TORONTO, CANADA—Canadian REIT H&R Real Estate Investment Trust has entered into an agreement to sell 63 US retail properties for approximately US$633 million. The sale includes all of H&R REIT's retail properties in the US, other than 16 gas stations and convenience stores.
The sale price equates to a 7.3% capitalization rate on 2018 forecasted property operating income. Closing is expected to occur in June 2018. The REIT plans to use part of the proceeds from the sale to repay $205.9 million of mortgage debt on the portfolio and the remainder to make additional acquisitions.
“This transaction follows through on our strategy of narrowing and streamlining our focus, while enhancing the quality and growth profile of our portfolio,” CEO Thomas Hofstedter said in a prepared statement.
At the end of last year, H&R told shareholders that it had decided to sell all 79 of its wholly-owned US retail properties and, together with its partners, its 12 remaining US industrial properties. In September 2017, using an aggregate cap rate of 7.38%, H&R valued its US retail assets at approximately $750 million. It valued its ownership stake of the US industrial properties at approximately $145 million using a cap rate of 6.88%. H&R said in December that it planned to put the first tranche of the retail properties, valued at $250 million, on the market in the first quarter of this year.
H&R REIT is one of Canada's largest real estate investment trusts with total assets of approximately $14.5 billion as of March 31, 2018. H&R REIT has ownership interests in a North American portfolio of office, retail, industrial and residential properties of over 45 million square feet.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
