H&R Real Estate Investment Trust

H&R Real Estate Investment Trust

July 12, 2010 16:17 ET

H&R Announces $100 Million Offering of Convertible Debentures

TORONTO, ONTARIO--(Marketwire - July 12, 2010) -


H&R Real Estate Investment Trust ("H&R") (TSX:HR.UN) has announced that it has entered into an agreement to sell, to a syndicate of underwriters co-led by CIBC, RBC Capital Markets and TD Securities Inc., on a bought deal basis, $100 million principal amount 5.90% convertible unsecured subordinated debentures (the "Debentures"). Closing is expected to occur on or about July 27, 2010, subject to regulatory approval.

The net proceeds of the offering will be used to repay debt, for potential acquisitions, and for general trust purposes.

The Debentures will bear interest at a rate of 5.90% per annum payable semi-annually in arrears on June 30 and December 31 in each year commencing on December 31, 2010, and will mature on June 30, 2020 (the "Maturity Date"). The Debentures will be convertible at the holder's option into stapled units of H&R (the "Stapled Units") at any time prior to the earlier of the Maturity Date and the date fixed for redemption at a conversion price of $23.50 per Stapled Unit (the "Conversion Price"). The Debentures will not be redeemable on or before June 30, 2014. After June 30, 2014 and prior to June 30, 2016, the Debentures may be redeemed in whole or in part from time to time at H&R's option provided that the volume weighted average trading price for the Stapled Units is not less than 125% of the Conversion Price. On and after June 30, 2016 and prior to the Maturity Date, the Debentures may be redeemed in whole or in part from time to time at H&R's option at a price equal to their principal amount plus accrued and unpaid interest. Subject to regulatory approval, H&R may satisfy its obligation to repay the principal amount of the Debentures on redemption or at maturity, in whole or in part, by delivering that number of Stapled Units equal to the amount due divided by 95% of the market price for the units at that time, plus accrued interest in cash.

The offering is being made under H&R's existing amended and restated short from base shelf prospectus dated January 18, 2010. The terms of the offering will be described in a prospectus supplement to be filed with Canadian securities regulators. 

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 33 office, 118 industrial and 121 retail properties comprising nearly 39 million square feet, with a net book value of $4.1 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 financing. As a result, leases representing only 6.8% of total rentable area will expire from Q2 2010 to Q4 2012, while only 12.5% of H&R REIT's total mortgage payable will mature. H&R Finance Trust is an unincorporated investment trust, which primarily invests in notes issued by an H&R REIT subsidiary. 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. Additional information regarding H&R REIT and H&R Finance Trust is available at www.hr-reit.com and on www.sedar.com.

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 (together, "H&R"), 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, H&R REIT's expectation regarding future developments in connection with The Bow, and the amount of actual distributions to unitholders notwithstanding the trustees adoption of a distribution policy (which takes into account the REIT's covenant to its lenders to not distribute cash in excess of 70% of FFO). 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, risks related to:
prices and market value of securities of H&R; availability of cash for distributions; development and financing relating to The Bow development; 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; 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 is 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 forwardlooking 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.

Contact Information

  • H&R Real Estate Investment Trust
    Larry Froom
    Chief Financial Officer
    (416) 635-7520