H&R Real Estate Investment Trust (HR) Q1 2026 earnings summary

Executive summary

• Over $2.6B in non-strategic office and retail sales since June 2021, including $1.5B in Q1 2026, driving a shift to higher-growth residential and industrial assets, with residential and industrial now comprising up to 85% of the portfolio as of March 31, 2026.

• Debt reduction of $3.5B since June 2021, with $1.0B repaid in Q1 2026, strengthening the balance sheet and reducing leverage.

• Property management transitioned to Greystar as of April 1, targeting $5 million USD in annual cost savings and showing early operational improvements.

• Portfolio streamlined to focus on high-quality, well-located properties with 91.3% occupancy and long lease terms.

• Strategic plan refresh expected by year-end, focusing on industrial and Lantower assets, with office exposure now down to about 10–11% of the portfolio.

Financial highlights

• $1.5B in retail and office properties sold in Q1 2026; $1.0B of corporate debt repaid; total assets decreased to $8.07B as of March 31, 2026.

• FFO for Q1 2026 was $76.3M ($0.272 per unit), AFFO was $65.5M ($0.234 per unit), and payout ratio as a percentage of FFO was 55.1%.

• Same property net operating income from U.S. residential properties increased 2.3% in USD for Q1 2026 versus Q1 2025, but overall same-property NOI (cash basis) declined to $90.1M from $93.4M year-over-year.

• Debt to total assets at 42.6% (proportionate share) and debt to adjusted EBITDA at 7.0x as of March 31, 2026.

• NAV per unit at $15.96 as of March 31, 2026.

Outlook and guidance

• Expecting higher occupancy and improved lease spreads in Q3 and Q4 as supply declines and pricing power returns, with blended lease spreads anticipated to turn positive (2–3%) by year-end.

• Further reduction in finance costs expected in Q2 2026 by approximately $3M following debt repayments.

• Bulk Wi-Fi projects expected to generate CAD 800,000 in revenue for 2026, with additional projects in the pipeline.

• Ongoing focus on residential and industrial growth, with continued development pipeline in U.S. Sun Belt states and Canadian industrial markets.

• Targeting debt to adjusted EBITDA below 9.0x and payout ratio as a % of FFO between 50–60%.