H & R to sell $1.5B in retail, office properties

Executive Summary

• H & R Real Estate Investment Trust has entered into binding agreements to sell a portfolio of retail and office properties in Canada and the United States for total gross proceeds of $1.5 billion.
• The transaction is part of a portfolio simplification strategy to reduce leverage and shift focus toward residential and industrial assets, which will increase from 69% to 83% of the total portfolio post-sale.
• Net proceeds of approximately $1.1 billion will be used to repay corporate debt, with potential use of up to $200 million for future unit repurchases via a normal course issuer bid.

Key Details

• Transaction Value: Total gross proceeds of $1.5 billion (before transaction costs), approximating the September 30, 2025, IFRS values for the assets.
• Assets Sold:
  • H & R’s non-managing 33.1% ownership interest in Echo Realty L.P.’s U.S. retail portfolio (Buyer assumes ~$369 million in debt).
  • 27 Canadian retail properties.
  • Hess Tower (Houston office property).
  • 145 Wellington (Toronto office property).
  • 88 McNabb (GTA office property, 74,592 sq ft; subject to buyer due diligence).
• Financial Impact:
  • Assets contributed $33.3 million to Q3 2025 same-property net operating income (cash basis).
  • Pro forma debt to adjusted EBITDA ratio expected to be 8.7 times (target below 9.0 times).
  • Estimated U.S. tax liability of approximately $900,000.
  • If sales and debt repayments occurred at end of Q2 2025, Q3 2025 funds from operations would have been lower by ~$0.06 per unit.
• Use of Proceeds:
  • ~$1.1 billion net proceeds to repay corporate debt.
  • REIT intends to apply to TSX for a normal course issuer bid (NCIB); may use up to $200 million of newly created debt capacity over time to repurchase units.
• Portfolio Shift: Residential and industrial segments will rise from 35% (June 2021 baseline) to 83% of total real estate assets. Only remaining retail space will be part of the mixed-use River Landing property in Miami.
• Closing Timeline:
  • One retail property expected to close in Q4 2025.
  • Remaining properties expected to close in January 2026.
  • Subject to customary closing conditions.
• Future Plans: H & R remains in negotiations to sell two additional Canadian office properties in Toronto (310, 320, 330 Front St. West and 25 Sheppard Ave. West). No other binding sale agreements are expected in 2025.

Notable Quotes

• "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." — Tom Hofstedter, Executive Chair and CEO