TORONTO, Aug. 12, 2020 /CNW/ - H&R Real Estate
Investment Trust ("H&R" or "the REIT") (TSX: HR.UN) announces
its financial results for the three and six months ended
June 30, 2020.
Tom Hofstedter, President &
CEO of H&R REIT said "In these exceptional circumstances, we
are pleased to report operating and financial results that reflect
the high quality of our portfolio and the diligent efforts of our
team. Our office, industrial and multi-residential portfolios have
seen almost no disruption and tenant closures in our retail
portfolio total less than 65,000 sq.ft., or 0.5% of retail GLA.
While there remains a great deal of economic uncertainty, overall
rent collections surpassing 90% in July and a gradual resumption of
more typical activity bode well for the second half of
2020."
FINANCIAL HIGHLIGHTS
|
3 months ended June
30
|
6 months ended June
30
|
|
2020
|
2019
|
2020
|
2019
|
Rentals from
investment properties (millions)
|
$269.9
|
$287.0
|
$549.6
|
$585.7
|
Property operating
income (millions)
|
$163.6
|
$187.1
|
$304.3
|
$341.0
|
Same-Asset property
operating income (cash basis) (millions)(1)
|
$171.8
|
$184.8
|
$364.5
|
$375.6
|
Fair value adjustment
on real estate assets (millions)
|
($57.7)
|
($27.3)
|
($1,358.9)
|
($35.0)
|
Net income (loss)
(millions)
|
$35.8
|
$109.6
|
($984.1)
|
$107.6
|
Funds from operations
("FFO") (millions)(1)
|
$115.0
|
$128.2
|
$251.2
|
$265.1
|
FFO per Unit
(basic)(1)
|
$0.38
|
$0.43
|
$0.83
|
$0.88
|
Adjusted Funds from
Operations ("AFFO") per unit(1)
|
$0.29
|
$0.30
|
$0.69
|
$0.68
|
Distributions per
Unit
|
$0.23
|
$0.35
|
$0.58
|
$0.69
|
Payout ratio per Unit
(as a % of FFO)(1)
|
60.4%
|
81.2%
|
69.0%
|
78.4%
|
Net Asset Value
("NAV") per Unit as at June 30(1)
|
$21.80
|
$25.81
|
$21.80
|
$25.81
|
|
|
(1)
|
These are non-GAAP
measures. See "Non-GAAP Financial Measures" in this press release.
H&R's management discussion and analysis ("MD&A") for the
three and six months ended June 30, 2020 includes a reconciliation
of property operating income to Same-Asset property operating
income (cash basis) and net income (loss) to FFO and AFFO as well
as the calculation of NAV per Unit. Readers are encouraged to
review the reconciliations and calculation in H&R's
MD&A.
|
The primary reason for the decrease in rentals from investment
properties is net disposition activity over the past 18 months.
During this period, the REIT completed approximately $1.0 billion of asset sales compared to
$206.6 million of acquisitions over
the past 18 months, substantially repositioning its portfolio and
enhancing its internal growth profile. H&R continues to
actively reallocate capital through property dispositions to fund
value-creating developments, expand its residential rental platform
and strengthen its balance sheet.
Property operating income and Same-Asset property operating
income (cash basis) decreased for the three and six months ended
June 30, 2020 compared to the
respective 2019 periods primarily due to a $24.5 million provision for bad debts taken as a
result of the impact of COVID-19, which predominantly impacted
H&R's retail segment.
Same-Asset property operating income (cash basis) in H&R's
office, industrial and residential segments increased by 3.8%, 7.2%
and 15.3%, respectively during the three months ended June 30, 2020 compared to the three months ended
June 30, 2019.
Same-Asset property operating income (cash basis) for the retail
segment decreased 34.7% for the three months ended June 30, 2020 compared to the three months ended
June 30, 2019. Excluding the
$22.8 million provision for bad debts
taken with respect to the retail segment, retail Same-Asset
property operating income (cash basis) would have increased by
2.9%.
Net income decreased by $73.8
million for the three months ended June 30, 2020 compared to the respective 2019
period primarily due to the fair value adjustment on real estate
assets and financial instruments, gain (loss) on real estate
assets, and the provision for bad debts.
Net income (loss) decreased by $1.1
billion for the six months ended June
30, 2020 compared to the respective 2019 period primarily
due to the fair value adjustment of certain office and retail
properties by approximately $1.3
billion and an increase in the provision for bad
debts.
BUSINESS UPDATE
COVID-19
The COVID-19 pandemic has brought dramatic and unprecedented
challenges to nearly every corner of society and the global economy
and significantly impacted the commercial property industry. Risk
management has been and continues to be a core component of H&R
since the time of its IPO, most evident in a focus on long-term
leases, high credit quality tenants and a conservative balance
sheet.
H&R is doing everything possible to support and protect
everyone its organization touches, as it pulls together as a
community. H&R has made considerable efforts to ensure the
safety and wellbeing of its employees, tenants and visitors to its
properties.
Certain properties were closed to comply with government
mandates while providing for certain essential service tenants to
continue to operate out of these otherwise closed properties, and
H&R has engaged with tenants across all of its properties to
work together to reach customized operating and financial
arrangements. H&R has also undertaken detailed reviews of its
operations to reduce expenses and mitigate the financial impact of
economic disruptions and property closures on its tenants and on
its unitholders.
Fair Value Adjustments on Real Estate Assets
The financial results for the six months ended June 30, 2020 include significant fair value
adjustments recorded in Q1 2020. These adjustments are a result of
H&R's regular quarterly IFRS fair value process, and include
the following impacts of COVID-19: (i) an acceleration of
challenging conditions in the retail landscape impacting the
valuation assumptions of retail properties; and (ii) energy sector
challenges that have impacted the credit quality of many companies
operating in this industry and the related impacts on property
market fundamentals in markets significantly influenced by energy
industry employment.
Fair Value Adjustment
on Real Estate Assets
(in thousands of Canadian dollars)
|
Three months
ended
June 30, 2020
|
Six months ended
June 30, 2020
|
Operating
Segment:
|
|
|
Office
|
($40,447)
|
($688,767)
|
Retail
|
(5,338)
|
(665,218)
|
Industrial
|
(4,074)
|
2,808
|
Residential
|
(7,817)
|
(7,741)
|
Total fair value
adjustment on real estate assets
|
($57,676)
|
($1,358,918)
|
Given the rapidly changing dynamics within these industries and
the broader economy, management and the Board strongly supported
taking a more proactive approach to updating fair market values to
ensure appropriate financial reporting practices. Should the retail
industry recover or energy industry conditions improve, H&R
will have the opportunity to update fair values as market
conditions evolve.
Rent Collection
Rent collection has been a key focus during the
pandemic, and one where H&R believes it has performed well
while also accommodating the needs of its tenants. As of
August 10, 2020, H&R's rent
collections since the onset of COVID-19 are as follows:
Tenant
Type(1)
|
Average Share
of Rent(2)
|
April
Collection(2)
|
May
Collection(2)
|
June
Collection(2)
|
July
Collection(2)
|
August
Collection(2)(3)
|
Office
|
44%
|
99%
|
99%
|
99%
|
99%
|
99%
|
Retail:
|
|
|
|
|
|
|
Enclosed
|
21%
|
54%
|
49%
|
56%
|
66%
|
64%
|
Other
|
13%
|
91%
|
88%
|
90%
|
95%
|
83%
|
Total
Retail
|
34%
|
68%
|
64%
|
69%
|
77%
|
71%
|
Residential
|
16%
|
97%
|
96%
|
96%
|
96%
|
90%
|
Industrial
|
6%
|
99%
|
99%
|
99%
|
98%
|
97%
|
Total(4)
|
100%
|
89%
|
87%
|
89%
|
91%
|
87%
|
|
|
(1)
|
Retail tenants in an
office property for the purpose of this table have been classified
as retail.
|
(2)
|
The average share of
rent and collections include monthly billings for base rent and
property operating costs.
|
(3)
|
Includes Government
tenancies whose rent is only due at the end of August.
|
(4)
|
April to July
collections include an aggregate amount of $5.6 million received
from the Government of Canada under the Canada Emergency Commercial
Rent Assistance ("CECRA") program.
|
H&R's high-quality, long-term leased office portfolio
delivered strong rent collection consistent with the profile of the
tenant base, where 86.6% of tenants are investment-grade.
Rent collection was also strong in H&R's industrial and
residential portfolios, reflecting the stronger-than-average credit
profile of the REIT's tenant base across both of these
portfolios.
The tenants that have been impacted the most by the COVID-19
pandemic have been retailers. Rent collection in H&R's retail
portfolio reflects a blend of grocery-anchored centres, single
tenant and enclosed mall properties. Non-essential stores across
the country were closed by government mandates in March, however by
the end of June all properties, including most stores at enclosed
shopping centres, were re-opened. Rent collection has improved in
July and August as most tenants have been able to resume
operations. In prior months, rent collection has trended slightly
higher through the second half of the month, and management expects
August collections to continue to improve through the end of the
month, and improve further in September.
The CECRA program for small businesses implemented by the
Government of Canada provides
forgivable loans to qualifying landlords to cover 50% of five
monthly rent payments that are payable by eligible small business
tenants who are experiencing financial hardship during April, May,
June, July and August. Tenants are responsible for contributing 25%
of the rent payments with the landlords abating the remaining 25%
share. Establishing eligibility, the administration of applications
and the timing of payments have all contributed to a delay in the
resolution of rent deferrals, with many agreements still in
discussion.
In July 2020, H&R filed CECRA
applications for 37 properties covering approximately $16.0 million of gross rent at H&R's
ownership interest cumulatively for the four month period from
April to July. H&R's 25% abatement is approximately
$4.0 million and the
Government's forgivable 50% is approximately $8.0 million. As at August
10, 2020, H&R has received approximately $5.6 million from the Government under the CECRA
program for the months of April to July and anticipates receiving
the remaining $2.4 million in the
very near future.
As at June 30, 2020 H&R's
tenant receivables were $29.1 million
net a provision for bad debts of $23.9
million.
Provision for Bad Debts
The provision for bad debts is classified as an expense and is
grouped together with other expenses in property operating costs.
The following tables disclose H&R's provision for bad debts as
a result of the impact of COVID-19. H&R's retail segment was
impacted the most due to government mandated closures primarily
affecting the REIT's enclosed shopping centres.
Provision for Bad
Debts
(in thousands of
Canadian dollars)
|
Three months
ended
June 30, 2020
|
Six months ended
June 30, 2020
|
Expected rent
abatements and general provision for bad debts
|
$18,480
|
$18,814
|
Bankruptcies -
tenants who have filed for creditor protection
|
2,907
|
2,907
|
CECRA application
related abatements - April, May and June 2020
|
3,093
|
3,093
|
Provision for bad
debts per the REIT's proportionate share
|
24,480
|
24,814
|
Less: equity
accounted investments
|
(958)
|
(945)
|
Provision for bad
debts per the REIT's Financial Statements
|
$23,522
|
$23,869
|
The provision for bad debts amounts to 45% of the gross accounts
receivable balance as at June 30,
2020.
Provision for Bad
Debts
|
Three months ended
June 30
|
Six months ended June
30
|
(in thousands of
Canadian dollars)
|
2020
|
2019
|
Change
|
2020
|
2019
|
Change
|
Bad debts by
Same-Asset operating segment:
|
|
|
|
|
|
|
Office
|
$362
|
$33
|
$329
|
$375
|
$79
|
$296
|
Retail
|
22,842
|
39
|
22,803
|
22,912
|
152
|
22,760
|
Industrial
|
52
|
-
|
52
|
52
|
-
|
52
|
Residential
|
1,027
|
182
|
845
|
1,225
|
521
|
704
|
Total Same-Asset bad
debts
|
24,283
|
254
|
24,029
|
24,564
|
752
|
23,812
|
Transactions
|
197
|
9
|
188
|
250
|
73
|
177
|
Provision for bad
debts per the REIT's proportionate share
|
24,480
|
263
|
24,217
|
24,814
|
825
|
23,989
|
Less: equity
accounted investments
|
(958)
|
24
|
(982)
|
(945)
|
48
|
(993)
|
Provision for bad
debts per the REIT's Financial Statements
|
$23,522
|
$287
|
$23,235
|
$23,869
|
$873
|
$22,996
|
Tenant Closures
Many retailers have faced very challenging conditions in recent
months, as several have filed for Companies' Creditors
Arrangement Act (Canada)
("CCAA") creditor protection and several have announced store
closures. The REIT's focus on maintaining affordable cost
structures for its mall-based retailers has resulted in above
average rent collections as compared to other large mall owners,
and high retention of store locations by tenants planning store
closures elsewhere. The following table summarizes the tenant
groups that have filed for creditor protection under the CCAA:
|
|
----------------Current-----------------
|
------Expected to be Retained-----
|
Tenant
Group
|
CCAA Filing Date
|
Square
Footage(1)
|
Number
of
Stores
|
Square
Footage(1)
|
Number
of
Stores
|
Pier One
|
February 29,
2020
|
28,583
|
3
|
-
|
-
|
Aldo
|
May 7,
2020
|
27,715
|
19
|
23,724
|
15
|
Reitmans
|
May 19,
2020
|
43,917
|
17
|
38,544
|
14
|
Comark
|
June 3,
2020
|
79,890
|
26
|
79,890
|
26
|
General Nutrition
Centres
|
June 24,
2020
|
6,868
|
8
|
6,868
|
8
|
David's
Tea
|
July 8,
2020
|
9,158
|
16
|
-
|
-
|
Tristan
|
July 21,
2020
|
2,500
|
1
|
2,500
|
1
|
Ascena
|
July 23,
2020
|
19,187
|
7
|
2,199
|
1
|
Laura's
Group
|
August 4,
2020
|
9,047
|
3
|
9,047
|
3
|
Total subject
to CCAA
|
|
226,865
|
100
|
162,772
|
68
|
Total Retail
Segment
|
|
13,254,000
|
2,675
|
|
|
|
|
(1)
|
At H&R's
ownership interest.
|
Le Chateau (13 locations) has also announced plans for closures,
and management is in discussions with them regarding their
intentions. Management expects no closures from GAP, H&M,
or L Brands in the REIT's portfolio, and the REIT does not have any
locations with Brooks Brothers, Lucky Brands, J. Crew, Medocino,
Frank & Oak, Lole or Microsoft, each of which has announced
plans for store closures.
Distributions
As previously announced in May
2020, in light of current operating and capital markets
conditions, management recommended and the Board approved
a 50% reduction of monthly distributions effective
May 2020, from $0.115 per Unit to $0.0575 per Unit, or $0.690 per Unit annually.
This distribution rate provides additional financial flexibility
to absorb any income interruption related to the pandemic in the
near term, and allows for significant capital reinvestment into the
REIT's properties to address tenant turnover without increasing the
REIT's financial leverage. The new distribution rate is also
expected to satisfy the REIT's requirement to distribute all of its
taxable income. The Board will continue to re-evaluate the
distribution on a quarterly basis taking into account a variety of
relevant factors including the REIT's taxable income.
Liquidity
Management has taken precautionary steps to further bolster the
REIT's liquidity as a result of the severity of the pandemic's
impact on economic conditions. During Q2 2020, the REIT secured a
new $500.0 million unsecured line of
credit from a syndicate of five Canadian banks. The REIT also
arranged a new $100.0 million secured
mortgage on a previously unencumbered property, maturing in 2029.
Further, H&R issued $400.0
million Series Q Senior Debentures maturing June 16, 2025, the proceeds of which were used to
repay lines of credit. Notably, both the new line of credit and
mortgage were arranged following the onset of the COVID-19 economic
disruption, underscoring H&R's strong access to capital
availability and cash on hand. As at June
30, 2020, H&R had $995.8
million of unused borrowing capacity available under its
lines of credit and $131.4 million of
cash on hand. As at June 30, 2020,
H&R had $99.2 million of debt
maturing during the remainder of 2020.
SUMMARY OF SIGNIFICANT Q2 2020
ACTIVITY
Developments
H&R's active development pipeline in the United States currently comprises five
residential developments and one mixed-used development with a
total development budget of U.S. $679.3
million. As at June 30, 2020,
U.S. $535.7 million had been spent on
properties under development with U.S. $143.6 million of budgeted costs remaining to
complete of which U.S. $69.4 million
will be funded through secured construction facilities, in each
case at the REIT's proportionate share.
The largest current development project is River Landing, an urban in-fill mixed use
development site in Miami, FL,
which is adjacent to the Health District with approximately 1,000
feet of waterfront on the Miami River, two miles from downtown
Miami. River Landing includes approximately 373,000
square feet of retail space, approximately 118,000 square feet of
office space and 528 residential rental units. Construction is
nearing completion with retail occupancy scheduled to commence in
Q3 2020. The total cost of the project is expected to be
approximately U.S. $495.9 million. As
at June 30, 2020, approximately U.S.
$421.7 million has been included in
properties under development.
Construction continued on the first phase of a 2.7 million
square foot industrial development in Caledon, ON. The first phase consists of three
buildings, which will total approximately 526,000 square feet upon
completion. In January 2020, H&R
completed a 10-year lease with Deutsche Post AG to occupy the
largest of the three buildings totalling 342,821 square feet. The
lease is expected to commence in November
2020. The total budget for this building is $54.6 million. As a result of COVID-19, H&R
has temporarily suspended construction of the second and third
buildings.
Office
Committed occupancy for the Office segment was 99.8% compared to
actual occupancy of 99.5% as at June
30, 2020.
Same-Asset property operating income (cash basis) from office
properties increased by 3.8% for the three months ended
June 30, 2020 compared to the
respective 2019 period. Included in the three months ended
June 30, 2020 are lease termination
fees of $2.9 million compared to
$0.1 million for the three months
ended June 30, 2019.
Industrial
In April 2020, H&R sold a 50%
ownership interest in a 363,983 square foot single-tenanted
property in Boucherville, QC for
approximately $17.4 million, at
H&R's ownership interest. This property was previously
classified as held for sale as at December
31, 2019 and March 31,
2020.
Same-Asset property operating income (cash basis) from
industrial properties increased by 7.2% for the three months ended
June 30, 2020 compared to the
respective 2019 period.
Residential
Same-Asset property operating income (cash basis) from
residential properties in U.S. dollars increased by 11.0% for the
three months ended June 30, 2020
compared to the respective 2019 period.
Retail
In April 2020, H&R sold a
164,365 square foot multi-tenanted retail property in Niagara Falls, ON for gross proceeds of
$10.2 million.
Committed occupancy for the Retail segment was 92.5% compared to
actual occupancy of 90.6% as at June 30,
2020.
Same-Asset property operating income (cash basis) from retail
properties decreased by 34.7% for the three months ended
June 30, 2020 compared to the
respective 2019 period primarily due to the provision for bad debts
as a result of the impact of COVID-19. Excluding the provision for
bad debts, Same-Asset property operating income increased by
2.9%.
Debt Highlights
As at June 30, 2020, debt to total
assets was 48.1% compared to 44.4% as at December 31, 2019. The increase in debt to
total assets is primarily due to the fair value adjustment of
certain office and retail properties recognized in Q1 2020 of
approximately $1.3 billion. The
weighted average interest rate of H&R's debt as at June 30, 2020 was 3.5% with an average term to
maturity of 3.9 years.
Mortgages:
During Q2, 2020, H&R secured three new
mortgages totalling $113.9 million at
a weighted average interest rate of 3.8% for an average term of 8.1
years and repaid four mortgages totalling $24.1 million at a weighted average interest rate
of 4.1%.
Debentures:
In June
2020, H&R issued $400.0
million principal amount of 4.071% Series Q Senior
Debentures maturing June 16, 2025.
The proceeds were used to repay lines of credit.
Lines of Credit:
In Q2 2020, H&R bolstered its
liquidity by securing a $500.0
million unsecured line of credit from a syndicate of five
Canadian banks for a one-year term.
Monthly Distributions Declared
H&R today declared distributions for the months of August
and September scheduled as follows:
|
Distribution/Unit
|
Annualized
|
Record
date
|
Distribution
date
|
August
2020
|
$0.0575
|
$0.690
|
August 21,
2020
|
September 4,
2020
|
September
2020
|
$0.0575
|
$0.690
|
September 22,
2020
|
October 6,
2020
|
Conference Call and Webcast
Management will host a conference call to discuss the financial
results for the REIT on Thursday, August 13,
2020 at 9.30 a.m. Eastern
Time. Participants can join the call by dialing 647-427-7450
or 1-888-231-8191. 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
416-849-0833 or 1-855-859-2056 and enter the passcode 3534627
followed by the pound key. The telephone replay will be available
until Thursday, August 20, 2020 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.
The investor presentation is available on H&R's website at
https://www.hr-reit.com/investor-relations/#investor-presentation
About H&R REIT
H&R REIT is one of Canada's
largest real estate investment trusts with total assets of
approximately $13.3 billion at
June 30, 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 information in this press release contains
forward-looking information within the meaning of applicable
securities laws (also known as forward-looking statements)
including, among others, statements made or implied relating to
H&R's objectives, beliefs, plans, estimates, projections and
intentions and similar statements concerning anticipated future
events, results, circumstances, performance or expectations that
are not historical facts, including the statements made under the
headings "Business Update" and "Summary of Significant Q2 2020
Activity" including with respect to H&R's future plans,
including significant development projects, H&R's expectation
with respect to the activities of its development properties,
including the building of new properties, the timing of
construction, the timing of occupancy and the expected total cost
from development properties, the impact of the COVID-19 virus on
the REIT's retail tenants, management's expectations regarding
future rent collections, including as a result of CECRA, as well as
associated abatement expenses and recoveries, the REIT's provision
for bad debt, expectations regarding tenant retention and closures,
capitalization rates and other assumptions used to estimate fair
values, management's expectations regarding the REIT's leverage and
portfolio quality, and management's expectations regarding future
distributions. 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 described below under "Risks and Uncertainties" and
those 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 press release. Material factors or assumptions that were
applied in drawing a conclusion or making an estimate set out in
the forward–looking statements include that the general economy is
currently volatile and in an economic downturn as a result of the
COVID-19 pandemic and low oil and gas prices, the extent and
duration of which is unknown; interest rates are volatile as a
result of general economic conditions; and debt markets continue to
provide access to capital at a reasonable cost, notwithstanding the
ongoing economic downturn. Additional risks and uncertainties
include, among other things, risks related to: real property
ownership; the current economic environment; COVID-19; credit risk
and tenant concentration; lease rollover risk; interest and other
debt-related risk; construction risks; currency risk; liquidity
risk; financing credit risk; cyber security risk; environmental and
climate change risk; co-ownership interest in properties; joint
arrangement and investment risks; unit price risk; availability of
cash for distributions; ability to access capital markets;
dilution; unitholder liability; redemption right risk; risks
relating to debentures and the inability of the REIT to purchase
senior debentures on a change of control; tax risk, U.S. tax reform
and tax consequences to U.S. holders. H&R cautions that these
lists of factors, risks and uncertainties are not exhaustive.
Although the forward-looking statements contained in this press
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
press release. All forward-looking statements in this press release
are qualified by these cautionary statements. These forward-looking
statements are made as of August 12,
2020 and the REIT, 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 Financial Measures
The REIT's financial statements are prepared in accordance with
International Financial Reporting Standards ("IFRS"). H&R'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 measures NAV,
FFO, AFFO, Payout Ratio per Unit, Same-Asset property operating
income (cash basis) and the REIT's proportionate share as well as
other non-GAAP measures discussed elsewhere in this release, should
not be construed as an alternative to financial measures calculated
in accordance with GAAP. Further, H&R's method of calculating
these supplemental non-GAAP financial measures may differ from the
methods of other real estate investment trusts or other issuers,
and accordingly may not be comparable. H&R use these measures
to better assess H&R's underlying performance and provide these
additional measures so that investors may do the same. These
non-GAAP financial measures are more fully defined and discussed in
H&R's MD&A for the three and six months ended June 30, 2020, available at
www.hr-reit.com and on www.sedar.com.
Additional information regarding H&R is available at
www.hr-reit.com and on www.sedar.com.
SOURCE H&R Real Estate Investment Trust