STABILITY, SECURITY & GROWTH THROUGH QUALITY, DIVERSIFICATION & SCALE DEBT INVESTOR PRESENTATION As at September 30, 2019 unless otherwise noted H & R R e a l E s t a t e I n v e s t m e n t T r u s t ( T S X : H R . U N )
Caution Regarding Forward-looking Statements Forward Looking Statements Certain statements made in this presentation will contain forward‐looking information within the meaning of applicable securities laws (also known as forward‐ looking statements) including, among others, statements made or implied relating to H&R’s objectives, strategies to achieve those objectives, H&R’s beliefs, plans, estimates, projections and intentions and statements with respect to H&R’s development activities, including planned future expansions, redevelopment of existing properties and building of new properties; the expected yield on cost of H&R’s developments and other investments; the expected costs of any of H&R’s projects; and the expected occupancy, budget, net leasable area or contributions to rental revenue from H&R’s developments and other properties. Statements concerning forward‐looking information 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. Forward‐looking statements are provided for the purpose of presenting information about management’s current expectations and plans relating to the future and readers are cautioned that such statements may not be appropriate for other purposes. 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, including H&R’s MD&A for the quarter ended September 30, 2019 and H&R’s most recently filed annual information form, which could cause the actual results and performance of H&R to differ materially from the forward‐looking statements made in this presentation. Although the forward‐looking statements made in this presentation 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. Readers are also urged to examine H&R’s materials filed with the Canadian securities regulatory authorities from time to time as they may contain discussions on risks and uncertainties which could cause the actual results and performance of H&R to differ materially from the forward‐looking statements made in this presentation. All forward‐looking statements made in this presentation are qualified by these cautionary statements. These forward‐looking statements are made as of November 13, 2019 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. Non-GAAP Measures The REIT’s audited annual financial statements are prepared in accordance with IFRS. H&R’s management uses a number of measures which do not have a meaning recognized or standardized under IFRS or Canadian Generally Accepted Accounting Principles (“GAAP”). The non‐GAAP measures REIT’s proportionate share, Same‐Asset property operating income (cash basis), Interest Coverage ratio and Net Asset Value (“NAV”), as well as other non‐GAAP measures discussed elsewhere in this presentation, should not be construed as an alternative to financial measures calculated in accordance with GAAP. Further, H&R’s method of calculating these supplemental non‐GAAP financial measures may differ from the methods of other real estate investment trusts or other issuers, and accordingly may not be comparable. H&R uses these measures to better assess its underlying performance and provides these additional measures so that investors may do the same. These non‐GAAP financial measures are more fully defined and discussed in H&R’s MD&A as at and for the nine months ended September 30, 2019, available at www.hr‐reit.com and on www.sedar.com. Other All figures have been reported at H&R’s ownership interest unless otherwise stated. 2 STABILITY, SECURITY & GROWTH through QUALITY, DIVERSIFICATION & SCALE
Stability, Security & Growth through Quality, Diversification & Scale H&R One of the Largest REITs in Fully Internalized Management Canada With a Market Cap of Total Investment Properties (Insiders own 6%) $7.0 billion $14.1 billion (1) Residential (1) Retail (1) Office (1) Industrial (1) (Lantower Residential) (Primaris) 33 Properties 87 Properties 316 Properties 24 Properties ~10,810,000 Square Feet ~9,177,000 Square Feet ~13,888,000 Square Feet 8,443 Residential Rental Units The Bow, Front St., Legacy Lakes, Corus Quay, Orchard Park, Dufferin Mall, Grande Pines, Purolator, Unilever, Calgary Toronto Toronto Orlando Dallas Kelowna Toronto Calgary Mississauga Long Term Leases Stable Performance Pension Fund JV High Growth Opportunity (1) Figures above are at H&R’s ownership interest including equity accounted investments. 3 STABILITY, SECURITY & GROWTH through QUALITY, DIVERSIFICATION & SCALE
Portfolio Diversification Fair Value of Investment Properties (1) By Segment By Region Ontario Office 28% 43% $14 14.1 .1 $14 14.1 .1 Billion Billion United States Alberta 40% Industrial 23% Retail 7% 30% Residential 20% Other Canadian Provinces 9% (1) Includes H&R’s proportionate share of equity accounted investments. 4 STABILITY, SECURITY & GROWTH through QUALITY, DIVERSIFICATION & SCALE
Office Portfolio Total value: $6.0 billion (weighted average cap rate: 5.57%) Average remaining lease term to maturity: 12.7 years Occupancy: 98.3%; committed occupancy: 99.5% Revenue from tenants with investment grade ratings: 86.3% Canada United Total Ontario Alberta Other Subtotal States Number of properties 19 4 4 27 6 33 Square feet (in thousands) 5,366 2,607 893 8,866 1,944 10,810 Fair value (in millions) $2,225 $1,731 $228 $4,184 $1,784 $5,968 310-320-330 Front St.| Toronto Corus Quay | Toronto Hess Tower | Houston 2 Gotham Centre | New York 5 STABILITY, SECURITY & GROWTH through QUALITY, DIVERSIFICATION & SCALE
Alberta Office Portfolio H&R’s office tenants in Alberta are some of the strongest companies in the energy sector with an average remaining lease term of 17.2 years There are currently no vacancies in H&R’s Alberta Office Portfolio % of H&R's Same-Asset Property Operating GLA at Remaining Income Total GLA Ownership H&R's Lease Term S&P Tenant (cash basis) (1) Address City (Sq.Ft.) Interest Interest (years) Major Tenant Credit Rating 5 th Ave. at Centre St. Calgary Encana Corporation (2) 2,024,182 100% 2,024,182 14.2% 18.4 BBB Stable 450‐1st St., S.W. Calgary 931,187 50% 465,594 2.3% 11.6 TC Energy Corporation BBB+ Stable 2767‐2nd Ave. Calgary 69,793 100% 69,793 0.1% 19.4 AltaLink, L.P. A Stable 2611‐3rd Ave. Calgary 95,225 50% 47,613 0.1% 19.4 AltaLink, L.P. A Stable Total / Average 3,120,387 2,607,182 16.7% 17.2 (1) Same‐asset property operating income (cash basis) includes the proportionate share of equity accounted investments and excludes straight‐lining of contractual rent and realty taxes accounted for under IFRIC 21. (2) Encana Corporation has sublet 27 floors to Cenovus Energy. 6 STABILITY, SECURITY & GROWTH through QUALITY, DIVERSIFICATION & SCALE
Retail Portfolio Total value: $4.2 billion (weighted average cap rate: 6.31%) Average remaining lease term to maturity: 6.6 years Occupancy: 89.4%; committed occupancy: 93.8% Canada United States Total Ontario Alberta Other Subtotal ECHO Other Subtotal Number of properties 39 17 14 70 230 16 246 316 Square feet (in thousands) 3,726 4,000 2,800 10,526 3,143 219 3,362 13,888 Fair value (in millions) $1,133 $1,223 $881 $3,237 $875 $135 $1,010 $4,247 Orchard Park | Kelowna Dufferin Mall | Toronto Stone Road Mall | Guelph 7 STABILITY, SECURITY & GROWTH through QUALITY, DIVERSIFICATION & SCALE
Retail Portfolio Enclosed Shopping Grocery Centre Anchored ECHO Other Total Number of properties 17 22 230 47 316 Square feet (in thousands) 7,062 1,008 3,143 2,675 13,888 Fair value (in millions) $2,565 $225 $875 $582 $4,247 Enclosed Shopping Centres All Store CRU Sales (1) 2019 (4) 2015 2016 2017 2018 British Columbia $614 $649 $653 $668 $659 Alberta 568 530 531 520 514 Manitoba 479 511 509 515 501 Ontario 542 552 575 574 567 Québec 415 423 431 428 432 New Brunswick 523 530 516 517 513 Total (2)(3) $539 $538 $545 $544 $537 CRU square feet (in thousands) 2,483 2,412 2,411 2,381 2,287 (1) Generally includes tenants occupying Commercial Retail Units (“CRU”) less than 15,000 square feet. (2) Reported as if Primaris owned 100% of these enclosed shopping centres. (3) Excluding Northland Village which is slated for redevelopment. (4) Rolling 12 months ended August 31, 2019 8 STABILITY, SECURITY & GROWTH through QUALITY, DIVERSIFICATION & SCALE
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