TORONTO, May 14, 2026 /CNW/ – H&R Real Estate Investment Trust (“H&R” or “the REIT”) (TSX:HR) is pleased to announce its financial results for the three months ended March 31, 2026. During the quarter, the REIT continued to successfully execute on its strategic plan, continuing to sell assets during the quarter to focus on residential and industrial properties. See “Completion of $1.5 Billion of Retail and Office Property Sales” below.
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(1) |
At the REIT’s proportionate share, excluding assets classified as held for sale. Refer to the “Non-GAAP Measures” section of this news release. |
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(2) |
June 30, 2021 has been used as a benchmark since H&R’s strategic repositioning plan was announced prior to the release of H&R’s Q3 2021 results. |
|
(3) |
Excludes the Bow and 100 Wynford, which were legally sold in October 2021 and August 2022, respectively. |
FINANCIAL HIGHLIGHTS
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March 31 |
December 31 |
|
|
2026 |
2025 |
|
|
Total assets (in thousands) |
$8,065,061 |
$9,108,286 |
|
Debt to total assets per the REIT’s Financial Statements(1) |
31.7 % |
38.4 % |
|
Debt to total assets at the REIT’s proportionate share(1)(2) |
42.6 % |
49.8 % |
|
Debt to Adjusted EBITDA at the REIT’s proportionate share(1)(2)(3) |
7.0x |
9.3x |
|
Unitholders’ equity (in thousands) |
$4,117,616 |
$4,135,718 |
|
Units outstanding (in thousands) |
264,567 |
264,558 |
|
Exchangeable units outstanding (in thousands) |
15,442 |
15,442 |
|
Unitholders’ equity per Unit |
$15.56 |
$15.63 |
|
Net Asset Value (“NAV”) per Unit(2)(4) |
$15.96 |
$16.09 |
|
Three months ended March 31 |
||
|
(in thousands except for per Unit amounts) |
2026 |
2025 |
|
Rentals from investment properties |
$184,253 |
$205,639 |
|
Net operating income |
$85,869 |
$82,963 |
|
Same-Property net operating income (cash basis)(5) |
$90,107 |
$93,403 |
|
Net loss from equity accounted investments |
($7,264) |
($10,082) |
|
Fair value adjustment on real estate assets |
($79,053) |
($52,698) |
|
Net loss |
($34,870) |
($52,018) |
|
Funds from Operations (“FFO”)(5) |
$76,265 |
$83,098 |
|
Adjusted Funds from Operations (“AFFO”)(5) |
$65,499 |
$68,013 |
|
Weighted average number of Units and exchangeable units |
280,003 |
279,990 |
|
FFO per basic and diluted Unit(2) |
$0.272 |
$0.297 |
|
AFFO per basic and diluted Unit(2) |
$0.234 |
$0.243 |
|
Cash distributions per Unit |
$0.150 |
$0.150 |
|
Payout ratio as a % of FFO(2) |
55.1 % |
50.5 % |
|
Payout ratio as a % of AFFO(2) |
64.1 % |
61.7 % |
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(1) |
Debt includes mortgages payable, debentures payable, unsecured term loans and lines of credit. |
|
(2) |
These are non-GAAP ratios. Refer to the “Non-GAAP Measures” section of this news release. |
|
(3) |
Adjusted EBITDA is based on the trailing 12 months and is calculated on page 7 of this news release. |
|
(4) |
See page 9 of this news release for a detailed calculation of NAV per Unit. |
|
(5) |
These are non-GAAP measures. Refer to the “Non-GAAP Measures” section of this news release. |
COMPLETION OF $1.5 BILLION OF RETAIL AND OFFICE PROPERTY SALES
The assets listed below were sold for approximately $1.5 billion in Q1 2026. Total debt assumed by the purchaser of the REIT’s interest in ECHO Realty, L.P. (“ECHO”) was approximately $424.5 million. The net proceeds of approximately $1.0 billion were used to repay corporate debt, including $375.0 million of unsecured term loans, and the remaining balance was used to repay unsecured operating lines of credit.
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1) |
H&R’s non-managing 33.1% ownership interest in ECHO; |
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2) |
26 Canadian retail properties; |
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3) |
145 Wellington Street West, a downtown Toronto office property; |
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4) |
88 McNabb Street, an office property in the Greater Toronto Area; and |
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5) |
Hess Tower, a Houston, TX office property. |
In aggregate, the assets sold in Q1 2026 contributed the following:
|
Three months ended March 31 |
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(in thousands of Canadian dollars) |
2026 |
2025 |
Change |
|
Net operating income per the REIT’s Financial Statements |
$8,439 |
$6,534 |
$1,905 |
|
Net operating income from equity accounted investments(1) |
9,198 |
12,122 |
(2,924) |
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Net operating income at the REIT’s proportionate share(1) |
17,637 |
18,656 |
(1,019) |
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Adjusted for: |
|||
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Straight-lining of contractual rent at the REIT’s proportionate share(1) |
181 |
684 |
(503) |
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Realty taxes in accordance with IFRIC 21 at the REIT’s proportionate share(1)(2) |
— |
14,173 |
(14,173) |
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Net operating income (cash basis) at the REIT’s Proportionate share(1) |
17,818 |
33,513 |
(15,695) |
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FFO(1)(3) |
$14,568 |
$25,686 |
($11,118) |
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(1) |
These are non-GAAP measures. Refer to the “Non-GAAP Measures” section of this news release. |
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(2) |
Realty taxes in accordance with IFRIC 21 was $10,333 per the REIT’s Financial Statements and $3,840 from equity accounted investments. |
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(3) |
Excludes finance costs savings from repayment of corporate debt. |
As the proceeds from these sales were used to repay corporate debt, finance costs were lower in Q1 2026 compared to Q4 2025 by approximately $7.0 million. H&R expects a further reduction in finance costs in Q2 2026 compared to Q1 2026 by approximately $3.0 million.
LANTOWER RESIDENTIAL UPDATE
Effective April 1, 2026, Lantower Residential, the REIT’s residential division, externalized its property management operations and entered into a master management agreement with Greystar Real Estate Partners (“Greystar”). This strategic action is intended to enhance operating efficiency, improve cost structure, and increase strategic flexibility across the residential platform. The transition to a third-party management model is expected to yield cost savings of approximately U.S. $5.0 million annually.
Greystar hired the majority of Lantower’s onsite property management employees and key home office associates, supporting operational continuity at the property level. Emily Watson is continuing as Chief Operating Officer of Lantower Residential, and Hunter Webb continues to lead the development platform, ensuring continuity of leadership, strategy, and execution. Lantower Residential has retained approximately 20 employees in asset management, development and accounting functions for Lantower Residential’s properties.
Included in trust expenses for the three months ended March 31, 2026 were employee termination costs, legal costs and other one-time costs relating to Lantower Residential externalizing its property management operations, totalling approximately $2.6 million.
DEBT & LIQUIDITY HIGHLIGHTS
Liquidity
As at March 31, 2026, H&R had cash and cash equivalents of $68.5 million and $897.0 million available under its unused lines of credit. H&R has an unencumbered property pool of approximately $3.2 billion, which is 2.99x unsecured debt.
As at March 31, 2026, debt to total assets per the REIT’s Financial Statements was 31.7% compared to 38.4% as at December 31, 2025. As at March 31, 2026, debt to total assets at the REIT’s proportionate share (a non-GAAP ratio, refer to the “Non-GAAP Measures” section of this news release) was 42.6% compared to 49.8% as at December 31, 2025. Debt to Adjusted EBITDA at the REIT’s proportionate share (a non-GAAP ratio, refer to the “Non-GAAP Measures” section of this news release) was 7.0x as at March 31, 2026.
MONTHLY DISTRIBUTION DECLARED
H&R today declared a distribution for the month of May scheduled as follows:
|
Distribution per Unit |
Annualized |
Record date |
Distribution date |
|
|
May 2026 |
$0.05 |
$0.60 |
May 29, 2026 |
June 15, 2026 |
CONFERENCE CALL AND WEBCAST
Management will host a conference call to discuss the financial results of the REIT on Friday, May 15, 2026 at 9.30 a.m. Eastern Time. Participants can join the call by dialing 1‐800‐717‐1738 or 1‐289‐514‐5100. For those unable to participate in the conference call at the scheduled time, a replay will be available approximately one hour following completion of the call. To access the archived conference call by telephone, dial 1‐289‐819‐1325 or 1‐888‐660‐6264 and enter the passcode 46736 followed by the “#” key. The telephone replay will be available until Friday, May 22, 2026 at midnight.
A live audio webcast will be available through www.hr-reit.com/investor-relations/#investor-events. Please connect at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be required to join the webcast. The webcast will be archived on H&R’s website following the call date.
The investor presentation is available on H&R’s website at www.hr-reit.com/investor-relations/#investor-presentation.
ABOUT H&R REIT
H&R is one of Canada’s largest real estate investment trusts. H&R has ownership interests in a Canadian and U.S. portfolio primarily comprised of high‐quality residential (operating as Lantower Residential), industrial and office properties totalling approximately 20.3 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 made or implied 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 the statements made under the heading “Completion of $1.5 Billion of Retail and Office Property Sales” including with respect to H&R’s future plans and targets, future reductions in finance costs, the benefits of …