GO Residential, a luxury rental REIT in New York, launches rare IPO in Canada

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An American real estate company that owns luxury rental apartment towers in New York is trying to go public in Canada, with GO Residential Real Estate Investment Trust launching a US$410-million initial public offering on the Toronto Stock Exchange.

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. Mr. Orbach also owned 17 per cent of the National Basketball Association’s Minnesota Timberwolves until June, 2025, when the team was sold.

If GO completes the deal, it will be one of the largest real estate IPOs in Canadian history. To help win over investors, the company has lined up a cornerstone backer, Cohen & Steers Capital Management Inc. CNS-N, which will purchase US$90-million of additional shares, bringing the total size of the offering to US$500-million.

However, the IPO is launching into a tricky market for commercial real estate companies, and GO has used a heavy amount of leverage to help fund its real estate purchases. The goal of the IPO is to help pay down some of this debt.

GO is targeting an enterprise value (equity plus debt) of US$2.225-billion, US$830-million of which will be equity – roughly half held by public investors, and the other half held by the current owners and the new cornerstone investor. The remainder of GO’s valuation will come from debt.

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American real estate companies such as Flagship Communities REIT MHC-U-T and BSR REIT HOM-U-T have listed in Canada before, often coming here because they are too small to garner much investor attention in the large U.S. market. Canadians also have a history of buying yield stocks, and REITs tend to pay annual distributions in the range of 4 to 6 per cent. GO is targeting a 4.3-per-cent annual yield.

However, REITs have struggled to win over Canadian investors since central banks staring hiking interest rates in March, 2022. Since then, the iShares S&P/TSX Capped REIT Index has delivered a total return, including distributions, of negative 7 per cent. The S&P/TSX Composite Index, meanwhile, has delivered a 42-per-cent total return.

A similar company with American rental properties, Dream Residential REIT DRR-U-T, also went public on the TSX in May, 2022, but its unit price has struggled, too, and the company has delivered a total return of negative 17 per cent since then.

GO did not return a request for comment, but in marketing documents for the IPO, the company said it is launching 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.)

The company is also banking on the strength of the NYC real estate market. Dream Residential owns “garden-style” apartments that tend to look like blocks of townhouses in states such as Oklahoma, Texas and Kansas, while GO owns 2,015 suites in Manhattan, where the vacancy rate for one-bedroom apartments is hovering around just 2 per cent.

GO is also marketing its ability to upgrade older buildings in its portfolio – such as One East River, which was designed in 1987 – by renovating two-bedroom suites into three-bedroom suites to increase rents.

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.