Mr. Tom Hofstedter reports

H&R REIT ANNOUNCES $1.5 BILLION OF RETAIL AND OFFICE PROPERTY SALES

H & R Real Estate Investment Trust has entered into binding agreements with multiple buyers to sell retail and office properties in Canada and the United States.

Total gross proceeds before transaction costs amount to $1.5-billion, which approximates the Sept. 30, 2025, aggregate international financial reporting standard values for these assets.

Tom Hofstedter, executive chair and chief executive officer, said: "These sales accelerate the REIT's portfolio simplification strategy of selling office and retail properties while reducing leverage and positioning the REIT to drive sustainable long-term value for all unitholders. In June, 2021, when we announced the strategy, our residential and industrial segments amounted to 35 per cent of our total portfolio. After these sales, our residential and industrial segments will amount to 83 per cent of our total real estate assets. We will begin to market a number of other properties to aggressively accelerate this strategy."

The assets to be sold are:

1. H & R's non-managing 33.1-per-cent ownership interest in Echo Realty L.P.'s U.S. retail portfolio;
2. 27 Canadian retail properties;
3. Hess Tower, a Houston office property;
4. 145 Wellington, a downtown Toronto office property; and
5. 88 McNabb, an office property in the Greater Toronto Area.

These assets contributed $33.3-million to third quarter 2025 same-property net operating income (cash basis), which does not reflect the impact of Hess Corp.'s previously announced plan to vacate one-third of the Hess Tower in June, 2026, representing 278,850 square feet of space. Had these sales and the anticipated debt repayments been made at the end of second quarter 2025, funds from operations in Q3 2025 would have been lower by approximately six cents per unit. H & R expects its pro forma debt to adjusted earnings before interest, taxes, depreciation and amortization at the REIT's proportionate share before any unit repurchases to be 8.7 times. H & R expects to keep this ratio below 9.0 times on a go-forward basis. H & R expects to incur approximately $900,000 (U.S.) in U.S. taxes upon the sale of these assets.

Following the completion of the $1.5-billion of sales, the proportion of the REIT's portfolio composed of residential and industrial assets will increase from 69 per cent to 83 per cent. The only remaining retail square feet will be part of a mixed-use property at River Landing in Miami comprising 528 residential units, 341,771 square feet of retail space and 149,178 square feet of office space.

Total gross proceeds before transaction costs amount to approximately $1.5-billion, which approximates the Sept. 30, 2025, aggregate international financial reporting standard values for these assets. The buyer of H & R's interest in Echo Realty will assume debts of approximately $369-million at H & R's interest.

Net proceeds of approximately $1.1-billion will be used to repay corporate debt. Additionally, the REIT intends to apply to the Toronto Stock Exchange for approval to commence a normal course issuer bid and may use up to $200-million of the newly created debt capacity, over time, to repurchase units pursuant to any such NCIB.

The sale of one retail property is expected to close in fourth quarter 2025, and the rest of the property sales is expected to close in January, 2026. The sales are subject to customary closing conditions. The sale of 88 McNabb, a 74,592-square-foot office property in the GTA, is still subject to the buyer's due diligence.

H & R remains in negotiations to sell two Canadian office properties in Toronto (310, 320 and 330 Front St. West and 25 Sheppard Ave. West). H & R is not expecting to enter into any other binding sale agreements in 2025.

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 $9.6-billion as at Sept. 30, 2025. H & R REIT has ownership interests in a Canadian and U.S. portfolio composed of high-quality residential, industrial, office and retail properties comprising over 25.7 million square feet.

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