Q2 2026 H&R Real Estate Investment Trust Earnings Call

August 13, 2026

Speaker #1: Good morning, and welcome to H&R Real Estate Investment Trust 2026, Q2 earnings conference call. Before beginning the call, H&R would like to remind listeners that a certain statement, which may include predictions, conclusions, forecasts, or projections, in the remarks that follow may contain forward-looking information, which reflects the current expectations of management regarding future events and performance, and speak only as of today's date.

Operator: Good morning, and welcome to H&R Real Estate Investment Trust 2026 Q2 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 in the remarks that follow, may contain forward-looking information, which reflects the current expectations of management regarding future events and performance and speaks only as of today's date.

Speaker #1: 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.

Operator: 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 Canadian 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 REIT's underlying performance and provides these additional measures so that investors can do the same.

Operator: 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 Canadian 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 REIT's underlying performance and provides these additional measures so that investors can do the same.

Speaker #1: In discussing H&R's financial and operating performance, and in responding to your questions, we may refer certain financial measures which do not have a meaning recognized or standardized under IFRS or Canadian Generally Accepted Accounting Principles and are therefore unlikely to be comparable to similar measures presented by other reporting issuers.

Speaker #1: 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.

Speaker #1: H&R's management uses these measures to aid in assessing the REIT's underlying performance and provides these additional measures so that investors can do the same.

Speaker #1: 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-GAAP financial measures, are described in more detail in H&R's public filings, which can be found on H&R's website and www.cedarplus.com.

Operator: 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-GAAP financial measures, are described in more detail in H&R's public filings, which can be found on H&R's website and www.sedarplus.ca. I would now like to introduce Mr. Tom Hofstedter, Chief Executive Officer of H&R REIT. Please go ahead, Mr. Hofstedter.

Speaker #1: I would now like to introduce Mr. Tom Hofstetter, Chief Executive Officer of H&R REIT. Please go ahead, Mr. Hofstetter.

Speaker #2: Thank you, and good morning, everyone. Before we dive into this quarter's results, I'd like to speak directly to the transaction renounced earlier this week, because I know that's what's on everyone's mind.

Tom Hofstedter: Thank you and good morning, everyone. Before we dive into this quarter's results, I would like to speak directly to the transaction we announced earlier this week because I know that is what is on everyone's mind. You heard from Stephen Gross, lead trustee for the REIT first on Tuesday, and that was deliberate. The independent trustees ran a rigorous, exhaustive process entirely independent of the management, and it was important that you heard about it from Stephen before hearing from me. While I was not part of that process, I am excited about the outcome, and I believe in the vision and that the GO team is presenting and the opportunity it represents for our unitholders. With that as the backdrop, I want to share my perspective. I have been listening, I have read the commentary, and I understand the questions. Let me give you some context on how we got there.

Speaker #2: You heard from Stephen Gross, lead trustee for the REIT first on Tuesday, and that was deliberate. The independent trustees ran a rigorous, exhaustive process entirely independent of the management, and it was important that you heard about it from Stephen before hearing from me.

Speaker #2: While I wasn't part of that process, I am excited about the outcome, and I believe in the vision that the GOAT team is presenting and the opportunity to represent for our unit holders.

Tom Hofstedter: While I was not part of that process, I am excited about the outcome, and I believe in the vision and that the GO team is presenting and the opportunity it represents for our unitholders. With that as the backdrop, I want to share my perspective. I have been listening, I have read the commentary, and I understand the questions. Let me give you some context on how we got there.

Speaker #2: With that as the backdrop, I want to share my perspective. I have been listening, I have read the commentary, and I understand the questions.

Speaker #2: Let me give you some context on how we got there. H&R is an incredible company, but it is also a very complex one. We operate across multiple jurisdictions, partnerships, and joint ventures; industrial, residential, office; East Coast, West Coast. At the end of the day, there is no natural single buyer for a portfolio of this breadth and complexity.

Tom Hofstedter: H&R is an incredible company, but it is also a very complex one. We operate across multiple jurisdictions, partnerships, joint ventures, industrial, residential, office, East Coast, West Coast. At the end of the day, there is no natural single buyer for a portfolio of this breadth and complexity. The structure you see with best-in-class partners, including Blackstone, Crestpoint, PSP, and GO REIT, is how we are maximizing value for H&R unitholders from this portfolio. Each partner was selected because they are the right buyer for this specific piece. Blackstone and Crestpoint for the income-producing industrial assets they know best, GO REIT for the residential platform they are building, and CRAL for the non-core assets that require a long-term private market orientation. That is not a club deal by convenience. It is how you extract full value from a portfolio like ours.

Speaker #2: The structure you see, with best-in-class partners including Blackstone, Crestpoint, PSP, and GOREIT, is how we are maximizing value for H&R unit holders from this portfolio.

Speaker #2: Each partner was selected because they are the right buyer for their specific piece. Blackstone and Crestpoint for the income-producing industrial assets they know best, GOREIT for the residential platform they are building, and CREL for the non-core assets that require a long-term private market orientation.

Speaker #2: That's not a club deal by convenience—it's how you extract full value from a portfolio like ours. Every alternative was considered: selling Lantower independently, retaining it and selling everything else, or spinning it out as a standalone entity.

Tom Hofstedter: Every alternative was considered: selling Lantower independently, retaining it, and selling everything else, spinning it out as a standalone entity. The answer is that a standalone Lantower would have been a small cap company with limited liquidity, sizable tax leakage, and no clear path to the institutional recognition this portfolio deserves. This transaction delivers all of that on a tax-efficient basis in one single step. The compelling new value enhancement opportunity this represents is the culmination of a long-term effort. We have been executing a strategic repositioning plan since 2021. We spun out Primaris, we sold over CAD 2.6 billion in non-strategic assets. We reduced leverage from 10 to seven times debt to adjusted EBITDA, which you saw reflected in our Q2 numbers. We built Lantower into a portfolio of 26 high-quality residential properties across seven Sunbelt markets with an established brand and a proven operating track record.

Speaker #2: The answer is that a standalone Lantower would have been a small-cap company with limited liquidity, sizable tax leakage, and no clear path to the institutional recognition this portfolio deserves.

Speaker #2: This transaction delivers all of that, on the tax eviction basis, in one single step. The compelling new value enhancement opportunity this represents is the culmination of a long-term effort.

Speaker #2: We have been executing a strategic repositioning plan since 2021. We spun out Primaris, sold over $2.6 billion in non-strategic assets, and reduced leverage from 10 to 7 times debt to adjusted EBITDA, which you saw reflected in our Q2 numbers.

Speaker #2: We built Lantower into portfolio 26 high-quality residential properties across seven Sunbelt markets with an established brand and a proven operating track record. That works at the stage for what we are announcing today.

Tom Hofstedter: That work set the stage for what we are announcing today. What H&R unitholders are receiving: CAD 4.28 per unit in immediate cash, a tax-deferred rollover on unit consideration for eligible Canadian resident unitholders, and a 66.9% majority ownership stake in the combined platform that will be the second-largest publicly traded residential REIT in Canada by enterprise value and seventh-largest in the United States. I want to say something about that GO REIT stake because I think it is being underappreciated right now. H&R unitholders are rolling into GO REIT at what we believe is an attractive entry point into a larger, stronger, better-capitalized platform. This is a relative value trade. The combined platform, with its scale, pure-play focus, and expanded float, creates the structural conditions to narrow the gap between their market and intrinsic values. At 67% majority owners, H&R unitholders are positioned to benefit from that from day one.

Speaker #2: But H&R unit holders are receiving $4.28 per unit in immediate cash, a tax-deferred rollover on the unit consideration for eligible Canadian resident unit holders, and a 66.9% majority ownership stake in the combined platform that will be the second-largest publicly traded residential REIT in Canada by enterprise value, and the seventh-largest in the United States.

Speaker #2: I want to say something about that that GOREIT stake, because I think it is being underappreciated right now. H&R unit holders are rolling into GOREIT, and what we believe is an attractive entry point into a larger, stronger, better capitalized platform.

Speaker #2: This is a relative value trade. The combined platform, with its scale, pure-play focus, and expanded float, creates a structural condition to narrow the gap between their market and intrinsic values.

Tom Hofstedter: This is a relative value trade. The combined platform, with its scale, pure-play focus, and expanded float, creates the structural conditions to narrow the gap between their market and intrinsic values. At 67% majority owners, H&R unitholders are positioned to benefit from that from day one.

Speaker #2: At 67% majority owners, H&R unit holders are positioned to benefit from that from day one. The value is not only in what you are receiving today; it is where the combined platform is positioned to go.

Tom Hofstedter: The value is not only in what you are receiving today, it is where the combined platform is positioned to go. I have spent the last several months getting to know the GO team, their portfolio, their strategy, and their approach. These are smart, disciplined buyers and managers with a singular residential mandate and a real track record. They are interested in building a growth business, and they have their own skin in the game. They are tough negotiators, which frankly, is exactly what you want when they are now going to be stewards of what we have built. I trust them with Lantower, and I believe in what they are building. On my participation in the transaction, let me be direct about my own role.

Speaker #2: I have spent the last several months getting to know the GO team, their portfolio, their strategy, and their approach. These are smart, disciplined buyers and managers with a singular residential mandate and a real track record.

Speaker #2: They are interested in building a growth business, and they have their own skin in the game. They are tough negotiators, which, frankly, is exactly what you want when they are now going to be stewards of what we've built.

Speaker #2: I trust them with Lantower, and I believe in what they are building. On my participation in the transaction, let me be direct about my own role.

Speaker #2: As disclosed in our Q2 press releases, 44 million H&R units held by CREL, a company controlled by members of my family, together with units held by certain of its affiliates and associates, will be redeemed and canceled as part of this arrangement.

Tom Hofstedter: As disclosed in our Q2 press releases, 44 million H&R units held by CRAL, a company controlled by members of my family, together with units held by certain of its affiliates and associates, will be redeemed and canceled as part of this arrangement. Those units will not receive the CAD 4.28 cash or the GO REIT units being paid to all of the other unitholders. Some have asked why I am not receiving GO REIT units like everybody else. The answer is that CRAL is acquiring REIT's non-core assets, and the cancellation of those units is part of the consideration I am contributing to fund that acquisition. The structure is straightforward, and it will be fully detailed in the circular.

Speaker #2: Those units will not receive the $4.28 cash or the GOREIT units being paid to all of the other unit holders. Some of that's why I'm not receiving GOREIT units like everybody else.

Speaker #2: The answer is that CREL is acquiring REIT's non-core assets and the cancellation of those units is part of the consideration I'm contributing to fund that acquisition.

Speaker #2: The structure is straightforward, and it will be fully detailed in the circular. What CREL is acquiring are non-core assets, undeveloped land, suburban and secondary office properties, and other assets that are more complex to value and trade than the income-producing industrial and residential portfolios being acquired by Blackstone, Crestpoint, and GOREIT.

Tom Hofstedter: What CRAL is acquiring are non-core assets, undeveloped land, suburban and secondary office properties, and other assets that are more complex to value and trade than the income-producing industrial and residential portfolios being acquired by Blackstone, Crestpoint, and GO REIT. These assets require a buyer with local knowledge and a long-term orientation. At closing, I will have no role, no board seat, and no equity interest in GO REIT. This transaction is the conclusion of my involvement with H&R as a public entity. I want to be clear about something. My commitment to this outcome does not end at closing. CRAL has committed to provide income support and other payments to GO of up to approximately CAD 71 million over the first two years following close. As disclosed in our press release, CRAL will remain a joint venture partner with GO on River Landing going forward.

Speaker #2: These assets require a buyer with local knowledge and a long-term orientation. At closing, I will have no role, no board seat, and no equity interest in GOREIT.

Speaker #2: This transaction is the conclusion of my involvement with H&R as a public entity. I want to be clear about about something. My commitment to this outcome does not end at closing.

Speaker #2: CREL has committed to provide income support and other payments to GO of up to up to approximately $71 million over the first two years following close.

Speaker #2: And as disclosed in our press release, CREL will remain a joint venture partner with GO on Riverlanding, going forward. I am leaving meaningful capital alongside this team because I believe in their ability to execute and in what they are building and that is not something I would do without conviction.

Tom Hofstedter: I am leaving meaningful capital alongside this team because I believe in their ability to execute and in what they are building, and that is not something I would do without conviction. Those commitments reflect my genuine conviction that this transaction is the right outcome for every H&R unitholder. On the process, Stephen Gross addressed this in detail on Tuesday's call, but I will add that CIBC has been working on this for close to two years, not selling individual assets here and there, but working to find the right comprehensive solution for the full portfolio. The independent trustees engaged National Bank as their own independent advisor, who conducted a formal valuation of both H&R units and GO REIT units. Both advisors concluded this consideration is fair. The board's recommendation was unanimous.

Speaker #2: Those commitments reflect my genuine conviction that this transaction is the right outcome for every H&R unit holder. On the process, Stephen addressed this in detail on Tuesday's call, but I will add that CIBC has been working on this for close to two years.

Speaker #2: Not selling individual assets here and there, but working to find the right comprehensive solution for the full portfolio. The independent trustees engaged National Bank as their own independent advisor, conducted a formal valuation of both H&R units and GOREIT units, both advisors concluded this consideration is fair, the board's recommendation was unanimous.

Speaker #2: That process and those conclusions will be fully documented in the management information circular, and I would encourage every unit holder to read it carefully.

Tom Hofstedter: That process and those conclusions will be fully documented in the management information circular, and I would encourage every unitholder to read it carefully. I spent 30 years building this company. Lantower is not just a portfolio. It is something we built with care, asset by asset, market by market. Entrusting the majority of it to the GO team is not a decision I made lightly. I made it because I believe this next generation of management has the focus, the discipline, and the capability to take what we built and turn it into something that finally gets the recognition it deserves. This transaction accelerates what we have been working towards, creating a pure-play, institutional-scale, multi-family platform with the focus and financial profile to create real lasting value for our unitholders.

Speaker #2: I spent 30 years building this company, Lantower is not just a portfolio. It is something we built with care, asset by asset, market by market.

Speaker #2: Entrusting the majority of it to the GO's team is not a decision I made lightly. I made it because I believe this next generation of management has the focus, the discipline, and the capability to take what we built and turn it into something that finally gets the recognition it deserves.

Speaker #2: This transaction accelerates what we have been working towards, creating a pure-play institutional-scale, multifamily platform with a focus and financial profile to create real, lasting value for our unit holders.

Speaker #2: The combined entity—37 properties, over 13,300 residential units across eight markets and four states, with a $7.8 billion enterprise value—is a fundamentally different and stronger entity than either company is today.

Tom Hofstedter: The combined entity, 37 properties, over 13,300 residential units across eight markets and four states with a CAD 7.8 billion enterprise value, is a fundamentally different and stronger entity than either company is today. It has the scale to attract institutional capital and the pure-play focus to trade at multiples more consistent with North American peers. Neither GO nor H&R gets there independently. With this combination, we do. We are proud of where this has landed, and we are genuinely excited about what it represents for unitholders going forward. With that, I will turn the call over to Cheryl, who will walk us through an overview of our Q2 results.

Speaker #2: It has a scale to attract institutional capital, and the pure-play focus to trade in multiples and market systems with North American peers. Now, the GO and OH&R gets their independently.

Speaker #2: With this combination, we do. We are proud of where this has landed, and we are genuinely excited about what it represents for unit holders going forward.

Speaker #2: With that, I will turn the call over to Cheryl, who will walk us through an overview of our second quarter results.

Speaker #3: Thank you, Tom, and good morning, everyone. Following $1.5 billion of retail and office property dispositions in Q1 2026, H&R continued advancing its repositioning strategy in Q2.

[Company Representative] (H&R REIT): Thank you, Tom, and good morning, everyone. Following CAD 1.5 billion of retail and office property dispositions in Q1 2026, H&R continued advancing its reposition strategy in Q2. Approximately CAD 773 million of assets were classified as held for sale as at 30 June 2026, of which CAD 124 million has been sold since quarter end. On the development front, our two Slate properties in Mississauga, Ontario, reached substantial completion in June 2026 and were transferred to investment properties. Both properties are fully leased at market rents to a single tenant for approximately 11 years. The lease at 560 Slate Drive commenced in March 2026, and the lease at 600 Slate Drive will commence in October 2026. Both leases include a five-month rent-free period beginning at the commencement of their respective lease term. Lastly, we expect our Reddit properties under development to reach substantial completion next quarter.

Cheryl Fried: Thank you, Tom, and good morning, everyone. Following CAD 1.5 billion of retail and office property dispositions in Q1 2026, H&R continued advancing its reposition strategy in Q2. Approximately CAD 773 million of assets were classified as held for sale as at 30 June 2026, of which CAD 124 million has been sold since quarter end. On the development front, our two Slate properties in Mississauga, Ontario, reached substantial completion in June 2026 and were transferred to investment properties. Both properties are fully leased at market rents to a single tenant for approximately 11 years. The lease at 560 Slate Drive commenced in March 2026, and the lease at 600 Slate Drive will commence in October 2026. Both leases include a five-month rent-free period beginning at the commencement of their respective lease term. Lastly, we expect our Reddit properties under development to reach substantial completion next quarter.

Speaker #3: Approximately 773 million of assets were classified as held for sale as at June 30th, 2026, of which 124 million has been sold since quarter-end.

Speaker #3: On the development front, our two slate properties in Mississauga, Ontario, reached substantial completion in June 2026 and were transferred to investment properties. Both properties are fully leased at market rents to a single tenant for approximately 11 years.

Speaker #3: The lease at 560 Slate Drive commenced in March 2026, and the lease at 600 Slate Drive will commence in October 2026. Both leases include a five-month rent-free period beginning at the commencement of their respective lease terms.

Speaker #3: Lastly, we expect our Reddit properties under development to reach substantial completion next quarter. Our balance sheet remains in a strong position. Debt to total assets at the REIT's proportionate share was 41.8%.

[Company Representative] (H&R REIT): Our balance sheet remains in a strong position. Debt to total assets at the REIT's proportionate share was 41.8%. Debt to adjusted EBITDA at the REIT's proportionate share was 7.1 times, and our unencumbered assets to unsecured debt coverage ratio was 3.21 times. Corporate debt at 30 June 2026 consisted of CAD 550 million of debentures, one unsecured term loan of CAD 250 million, and lines of credit at CAD 225 million. In June 2026, we redeemed our CAD 250 million Series R senior debentures upon maturity, which bore interest at 2.906% per annum. The redemption was primarily funded using unsecured operating lines of credit. On the leasing front, we received a lease termination payment of approximately CAD 15.7 million from Bell Canada at 200 Bouchard Boulevard in Montreal. We recorded a corresponding non-cash adjustment to straight-lining of contractual rent of approximately the same amount.

Cheryl Fried: Our balance sheet remains in a strong position. Debt to total assets at the REIT's proportionate share was 41.8%. Debt to adjusted EBITDA at the REIT's proportionate share was 7.1 times, and our unencumbered assets to unsecured debt coverage ratio was 3.21 times. Corporate debt at 30 June 2026 consisted of CAD 550 million of debentures, one unsecured term loan of CAD 250 million, and lines of credit at CAD 225 million. In June 2026, we redeemed our CAD 250 million Series R senior debentures upon maturity, which bore interest at 2.906% per annum. The redemption was primarily funded using unsecured operating lines of credit. On the leasing front, we received a lease termination payment of approximately CAD 15.7 million from Bell Canada at 200 Bouchard Boulevard in Montreal. We recorded a corresponding non-cash adjustment to straight-lining of contractual rent of approximately the same amount.

Speaker #3: Debt to adjusted EBITDA, at the REIT's proportionate share, was 7.1 times, and our unencumbered assets to unsecured debt coverage ratio was 3.21 times. Corporate debt at June 30, 2026, consisted of $550 million of debentures, one unsecured term loan of $250 million, and lines of credit at $225 million.

Speaker #3: In June 2026, we redeemed our $250 million Series R senior debentures upon maturity, which bore interest at 2.906% per annum. The redemption was primarily funded using unsecured operating lines of credit.

Speaker #3: On the leasing front, we received a lease termination payment of approximately $15.7 million from Bell Canada at $200 Bouchard Boulevard in Montreal. We recorded a corresponding non-cash adjustment to straightlining of contractual rent of approximately the same amount.

Speaker #3: Therefore, the $200 Bouchard lease termination payment had no impact on net operating income and FFO for Q2, 2026. However, same property, net operating income, cash basis, and AFFO were positively impacted by $15.7 million, as H&R deducts non-cash items, including straightlining of contractual rent, in calculating these amounts.

[Company Representative] (H&R REIT): Therefore, the 200 Bouchard lease termination payment had no impact on net operating income and FFO for Q2 2026. However, same property net operating income cash basis and AFFO were positively impacted by CAD 15.7 million as H&R deducts non-cash items, including straight-lining of contractual rent, in calculating these amounts. In July 2026, the 200 Bouchard lease was further amended to advance the lease termination date to August 2026, which resulted in H&R receiving the final lease termination payment of CAD 56.1 million in July 2026. Please refer to our press release and MD&A for further information on the expected accounting treatment for Q3.

Cheryl Fried: Therefore, the 200 Bouchard lease termination payment had no impact on net operating income and FFO for Q2 2026. However, same property net operating income cash basis and AFFO were positively impacted by CAD 15.7 million as H&R deducts non-cash items, including straight-lining of contractual rent, in calculating these amounts. In July 2026, the 200 Bouchard lease was further amended to advance the lease termination date to August 2026, which resulted in H&R receiving the final lease termination payment of CAD 56.1 million in July 2026. Please refer to our press release and MD&A for further information on the expected accounting treatment for Q3.

Speaker #3: In July 2026, the $200 Bouchard lease was further amended to advance the lease termination date to August 2026, which resulted in H&R receiving the final lease termination payment of $56.1 million in July 2026.

Speaker #3: Please refer to our press release and MD&A for further information on the expected accounting treatment for Q3. FFO for Q2, 2026 was $24.7 cents per unit, compared to $31.4 cents per unit in Q2, 2025, reflecting lower NOI from property dispositions partially offset by reduced finance costs as a result of using the proceeds from property dispositions to repay corporate debt and an increase in finance income from our construction loan to the Reddit JV.

[Company Representative] (H&R REIT): FFO for Q2 2026 was CAD 0.247 per unit compared to CAD 0.314 per unit in Q2 2025, reflecting lower NOI from property disposition, partially offset by reduced finance costs as a result of using the proceeds from property disposition to repay corporate debt and an increase in finance income from our construction loan to the Reddit JV. Our FFO payout ratio was a healthy 60.7% for Q2 2026. Included in AFFO for the three and six months ended 30 June 2026, is the add back of straight-lining of contractual rent relating to the 200 Bouchard Boulevard lease termination payment, equating to approximately CAD 0.06 per unit. Breaking down our same property net operating income on a cash basis between the segments. Residential was down 0.1% in US dollars for Q2 2026 compared to Q2 2025. Emily will provide more details on Lantower's results shortly.

Cheryl Fried: FFO for Q2 2026 was CAD 0.247 per unit compared to CAD 0.314 per unit in Q2 2025, reflecting lower NOI from property disposition, partially offset by reduced finance costs as a result of using the proceeds from property disposition to repay corporate debt and an increase in finance income from our construction loan to the Reddit JV. Our FFO payout ratio was a healthy 60.7% for Q2 2026. Included in AFFO for the three and six months ended 30 June 2026, is the add back of straight-lining of contractual rent relating to the 200 Bouchard Boulevard lease termination payment, equating to approximately CAD 0.06 per unit. Breaking down our same property net operating income on a cash basis between the segments. Residential was down 0.1% in US dollars for Q2 2026 compared to Q2 2025. Emily will provide more details on Lantower's results shortly.

Speaker #3: Our FFO payout ratio was a healthy 60.7% for Q2, 2026. Included in AFFO for the 3 and 6 months ended June 30th, 2026, is the add-back of straightlining of contractual rent relating to the $200 Bouchard lease termination payment, equating to approximately 6 cents per unit.

Speaker #3: Breaking down our same property, net operating income on a cash basis between the segments, residential was down 0.1% in US dollars for Q2, 2026, compared to Q2, 2025.

Speaker #3: Emily will provide more details on Lantower's results shortly. Our industrial segment, same property net operating income on a cash basis decreased 0.7% in Q2 2026, compared to Q2 2025, primarily due to a decline in same property occupancy during the 18 months ended June 30, 2026.

[Company Representative] (H&R REIT): Our industrial segment same property net operating income on a cash basis decreased 0.7% in Q2 2026 compared to Q2 2025, primarily due to a decline in same property occupancy during the 18 months ended 30 June 2026, from 98.9% at 31 December 2024 to 92.7% at 30 June 2026. This was partially offset by strong rental rate growth. Our office segment same property net operating income on a cash basis, excluding the Bouchard lease termination payment, decreased 6.5% in Q2 2026 compared to Q2 2025, primarily due to the expiration of the 188,526 square foot RBC lease at 330 Front Street in Toronto on 31 December 2025. Our retail segment same property net operating income cash basis in US dollars decreased 5.9% in Q2 2026 compared to Q2 2025 due to a decrease in sundry income. Residential and industrial segments now comprise 86% of our real estate assets.

Cheryl Fried: Our industrial segment same property net operating income on a cash basis decreased 0.7% in Q2 2026 compared to Q2 2025, primarily due to a decline in same property occupancy during the 18 months ended 30 June 2026, from 98.9% at 31 December 2024 to 92.7% at 30 June 2026. This was partially offset by strong rental rate growth. Our office segment same property net operating income on a cash basis, excluding the Bouchard lease termination payment, decreased 6.5% in Q2 2026 compared to Q2 2025, primarily due to the expiration of the 188,526 square foot RBC lease at 330 Front Street in Toronto on 31 December 2025. Our retail segment same property net operating income cash basis in US dollars decreased 5.9% in Q2 2026 compared to Q2 2025 due to a decrease in sundry income. Residential and industrial segments now comprise 86% of our real estate assets.

Speaker #3: From 98.9% at December 31st, 2024, to 92.7% at June 30th, 2026. This was partially offset by strong rental rate growth. Our office segment, same property, net operating income on a cash basis excluding the Bouchard lease termination payment decreased 6.5% in Q2, 2026, compared to Q2, 2025, primarily due to the expiration of the $188,526 square-foot RBC lease at 330 Front Street in Toronto on December 31st, 2025.

Speaker #3: Our retail segment, same property, net operating income cash basis in US dollars decreased 5.9% in Q2, 2026, compared to Q2, 2025, due to a decrease in sundry income.

Speaker #3: Residential and industrial segments, now comprise 86% of our real estate assets. Our portfolio our office portfolio comprising 12 properties, now accounts for 10% of our real estate assets.

[Company Representative] (H&R REIT): Our office portfolio, comprising 12 properties, now accounts for 10% of our real estate assets. The only remaining retail asset in the commercial component is the commercial component of River Landing, which comprises 4% of our total real estate assets. With that, I will turn the call over to Emily, who will walk us through operational performance across the Lantower Residential portfolio. Emily, please go ahead.

Cheryl Fried: Our office portfolio, comprising 12 properties, now accounts for 10% of our real estate assets. The only remaining retail asset in the commercial component is the commercial component of River Landing, which comprises 4% of our total real estate assets. With that, I will turn the call over to Emily, who will walk us through operational performance across the Lantower Residential portfolio. Emily, please go ahead.

Speaker #3: The only remaining retail asset in the commercial component is the commercial component of River Landing, which comprises 4% of our total real estate assets.

Speaker #3: With that, I will turn the call over to Emily, who will walk us through operational performance across the Lantower residential portfolio. Emily, please go ahead.

Speaker #4: Thank you, Cheryl, and good morning, everyone. I'll begin with an overview of our second quarter performance and the operating environment across our multifamily platform before turning to market trends.

[Company Representative] (Lantower Residential): Thank you, Cheryl, and good morning, everyone. I will begin with an overview of our second quarter performance and the operating environment across our multifamily platform before turning to market trends. For the three months ending 30 June 2026, same property net operating income on a cash basis in US dollars decreased 10 basis points compared with the respective 2025 period. While near-term pressure remains in the Sun Belt, occupancy is improving, and leasing activity and pricing trends are providing encouraging signs as we move through the second half of the year. Our second quarter results reflect continued improvement across the portfolio and encouraging performance in our first full quarter under Greystar Property Management. Occupancy in the Sun Belt ended the quarter 145 basis points higher than Q1 and 70 basis points higher than Q2 2025 ended. Additionally, traffic and conversion metrics have also strengthened.

Emily Watson: Thank you, Cheryl, and good morning, everyone. I will begin with an overview of our second quarter performance and the operating environment across our multifamily platform before turning to market trends. For the three months ending 30 June 2026, same property net operating income on a cash basis in US dollars decreased 10 basis points compared with the respective 2025 period. While near-term pressure remains in the Sun Belt, occupancy is improving, and leasing activity and pricing trends are providing encouraging signs as we move through the second half of the year. Our second quarter results reflect continued improvement across the portfolio and encouraging performance in our first full quarter under Greystar Property Management. Occupancy in the Sun Belt ended the quarter 145 basis points higher than Q1 and 70 basis points higher than Q2 2025 ended. Additionally, traffic and conversion metrics have also strengthened.

Speaker #4: For the three months ending June 30th, 2026, same property, net operating income on a cash basis in US dollars decreased 10 basis points compared with the respective 2025 period.

Speaker #4: While near-term pressure remains in the sunbelt, occupancy is improving, and leasing activity and pricing trends are providing encouraging signs as we move through the second half of the year.

Speaker #4: Our second quarter results reflect continued improvement across the portfolio and encouraging performance in our first full quarter under Greystar Property Management. Occupancy in the Sunbelt ended the quarter 145 basis points higher than Q1, and 70 basis points higher than where Q2 2025 ended.

Speaker #4: Additionally, traffic and conversion metrics have also strengthened. Leasing inquiries increased 24% in Q2 compared with Q1, while traffic increased by 15%. Tour-to-application conversion improved 540 basis points sequentially.

[Company Representative] (Lantower Residential): Leasing inquiries increased 24% in Q2 compared with Q1, while traffic increased by 15%. Tour to application conversion improved 540 basis points sequentially. While pricing remains competitive in several Sunbelt markets, our operating indicators continue to move in the right direction. Net effective asking rents increased 30 basis points from Q1 to Q2 in the Sunbelt, compared with an approximately 100 basis point decline over the same period in 2025. This improvement, together with rising occupancy, stronger conversion, provides early evidence of improving pricing traction. The broader fundamentals supporting our portfolio remain intact. Plainly stated, our markets are the places where people want to live. Sunbelt markets continue to benefit from domestic inflows, particularly Dallas, Austin, Charlotte, and Raleigh, while gateway markets continue to demonstrate resilience despite shifting migration patterns. Demand continues to benefit from the affordability advantage of renting relative to home ownership.

Emily Watson: Leasing inquiries increased 24% in Q2 compared with Q1, while traffic increased by 15%. Tour to application conversion improved 540 basis points sequentially. While pricing remains competitive in several Sunbelt markets, our operating indicators continue to move in the right direction. Net effective asking rents increased 30 basis points from Q1 to Q2 in the Sunbelt, compared with an approximately 100 basis point decline over the same period in 2025. This improvement, together with rising occupancy, stronger conversion, provides early evidence of improving pricing traction. The broader fundamentals supporting our portfolio remain intact. Plainly stated, our markets are the places where people want to live. Sunbelt markets continue to benefit from domestic inflows, particularly Dallas, Austin, Charlotte, and Raleigh, while gateway markets continue to demonstrate resilience despite shifting migration patterns. Demand continues to benefit from the affordability advantage of renting relative to home ownership.

Speaker #4: While pricing remains competitive in several Sunbelt markets, our operating indicators continue to move in the right direction. Net effective asking rents increased 30 basis points from Q1 to Q2 in the Sunbelt, compared with an approximately 100 basis point decline over the same period in 2025.

Speaker #4: This improvement, together with rising occupancy, stronger conversion, provides early evidence of improving pricing traction. The broader fundamentals supporting our portfolio remain intact. Plainly stated, our markets are the places where people want to live.

Speaker #4: Sunbelt markets continue to benefit from domestic inflows, particularly Dallas, Austin, Charlotte, and Raleigh, while gateway markets continue to demonstrate resilience despite shifting migration patterns.

Speaker #4: Demand continues to benefit from the affordability advantage of renting relative to home ownership. As supply pressures moderate, across many of our markets, we believe the combination of stronger traffic, improved conversion, and rising occupancy positions the portfolio well for further improvement through the second half of the year.

[Company Representative] (Lantower Residential): As supply pressures moderate across many of our markets, we believe the combination of stronger traffic, improved conversion, and rising occupancy positions the portfolio well for further improvement through the H2 of the year. Turning to development, our Florida Reddit project completed construction in July and received their TCOs. Leasing is underway, with Lantower Bayside at 41 leases and Lantower Sunrise at 17 leases as of today. In summary, our Q2 results show measurable progress across several key operating indicators. Occupancy is improving, leasing activity and conversion have strengthened, and bad debt is at a historical low. Importantly, these trends are occurring alongside improvement in Sunbelt asking rents. We are encouraged by the early results Greystar Property Management teams, and believe the combination of stronger operating execution, improving market conditions, and a more scalable platform positions Lantower well as we move through the balance of 2026.

Emily Watson: As supply pressures moderate across many of our markets, we believe the combination of stronger traffic, improved conversion, and rising occupancy positions the portfolio well for further improvement through the H2 of the year. Turning to development, our Florida Reddit project completed construction in July and received their TCOs. Leasing is underway, with Lantower Bayside at 41 leases and Lantower Sunrise at 17 leases as of today. In summary, our Q2 results show measurable progress across several key operating indicators. Occupancy is improving, leasing activity and conversion have strengthened, and bad debt is at a historical low. Importantly, these trends are occurring alongside improvement in Sunbelt asking rents. We are encouraged by the early results Greystar Property Management teams, and believe the combination of stronger operating execution, improving market conditions, and a more scalable platform positions Lantower well as we move through the balance of 2026.

Speaker #4: Turning to development, our Florida Reddit projects completed construction in July and received their TCOs. Leasing is underway with Lantower Bayside at 41 leases in Lantower Sunrise at 17 leases as of today.

Speaker #4: In summary, our second quarter results show measurable progress across several key operating indicators. Occupancy is improving, leasing activity and conversion have strengthened, and bad debt is at a historical low.

Speaker #4: Importantly, these trends are occurring alongside improvement in sunbelt asking rents. We are encouraged by the early results Greystar Property Management teams and believe the combination of stronger operating execution, improving market conditions, and a more scalable platform positions Lantower well as we move through the balance of 2026.

Speaker #4: Finally, I want to recognize our Lantower and Greystar teams for their continued partnership transition. Their focus on leasing, customer service, and operating discipline is only the beginning to continue to improvement in portfolio performance.

[Company Representative] (Lantower Residential): Finally, I want to recognize our Lantower and Greystar teams for their continued partnership and execution during the transition. Their focus on leasing, customer service, and operating discipline is only the beginning to continued improvements in portfolio performance. With that, I turn the conversation back to Tom.

Emily Watson: Finally, I want to recognize our Lantower and Greystar teams for their continued partnership and execution during the transition. Their focus on leasing, customer service, and operating discipline is only the beginning to continued improvements in portfolio performance. With that, I turn the conversation back to Tom.

Speaker #4: And with that, I turn the conversation back to Tom.

Speaker #1: Thank you, Emily. Before I close, I want to come back to this transaction one final time. I recognize that what I've shared today together with Tuesday's joint call and our press releases does not answer every question you have.

Tom Hofstedter: Thank you, Emily. Before I close, I want to come back to this transaction one final time. I recognize that what I have shared today, together with Tuesday's joint call and our press releases, does not answer every question you have. There are things that will be appropriately disclosed in the management information circular, and we are committed to providing that detail fully and transparently when it is filed in the coming weeks. For that reason, we are not opening the lines for Q&A today. I do not think it would be fair to put you in a position where the honest answer to most of your questions is that it will be in the circular. In the meantime, I am available. Please feel free to reach out directly. I am happy to take your calls.

Speaker #1: There are things that will be appropriately disclosed in the management information circular, and we are committed to providing that detail fully and transparently when it is filed in the coming weeks.

Speaker #1: For that reason, we are not opening the lines for Q&A today. I do not think it would be fair to put you in a position where the honest answer to most of your questions is that it'll be in the circular.

Speaker #1: In the meantime, I'm available. Please feel free to reach out directly—I'm happy to take your calls. Thank you for your continued interest in H&R, and for your patience as we work through this process together.

Tom Hofstedter: Thank you for your continued interest in H&R and for your patience as we work through this process together.

Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating, and we ask that you please disconnect your lines.