H&R Reports Solid Q2 2013 Results and Successfully Completes the Integration of Primaris

H&R Reports Solid Q2 2013 Results  and Successfully Completes the Integration 
of Primaris 
TORONTO, Aug. 14, 2013 /CNW/ - H&R Real Estate Investment Trust ("H&R REIT") 
and H&R Finance Trust (collectively, "H&R") (TSX: HR.UN; HR.DB.D; HR.DB.E and 
HR.DB.H) today announced their financial results for the quarter ended June 
30, 2013. 
Capital Transaction Highlights
During the second quarter of 2013, H&R REIT acquired 100% of Primaris Retail 
Real Estate Investment Trust ("Primaris") which consisted of 26 properties 
valued at $3.1 billion. The acquisition was funded through the issuance of 
62.5 million Stapled Units with a value of $1.4 billion and the assumption of 
Primaris' outstanding mortgages, convertible debentures and bank indebtedness 
totalling $1.6 billion. In addition, holders of 2.1 million exchangeable 
units of certain subsidiaries of Primaris received the same number of Class B 
units of subsidiaries of H&R REIT, each of which is exchangeable for 1.166 
Stapled Units. The increased market capitalization relating to the 
acquisition of Primaris has substantially enhanced liquidity for 
unitholders. Through this transaction, H&R REIT has achieved broader 
diversification by geographic region and tenant base into the enclosed 
shopping centre asset class at a time when U.S. and international retailers 
are expanding into Canada. H&R is pleased with its successful integration of 
the Primaris portfolio and platform all in accordance with H&R's proforma 
budgets. The property operating income of $41.0 million attributable to the 
Primaris portfolio for Q2 2013 was in line with H&R REIT management's 
expectation at the time of the Primaris acquisition and it is expected that 
such property operating income will increase for Q3 and Q4 2013. 
Operating Highlights
H&R REIT's average remaining term to maturity as at June 30, 2013 was 10.3 
years for leases and 7.3 years for outstanding mortgages. Occupancy at June 
30, 2013 was 98.7%, up slightly from 98.0% at June 30, 2012. Leases 
representing only 4.9% of total rentable area will expire during the balance 
of 2013 and 2014. As at June 30, 2013, the ratio of H&R's debt to fair 
market value of assets was 48.5% compared to 50.3% as at December 31, 2012. 
Development Highlights 
Effective December 31, 2012, H&R REIT reached practical completion on the 
construction of a two million square foot office building in Calgary, Alberta 
(the "Bow"), which is fully leased to Encana Corporation for a 25-year term. 
On March 15, 2013, the final floors were delivered to Encana Corporation and 
the 25-year lease term commenced, and will continue until May 14, 2038. 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 
$12.5 million in costs will be incurred to fully complete this project. As 
at June 30, 2013, the total cost incurred on the project, including the South 
Block, amounted to $1.70 billion (December 31, 2012 - $1.67 billion) which 
includes the costs for construction of 1,358 underground parking stalls. 
Consistent with H&R's strategy to secure long-term fixed rate financing, on 
June 20, 2013, H&R REIT issued $300.0 million, Series C bonds at an annual 
rate of 3.797%, due June 13, 2023. These bonds rank pari passu to the $250.0 
million, 3.690% Series A bonds due June 14, 2021 and the $250.0 million, 
3.693% Series B bonds due June 14, 2022, which were both issued on June 14, 
2012. Encana Corporation was entitled to a 60-day free rent fixturing period 
and an additional rent credit equal to the delay penalty of approximately 
$32.0 million for delays in delivering the tranches. As at June 30, 2013, 
there is no more rent credit due to the tenant. For the three months ended 
June 30, 2013, the Bow has contributed $16.1 million to AFFO. Although 
mortgage interest will increase due to the issuance of the Series C bonds, the 
REIT expects the Bow to generate approximately the same amount of AFFO going 
The table below also provides an estimate of FFO and AFFO to be generated by 
the Bow for the remainder of 2013: 
|                   |      Actual   |Six months ended|Estimate((1)(2))|
|In Millions        |Q1 2013|Q2 2013|  June 30, 2013 |Q3 2013|Q4 2013 |
|Basic rent         |  $2.2 | $21.3 |        $23.5   | $23.3 |  $23.3 |
|Straight-lining of |       |       |                |       |        |
|contractual rent   |  20.6 |   3.3 |         23.9   |   1.8 |   1.8  |
|Interest           |       |       |                |       |        |
|capitalized        |   0.5 |    -  |         0.5    |    -  |     -  |
|Mortgage interest  | (4.4) | (5.2) |        (9.6)   | (7.3) |  (7.3) |
|Expected Bow impact|       |       |                |       |        |
|on FFO((3))        |  18.9 |  19.4 |         38.3   |  17.8 |   17.8 |
|Expected Bow impact|       |       |                |       |        |
|on AFFO((3))       | (1.7) |  16.1 |         14.4   |  16.0 |   16.0 |
((1)) 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

((2)) The estimates for Q3 and Q4 2013 supersede the estimates
      previously provided by H&R REIT.

((3)) 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.

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 management discussion and analysis ("MD&A") for 
further discussion of non-GAAP information presented.

|                       |3 months ended June 30|6 months ended June 30|
|                       |______________________|______________________|
|                       | 2013 |        2012   | 2013 |        2012   |
|Rentals from investment|      |               |      |               |
|properties (millions)  |$294.1|      $199.6   |$516.7|      $382.6   |
|Net income (millions)  |188.1 |       106.2   |320.3 |       305.5   |
|FFO (millions)((1)(2)) |119.5 |        92.6   |209.5 |       165.0   |
|FFO per Stapled Unit   |      |               |      |               |
|(basic)((2))           | 0.45 |        0.49   | 0.90 |        0.90   |
|Cash provided by       |      |               |      |               |
|operations (millions)  | 57.2 |       100.7   |194.3 |       241.4   |
|Cash distributions     |      |               |      |               |
|(millions)( (3))       | 68.0 |        38.5   |117.2 |        73.6   |
|Distributions per      |      |               |      |               |
|Stapled Unit           | 0.34 |        0.29   | 0.68 |        0.56   |

((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 AFFO per Stapled Unit.

((3)) Cash distributions exclude distributions reinvested in units
      pursuant to H&R's unitholder distribution reinvestment plan.

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

|                       |3 months ended June 30|6 months ended June 30|
|In millions            |2013 |         2012   |2013 |         2012   |
|Additional recoveries  |     |                |     |                |
|for capital            |     |                |     |                |
|expenditures           |$2.1 |         $3.8   |$4.2 |         $4.8   |
|Gain on extinguishment |     |                |     |                |
|of debt                |   - |         10.3   |   - |         10.3   |
|Adjustment to          |     |                |     |                |
|straight-lining of     |     |                |     |                |
|contractual rent       |(2.4)|           -    |(2.4)|           -    |
|Sundry income          | 1.4 |           -    | 1.4 |         0.2    |
|Incentive fee waived by|     |                |     |                |
|the Property Manager   |   - |           -    | 1.1 |           -    |

Excluding the above items, FFO would have been $118.4 million for the three 
months ended June 30, 2013 (Q2 2012 - $78.5 million) and $0.45 per basic 
Stapled Unit (Q2 2012 - $0.42 per basic Stapled Unit). For the six months 
ended June 30, 2013, FFO would have been $205.2 million (six months ended June 
30, 2012 - $149.7 million) and $0.88 per Stapled Unit (six months ended June 
30, 2012 - $0.81 per Stapled Unit).

Subsequent to June 30, 2013, H&R REIT:
    --  purchased a 200,145 square foot retail shopping centre in Fort
        McMurray, Alberta for $168.5 million.
    --  announced its agreement with the Property Manager to
        internalize H&R REIT's property management function effective
        July 1, 2013.  Upon closing of the transaction, a subsidiary of
        H&R REIT will acquire the Property Manager's H&R-related
        property management business in return for 9.5 million limited
        partnership units of that subsidiary, such units to be
        exchangeable on a one-for-one basis for Stapled Units.
    --  entered into an agreement to sell a 50% non-managing interest
        in Place d'Orleans Mall, a 759,462 square foot retail shopping
        centre in Orleans, Ontario for gross proceeds of $110.6
    --  acquired a one-third interest in ECHO Realty LP for U.S. $294
        million.  ECHO Realty LP's portfolio consists of 176 properties
        totalling approximately 7.4 million square feet with an average
        remaining lease term of 12.9 years.  Giant Eagle Inc. is a
        tenant in 161 of the properties and contributes approximately
        79% of ECHO's annual revenue.

Monthly Distribution Declared
H&R's declared distribution for the month of September is scheduled as follows:

|         |Distribution/Stapled|Annualized|Record date  |Distribution |
|         |Unit                |          |             |date         |
|September|$0.11250            |$1.35     |September 10,|September 30,|
|2013     |                    |          |2013         |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 41 office, 112 industrial and 165 retail properties 
comprising over 53 million square feet and 2 development projects, with a fair 
value of approximately $13 billion. In addition, H&R REIT has a one-third 
interest in ECHO Realty LP which owns 176 properties totalling 7.4 million 
square feet. 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 for long terms 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 June 30, 2013, the note receivable balance is U.S. $216.6 
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 statements in this news release contain 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, H&R 
REIT's expectation in connection with the 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 risks 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, H&R REIT's expectation with respect 
to the Bow and Primaris' Q3 and Q4 2013 results, 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 
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CO: H&R Real Estate Investment Trust
ST: Ontario
-0- Aug/14/2013 13:54 GMT
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