American luxury rental apartment owner GO Residential pulls off $560-million IPO in Canada
After converting to Canadian dollars, GO Residential is raising $560-million, making it one of the largest-ever real-estate IPOs in Canada.
GO owns five rental towers in Manhattan along the East River, including the Copper Buildings, where the average monthly rent is US$8.05 per square foot. That amounts to US$8,050 per month for a 1,000-square-foot apartment.
The company was co-founded by Joshua Gotlib and Meyer Orbach, who both have bought, managed and sold commercial properties in the NYC area.
To help win over investors, the company lined up a cornerstone backer, Cohen & Steers Capital Management Inc., which will purchase US$90-million of additional shares, bringing the total size of the offering to US$500-million.
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GO launched the IPO in a tricky market for commercial real-estate companies, and the company has used a heavy amount of leverage to help fund its real-estate purchases. However, the REIT was still able to pull the deal off, and will use some proceeds to pay down debt.
IPOs have been rare in Canada since the COVID-19 pandemic boom, and they are particularly rare for real-estate companies considering many REITs are trading far below their net asset values.
In marketing documents for the IPO, the company said it raised money in Canada because of the country's 'established and supportive midcap REIT market.' (REITs return most of the cash they earn to their unit holders through distributions.) GO will pay a 4.26-per-cent annual yield.
While GO is run by Americans, the REIT has brought Canadians into its management team and onto its board of trustees. The company's chief financial officer, Peter Sweeney, used to hold the same position at SmartCentres REIT and Lori-Ann Beausoleil, a retired partner from PricewaterhouseCoopers LLP who currently sits on several REIT boards, will join GO's board.
CIBC World Markets and BMO Nesbitt Burns served as lead underwriters for the IPO.
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