H&R Real Estate Investment Trust has confirmed a series of binding agreements to sell retail and office properties in Canada and the United States, in transactions amounting to $1.5 billion before costs. The Toronto-based REIT said the deals closely match the aggregate IFRS values of the assets as at 30 September 2025.

The announcement marks a significant step in the trust’s long-running plan to streamline its portfolio and prioritise residential and industrial real estate. 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% of our total portfolio. After these sales, our Residential and Industrial segments will amount to 83% of our total real estate assets. We will begin to market a number of other properties to aggressively accelerate this strategy.”

The properties included in the disposals are H&R’s non-managing 33.1% interest in Echo Realty, L.P.’s U.S. retail portfolio, 27 Canadian retail sites, Hess Tower in Houston, 145 Wellington in downtown Toronto, and 88 McNabb in the Greater Toronto Area. Collectively, these assets contributed $33.3 million to Same-Property net operating income (cash basis) in the third quarter of 2025, excluding the impact of Hess Corporation’s plan to vacate one-third of Hess Tower in June 2026.

H&R said that, had the sales and debt repayments been completed at the end of the second quarter, third-quarter FFO per unit would have been approximately $0.06 lower. The trust expects its proforma debt to Adjusted EBITDA at its proportionate share to stand at 8.7x, remaining below 9.0x in the near term. The buyer of its interest in Echo Realty, L.P. will assume around $369 million in debt at H&R’s share, with net proceeds of roughly $1.1 billion planned for corporate debt repayment.

The REIT also intends to seek approval for a normal course issuer bid and may allocate up to $200 million of newly available capacity to unit repurchases. Most of the sales are scheduled to complete in January 2026, with one retail property expected to close in the final quarter of 2025. Discussions continue over two additional Toronto office assets, though no further binding agreements are anticipated before year-end.