H&R Reports Solid Q4 Results

TORONTO, March 8, 2013 /CNW/ - H&R Real Estate Investment Trust ("H&R REIT") 
and H&R Finance Trust (collectively, "H&R") (TSX: HR.UN; HR.DB.C; HR.DB.D; 
HR.DB.E) announced their financial results for the year ended December 31, 
Operating Highlights
H&R REIT's average remaining term to maturity as at December 31, 2012 was 12.5 
years for leases and 7.7 years for outstanding mortgages. Occupancy at 
December 31, 2012 was 98.7%, down slightly from 99.1% at December 31, 2011. 
Leases representing 1.9% of total rentable area will expire during 2013. As 
at December 31, 2012, the ratio of H&R's debt to fair market value was 51.6% 
compared to 53.6% as at December 31, 2011. H&R's debt excluding convertible 
debentures to fair market value ratio was 48.3% compared to 47.1% as at 
December 31, 2011. 
Capital Transaction Highlights
During the fourth quarter of 2012, H&R REIT: 

    --  completed a public offering of $150.1 million of Stapled Units;
    --  purchased two grocery anchored retail properties totalling
        135,200 square feet in Florida, United States for an aggregate
        purchase price of U.S. $19.7 million, at a weighted average
        capitalization rate of 7.2% and a levered return of 11.2%.  H&R
        REIT assumed a U.S. $6.5 million mortgage bearing interest at
        5.75% per annum for a 9-year term and subsequently closed a
        U.S. $5.8 million mortgage bearing interest at 3.35% per annum
        for a 6.75-year term.

|Property Address            |Anchor   |   Square Feet|   Occupancy|
|1491-1575 Main St., Dunedin,|Publix   |        74,200|         87%|
|Florida                     |         |              |            |
|955 State Road 16, St.      |Publix   |        61,000|         93%|
|Augustines, Florida         |         |              |            |
|Total                       |         |       135,200|            |
    --  acquired a 50% interest in a 84,100 square foot retail property
        in Thunder Bay, Ontario for a purchase price of $1.4 million;
    --  sold four retail properties in Georgia, United States for gross
        proceeds of approximately U.S. $51.4 million; and
    --  sold an industrial property and a parcel of land held for
        development in Ontario for gross proceeds of $22.7 million.

Development Highlights
H&R REIT has reached practical completion on the construction of a two million 
square foot office building in Calgary, Alberta (the "Bow"), which is fully 
pre-leased to Encana Corporation for a 25-year term. Floors 3 to 57 were 
delivered to Encana Corporation in tranches between May 2, 2012 and February 
22, 2013. The 25-year lease term is expected to commence on March 15, 2013 
upon the anticipated delivery of the final two floors to Encana Corporation. 
Rent escalations will be at 0.75% per annum on the office space and 1.5% per 
annum on the parking income for the full 25-year term. H&R REIT estimates a 
further $48.2 million in costs will be incurred to complete the project, 
including capitalized interest. As at December 31, 2012, the total cost 
incurred on the project amounted to $1.67 billion (December 31, 2011 - $1.48 
billion). This amount includes the costs for the construction of 1,358 parking 
stalls. Encana Corporation is entitled to a 60-day free rent fixturing period 
and a rent credit equal to the delay penalty of approximately $32.5 million. 
As at December 31, 2012, the unused portion of the rent credit balance 
relating to the delay penalty was approximately $15.2 million. This rent free 
period, combined with the interest expense that was no longer capitalized as 
tranches of the project became available for their intended use, resulted in 
an FFO loss of $1.3 million and an AFFO loss of $31.0 million in 2012 as shown 
in the table below. The table below also provides an estimate of FFO and 
AFFO for the first three quarters in 2013.

|                   |            Actual     |       Estimate((2))   |
|In Millions        |Q4 2012((1))|Total 2012|Q1 2013|Q2 2013|Q3 2013|
|Basic rent         |     $     -|   $     -|   $2.2|  $22.4|  $23.3|
|Straight-lining of |        15.4|      29.7|   22.6|    2.7|    1.9|
|contractual rent   |            |          |       |       |       |
|Interest no longer |            |          |       |       |       |
|capitalized((3))   |      (14.0)|    (25.1)|  (3.1)|  (4.3)|  (4.3)|
|Mortgage interest  |       (3.4)|     (5.9)|  (4.4)|  (4.6)|  (4.6)|
|Expected Bow impact|            |          |       |       |       |
|on FFO((4))        |       (2.0)|     (1.3)|   17.3|   16.2|   16.3|
|Expected Bow impact|            |          |       |       |       |
|       on AFFO((4))|      (17.4)|    (31.0)|  (5.3)|   13.5|   14.4|

((1))      Results varied from previously reported estimates due to a
           delay in the projected completion date.

((2))      This information is being provided so that investors are
           able to understand the expected impact of the Bow to H&R
           REIT's operations.  This information may not be appropriate
           for other purposes.

((3))      The estimates for Q1 and Q2 2013 supersede the estimates
           previously provided by H&R since, in particular, the
           interest no longer capitalized is now being compared to Q4
           2012's capitalized interest whereas it had previously been
           compared to 2011's.

((4))      H&R's combined Management Discussion and Analysis ("MD&A")
           includes reconciliations of: net income to FFO; FFO and
           AFFO; and AFFO to cash provided by operations.  Readers are
           encouraged to review such reconciliations in the combined

Financial Highlights
The following table includes non-Generally Accepted Accounting Principles 
("GAAP") information that should not be construed as an alternative to 
comprehensive income (loss) or cash provided by operations and may not be 
comparable to similar measures presented by other issuers as there is no 
standardized meaning of FFO under GAAP. Management believes that these are 
meaningful measures of operating performance. Readers are encouraged to 
refer to H&R's combined MD&A for further discussion of non-GAAP information 

|                  |3 months ended December 31|Year ended December 31|
|                  |__________________________|______________________|
|                  | 2012 |           2011    | 2012 |        2011   |
|Rentals from      |$230.5|         $178.2    |$835.3|      $656.9   |
|investment        |      |                   |      |               |
|properties        |      |                   |      |               |
|(millions)        |      |                   |      |               |
|Net income        |$102.6|          $24.6    |$508.9|      $338.0   |
|(millions)        |      |                   |      |               |
|FFO (millions)((1)|      |                   |      |               |
|(2))              |$85.2 |          $67.8    |$329.0|      $261.5   |
|FFO per Stapled   |      |                   |      |               |
|Unit (basic)((2)) |$0.44 |          $0.40    |$1.74 |       $1.64   |
|Cash provided by  |$153.8|         $104.0    |$551.4|      $404.6   |
|operations        |      |                   |      |               |
|(millions)        |      |                   |      |               |
|Cash distributions|      |                   |      |               |
|paid (millions)(  |      |                   |      |               |
|(3))              |$46.2 |          $31.7    |$164.8|      $119.4   |
|Distributions per |$0.31 |          $0.26    |$1.18 |       $0.98   |
|Stapled Unit      |      |                   |      |               |

((1))      H&R's combined MD&A includes reconciliations of: net income
           to FFO; FFO to AFFO; and AFFO to cash provided by
           operations.  Readers are encouraged to review such
           reconciliations in the combined MD&A.

((2))      See below for significant and non-recurring items included
           in FFO and FFO per Stapled Unit.

((3))      Cash distributions paid exclude distributions reinvested in
           units pursuant to H&R's unitholder distribution reinvestment
           plan and include distributions paid to the Class B Limited
           Partnership unitholders who can exchange their units for
           Stapled Units.

Beginning in Q4 2012, H&R REIT has elected to record investment properties at 
fair value. This change in accounting policy has been adopted on a 
retrospective basis and the comparative 2011 results have been restated 
accordingly. This change resulted in an increase to unitholder's equity of 
$997.9 million as at January 1, 2011. The fair value adjustment on real 
estate assets was $30.7 million for the three months ended December 31, 2012 
(Q4 2011 - $38.3 million) and $253.1 million for the year ended December 31, 
2012 (December 31, 2011 - $199.9 million). Under International Financial 
Reporting Standards at each reporting period, H&R REIT fair values its 
convertible debentures and exchangeable units using closing market prices. 
This is shown as a gain (loss) on change in fair value. Also included in the 
gain (loss) on change in fair value is the net gain (loss) on derivative 
instruments. The total gain (loss) on change in fair value was $17.7 million 
for the three months ended December 31, 2012 (Q4 2011 - ($69.2 million)) and 
($7.7 million) for the year ended December 31, 2012 (December 31, 2011 - 
($108.4 million)). Excluding the fair value adjustment on real estate assets 
and the gain (loss) on change in fair value net income would have been $54.2 
million for the three months ended December 31, 2012 (Q4 2011 - $55.5 million) 
and $263.5 million for the year ended December 31, 2012 (December 31, 2011 - 
$246.5 million).

Included in FFO are the following items which can be a source of significant 
variances between different periods:

|                 |3 months ended December|   Year ended December 31|
|                 |                     31|                         |
|In millions      | 2012|             2011|  2012|              2011|
|Additional       | $5.3|             $4.4| $13.8|              $7.1|
|recoveries for   |     |                 |      |                  |
|capital          |     |                 |      |                  |
|expenditures     |     |                 |      |                  |
|Gain (loss) on   |(0.1)|             $0.2| $10.1|              $9.3|
|extinguishment of|     |                 |      |                  |
|debt             |     |                 |      |                  |
|One-time         | $0.1|                -|($1.5)|              $1.9|
|non-recurring    |     |                 |      |                  |
|items*           |     |                 |      |                  |
|The Bow          |(2.0)|                -|($1.3)|                 -|
|                 | $3.3|             $4.6| $21.1|             $18.3|

*  One-time non-recurring items may include lease termination payments,
   mortgage pre-payment penalties, sundry income, one-time occupancy
   and realty tax adjustments and unusual trust expenses.

Excluding the above items, FFO would have been $81.9 million for the three 
months ended December 31, 2012 (Q4 2011 - $63.1 million) and $0.42 per basic 
Stapled Unit (Q4 2011 - $0.38 per basic Stapled Unit). For the year ended 
December 31, 2012, FFO would have been $307.9 million (December 31, 2011 - 
$243.2 million) and $1.63 per basic Stapled Unit (December 31, 2011 - $1.52 
per basic Stapled Unit).

Subsequent to December 31, 2012, H&R REIT:
    --  sold two industrial properties in Ontario for gross proceeds of
        approximately $20.5 million;
    --  repaid a Canadian mortgage of approximately $69.5 million
        bearing interest at a rate of 8.16% and
    --  entered into an amended and restated arrangement agreement with
        Primaris Retail Real Estate Investment Trust ("Primaris") and
        PRR Investments Inc. to acquire all the property of Primaris
        remaining following the sale by Primaris of 18 properties to a
        consortium led by KingSett Capital and to become the sole
        unitholder of Primaris.  In connection with the transaction,
        H&R expects to issue approximately 65.2 million stapled units
        for delivery to certain existing Primaris unitholders and H&R
        REIT expects to assume certain outstanding convertible
        debentures of Primaris. It is expected that H&R REIT will
        acquire 26 properties from Primaris with a fair value of $3.1
        billion along with assumed indebtedness of approximately $1.4
        billion. The transaction is subject to approval by the
        unitholders of H&R REIT, Finance Trust and Primaris at meetings
        to be held on March 22, 2013 as well as other customary closing
        conditions. Assuming all conditions to closing are satisfied or
        waived, closing is expected to occur in early April 2013.

March's Monthly Distributions Declared
March's declared distribution is scheduled as follows:

|          |Distribution/Stapled|Annualized|Record date| Distribution|
|          |                Unit|          |           |         date|
|          |                    |          | March 19, |             |
|March 2013|         $0.11250   |   $1.35  |   2013    |April 2, 2013|

About H&R REIT and H&R Finance Trust
H&R REIT is an open-ended real estate investment trust, which owns a North 
American portfolio of 42 office, 113 industrial and 138 retail properties 
comprising over 44 million square feet and 2 development projects, with a fair 
value of approximately $10 billion. The foundation of H&R REIT's success since 
inception in 1996 has been a disciplined strategy that leads to consistent and 
profitable growth. H&R REIT leases its properties long term to creditworthy 
tenants and strives to match those leases with primarily long-term, fixed-rate 

H&R Finance Trust is an unincorporated investment trust, which primarily 
invests in notes issued by a U.S. corporation which is a subsidiary of H&R 
REIT. As at December 31, 2012, the note receivable balance is U.S. $162.5 
million. In 2008, H&R REIT completed an internal reorganization which 
resulted in each issued and outstanding H&R REIT unit trading together with a 
unit of H&R Finance Trust as a "Stapled Unit" on the Toronto Stock Exchange.

Forward-looking Statements
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 
the objectives of H&R REIT and H&R Finance Trust, strategies to achieve those 
objectives, H&R's beliefs, plans, estimates, and intentions, and similar 
statements concerning anticipated future events, results, circumstances, 
performance or expectations that are not historical facts including, in 
particular, the acquisition of Primaris by H&R, H&R REIT's expectation 
regarding future developments in connection with and financial impact of The 
Bow and the amount of distributions to unitholders. 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. These statements are not guarantees of 
future performance and are based on H&R's estimates and assumptions that are 
subject to risk and uncertainties, including those discussed in H&R's 
materials filed with the Canadian securities regulatory authorities from time 
to time, which could cause the actual results and performance of H&R to differ 
materially from the forward-looking statements contained in this news release. 
Those risks and uncertainties include, among other things, the completion of 
the acquisition of Primaris, risks related to: prices and market value of 
securities of H&R; availability of cash for distributions; restrictions 
pursuant to the terms of indebtedness; liquidity; credit risk and tenant 
concentration; interest rate and other debt related risk; tax risk; ability to 
access capital markets; dilution; lease rollover risk; construction risks; 
currency risk; unitholder liability; co-ownership interest in properties; 
competition for real property investments; environmental matters; reliance on 
one corporation for management of substantially all H&R REIT's properties; and 
changes in legislation and indebtedness of H&R. Material factors or 
assumptions that were applied in drawing a conclusion or making an estimate 
set out in the forward-looking statements include that the general economy is 
stable; local real estate conditions are stable; interest rates are relatively 
stable; and equity and debt markets continue to provide access to capital. H&R 
cautions that this list of factors is 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. All 
forward-looking statements in this news release are qualified by these 
cautionary statements. These forward-looking statements are made as of today, 
and H&R, except as required by applicable law, assumes no obligation to update 
or revise them to reflect new information or the occurrence of future events 
or circumstances.

Additional information regarding H&R REIT and H&R Finance Trust is  available 
atwww.hr-reit.com and onwww.sedar.com. For more information, please 
contact Larry Froom, Chief Financial  Officer, H&R REIT, 416-635-7520, or 

SOURCE: H&R Real Estate Investment Trust

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CO: H&R Real Estate Investment Trust
ST: Ontario

-0- Mar/08/2013 15:22 GMT

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