H&R REIT Reports Second Quarter 2025 Results

Cision Canada

18 hours ago

TORONTO, Aug. 13, 2025 /CNW/ - H&R Real Estate Investment Trust ("H&R" or "the REIT") (TSX: HR.UN) is pleased to announce its financial results for the three and six months ended June 30, 2025.
Tom Hofstedter, Executive Chair and Chief Executive Officer said "Our Q2 performance highlights our continued ability to drive operating results and execute against our strategy. In the first half of 2025, we completed or entered into agreements to sell $121.6 million of real estate assets. Same-Property net operating income (cash basis) increased 3.4%, and FFO improved to $0.61 per Unit from $0.60 per Unit in the prior year period. These results support our ongoing efforts to simplify the portfolio and enhance long-term value for unitholders."
FINANCIAL HIGHLIGHTS
June 30
December 31
December 31
2025
2024
2023
Total assets (in thousands)
$9,890,709
$10,620,487
$10,777,643
Debt to total assets per the REIT's Financial Statements (1)
34.9 %
33.4 %
34.2 %
Debt to total assets at the REIT's proportionate share (1)(2)
45.5 %
43.7 %
44.0 %
Debt to Adjusted EBITDA at the REIT's proportionate share (1)(2)(3)
9.2x
9.4x
8.5x
Unitholders' equity (in thousands)
$4,724,801
$5,278,743
$5,192,375
Units outstanding (in thousands)
262,566
262,016
261,868
Exchangeable units outstanding (in thousands)
17,424
17,974
17,974
Unitholders' equity per Unit
$17.99
$20.15
$19.83
Net Asset Value ("NAV") per Unit (2)(4)
$18.86
$20.92
$20.75
Three months ended June 30
Six months ended June 30
(in thousands except for per Unit amounts)
2025
2024
2025
2024
Rentals from investment properties
$204,011
$204,775
$409,650
$414,296
Net operating income
$143,826
$144,470
$226,789
$238,657
Same-Property net operating income (cash basis) (5)
$124,751
$121,733
$251,161
$242,859
Net income (loss) from equity accounted investments
$26,780
($108,859)
$16,698
($96,309)
Fair value adjustment on real estate assets
($280,656)
($302,310)
($333,354)
($346,477)
Net loss
($166,370)
($272,666)
($218,388)
($240,874)
Funds from Operations ("FFO") (5)
$87,804
$85,631
$170,902
$168,697
Adjusted Funds from Operations ("AFFO") (5)
$73,380
$68,805
$141,393
$137,592
Weighted average number of Units and exchangeable units
279,990
279,905
279,990
279,876
FFO per basic and diluted Unit (2)
$0.314
$0.306
$0.610
$0.603
AFFO per basic and diluted Unit (2)
$0.262
$0.246
$0.505
$0.492
Cash distributions per Unit
$0.150
$0.150
$0.300
$0.300
Payout ratio as a % of FFO (2)
47.8 %
49.0 %
49.2 %
49.8 %
Payout ratio as a % of AFFO (2)
57.3 %
61.0 %
59.4 %
61.0 %
(1)
Debt includes mortgages payable, debentures payable, unsecured term loans, lines of credit and liabilities classified as held for sale.
(2)
These are non-GAAP ratios. Refer to the "Non-GAAP Measures" section of this news release.
(3)
Adjusted EBITDA is based on the trailing 12 months and is calculated in the non-GAAP measures section of this news release.
(4)
See page 11 of this news release for a detailed calculation of NAV per Unit.
(5)
These are non-GAAP measures. Refer to the "Non-GAAP Measures" section of this news release.
SUMMARY OF SIGNIFICANT Q2 2025 ACTIVITY
Net Operating Income Highlights:
Three months ended June 30
Six months ended June 30
(in thousands of Canadian dollars)
2025
2024
% Change
2025
2024
% Change
Operating Segment:
Same-Property net operating income (cash basis) - Residential (1)
$43,011
$42,290
1.7 %
$87,494
$84,630
3.4 %
Same-Property net operating income (cash basis) - Industrial (1)
16,689
17,105
(2.4) %
33,870
33,540
1.0 %
Same-Property net operating income (cash basis) - Office (1)
39,317
38,563
2.0 %
78,615
77,389
1.6 %
Same-Property net operating income (cash basis) - Retail (1)
25,734
23,775
8.2 %
51,182
47,300
8.2 %
Same-Property net operating income (cash basis) (1)
124,751
121,733
2.5 %
251,161
242,859
3.4 %
Net operating income (cash basis) from Transactions at the REIT's proportionate share (1)(2)
30,591
32,702
(6.5) %
59,524
69,404
(14.2) %
Realty taxes in accordance with IFRIC 21 at the REIT's proportionate share (1)(3)
16,820
14,378
17.0 %
(32,374)
(29,443)
(10.0) %
Straight-lining of contractual rent at the REIT's proportionate share (1)
3,861
5,448
(29.1) %
7,519
10,424
(27.9) %
Net operating income from equity accounted investments (1)
(32,197)
(29,791)
(8.1) %
(59,041)
(54,587)
(8.2) %
Net operating income per the REIT's Financial Statements
$143,826
$144,470
(0.4) %
$226,789
$238,657
(5.0) %
(1)
These are non-GAAP measures. Refer to the "Non-GAAP Measures" section of this news release.
(2)
Transactions includes acquisitions, dispositions, and transfers of investment properties to or from properties under development during the 18-month period ended June 30, 2025.
(3)
Realty taxes in accordance with IFRS Interpretations Committee Interpretation 21, Levies ("IFRIC 21") relates to the timing of the liability recognition for U.S. realty taxes. By excluding the impact of IFRIC 21, U.S. realty tax expenses are evenly matched with realty tax recoveries received from tenants throughout the period.
(1)
The REIT's proportionate share is a non-GAAP measure defined in the"Non-GAAP Measures" section of this news release.
During the three months ended June 30, 2025, management reduced the valuations of its downtown Toronto office properties advancing through the process of rezoning to residential use to an average of $120 per square foot, primarily due to softening economic conditions, which has halted the development of many new high-rise residential projects. The downtown Toronto office properties include 145 Wellington St. W. and 310 & 330 Front St. W., which are included in investment properties, as well as 53 & 55 Yonge St., which is included in properties under development.
During the three months ended June 30, 2025, management reduced the valuations on its industrial properties due to lower market rent assumptions for renewals and vacant properties.
During the three months ended June 30, 2025, management reduced the valuations across its U.S. land parcels, primarily due to softening economic conditions as well as persistently high interest rates for construction financing, resulting in higher construction costs.
Transaction Highlights
2025 Property Dispositions
During the six months ended June 30, 2025, H&R sold its ownership interests in seven Canadian retail properties, one U.S. retail property and one commercial unit adjacent to a Canadian office property totalling 351,606 square feet for $64.7 million, all at H&R's ownership interest.
During Q2 2025, H&R entered into agreements to sell one U.S. retail property, one Canadian retail property and one Canadian office property, which were all classified as held for sale as at June 30, 2025, for approximately $56.9 million.
Subsequent to June 30, 2025, H&R sold two properties which were classified as held for sale as at June 30, 2025: (i) 69 Yonge St., a 89,276 square foot office property in Toronto, ON, for $20.2 million. As at June 30, 2025, the property was 81.4% occupied with an average remaining lease term of 3.4 years; and (ii) 3990 Red Cedar Dr., a 9,751 square foot retail property in Highlands Ranch, CO, for $10.1 million (U.S. $7.4 million.)
Leasing Update
During 2025, H&R had three industrial vacancies: (i) 5550 Skyline Way N.E., a 62,403 square foot property at H&R's 50% ownership interest, in Calgary AB, became available for lease in February 2025; (ii) 77 Union St., a 195,000 square foot property in Toronto, ON became available for lease in June 2025; and (iii) 100 Metropolitan Rd., a 369,051 square feet at H&R's 50% ownership interest, in Toronto, ON became available to lease in June 2025.
The weighted average annual contractual rent per square foot at lease expiry at these three properties was $6.30.
In June 2025, 6900 Maritz Drive in Mississauga, ON, a newly constructed 122,367 square foot industrial building reached substantial completion, at which point it was transferred from properties under development to investment properties. The property is currently available for lease.
The industrial vacancies discussed above resulted in H&R's industrial occupancy decreasing from 98.9% as at December 31, 2024 to 89.9% as at June 30, 2025.
In June 2025, Alimentation Couche-Tard Inc., ("Couche-Tard") completed the acquisition of GetGo Cafe + Market ("GetGo") from Giant Eagle, Inc. GetGo's locations in Pennsylvania, Maryland, West Virginia, Ohio and Indiana will make up a new and separate business unit within Couche-Tard's U.S. store network. Therefore, as at June 30, 2025, Giant Eagle, Inc. represented 3.6% of H&R's rentals from investment properties and Mac's Convenience Stores LLC, a subsidiary of Couche-Tard, represented 1.8% of H&R's rentals from investment properties, whereas as at March 31, 2025, Giant Eagle, Inc. represented 5.5% of H&R's rentals from investment properties.
Development Update
Canadian Properties under Development
In January 2024, H&R received approval from the City of Mississauga to replace the existing 104,689 square foot office building at 6900 Maritz Drive in Mississauga, ON with a new 122,367 square foot industrial building. Construction commenced in 2024, and the project reached substantial completion in June 2025, at which point it was transferred from properties under development to investment properties. The building incorporates sustainability features such as EV charging stations and solar panel readiness, and it is targeting LEED Gold certification.
Equity Accounted Investments
H&R has a 50% managing ownership interest in 560 & 600 Slate Drive, a 26.6 acre land site in Mississauga, ON, located next to Toronto Pearson International Airport and in close proximity to access points on the 410, 401 and 407 Highways. In 2024, construction commenced on two single storey industrial buildings totalling 309,727 square feet and 160,485 square feet, respectively at the 100% level. Both buildings have been designed with flexibility such that they can accommodate either single or multiple tenants. Both will include sustainability elements such as EV charging stations and solar panel readiness and are targeting LEED Gold certification. As at June 30, 2025, the total budget for 560 & 600 Slate Drive was approximately $66.3 million with costs remaining to complete of $13.1 million, all at H&R's ownership interest. The yield on cost for the overall project is expected to be approximately 6.6% with completion expected in Q3 2025.
H&R has a 29.1% ownership interest in Lantower Residential REDT (No.1) JV LP ("REDT JV LP"). The REDT JV LP owns two residential development projects (the "REDT Projects") in Florida, in which 601 residential rental units are currently under construction to be completed in mid-2026. As at June 30, 2025, H&R's share of the total budget for the REDT Projects was approximately $83.0 million (U.S. $61.0 million) with costs remaining to complete of $41.4 million (U.S. $30.4 million), all at H&R's ownership interest. During the three months ended June 30, 2025, H&R earned $4.0 million in fees and interest income from the REDT JV LP (June 30, 2024 - $0.9 million). During the six months ended June 30, 2025, H&R earned $5.7 million in fees and interest income from the REDT JV LP (June 30, 2024 - $0.9 million).
Debt & Liquidity Highlights
Mortgages
During the three months ended June 30, 2025, H&R repaid one mortgage of approximately $46.8 million, which bore interest at 4.2%.
Debentures
In June 2025, H&R redeemed all of its $400.0 million, Series Q Senior Debentures, which bore interest at 4.071% per annum.
Liquidity
As at June 30, 2025, H&R had cash and cash equivalents of $60.1 million, $377.3 million available under its unused lines of credit and an unencumbered property pool of approximately $4.3 billion.
As at June 30, 2025, debt to total assets per the REIT's Financial Statements was 34.9% compared to 33.4% as at December 31, 2024. As at June 30, 2025, debt to total assets at the REIT's proportionate share (a non-GAAP ratio, refer to the "Non-GAAP Measures" section of this news release) was 45.5% compared to 43.7% as at December 31, 2024.
Special Committee Process
The Special Committee of independent trustees together with its financial and legal advisors continues to evaluate value-maximizing alternatives and determine the best path forward for the REIT and its unitholders.
The Special Committee was formed in February 2025 following receipt of an unsolicited expression of interest. Since that time, it has received additional interest and is currently engaged in discussions with multiple parties.
The REIT continues to believe in the long-term strategy including the strategic repositioning plan and the Board will only pursue a potential transaction that is in the best interests of the REIT and its unitholders. At this time, there is no certainty that a transaction will result, nor is there a defined timeline for the process to conclude.
During the three and six months ended June 30, 2025, H&R incurred $8.7 million in transaction costs relating to the Potential Transaction, which primarily consists of legal and advisor fees for the REIT and the Special Committee.
MONTHLY DISTRIBUTION DECLARED
H&R today declared a distribution for the month of August scheduled as follows:
Distribution per Unit
Annualized
Record date
Distribution date
August 2025
$0.05
$0.60
August 29, 2025
September 15, 2025
CONFERENCE CALL AND WEBCAST
Management will host a conference call to discuss the financial results of the REIT on Thursday, August 14, 2025 at 9.30 a.m. Eastern Time. Participants can join the call by dialing 1–800–717–1738 or 1–289–514–5100. For those unable to participate in the conference call at the scheduled time, a replay will be available approximately one hour following completion of the call. To access the archived conference call by telephone, dial 1–289–819–1325 or 1–888–660–6264 and enter the passcode 00890 followed by the "#" key. The telephone replay will be available until Thursday, August 21, 2025 at midnight.
A live audio webcast will be available through www.hr-reit.com/investor-relations/#investor-events. Please connect at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be required to join the webcast. The webcast will be archived on H&R's website following the call date.
The investor presentation is available on H&R's website at www.hr-reit.com/investor-relations/#investor-presentation.
ABOUT H&R REIT
H&R REIT is one of Canada's largest real estate investment trusts with total assets of approximately $9.9 billion as at June 30, 2025. H&R REIT has ownership interests in a Canadian and U.S. portfolio comprised of high-quality residential, industrial, office and retail properties comprising over 25.8 million square feet. H&R's strategy is to create a simplified, growth-oriented business focused on residential and industrial properties in order to create sustainable long-term value for unitholders. H&R plans to sell its office and retail properties as market conditions permit. H&R's target is to be a leading owner, operator and developer of residential and industrial properties, creating value through redevelopment and greenfield development in prime locations within Toronto and high growth U.S. sunbelt and gateway cities.
FORWARD-LOOKING DISCLAIMER
Certain information in this news release contains forward–looking information within the meaning of applicable securities laws (also known as forward–looking statements) including, among others, statements relating to H&R's objectives, beliefs, plans, estimates, targets, projections and intentions and similar statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts, including with respect to H&R's future plans and targets, the REIT's strategic repositioning plan to create sustainable long-term value for unitholders, H&R's strategy to grow its exposure to residential assets in U.S. sunbelt and gateway cities, H&R's expectations with respect to the activities of its development properties, including the building of new properties and the redevelopment of existing properties, the use of such properties, the timing of construction and completion, expected construction plans and costs, yield on cost, anticipated square footage, future intensification opportunities, expectations with respect to the REDT and the REDT Projects, the sale of assets under contract, management's expectations regarding future distributions by the REIT, and management's expectation to be able to meet all of the REIT's ongoing obligations. Forward–looking statements generally can be identified by words such as "outlook", "objective", "may", "will", "expect", "intend", "estimate", "anticipate", "believe", "should", "plans", "project", "budget" or "continue" or similar expressions suggesting future outcomes or events. Such forward–looking statements reflect H&R's current beliefs and are based on information currently available to management.
Forward–looking statements are provided for the purpose of presenting information about management's current expectations and plans relating to the future and readers are cautioned that such statements may not be appropriate for other purposes. These statements are not guarantees of future performance and are based on H&R's estimates and assumptions that are subject to risks, uncertainties and other factors including those risks and uncertainties discussed in H&R's materials filed with the Canadian securities regulatory authorities from time to time, which could cause the actual results, performance or achievements of H&R to differ materially from the forward–looking statements contained in this news release. Material factors or assumptions that were applied in drawing a conclusion or making an estimate set out in the forward–looking statements include assumptions relating to the general economy, including the continuing effects of inflation; debt markets continue to provide access to capital at a reasonable cost; and assumptions concerning currency exchange and interest rates. Additional risks and uncertainties include, among other things, risks related to: real property ownership; the current economic environment, including the impact of any tariffs and retaliatory tariffs on the economy; strategic transformational repositioning plan; credit risk and tenant concentration; lease rollover risk; interest rate and other debt-related risks; inflation risk; development risks; residential rental risk; capital expenditure risk; currency risk; liquidity risk; cyber security risk; financing credit risk; ESG and climate change risk; risks associated with disease outbreaks; co-ownership interest in properties; general uninsured losses; joint arrangement and investment risks; dependence on key personnel and succession planning; potential acquisition, investment and disposition opportunities and joint venture arrangements; potential undisclosed liabilities associated with acquisitions; competition for real property investments; potential conflicts of interest; litigation and regulatory risk; Unit prices; availability of cash for distributions; credit ratings; ability to access capital; dilution; unitholder liability; redemption right; investment eligibility; debentures; statutory remedies; tax risk; and additional tax risks applicable to the REIT and to unitholders. H&R cautions that these lists of factors, risks and uncertainties are not exhaustive. Although the forward–looking statements contained in this news release are based upon what H&R believes are reasonable assumptions, there can be no assurance that actual results will be consistent with these forward–looking statements.
Readers are also urged to examine H&R's materials filed with the Canadian securities regulatory authorities from time to time as they may contain discussions on risks and uncertainties which could cause the actual results and performance of H&R to differ materially from the forward–looking statements contained in this news release. All forward–looking statements contained in this news release are qualified by these cautionary statements. These forward–looking statements are made as of August 13, 2025 and the REIT, except as required by applicable Canadian law, assumes no obligation to update or revise them to reflect new information or the occurrence of future events or circumstances.
NON-GAAP MEASURES
The unaudited condensed consolidated financial statements of the REIT and related notes for the three and six months ended June 30, 2025 (the "REIT's Financial Statements") were prepared in accordance with International Financial Reporting Standards ("IFRS"). However, H&R's management uses a number of measures, including NAV per Unit, FFO, AFFO, FFO and AFFO per basic and diluted Unit, payout ratio as a % of FFO, payout ratio as a % of AFFO, debt to total assets at the REIT's proportionate share, debt to Adjusted EBITDA at the REIT's proportionate share, Same–Property net operating income (cash basis) and the REIT's proportionate share, which do not have meanings recognized or standardized under IFRS or GAAP. These non–GAAP measures and non–GAAP ratios should not be construed as alternatives to financial measures calculated in accordance with GAAP. Further, H&R's method of calculating these supplemental non–GAAP measures and ratios may differ from the methods of other real estate investment trusts or other issuers, and accordingly may not be comparable. H&R uses these measures to better assess H&R's underlying performance and provides these additional measures so that investors may do the same.
For information on the most directly comparable GAAP measures, composition of the measures, a description of how the REIT uses these measures and an explanation of how these measures provide useful information to investors, refer to the "Non–GAAP Measures" section of the REIT's management's discussion and analysis as at and for the three and six months ended June 30, 2025 available at www.hr–reit.com and on the REIT's profile on SEDAR at www.sedarplus.com, which is incorporated by reference into this news release.
The following table reconciles the REIT's Statement of Financial Position from the REIT's Financial Statements to the REIT's proportionate share (a non-GAAP measure):
DEBT TO ADJUSTED EBITDA AT THE REIT'S PROPORTIONATE SHARE
The following table provides a reconciliation of Debt to Adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA") at the REIT's proportionate share (a non-GAAP ratio):
June 30
December 31
(in thousands of Canadian dollars)
2025
2024
Debt per the REIT's Financial Statements (1)
$3,452,681
$3,550,417
Debt - REIT's proportionate share of equity accounted investments (1)
1,152,023
1,199,391
Debt at the REIT's proportionate share (1)
4,604,704
4,749,808
(Figures below are for the trailing 12 months)
Net loss per the REIT's Financial Statements
(97,228)
(119,714)
Net income from equity accounted investments (within equity accounted investments)
(273)
(430)
Finance costs - operations
295,120
296,538
Fair value adjustments on financial instruments and real estate assets
419,598
491,319
(Gain) loss on sale of real estate assets, net of related costs
(1,390)
12,156
(Gain) loss on foreign exchange (within equity accounted investments)
132
(856)
Income tax recovery
(11,142)
(58,951)
Non-controlling interest
1,259
1,256
Adjustments:
The Bow and 100 Wynford non-cash rental income adjustments
(94,145)
(93,736)
Straight-lining of contractual rent
(15,351)
(18,256)
IFRIC 21 - realty tax adjustment
2,931
—
Fair value adjustment to unit-based compensation
2,945
(1,791)
Adjusted EBITDA at the REIT's proportionate share
$502,456
$507,535
Debt to Adjusted EBITDA at the REIT's proportionate share (1)
9.2x
9.4x
(1)
Debt includes mortgages payable, debentures payable, unsecured term loans, lines of credit and liabilities classified as held for sale.
RESULTS OF OPERATIONS
The following table reconciles the REIT's Results of Operations from the REIT's Financial Statements to the REIT's proportionate share (a non-GAAP measure):
Three months ended June 30, 2025
Three months ended June 30, 2024
(in thousands of Canadian dollars)
REIT's
Financial
Statements
Equity
accounted
investments
REIT's
proportionate
share
REIT's
Financial
Statements
Equity
accounted
investments
REIT's
proportionate
share
Rentals from investment properties
$204,011
$41,571
$245,582
$204,775
$38,858
$243,633
Property operating costs
(60,185)
(9,374)
(69,559)
(60,305)
(9,067)
(69,372)
Net operating income
143,826
32,197
176,023
144,470
29,791
174,261
Net income (loss) from equity accounted investments
26,780
(26,793)
(13)
(108,859)
109,128
269
Finance costs - operations
(51,210)
(12,102)
(63,312)
(50,755)
(12,538)
(63,293)
Finance income
2,731
536
3,267
2,847
233
3,080
Trust expenses
(3,489)
(1,674)
(5,163)
(4,422)
(1,481)
(5,903)
Fair value adjustment on financial instruments
(8,018)
(17)
(8,035)
94
(23)
71
Fair value adjustment on real estate assets
(280,656)
9,145
(271,511)
(302,310)
(124,853)
(427,163)
Gain (loss) on sale of real estate assets, net of related costs
292
(27)
265
(13,671)
3
(13,668)
Gain (loss) on foreign exchange
—
(850)
(850)
—
138
138
Transaction costs
(8,669)
—
(8,669)
—
—
—
Net income (loss) before income taxes and non-controlling interest
(178,413)
415
(177,998)
(332,606)
398
(332,208)
Income tax (expense) recovery
12,043
(89)
11,954
59,940
(78)
59,862
Net income (loss) before non-controlling interest
(166,370)
326
(166,044)
(272,666)
320
(272,346)
Non-controlling interest
—
(326)
(326)
—
(320)
(320)
Net loss
(166,370)
—
(166,370)
(272,666)
—
(272,666)
Other comprehensive income (loss):
Items that are or may be reclassified subsequently to net loss
(261,892)
—
(261,892)
64,448
—
64,448
Total comprehensive loss attributable to unitholders
($428,262)
$—
($428,262)
($208,218)
$—
($208,218)
RESULTS OF OPERATIONS
The following table reconciles the REIT's Results of Operations from the REIT's Financial Statements to the REIT's proportionate share (a non-GAAP measure):
Six months ended June 30, 2025
Six months ended June 30, 2024
(in thousands of Canadian dollars)
REIT's
Financial
Statements
Equity
accounted
investments
REIT's
proportionate
share
REIT's
Financial
Statements
Equity
accounted
investments
REIT's
proportionate
share
Rentals from investment properties
$409,650
$83,137
$492,787
$414,296
$76,833
$491,129
Property operating costs
(182,861)
(24,096)
(206,957)
(175,639)
(22,246)
(197,885)
Net operating income
226,789
59,041
285,830
238,657
54,587
293,244
Net income (loss) from equity accounted investments
16,698
(16,657)
41
(96,309)
96,507
198
Finance costs - operations
(103,219)
(24,490)
(127,709)
(104,269)
(24,858)
(129,127)
Finance income
5,921
758
6,679
5,193
348
5,541
Trust expenses
(10,726)
(3,719)
(14,445)
(10,836)
(3,312)
(14,148)
Fair value adjustment on financial instruments
(30,123)
(113)
(30,236)
18,984
(45)
18,939
Fair value adjustment on real estate assets
(333,354)
(14,740)
(348,094)
(346,477)
(122,513)
(468,990)
Gain (loss) on sale of real estate assets, net of related costs
(811)
1,565
754
(12,805)
13
(12,792)
Gain (loss) on foreign exchange
—
(850)
(850)
—
138
138
Transaction costs
(8,669)
—
(8,669)
—
—
—
Net income (loss) before income taxes and non-controlling interest
(237,494)
795
(236,699)
(307,862)
865
(306,997)
Income tax (expense) recovery
19,106
(108)
18,998
66,988
(181)
66,807
Net income (loss) before non-controlling interest
(218,388)
687
(217,701)
(240,874)
684
(240,190)
Non-controlling interest
—
(687)
(687)
—
(684)
(684)
Net loss
(218,388)
—
(218,388)
(240,874)
—
(240,874)
Other comprehensive income (loss):
Items that are or may be reclassified subsequently to net loss
(261,954)
—
(261,954)
163,026
—
163,026
Total comprehensive loss attributable to unitholders
($480,342)
$—
($480,342)
($77,848)
$—
($77,848)
SAME-PROPERTY NET OPERATING INCOME (CASH BASIS)
The following table reconciles net operating income per the REIT's Financial Statements to Same-Property net operating income (cash basis) (a non-GAAP measure):
NAV PER UNIT
The following table reconciles Unitholders' equity per Unit to NAV per Unit (a non-GAAP ratio):
Unitholders' Equity per Unit and NAV per Unit
June 30
December 31
(in thousands except for per Unit amounts)
2025
2024
Unitholders' equity
$4,724,801
$5,278,743
Exchangeable units
186,090
166,800
Deferred tax liability
370,912
413,186
Total
$5,281,803
$5,858,729
Units outstanding
262,566
262,016
Exchangeable units outstanding
17,424
17,974
Total
279,990
279,990
Unitholders' equity per Unit (1)
$17.99
$20.15
NAV per Unit
$18.86
$20.92
(1)
Unitholders' equity per Unit is calculated by dividing unitholders' equity by Units outstanding.
FUNDS FROM OPERATIONS AND ADJUSTED FUNDS FROM OPERATIONS
The following table reconciles net loss per the REIT's Financial Statements to FFO and AFFO (non-GAAP measures):
FFO AND AFFO
Three Months ended June 30
Six months ended June 30
(in thousands of Canadian dollars except per Unit amounts)
2025
2024
2025
2024
Net loss per the REIT's Financial Statements
($166,370)
($272,666)
($218,388)
($240,874)
Realty taxes in accordance with IFRIC 21
(15,504)
(13,199)
29,850
27,022
FFO adjustments from equity accounted investments
(8,689)
124,010
18,421
125,282
Exchangeable unit distributions
2,613
2,696
5,227
5,392
Provision for expected credit loss
—
—
268
—
Fair value adjustments on financial instruments and real estate assets
288,674
302,216
363,477
327,493
Fair value adjustment to unit-based compensation
1,633
(1,067)
3,147
(1,589)
(Gain) loss on sale of real estate assets, net of related costs
(292)
13,671
811
12,805
Transaction costs
8,669
—
8,669
—
Deferred income tax recovery applicable to U.S. Holdco
(12,535)
(60,326)
(20,030)
(67,713)
Incremental leasing costs
572
540
1,161
1,155
The Bow and 100 Wynford non-cash rental income and accretion
(10,967)
(10,244)
(21,711)
(20,276)
FFO
$87,804
$85,631
$170,902
$168,697
Straight-lining of contractual rent
(3,355)
(5,370)
(6,967)
(10,199)
Rent amortization of tenant inducements
1,129
1,141
2,279
2,271
Capital expenditures
(9,849)
(8,813)
(20,206)
(17,396)
Leasing expenses and tenant inducements
(598)
(1,941)
(1,255)
(2,156)
Incremental leasing costs
(572)
(540)
(1,161)
(1,155)
AFFO adjustments from equity accounted investments
(1,179)
(1,303)
(2,199)
(2,470)
AFFO
$73,380
$68,805
$141,393
$137,592
Basic and diluted weighted average number of Units and exchangeable units (in thousands of Units) (1)
279,990
279,905
279,990
279,876
FFO per basic and diluted Unit
$0.314
$0.306
$0.610
$0.603
AFFO per basic and diluted Unit
$0.262
$0.246
$0.505
$0.492
Cash distributions per Unit
$0.150
$0.150
$0.300
$0.300
Payout ratio as a % of FFO
47.8 %
49.0 %
49.2 %
49.8 %
Payout ratio as a % of AFFO
57.3 %
61.0 %
59.4 %
61.0 %
(1)
For the three and six months ended June 30, 2025, included in the weighted average and diluted weighted average number of Units are exchangeable units of 17,424,186 and 17,448,495, respectively. For the three and six months ended June 30, 2024, included in the weighted average and diluted weighted average number of Units are exchangeable units of 17,974,186.