TORONTO—Canadian REIT H&R Real Estate Investment Trust said Wednesday it had forged a strategic alliance with the Public Sector Pension Investment Board and Crestpoint Real Estate Investments Ltd. by selling a 50% interest to a portfolio of Canadian industrial properties and a 49.5% stake in a US portfolio. Totaling 19.5 million square feet and 101 properties across eight Canadian provinces and nine US states, the portfolio stakes will be sold for a total purchase price of about C$731 million, or about US$644 million, with the US portfolio comprising US$150 million of that total.

In a regulatory filing, H&R says the sale encompasses the entirety of its industrial portfolio with the exception of about three million square feet of Canadian industrial space across eight properties and one 50,569-square-foot warehouse in Las Vegas, which is currently vacant. It's expecting to realize C$390 million from the sale, reducing its rate of debt to total assets from 47.8% at Sept. 30 to 45.7%.

The sale is expected to close in two tranches, one later this month and the second in February 2015. Under terms of the agreement, PSP Investments and Crestpoint will have a 90-day option after the second closing to purchase 50% of H&R's currently held industrial land, totaling 1,465 acres. If the two organizations decline to buy the land, they will continue to have the option of taking a 50% stake in any industrial building constructed on the land, and will also have the right of first refusal for three years on future industrial parcel acquisitions H&R intends to make.