for companies with weaker balance sheets and those where investors are expecting a beneficial corporate action like major asset sales or M&A. Deals will slow sharply until the macro uncertainty is resolved.

This article updates valuations using 3/27 prices and updates financials for issuers that filed in the past week. There’s no change to trade ideas mentioned a week ago and there have been no major changes at those companies.

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Brandywine’s February call commented on the performance of its Philadelphia assets:

No other office REITs own any Philadelphia buildings so the market may not be well understood by equity investors. The city is at the center of the country’s 9th largest MSA and 20% of the US population lives within 300 miles. Frequent intercity rail service connects to New York City in 70 minutes, Baltimore in 75 minutes, and DC in 110 minutes. Medical research benefits from the regional concentration of 80 degree granting institutions. Children’s Hospital of Philadelphia (CHOP) is the second most highly ranked medical institution in America (US News) and two University of Pennsylvania researchers received a Nobel Prize in Medicine in 2023.

Yardi Matrix compiled data showing that Philadelphia was one of the strongest US markets in 2025 for growth in “Office-Using Employment”:

Seeing Brandywine’s properties gave me confidence that they are well-positioned to continue outperforming within this market and that the REIT deserves a higher market valuation once its balance sheet risk has been addressed.

Topics:

• Financial Profile - Updating my prior analysis for year-end results and commentary

• CBD West Properties

• University City Properties

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Risks related to the Iran War remain high. Equities have not fallen nearly enough to reflect the impact of the oil supply and price shock that would result from extended closure of the Strait of Hormuz. As an example of indicator that would signal extreme panic, investors almost always enjoy a positive 1-year return when buying the S&P500 at 20% or more below its 200dma. On 3/20 the index closed only 1.7% below its 200dma. Investors should be prepared psychologically and financially for the possibility that equities could fall much further.

Hopefully diplomacy will avert a worst-case outcome. The greatest risks in the real estate sector are for companies with weaker balance sheets and those where investors are expecting a beneficial corporate action like major asset sales or M&A. Deals will slow sharply until the macro uncertainty is resolved.

This article updates valuations using 3/20 prices and updates financials for issuers that filed in the past week. Then a brief review of all previously mentioned trade ideas in the context of current market risks.

Topics

• Valuation Comparison ($)

• Canadian Real Estate Trade Ideas ($) D.UN, DIR.UN, DRM, HR.UN, KMP.UN

• Other Trade Ideas ($) AAV, BDN. CSIQ, CSI (497), ELME, NOAH, PFX, STHO

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