H&R REIT Announces $1.5 billion of Retail and Office Property Sales
Total Gross Proceeds Approximate the Aggregate IFRS Values for the Divested Assets
Sale Proceeds to be Used to Further Strengthen Balance Sheet
Transactions Accelerate H&R REIT's Simplification Strategy and Further Sharpens Portfolio Focus
TORONTO, Nov. 25, 2025 /CNW/ - H&R Real Estate Investment Trust ("H&R" or "the REIT") (TSX: HR.UN) today announced it has entered into binding agreements with multiple buyers to sell retail and office properties in Canada and the United States.
Total gross proceeds before transaction costs amount to $1.5 billion which approximates the September 30, 2025 aggregate IFRS values for these assets.
Tom Hofstedter, Executive Chair and Chief Executive Officer said "These sales accelerate the REIT's portfolio simplification strategy of selling office and retail properties, while reducing leverage and positioning the REIT to drive sustainable long-term value for all unitholders. In June 2021 when we announced the strategy, our Residential and Industrial segments amounted to 35% of our total portfolio. After these sales, our Residential and Industrial segments will amount to 83% of our total real estate assets. We will begin to market a number of other properties to aggressively accelerate this strategy."
(1) |
At the REIT's proportionate share, including assets classified as held for sale. Refer to the "Non-GAAP Measures" section of this news release. |
(2) |
Excludes the Bow and 100 Wynford, which were legally sold in October 2021 and August 2022, respectively. |
(3) |
After giving effect to the announced sales above. |
The assets to be sold are:
1) H&R's non-managing 33.1% ownership interest in Echo Realty, L.P.'s U.S. retail portfolio;
2) 27 Canadian retail properties;
3) Hess Tower, a Houston office property;
4) 145 Wellington, a downtown Toronto office property; and
5) 88 McNabb, an office property in the Greater Toronto Area ("GTA").
These assets contributed $33.3 million to Q3 2025 Same-Property net operating income (cash basis)1 which does not reflect the impact of Hess Corporation's previously announced plan to vacate one-third of the Hess Tower in June 2026, representing 278,850 square feet of space. Had these sales and the anticipated debt repayments been made at the end of Q2 2025, Funds from Operations ("FFO") 1 in Q3 2025 would have been lower by approximately $0.06 per unit. H&R expects its proforma debt to Adjusted EBITDA at the REIT's proportionate share1 before any unit repurchases to be 8.7x. H&R expects to keep this ratio below 9.0x on a go-forward basis. H&R expects to incur approximately U.S. $0.9 million in U.S. taxes upon the sale of these assets.
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1 These are non-generally accepted accounting principles ("GAAP") measures or ratios. Refer to the "Non-GAAP Measures" section of this news release. |
Following the completion of the $1.5 billion of sales, the proportion of the REIT's portfolio comprised of Residential and Industrial assets will increase from 69% to 83%. The only remaining retail sq.ft. will be part of a mixed-use property at River Landing in Miami comprising 528 residential units, 341,771 sq.ft. of retail space and 149,178 sq.ft. of office space.
Total gross proceeds before transaction costs amount to approximately $1.5 billion which approximates the September 30, 2025 aggregate IFRS values for these assets. The buyer of H&R's interest in Echo Realty, L.P. will assume debts of approximately $369 million at H&R's interest.
Net proceeds of approximately $1.1 billion will be used to repay corporate debt. Additionally, the REIT intends to apply to the Toronto Stock Exchange for approval to commence a normal course issuer bid (an "NCIB") and may use up to $200 million of the newly created debt capacity, over time, to repurchase units pursuant to any such NCIB.
The sale of one retail property is expected to close in Q4 2025 and the rest of the property sales are expected to close in January 2026. The sales are subject to customary closing conditions. The sale of 88 McNabb, a 74,592 square foot office property in the GTA, is still subject to the buyer's due diligence.
H&R remains in negotiations to sell two Canadian office properties in Toronto (310, 320 & 330 Front St. W. and 25 Sheppard Ave. W.). H&R is not expecting to enter into any other binding sale agreements in 2025.
ABOUT H&R REIT
H&R REIT is one of Canada's largest real estate investment trusts with total assets of approximately $9.6 billion as at September 30, 2025. H&R REIT has ownership interests in a Canadian and U.S. portfolio comprised of high-quality residential, industrial, office and retail properties comprising over 25.7 million square feet.
FORWARD-LOOKING DISCLAIMER
Certain information in this news release contains forward–looking information within the meaning of applicable securities laws (also known as forward–looking statements) including, among others, statements relating to H&R's objectives, beliefs, plans, estimates, targets, projections and intentions and similar statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts, including with respect to H&R's future plans and targets, the sale of assets under contract or held for sale and the timing of closing thereof, the satisfaction of closing conditions for the sale of assets, the use of proceeds of the REIT from announced sales, including the repayment of debt and the intention to apply to the Toronto Stock Exchange for approval of an NCIB, the expected interest savings from the debt repayments, the expected decrease in FFO per unit, the proforma debt to Adjusted EBITDA at the REIT's proportionate share ratio and future expectations relating to same, ongoing negotiations with respect to certain assets, and the intention of H&R continue selling assets. Forward–looking statements generally can be identified by words such as "outlook", "objective", "may", "will", "expect", "intend", "estimate", "anticipate", "believe", "should", "plans", "project", "budget" or "continue" or similar expressions suggesting future outcomes or events. Such forward–looking statements reflect H&R's current beliefs and are based on information currently available to management.
Forward–looking statements are provided for the purpose of presenting information about management's current expectations and plans relating to the future and readers are cautioned that such statements may not be appropriate for other purposes. These statements are not guarantees of future performance and are based on H&R's estimates and assumptions that are subject to risks, uncertainties and other factors including those risks and uncertainties discussed in H&R's materials filed with the Canadian securities regulatory authorities from time to time, which could cause the actual results, performance or achievements of H&R to differ materially from the forward–looking statements contained in this news release. Material factors or assumptions that were applied in drawing a conclusion or making an estimate set out in the forward–looking statements include assumptions relating to the general economy, including the continuing effects of inflation; debt markets continue to provide access to capital at a reasonable cost; and assumptions concerning currency exchange and interest rates. Additional risks and uncertainties include, among other things, risks related to: real property ownership; the current economic environment, including the impact of any tariffs and retaliatory tariffs on the economy; strategic transformational repositioning plan; credit risk and tenant concentration; lease rollover risk; interest rate and other debt-related risks; inflation risk; development risks; residential rental risk; capital expenditure risk; currency risk; liquidity risk; cyber security risk; financing credit risk; ESG and climate change risk; risks associated with disease outbreaks; co-ownership interest in properties; general uninsured losses; joint arrangement and investment risks; dependence on key personnel and succession planning; potential acquisition, investment and disposition opportunities and joint venture arrangements; potential undisclosed liabilities associated with acquisitions; competition for real property investments; potential conflicts of interest; litigation and regulatory risk; Unit prices; availability of cash for distributions; credit ratings; ability to access capital; dilution; unitholder liability; redemption right; investment eligibility; debentures; statutory remedies; tax risk; and additional tax risks applicable to the REIT and to unitholders. H&R cautions that these lists of factors, risks and uncertainties are not exhaustive. Although the forward–looking statements contained in this news release are based upon what H&R believes are reasonable assumptions, there can be no assurance that actual results will be consistent with these forward–looking statements.
Readers are also urged to examine H&R's materials filed with the Canadian securities regulatory authorities from time to time as they may contain discussions on risks and uncertainties which could cause the actual results and performance of H&R to differ materially from the forward–looking statements contained in this news release. All forward–looking statements contained in this news release are qualified by these cautionary statements. These forward–looking statements are made as of November 25, 2025 and the REIT, except as required by applicable Canadian law, assumes no obligation to update or revise them to reflect new information or the occurrence of future events or circumstances.
NON-GAAP MEASURES
The unaudited condensed consolidated financial statements of the REIT and related notes for the three and nine months ended September 30, 2025 (the "REIT's Financial Statements") were prepared in accordance with IFRS Accounting Standards ("IFRS"). However, H&R's management uses a number of measures, including Same–Property net operating income (cash basis), FFO, FFO per Unit, debt to adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA") at the REIT's proportionate share, and the REIT's proportionate share, which do not have meanings recognized or standardized under IFRS or GAAP. These non–GAAP measures should not be construed as alternatives to financial measures calculated in accordance with GAAP. Further, H&R's method of calculating these supplemental non–GAAP measures and ratios may differ from the methods of other real estate investment trusts or other issuers, and accordingly may not be comparable. H&R uses these measures to better assess H&R's underlying performance and provides these additional measures so that investors may do the same.
For information on the most directly comparable GAAP measures, composition of the measures, a description of how the REIT uses these measures, an explanation of how these measures provide useful information to investors and a reconciliation of these non-GAAP measures to the most directly comparable GAAP measures, refer to the "Non–GAAP Measures" section of the REIT's management's discussion and analysis as at and for the three and nine months ended September 30, 2025 available at www.hr–reit.com and on the REIT's profile on SEDAR+ at www.sedarplus.com, which is incorporated by reference into this news release.
Additional information regarding H&R REIT is available at www.hr-reit.com and on www.sedarplus.com.
SOURCE H&R Real Estate Investment Trust
For further information: Larry Froom, Chief Financial Officer, 416-635-7520, e-mail [email protected]
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