TORONTO, Nov. 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 nine months ended
September 30, 2020.
BUSINESS UPDATE
COVID-19
The COVID-19 pandemic has dramatically disrupted society and the
economy and significantly impacted the commercial property
industry. A strong focus on risk management has been and continues
to be core to H&R, as reflected by the REIT's long-term leases,
high credit quality tenants and conservative balance
sheet.
H&R is pleased to report that all of the REIT's properties
are currently open and fully operational, including all retail
properties, some of which were impacted by mandated closures during
Q2 2020. Management has been working closely with all of the
REIT's tenants, and particularly retailers at H&R's enclosed
shopping centres where same-store sales volume (comprised
of commercial retail units smaller than 15,000 square feet)
recovered in Q3 2020 to 86% of prior year levels, up from the low
31% average in Q2 2020. Tenant sales have been trending
higher since April lows, reaching 88% in September.
Tom Hofstedter, President &
CEO of H&R REIT said "We are pleased with our third quarter
results given the challenging operating environment, which reflect
the following:
- Overall rent collection improved to 93% from 90% in Q2
2020
- FFO(1) increased 8% over Q2 2020
- AFFO(1) increased 21% over Q2 2020
- Our AFFO payout ratio(1) was a conservative 49% and
our available liquidity remained at over $1
billion
- Our debt to total assets decreased to 47.2% at the end of Q3
2020 from 48.1% at the end of Q2 2020
- Residential properties in the U.S. Sun-Belt cities have seen
increased investment demand
While we are mindful that there may be further COVID related
bumps along the way, we believe we will see continued improvement
in our future results".
FINANCIAL HIGHLIGHTS
|
3 months ended
September 30
|
9 months ended
September 30
|
|
2020
|
2019
|
2020
|
2019
|
Rentals from
investment properties (millions)
|
$271.6
|
$281.6
|
$821.2
|
$867.2
|
Property operating
income (millions)
|
$175.8
|
$185.2
|
$480.1
|
$526.2
|
Same-Asset property
operating income (cash basis) (millions)(1)
|
$176.2
|
$186.5
|
$540.5
|
$561.9
|
Fair value adjustment
on real estate assets (millions)
|
$93.0
|
($25.3)
|
($1,265.9)
|
($60.2)
|
Net income (loss)
(millions)
|
$247.8
|
$69.3
|
($736.2)
|
$176.9
|
Funds from operations
("FFO") (millions)(1)
|
$124.5
|
$130.3
|
$375.7
|
$395.4
|
FFO per Unit
(basic)(1)
|
$0.41
|
$0.43
|
$1.25
|
$1.31
|
Adjusted Funds from
Operations ("AFFO") (millions)(1)
|
$106.7
|
$104.0
|
$314.2
|
$309.6
|
AFFO per unit
(basic)(1)
|
$0.35
|
$0.35
|
$1.04
|
$1.03
|
Distributions per
Unit
|
$0.17
|
$0.35
|
$0.75
|
$1.04
|
Payout ratio per Unit
(as a % of AFFO)(1)
|
49.0%
|
100.0%
|
71.8%
|
100.8%
|
Net Asset Value
("NAV") per Unit as at September 30(1)
|
$22.11
|
$25.81
|
$22.11
|
$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 nine months ended September 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 previous 21 months.
The REIT completed approximately $1.0
billion of asset sales compared to $206.6 million of acquisitions since January 1, 2019, 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 nine months ended
September 30, 2020 compared to the
respective 2019 periods primarily due to a provision for bad debts
taken as a result of the impact of COVID-19, which predominantly
impacted H&R's retail segment.
Net income increased by $178.5
million for the three months ended September 30, 2020 compared to the respective
2019 period primarily due to fair value adjustments on real estate
assets and financial instruments.
Net income decreased by $913.1
million for the nine months ended September 30, 2020 compared to the respective
2019 period primarily due to the fair value adjustment of certain
office and retail properties of approximately $1.3 billion and an increase in the provision for
bad debts.
FFO per Unit in Q3 2020 was $0.41
compared to $0.38 in Q2 2020 and
$0.43 in Q3 2019. Excluding the
Q3 2020 provision for bad debts of $13.4
million, Q3 2020 FFO would have been $0.46 per Unit, an increase of $0.03 per Unit compared to Q3 2019. AFFO
per Unit was $0.35 in Q3 2020
compared to $0.29 in Q2 2020 and
$0.35 in Q3 2019. Distributions
paid as a percentage of AFFO was 49.0% in Q3 2020, resulting in
significant retained cash flow.
Fair Value Adjustments on Real Estate Assets
The financial results for the nine months ended September 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.
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 in
Q1 2020. While the strong recovery in same-store sales at the
REIT's shopping centres and the improved cost and access to credit
enjoyed by energy sector tenants are encouraging, there have not
been a sufficient number of transactions in the direct property
market to warrant changes to valuations in these sectors in Q3
2020.
Fair Value
Adjustment on Real Estate Assets
(in thousands of Canadian dollars)
|
3 months ended
March 31,
2020
|
3 months ended
June 30,
2020
|
3 months ended
September 30,
2020
|
9 months ended
September 30,
2020
|
Operating
Segment:
|
|
|
|
|
Office
|
($668,904)
|
($34,210)
|
($2,666)
|
($705,780)
|
Retail
|
(658,801)
|
(5,690)
|
(5,557)
|
(670,048)
|
Industrial
|
7,094
|
(4,142)
|
10,209
|
13,161
|
Residential
|
19,369
|
(13,634)
|
91,014
|
96,749
|
Total fair value
adjustment on real estate assets
|
($1,301,242)
|
($57,676)
|
$93,000
|
($1,265,918)
|
Residential properties in U.S. Sun-Belt cities have seen
increased investment demand since the start of COVID-19 and this
has resulted in a decrease in the capitalization rates used as part
of H&R's regular quarterly IFRS fair value process in Q3
2020.
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
September 30, 2020
|
Nine months ended
September 30, 2020
|
Expected rent
abatements and general provision for bad debts
|
$5,500
|
$24,314
|
Bankruptcies -
tenants who have filed for creditor protection
|
5,186
|
8,093
|
CECRA application
related abatements - April - September 2020
|
2,762
|
5,855
|
Provision for bad
debts per the REIT's proportionate share
|
13,448
|
38,262
|
Less: equity
accounted investments
|
(844)
|
(1,789)
|
Provision for bad
debts per the REIT's Financial Statements
|
$12,604
|
$36,473
|
Provision for Bad
Debts
|
Three months
ended
September 30
|
Nine months ended
September 30
|
(in thousands of
Canadian dollars)
|
2020
|
2019
|
Change
|
2020
|
2019
|
Change
|
Bad debts by
Same-Asset operating segment:
|
|
|
|
|
|
|
Office
|
$168
|
$40
|
$128
|
$543
|
$119
|
$424
|
Retail
|
12,808
|
66
|
12,742
|
35,720
|
218
|
35,502
|
Industrial
|
-
|
-
|
-
|
52
|
-
|
52
|
Residential
|
392
|
276
|
116
|
1,617
|
797
|
820
|
Total Same-Asset bad
debts
|
13,368
|
382
|
12,986
|
37,932
|
1,134
|
36,798
|
Transactions
|
80
|
50
|
30
|
330
|
123
|
207
|
Provision for bad
debts per the REIT's proportionate share
|
13,448
|
432
|
13,016
|
38,262
|
1,257
|
37,005
|
Less: equity
accounted investments
|
(844)
|
8
|
(852)
|
(1,789)
|
56
|
(1,845)
|
Provision for bad
debts per the REIT's Financial Statements
|
$12,604
|
$440
|
$12,164
|
$36,473
|
$1,313
|
$35,160
|
H&R has recorded a provision for bad debts as at
September 30, 2020 of $36.5 million. The provision for bad debts
of $23.9 million as at June 30, 2020 was increased by $12.6 million in Q3 2020. Management
anticipates that the increase to the provision for bad debts in Q4
2020 will be smaller than the increase in Q3 2020. Early 2021
may bring further retailer distress, which is difficult to predict
in advance. Management is committed to working together with its
tenants to ensure the vitality of H&R's shopping centres.
The financial impact of bad debts is one-time in nature, while
continuing impacts on rental revenues is covered in the next
section addressing tenant closures and lease amendments.
These bad debts relate to rental revenues billed but not paid for
the reporting period but not future periods. These bad debts
include rental abatements agreed to under both the Canada Emergency Commercial Rent Assistance
("CECRA") program and abatements agreed to by management with
tenants in distress, as well as unpaid rent from tenants that have
filed for protection under Canada's Companies' Creditors Arrangement Act
("CCAA").
Tenant Closures
Many retailers have faced very challenging conditions in recent
months. Several have filed for 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. To date, tenants occupying
136 stores and totalling 328,666 square feet have filed for
creditor protection under the CCAA. H&R expects to retain
89 of these stores totalling 219,524 square feet.
H&R REIT continues to work collaboratively with its tenants
that have been significantly affected by the pandemic.
Retailers undergoing CCAA restructuring has been an area of
particular focus for management, where retention of stores has
exceeded 65%. 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,
Mendocino, Frank & Oak, Lole or Microsoft Corporation, each of
which has announced plans for store closures.
In relation to the REIT's initial 2020 budget of approximately
$1.1 billion of gross revenue,
Primaris accounted for approximately $285
million. Of that amount, approximately $21.1 million of gross rent is attributable to
tenants undergoing restructurings or liquidations. H&R has
committed to an annualized rental revenue reduction of
approximately $12.2 million as a
result of both store closures and lease amendments, at the REIT's
share. Store closures, which provide the opportunity to
re-lease space to new tenants, account for $6.0 million of this amount, while temporary
lease amendments to rental rates for retained tenancies accounts
for $6.2 million of this
amount.
In restructuring existing leases to accommodate rental rate
reductions, while each situation is unique, typical lease
amendments include the following characteristics:
- a limited period of three months to as much as 24 months of
reduced gross rent, after which tenants revert to previous lease
terms;
- a lower percentage rent breakpoint during the period of reduced
rent, which provides H&R the opportunity to earn additional
revenue as sales volumes recover; and
- no change to all other lease terms, including term, renewal
rights and renewal rental rates, with the exception of some
instances where H&R secured certain lease amendments, to the
benefit of the REIT.
Among the 47 store closures for tenants that have filed for
creditor protection under the CCAA aggregating 109,142 square feet
across H&R's 13,183,000 square feet retail portfolio, leases
have been signed with replacement tenants for 23 stores aggregating
35,672 square feet, with many having commenced occupancy. The
rental revenues from these new tenancies are expected to partially
offset the annualized $6.0 million
reduction in gross revenues relating to store closures, though the
magnitude of that offset depends significantly on tenants sales and
percentage rent participation. Similarly, the annualized
$6.2 million of gross revenue
reduction due to temporary lease amendments assumes no percentage
rent is collected under the temporary lease terms. In September,
average same-store sales from tenants across the Primaris portfolio
reached 88% of prior year levels.
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 November 9, 2020, H&R's rent
collections since the onset of COVID-19 are as follows:
Tenant
Type(1)
|
|
|
Share of
Rent(2)
|
Q2 2020
Collection(2)
|
Q3 2020
Collection(2)
|
October
Collection(2)
|
Office
|
|
|
44%
|
99%
|
99%
|
99%
|
Retail:
|
|
|
|
|
|
|
|
Enclosed
|
|
|
21%
|
60%
|
72%
|
83%
|
|
Other
|
|
|
13%
|
92%
|
94%
|
96%
|
Total
Retail
|
|
|
34%
|
72%
|
80%
|
88%
|
Residential
|
|
|
16%
|
97%
|
97%
|
96%
|
Industrial
|
|
|
6%
|
99%
|
99%
|
100%
|
Total(3)
|
|
|
100%
|
90%
|
93%
|
95%
|
|
|
(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)
|
April to September
collections include an aggregate amount of $11.8 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, as 85.3% of revenues come from investment-grade rated
tenants. 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.
H&R achieved an overall rent collection of 95% in October,
compared to 93% in Q3 2020 and 90% in Q2 2020.
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. By the end of June all properties, including most
stores at enclosed shopping centres, were re-opened, which is
reflected in the retail rent collections trending upwards from 72%
in Q2 to 80% in Q3. October's collections from the retail
portfolio of 88% is without any CECRA subsidies.
The CECRA program for small businesses implemented by the
Government of Canada provided
forgivable loans to qualifying landlords to cover 50% of six
monthly rent payments that were payable by eligible small business
tenants who were experiencing financial hardship during April to
September. Tenants were responsible for contributing 25% of the
rent payments with the landlords abating the remaining 25%
share.
H&R filed CECRA applications for 39 properties covering
approximately $23.5 million of gross
rent at H&R's ownership interest cumulatively for the six month
period from April to September. H&R's 25% abatement was
approximately $5.9 million and the
Government of Canada's 50%
received was approximately $11.8
million.
In October 2020, the Government of
Canada introduced the Canada Emergency Rent Subsidy ("CERS") which
will provide tenants with direct access (without landlord
participation) to rent support until June
2021 for qualifying organizations affected by COVID-19. The
REIT expects its tenants who qualify will participate in this
program which should cover up to 65% of such tenants' eligible
expenses.
Liquidity
As at September 30, 2020, H&R
had $1.0 billion of unused borrowing
capacity available under its lines of credit, $54.4 million of cash on hand and an unencumbered
asset pool of approximately $3.5
billion. As at September 30,
2020, H&R had approximately $39.0
million of mortgages maturing during the remainder of
2020.
SUMMARY OF SIGNIFICANT Q3 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 September 30,
2020, U.S. $577.8 million had
been spent on properties under development with U.S. $101.5 million of budgeted costs remaining to
complete of which U.S. $58.9 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 346,000
square feet of retail space, approximately 149,000 square feet of
office space and 528 residential rental units. Retail occupancy has
commenced and as at November 6, 2020,
eight stores were opened including Hobby Lobby, Burlington, Publix Super Markets Inc., Ross
Stores Inc., Five Below, Chase Bank,
AT&T and Old Navy totalling 206,365 square feet. The centre
will also welcome TJ Maxx, Planet Fitness, Ulta Cosmetics,
Chick-fil-A, Ficelle Patisserie & Boulangerie, Sapphira Prive
Med-Spa, and The Pediatric Dental Center of River Landing, whose stores are all expected to
open in Q1/Q2 2021. The remaining retail and office lease-up is
expected to occur during the balance of 2020 and 2021. The retail
component of this development is expected to be transferred from
properties under development to investment properties in Q4
2020. As at November 6, 2020,
91 residential leases have been entered into exceeding management's
expectations on leasing velocity. The total cost of the project is
expected to be approximately U.S. $495.9
million. Construction is nearing completion and as at
September 30, 2020, approximately
U.S. $446.9 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. Rent
payments are expected to commence on November 14, 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.
In July 2020, H&R purchased
15.4 acres of land in Mississauga,
ON for $18.7 million which is
expected to be developed into two industrial buildings totalling
approximately 329,000 square feet.
Office
Same-Asset property operating income (cash basis) from office
properties increased by 2.0% for the three months ended
September 30, 2020 compared to the
respective 2019 period, primarily due to contractual rental
escalations and an increase in occupancy.
Industrial
Same-Asset property operating income (cash basis) from
industrial properties increased by 7.4% for the three months ended
September 30, 2020 compared to the
respective 2019 period, primarily due to an increase in occupancy
and rental rates.
Residential
Same-Asset property operating income (cash basis) from
residential properties in U.S. dollars decreased by 12.7% for the
three months ended September 30, 2020
compared to the respective 2019 period, primarily due to Jackson
Park in New York, which has been
negatively impacted by lower than average lease renewals and
apartment traffic due to COVID-19. H&R believes this decline is
temporary and expects operating fundamentals to improve in the
upcoming quarters. Excluding Jackson
Park, Same-Asset property operating income (cash basis) from
residential properties in U.S. dollars increased by 4.1% for the
three months ended September 30, 2020
compared to the respective 2019 period.
Retail
Same-Asset property operating income (cash basis) from retail
properties decreased by 15.7% for the three months ended
September 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 5.3% which was primarily due to an increase in
occupancy due to the re-leasing of the former Target and Sears
premises.
Debt Highlights
As at September 30, 2020, debt to
total assets was 47.2%, an improvement from 48.1% last quarter but
an increase compared to 44.4% as at December
31, 2019. This 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
September 30, 2020 was 3.6% with an
average term to maturity of 3.7 years.
Monthly Distributions Declared
H&R today declared a distribution for the month of December
scheduled as follows:
|
Distribution/Unit
|
Annualized
|
Record
date
|
Distribution
date
|
December
2020
|
$0.0575
|
$0.690
|
December 22,
2020
|
January 6,
2021
|
Conference Call and Webcast
Management will host a conference call to discuss the financial
results for the REIT on Friday, November 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 3989711
followed by the pound key. The telephone replay will be
available until Friday, November 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
September 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 Q3 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 transfer from properties under
development to investment properties, the timing of occupancy, the
timing of lease-up 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, including tenants' participation
in the Canada Emergency Rent
Subsidy, the REIT's provisions for and incurrences of bad debt,
expectations regarding tenant retention and closures, the expected
rental revenues from leases with replacement tenants, including any
offset of a reduction in gross revenues relating to store closures,
capitalization rates and other assumptions used to estimate fair
values, management's expectations regarding the REIT's leverage and
portfolio quality, management's belief that Jackson Park's decline is temporary and
expectations regarding future operating fundamentals, 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 November 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 nine months ended September 30,
2020, available at www.hr-reit.com and on
www.sedar.com.
SOURCE H&R Real Estate Investment Trust