H&R REIT Pays a 5.6% Yield Backed by Residential and Industrial Properties

H&R REIT’s management has demonstrated disciplined execution of its strategic repositioning plan, successfully transitioning the portfolio toward higher-growth residential and industrial segments. This transformation has already improved key metrics including occupancy rates and geographic diversification.

The REIT also offers an attractive combination of value and income potential as it demonstrates both the financial strength to weather economic uncertainty and the flexibility to capitalize on growth opportunities as they arise.

The stock trades at 11.0 times its forecast 2025 cash flow per share.

H&R REAL ESTATE INVESTMENT TRUST (Toronto symbol HR.UN; www.hr-reit.com) has 364 residential, industrial, office and some retail properties in Canada and the U.S. The trust’s overall occupancy rate is a solid 95.6%.

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.

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.

H&R REIT: High yield with a low Price/Cash Flow multiple

In the three months ended March 31, 2025, revenue fell 1.9%, to $205.6 million from $209.5 million a year earlier due to property sales. Cash flow fell 1.2%, to $0.243 a unit (or $68.0 million) from $0.246 ($68.8 million).

H&R last increased your monthly distribution by 11.1% with the January 2023 payment. The annual rate of $0.60 a unit yields an attractive 5.6%. Due to asset sales, in January 2024,
it also paid a special distribution of $0.62 a unit ($0.52 in units plus $0.10 in cash).

The units trade at a low 11.0 times the projected 2025 cash flow of $0.97 a unit.

Recommendation in Dividend Advisor: H&R REIT is a buy.

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Jim Bates

Jim is an associate editor at TSI Network. He is the lead reporter and analyst for The Successful Investor and Wall Street Stock Forecaster and a member of the Investment Planning Committee. Jim has held the Chartered Financial Analyst designation since 1992 and spent more than a decade at the Financial Post DataGroup before joining TSI Network. He has a Bachelor of Commerce degree from the University of Toronto.

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