H&R REIT Announces Closure of Seven US Department Stores and Sale of Retail Property in Toronto



    TORONTO, Aug. 5 /CNW/ - H&R Real Estate Investment Trust (TSX: HR.UN)
announced today that one of its retail tenants - Boscov Department Stores -
has filed for protection with a United States bankruptcy court, and plans to
close seven of its stores on properties owned by H&R. The seven stores, which
anchor shopping centres, have a total gross leasable area of approximately
1,679,000 square feet. With non-recourse mortgages outstanding on the
properties of approximately $124 million, the stores represent an equity
investment of approximately $42 million for H&R. The stores contribute
distributable cash of approximately USD$4.3 million or 3 cents per unit
annually to the REIT.
    H&R President & CEO Tom Hofstedter said, "Weakened economic conditions in
the United States are affecting the profitability of retailers that depend on
consumer discretionary spending. While exploring several options to remedy the
situation, we will strive to minimize the negative impacts of these store
closures on our unitholders."
    H&R also announced that it has entered into a binding contract to sell
one of its retail properties in Toronto for gross proceeds of $79 million,
generating a gain on sale of approximately $38 million and net cash after debt
repayment of $54 million. The sale is expected to close in the fourth quarter
this year.
    Mr. Hofstedter added, "The REIT expects that the potential annual loss
incurred from the closure of the Boscov department stores will be mostly
offset once the cash generated from the sale of this Toronto property has been
re-invested."

    About H&R REIT

    H&R REIT is a TSX-listed, open-ended real estate investment trust, which
owns a North American portfolio of 35 office, 124 industrial and 129 retail
properties comprising 43 million square feet, with a net book value of
$4.5 billion. The foundation of H&R's success since inception in 1996 has been
a disciplined strategy that leads to consistent and profitable growth.
Additional information regarding H&R REIT is available at www.hr-reit.com and
on www.sedar.com.

    Certain information in this news release contains forward-looking
statements within the meaning of applicable securities laws including, among
others, statements relating to the Trust's objectives, strategies to achieve
those objectives, the Trust's beliefs, plans, estimates, and intentions, and
similar statements concerning anticipated future events, results,
circumstances, performance or expectations that are not historical facts.
Forward-looking statements generally can be identified by words such as
"outlook", "objective", "may", "will", "expect", "intend", "estimate",
"anticipate", "believe", "should", "plans" or "continue" or similar
expressions suggesting future outcomes or events. Such forward-looking
statements reflect the Trust's current beliefs and are based on information
currently available to management. These statements are not guarantees of
future performance and are based on the Trust's estimates and assumptions that
are subject to risk and uncertainties, including those discussed in the
Trust's materials filed with the Canadian securities regulatory authorities
from time to time, which could cause the actual results and performance of the
Trust to differ materially from the forward-looking statements contained in
this news release. Those risks and uncertainties include, among other things,
risks related to: Unit prices; availability of cash for distributions;
development and financing relating to the Bow development; credit risk and
tenant concentration; interest rate and other debt related risk; tax risk;
ability to access capital markets; dilution; lease rollover risk; construction
risks; real property; currency risk; government regulation; investment
eligibility; unitholder liability; co-ownership interest in properties;
dependence on key personnel; mezzanine financing credit risk; competition for
real property investments influence of H&R Property Management over the REIT;
potential conflicts of interest; redemption right; statutory remedies,
environmental matters; reliance on one corporation for management of a
significant number of the Trust's properties; changes in legislation and
indebtedness of the Trust. Material factors or assumptions that were applied
in drawing a conclusion or making an estimate set out in the forward-looking
statements include that the general economy remains stable; interest rates are
relatively stable; and equity and debt markets continue to provide access to
capital. The Trust cautions that this list of factors is not exhaustive.
Although the forward-looking statements contained in this news release are
based upon what the Trust believes are reasonable assumptions, there can be no
assurance that actual results will be consistent with these forward-looking
statements. All forward-looking statements in this news release are qualified
by these cautionary statements. These forward-looking statements are made as
of today and H&R, except as required by applicable law, assumes no obligation
to update or revise them to reflect new information or the occurrence of
future events or circumstances.

    %SEDAR: 00002857E




For further information:

For further information: please contact Larry Froom, Chief Financial
Officer, H&R REIT, (416) 635-7520, or e-mail info@hr-reit.com


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890