H&R REIT presents an extraordinary value opportunity as it trades at substantial discounts across multiple valuation metrics. In fact, the units trade at only 11.4 times 2025 forecast cash flow per share.
Meanwhile, management’s disciplined asset disposition strategy is simplifying the business model and improving asset quality. The focus on high-growth residential and industrial properties in prime locations positions the trust to benefit from favourable demographic and economic trends.
H&R REIT (Toronto symbol HR.UN; www.hr-reit.com) owns 365 residential, industrial, office and retail properties in Canada and the U.S. The trust’s overall occupancy rate is a solid 93.0%.
In 2022, H&R spun off most of its retail properties, including all of its enclosed shopping malls, to a new publicly traded REIT called Primaris (symbol PMZ.UN on Toronto).
H&R has announced the sale of the Canadian Pacific Building. That’s a landmark office property at 69 Yonge Street, Toronto. The price was $20.2 million.
The property, originally constructed in 1913 and designated as a heritage site, will be redeveloped into a 127-unit condominium. Zoning approvals are in place for expansion to a 21-storey mixed-use building, combining residential units and retail space. The existing building will be converted from office to residential use to better accommodate the site’s constraints.
H&R REIT’s sustainable 5.1% yield backed by improving financial situation
H&R last increased your monthly distribution by 11.1% with the January 2023 payment. The annual rate of $0.60 a unit yields 5.1%.
Note that thanks to the sale of non-core properties in 2024, investors received a special distribution of $0.72 a unit ($0.60 in units and $0.12 in cash) on January 15, 2025.
Immediately after that payment, H&R consolidated its outstanding units so that the number of units each investor holds remains the same as before the payment. The special distribution, however, increased the adjusted cost base of your units. That reduces your capital gains tax when you sell your units.
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In the three months ended June 30, 2025, revenue fell slightly, to $204.0 million from $204.8 million a year earlier due to property sales. Cash flow rose 6.6%, to $0.262 a unit (or $73.4 million) from $0.246 ($68.8 million).
In July 2025, H&R confirmed that it has received interest from an undisclosed party about buying some of its properties, or perhaps the entire REIT.
As a result, H&R has formed a special committee of independent trustees to review any proposals.
H&R now focuses on Toronto, Vancouver, Montreal and cities in the U.S. Sunbelt. Since the start of 2024, it has sold $465.4 million of non-core properties. It plans to be completely out of retail and office properties in the future, focusing on residential and industrial real estate.
H&R is also looking to rezone and redevelop $1.4 billion of its office properties into approximately 5,900 upscale multi-residential units in growing markets across Toronto and Vancouver.
Meantime, the REIT still plans to sell its office and retail properties over the next few years. That will let it focus on its more-promising residential properties in Toronto, Vancouver, Montreal and U.S. Sun Belt and Gateway cities (generally, cities that are home to corporate headquarters, and large educational and cultural institutions).
H&R’s units yield an attractive 5.1%. The units trade at a low 11.4 times the projected 2025 cash flow of $1.03 a unit.
Recommendation in Dividend Advisor: H&R REIT is a buy.
