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Earnings

H&R REIT Reports Fourth Quarter 2025 Financial Results

By The Northwire Desk — AI Analysis Feb 12, 2026 · 17:01 HR · 10.50
HR · Price

Executive Summary

  • H&R Real Estate Investment Trust reported its Fourth Quarter and Full Year 2025 financial results, highlighting a strategic repositioning that has shifted the portfolio toward residential and industrial assets.
  • The company reported a net loss of $791.6 million for the year ended December 31, 2025, driven primarily by significant fair value adjustments on real estate assets, particularly in the office and residential sectors.
  • Despite the accounting loss, operational metrics remained stable with Same-Property Net Operating Income (cash basis) increasing 1.6% to $489.7 million, and Funds from Operations (FFO) rising to $339.3 million.

Key Details

  • Financial Performance (Year Ended Dec 31, 2025):
    • Net Loss: $791.6 million (vs. Net Loss of $119.7 million in 2024).
    • Funds from Operations (FFO): $339.3 million (up from $334.4 million in 2024).
    • Adjusted Funds from Operations (AFFO): $278.6 million (up from $267.0 million in 2024).
    • FFO per Unit: $1.212 (up from $1.195).
    • AFFO per Unit: $0.995 (up from $0.954).
    • Net Operating Income: $509.1 million (down from $520.0 million in 2024).
    • Same-Property Net Operating Income (cash basis): $489.7 million (up 1.6% from $481.8 million).
  • Balance Sheet & Liquidity:
    • Total Assets: $9.11 billion.
    • Unitholders' Equity: $4.14 billion.
    • Debt to Total Assets (per Financial Statements): 38.4%.
    • Debt to Adjusted EBITDA (proportionate share): 9.3x.
    • Cash and Cash Equivalents: $52.1 million.
    • Available Liquidity: $316.8 million under unused lines of credit plus unencumbered property pool of ~$3.9 billion.
    • NAV per Unit: $16.09 (down from $20.92 in 2024).
  • Strategic Repositioning Highlights (Since June 30, 2021):
    • Completed spin-off of 27 enclosed shopping centres to Primaris REIT (valued at ~$2.4 billion at spin-off).
    • Sold 69 real estate assets totaling ~$3.0 billion through Dec 31, 2025.
    • Portfolio Composition Shift: Residential and Industrial assets increased from 34% to 84% of the portfolio; U.S. assets increased from 45% to 68%.
    • Office Portfolio Reduced: From ~$5.0 billion to ~$0.9 billion.
    • Retail Portfolio Reduced: From ~$4.0 billion to ~$0.3 billion.
    • Debt Reduction: Reduced from ~$6.1 billion to ~$3.5 billion.
  • Transaction Activity (2025/2026):
    • Sold ownership interests in 8 Canadian retail, 2 U.S. retail, 1 Canadian office, and 1 commercial unit for $121.0 million in 2025.
    • In January 2026, sold ECHO Realty (33.1% interest), 23 Canadian retail properties, 145 Wellington Street West, and 88 McNabb Street for ~$1.1 billion.
    • Net proceeds of $727.3 million from the Jan 2026 sales were used to repay corporate debt ($375.0 million to unsecured term loans, remainder to lines of credit).
    • Assets under contract for Q1 2026 closure: Hess Tower (Houston, TX) and remaining 3 Canadian retail properties.
  • Leasing & Development:
    • Completed 5 single-tenant industrial developments in GTA (641,920 sq ft) and 2 residential developments in Dallas (763 units).
    • Leased 6900 Maritz Drive (Mississauga, ON, 122,320 sq ft) at market rents commencing Jan 2026.
    • Leased 560 & 600 Slate Drive (Mississauga, ON) at market rents for ~11 years to a single tenant; leases commence March and October 2026.
    • Average contractual rent for U.S. residential properties increased to $27.18/sq ft (from $21.16).
    • Average contractual rent for Canadian industrial properties increased to $10.05/sq ft (from $7.17).
  • Distributions:
    • Cash distributions for 2025: $0.60 per Unit (down from $0.72 in 2024).
    • No special cash distribution in 2025 (vs. $0.12 in 2024).
    • Payout ratio as % of AFFO: 60.3% (down from 75.5% in 2024).
    • Declared monthly distributions of $0.05 per Unit for February and March 2026.

Notable Quotes

  • "We continue to successfully execute our strategic plan to reposition H&R to be a more simplified growth and income-oriented REIT focused on residential and industrial properties. From the announcement of this plan to December 31, 2025, H&R completed the spin-off of the REIT's 27 enclosed shopping centres and sold ownership interests in 69 properties totaling approximately $5.4 billion." — Tom Hofstedter, Executive Chair and Chief Executive Officer
Read the original news release →

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