H&R REIT Reports Fourth Quarter 2025 Financial Results

Feb 12 2026 22:01 GMT

TORONTO , Feb. 12, 2026 /CNW/ - H&R Real Estate Investment Trust ("H&R" or "the REIT") (TSX: HR.UN) is pleased to announce its financial results for the three months and year ended December 31, 2025.

Tom Hofstedter, Executive Chair and Chief Executive Officer said "We continue to successfully execute our strategic plan to reposition H&R to be a more simplified growth and income-oriented REIT focused on residential and industrial properties. From the announcement of this plan to December 31, 2025, H&R completed the spin-off of the REIT's 27 enclosed shopping centres and sold ownership interests in 69 properties totaling approximately $5.4 billion. In addition, properties sold and under contract to be sold in 2026 total approximately $1.6 billion. As a result of these sales and properties under contract to be sold, H&R's residential and industrial real estate assets combined will grow from 34% of the total portfolio to 84% and geographically, our real estate assets in the United States will grow from 45% of the total portfolio to 68%."

⁽¹⁾	At the REIT's proportionate share, excluding assets classified as held for sale. Refer to the "Non-GAAP Measures" section of this news release.
⁽²⁾	June 30, 2021 has been used as a benchmark since H&R's strategic repositioning plan was announced prior to the release of H&R's Q3 2021 results.
⁽³⁾	Excludes the Bow and 100 Wynford, which were legally sold in October 2021 and August 2022, respectively.

STRATEGIC REPOSITIONING HIGHLIGHTS SINCE JUNE 30, 2021⁽¹⁾

H&R completed a spin off, on a tax-free basis, of 27 properties including all of the REIT's enclosed shopping centres to a new publicly-traded REIT, Primaris REIT, which properties were valued at approximately $2.4 billion at the time of the spin off;
H&R sold 69 real estate assets totalling approximately $3.0 billion through December 31, 2025, including the Bow and 100 Wynford;
H&R has sold $1.1 billion and contracted to sell a further $0.4 billion of assets in 2026;
H&R increased its percentage of residential and industrial real estate assets at the REIT's proportionate share⁽²⁾ excluding assets classified as held for sale, from 34% as at June 30, 2021 to 84% as at December 31, 2025;
H&R increased its percentage of real estate assets held in the United States at the REIT's proportionate share⁽²⁾ excluding assets classified as held for sale, from 45% as at June 30, 2021 to 68% as at December 31, 2025 (excluding the Bow and 100 Wynford);
H&R reduced its office portfolio at the REIT's proportionate share⁽²⁾excluding assets classified as held for sale, from approximately $5.0 billion as at June 30, 2021 to approximately $0.9 billion as at December 31, 2025 (excluding the Bow and 100 Wynford);
H&R reduced its retail portfolio at the REIT's proportionate share⁽²⁾ excluding assets classified as held for sale, from approximately $4.0 billion as at June 30, 2021 to approximately $0.3 billion as at December 31, 2025;
H&R completed five single-tenant industrial developments in the Greater Toronto Area ("GTA") totalling 641,920 square feet and two residential developments in Dallas, TX, totalling 763 residential rental units;
H&R increased average contractual rent for U.S. residential properties from U.S.$21.16 per square foot as at June 30, 2021 to U.S.$27.18 per square foot as at December 31, 2025;
H&R increased average contractual rent for Canadian industrial properties from $7.17 per square foot as at June 30, 2021 to $10.05 per square foot as at December 31, 2025;
H&R reduced debt per the REIT's Financial Statements⁽³⁾ from approximately $6.1 billion as at June 30, 2021 to approximately $3.5 billion as at December 31, 2025;
H&R improved debt to total assets at the REIT's proportionate share⁽³⁾⁽⁴⁾ from 50.0% as at June 30, 2021 to 49.8% as at December 31, 2025;
H&R improved its unencumbered asset to unsecured debt coverage ratio⁽⁵⁾ from 1.65x as at June 30, 2021 to 1.92x as at December 31, 2025;
H&R improved debt to Adjusted EBITDA (based on trailing 12 months) at the REIT's proportionate share^(3)(4)(6) from 10.4x as at June 30, 2021 to 9.3x as at December 31, 2025.

⁽¹⁾	June 30, 2021 has been used as a benchmark as H&R's Strategic Repositioning Plan was announced prior to the release of Q3 2021 results.
⁽²⁾	These are non-GAAP measures. Refer to the "Non-GAAP Measures" section of this news release.
⁽³⁾	Debt includes mortgages payable, debentures payable, unsecured term loans and lines of credit.
⁽⁴⁾	These are non-GAAP ratios. Refer to the "Non-GAAP Measures" section of this news release.
⁽⁵⁾	Unencumbered assets are investment properties and properties under development without encumbrances for mortgages or lines of credit. Unsecured debt includes debentures payable, unsecured term loans and unsecured lines of credit.
⁽⁶⁾	Adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA") is defined in the "Non-GAAP Measures" section of this news release.

FINANCIAL HIGHLIGHTS

	December 31	December 31
	2025	2024
Total assets (in thousands)	$9,108,286	$10,620,487
Debt to total assets per the REIT's Financial Statements⁽¹⁾	38.4 %	33.4 %
Debt to total assets at the REIT's proportionate share⁽¹⁾⁽²⁾	49.8 %	43.7 %
Debt to Adjusted EBITDA at the REIT's proportionate share^(1)(2)(3)	9.3x	9.4x
Unitholders' equity (in thousands)	$4,135,718	$5,278,743
Units outstanding (in thousands)	264,558	262,016
Exchangeable units outstanding (in thousands)	15,442	17,974
Unitholders' equity per Unit	$15.63	$20.15
Net Asset Value ("NAV") per Unit⁽²⁾⁽⁴⁾	$16.09	$20.92

	Three months ended December 31		Year ended December 31
(in thousands except for per Unit amounts)	2025	2024	2025	2024
Rentals from investment properties	$203,750	$202,350	$815,128	$816,990
Net operating income	$143,107	$141,149	$509,083	$519,918
Same-Property net operating income (cash basis)⁽⁵⁾	$123,148	$122,651	$489,739	$481,813
Net income (loss) from equity accounted investments	($241,748)	$82,308	($271,064)	$2,477
Fair value adjustment on real estate assets	($216,378)	($53,265)	($969,275)	($425,884)
Net income (loss)	($250,308)	$130,882	($791,564)	($119,714)
Funds from Operations ("FFO")⁽⁵⁾	$87,278	$83,417	$339,278	$334,427
Adjusted Funds from Operations ("AFFO")⁽⁵⁾	$72,936	$61,594	$278,585	$266,962
Weighted average number of Units and exchangeable units	279,993	279,990	279,990	279,933
FFO per basic and diluted Unit⁽²⁾	$0.312	$0.298	$1.212	$1.195
AFFO per basic and diluted Unit⁽²⁾	$0.260	$0.220	$0.995	$0.954
Cash distributions per Unit	$0.150	$0.150	$0.600	$0.600
Special December cash distribution per Unit	$—	$0.120	$—	$0.120
Payout ratio as a % of FFO⁽²⁾	48.1 %	90.6 %	49.5 %	60.3 %
Payout ratio as a % of AFFO⁽²⁾	57.7 %	122.7 %	60.3 %	75.5 %

⁽¹⁾	Debt includes mortgages payable, debentures payable, unsecured term loans, lines of credit and liabilities classified as held for sale.
⁽²⁾	These are non-GAAP ratios. Refer to the "Non-GAAP Measures" section of this news release.
⁽³⁾	Adjusted EBITDA is based on the trailing 12 months and is calculated on page 9 of this news release.
⁽⁴⁾	See page 12 of this news release for a detailed calculation of NAV per Unit.
⁽⁵⁾	These are non-GAAP measures. Refer to the "Non-GAAP Measures" section of this news release.

SUMMARY OF SIGNIFICANT 2025 ACTIVITY

Net Operating Income Highlights:

	Three months ended December 31			Year ended December 31
(in thousands of Canadian dollars)	2025	2024	% Change	2025	2024	% Change
Operating Segment:
Same-Property net operating income (cash basis) - Residential⁽¹⁾	$44,033	$43,559	1.1 %	$170,394	$168,417	1.2 %
Same-Property net operating income (cash basis) - Industrial⁽¹⁾	15,831	17,396	(9.0 %)	65,343	67,851	(3.7 %)
Same-Property net operating income (cash basis) - Office⁽¹⁾	38,553	37,998	1.5 %	154,682	152,448	1.5 %
Same-Property net operating income (cash basis) - Retail⁽¹⁾	24,731	23,698	4.4 %	99,320	93,097	6.7 %
Same-Property net operating income (cash basis)⁽¹⁾	123,148	122,651	0.4 %	489,739	481,813	1.6 %
Net operating income (cash basis) from Transactions at the REIT's proportionate share⁽¹⁾⁽²⁾	32,873	31,073	5.8 %	126,390	134,486	(6.0 %)
Realty taxes in accordance with IFRIC 21 at the REIT's proportionate share⁽¹⁾⁽³⁾	15,781	14,686	7.5 %	—	—	— %
Straight-lining of contractual rent at the REIT's proportionate share⁽¹⁾	3,284	3,527	(6.9 %)	13,898	18,256	(23.9 %)
Net operating income from equity accounted investments⁽¹⁾	(31,979)	(30,788)	3.9 %	(120,944)	(114,637)	5.5 %
Net operating income per the REIT's Financial Statements	$143,107	$141,149	1.4 %	$509,083	$519,918	(2.1 %)

⁽¹⁾	These are non-GAAP measures. Refer to the "Non-GAAP Measures" section of this news release.
⁽²⁾	Transactions includes acquisitions, dispositions, and transfers of investment properties to or from properties under development during the two-year period ended December 31, 2025.
⁽³⁾	Realty taxes in accordance with IFRS Interpretations Committee Interpretation 21, Levies ("IFRIC 21") relates to the timing of the liability recognition for U.S. realty taxes. By excluding the impact of IFRIC 21, U.S. realty tax expenses are evenly matched with realty tax recoveries received from tenants throughout the period.

*Fair Value Adjustment on Real Estate Assets*	Three months ended December 31			Year ended December 31
(in thousands of Canadian dollars)	2025	2024	Change	2025	2024	Change
Operating Segment:
Residential	($302,175)	$56,099	($358,274)	($361,874)	($39,312)	($322,562)
Industrial	(16,975)	5,225	(22,200)	(85,971)	(24,872)	(61,099)
Office	(126,531)	(36,869)	(89,662)	(563,130)	(275,732)	(287,398)
Retail	(11,845)	(14,385)	2,540	(96,660)	(114,684)	18,024
Land and properties under development	(18,437)	485	(18,922)	(198,588)	(27,178)	(171,410)
Fair value adjustment on real estate assets per the REIT's proportionate share⁽¹⁾	(475,963)	10,555	(486,518)	(1,306,223)	(481,778)	(824,445)
Less: equity accounted investments	259,585	(63,820)	323,405	336,948	55,894	281,054
Fair value adjustment on real estate assets per the REIT's Financial Statements	($216,378)	($53,265)	($163,113)	($969,275)	($425,884)	($543,391)

⁽¹⁾	The REIT's proportionate share is a non-GAAP measure defined in the "Non-GAAP Measures" section of this news release.

During the three months and year ended December 31, 2025, the fair value adjustments on real estate assets were primarily due to one office property and one residential property, both in Long Island City, NY. These adjustments were driven by feedback from the Strategic Review process and uncertainty surrounding the change in municipal political policies and the potential impact on New York City, its residents and investors.

During the year ended December 31, 2025, additional fair value adjustments on real estate assets were primarily due to the following: (i) properties classified as held for sale, to be in line with the expected selling prices of these properties; (ii) a reduction in valuations of certain industrial properties due to lower market rent assumptions for renewals and vacant properties; and (iii) a reduction in valuations of the REIT's U.S. land parcels, primarily due to softening economic conditions for development projects as well as persistently high interest rates for construction financing, resulting in higher construction costs.

Transaction Highlights

Property Dispositions

During the year ended December 31, 2025, H&R sold its ownership interests in eight Canadian retail properties, two U.S. retail properties, one Canadian office property and one commercial unit adjacent to a Canadian office property totalling 601,090 square feet for $121.0 million, all at H&R's ownership interest.

In November 2025, H&R announced it had entered into binding agreements with multiple buyers to sell certain retail and office properties in Canada and the United States for approximately $1.5 billion.

The following assets were sold for approximately $1.1 billion in January 2026. Net proceeds of approximately $727.3 million have been used to repay corporate debt.

1) H&R's non-managing 33.1% ownership interest in ECHO Realty, L.P. ("ECHO");
2) 23 Canadian retail properties;
3) 145 Wellington Street West, a downtown Toronto office property; and
4) 88 McNabb Street, an office property in the GTA.

The following assets are under contract to be sold and expected to close in Q1 2026:

1) Hess Tower, a Houston, TX office property; and
2) Remaining 3 Canadian retail properties.

Leasing Update

In June 2025, 6900 Maritz Drive in Mississauga, ON, a newly constructed 122,320 square foot industrial building reached substantial completion, at which point it was transferred from properties under development to investment properties. In September 2025, H&R entered into a binding letter of intent with a tenant to lease the full building at market rents commencing January 2026. The tenant has a 4-month rent free period commencing at the start of the lease term.

In Q3 2025, H&R completed lease renewals at two single tenanted Canadian office properties located in Markham, ON and Sydney, NS, totalling 143,641 square feet, with annual contractual rent increasing by an average of $6.15 per square foot commencing in Q4 2025.

In Q4 2025, H&R leased its remaining two industrial properties under development, 560 & 600 Slate Drive in Mississauga, ON. Both properties were leased at market rents for approximately 11 years to a single tenant. The leases will commence at 560 Slate Drive in March 2026 and in October 2026 for 600 Slate Drive, with a 5-month rent free period at both properties commencing at the start of the respective lease term. These properties are expected to be substantially completed and transferred from properties under development to investment properties in Q1 2026.

The Royal Bank of Canada's 188,526 square foot lease at 330 Front Street West, in Toronto, ON matured on December 31, 2025. H&R is in negotiations with several prospective tenants for part of this space.

Debt & Liquidity Highlights

Debentures

In June 2025, H&R redeemed all of its $400.0 million, Series Q Senior Debentures upon maturity, which bore interest at 4.071% per annum.

Liquidity

As at December 31, 2025, H&R had cash and cash equivalents of $52.1 million, $316.8 million available under its unused lines of credit and an unencumbered property pool of approximately $3.9 billion. In January 2026, H&R received net proceeds before closing costs of $727.3 million from the sale of ECHO and certain Canadian properties. $375.0 million of the proceeds were used to repay unsecured term loans. The majority of the remaining proceeds were used to repay lines of credit, further bolstering H&R's liquidity.

2025 Cash Distributions

H&R's cash distributions amounted to $0.60 per Unit during 2025 (2024 - $0.72 per Unit) which was comprised of monthly cash distributions which annualized to an aggregate amount of $0.60 per Unit (2024 - $0.60 per Unit). A special cash distribution of $0.12 per Unit was paid in 2024 (2025 - nil).

For the year ended December 31, 2025, H&R's payout ratio as a percentage of Adjusted Funds from Operations ("AFFO") (a non-GAAP ratio, refer to the "Non-GAAP Measures" section of this news release) was 60.3% (2024 - 75.5%).

2025 Taxation Consequences for Taxable Canadian Unitholders

H&R's cash distributions amounted to $0.60 per Unit during 2025. The REIT also made a special distribution to unitholders of record on December 31, 2025 of $0.15 per Unit payable in additional Units, which were immediately consolidated such that there was no change in the number of outstanding Units. The special distribution increased the adjusted cost basis of unitholders' consolidated Units.

MONTHLY DISTRIBUTIONS DECLARED

H&R today declared distributions for the months of February and March scheduled as follows:

	Distribution per Unit	Annualized	Record date	Distribution date
February 2026	$0.05	$0.60	February 27, 2026	March 16, 2026
March 2026	$0.05	$0.60	March 31, 2026	April 15, 2026

CONFERENCE CALL AND WEBCAST

Management will host a conference call to discuss the financial results of the REIT on Friday, February 13, 2026 at 9.30 a.m. Eastern Time. Participants can join the call by dialing 1–800–717–1738 or 1–289–514–5100. For those unable to participate in the conference call at the scheduled time, a replay will be available approximately one hour following completion of the call. To access the archived conference call by telephone, dial 1–289–819–1325 or 1–888–660–6264 and enter the passcode 62704 followed by the "#" key. The telephone replay will be available until Friday, February 20, 2026 at midnight.

A live audio webcast will be available through www.hr-reit.com/investor-relations/#investor-events. Please connect at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be required to join the webcast. The webcast will be archived on H&R's website following the call date.

The investor presentation is available on H&R's website at www.hr-reit.com/investor-relations/#investor-presentation.

ABOUT H&R REIT

H&R is one of Canada's largest real estate investment trusts. H&R has ownership interests in a Canadian and U.S. portfolio primarily comprised of high–quality residential (operating as Lantower Residential), industrial and office properties totalling approximately 21.2 million square feet.

FORWARD-LOOKING DISCLAIMER

Certain information in this press release contains forward-looking information within the meaning of applicable securities laws (also known as forward-looking statements) including, among others, statements made or implied relating to H&R's objectives, beliefs, plans, estimates, targets, projections and intentions and similar statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts, including the statements made under the heading "Summary of Significant 2025 Activity" including with respect to H&R's future plans and targets, the potential for additional asset sales, the expected timing of, and gross proceeds from, properties under contract to be sold, leasing of the REIT's investment properties, anticipated lease vacancies and new lease commencements, H&R's expectation with respect to its development properties, the value of assets and liabilities held for sale, capitalization rates and cash flow models used to estimate fair values, expectations regarding future operating fundamentals, management's expectations regarding future distributions by the REIT, and management's expectation to be able to meet all of the REIT's ongoing obligations. Forward-looking statements generally can be identified by words such as "outlook", "objective", "may", "will", "expect", "intend", "estimate", "anticipate", "believe", "should", "plans", "project", "budget" or "continue" or similar expressions suggesting future outcomes or events. Such forward-looking statements reflect H&R's current beliefs and are based on information currently available to management.

Forward-looking statements are provided for the purpose of presenting information about management's current expectations and plans relating to the future, and readers are cautioned that such statements may not be appropriate for other purposes. These statements are not guarantees of future performance and are based on H&R's estimates and assumptions that are subject to risks, uncertainties and other factors including those risks and uncertainties described below under "Risks and Uncertainties" and those discussed in H&R's materials filed with the Canadian securities regulatory authorities from time to time, which could cause the actual results, performance or achievements of H&R to differ materially from the forward-looking statements contained in this press release. Material factors or assumptions that were applied in drawing a conclusion or making an estimate set out in the forward-looking statements include assumptions relating to the general economy, including debt markets continuing to provide access to capital at a reasonable cost; and assumptions concerning currency exchange and interest rates. Additional risks and uncertainties include, among other things, those related to: real property ownership; the current economic environment; tariffs and other international trade disputes; property valuations; credit risk and tenant concentration; lease rollover risk; interest rate and other debt-related risks; inflation risk; development risks; residential rental risk; capital expenditure risk; currency risk; liquidity risk; cyber security risk and breach of privacy or information security systems; artificial intelligence and related technologies; expanding social media vehicles; financing credit risk; ESG and climate change risk; public health crises; co-ownership interest in properties; business continuity; general uninsured losses; joint arrangement and investment risks; talent management and succession planning; potential acquisition, investment and disposition opportunities and joint venture arrangements; potential undisclosed liabilities associated with acquisitions; competition for real property investments; potential conflicts of interest; litigation and regulatory risk; Unit prices; availability of cash for distributions; credit ratings; ability to access capital; dilution; unitholder liability; redemption right; investment eligibility; debentures; statutory remedies; unitholder activism; tax risk; and additional tax risks applicable to the REIT and to unitholders. H&R cautions that these lists of factors, risks and uncertainties are not exhaustive. Although the forward-looking statements contained in this press release are based upon what H&R believes are reasonable assumptions, there can be no assurance that actual results will be consistent with these forward-looking statements.

Readers are also urged to examine H&R's materials filed with the Canadian securities regulatory authorities from time to time as they may contain discussions on risks and uncertainties which could cause the actual results and performance of H&R to differ materially from the forward-looking statements contained in this press release. All forward-looking statements in this press release are qualified by these cautionary statements. These forward-looking statements are made as of February 12, 2026 and the REIT, except as required by applicable Canadian law, assumes no obligation to update or revise them to reflect new information or the occurrence of future events or circumstances.

NON-GAAP MEASURES

The audited consolidated financial statements of the REIT and related notes for the three months and year ended December 31, 2025 (the "REIT's Financial Statements") were prepared in accordance with International Financial Reporting Standards ("IFRS"). However, H&R's management uses a number of measures, including NAV per Unit, FFO, AFFO, FFO and AFFO per basic and diluted Unit, payout ratio as a % of FFO, payout ratio as a % of AFFO, debt to total assets at the REIT's proportionate share, debt to Adjusted EBITDA at the REIT's proportionate share, Same–Property net operating income (cash basis) and the REIT's proportionate share, which do not have meanings recognized or standardized under IFRS or GAAP. These non–GAAP measures and non–GAAP ratios should not be construed as alternatives to financial measures calculated in accordance with GAAP. Further, H&R's method of calculating these supplemental non–GAAP measures and ratios may differ from the methods of other real estate investment trusts or other issuers, and accordingly may not be comparable. H&R uses these measures to better assess H&R's underlying performance and provides these additional measures so that investors may do the same.

For information on the most directly comparable GAAP measures, composition of the measures, a description of how the REIT uses these measures and an explanation of how these measures provide useful information to investors, refer to the "Non–GAAP Measures" section of the REIT's management's discussion and analysis as at and for the year ended December 31, 2025 available at www.hr–reit.com and on the REIT's profile on SEDAR+ at www.sedarplus.com, which is incorporated by reference into this news release.

FINANCIAL POSITION

The following table reconciles the REIT's Statement of Financial Position from the REIT's Financial Statements to the REIT's proportionate share (a non-GAAP measure):

	December 31, 2025			December 31, 2024
(in thousands of Canadian dollars)	REIT's Financial Statements	Equity accounted investments	REIT's proportionate share	REIT's Financial Statements	Equity accounted investments	REIT's proportionate share
Assets
Real estate assets
Investment properties	$6,370,453	$1,053,283	$7,423,736	$7,996,810	$2,275,559	$10,272,369
Properties under development	785,184	240,930	1,026,114	1,010,648	208,898	1,219,546
	7,155,637	1,294,213	8,449,850	9,007,458	2,484,457	11,491,915
Equity accounted investments	484,702	(484,702)	—	1,275,549	(1,275,549)	—
Assets classified as held for sale	1,142,900	—	1,142,900	59,880	—	59,880
Other assets	272,910	6,979	279,889	177,246	34,758	212,004
Cash and cash equivalents	52,137	6,503	58,640	100,354	41,000	141,354
	$9,108,286	$822,993	$9,931,279	$10,620,487	$1,284,666	$11,905,153
Liabilities and Unitholders' Equity
Liabilities
Debt	$3,501,891	$800,889	$4,302,780	$3,537,384	$1,199,391	$4,736,775
Exchangeable units	157,968	—	157,968	166,800	—	166,800
Deferred Revenue	862,139	—	862,139	906,363	—	906,363
Deferred tax liability	212,781	—	212,781	413,186	—	413,186
Accounts payable and accrued liabilities	237,789	22,104	259,893	304,978	64,744	369,722
Liabilities classified as held for sale	—	—	—	13,033	—	13,033
Non-controlling interest	—	—	—	—	20,531	20,531
	4,972,568	822,993	5,795,561	5,341,744	1,284,666	6,626,410
Unitholders' equity	4,135,718	—	4,135,718	5,278,743	—	5,278,743
	$9,108,286	$822,993	$9,931,279	$10,620,487	$1,284,666	$11,905,153

DEBT TO ADJUSTED EBITDA AT THE REIT'S PROPORTIONATE SHARE

The following table provides a reconciliation of Debt to Adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA") at the REIT's proportionate share (a non-GAAP ratio):

	December 31	December 31
(in thousands of Canadian dollars)	2025	2024
Debt per the REIT's Financial Statements⁽¹⁾	$3,501,891	$3,550,417
Debt - REIT's proportionate share of equity accounted investments⁽¹⁾	800,889	1,199,391
Debt at the REIT's proportionate share⁽¹⁾	4,302,780	4,749,808
H&R's share of ECHO's debt classified within assets held for sale⁽¹⁾⁽²⁾	361,423	—
Total Debt⁽¹⁾	4,664,203	4,749,808

Year ended December 31	2025	2024
Net loss per the REIT's Financial Statements	(791,564)	(119,714)
Net income from equity accounted investments (within equity accounted investments)	(57)	(430)
Finance costs - operations	253,893	296,538
Fair value adjustments on financial instruments and real estate assets	1,324,237	491,319
Loss on sale of real estate assets, net of related costs	748	12,156
(Gain) loss on foreign exchange (within equity accounted investments)	879	(856)
Income tax recovery	(182,420)	(58,951)
Non-controlling interest	1,171	1,256
Adjustments:
The Bow and 100 Wynford non-cash rental income adjustments	(94,559)	(93,736)
Straight-lining of contractual rent	(13,898)	(18,256)
Fair value adjustment to unit-based compensation	3,168	(1,791)
Adjusted EBITDA at the REIT's proportionate share	$501,598	$507,535
Debt to Adjusted EBITDA at the REIT's proportionate share⁽¹⁾	9.3x	9.4x

⁽¹⁾	Debt includes mortgages payable, debentures payable, unsecured term loans, lines of credit and liabilities classified as held for sale.
⁽²⁾	H&R has included ECHO's debt classified within assets held for sale within Total Debt as ECHO's share of EBITDA has been included within Adjusted EBITDA at the REIT's proportionate share for the year ended December 31, 2025.

RESULTS OF OPERATIONS

The following table reconciles the REIT's Results of Operations from the REIT's Financial Statements to the REIT's proportionate share (a non-GAAP measure):

	Three months ended December 31, 2025			Three months ended December 31, 2024
(in thousands of Canadian dollars)	REIT's Financial Statements	Equity accounted investments	REIT's proportionate share	REIT's Financial Statements	Equity accounted investments	REIT's proportionate share
Rentals from investment properties	$203,750	$41,508	$245,258	$202,350	$40,605	$242,955
Property operating costs	(60,643)	(9,529)	(70,172)	(61,201)	(9,817)	(71,018)
Net operating income	143,107	31,979	175,086	141,149	30,788	171,937
Net income (loss) from equity accounted investments	(241,748)	241,757	9	82,308	(82,169)	139
Finance costs - operations	(50,869)	(11,846)	(62,715)	(59,579)	(12,448)	(72,027)
Finance income	4,654	465	5,119	2,959	237	3,196
Trust expenses, net	(3,886)	(1,790)	(5,676)	(1,915)	(650)	(2,565)
Fair value adjustment on financial instruments	24,784	(114)	24,670	39,017	145	39,162
Fair value adjustment on real estate assets	(216,378)	(259,585)	(475,963)	(53,265)	63,820	10,555
Gain (loss) on sale of real estate assets, net of related costs	(1,054)	10	(1,044)	268	(377)	(109)
Gain on foreign exchange	—	—	—	—	935	935
Transaction costs	(2,481)	(560)	(3,041)	—	—	—
Net income (loss) before income taxes and non-controlling interest	(343,871)	316	(343,555)	150,942	281	151,223
Income tax (expense) recovery	93,563	(51)	93,512	(20,060)	(28)	(20,088)
Net income (loss) before non-controlling interest	(250,308)	265	(250,043)	130,882	253	131,135
Non-controlling interest	—	(265)	(265)	—	(253)	(253)
Net income (loss)	(250,308)	—	(250,308)	130,882	—	130,882
Other comprehensive income (loss):
Items that are or may be reclassified subsequently to net income (loss)	(57,297)	—	(57,297)	293,302	—	293,302
Total comprehensive income (loss) attributable to unitholders	($307,605)	$—	($307,605)	$424,184	$—	$424,184

RESULTS OF OPERATIONS

The following table reconciles the REIT's Results of Operations from the REIT's Financial Statements to the REIT's proportionate share (a non-GAAP measure):

	Year ended December 31, 2025			Year ended December 31, 2024
(in thousands of Canadian dollars)	REIT's Financial Statements	Equity accounted investments	REIT's proportionate share	REIT's Financial Statements	Equity accounted investments	REIT's proportionate share
Rentals from investment properties	$815,128	$165,368	$980,496	$816,990	$156,451	$973,441
Property operating costs	(306,045)	(44,424)	(350,469)	(297,072)	(41,814)	(338,886)
Net operating income	509,083	120,944	630,027	519,918	114,637	634,555
Net income (loss) from equity accounted investments	(271,064)	271,121	57	2,477	(2,047)	430
Finance costs - operations	(205,551)	(48,342)	(253,893)	(246,829)	(49,709)	(296,538)
Finance income	14,498	1,725	16,223	11,577	891	12,468
Trust expenses, net	(19,381)	(6,682)	(26,063)	(20,580)	(5,125)	(25,705)
Fair value adjustment on financial instruments	(17,498)	(516)	(18,014)	(8,452)	(1,089)	(9,541)
Fair value adjustment on real estate assets	(969,275)	(336,948)	(1,306,223)	(425,884)	(55,894)	(481,778)
Gain (loss) on sale of real estate assets, net of related costs	(2,254)	1,506	(748)	(11,154)	(1,002)	(12,156)
Gain (loss) on foreign exchange	—	(879)	(879)	—	856	856
Transaction costs	(12,740)	(560)	(13,300)	—	—	—
Net income (loss) before income taxes and non-controlling interest	(974,182)	1,369	(972,813)	(178,927)	1,518	(177,409)
Income tax (expense) recovery	182,618	(198)	182,420	59,213	(262)	58,951
Net income (loss) before non-controlling interest	(791,564)	1,171	(790,393)	(119,714)	1,256	(118,458)
Non-controlling interest	—	(1,171)	(1,171)	—	(1,256)	(1,256)
Net loss	(791,564)	—	(791,564)	(119,714)	—	(119,714)
Other comprehensive income (loss):
Items that are or may be reclassified subsequently to net loss	(219,573)	—	(219,573)	393,292	—	393,292
Total comprehensive income (loss) attributable to unitholders	($1,011,137)	$—	($1,011,137)	$273,578	$—	$273,578

SAME-PROPERTY NET OPERATING INCOME (CASH BASIS)

The following table reconciles net operating income per the REIT's Financial Statements to Same-Property net operating income (cash basis) (a non-GAAP measure):

	Three months ended December 31			Year ended December 31
(in thousands of Canadian dollars)	2025	2024	Change	2025	2024	Change
Rentals from investment properties	$203,750	$202,350	$1,400	$815,128	$816,990	($1,862)
Property operating costs	(60,643)	(61,201)	558	(306,045)	(297,072)	(8,973)
Net operating income per the REIT's Financial Statements	143,107	141,149	1,958	509,083	519,918	(10,835)
Adjusted for:
Net operating income from equity accounted investments	31,979	30,788	1,191	120,944	114,637	6,307
Straight-lining of contractual rent at the REIT's proportionate share	(3,284)	(3,527)	243	(13,898)	(18,256)	4,358
Realty taxes in accordance with IFRIC 21 at the REIT's proportionate share	(15,781)	(14,686)	(1,095)	—	—	—
Net operating income (cash basis) from Transactions at the REIT's proportionate share	(32,873)	(31,073)	(1,800)	(126,390)	(134,486)	8,096
Same-Property net operating income (cash basis)	$123,148	$122,651	$497	$489,739	$481,813	$7,926

NAV PER UNIT

The following table reconciles Unitholders' equity per Unit to NAV per Unit (a non-GAAP ratio):

Unitholders' Equity per Unit and NAV per Unit	December 31	December 31
(in thousands except for per Unit amounts)	2025	2024
Unitholders' equity	$4,135,718	$5,278,743
Exchangeable units	157,968	166,800
Deferred tax liability	212,781	413,186
Total	$4,506,467	$5,858,729

Units outstanding	264,558	262,016
Exchangeable units outstanding	15,442	17,974
Total	280,000	279,990
Unitholders' equity per Unit⁽¹⁾	$15.63	$20.15
NAV per Unit	$16.09	$20.92

⁽¹⁾	Unitholders' equity per Unit is calculated by dividing unitholders' equity by Units outstanding.

FUNDS FROM OPERATIONS AND ADJUSTED FUNDS FROM OPERATIONS

The following table reconciles net income (loss) per the REIT's Financial Statements to FFO and AFFO (non-GAAP measures):

*FFO AND AFFO*	Three Months ended December 31		Year ended December 31
(in thousands of Canadian dollars except per Unit amounts)	2025	2024	2025	2024
Net income (loss) per the REIT's Financial Statements	($250,308)	$130,882	($791,564)	($119,714)
Realty taxes in accordance with IFRIC 21	(14,528)	(13,474)	—	—
FFO adjustments from equity accounted investments	260,259	(64,747)	341,414	59,574
Exchangeable unit distributions	2,514	4,853	10,355	12,941
Provision for expected credit loss	—	5,605	268	37,605
Fair value adjustments on financial instruments and real estate assets	191,594	14,248	986,773	434,336
Fair value adjustment to unit-based compensation	(1,260)	(3,467)	3,168	(1,791)
(Gain) loss on sale of real estate assets, net of related costs	1,054	(268)	2,254	11,154
Transaction costs	2,481	—	12,740	—
Deferred income tax expense (recovery) applicable to U.S.Holdco	(93,819)	19,754	(184,269)	(60,675)
Incremental leasing costs	617	611	2,363	2,305
The Bow and 100 Wynford non-cash rental income and accretion adjustments	(11,326)	(10,580)	(44,224)	(41,308)
FFO	$87,278	$83,417	$339,278	$334,427
Straight-lining of contractual rent	(2,696)	(3,298)	(12,380)	(17,606)
Rent amortization of tenant inducements	1,117	1,167	4,508	4,574
Capital expenditures	(9,799)	(13,107)	(41,995)	(39,588)
Leasing expenses and tenant inducements	(575)	(3,932)	(1,938)	(6,629)
Incremental leasing costs	(617)	(611)	(2,363)	(2,305)
AFFO adjustments from equity accounted investments	(1,772)	(2,042)	(6,525)	(5,911)
AFFO	$72,936	$61,594	$278,585	$266,962
Basic and diluted weighted average number of Units and exchangeable units (in thousands of Units)⁽¹⁾	279,993	279,990	279,990	279,933
FFO per basic and diluted Unit	$0.312	$0.298	$1.212	$1.195
AFFO per basic and diluted Unit	$0.260	$0.220	$0.995	$0.954
Cash distributions per Unit	$0.150	$0.150	$0.600	$0.600
Special December cash distribution per Unit	$—	$0.120	$—	$0.120
Payout ratio as a % of FFO	48.1 %	90.6 %	49.5 %	60.3 %
Payout ratio as a % of AFFO	57.7 %	122.7 %	60.3 %	75.5 %

⁽¹⁾

For the three months and year ended December 31, 2025, included in the weighted average and diluted weighted average number of Units are exchangeable units of 17,402,637 and 17,430,809, respectively. For the three months and year ended December 31, 2024, included in the weighted average and diluted weighted average number of Units are exchangeable units of 17,974,186.

Additional information regarding H&R is available at www.hr-reit.com and on www.sedarplus.com.

SOURCE H&R Real Estate Investment Trust

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H&R REIT Reports Fourth Quarter 2025 Financial Results