In my opinion, GO's entire modus operandi was to de-risk their core Manhattan properties which they bought with their own private capital. I avoided it until it was around $10, got in and got out (oddly to buy H&R!). I was surprised to see Cohen and Steers take so much down as they specialize in the space and are from New York City (like GO's original properties...) Then you have Vision Capital from Canada who also has a huge position. Andrew Moffs & Jeffrey Olin have been loving it all year and made it routinely a top holding/pick.
Fidelity Funds are also bright people, from the US, and bought in. So you do have bright people who bought into the GO IPO at $15 thinking it was cheap.
The stock is now at 6.9% implied cap if incorporating the Lantower portfolio or 6.5% otherwise according to RBC this morning. Tough to argue it is not cheap, today or with Lantower. I have found private market comparables in the past months in Manhattan / New York which seem to demonstrate GO is cheap. Today's price is less then what the Blackspruce paid in 2022 when vacancy rate in Manhattan was significantly higher.
Like you said, I think the smart thing to do is prove out the NAV by selling one of their original buildings. Perhaps they will do this when the deal closes. They aluded to 'capital recycling' on the Q4 conference call based on recent private market comps.
In the end, i suspect they plan to become a US REIT and sell it all within the next few years at a much better price. In the meantime, they have successfully used Canadian markets to de-risk their original 5 port highly correlated portfolio in Manhattan.
Question I have is what can go wrong to lose money here at current valuation??? You didn't mention it but insiders including Teo have upped over $50 million since IPO at higher prices. Not something you usually see in names without value.
Overall I may have voted for a deal like this if it was more transparent and fair, preferably by returning the other part of the portfolio in cash rather then doing a shady deal with the Hofstedter family. I think the premis for the merger is very realistic, to see a multiple re-rate, given the size, scale, high distribution, low multiple of the potential "GO" entity proforma.
Also if HOfstedter would have taken the GO units it would have corroborated his views on the opportunity, but he is cashing out. I agree with him, several of those properties are tough to sell, likely illiquid, but it seems as you point out he was marking them down perhaps with dirty ambitions. We know Front St in Toronto is a good office & Gowanus he told us had a buyer on the last call. Halifax is a good market and all leases are to the government.
Josh Gotlib tenants know there is never just one cockroach. I think GO unitholders will find the same thing if they keep digging. Everybody has seen my piece and I hope it triggers some conversations that lead to a more favorable outcome for HR investors.
The tenant thing is not my concern. You can see the same type of legal issues with Dream Unlimited and angry tenants rioting against Cooper, which I believe you are a fan of. I don't have the profile of Gotlib enough to be confident. The way they behaved since IPO only proves what I thought: they wanted to de-risk their own investment by raising capital and paying debt with IPO proceeds. They have largely accomplished that. Leverage was also an issue and it is no longer nearly as big as an issue. So I ask myself what can go wrong from here for new investors? It is a big position for me so I have to decide. I like the 'skin in the game' of GO and the fact they bought tons in the past year including 2026. I feel not smart selling a REIT like this going in with a 7% cap. If Hofstedter's plan was to avoid taxes on Lantower, why can't GO spin out Lantower or Manhattan when the smoke clears? I will look to see if their team adds units in the coming week(s) assuming they are not under some type of blackout.
Thank you very much Koneko for everything you have done to bring attention to GO Residential. Very unfortunate that unitholders couldn't have been given an all-cash offer or that H&R couldn't have continued disposing assets as they had been previously doing while unitholders received their monthly distributions. I'm not sure why anyone unhappy with the performance of H&R Reit would want their H&R units converted to GO which really seems like 'more of the same' if not worse Management (!). I'm admittedly a tourist in this area so maybe I'm wrong however it seems highly unusual to me that a company (GO Residential) would so heavily dilute their existing unitholders when trading so far below their stated NAV. Doesn't inspire confidence for future unitholders in my opinion. Wish everyone well with their decision and I'm sorry we didn't get the clean exit most of us thought would eventually come.
The facts have been presented and it is obvious that HR investors have been swindled out of their fair share of this buyout ! The separate payout to Tom’s group far exceeds the rest of the shareholder! His inside knowledge was used to carve out some of the best assets far below market value is nothing other than fraud! Obviously this was over 2 years in the planning stage maybe longer to line up all domino’s so they would all fall in his favour! I’m sure other interested parties were turned away as they wouldn’t play this game because their reputations in business ment something to them! In comes GO who that has built a reputation of time and it all sounds shady so they were a fit for this con job! All the numbers and evidence are in this report and as an investor it turns my stomach! It is so blatantly obvious that this was a con that developed throughout the process and the over 2 million dollars that were spent to shaft the shareholders was company money misappropriated I’m sure to dot the I”sand cross the T’s that in the end was presented to screw the shareholders who didn’t get a special pre GO liquidity! Tom loves Go but doesn’t want any of their stock! That’s funny he sure made sure other shareholders received lots! The Guy is a nasty fellow and is guilty of not acting honestly in his fiduciary duty as a CEO! We need a full 3rd party audit of this group for minimum last 2 years to see if any other funds have been misappropriated before he rides off into the sunset !
Do you think if GO did not reveal the American Copper lawsuit it would constitute a ‘material adverse change’ which would allow for the deal to be canceled before the vote? Not only due to $20 million in potential penalties, but it would alter the future NOI projections potentially of GO. I guess we will not know until we see the disclosure.
In my opinion, GO's entire modus operandi was to de-risk their core Manhattan properties which they bought with their own private capital. I avoided it until it was around $10, got in and got out (oddly to buy H&R!). I was surprised to see Cohen and Steers take so much down as they specialize in the space and are from New York City (like GO's original properties...) Then you have Vision Capital from Canada who also has a huge position. Andrew Moffs & Jeffrey Olin have been loving it all year and made it routinely a top holding/pick.
Fidelity Funds are also bright people, from the US, and bought in. So you do have bright people who bought into the GO IPO at $15 thinking it was cheap.
The stock is now at 6.9% implied cap if incorporating the Lantower portfolio or 6.5% otherwise according to RBC this morning. Tough to argue it is not cheap, today or with Lantower. I have found private market comparables in the past months in Manhattan / New York which seem to demonstrate GO is cheap. Today's price is less then what the Blackspruce paid in 2022 when vacancy rate in Manhattan was significantly higher.
Like you said, I think the smart thing to do is prove out the NAV by selling one of their original buildings. Perhaps they will do this when the deal closes. They aluded to 'capital recycling' on the Q4 conference call based on recent private market comps.
In the end, i suspect they plan to become a US REIT and sell it all within the next few years at a much better price. In the meantime, they have successfully used Canadian markets to de-risk their original 5 port highly correlated portfolio in Manhattan.
Question I have is what can go wrong to lose money here at current valuation??? You didn't mention it but insiders including Teo have upped over $50 million since IPO at higher prices. Not something you usually see in names without value.
Overall I may have voted for a deal like this if it was more transparent and fair, preferably by returning the other part of the portfolio in cash rather then doing a shady deal with the Hofstedter family. I think the premis for the merger is very realistic, to see a multiple re-rate, given the size, scale, high distribution, low multiple of the potential "GO" entity proforma.
Also if HOfstedter would have taken the GO units it would have corroborated his views on the opportunity, but he is cashing out. I agree with him, several of those properties are tough to sell, likely illiquid, but it seems as you point out he was marking them down perhaps with dirty ambitions. We know Front St in Toronto is a good office & Gowanus he told us had a buyer on the last call. Halifax is a good market and all leases are to the government.
Josh Gotlib tenants know there is never just one cockroach. I think GO unitholders will find the same thing if they keep digging. Everybody has seen my piece and I hope it triggers some conversations that lead to a more favorable outcome for HR investors.
The tenant thing is not my concern. You can see the same type of legal issues with Dream Unlimited and angry tenants rioting against Cooper, which I believe you are a fan of. I don't have the profile of Gotlib enough to be confident. The way they behaved since IPO only proves what I thought: they wanted to de-risk their own investment by raising capital and paying debt with IPO proceeds. They have largely accomplished that. Leverage was also an issue and it is no longer nearly as big as an issue. So I ask myself what can go wrong from here for new investors? It is a big position for me so I have to decide. I like the 'skin in the game' of GO and the fact they bought tons in the past year including 2026. I feel not smart selling a REIT like this going in with a 7% cap. If Hofstedter's plan was to avoid taxes on Lantower, why can't GO spin out Lantower or Manhattan when the smoke clears? I will look to see if their team adds units in the coming week(s) assuming they are not under some type of blackout.
Thank you very much Koneko for everything you have done to bring attention to GO Residential. Very unfortunate that unitholders couldn't have been given an all-cash offer or that H&R couldn't have continued disposing assets as they had been previously doing while unitholders received their monthly distributions. I'm not sure why anyone unhappy with the performance of H&R Reit would want their H&R units converted to GO which really seems like 'more of the same' if not worse Management (!). I'm admittedly a tourist in this area so maybe I'm wrong however it seems highly unusual to me that a company (GO Residential) would so heavily dilute their existing unitholders when trading so far below their stated NAV. Doesn't inspire confidence for future unitholders in my opinion. Wish everyone well with their decision and I'm sorry we didn't get the clean exit most of us thought would eventually come.
Great article! HR = Huge Redflags. I will be voting no with my 18000 shares.
The facts have been presented and it is obvious that HR investors have been swindled out of their fair share of this buyout ! The separate payout to Tom’s group far exceeds the rest of the shareholder! His inside knowledge was used to carve out some of the best assets far below market value is nothing other than fraud! Obviously this was over 2 years in the planning stage maybe longer to line up all domino’s so they would all fall in his favour! I’m sure other interested parties were turned away as they wouldn’t play this game because their reputations in business ment something to them! In comes GO who that has built a reputation of time and it all sounds shady so they were a fit for this con job! All the numbers and evidence are in this report and as an investor it turns my stomach! It is so blatantly obvious that this was a con that developed throughout the process and the over 2 million dollars that were spent to shaft the shareholders was company money misappropriated I’m sure to dot the I”sand cross the T’s that in the end was presented to screw the shareholders who didn’t get a special pre GO liquidity! Tom loves Go but doesn’t want any of their stock! That’s funny he sure made sure other shareholders received lots! The Guy is a nasty fellow and is guilty of not acting honestly in his fiduciary duty as a CEO! We need a full 3rd party audit of this group for minimum last 2 years to see if any other funds have been misappropriated before he rides off into the sunset !
Do you think if GO did not reveal the American Copper lawsuit it would constitute a ‘material adverse change’ which would allow for the deal to be canceled before the vote? Not only due to $20 million in potential penalties, but it would alter the future NOI projections potentially of GO. I guess we will not know until we see the disclosure.
Probably not material enough by itself, but my guess is that if lawyers start digging into GO then they'll hit more dirt.