H&R REIT (HR-UN-T) has announced the first of what is expected to be a series of major asset divestments, confirming binding agreements with “multiple buyers” for approximately $1.5 billion of office and retail sales in Canada and the United States.

The announcement Tuesday morning states this round of divestments will reap proceeds that “approximate the aggregate IFRS values for the divested assets.”

"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, H&R executive chair and CEO Tom Hofstedter said in the announcement.

“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."

H&R has not identified any of the buyers for the properties. It has also not offered a timeline for closing of the sales.

The office and retail assets being sold

Assets being divested as part of this announcement are:

• H&R's non-managing 33.1 per cent ownership interest in Echo Realty, L.P.'s U.S. retail portfolio;
• 27 Canadian retail properties;
• Hess Tower, a 29-storey, 844,763-square-foot, LEED Platinum downtown Houston office property completed in 2011;
• 145 Wellington, a 160,000-square-foot downtown Toronto office property; and
• 88 McNabb, a fully leased suburban 74,592-square-foot office property in Markham, north of Toronto.

These assets contributed $33.3 million to H&R’s Q3 2025 same-property net operating income, which the trust said does not reflect the impact of Hess Corporation's previously announced plan to vacate one-third of the Hess Tower in June 2026. That will result in increased vacancy of 278,850 square feet of space. 

Had these sales and the anticipated debt repayments been made at the end of Q2 2025, the trust reports its funds from operations in Q3 2025 would have been lower by approximately $0.06 per unit.

H&R expects its pro forma debt-to-adjusted-EBITDA to be 8.7 times following the transactions. H&R states it plans to keep this ratio below nine times on a go-forward basis. 

H&R's recent strategic update

H&R had announced the pending sales of a total of $2.6 billion of assets in its Q3 2025 financial report a few weeks ago. The trust has been actively marketing retail and office assets, transitioning its portfolio to focus on industrial and multifamily.

It also announced the end of a strategic review in releasing its Q3 financials. 

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