Mr. Larry Froom reports

H&R REIT CREATES LANTOWER REAL ESTATE DEVELOPMENT TRUST IPO FOR TWO FLORIDA PROJECTS

H & R Real Estate Investment Trust has created a real estate development trust (REDT), known as Lantower Residential Real Estate Development Trust (No. 1), in order to sell units of the REDT by way of an initial public offering (IPO) to raise up to $52-million (U.S.).

The purpose of the REDT will be to partner with the REIT's subsidiary, Lantower Residential, on two residential development projects in Florida expected to contain an aggregate of 601 units comprised as follows:

1. A project to build one contiguous building of four stories comprising approximately 261,000 net rentable square feet consisting of 271 residential rental units sitting on 8.4 acres of land in Largo, Fla. (Tampa);
2. A project to build two residential buildings of four stories comprising approximately 342,000 net rentable square feet, consisting of 330 residential rental units on 17.2 acres of land in Kissimmee, Fla. (Orlando).

The REDT will aim to develop the assets, commence lease-up and operate the projects, and subsequently achieve a liquidity event.

Highlights:

• Formation of a REDT to accelerate H & R's project development process for the two projects;
• Lower cash flow requirements and leverage impact for the two development projects on H & R;
• H & R will have an option to acquire the projects.

"The creation of the REDT is expected to maximize value both for H & R REIT and the REDT," said Thomas J. Hofstedter, executive chairman and chief executive officer of H & R REIT. "This strategic initiative positions H&R's development pipeline well for the future. We expect the REDT to not only unlock value for our unitholders, but also to enhance our financial flexibility and increase our financial capacity, with the longer term ability for H & R to acquire these assets following development."

"H & R REIT is proud to continue as a capital markets innovator being the first public issuer sponsor of a real estate development IPO dedicated to development assets inside its own pipeline. This vehicle represents a new and innovative capital source that will enable us to build on our long-standing commitment to owning and developing high quality real estate," continued Mr. Hofstedter.

The minimum offering size of the IPO is $42-million (U.S.) with the maximum being $52-million (U.S.). H & R will contribute the two land parcels for the projects to the REDT and will commit to invest up to an additional $10-million (U.S.) of equity in the projects assuming achievement of minimum IPO offering size. H & R is expected to own 42.7 per cent of the projects if only the minimum offering is raised, and 29.1 per cent of the projects if the maximum is raised with no additional equity investment from H & R. The REIT expects to account for this investment as an equity accounted investment.

The projects are zoning compliant and entitled development projects with development expected to commence shortly following closing of the IPO. Total budgeted costs for the projects are approximately $210-million (U.S.).

The REDT will be managed by an affiliate of the REIT and administered by a board of trustees, a majority of whom are independent of the REIT.

The IPO is expected to be completed in late March, 2024, subject to prevailing market conditions and receipt of required regulatory approvals.

CIBC World Markets Inc. is the sole agent for the IPO.

About H & R Real Estate Investment Trust

H & R REIT is one of Canada's largest real estate investment trusts with total assets of approximately $10.8-billion as at Dec. 31, 2023. H & R REIT has ownership interests in a North American portfolio comprising high-quality residential, industrial, office and retail properties comprising over 26.9 million square feet.

We seek Safe Harbor.