H&R Real Estate Investment Trust (HR) Q2 2026 earnings summary

Executive summary

• Announced a $6.7 billion transaction with GO REIT and consortium, offering unitholders $4.28 cash plus 0.5688 GO REIT units per unit, valuing each at $12.01, and resulting in a 66.9% majority stake in the new combined residential REIT platform; transaction expected to close in Q4 2026.

• The transaction creates the second-largest publicly traded residential REIT in Canada and the seventh-largest in the U.S. by enterprise value, with 37 properties and over 13,300 units.

• Over $2.6B in non-strategic office and retail assets sold from June 2021 to December 2025, including a $1.5B sale in Q1 2026 and a $2.4B spinout of 27 properties to Primaris REIT.

• The process was led by independent trustees, with a formal valuation and unanimous board approval, aiming to maximize value for unitholders.

• The CEO and related parties will not participate in the new REIT but will acquire non-core assets and provide income support to the new entity.

Financial highlights

• Q2 2026 FFO was $69.1 million ($0.247 per unit), down from $87.8 million ($0.314 per unit) in Q2 2025, mainly due to lower NOI from property dispositions.

• AFFO per unit was $0.263 in Q2 2026, flat year-over-year.

• Debt to total assets was 41.8%, and debt to adjusted EBITDA was 7.1x as of June 30, 2026.

• NAV per unit was $16.23 at June 30, 2026.

• Received a CAD 15.7 million lease termination payment from Bell Canada, with a further CAD 56.1 million payment expected in Q3.

Outlook and guidance

• Management expects further improvement in occupancy, leasing activity, and pricing in the residential segment as supply pressures moderate.

• Q3 2026 expected to benefit from a $56.1 million lease termination payment at 200 Bouchard, with significant positive impact on same-property NOI and FFO.

• Continued focus on high-growth residential and industrial assets, with ongoing development pipeline in U.S. Sun Belt states.

• Management targets further acceleration of same-property NOI growth and value creation through rezoning.

• REDT properties under development are expected to reach substantial completion next quarter.