H&R REIT acquires $215 million portfolio of 12 refrigerated distribution facilities

    TORONTO, Sept. 25 /CNW/ - H&R Real Estate Investment Trust (TSX: HR.UN)
("H&R") announced that it has acquired a portfolio of 12 refrigerated
distribution facilities in six provinces totaling 1.7 million square feet, for
approximately $215 million. The cold storage properties will be leased for a
weighted average term of 19.3 years to Eimskip Atlas Canada Inc. The leases
will be indemnified by hf Eimskipafelag Islands - an Icelandic, publicly
listed company with a market cap of over USD$1 billion, and the largest North
American refrigerated warehouse company.
    H&R President and CEO Tom Hofstedter said, "This transaction will be
highly accretive to the REIT. We have secured $161 million of first mortgage
financing for a term of 10 years at an interest rate of 5.66% per annum. The
REIT's levered return on equity invested is expected to be in excess of 12%.
Moreover, the acquisition of this nationwide portfolio further diversifies
H&R's income by type of asset and by geographic region."
    Additionally, H&R has exercised its purchase option for the Phase III
expansion of Bell Canada's office complex in Mississauga, Ontario. The REIT
will fund the construction of the 348,000 square foot, state-of-the-art
building, which is expected to be completed in the summer of 2009. The
estimated total construction cost is $125 million and the project will
generate an un-levered return of 7.6%.
    Mr. Hofstedter added, "We are pleased to continue our development program
with Bell Canada. We completed construction of the first, 525,000 square foot
phase of this office complex in 2002 and the second phase of 249,000 square
feet in 2004. In keeping with our strategy of leasing premises to creditworthy
tenants on a long-term basis, the Phase III expansion will have a 20-year
lease, as was the case in the first two phases."

    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, 126 industrial and 142 retail
properties comprising 43 million square feet, with a net book value of
$4.6 billion. The foundation of H&R's success since 1996 is a disciplined
strategy that leads to consistent and profitable growth.
    Additional information regarding H&R REIT is available at 

    This news release contains forward-looking statements with the meaning of
applicable securities laws, including statements relating to the Trust's
objectives, and strategies to achieve those objectives, and similar statements
concerning anticipated future events, results, circumstances, performance or
expectations that are not historical facts. 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: price of the units; real property ownership; availability of cash
flow; competition for real property investments; government regulation;
interest rates and financing; environmental matters; redemption of the units;
unitholder liability; co-ownership interest in properties; reliance on one
corporation for management of a significant number of the Trust's properties;
dependence on key personnel; potential conflicts of interest; changes in
legislation; investment eligibility; construction risks; currency risk; tax
treatment of income trusts; dilution; ability to access capital markets; cash
distributions; indebtedness of the Trust; and statutory remedies. 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; acquisition
capitalization rates are stable; competition for acquisitions of high quality
office, industrial and retail properties remains strong; 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.
The forward-looking statements are made only as of the date of this news
release and the Trust, 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: Larry Froom, Chief Financial Officer, H&R REIT,
(416) 635-7520, or e-mail info@hr-reit.com

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