H&R REIT Announces $1.5 billion of Retail and Office Property Sales

Executive Summary

• H&R REIT entered binding agreements to sell retail and office properties for total gross proceeds of approximately $1.5 billion.
• Net proceeds of about $1.1 billion will be used to repay corporate debt and support a potential normal‑course issuer bid (NCIB) for unit repurchases.
• The transactions shift the REIT’s portfolio composition, increasing residential & industrial assets from 69% to 83% of total holdings.

Key Details

• Total Gross Proceeds: ~ $1.5 billion (pre‑transaction costs), approximating September 30 2025 IFRS values of the sold assets.
• Net Proceeds: ~ $1.1 billion earmarked for corporate debt repayment.
• Debt Reduction Impact: Expected pro‑forma Debt/Adjusted EBITDA ratio to stay below 9.0× (target 8.7×).
• Portfolio Shift: Residential & industrial share rises from 69% → 83% after sales; remaining retail space limited to mixed‑use River Landing, Miami (528 units, 341,771 sq ft retail, 149,178 sq ft office).
• Assets Sold: 1. 33.1% non‑managing interest in Echo Realty, L.P.’s U.S. retail portfolio.
  2. 27 Canadian retail properties.
  3. Hess Tower (Houston office).
  4. 145 Wellington (downtown Toronto office).
  5. 88 McNabb (GTA office, 74,592 sq ft).
• Operating Income Impact: Contributed $33.3 million to Q3 2025 Same‑Property NOI; would have lowered FFO per unit by ~ $0.06 if realized at end of Q2 2025.
• Tax Cost: Approx. US $0.9 million in U.S. taxes on the sales.
• Closing Timeline: One retail property expected to close in Q4 2025; remaining sales slated for January 2026 (subject to customary conditions). 88 McNabb still under buyer due diligence.
• Future Sale Activity: Ongoing negotiations to sell two additional Toronto office properties (310‑330 Front St. W. and 25 Sheppard Ave. W.). No further binding agreements anticipated for 2025.
• NCIB Intentions: REIT will seek TSX approval to commence a normal‑course issuer bid; may use up to $200 million of newly created debt capacity over time for unit repurchases.

Notable Quotes

“These sales accelerate the REIT's portfolio simplification strategy… while reducing leverage and positioning the REIT to drive sustainable long‑term value for all unitholders.” – Tom Hofstedter, Executive Chair & CEO