Mr. Tom Hofstedter reports

H&R REIT ANNOUNCES AGREEMENT TO SELL $232.5 MILLION TORONTO OFFICE PROPERTY AND ANNOUNCES REGULAR MONTHLY AND SPECIAL DISTRIBUTION

H & R Real Estate Investment Trust has entered into an agreement to sell 25 Dockside Dr. for $232.5-million to George Brown College and Halmont Properties Corp. (collectively, the purchaser). 25 Dockside Dr. is located directly on the waterfront in downtown Toronto, comprising 479,437 square feet, and is substantially leased to Corus Entertainment. The expected closing for the sale is April, 2024, and is subject to customary closing conditions. This sale is consistent with the REIT's strategic repositioning plan to surface significant value for unitholders, by transforming into a simplified, growth-oriented company focused on residential and industrial properties.

"Given the considerable headwinds in the public and private real estate markets, we are very pleased to have executed this transaction," said Tom Hofstedter, executive chairman and chief executive officer. "This office sale furthers 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."

Highlights:

• 25 Dockside Dr. was valued at $225-million at Sept. 30, 2023.
• Sale price represents an approximate 5.7-per-cent capitalization rate.
• 25 Dockside Dr. is encumbered by a $60-million mortgage bearing interest at 4.9 per cent.
• Net proceeds of approximately $168-million are expected to be used to repay debt and finance the REIT's current developments.
• 25 Dockside Dr. represents approximately 9 per cent of H & R's office portfolio (based on Sept. 30, 2023, international financial reporting standards fair values).
• On a square footage basis, 25 Dockside Dr. represents approximately 12 per cent of the REIT's Canadian office portfolio at Sept. 30, 2023.
• Out of the REIT's 20 remaining office properties, eight office properties are currently being rezoned for residential or industrial developments with expected increased density of approximately 2.7 million square feet at H & R's ownership interest.
• Improves the REIT's growth profile by increasing relative exposure to higher-growth residential and industrial sectors.
• The REIT has sold 12 non-core properties totalling $432.9-million this year. Including 25 Dockside Dr., H & R's 2023 properties sold or under contract to be sold total $665.4-million, exceeding the disposition target of $600-million.

Monthly Distribution Declared

H & R today declared a distribution for the month of December scheduled as noted herein.

2023 special distribution

The REIT also announced today that it has declared a special distribution of 62 cents per unit. The distribution will be payable in units (52 cents per unit) and cash (10 cents per unit) to unitholders of record as at Dec. 29, 2023.

The special distribution is principally being made to distribute to unitholders the taxable income realized by the REIT from transactions completed during the year ended Dec. 31, 2023. The REIT is making the special distribution payable partially in cash and partially in units, in order to provide unitholders with cash to help finance any additional tax that may arise associated with the special distribution.

Immediately following the special distribution, the outstanding units of the REIT will be consolidated such that each unitholder will hold, after the consolidation, the same number of inits as such unitholder held before the special distribution. The amount of the special distribution payable in units will increase the tax cost basis of unitholders' consolidated units. The remaining portion of the special distribution will be paid in cash on Jan. 15, 2024.

The REIT cautions that the foregoing comments are not intended to be, and should not be construed as, legal or tax advice to any unitholder. The REIT recommends that unitholders consult their own tax advisers regarding the income tax consequences to them of this anticipated special distribution and related unit consolidation.

About H & R Real Estate Investment Trust

H & R is one of Canada's largest real estate investment trusts with total assets of approximately $11.1-billion as at Sept. 30, 2023. H & R has ownership interests in a North American portfolio comprising high-quality residential, industrial, office and retail properties comprising over 27.1 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. Sun Belt and gateway cities.

We seek Safe Harbor.