TORONTO, June 8, 2018 /CNW/ - H&R Real Estate
Investment Trust ("H&R REIT") (TSX: HR.UN) announced it has
sold 62 U.S. retail properties (the "Portfolio") for approximately
U.S. $620.4 million. The sale
includes all of H&R REIT's retail properties in the United States, other than 16 gas and
convenience stores and one grocery-anchored centre in
Florida. The remaining grocery-anchored centre is currently
under contract to be sold to the centre's leading tenant for U.S.
$12.6 million.
The sale price equates to a 7.3% capitalization rate on 2018
forecasted property operating income and is in line with IFRS fair
values before mortgage prepayment and other closing costs.
Management does not expect to incur any material income tax expense
resulting from the sale as substantially all of the taxable gains
will be deferred through Internal Revenue Code Section 1031
exchanges.
Part of the proceeds from the sale were used to repay U.S.
$205.3 million of mortgage debt on
the Portfolio (weighted average interest rate of 4.8%). The
balance of the proceeds will be used to repay debt and then fund
Lantower Residential acquisitions. As a result of the sale,
H&R REIT expects stronger long-term funds from operations
("FFO") growth and net asset value growth. FFO is a non-GAAP
measure. See "Non-GAAP Financial Measures" in this press
release.
The table below highlights the pro forma fair value of
investment properties and properties under development by segment,
at the REIT's ownership share, following the sale of the
Portfolio:
Segment
|
Fair Value -
Pro forma(1)
|
Fair Value -
Pro forma %
|
Office
|
$6,601
|
47.1%
|
Primaris
|
2,850
|
20.3%
|
Lantower
Residential
|
2,080
|
14.8%
|
Industrial
|
1,094
|
7.8%
|
Echo
|
821
|
5.8%
|
H&R
Retail
|
596
|
4.2%
|
Total
|
$14,042
|
100.0%
|
(1)
|
Using $1.29 Canadian dollars for
every $1.00 U.S. dollar (the exchange rate as at March 31,
2018).
|
About H&R REIT
H&R REIT is one
of Canada's largest real estate
investment trusts with total assets of approximately $14.5 billion at March 31,
2018. H&R REIT has ownership interests in a North
American portfolio of high quality office, retail, industrial and
residential properties comprising over 45 million square feet.
Forward-looking Statements
Certain statements in this
news release contain forward-looking information 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 REIT's plans, objectives, expectations and
intentions, the expected use of net proceeds from the sale of the
Portfolio; the capitalization rate on 2018 forecasted property
operating income; management's expectation that it does not expect
to incur any material income tax expense resulting from the sale
and management's expectation of stronger FFO growth and net asset
value growth as a result of the sale of the Portfolio. Such
forward-looking statements reflect H&R REIT'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 REIT's estimates and assumptions that are subject
to risks and uncertainties, including those to be set forth 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 REIT 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 REIT believes are reasonable
assumptions, there can be no assurance that actual results will be
consistent with these forward-looking statements. 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 REIT, except as required by applicable
law, assumes no obligation to update or revise them to reflect new
information or the occurrence of future events or
circumstances.
Non-GAAP Financial Measures
H&R REIT's management uses a number of measures which do not
have a meaning recognized or standardized under IFRS or Canadian
Generally Accepted Accounting Principles ("GAAP"). The non-GAAP
measure FFO should not be construed as an alternative to financial
measures calculated in accordance with GAAP. Further, H&R
REIT's method of calculating FFO may differ from the methods of
other real estate investment trusts or other issuers, and
accordingly may not be comparable. H&R REIT uses FFO to better
assess H&R REIT's underlying performance and provides this
additional measure so that investors may do the same. FFO is more
fully defined and discussed in H&R REIT's combined MD&A for
the three months ended March 31,
2018, available at www.hr-reit.com and on www.sedar.com.
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