Dufferin Mall in Toronto, one of the properties in the Primaris portfolio, is seen in this file photo.Ryan Enn Hughes/The Globe and Mail
H&R Real Estate Investment Trust's property manager has agreed to forgo a number of fees it might have taken in connection with a takeover of Primaris Retail Real Estate Investment Trust, as H&R seeks to win over Primaris's investors before they vote on its offer.
The agreement to waive the controversial fees comes as rival bidder KingSett Capital made it clear that it's not bowing out of the competition yet.
H&R REIT's properties are managed by a property manager that is partly owned by the family of Tom Hofstedter, H&R's chief executive officer. That property manager, and by extension Mr. Hofstedter's family, receives fees in part based on doing deals.
In a statement on its website, H&R said that it and its property manager have agreed that the manager will waive any acquisition fee it might have earned as a result of the Primaris takeover. It also said that if it acquires Primaris, which owns dozens of malls and shopping centres, that company's properties will still be managed by its current executives and so H&R's property manager will not earn management fees from those shopping centres.
While the consortium led by KingSett Capital has made an all-cash offer for Primaris, H&R's bid is a mix of cash and shares.