TORONTO, July 28, 2020 /CNW/ - H&R Real Estate
Investment Trust ("H&R" or "the REIT") (TSX: HR.UN) is pleased
to announce the following recent developments:
- Strong and rising rent collections reaching 88% overall in
July, driven by improving collections in the Primaris portfolio
- Update on tenant restructurings and store retention
- The appointment of Alex Avery as
Executive Vice President, Asset Management & Strategic
Initiatives
- The promotion of Blair Kundell
to Executive Vice President, Operations
- The retirement of Nathan Uhr
from the role of Chief Operating Officer
2020 has brought considerable disruption to the economy
globally, and to H&R and its tenants. First and foremost,
H&R has been focused on providing safe and functional
environments for its tenants, staff and visitors to its properties
throughout the COVID 19 pandemic, while also acting in the best
interests of its unitholders. The diligent efforts of H&R's
employees have been essential to the REIT's success in delivering
strong rent collection while accommodating the needs of its tenants
and other stakeholders.
July Rent Collection Statistics
The REIT has achieved strong rent collection since April 2020, with material improvement in July to
overall rent collection of 88% month to date, as many tenants have
been able to re-open for business. Tenant receipts for July
rent charges through July
27th by property type:
Tenant
Type
|
Share of
Rent
|
July
Collection
|
Office
|
44%
|
100%
|
Retail
|
|
|
Enclosed
malls
|
20%
|
56%
|
Other
|
13%
|
91%
|
Total
Retail
|
33%
|
70%
|
Residential
|
17%
|
95%
|
Industrial
|
6%
|
97%
|
Total REIT
Portfolio
|
100%
|
88%
|
Performance of the Primaris enclosed mall portfolio is
particularly noteworthy, as it has delivered consistently stronger
than industry-average mall rent collections throughout the
pandemic. The following table summarizes monthly rent
collections from April 1st
through July 27th:
Gross Rent
Collections
|
April
|
May
|
June
|
July to
date
|
Enclosed
Malls
|
45%
|
41%
|
46%
|
56%
|
Total REIT
Portfolio
|
87%
|
85%
|
86%
|
88%
|
Rents from many of the REIT's tenants in each of April, May,
June and July are eligible for the Canadian Emergency Commercial
Rent Assistance (CECRA) program, applications for which were
submitted last week. Establishing eligibility, the
administration of applications and the timing of payments have all
delayed the resolution of rent deferrals, with many agreements
still in discussion. Management expects collections to
continue to improve over time, and expects further improvement of
collections in August, once the CECRA process is concluded.
Within the enclosed mall portfolio, tenant operations are
returning to more normal conditions:
- All enclosed mall properties have resumed operations, with
Dufferin Mall in Toronto the last
property to re-open on June
24th.
- Over 90% of retailers are open, with some still transitioning
from limited hours back to full mall hours.
- Tenants are reporting brisk sales and contending with depressed
inventory levels.
- CECRA applications on behalf of ~565 tenants across 25 Primaris
properties covering $15.3 million of
gross rent at H&R's share, cumulatively for the four months of
April, May, June and July, were submitted July 23rd. The associated 25%
abatement is estimated at $3.8
million (at the REIT's share) and H&R expects to collect
a significant portion of the remaining $11.5
million due under CECRA from tenants and the Government of
Canada in the near term.
In the remainder of the REIT's portfolio there are an additional
43 tenants with CECRA applications covering $1.3 million of rent for the four months April
through July, and an associated expected abatement of $0.3 million, at H&R's share. Management
continues to evaluate rent deferral requests on a case by case
basis. The REIT expects a significant portion of the balance of
April - July rent owing will be collected over time.
Tenant Restructurings and Store Retention
Many retailers have faced very challenging conditions in recent
months, and several have announced store closures, both negotiated
and under CCAA creditor protection. The REIT's focus on
maintaining affordable cost structures for its mall-based retailers
has resulted in both the above average rent collections, versus
other large mall owners, and high retention of store locations by
tenants planning store closures elsewhere.
Retailer
|
# of
Locations
|
Retained
|
%
Retained
|
Comark
|
26
|
26
|
100%
|
Aldo
|
19
|
15
|
79%
|
Reitmans
|
17
|
14
|
82%
|
GNC
|
9
|
5
|
56%
|
Ascena
|
7
|
1
|
14%
|
Pier 1
|
3
|
0
|
0%
|
Total
|
81
|
61
|
75%
|
Among other retailers, David's Tea (16 current locations) and Le
Chateau (13) have announced plans for closures, and management is
in discussion with these retailers regarding their plans.
Management expects no closures from GAP, H&M, L Brands in our
portfolio, and the REIT does not have any locations with Brooks
Brothers, Lucky Brands, J. Crew or Microsoft.
Senior Executive Changes
As the real estate industry and the REIT's scale and operations
continue to evolve, H&R is committed to prudently expanding its
in-house management resources to keep pace. The emergence of
COVID-19 has accelerated the pace of change in the real estate
industry, bringing both opportunities and challenges. The following
changes are designed to enhance the REIT's capabilities as its
business continues to evolve.
Alex Avery has been appointed
Executive Vice President, Asset Management & Strategic
Initiatives. Mr. Avery has been a member of the REIT's board
of trustees since 2017, and in this newly created role he will
pursue opportunities to leverage the scale and capabilities of
H&R, focus on diversifying and optimizing the REIT's sources
and cost of capital, as well as undertake initiatives key to the
strategic goals of the REIT. Mr. Avery will work closely with
the Lantower Residential and Primaris operating segments, as well
as engage with investors. Mr. Avery brings a wealth of
capital markets experience and knowledge as a thought leader,
analyst and investment manager, and will continue as a member of
H&R's board of trustees.
Blair Kundell has been promoted
to Executive Vice President, Operations. Mr. Kundell joined H&R
in 2004, and has held progressively more senior executive roles,
most recently as Vice President, Operations. In his new,
expanded role Mr. Kundell is responsible for building operations,
tenant services and joint health and safety across the REIT's
office and industrial portfolios aggregating 28 million square feet
across North America. Mr. Kundell's experience includes a
variety of roles overseeing commercial property operations, project
management, tenant services, and emergency preparedness.
It is with mixed emotions that H&R announces the retirement
of Nathan Uhr from the role of Chief
Operating Officer.
"For nearly 50 years Nathan has played a key role in H&R's
evolution, at predecessor companies through the 1970s, 1980s and
1990s, joining the REIT's senior management team in 1996 at the
time of the initial public offering. He has been a dear
friend to our organization and my family, and his contribution to
the REIT's operations have been essential." said Tom Hofstedter, President & CEO of H&R
REIT. "I personally have benefitted from my association with
Nathan and learned a lot from him. I will very much miss our daily
interactions."
Fortunately, Mr. Uhr has agreed to remain available to the
REIT's management to share his wealth of knowledge and experience,
as he pursues retirement interests.
"H&R REIT is a dynamic organization operating in a dynamic
marketplace. Our leadership team needs to evolve with the changing
nature of our business and the environment in which we
operate. Over the past five years H&R has seen
significant change, including substantial capital recycling,
streamlining and simplifying of the portfolio, and a renewed sense
of focus." commented Tom Hofstedter.
"As H&R explores new opportunities to leverage our scale and
platform, and address the uncertainties of evolving property
markets, the changes announced today are consistent with our
efforts to best position the REIT for success."
About H&R REIT
H&R REIT is one of Canada's
largest real estate investment trusts with total assets of
approximately $13.4 billion at
March 31, 2020. 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.
Forward-Looking Disclaimer
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's plans,
objectives, expectations and intentions, including with respect to
the collection of April rent owing and the payment of
distributions. 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
discussed in H&R'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 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, 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.
Additional information regarding H&R is available at
www.hr-reit.com and on www.sedar.com.
SOURCE H&R Real Estate Investment Trust