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SOURCE H&R Real Estate Investment Trust
TORONTO, Feb. 27, 2014 /CNW/ - H&R Real Estate Investment Trust ("H&R REIT" or the "REIT") and H&R Finance Trust (collectively, "H&R") (TSX: HR.UN; HR.DB.D; HR.DB.E and HR.DB.H) today announced their financial results for the year ended December 31, 2013 and further announced that, subject to the approval of the Toronto Stock Exchange (the "TSX"), H&R intends to launch a normal course issuer bid through the facilities of the TSX to repurchase up to 25,000,000 Stapled Units on the open market. As at February 26, 2014, H&R had 270,303,206 outstanding Stapled Units and the maximum number of Stapled Units to be purchased under the bid represents approximately 9.4% of the public float (determined in accordance with the applicable rules of the TSX) of 265,574,442 Stapled Units. H&R will file a notice of intention with the TSX in this regard and may commence purchases for a period of a year after the TSX has accepted the notice of intention.
Purchases of Stapled Units under the normal course issuer bid will be made primarily through the facilities of the TSX in accordance with TSX by-laws, rules and policies. The Stapled Units so purchased will be cancelled. The price paid for any repurchased units will be the market price of such Stapled Units at the time of acquisition.
"Management believes the repurchase of Stapled Units is an appropriate use of H&R's general funds in order to increase unitholder value," said Thomas Hofstedter, President and CEO of H&R. "We are currently exploring the sale and joint venturing of certain assets the proceeds of which may be added to H&R's general funds for use to repurchase Stapled Units under this bid. The normal course issuer bid is a reflection of the confidence we have in the company and the commitment we have to using our balance sheet strength to sustain growth and generate economic value."
2013 Highlights include:
Capital Transaction Highlights
H&R REIT's average remaining term to maturity as at December 31, 2013 was 10.3 years for leases and 7.0 years for outstanding mortgages. Occupancy at December 31, 2013 was 98.1%, down slightly from 98.7% at December 31, 2012. Leases representing only 3.5% of total rentable area will expire during 2014. As at December 31, 2013, the ratio of H&R's debt to total assets was 49.2% compared to 50.3% as at December 31, 2012.
The following table includes non-Generally Accepted Accounting Principles ("GAAP") information that should not be construed as an alternative to comprehensive income (loss) or cash provided by operations and may not be comparable to similar measures presented by other issuers as there is no standardized meaning of FFO under GAAP. Management believes that these are meaningful measures of operating performance. Readers are encouraged to refer to H&R's combined MD&A for further discussion of non-GAAP information presented.
|3 months ended December 31||Year ended December 31|
|Rentals from investment properties (millions)||$314.6||$216.6||$1,137.0||$799.2|
|Property operating income||$204.6||$145.0||$749.9||$256.7|
|Net income (millions)||$113.7||$102.6||$323.6||$508.9|
|FFO per Stapled Unit (basic)(2)||$0.47||$0.44||$1.82||$1.74|
|FFO per Stapled Unit (diluted)(2)||$0.46||$0.43||$1.79||$1.67|
|Cash provided by operations (millions)||$203.0||$144.5||$617.4||$519.3|
|Cash distributions (millions) (3)||$70.3||$44.5||$256.8||$158.4|
|Distributions per Stapled Unit||$0.34||$0.31||$1.35||$1.18|
|Payout ratio per Stapled Unit (as a % of FFO)||72.3%||70.5%||74.2%||67.8%|
|(1)||H&R's combined MD&A includes a reconciliation of net income to FFO. Readers are encouraged to review the reconciliation in the combined MD&A.|
|(2)||See below for significant and non-recurring items included in FFO per Stapled Unit.|
|(3)||Cash distributions exclude distributions reinvested in units pursuant to H&R's unitholder distribution reinvestment plan.|
Net income for the year ended December 31, 2013 has been reduced by $204.8 million due to transaction costs relating to the Primaris acquisition and the property management internalization which were expensed during the year.
During the year ended December 31, 2012, there was a gain on extinguishment of debt of $10.2 million. Excluding this gain, FFO would have been $318.8 million and $1.69 per Stapled Unit (basic). This equates to an increase in FFO per Stapled Unit of 8% in 2013.
Monthly Distribution Declared
H&R's declared distribution for the month of March is scheduled as follows:
|Distribution/Stapled Unit||Annualized||Record date||Distribution date|
|March 2014||$0.11250||$1.35||March 17, 2014||March 31, 2014|
H&R REIT is pleased to announce the following new appointments:
(a) Cheryl Fried has been appointed Executive Vice President,
(b) Blair Kundell has been appointed Vice President, Operations; and
(c) Jason Birken has been appointed Vice President, Finance.
Cheryl previously served as H&R REIT's VP-Accounting. In her new role, she will oversee corporate finance, accounting and public reporting responsibilities for H&R REIT. Cheryl earned a Bachelor of Arts at The City University of New York and holds a Chartered Accountant designation.
Blair previously served as H&R REIT's General Manager, Operations. In his new role, he will be responsible for building operations, tenant services and joint health and safety. Blair holds a degree in Economics from the University of Western Ontario.
Jason previously served as H&R REIT's Controller. In his new role, he will be responsible for financial reporting, finance and compliance functions of the Trust, cash and treasury management and investor relations. Jason earned a Bachelor of Business Administration at Wilfrid Laurier University and holds a Chartered Accountant designation.
2014 Annual Unitholders' Meeting
H&R will host their Annual Unitholders' meeting this year on Thursday, June 19 at 1:00 pm at the TSX Gallery, 130 King Street West, Toronto, Ontario.
About H&R REIT and H&R Finance Trust
H&R REIT is an open-ended real estate investment trust, which owns a North American portfolio of 42 office, 112 industrial and 167 retail properties comprising over 53 million square feet and 2 development projects, with a fair value of approximately $13 billion. In addition, H&R REIT owns a 33.7% interest in ECHO Realty LP which owns 173 properties, excluding properties under development and vacant land, totalling 7.3 million square feet. The foundation of H&R REIT's success since inception in 1996 has been a disciplined strategy that leads to consistent and profitable growth. H&R REIT leases its properties for long terms to creditworthy tenants and strives to match those leases with primarily long-term, fixed-rate financing.
H&R Finance Trust is an unincorporated investment trust, which primarily invests in notes issued by a U.S. corporation which is a subsidiary of H&R REIT. As at December 31, 2013, the note receivable balance is U.S. $219.8 million. In 2008, H&R REIT completed an internal reorganization which resulted in each issued and outstanding H&R REIT unit trading together with a unit of H&R Finance Trust as a "Stapled Unit" on the Toronto Stock Exchange.
Certain statements in this news release contain forward-looking information within the meaning of applicable securities laws (also known as forward-looking statements) including, among others, statements relating to the objectives of H&R REIT and H&R Finance Trust, strategies to achieve those objectives, H&R's beliefs, plans, estimates, and intentions, and similar statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts including, the amount of distributions to unitholders. 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. These statements are not guarantees of future performance and are based on H&R's estimates and assumptions that are subject to risks and uncertainties, including those discussed in H&R's materials filed with the Canadian securities regulatory authorities from time to time, which could cause the actual results and performance of H&R to differ materially from the forward-looking statements contained in this news release. Those risks and uncertainties include, among other things, risks related to: prices and market value of securities of H&R; real property ownership; availability of cash for distributions; restrictions pursuant to the terms of indebtedness; liquidity; credit risk and tenant concentration; interest rate and other debt related risk; tax risk; ability to access capital markets; dilution; lease rollover risk; construction risks; joint arrangements risk; currency risk; unitholder liability; co-ownership interest in properties; competition for real property investments; environmental matters and changes in legislation and indebtedness of H&R. Material factors or assumptions that were applied in drawing a conclusion or making an estimate set out in the forward-looking statements include that the general economy is stable; local real estate conditions are stable; interest rates are relatively stable; and equity and debt markets continue to provide access to capital. H&R cautions that this list of factors is not exhaustive. Although the forward-looking statements contained in this news 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. All forward-looking statements in this news release are qualified by these cautionary statements. These forward-looking statements are made as of today, and H&R, except as required by applicable law, assumes no obligation to update or revise them to reflect new information or the occurrence of future events or circumstances.
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