H&R Real Estate Investment Trust announced Tuesday it has entered into binding agreements with multiple buyers to sell retail and office properties in Canada and the United States.
Total gross proceeds before transaction costs amount to $1.5 billion which approximates the September 30, 2025 aggregate IFRS values for these assets, said the REIT.
Tom Hofstedter, Executive Chair and Chief Executive Officer, said: “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. In June 2021 when we announced the strategy, our Residential and Industrial segments amounted to 35% of our total portfolio. After these sales, our Residential and Industrial segments will amount to 83% of our total real estate assets. We will begin to market a number of other properties to aggressively accelerate this strategy.”
The assets to be sold are:
1) H&R’s non-managing 33.1% ownership interest in Echo Realty, L.P.’s U.S. retail portfolio;
2) 27 Canadian retail properties;
3) Hess Tower, a Houston office property;
4) 145 Wellington, a downtown Toronto office property; and
5) 88 McNabb, an office property in the Greater Toronto Area (“GTA”).
“These assets contributed $33.3 million to Q3 2025 Same-Property net operating income (cash basis) which does not reflect the impact of Hess Corporation’s previously announced plan to vacate one-third of the Hess Tower in June 2026, representing 278,850 square feet of space. Had these sales and the anticipated debt repayments been made at the end of Q2 2025, Funds from Operations (“FFO”) in Q3 2025 would have been lower by approximately $0.06 per unit. H&R expects its proforma debt to Adjusted EBITDA at the REIT’s proportionate share before any unit repurchases to be 8.7x. H&R expects to keep this ratio below 9.0x on a go-forward basis. H&R expects to incur approximately U.S. $0.9 million in U.S. taxes upon the sale of these assets,” explained the REIT.
“Following the completion of the $1.5 billion of sales, the proportion of the REIT’s portfolio comprised of Residential and Industrial assets will increase from 69% to 83%. The only remaining retail sq.ft. will be part of a mixed-use property at River Landing in Miami comprising 528 residential units, 341,771 sq.ft. of retail space and 149,178 sq.ft. of office space.”
The sale of one retail property is expected to close in Q4 2025 and the rest of the property sales are expected to close in January 2026. The sales are subject to customary closing conditions. The sale of 88 McNabb, a 74,592 square foot office property in the GTA, is still subject to the buyer’s due diligence, added the REIT.
H&R said it remains in negotiations to sell two Canadian office properties in Toronto (310, 320 & 330 Front St. W. and 25 Sheppard Ave. W.). H&R is not expecting to enter into any other binding sale agreements in 2025.
H&R REIT is one of Canada’s largest real estate investment trusts with total assets of approximately $9.6 billion as at September 30, 2025. H&R REIT has ownership interests in a Canadian and U.S. portfolio comprised of high-quality residential, industrial, office and retail properties comprising over 25.7 million square feet.
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