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How To Write a Business Plan for Real Estate Investment Trust (REIT) in 9 Steps: Checklist

By alex ryzhkov, resources on real estate investment trust (reit).

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Welcome to our blog post on how to write a business plan for a Real Estate Investment Trust (REIT) focused on sustainable and eco-friendly commercial properties in emerging markets. With the growing demand for environmentally conscious investments, the REIT industry has seen significant growth in recent years. According to the latest statistics, the global REIT market reached a value of $1.7 trillion in 2020, and is expected to grow at a CAGR of 3.1% from 2021 to 2028.

Whether you're an experienced investor or just starting out, creating a business plan is crucial for the success of your REIT. It not only helps outline your investment strategy, but also attracts potential investors and lenders. In this article, we will guide you through nine essential steps to write a comprehensive business plan for your sustainable and eco-friendly REIT. So, let's dive in!

Research The Real Estate Market

Before embarking on any real estate investment venture, it is crucial to thoroughly research the market you are planning to enter. This research will provide you with valuable insights and data that will help guide your investment decisions and set realistic expectations for the success of your REIT focused on sustainable and eco-friendly commercial real estate properties in emerging markets.

Here are some important steps to follow when researching the real estate market:

  • Evaluate the current state of the real estate market in your target location, including key factors such as property prices, demand and supply dynamics, rental rates, and vacancy rates.
  • Closely examine emerging markets and identify the potential for growth and profitability in those areas.
  • Research local regulations and policies that could impact your investment, such as zoning laws, building codes, and environmental regulations.
  • Consider the economic and demographic trends in the area, including population growth, job opportunities, and income levels, to gauge the demand for commercial real estate properties.
  • Analyze any potential risks or challenges associated with investing in the chosen market, such as political instability, currency fluctuations, or legal complexities.
  • Connect with local real estate professionals, brokers, and industry experts to gain valuable insights and gather additional information about the market.

Tips for Researching the Real Estate Market:

  • Utilize online resources and databases that provide market reports and data on real estate trends.
  • Attend industry conferences, seminars, and workshops to network with professionals and stay updated on the latest market developments.
  • Join relevant real estate associations or organizations to access industry-specific resources and gain exposure to industry best practices.
  • Consider hiring a market research firm or consultant specializing in real estate to conduct a detailed analysis and provide expert insights.

By conducting thorough research on the real estate market, you will be equipped with the necessary knowledge and information to make informed investment decisions, effectively manage risks, and position your REIT for long-term success.

Identify Target Market and Investment Strategy

When starting a real estate investment trust (REIT), it is crucial to define your target market and investment strategy. This step will guide all your future decisions and ensure that you are focused on the right opportunities.

1. Research potential markets: Begin by researching emerging markets that align with your goal of investing in sustainable and eco-friendly commercial real estate properties. Look for regions that have a growing demand for such properties and offer favorable market conditions.

2. Determine your target audience: Identify the specific groups or individuals who are most likely to be interested in your sustainable real estate offerings. This could include environmentally conscious businesses, investors looking for sustainable investment opportunities, or even government entities focusing on eco-friendly initiatives.

3. Define your investment strategy: Develop a clear investment strategy that outlines the types of properties you intend to invest in, such as office buildings, retail spaces, or industrial complexes. Consider factors like location, size, and potential for sustainable renovations or upgrades.

4. Assess the market demand: Evaluate the demand for sustainable properties in your target market. Look at factors such as vacancy rates, rental and occupancy rates, and growth projections for the commercial real estate sector. This analysis will help you determine if there is sufficient demand to support your investment strategy.

  • Consider partnering with local real estate professionals or sustainability experts who can provide valuable insights into the target market.
  • Stay updated on the latest sustainable real estate trends and regulations to align your investment strategy accordingly.
  • Explore opportunities to leverage government incentives or grants for sustainable real estate development in emerging markets.

Conduct A Competitive Analysis

An essential step in creating a solid business plan for a Real Estate Investment Trust (REIT) focused on sustainable and eco-friendly commercial real estate properties in emerging markets is conducting a thorough competitive analysis. This analysis allows you to gain important insights into the competitive landscape and identify the strengths and weaknesses of your potential rivals.

Begin by researching other REITs that operate in the same market or have a similar investment focus. Look into their investment strategies, target markets, and performance track record. This will help you understand their competitive advantages and the key factors that have contributed to their success.

Identify Key Competitors:

Analyze investment strategies:, assess market positioning:, evaluate financial performance:, identify competitive advantages and weaknesses:.

By conducting a comprehensive competitive analysis, you can refine your investment strategy and marketing plan, ensuring that your REIT stands out in the market and offers unique value propositions to potential investors.

Determine Funding Sources And Financial Projections

Securing adequate funding for your real estate investment trust (REIT) is crucial to its success. To determine the funding sources and create accurate financial projections, you need to conduct thorough research and analysis. Here are the steps to follow:

  • 1. Assess your capital needs: Evaluate the amount of initial capital required to launch your REIT and support its operations until it generates a stable revenue stream. Consider factors such as property acquisition costs, renovation expenses, marketing expenses, and administrative costs.
  • 2. Explore funding options: Look into various funding sources that align with your investment strategy. These can include personal savings, partnerships, bank loans, private investors, and crowdfunding. Analyze the pros and cons of each option to determine the most suitable ones for your REIT.
  • 3. Create a financial projection: Develop a detailed financial projection that outlines your REIT's anticipated revenue and expenses over a specified period, typically five to ten years. Consider variables such as rental income, property appreciation, operating expenses, and taxes. This projection will help you determine the feasibility of your investment strategy and attract potential investors.
  • 4. Seek expert advice: Consult with financial advisors or real estate professionals specialized in REITs to gain insight into the industry and obtain guidance on financial projections and funding sources. Their expertise can save you from costly mistakes and help you secure the necessary capital for your REIT.
  • Consider incorporating sustainability and eco-friendly practices into your financial projections. This can attract socially conscious investors and differentiate your REIT in the market.
  • Ensure your financial projections include realistic assumptions about market conditions, rental rates, and vacancy rates to increase their credibility.
  • Regularly review and revise your financial projections as market conditions and economic factors change to adjust your funding strategy accordingly.

By determining your funding sources and creating accurate financial projections, you can demonstrate the viability of your REIT to potential investors and stakeholders. This step is essential in securing the necessary capital to launch and grow your sustainable and eco-friendly commercial real estate investment trust.

Develop A Detailed Investment Strategy

Developing a detailed investment strategy is essential for a real estate investment trust (REIT) focused on sustainable and eco-friendly commercial real estate properties in emerging markets. A solid investment strategy will help guide your decision-making process, maximize returns, and mitigate risks.

When developing your investment strategy, consider the following key factors:

  • Type of properties: Determine the types of sustainable and eco-friendly commercial real estate properties you want to invest in. This could include office buildings, retail spaces, or industrial properties that meet specific environmental standards.
  • Geographic focus: Identify the emerging markets where you believe there is a high demand for sustainable real estate properties. Conduct thorough market research to understand the potential for growth and profitability in these markets.
  • Profitability analysis: Analyze the financial viability of potential investment properties. Consider factors such as rental income potential, potential for capital appreciation, operating expenses, and vacancy rates.
  • Risk assessment: Assess the potential risks associated with investing in sustainable real estate properties in emerging markets. Consider factors such as political stability, regulatory risks, environmental risks, and market volatility.
  • Sustainability criteria: Set clear criteria for what qualifies as a sustainable and eco-friendly property. Consider factors such as energy efficiency, green certifications, water conservation, and waste management practices.

Tips for developing a successful investment strategy:

  • Stay updated with the latest industry trends and news related to sustainable real estate investment.
  • Network with industry professionals and attend conferences and events to gain insights and knowledge about emerging markets and investment opportunities.
  • Consider partnering with experienced professionals or firms that specialize in sustainable real estate investment to leverage their expertise.
  • Regularly review and adjust your investment strategy based on market conditions and performance.

Developing a detailed investment strategy requires careful analysis and consideration of various factors. It is crucial to stay informed, conduct thorough research, and adhere to your defined criteria for sustainable and eco-friendly properties. By following a well-thought-out strategy, you can increase the likelihood of success for your REIT focused on investing in sustainable real estate in emerging markets.

Create A Comprehensive Marketing Plan

A comprehensive marketing plan is crucial for the success of your Real Estate Investment Trust (REIT). It will define how you will attract investors, promote your sustainable and eco-friendly commercial real estate properties, and differentiate yourself from competitors in the emerging markets. Here are the key steps to create an effective marketing plan:

  • 1. Define your target audience: Clearly identify the individuals or organizations you want to attract as investors for your REIT. Understand their needs, preferences, and motivations to tailor your marketing messages accordingly.
  • 2. Establish your unique selling proposition: Determine what sets your REIT apart from others in the market. Highlight the sustainable and eco-friendly aspects of your commercial real estate properties and emphasize the financial benefits of investing in your REIT.
  • 3. Develop a branding strategy: Create a strong brand identity for your REIT that aligns with your values of sustainability and eco-friendliness. This includes designing a visually appealing logo, selecting appropriate colors and fonts, and consistent messaging across all marketing materials.
  • 4. Choose the right marketing channels: Identify the most effective channels to reach your target audience. This may include online platforms such as websites, social media, and email marketing, as well as traditional methods like print advertisements, direct mail, and industry conferences.
  • 5. Craft compelling content: Develop high-quality content that showcases the benefits and value of investing in your REIT. This can include informative articles, case studies, videos, and testimonials from satisfied investors or tenants.
  • 6. Utilize digital marketing strategies: Implement search engine optimization (SEO) techniques to improve your website's visibility on search engines. Consider running targeted online advertising campaigns and engaging with your audience through social media platforms.
  • 7. Build strategic partnerships: Collaborate with other sustainable and eco-friendly organizations, such as green building associations or environmental nonprofits. This can help expand your reach, gain credibility, and attract like-minded investors.
  • 8. Measure and analyze results: Regularly monitor and analyze the effectiveness of your marketing efforts. Utilize analytics tools to track website traffic, engagement rates, and conversion rates. Identify areas for improvement and make necessary adjustments to your marketing strategy.
  • 9. Stay updated with industry trends: Continuously stay informed about the latest trends and developments in sustainable and eco-friendly real estate investment. Stay active in industry forums, attend conferences, and network with professionals to ensure your marketing plan remains relevant and effective.

Tips for Creating a Strong Marketing Plan:

  • Invest in professional graphic design and branding services to ensure your marketing materials are visually appealing and consistent.
  • Regularly update your website and social media profiles with fresh content to keep your audience engaged and informed.
  • Consider offering educational resources or hosting webinars to establish yourself as a thought leader in sustainable real estate investing.
  • Collaborate with influencers or industry experts to amplify your marketing efforts and expand your reach.
  • Seek feedback from potential investors and adjust your marketing approach based on their input and preferences.

Set Goals And Objectives For The REIT

Setting goals and objectives is an essential step in creating a business plan for a Real Estate Investment Trust (REIT). It provides a clear direction and roadmap for the organization, helping to guide decision-making and measure success. Here are some key considerations when setting goals and objectives for your REIT:

  • Define financial goals: Start by identifying your desired financial outcomes. This could include targets for annual income, long-term profitability, or return on investment. It is important to ensure these goals align with the mission and vision of the REIT.
  • Establish investment objectives: Determine the specific types of real estate properties and investment strategies that align with your REIT's focus on sustainability and eco-friendliness. Outline the criteria for selecting properties, such as location, size, and potential for growth, as well as the desired risk-return profile.
  • Set growth targets: Consider how you want your REIT to expand over time. This could include targets for the number of properties in your portfolio, geographic diversification, or the growth of assets under management. Clearly defining these growth objectives will help guide your decision-making and resource allocation.
  • Establish operational objectives: Determine how you want to run your REIT on a day-to-day basis. This could involve setting targets for occupancy rates, rental income, property maintenance standards, or investor relations. Consider the operational processes and procedures that will support these objectives.
  • Ensure that your goals and objectives are specific, measurable, attainable, relevant, and time-bound (SMART).
  • Regularly review and update your goals and objectives to adapt to changes in the market or organizational needs.
  • Communicate your goals and objectives to all stakeholders, including investors, employees, and partners, to ensure alignment and accountability.

By setting clear goals and objectives for your REIT, you can provide a strategic framework for decision-making, measure progress, and rally your team towards a common vision. Remember to regularly review and update these goals to ensure they remain aligned with your REIT's evolving needs and market dynamics.

Analyze Potential Risks And Develop Risk Mitigation Strategies

An important aspect of creating a business plan for a Real Estate Investment Trust (REIT) is analyzing potential risks and developing strategies to mitigate those risks. This step is crucial in ensuring the long-term success and sustainability of the REIT.

One of the primary risks to consider is the fluctuation in real estate markets. As an investor in emerging markets, it's essential to conduct a thorough research of the local real estate market to understand its current state and future potential. This will help identify potential risks such as market saturation, economic instability, or regulatory changes that may impact the value and profitability of the REIT's property portfolio.

Another risk is the potential for environmental factors to impact the sustainable and eco-friendly properties. Climate change, natural disasters, and other environmental risks can have a significant impact on the value and operation of real estate assets. It is important to assess these risks and develop strategies to minimize their impact, such as investing in resilient and adaptive properties or obtaining appropriate insurance coverage.

Here are some tips to consider when analyzing potential risks and developing risk mitigation strategies:

Conduct a thorough risk assessment:

Diversify the portfolio:, establish contingency plans:, monitor and review risks regularly:.

By analyzing potential risks and developing robust risk mitigation strategies, the REIT can enhance its ability to weather market fluctuations, protect its sustainable property investments, and deliver consistent returns to its investors.

Outline The Organizational Structure And Management Team

Once you have determined the investment strategy and goals for your Real Estate Investment Trust (REIT), it is crucial to outline the organizational structure and assemble a strong management team to drive the success of your venture. Here are the key steps to outline the organizational structure and select the right team members:

  • Define Roles and Responsibilities: Clearly define the roles and responsibilities within your REIT, including positions such as CEO, CFO, COO, and property managers. Each team member should have a well-defined role that aligns with their expertise and contributes to the overall success of the organization.
  • Identify Necessary Skills and Expertise: Assess the skills and expertise required to successfully operate a sustainable and eco-friendly commercial real estate REIT in emerging markets. Look for professionals with experience in these areas, including real estate investment, property management, finance, and environmental sustainability.
  • Recruit Top Talent: Use various recruitment channels, including industry associations, job portals, and personal networks, to attract top talent for key positions within your REIT. Conduct thorough interviews and background checks to ensure that you select individuals who are not only qualified but also align with your company's values and long-term vision.
  • Consider Board of Directors: A strong board of directors can provide valuable guidance and expertise. Consider including professionals with industry knowledge, financial acumen, and strategic vision on your board. Their involvement can enhance the credibility and decision-making processes of your REIT.
  • Develop a Succession Plan: It is essential to have a succession plan in place to ensure a smooth transition in case key members of your management team leave or transition to different roles. Identify potential successors and provide them with opportunities for growth and development within the organization.
  • Build a diverse and inclusive team to bring different perspectives and ideas to the table.
  • Regularly evaluate the performance of your management team and provide feedback for continuous improvement.
  • Establish clear communication channels and encourage open dialogue within the organization.
  • Invest in professional development and training programs to empower your team members and keep them up-to-date with industry trends.
  • Consider partnering with external consultants or advisors who can provide specialized expertise and guidance when needed.

By carefully outlining the organizational structure and assembling a skilled management team, your REIT will be well-positioned to navigate the complexities of sustainable real estate investment in emerging markets and achieve long-term success.

Developing a business plan for a Real Estate Investment Trust (REIT) focused on sustainable and eco-friendly commercial properties in emerging markets requires thorough research, strategic planning, and a comprehensive understanding of the target market. By following these 9 steps, you can create a solid foundation for your REIT and increase your chances of success.

  • Research the real estate market and identify opportunities in emerging markets.
  • Define your target market and investment strategy, focusing on sustainable and eco-friendly properties.
  • Conduct a competitive analysis to understand the market landscape and position your REIT effectively.
  • Determine funding sources and create financial projections to attract investors.
  • Develop a detailed investment strategy that aligns with your goals and objectives.
  • Create a comprehensive marketing plan to attract potential investors and tenants to your sustainable properties.
  • Set clear goals and objectives for your REIT to track and measure your progress.
  • Analyze potential risks and develop strategies to mitigate them, ensuring long-term success.
  • Outline your organizational structure and assemble a capable management team to drive your REIT forward.

By following this checklist and putting in the necessary effort to create a strong business plan, you will be well-prepared to launch and grow your REIT focused on sustainable real estate investments in emerging markets. With a clear vision and strategic approach, you can make a positive impact while generating significant returns for your investors.

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H&r reit announces transformational strategic repositioning plan.

/NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES . ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF U.S. SECURITIES LAW./

Primaris Spin-Off, Exit Retail, Exit Office, Significant 12,700 Residential Unit Development Pipeline

TORONTO , Oct. 27, 2021 /CNW/ - H&R REIT ("H&R" or the "REIT") announces today its strategic repositioning plan to transform from a diversified REIT, into a simplified, growth-oriented REIT with increased multi-residential and industrial exposure surfacing value through its significant development pipeline. This follows H&R's previously announced sale of the Bow office tower and Bell office campus totalling $1.47 billion in gross proceeds.

To achieve this transformation, H&R will execute the following strategic repositioning initiatives:

(i) Tax-free spin-off (the "Spin-Off") of its Primaris properties including all of H&R's enclosed malls to a new stand-alone, publicly traded REIT ("Primaris") focused on owning and managing enclosed shopping centres in Canada .

(ii) Disposition of the following property groups (the "Strategic Dispositions"), synchronized to match capital funding requirements. The Strategic Dispositions are poised to generate gross proceeds of approximately $3.4 billion over time:

  • Exit retail - sale of approximately $600 million of grocery-anchored and essential service retail and monetization of H&R's CDN $470 million equity interest in Echo Realty LP ("ECHO"); and
  • Exit office - sale of approximately $2.3 billion of office properties with the remaining $1.4 billion to be held for redevelopment into Class A multi-residential and industrial redevelopments.

(iii) Reinvestment of proceeds generated from the Strategic Dispositions to fund H&R's significant multi-residential and industrial development pipeline and for select acquisitions, in prime locations in Toronto , Montreal , Vancouver , and high-growth U.S. sunbelt and gateway cities.

"We are incredibly excited to announce our transformational strategic repositioning plan, providing a clear path forward to simplify H&R's business model and to create significant value and growth for unitholders," said Thomas Hofstedter , President & CEO of H&R REIT. "Our focus on Class A multi-residential and industrial properties surfaces value embedded in our existing portfolio through intensification and redevelopment and creates what we believe is a more compelling investment profile, streamlines our operating platform and enhances our financial flexibility."

"Over the past several years, H&R's Board of Trustees and management have executed on a number of initiatives aimed at repositioning the business to maximize unitholder value and better align with investor preferences", said Ronald Rutman , Chairman of the Board of H&R REIT. "The Spin-Off, combined with H&R's previously completed dispositions of the Bow office tower and Bell office campus mark recent significant milestones in the advancement of these initiatives. H&R will remain focused on executing the strategic repositioning plan with the objective of unlocking the value of its portfolio for unitholders."

STRATEGIC REPOSITIONING BENEFITS:

  • Greater exposure to higher growth multi-residential and industrial assets, with reduced exposure to retail and office properties.
  • Enhanced major market presence in the Greater Toronto Area and high-growth U.S. sunbelt and gateway cities and immediate reduction of Alberta exposure to 7% of investment properties post Spin-Off.
  • Improved proforma balance sheet enhances financial flexibility to execute on growth while maintaining H&R's current investment grade credit rating.
  • Upon completion of the Spin-Off, the combined annual distributions of H&R REIT and Primaris are anticipated to total $0.72 , up 4.3% from the current $0.69 per H&R unit. H&R is anticipated to distribute $0.52 per annum while Primaris is anticipated to distribute $0.20 per annum.

Investment Properties June 30, 2021, Investment Properties Post Spin-Off January 1, 2022, and Investment Properties 5-Year Target (CNW Group/H&R Real Estate Investment Trust)

H&R REIT STRATEGIC REPOSITIONING PLAN

  • EXIT RETAIL THROUGH SPIN-OFF AND DISPOSITIONS:
  • Primaris Spin-Off Transaction: H&R intends to spin-off its enclosed mall portfolio and together with Healthcare of Ontario Pension Plan ("HOOPP") create Primaris. Primaris will own interests in 35 properties with an appraised value of approximately $3.2 billion encompassing 11.4 million square feet of gross leasable area ("GLA"). H&R will contribute 27 properties with an appraised value of approximately $2.4 billion and HOOPP will contribute eight properties with an appraised value of approximately $0.8 billion . H&R's secured debt will be reduced by approximately $579 million for the outstanding mortgage balances on the Primaris properties. H&R has applied to the TSX for the listing of Primaris units on the TSX with the ticker PMZ.UN, following the expected closing in late December 2021 or early 2022. The listing will be subject to the TSX's customary listing approval requirements.
  • Disposition of High-Quality Grocery-Anchored and Essential Service Retail Properties to Fund Developments:
  • Retail Property Dispositions: In aggregate, H&R's grocery-anchored and essential service retail portfolio includes 56 properties located primarily in Ontario , encompassing 2.8 million square feet of GLA which represent a fair value of approximately $600 million at June 30, 2021 . H&R's 33.6% ownership interest in ECHO Realty LP, a privately held real estate company with a portfolio of 237 grocery-anchored shopping centres primarily occupied by Giant Eagle, Inc., one of the largest supermarket chains in the United States . The portfolio encompasses 2.9 million square feet of GLA, and an equity ownership interest of approximately $470 million at June 30, 2021 .
  • EXIT OFFICE THROUGH DISPOSITIONS AND RE-DEVELOPMENT:
  • Office Properties to be Sold to Fund Developments: The office assets to be sold over time comprise 15 properties, encompassing 4.2 million square feet of GLA with a weighted average lease term of 9.5 years. These properties with an average occupancy rate of 99.5% are located in major urban markets with high-credit quality tenants, and represent a fair value of approximately $2.3 billion at Q2 2021.
  • Office Properties held for Re-development into Class A Multi-Residential and Industrial Re-development: 12 office properties representing a fair value of approximately $1.4 billion at Q2 2021, encompassing 3.1 million square feet of GLA with intensification potential will be retained for redevelopment into multi-residential and industrial properties.
  • FOCUS ON MULTI-RESIDENTIAL AND INDUSTRIAL H&R expects to evaluate each potential development in the context of its capital allocation strategy, and may elect to pursue development on its own, with capital partners, or sell the developments with approvals in place, capturing much of the value creation.
  • Reinvest Proceeds into Higher Growth Multi-Residential and Industrial :
  • Proceeds generated from the Strategic Dispositions will be redeployed into development of Class A multi-residential and industrial properties, in prime locations in Canada , and high growth sunbelt and gateway cities in the United States . The total pipeline is comprised of approximately 12,700 residential units and 3.2 million square feet of industrial GLA. The execution of these developments within H&R's multi-residential and industrial development pipeline is poised to drive earnings and NAV growth.
  • Office to Class A Multi-Residential and Industrial Redevelopment:
  • 12 office properties located in Toronto , Vancouver and Montreal will be redeveloped into Class A multi-residential and industrial properties. These office properties would add approximately 5,900 residential units and 440,000 square feet of industrial GLA to H&R's portfolio over time.

Executive Leadership Appointments

As part of this transformative initiative, H&R is pleased to announce the following executive officer appointments:

Philippe Lapointe – President Lantower Residential

Emily Watson - Chief Operating Officer of Lantower Residential

Colleen Grahn - President of Lantower Property Management

Robyn Kestenberg – Executive VP Office and Industrial

Matthew Kingston – Executive VP Development and Construction

In addition, upon completion of the Spin-Off, Alex Avery , who will be Chief Executive Officer and a Trustee of Primaris, will be resigning as an officer and Trustee of H&R REIT so that H&R and Primaris will be completely independent with no common officers or trustees.

Built for the New Retail Landscape

Primaris will have substantial scale, a differentiated financial model and a full service, vertically integrated management platform. The portfolio will include a combination of assets contributed by H&R and HOOPP, aggregating interests in 35 properties with an appraised value of approximately $3.2 billion spanning 11.4 million square feet of GLA, at Primaris' interest. Primaris will be fully internally managed, with an independent board of trustees and operate as a distinct and separate publicly-traded entity upon completion of the Spin-Off. Immediately following the Spin-Off, H&R unitholders will directly own approximately 74% of Primaris units outstanding, and HOOPP will own approximately 26% of Primaris units outstanding.

"Primaris will be exceptionally well positioned to take advantage of market opportunities at a unique time in the evolution of the Canadian retail property landscape," said Alex Avery , who will be Chief Executive Officer of Primaris following the Spin-Off. "The scale and strength of the Primaris platform combined with its conservative financial model provides significant flexibility and capacity to both self-fund Primaris' strategy and positions it well to pursue investment opportunities in the current environment."

"HOOPP is excited to be Primaris' institutional partner to this important transaction, forming Canada's only publicly-traded, pure play national enclosed shopping centre REIT," said Eric Plesman , Head of Global Real Estate at HOOPP. "Primaris is a well-recognized Canadian operator with a significant track record, and is well-positioned to grow and benefit from the economic recovery."

Key Transaction Highlights

  • Large-Scale Canadian Enclosed Shopping Centre Portfolio : Primaris' high-quality national portfolio will be comprised of dominant shopping centres located in primary and secondary Canadian markets. As one of the four largest enclosed shopping centre platforms in Canada , Primaris will be an essential partner for retailers, providing efficient access to key markets across the country.
  • Fully-Internal Management Platform and Strong Independent Board of Trustees: Primaris' fully-internal management platform capabilities span leasing, legal, finance, lease administration, human resources, information technology, accounting and reporting, operations, asset management and development with nearly 20 years of operating history. Primaris' executive leadership team will be led by Alex Avery , current Executive Vice President, Asset Management & Strategic Initiatives at H&R REIT, and Patrick Sullivan , current Chief Operating Officer of H&R's Primaris division, bringing significant real estate investment, capital markets and retail property operating expertise. The incoming Board of Trustees has been selected to ensure strong and independent governance.
  • Differentiated Capital Structure and Financial Strategy: Primaris' leverage at formation is expected to be approximately 29% Debt to Gross Book Value and 5.3x Debt to EBITDA. Its target payout ratio of 45% – 50% of FFO is expected to initially provide significant retained annual cash flow of approximately $65 million to fund investments in development and acquisition opportunities and minimize reliance on external capital sources. This unique and flexible financial model is expected to differentiate Primaris, with leverage significantly below most Canadian REIT peers.
  • Strong Institutional Endorsement: HOOPP, one of the largest and most successful pension fund investors in Canada , will be Primaris' largest unitholder, holding approximately 26% of outstanding units following the HOOPP Contribution, providing strong institutional support of Primaris' governance and strategy.
  • Excess Density and Substantial Intensification Potential: The Primaris portfolio includes several urban properties with significant intensification potential. Dufferin Grove , Primaris' flagship 1,285 suite multi-residential development on four acres of excess land at Dufferin Mall is well advanced, with full zoning approval expected in 2021. Other significant intensification opportunities include Orchard Park in Kelowna , Place D' Orleans in Ottawa , Sunridge and Marlborough Malls in Calgary , among others. Internal development, intensification and adaptive reuse projects will be considered over time, in the context of alternative investment opportunities.

The property values and the resulting equity ownership in Primaris are based on recently completed independent third-party appraisals completed on 100% of the properties. H&R will contribute 27 properties with an appraised value of approximately $2.4 billion aggregating 7.6 million square feet of GLA at Primaris' proportionate interest, and HOOPP will contribute eight properties with an appraised value of approximately $0.8 billion , aggregating 3.8 million square feet of GLA.

Primaris will have a strong and well-diversified tenant base with its top ten tenants representing 29% of minimum rent. Canadian Tire, Walmart, Loblaws, TJX Companies and Bell Canada will be Primaris' largest tenants, and seven of the top ten tenants will be investment grade rated. Across Primaris' approximately 2,300 tenant portfolio, the weighted average lease term will be approximately 5.1 years.

Further information regarding the Spin-Off, including anticipated portfolio metrics and certain forecast financials will be included in the management proxy circular (the "Circular") expected to be mailed to H&R unitholders in November 2021 . A Primaris investor presentation containing further information regarding the Spin-Off is available on H&R's website.

Details of the Spin-Off

H&R's properties will be transferred to Primaris pursuant to a plan of arrangement (the "Arrangement"). Each existing H&R unitholder will receive one unit of Primaris for every one H&R unit held, subject to any consolidation or split of Primaris units pursuant to the Arrangement. After completion of the Arrangement, HOOPP's properties will be sold to Primaris in consideration for units of Primaris. Following closing of the Arrangement and the HOOPP Contribution, H&R unitholders and HOOPP are expected to own an approximate 74% and 26% interest in Primaris, respectively.

In connection with the Arrangement, H&R will apply to the Court of Queen's Bench of Alberta for an interim order confirming, among other things, the calling and holding of a meeting (the "Meeting") of H&R unitholders to be held in December 2021 to approve the Arrangement. In addition, H&R has (i) applied to the Canada Revenue Agency for an advance income tax ruling confirming certain Canadian federal income tax consequences of the Arrangement (the "CRA Ruling"), and (ii) applied for conditional approval from the TSX for the listing and posting for trading of the Primaris units. Listing will be subject to the TSX's customary listing approval requirements.

The Arrangement is subject to the approval of H&R unitholders by way of the affirmative vote of at least two-thirds of the votes cast by H&R unitholders present in person or by proxy at the Meeting. The Board of H&R has determined that the Arrangement is in the best interests of H&R REIT and accordingly, H&R's Board recommends that H&R unitholders vote IN FAVOUR OF the Arrangement for the reasons to be set out in detail in the Circular. The H&R trustees have received a fairness opinion from their financial advisor, CIBC World Markets ("CIBC") that, subject to the assumptions, limitations and qualifications contained therein, (i) the distribution to H&R unitholders pursuant to the Arrangement is fair, from a financial point of view, to the H&R unitholders, and (ii) that the consideration to be paid to HOOPP by Primaris is fair, from a financial point of view, to Primaris.

If the Arrangement is approved by the H&R unitholders and assuming timely satisfaction (or waiver) of all other closing conditions, including receipt of a final order of the Court of Queen's Bench of Alberta and the CRA Ruling, it is anticipated that the transaction will be completed in late December 2021 or early 2022.

The foregoing is qualified in its entirety by the more detailed information that will be included in the Circular. Unitholders are urged to carefully read the Circular, once available, before making their decision with regards to the Arrangement. Copies of the arrangement agreement , purchase and sale agreement relating to the properties to be contributed by HOOPP and Circular will be available on SEDAR at www.sedar.com .

CIBC World Markets and Scotiabank are acting as financial advisors to H&R REIT. Blake, Cassels & Graydon LLP is acting as a legal counsel to H&R REIT.

BMO Capital Markets is acting as financial advisor to HOOPP. Torys LLP is acting as a legal counsel to HOOPP.

Real Asset Strategies is acting as investor relations advisor to H&R REIT.

CONFERENCE CALL

A conference call and live audio webcast and accompanying presentation hosted by H&R REIT and Primaris will be held to discuss the strategic repositioning plan, including the Spin-Off of Primaris on Wednesday, October 27, 2021 at 11.00 a.m. Eastern Time . Participants can join by logging into the webcast here , or at www.hr-reit.com , and selecting Investor Events under the Investor Relations section, or by dialing 1-888-510-2507 or 1-289-514-5065. 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.

For those unable to participate in the conference call at the scheduled time, it will be archived for replay beginning approximately one hour following completion of the call. To access the archived conference call by telephone, dial 1-800-770-2030 or 1-647-362-9199 and enter the passcode 7614157 followed by the pound key. The telephone replay will be available until November 3, 2021 at midnight.

Investor presentations for both H&R and Primaris are available on H&R's website at https://www.hr-reit.com/investor-relations/#investorpresentation .

Q3 RESULTS UPDATED CONFERENCE CALL AND WEBCAST DATE

H&R now intends to release its financial results for Q3 2021 on Monday, November 15 , 2021. Management will host a conference call to discuss such financial results on Tuesday, November 16, 2021 at 9.30 a.m. Eastern Time . Participants can join the call by dialing 1-888-510-2507 or 1-289-514-5065. For those unable to participate in the conference call at the scheduled time, it will be archived for replay beginning approximately one hour following completion of the call. To access the archived conference call by telephone, dial 1-647-362-9199 or 1-800-770-2030 and enter the passcode 3504623 followed by the pound key. The telephone replay will be available until Tuesday, November 23, 2021 at midnight.

A live audio webcast will be available through https://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.

About H&R REIT

H&R REIT is one of Canada's largest real estate investment trusts with total assets of approximately $13.1 billion at June 30, 2021 . H&R REIT has ownership interests in a North American portfolio of high-quality office, retail, industrial and residential properties comprising over 40 million square feet.

About the Healthcare of Ontario Pension Plan

HOOPP serves Ontario's hospital and community-based healthcare sector, with more than 610 participating employers and 400,000 active, deferred and retired members. It operates as a private independent trust and is governed by a Board of Trustees with a sole fiduciary duty to deliver the pension promise.

HOOPP is fully funded and manages a highly diversified portfolio of more than $104 billion in assets. The 10-year annualized rate of return is 11.16%. HOOPP's investing success is delivered by an in-house team of investment professionals.

HOOPP's real estate portfolio has a market value of more than $15 billion , spanning multiple geographies and asset classes (office, logistics, retail, residential). The Fund continues to grow both the scale and scope of this portfolio, with a focus on high-quality assets and best-in-class partners that share our sustainable investing approach and creation of long-term value for our members. The real estate portfolio had a currency-hedged return of 8.2% over the past five years, which is $1.8 billion over the benchmark.

Non-IFRS Financial Measures

Growth in Same-Asset property operating income (cash basis) and Payout ratio as a % of FFO are both non-GAAP ratios that are more fully defined and discussed in H&R's MD&A in full as at June 30, 2021 and available on www.hr-reit.com and www.sedar.com . Debt to EBITDA is a non-GAAP ratio is calculated by dividing the total of: Debt (including mortgages payable, debentures payable, unsecured term loans and lines of credit) by (i) property operating income (excluding straight-lining of contractual rent and IFRIC 21); (ii) finance income; and (iii) trust expenses (excluding the fair value adjustment to unit-based compensation). Management uses Debt to EBITDA to assess the REIT's leverage ratio.

These ratios do not have a standard meaning prescribed by GAAP and therefore they may not be comparable to similarly titled measurers presented by other publicly traded companies, and should not be construed as an alternative to other financial measures determined in accordance with GAAP.

Forward-looking Information

Certain statements in this news release contain forward-looking statements within the meaning of applicable securities laws (also known as forward-looking statements). These forward-looking statements include, but are not limited to H&R's plans, objectives, expectations and intentions, including the Spin-Off, the Strategic Dispositions, the timing thereof and the gross proceeds therefrom, the intention to develop and redevelop properties, management's beliefs regarding H&R's growth prospects and the ability to surface value for unitholders, the benefits of the strategic repositioning initiatives and the pro forma impact on H&R's portfolio and financial metrics, H&R's investment grade credit rating, combined annual distributions of H&R REIT and Primaris, H&R's target investment mix, the transaction with HOOPP, earnings and NAV growth as a result of execution of H&R's development pipeline, the timing and budgets for future developments, the size, asset value and portfolio metrics of Primaris upon completion of the Spin-Off and HOOPP Contribution, Primaris' ability to take advantage of market opportunities, Primaris' expected leverage, payout ratio, and annual retained cash flow, Primaris' growth potential, intensification opportunities, Primaris' capital structure and financing strategy, the timing of H&R's unitholders meeting and publication of related unitholder materials, the expected completion date of the proposed transaction, the ability to obtain the final order and the CRA Ruling on the terms and timing contemplated by the parties, to complete the Arrangement and the transaction with HOOPP on the terms and on the timing contemplated by management, the assumption that all necessary conditions will be met for the completion of the Arrangement and the pro forma information regarding Primaris. Such forward-looking statements reflect H&R's current beliefs and are based on information currently available to management. These statements are not guarantees of future performance and are based on H&R's estimates and assumptions that are subject to risks and uncertainties, including those to be set forth in the Circular and in H&R REIT's materials filed with the Canadian securities regulatory authorities from time to time, which could cause the actual results and performance of H&R to differ materially from the forward-looking statements contained in this news release. Although the forward-looking statements contained in this news release are based upon what H&R believe are reasonable assumptions, there can be no assurance that actual results will be consistent with these forward-looking statements. There can be no assurance that the proposed transaction will occur or that the anticipated benefits will be realized. The proposed transaction is subject to approval by the Court of Queen's Bench of Alberta , H&R unitholders and by the TSX and the fulfillment of certain conditions, and there can be no assurance that any such approvals will be obtained and/or any such conditions will be met. The proposed transaction could be modified, restructured or terminated. All forward-looking statements in this news release are qualified by these cautionary statements. These forward-looking statements are made as of today and H&R, except as required by applicable law, assume no obligation to update or revise them to reflect new information or the occurrence of future events or circumstances.

Additional information regarding H&R REIT is available at http://www.hr-reit.com and on www.sedar.com .

SOURCE H&R Real Estate Investment Trust

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H&r reit provides update on property sales further advancing its strategic repositioning plan.

TORONTO , April 16, 2024 /CNW/ - H&R Real Estate Investment Trust ("H&R" or "the REIT") (TSX: HR.UN) is pleased to announce it has closed the previously announced sale of 25 Dockside Drive, located directly on the waterfront in downtown Toronto , for $232.5 million .

During Q1 2024, H&R sold its 50%  ownership interest in four non-core industrial properties for gross proceeds of  approximately  $17.2 million and sold two U.S. automotive-tenanted properties for U.S. $7.7 million . H&R has also entered into agreements to sell its 50% interest in one Canadian industrial property and one U.S. industrial property. Gross proceeds from the Canadian industrial property sale is expected to be $60.7 million , at H&R's ownership interest, and closing is expected to occur in Q3 2024. Gross proceeds from the U.S. industrial sale is expected to be U.S. $6.3 million and closing is expected to occur in Q2 2024.

H&R is also pleased to announce that it has entered into an agreement to sell its 50% ownership interest in 3777/3791 Kingsway, Burnaby, BC (the "Kingsway Property") for $82.5 million to Crestpoint Real Estate Investments Ltd. ("Crestpoint"), the current co-owner of the Property. The Kingsway Property comprises 671,555 square feet of office space. The sale is expected to close in May 2024 and is subject to customary closing conditions.

The Kingsway Property was valued at approximately $81.4 million as at December 31, 2023 .

2024 net operating income from the Kingsway Property (at H&R's ownership interest) was only expected to be approximately $3.7M .

The Kingsway Property is encumbered by a $25.1 million mortgage (at H&R's ownership interest). Crestpoint will be assuming this as part of the transaction.

Gross proceeds from properties sold or under agreement to be sold in 2024 total approximately $411.7  million. Proceeds will be used to repay debt and for general corporate purposes.

"Given the considerable headwinds in the public and private real estate markets, we are very pleased to have completed the sale of 25 Dockside Drive and agreed to sell our interest in the 3777/3791 Kingsway," said Tom Hofstedter , Executive Chairman and CEO. "These office sales further our strategic repositioning plan and moves H&R REIT closer to achieving our portfolio simplification strategy goals. We continue to execute our plan with discipline by transacting when we can surface fair value for our unitholders."

Proforma Real Estate Assets

H&R's proforma December 31 , 2023 Real Estate Assets at the REIT's proportionate share 1 , adjusted for the sale of 25 Dockside Drive, the sales made in Q1 2024 and the currently pending sales of the properties under agreements to be sold is as follows:

About H&R REIT

H&R REIT is one of Canada's largest real estate investment trusts with total assets of approximately $10.8 billion as at December 31, 2023 . H&R REIT has ownership interests in a North American portfolio comprised of high-quality residential, industrial, office and retail properties comprising over 26.9 million square feet. H&R's strategy is to create a simplified, growth-oriented business focused on residential and industrial properties in order to create sustainable long term value for unitholders. H&R plans to sell its office and retail properties as market conditions permit. H&R's target is to be a leading owner, operator and developer of residential and industrial properties, creating value through redevelopment and greenfield development in prime locations within Toronto , Montreal , Vancouver , and high growth U.S. sunbelt and gateway cities.

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 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, with respect to the REIT's proforma real asset mix, and the timing of closing and the use of proceeds from property sales, including the sale of the Kingsway Property. Forward-looking statements generally can be identified by words such as "outlook", "objective", "may", "will", "expect", "intend", "estimate", "anticipate", "believe", "should", "plans", "project", "budget" or "continue" or similar expressions suggesting future outcomes or events. Such forward-looking statements reflect H&R's current beliefs and are based on information currently available to management.

Forward-looking statements are provided for the purpose of presenting information about management's current expectations and plans relating to the future and readers are cautioned that such statements may not be appropriate for other purposes. These statements are not guarantees of future performance and are based on H&R's estimates and assumptions that are subject to risks, uncertainties and other factors including those risks and uncertainties discussed in H&R's materials filed with the Canadian securities regulatory authorities from time to time, which could cause the actual results, performance or achievements of H&R to differ materially from the forward-looking statements contained in this news release. Material factors or assumptions that were applied in drawing a conclusion or making an estimate set out in the forward-looking statements include assumptions relating to the general economy, including the effects of increased inflation; the debt markets continuing to provide access to capital at a reasonable cost, notwithstanding rising interest rates; and assumptions concerning currency exchange and interest rates. Additional risks and uncertainties include, among other things, risks related to: real property ownership; current economic environment; credit risk and tenant concentration; lease rollover risk; interest rates and other debt-related risks; development risks; residential rental risk; capital expenditure risk; currency risk; liquidity risk; risks associated with disease outbreaks; cyber security risk; financing credit risk; ESG and climate change risk; coownership interest in properties; general uninsured losses; joint arrangements and investment risk; dependence on key personnel and succession planning; potential acquisition, investment and disposition opportunities and joint venture arrangements; potential undisclosed liabilities associated with acquisitions; competition for real property investments; and potential conflicts of interest; unit-price risk; availability of cash for distributions; credit ratings; ability to access capital markets; tax risk; additional tax risks applicable to unitholders; dilution; unitholder liability; redemption right risk; investment eligibility; risks relating to debentures; and statutory remedies. H&R cautions that these lists of factors, risks and uncertainties are not exhaustive. Although the forward-looking statements contained in this news release are based upon what H&R believes are reasonable assumptions, there can be no assurance that actual results will be consistent with these forward-looking statements.

Readers are also urged to examine H&R's materials filed with the Canadian securities regulatory authorities from time to time as they may contain discussions on risks and uncertainties which could cause the actual results and performance of H&R to differ materially from the forward-looking statements contained in this news release. All forward-looking statements in this news release are qualified by these cautionary statements. These forward-looking statements are made as of today and H&R, except as required by applicable Canadian law, assumes no obligation to update or revise them to reflect new information or the occurrence of future events or circumstances.

Non-GAAP measures

The audited consolidated financial statements of the REIT and related notes for the three months and year ended December 31, 2023 (the "REIT's Financial Statements") were prepared in accordance with International Financial Reporting Standards ("IFRS"). However, H&R's management uses a number of measures, including the REIT's proportionate share, which do not have meanings recognized or standardized under IFRS or GAAP. These non‐GAAP measures and non‐GAAP ratios should not be construed as alternatives to financial measures calculated in accordance with GAAP. Further, H&R's method of calculating these supplemental non‐GAAP measures and ratios may differ from the methods of other real estate investment trusts or other issuers, and accordingly may not be comparable. H&R uses these measures to better assess H&R's underlying performance and provides these additional measures so that investors may do the same.

For information on the most directly comparable GAAP measures, composition of the measures, a description of how the REIT uses these measures and an explanation of how these measures provide useful information to investors, refer to the "Non‐GAAP Measures" section of the REIT's management's discussion and analysis as at and for the three months and year ended December 31 , 2023  available at www.hr‐reit.com and on the REIT's profile on SEDAR at www.sedarplus.com , which is incorporated by reference into this news release.

Additional information regarding H&R is available at www.hr-reit.com and on www.sedarplus.com

SOURCE H&R Real Estate Investment Trust

View original content to download multimedia: http://www.newswire.ca/en/releases/archive/April2024/16/c0207.html

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Boston Properties Releases Robust Health Security Strategic Plan

Owen Thomas, CEO of Boston Properties (NYSE: BXP), participated in a video interview in conjunction with Nareit’s REITweek: Virtual Investor Conference (held June 2-4).

Thomas said that because it was clear to Boston Properties at the outset of the pandemic that workers would eventually return to the office, the REIT began efforts on a robust health security strategic plan early into quarantine. The company formed a task force that included representatives from all Boston Properties departments and regions as well as external medical experts.

“Dr. Joseph Allen from Harvard’s School of Public Health is part of our committee because whatever solutions we came up with [for] customers, we wanted them grounded in science,” Thomas said.

He added that the resulting plan, shared with customers as well as externally on its website, highlights the high-level reopening issues Boston Properties will be dealing with post-pandemic, including cleaning and disinfecting of spaces; air recharging and filtering; spacing in common areas like lobbies and elevators; the importance of health screenings and PPE; and communication with customers.

Thomas said that two of the biggest changes he sees all office buildings making post-pandemic is an increased focus on healthy building policies surrounding light and air, and de-densification. He also discussed the regional differences that Boston Properties sees among its five markets.

“A big differentiator is going to be public transportation,” Thomas said. “[Workers] are going to feel comfortable in their office space, but they’re going to feel less comfortable getting to work.”

Thomas also noted that due to the pandemic, the U.S. is now in a recession, but that it will be a short-term event.

“I’m confident that the U.S. economy will recover and we’ll be back to a more typical growth environment [and] rents will come back,” he said.

Company name BXP Office 1 Year Total Return 43.96% As of market close 05/16/2024 Stock price $63.65

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What's a reit.

REITs, or real estate investment trusts, are companies that own or finance income-producing real estate across a range of property sectors. These real estate companies have to meet a number of requirements to qualify as REITs. Most REITs trade on major stock exchanges, and they offer a number of benefits to investors.

Why Invest in REITs

REITs historically have delivered competitive total returns, based on high, steady dividend income and long-term capital appreciation. Their comparatively low correlation with other assets also makes them an excellent portfolio diversifier that can help reduce overall portfolio risk and increase returns. These are the characteristics of real estate investment.

About Nareit

Nareit serves as the worldwide representative voice for REITs and real estate companies with an interest in U.S. real estate. Nareit’s members are REITs and other real estate companies throughout the world that own, operate, and finance income-producing real estate, as well as those firms and individuals who advise, study, and service those businesses.

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Process and Spotlights

"uc berkeley's it professionals work together to provide the tools, data, and infrastructure the campus community needs to continue to grow as the world's greatest public research university.", our process.

In-depth IT strategic planning began in the Fall of 2016 with  Reimagining IT (ReIT) : a months-long process involving the entire One IT community. During this time, the Program Planning Group (PPG) was formed to guide the process and to ensure priorities aligned with Berkeley's  campus strategic plan . Since the successful creation of the initial ReIT Strategic Plan, a newly constituted PPG continues to oversee our annual One IT priority-setting process and steward strategic technology projects and related campus initiatives. In Spring 2021, we evolved, and to reflect the new operational phase of our work, we renamed this the One IT Strategic Plan.

One IT Strategic Planning Process 

  • Each year, in January, we begin the strategic planning process by calling for top IT-related priorities from dozens of departments across campus.
  • In mid-April, we invite One IT Leaders to collectively identify the top IT Priority Initiatives for our One IT Strategic Plan.
  • In June, we publish the plan and share it with the Chancellor’s Cabinet to showcase the ways in which we coordinate and collaborate to support the campus Strategic Plan through our work.

Slide showing timeline of Strategic Planning process outlined in the paragraph above

Presentations and Updates

During our plan's project and implementation phases, we sent regular reports. Progress updates are now highlighted during the monthly  CIO Open Forum .

  • Dec. 10: CIO Annual Report  |  ReIT Spotlight SILS implementation |  slide deck  |  watch Zoom video
  • Nov. 16: Reimagining IT Program Update
  • Nov. 12: ReIT Updates for members of PPG  |  slide deck  |  watch Zoom video
  • Oct. 8: IS-3 Security Update  |  slide deck  |  watch Zoom video
  • Sept. 30: ReIT Program Update #28 - Read the FY21 Plan
  • Feb. 4: Workshop Slide Deck  |  Notes
  • Nov. 20: ReIT Program Update #27
  • Sept. 26: ReIT Program Update #26 - Read the FY20 Plan
  • Aug. 19: ReIT Program Update #25
  • July 25: Workshop Slide Deck
  • June 19: ReIT Program Update #24
  • May 21: ReIT Program Update #23
  • April 29: Open Seminar
  • April 23: ReIT Program Update #22
  • April 11: EDUCAUSE Webinar The Evolution of Strategic Management
  • March 27: ReIT Program Update #21
  • Feb. 28: ReIT Program Update #20 - See the Revised Plan
  • Jan. 31: Reimagining IT: 2018 CIO Annual Report
  • Dec. 18: ReIT Program Update #19
  • Nov. 14: ReIT Program Update #18
  • Oct. 17: ReIT Program Update #17
  • Sept. 19: ReIT Program Update #16
  • Aug. 16: ReIT Program Update #15
  • July 26: ReIT Program Update #14: A Year in Review
  • June 21: ReIT Program Update #13
  • May 22: ReIT Program Update #12
  • April 23: ReIT Program Update #11
  • April 13: ReIT Update #10: IT Knowledge Management by Marlita Kahn
  • March 21: Workshop   Slide Deck  | Notes   
  • March 15: ReIT Update #9: IT Service Catalog Analytics by Rita Rosenthal
  • Feb. 15: ReIT Update #8: UX Testing of IT Service Catalog by Daphne Ogle
  • Feb. 1: Open Seminar
  • Jan. 31: ReIT Update #7: Student Computing at Cal by Traci Young
  • Jan. 18: ReIT Update #6: Progress Report & Sneak Peek at 2018 from David Greenbaum
  • Dec. 14: Open Seminar
  • Nov. 29: ReIT Update#5: IT Service Catalog by Rita Rosenthal
  • Nov. 8: ReIT Update #4: Telling Our Story by Jon Conhaim
  • Oct. 27: ReIT Update #3: Aligning Orgs to Support Teaching and Research by Jenn Stringer
  • Oct. 12: Open Seminar
  • Oct. 10: ReIT Update #2: CalNet 2-Step by Matt Wolf
  • Sept. 28: ReIT Update #1: Implementation Updates from David Greenbaum
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Greatness Through Difference

Vision and Mission

We shape the future and improve the world through creativity and innovation. As an engaged, intellectually curious, and socially conscious community, we leverage the power of technology, the arts, and design for the greater good.

Introduction

A casual reader of the history of Rochester Institute of Technology could be forgiven for posing the question “How did a small evening school offering a single class in 1885 become one of the country’s largest and most leading-edge private universities, with multiple Ph.D. programs, five international campuses, and 19,000 students of whom almost 1200 are deaf and hard-of-hearing?” A close look at RIT’s early history reveals that the origins of this apparent sea change in mission were actually contained within the institutional character of the 19th-century Mechanics Institute, and that they serve as the perfect introduction of the new strategic plan before you.

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The RIT Strategic Plan Summary

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Dimension One: People

Where Creativity Begins

Dimension Two: Programs

Innovating Across the University

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Dimension Three: Places

Facilitating Creativity

Dimension Four: Partnerships

Extending Our Reach and Serving the World

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REIT news, Real Estate Investment Trusts, Canadian REIT News, REIT Stocks Canada

H&R REIT Announces Transformational Strategic Repositioning Plan

October 27, 2021 By NewsWire Tagged With: TSX:HR.UN

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Primaris Spin-Off, Exit Retail, Exit Office, Significant 12,700 Residential Unit Development Pipeline

TORONTO , Oct. 27, 2021 /CNW/ – H&R REIT (“H&R” or the “REIT”) announces today its strategic repositioning plan to transform from a diversified REIT, into a simplified, growth-oriented REIT with increased multi-residential and industrial exposure surfacing value through its significant development pipeline. This follows H&R’s previously announced sale of the Bow office tower and Bell office campus totalling $1.47 billion in gross proceeds.

To achieve this transformation, H&R will execute  the following strategic repositioning initiatives:

(i) Tax-free spin-off (the “Spin-Off”) of its Primaris properties including all of H&R’s enclosed malls to a new stand-alone, publicly traded REIT (“Primaris”) focused on owning and managing enclosed shopping centres in Canada .

(ii) Disposition of the following property groups (the “Strategic Dispositions”), synchronized to match capital funding requirements. The Strategic Dispositions are poised to generate gross proceeds of approximately $3.4 billion over time:

  • Exit retail – sale of approximately $600 million of grocery-anchored and essential service retail and monetization of H&R’s CDN $470 million equity interest in Echo Realty LP (“ECHO”); and
  • Exit office – sale of approximately $2.3 billion of office properties with the remaining $1.4 billion to be held for redevelopment into Class A multi-residential and industrial redevelopments.

(iii) Reinvestment of proceeds generated from the Strategic Dispositions to fund H&R’s significant multi-residential and industrial development pipeline and for select acquisitions, in prime locations in Toronto , Montreal , Vancouver , and high-growth U.S. sunbelt and gateway cities.

“We are incredibly excited to announce our transformational strategic repositioning plan, providing a clear path forward to simplify H&R’s business model and to create significant value and growth for unitholders,” said Thomas Hofstedter , President & CEO of H&R REIT. “Our focus on Class A multi-residential and industrial properties surfaces value embedded in our existing portfolio through intensification and redevelopment and creates what we believe is a more compelling investment profile, streamlines our operating platform and enhances our financial flexibility.”

“Over the past several years, H&R’s Board of Trustees and management have executed on a number of initiatives aimed at repositioning the business to maximize unitholder value and better align with investor preferences”, said Ronald Rutman , Chairman of the Board of H&R REIT. “The Spin-Off, combined with H&R’s previously completed dispositions of the Bow office tower and Bell office campus mark recent significant milestones in the advancement of these initiatives. H&R will remain focused on executing the strategic repositioning plan with the objective of unlocking the value of its portfolio for unitholders.”

STRATEGIC REPOSITIONING BENEFITS:

  • Greater exposure to higher growth multi-residential and industrial assets, with reduced exposure to retail and office properties.
  • Enhanced major market presence in the Greater Toronto Area and high-growth U.S. sunbelt and gateway cities and immediate reduction of Alberta exposure to 7% of investment properties post Spin-Off.
  • Improved proforma balance sheet enhances financial flexibility to execute on growth while maintaining H&R’s current investment grade credit rating.
  • Upon completion of the Spin-Off, the combined annual distributions of H&R REIT and Primaris are anticipated to total $0.72 , up 4.3% from the current $0.69 per H&R unit. H&R is anticipated to distribute $0.52 per annum while Primaris is anticipated to distribute $0.20 per annum.

Investment Properties June 30, 2021, Investment Properties Post Spin-Off January 1, 2022, and Investment Properties 5-Year Target (CNW Group/H&R Real Estate Investment Trust)

H&R REIT STRATEGIC REPOSITIONING PLAN

H&R intends to spin-off its enclosed mall portfolio and together with Healthcare of Ontario Pension Plan (“HOOPP”) create Primaris. Primaris will own interests in 35 properties with an appraised value of approximately $3.2 billion encompassing 11.4 million square feet of gross leasable area (“GLA”). H&R will contribute 27 properties with an appraised value of approximately $2.4 billion and HOOPP will contribute eight properties with an appraised value of approximately $0.8 billion . H&R’s secured debt will be reduced by approximately $579 million for the outstanding mortgage balances on the Primaris properties. H&R has applied to the TSX for the listing of Primaris units on the TSX with the ticker PMZ.UN, following the expected closing in late December 2021 or early 2022. The listing will be subject to the TSX’s customary listing approval requirements.

In aggregate, H&R’s grocery-anchored and essential service retail portfolio includes 56 properties located primarily in Ontario , encompassing 2.8 million square feet of GLA which represent a fair value of approximately $600 million at June 30, 2021 .

H&R’s 33.6% ownership interest in ECHO Realty LP, a privately held real estate company with a portfolio of 237 grocery-anchored shopping centres primarily occupied by Giant Eagle, Inc., one of the largest supermarket chains in the United States . The portfolio encompasses 2.9 million square feet of GLA, and an equity ownership interest of approximately $470 million at June 30, 2021 .

The office assets to be sold over time comprise 15 properties, encompassing 4.2 million square feet of GLA with a weighted average lease term of 9.5 years. These properties with an average occupancy rate of 99.5% are located in major urban markets with high-credit quality tenants, and represent a fair value of approximately $2.3 billion at Q2 2021.

12 office properties representing a fair value of approximately $1.4 billion at Q2 2021, encompassing 3.1 million square feet of GLA with intensification potential will be retained for redevelopment into multi-residential and industrial properties.

H&R expects to evaluate each potential development in the context of its capital allocation strategy, and may elect to pursue development on its own, with capital partners, or sell the developments with approvals in place, capturing much of the value creation.

  • Reinvest Proceeds into Higher Growth Multi-Residential and Industrial :
  • Proceeds generated from the Strategic Dispositions will be redeployed into development of Class A multi-residential and industrial properties, in prime locations in Canada , and high growth sunbelt and gateway cities in the United States . The total pipeline is comprised of approximately 12,700 residential units and 3.2 million square feet of industrial GLA. The execution of these developments within H&R’s multi-residential and industrial development pipeline is poised to drive earnings and NAV growth.
  • 12 office properties located in Toronto , Vancouver and Montreal will be redeveloped into Class A multi-residential and industrial properties. These office properties would add approximately 5,900 residential units and 440,000 square feet of industrial GLA to H&R’s portfolio over time.

Executive Leadership Appointments

As part of this transformative initiative, H&R is pleased to announce the following executive officer appointments:

Philippe Lapointe – President Lantower Residential

Emily Watson – Chief Operating Officer of Lantower Residential

Colleen Grahn – President of Lantower Property Management

Robyn Kestenberg – Executive VP Office and Industrial

Matthew Kingston – Executive VP Development and Construction

In addition, upon completion of the Spin-Off, Alex Avery , who will be Chief Executive Officer and a Trustee of Primaris, will be resigning as an officer and Trustee of H&R REIT so that H&R and Primaris will be completely independent with no common officers or trustees.

Built for the New Retail Landscape

Primaris will have substantial scale, a differentiated financial model and a full service, vertically integrated management platform.  The portfolio will include a combination of assets contributed by H&R and HOOPP, aggregating interests in 35 properties with an appraised value of approximately $3.2 billion spanning 11.4 million square feet of GLA, at Primaris’ interest. Primaris will be fully internally managed, with an independent board of trustees and operate as a distinct and separate publicly-traded entity upon completion of the Spin-Off. Immediately following the Spin-Off, H&R unitholders will directly own approximately 74% of Primaris units outstanding, and HOOPP will own approximately 26% of Primaris units outstanding.

“Primaris will be exceptionally well positioned to take advantage of market opportunities at a unique time in the evolution of the Canadian retail property landscape,” said Alex Avery , who will be Chief Executive Officer of Primaris following the Spin-Off. “The scale and strength of the Primaris platform combined with its conservative financial model provides significant flexibility and capacity to both self-fund Primaris’ strategy and positions it well to pursue investment opportunities in the current environment.”

“HOOPP is excited to be Primaris’ institutional partner to this important transaction, forming Canada’s only publicly-traded, pure play national enclosed shopping centre REIT,” said Eric Plesman , Head of Global Real Estate at HOOPP. “Primaris is a well-recognized Canadian operator with a significant track record, and is well-positioned to grow and benefit from the economic recovery.”

Key Transaction Highlights

  • Large-Scale Canadian Enclosed Shopping Centre Portfolio : Primaris’ high-quality national portfolio will be comprised of dominant shopping centres located in primary and secondary Canadian markets. As one of the four largest enclosed shopping centre platforms in Canada , Primaris will be an essential partner for retailers, providing efficient access to key markets across the country.
  • Fully-Internal Management Platform and Strong Independent Board of Trustees: Primaris’ fully-internal management platform capabilities span leasing, legal, finance, lease administration, human resources, information technology, accounting and reporting, operations, asset management and development with nearly 20 years of operating history. Primaris’ executive leadership team will be led by Alex Avery , current Executive Vice President, Asset Management & Strategic Initiatives at H&R REIT, and Patrick Sullivan , current Chief Operating Officer of H&R’s Primaris division, bringing significant real estate investment, capital markets and retail property operating expertise. The incoming Board of Trustees has been selected to ensure strong and independent governance.
  • Differentiated Capital Structure and Financial Strategy: Primaris’ leverage at formation is expected to be approximately 29% Debt to Gross Book Value and 5.3x Debt to EBITDA. Its target payout ratio of 45% – 50% of FFO is expected to initially provide significant retained annual cash flow of approximately $65 million to fund investments in development and acquisition opportunities and minimize reliance on external capital sources. This unique and flexible financial model is expected to differentiate Primaris, with leverage significantly below most Canadian REIT peers.
  • Strong Institutional Endorsement: HOOPP, one of the largest and most successful pension fund investors in Canada , will be Primaris’ largest unitholder, holding approximately 26% of outstanding units following the HOOPP Contribution, providing strong institutional support of Primaris’ governance and strategy.
  • Excess Density and Substantial Intensification Potential: The Primaris portfolio includes several urban properties with significant intensification potential. Dufferin Grove , Primaris’ flagship 1,285 suite multi-residential development on four acres of excess land at Dufferin Mall is well advanced, with full zoning approval expected in 2021. Other significant intensification opportunities include Orchard Park in Kelowna , Place D’ Orleans in Ottawa , Sunridge and Marlborough Malls in Calgary , among others. Internal development, intensification and adaptive reuse projects will be considered over time, in the context of alternative investment opportunities.

The property values and the resulting equity ownership in Primaris are based on recently completed independent third-party appraisals completed on 100% of the properties.  H&R will contribute 27 properties with an appraised value of approximately $2.4 billion aggregating 7.6 million square feet of GLA at Primaris’ proportionate interest, and HOOPP will contribute eight properties with an appraised value of approximately $0.8 billion , aggregating 3.8 million square feet of GLA.

Primaris will have a strong and well-diversified tenant base with its top ten tenants representing 29% of minimum rent. Canadian Tire, Walmart, Loblaws, TJX Companies and Bell Canada will be Primaris’ largest tenants, and seven of the top ten tenants will be investment grade rated. Across Primaris’ approximately 2,300 tenant portfolio, the weighted average lease term will be approximately 5.1 years.

Further information regarding the Spin-Off, including anticipated portfolio metrics and certain forecast financials will be included in the management proxy circular (the “Circular”) expected to be mailed to H&R unitholders in November 2021 . A Primaris investor presentation containing further information regarding the Spin-Off is available on H&R’s website.

Details of the Spin-Off

H&R’s properties will be transferred to Primaris pursuant to a plan of arrangement (the “Arrangement”).  Each existing H&R unitholder will receive one unit of Primaris for every one H&R unit held, subject to any consolidation or split of Primaris units pursuant to the Arrangement. After completion of the Arrangement, HOOPP’s properties will be sold to Primaris in consideration for units of Primaris. Following closing of the Arrangement and the HOOPP Contribution, H&R unitholders and HOOPP are expected to own an approximate 74% and 26% interest in Primaris, respectively.

In connection with the Arrangement, H&R will apply to the Court of Queen’s Bench of Alberta for an interim order confirming, among other things, the calling and holding of a meeting (the “Meeting”) of H&R unitholders to be held in December 2021 to approve the Arrangement. In addition, H&R has (i) applied to the Canada Revenue Agency for an advance income tax ruling confirming certain Canadian federal income tax consequences of the Arrangement (the “CRA Ruling”), and (ii) applied for conditional approval from the TSX for the listing and posting for trading of the Primaris units. Listing will be subject to the TSX’s customary listing approval requirements.

The Arrangement is subject to the approval of H&R unitholders by way of the affirmative vote of at least two-thirds of the votes cast by H&R unitholders present in person or by proxy at the Meeting. The Board of H&R has determined that the Arrangement is in the best interests of H&R REIT and accordingly, H&R’s Board recommends that H&R unitholders vote IN FAVOUR OF the Arrangement for the reasons to be set out in detail in the Circular. The H&R trustees have received a fairness opinion from their financial advisor, CIBC World Markets (“CIBC”) that, subject to the assumptions, limitations and qualifications contained therein, (i) the distribution to H&R unitholders pursuant to the Arrangement is fair, from a financial point of view, to the H&R unitholders, and (ii) that the consideration to be paid to HOOPP by Primaris is fair, from a financial point of view, to Primaris.

If the Arrangement is approved by the H&R unitholders and assuming timely satisfaction (or waiver) of all other closing conditions, including receipt of a final order of the Court of Queen’s Bench of Alberta and the CRA Ruling, it is anticipated that the transaction will be completed in late December 2021 or early 2022.

The foregoing is qualified in its entirety by the more detailed information that will be included in the Circular. Unitholders are urged to carefully read the Circular, once available, before making their decision with regards to the Arrangement. Copies of the arrangement agreement , purchase and sale agreement relating to the properties to be contributed by HOOPP and Circular will be available on SEDAR at www.sedar.com .

CIBC World Markets and Scotiabank are acting as financial advisors to H&R REIT. Blake, Cassels & Graydon LLP is acting as a legal counsel to H&R REIT.

BMO Capital Markets is acting as financial advisor to HOOPP. Torys LLP is acting as a legal counsel to HOOPP.

Real Asset Strategies is acting as investor relations advisor to H&R REIT.

CONFERENCE CALL

A conference call and live audio webcast and accompanying presentation hosted by H&R REIT and Primaris will be held to discuss the strategic repositioning plan, including the Spin-Off of Primaris on Wednesday, October 27, 2021 at 11.00 a.m. Eastern Time . Participants can join by logging into the webcast here , or at www.hr-reit.com , and selecting Investor Events under the Investor Relations section, or by dialing 1-888-510-2507 or 1-289-514-5065. 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.

For those unable to participate in the conference call at the scheduled time, it will be archived for replay beginning approximately one hour following completion of the call. To access the archived conference call by telephone, dial 1-800-770-2030 or 1-647-362-9199 and enter the passcode 7614157 followed by the pound key. The telephone replay will be available until November 3, 2021 at midnight.

Investor presentations for both H&R and Primaris are available on H&R’s website at https://www.hr-reit.com/investor-relations/#investorpresentation .

Q3 RESULTS UPDATED CONFERENCE CALL AND WEBCAST DATE

H&R now intends to release its financial results for Q3 2021 on Monday, November 15 , 2021.  Management will host a conference call to discuss such financial results on Tuesday, November 16, 2021 at 9.30 a.m. Eastern Time .  Participants can join the call by dialing 1-888-510-2507 or 1-289-514-5065. For those unable to participate in the conference call at the scheduled time, it will be archived for replay beginning approximately one hour following completion of the call. To access the archived conference call by telephone, dial 1-647-362-9199 or 1-800-770-2030 and enter the passcode 3504623 followed by the pound key.  The telephone replay will be available until Tuesday, November 23, 2021 at midnight.

A live audio webcast will be available through https://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.

About H&R REIT

H&R REIT is one of Canada’s largest real estate investment trusts with total assets of approximately $13.1 billion at June 30, 2021 . H&R REIT has ownership interests in a North American portfolio of high-quality office, retail, industrial and residential properties comprising over 40 million square feet.

About the Healthcare of Ontario Pension Plan

HOOPP serves Ontario’s hospital and community-based healthcare sector, with more than 610 participating employers and 400,000 active, deferred and retired members. It operates as a private independent trust and is governed by a Board of Trustees with a sole fiduciary duty to deliver the pension promise.  

HOOPP is fully funded and manages a highly diversified portfolio of more than $104 billion in assets. The 10-year annualized rate of return is 11.16%. HOOPP’s investing success is delivered by an in-house team of investment professionals. 

HOOPP’s real estate portfolio has a market value of more than $15 billion , spanning multiple geographies and asset classes (office, logistics, retail, residential). The Fund continues to grow both the scale and scope of this portfolio, with a focus on high-quality assets and best-in-class partners that share our sustainable investing approach and creation of long-term value for our members. The real estate portfolio had a currency-hedged return of 8.2% over the past five years, which is $1.8 billion over the benchmark. 

Non-IFRS Financial Measures

Growth in Same-Asset property operating income (cash basis) and Payout ratio as a % of FFO are both non-GAAP ratios that are more fully defined and discussed in H&R’s MD&A in full as at June 30, 2021 and available on www.hr-reit.com and www.sedar.com . Debt to EBITDA is a non-GAAP ratio is calculated by dividing the total of: Debt (including mortgages payable, debentures payable, unsecured term loans and lines of credit) by (i) property operating income (excluding straight-lining of contractual rent and IFRIC 21); (ii) finance income; and (iii) trust expenses (excluding the fair value adjustment to unit-based compensation). Management uses Debt to EBITDA to assess the REIT’s leverage ratio.

These ratios do not have a standard meaning prescribed by GAAP and therefore they may not be comparable to similarly titled measurers presented by other publicly traded companies, and should not be construed as an alternative to other financial measures determined in accordance with GAAP.

Forward-looking Information

Certain statements in this news release contain forward-looking statements within the meaning of applicable securities laws (also known as forward-looking statements). These forward-looking statements include, but are not limited to H&R’s plans, objectives, expectations and intentions, including the Spin-Off, the Strategic Dispositions, the timing thereof and the gross proceeds therefrom, the intention to develop and redevelop properties, management’s beliefs regarding H&R’s growth prospects and the ability to surface value for unitholders, the benefits of the strategic repositioning initiatives and the pro forma impact on H&R’s portfolio and financial metrics, H&R’s investment grade credit rating, combined annual distributions of H&R REIT and Primaris, H&R’s target investment mix, the transaction with HOOPP, earnings and NAV growth as a result of execution of H&R’s development pipeline, the timing and budgets for future developments, the size, asset value and portfolio metrics of Primaris upon completion of the Spin-Off and HOOPP Contribution, Primaris’ ability to take advantage of market opportunities, Primaris’ expected leverage, payout ratio, and annual retained cash flow, Primaris’ growth potential, intensification opportunities, Primaris’ capital structure and financing strategy, the timing of H&R’s unitholders meeting and publication of related unitholder materials, the expected completion date of the proposed transaction, the ability to obtain the final order and the CRA Ruling on the terms and timing contemplated by the parties, to complete the Arrangement and the transaction with HOOPP on the terms and on the timing contemplated by management, the assumption that all necessary conditions will be met for the completion of the Arrangement and the pro forma information regarding Primaris. Such forward-looking statements reflect H&R’s current beliefs and are based on information currently available to management. These statements are not guarantees of future performance and are based on H&R’s estimates and assumptions that are subject to risks and uncertainties, including those to be set forth in the Circular and in H&R REIT’s materials filed with the Canadian securities regulatory authorities from time to time, which could cause the actual results and performance of H&R to differ materially from the forward-looking statements contained in this news release. Although the forward-looking statements contained in this news release are based upon what H&R believe are reasonable assumptions, there can be no assurance that actual results will be consistent with these forward-looking statements. There can be no assurance that the proposed transaction will occur or that the anticipated benefits will be realized. The proposed transaction is subject to approval by the Court of Queen’s Bench of Alberta , H&R unitholders and by the TSX and the fulfillment of certain conditions, and there can be no assurance that any such approvals will be obtained and/or any such conditions will be met. The proposed transaction could be modified, restructured or terminated. All forward-looking statements in this news release are qualified by these cautionary statements. These forward-looking statements are made as of today and H&R, except as required by applicable law, assume no obligation to update or revise them to reflect new information or the occurrence of future events or circumstances.

Additional information regarding H&R REIT is available at http://www.hr-reit.com and on www.sedar.com .

SOURCE H&R Real Estate Investment Trust

Cision

reit strategic plan

Instrument Name H&R Real Estate Inv Trust Instrument Symbol (HR-UN-T) Instrument Exchange TSX

H&r reit announces transformational strategic repositioning plan.

/NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES . ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF U.S. SECURITIES LAW./

Primaris Spin-Off, Exit Retail, Exit Office, Significant 12,700 Residential Unit Development Pipeline

TORONTO , Oct. 27, 2021 /CNW/ - H&R REIT ("H&R" or the "REIT") announces today its strategic repositioning plan to transform from a diversified REIT, into a simplified, growth-oriented REIT with increased multi-residential and industrial exposure surfacing value through its significant development pipeline. This follows H&R's previously announced sale of the Bow office tower and Bell office campus totalling $1.47 billion in gross proceeds.

To achieve this transformation, H&R will execute  the following strategic repositioning initiatives:

(i) Tax-free spin-off (the "Spin-Off") of its Primaris properties including all of H&R's enclosed malls to a new stand-alone, publicly traded REIT ("Primaris") focused on owning and managing enclosed shopping centres in Canada .

(ii) Disposition of the following property groups (the "Strategic Dispositions"), synchronized to match capital funding requirements. The Strategic Dispositions are poised to generate gross proceeds of approximately $3.4 billion over time:

  • Exit retail - sale of approximately $600 million of grocery-anchored and essential service retail and monetization of H&R's CDN $470 million equity interest in Echo Realty LP ("ECHO"); and
  • Exit office - sale of approximately $2.3 billion of office properties with the remaining $1.4 billion to be held for redevelopment into Class A multi-residential and industrial redevelopments.

(iii) Reinvestment of proceeds generated from the Strategic Dispositions to fund H&R's significant multi-residential and industrial development pipeline and for select acquisitions, in prime locations in Toronto , Montreal , Vancouver , and high-growth U.S. sunbelt and gateway cities.

"We are incredibly excited to announce our transformational strategic repositioning plan, providing a clear path forward to simplify H&R's business model and to create significant value and growth for unitholders," said Thomas Hofstedter , President & CEO of H&R REIT. "Our focus on Class A multi-residential and industrial properties surfaces value embedded in our existing portfolio through intensification and redevelopment and creates what we believe is a more compelling investment profile, streamlines our operating platform and enhances our financial flexibility."

"Over the past several years, H&R's Board of Trustees and management have executed on a number of initiatives aimed at repositioning the business to maximize unitholder value and better align with investor preferences", said Ronald Rutman , Chairman of the Board of H&R REIT. "The Spin-Off, combined with H&R's previously completed dispositions of the Bow office tower and Bell office campus mark recent significant milestones in the advancement of these initiatives. H&R will remain focused on executing the strategic repositioning plan with the objective of unlocking the value of its portfolio for unitholders."

STRATEGIC REPOSITIONING BENEFITS:

  • Greater exposure to higher growth multi-residential and industrial assets, with reduced exposure to retail and office properties.
  • Enhanced major market presence in the Greater Toronto Area and high-growth U.S. sunbelt and gateway cities and immediate reduction of Alberta exposure to 7% of investment properties post Spin-Off.
  • Improved proforma balance sheet enhances financial flexibility to execute on growth while maintaining H&R's current investment grade credit rating.
  • Upon completion of the Spin-Off, the combined annual distributions of H&R REIT and Primaris are anticipated to total $0.72 , up 4.3% from the current $0.69 per H&R unit. H&R is anticipated to distribute $0.52 per annum while Primaris is anticipated to distribute $0.20 per annum.

H&R REIT STRATEGIC REPOSITIONING PLAN

  • EXIT RETAIL THROUGH SPIN-OFF AND DISPOSITIONS:
  • Primaris Spin-Off Transaction: H&R intends to spin-off its enclosed mall portfolio and together with Healthcare of Ontario Pension Plan ("HOOPP") create Primaris. Primaris will own interests in 35 properties with an appraised value of approximately $3.2 billion encompassing 11.4 million square feet of gross leasable area ("GLA"). H&R will contribute 27 properties with an appraised value of approximately $2.4 billion and HOOPP will contribute eight properties with an appraised value of approximately $0.8 billion . H&R's secured debt will be reduced by approximately $579 million for the outstanding mortgage balances on the Primaris properties. H&R has applied to the TSX for the listing of Primaris units on the TSX with the ticker PMZ.UN, following the expected closing in late December 2021 or early 2022. The listing will be subject to the TSX's customary listing approval requirements.
  • Disposition of High-Quality Grocery-Anchored and Essential Service Retail Properties to Fund Developments:
  • Retail Property Dispositions: In aggregate, H&R's grocery-anchored and essential service retail portfolio includes 56 properties located primarily in Ontario , encompassing 2.8 million square feet of GLA which represent a fair value of approximately $600 million at June 30, 2021 . H&R's 33.6% ownership interest in ECHO Realty LP, a privately held real estate company with a portfolio of 237 grocery-anchored shopping centres primarily occupied by Giant Eagle, Inc., one of the largest supermarket chains in the United States . The portfolio encompasses 2.9 million square feet of GLA, and an equity ownership interest of approximately $470 million at June 30, 2021 .
  • EXIT OFFICE THROUGH DISPOSITIONS AND RE-DEVELOPMENT:
  • Office Properties to be Sold to Fund Developments: The office assets to be sold over time comprise 15 properties, encompassing 4.2 million square feet of GLA with a weighted average lease term of 9.5 years. These properties with an average occupancy rate of 99.5% are located in major urban markets with high-credit quality tenants, and represent a fair value of approximately $2.3 billion at Q2 2021.
  • Office Properties held for Re-development into Class A Multi-Residential and Industrial Re-development: 12 office properties representing a fair value of approximately $1.4 billion at Q2 2021, encompassing 3.1 million square feet of GLA with intensification potential will be retained for redevelopment into multi-residential and industrial properties.
  • FOCUS ON MULTI-RESIDENTIAL AND INDUSTRIAL H&R expects to evaluate each potential development in the context of its capital allocation strategy, and may elect to pursue development on its own, with capital partners, or sell the developments with approvals in place, capturing much of the value creation.
  • Reinvest Proceeds into Higher Growth Multi-Residential and Industrial :
  • Proceeds generated from the Strategic Dispositions will be redeployed into development of Class A multi-residential and industrial properties, in prime locations in Canada , and high growth sunbelt and gateway cities in the United States . The total pipeline is comprised of approximately 12,700 residential units and 3.2 million square feet of industrial GLA. The execution of these developments within H&R's multi-residential and industrial development pipeline is poised to drive earnings and NAV growth.
  • Office to Class A Multi-Residential and Industrial Redevelopment:
  • 12 office properties located in Toronto , Vancouver and Montreal will be redeveloped into Class A multi-residential and industrial properties. These office properties would add approximately 5,900 residential units and 440,000 square feet of industrial GLA to H&R's portfolio over time.

Executive Leadership Appointments

As part of this transformative initiative, H&R is pleased to announce the following executive officer appointments:

Philippe Lapointe – President Lantower Residential

Emily Watson - Chief Operating Officer of Lantower Residential

Colleen Grahn - President of Lantower Property Management

Robyn Kestenberg – Executive VP Office and Industrial

Matthew Kingston – Executive VP Development and Construction

In addition, upon completion of the Spin-Off, Alex Avery , who will be Chief Executive Officer and a Trustee of Primaris, will be resigning as an officer and Trustee of H&R REIT so that H&R and Primaris will be completely independent with no common officers or trustees.

Built for the New Retail Landscape

Primaris will have substantial scale, a differentiated financial model and a full service, vertically integrated management platform.  The portfolio will include a combination of assets contributed by H&R and HOOPP, aggregating interests in 35 properties with an appraised value of approximately $3.2 billion spanning 11.4 million square feet of GLA, at Primaris' interest. Primaris will be fully internally managed, with an independent board of trustees and operate as a distinct and separate publicly-traded entity upon completion of the Spin-Off. Immediately following the Spin-Off, H&R unitholders will directly own approximately 74% of Primaris units outstanding, and HOOPP will own approximately 26% of Primaris units outstanding.

"Primaris will be exceptionally well positioned to take advantage of market opportunities at a unique time in the evolution of the Canadian retail property landscape," said Alex Avery , who will be Chief Executive Officer of Primaris following the Spin-Off. "The scale and strength of the Primaris platform combined with its conservative financial model provides significant flexibility and capacity to both self-fund Primaris' strategy and positions it well to pursue investment opportunities in the current environment."

"HOOPP is excited to be Primaris' institutional partner to this important transaction, forming Canada's only publicly-traded, pure play national enclosed shopping centre REIT," said Eric Plesman , Head of Global Real Estate at HOOPP. "Primaris is a well-recognized Canadian operator with a significant track record, and is well-positioned to grow and benefit from the economic recovery."

Key Transaction Highlights

  • Large-Scale Canadian Enclosed Shopping Centre Portfolio : Primaris' high-quality national portfolio will be comprised of dominant shopping centres located in primary and secondary Canadian markets. As one of the four largest enclosed shopping centre platforms in Canada , Primaris will be an essential partner for retailers, providing efficient access to key markets across the country.
  • Fully-Internal Management Platform and Strong Independent Board of Trustees: Primaris' fully-internal management platform capabilities span leasing, legal, finance, lease administration, human resources, information technology, accounting and reporting, operations, asset management and development with nearly 20 years of operating history. Primaris' executive leadership team will be led by Alex Avery , current Executive Vice President, Asset Management & Strategic Initiatives at H&R REIT, and Patrick Sullivan , current Chief Operating Officer of H&R's Primaris division, bringing significant real estate investment, capital markets and retail property operating expertise. The incoming Board of Trustees has been selected to ensure strong and independent governance.
  • Differentiated Capital Structure and Financial Strategy: Primaris' leverage at formation is expected to be approximately 29% Debt to Gross Book Value and 5.3x Debt to EBITDA. Its target payout ratio of 45% – 50% of FFO is expected to initially provide significant retained annual cash flow of approximately $65 million to fund investments in development and acquisition opportunities and minimize reliance on external capital sources. This unique and flexible financial model is expected to differentiate Primaris, with leverage significantly below most Canadian REIT peers.
  • Strong Institutional Endorsement: HOOPP, one of the largest and most successful pension fund investors in Canada , will be Primaris' largest unitholder, holding approximately 26% of outstanding units following the HOOPP Contribution, providing strong institutional support of Primaris' governance and strategy.
  • Excess Density and Substantial Intensification Potential: The Primaris portfolio includes several urban properties with significant intensification potential. Dufferin Grove , Primaris' flagship 1,285 suite multi-residential development on four acres of excess land at Dufferin Mall is well advanced, with full zoning approval expected in 2021. Other significant intensification opportunities include Orchard Park in Kelowna , Place D' Orleans in Ottawa , Sunridge and Marlborough Malls in Calgary , among others. Internal development, intensification and adaptive reuse projects will be considered over time, in the context of alternative investment opportunities.

The property values and the resulting equity ownership in Primaris are based on recently completed independent third-party appraisals completed on 100% of the properties.  H&R will contribute 27 properties with an appraised value of approximately $2.4 billion aggregating 7.6 million square feet of GLA at Primaris' proportionate interest, and HOOPP will contribute eight properties with an appraised value of approximately $0.8 billion , aggregating 3.8 million square feet of GLA.

Primaris will have a strong and well-diversified tenant base with its top ten tenants representing 29% of minimum rent. Canadian Tire, Walmart, Loblaws, TJX Companies and Bell Canada will be Primaris' largest tenants, and seven of the top ten tenants will be investment grade rated. Across Primaris' approximately 2,300 tenant portfolio, the weighted average lease term will be approximately 5.1 years.

Further information regarding the Spin-Off, including anticipated portfolio metrics and certain forecast financials will be included in the management proxy circular (the "Circular") expected to be mailed to H&R unitholders in November 2021 . A Primaris investor presentation containing further information regarding the Spin-Off is available on H&R's website.

Details of the Spin-Off

H&R's properties will be transferred to Primaris pursuant to a plan of arrangement (the "Arrangement").  Each existing H&R unitholder will receive one unit of Primaris for every one H&R unit held, subject to any consolidation or split of Primaris units pursuant to the Arrangement. After completion of the Arrangement, HOOPP's properties will be sold to Primaris in consideration for units of Primaris. Following closing of the Arrangement and the HOOPP Contribution, H&R unitholders and HOOPP are expected to own an approximate 74% and 26% interest in Primaris, respectively.

In connection with the Arrangement, H&R will apply to the Court of Queen's Bench of Alberta for an interim order confirming, among other things, the calling and holding of a meeting (the "Meeting") of H&R unitholders to be held in December 2021 to approve the Arrangement. In addition, H&R has (i) applied to the Canada Revenue Agency for an advance income tax ruling confirming certain Canadian federal income tax consequences of the Arrangement (the "CRA Ruling"), and (ii) applied for conditional approval from the TSX for the listing and posting for trading of the Primaris units. Listing will be subject to the TSX's customary listing approval requirements.

The Arrangement is subject to the approval of H&R unitholders by way of the affirmative vote of at least two-thirds of the votes cast by H&R unitholders present in person or by proxy at the Meeting. The Board of H&R has determined that the Arrangement is in the best interests of H&R REIT and accordingly, H&R's Board recommends that H&R unitholders vote IN FAVOUR OF the Arrangement for the reasons to be set out in detail in the Circular. The H&R trustees have received a fairness opinion from their financial advisor, CIBC World Markets ("CIBC") that, subject to the assumptions, limitations and qualifications contained therein, (i) the distribution to H&R unitholders pursuant to the Arrangement is fair, from a financial point of view, to the H&R unitholders, and (ii) that the consideration to be paid to HOOPP by Primaris is fair, from a financial point of view, to Primaris.

If the Arrangement is approved by the H&R unitholders and assuming timely satisfaction (or waiver) of all other closing conditions, including receipt of a final order of the Court of Queen's Bench of Alberta and the CRA Ruling, it is anticipated that the transaction will be completed in late December 2021 or early 2022.

The foregoing is qualified in its entirety by the more detailed information that will be included in the Circular. Unitholders are urged to carefully read the Circular, once available, before making their decision with regards to the Arrangement. Copies of the arrangement agreement , purchase and sale agreement relating to the properties to be contributed by HOOPP and Circular will be available on SEDAR at www.sedar.com .

CIBC World Markets and Scotiabank are acting as financial advisors to H&R REIT. Blake, Cassels & Graydon LLP is acting as a legal counsel to H&R REIT.

BMO Capital Markets is acting as financial advisor to HOOPP. Torys LLP is acting as a legal counsel to HOOPP.

Real Asset Strategies is acting as investor relations advisor to H&R REIT.

CONFERENCE CALL

A conference call and live audio webcast and accompanying presentation hosted by H&R REIT and Primaris will be held to discuss the strategic repositioning plan, including the Spin-Off of Primaris on Wednesday, October 27, 2021 at 11.00 a.m. Eastern Time . Participants can join by logging into the webcast here , or at www.hr-reit.com , and selecting Investor Events under the Investor Relations section, or by dialing 1-888-510-2507 or 1-289-514-5065. 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.

For those unable to participate in the conference call at the scheduled time, it will be archived for replay beginning approximately one hour following completion of the call. To access the archived conference call by telephone, dial 1-800-770-2030 or 1-647-362-9199 and enter the passcode 7614157 followed by the pound key. The telephone replay will be available until November 3, 2021 at midnight.

Investor presentations for both H&R and Primaris are available on H&R's website at https://www.hr-reit.com/investor-relations/#investorpresentation .

Q3 RESULTS UPDATED CONFERENCE CALL AND WEBCAST DATE

H&R now intends to release its financial results for Q3 2021 on Monday, November 15 , 2021.  Management will host a conference call to discuss such financial results on Tuesday, November 16, 2021 at 9.30 a.m. Eastern Time .  Participants can join the call by dialing 1-888-510-2507 or 1-289-514-5065. For those unable to participate in the conference call at the scheduled time, it will be archived for replay beginning approximately one hour following completion of the call. To access the archived conference call by telephone, dial 1-647-362-9199 or 1-800-770-2030 and enter the passcode 3504623 followed by the pound key.  The telephone replay will be available until Tuesday, November 23, 2021 at midnight.

A live audio webcast will be available through https://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.

About H&R REIT

H&R REIT is one of Canada's largest real estate investment trusts with total assets of approximately $13.1 billion at June 30, 2021 . H&R REIT has ownership interests in a North American portfolio of high-quality office, retail, industrial and residential properties comprising over 40 million square feet.

About the Healthcare of Ontario Pension Plan

HOOPP serves Ontario's hospital and community-based healthcare sector, with more than 610 participating employers and 400,000 active, deferred and retired members. It operates as a private independent trust and is governed by a Board of Trustees with a sole fiduciary duty to deliver the pension promise.  

HOOPP is fully funded and manages a highly diversified portfolio of more than $104 billion in assets. The 10-year annualized rate of return is 11.16%. HOOPP's investing success is delivered by an in-house team of investment professionals. 

HOOPP's real estate portfolio has a market value of more than $15 billion , spanning multiple geographies and asset classes (office, logistics, retail, residential). The Fund continues to grow both the scale and scope of this portfolio, with a focus on high-quality assets and best-in-class partners that share our sustainable investing approach and creation of long-term value for our members. The real estate portfolio had a currency-hedged return of 8.2% over the past five years, which is $1.8 billion over the benchmark. 

Non-IFRS Financial Measures

Growth in Same-Asset property operating income (cash basis) and Payout ratio as a % of FFO are both non-GAAP ratios that are more fully defined and discussed in H&R's MD&A in full as at June 30, 2021 and available on www.hr-reit.com and www.sedar.com . Debt to EBITDA is a non-GAAP ratio is calculated by dividing the total of: Debt (including mortgages payable, debentures payable, unsecured term loans and lines of credit) by (i) property operating income (excluding straight-lining of contractual rent and IFRIC 21); (ii) finance income; and (iii) trust expenses (excluding the fair value adjustment to unit-based compensation). Management uses Debt to EBITDA to assess the REIT's leverage ratio.

These ratios do not have a standard meaning prescribed by GAAP and therefore they may not be comparable to similarly titled measurers presented by other publicly traded companies, and should not be construed as an alternative to other financial measures determined in accordance with GAAP.

Forward-looking Information

Certain statements in this news release contain forward-looking statements within the meaning of applicable securities laws (also known as forward-looking statements). These forward-looking statements include, but are not limited to H&R's plans, objectives, expectations and intentions, including the Spin-Off, the Strategic Dispositions, the timing thereof and the gross proceeds therefrom, the intention to develop and redevelop properties, management's beliefs regarding H&R's growth prospects and the ability to surface value for unitholders, the benefits of the strategic repositioning initiatives and the pro forma impact on H&R's portfolio and financial metrics, H&R's investment grade credit rating, combined annual distributions of H&R REIT and Primaris, H&R's target investment mix, the transaction with HOOPP, earnings and NAV growth as a result of execution of H&R's development pipeline, the timing and budgets for future developments, the size, asset value and portfolio metrics of Primaris upon completion of the Spin-Off and HOOPP Contribution, Primaris' ability to take advantage of market opportunities, Primaris' expected leverage, payout ratio, and annual retained cash flow, Primaris' growth potential, intensification opportunities, Primaris' capital structure and financing strategy, the timing of H&R's unitholders meeting and publication of related unitholder materials, the expected completion date of the proposed transaction, the ability to obtain the final order and the CRA Ruling on the terms and timing contemplated by the parties, to complete the Arrangement and the transaction with HOOPP on the terms and on the timing contemplated by management, the assumption that all necessary conditions will be met for the completion of the Arrangement and the pro forma information regarding Primaris. Such forward-looking statements reflect H&R's current beliefs and are based on information currently available to management. These statements are not guarantees of future performance and are based on H&R's estimates and assumptions that are subject to risks and uncertainties, including those to be set forth in the Circular and in H&R REIT's materials filed with the Canadian securities regulatory authorities from time to time, which could cause the actual results and performance of H&R to differ materially from the forward-looking statements contained in this news release. Although the forward-looking statements contained in this news release are based upon what H&R believe are reasonable assumptions, there can be no assurance that actual results will be consistent with these forward-looking statements. There can be no assurance that the proposed transaction will occur or that the anticipated benefits will be realized. The proposed transaction is subject to approval by the Court of Queen's Bench of Alberta , H&R unitholders and by the TSX and the fulfillment of certain conditions, and there can be no assurance that any such approvals will be obtained and/or any such conditions will be met. The proposed transaction could be modified, restructured or terminated. All forward-looking statements in this news release are qualified by these cautionary statements. These forward-looking statements are made as of today and H&R, except as required by applicable law, assume no obligation to update or revise them to reflect new information or the occurrence of future events or circumstances.

Additional information regarding H&R REIT is available at http://www.hr-reit.com and on www.sedar.com .

SOURCE H&R Real Estate Investment Trust

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Stock HR.UN

H&R Real Estate Investment Trust

Ca4039254079, diversified reits, h&r reit announces transformational strategic repositioning plan.

/NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES . ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF U.S. SECURITIES LAW./

Primaris Spin-Off, Exit Retail, Exit Office, Significant 12,700 Residential Unit Development Pipeline

TORONTO , Oct. 27, 2021 /CNW/ - H&R REIT ("H&R" or the "REIT") announces today its strategic repositioning plan to transform from a diversified REIT, into a simplified, growth-oriented REIT with increased multi-residential and industrial exposure surfacing value through its significant development pipeline. This follows H&R's previously announced sale of the Bow office tower and Bell office campus totalling $1.47 billion in gross proceeds.

To achieve this transformation, H&R will execute  the following strategic repositioning initiatives:

(i) Tax-free spin-off (the "Spin-Off") of its Primaris properties including all of H&R's enclosed malls to a new stand-alone, publicly traded REIT ("Primaris") focused on owning and managing enclosed shopping centres in Canada .

(ii) Disposition of the following property groups (the "Strategic Dispositions"), synchronized to match capital funding requirements. The Strategic Dispositions are poised to generate gross proceeds of approximately $3.4 billion over time:

  • Exit retail - sale of approximately $600 million of grocery-anchored and essential service retail and monetization of H&R's CDN $470 million equity interest in Echo Realty LP ("ECHO"); and
  • Exit office - sale of approximately $2.3 billion of office properties with the remaining $1.4 billion to be held for redevelopment into Class A multi-residential and industrial redevelopments.

(iii) Reinvestment of proceeds generated from the Strategic Dispositions to fund H&R's significant multi-residential and industrial development pipeline and for select acquisitions, in prime locations in Toronto , Montreal , Vancouver , and high-growth U.S. sunbelt and gateway cities.

Thomas Hofstedter , President & CEO of H&R REIT. "Our focus on Class A multi-residential and industrial properties surfaces value embedded in our existing portfolio through intensification and redevelopment and creates what we believe is a more compelling investment profile, streamlines our operating platform and enhances our financial flexibility."

Ronald Rutman , Chairman of the Board of H&R REIT . "The Spin-Off, combined with H&R's previously completed dispositions of the Bow office tower and Bell office campus mark recent significant milestones in the advancement of these initiatives. H&R will remain focused on executing the strategic repositioning plan with the objective of unlocking the value of its portfolio for unitholders."

STRATEGIC REPOSITIONING BENEFITS:

  • Greater exposure to higher growth multi-residential and industrial assets, with reduced exposure to retail and office properties.
  • Enhanced major market presence in the Greater Toronto Area and high-growth U.S. sunbelt and gateway cities and immediate reduction of Alberta exposure to 7% of investment properties post Spin-Off.
  • Improved proforma balance sheet enhances financial flexibility to execute on growth while maintaining H&R's current investment grade credit rating.
  • Upon completion of the Spin-Off, the combined annual distributions of H&R REIT and Primaris are anticipated to total $0.72 , up 4.3% from the current $0.69 per H&R unit. H&R is anticipated to distribute $0.52 per annum while Primaris is anticipated to distribute $0.20 per annum.

Investment Properties June 30, 2021, Investment Properties Post Spin-Off January 1, 2022, and Investment Properties 5-Year Target (CNW Group/H&R Real Estate Investment Trust)

H&R REIT STRATEGIC REPOSITIONING PLAN

  • EXIT RETAIL THROUGH SPIN-OFF AND DISPOSITIONS:
  • Primaris Spin-Off Transaction: H&R intends to spin-off its enclosed mall portfolio and together with Healthcare of Ontario Pension Plan ("HOOPP") create Primaris. Primaris will own interests in 35 properties with an appraised value of approximately $3.2 billion encompassing 11.4 million square feet of gross leasable area ("GLA"). H&R will contribute 27 properties with an appraised value of approximately $2.4 billion and HOOPP will contribute eight properties with an appraised value of approximately $0.8 billion . H&R's secured debt will be reduced by approximately $579 million for the outstanding mortgage balances on the Primaris properties. H&R has applied to the TSX for the listing of Primaris units on the TSX with the ticker PMZ.UN, following the expected closing in late December 2021 or early 2022. The listing will be subject to the TSX's customary listing approval requirements.
  • Disposition of High-Quality Grocery-Anchored and Essential Service Retail Properties to Fund Developments:
  • Retail Property Dispositions: In aggregate, H&R's grocery-anchored and essential service retail portfolio includes 56 properties located primarily in Ontario , encompassing 2.8 million square feet of GLA which represent a fair value of approximately $600 million at June 30, 2021 . H&R's 33.6% ownership interest in ECHO Realty LP , a privately held real estate company with a portfolio of 237 grocery-anchored shopping centres primarily occupied by Giant Eagle, Inc. , one of the largest supermarket chains in the United States . The portfolio encompasses 2.9 million square feet of GLA, and an equity ownership interest of approximately $470 million at June 30, 2021 .
  • EXIT OFFICE THROUGH DISPOSITIONS AND RE-DEVELOPMENT:
  • Office Properties to be Sold to Fund Developments: The office assets to be sold over time comprise 15 properties, encompassing 4.2 million square feet of GLA with a weighted average lease term of 9.5 years. These properties with an average occupancy rate of 99.5% are located in major urban markets with high-credit quality tenants, and represent a fair value of approximately $2.3 billion at Q2 2021.
  • Office Properties held for Re-development into Class A Multi-Residential and Industrial Re-development: 12 office properties representing a fair value of approximately $1.4 billion at Q2 2021, encompassing 3.1 million square feet of GLA with intensification potential will be retained for redevelopment into multi-residential and industrial properties.
  • FOCUS ON MULTI-RESIDENTIAL AND INDUSTRIAL H&R expects to evaluate each potential development in the context of its capital allocation strategy, and may elect to pursue development on its own, with capital partners, or sell the developments with approvals in place, capturing much of the value creation.
  • Reinvest Proceeds into Higher Growth Multi-Residential and Industrial :
  • Proceeds generated from the Strategic Dispositions will be redeployed into development of Class A multi-residential and industrial properties, in prime locations in Canada , and high growth sunbelt and gateway cities in the United States . The total pipeline is comprised of approximately 12,700 residential units and 3.2 million square feet of industrial GLA. The execution of these developments within H&R's multi-residential and industrial development pipeline is poised to drive earnings and NAV growth.
  • Office to Class A Multi-Residential and Industrial Redevelopment:
  • 12 office properties located in Toronto , Vancouver and Montreal will be redeveloped into Class A multi-residential and industrial properties. These office properties would add approximately 5,900 residential units and 440,000 square feet of industrial GLA to H&R's portfolio over time.

Executive Leadership Appointments

As part of this transformative initiative, H&R is pleased to announce the following executive officer appointments:

Philippe Lapointe – President Lantower Residential

Emily Watson - Chief Operating Officer of Lantower Residential

Colleen Grahn - President of Lantower Property Management

Robyn Kestenberg – Executive VP Office and Industrial

Matthew Kingston – Executive VP Development and Construction

Alex Avery , who will be Chief Executive Officer and a Trustee of Primaris, will be resigning as an officer and Trustee of H&R REIT so that H&R and Primaris will be completely independent with no common officers or trustees.

Built for the New Retail Landscape

Primaris will have substantial scale, a differentiated financial model and a full service, vertically integrated management platform.  The portfolio will include a combination of assets contributed by H&R and HOOPP, aggregating interests in 35 properties with an appraised value of approximately $3.2 billion spanning 11.4 million square feet of GLA, at Primaris' interest. Primaris will be fully internally managed, with an independent board of trustees and operate as a distinct and separate publicly-traded entity upon completion of the Spin-Off. Immediately following the Spin-Off, H&R unitholders will directly own approximately 74% of Primaris units outstanding, and HOOPP will own approximately 26% of Primaris units outstanding.

Alex Avery , who will be Chief Executive Officer of Primaris following the Spin-Off. "The scale and strength of the Primaris platform combined with its conservative financial model provides significant flexibility and capacity to both self-fund Primaris' strategy and positions it well to pursue investment opportunities in the current environment."

Eric Plesman , Head of Global Real Estate at HOOPP. "Primaris is a well-recognized Canadian operator with a significant track record, and is well-positioned to grow and benefit from the economic recovery."

Key Transaction Highlights

  • Large-Scale Canadian Enclosed Shopping Centre Portfolio : Primaris' high-quality national portfolio will be comprised of dominant shopping centres located in primary and secondary Canadian markets. As one of the four largest enclosed shopping centre platforms in Canada , Primaris will be an essential partner for retailers, providing efficient access to key markets across the country.
  • Differentiated Capital Structure and Financial Strategy: Primaris' leverage at formation is expected to be approximately 29% Debt to Gross Book Value and 5.3x Debt to EBITDA. Its target payout ratio of 45% – 50% of FFO is expected to initially provide significant retained annual cash flow of approximately $65 million to fund investments in development and acquisition opportunities and minimize reliance on external capital sources. This unique and flexible financial model is expected to differentiate Primaris, with leverage significantly below most Canadian REIT peers.
  • Strong Institutional Endorsement: HOOPP, one of the largest and most successful pension fund investors in Canada , will be Primaris' largest unitholder, holding approximately 26% of outstanding units following the HOOPP Contribution, providing strong institutional support of Primaris' governance and strategy.
  • Excess Density and Substantial Intensification Potential: The Primaris portfolio includes several urban properties with significant intensification potential. Dufferin Grove , Primaris' flagship 1,285 suite multi-residential development on four acres of excess land at Dufferin Mall is well advanced, with full zoning approval expected in 2021. Other significant intensification opportunities include Orchard Park in Kelowna , Place D' Orleans in Ottawa , Sunridge and Marlborough Malls in Calgary , among others. Internal development, intensification and adaptive reuse projects will be considered over time, in the context of alternative investment opportunities.

The property values and the resulting equity ownership in Primaris are based on recently completed independent third-party appraisals completed on 100% of the properties.  H&R will contribute 27 properties with an appraised value of approximately $2.4 billion aggregating 7.6 million square feet of GLA at Primaris' proportionate interest, and HOOPP will contribute eight properties with an appraised value of approximately $0.8 billion , aggregating 3.8 million square feet of GLA.

Bell Canada will be Primaris' largest tenants, and seven of the top ten tenants will be investment grade rated. Across Primaris' approximately 2,300 tenant portfolio, the weighted average lease term will be approximately 5.1 years.

Further information regarding the Spin-Off, including anticipated portfolio metrics and certain forecast financials will be included in the management proxy circular (the "Circular") expected to be mailed to H&R unitholders in November 2021 . A Primaris investor presentation containing further information regarding the Spin-Off is available on H&R's website.

Details of the Spin-Off

H&R's properties will be transferred to Primaris pursuant to a plan of arrangement (the "Arrangement").  Each existing H&R unitholder will receive one unit of Primaris for every one H&R unit held, subject to any consolidation or split of Primaris units pursuant to the Arrangement. After completion of the Arrangement, HOOPP's properties will be sold to Primaris in consideration for units of Primaris. Following closing of the Arrangement and the HOOPP Contribution, H&R unitholders and HOOPP are expected to own an approximate 74% and 26% interest in Primaris, respectively.

In connection with the Arrangement, H&R will apply to the Court of Queen's Bench of Alberta for an interim order confirming, among other things, the calling and holding of a meeting (the "Meeting") of H&R unitholders to be held in December 2021 to approve the Arrangement. In addition, H&R has (i) applied to the Canada Revenue Agency for an advance income tax ruling confirming certain Canadian federal income tax consequences of the Arrangement (the "CRA Ruling"), and (ii) applied for conditional approval from the TSX for the listing and posting for trading of the Primaris units. Listing will be subject to the TSX's customary listing approval requirements.

The Arrangement is subject to the approval of H&R unitholders by way of the affirmative vote of at least two-thirds of the votes cast by H&R unitholders present in person or by proxy at the Meeting. The Board of H&R has determined that the Arrangement is in the best interests of H&R REIT and accordingly, H&R's Board recommends that H&R unitholders vote IN FAVOUR OF the Arrangement for the reasons to be set out in detail in the Circular. The H&R trustees have received a fairness opinion from their financial advisor, CIBC World Markets ("CIBC") that, subject to the assumptions, limitations and qualifications contained therein, (i) the distribution to H&R unitholders pursuant to the Arrangement is fair, from a financial point of view, to the H&R unitholders, and (ii) that the consideration to be paid to HOOPP by Primaris is fair, from a financial point of view, to Primaris.

If the Arrangement is approved by the H&R unitholders and assuming timely satisfaction (or waiver) of all other closing conditions, including receipt of a final order of the Court of Queen's Bench of Alberta and the CRA Ruling, it is anticipated that the transaction will be completed in late December 2021 or early 2022.

The foregoing is qualified in its entirety by the more detailed information that will be included in the Circular. Unitholders are urged to carefully read the Circular, once available, before making their decision with regards to the Arrangement. Copies of the arrangement agreement , purchase and sale agreement relating to the properties to be contributed by HOOPP and Circular will be available on SEDAR at www.sedar.com.

CIBC World Markets and Scotiabank are acting as financial advisors to H&R REIT. Blake, Cassels & Graydon LLP is acting as a legal counsel to H&R REIT.

BMO Capital Markets is acting as financial advisor to HOOPP. Torys LLP is acting as a legal counsel to HOOPP.

Real Asset Strategies is acting as investor relations advisor to H&R REIT.

CONFERENCE CALL

A conference call and live audio webcast and accompanying presentation hosted by H&R REIT and Primaris will be held to discuss the strategic repositioning plan, including the Spin-Off of Primaris on Wednesday, October 27, 2021 at 11.00 a.m. Eastern Time . Participants can join by logging into the webcast here, or at www.hr-reit.com, and selecting Investor Events under the Investor Relations section, or by dialing 1-888-510-2507 or 1-289-514-5065. 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.

For those unable to participate in the conference call at the scheduled time, it will be archived for replay beginning approximately one hour following completion of the call. To access the archived conference call by telephone, dial 1-800-770-2030 or 1-647-362-9199 and enter the passcode 7614157 followed by the pound key. The telephone replay will be available until November 3, 2021 at midnight.

Investor presentations for both H&R and Primaris are available on H&R's website at https://www.hr-reit.com/investor-relations/#investorpresentation .

Q3 RESULTS UPDATED CONFERENCE CALL AND WEBCAST DATE

H&R now intends to release its financial results for Q3 2021 on Monday, November 15, 2021 .  Management will host a conference call to discuss such financial results on Tuesday, November 16, 2021 at 9.30 a.m. Eastern Time .  Participants can join the call by dialing 1-888-510-2507 or 1-289-514-5065. For those unable to participate in the conference call at the scheduled time, it will be archived for replay beginning approximately one hour following completion of the call. To access the archived conference call by telephone, dial 1-647-362-9199 or 1-800-770-2030 and enter the passcode 3504623 followed by the pound key.  The telephone replay will be available until Tuesday, November 23, 2021 at midnight.

A live audio webcast will be available through https://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.

About H&R REIT

H&R REIT is one of Canada's largest real estate investment trusts with total assets of approximately $13.1 billion at June 30, 2021 . H&R REIT has ownership interests in a North American portfolio of high-quality office, retail, industrial and residential properties comprising over 40 million square feet.

About the Healthcare of Ontario Pension Plan

HOOPP serves Ontario's hospital and community-based healthcare sector, with more than 610 participating employers and 400,000 active, deferred and retired members. It operates as a private independent trust and is governed by a Board of Trustees with a sole fiduciary duty to deliver the pension promise.  

HOOPP is fully funded and manages a highly diversified portfolio of more than $104 billion in assets. The 10-year annualized rate of return is 11.16%. HOOPP's investing success is delivered by an in-house team of investment professionals. 

HOOPP's real estate portfolio has a market value of more than $15 billion , spanning multiple geographies and asset classes (office, logistics, retail, residential). The Fund continues to grow both the scale and scope of this portfolio, with a focus on high-quality assets and best-in-class partners that share our sustainable investing approach and creation of long-term value for our members. The real estate portfolio had a currency-hedged return of 8.2% over the past five years, which is $1.8 billion over the benchmark. 

Non-IFRS Financial Measures

Growth in Same-Asset property operating income (cash basis) and Payout ratio as a % of FFO are both non-GAAP ratios that are more fully defined and discussed in H&R's MD&A in full as at June 30, 2021 and available on www.hr-reit.com and www.sedar.com. Debt to EBITDA is a non-GAAP ratio is calculated by dividing the total of: Debt (including mortgages payable, debentures payable, unsecured term loans and lines of credit) by (i) property operating income (excluding straight-lining of contractual rent and IFRIC 21); (ii) finance income; and (iii) trust expenses (excluding the fair value adjustment to unit-based compensation). Management uses Debt to EBITDA to assess the REIT's leverage ratio.

These ratios do not have a standard meaning prescribed by GAAP and therefore they may not be comparable to similarly titled measurers presented by other publicly traded companies, and should not be construed as an alternative to other financial measures determined in accordance with GAAP.

Forward-looking Information

Certain statements in this news release contain forward-looking statements within the meaning of applicable securities laws (also known as forward-looking statements). These forward-looking statements include, but are not limited to H&R's plans, objectives, expectations and intentions, including the Spin-Off, the Strategic Dispositions, the timing thereof and the gross proceeds therefrom, the intention to develop and redevelop properties, management's beliefs regarding H&R's growth prospects and the ability to surface value for unitholders, the benefits of the strategic repositioning initiatives and the pro forma impact on H&R's portfolio and financial metrics, H&R's investment grade credit rating, combined annual distributions of H&R REIT and Primaris, H&R's target investment mix, the transaction with HOOPP, earnings and NAV growth as a result of execution of H&R's development pipeline, the timing and budgets for future developments, the size, asset value and portfolio metrics of Primaris upon completion of the Spin-Off and HOOPP Contribution, Primaris' ability to take advantage of market opportunities, Primaris' expected leverage, payout ratio, and annual retained cash flow, Primaris' growth potential, intensification opportunities, Primaris' capital structure and financing strategy, the timing of H&R's unitholders meeting and publication of related unitholder materials, the expected completion date of the proposed transaction, the ability to obtain the final order and the CRA Ruling on the terms and timing contemplated by the parties, to complete the Arrangement and the transaction with HOOPP on the terms and on the timing contemplated by management, the assumption that all necessary conditions will be met for the completion of the Arrangement and the pro forma information regarding Primaris. Such forward-looking statements reflect H&R's current beliefs and are based on information currently available to management. These statements are not guarantees of future performance and are based on H&R's estimates and assumptions that are subject to risks and uncertainties, including those to be set forth in the Circular and in H&R REIT's materials filed with the Canadian securities regulatory authorities from time to time, which could cause the actual results and performance of H&R to differ materially from the forward-looking statements contained in this news release. Although the forward-looking statements contained in this news release are based upon what H&R believe are reasonable assumptions, there can be no assurance that actual results will be consistent with these forward-looking statements. There can be no assurance that the proposed transaction will occur or that the anticipated benefits will be realized. The proposed transaction is subject to approval by the Court of Queen's Bench of Alberta , H&R unitholders and by the TSX and the fulfillment of certain conditions, and there can be no assurance that any such approvals will be obtained and/or any such conditions will be met. The proposed transaction could be modified, restructured or terminated. All forward-looking statements in this news release are qualified by these cautionary statements. These forward-looking statements are made as of today and H&R, except as required by applicable law, assume no obligation to update or revise them to reflect new information or the occurrence of future events or circumstances.

Additional information regarding H&R REIT is available at http://www.hr-reit.com and on www.sedar.com.

SOURCE H&R Real Estate Investment Trust

© Canada Newswire, source Canada Newswire English

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