H&R Real Estate Investment Trust

Good morning, and welcome to H&R Real Estate Investment Trust's 2025 Fourth Quarter Earnings Conference Call. Before beginning the call, H&R would like to remind listeners that certain statements, which may include predictions, conclusions, forecasts, or projections, and the remarks that follow may contain forward-looking information, which reflect the current expectations of management regarding future events and performance, and speak only as of today's date. Forward-looking information requires management to make assumptions or rely on certain material factors and is subject to inherent risks and uncertainties, and actual results could differ materially from the statements in the forward-looking information. In discussing H&R's financial and operating performance and in responding to your questions, we may reference certain financial measures which do not have a meaning recognized or standardized under IFRS or Community and Generally Accepted Accounting Principles. and are therefore unlikely to be comparable to similar measures presented by other reporting issuers. Non-GAAP measures should not be considered as alternatives to net income or comparable metrics determined in accordance with IFRS as indicators of H&R's performance, liquidity, cash flows, and profitability. H&R's management uses these measures to aid in assessing the route's underlying performance and provides these additional measures so that investors can do the same. Additional information about the material factors, assumptions, risks, and uncertainties that could cause actual results to differ materially from the statements in the forward-looking information and the material factors or assumptions that may have been applied in making such statements, together with details on H&R's use of non-debt financial measures, are described in more detail in H&R's public filings, which can be found on H&R's website and www.cetaplus.com. I would now like to introduce Mr. Tom Hofstadter, Chief Executive Officer of H&R REIT. Please go ahead, Mr. Hofstadter.

Thank you, Operator. Good morning, everyone. With me today are Larry Frum, our CFO, and Emily Watson, COO of LandTower. We'll jump right into it. Now I'll hand it over to Larry.

Thank you, Tom, and good morning, everyone. Overall, given the headwinds we face with multifamily supply concerns, a weak office market, the tariff war creating general market uncertainty and a weaker Canadian economy, we are very pleased with our results and in particular the 1.6% growth in same property net operating income on a cash basis for the year ended December 31st, 2025 compared to the same period last year. FFO for the year ended December 31st, 2025 was $1.21 per unit. A 1.4% increase over the $1.20 for the year ended December 31st, 2024. A great result considering the headwinds I just mentioned and the fact that we have property sales of approximately $527 million over the two-year period from January 1, 2024 to December 31st, 2025. Breaking down our same property net operating income on a cash basis between the segments The residential segment was up 1.1% for Q4 2025 compared to Q4 2024 and was up 1.2% for the 2025 year over the 2024 year. Emily will provide more details on LandTower's results shortly. Our office segment, same property, net operating income on a cash basis, increased 1.5% for both Q4 2025 compared to Q4 2025 for 2024 and for the year 2025 over the 2024 year. Our office occupancy at December 31st, 2025 was 96% with an average remaining lease term of 5.2 years. We expect vacancy to increase in 2026 with RBC's lease of approximately 189,000 square feet at 330 Front Street maturing on December 31st, 2025. We are in negotiations with several prospective tenants for part of the space. Our office portfolio at December 31st, 2025 consisted of 15 properties. Four of these properties were classified as held for sale at December 31st, 2025. Two of which were sold in January, 2026. Hess Tower is expected to be sold at the end of this month and 25 Shepherd is expected to be sold in the second half of 2026. After the sale of these four properties, the pro forma office segment will comprise 12% of our total real estate assets. Retail segment same property net operating income on a cash basis increased 4.4% for Q4 2025 compared to Q4 2024 and was up 6.7% for the 2025 year compared to 2024 due to occupancy gains at River Landing and Forex. Our net investment in ECHO and 23 Canadian retail properties was sold in January 2026 and we are expecting to sell the remaining three Canadian retail properties in March of this year. The only remaining retail assets will be the commercial component of River Landing and is expected to comprise 4% of our total real estate assets. Industrial segment same property net operating income decreased 9% for Q4 2025 compared to Q4 2024 and decreased 3.7% for the 2025 year over the 2024 year. Industrial occupancy decreased from 98.9% at December 31st, 2024 to 90.7% at December 31st, 2025. Our three industrial developments totaling approximately 360,000 square feet at H&R's ownership share have all been leased. Two of the leases totaling approximately 204,000 square feet will commence in Q1, 2026. and the third will commence in Q4 of 2026. Our FFO and AFO payout ratios were a healthy 50% and 60% respectively for the year ended December 31st, 2025. The proceeds received from the sales announced to date have been used to repay debt. Our pro forma debt to total assets of the reached proportionate share are expected to be 41.8%, and the pro forma debt to EBITDA is expected to be 8.7 times coverage. With that, I will turn the call over to Emily for an update from the Landtower residential segment. Emily?