H&R’s clearest reason to buy is not just the 5.8% yield. It’s the improving quality of cash flows through simplification: it’s actively converting itself from a mixed REIT into a residential/industrial-led platform, which typically commands better long-run growth and investor demand than challenged retail/office-heavy mixes.
That repositioning isn’t just a “slide-deck story” because large asset sales have been executed, leverage is being addressed with proceeds, and the portfolio is increasingly U.S.-weighted (68%), to provide deeper demand pools in selected residential markets.
Meanwhile, the stock trades at just 9.8 times the REIT’s likely 2026 cash flow of $1.05 a unit. That’s comfortably low for a REIT and supports the argument that the current distribution is well‑covered by forward cash flow, not just trailing results.
H&R REAL ESTATE INVESTMENT TRUST (Toronto symbol HR.UN; www.hr-reit.com) has 363 residential, industrial, office and retail properties in Canada and the U.S. Its occupancy rate is a solid 96.8%.
H&R’s revenue in the three months ended December 31, 2025, rose 0.7%, to $203.8 million from $202.4 million a year earlier. Meanwhile, cash flow increased 18.4%, to $0.26 per unit (or a total of $72.9 million) from $0.22 per unit (or $61.6 million).
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H&R’s asset sales and debt repayment reshape the balance sheet
Since June 2021, the REIT has executed on its 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 in June 2021, to December 31, 2025, H&R completed the spin-off of the REIT’s 27 enclosed shopping centres (as Primaris REIT) 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 U.S. will grow from 45% of the total portfolio to 68%.
The trust will also use the funds to pay down its debt.
Going forward, H&R’s moves sharply increase its residential, industrial and U.S. exposure while cutting office and retail, repositioning the REIT for growth and income.
H&R last increased your monthly distribution by 11.1% with the January 2023 payment. The annual rate of $0.60 a unit currently yields 5.8% for investors. The payout ratio is a low 44.8%.
The units trade at a low 9.8 times the REIT’s likely 2026 cash flow of $1.05 a unit.
Recommendation in Dividend Advisor: H&R REIT is a buy.
